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STOTSENBERG LEISURE PARK & HOTEL CORPORATION

STATEMENT OF FINANCIAL POSITION

June 30, 2015

(With Comparative Figures for December 31, 2014, 2013 and 2012)

(In Philippine Peso)

Notes 2015 2014 2013 2012

A S S E T S

Current Assets

Cash 6 5,291,339 35,090,087 4,969,357 8,059,247

Trade and other receivables 7 312,862,983 265,938,987 210,509,408 230,229,286

Inventories 8 4,161,144 2,942,402 2,288,416 2,460,352

Prepayments 9 9,226,205 9,226,205 8,772,275 9,037,888

331,541,671 313,197,681 226,539,456 249,786,773

Non-current Asset

Property and equipment - net 10 467,085,412 478,504,583 506,298,215 540,376,516

TOTAL ASSETS 798,627,083 791,702,264 732,837,671 790,163,289

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Trade and other payables 11 241,841,171 267,046,523 387,841,100 460,137,634

Deposits for future stock subcriptions 12 150,000,000 150,000,000 - -

Income tax payable 2,346,480 2,477,446 1,485,502 207,594

TOTAL LIABILITIES 394,187,651 419,523,969 389,326,602 460,345,228

S T O C K H O L D E R S' E Q U I T Y

Capital Stock 13 200,000,000 200,000,000 200,000,000 200,000,000

Retained Earnings 204,439,432 172,178,295 143,511,069 129,818,061

TOTAL STOCKHOLDERS' EQUITY 404,439,432 372,178,295 343,511,069 329,818,061

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 798,627,083 791,702,264 732,837,671 790,163,289

(See Notes to Financial Statements)

L I A B I L I T I E S

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STATEMENT OF COMPREHENSIVE INCOME

For the Period Ended June 30, 2015



Notes 2015 2014 2013 2012

REVENUES 14 336,928,174 630,796,615 474,959,304 389,589,092

DIRECT COSTS 15 283,069,752 576,831,616 429,997,857 357,116,116

GROSS PROFIT 53,858,422 53,964,999 44,961,447 32,472,976

OPERATING EXPENSES 16 18,904,364 22,599,523 29,020,367 35,550,677

PROFIT (LOSS) BEFORE TAX 34,954,058 31,365,476 15,941,080 (3,077,701)

INCOME TAX 19 2,692,921 2,698,250 2,248,072 1,638,339

PROFIT (LOSS) 32,261,137 28,667,226 13,693,008 (4,716,040)


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STATEMENT OF CHANGES IN EQUITY




Note Capital Stock Retained Earnings Total

Balance at December 31, 2011 200,000,000 134,534,101 334,534,101

Loss (4,716,040) (4,716,040)

Balance at December 31, 2012 13 200,000,000 129,818,061 329,818,061

Profit 13,693,008 13,693,008


Profit 28,667,226 28,667,226


Profit 32,261,137 32,261,137

Balance at June 30, 2015 13 200,000,000 204,439,432 404,439,432


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STATEMENT OF CASH FLOWS




Note 2015 2014 2013 2012

CASH FLOWS FROM OPERATING ACTIVITIES

Profit (Loss) before tax 34,954,058 31,365,476 15,941,080 (3,077,701)

Adjustments for depreciation 10 15,566,630 31,133,260 37,980,752 47,377,927

Operating cash flows before changes in working capital 50,520,688 62,498,736 53,921,832 44,300,226

Increase in operating assets:

Trade and other receivables (46,923,996) (55,429,579) 19,719,878 (31,900,077)

Inventories (1,218,742) (653,986) 171,936 762,508

Prepayments - (453,930) 265,612 (611,552)

Increase (Decrease) in trade and other payables (25,205,353) 30,197,367 (71,018,625) 3,758,946

Cash generated from (used in) operations (22,827,403) 36,158,608 3,060,633 16,310,051

Income taxes paid (2,823,886) (2,698,250) (2,248,072) (1,638,338)

Net cash from (used in) operating activities (25,651,289) 33,460,358 812,561 14,671,713

CASH FLOWS FROM INVESTING ACTIVITY

Additions to property and equipment 10 (4,147,459) (3,339,628) (3,902,451) -

CASH FLOWS FROM FINANCING ACTIVITY

Payment for loan - - - (12,500,000)

NET INCREASE (DECREASE) IN CASH (29,798,748) 30,120,730 (3,089,890) 2,171,713

CASH AT BEGINNING OF PERIOD 35,090,087 4,969,357 8,059,247 5,887,534

CASH AT END OF PERIOD 5,291,339 35,090,087 4,969,357 8,059,247


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STOTSENBERG LEISURE PARK & HOTEL CORPORATION NOTES TO FINANCIAL STATEMENTS

June 30, 2015


1. CORPORATE INFORMATION

Stotsenberg Leisure Park and Hotel Corporation (the “Company”) was incorporated and

registered with the Philippine Securities and Exchange Commission (SEC) on

August 10, 2004. The Company is principally engaged in the business of establishing,

developing, renovating, owning, managing and/or operating hotels, lodging houses,

recreational complexes, theme parks, resorts, restaurants, coffee shops and

refreshment parlors, food catering businesses, sports and recreational facilities, gaming

business enterprise, slot lounges with table games, video arcade, internet gaming,

sports and racing, telephone betting and other related activities, and all other

businesses incident thereto.

The Company is 20% owned by Saint Mary’s Angel Estate Inc. and 9% owned by Red

Oasis Holding Corporation, a domestic corporation and 71% owned by individuals who

are Filipino citizens.

The Company operates within the Clark Freeport Zone (CFZ) and is governed by rules

and regulations of the Clark Development Corporation (CDC), which was created by

Republic Act No. 7227, otherwise known as the “Bases Conversion and Development

Act of 1992”, as amended by R.A. 9400. The Company is entitled to tax and duty-

free importation of raw materials and capital equipment to be used solely within the

territories of CFZ as indicated in Sec. 12b and 12c of R.A. 7227, Sec. 43, 45, 46 and

49 of its Implementing Rules and Regulations (IRR), and Sec. 2 of R.A. 9400. Under

Sections 12 and 15 of R.A. 7227, the Company shall pay a final tax of 5% of its gross

income earned from sources within CFZ and shall be directly remitted as follows: three

percent (3%) to the National Government, and two percent (2%) to the treasurer’s

office of the municipality or city where they are located. Section 57 of R.A. 7227

define gross income as gross sales or revenues derived from any business activity, net

of returns, discounts and allowances, less cost of sales before any deduction for

administrative expenses and incidental losses during a given taxable period.

The Company’s registered office is located at Gil Puyat Avenue corner Andres Soriano

St., Clark Special Economic Zone (CSEZ) Pampanga.

2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS

The Philippine Financial Reporting Standards Council (FRSC) approved the issuance of

new and revised Philippine Financial Reporting Standards (PFRS). The term “PFRS” in

general includes all applicable PFRS, Philippine Accounting Standards (PAS), and

Interpretations issued by the Philippine Interpretations Committee (PIC), Standing

Interpretations Committee (SIC) and International Financial Reporting Interpretations

Committee (IFRIC) which have been approved by the FRSC and adopted by SEC.

These new and revised PFRS prescribe new accounting recognition, measurement and

disclosure requirements applicable to the Company. When applicable, the adoption of

the new standards was made in accordance with their transitional provisions,

otherwise the adoption is accounted for as change in accounting policy under PAS 8,

Accounting Policies, Changes in Accounting Estimates and Errors.

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2.01 First-time Adoption of PFRS

2.01.01 Adoption of Extant, New and Revised PFRSs Applied on the Financial

Statements

The following extant, new and revised PFRSs have been adopted in these financial

statements. The application of these PFRSs has not had any material impact on the

amounts reported for the current period but may affect the accounting for future

transactions or arrangements.

PFRS 1, First Time Adoption of PFRS – sets out the procedure that an entity must

follow when it adopts PFRS for the first time as the basis for preparing its general

purpose financial statements. It provides guidance on the accounting policies,

reporting periods, recognition, derecognition, reclassification and measurement of

assets and liabilities. The standard sets out optional and mandatory exemptions

from the general restatement and measurement principles of assets and liabilities.

