ABA - Annual Report 2017

ABACORE CAPITAL HOLDINGS, INC.
and SUBSIDIARIES
(Formerly, ABACUS CONSOLIDATED RESOURCES AND HOLDINGS, INC. and
SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017
(With Comparative Figures for 2016)
NOTE 1 – CORPORATE INFORMATION
ABACORE CAPITAL HOLDINGS, INC. Formerly, Abacus Consolidated Resources and

Holdings, Inc. (the Parent Company), is a publicly listed corporation registered with the Philippine
Securities and Exchange Commission (SEC) on May 5, 1981. Its primary purpose is to purchase,
subscribe for, or otherwise acquire, own, hold, use, sell, assign, transfer, mortgage, pledge,
exchange or dispose of real and/or personal properties of every kind and description, including
shares of stocks, voting trust certificates for shares of capital stocks and other securities, contracts,
or obligations of any corporation or association, domestic or foreign, and to pay therefore, in whole
or in part, in cash or in property or by exchanging stocks or bonds of other corporation. Its secondary
purpose is to engage in the exploration and exploitation of ore and other mineral resources in the
Philippines.
On October 18, 2013, the Securities and Exchange Commission (SEC) approved the Parent
Company’s amendment of Article I of its Articles of Incorporation by changing the corporate name
from Abacus Consolidated Resources and Holdings, Inc. to Abacore Capital Holdings, Inc. and
Article VII by increasing the authorized capital stock from Three Billion Pesos (P3,000,000,000)
to Five Billion Pesos (P5,000,000,000).
Its registered address is No. 28 N. Domingo Street, New Manila, Quezon City.
The Parent Company’s shares are traded in the Philippine Stock Exchange (PSE). It owns majority
stockholdings in five subsidiaries that are in the business of exploration, investment and real estate.
The details of the Parent Company’s ownership in its direct subsidiaries are as follows:
Principal Controlling Interest (%)

Name of Subsidiaries Activities 2017 2016
Philippine Regional Investment Investment
Development Corporation (PRIDE) House 100 100
Kapuluan Properties, Inc. (KPI) Real Estate 100 100
Vantage Realty Corporation (VRC) Real Estate 100 100
Abacus Goldmines Exploration and Gold
Development Corporation (AbaGold) Exploration 99.70 99.70
Abacus Coal Exploration and Coal
Development Corporation (AbaCoal) Exploration 100 100
The consolidated financial statements were approved and authorized for issue by the board of
directors (BOD) on April 17, 2018.
9
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all years presented,
unless otherwise stated.
2.1 Basis of Preparation of Financial Statements
2.1.1 Statement of Compliance
The financial statements of the Group have been prepared in accordance with PFRS. PFRSs are
adopted by the Financial Reporting Standards Council (FRSC), formerly the Accounting Standards
Council, from the pronouncements issued by the International Accounting Standards Board (IASB).
(a) PFRSs – corresponding to International Financial Reporting Standards;

(b) Philippine Accounting Standards (PASs) – corresponding to International Accounting
Standards; and
(c) Interpretations to existing standards – representing interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC), formerly the Standing
Interpretations Committee, of the IASB which are adopted by the FRSC.
The consolidated financial statements of the group have been prepared under the cost convention
as modified by the revaluation of financial assets at fair value through profit and loss and investment
properties.
The preparation of financial statements in conformity with PFRS requires the use of certain critical
accounting estimates. It also requires the management to exercise judgments in the process of
applying the group’s accounting policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the financial statements are
disclosed in Note 3.
2.1.2 Basis of consolidation
The consolidated financial statements comprise the financial statements of the group as of
December 31, 2017 and 2016. The financial statements of the subsidiaries are prepared for the same
reporting year as the group, using consistent accounting policies. The consolidated financial
statements present the financial performance and financial position of the group and its subsidiaries
as if they form a single entity. Inter-company transactions and balances between companies within
the group are eliminated in full in preparing the consolidated financial statements.
The subsidiaries are entities over which the Parent Company exercises significant control or over
which the Parent Company has the power, either directly or indirectly, to govern the financial and
operating policies generally accompanying shareholdings of more than 50% of the voting rights.
The Parent Company obtains and exercises control through voting rights.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the
Parent Company obtained control of its subsidiaries, and continue to be consolidated until the date
that such control ceases.
At acquisition date, the assets and liabilities of the relevant subsidiaries acquired are measured at
their fair values. The interest of minority shareholders is stated at the minority’s proportional share
to the fair values of the assets and liabilities recognized.
10
The results of operations of subsidiaries acquired or disposed of during the year are included in the
consolidated statements of comprehensive income from the effective dates of acquisition or up to
the effective dates of disposal, as appropriate.
The Parent Company’s direct and indirect subsidiaries are as follows:

Effective Percentage
of Controlling Interest
Name of Subsidiaries Principal Activities 2017 2016
Subsidiaries of Abacore Capital Holdings, Inc. (formerly, Abacus

Consolidated Resources and Holdings, Inc.
Philippine Regional Investment
Development Corporation (PRIDE) Investment house 100.00 100.00
Kapuluan Properties, Inc. (KPI) Real estate 100.00 100.00
Vantage Realty Corporation (VRC) Real estate 100.00 100.00
Abacus Goldmines Exploration and
Development Corporation (AbaGold) Gold exploration 99.70 99.70
Abacus Coal Exploration and
Development Corporation (AbaCoal) Coal exploration 100.00 100.00
Subsidiaries of PRIDE:
Tagapo Realty Company, Inc. (TRC) Real Estate 100.00 100.00
Omnicor Industrial Estate (Omnicor) Real Estate 100.00 100.00
Philippine Sinohydro Dev’t Corp Holdings 60.10 60.10
Philippine International
Infrastructure Fund, Inc. (PIIFI) Investment Company 100.00 100.00
Total Mall Philippines, Inc. Wholesaler/ retailer 100.00 100.00
Subsidiaries of TRC:
Ala-eh Knit, Inc. Real Estate 100.00 100.00
Assurance Realty Corporation Real Estate 100.00 100.00
Countrywide Leverage Holdings
Corporation Holdings 100.00 100.00
In-town Wholesale Marketing, Inc. Wholesaler / retailer 100.00 100.00
System Organization, Inc. Real Estate 100.00 100.00
Subsidiaries of Omnicor:
Montemayor Aggregates and Mining Mining and
Corporation (MAMCor) Exploration 100.00 100.00
Adroit Realty Corporation Real estate 100.00 100.00
Allegiance Realty Corporation Real estate 100.00 100.00
Asean Publishers, Inc. Publisher 100.00 100.00
Export Affiliates for Service and
Trade, Inc. Importer / exporter 100.00 100.00
Fair Field Realty Estate Company, Inc. Real estate 100.00 100.00
Logic Realty Corporation Real estate 100.00 100.00
Sanctuary Transcendental Havens, Inc. Non-stock corporation 100.00 100.00
Three Fold Realty Corporation Real estate 100.00 100.00
Aerosonic Land, Inc. Real estate 100.00 100.00
International Pilgrimage Shrine at
Montemaria, Inc. Non-stock corporation 100.00 100.00
Montemaria Asia Pilgrims, Inc. Non-stock corporation 55.00 100.00
Verde Island Passage (VIP) Marine
Sanctuary, Inc. Non-stock corporation 100.00 100.00
11
Subsidiaries of MAMCor:
Asean Traders and Exporters, Inc. Importer / exporter 100.00 100.00
Batangas Stock Development Farms,
Inc. (BSDFI) Real estate 100.00 100.00
Channel Minerals and Exploration and Mining and
Development Corporation Exploration 100.00 100.00
Subsidiaries of BSFHI:
Banalo Mining Corporation Mining 100.00 100.00
Calatagan Aquafarms, Inc. Aqua and fishery 100.00 100.00
Him Management and Associates, Inc. Trading 100.00 100.00
Subsidiaries of KPI:
Aerotropic Land, Inc. Real Estate 99.99 99.99
Barit Resort & International Tour
Corporation Real Estate 99.99 99.99
Batangas Beef Business, Inc. Manufacturing 99.99 99.99
Batangas Cement Park, Inc. Warehousing of
Cement, Aggregates,
Limestones or their
Derivatives 99.99 99.99
Candor Realty Corporation (CRC) Real Estate 99.99 99.99
Epulare Properties, Inc. Real Estate 99.96 99.96
Focus Real Estate Corporation Real Estate 99.99 99.99
Management Parent
GMTM Management Company, Inc. company 99.99 99.99
Hedge Tropical Farmlands, Inc. Real Estate 99.96 99.96
Hewdon Land, Inc. Real Estate 99.96 99.96
Hillside Orchards & Parks, Inc. Agriculture 99.99 99.99
JAP Aggregates Network, Inc. Cement Production 99.99 99.99
Pasture View Real Properties, Inc. Real Estate 99.99 99.99
Quilib Cattle Corporation (QCC) Real Estate 99.99 99.99
Quilib Pasture Estates, Inc. Real Estate 99.96 99.96
Quilib Quality Farms, Inc. (QQFI) Agriculture 99.99 99.99
San Isidro Catholic Memorial Park and
Development Corporation Real Estate 99.99 99.99
Vinterra Realty Corporation Real Estate 99.96 99.96
Subsidiaries of VRC:
Omnilines Maritime Network, Inc. Maritime Commerce 99.99 99.99
Hedge Inter Market Technologist, Inc. Games Technology 99.99 99.99
D r M Development Corp. Trading 99.99 99.99
Management of Real
Friendship Management Corporation Property 99.99 99.99
Haves Insurance Management and
Liability Agency, Inc. (Haves) Insurance Agency 99.99 99.99
All Lemery Assets Enterprises
Holdings, Inc. Real Estate 99.99 99.99
Far Pacific Manufacturing Corp. Manufacturing 99.99 99.99
Munera Real Estate Company, Inc. Real Estate 99.99 99.99
Certain Corporation Construction 99.99 99.99
Manivest Development Corp. Real Estate 99.99 99.99
A brief summary of the direct subsidiaries’ nature of business and operations are as follows:
12
Philippine Regional Investment Development Corporation (PRIDE)
PRIDE is a domestic corporation which was registered with the SEC on September 26, 1979 as
Manila Equities Corporation. It served as a stock brokerage firm for the first four years until the
SEC granted PRIDE on March 2, 1983 a license to operate as an investment house. The license was
confirmed by the then Central Bank of the Philippines, which is now known as Bangko Sentral ng
Pilipinas. On July 26, 1995, it changed its name to Philippine Regional Investment Development
Corporation. Presently, it has no quasi-banking license.
PRIDE is an institution by and through which comprehensive financial products and service lines
shall be offered and provided to clients, either through its own operations or through affiliations,
conformably with the provisions of existing laws. Its registered address is No. 28 N. Domingo
Street, New Manila, Quezon City.
PRIDE was wholly-owned subsidiary of Abacore Capital Holdings, Inc. (ACHI) formerly Abacus
Consolidated Resources and Holdings, Inc., with 99.99% ownership of its outstanding shares.
ACHI, the parent company, is a publicly listed company which operates as a holding company.
In 2009, PRIDE issued additional 1,500,000 shares amounting to P150 million. The parent
company exercised its pre-emptive rights and subscribed to all the additional shares by partial
payment, through offsetting of its advances to PRIDE which amounted to P 64,352,238. The
remaining balance of P 85,647,762 is recorded as subscription payable.
PRIDE also declared its P50 million worth of shares as stock dividends to its shareholders in
October 2009 out of which the parent company received 481,978 additional shares.
In a special meeting held on December 7, 2013, the stockholders approved the amendment of
Article Seventh of the Articles of Incorporation increasing the authorized capital stock from
P500,000,000 divided into 5,000,000 shares with par value at P 100 each, to P 1,000,000,000
divided into 10,000,000 shares with par value at P 100 each.
The increase in the authorized capital stock was approved by the SEC on March 24, 2014.
Of the said increase, the amount of One Hundred Twenty Five Million Pesos (P125M) was
subscribed and paid in cash.
Kapuluan Properties, Inc. (KPI)
KPI is a domestic corporation registered with the SEC on April 8, 1996. Its primary purpose is to
engage in the purchase, subdivision, sale, leasing and holding for capital appreciation real estate
together with their appurtenances.
KPI was acquired by the parent company from BSDHI in December 2009 through a share-for-share
swap. BSDHI assigned the entire outstanding share capital of KPI in favor of the parent company
in exchange for its new shares amounting to P 359,660,803.
Its registered address is 2F SEDDCO I Building, Rada St., Legaspi Village, Makati City.
Vantage Realty Corporation (VRC)
VRC is a domestic corporation registered with the SEC on October 10, 1996. Its primary purpose
is to engage in the purchase, subdivision, sale, leasing and holding for capital appreciation real
estate together with their appurtenances.
VRC was acquired by the parent company from BSDHI in December 2009 through a share-for-
share swap. BSDHI assigned the entire outstanding share capital of VRC in favor of the parent
company in exchange for its new shares amounting to P 294,869,017.
13
Its registered address is 2F SEDDCO I Building, Rada St., Legaspi Village, Makati City.
Abacus Coal Exploration and Development Corporation (AbaCoal)
AbaCoal is a domestic corporation registered with the SEC on November 9, 2007. Its primary
purpose is to engage in the exploration, exploitation, operation, production and development of coal
and its derivative products in the Philippines.
Its registered office address is No. 28 N. Domingo Street, New Manila, Quezon City.
In 2008, the parent company transferred its Coal Operating Contract (COC) with the Department
of Energy to AbaCoal in exchange for shares amounting to P3,047,512.
On April 12, 2011, the Department of Energy approved the conversion of COC No. 148 from
Exploration Phase to Development and Production Phase. As of the audit period, Abacus Coal is
completing the post-approval requirements prior to actual operation, namely, the Environmental
Compliance Certificate (ECC) and the Clearance from the National Commission on Indigenous
Peoples (NCIP). It is expected to start operation in the middle or latter part of 2016.
The parent company also entered into a Heads of Agreement with Lodestar Investment Holdings
Corporation (Lodestar) and Music Semiconductors Corporation (Music) to transfer its outstanding
shares in AbaCoal including its interest in a coal property located in Tandag, Surigao del Sur.
This Agreement was amended in 2009 whereby Music assigned its right to acquire 55%
participation and equity interest in AbaCoal to Lodestar. The purchase price is in the form of
exchange of shares whereby 225 million shares of AbaCoal at par value of P1.00 per share are
swapped with 25 million shares of Lodestar valued at P9 per share or a total value of P225 million.
As a consequence of this exchange of shares, Lodestar shall gain control of 75% of the over-all
outstanding share capital of AbaCoal.
On July 21, 2015, the parties agreed to cancel all agreements relative, pertinent and concerning the
acquisition of Abacus Coal and the Coal Property as well as the merger due to some corporate
constraints. Lodestar, despite (2) two attempts, failed to gather enough quorum and votes from its
shareholders to approve the merger. Without the approval, the merger may thus not be legally
undertaken. Lodestar does not foresee that the required quorum and votes may be achieved with its
current condition and corporate structure.
For and in consideration of the signing of this agreement, the Abacore shall pay Lodestar the
following amounts:
a. Three Million Five Hundred Thousand Pesos (P 3,500,000) upon signing of the agreement.
b. Three Million Five Hundred Thousand Pesos (P 3,500,000) payable within fifteen (15) days
from signing of the agreement.
c. Ten Million Pesos (P 10,000,000) on demand.
On April 20, 2015, the Company entered into a Development and Exploration Agreement with
Oriental Vision Mining Philippines Corporation (ORVI). The agreement covers the development,
extraction and mining of Coal Block 85 and likewise the simultaneous exploration of Blocks 84
and 86, which areas are covered by the Coal Operating Contract (COC) No. 148 issued by the
Department of Energy (DOE). Upon signing of the agreement, ORVI shall give an advance royalty
to the Company amounting to Ten Million Pesos (P 10,000,000) which shall be deductible from
Abacoal‟s future royalties.
14
On February 2015, the company submitted to the Department of Energy the required feasibility
study and a 5-year work program covering the coal Blocks: CBS 138-84 and L38-85 relative to the
application for conversion of COC No. 148 from Exploration Phase to Development and Production
Phase.
Peoples (NCIP).
Abacus Goldmines Exploration and Development Corporation (AbaGold)
AbaGold is a domestic corporation registered with the SEC on April 28, 2008. Its primary purpose
is to engage in the exploration, exploitation, operation, production and development of gold and its
derivative products in the Philippines. Its registered office address is No. 28 N. Domingo Street,
New Manila, Quezon City.
On December 27, 2011, parent company executed a Deed of Assignment of Gold Mining Rights in
exchange for shares of stock in favor of Abacus Goldmines Exploration and Development
Corporation (AbaGold) with supplemental Deed of Assignment executed on February 17, 2012.
The parties agree that AbaGold shall increase its authorize capital stock from Forty Million Pesos
(P 40,000,000) to Five Hundred Million Pesos (P 500,000,000), or an increase of Four Hundred
Sixty Million Pesos (P 460,000,000), and that the Company assigns, transfers and conveys its entire
title and interests in its gold mining rights unto and in favor of the AbaGold, in exchange for which
the AbaGold shall issue Four Hundred Ninety Million (490,000,000) new fully paid and non-
assessable common shares of the AbaGold with a par value of One Peso (P 1.00) per share in favor
of the Company. The increase in authorized capital stock was approved by the SEC on April 4,
2012. Consequently, the ownership of the Parent company increased to 99.70%.
Accounting for business combination
PFRS 3 provides that if the initial accounting for business combination can be determined only
provisionally by the end of the period in which the combination is effected because either the fair
values to be assigned to the acquiree’s identifiable assets, liabilities or contingent liabilities or the
cost of business combination can be determined only provisionally, the acquirer shall account for
the combination using those provisional values. The acquirer shall recognize any adjustments to
those provisional values as a result of completing the initial accounting within twelve months of
the acquisition date as follows:
1. the carrying amount of the identifiable asset, liability or contingent liability that is recognized
or adjusted as a result of completing the initial accounting shall be calculated as if its fair value
at the acquisition date had been recognized from that date;
2. goodwill or any gain recognized shall be adjusted by an amount equal to the adjustment to the
fair value at acquisition date of the identifiable asset, liability or contingent liability being
recognized or adjusted;
3. comparative information presented for the periods before the initial accounting for the
combination is complete shall be presented as if the initial accounting had been completed from
the acquisition date.
15
Minority interest
Minority interests represent the portion of the net assets of subsidiaries attributable to interests that
are not owned by the parent company, whether directly or indirectly through subsidiaries, and in
respect of which the group has not agreed on any additional terms with the holders of those interests
which would result in the group as a whole having a contractual obligation in respect to those
interests, that meet the definition of a financial liability. Minority interests are presented in the
consolidated statements of financial position within equity, separately from equity attributable to
the equity shareholders of the parent company. Minority interests in the results of operation of the
group are presented on the face of the consolidated statements of comprehensive income as an
allocation of the net income for the year between minority interests and the equity shareholders of
the parent company.
Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary,
the excess, and any further losses applicable to the minority, are charged against the group’s interest
except to the extent that the minority has a binding obligation to, and is able to, make additional
investment to cover the losses. If the subsidiary subsequently reports profits, all such profits are
allocated to the group’s interest until the minority’s share of losses previously absorbed by the
group has been recovered in full.
The consolidated financial statements are prepared using uniform accounting policies for like
transactions and other events in similar circumstances.
2.2 Foreign currency translation
a. Functional and Presentation Currency
Items included in the financial statements of the company are measured using the currency of
the primary economic environment in which the company operates (the functional currency).
The financial statements are presented in Philippine peso, which is the company’s functional
and presentation currency. All values are rounded to the nearest peso except when otherwise
indicated.
b. Transactions and balances
Foreign currency transactions are translated into the functional currency at exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from of
such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized in the statement of comprehensive
income.
2.3 New and Amended Standards
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.
16
• PFRS 10, Consolidated Financial Statements – Investment Entities: Applying the
Consolidation Exception
The amendments confirm that the exemption from preparing consolidated financial statements
for an intermediate parent entity is available to a parent entity that is a subsidiary of an
investment entity, even if the investment entity measures all its subsidiaries at fair value.
A subsidiary that provides services related to the parent's investment activities should not be
consolidated if the subsidiary itself is an investment entity.
When applying the equity method to an associate or a joint venture, a non-investment entity
investor in an investment entity may retain the fair value measurement applied by the associate
or joint venture to its interests in subsidiaries.
An investment entity measuring all its subsidiaries at fair value must provide disclosures
relating to investment entities required by PFRS 12.
• PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint
Ventures (Amended in 2011) – Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
The requirements on gains and losses resulting from transactions between an entity and its
associate or joint venture have been amended to relate only to assets that do not constitute a
business.
A new requirement has been introduced that gains or losses from downstream transactions
involving assets that constitute a business between an entity and its associate or joint venture
must be recognized in full in the investor's financial statements. A requirement has been added
that an entity needs to consider whether assets that are sold or contributed in separate
transactions constitute a business and should be accounted for as a single transaction.
The amendment to PFRS 10 provide an exception from the general requirement of full gain or
loss recognition for the loss control of a subsidiary that does not contain a business in a
transaction with an associate or a joint venture that is accounted for using the equity method.
New guidance has been introduced requiring that gains or losses resulting from those
transactions are recognized in the parent's profit or loss only to the extent of the unrelated
investors' interests in that associate or joint venture. Similarly, gains and losses resulting from
the remeasurement at fair value of investments retained in any former subsidiary that has
become an associate or a joint venture that is accounted for using the equity method are
recognized in the former parent's profit or loss only to the extent of the unrelated investors'
interests in the new associate or joint venture.
• PFRS 11, Joint Arrangements – Accounting for Acquisitions of Interest in Joint Operations
Accounting for Acquisitions of Interests in Joint Operations amends PFRS 11 such that the
acquirer of an interest in a joint operation in which the activity constitutes a business, as
defined in PFRS 3, is required to apply all of the principles on business combinations
accounting in PFRS 3 and other PFRSs with the exception of those principles that conflict with
the guidance in PFRS 11. Accordingly, a joint operator that is an acquirer of such an interest
has to:
- measure most identifiable assets and liabilities at fair value;
- expense acquisition-related costs (other than debt or equity issuance costs);
- recognize deferred taxes;
- recognizing any goodwill or bargain purchase gain;
17
- perform impairment tests for the cash generating units to which goodwill has been
allocated; and
- disclose information required relevant for business combinations.
The amendments apply to the acquisition of an interest in an existing joint operation and also
to the acquisition of an interest in a joint operation on its formation, unless the formation of
the joint operation coincides with the formation of the business.
• PFRS 14, Regulatory Deferral Accounts (New in 2014)
PFRS 14 requires the balances reflecting the effects of rate regulation to be described as
“regulatory deferral account debit balances” and “regulatory deferral account credit balances”
(collectively they are referred to as “regulatory deferral account balances”) and these balances
cannot be referred to as, or presented with, assets and/or liabilities because the determination
of whether these balances meet the definition of assets or liabilities in the Conceptual
Framework must be addressed as part of the PASB's comprehensive conceptual framework
project
The effects of rate regulation must be separately presented in the statement of financial
position and statements of profit or loss and other comprehensive income.
All assets and liabilities, balances and transactions have to comply with all other PFRS
standards so the regulatory deferral account balances represent the effects of rate regulation
only after the requirements of other PFRS standards have been met
The standard includes some specific guidance on how other Standards should be applied to
regulatory deferral balances and/or movements in such balances.
There are specific disclosure requirements to (a) enable users to evaluate the nature of, and the
risks associated with, the specific rate regulation regime and (b) enable users to understand
how the regulatory deferral account balances are recognized and measured both initially and
subsequently.
• PAS 1, Presentation of Financial Statements – Disclosure Initiative

