Securities and Exchange Commission Sec Form 17A, As Amended

4/17/2017 Annual Report

CR023232017

SECURITIES AND EXCHANGE COMMISSION SEC FORM 17A, AS AMENDED

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF THE CORPORATION CODE OF THE PHILIPPINES

1. For the fiscal year ended Dec 31, 2016 2. SEC Identification Number A200101631 3. BIR Tax Identification No. 210407466000 4. Exact name of issuer as specified in its charter IREMIT, INC. 5. Province, country or other jurisdiction of incorporation or organization Metro Manila, PHILIPPINES 6. Industry Classification Code(SEC Use Only)

7. Address of principal office 26/F Discovery Centre, 25 ADB Avenue, Ortigas Center, Pasig City Postal Code 1605

8. Issuer's telephone number, including area code (02) 706 – 9999 Local 100 / 105 / 109 9. Former name or former address, and former fiscal year, if changed since last report Not applicable 10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA

Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding Common Stock 612,043,122 11. Are any or all of registrant's securities listed on a Stock Exchange? Yes No If yes, state the name of such stock exchange and the classes of securities listed therein: The Philippine Stock Exchange, Inc. 12. Check whether the issuer:

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(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1 thereunder or Section 11 of the RSA and RSA Rule 11(a)1 thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports)

Yes No

(b) has been subject to such filing requirements for the past ninety (90) days Yes No 13. State the aggregate market value of the voting stock held by nonaffiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within sixty (60) days prior to the date of filing. If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by nonaffiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided the assumptions are set forth in this Form PHP 1,064,955,032.28 (as of December 31, 2016, PHP 1.74 per share)

APPLICABLE ONLY TO ISSUERS INVOLVED IN INSOLVENCY SUSPENSION OF PAYMENTS PROCEEDINGS DURING THE PRECEDING FIVE YEARS

14. Check whether the issuer has filed all documents and reports required to be filed by Section 17 of the Code subsequent to the distribution of securities under a plan confirmed by a court or the Commission.

Yes No

DOCUMENTS INCORPORATED BY REFERENCE 15. If any of the following documents are incorporated by reference, briefly describe them and identify the part of SEC Form 17A into which the document is incorporated:

(a) Any annual report to security holders Not applicable

(b) Any information statement filed pursuant to SRC Rule 20 Not applicable

The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.

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IRemit, Inc. I

PSE Disclosure Form 171 Annual Report References: SRC Rule 17 and Sections 17.2 and 17.8 of the Revised Disclosure Rules

For the fiscal year ended Dec 31, 2016 Currency (indicate units, if applicable) PHP

Balance Sheet Year Ending Previous Year Ending Dec 31, 2016 Dec 31, 2015 Current Assets 2,636,233,059 2,349,949,328 Total Assets 2,903,366,914 2,577,978,778 Current Liabilities 1,579,815,616 1,298,626,384 Total Liabilities 1,586,936,219 1,302,821,237 Retained Earnings/(Deficit) 261,986,980 244,766,906 Stockholders' Equity 1,316,430,695 1,275,157,541 Stockholders' Equity Parent 1,316,430,695 1,275,157,541 Book Value per Share 2.15 2.08

Income Statement Year Ending Previous Year Ending Dec 31, 2016 Dec 31, 2015 Operating Revenue 748,487,090 685,685,520 Other Revenue 41,279,149 24,626,958 Gross Revenue 789,766,239 710,312,478 Operating Expense 737,916,850 674,266,542 Other Expense 0 9,926,117 Gross Expense 737,916,850 684,192,659 Net Income/(Loss) Before Tax 51,849,389 26,119,819 Income Tax Expense 14,669,929 13,377,252 Net Income/(Loss) After Tax 31,179,460 12,742,567 Net Income/(Loss) Attributable to Parent Equity Holder 31,179,460 12,742,567 Earnings/(Loss) Per Share (Basic) 0.06 0.02 Earnings/(Loss) Per Share (Diluted) 0 0

Financial Ratios Formula Fiscal Year Ended Previous Fiscal Year http://edge.pse.com.ph/openDiscViewer.do?edge_no=fe3b638e09aa09383318251c9257320d 3/4 4/17/2017 Annual Report Dec 31, 2016 Dec 31, 2015 Liquidity Analysis Ratios: Current Ratio or Current Assets / Current Working Capital Ratio Liabilities 1.67 1.81 (Current Assets Inventory Quick Ratio Prepayments) / Current 1.66 1.8 Liabilities Solvency Ratio Total Assets / Total Liabilities 1.83 1.98 Financial Leverage Ratios Debt Ratio Total Debt/Total Assets 0.55 0.51 Total Debt/Total Stockholders' DebttoEquity Ratio Equity 1.21 1.02 Earnings Before Interest and Interest Coverage Taxes (EBIT) / Interest Charges 2.24 1.78 Total Assets / Total Asset to Equity Ratio Stockholders' Equity 2.21 2.02 Profitability Ratios Sales Cost of Goods Sold or Gross Profit Margin Cost of Service / Sales 0.66 0.67 Net Profit Margin Net Profit / Sales 0.05 0.02 Return on Assets Net Income / Total Assets 0.01 0 Net Income / Total Return on Equity Stockholders' Equity 0.03 0.01 Price Per Share / Earnings Per Price/Earnings Ratio Common Share 28.65 88.94

