FONTAN SECURITIES AND EXCHANGE COMMISSION ‘SECButeny ESA ieeshts MendeyongCiy MeodanlaPippines "TeGn2 72600 oSOFae(22) 725 208Ema magne 9 Barcode Page ‘The following document has been received: Receiving OficeriEncoder : Ma. Theresa D. Mabuyo Recelving Branch: SEC Head Orfce Receipt Date and Time : May 13, 2016 07:16:26 PML Received From Head Office Company Representative Doe Source Company Information SEC Regstvation No. 03201424077 ‘Company Name RAPPLER HOLDINGS CORPORATION Industry Classifeation Financial Holding Company Actos ‘Company Type Stock Corporation ocumont information Document 105132016008836 Document Type FS-CONSOLIDATED. Document Code Fsc Period Covered December 31, 2015 No of Days tate 0 Department RMD RemarksCOVER SHEET For AUDITED FINANCIAL STATEMENTS ‘SEC Registration Number cls|2}ofi|afolzi7 COMPANY NAME rlelole|alr [fol ® ‘ i g {0 prmciPat OFFICE 1H. = Stufed ted Tal fuleL | Tubode fe Tol ful | Blelsl lalslelifel lolelelilelels lL. Iclafolil deli] Stelolmlmolals! lolelilitelals! lelelalelele fbb ELE) lebih! [ em Te Dermot regitng Weperd frond ens Tp # pont AAPS COMPANY INFORMATION Peemriemt aise ceagueyn pene ented as sor eel ect Ann Mee (ot Oy act Ye enn m9 i aly 31 December 31 ‘CONTACT PERSON INFORMATION Name of Contact Person mall dé Telephone Numbers Mobile Humbor Ms, Marie Fel Ducat-Dalai Feldalfu@rapplercom | [ (02) 661-9983, ‘CONTACT PERSON’s ADDRESS ‘Unit B, 3, North Wing Estancia Offices, Capitol Commons, Ortigas Centr, Pasig City 1605RAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS December 31, 2015 and 2014eaeee ease stee AG Maebet 8c Tolpore 63665 7000 Thee cr, 9 Foc Senge ns a7 Ate Arne emet Sortemgeom NnGy 1 Movoto Pugs Eval” Srnguipmacon REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders ARapples Holdings Corporation Unit B, 3, Noh Wing Estancia Offices Capitol Commons, Ortigas Center Pasig City ‘Report on the Consolidated Financial Statements ‘We have aucited the accompanying consoideted financial statements of Rapper Holdings Corporation and a Subsidiary, which comprise the consolidated satoments of financial position sat December 31,2015 and 2014, and the consolidated statements of comprehensive income, ‘consolidated statements of changes in equity and consolidated statements of cash flows forthe year ended December 31, 2015 and for period from December 12 to December 31,2014, and fs, comping a mma of ian ning rol ad tector information Management's Responsbiliy forthe Consolidated Finacial Statements Managements responsible forthe preparation and fir presentation of these consolidated Finaneil statements in eecordence wit Pilipine Financial Reporting Standards for Small and ‘Medium.sized Entities, and for such internal contol as management determine is nesessay to ‘enable the preparation of consolidated financial statements that are fee from materia misstatement, whether due to fraud or ere. Autos” Responsibility (Our responsibil i to express an opinion on these consolidated fnancal statements based on ‘our audits, We conducted our audits in accordance with Philippine Standards on Auditing. Those ‘Standards require that we comply with ethical requirements and plan and perform the audit 0 ‘obiain reasonable assurance about whether the consolidated financial statements are fee from ‘material misstatement. ‘An audit involves performing procedures o obtain aut evidence about the amounts and disclosures inthe consolidated financial statements. The procedures selected depend on the fuditors" judgment, including the assessment ofthe esks of material misstatement ofthe ‘consolidated financial statements, whether due to fraud or ero, la making those risk ‘sssessments the auditors consider interal control relevant othe eniy’s preparation and fir [resetation of the consolidated fnancil statements in onder to design audit procedures that are “appropriate inthe eiroumstances, but not for the purpose of expressing an opinion oa the {ffetiveness of the entiy’s intemal control, An audit also includes evaluating the “appropriateness of accounting policies used and the reasonableness of accounting estimates made by management & well x evaluating the overal presentation ofthe consolidated financial statements ‘We believe thatthe ait evidence we have obtained is sufficient and appropiate to provide & ‘basis for our audit opinion.Opinion In our opinion, the consolidated financial statements present fit, in all material respects, the financial postion of Rapper Holdings Corpestion anda Subsidiary, as at December 31,2015 ‘and 2014, and its Finan performance ad its cash lows fr the year ended December 31,2015 nd forthe peed from December 12 to December 31,2014 in accordance with Philippine Financial Reporting Standards for Small and Medium-sized Enis. R.G. MANABAT & CO. yore NOEL A. BALADIANG Parner CPA License No, 106166 SEC Accreditation No, 