The amendments clarify matters on materiality that:
- information should not be obscured by aggregating or by providing immaterial
information;
- materiality considerations apply to the all parts of the financial statements; and
- even when a standard requires a specific disclosure, materiality considerations do apply.
The amendments introduce a clarification that the list of line items to be presented in the
statement of financial position and statement of profit or loss and other comprehensive income
can be disaggregated and aggregated as relevant and additional guidance on subtotals in these
statements and clarify 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.
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 and to demonstrate that the notes need not be presented in the order so far listed in
paragraph 114 of PAS 1.
18
• PAS 16, Property, Plant and Equipment and PAS 38, Intangible Assets – Clarification of
Acceptable Methods of Depreciation and Amortization
The requirements of PAS 16 are amended to clarify that a depreciation method that is based
on revenue that is generated by an activity that includes the use of an asset is not appropriate.
This is because such methods reflect a pattern of generation of economic benefits that arise
from the operation of the business of which an asset is part, rather than the pattern of
consumption of an asset’s expected future economic benefits.
The requirements of PAS 38 are amended to introduce a rebuttable presumption that a revenue-
based amortization method for intangible assets is inappropriate for the same reasons as in
PAS 16. However, the PASB states that there are limited circumstances when the presumption
can be overcome:
- The intangible asset is expressed as a measure of revenue (the predominant limiting factor
inherent in an intangible asset is the achievement of a revenue threshold); and
- and it can be demonstrated that revenue and the consumption of economic benefits of the
intangible asset are highly correlated (the consumption of the intangible asset is directly
linked to the revenue generated from using the asset).
• PAS 16, Property, Plant and Equipment and PAS 41, Agriculture – Agriculture: Bearer
Plants
The amendments bring bearer plants, which are used solely to grow produce, into the scope
of PAS 16 so that they are accounted for in the same way as property, plant and equipment.
For the purpose of bringing bearer plants from the scope of PAS 41 into the scope of PAS 16
and therefore enabling entities to measure them at cost subsequent to initial recognition or at
revaluation, a definition of a 'bearer plant' is introduced into both standards. A bearer plant is
defined as “a living plant” that:
- is used in the production or supply of agricultural produce;
- is expected to bear produce for more than one period; and
- has a remote likelihood of being sold as agricultural produce, except for incidental scrap
sales.
The scope sections of both standards are then amended to clarify that biological assets except
for bearer plants are accounted for under PAS 41 while bearer plants are accounted for under
PAS 16.
The amendments also clarify that produce growing on bearer plants continues to be accounted
for under PAS 41 and that government grants related to bearer plants no longer fall into the
scope of PAS 41 but need to be accounted for under PAS 20, Accounting for Government
Grants and Disclosure of Government Assistance.
• PAS 27, Separate Financial Statements (Amended in 2011) – Equity Method in Separate
Financial Statements
The amendments allow an entity to account for investments in subsidiaries, joint ventures
and associates in its separate financial statements
- at cost;
- in accordance with PFRS 9 Financial Instruments (or PAS 39 Financial Instruments:
Recognition and Measurement for entities that have not yet adopted PFRS 9); or
- using the equity method as described in PAS 28, Investments in Associates and Joint
Ventures.; and
- The accounting option must be applied by category of investments.
19
The amendments also clarify that when a parent ceases to be an investment entity, or becomes
an investment entity, it shall account for the change from the date when the change in status
occurred.
• Annual Improvements to PFRS – the 2012-2014 Cycle
PFRS 5, Non-current Assets Held for Sale and Discontinued Operations – Changes in
methods of disposal.
The amendment adds specific guidance in PFRS 5 for cases in which an entity reclassifies an
asset from held for sale to held for distribution or vice versa and cases in which held-for-
distribution accounting is discontinued.
PFRS 7, Financial Instruments: Disclosures – Servicing contracts.
The amendment adds additional guidance to clarify whether a servicing contract is continuing
involvement in a transferred asset for the purpose of determining the disclosures required. The
amendment further clarifies the applicability of the amendments to PFRS 7 on offsetting
disclosures to condensed interim financial statements.
PAS 19, Employee Benefits – Discount rate: regional market issue.