PFRS 7, Financial Instruments: Disclosures – requires entities to provide disclosures

in their financial statements that enable users to evaluate the significance of

financial instruments for the entity’s financial position and performance; the nature

and extent of risks arising from financial instruments to which the entity is exposed

during the period and at the end of the reporting period, and how the entity

manages those risks.

PFRS 12, Disclosure of Interests in Other Entities - requires an entity to disclose

information that enables users of its financial statements to evaluate the nature of,

and risks associated with, its interests in other entities; and the effects of those

interests on its financial position, financial performance and cash flows.

PFRS 13, Fair Value Measurements – provides a framework which defines fair

value, sets out in a single PFRS a framework for measuring fair value and requires

disclosures about fair value measurements

PAS 1, Presentation of Financial Statements – provides a framework within which

an entity assesses how to present fairly the effects of transactions and other

events.

PAS 2, Inventories - provides guidance on the determination of cost and its

subsequent recognition as an expense, including any write-down to net realizable

value. It also provides guidance on the cost formulas that are used to assign costs

to inventories.

PAS 7, Cash Flow Statements – requires the presentation of information about the

historical changes in cash and cash equivalents of an enterprise by means of a cash

flow statement which classifies cash flows during the period according to

operating, investing and financing activities.

PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors –

eliminates the concept of fundamental error and requires retrospective application

of voluntary changes in accounting policies and retrospective restatement to

correct prior period errors.

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PAS 10, Events after the Reporting Period – prescribes when an entity should

adjust its financial statements for events after the reporting period date and

requires disclosure of the date when the financial statements were authorized for

issue and other subsequent events.

PAS 12, Income Taxes – prescribes the accounting treatment for income taxes and

its presentation and disclosures in the financial statements. It requires the

recognition of deferred tax asset or liability for timing differences in tax benefits or

payments.

PAS 16, Property, Plant and Equipment – prescribes the accounting treatment for

property, plant and equipment so that users of the financial statements can discern

information about an entity’s environment in its property, plant and equipment and

the changes in such investments.

PAS 17, Leases – prescribes, for lessees and lessors, the appropriate accounting

policies and disclosures to apply in relation to leases.

PAS 18, Revenue – prescribes the accounting treatment for revenue arising from

certain types of transactions and events.

PAS 19, Employee Benefits – prescribes the accounting and disclosure for

employee benefits. It requires an entity to recognize a liability when an employee

has provided service in exchange for employee benefits to be paid in the future and

an expense when the entity consumes the economic benefit arising from service

provided by an employee in exchange for employee benefits.

PAS 23, Borrowing Cost – costs that are directly attributable to the acquisition,

construction or production of a qualifying asset form part of the cost of that asset.

Other borrowing costs are recognized as an expense.

PAS 24, Related Party Disclosures – ensures that an entity’s financial statements

contain the disclosures necessary to draw attention to the possibility that its

financial position and profit or loss may have been affected by the existence of

related parties and by transactions and outstanding balances, including

commitments, with such parties.

PAS 27, Financial Statements - prescribe the accounting and disclosure

requirements for investments in subsidiaries, joint ventures and associates when an

entity prepares financial statements.

PAS 32, Financial Instruments: Presentation – establishes principles for presenting

financial instruments as liabilities or equity and for offsetting financial assets and

financial liabilities.

PAS 36, Impairment of Assets – ensures that assets are carried at no more than

their recoverable amount, and to define how recoverable amount is calculated.

PAS 37, Provisions, Contingent Liabilities and Contingent Assets – ensures that

appropriate recognition criteria and measurement bases are applied to provisions,

contingent liabilities and contingent assets and that sufficient information is

disclosed in the notes to the financial statements to enable users to understand

their nature, timing and amount.

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PAS 39, Financial Instruments: Recognition and Measurement – prescribes the

principles for recognizing and measuring financial assets and financial liabilities.

2.01.02 Application of the PFRS

The Company’s financial statements for the period ended June 30, 2015 are its first

annual financial statements prepared under accounting policies that comply with PFRS.

The Company’s transition date is January 1, 2013. The Company prepared its opening

PFRS statement of financial position at that date.

In preparing these financial statements in accordance with the PFRS, the Company has

applied all the mandatory exceptions from retrospective application of the PFRS.

2.02 New and Revised PFRSs Applied with No Material Effect on the Financial

Statements

The following new and revised PFRSs have also been adopted in these financial

statements. The application of these new and revised PFRSs has not had any material

impact on the amounts reported for the current and prior years but may affect the

accounting for future transactions or arrangements.

PAS 32 (Amended), Financial Instruments: Presentation – Offsetting of Financial

Assets and Liabilities

The amendments clarified the meanings of “currently has a legally enforceable right

of set-off” and “simultaneous realization and settlement”. These amendments are

effective for annual periods beginning on or after January 1, 2014 and should be

applied retrospectively. Earlier application is permitted.

PAS 36, Impairment of Assets – Recoverable Amount Disclosures for Non-Financial

Assets

The amendments remove the requirement to disclose the recoverable amount of

each cash-generating unit (group of units) which contains goodwill or intangible

assets with indefinite useful lives but there has been no impairment. Instead,

it requires the disclosure of the recoverable amount of an individual asset (including

goodwill) or a cash-generating unit when an impairment loss has been recognized

or reversed. It also requires additional information about the fair value measurement

of impaired assets when recoverable amount is based on fair value less cost of

disposal. This is effective retrospectively for annual periods beginning on or after

January 1, 2014 and may be early adopted to any period in which it also applies

PFRS 13.

IFRIC 21, Levies

This interpretation provides guidance on how to account levies that are within the

scope of PAS 37, Provisions, Contingent Liabilities and Contingent Assets.

It clarifies that the obligating event that gives rise to a liability to pay a levy is the

activity that triggers payment of the levy, as identified by the legislation.

This interpretation is effective for annual periods beginning on or after

January 1, 2014 and it shall be applied retrospectively. Earlier application is

permitted.

Improvements to PFRS (2012) – Effective for annual periods beginning on or after

July 1, 2014. Earlier application is permitted.

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PFRS 13, Fair Value Measurements – It clarifies that short-term receivables and

payables with no stated interest rate can be measured at invoice amounts without

discounting, when the effect of not discounting is immaterial.

PAS 16, Property, Plant and Equipment and PAS 38, Intangible Assets –

The improvements in these PFRS clarify the computation of accumulated

amortization and/or depreciation when intangible assets and/or items of property,

plant and equipment are subsequently measured using the revaluation model. The

net carrying amount of the asset is adjusted to the revalued amount, and either the

gross carrying amount is adjusted in a manner consistent with the net carrying

amount then accumulated depreciation/amortization is then adjusted to equal the

difference between the gross and net carrying amounts or the accumulated

depreciation/amortization is eliminated against the gross carrying amount.

PAS 24, Related Party Disclosures – The improvements in this PFRS clarify that the

definition of related parties is extended to include management entities. Further,

the disclosure requirement is also extended to require separate disclosure of

transactions for the provision of key management personnel services and the

compensation provided by a management entity to its own employees is excluded

from the disclosure requirements to prevent duplication.


July 1, 2014. Earlier application is permitted.

PFRS 1, First-time Adoption of Philippine Financial Reporting Standards – The

amendments in this PFRS clarify that a first-time adopter should apply a single

version of each PFRS throughout each period presented in its first PFRS financial

statements. Further, it requires that PFRSs that are effective at the end of the first

PFRS reporting period must be used. A first-time adopter is allowed to apply a new

PFRS that is not yet mandatory if early application is permitted. Consequently, if a

first-time adopter chooses to early apply a new PFRS, that new PFRS will be

applied throughout the periods presented in its first PFRS financial statements,

unless this PFRS provides an exemption or an exception that permits or requires

otherwise.

PFRS 13, Fair Value Measurements – The amendment clarifies that that the

portfolio exception applies to all contracts that are within the scope of PAS 39,

Financial Instruments: Recognition and Measurement or PFRS 9, Financial

Instruments, regardless of whether they meet the definitions of financial assets or

financial liabilities as defined in PAS 32, Financial Instruments: Presentation.