1473-A, Group A, valid until March 30, 2018 Ta Identification No, 223-804-972 BIR Accreditation No, 08-001987.33.2014 Issued October iS, 2014; valid until October 14,2017 PTR No. $320737MD Issued January 4, 2016 at Makati City ‘March31, 2016 ‘Makati City, Metro Manilaseen" ‘STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS, ‘The mmagement of Rappler Hldings Corporation (ihe “Company”, it responsible forte preparation and fur presentation ofthe consolidated Gnancal statements asa and forthe yous ended Deveriber 31, 2015 and 2014, inclodng the addtional components atached then, in tocodance withthe pressibed {inane reporting framework indcared therein. This esponsibity includes designing and implementing, Iinkeral controls relevant othe preparation and fir presentation ofthe consolidated financial stern that are fee fom material misstatement, whether de o fraud o ero, selecting and applying sppropriae accoumting policies, and making accountng esas ha are easoable inthe eeurstances, ‘The Board of Directors reviews and approves the financial statements and submis-the same to the stockholders RG. Mansbat & Co, the indepeadent autos appointed byte stockholders, has ited the consolidated financial satements ofthe Company in accordance wih Philippine Standards on Auditing. and in the reports othe stockholders, has expressed their opnio onthe Furness of presentation upon completion of such adits Lt ‘Mawel Ayala airman oF he Board es Mara & Resta’ Chel Exesaive Officer meh Palliat 7 Chir Financal Ofcer Signed thinsbBrday of _Maweet 2006 ere Hort Wag Eatin Oc, Cate Comens gyro, Pay 203, “lone nt oe! 9984108 / URL ree permNote 2015 204 ASSETS Current Assets Cash and etch equvalens 618 Pro6geae —P8419,413. Trade and other receivables 718 104426,168 —_89.242,995 Prepaid expenses and oer curent asses 8187359979 4217 590 ‘Total Current Assets 218,685,535 101,879,998 [Noncurrent Assets Property and equipment - net 9 10,763,659 9,898,077 Intangible asses - net 10 ‘s8278 1.548.922 Deefered tax asset = nat 16 18398411 17,688,620 (Other noneurent assets 2499233, “18, ‘Total Noneurrent Assets io 32494578 29,551,282 251,180,113 PISI,431 280 LIABILITIES AND EQUITY (Current Liabilities ‘Accoums payable end otbercurentHablhies 17, 18 PIS 143682 —_P46,034,434 Lun payable 1238, ~ 6.976.320 ‘Total Current Liabilities 2ISTAR.6S2_—_ 53,010,754 Equity [Equity Artribotable to Equity Holders ofthe Parent Company Capital stock 1398928 1,398,928, Retained earings (6195346) __36380,466 (45796418) 37,799,394 [Nos-conteolling Interests 400379 40,641,132, Total Equity 35,486,461 18,420,526 251,190,113 PI31,491,280,eo 2aebe RAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY ‘CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND FOR THE PERIOD FROM DECEMBER 12 TO DECEMBER 31, 2014+ fein Nowe 2015 2018 SERVICE REVENUE 13 PI39.461,654 Pp. COST OF SERVICES. 14 133,433,496 : GROSS PROFIT 6,928,158 7 GENERAL AND ADMINISTRATIVE EXPENSES 15 (82,172,571) (1,057) OTHER INCOME (EXPENSES) Foreign exchange gsin-net 2.617887 . Interest income 6 151194 355 ‘Bank charges 4193976) : ‘Other income 102 2,593,687 355 LOSS FROM OPERATIONS (43,850,726) (00,702) oTirrs 4 : 36,871,239, INCOME (LOSS) BEFORE INCOME TAX (43,850,726) 36,380,537 INCOME TAX BENEFIT (EXPENSE) 16 566,661 cm NET INCOME (LOSSVTOTAL COMPREHENSIVE INCOME (LOSS) (P42984965) 736,380,466 Attributable to: Equity holders ofthe Parent Company (P42575812) 736,380,466 [Non-sontrollng interests 408,283 - (P42,984065) 36,380,466 "Tn Coup wa Breed on eon 12RAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY ‘CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015 AND FOR THE PERIOD FROM DECEMBER 12 TO DECEMBER 31, 2014* 2015, 2016 CAPITAL STOCK - Pl par valve “Authorized - 5,500,000 shares a Subseibed- 1398928 shares Pigeeg18 1398928 a RETAINED EARNINGS a ‘Balance t begining of year 3630066 2 e ‘Net income (lou)alcomprebesive inom (os (arsrSsI2) 36,300.66 4 6.195346) 36,380,465 @ NON-CONTROLLING INTERESTS ¥ Balance at beginning of year 40,644432—— 40,641,132 s Net lest comprehensive loss 08.253 i a 40,232,879 40,641,132 e P3506 461 FTBAIO.SI6 w Tae Pre Comper na beaprat es Dem 208 Ses has Be Conta Fanel Son,w a wu 6 @ @ at sese RAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND. FOR THE PERIOD FROM DECEMBER 12 TO DECEMBER 31, 2014* Nove 2015 2014 ‘CASH FLOWS FROM OPERATING ACTIVITIES, Income (loss) before income tax (42,550,726) P36380,537 Adjustments for: ‘Depreciation and ainortization 7,021,406 Impairment loss on receivables 7 627136 : Inerest income 6 (151,198) G55) Unrealized foreign exchange gain 2,617,887), . Others 4 - 36,471,239) ‘Operating loss before working capital changes CBS, 1,057) Increase in: ‘Trade and other ossivables (15,810,306, d Prepaid expenses and other current assets 3,142,389) ‘Other noncurent assets (2,083,570) Increase in: __Accounts payable and ther current liabiliies __J._172,$20,868. ig ‘Net casi generated ffom operations 112,719,068 Interest received 151,194 355 Figal tres paid on intrest income (138,130) an [Net eash flows proved by (used i) operating activites 112,732,132, (90,773) ‘CASH FLOWS FROM INVESTING ‘ACTIVITIES ‘Acquisition of propery end equipment 9 qse381) : Acquisition of subsidiary, net of ash and cash and cach equivalents acquired 4 : 2101258 ‘Cash lows provided (used) in investing activitios Gassay—__7.111,258 ‘CASEL FLOWS FROM FINANCING ACTIVITIES, Payment of loans 7,049,640) : Proceeds from isuance of capital stock 1.398928 provided (sed) in fa 79,640) 1.398.028 EFFECT OF EXCHANGE RATE CHANGES ‘ON CASH AND CASH EQUIVALENTS 207 . NET INCREASE IN CASH AND CASH EQUIVALENTS 98979978 ———8419,413 CASH AND CASH EQUIVALENTS AT ‘BEGINNING OF YEAR 8810813, : ‘CASH AND CASH EQUIVALENTS AT END ‘OF YEAR 6 P106,899391 8,419,413 “iar aca Company wr naan on Deeb 122RAPPLER HOLDINGS CORPORATION AND A SUBSIDIARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS T. Reporting Entity Rappler Holdings Corporation (the Parent Company), was incorporated in the Philippines fand registered with the Prilippine Securities and Exchange Commission (SEC) on December 12,2014 “The accompanying consolidated financial statements comprise the financial statements of ® the Parent Company an is Subsidy (olesvel eter a he "Croup) i @ ‘Tre Group is primary engaged in developing and selling news, information and social 8 retvock serves throug vse dley formats The sop of serves ides Communicate, adoring, erorte soil remponsbiiy public relon, sven, $ Teand fin and eter ead servos a phages ® (On October 7, 2015, the Parent Company fled change in its corporate adress fm ‘Unit 2501, Antel Globe! Building, 3 Julia Vargas Ortigas Center, Pasig City to Unit B, VF, North Wing Estancia Offices, Capitol Commons, Ortigas Center, Pasig City 1605 e and was approved by the SEC on Octoter 8, 2015 a 2 Basis of Preparation Statement of Compliance ‘The accompanying, consolidated financial statements have been prepared in accordance with the Philippine Financial Reporting Standards for Small and Medium-sized Entities (PFRS for SMES), ‘The consolidated financial statements were authorize for issue by the Board of Directors (BOD) on Mare 31, 2016. ‘Basis of Metsurement ‘The consolidated financial statements of the Group have been prepared on a historical coat basis of recounting. Ennetional and Presentation Currency ‘The consolidated financial stalements are presented in Philippine peso, which is the Parent Company's functional currency. Al financial information are rounded off to the nearest peso, except when otherwise indicated Basis of Consolidation ‘The consolidated financial statements incorporate the financial statements ofthe Parent ‘Company and its subsidiary. ‘A subsidiary is an entity contrlled by the Group. ‘The Group controls an entity if, and only if the Group is exposed to, or has rights (0, variable returns from its involvement ‘with the entity and has the ability to affect those returs through ts power over the entity ‘The Group ressesses whethor ot ot it controls an investee if fasts and circumstances indicat that there are changes to one cr more of the thee clements of contro.‘The financial statements of the subsidiary are included in the consolidated financial statements fom the date when the Greup obtains contol, and continue o be consolidated until he date when such contol ceases. ‘The financial statements ofthe subsidiary are prepared for the same reposting period as the Parent Company, using uniform accounting policies for lke transactions and other ‘events in similar cacumstances. Intergroup balances and transactions, including inergoup sell pros and loses, we clininted in pepig the consoled nancial statements. Use of Judgments and Estimates ‘The preparation ofthe consolidated financial statements in accordance with PFRS for [SMEs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported ameunts of asses, liabilities, income and expenses. However, uncerainty about these judgments, estimates and assumptions could result in an outcome that could require a material adjustment to the carrying amount of the affected asset or liability in the future. 