The amendment clarifies that the high quality corporate bonds used in estimating the discount
rate for post-employment benefits should be denominated in the same currency as the benefits
to be paid, thus, the depth of the market for high quality corporate bonds should be assessed at
currency level.
PAS 34, Interim Financial Reporting – Disclosure of information 'elsewhere in the interim
financial report'.
The amendment clarifies the meaning of 'elsewhere in the interim report' and requires a
cross-reference.
New and Revised PFRSs in Issue but Not Yet Effective
The Company will adopt the following standards and interpretations enumerated below 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.
• PFRS 16, Leases (New in 2016)
PFRS 16 specifies how an PFRS reporter will recognize, measure, present and disclose leases.
The standard provides a single lessee accounting model, requiring lessees to recognize assets
and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has
a low value. Lessors continue to classify leases as operating or finance, with PFRS 16‟s
approach to lessor accounting substantially unchanged from its predecessor, PAS 17.
PFRS 16 replaces the following standards and interpretations:

- PAS 17 Leases;
- PFRIC 4 Determining whether an Arrangement contains a Lease;
- PIC-15 Operating Leases – Incentives; and
- PIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
PFRS 16 establishes principles for the recognition, measurement, presentation and disclosure of
leases, with the objective of ensuring that lessees and lessors provide relevant information that
faithfully represents those transactions.
20
PFRS 16 Leases applies to all leases, including subleases, except for:
- leases to explore for or use minerals, oil, natural gas and similar non-regenerative
resources; leases of biological assets held by a lessee;
- service concession arrangements;
- licences of intellectual property granted by a lessor; and
- rights held by a lessee under licensing agreements for items such as films, videos, plays,
manuscripts, patents and copyrights within the scope of PAS 38 Intangible Assets.
A lessee can elect to apply PFRS 16 to leases of intangible assets, other than those items listed
above.
An entity applies PFRS 16 for annual reporting periods beginning on or after 1 January 2019.
Earlier application is permitted if PFRS 15 Revenue from Contracts with Customers has also
been applied.
As a practical expedient, an entity is not required to reassess whether a contract is, or contains,
a lease at the date of initial application.
A lessee shall either apply PFRS 16 with full retrospective effect or alternatively not restate
comparative information but recognize the cumulative effect of initially applying PFRS 16 as
an adjustment to opening equity at the date of initial application.
The Standard is applicable to annual reporting periods beginning on or after January 1, 2019.
• PFRS 9, Financial Instruments (New in 2014) – Classification and Measurement of Financial

Assets and Financial Liabilities and for Derecognition; and Hedge Accounting
The issued final version of PFRS 9 requires all recognized 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 the amendment 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.
The amendment on hedge accounting was issued permitting an entity to elect to continue to
apply the hedge accounting requirements in PAS 39 for a fair value hedge of the interest rate
exposure of a portion of a portfolio of financial assets or financial liabilities when PFRS 9 is
applied, and to extend the fair value option to certain contracts that meet the 'own use' scope
exception.
21
This amendment is effective for annual periods beginning on or after January 1, 2018. Earlier
application is permitted.
• PFRS 15, Revenue from Contracts with Customers (Amended in 2016)
The new standard provides a single, principles-based five-step model to be applied to all
contracts with customers. The five steps are:
- Identify the contract with the customer;
- Identify the performance obligations in the contract;
- Determine the transaction price;
- Allocate the transaction price to the performance obligations in the contracts; and
- Recognize revenue when (or as) the entity satisfies a performance obligation.
There is new guidance on whether revenue should be recognized at a point in time or over time,
which replaces the previous distinction between goods and services. Where revenue is variable,
a new recognition threshold has been introduced by the Standard. This threshold requires that
variable amounts are only included in revenue if, and to the extent that, it is highly probable that
a significant revenue reversal will not occur in the future as a result of re-estimation.
However, a different approach is applied for sales and usage-based royalties from licences of
intellectual property; for such royalties, revenue is recognized only when the underlying sale or
usage occurs. The standard provides detailed guidance on various issues such as identifying
distinct performance obligations, accounting for contract modifications and accounting for the
time value of money. Detailed implementation guidance is included on topics such as sales with
a right of return, customer options for additional goods or services, principal versus agent
considerations, licensing, and bill-and hold arrangements.
The standard also introduces new guidance on costs of fulfilling and obtaining a contract,
specifying the circumstances in which such costs should be capitalized. Costs that do not meet
the criteria must be expensed when incurred. The standard introduces new, increased
requirements for disclosure of revenue in a PFRS reporter’s financial statements.
The Standard can be applied in an entity's first annual PFRS financial statements for periods
beginning on or after January 1, 2018.
• PAS 12, Income Taxes (Amended in 2016) – Recognition of Deferred Tax Assets for
Unrealized Losses
Amends PAS 12 Income Taxes to clarify the following aspects:

- Unrealized losses on debt instruments measured at fair value and measured at cost for tax
purposes give rise to a deductible temporary difference regardless of whether the debt
instrument's holder expects to recover the carrying amount of the debt instrument by sale or
by use;
- The carrying amount of an asset does not limit the estimation of probable future taxable
profits. Estimates for future taxable profits exclude tax deductions resulting from the reversal
of deductible temporary differences; and
- An entity assesses a deferred tax asset in combination with other deferred tax assets. Where
tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in
combination with other deferred tax assets of the same type.
The Amendments to PAS 12 are effective for annual periods beginning on or after January 1,
2017.
22
• PAS 7, Statement of Cash Flows (Amended in 2016) – Disclosure Initiative
Amends PAS 7 Statement of Cash Flows to clarify that entities shall provide disclosures that
enable users of financial statements to evaluate changes in liabilities arising from financing
activities.
2017.
• PFRS 2, Share-based Payment (Amended in 2016) – Classification and Measurement of

Share-based Payment Transactions
Amends PFRS 2 Share-based Payment to clarify the standard in relation to the accounting for
cash-settled share-based payment transactions that include a performance condition, the
classification of share-based payment transactions with net settlement features, and the
accounting for modifications of share-based payment transactions from cash-settled to equity-
settled.
The Amendments to PFRS 2 are effective for annual periods beginning on or after January 1,
2018.
• PFRS 4, Insurance Contracts (Amended in 2016) – Applying PFRS 9 'Financial Instruments'

with PFRS 4 'Insurance Contracts'
Amends PFRS 4 Insurance Contracts provide two options for entities that issue insurance
contracts within the scope of PFRS 4:
- an option that permits entities to reclassify, from profit or loss to other comprehensive
income, some of the income or expenses arising from designated financial assets; this is the
so-called overlay approach; and
- an optional temporary exemption from applying PFRS 9 for entities whose predominant
activity is issuing contracts within the scope of PFRS 4; this is the so-called deferral
approach.
The application of both approaches is optional and an entity is permitted to stop applying them
before the new insurance contracts standard is applied.
Overlay approach is to be applied when PFRS 9 is first applied. Deferral approach is effective
for annual periods beginning on or after January 1, 2018 and is only available for three years
after said date.
• PAS 40, Investment Property (Amended in 2016) – Transfers of Investment Property

The amendments to PAS 40, Investment Property:
- Amends paragraph 57 to state that an entity shall transfer a property to, or from, investment
property when, and only when, there is evidence of a change in use. A change of use occurs
if property meets, or ceases to meet, the definition of investment property. A change in
management’s intentions for the use of a property by itself does not constitute evidence of a
change in use; and
- The list of examples of evidence in paragraph 57(a)-(d) is now presented as a non-
exhaustive list of examples instead of the previous exhaustive list.
2018.
23
• Annual Improvements to PFRS – the 2014-2016 Cycle
PFRS 1, First-time Adoption of International Financial Reporting Standards – Deletion of

short-term exemptions for first-time adopters.
The amendment deletes the short-term exemptions in paragraphs E3-E7 of PFRS 1, because
they have now served their intended purpose.
The Company, in its first PFRS financial statements, has applied for the existing and currently
effective PFRS.
PFRS 12, Disclosure of Interests in Other Entities – Clarification of the scope of the Standard.
The amendment clarifies the scope of the Standard by specifying that the disclosure
requirements in the Standard, except for those in paragraphs B10-B16, apply to an entity‟s
interests listed in paragraph 5 that are classified as held for sale, as held for distribution or as
discontinued operations in accordance with PFRS 5, Non-current Assets Held for Sale and
Discontinued Operations.
The above amendment has no material effect to the Company’s financial statements since as of
December 31, 2017 and 2016, the Company has no assets held for sale and discontinued
operations.
PAS 28 Investments in Associates and Joint Ventures (as amended in 2011) – Measuring an
associate or joint venture at fair value.
The amendment clarifies that the election to measure at fair value through profit or loss an
investment in an associate or a joint venture that is held by an entity that is a venture capital
organization, or other qualifying entity, is available for each investment in an associate or joint
venture on an investment-by-investment basis, upon initial recognition.
The amendments to PFRS 1 and PAS 28 are effective for annual periods beginning on or after
January 1, 2018, the amendment to PFRS 12 for annual periods beginning on or after January
1, 2017.
The above amendment has no material effect to the Company’s financial statements since as
of December 31, 2017 and 2016, the Company has no investment in an associate or joint
venture.
24
• PFRS 9, Financial Instruments: Recognition and Measurement (effective from January1,
2018). „Financial instruments‟, addresses the classification, measurement and recognition of
financial assets and financial liabilities. The complete version of PFRS 9 was issued in July
2014. It replaces the guidance in PAS 39 that relates to the classification and measurement of
financial instruments. PFRS 9 retains but simplifies the mixed measurement model and
establishes three primary measurement categories for financial assets: amortised cost, fair value
through OCI and fair value through P&L. The basis of classification depends on the entity’s
 business model and the contractual cash flow characteristics of the financial asset.
Investments in equity instruments are required to be measured at fair value through profit or
loss with the irrevocable option at inception to present changes in fair value in OCI not
recycling. There is now a new expected credit losses model that replaces the incurred loss
impairment model used in PAS 39. For financial liabilities there were no changes to
classification and measurement except for the recognition of changes in own credit risk in other
comprehensive income, for liabilities designated at fair value through profit or loss. PFRS 9
relaxes the requirements for hedge effectiveness by replacing the bright line hedge
effectiveness tests. It requires an economic relationship between the hedged item and hedging
instrument and for the „hedged ratio‟ to be the same as the one management actually use for
risk management purposes. Contemporaneous documentation is still required but is different to
that currently prepared under PAS 39.

The group is yet to assess IFRS 9’s full impact.
2.4 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
Initial Recognition
Financial assets and liabilities are recognized in the statements of financial position when the
company becomes a party to the contractual provisions of the financial instruments. In case of
regular way purchase or sale of financial assets, recognition is done at trade date which is the date
on which the company commits to purchase or sell the asset. Financial instruments are recognized
initially at fair value plus transaction cost except for those designated at fair value through profit or
loss (FVPL).
2.4.1 Financial Assets
2.4.1.1 Classification
The group allocates financial assets to the following categories: financial assets at fair value through
profit or loss; loans and receivable; held-to-maturity investments and available-for –sale financial
assets. Management determines the classification of its financial instruments at initial recognition.
 • Financial assets at fair value through profit or loss

This includes financial assets classified as held for trading purposes and those classified by the
company, at initial recognition, to be carried at fair value through profit or loss. Derivatives are
included in this category, unless they fall under hedging instruments.

These assets are to be realized within 12 months from the end of the reporting period. Assets
in this category are classified as current assets.
25
 • Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Loans and receivables are considered current assets unless their
maturities are more than 12 months after the reporting period; therefore, they are classified as
non-current assets.

The group’s trade and other receivables and advances to related parties are included in this
category (see Notes 5 and 11).

 • Available-for-sale financial assets
This includes non-derivative financial assets that do not qualify in any classifications or
designated specifically as such. Such assets are classified under non-current assets unless the
maturity falls within 12 months from the reporting period, where it would be classified under
current assets.
As of December 31, 2017 and 2016, the company’s AFS financial assets consist of stock
investment presented in non-current assets.
2.4.1.2 Recognition and Measurement
a) Initial measurement
Regular purchase and sales of investment are recognized on trade-date – the date on which the
company commits to purchase or sell the asset. Investments are initially recognized at fair value
plus transaction cost for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially recognized at fair value,
and transaction costs are expensed in the statements of comprehensive income.
b) Subsequent measurement
Financial assets at fair value through profit or loss and available for-sale financial assets are
carried at fair value. Gains or losses arising from the change in the fair value are recognized in
profit or loss in the statement of comprehensive income.
Loans and receivables and held-to-maturity investments are carried at amortized cost using the
effective interest method. The changes in value of available for-sale financial assets are
recognized in other comprehensive income.
Determination of fair value
The fair value of financial instruments traded in active markets is based on their quoted market
price or dealer price quotation (bid price for long positions and ask price for short positions). When
current bid and asking prices are not available, the price of the most recent transaction provides
evidence of the current fair value as long as there has not been a significant change in economic
circumstances since the time of the transaction.
If the financial instruments are not listed in an active market, the fair value is determined using
appropriate valuation techniques, which include recent arm’s length market transactions, net
present value techniques, comparison to similar instruments for which market observable prices
exist, options pricing models, and other relevant valuation models.
Fair value hierarchy
The group categorizes its financial asset and financial liability based on the lowest level input that
is significant to the fair value measurement. The fair value hierarchy has the following levels: (a)
Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities accessible by
the group; (b) Level 2 – inputs that are observable in the marketplace other than those classified as
Level 1; and (c) Level 3 – inputs that are unobservable in the marketplace and significant to the
valuation.
26
2.4.2 Financial Liabilities
• Other Financial Liabilities


This classification pertains to financial liabilities that are not held for trading or not designated
as at FVPL upon the inception of the liability. Included in this category are liabilities arising
from operations or borrowings.

The financial liabilities are recognized initially at fair value and are subsequently carried at
amortized cost, taking into account the impact of applying the effective interest rate method of
amortization (or accretion) for any related premium, discount and any directly attributable
transaction costs.