2.03 New and Revised PFRSs in Issue but Not Yet Effective

The Company will adopt the following standards and interpretations when they

become effective. Except as otherwise indicated, the Company does not expect the

adoption of these new and amended PFRS, to have significant impact on the financial

statements.

2.03.01 Standard Adopted by FRSC and Approved by the Board of Accountancy

(BOA)

PFRS 9, Financial Instruments – Classification and Measurement

PFRS 9, Financial Instruments, issued in November 2009 and amended in October

2010 introduces new requirements for the classification and measurement of

financial assets and financial liabilities and for derecognition.

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PFRS 9 requires all recognised financial assets that are within the scope of PAS 39,

Financial Instruments: Recognition and Measurement, to be subsequently measured

at amortized cost or fair value. Specifically, debt investments that are held within a

business model whose objective is to collect the contractual cash flows, and that

have contractual cash flows that are solely payments of principal and interest on

the principal outstanding are generally measured at amortized cost at the end of

subsequent accounting periods. All other debt investments and equity investments

are measured at their fair values at the end of subsequent accounting periods.

The most significant effect of PFRS 9 regarding the classification and measurement

of financial liabilities relates to the accounting for changes in fair value of a

financial liability (designated as at fair value through profit or loss) attributable to

changes in the credit risk of that liability. Specifically, under PFRS 9, for financial

liabilities that are designated as at fair value through profit or loss, the amount of

change in the fair value of the financial liability that is attributable to changes in the

credit risk of that liability is recognized in other comprehensive income, unless the

recognition of the effects of changes in the liability's credit risk in other

comprehensive income would create or enlarge an accounting mismatch in profit or

loss. Changes in fair value attributable to a financial liability's credit risk are not

subsequently reclassified to profit or loss. Previously, under PAS 39, the entire

amount of the change in the fair value of the financial liability designated as at fair

value through profit or loss was recognized in profit or loss.

PFRS 9 is effective for annual periods beginning on or after January 1, 2015, with

earlier application permitted.

2.03.02 Standards Adopted by FRSC but pending for Approval of the BOA

PFRS 9, Financial Instruments – Hedge Accounting and Amendments to PFRS 9,

PFRS 7 and PAS 39 (2013)

PFRS 9 (2013) includes the new hedge accounting requirements that align hedge

accounting more closely with risk management, establish a more principle-based

approach to hedge accounting and address inconsistencies and weaknesses in the

hedge accounting model in PAS 39. One of the significant changes is that inclusion

of non-financial items into the type of transactions eligible for hedge accounting,

provided that the risk component is separately identifiable and reliably measurable.

Entities were given an accounting policy choice between applying the hedge

accounting requirements of PFRS 9 and continuing to apply the hedge accounting

requirements in PAS 39. Also, the disclosure on hedge accounting and risk

management disclosures were improved.

PFRS 9 (2013) does not have a mandatory effective date, early application is

permitted.

PFRS 9, Financial Instruments (2014)

PFRS 9, amended on July 24, 2014, made limited amendments to the requirements

for classification and measurement of financial assets and requirements for

impairment.

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The amendments introduced a ‘fair value through other comprehensive income’

measurement category for particular simple debt instruments. Also it introduced

impairment requirements relating to the accounting for an entity’s expected credit

losses on its financial assets and commitments to extend credit. These

requirements eliminate the threshold that was in PAS 39 for the recognition of

credit losses. Under the impairment approach in PFRS 9 it is no longer necessary

for a credit event to have occurred before credit losses are recognized. Instead, an

entity always accounts for expected credit losses, and changes in those expected

credit losses. The amount of expected credit losses is updated at each reporting

date to reflect changes in credit risk since initial recognition and, consequently,

more timely information is provided about expected credit losses.

PFRS 9 supersedes PFRS 9 (2009), PFRS 9 (2010) and PFRS 9 (2013) and is

effective retrospectively for annual periods beginning on or after January 1, 2018,

with earlier application permitted.

Amendments to PAS 1, Disclosure Initiative

The amendments clarify that information should not be obscured by aggregating or

by providing immaterial information. Materiality considerations shall apply to all

parts of the financial statements even if when a standard requires a specific

disclosure.

In addition, the amendments introduce a clarification that the list of line items to be

presented in the statement of financial position and statement of comprehensive

income can be disaggregated and aggregated as relevant. Also, it clarifies that an

entity's share of OCI of equity-accounted associates and joint ventures should be

presented in aggregate as single line items based on whether or not it will

subsequently be reclassified to profit or loss.

Further, the amendments add additional examples of possible ways of ordering the

notes to clarify that understandability and comparability should be considered when

determining the order of the notes. The IASB also removed guidance and examples

with regard to the identification of significant accounting policies that were

perceived as being potentially unhelpful. The amendments are effective for annual

periods beginning on or after January 1, 2016. Earlier application is permitted.

PAS 16, Property, Plant and Equipment and PAS 38, Intangible Assets –

Clarification of Acceptable Methods of Depreciation and Amortization

The amendments clarify that revenue-based depreciation is not appropriate for

property, plant and equipment. Revenue-based amortization is allowed only when

the intangible assets are expressed as a measure of revenue or when it can be

demonstrated that revenue and the consumption of economic benefits of the

intangible asset are highly correlated. This is effective prospectively from

January 1, 2016. Earlier application is permitted.


January 1, 2016. Earlier application is permitted.

PFRS 7, Financial Instruments: Disclosure – The amendments clarify that the right

to service a financial asset transferred may be retained for a fee that is included in

the servicing contract. The right to earn a fee for servicing the financial asset is

generally continuing involvement for the purpose of applying the disclosure

requirements. The service contract must be assessed to determine whether there is

a continuing involvement in the financial asset transferred.

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Further, the additional disclosure required by amendments to PFRS 7, Disclosure –

Offsetting Financial Assets and Financial Liabilities is not specifically required for all

interim periods. For condensed financial interim financial statements, the disclosure

requirements are required to be given if the financial statements are prepared in

accordance with PAS 34, Interim Financial Reporting when the inclusion would be

required by the standard.

PAS 19, Employee Benefits – It clarifies that the high quality corporate bonds used

to estimate the discount rate for post-employment benefit obligations should be

denominated in the same currency as the liability and that the depth of the market

for high quality corporate bonds should be assessed at the currency level.

3. BASIS FOR THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS

3.01 Statement of Compliance

The financial statements have been prepared in conformity with PFRS and are under

the historical cost convention, except for certain financial instruments that are carried

either at amortized cost or at fair value.

3.02 Functional and Presentation Currency

Items included in the financial statements of the Company are measured using

Philippine Peso (P), the currency of the primary economic environment in which the

Company operates (the “functional currency”).

The Company chose to present its financial statements using its functional currency.

3.03 Basis of Preparation

The Company’s financial statements are not entirely comparable since the amounts

disclosed for the current period is for six (6) months only while the comparative figures

are for twelve (12) months. As such, comparative amounts for the statements of

income, statements of changes in equity, statements of cash flows and the related

notes are not entirely comparable

4. SIGNIFICANT ACCOUNTING POLICIES

Principal accounting and financial reporting policies applied by the Company in the

preparation of its financial statements are enumerated below and are consistently

applied to all the years presented, unless otherwise stated.

4.01 Financial Assets

Financial assets are initially measured at fair value, plus transaction costs, except for

those financial assets classified as at fair value through profit or loss, which are initially

measured at fair value.

Financial assets are classified into the following specified categories: financial assets at

fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-

sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on

the nature and purpose of the financial assets and is determined at the time of initial

recognition.

The Company financial assets include cash and trade and other receivables.

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4.01.01 Effective Interest Method

The effective interest method is a method of calculating the amortized cost of a debt

instrument and of allocating finance income over the relevant period. The effective

interest rate is the rate that exactly discounts estimated future cash receipts including

all fees on points paid or received that form an integral part of the effective interest

rate, transaction costs and other premiums or discounts, through the expected life of

the debt instrument, or, where appropriate, a shorter period to the net carrying amount

on initial recognition.