1s re continually evaluated and are based on historical experience ing expectations of future events that are believed to be reasonable under the circumstances. Revisions are recognized inthe perod in which the judgments and estimates ae revised and in any future period affected Determining Functional Ciereney, Based on the economic sutstance of the underiying circumstances eelevant to the Group, the funetional cureney has been determined to be ‘the Philippine peso. It isthe cureney that mainly influences the determination of the ‘Group's revenue and expenses. Estimating Allowance for Impairment Losses on Trade and Other Receivables, Tae ‘Group provides an allowance for impairment losses on trade and other receivables at a level considered adequate to provide for uncollectible eceivables, The level of this tllowanceis evaluated by the Group on the bass of fates that affect che collect of the accounts, These factors include, but aro not limited to the length of the Group's relationship with the customers and counterparties, the cuten credit status based on third party crodc repors and known market forces, average age of accounts, collection experience and historical lass experience. The Group reviews the age and sta of its trade and olher receivables and identifies accounts that are fo he provided with allowance based on spevific and collective assessment. The amount and timing of the recorded expenses for any period would differ ifthe Group made diffrent judgments or uilized diferent methodologies. An increase in the allowance for impairment losses would ‘ncreae the recorded operating expenses and decrease current asses ‘The Group recorded an impairment loss on its trade and cther receivables amounting to 677,136 in 2015, ‘The carying amount of trade and other rccivables amounted to P104,426,165 and 9,242,908 ws at December 31, 2015 and 2014, respectively (Notes 7 and 18),Estimasing Useful Lives of Property and Exuipment and Intangible Asser, The Group cestmates the usefl lives of propery and equipment and intangible asets base on the period over which the assts are expected (0 be avaiable for use. The estimated useful lives of property and equipment and intangible assets are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal and other limits on the use of the assets. Inaddition, estimation ofthe useful ives of property and equipment and intangible assets is based on collective assessment of industry practice, internal technical evaluation and ‘experience with similar assets Its possible, however, that future finarcial 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 factors and civeumstanees Thore were no changes in the useful lives of property and equipment and intangible assets in 2015 and 2014 Property and equipment, net of accumulated depreciation and amertizaton, amounted 10 P10, 763,659 and P9,898,077 as at December 31,2015 and 2014, respectively (Note 9). Intangible esses, net of accumulated amortization, amounted to 838,275 and 1,548,922 a8 at December 31, 2015 and 2014, respectively (Note 10) Impairment of Nonfinancial Assets. The Group assesses impairment of non-inanc assets whenever events or citeumstances indicate thatthe carrying amount ofthe assets ray aot be recoverable, The factors that the Group considered important which could trigger an impairment review include the following: 1 Significant under performance relative tothe expected historical or projected future ‘operating ests; ‘Significant changes in the manner of use ofthe acquired assets or the strategy for ‘overall business; and + Significant negative industry or economic trends ‘An impairment loss is recognized whenever the carrying amount ofan asset exceeds its recoverable amount. Based on managements assessment, no impairment loss was recognized onthe Groups propery and egupment and intangible asses as at Decerber 31,2015 and 2014 Evaluating Realzoblty of Deferred Tax Assets. The Group reviews its defered tax lasses at each reporing date and provides valuation allowance to reduce the earring amount to the extent that tis no longer probable that sufficient taxable profit will Be available to allow all or part of the defered tax assets 0 be tiled Defer tax assets amounted to PIE 393,411 and P17,688,620 as at December 31, 2015, and 2014, respectively (Note 16) Provisions and Contingencies. The Group, in the ordinary course of busines, sets up appropriate provisions for its present legal or consirctve obligations, if any, in facvordance with its policies on provisions and contingencies. In recognizing and ‘neasuing provisions, managemen® takes risks and uncertainties into account. [No provision for probable losses was recognized as at December 31, 2015 and 20143. Summary of Significant Accounting Reporting Policies ‘The accounting polices set out below have been applied consistently to all years presented in the conslidsted financial statoments unless, oherwise indicated, Amendments tothe PERS for SMES (On August 12,2015, the Financial Reporting Standards Council (FRSC) has adopted the 2015 Amendments to the IFS for SMEs as 2015 Amendments to the PFRS for SMEs, Which will become mandatory for annual periods on or after January 1, 2017. Earlier pplication is permits. ‘The following are the significant amendments tothe PERS for SMEs: ‘Addition ofan option to use the revaluation mode! for property, plant and equipment in Section 17 Property, Plant and Equipment; and “Alignment of the main recognition and measurement requirements for defered income tax with PAS 12, Income Taxes ‘Other amendments pertain to undue cost or effort exemptions, recognition and ‘measurement requiremenis, and preseatation and disclosure requirement, ‘None ofthese amendmen are expected to have a significant impact onthe Company's financial statements Finanial instruments ‘The Group's financial instruments include cash and cash equivalents, ade and other receivables, security aocouas payable and other current liabilities and loans payable Recognition and Derecognition A financial instrument is recognized if the Group ‘becomes a pery to the contractual provisions ofthe instrument. Regular way purchases and sales of financial instrument are accounted for at settlement date. Financial assets ate dereeognizaé ifthe Group's caniretual rights 10 the cash flows from the financial asset expizes or if the Group transfers the financial asset to another party without retaining control or the risks and rewards of ownership of the asset hasbeen substantially transfered. Financial liabilities are derecogrized ifthe Group's obligations specified in the contract expire o are discharged or eancelled. Offeting Financial Instruments. Finaeialascts and financial liabiites are offset and the net emount is repored in the consolidated statement of financial position only when there is a legally enforeable right t offset the recognized amounts and there is an intention to sete on a net basis, or 10 realize the asset and setle the lability simultaneously. Cash and Cash Fuivalent. Cash eludes cash on hand and in banks which are stated at, face value. Cash equivalnts ere short-term, highly liguid investments that ae readily convertible to known amounts of cash and ee subject to an insinifiant risk of changes, in value Trade and Other Receivables, Trade and other receivables are non-dervative financial sets with xed ot determinable peyments and maturities that are not quoted in an ative tarket, Such asets are recognizod initially atthe transition price. Subsequent to initial measurement, receivables are carried at amortized cost using the effective interest method, less any impairment in value.A the end ofeach reporting period, the carying amount of trade and other recsivables are reviewed 10 determine whether there is any objective evidence thatthe amounts are not recoverable. If there is objective evidence of impainnent, an impsinnent loss is recognized immediatly in profit los. Accounts Payable and Other Current Liobltes ond Loans Payable. Accounts payable and other cuteatLibilites and loans payable a recognized intl at the transaction rice, including transaction costs, ‘Subsequent o inital recogaiton, thes financial lables are measured at amortized cost using the effetve interest method. Interest expense is recognized onthe bass of the cflecive interest method ands included in finance costs. Loan payable is clasiied as curent Fails unless the Group has an unconditional right 0 defer setlement ofthe ability fora least twelve months ater the reporting date. Prepaid Expenses Prepaid expenses are expenses paid in advance and recorded as asset before they are ulllaed, Prepaid expenses are apportioned over the period covered by the payment and charged to the approprste acount in the consolidated statement of comprehensive income when ulzed. Prepaid expenses that are expected tobe realized for no more than 12 youths aftr the reporting period are classified as current ase. Otherwise, these are classified a8 other aoncurrent ss, Property and Equipment Property and equipment are stated al cost less accumulated depreistion and amortization ‘nd any impairment in valu. Such cost inludes the cost of replacing part of property tnd equipment atthe time thet cost is incurred, ifthe recognition eieria are met, and excludes the oss of day-to-day servicing. Cost includes expenditare that direcly attributable to the acquisition ofthe asset. The cost of replacing a part of an item of property and equipment is recognized in the caring amaunt of th item if tis probable that the future economic benefits embodied within the part will Now to the Group, and ils cost can be measured reliably. The carping amount of the replaced par i derecopnized. The costs of the day-to-ay ‘servicing of property and equipment are reeognzed in profit or los as incurred, Depreciation and amertization, which commences when the assets ao availabe for thee intended use, is computed using the swaighline method over the following estimated ‘useful lives ofthe assets: Number of Years Broodcasting equipment 3 -Fumiture and fixtures a: Leasehold improvements 3orlease tem, whickeveris shorter Vehicles 5 If there isan indication that there has been significant change in the deprecation method, usefil life or residual value ofan essa, the