COVER SHEET for AUDITED FINANCIAL STATEMENTS SEC Reglsraton Number ali{9|9}9{o[2}0}7]4 COMPANY NAME uln[ifrfelefefelr] [efr[elrfelr[Nfo],| [rine]. Cal [wiofofi]ify]-[olw]a[e[a] [s[u]o[slifalilalr[y] [ot ulnliftfefifife{r] [Flifnlalmle]ifali] [sfe[r|vlifele[s], ‘tIale]-[ PRINCIPAL OFFICE (No, /Svoet/ Barangay /Cly/ Town / Prove) Fom Type Department equing he report ‘Secondary License Type, Aplcatle COMPANY INFORMATION Company’ Ema Adress Company's Telephone Number ‘bile Number No.of Stoekliers Anos! Meeting (Month/Day) Fal Year (Month/Day) r | 5 December 31 CONTACT PERSON INFORMATION ‘The designated conte perion MUST be an Otce ofthe Corporation Name a Contact Person Ena Ars Telephone Numbers bie Number Felipe Z. Roque, Jr. fzr@Uniteller.com 636 - 4611 ‘CONTACT PERSON’s ADDRESS 7 ease dat vlan or const of ace le Sica dgnted 0 Cod perso, Hah Pea al be are ee Ca wi abrdar day ame occuranceteea! th maton an compe cote! Stele Oe Mew cnc petondesgnated. es mus! be properly and comply ld. Fre to do osha cause the dey in updating the coportonsrecorcs wih te Commision erslornonvaosi of Noe of Defences. Fuer, nonsecep of Note of Defencies shal ot excuse the coporaten frm fbity rf defences,al Tower The Fat. Taguig City 1634 Unit 2409, 24 Trade and F ‘Ave. comer 32" Steet, DS UniTeller neu oe JEBANORTE | Fax (63-2) 636-4613 ta ufiunteler com URL: wa UniTelles.com “STATEMENT OF MANAGEMENT'S RESPONSIBILITY, FOR FINANCIAL STATEMENTS” The management of Uniteller Filipino, Inc. (the “Company”) is responsible for all the preparation and fair presentation of the financial statements including the schedules of attached therein, for the year ended December 31, 2017, in accordance with the prescribed financial reporting framework indicated therein, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable matters related to going concern ‘and using the going concern basis of accounting unless management either to liquidate the Company of to cease operations, or has no realistic alternative but t0 do so. The Board of Directors (Trustees) is responsible for overseeing the Company's financial reporting process. ‘The Board of Director (Trustees) reviews and approves the financial statements including the schedules attached therein, and submits the same to the stockholders or members. SGV & Co., the independent auditor appointed by the stockholders, has audited the financial statements of the company in accordance with Philippine Standards on Auditing, and in its report to the stockholders or members, has expressed its opinion on the fairness of presentation upon. completion of such audit. Signature Laguerta Signed this 8" day of March 20182403, 240 Trade and ‘Ave. comer 32" Street, BGC, The For, Taguig Cy 1694 Wuniteller #EBANORTE Fax (62-2) 636-4613 Email ui@untellercom URL: ww UniTeler.com STATEMENT OF MANAGEMENT'S RESPONSIBILITY, FOR ANNUAL INCOME TAX RETURN The Management of UNITELLER FILIPINO, INC., is responsible to all information and representations contained in the Annual Income Tax Return for the year ended December 31, 2017. Management is likewise responsible for all information and representations contained in the financial statements accompanying the Annual Income Tax Return covering the same reporting period. Furthermore, the Management is responsible for all information and representations contained in all the other tax returns filed for the reporting period, including, but not limited, to the value added tax and/or percentage tax returns, withholding tax returns, documentary stamp tax returns, and any and all other tax returns. In this regard, the Management affirms that the attached audited financial statements for the year ended December 31, 2017 and the accompanying Annual Income Tax Return are in accordance with the books and records of Uniteller Filipino, Inc., complete and correct in all material respects. Management likewise affirms that: (a) The Annual Income Tax Return has been prepared in accordance with the provisions of the National Internal Revenue Code, as amended, and pertinent tax regulations and other issuances for the Department of Finance and the Bureau of Internal Revenue; (b) Any disparity of figures in the submitted reports arising from the preparation of financial statements pursuant to financial accounting standards and the preparation of ‘the income tax return pursuant to tax accounting rules has been reported as reconciling items and maintained in the company’s books and records in accordance with the requirement of Revenue Regulations No, 8-2007 and other relevant issuances; (©) Uniteller Filipino, Inc., has filed all applicable tax returns, reports and statements required to be filed under Philippine tax laws for the reporting period, and all taxes and other impositions shown thereon to be due and payable have been paid for the reporting period, except those contested in good faith. TEASED Signed this 8" day of March 2018envy Sycp Gores Veleyo &.Co Te (632) 891 0307 BOAPRC Reg. No. 0001 SUV reo Ayala Avenue Fax (632) 819 0872 December 14,2018, vaid untt December 21,2018 - 1226 Manat Cy eyeomien SEC Accredtation No, OO12-FF (Group A). ter Prippines ‘November 10,2018, vali unt Noverber 8, 2078 INDEPENDENT AUDITOR'S REPORT rhe Board of Directors and Stockholders UniTeller Filipino, Inc, Jnit 2403, 24/F, Trade and Financial Tower * Avenue, BGC, The Fort Faguig City We have audited the accompanying financial statements of UniTeller Filipino, Inc. ‘a wholly-owned subsidiary of UniTeller Financial Services, Inc.) as at and for the year ended December 31, 2017, on which we have rendered our report dated March 8, 2018. In compliance with Securities Regulation Code Rule 68, As Amended, we are stating that the said Company has one (1) stockholder owning one hundred (100) or more shares. SYCIP GORRES VELAYO & CO. Pe Nanay - pei Partner CPA Certificate No, 111092 SEC Accreditation No. 1328-AR-1 (Group A), July 28, 2016, valid until July 28, 2019 Tax Identification No. 900-322-673 BIR Accreditation No. 08-001998-69-2018, February 26, 2018, valid until February 25, 2021 PTR No. 6621305, January 9, 2018, Makati City March 8, 2018ee SyCip Gores Velayo & Co To: (632) 891.0307 BOAPRC Reg. No. 0001 SGV Sosiyals her Fon\(6a2) 819 0072 "December 14,2015, vad ut December 91,2018 ‘ze Manat Cy eyeowen SEC Acredtation No) OOI2FR-# (G09 A) Prisppines Novornber 10,2018, vad uti Novernoe 8, 2018 INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY SCHEDULES The Board of Directors and Stockholders UniTeller Filipino, Ine. Unit 2403, 24/P, Trade and Financial Tower 7® Avenue, BGC, The Fort Taguig City ‘We have audited in accordance with Philippine Standards on Auditing, the financial statements of UniTeller Filipino, Ine. (the Company) as at and for the years ended December 31, 2017 and 2016, and nave issued our report thereon dated March 8, 2018, Our audits were made for the purpose of forming an opinion on the basic financial statements taken asa whole. The accompanying schedule of all effective standards and interpretations and schedule of retained earnings available for dividend declaration are the responsibility of the Company’s management, These schedules are presented for purposes of complying swith Securities Regulation Code Rule 68, As Amended (2011), and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respect, the information required :o be set forth therein in relation to the basic financial statements taken as a whole. SYCIP GORRES VELAYO & CO. Partner CPA Certificate No. 111092 SEC Accreditation No. 1328-AR-I (Group A), July 28, 2016, valid until July 28, 2019 Tax Identification No. 900-322-673 BIR Accreditation No. 08-001998-69-2018, February 26, 2018, valid until February 25, 2021 PTR No. 6621305, January 9, 2018, Makati City March 8, 2018‘syCip Gores Velayo & Co, Te: (652) 891 0307 SONPRC Reg. No. 0001 6760 Ayala Avenue Fex\(ea2) 819.0872 _ December 14,2075, valid unt December 37, 2018 ‘as makati cy eycamiph ‘SEC Accreditation No, O012-FR-4 (Group A. Bulging a better Phitppnes November 1.2018, ved uni Novembar 9.2018 ‘working werd a eee i INDEPENDENT AUDITOR’S REPORT ‘The Board of Directors and Stockholders UniTeller Filipino, Ine. Unit 2403, 24/P, Trade and Financial Tower 7 Avenue, BGC, The Fort Taguig City Report on the Audit of the Financial Statements Opinion We have audited the financial statements of UniTeller Filipino, Inc. (the Company) (a wholly-owned subsidiary of UniTeller Financial Services, Inc.), which comprise the statements of financial position as at December 31, 2017 and 2016, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2017 and 2016, and its financial performance and its cash flows for the years then ended in accordance with Philippine Financial Reporting Standards (PFRSS). Basis of Opinion We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethies for Professional Accountants in the Philippines (Code of Ethies) together with the ethical requirements that are relevant to our audit ofthe financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics, We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements ‘Management is responsible for the preparation and fair presentation of the financial statements in accordance with PFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concer, disclosing, as applicable, matters related to going concern and using the going concen basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so, ‘Those charged with governance areSGV Building a better working world Auditor’s Responsibilities for the Audit of the Financial Statements ‘Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. [As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: «Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. ‘The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. + Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. + Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. «© Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concer If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to ‘modify our opinion, Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concer. «Evaluate the overall presentation, structure and content of the financial statements, including the isclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation, © We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit, RECEIVER 47018SGV Building a better ‘working world oe Report on the Supplementary Information Required under Revenue Regulation No. 15-2010 ‘Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as awhole. The supplementary information required ‘under Revenue Regulations 15-2010 in Note 17 to the financial statements is presented for purposes of filing with the Bureau of Internal Revenue and is not statements, Such information is the responsibility of management of the Company. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements, In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. SYCIP GORRES VELAYO & CO. Qa 7 Muncy. Sesier Janeth T. Nufiez-Javier Partner CPA Certificate No. 111092 SEC Accreditation No, 1328-AR-1 (Group A), July 28, 2016, valid until July 28, 2019 ‘Tax Identification No. 900-322-673 BIR Accreditation No, 08-001998-69-2018, February 26, 2018, valid until February 25, 2021 PTR No. 6621305, January 9, 2018, Makati City March 8, 2018 MOONUNITELLER FILIPINO, INC. (A Wholly-owned Subsidiary of UniTeller Financial Services, In STATEMENTS OF FINANCIAL POSITION December 31 Notes 2017 2016 ASSETS Current assets Cash 4,16 72,937,836 51,401,361 Receivables 5,16 32,880,241 9,120,729 Due from parent company 9,16 57,834,801 92,365,587 Prepaid expenses and other current assets 6 $127,537, 2,628,927 Total Current Assets 168,780,415 155,516,604 Noneurrent assets Property and equipment, net 1 3,489,750 2,732,066 Deferred tax assets, net B 3,869,736 4,001,571 Other noncurrent assets, 11,16 = 367,540 “Total Noneurrent assets 7,359,486, 7,301,177 Total Assets F176,139,901 P162,817,781 LIABILITIES AND EQUITY Current liabilities ‘Accounts payable and accrued expenses 8,16 P26,141,780 23,758,390 Notes payable - current 16 432,421 932,753 Due to parent company 9,16 123,482,923 111,563,999 Income tax payable 1,151,032 6,011,978, Total Current Liabilities 151,208,156 141,867,120 Noncurrent liabilities ‘Notes payable - noneurrent 16 = 432,421 Retirement liability 2 4,380,426 4,138,354 Total Noneurrent Lial 4,380,426, 4,570,775. Total Liabilities 155,588,582, 146,437,895 Equity Capital stock 10 7,800,000 7,800,000, Reserve for remeasurement of retirement benefit obligation 2 (827,472) 1,135,087) Retained earings _ 13,578,791 9,714,973, Total equity 20,551,319, 16,379,886, Total abilities and equity 176,139,901 162,817,781 Tee Noes tothe Financial StatementsUNITELLER FILIPINO, INC. (A Wholly-owned Subsidiary of UniTeller Financial Services, Ine.) ‘STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 Notes 2017 2016 Revenues Service fee 939,461,988 30,682,493 Commission income 9 6,803,753 6,469,321 Country fee 9 3,904,360 3,473,149, 30,170,101, 40,624,965. Operating expenses Salaries, wages and employee benefits 9 10,558,464 5,300,005 ‘Commission expense 9 6,803,753 6,469,321 Professional fees and outside services 9 5,163,880 3,566,171 Advertising 3,214,603 130,337 Rent n 1,985,395 1,292,442 ‘Transportation and travel 1,452,133 760,793 Depreciation and amortization ty 1,117,084 1,128,638 Insurance ‘833,108 642,320 ‘Communication 755,286 686,801 Retirement expense 2 681,522 133,944 Utilities 367,160 409,605 Repairs and maintenance 499277 502,567 Bank charges: 361,173 182,101 Dues and subscription 350,398 231,782 Office supplies 306,640 158,163, ‘Taxes and licenses 284,914 112579 34,904,750) 21,727,569 Income from operations 15,265,351 18,897,394 Other expenses, net 4 5,781,187 8,137,750 Income before income tax 9,484,168 10,759,644 Income tax expense 3 5,620,346, 3,229,780, Net income 3,863,818 7,529,864 Other comprehensive income (loss) Items that will not be reclassified subsequently to profit or loss Remeasurement gain (loss) on defined benefit liability, net of tax 2 307,615 (2,334,048) 307,613 (2,334,088), ‘Total comprehensive income P4171433 P5,195,816 ‘See Notes fo he Financial Siatements PEE RECEIV b 42018 Sa Fess | EKAUNITELLER FILIPINO, INC. (A Wholly-owned Subsidiary of UniTeller Financial Services, Inc.) STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 Reserve for remeasurement of retirement benefit Capital stock obligation Retained Total (Note 10) __(Note 12) earnings equity Balances at January 1, 2017 77,800,000 (1,135,087) P9,714 973 F16,379,886 ‘Comprehensive income: Net income - = —-3,863,818 3,863,818 Other comprehensive income - 307,615 = 307,615 Balances at December 31, 2017 7,800,000, P827.472) _ PISS78, 191 __P20.551,319, Balances at January 1, 2016 7,800,000 1,198,961 2,185,109 _PI,184,070 ‘Comprehensive income: Net income - — 529,864 7,529,864 ‘Other comprehensive loss = 2,334,048) = 2,334,048) _ Balances at December 31,2016 ¥7500,900 (PI, 135,087) _P9,714 973 16,379,886 See Nowe to the Financial StatementsUNITELLER FILIPINO, INC. (A Wholly-owned Subsidiary of UniTeller Financial Services, Ine.) STATEMENTS OF CASH FLOWS Years Ended December 31 Notes 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax 9,484,164 10,759,644 Adjustments for: Provision for losses “4 6937347 9,615,787 Depreciation and amortization f 1,117,044 1,128,638 Unrealized foreign exchange loss (gain) 15 249,385 (415,568) Retirement expense 2 681,522 133,944 Interest income 4 (103,756) (66,567) Interest expense 4 65,819 17,858. ‘Operating income before working capital changes 18,431,525 21,173,736 ‘Changes in operating assets and liabilities: ‘Decrease (inerease) in Receivables (23,759,512) 1,746,249 Due from parent company 34,529,329 (60,180,995) Prepaid expenses and other current assets (2,498,610) (1376711) Increase (decrease) in ‘Accounts payable and accrued expenses (4,553,957) 8,243,090 ‘Due to parent company. 11,719,677. (20,340;386) ‘Net cash flows generated from (used in) operations 33,868,452 (20,935,017) Interest received 103,756 66,567 Interest paid (65,819) (17,858) Income tax paid (10,481,292) (102,123) ‘Net eash provided by (used in) operating activities 23,425,097, 21,988,431) ‘CASH FLOWS FROM INVESTING ACTIVITIES Decrease in other non-current assets 367,540 19,985,651 ‘Acquisitions of property and equipment (2,893,751) (446,513) Proceeds from sale of property and equipment 486,270 = ‘Net cash provided by (used in) investing activities (0,839,941) 19,539,158, NET INCREASE (DECREASE) IN CASH 21,585,156 (2,449,293) CASH AT BEGINNING OF THE YEAR 51,401,361 53,739,294 Effect of exchange rate changes on cash (48,681) 111,360 \SH AT THE END OF THE YEAR 72,937 836 51,401,361 (CASH AT THEEND OF THEYEAR Oe ‘See Notes to the Financial StatementsUNITELLER FILIPINO, INC. (A Wholly-owned Subsidiary of UniTeller Financial Services, Inc.) NOTES TO THE FINANCIAL STATEMENTS 1. Corporate Information UniTeller Filipino, Inc. (the “Company”) was registered with the Philippine Securities and Exchange Commission (SEC) on February 15, 1999, to engage in the business of remitting, transferring, or otherwise delivering any kind of foreign currency from abroad into the Philippines either by telegraphic, wire, electronic transfer or any other manner. The Company was also registered with the Bangko Sentral ng Pilipinas (BSP) on January 20, 2005, as a remittance agent, subject to the applicable provisions of law and BSP rules and regulations, as well as the provisions of the Anti- Money Laundering Act of 2001 (R.A. No. 9160, as amended by R.A. No. 9194) and its implementing rules and regulations. Effective January 18, 2007, UniTeller Financial Services, Inc. (UFSD), the parent company of UniTeller Filipino, Inc., has joined the Banorte group of companies, through its acquisition by Banorte USA Corporation, Banorte USA Corporation, the arm of Grupo Financiero Banorte, was established to develop a greater share of the cross-border financial services market, including transfers to Latin America and the Philippines. ‘The ultimate parent of the Company is Grupo Financiero Banorte, ‘The registered office address of the Company is located at Unit 2403, 24/F, Trade and Financial ‘Tower, 7 Avenue, BGC, The Fort, Taguig City. ‘The accompanying financial statements were approved and authorized for issuance by the Board of Directors on March 8, 2018. 2, Summary of Significant Accounting Policies ‘The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation ‘The financial statements of the Company have been prepared in accordance with Philippine Financial Reporting Standards (PERS). The term PERS in general includes all applicable PFRS, Philippine ‘Accounting Standards (PAS), and interpretations of the Philippine Interpretations Committee (PIC), Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations ‘Committee (IFRIC) which have been approved by the Financial Reporting Standards Council (FRSC) and adopted by the SEC. The financial statements have been prepared on the historical cost basis of accounting. ‘The financial statements are presented in Philippine peso (P), which is the Company's functional currency. All financial information presented in Philippine peso has been rounded off to the nearest peso, unless otherwise indicated. OU EEO AEC‘The preparation of financial statements in conformity with PFRS requires the use of certain critical accounting estimates, It also requires management to exercise its judgment in the process of applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, ‘or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. 2.2 Changes in accounting policies and disclosure ‘The accounting policies adopted are consistent with those of the previous financial year except for the following new, amendments and improvements to PERS, PAS and Philippine Interpretation which became effective as of January 1, 2017. These changes in the accounting policies did not have any significant impact on the financial position or performance of the Company’ PERS 12, Disclosure of Interests in Other Entities, Clarification of the Scope of the Standard (Part of Annual Improvements to PERSs 2014 - 2016 Cycle) The amendments clarify that the disclosure requirements in PFRS 12, other than those relating to summarized financial information, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale. PAS 7, Statement of Cash Flows, Disclosure Initiative ‘The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). PAS 12, Income Taxes, Recognition of Deferred Tax Assets for Unrealized Losses ‘The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions upon the reversal of the deductible temporary difference related to unrealized losses. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit ‘may include the recovery of some assets for more than their carrying amount. 2.3. Financial assets Classification and presentation ‘The Company classifies its financial assets in the following categories: (a) loans and receivables, (b) held-to-maturity financial assets, (c) financial assets at fair value through profit or loss, and (@) available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at itial recognition The Company did not hold financial assets under category (b), (c) and (4) during and at the end of each reporting periodLoans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These are included in current assets, except for those with ‘maturities greater than 12 months after the reporting date which are included as part of non-current assets ‘The Company’s loans and receivables consist mainly of cash (Note 2.7), receivables including due from parent company (Note 2.8) and refundable deposits (Note 2.12). Recognition and measurement Loans and receivables are initially recognized and measured at fair value plus transaction costs and are subsequently carried at amortized cost using the effective interest rate method, Derecognition Loans and receivables are derecognized when the rights to receive cash flows have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Impairment of loans and receivables ‘The Company assesses at each reporting date whether there is objective evidence that a financial asset ot group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. For loans and receivables category, the Company first assesses whether there is objective evidence of impairment exists individually for receivables that are individually significant, and collectively for receivables that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed receivable, whether significant or not, it includes the asset in group of financial assets with similar credit risk characteristics and collectively assesses those for impairment. Receivables that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment. ‘The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in profit or loss within general and administrative expenses. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor's credit rating), the reversal of the previously recognized impairment loss is recognized in profit or loss. Reversals of previously recorded impairment provision are based on the result of management's update assessment, considering the available facts and changes in ircumstances, including but not limited to results of recent discussions and arrangements entered into with customers as to the recoverability of receivables at the end of the reporting period. Subsequentrecoveries of amounts previously written-off are credited against general and administrative expenses in profit or loss, 2.4 Financial liabilities Classification and presentation as: (i) financial liabilities at fair value through profit or ies under category (i) 1 of two sub-categories: financial liabilities classified as held for trading and financial liabilities designated by the Company as at fair value through profit or loss upon initial recognition. Management determines the classification of its financial liabilities at initial recognition. The Company did not classify any of its financial liabilities at fair value through profit or loss. Financial liabilities at amortized cost Financial liabilities at amortized cost are contractual obligations which are either to deliver cash or another financial asset to another entity or to exchange financial assets or financial liabilities with ‘another entity under conditions that are potentially unfavourable to the Company, They are included in current liabilities, except for maturities greater than 12 months after the reporting period which are classified as non-current liabilities. ‘The Company’s financial liabilities at amortized cost consist of accounts payable, notes payable, due to paying agents, accrued expenses (Note 2.13) and due to parent company (Note 2.14). Recognition and measurement ‘The Company recognizes a financial liability in the statement of financial position when, and only when, the Company becomes a party to the contractual provision of the instrument. Other liabilities at amortized cost are initially measured at fair value plus transaction costs. Subsequently, these are measured at amortized cost using the effective interest rate method. Interest expense on financial liabilities is recognized at gross amount in profit or loss. Derecognition Other liabilities at amortized cost are derecognized when it is extinguished, that is, when the obligation specified in a contract is discharged or cancelled, or when the obligation expires. 2.5 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there isa legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. ‘The Company does not have financial assets and liabilities that are covered by enforceable master netting arrangements and other similar agreements.2.6 Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ‘The fair value of a non-financial asset is measured based on its highest and best use. The asset's current use is presumed to be its highest and best use. The fair value of financial and non-financial liabilities takes into account non-performance risk, i the risk that the entity will not fulfil an obligation. ‘The Company classifies its fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: * Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; * Level 2: inputs other than quoted prices included within Level | that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and * Level 3: inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) ‘The appropriate level is determined on the basis of the lowest level input that is significant to the fair value measurement. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date, A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company is the most representative price within the bid-ask spread, These instruments are included in Level 1 The fair value of assets and liabilities that are not traded in an active market (for example, over-the- counter derivatives) is determined by using valuation techniques. These valuation techniques ‘maximize the use of observable market data where itis available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the asset or liability is included in Level 2. If one or more of the significant inputs is not based on “observable market data, the asset or liability is included in Level 3. ‘The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. ay 1? Profit When the transaction price in a non-active market is different from the fair value of other observable current market transactions of the same instrument or based on a valuation technique whose variables include only data from observable market, the Company recognizes the difference between the transaction price and fair value (a ‘Day 1” profit’) in profit or loss. In cases where no observable data is used, the difference between the transaction price and model value is only recognized in profit or loss when the inputs become observable or when the instrument is derecognized. For each transaction, the Company determines the appropriate method of recognizing the ‘Day 1” profit amount. [As at December 31, 2017 and 2016, the Company has no assets and liabilities measured at fair value.2.7. Cash and eash equivalents For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash con hand and deposits held at call with financial institutions. Cash in banks earns interest at the respective bank deposit rates. This is carried in the statement of financial position at face or at ‘nominal amount. 2.8 Receivables Receivables, including due from related parties, are recognized initially at the transaction price. They are subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables, Such impairment loss is recognized immediately in profit or loss. When a receivable remains tuncollectible after the Company has exerted all legal remedies, it is written-off against allowance for impairment of receivables amount. Other than the instance of impairment as noted above, these receivables are derecognized when the rights to the cash flow from this asset have expired or are settled - that is, when collected. 2.9 Prepayments and other current assets Prepayments are recognized in the event that payment has been made in advance of obtaining right of ‘access to goods or receipt of services and measured at nominal amounts. These are derecognized and ‘charged to profit or loss either with the passage of time or through use or consumption. Prepayments are included in current assets, except when the related goods or services are expected to be received and rendered more than twelve months after the end of the reporting period, in which case, these are classified as non-current assets. Other current assets include input value-added tax (VAT) which is stated at historical cost less provision for impairment, if any. Provision for unrecoverable input VAT, if any, is maintained by the Company at a level considered adequate to provide for potential unutilized portions of the claims. ‘The Company, on a continuing basis, makes a review of the status of recoverability of its input VAT designed to identify those that may require provision for impairment losses. These are derecognized When refunded, used or offset against output tax or disallowed by the tax authority. 2.10 Property and equipment Property and equipment are stated at historical cost less accumulated depreciation and impairment in value, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as ‘appropriate, only when it is probable that future economic benefits associated with the item will flow 10 the Company and the cost of the item can be measured reliably. Major renovations are depreciated over the remaining useful life of the related asset or to the date of the next major renovation, whichever is sooner. Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.Leasehold improvements are amortized over the estimated useful lives of the improvements, which is the shorter period compared to the term of the lease considering renewal options and management's intention. Depreciation on assets is computed using the straight-line method over the asset’s estimated useful lives, as follows: In years ‘Transportation equipment 5 ‘Computer equipment 5 Office equipment 5 Furniture and fixtures 3 Leasehold improvements 3 or the lease term, whichever is shorter ‘The assets’ residual values and useful lives are reviewed periodically, and adjusted as appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Fully depreciated assets are retained in the property and equipment account until these are retired. Gains and losses on disposals are determined by comparing proceeds with carrying amount and these are included in profit or loss within other income (expenses), net. ‘An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal at which time the cost and their accumulated depreciation are removed from the accounts. 2.11 Impairment of non-financial assets The carrying values of non-financial assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Value in se requires entities to make estimates of future cash flows to be derived from the particular asset, and discount them using a pre-tax market rate that reflects current assessments of the time value of ‘money and the risks specific to the asset. Impairment losses, if any, are recognized in profit or loss within other expenses. Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. When impairment loss subsequently reverses, the carrying amount of the assets or cash-generating unit is increased to the revised estimate of its recoverable amount, but the increased carrying amount should not exceed the carrying amount that would have been determined had no impairment loss has been recognized for the asset or cash-generating unit in prior years. Reversals of previously recorded impairment provisions are credited against provision account in profit and loss,2.12, Refundable deposits Refundable deposits (including surety bond) are amounts which are refundable upon expiry of a specified term in a contract, subject to certain conditions such as the lessee's payment of rent as it becomes due. If part or all of a refundable deposit becomes non-refundable, e.g. where no refund will be paid due to damage to the property by the lessee or a loss has been incurred, the right to receive the depositor part thereof is impaired, and the carrying amount is reduced and the corresponding loss is recognized in profit or loss within general and administrative expenses. [Also refer to Note 2.3 for the recognition, measurement and derecognition of financial assets. 