The group’s accounts payable and accrued expenses, advances from related parties, deposit for
the sale of investment in AbaCoal, advances from joint venture, loans payable and rental deposit
payable are classified under this category (see Notes 11, 12, 13, 19, 20 and 21).
2.4.3 Derecognition of financial instruments
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognised when:
 • The rights to receive cash flows from the asset have expired; or
• The group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
pass-through arrangement; and either (a) the group has transferred substantially all the risks
and rewards of the asset, or (b) the group has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When the group has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the asset is recognized to the extent of the group’s continuing involvement in the asset.
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or has expired.
When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognized in the consolidated
statements of comprehensive income.
Impairment of financial assets
Assessment of impairment
The group assesses at the end of each reporting period whether there is any objective evidence that
a financial asset or group of financial assets is impaired. A financial asset or a group of financial
assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the asset
(a „loss event‟) and that loss event (or events) has an impact on the estimated future cash flows of
the financial asset or group of financial assets that can be reliably estimated. If it is not possible to
identify a single, discrete event that caused the impairment, a combined effect of several events
may have caused the impairment.
Losses expected as a result of future events, no matter how likely, are not recognised.
27
Objective evidence that a financial asset or group of assets is impaired includes observable data
that comes to the attention of the holder of the asset about the following loss events:
(a) significant financial difficulty of the issuer or obligor;

(b) a breach of contract, such as a default or delinquency in interest or principal payments;
(c) the lender, for economic or legal reasons relating to the borrower’s financial difficulty,
granting to the borrower a concession that the lender would not otherwise consider;
(d) it becomes probable that the borrower will enter company bankruptcy or other financial
reorganisation;
(e) the disappearance of an active market for that financial asset because of financial
difficulties;
(f) 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; or
ii. national or local economic conditions that correlate with defaults on the assets in the
group.
The disappearance of an active market because an entity’s financial instruments are no longer
publicly traded is not evidence of impairment. A downgrade of an entity’s credit rating is not, of
itself, evidence of impairment, although it may be evidence of impairment when considered with
other available information. A decline in the fair value of a financial asset below its cost or
amortised cost is not necessarily evidence of impairment.
Financial assets carried at amortised cost
The group first assesses whether objective evidence of impairment exists individually for financial
assets that are individually significant, and individually or collectively for financial assets that are
not individually significant. If an entity determines that no objective evidence of impairment exists
for an individually assessed financial asset, whether significant or not, it includes the asset in a
group of financial assets with similar credit risk characteristics and collectively assesses them for
impairment. Assets that are individually assessed for impairment and for which an impairment loss
is or continues to be recognized are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on financial assets measured at amortized cost
has been incurred, the amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that
have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the
effective interest rate computed at initial recognition). The carrying amount of the asset shall be
reduced either directly or through use of an allowance account. The amount of the loss shall be
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 (such as an
improvement in the debtor’s credit rating), the previously recognized impairment loss shall be
reversed either directly or by adjusting an allowance account. The reversal shall not result in a
carrying amount of the financial asset that exceeds what the amortized cost would have been had
the impairment not been recognized at the date the impairment is reversed. The amount of the
reversal shall be recognized in profit or loss.
28
Classification of financial instruments between debt and equity
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest relating to a financial instrument or a component that is a financial
liability is reported as an expense.
A financial instrument is classified as debt if it provides for a contractual obligation to: (a) deliver
cash or another financial assets to another entity; or (b) exchange financial assets or financial
liabilities with another entity under conditions that are potentially unfavorable to the Group; or (c)
satisfy the obligation other than by the exchange of a fixed amount of cash or another financial
asset for a fixed number of own equity shares.
If the group does not have an unconditional right to avoid delivering cash or another financial asset
to settle its contractual obligation, the obligation meets the definition of a financial liabilities.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
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 asset and
settle the liability simultaneously. This is not generally the case with master netting agreements,
when the related assets and liabilities are presented gross in the consolidated statements of financial
position.
2.5 Investments in subsidiaries
A subsidiary is an entity over which the parent company exercises significant control or over which
it has the power to govern the financial and operating policies generally accompanying a
shareholding of more than 50% of the voting rights. The parent company obtains and exercises
control through voting rights. The existence and effect of potential voting rights that are currently
exercisable and convertible are considered when assessing whether the parent company controls
another entity.
Investments in subsidiaries are carried at cost less any impairment losses in the separate financial
statements of the parent company.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the parent
company obtained control of its subsidiaries, and continue to be consolidated until the date that
such control ceases.
2.6 Investments in associates
An associate is an entity over which the group has significant influence but has no control and
which is neither a subsidiary nor a joint venture.
Investment in an associate is accounted for by the equity method of accounting. Under this method,
the investment is initially recognized at cost and adjusted thereafter by post acquisition changes in
the group’s share in the net assets of the associate and any impairment losses. The group’s share of
its associate’s post-acquisition profits or losses is recognized in the consolidated statements of
comprehensive income. Share in post-acquisition change in the associate’s net asset not recognized
in the associate’s statement of comprehensive income is directly recognized in the group’s equity.
Dividends received from the associates are deducted from the carrying amount of the investment.
29
The group discontinues applying the equity method when their investments in associates are
reduced to zero. Accordingly, additional losses are not recognized unless the group has guaranteed
certain obligations to the associate. When the associate subsequently reports net income, the group
will resume applying the equity method but only after its share of that net income equals the share
of net losses not recognized during the period the equity method was suspended.
The reporting date of the associate and the group are identical and the associates‟ accounting
policies conform to those used by the group for like transactions and events in similar
circumstances.
2.7 Joint venture transactions
A joint venture is a contractual arrangement whereby the group and other parties undertake an
economic activity, which is subject to joint control, and none of the participating parties has
unilateral control over the economic activity.
Assets that the group controls and liabilities that it incurs in relation to jointly controlled operations
are recognized in the group’s consolidated statements of financial position on an accrual basis and
classified according to the nature of the item. The group’s share of income that it earns from jointly
controlled operations, together with the expenses that it incurs, are included in the group’s
consolidated statements of comprehensive income when it is probable that economic benefits
associated with the transaction will flow to/from the group.
2.8 Business combination and goodwill
Business acquisitions are accounted for using the purchase method of accounting. The cost of
acquisition is measured as the fair value of the asset given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at fair values at the date of acquisition, irrespective of the extent
of any minority interest.
Goodwill acquired in business combination is initially measured at cost as the excess of cost of a
business combination over the group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses. Goodwill is reviewed for impairment annually, or more
frequently if events or changes in circumstances indicate that the carrying value may be impaired.
Negative goodwill, which is the excess of the group’s interest in the net fair value of acquired
identifiable assets, liabilities and contingent liabilities over cost, is charged directly to income.
Transfers of assets between commonly controlled entities are accounted for under historical cost
accounting.
2.9 Investment property
Initially, investment property is measured at cost including transaction costs. The cost of investment
property comprises its purchase price and any directly attributable expenditure.
Subsequent expenditures are recognized as an asset when the expenditures improve the condition
of the asset beyond its originally assessed standard of performance. All other subsequent
expenditure is recognized as an expense when incurred.
30
Subsequent to initial recognition, investment property is stated at fair value, which reflects the
market conditions at the financial reporting date. Any gains (loss) resulting from either change in
the fair value is immediately recognized in the consolidated statement of comprehensive income in
the year in which it arises.
Investment property is derecognized when it has either been disposed or when they are permanently
withdrawn from use and no future benefit is expected from their disposal. Any gain or loss on the
retirement or disposal of an investment property is recognized in the consolidated statement of
comprehensive income in the year of retirement or disposal.
2.10 Prepaid and Others current assets
Prepaid expenses represent advance payment initially recorded as asset when purchased. The
portion of assets that have been used or expired during period is charged to expense.
Other current assets represent input value added tax and are recognized at their face value.
2.11 Property and equipment
Property and equipment are stated at cost less accumulated depreciation and any impairment losses.
The initial cost of property and equipment is comprised of the purchase price and costs directly
attributable to bringing the assets to their intended use.
Subsequent expenditures incurred after the assets have been put into operation are capitalized as
additional cost of the assets when the resulting future economic benefit exceeds the originally
assessed standard of performance of the asset. All other subsequent expenditures incurred such as
repairs and maintenance are recognized in the consolidated statement of comprehensive income in
the period the costs are incurred.
When assets are sold or retired, their cost, accumulated depreciation and amortization and
accumulated impairment losses are eliminated from the accounts and any resulting gain or loss is
included in the consolidated statement of comprehensive income of such period.
Depreciation is computed using the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are amortized over the shorter of the terms of the lease or estimated
useful lives of improvements. The estimated useful lives of the assets and the improvements are as
follows:
Category Estimated useful life in years

Building and improvements 50 years
Face and hands of the Blessed Virgin 50 years
Welcome Arch 15 years
Heavy equipments 10 years
Road improvements 10 years
Machinery and other equipments 3 to 5 years
Hauling and transport equipment 5 years
Leasehold improvements 5 years
The useful lives and depreciation and amortization method are reviewed periodically to ensure that
the periods and method of depreciation and amortization are consistent with the expected pattern
of economic benefits from items of property and equipment.
31
2.12 Construction-in-progress
Construction-in-progress (CIP) is stated at cost. This includes cost of construction and other direct
costs. Borrowing costs that are directly attributable to the construction of property and equipment
are capitalized during the construction period. CIP is not depreciated until such time as the relevant
assets are completed and put into operational use. Assets under construction are transferred to the
investment property account or reclassified to a specific category of property and equipment when
the construction and other related activities necessary to prepare the properties for their intended
use are completed and the properties are available for service.
2.13 Deferred exploration costs
Deferred exploration costs are stated at cost less impairment losses, and include deferred
exploration costs and other expenses incurred prior to the start of commercial operations, net of
incidental income.
Deferred exploration costs are accumulated separately for each area of interest. These include
acquisition costs, direct exploration and development costs and an appropriate portion of related
overhead expenditures, and exclude general overhead or administrative expenditures not
specifically identified with exploration activities.
Deferred exploration costs are carried in the books only if the costs related to an area of interest for
which the rights of tenure are current and such are expected to be recouped through successful
development and exploration or from sale of the area or exploration and evaluation activities in the
area as of financial reporting date have not reached a stage which permits a reasonable assessment
of the existence or otherwise of economically recoverable reserves, and active operations in, or
relating to, the area are continuing. Exploration costs, which do not satisfy the above criteria, are
recognized in the consolidated statements of comprehensive income.
Revenues earned in connection with the exploration activities in an area of interest prior to the start
of commercial operations are offset against the expenditures of such area of interest.
The carrying value of each producing area of interest is reviewed regularly and, to the extent to
which this amount exceeds its recoverable amount (based on the higher of the net present value of
estimated future net cash flows and current realizable value), an allowance for impairment will be
provided in the year in which it is determined.
When further development expenditures are incurred on producing area of interest, such
expenditures are capitalized as part of the costs of such area of interest only when substantial
economic benefits are thereby established; otherwise, such expenditures are charged to cost of
production.
2.14 Other non-current assets
Other non-current assets include security deposit and are recognized at their nominal values.
2.15 Impairment of non-financial assets
The carrying amounts of the group’s non-financial assets are reviewed at each financial reporting
date to determine whether there is any indication of impairment or an impairment loss previously
recognized no longer exists or may have decreased. If any such indication exists, the group makes
a formal estimate of the asset’s recoverable amount.
32
The recoverable amount is the higher of an asset’s or its cash generating unit’s fair value less costs
to sell and its value in use. The fair value less costs to sell is the amount obtainable from the sale of
the asset in an arm’s length transaction. 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 an asset that does not
generate cash flows independent of those from other assets, the recoverable amount is determined
for the cash-generating unit to which the asset belongs.
2.16 Provisions and contingencies
Provisions are recognized when there is a present legal or constructive obligation as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
Contingent liabilities are not recognized in the consolidated financial statements but they are
disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognized in the consolidated financial statements but disclosed in the
notes to consolidated financial statements when an inflow of economic benefits is probable.
2.17 Equity
Share capital is determined using the nominal value of shares that have been issued.
Retained earnings include all current and prior period results of operations as disclosed in the
consolidated statements of comprehensive income.
Shares held by subsidiaries are recognized at cost. These are shares of the parent company that are
owned by its subsidiaries.
Treasury shares are recognized at cost.
2.18 Revenue recognition
Revenue is recognized when the significant risks and rewards of ownership of goods has been
transferred to the buyer, the group 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 group, and the costs incurred or to be incurred in respect of the transaction can be
measured reliably.
Interest income
Interest income is recognized as the interest accrues on a time 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 the asset’s net
carrying amount.
Share in net earnings and losses of associates
The proportionate share in net earnings and losses of the associates is recognized as soon as the
basis for the share, which is the audited financial statements of the associates for the current year,
becomes available.
33
Dividend income
Dividend income from investment is recognized when the shareholder’s right to receive payment
has been established.
2.19 Leases
Group as lessor
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease receipts are recognized as income in the consolidated
statements of comprehensive income on a straight-line basis over the lease term.
Group as lessee
Leases where substantially all the risks and benefits of ownership of the asset do not pass on to the
lessee are classified as operating leases. Operating lease payments are recognized as expense in the
consolidated statements of comprehensive income on a straight-line basis over the lease term.
2.20 Employee benefits
(a) Short – term benefits

The company provides short-term benefits to its officers and employees in the form of salaries and
wages, 13th month pay, contribution to SSS/PHIC/HDMF, bonuses and allowances that are
presented as “salaries and wages” as part of administrative expenses.
(b) Retirement benefit

