uw a & a a a COVER SHEET For ‘AUDITED FINANCIAL STATEMENTS SEC Rept br c[s]2/oJiTs[ola[7 Company Name elalrlr wlolt [pli Ts]els] Jelole iJolN Als|o] Tal [s[uls[s[r Joli Jalely Principal fice ( No/StreevBarangayiCity/Town)Province fula[itel [atsfoiih.] Jalattleli| |olifole els clolrlplolrlalelel [clelalelelrl.] [sfuli lila] Tvle = ‘alvlelalulel.[ Jole[elilelals| Jelelalele Pla[s[ilel Telile Fonte wa sont Lore patna etn ea ey ome alalrls 2TeTe[9} COMPANY INFORMATION onsen Ame Conan Tone heels eed CET ae wr om ecg facaveur Neotel Wow Henan 2 July 31 December 31 ‘CONTACT PERSON INFORMATION Teese cra peree HST om Ox Carin Mis Mai FeiDesarDais | [piasqvaagdenon | [2661955] [ow an-m Contac Prete one Unit 2501 Ante Global Corporat Coner, Julia Vargas Avenue, Ortigas Center, Pasig City 1605 te nn tm apt rent fe a dab an a Jos eee Cea, ‘iat cane tn hr osumss tess etincrmcr seman noel mu ans as ochRAPPLER HOLDINGS CORPORATION AND Aw “ b LET RO Manabe co. Telptone 0 @)085 7200 (ayes ers Sieve wgcorech Nikos 126 Wavotania risares ENG ghiegnyarem REPORT OF INDEPENDENT AUDITORS. ‘The Board of Ditectors and Stockholders Rappler Holdings Corporation Unit 2501 Antel Global Corporate Center Julia Vargas Avenue, Ortigas Center Pasig City 1605 [Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Rappler Holdings Corporation and a Subsidiary, which comprise the consolidated statement of financial postion as ‘at December 31,2014, and the consolidated statement of comprehensive income, consolidated stalement of changes in equity and consolidated statement of cash flows forte period from December 12 to December 31,2014, and notes, comprising a summary of significant accounting polices and other explanatory information. Management's Responsibility forthe Consoldcted Financial Statements Management is responsible forthe preparation and fr presentation ofthese consolidated financial statements in accordance with Philippine Financial Reporting Standards for Small and Medium-sized Entities, and for such intomal contol 2s management determines is necessary 1 enable the preparation of consolidated financial statements that are fee fom material misstatement, whether due to fraud or ear. Auditors’ Responsibility (ur responsibility i to express an opinion on these conslidated financial statements based on cur audit. We conducted our audit in accordance with Philippine Standards on Aueiting. ‘Those standards require that we comply with ethical requirements and plan and perform the audit oblain reasonable assurance about whether the consolidated financial statements are fee from ‘material misstatement ‘An ait involves performing procedures to obtain audit evidence about the amounts and disclosures inthe consolidated financial statements. The procedures selected depend onthe auditors” judgment, including the assessment ofthe risks of material misstatement ofthe ‘consolidated financial statements, whether due to fraud or eroe. In making those risk ‘sssessments, the auditors conser intemal contol relevant tothe entity's preparation and fair presentation of the consolidated financial statements in order to design audt procedures that are Appropriate in the circumstances, but wot forthe purpose of expressing an opinion on the cffeetiveness ofthe entity's internal control. An audit also includes evaluating the “appropriateness of accounting policies used and the reasonableness of ecounting estimates made ‘by management, aswell as evaluating the overall presontation of the consolidated financial statements ‘We believe that the audit evidence we have obtained is suficient and appropriate to provide a basis fr our audit opinion.uy @ uw Opinion In our opinion, the consolidated financial statements present fil, in all material respects, the ‘consolidated financial postion of Rapper Holdings Corporation and a Subsidiary as at December 31, 2014, and its financial performance and its cash flows forthe period fom December 12 to December 31,2014 in accordance with Philippine Financial Reporting Standards for Small and Medium-sized RG, MANABAT & CO. KER TRE Partner CPA Liconse No. 106166 ‘Tay Identification No. 223-804-972 BIR Accreditation No, 08-001987-33-2014 Issued Ostober 1, 2014; valid until October 14,2017 PTR No. 4748097MC Issued January 5,2015 at Makati City March 27, 2015 Makati City, Metro Manilaeviog SLET RAPPLER HOLDINGS CORPORATION ‘STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR SEPARATE FINANCIAL STATEMENTS. ‘The management of Rapper Holdings Corporation (the Company, is responsible forthe preparation and fair presentation ofthe consolidated fnancalstatents as at and fr the year ended December 31, 2014, inching the additional components attache therein, in accordance with the prescribed Financial’ reporing amework indicated therein, This responsibility melades designing. and implementing intemal eonvols relevant to the