2.13. Accounts payable and other accrued expenses These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. ‘Accounts payable and other accrued expenses denominated in foreign currency are translated to Philippine peso using the exchange rate at the reporting date. Foreign exchange gains or losses are included in “Other expenses, net” in profit or loss. Accounts payable and other accrued expenses are derecognized when extinguished, that is, when the obligation specified in a contract is discharged or cancelled or when the obligation expires. 2.14 Related party transactions and relationships Related party relationships exist when one party has the ability to control, directly, or indirectly ‘through one or more intermediaries, the other party or exercises significant influence over the other party in making financial and operating decisions. Such relationships also exist between and/or among entities, which are under common control with the reporting enterprise, or between, and/or ‘among the reporting enterprise and its key management personnel, directors, or its shareholders. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. 2.15. Provisions Provisions for legal claims are recognized when the Company has a present legal or constructive obligation as a result of past events, itis probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value cof money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense.2.16 Retirement liability ‘The Company has yet to adopt a formal retirement plan for the benefit of its qualified employees. Under Republic Act (RA) 7641, otherwise known as the Retirement Pay Law, in the absence of a retirement plan or agreement providing for retirement benefits of employees in the private sector, an employee upon reaching the age of 60 years or more, but not beyond 65 years, who has served at least 5 years in a private company, may retire and shall be entitled to retirement pay equivalent to at least ¥ month salary for every year of service, a fraction of at least 6 months being considered as 1 whole year. ‘The Company recognizes retirement benefit provision based on the minimum requirements of RA 7641, The liability recognized in the statement of financial position is the present value of the accumulated retirement benefit obligation at the financial reporting date as calculated annually by an independent actuary using the projected unit credit method. ‘The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. Where there is no deep market in such bonds, the market rates on government bonds are used. ‘The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the profit or loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, direetly in other comprehensive income. ‘Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service costs. 2.17 Equity Capital Stock Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of shares are recognized as a deduction from equity, net of any tax effect. Retained earnings Retained earnings represent the accumulated profit/loss arising from the operations of the Company, less any dividends declared. 2.18 Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the amount of revenue can be reliably measured,-10- Service fee income Service fee income is recognized for a fixed amount that shall be determined as a function of expenses that the Company incurs plus an eight percent (8%) mark-up. Country fee income Country fee income is recognized for every processed remittance transaction based on a fixed rate as agreed with UFSI. Commission income ‘Commission income is recognized upon reimbursement from UFSI of the commission fees of the paying agents. Interest income Interest income is recognized as it accrues using the effective interest method and is presented net of final tax, 2.19 Cost and expense recognition Cost and expenses are recognized when decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably. Expenses are recognized when they are incurred 2.20. Operating leases ‘A lease is classified as an operating lease if it does not substantially transfer all risks and rewards incidental to ownership. Operating lease payments are recognized as expense in profit or loss on a straight-line basis over the lease term. ‘Associated costs, such as maintenance and insurance are expensed as incurred. 2.21 Foreign currency transactions and translations Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic ‘environment in which the entity operates (the “functional currency”). The financial statements are presented in Philippine Peso, which is the Company's functional and presentation currency. ‘Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit or loss. Foreign exchange gains and losses are presented in profit or loss within other expenses.alts 2.22 Current and deferred income tax ‘The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. ‘The current income tax charge is calculated on the basis of the tax laws enacted or substantively ‘enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax assets are recognised only if itis probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax losses (net operating loss carryover or NOLCO) and unused tax credits (excess minimum corporate income tax or MCIT) to the extent that it is probable that future taxable profit will be available against which the temporary differences, unused tax losses and unused tax credits can be utilized. The Company reassesses at each reporting date the need to recognize a previously unrecognized deferred income tax asset. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset ‘and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this ease, the tax is also recognised in other comprehensive income or directly in equity, respectively. 2.23. Contingencies Contingent liabilities are not recognized in the financial statements. They are disclosed in the notes to the financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed in the notes to the financial statements when an inflow of economic benefits is probable. 2.24. Events after reporting date Post period-end events that provide additional information about the Company's financial position at the end of the reporting date (adjusting events) are reflected in the financial statements. Post period- ‘end events that are not adjusting events are disclosed in the notes to the financial statements when material. MA-12- 2.25 Future Changes in Accounting Policies ‘The Company will adopt the Standards and Interpretations enumerated below when these become effective, Except as otherwise indicated, the Company does not expect the adoption of these new and amended PERS and Philippine Interpretations to have significant impact on its financial statements. Effective January 1, 2018 PERS 2, Share-based Payment, Classification and Measurement of Share-based Payment Transactions ‘The amendments to PFRS 2 address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and the accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. ‘On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and if other eriteria are met. Early application of the amendments is permitted. PERS 9, Financial Instruments PERS 9 reflects all phases of the financial instruments project and replaces PAS 39, Financial Instruments: Recognition and Measurement, and all previous versions of PFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting, Retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. ‘The Company is still assessing the potential impact of adopting the new standard in the financial statements, PERS 4, Insurance Contracts, Applying PFRS 9, Financial Instruments, with PFRS 4 ‘The amendments address concems arising from implementing PFRS 9, the new financial instruments standard before implementing the new insurance contracts standard. The amendments introduce two options for entities issuing insurance contracts: a temporary exemption from applying PFRS 9 and an overlay approach. The temporary exemption is first applied for reporting periods beginning on or ‘fier January 1, 2018. An entity may elect the overlay approach when it first applies PFRS 9 and apply that approach retrospectively to financial assets designated on transition to PFRS 9. The entity restates comparative information reflecting the overlay approach if, and only if, the entity restates comparative information when applying PFRS 9. PERS 15, Revenue from Contracts with Customers PERS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers, Under PFRS 15, revenue is recognized at an amount that reflects the consideration to Which an entity expects to be entitled in exchange for transferring goods or services to a customer. ‘The principles in PFRS 15 provide a more structured approach to measuring and recognizing revenue,13 ‘The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under PFRSs. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1, 2018. Early adoption is permitted. The Company plans to adopt the new standard on the required effective date using the full retrospective method. ‘The Company is still assessing the potential impact of adopting the new standard in the financial statements. PAS 28, Measuring an Associate or Joint Venture at Fair Value (Part of Annual Improvements to PFRSs 2014 - 2016 Cycle) ‘The amendments clarify that an entity that is a venture capital organization, or other qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to measure its investments in fassociates and joint ventures at fair value through profit or loss. They also clarify that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate's or joint vVenture’s interests in subsidiaries. This election is made separately for each investment enti Jssociate or joint venture, atthe later of the date on which (a) the investment entity associate or joint ‘venture is initially recognized; (b) the associate or joint venture becomes an investment entity; and (c) the investment entity associate or joint venture first becomes a parent. PAS 40, Investment Property, Transfers of Investment Property ‘The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management's intentions for the use of property does not provide evidence of a change in use. The amendments should be applied prospectively to changes in use that occur on of after the beginning of the annual reporting period in Which the entity first applies the amendments. Retrospective application is only permitted if this is possible without the use of hindsight. Since the Company’s current practice is in line with the clarifications issued, the Company does not expect any effect on its consolidated financial statements upon adoption of these amendments, Philippine Interpretation IFRIC 22, Foreign Curreney Transactions and Advance Consideration ‘The interpretation clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on ‘which an entity initially recognizes the nonmonetary asset or non-monetary liability arising from the advance consideration, If there are multiple payments or rec advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration. Entities ‘may apply the amendments on a fully retrospective basis. Alternatively, an entity may apply the interpretation prospectively to all assets, expenses and income in its scope that are initially recognized on oF after the beginning of the reporting period in which the entity first applies the interpretation or the beginning ofa prior reporting period presented as comparative information in the finaneial statements of the reporting period in which the entity first applies the interpretation.