Republic Act No. (RA) 7641 (New Retirement Law) requires the group to provide minimum
retirement benefits to qualified retiring employees. In compliance with the law, the group provides
for estimated retirement benefits to all of its qualified regular and permanent employees.
2.21 Income tax
Current income tax
Current income tax assets and liabilities for the current and the prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are substantively enacted at the financial reporting date.
Deferred income tax
Deferred income tax is provided, using the liability method, on all temporary differences at the
financial reporting date between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes.
Deferred income tax assets are recognized for all deductible temporary differences, carryforward
of unused tax credits from excess minimum corporate income tax (MCIT) and net operating loss
carryover (NOLCO), to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences and carryforward of unused tax credits and NOLCO
can be utilized.
The carrying amount of deferred income tax assets is reviewed at each financial reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilized.
34
Deferred income tax liabilities are recognized for all taxable temporary differences.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to be
applied to the temporary differences when they reverse.
2.22 Earnings (loss) per share (EPS)
Basic EPS is calculated by dividing the net income or loss for the period by the weighted average
number of shares outstanding during the period, net of shares held by the subsidiaries, after giving
retroactive effect to any stock dividend declared during the year.
2.23 Segment reporting
The group’s operating businesses are organized and managed separately according to the nature of
the products and services provided, with each segment representing a strategic business unit that
offers different products and serves different markets.
2.24 Related parties
Parties are considered related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions.
Individuals, associates or companies that directly or indirectly control or are controlled by or under
common control are considered related parties.
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, directly or indirectly, including any director of
that entity.
2.25 Events after the financial reporting date
Post-year-end events up to the date of the auditors’ report that provide additional information about
the group’s position at the financial reporting date (adjusting events) are reflected in the
consolidated financial statements. Post-year-end events that are not adjusting events are disclosed
in the notes to consolidated financial statements when material.
NOTE 3 – SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
The preparation of the consolidated financial statements in conformity with PFRS requires the
group’s management to make estimates, assumptions and judgments that affect the amounts
reported in the financial statements.
The estimates and associated assumptions are based on historical experiences and other various
factors that are believed to be reasonable under the circumstances including expectations of related
future events, the results of which form the basis of making the judgments about carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates.
The estimates, assumptions and judgments are reviewed and evaluated 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.
35
3.1 Judgments
3.1.1 Leases
3.1.1.1 The Group as a lessee
The Group leases certain property and equipment. Leases of property and equipment where the
Group has substantially all the risks and rewards of ownership are classified as finance leases.
Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the
leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The corresponding rental
obligations, net of finance charges, are included in other long-term payables. The interest element
of the finance cost is charged to the profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. The property and
equipment acquired under finance leases is depreciated over the shorter of the useful life of the
asset and the lease term.
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. 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.
3.1.2 Foreign currency translation
3.1.1.2 Functional and Presentation Currency
Items included in the Company’s financial statements of the Company are measured using the
currency of the primary economic environment in which the company operates (the functional
currency). The Company’s financial statements are presented in Philippine peso, which is the
company’s functional and presentation currency. All values are rounded to the nearest peso except
when otherwise indicated.
3.2 Estimates
Useful lives of property and equipment
The group estimates the useful lives of property and equipment based on the period over which the
assets are expected to be available for use. The estimated useful lives of property and equipment
are reviewed periodically and are updated if expectations differ from previous estimates due to
physical wear and tear, technical or commercial obsolescence and legal or other limits on the use
of the assets. In addition, estimation of the useful lives of property and equipment is based on
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 carrying value of
property and equipment, net of accumulated depreciation is presented in consolidated statements of
financial position (see Note 10).
Fair value of investment properties
The group used to have its investment properties valued by an independent appraiser to reflect the
market conditions of such at the reporting date. Such fair values were determined based on recent
prices of similar properties, with adjustments, to reflect any changes in economic condition since
the date of those transactions.
36
Mine rehabilitation and decommissioning costs
The group recognizes mine rehabilitation and decommissioning liability as soon as legal liability
to it has been established. The provision recognized represents the best estimate of the expenditures
required to decommission the related equipment at the end of its useful life. Such cost estimates are
discounted using a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. Each year, the provision is increased to reflect the accretion of
discount and to accrue an estimate for the effects of inflation, with the charges being recognized
under the “Provision for Mine Rehabilitation and Decommissioning” account.
The group is liable to provide for mine rehabilitation and decommissioning costs in compliance
with the terms of the Mineral Production Sharing Agreement (MPSA). However, according to the
agreement, recognition shall commence on the development, utilization and processing of mines,
which the licensee is not yet into as of the moment.
Goodwill and Intangible assets
Goodwill acquired in business combination is initially measured at cost as the excess of cost of a
business combination over the group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses.
The group reviews its goodwill for impairment annually or more frequently, if events or changes in
circumstances indicate that the carrying value may be impaired.
Negative goodwill, which is the excess of the group’s interest in the net fair value of acquired
identifiable assets, liabilities and contingent liabilities over cost, is charged directly to income.
Transfers of assets between commonly controlled entities are accounted for under historical cost
accounting.
Impairment of financial and non-financial assets
The group assesses at each financial reporting date whether there is an indication that the carrying
amount of all financial and non-financial assets may be impaired or that previously recognized
impairment losses may no longer exist or may have decreased. If any such indication exists, or
when annual impairment testing for an asset is required, the group makes an estimate of the asset’s
recoverable amount.
Income taxes
The group is subject to income tax in several jurisdictions and significant judgment is required in
determining the provision for income taxes. During the ordinary course of business, there are
transactions and calculations for which the ultimate tax determination is uncertain. As a result, the
group recognizes tax liabilities based on estimates of whether additional taxes and interest will be
due. These tax liabilities are recognized when, despite the group's belief that its tax return positions
are supportable, the group believes that certain positions are likely to be challenged and may not be
fully sustained upon review by tax authorities. The group believes that its accruals for tax liabilities
are adequate for all open audit years based on its assessment of many factors including past
experience and interpretations of tax law.
37
NOTE 4 – CASH
The details of the account are as follows:
2017 2016
Cash in banks ₱ 96,278,769 ₱ 56,760,516

Cash on hand 61,331 83,671
Total ₱ 96,340,100 ₱ 56,844,187
Cash in banks includes current and savings accounts which generally earn interest at the prevailing
bank deposit rates. Interest earned in 2017 and 2016 amounted to ₱ 186,798 and ₱ 265,386,
respectively.
The details of the foreign-currency denominated deposits are presented below:
2017 2016
Cash in bank $ 3,502 $ 3,494
The peso equivalent of the U.S. dollar is presented below.
2017 2016
Cash in bank ₱ 174,855 ₱ 173,722
The U.S. dollar denominated cash in bank is translated at ₱ 49.93 and ₱ 49.72 in 2017 and 2016,
respectively.
NOTE 5 – TRADE AND OTHER RECEIVABLES
The details of the account are as follows:
2017 2016
Accounts receivable – trade ₱ 63,652,256 ₱ 57,194,747

Advances to officers and employees 487,711 593,796
Others 98,457,606 1,358,075
₱ 162,597,573 ₱ 59,146,618
Substantial portion of trade receivables represents the receivable from certain banks and institutions
amounting to ₱14,935,139. Specifically, the company has receivables from PNB-IBJL Leasing and
Finance Corporation in the amount of ₱11,641,124, which claim is already the subject of Civil Case
No. R-QZN-17-00452-CV, now pending before the Regional Trial Court of Quezon City. The
company is also expecting to receive the amounts of ₱2,988,390 and ₱305,625 from BOT Lease
and Finance Philippines, Inc. and Mapfre Insular Insurance Corporations, respectively, for
payments that were previously made with reservation.
As of 2017, the case against PNB Leasing et al., is still being litigated in Quezon city under Civil
Case No. R-QZN-17-00452-CV RTC Branch 223.
38
Advances granted to officers and employees are interest – free and are payable through salary
deduction.
Substantial portion of other receivables pertains to receivable arising from the rescission of the sale
of land sold in 2015 in Malinis, Lemery, Batangas. The account is treated as receivable until the
delivery of the land titles.
The face value of the receivables approximates its fair value. Further, no allowance for bad debts
was recognized after careful evaluation by the group’s management.
NOTE 6 – PREPAID AND OTHER CURRENT ASSETS
2017 2016
Input Vat ₱ 45,638,300 ₱ 39,361,667

Prepaid expense 1,710,176 2,126,973
Creditable tax 144,496 112,854
Others 31,748 31,748
₱ 47,524,720 ₱ 41,633,242
Input VAT of the company will be applied against output VAT in the future periods when the
company starts its commercial operations.
NOTE 7 – INVESTMENT IN ASSOCIATES
This pertains to the investments in Pacific Online Systems Corporation (POSC) and Abacus Global
Technovisions, Inc. (AbaGT) and Phil Star Development Bank, Inc. (PSDBI) (formerly, Pride Star
Development Bank, Inc.), which are accounted for using the equity method. The details of the
parent company’s ownership in its associates are as follows:
Percentage of Ownership
Principal 2017 2016
Activities Conditions Direct Indirect Direct Indirect
POSC Gaming Unsecured; no impairment 1.85% – 1.85% –
AbaGT Holding Unsecured; no impairment 9.64% – 9.64% –
PSDBI Banking Unsecured; no impairment – 40% – 40%
POSC is registered with the SEC and is engaged in the development, design and management of
online computer systems, terminals and software for the gaming industry. POSC’s shares are traded
in the PSE. Its registered office address is located at the 22nd Floor, West Tower, Philippine Stock
Exchange Centre, Ortigas Center, Pasig City.
During the year, the cash dividend received from POSC is ₱4,960,779; ₱6,449,013 in 2016.
The fair value of the group’s interest in POSC which is traded in the PSE as of December 31, 2017
was ₱ 91,774,423 and P 92,932,809 in 2016 at fair value per share of P 11.10 and P 11.24 at
December 31, 2017 and 2016, respectively. Shares of POSC amounting to ₱ 118,914,247 were sold
earning a gain on sale of ₱ 133,577,423 in 2015.
39
AbaGT is registered with the SEC on June 21, 1993 and is a majority-owned subsidiary of Blue
Stock Development Holdings Inc. (BSDHI). In July 2009, AbaGT amended its primary purpose, to
purchase, subscribe for, or otherwise acquire, own, hold, use, sell, assign, transfer, mortgage,
pledge, exchange, or dispose of real and/or personal properties of every kind and description,
including shares of stock, voting trust certificates for shares of capital stock and other securities,
contracts, or obligations of any corporation or association, domestic or foreign, and to pay therefore,
in whole or in part, in cash or in property or by exchanging stocks, bonds of other corporation and
in general, to do every act and thing covered by the denomination “holding company” without
engaging as stockbroker, dealer in securities or investment company. Its registered business address
is located at 28 N. Domingo St. New Manila, Quezon City.
AbaGT has 100% shareholdings in two subsidiaries: Simlong Realty Corporation (SRC) and Pride
Resources Infrastructure Development Corporation.
In January 2008, the parent company’s investment in AbaGT amounting to ₱ 199,470,100 was
declared by the BOD as property dividends to shareholders of record as of March 11, 2008. This
reduced its ownership in AbaGT from 66.67% to 9.64%. Thus, the investment had been accounted
for as investment in associate starting 2008.
On December 22, 2009, the board resolved to amend AbaGT’s primary purpose (Article Two of
the Articles of Incorporation) from holding company to owning, developing, operating and
managing hotels, condotels and other establishments that provide lodging, food, refreshments and
allied services to tourists, travelers and other transients and to include real estate as one of its
secondary purposes.
It was also resolved, subject to the approval of the stockholders and the SEC, to approve the merger
with Alpha Hotel and Batangan Plaza, Inc. (BPI) with AbaGT as the surviving entity. The merger
was approved by the SEC on May 27, 2010. AbaGT is also currently in the process of listing its
shares in the PSE.
PSDBI is a corporation organized and domiciled in the Philippines and has started operations on
August 29, 1956. On January 21, 2006, the term of existence of the corporation was extended for
another fifty (50) years from and after the date of expiry on March 2, 2006.
PSDBI is registered with SEC and Bangko Sentral ng Pilipinas primarily to engage in accumulating
deposits and extending rural credits to small farmers and tenants and deserving rural industries or
enterprises.
In 2008, PRIDE’s investment in PSDBI’s shares was diluted to 40% due to lesser amount of
subscription in PSDB‟s additional authorized share capital of ₱ 90,000,000 from ₱ 10,000,000 to
₱ 100,000,000 or from 100,000 shares to 1,000,000 shares at ₱ 10 par value per share.
In 2009, PSDBI was converted from a rural bank into a private development bank to upgrade its
purpose of giving further services in the countryside and economic development in the province of
Batangas.
The management believes that the Parent Company still has a significant influence over the
associates.
40
The movements in investments in associates are as follows:
2017 2016
Acquisition cost:
Balance, January 1 ₱ 21,186,416 ₱ 15,936,417
Acquisitions during the year – 5,249,999
Disposals during the year – –
Balance, December 31 21,186,416 ₱ 21,186,416
Accumulated equity in net earnings:

Balance, January 1 229,730,274 232,311,637
Adjustments (16,163,537) –
Equity in net earnings, net 4,087,134 (2,581,363)
Balance, December 31 217,653,871 229,730,274
₱ 238,840,287 ₱ 250,916,690
The summary of the group’s share in net earnings and losses in POSC, PSDBI and AbaGT are as
follows:
2017 2016
Share in net earnings – POSC ₱ 2,804,121 ₱ (1,854,476)

Share in net earnings – PSDBI 1,283,013 (726,887)
Share in net earnings – AbaGT – –
₱ 4,087,134 ₱ (2,581,363)
Summarized financial information for POSC and ABAGT which are accounted for using equity
method are as follows:
41
Financial position
POSC ABAGT Total
2017 2016 2017 2016 2017 2016
CURRENT
Cash ₱ 447,130,976 ₱ 258,944,786 ₱ 4,424,389 ₱ 21,938,775 ₱ 451,555,365 ₱ 280,883,561
Other current assets (excluding cash) 796,655,561 788,551,650 42,624,350 7,512,302 839,279,911 797,085,356
Total current assets 1,243,796,537 1,047,496,436 47,048,739 29,451,077 1,290,835,276 1,077,968,917
Financial liabilities 532,437,668 333,407,498 3,367,736 20,618,061 535,805,404 354,538,173

Other current liabilities 43,197,069 61,517,615 2,148,643 37,388,112 45,345,712 98,905,727
Total current liabilities 575,634,737 394,925,113 5,516,379 58,006,173 581,151,116 453,443,900
NON-CURRENT
Assets 1,390,060,541 1,379,703,789 234,508,378 318,497,105 1,624,568,919 1,698,199,032
Financial liabilities 35,374,474 71,644,208 – – 35,374,474 71,644,208

Other liabilities 2,762,995 – 48,875,085 67,358,303 51,638,080 67,358,303
Total non-current liabilities 38,137,469 71,644,208 48,875,085 67,358,303 87,012,554 139,002,511
NET ASSETS ₱ 2,020,084,874 ₱ 1,960,630,904 ₱ 227,165,653 ₱ 222,583,706 ₱ 2,247,250,527 ₱ 2,183,721,538
42
Comprehensive income
POSC ABAGT Total
2017 2016 2017 2016 2017 2016
Revenue ₱ 2,319,993,376 ₱ 1,888,099,468 ₱ 85,402,273 ₱ 18,096,013 ₱ 2,405,395,649 ₱ 1,906,195,481
Depreciation and amortization 225,444,278 171,168,627 4,389,419 4,358,033 229,833,697 175,526,660
Interest income 853,644 815,079 22,119 16,015 875,763 831,094
Interest expense 10,859,855 12,748,505 – – 10,859,855 12,748,505
Profit or loss from continuing

Operations 2,557,151,153 2,072,831,679 89,813,811 22,470,061 2,646,964,964 2,095,301,740
Post tax profit from discontinued