preparation and far presentation ofthe consolidated Finaneial statements that are fee from material misstatement, whether dc to fraud oc eter, seleesing, and solving appropri cexuning pies and aking acouning esate hate enable im ‘The Board of Dirclors reviews and approves the conslideted financial statements and submits the sume othe stockholders, RG. Manabat & Co. the independent auditor appointed by the slocholders for the year ended December 31, 2014 has audited the eonsolidated fnarcialsstements ofthe Company in accordance swith Philippine Standacds om Ausiting, and int report to the sackheldes, has expressed is epinion ‘on he faimess of presentation upon completion of such audit Ayala / Chauman of the Board Gee Maria A Res Executive Officer exams FeiDanlh7 cher ail otiesr Signod his sh day of mitch 2015epiog Beer DECEMBER 31, 2014 Nate 2016 ASSETS: Current Assets ‘Cash and cash equivalents Sd paaI9813 ‘rade and other rczivables 614 #9242995, nd expenses and other cure assets 3J4 4317590 ‘Total Current Assets 101,879,998 [Noncurrent Assets Property and equipment -net 8 9898077 Inangible asseis-net 9 1548,922 Deterred tax assets ~ net 2 1698,620 Other noncurent sets 415,663 Total Noncurrent Assets 29,851,282 431280 LIABILITIES AND EQUITY Current Liabiities Accouns payable and other cument bilities 10,1214 PA634434 Loan payable tia 6976320 “Total Current Liabilities 53,010,756 Equity Equity Atrbotable to Equity Holders of the Pareat Company Capital stock 198,928 Relained earings 36)380,466 31,779,394 ‘Non-controlling Interests 132 Total Equity 78,420,526 PIS1 31280° a u ° re RAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY ‘CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM DECEMBER 12 TO DECEMBER 31, 2014* 2044 INTEREST INCOME 5 PSs. EXPENSES. “Taxes a licenses 11,820 Professional foes 79437, ons? LOSS FROM OPERATIONS 00,702) OTHERS __ 436471239 INCOME BEFORE INCOME TAX. 36,380,537 INCOME TAX EXPENSE BR cm ‘NETINCOME/TOTAL COMPREHENSIVE INCOME, 36,380,466 ‘Mth Coulee Phan Sama te RAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD FROM DECEMBER 12 TO DECEMBER 31,2014* 2016 ‘CAPITAL STOCK -Pl par value ‘Authorized - 5,500,000 shares Subseribed - 1.398.978 shares P1,398928 RETAINED EARNINGS. Net income/Total comprehensive income 36:380,466 NON-CONTROLLING INTERESTS 40,641,132 P78.420,526 Tine Conary war meopod x Deco 7RAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM DECEMBER 12 TO DECEMBER 31, 2014* 2018 ‘CASH FLOWS FROM OPERATING ‘ACTIVITIES Income before income tax P36,380,537 Adjustments for: Others 4 G6471239) Interest income 5 G55), ‘Operating loss before working capital changes @i,057) Interest received 355 Final taxes pad on interest income ) ‘Net cash flews used in operating activites (00,773) (CASH FLOWS FROM AN INVESTING ACTIVITY ‘Acquisition of subsidiary, net of cash and cash ‘and cash equivalents acquired 4328 ‘CASH FLOWS FROM A FINANCING ACTIVITY, _Broceeds from issuance of capital stock 1398,928, ‘CASH AND CASH EQUIVALENTS AT ‘END OF YEAR 5 P5a19.413 Tie Compo wa newport Dosen 7906 ‘Ste so te Conde Fania SatRAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY ‘NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Reporting Bat Rappler Holdings Corporation (the Parent Company), was incorporated and registered ‘with the Philippine Securities and Exchange Commission (SEC) on December 12, 2014 ‘The sccompanying consolidated financial statements comprise the financial statements of the Parent Company and its Subsidiary (collectively ceferred to as the “Group”) ‘The Group is primary engaged in developing and selling news, information, and social network services through various delivery formals. The scope of its services includes communications, advertising, corporate social responsibility, public relations, evens, brand affinity and other related services ad packages. ‘The registered office address of the Parent Compaay is Unit 2501 Antel Globel Corporate Center, Julia Vargas Avenue, Ortigns Contr, Pasig City 1608, 2 Basis of Preparation ‘Statement of Compliance ‘The accompanying consolidated financial statements have been prepared in accordance ‘wih the Philippine Financial Reporting Standards for Small and Medium-sized Entities (PRS for SMEs) ‘The consolidated Finsncial statements were authorized for issue by the Board of Directors (BOD) on March 27,2015. Basis of Measurement ‘The consolidated financial sttements of the Group have been prepared on ahistorical cost bass of accounting. ? cat ‘The consolidated financial statements are presented in Philippine peso, which is the Parent Company's functional currency. All financial information are rounded off to the nearest pes, except when otherwise indicated, - The consolidated financial statements incorporate the financial statements of the Parent CCompaay and its subsidiary. {A subsidiary isan entity controlled