-14- Effective beginning on or after January 1, 2019 ‘Amendments to PERS 9, Prepayment Features with Negative Compensation ‘The amendments to PFRS 9 allow debt instruments with negative compensation prepayment features to be measured at amortized cost or fair value through other comprehensive income, An entity shall apply these amendments for annual reporting periods beginning on or after January |, 2019. Earlier application is permitted PERS 16, Leases PERS 16 sets out the principles for the recognition, measurement, presentation and disclosure of Jeases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under PAS 17, Leases. The standard includes two recognition exemptions for lessees — leases of “low-value’ assets (¢-g., personal computers) and short-term Teases (ie. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e. the lease liability) and an asset representing the right o use the underlying asset during the lease term (i.e. the right-of-use asset), Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g, a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. Lessor accounting under PERS 16 is substantially unchanged from today's accounting under PAS 17. Lessors will continue to classify all leases using the same classification principle as in PAS 17 and distinguish between two types of leases: operating and finance leases. PERS 16 also requires lessees and lessors to make more extensive disclosures than under PAS 17. Early application is permitted, but not before an entity applies PFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs ‘The Company is still assessing the potential impact of adopting the new standard in the financial statements, Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures ‘The amendments to PAS 28 clarify that entities should account for long-term interests in associate or joint venture to which the equity method is not applied using PFRS 9. An ent ‘apply these amendments for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted shall Philippine Interpretation IFRIC 23, Uncertainty over Income Tax Treatments ‘The interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of PAS 12 and does not apply to taxes or levies outside the scope of PAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.=158 ‘The interpretation specifically addresses the following: + Whether an entity considers uncertain tax treatments separately + The assumptions an entity makes about the examination of tax treatments by taxation authorities + How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates + How an entity considers changes in facts and circumstances ‘An entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. Deferred effectivity «Amendments to PFRS 10 and PAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture ‘The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that a full gain or loss is recognized when a transfer to an associate or joint venture involves a business as defined in PFRS 3, Business Combinations. Any gain or loss resulting from the sale or contribution of assets that does not constitute a business, however, is recognized only to the extent of unrelated investors’ interests in the associate or joint venture, On January 13, 2016, the Financial Reporting Standards Council deferred the original effective date of January 1, 2016 of the said amendments until the International Accounting Standards Board (IASB) completes its broader review of the research project on equity accounting that may result in the simplification of accounting for such transactions and of other aspects of accounting for associates and joint ventures. 3, Critical Accounting Estimates, Assumptions and Judgments Estimates, assumptions and judements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. ‘The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates, assumptions and judgments that have a significant risk of causing a material adjustment tothe carrying amounts of ‘assets and liabilities within the next financial year are discussed below: 3.1 Critical accounting estimates and assumptions Retirement benefit obligation (Note 12) ‘The present value of the pension obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate and future salary increases. Any changes in these assumptions will impact the carrying amount of retirement obligations.L168 ‘The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rates of government bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related retirement obligation. Other key assumptions for pension obligations are based in part on current market conditions. ‘The possible effects of sensiti presented in Note 12. ies surrounding these actuarial assumptions at reporting date are 3.2 Critical judgments in applying the entity’s accounting policies Provis and deferred income tax (Note 13. Significant judgment is required in determining the recorded provision for income tax in the Statement of total comprehensive income. There are many transactions and calculations for which the fe tax determination is uncertain in the ordinary course of business. The Company recognizes ies for anticipated tax audit issues when it is probable. The liabilities are based on assessment and judgment of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the Company’s current income tax and deferred income tax provisions in the period in which such determination is made. Further, the recognition of deferred income tax assets depends on management's assessment of the probability of available future taxable income against which the temporary differences can be applied. ‘The Company reviews the carrying amounts of deferred income tax assets at the end of each reporting period and reduces the amounts to the extent that itis no longer probable that sufficient taxable profit ‘will allow all or part of its deferred income tax assets to be utilized. The Company's management believes that the deferred income tax assets at the end of each reporting period will be realized. ‘The Company has deferred income tax assets of P3,869,154 and P4,001,571 as at December 31, 2017 and 2016, respectively, which was assessed by management to be fully recoverable based on projected taxable profits and expected timing of reversal of the temporary differences. The Company’s unrecognized deferred income tax assets amounted to P2,360,476 as of December 31, 2017. Provision for recoverability of input VAT (Note, Provision for unrecoverable input tax credits is maintained at a level considered adequate to provide for potentially unrecoverable tax claims from excess input VAT. The level of provision is based on factors affecting the recoverability of the tax credit certificates applied and filed with the Bureau of Internal Revenue (BIR). An evaluation of the input VAT claims, designed to identify potential charges to the provision, is performed on a continuous basis throughout the period. Management uses judgment based on the best available facts and circumstances, including but not limited to the ‘adequacy of documentation, timely filing of application with the tax authority and evaluation of the individual tax credit claim’s future recoverability and utilization. |As at December 31, 2017, the Company's management believes that the recognized input VAT will be fully realized.“1 Contingencies In accordance with PAS 37, Provisions, Contingent Liabilities and Contingent Assets, the Company determines whether to provide for loss contingencies based on an assessment of whether the risk of loss is remote, reasonably possible or probable. Management's assessment is developed in consultation with the Company’s outside counsels and advisors and is based on an analysis of possible outcomes under various circumstances. Contingency assumptions involve judgments that fre inherently subjective and can involve matters that are in litigation, appeal and ongoing negotiations with authorities and third parties which by its nature is unpredictable. Management believes that its assessment of the probability of contingencies is reasonable, but because of the subjectivity involved and the unpredictable nature of the subject matter at issue, management's ‘assessment may prove ultimately to be incorrect, which could materially impact the financial statements in current or future periods. Cash. Cash as at December 31 consists of: Note 2017 2016 Cashin banks 16 72,927,836 PS1,391,361 Petty cash fund 10,000 10,000 PSI.401,361 Cash in banks earn interest at the prevailing bank deposit rates. Interest income on cash in banks for the years ended December 31, 2017 and 2016 amounted to 103,756 and P66,567 (Note 14), respectively, and is presented under ‘Other expenses, net’ in the statements of comprehensive income. Receivables Receivables mainly pertain to advances made by the Company to paying agents for cash remittances to beneficiaries amounting to P32,880,241 and P8,356,759 as at December 31, 2017 and 2016, respectively. For the years ended December 31, 2017 and 2016, the Company has not provided any allowance for impairment since there has not been a significant change in credit quality and the receivables are considered fully recoverable taking into account the paying agents’ historical payment patterns and their financial condition. The Company holds no collateral with respect to receivables and others. (ONE A-18- 6. Prepaid Expenses and Other Current Assets Prepayments and other current assets as at December 31 consist of: Note 2017 2016 Input VAT, net P2,846,721 1,804,789 Prepaid rent u 1,323,581 434,505 Prepaid insurance 619,002 359,221 Refundable deposits n 338,233 - Prepaid expenses, = 30,412 P5,127,537 2,628,927 Property and Equipment ‘The movements for each category of property and equi ipment are as follows: eS a ee iT “Transportation Computer Office Furniture Leasehold Teuipment Equipment Equipment and Fixtures Improvements __Total oar Sunge at beginning of year -«P2,S38,765 2,603,765 768,740 PHANG PILGS3,984 76254630 ‘ndaitions Sess 176686 © SLT62——‘LADG,O4S 2,360,998 Disposals = s E. S_a's779s4)_ 0.577589, Balance end ofyear FETS ISRO 9S SELGR CARAS _—8408,674 ‘Accumulated Depreciation find Amortization Balance at beginning of year 1373318 STNT 439.983 3198 serge 4893.64 Depreciation and amortization esas? "24432116025 TS 489885 L170 Disposals = = y = 091,686) (.091.654) Balance af end of year Taies TS 260242 4918924 ‘NetBook Value 920.090, 7UT__P38D 418 79,728 1,201,803 P3.489,750 ———eeoeoeeeeoee ie “Transportation Computer Office Furniture Teaseh Equipment Equipment Equipment and Fixtures Improvements Tou Gost uance at begining ofyear -«PL31I.979 F2,S19,770 718240 30,000 I,633,954 613.903 ‘Adsitions 1326786" #3995__$0.500_ $0,406 = 1168? Balance at end of ear SSE 76S 2603, 765 768,740 804061, SSS 547,625,630 ‘Accumulated Depree and Amortza