New and Amended PFRS Issued But Not Yet Effective

Relevant new and amended PFRS which are not yet effective for the year ended December  31, 2018
and have not been applied in preparing the financial statements are summarized below.

Effective for annual periods beginning on or after January 1, 2019:

 PFRS 16, Leases – This standard will replace PAS 17, Leases and its related interpretations. The
most significant change introduced by the new standard is that almost all leases will be brought
onto lessees’ statement of financial position under a single model (except leases of less than 12
months and leases of low-value assets), eliminating the distinction between operating and
finance leases. Lessor accounting, however, remains largely unchanged and the distinction
between operating and finance lease is retained.

 <For the Company’s non-cancellable operating lease commitments as at December 31, 2018,
a preliminary assessment indicates that these arrangements will continue to meet the
definition of a lease under PFRS 16. Thus, the Company will have to recognize a right-of-use
asset and a corresponding liability in respect of all these leases - unless these qualify for low
value or short-term leases upon the application of PFRS 16 – which might have a significant
impact on the amounts recognized in the Company’s financial statements. However, it is not
practicable to provide a reasonable estimate of that effect until the Company complete the
review.

 For finance leases where the Company is a lessee, as the Company has already recognized an
asset and a related finance lease liability for the lease arrangement, it is not anticipated that
the application of PFRS 16 will have a significant impact on the amounts recognized in the
financial statements.>

 Philippine Interpretation IFRIC 23, Uncertainty Over Income Tax Treatments – The interpretation
provides guidance on how to reflect the effects of uncertainty in accounting for income taxes
under PAS 12, Income Taxes, in particular (i) whether uncertain tax treatments should be
considered separately, (ii) assumptions for taxation authorities’ examinations, (iii) determination
of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, and
(iv) effect of changes in facts and circumstances.

 Amendments to PFRS 9, Financial Instruments - Prepayment Features with Negative

 Amendments to PAS 28, Investments in Associates and Joint Ventures - Long-term Interests in
Associates and Joint Ventures – The amendments clarify that long-term interests in an associate
or joint venture that, in substance, form part of the entity’s net investment but to which the
equity method is not applied, are accounted for using PFRS 9, Financial Instruments.

 Amendments to PAS 19, Employee Benefits - Plan Amendment, Curtailment or Settlement – The
amendments specify how companies remeasure a defined benefit plan when a change - an
amendment, curtailment or settlement - to a plan takes place during a reporting period. It
requires entities to use the updated assumptions from this remeasurement to determine current
 service cost and net interest cost for the remainder of the reporting period after the change to
the plan.

 Amendments to PFRS 3, Business Combinations and PFRS 11, Joint Arrangements - Previously
Held Interest in a Joint Operation – The amendments are part of the Annual Improvements to
PFRS 2015-2017 Cycle. The amendment to PFRS 3, Business Combinations clarifies that when an
entity obtains control of a business that is a joint operation, the acquirer applies the
requirements for a business combination achieved in stages, including remeasuring previously
held interests in the joint operation at its acquisition-date fair value. The amendment to
PFRS 11, Joint Arrangements clarifies that when an entity obtains joint control of a business that
is a joint operation, the previously held interests in that business are not remeasured.

 Amendments to PAS 12, Income Taxes - Income Tax Consequences of Payments on Financial
Instruments Classified as Equity – The amendments are part of the Annual Improvements to
PFRS 2015-2017 Cycle and clarify that income tax consequences of dividends are linked more
directly to past transactions or events that generated distributable profits than to distribution to
owners and thus, should be recognized in profit or loss, other comprehensive income or equity
according to where the entity originally recognized those past transactions or events.

 Amendments to PAS 23, Borrowing Costs - Borrowing Costs Eligible for Capitalization – The
amendments are part of the Annual Improvements to PFRS 2015-2017 and clarify that in
calculating the capitalization rate on general borrowings, if any specific borrowing remains
outstanding after the related qualifying asset is ready for its intended use or sale, that borrowing
becomes part of the funds that an entity borrows generally.

Effective for annual periods beginning on or after January 1, 2021:

 PFRS 17, Insurance Contracts – This standard will replace PFRS 4, Insurance Contracts. It requires
insurance liabilities to be measured at current fulfillment value and provides a more uniform
measurement and presentation approach to achieve consistent, principle-based accounting for
all insurance contracts. It also requires similar principles to be applied to reinsurance contracts
held and investment contracts with discretionary participation features issued.

Deferred effectivity -

 Amendments to PFRS 10, Consolidated Financial Statements and PAS 28, Investments in
Associates and Joint Ventures - Sale or Contribution of Assets Between an Investor and its
Associate or Joint Venture – The amendments address a current conflict between the two
standards and clarify that a gain or loss should be recognized fully when the transaction involves
a business, and partially if it involves assets that do not constitute a business. The effective date
of the amendments, initially set for annual periods beginning on or after January 1, 2016, was
deferred indefinitely in December 2015 but earlier application is still permitted.

Under prevailing circumstances, the adoption of the foregoing new and amended PFRS is not
expected to have any material effect on the financial statements of the Company <except for PFRS
16>*.

*To be included, when applicable. These are client-specific disclosures and must be properly
modified.
**Those highlighted in red are still for approval by the Board of Accountancy (BOA). We will send an
e-mail notification if there are any update on the status of these standards.