Other Relevant Information

Filed on behalf by: Name Harris Jacildo Designation President and Chief Operating Officer

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April 12, 2017

THE PHILIPPINE STOCK EXCHANGE, INC. 3rd Floor, Philippine Stock Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Metro Manila

Attention MR. JOSE VALERIANO B. ZUNO III OIC - Head, Disclosure Department

Gentlemen:

In accordance with the Securities Regulation Code, we are submitting herewith a copy of SEC Form 17-A (Annual Report) of I-Remit, Inc. as at December 31, 2016.

Thank you.

Very truly yours,

ACILDO hief Operating Officer

I-Remit, Inc. 26/F Discovery Centre 25 ADS Avenue Ortigas Center, Pasig City 1605 Philippines Telephone: (632) 706-9999 and (632) 706-2737 Facsimile: (632) 706-2767 Website: www.myiremit.com Facebook: www.facebook.com/iremitinc Twitter: www.twitter.comliremitinc COVER SHEET

A 2 0 0 1 0 1 6 3 1 SEC Registration Number

I - R E M I T , I N C . A N D S U B S I D I A R I E S

(Company’s Full Name)

2 6 / F D i s c o v e r y C e n t r e , 2 5 A D B A v e

n u e , O r t i g a s C e n t e r , P a s i g C i t y

(Business Address: No. Street City/Town/Province)

Mr. HARRIS D. JACILDO (02) 706 – 9999 Local 100/105/109 (Contact Person) (Company Telephone Number)

1 2 3 1 17-A 0 7 Month Day (Form Type) Month Day (Fiscal Year) (Annual Meeting)

(Secondary License Type, If Applicable)

Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of Borrowings

Total No. of Stockholders Domestic Foreign

To be accomplished by SEC Personnel concerned

File Number LCU

Document ID Cashier

S T A M P S Remarks: Please use BLACK ink for scanning purposes.

SEC Number A200101631 PSE Code File Number

I-REMIT, INC. AND SUBSIDIARIES (Company’s Full Name)

26/F Discovery Centre, 25 ADB Avenue, Ortigas Center, Pasig City, 1605 Metro Manila (Company’s Address)

(02) 706 – 9999 Local 100 / 105 / 109 (Telephone Number)

December 31 (Fiscal Year Ending) (Month and Day)

SEC FORM 17-A Form Type

Amendment Designation (if applicable)

December 31, 2016 Period Ended Date

(Secondary License Type and File Number) • •••C SECURITIES AND EXCHANGE COMMISSION ~ .~----.;---_-l@ SEC FORM 17-A

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF THE CORPORATION CODE OF THE PHILIPPINES

I. For the fiscal year ended December 31,2016

2. Commission Identification No. A200101631 3. BIR Tax Identification No. 210-407-466-000

4. Exact name of registrant as specified in its charter I-REMIT,INC.

5. ---=-M::.::e:..:;tr:,-:o:...:M:.:..:;::a::::n.::iI::::a,'-'P:....:H:.:.I:6.:..:Lo:.:l:.:.P-=-P-=-II:..(SEC.:N.::E Use:.:::S- O,:--nl,--y)_,----_ Province, Country or other jurisdiction of Industry Classification Code incorporation or organization

7. 26/F Discovery Centre, 25 ADB Avenue, Ortigas Center, Pasig City 1605 Address of principal office Postal code

8. (02) 706 - 9999 Local 100/105/109 Issuer's telephone number, including area code

9. Not applicable Former name, former address, and former fiscal year, if changed since last report

10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA

Title Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding

Common Stock 612,043,122 shares (as of December 31, 2016)

II. Are ~ny or all of these securities listed on a Stock Exchange?

Yes [./] No [ ]

If yes, state the name of such stock exchange and the classes of securities listed therein: The Philippine Stock Exchange, Inc.

12.Check whether the issuer:

(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.l thereunder or Section II of the RSA and RSA Rule 11(a)-I thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports)

Yes [./] No [ ]

(b) has been subject to such filing requirements for the past 90 days

Yes [./] No [ ]

13. Aggregate market value of the voting stock held by non-affiliates of the registrant: PHP 1,064,955,032.28 (as of December 31, 2016, PHP 1.74 per share)

DOCUMENTS INCORPORATED BY REFERENCE

Documents incorporated by reference in any part of this report:

2016 Audited Consolidated Financial Statements of I-Remit, Inc. and Subsidiaries, and 2016 Audited Separate Financial Statements of I-Remit, Inc. (incorporated as reference for Items 1, 6, 7 and 8 of SEC Form 17-A)

TABLE OF CONTENTS

PART I BUSINESS AND GENERAL INFORMATION

Item 1 Business 1 Item 2 Properties 36 Item 3 Legal Proceedings 38 Item 4 Submission of Matters to a Vote of Security Holders 38