Balance at begining of year 1197 17mqn 335932 25.217 319,776 3.764926 Depreciation and amortization 61339__ 415,008 _10401 S978 542265 1,128,638 Balance at end of year Tans sne77 439988 “Fea nal 493.568 PL TGS ATT — BHT6 738 P3UB.757___POg.20 P71, 913_ 2,732,066 Net Hoak Value Certain fully-depreciated property and equipment wit December 31, 2017 and 2016, respectively, are still cost of 3,764,467 and P2,778,877 as at use. GN=19- ‘Accounts Payable and Accrued Expenses ‘Accounts payable and accrued expenses as at December 31 consist of: Note 2017 2016 Financial abilities Due to paying agents 5,229,568 P12,180,303 ‘Accounts payable 36,889 Accrued expenses: ‘Accrued professional fees 756,918 1,563,864 ‘Accrued salaries 626,763 41,850 Other accrued expenses 2,624,990 67.976 9,238,239 13,890,882 ‘Non-financial abilities: Provision for losses 14 16,611,757 9,615,787 Payable to regulatory agencies 291,784 195,301 Deferred rent = 56,420 16,903,541 9,867,508 F26,141,780_P23,758,390 Due to paying agents pertains to advances made by banks for the cash remitted to a beneficiary. Provision for losses pertains to an ongoing case wherein the Company has a pending application for compromise. No specific disclosure on such unsettled claim is made because any such specific disclosures would prejudice the Company's position with the other parties with whom it is in dispute. Such exemption from disclosures is allowed under PAS 37, Provisions, Contingent Liabilities and Contingent Assets. Other accrued expenses pertains to accruals for marketing, community service and utilities. Related Party Transactions In the normal course of bu: immediate parent, UFSI. ss, the Company's only related party transactions are with its Significant related party transactions for the years ended December 31 are as follows: Related part ‘Terms and Conditions 2017 2016 Ty Service fee “The Company has a service agreement with Immediate parent: UFSI to provide administrative, financial, UFSI ‘and accounting services inthe nature of those 39,461,988 P30,682,495, services required by the latter, including the processing and transfer of information, and Fepresenting or serving as a commission fagent in the Philippines or in a foreign territory, for every kind of industrial or ‘commercial dealing, whether national or forcign “The Company adds reasonable arm's length ‘margin to the total costs and expenses on the said services-20- Related party Terms and Conditions 2017 2016 rier athens agreed on wing By he partes, the service fer is due on a monthly basis in rears within thiry G0) éays following he bling date The fee is presented a service fee inthe Statement of ttl comprehensive income (8) County fee Country fee income represents the Trxmediat parent: consideration recived by the Company from UFSI ‘UPS! for its part inthe remitance busines. 3904360 3.47309 Country fe income is billed bythe Company to UFSI ata fixed rate mulplied by the numberof remittance transaction processed. “The fee is presented as country fee in the Statements of total comprehensive income (©)Commission Commision income pertains to the amount Tinmodiate parent; reimbursed by UFSI representing the amount UFSst fof commission expenesincurred and pid by 6803783 6.469321 the Company tothe paying agents. (D)Reimbursements The remittance payments to beneficiaries Tmmediate parent. made unde the Company's acount though uFst itspaying agents are reimbursed to UFSL 33,050,190 48,063,717 Reimbursements e__pas-through transactions that are setled through the Subsequent inward funding. remittance by UFSI to the Company. (©) Advances LUFSI advances cash othe Company to pre Tnmediate parent: fund reimbursements to beneficiaries in FS periods where there are no banking 2645260 14,533,536 Transactions due to weekends and holidays ‘The advances from UFSI are pass-through transctons that are setled through Subsequent deduction from the invard funding remitances by UPS! 10 the Company. ‘At December 31, outstanding balances are summarized as follows: Related pany “Terms and Conitons Ref 2017 2016 ‘ae om immediate Due fom immediate parent ae colesed in rent “UFSI_cashon anet basis. “These are unsecured and noninterest bearing A,B,C PS7.834,801 792,365,587 and have no fixed repayment term, due on demand but not later than 12 months. No provisions were set up for these receivables, as these are deemed fully collectible.=21ke Related party ‘Terms and Conditions Ref 2017 2016 Dus o immediate Due to iamediate parent are setied in cash parent: UPS] fon anet basis. “These are unsecured and non-interest bearing D_—=—=—*123,482,923 111,563,999 and have no fixed repayment term, due on ‘demand but not later than 12 months. ‘There are no guarantees issued and collaterals held with respect to transactions and balances with related parties. Key management compensation for the years ended December 31 consists of: Related party ‘Terms and Conditions 2017 2016, Salaries and other Key management compensation covering short-term benefits salaries and other shor term benefits are 2,763,034 P1,796,846 Consulting fees ‘determined based on contract of employment = 416279 fand payable in accordance with the Company's payroll period. Key management compensation covering consulting fees are determined based on a consulting agreement and payable monthly at fa fixed rate as stated in the terms of the agreement, Salaries and other short term benefits and consulting fees were fully paid at reporting date, = 2.213.125 ‘The Company has not provided termination benefits or other long term benefits, other than retirement benefits, to its key management employees for the years ended December 31, 2017 and 2016 10. Capital Stock Details of share capital as at December 31, 2017 and 2016 follow: Number of shares Amount ‘Authorized ~ common shares at P100 par value per share 300,000 30,000,000 Issued and outstanding, 78,000 7,800,000 Wl ‘Operating Lease Commitment ‘On December 3, 2014, the Company has entered into a non-cancellable lease agreement with a third party lessor for the rental of its administrative office. The lease agreement runs for a period of three G) years from January 1, 2015 up to December 31, 2017. The lease agreement is renewable upon terms and conditions mutually agreed by the contracting parties. As at December 31, 2016, the security deposit on the leased facility under ‘Other non-current assets” amounted to 567,540 and the three (3)-month advance rent under ‘Prepaid expenses and other current assets’P434,505 (Note 6).-2- (On May 11, 2017, the Company has entered into another non-cancellable lease agreement for the rental ofits new administrative office. The new lease agreement runs for a period of one (1) year from June 1, 2017 up to May 31, 2018, The lease agreement is renewable upon terms and conditions ‘mutually agreed by the contracting parties. As at December 31, 2017, the security deposit and the three (3)-month advance rent amounted to P338,233 and PS58,450, respectively and both are presented as “Prepaid Expenses and Other Current Assets’ (Note 6). Rental expense recognized in the statements of total comprehensive income amounted to 1,955,395 and P1,292,442 for the years ended December 31, 2017 and 2016, respectively. The lease commitments also include car park rental, air condition charges and common area charges. ‘As of December 31, 2017 and 2016, the total estimated future annual minimum rentals and other charges payable under the lease which are due within one year amounted to P950,750 and P1,251,930, respectively. 12. Retirement ‘The Company has yet to adopt a formal retirement plan. The Company's basis of provision for retirement benefits cost and obligation is discussed in Note 2.16. ‘The amounts recognized in the statements of financial position as at December 31 as retirement liability are determined as follows: 2017 2016, Present value of defined benefit obligation P4,380,426 4,138,354 Fair value of plan assets = = Liability in the statements of financial position P4,380,426 4,138,354 ‘The movements in the present value of retirement liability for the years ended December 31 follow: 2017 2016 Beginning of the year P4,138,354 P670,054 Included in profit or loss: Current service cost 433,635 100,106 Interest cost 247,887 33,838 (681,522 133,944 Included in other comprehensive income: Remeasurement loss (gain) on experience adjustment (532,027) 3,395,382 Remeasurement gain on change in financial assumptions 92,577 (61,026) (439,450) 3,334,356 End of the year 4,380,426 4,138,354 ‘As of December 31, 2017 and 2016, remeasurement gain presented in the statements of financial position as ‘Reserve for remeasurement of retirement benefit obligation’ amounted to P827,472 and 1,135,087, respectively. NOW22a ‘The movement in remeasurement gain (loss) of 439,450 and (P3,334,356) in 2017 and 2016, respectively, is presented net of deferred income tax of (P131,835) and PI,000,305 in 2017 and 2016 (Note 13), respectively, in the statements of total comprehensive income, ‘The principal actuarial assumptions used at December 31 are as follows: Discount rate Future salary increase rate Discount rate ‘The discount rate is determined by reference to yields on long-term Philippine Treasury Bonds and adjusted to reflect the term similar tothe estimated term of the benefit obligation as determined by the actuary as atthe end of the reporting period as there is no deep market in high quality corporate bonds in the Philippines. Future salary increases ‘This is the expected long-term average rate of salary increase taking into account inflation, seniority, promotion and other market factors. Salary increases comprise of the general inflationary increases plus a further increase for individual productivity, merit and promotion. ‘The future salary increase Tates are set by reference over the period over which benefits are expected to be paid. Demographic assumptions ‘Assumptions regarding mortality experience are set based on advice from published statistics and experience in the Philippines. ‘The sensitivity of the defined benefit obligations to changes in the significant actuarial assumptions at December 31 follows: 2017 Impact on defined benefit obligation Changes in Increase in Decrease in assumptions assumption assumption Discount rate 1.00% Decrease by 157,147 Increase by P184,925 Salary increase rate 1.00% Increase by P142,488 Decrease by P119,833 2016 Impact on defined benefit obligation Changes in Tnerease in Decrease in assumptions assumption assumption Discount rate 1,00% Decrease by P57,707 Increase by P65,173 Salary increase rate 1,00% Increase by B56,755_Decrease by P51,236 ‘The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant, In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated, When calculating the sensitivity of the defined benefit obligation to significant dctuarial assumptions the same method (present value of the defined benefit obligation calculated With the projected unit credit method at the end of the reporting period) has been applied as when-24- calculating the retirement benefit obligation recognized in the statement of financial position. “The weighted average duration of the defined benefit obligation is 3.9 years and 1.5 years in 2017 and 2016, respectively. In 2017 and 2016, the expected benefit payments for less than 1 year is both nil. There are no expected benefit payments for more than 1 year for both periods. Taxation Deferred income tax (DIT) assets and liability are determined using income tax rates in the period the temporary differences are expected to be recovered or settled. i eee ee DIT assets on: Retirement benefit obligation P1,109,670 P1,241,505 Provision for losses. 