deprecation ofthat aset is reviewed and adjusted prospectively, ifappropriateGains end losses on disposal ofan tem of propery and equipment are determined by comparing the prose frm disposal withthe caring amount propery and equipment, nd ae recogni nantes in poi os. Intangible As Intangible assets consist of the Group's website, patents and computer software Intangible assets acquired separately are measured on initial recognition at cos ‘Subsequently, intangible assets are measured al cost less accumulated amortization and ‘any accumulated impairment losses. Interally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditures are recognized in ‘profit or loss in the year in which the related expenditures ae incurred The useful lives of intangible asets are assessed o be either finite or indefinite. Intangible assets with finite lives are amortized over the useful life and assested for impairment whenever there is an indication tha te intangible asets may be impaired, ‘The amortization period andthe amortization method used for an intangible asset with finite useful life are reviewed atleast at each reporting date. Changes inthe expected _Usefl ife or the expected patter of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, a8 ‘appropiate, and are treated os changes in accounting estimate. The amortization expense ‘on intangible assets with finite lives is recognized in profit or loss consistent with the function ofthe intangible asset Amortization is computed using the straight-line method over the following estimated ‘sel lives as follows: Number of Years Patents and Righas 10 Website Development 3 Computer sofware 3 Gains or losses arising from dispose of en intangible asset are measured es the difference ‘between the net disposal proceeds and te carrying amount of the asset, and are tecognized in profit or loss when the asst is derecogized. Inpaiment of Nonfsansal Ascts “The camying amounts ofthe Group's nenfnancal assets are reviewed fo impairment whenever events or changes in circumstances indicate thatthe earying emount of an asset may not be recoverable. Whece thee is any indication that an asset may be ‘pated, the carrying amount of the assets este for impairment, An impairment os is recogniznd forthe ammount by which the asset's carrying amoant exceeds it recoverable “amount, The recoverable amount isthe higher ofan ase's fir value less costs to sll {and value in us. For purposes of assessing impairment, assets ae groupe a the lowest, levels for which there are separately idcaifiable cashflows. Nonfinancial assets where impaimment losses have been recorded in previous years are reviewed for posible reversal of impairment at each rporing dateis accounted for using the purchase method as atthe acquisition date, The cost of an acquisition is measured as the aggregate of the consideration transfered, measured at acquisition date fer value, the amount of any non-coatrlling interests in the acquire, and any costs directly aiributabe to the acquisition. The Group measures the ron-contrlling interests in the sequres ot proportionate share of the avquite’s identifiable net asses, ‘The Group measures goodwill st cast, being the excess of the east of the business combination over the sequrer’s interest in che net fair value ofthe identifiable net assets, ‘When the excess is negative, a bargain purchase gain is recognized immediately in profit orloss. ‘The acquisition of non-controlling interests is accounted for as transactions with owners fn their capacity as ovmers and therefore no goodwill i recognized asa result of such transactions. Any difference between the purchase price and the net assets of the acquired entity is recognized in equity. The adjustments to non-controling interests are ‘based on a preportonate amount of the idemifiable net assets ofthe subsiiary. Paris ae considered 1 berated if one party has the abiiy,drety or indirect, to onl the other pary or exis significant influence over the eter party in making Financial and operting decisions. Partos are also considered to be read if they are sabes to common cori Related parties maybe individuals or corporat eats. Capital Stock ‘Copii! stock is measured at par value forall shares issued. Proceeds and/or fair value of ‘considerations ressived in excess of par value, ifany, are recognized as additonal paid. ‘apical, Ineremental costs incurred directly attributable tothe issuance of new shares are recognized in equity 2s deduction from proceeds, net of tax. Unpeid subscriptions are recognized a a reduction from subscribed common shares. Revenue Recognition ‘Revenue is recognized tothe extent tat itis probable that the economic benefits will ‘ow tothe Graup andthe revenue can be measured reliably. Interest Income, Revenue is recognized as the interest accrues, teking into acount the effective yield on the asets. Cost and