PART II OPERATIONAL AND FINANCIAL INFORMATION

Item 5 Market for Issuer’s Common Equity and Related Stockholder Matters 39 Item 6 Management’s Discussion and Analysis or Plan of Operation 45 Item 7 Financial Statements 69 Item 8 Changes in and Disagreements with Accountants on Accounting and Financial 69 Disclosure

PART III CONTROL AND COMPENSATION INFORMATION

Item 9 Directors and Executive Officers of the Issuer 74 Item 10 Executive Compensation 84 Item 11 Security Ownership of Certain Beneficial Owners and Management 85 Item 12 Certain Relationships and Related Party Transactions 87

PART IV CORPORATE GOVERNANCE Item 13 Corporate Governance 90

PART V EXHIBITS AND SCHEDULES

Item 14 a. Exhibit 91 b. Reports on SEC Form 17-C 91

SIGNATURES

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

INDEX TO EXHIBIT

PART I. BUSINESS AND GENERAL INFORMATION

Item 1. Business

(A) Description of Business

(1) Business Development

I-Remit, Inc. (“I-Remit”, “Parent Company”, or “Company”) is a company in the Philippines engaged in the business of servicing the remittance needs of overseas Filipino workers (OFWs) and other migrant workers. The Parent Company was duly registered with the Securities and Exchange Commission (SEC) on March 5, 2001 with SEC Registration No. A200101631. It started commercial operations on November 11, 2001.

The Parent Company and its subsidiaries (“Group”) are primarily engaged in the business of fund transfer and remittance services, from abroad into the Philippines or otherwise, of any form or kind of currencies or monies, either by electronic, telegraphic, wire or any other mode of transfer; as well as in undertaking the delivery of such funds or monies, both in the domestic and international market, by providing courier or freight forwarding services; and conducting foreign exchange transactions as may be allowed by law and other allied activities relative thereto, including financial derivatives activities such as foreign currency swaps, forwards, options or other similar instruments as defined under Bangko Sentral ng Pilipinas (BSP) Circular No. 102, Series of 1995; provided, that the Company shall not engage in the business of being a commodity future broker.

The Parent Company is duly registered as a Remittance Agent with the Bangko Sentral ng Pilipinas (BSP), with Certificate No. FX-2005-000364 issued on May 10, 2005, pursuant to BSP Circular 471, Series of 2005 dated January 24, 2005. It is subject to the applicable provisions of law and BSP rules and regulations, as well as the provisions of the Anti-Money Laundering Act of 2001 (Republic Act No. 9160 as amended by Republic Acts 9194, 10167, and 10365) and its revised implementing rules and regulations, and Republic Act 10168 or the Terrorism Financing Prevention and Suppression Act of 2012 and its implementing rules and regulations.

The Parent Company’s list of services also includes auxiliary services such as liaising and coordinating with, and accepting and distributing membership contributions, loan amortization payments, and premium payments to various government and non-government entities such as the Social Security System (SSS) , Overseas Workers Welfare Administration (OWWA), the Home Development Mutual Fund (HDMF or Pag-IBIG Fund), the Philippine Retirement Authority (PRA) and the Philippine Health Insurance Corporation (PhilHealth), as well as various insurance, pre-need, and real estate companies.

The Parent Company is to exist for fifty (50) years from and after the date of incorporation.

The registered office and principal place of business of the Parent Company is 26/F Discovery Centre, 25 ADB Avenue, Ortigas Center, Pasig City, 1605 Metro Manila, Philippines.

The Company also operates in various countries through subsidiaries, associates, or affiliates, and via tie-ups and strategic partnerships. Tie-up and partnership arrangements are utilized when the potential volume of remittances do not justify the investment of equity.

I-Remit currently operates in 27countries and territories worldwide.

Lucky Star Management Limited, the first international office of I-Remit, opened in Hong Kong in May 2001. In the same year, I-Remit started its aggressive global expansion by forging alliances in other countries with high concentrations of overseas Filipino workers (OFWs) and Filipino migrants.

In July 2001, I-Remit forged a tie-up with its Canadian partner International Remittance (Canada) Limited (IRCL), and established operations in three (3) major provinces of Canada: British Columbia, Alberta, and Ontario. In 2005, I-Remit acquired 65% ownership in the said company, and which was subsequently increased to 95% in 2006, and further consolidated to 100% by the end of June 2007.

Also, in July 2001, I-Remit entered into its first European partnership in the United Kingdom (UK), and eventually started the operation of its subsidiary, IRemit Global Remittance Limited, in January 2003. It was sold by the Company in 2004 and was repurchased in June 2007.

I-Remit’s expansion in Europe is in pursuit of the authorization obtained from the Financial Services Authority (now the Financial Conduct Authority) of the United Kingdom by its wholly- owned subsidiary, IRemit Global Remittance Limited to operate as a payment institution in the European Economic Area (EEA). Under the European Payment Services Directive, IRemit Global Remittance Limited may avail of its “passporting” rights and carry on its business activities in other EEA states by establishing branches, engaging agents, or providing cross- border services.