2,884,736 2,884,736 3,994,406 4,126,241 DIT liability on unrealized foreign exchan; ‘in (124,670) 124,670) DIT assets, net 3,869,736 ‘4,001,571 DiTassets, net The expected timing of recovery/settlement of the Company's DIT assets and liabilities are as follows: ___ hia... ex “20S _ 2016 DIT assets To be recovered within 12 months ‘P2,884,736 ‘P2,884,736 To be recovered more than 12 months 1,109,670 1,241,505 3,994,406 4,126,241 DIT liability To be recovered within 12 months 124,670. 124,670 DIT assets, net B3,869,736 4,001,571 ‘The movements in the Company’s net DIT assets (liabilities) are as follows: _ ae 2s Beginning of the year P4,001,571 219,068 Charged to profit or loss S 2,782,198 Charged to other comprehensive income (131,835) 1,000,305 End of the year 3,869,736 ‘4,001,571 Realization of the future tax benefits related to the DIT assets is dependent on many factors including the Company's ability to generate taxable income during the periods in which the DIT assets are expected to be recovered. Management has considered these factors in reaching its conclusion to recognize in full the related future tax benefits from the above DIT assets.-95e 1m 2017, the Company did not recognize deferred tax assets on the following temporary differences since management believes that it will not be able to realize the tax benefit in the future: Provision for losses 6,937,347 Accrued retirement cost 681,522 Unrealized foreign exchange loss 249,384 P7,868,253 ‘The components of income tax expense shown in profit or loss for the years ended December 31 are as follows: 2017 2016 Current P5,620,346 6,011,978 Deferred = (2,782,198) P5,620,346 __P3,229,780 “The reconciliation between income taxes computed at the statutory tax rate and the income tax expense as shown in profit or loss for the years ended December 31 follows: 2017 2016 Income tax (credit) expense computed at statutory rate of 30% 2,845,249 P3,227,893. ‘Adjustments for: Unrecognized deferred tax 2,360,476 - ‘Non-deduetible expenses 432,908 16,500 Interest income subjected to final tax 31,127) (19,970) Interest expense limitation 12,840 5,357 __ Interest expense limitation 0 ________ P5,620,346 __P3.229.780 14, Other Expenses, Net Other expenses, net for the years ended December 31 consist of: Notes 2017 2016 Provision for losses 8 76,937,347 9,615,787 Foreign exchange loss (gain), net 15 (1,118,242) (1,417,708) Interest income 4 (103,756) (66,567) Interest expense 65,819 17,858 Miscellaneous 19 (11,620) P5,781,187___ 8,137,750 EE Ee-26- 15. Foreign Curreney Denominated Monetary Assets and Liabilities The Company's foreign currency denominated monetary assets and liabilities as at December 31 are as follows: 2017 2016 inUSD Assets: Cash in bank $129,459 $99,102 Due from related party 3,874 32,507 Liabilities Due to related party (529,865) (239,716) Net foreign currency denominated liabilities ($396,532) ($108,107) Exchange rates at December 31 49.92 49.77 Peso equivalent (19,794,877) (P5,380.485) Foreign exchange loss (gain), net, presented in ‘Other expenses, net’ in the statements of comprehensive income (loss) for the years ended December 31, 2017 and 2016 amounted to (P1,118,242) and (PI ,417,708), respectively, ‘of which P249,385 and (P415,568) pertains to Unrealized foreign exchange loss (gain) as at December 31, 2017 and 2016, respectively (Note 14). 16. Financial Instruments and Risk Management 16.1 Financial risk factors ‘The Company's ultimate parent company provides written principles for overall risk management, a5 Wellas written policies covering specific areas, such as foreign exchange risk, interest-rate risk, credit risk, use of non-derivative financial instruments, and investing excess liquidity. ‘The Company's activities expose it to a variety of financial risks and these activities involve the analysis, evaluation and management of some degree of risk or combination of risks. The Company's Overall risk management program focuses on the unpredictability of financial markets, aims to achieve an appropriate balance between risk and return and seeks to minimize potential adverse effects on the Company’s financial performance. “The most important types of risk the Company manages are: credit risk, market risk and liquidity risk. Market risk includes foreign exchange risk.-27- 16.2 Components of financial assets and liabilities Financial assets Details of the Company's financial assets as at December 31 are as follows: Notes 2017 2016 Cashin bank 472,927,836 751,391,361 Receivables 5 32,880,241 9,120,729 Due from parent company 9 57,834,801 92,365,587 Refundable deposits u 338,233, 567,540 PIOS,981,111__P153,445.217 Einancial liabilities Details of the Company’s financial liabilities classified as liabilities at carrying value as at December 31 are as follows: Notes 2017 2016 ‘Accounts payable and accrued expenses 8 _P9,238,239 13,890,882 Due to parent company 9 123,482,923 ‘111,563,999 Notes payable 432,421 965,174 15358386 OOS Notes payable pertain to a note issued by the Company on October 26, 2016, to fund the acquisition of the transportation equipment. The note bears interest of 9.08% and have a maturity period of two (2) years. 16.3 Credit risk Credit risk is the risk of financial loss to the Company if counterparty to a financial instrument fails to ‘meet its contractual obligations and arises from the Company's cash and due from parent company. ‘The Company has established controls in its credit policy to determine and monitor the credit worthiness of customers and counterparties. The Company’s exposure to credit risk is not considered significant because the counterparty of its financial assets has good credit standing, The Company's ‘maximum exposure to credit risk is represented by the carrying amount of each financial asset. ‘The Company's exposure to credit risk arises mainly from Cash in banks (Note 4), Receivables (Note 5), Due from parent company (Note 9) and Refundable deposits (Note 6). ‘The carrying amount of financial assets represents the Company's maximum credit exposure. The maximum exposure to credit risk as at December 31 is as follows: Note 2017 2016 Cash in bank ‘4 P72,927,836 951,391,361 Receivables 5 32,880,241 9,120,729 Due from parent company o) 57,834,801 92,365,587 Refundable deposits u 338,233 567,540 Total maximum exposure PI63,981,111__P153,445.217285 The table below shows the credit quality of the Company’s financial assets which are neither past due nor impaired based on its historical experience with the corresponding debtors. 2017 GradeA _GradeB Grade C Total Cash in bank P72,927,836 ez P-_P72,927,836 Receivables 32,880,241 - — 32,880,241 Due from parent company 57,834,801 = - $7,834,801 Refundable deposits 338,233, = = 338,233, P163,981,111 Pe P__P163,981,111 2016 GradeA Grade Grade C Total Cash in bank 51,391,361 e PPS1391,361 Receivables 9,120,729 - — 9,120,729 Due from parent company 92,365,587 - = 92,365,587 Refundable deposits 567,540 = pai 567,540 153,445,217 ze Po PI53,445,217, Grade A receivables and other financial assets pertain to those receivables from customers or ‘counterparties that always pay on time or even before the maturity date and with good credit standing, Grade B includes receivables that are collected on their due dates provided that they were reminded ot followed up by the Company. Those receivables which are collected consistently beyond their due dates and require persistent effort from the Company are included under Grade C. ‘The Company does not hold any collateral as security to the above financial assets, The Company has no past due and impaired financial assets as ‘of December 31, 2017 and 2016. 16.4 Credit quality of the Company’s financial assets in bank Credit risk exposure arising from cash in bank arises from default of the counter party, with a ‘maximum exposure equal to the fair value of financial assets. The Company has policies that limit the amount of credit exposure with financial institutions. ‘To reduce the credit risk, the Company has concentrated its banking activities with a limited group of banks that have good financial ratings. Individual risk limits on per bank basis are set based on its financial position, credit ratings, past experience and other factors in accordance with those set by the Board of Directors. The utilization of credit limits with each bank is regularly monitored. Amounts deposited to these banks at December 31 are as follows: 2017 2016 Universal banks 71,708,738 50,044,022 Commercial banks 1,219,098 1,347,339, P72,927, 51,391,361-29- Receivables Receivables mainly pertain to advances made by the Company to a paying agent for cash remittances to beneficiaries which are readily collectable by the Company, with the counterparty in good credit standing. Thus, the Company is not expecting any significant exposure on these balances. Due from Parent Company The Company's exposure to credit risk arising mainly from related party transactions pertain to service fees, country fees and reimbursements. The Company and its parent company are required to perform periodie confirmations and reconciliations to adopt uniform accounting polices across al regions. The Company has no historical default rates in relation to its due from a related party. Thus, the Company is not expecting significant exposure on these balances. Refundable Deposits Credit risk on refundable deposits pertains to deposits for the Company’ existing non-cancellable Tease agreements for a period of more than twelve months from reporting date. The Company limits its exposure to credit risk by transacting only with counterparty that has appropriate and acceptable credit history Refundable deposits on leased properties by the Company are normally refundable at the end of the lease term (Note 11). 