by the Group. The Group controls an entity if, and ‘only if the Group is expased to, or has rights to, variable retus from is involvement with de enty and has the ability to affect those returns through is power over te entity. ‘The Group reaseesses whether or not it conols an investee if facts and circumstances indicate that there are changes to one or more ofthe tree elements of conto® w he ty ‘The financial statements of the subsidiary are included in the consotiated financial statements from the date whea the Group obtains contol, and continue to be consolidted ‘util the date when such contol ceases ‘The consolidated financial statements are prepared forthe same reporting period as the Parent Company, using uniform accountng polices for He transactions and oter events in similar circumstances. Intergroup balanees and transactions, including intergroup (Use of Judgments and Estimates ‘The preparation of the consolidated financial statements in accordance with PERS for ‘SMEs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounis of asset, labilies, ‘income and expenses. However, uncertainty about these judgments, estimates and assumptions could result in an outcome thet could require meirial adjustment to the carrying amount of the affected asst or lability inthe future. Sdgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of furure events that are believed 10 be reasonable under the circumstances. Revisions ae recognized inthe period in which the judgments and estimates are revised and in any future period affected Determining Functional Currency. Based on the economic substance of the underlying circumstances relevant tthe Group, the functional eurrency has been determined to be the Philippine peso. It is the currency thst mainly influences the determination of the Group's even and expenses. Investment in Share of Sick ofa Subsidiary in which the Parent Company has less then the Majority ofthe Voting Rights, The Parent Company considers tat it controls Rappler, Inc. (Rapper) even though it owns less than 50% of this entity. The Company had ‘determined that iti te largest stockholder of Rappler with 48.17% equity intrest In addition, the Parent Company also determined, by virtue of the extent of the Pareat ‘Company's parisipation in the BOD and management of Rapper, that i: ) has power ‘ver this entity; (i) is exposed and has rights to variable returns fom is involvement ‘with this enty: and (if) as the ability to use its povter over this entity to affect the amount of retums (Note 4). Estimating Allowance for Impairment Losses on Trade and Other Receivables. The Group provides an allowance for impairment losses on tade and other receivable at a level considered adequate to provide for uncolletble receivables. The level of this allowance is evaluated by the Group on the basis of factors that affect the collctabllity of the accounts. These factors include, but are not limited to, the lengih of the Group's telationship with the customers and counterparties, the current credit statis based on thd party credit roporss and known market fores, average age of accouns, collection experience and historical loss experience. The Grovp reviews the age and status ofits ‘rade and cther receivables and identifies account thet are t be provided with allowance based on specific and collective assessment. The amount and timing of the recorded expenses for any period would differ ifthe Group made different judgments ot wilized diferent methodologies. An increase in the allowance for impairment losses would increase the recorded operating expenses and decrease current asses “The Group assessed that there are no indications of impairment on its trade and other receivables as at December 31, 2014.BRET ‘The carrying amount of trade and other receivables amounted to PB9,242,095 as at December 31, 2014 (Notes 6 and 14), Eximaaing Usefid Lives of Property and Equipment and Intangible Assets, The Group estimates the useful lives of property and equipment and intangible assets based on the period over which the asses are expected to be available for use, The estimated uscful lives of property and equipment and intangible assets are reviewed periodically and are updated if expectations differ fom previous estimates due to physical wear and tear, technical or commercial obsolescence and legal and other limits on the use of the assets, Tn addition, estimation of the useful lives of propery and equipment and intangible assets 4s based on collective assessment of industry practice, intemal tecnica evaluation and experience with similar assets. Iti possible, however, that future financial performance could be materially affected by changes in estimates brought about changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these fctors and circumstances. ‘There-were-no changes in the useful lives of property-and