expenses are recognized upon receipt of goods, utilization of services ora the dete they are inoue. [Expenses are also recognized when a decrease in future economic benefit related t & decrease in an asset or an increase in a lability that ean be measure rlicly has arisen [Expenses ate recognized on the basis of a direct association between cos'sineuted and the eaming of specific items of income on the basis oF systematic and retinal ellocation procedures when economic benefits are expected 10 arise over several accounting periods fand the association can only be broadly or indirectly determined or immediately when an expenditure produces no future economic benefits or when, an tothe extent that future ‘economic benefits donot qualify, or cease to qualify, for recognition as an asset.w ry Gi wi w o * Foreign Curreney Transactions ‘Transactions in foreign currencies are translated tothe functional currency at exchange rates at the dates of the transactions. Monetary assets and monetary liabilities denominated in foreign curtencies atthe reporting date are retranslted to the functional curreney tthe exchange rate a thet date. Resulting exchange differences arising onthe seitlement of or on translating such monetary assets and monetary liabilities are recognized in profit or loss Sacome Taxes Income tax expense for the year is composed of current and deferred tax. Income tax expense Is recognized in profit or loss except (0 the extent that it relates to items recognized directly in equity or other comprehensive income, in which ease it is recognized in equity or other comprehensive income (Curren Tax. Curent axis the expected tax payable onthe taxable income forthe year, ing tex rates enacted or sobstantively enacted bythe end ofthe reporting dat, and any adjustment to ex payable in respect of previous yeas. Deferred Tax. Defered tex assets and libilties are recognized for the future ax consequences atribuable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation [purposes ad the carryZorward tax benefits of the net operating loss carryover (NOLCO) ‘and the minimum corporate income tax (MCTT) over the regular corporate income tax (RCM, The amount of deferred tax provided is basod on tho expected manner of realization of serlement ofthe carrying amount of assets and liabilities, using ax rates ‘enacied or substantively enacted atthe reporting date. ‘A valuation allowance against defer tx assets is recognized so thatthe net caring ‘moun equals the highest amount dha is more ikely thas not io be recovered based on ‘rent of fire taxable profis. The net canying amoust of a defened tx asst is reviewed a cach reporting dats and such valuation allowance is adjusted to reflect he urea assesment of future texable profits. ‘A defered tax aset is recognized only to the extent that ti probable that fare taxable profits willbe available against which te assets can be utilized. Deferred tax asses ae Teviewed at each reporting date and ae reduced to the extent thai sno longer probable that the related tax benefit wll be realize. Deferred tax assets and liabilities are offset ifthe Group has a legally enforceable right 19 ‘offget the amounts and it intends ether to settle on a net basis oto realize the asset and sete the lability simultaneously ‘Value.added Tax (VAT) Revenues, expenses and aces are recognized net ofthe amoutt of WAT, except: + where the tx incured on a purchase of assets or services i not recoverable from the taxation authority, in which caso the tax i recognized a5 part of the cost of scquisitin ofthe aset or as part ofthe expense item as applicable; and + receivables and paysbles tha are sated with the amount of tx included,a Provisions ‘A provision is rocognized if, asa result ofa past event, the Group has a present legal or constrictive obligation that ean be estimated reliably, and itis probable that a transfer of| teconomie benefits will be required to sete the obligation, Provisions are determined by discounting the expected feture cashflows at a pre-ax rate that reflects curent market assessments of the time value of money and the risks specific o the liability. The unwinding ofthe discount is recognized asa finance cost. The Group does not rezognize «8 provision for future oporatng loss. Contingencies Contingent libilities are not recognized inthe consolidated financial statemens. They are disclosed in the notes tothe consolidated financial statements unless the possibility of ‘an outflow of resources embodying econcmic benefits is remote. Contingent assets ere ‘ot recognized in the consolidated financial statements but are disclosed in the notes to the consolidated financial statements when an inflow of economic beneis i probable. events Aer the Reporting Period Post yearend evens tht provide addtional infomation about the Group’s financial postion atthe reporting