Appendix 3

Module 6A: Stockholders’ Equity

Module 6B: Retained Earnings

Worksheet Guide

Worksheet 18: Case Analysis

Submission Due Date: November 14, 2020

Task and Procedure:

For this worksheet, you are expected to apply the concepts you have studied in this module to actual
business setting.

1. Read the financial statements of the Company you have chosen in Module 1
2. Utilize the knowledge you gained in this module to identify key concepts and use them to answer or
explain the following:
1. What is the par or stated value of your Company’s common or capital stock?
THE PAR VALUE OF COMMON STOCK IS P0.50 PER SHARE.

2. How many common shares outstanding at the latest balance sheet date?
AS OF MARCH 31, 2019, STI HOLDINGS HAS OUTSTANDING SHARES TOTALING
9,904,806,924 OUT OF ITS AUTHORIZED CAPITAL STOCK OF 10 BILLION SHARES.

3. Are there dividends declared or paid? What was the type of dividends declared?
THE STI EDUCATION SYSTEMS HOLDINGS, INC. HAS DIVIDEND DECLARED. THE
DECLARATION OF DIVIDEND IS THROUGH CASH DIVIDEND.

IN THE MEETING OF THE BOARD OF DIRECTORS OF THE COMPANY HELD ON 15 FEBRUARY

2018, THE BOARD ADOPTED A REVISED POLICY ON THE DECLARATION OF DIVIDENDS STARTING
WITH FISCAL YEAR 2017-2018 IN ORDER TO CLARIFY THE DIVIDEND DECLARATION POLICY OF NOT
LESS THAN 25% OF THE COMPANY'S CORE NET INCOME FROM THE PREVIOUS FISCAL YEAR; AND
PROVIDE THE DEFINITION OF THE CORE NET INCOME OF THE COMPANY. THE BOARD APPROVED
A DIVIDEND DECLARATION POLICY OF NOT LESS THAN 25% OF THE CORE NET INCOME OF THE
COMPANY FROM THE PREVIOUS FISCAL YEAR, SUBJECT TO COMPLIANCE WITH THE
REQUIREMENTS OF APPLICABLE LAWS AND REGULATIONS, STATUTORY LIMITATIONS AND/OR
RESTRICTIONS, TERMS AND CONDITIONS WHICH MAY BE IMPOSED ON THE COMPANY BY
LENDERS OR OTHER FINANCIAL INSTITUTIONS, AND THE COMPANY'S INVESTMENT PLANS AND
FINANCIAL CONDITION.

CORE NET INCOME IS DEFINED AS CONSOLIDATED NET INCOME AFTER INCOME TAX
DERIVED FROM THE COMPANY'S MAIN BUSINESS-EDUCATION AND OTHER RECURRING INCOME.

THE NUMBER OF DIVIDENDS WILL BE REVIEWED PERIODICALLY BY THE BOARD IN LIGHT

OF THE COMPANY’S EARNINGS, FINANCIAL CONDITIONS, CASH FLOWS, CAPITAL REQUIREMENTS
AND OTHER CONSIDERATIONS, WHILE MAINTAINING A LEVEL OF CAPITALIZATION THAT IS
COMMERCIALLY SOUND AND SUFFICIENT TO ENSURE THAT THE COMPANY CAN OPERATE ON A
STANDALONE BASIS.
 DIVIDENDS SHALL BE DECLARED AND PAID OUT OF THE COMPANY’S UNRESTRICTED
RETAINED EARNINGS WHICH SHALL BE PAYABLE IN CASH, PROPERTY OR STOCK TO ALL
SHAREHOLDERS ON THE BASIS OF OUTSTANDING STOCK HELD BY THEM.
UNLESS OTHERWISE REQUIRED BY LAW, THE BOARD, AT ITS SOLE DISCRETION, SHALL
DETERMINE THE AMOUNT, TYPE AND DATE OF PAYMENT OF THE DIVIDENDS TO THE
SHAREHOLDERS, TAKING INTO ACCOUNT VARIOUS FACTORS, INCLUDING:

 THE LEVEL OF THE COMPANY’S EARNINGS, CASH FLOW, RETURN ON EQUITY AND
RETAINED EARNINGS;
 ITS RESULTS FOR AND ITS FINANCIAL CONDITION AT THE END OF THE YEAR IN
RESPECT OF WHICH THE DIVIDEND IS TO BE PAID AND ITS EXPECTED FINANCIAL
PERFORMANCE;
 THE PROJECTED LEVELS OF CAPITAL EXPENDITURES AND OTHER INVESTMENT
PROGRAMS;
 RESTRICTIONS ON PAYMENTS OF DIVIDENDS THAT MAY BE IMPOSED ON IT BY ANY
OF ITS FINANCING ARRANGEMENTS AND CURRENT OR PROSPECTIVE DEBT SERVICE
REQUIREMENTS; AND
 SUCH OTHER FACTORS AS THE BOARD DEEMS APPROPRIATE.