I-Remit started its second Asian operation in Singapore through IRemit Singapore Pte Ltd, which commenced its commercial operations in October 2001. IRemit Singapore Pte Ltd is an affiliate of I-Remit through common shareholders. Investment in IRemit Singapore Pte Ltd was derecognized by the Parent Company effective December 31, 2013.

I-Remit further expanded in Asia through a tie-up in Taiwan, Hwa Kung Hong & Co., Ltd., which became operational in 2001. I-Remit acquired 49% ownership in the said tie-up in July 2009.

I-Remit forged a tie-up in Australia that began its operations in September 2002. I-Remit Australia Pty Ltd (“IAPL”) was incorporated in December 2002 and in June 2007 ownership has been consolidated to 100%. Worldwide Exchange Pty Ltd (“WEPL”) in Australia started commercial operations in September 2003. The Company acquired 20% ownership of WEPL in June 2007 and additional 15% ownership in September 2007. On March 31, 2011, I-Remit acquired the 35% interest of minority shareholders in WEPL. With its 30% indirect voting interest through IAPL, I-Remit effectively owns 100.00% of WEPL.

On July 25, 2007, the Financial Monetary Authority of Austria granted the remittance license of IREMIT EUROPE Remittance Consulting AG in which the Company has 74.9% equity interest. It started commercial operations on September 16, 2007. In November 2009, IREMIT EUROPE Remittance Consulting AG was registered by Banca D’Italia Eurosistema in the general list of financial intermediaries as a provider of money transfer services under Article 106 of the legislative decree 385/1993 of Italy’s Banking Law. On May 5, 2011, the Parent Company acquired the 25.10% ownership interest in IREMIT EUROPE Remittance Consulting AG from the noncontrolling stockholder. The acquisition increased the Parent Company’s ownership interest in IREMIT EUROPE Remittance Consulting AG to 100.0% from 74.9%. Consequently, on October 11, 2011, IREMIT EUROPE Remittance Consulting AG changed its legal name to IREMIT Remittance Consulting GmbH and changed its legal status from a stock company to a limited liability company. It also amended its Articles of Incorporation to include management consultancy in its business activities.

I-Remit New Zealand Limited, a wholly-owned subsidiary, was incorporated and its registration was approved by the New Zealand Ministry of Economic Development on September 11, 2007. It started commercial operations on February 13, 2008.

On November 28, 2008, I-Remit’s Board of Directors (“Board”) ratified the acquisition of the 100.00% ownership interest in Power Star Asia Group Limited, a company based in Hong Kong which is engaged in foreign currency trading.

On January 9, 2009, the Board of I-Remit authorized the acquisition of up to 49% of the outstanding capital stock of Hwa Kung Hong & Co., Ltd., a company engaged in the remittance business in Taiwan with offices in Taipei and Kaohsiung. The acquisition of the shares was completed on July 1, 2009.

On June 10, 2011, K.K. I-Remit Japan was incorporated as a joint stock corporation in Tokyo, Japan with the primary purpose of providing money transfer and remittance services. On November 22, 2011, the company completed its registration with the Financial Services Agency (FSA) of Japan pursuant to the Payment Services Act of 2010. The company has offices in Tokyo and Nagoya.

I-Remittance Singapore Pte. Ltd., a wholly-owned subsidiary, was incorporated as a private company limited by shares under the Companies Act (Cap 50) on February 17, 2014. It started commercial operations on July 1, 2016.

The Company’s presence in various countries hosting overseas Filipino workers (OFWs) and Filipino migrants and several strategic partnerships and tie-ups with various local and international banks, pawnshops, couriers, and telecommunications companies makes it the largest independent local remittance company.

The Company was also the first remittance company registered with the Board of Investments (BOI) as a New Information Technology (IT) Service Firm in the Field of Information Technology Services (Remittance Infrastructure System) on a Non-Pioneer Status under the Omnibus Investments Code of 1987 which entitled the Company to Income Tax Holiday (ITH) Incentive for four (4) years and which was later extended to two (2) years and which expired on November 11, 2007.

I-Remit’s vision is to become the ultimate choice remittance service provider globally and to capture a significant share of the huge annual inward remittances of OFWs around the world. It will achieve these by using the latest in information technology and communication technology through the Internet platform in delivering its products and services to its target customers.

The Company was initially incorporated with a capital stock of two hundred million pesos (PHP 200,000,000) divided into two million shares with a par value of one hundred pesos (PHP 100) per share.

The subscribers at incorporation are the following:

Amount of Capital No. of Shares Amount Paid on Name Nationality Stock Subscribed Subscribed Subscription (PHP) (PHP) iVantage Corporation Filipino 999,993 99,999,300.00 49,999,300.00 Ben C. Tiu Filipino 1 100.00 100.00 Wilson L. Sy Filipino 1 100.00 100.00 Willy N. Ocier Filipino 1 100.00 100.00 William L. Chua Filipino 1 100.00 100.00 Juan G. Chua Filipino 1 100.00 100.00 David R. de Leon Filipino 1 100.00 100.00 Randolph C. de Leon Filipino 1 100.00 100.00 TOTAL 1,000,000 100,000,000.00 50,000,000.00

On August 15, 2001, iVantage Corporation sold all its titles, rights, interests and obligations in and to all its subscribed shares in the Company to the following:

Amount of Capital No. of Shares Amount Paid on Name Nationality Stock Subscribed Subscribed Subscription (PHP) (PHP) JTKC Equities, Inc. Filipino 650,000 65,000,000.00 32,500,000.00 Surewell Equities, Inc. Filipino 300,000 30,000,000.00 15,000,000.00 JPSA Global Services Co. Filipino 50,000 5,000,000.00 2,500,000.00 TOTAL 1,000,000 100,000,000.00 50,000,000.00

The new shareholders assumed pro rata the subscription payable to I-Remit, Inc. of iVantage Corporation amounting to fifty million pesos (PHP 50,000,000).