date (ejustng events) are reflected inthe consolidated financial Batements. Post year-and events tha are not adjusting events are disclosed in the noes to the consolidated financial statements when material ‘© Business Combination In December 2014, the Parent Company acquired 1,300,000 common shares represent 48.17% consoling interest in Rappler amounting o P,300,000, (On August 28, 2015, the BOD approved the issuance of addtional 7,217,257 common shares for atta subscription price of P7,217,257. As aresut of the issuance, the Parent ‘Company owns 98.84% ofthe total outstanding shares of Rapple. [Rappler is a Philippine company primarily engaged in the business to develop and sell ‘news information and social media services through various delivery formats. It also performs services such as communictions, advertising, corporate social responsibilty, vents and other related services. ‘The Parent Company has elected to measure non-~ Others 91,282 PS2I72,S71 91,057 Meeee q a ae: a * pres 6, Tacome Taxes The components of income tax expense (benefit) are shown below: 201s 2014 Final wc on interest income PITS Pr (Curren tax current 120917 : Deferred tax benefit 04,799 : (866,661) Pr ‘The reconciliation between the statutory income tax on loss before income tax and the Group's effective income tx expense i as fellows: 2015 2014 Income (Jos) before income tax (P48,550,726) 736380537 come tax computed a statutory tax rats (13,065,218) P10,914,161 Explzed NOLCO 10,1733222, . [Nondeductibe expenses 15300 : ‘Change in valuation allowance 233879 21317 Interest income already subjected ofinel wx (28,146) 63) Others . 10,941,372) (P566,661) PIL Deferred tax assets arise fom the folowing 2S NOLCO 140,777,309 57,057,636 McIT "120917 . Unrealized foreign exchange loss 783,078 144s 40,115,181 37,072,181 Less: Valuation allowance 21,721,740) (19,383,561 PIS393,11__P17,688,520 ‘Dofered tax asset arising from NOLO has boon provided with allowance amounting to 2,721,740 and P19,383,56t as at December 31, 2015 and 2014, respectively, because ‘management believes that it is not probable that future taxable profit wil be availble against which the Company can ulize the benefits therefrom. ‘The details of the Group's NOLCO which can be carried forward and claimed as deduction agains future taxable income, if any, areas follows: Year Incurred Amount Expired Balance _ Expiry Year 2012 P3910,741 (P33,910,741) Pp. 2015 2013 58,890,481 ~ $8.890481 2016, 2014 30,724232 + 30742322017 2015 46317259 = 463172592018 PUEO,842,713 (833,910,741) _P135,931,9727, Related Party Transactions Tn the normal course of busines, the Parent Company has transactions wit its subsidiary and shareholders, ‘The amounts owed to shareholders of its subsidiary amounting to 24,000,000 as at December 31, 2014 were used for working capital purposes. These amounts are non- ‘merest bearing and considered payable on demand (Nove 11). ‘Compessation of key management personnel ofthe Grovp amounted to P12.4 milion in 2018 and 2014, TS, Categories of Financial Assets ond Financial Liabilities ae es Financial Assets Measured at ‘Amortized Cast ‘Cash and cash equivalents 6 Plosso93o1 78,419,413 ‘Trade and othe receivables 7 104426168 §9.242.995 Security deposits (included as part of “Other noncutent asses 8236250 498,336 213,668,806 798,160,744 ‘Financial Liabilities Measured at ‘Amortized Cost ‘Accounts payable and otber current liabiltiest 11 P203651,564 35,303,778 Loan payable 2 : 676,320 203,681,568 P42.280,098 “ng ny paps anoaing PURO, ond PLATSDATE ww Desemtor STS ond 76 rec 16pa hmat co esreng se)505 700 Sevouponnr SF Tae Feneyaet es DeAnna ‘ere So pg a Soy esa ripe Bt Fogle REPORT OF INDEPENDENT AUDITORS. - “10 ACCOMPANY SEPARATE FINANCIAL STATEMENTS FOR FILING WITH THE SECURITIES AND EXCHANGE COMMISSION “The Boart of Directors and Stockholders appl Holdings Corporation Unit BF, Nora Wing Estancia Offices Capitol Commons, Onigas Center Pasig City We have auited the accompanying separate financial statements of Rappler Holdings Colon at and forthe ear ended Deceber 31,2015, on which we have rendered our report dated March 31,2016. Incompllance wth Secures Relation Code Roe 8, As Amended, we are stating that the sid ‘Gomnpuny as tal of nine) stockholders owning ore han one handed (100) stares ech RG. MANABAT & CO. wo Pee wa March 31,2016 ‘Makati Ci, Metro ManilaDecember 31, « : nis Pom a ass cs a Current Assets om 510 prog 9ara . te cure ass 3300 2 ‘Total Current Assets 10,395,034 99.22 & Noncurret Ast : Tira sas ck of aid 6.30000 1300 4 PinsssossPipean2 se nnn TINS OLS LIABILITIES AND EQUITY (Current Liabilities, ‘Accounts payable aid other accrued expenses 7.8. /0__P18,391,750 91.057 Equity Capital stock rassg28 1,398,928 Deli 780,644) 90.773), ‘Total Equity (Capital defilency) (6i81,716) 1,308,155 Piigosas4 _—_P2s99,212, Be Rear sepa Pre