Operations – – – – – –
Other comprehensive income 120,246,512 207,305,905 1,848,235 1,532,311 122,094,747 208,838,216
Total comprehensive income (loss) ₱ 613,112,500 ₱ 607,674,805 ₱ 59,638,292 ₱ (10,216,134) ₱ 672,750,792 ₱ (58,895,690)
Dividends received from associate ₱ 20,628,055 ₱ 22,074,912 ₱ – ₱ – ₱ 20,628,055 ₱ 22,074,912
43
NOTE 8 – GOODWILL
The details of the account as of December 31 are as follows:
2017 2016
Beginning balance ₱ 348,831,159 ₱ 348,831,159
KPI – –
VRC – –
₱ 348,831,159 ₱ 348,831,159
The management believes that the Parent Company’s goodwill is not impaired as of 2017 and 2016.
NOTE 9 – INVESTMENT PROPERTIES
The details of the account as of December 31, 2017 and 2016 are as follows:
2017 2016
Cost
As of January 1, ₱ 428,109,634 ₱ 428,109,634
Additional cost 5,921,832 -
Disposal (36,964,820) -
Total Cost 397,066,646 428,109,634
Fair Value Adjustment

Beginning balance ₱ 5,018,691,321 ₱ 4,788,848,754
Sale of investment (30,522,180) -
Adjustments (1,326,000) -
Fair value adjustment - 229,842,567
Total 4,986,843,141 5,018,691,321
Carrying value ₱ 5,383,909,787 ₱ 5,446,800,955
The fair values of the investment property were determined by independent, certified professional
firm of appraisers accredited with the SEC and were arrived at based on sales and listings of
comparable properties registered within the immediate vicinity of the properties.
On June 9, 2017, one of the subsidiaries donated a parcel of land with an area of 10,000 square
meters located in Mabacong, Batangas City to the Dao De Gong Temple Inc. Total cost of the
donated property is ₱ 18,000,000. The donation was covered by a Certificate Authorizing
Registration No. 2016-004-02522.
The Board of Directors, in a meeting held on March 20, 2018, ratified the exchange of shares of
subsidiary Munera with Asean Commodity Enterprises Inc. for cash worth ₱ 10,191,000. Asean
had previously exchanged land covered by land titles no. TCT No. 83846 and TCT No. 80552 for
shares of Munera, but later, proposed to exchange cash instead of land to Munera, which the Board
approved.
During the year, the subsidiaries sold two (2) parcels of land with an aggregate area of 20,892
square meters with a carrying value of ₱ 8,773,820 at a gain of ₱ 34,382,180.
44
In 2015, the subsidiaries sold two (2) parcels of land with an aggregate area of 20,000 square meters
with a carrying value of ₱31,996,800 at a gain of ₱103,989,600.
The gain is presented in the Statement of Comprehensive Income.
Corresponding deferred tax liability of ₱1,470,356,068 and ₱1,485,367,622 as of December 31,

2017 and 2016, respectively, had been recognized on the revaluation increment on investment
property.
The extent to which the fair value of the investment property is based on the valuation by an
independent appraiser is ₱5,383,909,787 and ₱5,446,800,955 as of December 31, 2017 and 2016,
respectively.
Rental income from lease of investment property recognized in the consolidated statements of
comprehensive income amounted to ₱646,053, and ₱309,836 for the years ended December 31,
2017, and 2016, respectively, as shown in Note 21.
An investment property with a total square meters of 174,058 located in Brgy. Matoco, Batangas
City with market value of P 439.7 million is mortgaged in PBB loan. (See Note 14)
45
NOTE 10 – PROPERTY AND EQUIPMENT
The details of property and equipment are as follows:

Building and Machinery and Construction in Road and Welcome Dive camp and
December 31, 2017 Land Improvements other Equipment progress Improvements Arch Images Stairway Total
Cost
January 1 ₱ 293,541 ₱ 42,857,883 ₱ 62,987,358 ₱ 402,283,169 ₱ 11,425,252 ₱ 2,260,262 ₱ 16,570,105 ₱ 538,677,570
Additions – 53,451,504 189,837 189,733 7,060,629 – 380,455 – 61,272,159
9Adjustment – – – (13,579,079) 639,297 – – 12,936,782 –
December 31 293,541 96,309,387 63,177,195 388,896,823 19,125,178 2,260,262 16,950,560 12,936,782 599,949,729
Accumulated Depreciation
January 1 – 7,225,394 31,096,901 – – – – 38,322,295
Provisions – 2,606 10,053,333 – 63,930 – – 1,293,678 11,413,547
December 31 – 7,228,000 35,160,944 – 63,930 – – 1,293,678 49,735,842

Net carrying value
December 31, 2016 ₱ 293,541 ₱ 35,632,489 ₱ 31,890,457 ₱ 388,896,823 ₱ 18,485,881 ₱ 2,260,262 ₱ 16,570,105 ₱ 11,643,104 550,213,887
Building and Machinery and Construction in Road and Welcome

December 31, 2016 Land Improvements other Equipment progress Improvements Arch Images Total
Cost
January 1 ₱ 293,541 ₱ 42,433,529 ₱ 56,816,543 ₱ 330,086,446 ₱ 11,362,831 ₱ 2,260,262 ₱ 16,570,105 ₱ 459,823,257
Additions – 424,354 6,170,815 72,196,723 62,421 – – 78,854,313
December 31 293,541 42,857,883 62,987,358 402,283,169 11,425,252 2,260,262 16,570,105 538,677,570
Accumulated Depreciation
January 1 – 7,218,651 22,659,003 – – – – 29,877,654
Provisions – 6,743 8,437,898 – – – – 8,444,641
December 31 – 7,225,394 31,096,901 – – – – 38,322,295

Net carrying value
December 31, 2016 ₱ 293,541 ₱ 35,632,489 ₱ 31,890,457 ₱ 402,283,169 ₱ 11,425,252 ₱ 2,260,262 ₱ 16,570,105 ₱ 500,355,275
46
The Management assesses the condition of the group’s property and equipment annually. At
December 31, 2017 and 2016, management has not recognized any condition of impairment and
based on its assessment, has not recognized any impairment loss.
Construction in progress pertains to continuation of works on the main statue, podium and
memorial vaults of the Montemaria project. Although 100% complete, some project components
were not yet transferred to the pertinent property, plant and equipment account because of
modifications on the project.
To add to the viability of the Mother of All Asia Shrine as a pilgrimage destination, in addition to
those already completed, the following works were added:
1. View deck (15th floor)
a. Construction of windows at the 15th floor
b. Construction of leaves made of wrought iron along the 10 meters cantilever beam
2. Cross
a. Construction of 8 meter height cross on top of the head of Mama Mary
3. Strengthening of the four (4) steel columns (19th – 20th floor) due to the increase of load
4. Strengthening of steel deck flooring at the 20th floor
5. Construction of ceiling from ground floor to the 10th floor
6. Construction of stairway going to the Shrine parallel to the main road
NOTE 11 – DEFERRED EXPLORATION COSTS AND MINING RIGHTS
This account represents the group’s accumulated intangible costs related to its Coal Operating
Contract (COC) and gold mining claims in Surigao del Sur and Agusan del Sur.
The recovery of deferred exploration costs is dependent upon the success of future exploration and
development activities and events, the outcome of which cannot be presently determined. In
September 2008, the parent company transferred its COC to AbaCoal in exchange for AbaCoal’s
304,751,200 new shares at its par value of P 0.01 per share equivalent to P 3,047,512.
In 2008, the parent company also entered into a Heads of Agreeement with Lodestar Investment
Holdings Corporation (Lodestar) and MUSX Corporation (MUSX – formerly Music
Semiconductors Corporation) to transfer its outstanding shares in AbaCoal including its interest in
a coal property located in Tandag, Surigao del Sur (see Note 20).
Peoples (NCIP).
On December 27, 2011, parent company executed a Deed of Assignment of Gold Mining Rights in
exchange for shares of stock in favor of Abacus Goldmines Exploration and Development
Corporation (AbaGold) with supplemental Deed of Assignment executed on February 17, 2012.
The parties agree that AbaGold shall increase its authorize capital stock from Forty Million Pesos
(₱40,000,000) to Five Hundred Million Pesos (₱500,000,000), or an increase of Four Hundred Sixty
Million Pesos (₱460,000,000), and that the company assigns, transfers and conveys its entire title
and interests in its gold mining rights unto and in favor of the AbaGold, in exchange for Four
Hundred Ninety Million (490,000,000) new fully paid and non-assessable common shares of the
AbaGold with a par value of One Peso (₱1.00) per share in favor of the company. The increase in
authorized capital stock was approved by the SEC on April 4, 2012. Consequently, the ownership
of the parent company increased to 99.70%.
47
As of December 31, 2017, and 2016, the accumulated mining claims amounted to ₱799,765,732
and ₱798,992,093, respectively.
NOTE 12 – RELATED PARTY TRANSACTIONS
Principal subsidiaries
The details of the group’s direct subsidiaries as of December 31 are as follows:

Proportion of Proportion of Proportion of
ordinary shares ordinary shares ordinary shares held
Nature of directly held by held by the group by non-controlling
business parent (%) (%) interest (%)
Philippine Regional Investment Development Investment

Corporation (PRIDE) House 100 100 –
Kapuluan Properties, Inc. (KPI) Real Estate 100 100 –
Vantage Realty Corporation Real Estate 100 100 –
Abacus Coal Exploration and Development Coal
Corporation (AbaCoal) Exploration 100 100 –
Abacus Goldmines Exploration and
Development Corporation (AbaGold) Gold Mining 99.70 99.70 .30
Related party transactions consist of non-interest bearing advances to and from related parties for
working capital requirements and other related expenses which will be liquidated either through cash
or equity shares of the borrower.
a. There were no guarantees received or given during the year.
The details of advances to related parties are as follows:
Nature of
Relationship 2017 2016
Arras Project Under common
Elements directorship ₱ 10,273,500 ₱ 10,273,500
Under common
HIMGI directorship 7,473,964 4,072,622
Under common
Geyser, Inc. (Geyser) directorship 4,998,773 4,998,773
Under common
AbaGT directorship 9,810 799,359
23,426,889 84,067,842
The summary of the group’s advances to related parties in the normal course of business are as
follows:
Amount/ Outstanding
Category Volume Balance Terms Conditions
No term. Non-interest Unsecured, No

Arras Project Elements ₱ – ₱ 10,273,500 bearing. impairment
BSDF 63,252,746 670,842 bearing. impairment
HIMGI (3,401,342) 7,473,964 bearing. impairment
AbaGT 789,549 9,810 bearing. impairment
Geyser, Inc. (Geyser) – 4,998,773 bearing. impairment
₱ 23,426,889
48
The details of advances from related parties are as follows:
Nature of
Relationship 2017 2016
AbaGT Under common directorship ₱ 18,717,329 ₱ -
Asean Commodity Under common directorship 2,094,000 -
Fluvion Real Estate Under common directorship 1,533,032 1,986,482
Batangas Harbor Individual Estate Under common directorship 252,688 252,688
₱ 22,597,049 ₱ 2,239,170
The summary of the group’s advances from related parties in the normal course of business are
as follows:
Amount/ Outstanding
Category Volume Balance Terms Conditions
AbaGT ₱ (18,717,329) ₱ 18,717,329 No term. Non- Unsecured, No

interest bearing. impairment
Asean Commodity (2,094,000) 2,094,000 No term. Non- Unsecured, No
Fluvion Real Estate ₱ 453,450 1,533,032 No term. Non- Unsecured, No
Batangas Harbor Individual No term. Non- Unsecured, No
Estate – 252,688 interest bearing. impairment
impairment
₱ 22,597,049
b. Directors’ fees, compensation and other benefits are composed of the following:
2017 2016
Short-term benefits P 6,766,235 P 4,436,374

Post-employment benefits – –
P 6,766,235 P 4,436,374
NOTE 13- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
This account consists of the following:
2017 2016
Trade ₱ 63,859,205 ₱ 60,025,169

Accruals 14,586,715 19,750,819
Others 133,876,297 8,061,692
₱ 212,322,217 ₱ 87,837,680
Trade payables, accruals and other liabilities are payable within one year after the financial
reporting date.
Substantial portion of trade payables represents the advances from a certain individual for the
ongoing projects in Batangas City.
49
Accrued expense pertains to company’s liability for professional services and other related
expenses.
Substantial portion of Other payables represents partial payment in the sale of land in Malinis
Batangas.
The parent company considers the carrying amounts of accrued expenses and other payables
recognized in the statements of financial position to be the reasonable approximation of their fair
values.
NOTE 14 – LOANS PAYABLE
Parent Loan
This represents loans obtained from Philippine Business Bank (PBB) and Luzon Development Bank
(LDB) to finance its short-term working capital requirements.
2017 2016
PBB
With 7.50% per annum payable on January 4, 2018 ₱ 13,000,000 ₱ -
With 7.50% per annum payable on January 3, 2018 10,350,000 -
With 7.50% per annum payable on February 2, 2018 16,200,000 -
With 7.75% per annum payable on June 6, 2018 10,000,000 -
With 7.75% per annum payable on March 13, 2018 18,000,000 -
With 7.50% per annum payable on January 9, 2017 - 14,000,000
With 7.50% per annum payable on February 8, 2017 - 19,000,000
With 7.50% per annum payable on February 28, 2017 - 15,000,000
With 7.50% per annum payable on March 17, 2017 - 20,000,000
With 7.50% per annum payable on March 24, 2017 - 15,000,000
With 7.50% per annum payable on July 7, 2017 - 11,500,000
With 7.50% per annum payable on August 10, 2017 - 15,000,000
With 7.50% per annum payable on September 22, 2017 - 23,500,000
With 7.50% per annum payable on December 8, 2017 - 12,500,000
Subtotal 128,800,000 145,500,000
LDB
With 7.75% per annum payable on June 4, 2018 50,000,000 -
TOTAL ₱ 178,800,000 ₱ 145,500,000
The loans in PBB are secured by 8,267,966 shares of stock of POSC owned by the Company with
market value of P 91,774,423 as of December 13, 2017 and real estate mortgage over a 174,058
square meter property located in Brgy. Matoco, Batangas City with market value of P 439.7 million
and a continuing suretyship executed by an officer. (See Note 9)
50
The loan in LDB is secured by the property located in Barrio Sambat Ibaba, Municipality of
Batangas covered by transfer certificate of Title Nos. 052-2016001955 with an area of 2006 sqm
more or less and TCT 052-2016001956 with an area of 590 sqm more or less which forms the land
area where Alpa Hotel Stands.
Interest payments on the loans amounted to P 6,982,323 and P 5,531,875 in 2017 and 2016,
respectively.
NOTE 15 – CAPITAL STOCK / DIVIDEND DECLARATION
Share Capital consists of the following:
2017 2016
Class A Shares (including Class B Shares declassified in 2008)
Authorized, @ P 1.00 par value per share
Number of Shares 5,000,000,000 5,000,000,000
Amount: ₱ 5,000,000,000 ₱ 5,000,000,000
Number of Shares Issued