On February 8, 2005, JTKC Equities, Inc. assigned all of its rights, interests and obligations in and to its entire subscription consisting of 650,000 shares in the Company unto Deighton Limited, a corporation organized and existing under the laws of Hong Kong.

On June 27, 2007, JTKC Equities, Inc. bought back the 650,000 shares in the Company from Deighton Limited.

On June 29, 2007, the Board and the stockholders of the Company approved the following amendments to the Articles of Incorporation and By-Laws:

On the Articles of Incorporation

1. Reduction of par value per share from PHP 100.00 to PHP 1.00 per share; 2. Increase in authorized capital stock from PHP 200 million to PHP 1.0 billion; 3. Denial of pre-emptive rights; 4. Authority of the Board of Directors to grant stock options, issue warrants or enter into stock purchase or similar agreements;

On the By-Laws

1. Period for closing of stock and transfer book or fixing of record date; 2. Period for notice of stockholders’ meeting; 3. Deadline for the submission / revocation of proxies; 4. Number, term of office, qualifications, and disqualifications; 5. Additional requirements for independent directors; 6. Election of directors; 7. Place of meeting of the Board of Directors; 8. Vacancies; 9. Constitution of a Nomination Committee; and 10. The addition of one or more Vice Chairmen to the list of officers of the Company.

On July 20, 2007, the Board approved a Special Stock Purchase Program (“SSPP”) for its directors, the officers and employees of the Company who have been in service for at least one (1) calendar year as of June 30, 2007, and the Company’s resource persons and consultants. A total of fifteen million (15,000,000) shares of the Company, at a par value of one peso (PHP 1.00) per share, was allocated under the SSPP. The shares were allocated to those eligible to avail of the shares based on a formula developed by the Company’s SSPP Committee and approved by the Board of Directors.

The Board of Directors of the Company also declared stock dividends worth PHP 43,000,000.00 to its shareholders on July 20, 2007, which declaration was subsequently ratified and confirmed by the Company’s shareholders during their annual meeting held on the same day, immediately after the Board meeting. The Record Date was set on August 19, 2007, thirty (30) days from the date of approval of the Company’s shareholders.

On August 22, 2007, the Securities and Exchange Commission (“SEC”) approved the Amended Articles of Incorporation and By-Laws of the Company.

The shares subscribed and paid-up subsequent to the increase in capital stock were as follows:

Amount of Capital No. of Shares Amount Paid on Name Nationality Stock Subscribed Subscribed Subscription (PHP) (PHP) Star Equities Inc. Filipino 158,418,225 158,418,225.00 158,418,225.00 Surewell Equities, Inc. Filipino 119,100,000 119,100,000.00 119,100,000.00 JTKC Equities, Inc. Filipino 99,631,775 99,631,775.00 99,631,775.00 JPSA Global Services Co. Filipino 19,850,000 19,850,000.00 19,850,000.00 TOTAL 397,000,000 397,000,000.00 397,000,000.00

On September 13, 2007, the SEC granted to the Company an exemption from registration of the SSPP shares under Section 10.2 of the SRC. On September 20, 2007, the Company issued to the directors, officers and employees eligible to avail of the SSPP their respective shares under the program. Notwithstanding the aforesaid confirmation of the exempt status of the SSPP shares, the SEC nonetheless required the Corporation to include the SSPP shares among the shares of iRemit which were registered with the Commission prior to the conduct of its Initial Public Offering (IPO) in October 2007. The registration of the I-Remit shares, together with the SSPP shares, was rendered effective on October 5, 2007.

All 15,000,000 shares were subscribed. The shares subject of the SSPP were sold at par value or PHP 1.00 per share payable in full and in cash and subject to a lock-up period of two (2) years from date of issue which ended on September 19, 2009. The sale is further subject to the condition that should an officer or an employee resign from the Company prior to the expiration of the lock-up period, the shares purchased by such resigning employee or officer shall be purchased at cost by the Company’s Retirement Fund (“Retirement Fund”) for the benefit of retiring employees or officers. Total share purchases amounting to PHP11.74 million were paid in full while the difference amounting to PHP3.26 million were paid by way of salary loan. The shares acquired through the SSPP were subject to a lock-up period of two (2) years from the date of issue which ended on September 19, 2009.

On May 18, 2007, the Board of Directors of the Company approved the listing of its shares with the Philippine Stock Exchange (“PSE”) in an initial public offering (IPO).