4.01.02 Amortized Cost

Amortized cost is computed using the effective interest method less any allowance for

impairment and principal repayment or reduction. The calculation takes into account

any premium or discount on acquisition and includes transaction costs and fees that

are an integral part of effective interest rate.

4.01.03 Trade and Other Receivables

Trade and other receivables are recognized initially at the transaction price and

subsequently measured at amortized cost using the effective interest method, less

provision for impairment. A provision for impairment of trade and other receivables 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.

4.01.04 Impairment of Financial Assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment

at the end of each reporting period. Financial assets are impaired where there is

objective evidence that, as a result of one or more events that occurred after the initial

recognition of the financial asset, the estimated future cash flows of the investment

have been affected.

For all other financial assets, including redeemable notes classified as AFS and finance

lease receivables.

Objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or

default or delinquency in interest or principal payments; or

it becoming probable that the borrower will enter bankruptcy or financial

re-organization; or

the lender, for economic or legal reasons relating to the borrower’s financial

difficulty, grants the borrower a concession that the lender would not otherwise

consider; or

the disappearance of an active market for that financial asset because of financial

difficulties; or

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observable data indicating that there is a measurable decrease in the estimated

future cash flows from a group of financial assets since the initial recognition of

those assets, although the decrease cannot yet be identified with the individual

financial assets in the group, including (i) adverse changes in the payment status of

borrowers in the group (e.g. an increased number of delayed payments or an

increased number of credit card borrowers who have reached their credit limit and

are paying the minimum monthly amount); or (ii) national or local economic

conditions that correlate with defaults on the assets in the group (e.g. an increase

in the unemployment rate in the geographical area of the borrowers, a decrease in

property prices for mortgages in the relevant area, a decrease in oil prices for loan

assets to oil producers, or adverse changes in industry conditions that affect the

borrowers in the group).

Other factors may also be evidence of impairment, including significant changes with

an adverse effect that have taken place in the technological, market, economic or legal

environment in which the issuer operates.

For certain categories of financial asset, such as trade receivables, assets that are

assessed not to be impaired individually are, in addition, assessed for impairment on a

collective basis. Objective evidence of impairment for a portfolio of receivables could

include the Company’s past experience of collecting payments, an increase in the

number of delayed payments in the portfolio past the average credit period of 30 days,

as well as observable changes in national or local economic conditions that correlate

with default on receivables.

For financial assets carried at amortized cost, the amount of the impairment is the

difference between the asset’s carrying amount and the present value of estimated

future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly

for all financial assets with the exception of trade receivables, where the carrying

amount is reduced through the use of an allowance account. When a trade receivable

is considered uncollectible, it is written off against the allowance account. Subsequent

recoveries of amounts previously written off are credited against the allowance

account. Changes in the carrying amount of the allowance account are recognized in

profit or loss.

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, the previously recognized impairment loss is reversed through profit or loss

to the extent that the carrying amount of the investment at the date the impairment is

reversed does not exceed what the amortized cost would have been had the

impairment not been recognized.

For financial assets carried at cost, the amount of the impairment loss is measured as

the difference between the carrying amount of the financial asset and the present

value of estimated future cash flows discounted at the current market rate of return for

a similar financial asset. Such impairment losses shall not be reversed.

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4.01.05 Derecognition of Financial Assets

The Company derecognizes a financial asset only when the contractual rights to the

cash flows from the asset expire or are settled, or when it transfers the financial asset

and substantially all the risks and rewards of ownership of the asset to another entity.

If the Company, despite having retained some significant risks and rewards of

ownership, has transferred control of the asset to another party and the other party

has the practical ability to sell the asset in its entirety to an unrelated third party and is

able to exercise that ability unilaterally and without needing to impose additional

restrictions on the transfer, the Company derecognizes the asset and any rights and

obligations retained or created in the transfer.

4.02 Inventories

Inventories are stated at the lower of cost and estimated selling price less costs to

complete and sell. Cost is determined using the average costing method. The cost of

inventories comprises cost of purchase, direct labor, other direct costs and appropriate

portion of fixed and variable overhead expenses. At each reporting date, inventories

are assessed for impairment. If inventory is impaired, the carrying amount is reduced to

its selling price less costs to complete and sell; the impairment loss is recognized

immediately in profit or loss.

When the circumstances that previously caused inventories to be impaired no longer

exist or when there is clear evidence of an increase in selling price less costs to

complete and sell because of changed economic circumstances, a reversal of the

impairment is recognized so that the new carrying amount is the lower of the cost and

the revised selling price less costs to complete and sell. Any impairment reversal is

recognized in profit or loss but is limited to the amount of the original impairment loss

recognized.

When inventories are sold, the carrying amount of those inventories is recognized as an

expense in the period in which the related revenue is recognized.

4.03 Prepayments

Prepayments represent expenses not yet incurred but already paid in cash.

Prepayments are initially recorded as assets and measured at the amount of cash paid.

Subsequently, these are charged to profit or loss as they are consumed in operations or

expire through passage of time.

Prepayments are classified in the statements of financial position as current assets

when the expenses related to prepayments are expected to be incurred within one year

or the Company’s normal operating cycle, whichever is longer. Otherwise,

prepayments are classified as other assets.

4.04 Property and Equipment

Property and equipment is stated initially at historical cost including expenditure that is

directly attributable to bringing the asset to the location and condition necessary for it

to be capable of operating in the manner intended by Management and subsequently

measured at cost less any accumulated depreciation and any accumulated impairment

losses.

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The Company adds to the carrying amount of an item of property and equipment the

cost of replacing parts of such an item when that cost is incurred if the replacement

part is expected to provide incremental future benefits to the Company. The carrying

amount of the replaced part is derecognized. All other repairs and maintenance are

charged to profit or loss during the period in which they are incurred.

Depreciation is computed on the straight-line method based on the estimated useful

lives of the assets as follows:

Building 25 years

Furniture, fixtures and equipment 2 to 5 years

The assets’ residual values, useful lives and depreciation method are reviewed, and

adjusted prospectively if appropriate, if there is an indication of a significant change

since the last reporting date.

Properties in the course of construction for production, rental or administrative

purposes, or for purposes not yet determined, are carried at cost, less any recognized

impairment loss. Cost includes professional fees. Depreciation of these assets, on the

same basis as other property assets, commences when the assets are ready for their

intended use.

An item of property and equipment is derecognized on disposal or when no future

economic benefits are expected from its use or disposal. Gain or loss arising on the

disposal or retirement of an asset is determined as the difference between the sales

proceeds and the carrying amount of the asset and is recognized in profit or loss.

4.05 Impairment of Assets

At each reporting date, the Company assesses whether there is any indication that any

of its assets other than inventories, deferred tax assets, financial assets within the

scope of PAS 39, Financial Instruments: Recognition and Measurement may have

suffered an impairment loss. If any such indication exists, the recoverable amount of

the asset is estimated in order to determine the extent of the impairment loss, if any.

Where it is not possible to estimate the recoverable amount of an individual asset, the

Company estimates the recoverable amount of the cash-generating unit to which the

asset belongs. When a reasonable and consistent basis of allocation can be identified,

assets are also allocated to individual cash-generating units, or otherwise they are

allocated to the smallest group of cash-generating units for which a reasonable and

consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use. In

assessing value in use, the estimated future cash flows are discounted to their present

value using a pre-tax discount rate that reflects current market assessments of the

time value of money and the risks specific to the asset for which the estimates of

future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less

than its carrying amount, the carrying amount of the asset or cash-generating unit is

reduced to its recoverable amount. An impairment loss is recognized as an expense.

When an impairment loss subsequently reverses, the carrying amount of the asset or

cash-generating unit is increased to the revised estimate of its recoverable amount, but

the increased carrying amount does not exceed the carrying amount that would have

been determined had no impairment loss been recognized for the asset or

cash-generating unit in prior years. A reversal of an impairment loss is recognized as

an income.

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4.06 Borrowing Costs

Borrowing costs are recognized in profit or loss in the period in which they are

incurred.