equipment and intangi assets in 2014 Property and equipment, net of accumulated depreciation and amortization, amounted t0 PO RORM77 ae at Nwemiver 17014 (Nata 8)Seet Epes ‘The carying amount of trade and other receivables amounted to 89,242.95 as at December 3, 2014 (Notes 6 and 14), Estimating Usefid Lives of Property and Equipment and Intangible Assets. Te Group ‘stints the usefl lives of property and equipment and intangible asets based on the period over which the ascets are expected to be availabe for use, The estimated wseful lives of property and equipment and intangible assets are roviewed periodically and are updated if expectations differ ffom previous estimates due to physical wear and ter, technical or commercial obsolescence and legal and oer limits onthe use of the assets In addition, estimation ofthe useful lives of property and equipment and intangible asets is based on collective assessment of industy practice, internal technical evaluation and ‘experience with similar assets. I is possible, however, that futare financial performance could be materially affected by changes in estimates brought about changes in factors ‘mentioned above, The amounts and timing of recorded expenses fer any period would be affected by changes in these factors and circumstances. ‘There were-no changes in the useful lives of property-and equipment and intangible assets in 2014 Property and equipment, net of accumulated depreciation and amoetzation, amounted to 'P9,898,077 as at December 31, 2014 (Note 8) Intangible assets, net of accumulated amortization, amounted to PI,548,922 as December 31, 2014 (Note 9), Impairment of Nonfinancial Assets. The Group assesses impairment of non-financial assets whenever evens orcifcumstances indicate thatthe caring amount of the assets ‘may not be recoverable, The factors that the Group considered import which eould teiger an impairment review include the following: ‘Significant under performance relative to the expected historical or projected future operating resis; Significant changes in the manner of use ofthe acquired asets or the strategy for overall business; and ‘+ Significant negative industry or esonomic trends ‘An impairment loss i recognized whenever the carrying amount of an asst exceeds its recoverable amount. Based on managements assessment, no impaiment loss was recognized on the Group's propery and equipment and intangible asset as at December 31,2014, Bralucting Realloabiity of Deferred Tex Assets. Tat Group reviews its deferred tax assets at each reprting date and provides valuation allowance to reduce the camming amount to the extent that it is no longer probable tat sufficient taxable profit will be availabe to allow al or part ofthe deferred tx asses tobe utilized ‘Defered tex assets amounted to PI 7,688,620 as at December 31, 2014 (Note 12).Tarde 3% Same Provisions and Contingencies. ‘The Group, in the orinary course of bosines, sets up ‘appropriate provisions for its present legal or constructive obligations, if any, in accordance with its policies oo provisions and contingencies, In recognizing. and ‘measuring provisions, management takes risks and uncertainties ito account, [No provision for probable losses was recognized as at December 31, 2014 ‘of Significant Accounting and Reporting Pole ‘Tho sesounting policies sot out below have been applied consistently to all years presented inthe consolidated financial statements unles, otherwise indicated, ‘Einaneal Instruments The Group's financial insrumemts include cash and cash equivalents, trade and other receivables, security depois included under “Prepaid expenses and other current assets” account, accounts payable and other curent liabilities and loans payable Recognition ane Derecogrition. A financial instrument is recognized if the Group becomes & party tothe contractual provision ofthe instrument. Regular way purchases and sales of financial instrument are accounted for st settlement dae, Financial asets are derecognized if the Group's contractual rights to the eash flows from the financial asset expires or if the Group transfers the financial asset to another party without ‘retaining contol orth risks and rewards of ownership of the asset has been substantially ‘ransfered. Financia liabilities are derecognized ifthe Group's obligations specified in the contract expire or are discharged or cancelled. Offetting Financial Instruments. Finaocial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position only when there is a legally enforceable right to offset the recognized amounts and ther it an iateation to setle on a net basis, or to realize the asset and setle the liability simuftaneously (Cashaned Cath Equivalents. Cash ncdes cash on had and in banks which are stated at face value Cash equivalents ae shortiem, highly liquid investments that are readily converdbe to known amownts ofeach