The Board of Directors of the PSE, in its regular meeting on September 27, 2007, approved the Company’s application to list its common shares with the PSE. On October 5, 2007, the Securities and Exchange Commission declared the Company’s Registration Statement in respect of the IPO effective and issued the Certificate of Permit to Offer Securities for Sale in respect of the offer shares.

The Company offered for subscription a total of 140,604,000 common shares each with par value of PHP 1.00 per share consisting of (i) 107,417,000 new common shares issued and offered by the Company by way of a primary offer and (ii) a total of 33,187,000 existing shares offered by selling shareholders, JTKC Equities, Inc. (21,571,550 common shares issued), Surewell Equities, Inc. (9,956,100 common shares offered), and JPSA Global Services Co. (1,659,350 common shares offered) pursuant to a secondary offer.

On October 17, 2007, the Company completed its IPO of 140,604,000 common shares, representing slightly above 25% of the total outstanding capital stock of 562,367,000 (net of 50,000 treasury shares) at an offer price of PHP 4.68 per share for total gross proceeds of PHP 658,026,720.00.

The net proceeds from the primary offer of PHP 466,198,457.05, determined by deducting from the gross proceeds of the primary offer the Company’s pro-rated share in the professional fees, underwriting and selling fees, listing and filing fees, taxes and other related fees and expenses, is intended to be used by the Company to finance, in part, its expansion in other countries and to partially retire some of the Company’s short term interest-bearing loans.

On August 16, 2008, the Board of the Company authorized the buy-back from the market of up to 10 million shares, representing approximately 1.78% of I-Remit’s outstanding common shares. The program was adopted with the objective of preserving the value of the Company’s shares, which was grossly undervalued at that time. The program also sought to boost investor confidence in the Company. A total of 10,000,000 shares have been purchased and lodged as treasury shares.

On September 16, 2011, the Board of the Company authorized the buy-back from the market of up to 10 million shares, representing approximately 1.64% of I-Remit’s outstanding common shares. The program was adopted with the objective of preserving the value of the Company’s shares, which was grossly undervalued at that time. The program also sought to boost investor confidence in the Company. A total of 10,000,000 shares have been purchased and lodged as treasury shares.

On September 21, 2012, the Board of the Company authorized the buy-back from the market of up to 10 million shares, representing approximately 1.67% of I-Remit’s outstanding common shares. The program was adopted with the objective of preserving the value of the Company’s shares, which was grossly undervalued at that time. The program also sought to boost investor confidence in the Company. A total of 4,562,000 shares, 5,162,000 shares and 5,747,000 shares have been purchased and lodged as treasury shares as of December 31, 2013, December 31, 2014 and December 31, 2015, respectively.

On June 11, 2013, the Board of the Company approved the amendment of the Corporation’s primary purpose wherein the Corporation will no longer be limited to engaging in ”spot” foreign currency transactions and will be able to engage in financial derivatives activities such as foreign currency swaps, forwards, options or other similar instruments. The amendment of the primary purpose will enable the Corporation to, among others, hedge against foreign exchange fluctuations and the resulting risk therefrom. The amendment, however, does not include activities that require new licenses and/or permits from the Bangko Sentral ng Pilipinas (BSP). The amendment will likewise not change the core business of the Corporation, which is to engage in fund transfer and remittance services from abroad and into the Philippines, or otherwise. During the annual stockholders’ meeting on July 19, 2013, the shareholders likewise approved said amendment. It has been approved by the Securities and Exchange Commission on September 3, 2013.

On March 21, 2014, the Board of the Company approved the amendment of the Corporation's principal office address pursuant to SEC Memorandum Circular No. 6, Series of 2014, from “Metropolitan Manila, Philippines” to “26/F Discovery Centre, 25 ADB Avenue, Ortigas Center, Pasig City, Metro Manila, Philippines.” The amendment has been approved by the stockholders during the Corporation's annual stockholders' meeting on July 28, 2014. It has been approved by the Securities and Exchange Commission on May 28, 2015.

As of March 31, 2017, the Company’s capital structure is as follows:

Amount of Capital % to Total No. of Shares Name Nationality Stock Subscribed Number of Subscribed (PHP) Shares Star Equities Inc. Filipino 180,308,109 180,308,109.00 29.47930 Surewell Equities, Inc. Filipino 144,290,205 144,290,205.00 23.59059 JTKC Equities, Inc. Filipino 131,566,368 131,566,368.00 21.51032 JPSA Global Services Co. Filipino 19,687,248 19,687,248.00 3.21875 Public Various 135,791,192 135,791,192.00 22.20105 Total, March 31, 2017 611,643,122 611,643,122.00 100.00000

The Company’s general expansion plans in 2017 include the engagement of new tie-ups and partners in the Asia-Pacific (Saipan, Australia, Hong Kong), Middle East (Kuwait, Kingdom of Saudi Arabia, Bahrain, Jordan), Canada and Europe (Spain, Germany, Italy, Greece).