4.07 Financial Liabilities and Equity Instruments

4.07.01 Classification as Debt or Equity

Debt and equity instruments are classified as either financial liabilities or as equity in

accordance with the substance of the contractual arrangements.

4.07.02 Financial Liabilities

Financial liabilities are initially measured at fair value inclusive of directly attributable

transaction costs. They are classified as either financial liabilities ‘at FVTPL’, or ‘at

amortized cost’.

The Company’s financial liabilities as presented in the statement of financial position

comprise of trade and other payables and deposits for future stock subscription.

4.07.03 Financial Liabilities at Amortized Cost

Financial liabilities are subsequently measured at amortized cost using the effective

interest method, with finance cost recognized on an effective yield basis.

The effective interest method is a method of calculating the amortized cost of a

financial liability and of allocating finance cost over the relevant period. The effective

interest rate is the rate that exactly discounts estimated future cash payments through

the expected life of the financial liability, or, where appropriate, a shorter period to the

net carrying amount on initial recognition.

4.07.04 Derecognition of Financial Liabilities

The Company derecognizes financial liabilities when, and only when, the Company’s

obligations are discharged, cancelled or expired.

Any difference between the carrying amount of the financial liability (or part of a

financial liability) extinguished or transferred to another party and the consideration

paid, including any non-cash assets transferred or liabilities assumed is recognized in

profit or loss.

4.07.05 Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of

an entity after deducting all of its liabilities. Equity instruments issued by the Company

are recognized at the proceeds received, net of direct issue costs.

Ordinary shares are classified as equity. Incremental costs directly attributable to the

issuance of new shares are shown in equity as a deduction from the proceeds, net of

tax.

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4.07.06 Deposits for Future Stock Subscription

The Company classifies a contract to deliver its own equity instruments under equity

as a separate account, such as deposits for future stock subscription, if and only if, all

the following requirements are met:

• The unissued authorized capital stock of the entity is insufficient to cover the

amount of shares indicated in the contract;

• There is Board of Directors’ approval on the proposed increase in authorized

capital stock;

• There is stockholders’ approval of said proposed increase; and

• The application for the approval of the proposed increase has been filed with the

SEC.

Otherwise, such contract is classified as a financial liability.

4.8 Offsetting of Financial Instruments

Financial assets and liabilities are offset and the net amount is reported in the

statements of financial position if, and only if, there is a currently enforceable legal

right to offset the recognized amounts and there is an intention to settle on a net

basis, or to realize the assets and settle the liabilities simultaneously.

4.9 Employee Benefits

The Company recognizes a liability, net of amounts already paid and an expense for

services rendered by employees during the accounting period. Short-term benefits

given by the Company to its employees include salaries and wages, social security

contributions, short-term compensated absences, profit sharing and bonuses and other

non-monetary benefits.

4.10 Provisions

Provisions are recognized when the Company has a present obligation, whether legal or

constructive, as a result of a past event, it is probable that the Company will be

required to settle the obligation, and a reliable estimate can be made of the amount of

the obligation.

The amount recognized as a provision is the best estimate of the consideration required

to settle the present obligation at the end of the reporting period, taking into account

the risks and uncertainties surrounding the obligation. Where a provision is measured

using the cash flows estimated to settle the present obligation, its carrying amount is

the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected

to be recovered from a third party, a receivable is recognized as an asset if it is

virtually certain that reimbursement will be received and the amount of the receivable

can be measured reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best

estimate.

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4.11 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will

flow to the Company and the revenue can be measured reliably. Revenue is measured

at the fair value of the consideration received or receivable and represents amounts

receivable for goods and services provided in the normal course of business.

4.11.01 Sale of Goods

Revenue from the sale of goods is recognized when all the following conditions are

satisfied:

the Company has transferred to the buyer the significant risks and rewards of

ownership of the goods;

the Company retains neither continuing managerial involvement to the degree

usually associated with ownership nor effective control over the goods sold;

the amount of revenue can be measured reliably;

it is probable that the economic benefits associated with the transaction will flow

to the Company; and

the costs incurred or to be incurred in respect of the transaction can be measured

reliably.

Revenue from sale of goods consists of sales of foods and beverages.

4.11.02 Rendering of Services

Revenue from a contract to provide services is recognized by reference to the stage of

completion of the contract. Revenue from rendering of services is recognized when all

the following conditions are satisfied:

the amount of revenue can be measured reliably;

it is probable that the economic benefits associated with the transaction will flow

to the Company;

the stage of completion of the transaction can be measured reliably; and

the costs incurred for the transaction and the costs to complete the transaction

can be measured reliably.

Revenue from rendering of services consists of rentals of rooms and winnings from

gaming business enterprise, slots lounges with table games, video arcade, internet

gaming and other related activities.

4.11.03 Finance Income

Finance income is recognized when it is probable that the economic benefits will flow

to the Company and the amount of revenue can be measured reliably. Finance income

is accrued on a time proportion basis, by reference to the principal outstanding and at

the effective interest rate applicable, which is the rate that exactly discounts estimated

future cash receipts through the expected life of the financial asset to that asset’s net

carrying amount on initial recognition.

4.11.04 Rental Income

The Company’s policy for recognition of revenue from operating leases is described in

Note 4.14.

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4.12 Expense Recognition

Expense encompasses losses as well as those expenses that arise in the course of the

ordinary activities of the Company.

The Company recognizes expenses in the statements of comprehensive income when

a 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.

4.13 Leases

Leases are classified as finance leases whenever the terms of the lease transfer

substantially all the risks and rewards of ownership to the lessee. All other leases are

classified as operating leases.

4.13.01 The Company as a Lessor

Rental income from operating leases is recognized on a straight-line basis over the term

of the relevant lease. Initial direct costs incurred in negotiating and arranging an

operating lease are added to the carrying amount of the leased asset and recognized on

a straight-line basis over the lease term.

4.13.02 The Company as Lessee

Operating lease payments are recognized as an expense on a straight-line basis over

the lease term, except where another systematic basis is more representative of the

time pattern in which economic benefits from the leased asset are consumed.

Contingent rentals arising under operating leases are recognized as an expense in the

period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such

incentives are recognized as a liability. The aggregate benefit of incentives is

recognized as a reduction of rental expense on a straight-line basis, except where

another systematic basis is more representative of the time pattern in which economic

benefits from the leased asset are consumed.

4.14 Related Parties and Related Party Transactions

A related party is a person or entity that is related to the Company that is preparing its

financial statements. A person or a close member of that person’s family is related to

Company if that person has control or joint control over the Company, has significant

influence over the Company, or is a member of the key management personnel of the

Company or of a parent of the Company.

An entity is related to the Company if any of the following conditions applies:

The entity and the Company are members of the same group (which means

that each parent, subsidiary and fellow subsidiary is related to the others); or

One entity is an associate or joint venture of the other entity (or an associate or

joint venture of a member of a group of which the other entity is a member); or

Both entities are joint ventures of the same third party; or

One entity is a joint venture of a third entity and the other entity is an associate

of the third entity; or

The entity is a post-employment benefit plan for the benefit of employees of

either the Company or an entity related to the Company. If the Company is

itself such a plan, the sponsoring employers are also related to the Company; or

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The entity is controlled or jointly controlled by a person identified above; or

A person identified above has significant influence over the entity or is a

member of the key management personnel of the entity (or of a parent of the

entity).

Close members of the family of a person are those family members, who may be

expected to influence, or be influenced by, that person in their dealings with the

Company and include that person’s children and spouse or domestic partner;

children of that person’s spouse or domestic partner; and dependents of that person or

that person’s spouse or domestic partner.

A related party transaction is a transfer of resources, services or obligations between

related parties, regardless of whether a price is charged.

4.15 Taxation

Income tax expense represents the sum of the tax current and deferred taxes.

4.15.01 Current Tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs

from profit as reported in the statements of comprehensive income because of items of

income or expense that are taxable or deductible in other years and items that are

never taxable or deductible. The Company’s liability for current tax is calculated using

tax rates that have been enacted or substantively enacted by the end of the reporting

period.