andar subject oan insignificant risk of changes invalue. Trade and Other Receivables. Trade and other receivables are non-derivative financial ‘asses with fixed or determinable payments and maturities tht are not quoted in an active market. Such assets ar recognized initially at the transaction price. Subsequent to intial measurement, receivables are carried st amortized cost using the effective interest method, less any impairment in value. At the end ofeach reporting period, the carrying amount of trade and other receivables te reviewed to determine whether there is ary objective evidence thatthe amounts are tot recoverable, If there is objective evidence of impsiement, an impairment loss is recognized immediately in profit or loss. Aecoums Payable and Other Current Liabilities and Loans Payable, Accounts payable {nd other curent liabilities and loans payable are recognized initially atthe transaction price, including transaction cost.BE u iy Subsequent to nial resogiton, these financial liabilities are measured at amortized cost, using the effective interest method, Interest expense is recognized on the basis of the effective intrest method and is included in finance casts. Loan payable is classified as current lisbilitis unless the Group has an unconditional right to defer seitlement ofthe liability for atleast twelve months after the reporting date. Prepaid Expenses Prepaid expenses are expenses paid in advance and recorded as asset before they are atlized. Prepaid expenses are apportioned over the period covered by the payment and charged to the appropriate sccounss in the consolidated statement of comprehensive income when utilized. Prepaid expenses that are expected tobe realized for no more than 12 moaths after the repomting period ae classified as eurent assets, Otherwise, these are classified as thor noncurent ase Property and Equipment Propery and equipment are stated a cost less accumulated depreciation and amnontzation ‘and any impairment in value, Such cost includes the cost of replacing part of property ‘and equipment at tho time that cost is incured if the recognition erteria are met, and excludes the costs of daytona servicing, ‘Cost includes expenditure that is directly attributable to the acquisition ofthe asset. The cost of replacing a part of am item of propecty and equipment is recognized in the carrying amount ofthe item if tis probable tat the future economic benefits embodied within the part will flow to the Group, and its east can be measured reliably. "The carrying amount of the replaced partis derecognized, The costs of the day-to-day servicing of property and equipment ae reengniaod in profit of loss as incurred. Depreciation and amortization, which commences when the asses aze available for their intended us, is computed using the straight-line method over the following estimated “ef ives of he assets Number of Years ‘Broadcasting equipment 3 Furiture and fotures 3 ‘Leasehold improvements 3 or lease term, whichever is shorter Vehicles S 1 there is an indication thet there has been a significant change in the deprecation ‘method, weful ile or residual valve ofan asso, the depreciation of that asset is reviewed and adjused prospectively, if approprite. Gains and loses on disposal ofan item of property and equipment are determined by ‘comparing the proceeds fom disposal with the earying amount property and equipment, and are recognized on ane basis in profit or loss.y & w & Intangible Assis Intangible asets consist of the Group's website, patents and computer softwar Tatangible assets sequired separately are measured on initial recognition at cast. Subsequently, intangible assets are measured at cost less accumulated amortization and ‘ny accumulated impairment losses. Internally generated intangible assets, exchiding ‘capitalized development costs, are not capitalized and expenditures are recognized in ‘profit or loss in the year in which the related expenditures are incurred. The useful lives ‘of intangible asets are assessed to be ether Fite or indefinite Intangible asets with finite ives are amortized over the useful life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. ‘The amortization period and the amortization medhod used for an intangible aset with a finite useful life are reviewed at least at each reporting date. Changes in the expected useful ifeor the expected pater of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are teat as changes in accounting estimate, The amortization expense on intangibie assets with finite lives is recognized in profit or loss consistent wih the function of the intangible asset. Amortization is computed using the saightline method over the following estimated ‘useful lives as follows: Number of Years Patents and Rights 10 Website Development 3 Computer software 3 Gains or losses arising fom disposal ofan intangible asset