16.5 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. Foreign Exchange Risk ‘The Company’s activities expose it primarily to the financial risks of changes in foreign currency ‘exchange rates, to the extent of its monetary foreign currency denominated assets and liabilities, primarily with respect to the U.S. dollars. ‘The reasonable possible change in foreign exchange rate used in the sensitivity analysis isthe rate of change in U.S. dollars between the Peso equivalent at year end and the Peso equivalent determined sixty (30) days from reporting date, by which management is expected to receive or settle the Company's most significant financial assets or liabilities, respectively. Closing rate thirty Closing rate at (30) days after Change in foreign reporting date reporting date exchange rate in (Peso equivalent) __(Peso equivalent) absolute % December 31, 2017 49.92 51.04 2.24% December 31, 2016 49.77 50.29 1.04% (NON-30- Reasonable possible change in foreign currency exchange rate determined above would lead to the following pre-tax (loss) profit and equity movements for the years ended December 31 as follows: 2017 Foreign currency Foreign currency exchange rate exchange rate weakened against strengthened against lippine Peso___Philippine Peso Cash in bank (P144,605) 144,605 Due from parent company 4327) 4,327 Due to parent company 591,859) (591,859) Net increase (deorease) in pre-tax loss and equity P442,927 (P442,927) 2016 Foreign currency Foreign currency exchange rate exchange rate weakened against strengthened against Philippine Peso Philippine Peso Cash in bank (P47,668) 47,668, Due from parent company (15,636) 15,636 Due to parent company 115,303, (115,303) Net inerease (decrease) in pre-tax Joss and equity 51,999 (P51,999) Price risk ‘The Company does not hold financial assets and liabilities that are price sensitive, nor does it have equity investments that are subject to price fluctuations. As such, the Company is not exposed to significant price risk. 16.6 Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities, efficient collection of customers’ accounts and the ability to close out market positions. The Company aims to maintain flexibility in funding by ‘monitoring and ensuring that there are available funds to operate the business. Management monitors rolling forecasts of the Company’s liquidity reserve on the basis of expected cash flows. ‘The Company believes that the cash generated from its operating activites is sufficient to meet currently maturing obligations required to operate the business. The table below analyzes the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date: 2017 Carrying Less than Months More than Amount 6 Months to1 Year, 1 Year ‘Recounts payable and ‘accrued expenses 9,238,239 9,238,239 eR Re Due to parent company 123,482,923 123,482,923 = - Notes payable 432,421 285,033 147,388 = PI33,153,583 _ P133,006,195 P1788. e<3 2016 Carrying Tess than @ Months More than Amount 6 Months to 1 Year, 1 Year ‘Recounts payable and accrued expenses 13,890,882 13,890,882 - B Due to parent company 111,563,999 111,563,999 - - Notes payable 965,174 216,340 316,413, 432,421 126,420,055_ P125,671,221 7316413, 432,421 ‘The Company expects to settle the above financial liabilities in accordance with their contractual maturity date. ‘The carrying amounts above approximate the undiscounted cash flows as the impact of discounting is not significant, considering their short-term maturity. [As shown in Note 16.2, the Company has sufficient financial assets such as cash and receivables which are available to settle these financial liabilities. Capital management The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concer, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, obtain borrowings from banks or related parties, and issue new shares. ‘Total capital being managed by the Company is its total equity, excluding reserve on remeasurements of retirement benefits, as shown in the statements of financial position. ‘The Company is not subject to externally imposed capital requirements. ‘Supplementary information required by the Bureau of Internal Revenue (BIR) This information is presented for purposes of filing with the BIR and is not a required part of the basic financial statements. Revenue Regulations (RR) No. 15-2010 On December 28, 2010, RR No. 15-2010 became effective and amended certain provisions of RR No, 21-2002 prescribing the manner of compliance with any documentary and/or procedural requirements in connection with the preparation and submission of financial statements and income tax returns, Section 2 of RR No. 21-2002 was further amended to include in the Notes to Financial Statements information on taxes, duties and license fees paid or accrued during the year in addition to what is mandated by PFRS,34 Below is the additional information required by RR No. 15-2010: a, Output value added tax (VAT) ‘Output VAT declared for the year ended December 31, 2017 and the gross receipts upon which the same was based consist of: Gross amount of revenues __Output VAT. Zero-rated transactions Sale of services 43,366,348 eB Zero-rated sales are sale of services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines, the consideration for whic paid in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP. b. Input VAT ‘Movements in input VAT for the year ended December 31, 2017 follow: Input VAT. Beginning Balance PI, 804,789 ‘Add: Current year’s domestic purchases/payments for Goods for resale 256,617 Services 731,643 Capital goods subject to amortization 33,672 Total input VAT, net 2,846,721 ‘Application against output VAT = Tax eredits/payment = Total input VAT, net 7 ‘The Company's input VAT as at December 31, 2017 are shown as part of prepayments and other current assets. ©. Excise tax ‘The Company has no transact 2017. that are subject to excise tax for the year ended December 31, d. Documentary stamp tax ‘The Company had no transactions for the year ended December 31, 2017 pertaining to acceptance, assignment, sale or transfer of an obligation, rights, or property requiring payment of documentary stamp tax.334 e. Allother local and national taxes ‘All other local and national taxes paid and acerued for the year ended December 31, 2017 consist oft Amount License and Permit Fees 277,748 Others 7,166 P284,914 ——_—__ ‘The above local and national taxes are presented as taxes and licenses within operating expenses. ‘The remaining taxes and licenses pertain to penalties and other licenses and registrations as at December 31, 2017. f. Withholding taxes Paid Accrued Total Withholding tax on compensation PI,116,287 148,520 1,264,807 Expanded withholding tax 1,182,053 122,007 __ 1,304,060 2,298,340 270,527 2,568,867 ‘Accrued withholding taxes are presented as part of payable to regulatory agencies under ‘Accounts payable and accrued expenses’ (Note 8). g. Tax assessments and cases During 2015, the Company has filed an application for compromise in relation to the remaining claim by the BIR of deficiency taxes and interest arising from the tax assessment of the 2007 and 2008 tax periods. The application for compromise is subject to the approval of the National Evaluation Board. Management believes thatthe final settlement for the income tax assessment, if any, would not adversely affect the Company’s financial position or result of operations.UNITELLER FILIPINO, INC. SCHEDULE OF ALL THE EFFECTIVE STANDARDS ‘AND INTERPRETATIONS: EFFECTIVE AS AT DECEMBER 31, 2017 ‘The following table summarizes the effective standards and interpretations 28 at December 31, 2017: [PHILIPPINE FINANCIAL REPORTING STANDARDS | AND INTERPRETATIONS ec ‘Effective as at December 31,2017 | Framework for the Preparation and Presentation of Financial Statements cienceptual Framework Phase A: Objectives and qualitative characteristics DERSs Practice Statement Management Commentary Philippine Financial Reporting Standards PFRS 1 |Firsttime Adoption of Philippine Financial Reporting (Revised) | Standards ‘Amendments to PFRS 1 and PAS 27: Cost of an Investment in ‘Subsidiary, Jointly Controlled Entity or Associate v “Amendments to PERS 1; Additional Exemptions for First-time Adopters “ “Amendment to PFRS I: Limited Exemption from Camparative PFRS 7 Diselosures for First-time Adopters ‘Amendments to PFRS I: Severe Hyperinflation and Removal | of Fixed Date for First-time Adopters “Amendments to PFRS 1: Government Loans 7 PERS? | Share-baved Payment Z “Amendments to PFRS 2: Vesting Conditions and Cancellations “ “Amendments fo PFRS 2; Group Cash-setied Share-based Payment Transactions x PFRS3 [Business Combinations |(Revised) a PFRS 4 Insurance Contracts v | “Amendments to PFRS 4: Financial Guarantee Contracts ¥ PERS = ~~ |Non-current Assets Held for Sale and Discontinued Operations v PFRS 6 ‘Exploration for and Evaluation of Mineral Resources a PERS7 [Financial Instruments: Disclosures "Amendments to PAS 39 and PFRS 7: ‘Reclassification of Financial Assets v ‘Amendments to PAS 39 and PFRS 7: Reclasifcaton of Financial Assets - Effective Date and Transition i ‘Amendments to PFRS 7: Improving Disclosures about Financial Instruments rAmendments to PFRS 7: Disclosures - Transfers of Finan Assets 4[PHILIPPINE FINANCIAL REPORTING STANDARDS. AND INTERPRETATIONS en | Prective as at December 31,2017 ee “Amendments to PFRS 7: Disclosures - Offsetting Financial | ‘assets and Financial Liabilities ‘Amendments to PFRS 7: Transition Disclosures* “Amendments to PFRS T; Disclosures - Hedge Accounting* es [pers _ | Operating Segments [PrRS9 [Financial Instrumens* v “Amendments to PFRS 9: Transition Disclosures v TPRRS 10 | Consolidated Financial Statements “Amendments to PFRS 10, PFRS 12 and PAS 27: (Consolidation for Investment Entities Zmendments to PFRS 10 and PAS 28: Sale or Contribution ar assets between an Investor and its Associate or Joint Venture* ¥ “Amendments 9 PFRS 10, PFRS 12 and PAS 28: Investment Entities: Application of the Consolidation Exception™ v [PERS 11 [Joint Arrangements “amendments to PFRS 11; Aecounting for Acquisitions of Interests in Joint Operations* v PERS 12 [Disclosure of Interests in Other Entities ‘Amendments to PERS 10, PFRS 12 and PAS 28: Investment Entities: Applying the Consolidation Exception” ¥ PERS 13 | Fair Value Measurement i PERS 14 | Regulatory Deferral Accounts* v PERS 1 | Revenue from Contracts with Customers® ¥ PERS 16 _ [Leases Y PASI Presentation of Financial Statements v (Revised) | Xgrendment to PAS I: Capital Disclosures ¥ “Amendments fo PAS 32 and PAS |: Puttable Financial Instruments and Obligations Arising on Liquidation “Amendments to PAS I: Presentation of Items of Other ‘Comprehensive Income ¢ “Amendments to PAS 1; Financial Statement Disclosures* 7 [Fas? ___ [Inventories PAS7 | Statement of Cash Flows wi FASE” | Accounting Policies, Changes in Accounting Estimates and Errors v [PAS 10 [Events after the Reporting Period a [pas 11 [Construction Contracts[PHILIPPINE FINANCIAL REPORTING HIANDARDS AND INTERPRETATIONS. eo : Not fective as at December 31, 2017 ee Applicable PAS 12 [income Taxes “Amendment to PAS 12 - Deferred Tax: Recovery of Underlying Assets a PASTS | Property, Plant and Equipment Z “\mendments t PAS 16 and PAS 38: Clarification of ‘Aateptable Methods of Depreciation and Amortization” Z “Amendments fo PAS 16 and PAS 41: Bearer Plants* z PASI7__ [Leases 7 PAS 18 __ [Revenue ¥ PAS 19 [Employee Benefits a (Revised) [Amendments to PAS 19: Defined Benefit Plans: Employee Contributions * a FaSIo [Accounting for Government Grants and Disclosure of \ Government Assistance v FASTI | Te ffets of Changes in Foreign Exchange Rates 7 “Amendment fo PAS 21: Net Investment in a Foreign Operation v PAS23 [Borrowing Costs (Revised) “ PAS 24 [Related Party Disclosures (Revised) ys FAST | Accounting and Reporting by Retirement Benefit Plans ¥ PASI7 | Separate Financial Statements 7 (Revised) [Ammendments to PERS 10, PFRS 12 and PAS 27: ‘Consolidation for Investment Entities a | =f | “

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