4.15.02 Deferred Tax

Deferred tax is recognized on temporary differences between the carrying amounts of

assets and liabilities in the financial statements and the corresponding tax bases used

in the computation of taxable profit. Deferred tax liabilities are generally recognized for

all taxable temporary differences. Deferred tax assets are generally recognized for all

deductible temporary differences, carry forward of unused tax credits from excess

Minimum Corporate Income Tax (MCIT) over Regular Corporate Income Tax (RCIT) and

unused Net Operating Loss Carryover (NOLCO), to the extent that it is probable that

taxable profits will be available against which those deductible temporary differences

and carry forward of unused MCIT and unused NOLCO can be utilized. Deferred

income tax, however, is not recognized when it arises from the initial recognition of an

asset or liability in a transaction that is not a business combination and, at the time of

the transaction that affects neither the accounting profit nor taxable profit or loss.

Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax

assets arising from deductible temporary differences are only recognized to the extent

that it is probable that there will be sufficient taxable profits against which to utilize

the benefits of the temporary differences and they are expected to reverse in the

foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting

period and reduced to the extent that it is no longer probable that sufficient taxable

profits will be available to allow all or part of the asset to be recovered.

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Deferred tax assets and liabilities are measured at the tax rates that are expected to

apply in the period in which the liability is settled or the asset realized, based on tax

rates and tax laws that have been enacted or substantively enacted by the end of the

reporting period. The measurement of deferred tax liabilities and assets reflects the tax

consequences that would follow from the manner in which the Company expects, at

the end of the reporting period, to recover or settle the carrying amount of its assets

and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to

set off current tax assets against current tax liabilities and when they relate to income

taxes levied by the same taxation authority and the Company intends to settle its

current tax assets and liabilities on a net basis.

4.15.03 Current and Deferred Tax for the Period

Current and deferred tax are recognized as an expense or income in profit or loss,

except when they relate to items that are recognized outside profit or loss, whether in

other comprehensive income or directly in equity, in which case the tax is also

recognized outside profit or loss.

4.16 Events after the Reporting Period

The Company identifies subsequent events as events that occurred after the reporting

period but before the date when the financial statements were authorized for issue.

Any subsequent events that provide additional information about the Company’s

position at the reporting period, adjusting events, are reflected in the financial

statements, while subsequent events that do not require adjustments, non-adjusting

events, are disclosed in the notes to financial statements when material.

5. KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, which are described in

Note 4, Management is required to make judgments, estimates and assumptions about

the carrying amounts of assets and liabilities that are not readily apparent from other

sources. The estimates and associated assumptions are based on historical experience

and other factors that are considered to be relevant. Actual results may differ from

these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to accounting estimates are recognized in the period in which the estimate is

revised if the revision affects only that period or in the period of the revision and future

periods if the revision affects both current and future periods.

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5.01 Key Sources of Estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources of

estimation uncertainty at the end of the reporting period that have a significant risk of

causing a material adjustment to the carrying amounts of assets and liabilities within

the next financial year.

5.01.01 Estimating Inventories at Net Realizable Values

Net realizable values of inventories are assessed regularly based on the prevailing

selling prices of inventories less estimated costs to sell. The Company recognizes

expense and provides allowance for decline in value of inventories whenever net

realizable value of inventories becomes lower than cost due to damage, physical

deterioration, obsolescence, changes on price levels or other causes. Inventory items

identified to be obsolete and unusable is written off and charged against allowance

account. Increase in the net realizable values will increase the carrying amount

through reduction of allowance for decline but only to the extent of original acquisition

cost.

Management believes that as of reporting dates, the net realizable value of inventories

exceeds its carrying amount. Thus, no impairment loss is recognized in the financial

statements for the period ended June 30, 2015 and for the years ended December 31,

2014, 2013 and 2012. As of June 30, 2015 and December 31, 2014, 2013 and

2012, the carrying values of inventories amounted to P4,161,144, P2,942,402,

P2,288,416 and P2,460,352, respectively, as disclosed in Note 8.

5.01.02 Reviewing Residual Values, Useful Lives and Depreciation Method of Property

and Equipment

The residual values, useful lives and depreciation method of the Company’s property

and equipment are reviewed at least annually, and adjusted prospectively if

appropriate, if there is an indication of a significant change in, how an asset is used;

significant unexpected wear and tear; technological advancement; and changes in

market prices since the most recent annual reporting date. The useful lives of the

Company’s assets are estimated based on the period over which the assets are

expected to be available for use. In determining the useful life of an asset,

the Company considers the expected usage, expected physical wear and tear,

technical or commercial obsolescence arising from changes or improvements in

production, or from a change in the market demand for the product or service output

and legal or other limits on the use of the Company’s assets. In addition, the

estimation of the useful lives is based on Company’s collective assessment of industry

practice, internal technical evaluation and experience with similar assets. It is possible,

however, that future results of operations could be materially affected by changes in

estimates brought about by changes in factors mentioned above. The amounts and

timing of recorded expenses for any period would be affected by changes in these

factors and circumstances. A reduction in the estimated useful lives of property and

equipment would increase the recognized operating expenses and decrease non-current

assets. The Company uses a depreciation method that reflects the pattern in which it

expects to consume the asset’s future economic benefits. If there is an indication that

there has been a significant change in the pattern used by which an Company expects

to consume an asset’s future economic benefits, the entity shall review its present

depreciation method and, if current expectations differ, change the depreciation

method to reflect the new pattern.

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Management assessed that there were no significant changes from the previous

estimates since the most recent annual reporting period. As of June 30, 2015 and

December 31, 2014, 2013 and 2012, the carrying values of the Company’s property

and equipment amounted to P467,085,412, P478,504,583, P506,298,215 and

P540,376,516, respectively, as disclosed in Note 10.

5.01.03 Asset Impairment

The Company performs an impairment review when certain impairment indicators are

present. Determining the fair value of property and equipment, which require the

determination of future cash flows expected to be generated from the continued use

and ultimate disposition of such assets, requires the Company to make estimates and

assumptions that can materially affect the financial statements. Future events could

cause the Company to conclude that property and equipment associated with an

acquired business is impaired. Any resulting impairment loss could have a material

adverse impact on the financial condition and results of operations.

The preparation of the estimated future cash flows involves significant judgment and

estimations. While the Company believes that its assumptions are appropriate and

reasonable, significant changes in the assumptions may materially affect the

assessment of recoverable values and may lead to future additional impairment charges

under PFRS.

Management assessed that no indicators of impairment had existed on its property and

equipment. As of June 30, 2015 and December 31, 2014, 2013 and 2012, the

carrying values as of reporting periods of the Company’s property and equipment

amounted to P467,085,412, P478,504,583, P506,298,215 and P540,376,516,

respectively, as disclosed in Note 10.

5.01.04 Estimating Allowances for Doubtful Accounts

The Company estimates the allowance for doubtful accounts related to its trade and

other receivables based on assessment of specific accounts where the Company has

information that certain customers are unable to meet their financial obligations.

In these cases judgment used was based on the best available facts and circumstances

including but not limited to, the length of relationship with the customer and the

customer’s current credit status based on third party credit reports and known market

factors. The Company used judgment to record specific allowances for customers

against amounts due to reduce the expected collectible amounts. These specific

allowances are re-evaluated and adjusted as additional information received impacts

the amounts estimated.

The amounts and timing of recorded expenses for any period would differ if different

judgments were made or different estimates were utilized. An increase in the

allowance for doubtful accounts would increase the recognized operating expenses and

decrease current assets.

As of June 30, 2015 and December 31, 2014, 2013 and 2012, Management believes

that the collectability of trade and other receivables is certain, thus, no provisions for

doubtful accounts were recognized. The carrying amounts of the Company’s trade and

other receivables amounted to P312,862,983, P265,938,987, P210,509,408 and

P230,229,286 as of June 30, 2015 and December 31, 2014, 2013 and 2012,

respectively, as disclosed in Note 7.

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6. CASH

For the purpose of the statement of cash flows, cash includes cash on hand and in

banks.