(2) Business of Issuer

(a) Description of Registrant

The Parent Company and its subsidiaries are primarily engaged in the business of fund transfer and remittance services of any form or kind of currencies or monies, either by electronic, telegraphic, wire or any other mode of transfer and undertakes the delivery of such funds or monies, both in the domestic and international market, by providing either courier or freight forwarding services; and conducts foreign exchange transactions as may be allowed by law and other allied activities relative thereto.

The Company’s subsidiaries are as follows:

International Remittance (Canada) Ltd., a wholly-owned subsidiary, was incorporated on July 16, 2001 pursuant to the Canada Business Corporations Act. It is registered with Industry Canada with registration number 392271-5. It is also registered as an extraprovincial company with the Registrar of Companies of the Province of British Columbia with certificate of registration number A-60718 dated December 3, 2003. Pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, International Remittance (Canada) Ltd. is registered as a money service business (MSB) with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) with registration number M08160706 valid until June 4, 2018 and subject to renewal every two (2) years. It started initially as a tie-up and partner of I-Remit, Inc. establishing its operations in three (3) major provinces in Canada, namely: British Columbia, Alberta, and Ontario. In 2005, I-Remit, Inc. acquired 65% ownership in the company that subsequently was increased to 95% in 2006 and eventually consolidated to 100% on June 29, 2007. It currently operates in seven (7) locations in Canada: (i) Pacific Mall, Calgary, Alberta; (ii) Edmonton Mall, Alberta; (iii) Jamestown, Toronto, Ontario; (iv) Bathurst Street, Toronto, Ontario; (v) Vancouver, British Columbia; (vi) Richmond, British Columbia; and, (vii) Winnipeg, Manitoba. The Filipino community is the third largest minority group in Canada. The Commission on Filipinos Overseas estimated that there were about 721,578 Filipinos in Canada as of December 2013.

I-Remit Australia Pty Ltd, a wholly-owned subsidiary, is a company incorporated on December 10, 2002 in Victoria, Australia under the Australian Corporations Act 2001 and registered with the Australian Securities and Investments Commission with Australian Company Number (ACN) 103 107 982 and Australian Business Number (ABN) 22 103 107 982. As of June 29, 2007, the ownership of I-Remit, Inc. has been consolidated to 100%. It has no regular employees and has not, since incorporation, engaged in any material activities other than those related to the maintenance of a bank account.

IREMIT Remittance Consulting GmbH (formerly IREMIT EUROPE Remittance Consulting AG) (100% owned) was incorporated on July 20, 2005 in Vienna, Austria. It started commercial operations on September 16, 2007. In November 2009, IREMIT EUROPE Remittance Consulting AG was registered by Banca D’Italia Eurosistema in the general list of financial intermediaries as a provider of money transfer services under Article 106 of legislative decree 385/1993, Italy’s banking law. It opened branches in Milan and Rome in Italy on April 18, 2010 and August 1, 2010, respectively. On April 28, 2011, it stopped its money remittance operations in accordance with Article 75 of the Transitional and Final Provisions of the Austrian Payment Services Act (Zahlungsdienstegesetz) which stipulated that credit institutions that have held authorizations pursuant to Article 1 paragraph 1 no. 23 of the Austrian Banking Act (Bankwesengesetz, BWG), as amended by the Federal Act, federal Law Gazette No. 35/2003, prior to December 25, 2009, had only until April 30, 2011 to carry out their money remittance operations. On May 5, 2011, the Parent Company, I-Remit, Inc., acquired the 25.1% ownership interest from a non-controlling stockholder of the Company. The acquisition enabled I-Remit, Inc. to have 100% ownership of IREMIT EUROPE Remittance Consulting AG. Consequently, on October 11, 2011, it changed its legal name to IREMIT Remittance Consulting GmbH and changed its legal status from a stock company to a limited liability company. It also amended its articles of incorporation to include management consultancy in its business activities. IREMIT Remittance Consulting GmbH was subsequently registered as an agent of IRemit Global Remittance Limited (United Kingdom) after the latter’s acquisition of passporting rights for establishment and offering of cross-border services in Austria. Pursuant to Article 12 para. 6 of the Austrian Payment Services Act (Zahlungsdienstegesetz), the Austrian law on the European Payment Services Directive (Directive 2007/64/EC), IREMIT Remittance Consulting GmbH provides money remittance services in Austria. It is registered in the Register of Payment Institutions of the Financial Services Authority of the United Kingdom with firm reference number 574797. The Company is in the process of winding down the operation of IREMIT Remittance Consulting GmbH and has instead engaged the services of an agent in Austria. The Commission on Filipinos Overseas estimated that there were 13,636 Filipinos in Austria as of December 2013 who were mostly employed in the nursing field and other skilled and semi-skilled occupational groups.