are measured asthe diference between the net disposal proceeds and the carrying amount of the assct, and are recognized in profit or loss when the asset is deecognized. Impairment of Nonf ‘The carying amounts ofthe Group's nonfioaaial asses are reviewed for impairment whenever events or changes in circumstances indicate thatthe caying amount of an asset may not be recoverible. Where thore is any indication that an asset may be impaired, the carying amount of the asset is ested for impairment. An impairment Loss is ecogniaed forthe amourt by which the asset's earying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair valu less costs fo sell, land valve in ute, For purposes of assessing impairment, assets are grouped atthe lowvst vols for which there are separately identifiable eash flows. Nonfinaneal asses where impairment losses have been recorded in previous years are reviewed for possible reversal of impairment at each reporting date. Business, 2 ‘Business combination is accounted for using the purchase method as a the acquisition date. The cost of an acquisition is measured as the aggregate of the consideration transfered, measured at aoquistion date fair value, the amount of any non-contolling interests in the acquire, and any costs directly attbutable tothe acquisition. The Group measures the noncontrlling interests in the acquitee at proporicnate share of the ‘acquires identifiable nt asseteset erie ‘The Group measures goodwill at cos, being the excess of the cost of the business combination over the acquirer's interest in the net fie value ofthe identifiable nt asses. ‘Whe the excess is negative, a bargain purchase gain ie recognized immediately in profit or las, ‘Non-contralling interests ‘The sequisiton of mon-contrlling interests is accounted for as transactions with owners fn their capacity as owners and therefore no goodwill is recognized as a rest of such transactions. Any difference between the purchase price and the net assets of the sequited entity is recognized in equity. The adjustments to non-contrlling intrest are based on «proportionate amount of the identifiable ne assets of the subsidiary Related Party Transustons and Relationships Parties are considered to be related if one party has the ability, directly or indirectly, to ‘control the other party or exercise significant influence over the other party in making ‘nancial and operating decisions. Parties are also considered to be related if they are subjeetto common conirol. Related parties may be individuals or corporate entities Capital Stock Capital stock is measured at par value forall shares issued, Proceeds andr fe valve of considerations received in exces of par valu, if any, are recognized es addtional paid-in capital, Incremental costs incurred directly attributable to the issuance of new shares are recognized in equity es deduction from proceeds, nct of tax. Unpaid subscriptions are recognized as a reduction from subscribed corumon shares. Revenue Resogniton Revenue is recognized to tho extent that itis probable thatthe economic benefits will flow to the Group and the revenue cam be measured reliably. Inerest Income. Revenue is recognized as the interest accrues, taking info account the effective yield on the asses. Cost and Expense ion Cost and expenses are recognized upon revcipt of goods, utilization of services oral the date they ar incurred. Expenses are also recognized when a decrease in future economic benefit related to a decrease in an asset or an increase in a Liability that ean be measured reliably bas arisen, Expenses are recognizod on the basis of direct association betweon costs incurred and the earning of specitic tems of income; onthe basis of systematic and rational allocation procedures when economic benefits are expected to arse over several accounting period's and the association ean only be broadly or indretly determined; o immediately when an tpenditure produces no firore economic benefits or when, and to the extent that fare economic benefits do not qualify, or cease to qualify, for recognition as an asset. ‘Eoreign Currency Transactions Transactions in freien currencies are translaod to the functional curroney at exchange rates at the dates of the transactions, Monetary assets and monetary labilies denominated in foreign currencies atthe reporting date ae retranlsted tothe funetional currency al the exchange rte at that date, Resulting exchange differences arising onthe fettlemont of or on translating such monetary assets and monetary lis recognized in profit o ess.ERLaE be by Jacome Taxes Income tax expense for the year is composed of current and deferred tax. Incame tax ‘expense is recognized in profit or loss except to the extent that it relates fo items recognized direely in equity or other compreiensive income, in which case it is recognized in equity or other comprehensive