Cash at the end of the reporting period as shown in the statement of cash flows can

be reconciled to the related item in the statement of financial position as follows:

2015 2014 2013 2012

Cash on hand P 1,706,571 P 12,096,164 P 333,000 P 610,000

Cash in banks 3,584,768 22,993,923 4,636,357 7,449,247

P 5,291,339 P 35,090,087 P 4,969,357 P 8,059,247

7. TRADE AND OTHER RECEIVABLES

The Company’s trade and other receivables for the periods ended June 30, 2015 and

December 31, 2014, 2013 and 2012 amounted to P312,862,983, P265,938,987,

P210,509,408 and P230,229,286, respectively.

Trade and other receivables disclosed above are past due at the end of the reporting

period but against which the Company has not recognized an allowance for doubtful

receivables because there has not been a significant change in credit quality and the

amounts are still considered recoverable. The Company does not hold any collateral

or other credit enhancements over these balances nor does it have a legal right of

offset against any amounts owed by the Company to the counterparty.

8. INVENTORIES

Details of the Company’s inventories are as follows:

2015 2014 2013 2012

Food P 1,777,065 P 1,262,830 P 867,989 P 310,851

Beverage 1,370,551 331,665 367,788 571,481

General supplies 473,763 1,107,917 877,149 1,374,919

Engineering

supplies 539,765 239,990 175,490 203,101

P 4,161,144 P 2,942,402 P 2,288,416 P 2,460,352

The cost of inventories recognized as an expense as of June 30, 2015 and


and P105,663,924, and P52,835,250 respectively, as disclosed in Note 15.

9. PREPAYMENTS

The Company’s prepayments for the periods ended June 30, 2015 and December 31,

2014, 2013 and 2012 amounted to P9,226,205, P9,226,205, P8,772,275 and

P9,037,888, respectively.

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10. PROPERTY AND EQUIPMENT – net

The carrying amounts of the Company’s property and equipment as of June 30, 2015

and December 31, 2014, 2013 and 2012 are as follows:

Building

Furniture, fixture

and equipment Total

January 1, 2012

Cost P 706,395,900 P 143,599,942 P 849,995,842

Accumulated depreciation (141,171,725) (121,069,674) (262,241,399)

Carrying amount P 565,224,175 P 22,530,268 P 587,754,443

Movements from 2011 to 2012

Opening carrying amount P 565,224,175 P 22,530,268 P 587,754,443

Depreciation (28,428,247) (18,949,680) (47,377,927)

Balance, December 31, 2012 P 536,795,928 P 3,580,588 P 540,376,516

January 1, 2013

Cost P 706,395,900 P 143,599,942 P 849,995,842





Additions - 3,902,451 3,902,451

Depreciation (31,668,330) (6,312,422) (37,980,752)


January 1, 2014

Cost P 706,395,900 P 147,502,393 P 853,898,293





Additions - 3,339,628 3,339,628

Depreciation (28,502,100) (2,631,160) (31,133,260)


January 1, 2015

Cost P 706,395,900 P 150,842,021 P 857,237,921





Additions - 4,147,459 4,147,459

Depreciation (14,251,050) (1,315,580) (15,566,630)

Balance, June 30, 2015 P 476,625,498 P 4,710,964 P 467,085,412

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Depreciation is distributed as follows:

2015 2014 2013 2012

Direct Cost

(Note 15) P 15,566,630 P 31,133,260 P 34,533,629 P 43,372,364

Operating expense

(Note 16) - - 3,447,123 4,005,563

P 15,566,630 P 31,133,260 P 37,980,752 P 47,377,927

Management carried out a review of the recoverable amounts of its property and

equipment in all reporting periods. As a result of the review, Management assessed

that there were no indications of impairment existing in property and equipment in both

years.

11. TRADE AND OTHER PAYABLES

The Company’s trade and other payables for the periods ended June 30, 2015 and


P387,841,100 and P460,137,634, respectively.

The average credit period on purchases of certain goods from suppliers is thirty (30)

days. No interest is charged on trade payables.

12. DEPOSITS FOR FUTURE STOCK SUBSCRIPTION

Deposits for future stock subscription amounting to P150,000,000 were received from

certain existing stockholders. The Company intends to convert these deposits into

capital stock. The deposits for future stock subscription were presented initially as

liabilities since the requirements for classification and presentation of equity were not

yet satisfied and completed. As of June 30, 2015, the application is yet to be filed to

SEC.

13. CAPITAL STOCK

The capital stock of the Company is as follows:

2015 2014

Shares Amount Shares Amount

Authorized

Ordinary shares

P1,000 par value 200,000 P 200,000,000 200,000 P 200,000,000

Issued and fully paid

Balance, June 30 200,000 P 200,000,000 200,000 P 200,000,000

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2013 2012

Shares Amount Shares Amount

Authorized

Ordinary shares

P1,000 par value 200,000 P 200,000,000 200,000 P 200,000,000

Issued and fully paid

Balance, June 30 200,000 P 200,000,000 200,000 P 200,000,000

Ordinary shares carry one (1) vote per share and a right to dividends.

14. REVENUES

Compositions of the Company’s revenues are as follows:

2015 2014 2013 2012

Casino P 269,118,477 P 524,859,508 P 377,989,233 P 261,808,181

Hotel 33,816,987 60,996,852 45,447,616 58,463,547

Food and

beverages 24,977,399 39,734,499 43,859,373 64,188,278

Others 8,235,311 5,205,756 7,663,082 5,129,086

P 336,148,174 P 630,796,615 P 474,959,304 P 389,589,092

15. DIRECT COSTS

The following is an analysis of the Company‘s direct costs:

2015 2014 2013 2012

Casino P 188,849,159 P 356,889,841 P 223,267,085 P 198,369,851

Hotel 42,378,207 99,795,393 105,663,924 52,835,250

Labor cost 32,830,818 82,193,684 59,419,435 59,274,217

Depreciation 15,566,630 31,133,260 34,533,629 43,372,364

Rental 3,444,938 6,819,438 7,113,784 3,264,434

P 283,069,752 P 576,831,616 P 429,997,857 P 357,116,116

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16. OPERATING EXPENSES

The account is composed of the following expenses:

2015 2014 2013 2012

Salaries, wages,

and other benefits P 4,176,025 P 7,365,306 P 9,793,662 P 12,243,996

Penalties 3,289,530 - - -

Representation 3,161,624 988,728 846,521 540,139

Repairs and

maintenance 2,624,598 3,293,166 2,139,046 808,709

Other services 1,875,286 461,000 1,653,425 6,062,540

Transportation 1,820,375 7,312,632 2,351,744 1,262,193

Supplies 748,233 237,404 460,111 6,456,979

Charitable

contributions 117,047 32,512 92,480 -

Taxes and Licenses 101,940 181,100 89,066 178,118

Communication

light and water - - 3,087,445 3,079,390

Insurance - 120,000 115,167 75,406

Depreciation - - 3,447,123 4,005,563

Miscellaneous 989,706 2,607,675 4,944,577 837,644

P 18,904,364 P 22,599,523 P 29,020,367 P 35,550,677

Miscellaneous include commission, dues and subscription, photocopies and notarial,

registration, advertising, and others.

17. EMPLOYEE BENEFITS

Short-term Benefits

The Company’s short term benefits which pertain to salaries, wages and other

employee benefits, for the periods ended June 30, 2015, and December 31, 2014,

2013 and 2012 amounted to P37,006,843, P89,558,990, P69,213,097 and

P71,518,213, respectively, as disclosed in Notes 15 and 16.

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18. OPERATING LEASE AGREEMENTS

The Company as a Lessee

On October 29, 2004 the Company entered into Lease Agreement involving a parcel

of land with an area of 28,235.54 sq. meters with improvements identified as

Structure Nos. 7320, 7321, 7322, 7323, 7327, 7325 and 7326, for establishment

and operation of hotel and restaurant having the lease term of twenty five (25) years

starting October 29, 2004. The term of the lease shall be automatically renewed for

another twenty five (25) years subject to escalations and the total of 1,926 sq. meters

for future expansion.