4. Enumerate or list down the transactions of the Company that has affected its stockholder’s
equity at the latest balance sheet date.

THE TRANSACTIONS OF STI HOLDINGS THAT AFFECT THE STOCKHOLDER’S EQUITY ARE AS
FOLLOWS:
 CAPITAL STOCK
 ADDITIONAL PAID IN CAPITAL
 COST OF SHARES HELD BY A SUBSIDIARY
 CUMULATIVE ACTUARIAL GAIN
 FAIR VALUE CHANGE IN EQUITY INSTRUMENT AT FVOCI
 UNREALIZED MARK-TO-MARKET GAIN ON AFS FINANCIAL ASSETS
 OTHER EQUITY RESERVED
 OTHER COMPREHENSIVE INCOME ASSOCIATED WITH NONCURRENT ASSET HELD FOR SALE
 SHARE IN ASSOCIATE:
 CUMULATIVE ACTUARIAL GAIN
 FAIR VALUE CHANGE IN EQUITY INSTRUMENT DESIGNATED AT FVOCI
 UNREALIZED MARK-TO-MARKET LOSS ON AFS FINANCIAL ASSETS
 RETAINED EARNINGS
 EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTEREST

5. What are the disclosures presented by your Company in the financial reports that has an effect
on the stockholder’s equity?

THE DISCLOSURE PRESENTED IN THE STI HOLDINGS IS THE PFRS 9. PFRS 9 REFLECTS ALL
PHASES OF THE FINANCIAL INSTRUMENTS PROJECT AND REPLACES PHILIPPINE ACCOUNTING
STANDARDS (“PAS”) 39, FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT, AND ALL
PREVIOUS VERSIONS OF PFRS 9. THE STANDARD INTRODUCES NEW REQUIREMENTS FOR
CLASSIFICATION AND MEASUREMENT, IMPAIRMENT, AND HEDGE ACCOUNTING.
THE EFFECT OF ADOPTING PFRS 9 FOLLOWS:
 CLASSIFICATION AND MEASUREMENT
PFRS 9 REQUIRES THE GROUP TO CLASSIFY DEBT INSTRUMENTS BASED ON THE
CONTRACTUAL CASH FLOW CHARACTERISTICS OF THE ASSETS AND THE BUSINESS MODEL FOR
MANAGING THOSE ASSETS. THESE FACTORS DETERMINE WHETHER THE FINANCIAL ASSETS ARE
MEASURED AT AMORTIZED COST, FVOCI, OR FAIR VALUE THROUGH PROFIT OR LOSS (“FVPL”).

THE ASSESSMENT OF THE GROUP’S BUSINESS MODEL WAS MADE BASED ON THE FACTS
AND CIRCUMSTANCES THAT EXIST AS OF THE DATE OF INITIAL APPLICATION, APRIL 1, 2018. THE
ASSESSMENT OF WHETHER CONTRACTUAL CASH FLOWS ON DEBT INSTRUMENTS ARE SOLELY
COMPRISED OF PRINCIPAL AND INTEREST (“SPPI”) WAS MADE BASED ON THE FACTS AND
CIRCUMSTANCES AS AT THE INITIAL RECOGNITION OF THE ASSETS.

THE CLASSIFICATION AND MEASUREMENT REQUIREMENTS OF PFRS 9 DID NOT HAVE

SIGNIFICANT IMPACT TO THE GROUP. THE FOLLOWING ARE THE CHANGES IN THE
CLASSIFICATION OF THE GROUP’S FINANCIAL ASSETS:
 EQUITY INVESTMENT IN LISTED AND NON-LISTED COMPANIES CLASSIFIED AS AFS
FINANCIAL ASSETS AS AT MARCH 31, 2018 ARE CLASSIFIED AND MEASURED AS EQUITY
INSTRUMENTS DESIGNATED AT FVOCI BEGINNING APRIL 1, 2018. THE ADOPTION OF PFRS
9 RESULTED IN A FAIR VALUE ADJUSTMENT ON EQUITY INSTRUMENTS DESIGNATED AT
FVOCI AMOUNTING TO P=40.2 MILLION. IN ADDITION, UNREALIZED MARKET-TO-MARKET
GAIN ON AFS FINANCIAL ASSETS OF P=0.8 MILLION WAS RECLASSIFIED TO “FAIR VALUE
CHANGE IN EQUITY INSTRUMENTS AT FVOCI” ACCOUNT IN THE EQUITY SECTION OF THE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT APRIL 1, 2018.

3. Upload the completed assignment to Module6Worksheet18 on the course site. Follow this format in
naming your Word or PDF file:

Last Name, First Name.Course Code.YearSection.Worksheet18

Extension File Names: .doc / .docx / .pdf

Example: Balingasa,AnaMargarita.BEACCTNG6.3A.Module5Worksheet18

Note: if you have two first names type them with no spaces. See example above.