income, ‘Current Tax. Cutent tax isthe expected tax payable on the taxable income for the year, using tx rates enacted or substantively enacted by the end of the reporting date and any adjustment to tx payable in respect of previous yeas Deferred Tax. Deferred tax assets and liabilities are recognized for the fuure tox consequences attributable to temporary differences between the carrying amounts of assets and ltblites for financial reporting purposes and the amounts used for taxation purposes, andthe caryforward tax benefits of the net operating loss carryover (NOLCO) and the minimum eorporse income tax (MCIT) over the regular corporate income tax (RCTT), The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of asets and libilities, using tax rates enacted or substantively enacted at the reporting date. ‘A valuation allowance against deferred tax assets is recognized so thatthe net carying ‘amount equals the highest amount that is more likely than not to be recovered based on ‘curent of future taxable profits. The net carying amount of a deferred tx asst is reviewed at each reporting date and suc valuation allowance is adjusted to reflest the ‘curent assessment of future toxable profits. ‘A deferred tax asst is recognized only tothe extent that it is probable that future taxable profits will be availble against which the assets can be utilized. Defered tax assets are Teviewed at each reporting date and are reduced tothe extent that it is no longer probable that the rested tax benefit wil be realized. Deferred tax asso and Habits are offset if the Group has a legally enforceable right to offset the amounts and it intends ether to setle on a net bass ot realize the axet and setl the lability simultanzousy ‘Value-added Tax VAT) ‘Revenues, expenses and assets are recognized net ofthe amount of VAT, except ‘+ where th tx incured on a purchase of asses or seviees isnot recoverable from the taxation authority, in which case the tne is recognized as part of the cast of acquisition of the asset or as part ofthe expense item as applicable; and ‘receivables and payables thet are stated with the amount of tax included, Provisions ‘A provision is recognized if, as a result of past eveut, the Group has a present yal or ccanstrctve obligation that ean be estimated relisbly, and iis probable that a transfer of economic benefits will be requied to settle the obligation. Provisions are determined by Aiseounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the libifiy. The ‘unwinding of the discount is recognized asa finance cost. The Group does not recognize provision for future operaing losses.£¥ 40 28ET Contingsncies Contingent liabilities are not recognized inthe consolidated financial statements. They are disclored inthe notes to the consolidated financial statements unless the possibilty of ‘an outflow of resources embodying economic benefits i remote. Contingent assets are not recognized in the consolidated financial statements but are disclosed in the notes to the consolidated financial statements when an inflow of economic benefits is probable, Events After the Reporting Period Pst year-end events that provide addtional information about the Group's financial position atthe reporting dae (adjusting events) ae reflected i the consolidated financial Statements, Post eared events that are not adjusting events ate disclosed inthe notes to the consolidated financial statements when material. F Business Combination In December 2014, the Parent Company acquired 1,300,000 common shares representing, 48.17% controling interest in Rapplee amounting oP, 300,000 Rappler is « Philippine company primarily engaged in the business to develop and sell news information end social media services through various delivery formats. It also performs services such as communications, advertising, corporate social responsibility, ‘events and other related services, ‘The Parent Company’ has elected to measure nomcontrolling interest at proportionate {terest in demtifiable net asses, ‘The following summarizes the recognized amounts of assets acquired and libiliies assumed athe acquisition date: ts ‘Assos Cash and eash equivalents 811.258 Trade and other receivables 89,242,998, Prepaid expenses and ctber current assets 4217,590 Property and equipment - net 91898077 Intangible asets- net 41,548,922 Defered tax asses - net 17,688,620, Other nonenrrent assets 115,63, Liabiies Accounts payable and other curent iabilites (46,035,439) Loan payable (6976320) ‘Total Mentifiable Net Assets at Fair Value Pr8412.371vies eee ‘The excess over the cost of the Parent Company's interest in the net fit value of Rappler's identifiable net assets, presented as “Others” account in the consolidated Statement of comprehensive income, was recognized at a result ofthe scquision as allows: 2014 “Total cath consideration transfered 300,000 ‘Non-contrllng