Rental expense recognized in the statement of comprehensive income as disclosed in

Notes 15 and 16 is allocated as follows:

2015 2014 2013 2012

Direct costs P 3,444,938 P 6,819,438 P 7,113,784 P 2,970,635

Operating expenses - - - 293,799

P 3,444,938 P 6,819,438 P 7,113,784 P 102,610,805

19. INCOME TAXES

Income Tax Recognized in Profit or Loss

Components of income tax expense for the six (6) months period ended June 30,

2015 and for the years ended December 31, 2014, 2013 and 2012 amounting to

P2,692,921, P2,662,807, P2,248,072, P1,638,339, respectively.

A numerical reconciliation between tax expense and the product of accounting profit

(loss) multiplied by the tax rate in 2015, 2014, 2013 and 2012 is as follows:

19.01 Special Tax Rate

2015 2014 2013 2012

Accounting profit (loss) P 34,954,058 P 31,365,476 P 15,941,080 P (3,077,701)

Tax expense (benefit)

at 5% 1,747,703 1,568.274 797,054 (153,885)

Tax effects of:

Non-deductible

operating expenses 945,218 1,129,976 1,451,018 1,792,224

P 2,692,921 P 2,698,250 P 2,248,072 P 1,638,339

19.02 Regular Corporate Income Tax

2015 2014 2013 2012

Accounting profit P - P - P - P -

Tax expense at 30% P - P - P - P -

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20. FAIR VALUE MEASUREMENTS

Fair Value of Financial Assets and Liabilities

The carrying amounts and estimated fair values of the Company’s financial assets and financial liabilities as of June 30, 2015 and

December 31, 2014, 2013 and 2012 are presented below:

2015 2014 2013 2012

Carrying

Amount Fair Value Carrying Amount Fair Value

Carrying

Amount Fair Value

Carrying

Amount Fair Value

Financial Assets:

Trade and other receivables P 312,862,983 P 312,862,983 P 265,938,987 p 265,938,987 p 210,509,408 p 210,509,408 p 230,229,285 P 230,229,285

Financial Liabilities:

Trade and other payables P 241,841,171 P 241,841,171 P 267,046,523 p 267,046,523 p 387,841,100 p 387,841,100 p 460,137,634 P 460,137,634

Deposits for future stock

subscription 150,000,000 150,000,000 150,000,000 150,000,000 - -

- -

P 391,841,171 P 391,841,171 P 417,046,523 p 417,046,523 p 387,841,100 p 387,841,100

p 460,137,634 P 460,137,634

Due to recoverable nature of the Company’s financial assets and liabilities, the carrying amounts of trade and other receivables, trade

and other payables and deposits for future stock subscription approximate their fair values.

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21. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Company’s principal financial instruments comprise mainly of cash, trade and

other receivables, trade and other payables and deposits for future stock subscription.

The main purpose of these financial instruments is to provide financing for the

Company’s operations and capital intensive projects. The Company does not enter into

or trade financial instruments, including derivative financial instruments, for speculative

purposes.

The Board of Directors of the Company regularly analyze financial risk exposures and

evaluate treasury management strategies in the context of the most recent economic

conditions and forecasts. These risks include market risk, including credit risk and

liquidity risk.

The Company seeks to minimize the effects of these risks. Compliance with policies

and exposure limits is reviewed by the Board of Directors (BOD) on a continuous basis.

The BOD is mainly responsible for the overall risk management and approval of the risk

strategies and principles of the Company.

21.01 Credit Risk Management

Credit risk refers to the risk that the counterparty will default on its contractual

obligations resulting in financial loss to the Company. The Company has adopted a

policy of only dealing with creditworthy counterparties. The Company’s exposure and

the credit ratings of its counterparties are continuously monitored and the aggregate

value of transactions concluded is spread amongst approved counterparties. Credit

exposure is controlled by counterparty limits that are reviewed and approved by the

risk management committee annually.

The carrying amount of financial assets recognized in the financial statements

represents the Company’s maximum exposure to credit risk, without taking into

account collateral or other credit enhancements held.

2015 2014 2013 2012

Cash P 5,291,339 P 35,090,087 P 4,969,357 P 8,059,247

Trade and other receivables 312,862,983 265,938,987 210,509,408 230,229,285

P 318,154,322 P 301,029,074 P 215,478,765 P 238,288,532

The Company does not hold any collateral or other credit enhancements to cover this

credit risk.

The financial asset of the Company which is neither past due nor impaired as of

reporting periods and considered as high grade credit quality is only cash amounting to

P5,291,339, P35,090,087, P4,969,357 and P8,059,247 as of June 30, 2015,

December 31, 2014, 2013 and 2012, respectively.

The credit quality of the financial assets is determined as follows:

High-grade credit quality monetary assets pertain to financial assets with

insignificant risk of default based on historical experience.

Medium – These are receivables from counterparties with up to three defaults in

payment.

Low – These are receivables from counterparties with more than three defaults in

payment.

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21.02 Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the Board of Directors,

who has established an appropriate liquidity risk management framework for the

management of the Company’s short-, medium- and long-term funding and liquidity

management requirements. The Company manages liquidity risk by maintaining

adequate reserves by continuously monitoring forecast and actual cash flows, and by

matching the maturity profiles of financial assets and liabilities.

The following tables detail the Company’s remaining contractual maturity for its non-

derivative financial liabilities with agreed repayment periods. The tables have been

drawn up based on the undiscounted cash flows of financial liabilities based on the

earliest date on which the Company can be required to pay. The tables include both

interest and principal cash flows. To the extent that interest flows are floating rate, the

undiscounted amount is derived from interest rate curves at the end of the reporting

period. The contractual maturity is based on the earliest date on which the Company

may be required to pay.

Weighted

Average

Effective

Interest Rate

Within 1 Year/On

Demand 1 – 5 Years Total

June 30, 2015

Trade and other payables P 241,841,171 P - P 241,841,171

Deposit for future stock

subscription - 150,000,000 - 150,000,000

- P 391,841,171 P - P 391,841,171

December 31, 2014

Trade and other payables P 267,046,523 P - P 267,046,523

Deposit for future stock

subscription - 150,000,000 - 150,000,000

- P 417,046,523 P - P 417,046,523

December 31, 2013 P P P

Trade and other payables 387,841,100 - 387,841,100

- P 387,841,100 P - P 387,841,100

December 31, 2012

Trade and other payables - 460,137,634 - 460,137,634

- P 460,137,634 P - P 460,137,634

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The following table details the Company’s expected maturity for its non-derivative

financial assets. The table has been drawn up based on the undiscounted contractual

maturities of the financial assets including interest that will be earned on those assets.

The inclusion of information on non-derivative financial assets is necessary in order to

understand the Company’s liquidity risk management as the liquidity is managed on a

net asset and liability basis.

Weighted

Average

Effective

Interest

Rate

Within 1

Year/On

Demand 1 – 5 Years Total

June 30, 2015

Cash - P 5,291,339 P - P 5,291,339

Trade and other receivables - 312,862,983 - 312,862,983

P 318,154,322 P - P 318,154,322

December 31, 2014

Cash - P 35,090,087 P - P 35,090,087


P 301,029,074 P - P 301,029,074

December 31, 2013

Cash - P 4,969,357 P - P 4,969,357


P 210,509,408 P - P 210,509,408

December 31, 2012

Cash - P 8,059,247 P - P 8,059,247


P 230,229,285 P - P 230,229,285

22. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Company manages its capital to ensure that the Company will be able to continue

as going concern while maximizing the return to stakeholders through the optimization

of the debt and equity balance. The Company’s overall strategy remains unchanged

from 2014.

The capital structure of the Company consists of its equity (comprising capital stock,

and retained earnings).

The primary objective of the Company’s capital management is to optimize the use and

potentials of the Company’s resources, ensuring that the Company complies with

externally imposed capital requirements if any, and considering in the economic

conditions and risk characteristic of Company’s activities.

The following summarizes the capital considered by the Company:

2015 2014 2013 2012

Capital stock P 200,000,000 P 200,000,000 P 200,000,000 P 200,000,000

Retained

earnings

203,904,277 172,178,295

143,511,069

129,818,061

P 403,906,292 P 372,180,309 P 343,513,082 P 329,820,073

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