Subscribed 2,655,095,834 2,655,095,834
Stock dividend 530,989,000 530,989,000
3,186,084,834 3,186,084,834
Subscription receivable (292,764,075) (292,764,075)
2,893,320,759 2,893,320,759
Amount:
January 1 ₱ 3,186,084,834 ₱ 2,655,095,834
Additions – 530,989,000
3,186,084,834 3,186,084,834
Subscription receivable (292,764,075) (292,764,075)
₱ 2,893,320,759 ₱ 2,893,320,759
Treasury shares at cost ₱ 150,790 ₱ 150,790
NOTE 16 – EXPENSES
The compensation and benefits includes the salaries and wages of employees of the group as well
as their 13th month pay and monthly contributions to SSS, PhilHealth and Pag-ibig Fund.
Taxes and licenses is composed of business taxes paid for permits, licenses and property taxes
incurred in the normal course of the group’s business operations.
Management and directors’ fees pertain to remuneration paid to the directors of the group when
board meetings are held.
Miscellaneous expenses include membership dues and fees, donations and input VAT from
purchases.
51
NOTE 17 – RETIREMENT BENEFIT COST
The company is required by Republic Act (R.A.) 7641, Retirement Law, to pay retirement benefits
for all employees who have reached the retirement age of 60 and have rendered a minimum
continued service of five years. Under R.A. 7641, the retirement pay is equivalent to at least half of
the final monthly salary of the employee for every year of service.
Under PAS 19, “Employee Benefits”, the cost of defined retirement benefits, including those
mandated under R.A. 7641, should be determined using an accrued benefit actuarial valuation
method or a projected unit credit actuarial valuation method.
Management believes that the effect on the financial statements of the difference between the
retirement benefit cost recognized by the group and the retirement benefit cost that could be
determined using the projected unit credit actuarial valuation method is not significant.
NOTE 18 – INCOME TAXES
The components of the Group’s provision for (benefit from) income tax for the years ended
December 31, 2017, 2016 and 2015 are as follows:
2017 2016 2015
Current ₱ 31,886 ₱ 9,471 ₱ 9,094

Deferred (179,790) 69,012,712 198,338,530
₱ (147,904) ₱ 69,022,183 ₱ 198,347,624
The deferred tax assets in the consolidated statements of financial position consist of the following:
2017 2016 2015
MCIT ₱ 126,424 ₱ 126,424 ₱ 126,424
The deferred tax liabilities in the consolidated statements of financial position consist of the
following:
2017 2016 2015

Revaluation increment in
investment property ₱ 1,470,355,338 ₱ 1,485,358,335 ₱ 1,416,370,726
Unrealized foreign exchange gain
(loss) 730 9,287 (15,816)
₱ 1,470,356,068 ₱ 1,485,367,622 ₱ 1,416,354,910
NOTE 19 – BASIC EARNINGS (LOSS) PER SHARE
The following table presents information necessary to calculate basic earnings (loss) per share:
2017 2016 2015

Net income (loss) attributable to
equity holders of the Parent company ₱ (38,087,495) ₱ 103,416,440 ₱ 643,235,883
Weighted average number of
common shares outstanding
during the year 2,992,201,447 2,992,201,447 2,992,201,447
₱ (0.01273) ₱ 0.03456 ₱ 0.21497
52
The diluted earnings (loss) per share for the years ended December 31, 2017 and 2016 have not
been calculated since no diluting events existed during those years.
NOTE 20 – COMMITMENTS AND CONTINGENCIES
In 2008, the parent company entered into a Heads of Agreement (the Agreement) with Music and
Lodestar to transfer its outstanding shares in AbaCoal including its interest in a coal property
located in Tandag, Surigao del Sur.
This Agreement was amended in 2009 whereby Music assigned its right to acquire 55%
participation and equity interest in AbaCoal to Lodestar. The purchase price was in the form of
exchange of shares whereby P225 million worth of shares of AbaCoal at par value were swapped
with 25 million shares of Lodestar valued at P9 per share or a total value of ₱225 million. As a
consequence of this exchange of shares, Lodestar gained control of 75% of the over-all outstanding
share capital of AbaCoal. Lodestar was also granted an option to acquire the remaining ₱75 million
worth of shares of Abacoal. However, as of report date, the transfer of ownership of the shares
between the two parties has not yet been completed.
In 2009, the parent company received advances from Lodestar amounting to ₱15 million in addition
to the ₱15 million received in 2008 and a partial payment based on the cancellation of the heads of
agreement amounting to ₱7M.
On November 3, 2010, the Heads of Agreement was revised as follows:
1. Merger and Acquisition
Lodestar shall acquire the Coal Property and all the other assets and liabilities of AbaCoal by
and through a merger of Lodestar and AbaCoal, with Lodestar as the surviving corporation.
By virtue of said merger, Lodestar shall issue two hundred fifty million (250,000,000) new
common shares at a par value of ten centavos (₱0.10) and an agreed issue value of ninety
centavos (₱0.90) to the parent company. The parent company undertakes to list the said
250,000,000 new common shares with the Philippine Stock Exchange (PSE) at the soonest
possible time. These terms and conditions shall be incorporated in a Merger Agreement and
Plan of Merger which the parties hereby agree to execute at the proper time.
2. Participation in Operating Revenues
As an indispensable component of this agreement, Lodestar shall make staggered cash payments to
the parent company which shall be deemed as constituting a participation in operating revenues
from the Coal Property in the total amount of seventy five million pesos (₱75,000,000), in
accordance with the following schedule:
Date or Period of Payment Amount
• September 24, 2008, June 1, 2009 and June 8 2009

– Advance Deposit on First Party’s Participation. Thirty Million Pesos (P 30,000,000)
Amounts to be paid upon and to be taken from the sale of the first production of Coal Products from
the Coal property
▪ Upon consummation of said first (1st) sale of Twenty Million Pesos (P 20,000,000)
Coal Products
▪ Thirty (30) days from consummation of said 1st Twenty Five Million Pesos (P 25,000,000)
sale of Coal Products
53
Lodestar shall be entitled to a grace period of ten (10) days from the dates the payments fall due.
On October 26, 2011, Abacus Consolidated Resources and Holdings, Inc. (ABACUS) entered into
an agreement with Lite Aviation Holdings, Limited (LAH) wherein, the following matters were
agreed upon: (a) LAH will issue shares to ABACUS at agreed rate of $ 1 per share based upon the
amount drawn down each milestone; (b) LAH hereby also grants ABACUS, or assign, an option at
a second ONE Million US DOLLARS ($ 1,000,000) investment into LAHS. The intent to invest
the “second million” option must be declared on or before January 31, 2012; (c) To secure the place
of ABACUS as an investor in LAH, ABACUS agrees to a deposit of fifty thousand dollars ($
50,000). The fifty thousand dollars ($ 50,000) shall also be deducted from the initial One million
US dollars ($ 1,000,000) investment; (d) Both parties agree to negotiate for a share swap conversion
on their respective shares up to the amount of US $ 100,000 under such terms and conditions
acceptable to the parties within one month from the date of signing of MOA.
ABACUS declares through MOA its intent to invest 1million US dollars ($ 1,000,000) in LAH to
support LAH‟s 49% interest in PT Lite Airways Indonesia and other aviation-related business. For
this purpose, Abacus shall utilize its fully-owned subsidiary, Tagapo Realty Company, Inc.
(TAGAPO), or assign, as its investing vehicle, and may change TAGAPO‟s name to Lite Aviation
Philippines, Inc., or to a similar name as may be approved by the Philippine Securities and Exchange
Commission.
NOTE 20 - LEASES
PRIDE(lessee) has entered into an operating lease agreement, renewable every year. The basic
terms and conditions of which, among others, are as follows:
1. The lessor agrees to lease out the Condominium Units located at Unit 1, Bricville
Condominium Bldg., No. 28 N. Domingo St., Brgy. Valencia, Quezon City at a
monthly rental of ₱ 39,930 plus vat.
2. The lessee shall deposit with the lessor an amount equivalent to two (2) months deposit
which shall be refunded upon expiration of the agreement and after the lessee shall have
completely and satisfactorily vacated and delivered the Leased Premises to the lessor
from said deposit and two (2) months advance rental to be applied on the last two
months of the lease.
3. Care and maintenance of leased premise, utilities and taxes are for the own expense of
the lessee.
4. The lessee rate shall increase annually by 10% starting October 1, 2017.
5. The lease agreement does not have any purchase options, sub-leases and other
restrictions.
Lease rental expense for the years ended December 31, 2017, 2016 and 2015 amounted to
₱ 642,919, ₱646,329 and ₱2,752,025, respectively.
The group has lease agreements that are renewable upon mutual agreement with its lessees as
follows:
Lessee Lease Period
Metro Lipa Water District February 28, 2010 – indefinite duration
Blue Stock Development Holdings, Inc. December 2008 – indefinite duration
54
On October 14, 2015, the parent company entered into an operating lease agreement with PNB-
IBJL Leasing and Finance Corporation for a term of three years for lease of various equipments.
Rental deposits amounted to ₱142,712 and ₱120,712 for 2017 and 2016, respectively.
Rental income earned for the years ended December 31, 2017, 2016 and 2015 amounted to
₱646,053, ₱309,836 and ₱452,162, respectively.
NOTE 22 – JOINT VENTURE AGREEMENT (JVA)
PRIDE represented Omnicor and its subsidiaries (the Owners) in a JVA with Solar Resources,
Inc. (Solar), executed on February 18, 2007 involving properties of the Owners amounting to
₱42,163,200. The pertinent terms of the JVA are as follows:
 • Solar undertakes to develop the property into a residential/commercial subdivision;

• Solar shall, as soon as practicable, start the construction and development work in the project
after all the necessary permits and clearances to commence development works shall have been
 completely secured;
• Solar shall develop the project by way of phases and commits to complete all construction and
development works on each phase within three (3) years or longer from the commencement
thereof but the period maybe shortened or lengthened depending on the sales performance of
 the project;
• Expenses in securing the approval from the Department of Agrarian Reform of the land
conversion of the properties to residential/commercial use, or its exemption from conversion
 shall be shared by Solar and the Owners on a 65%-35% ratio;
• As and by way of return on the respective contributions of the parties, the net saleable area in
the residential/commercial subdivision shall be divided between Solar and the Owners on a
65%-35% ratio; and
As part of the JVA, PRIDE shall acknowledge the receipt of P10 million from Solar as cash advance
from the joint venture. This cash advance shall be paid by PRIDE to the joint venture thru successive
deductions from any and all collections received from the sale of the Owners‟ 35% lot share in the
project. Advances received amounted to ₱9,500,000 for both years.
The joint venture agreement was terminated in 2013 and the company made an initial payment to
Solar amounting to ₱5,500,000.
On 11 July 2014, two (2) of the company’s subsidiaries, Asean Publishers, Inc. (API) and Export
Affiliates Services and Trade, Inc. (EASTI), as owners, and CHMI Land, Inc. (CLI), as developer,
executed a Memorandum of Agreement (MOA) for the dormitory/residential and commercial
development of the following properties located in Inosluban, Lipa City:
Landowner Land Area (sqm)