intrest measured at proportionate interest in ‘demifiable net assets 40,641,132 ‘Tol identifiable net assets afr valve (78,412.37 Excess (36,471,289) “The fai value ofthe trade and other receivables amounts to PB9,242,995, None of the receivables hasbeen impsied and itis expected that te full amount canbe collected. ‘Tal idemtifable-net asses at fair value is equal tothe consideration transferred and non-contlling interest measured at propetionat interest in Sdetifiable ne asses, ‘The Group is currently completing the purchase price alloation exercise on acquisition ‘made during the year. The identifiable assets and lables are based on provisionery mounts as atthe acquisition date within 12 months from the aquisition dae, Cash and Cash Equivalents ‘This account consists of Note 2014 ‘Cash in bake 7,789,951, Cash on hand 270193 Shortiomn irvestmens 359260 14 PSAI9A13 (Cash in banks earn interest atthe respective bank deposi ates. Short-term investments fnchide demand deposits which can be withdravm at anytime depending on the immediate cash requirements ofthe Group and ear interest a the respective short-term investment rates. ‘The Group's cash and cash equivalents eared intrest income amounting t0 F355 in 2014. © Trade and Other Receivables This acount consists of —_—__ —________Nate_ms. ‘Trade receivables 58.051 618, Advances to employees 1191377 14 P89242,995 Trade receivables are noninterstbearing and are generally on 1300 60-day credit tern. -10-EvLOE: Rit ‘Advances to employees are subject for liguiation within 15 days, This is provided to ‘employees for news coverage and othe projec-elated services 7. Prepaid Expenses and Other Current Assets ‘This account consist aft Note ‘Creditable withholding ax ‘Advances to suppliers Prepaid expenses Seurty deposits 4 198336 P4217.590 5 Property and Equipment This account consists of Drysdering —Furnne Latta qdgnest_ool Fours Improvements Vebleg Tot Decne Sate” ri mn 196 _rssasan _ rreaeses ‘eater. 30 gust say __sginser agar gunn amie Ames! Sere ae surgany Puss Labnast_waaoseon__pasoagr? a my vote nso rama as va mua sino res tists sae riseamuw 2 % b a ir 10. Accounts Payable and Other Current Liabilities This account consists of Note 2014 “Amounts owed to relate parties 13 P24,000,000 Deferred output VAT 3,683,309 ‘Accrued expenses 5.999.282 ‘Accounts payable 5,254,526 ‘Withholding axes payable 1i4egr2 Others 352475 14 PA634,434 ‘Accounts payable are noninterest bearing and are generally ona 30-45 days term, ‘Acerued expenses consist of expenses for operations such as commissions, salaries and others. These are nom interest bearing and are normally setled within one the yea. Ti, Loan Payable ‘Loan payable represents a non interest bearing promissory note entered by Reppler on "November 25, 2014 amounting to US$156,000 payable in 2015, 12, Income Taxes Final income tax on interest income amounted to P71 in 2014 ‘The reconciliation between the statutory income tax on loss before income tax and the Groups effective income tax expense isa follows: 2014 Treome before income tx P36380,537 Income x computed at statutory tax rate 10914161 Others 10,941,372) Interest income clready subjected to final tax @5) (Change in valuation allowance 27317 Pn Deferred tn assets arse from the following: 204 NOLCO 37,057,636 realized foreign exchange loss 145545 37,072,181 Less: Valuation allowance 19,383,561) P17 688,620 “12Doferred tnx asset arising from NOLLCO has been provided with allowance amounting to 19,383,561 as at December 31, 2014 because managertent believes that it is not probable that futuro taxable profit will be available against which the Company ean utilize the benefits therefrom, ‘The details of the Group's NOLCO which can be carried forward and claimed a5 eduction against future taxable income, if ay, areas follows: Year Incurred __Amount Expired Balance Expiry Year _ 2011 9,315,460 (P9,315,460) P- 2018 2012 33,910,741 = 33910741 201s 58,890,481 = S8890481 2016 30,724,232 ~ 307243322017 PIsZ e414 (9.315460) 123,525,454 13. Related Party Tramactions Jn he normal course of busines, the Parent Company has transuctions with its subsidiary and shareholders, ‘The amounts owed to shareholders of its subsidiary amounting to P24,000,000 as st December 31, 2014 were used for working capital purposes, These amounts are ‘noninterest bearing and considered payable on demand (Note 10). Compensation of Ley management personnel ofthe Group amounted to P12.4 million in 2014, 14. Categories of Financial Assets and Financial Liabilities Note 2014 Finandal Assets Measured at Amortized Cost (Cash and cash equivalents 5 Psai9.13 Trade and other receivables 5 s92an995 Security deposits z ‘98.336 198,160,744 Financial Liabifises Measured at ‘Amortized Cast ‘Accounts payable and other current Tiabilies* 10 P38,303,778 Loan payable 6976320 42,280,008 Scans ty pb ann POH Dae BT 3H a