Phase 1 API 34,309
API 8,313
Phase 2 EASTI 17,390
Total land area 60,012
Under the MOA, API and EASTI shall, among others, contribute aforesaid properties at an effective
valuation of P6,500/sqm, while CLI shall develop the properties. CLI is authorized to obtain loan
financing for project using API‟s and EASTI’s properties as collateral to partially finance the
project.
55
As for revenue sharing, for Phase 1 the MOA provides: a) that the parties shall agree, via a selection
process, on the distribution of rentable/saleable units which each party may sell at any time at an
average price of ₱1,200,000 per unit, b) the number of rentable/saleable units that each may select
shall be computed as follows:
Owners Projected value of land/Average net selling price of each rentable/saleable unit
Developer Total # of rentable/saleable units – # of rentable/saleable units allotted to Owners
And c) each party shall be entitled to the rent revenues, net of VAT, commissions and direct
expenses, from the unsold units selected by each. As of the date of these financial statements, the
parties have not yet implemented the above mentioned (a) selection process. For Phase 2, the MOA
provides that the parties shall execute a separate revenue sharing agreement.
On 23 September 2015, pursuant to its obligations under the MOA, CLI obtained a term loan in the
total amount of ₱130,502,000 from the Development Bank of the Philippines to partially finance
the development of the project. The release of the loan proceeds shall be on staggered basis
depending on the progress of the project and subject to the lender’s approval. The loan is secured
by a third party real estate mortgage on API’s 34,309 square meter property. Interest is at lender’s
prevailing rate at the time of release of the corresponding portion of the loan proceeds.
NOTE 23 – CAPITAL MANAGEMENT
The primary objective of the group’s capital management is to ensure its ability to continue as a
going concern and that it maintains a strong credit rating and healthy capital ratios to support its
business and maximize shareholder value.
The parent company’s BOD and management have overall responsibility for monitoring of capital
in proportion to risk. Profiles for capital ratios are set in the light of changes in the group’s external
environment and the risks underlying the group’s business operations and industry.
The group monitors capital on the basis of the debt-to-equity ratio which is calculated as total debt
divided by total equity. Total debt is equivalent to accounts payable and accrued expenses, loans
payable, rental deposit payable, bills payable, income tax payable, advances from related parties
and deferred tax liability. The group reports its total equity as the capital it manages. This comprises
all components of equity including share capital, retained earnings and minority interest. The
group’s equity amounts to ₱5,733,418,608 and ₱5,832,816,756 as of December 31, 2017 and 2016,
respectively.
There are no changes in the group’s approach to capital management during the year.
The group is not subject to statutory capital requirement except for PRIDE and PIIFI which are
subject to minimum capital requirements. PRIDE is in compliance with the statutory minimum
capital requirement of ₱300 million set by the Investment House Law. PIIFI also meets the
minimum capital requirement of ₱50 million set by the Investment Company Act.
NOTE 24 – SEGMENT INFORMATION
Business Segments
For management purposes, the group is organized into four main business segments – holding, real
estate, financial services and hotel. These are also the basis of the group in reporting its primary
segment information.
56
The holding segment is primary engaged in purchasing, owning, holding, transferring, or disposing
of real properties of every kind and description, including shares of stocks and other securities,
contracts or obligations of any corporation or association and contributed negative 89% and 29%
of the group’s consolidated net income for the years ended December 31, 2017 and 2016,
respectively. The decrease in income of holding segments was due to no revaluation of investment
property for the year.
The real estate segment includes purchases of land for appreciation which contributed 44% and
68% of the group’s consolidated net income for the years ended December 31, 2017 and 2016,
respectively
The financial services segment is involved in the accumulation of deposits and extension of rural
credits to small farmers and tenants and to deserving rural industries or enterprises. This segment
only existed in 2007 when PSDBI is still a subsidiary of PRIDE. It was deconsolidated in 2008
when the ownership of PRIDE in PSDBI was diluted to 40%.
The hotel segment is basically engaged to own, lease, operate, manage and administer
hotels/hometels, apartment hotels, restaurants and all facilities, accommodations adjunct and
accessories appurtenants to general hostelry business. This segment was also deconsolidated in
2008 when ownership of the parent company in AbaGT was reduced to 9.64%.
Other segments include the mining and exploration, investment and other small divisions of the
group which contributed 56% and 61% of the group’s consolidated net income for the years ended
December 31, 2017 and 2016, respectively. These are monitored by the group’s management as
well.
Segment Assets and Liabilities
Segment assets include all operating assets used by a segment and consist principally of operating
cash, receivable and property and equipment, net of allowances and provisions and investment
property. Segment liabilities include all operating liabilities and consist principally of accounts,
wages, taxes currently payable and accrued liabilities. Segment assets and liabilities do not include
deferred income taxes.
Inter-segment transactions
Segment revenues, expenses and performance include revenue and expenses between business
segments. Such revenues and expenses are eliminated in consolidation.
NOTE 25 – OTHER MATTERS
a.) The transactions covered by leases with Bank of Tokyo Lease and Finance Philippines, Inc., and
PNB leasing are currently under litigation for being unauthorized transactions entered into by
persons not authorized by the company to conduct business with said entities. Any amounts already
deposited to them prior to litigation were deposited with reservation subject to investigation of said
transactions and those persons liable. Hence, the pertinent entries relating to the transactions in the
financial statements of December 31, 2015 were reversed.
57
b.) In April 2017, PRIDE (the Company) entered into a Joint Venture agreement with Xentroland
Realty Corporation, Developer, a Corporation engaged in the business of real estate and
construction in the development of high-rise mixed -use condominiums. The Company which owns
a parcel of land located at Malinis, Lemery, Batangas with a total area of 32-36 hectares is offering
part of the subject property (more or less 67% of total land area of 24 hectares), as initial the site of
basic land development construction, hereinafter, referred to as the project.
• Developer agrees to do the basic land development and construction of the project,
amounting to One hundred fifty million pesos (Php 150,000,000.00) and likewise its
expertise in real estate and construction;
• Developer shall contribute the said amount for basic land development and (80%) or one
hundred twenty million (Php 120,000,000.00) of which is allotted for purchase of
Waltermart Mall properties situated and as part of total land area and the remaining shall
be allotted for land development construction costs;
• The total cost of the project for the land and construction by the corporations is one billion
two hundred million pesos (Php 1,200,000,000.00);
• Taxes, administrative fees and other fees related to the project operations and the like shall
be charged to capital expenditure infusion.
Pending compliance to certain deliverables, investment in the joint venture agreement was not yet
effected in the financial statements as of balance sheet date.
58
Segment Revenues and Results
Segment Revenues Segment Results
Year-ended Year-ended Year-ended Year-ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Holdings ₱ 10,129,524 ₱ 4,492,341 ₱ (43,798,005) ₱ (28,225,749)
Real estate 40,021,950 115,696,963 22,125,323 103,597,743
Other 445,270 116,193,217 (27,562,284) 94,000,184

Total Revenues and Results ₱ 50,596,744 ₱ 236,382,520
Profit before income tax ₱ (49,234,967) ₱ 169,372,177
Depreciation and amortization 11,954,026 8,444,641

Financing costs 12,815,639 7,897,973
Interest income (316,927) (274,673)
Equity share in net earnings (losses) 4,087,134 (2,581,363)
Provision for (benefit from) income tax 147,904 69,022,183
Net income (loss) for the year/Segment profit for the year (52,471,736 96,965,321
EBITDA for the year (24,079,768) 180,023,428
EBITDA margin for the year (48% ) 76%
Core income for the year (48,384,602) 94,383,958
Segment Assets 2017 2016

Holdings ₱ 1,240,692,897 ₱ 1,014,032,479
Real estates 3,054,785,536 2,886,027,007
Others 3,359,678,827 3,691,348,862
Total segment assets 7,655,157,260 7,591,408,348
Segment Liabilities 2017 2016

Holdings ₱ 513,128,025 ₱ 323,462,079
Real estates 683,083,966 708,244,580
Others 725,526,661 726,884,930
Total segment liabilities ₱ 1,921,738,652 ₱ 1,758,591,589
Other Segment Information

Depreciation and amortization
Year-ended Year-ended
Other Segment Information 12/31/2017 12/31/2016
Holdings ₱ 1,208,303 ₱ 1,241,899
Real estates 5,692,476 3,446,328
Financial services – – – –
Others 5,053,248 3,756,414
Total ₱ 11,954,026 ₱ 8,444,641
Earnings before interest, tax, depreciation and amortization of the segments are as follows:
2017 2016
Holding ₱ (57,644,746) ₱ (15,054,959)

Real Estate 15,637719 183,640,100
Others 32,619,725 141,041,819
59
NOTE 26– FINANCIAL INSTRUMENTS
The table below presents a comparison by category of carrying amounts and estimated fair values
of the group’s financial assets and liabilities as of December 31, 2017 and 2016:
2017 2016
Carrying Carrying
Value Fair Value Value Fair Value
Financial Assets
Cash ₱ 96,340,100 ₱ 96,340,100 ₱ 56,844,187 ₱ 56,844,187
Trade and other
Receivables 162,597,573 162,597,573 59,146,618 59,146,618
₱ 258,937,673 ₱ 258,937,673 ₱ 115,990,805 ₱ 115,990,805
Financial Liabilities
Accounts payable and
accrued expenses ₱ 212,322,217 ₱ 212,322,218 ₱ 87,837,680 ₱ 87,837,680
Loans payable 178,800,000 178,800,000 145,500,000 145,500,000
₱ 391,122,217 ₱ 391,122,218 ₱ 233,337,680 ₱ 233,337,680
Fair Value of Financial Instruments
The carrying amounts of the cash and cash equivalents, trade and other receivables, advances to
related parties, advances from a related party, advances from heads of agreement, loan payable and
accrued expenses and other payables approximate their fair values due to the relatively short-term
maturity of these financial instruments.
NOTE 27 – FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES
The group is exposed to variety of financial risks, which result from its operating, financing and
investing activities. The group’s principal financial instruments comprise of cash and cash
equivalents, loans receivable, deposit liabilities, loans and bills payable and advances to and from
related parties. The main purpose of these financial instruments is to earn income and raise finance
for the group’s operations. The group has various other financial assets and liabilities such as trade
and other receivables and accounts payable and accrued expenses, which arise directly from
operations.
The group’s financial risk management policies and guidelines cover credit risk, interest rate risk,
liquidity risk and market risk. The objective of financial risk management is to contain, where
appropriate, exposures in these financial risks to limit any negative impact on the group’s financial
position and results of operations. The group actively measures, monitors and manages its financial
risk exposures by various functions pursuant to the segregation of duties principles.
Credit Risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in
financial loss to the group.
The group is exposed to credit risk through its trade and other receivables and loans receivable.
60
The details of the group’s maximum exposure to credit risk as of December 31, 2017 and 2016 are
as follows:
2017 2016
Trade and other receivables ₱ 162,597,573 ₱ 59,146,618
The details of the group’s aging analysis of financial assets as of December 31, 2017 and 2016 are
as follows:
31 – 91 – 181 – < 3 years
December 31, Neither past due ≤ 30 90 180 360 1 – 3 but not Impaired
2017 Total nor impaired days days days days years impaired
Trade and other

Receivables ₱ 162,597,573 ₱ 162,597,573 – – – – – – –
31 – 91 – 181 – < 3 years

December 31, Neither past due ≤ 30 90 180 360 1 – 3 but not Impaired
2016 Total nor impaired days days days days years impaired
Trade and other

Receivables ₱ P59,146,618 ₱ 59,146,618 – – – – – – –
Liquidity Risk
Liquidity risk refers to the risk that the group will not be able to meet its financial obligations as
they fall due.
The group is mainly exposed to liquidity risk through its maturing liabilities. The group has a policy
of regularly monitoring its cash position to ensure that maturing liabilities will be adequately met.
To address the liquidity gap, Abacore expects cash from its subsidiaries from the sale of properties
located at Mataas na Bayan, Lemery Batangas by 2nd quarter of 2018.
61
The maturity analysis of the group’s financial liabilities as of December 31, 2017 and 2016 are as
follows:
Less than 3-12 1-5

December 31, 2017 Total On demand 3 months months years
Accounts payable
and accrued
expenses ₱ 212,322,217 ₱ 212,322,218 – – –
Loans payable 178,800,000 178,800,000 – – –
₱ 391,122,217 ₱ 391,122,218 – – –
Less than 3 – 12 1–5

December 31, 2016 Total On demand 3 months months years
Accounts payable
and
accrued expenses ₱ 87,837,680 ₱ 87,837,680 – – –
Loans payable 145,500,000 145,500,000 – – –
₱ 233,337,680 ₱ 233,337,680 – – –
Subsequent to financial reporting date, the company paid in full the remaining balance of loans
payable as part of Management’s continuing effort to contain and manage its liquidity risk.
NOTE 28 – PRIOR PERIOD ADJUSTMENT
Prior period adjustment pertains to cost of investment property.
62
BSDHI
56.69%
“SCHEDULE I”
37.46% ACHI
Abacus
Vantage Kapuluan Goldmines PRIDE Abacus Coal
% 9.64% ABA-GT
99.70%%
Barit Resort Philippine Intl. OMNICOR Phil.

All Lemery Total Mall
Infrastructure TAGAPO Sinohydro Pride Star
Batangas Beef (formerly:CTZ Dev't. Bank
DRM Dev Holdings)
Export Aff.
Hillside Orchs Assurance
60% 40%
Haves Insurance Asean Pub
Quilib Cattle
Allegiance Countrywide
Omnilines Quilib Quality Leverage
Simlong Realty
Threefold
Manivest Quilib Pasture In-town
Logic Wholesale Pride Resources
Far Pacific Candor Realty (Formerly:Better
Santuary Systems Resources)
Organization
Asean Properties Focus Real
Fairfield
Ala-Eh Knit
Friendship Mgt. GMTM
Adroit Realty
JAP Aggregates
Certain Corp. MAMCOR
BatangasCement
Asean Traders
Hedge Intermarket
Pasture View Channel Minerals
Epular
Munera Real e Batangas Stock
Estate Company Aerotrophic
(Asean Property)
Banalo
Vinterra
Calatagan
Pride Aeropark
HIM Mgt
San Isidro
Aerosonic Land
Hewdon Land
Harborworks R+ house @ Montemaria

Construction
(Note: 100% owned except where otherwise indicated) 55.00% Montemaria Asia Pilgrims
Verde Island Passage (VIP)

ABA - Annual Report 2017

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

ABA - Annual Report 2017

Uploaded by

Copyright:

Available Formats

ABACORE CAPITAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – CORPORATE INFORMATION

ABACORE CAPITAL HOLDINGS, INC. Formerly, Abacus Consolidated Resources and

Principal Controlling Interest (%)

2.1 Basis of Preparation of Financial Statements

2.1.1 Statement of Compliance

(a) PFRSs – corresponding to International Financial Reporting Standards;

2.1.2 Basis of consolidation

The Parent Company’s direct and indirect subsidiaries are as follows:

Subsidiaries of Abacore Capital Holdings, Inc. (formerly, Abacus

Kapuluan Properties, Inc. (KPI)

Vantage Realty Corporation (VRC)

Abacus Coal Exploration and Development Corporation (AbaCoal)

Abacus Goldmines Exploration and Development Corporation (AbaGold)

Accounting for business combination

2.2 Foreign currency translation

a. Functional and Presentation Currency

b. Transactions and balances

2.3 New and Amended Standards

• PFRS 14, Regulatory Deferral Accounts (New in 2014)

• PAS 1, Presentation of Financial Statements – Disclosure Initiative

• Annual Improvements to PFRS – the 2012-2014 Cycle

PAS 19, Employee Benefits – Discount rate: regional market issue.

New and Revised PFRSs in Issue but Not Yet Effective

• PFRS 16, Leases (New in 2016)

PFRS 16 replaces the following standards and interpretations:

• PFRS 9, Financial Instruments (New in 2014) – Classification and Measurement of Financial

• PFRS 15, Revenue from Contracts with Customers (Amended in 2016)

Amends PAS 12 Income Taxes to clarify the following aspects:

• PFRS 2, Share-based Payment (Amended in 2016) – Classification and Measurement of

• PFRS 4, Insurance Contracts (Amended in 2016) – Applying PFRS 9 'Financial Instruments'

• PAS 40, Investment Property (Amended in 2016) – Transfers of Investment Property

PFRS 1, First-time Adoption of International Financial Reporting Standards – Deletion of

2.4 Financial instruments

2.4.1 Financial Assets

 • Financial assets at fair value through profit or loss

2.4.1.2 Recognition and Measurement

Determination of fair value

Fair value hierarchy

• Other Financial Liabilities

2.4.3 Derecognition of financial instruments

Impairment of financial assets

(a) significant financial difficulty of the issuer or obligor;

Financial assets carried at amortised cost

Offsetting of financial instruments

2.5 Investments in subsidiaries

2.6 Investments in associates

2.7 Joint venture transactions

2.8 Business combination and goodwill

2.9 Investment property

2.10 Prepaid and Others current assets

2.11 Property and equipment

Category Estimated useful life in years

2.13 Deferred exploration costs

2.14 Other non-current assets

2.15 Impairment of non-financial assets

2.16 Provisions and contingencies

Treasury shares are recognized at cost.

2.18 Revenue recognition

Share in net earnings and losses of associates

2.20 Employee benefits

(a) Short – term benefits

(b) Retirement benefit