IRemit Global Remittance Limited, a wholly-owned subsidiary, is a private limited company in the United Kingdom and Wales that was incorporated on June 22, 2001. It is registered with the Companies House of the United Kingdom with company number 04239974 pursuant to the Companies Act 2006. It started commercial operations in July 2001. Initially, I-Remit, Inc. had a 96% equity interest in IRemit Global Remittance Limited until it was sold on January 18, 2004. I-Remit, Inc. reacquired the company on June 29, 2007 with 100% ownership interest. On April 15, 2011, it acquired authorization from the Financial Services Authority (FSA) to carry on payment services activities, particularly, money remittance, pursuant to the Payment Services Regulations 2009 of the United Kingdom, the British law implementing the European Payment Services Directive (Directive 2007/64/EC). It was issued its FSA reference number 537568. On April 1, 2013, it was placed under the regulatory authority of the Financial Conduct Authority that replaced the Financial Services Authority, and the Prudential Regulatory Authority. The company is registered with Her Majesty’s Revenue & Customs with money laundering regulations (MLR) registration number 12130185 with certificate of registration issued on June 7, 2016 and expiring on June 1, 2017 subject to annual renewal. IRemit Global Remittance Limited has offices in London and Manchester in the United Kingdom, and in Milan and Rome in Italy. It has agents in the United Kingdom, Germany, Spain, and Austria. The Commission on Filipinos Overseas estimated that there were about 218,126 Filipinos in the United Kingdom as of December 2013. They work mostly as nurses and caregivers in public and private nursing homes, medical professionals, and chambermaids.

I-Remit New Zealand Limited, a wholly-owned subsidiary, was incorporated on September 11, 2007. It is registered with the Registrar of Companies of the Ministry of Economic Development with certificate number 1984331. The company is registered in the Financial Service Providers (FSP) Register of the Companies House of New Zealand with FSP number 45263. It is also a participant in Financial Services Complaints Limited, a dispute resolution organization. It has an office in High Street corner Vulcan Lane, Auckland CBD. The company started operating commercially on February 13, 2008. The Commission on Filipinos Overseas estimated that there were 39,091 Filipinos in New Zealand as of December 2013.

Lucky Star Management Limited, a wholly-owned subsidiary, was incorporated on March 16, 2001 as a private company limited by shares under the Companies Ordinance (Cap 32) of Hong Kong. It is registered in the Companies Registry with company number 750525. It is licensed as a money service operator pursuant to Section 30 of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Chapter 615) with license no. 12-07-00326 from August 9, 2014 to August 8, 2016 issued by the Commissioner of Customs and Excise Department- Money Service Supervision Bureau. Its application for renewal of its license is in process. It has offices in World Wide Plaza, Central; and Lik Sang Plaza, Tsuen Wan, New Territories. The Commission on Filipinos Overseas estimated that there were 201,094 Filipinos in Hong Kong as of December 2013.

Power Star Asia Group Limited, a wholly-owned subsidiary, was incorporated on April 28, 2008 under the Companies Ordinance (Cap 32) of Hong Kong. It is registered with the Companies Registry with company number 1232132. It was acquired by I-Remit, Inc. on November 12, 2008. Power Star Asia Group Limited is engaged in foreign exchange trading activities.

Worldwide Exchange Pty Ltd, a wholly-owned subsidiary (through a direct equity interest of 70% and indirect equity interest through I-Remit Australia Pty Ltd of 30%), is a company that was incorporated on September 29, 2003 in Queensland, Australia under the Australian Corporations Act 2001 and registered with the Australian Securities and Investments Commission with Australian Company Number (ACN) 106 493 047 and Australian Business Number (ABN) 35 106 493 047. Pursuant to subsection 75C(2) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 of Australia (AML/CTF Act 2006), Worldwide Exchange Pty Ltd is registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) as an affiliate of I- Remit, Inc. with remittance affiliate number AFF100309950-001 since September 28, 2012. Its registration with AUSTRAC is valid until September 28, 2018 and subject to renewal every three (3) years under section 75J of the AML/CTF Act 2006. It has offices in Blacktown, New South Wales, and in Perth, Western Australia. It started commercial operations in September 2002. The Commission on Filipinos Overseas estimated that there were 397,982 Filipinos in Australia as of December 2013.

K.K. I-Remit Japan is a joint stock corporation (“Kabushiki Kaisha”) that was incorporated and registered on June 10, 2011 in Tokyo, Japan with the primary purpose of providing money transfer and remittance services. Its company number is 0100-01-140611. On October 14, 2011, it became a member of the Japan Payment Service Association (JPSA), the designated dispute resolving organization for payment service providers, including money transfer companies. On November 22, 2011, the company completed its registration with the Financial Services Agency (FSA) of Japan pursuant to the Payment Services Act of 2010 with Registration No. KLFB00019. The company has offices in Tokyo and Nagoya. It started commercial operations in Tokyo on May 14, 2012 and in Nagoya on September 1, 2012. The Commission on Filipinos Overseas estimated that there were 182,917 Filipinos in Japan as of December 2013.

I-Remittance Singapore Pte. Ltd., a wholly-owned subsidiary, was incorporated as a private company limited by shares under the Companies Act (Cap 50) on February 17, 2014. It is registered with the Registrar of Companies and Businesses of the Accounting and Corporate Regulatory Authority (ACRA) Singapore with company number 201404379N. It is licensed by the Monetary Authority of Singapore to carry on remittance business pursuant to Section 8(3) of the Money-changing and Remittance Businesses Act (Chapter 187) with RA No. 01456 valid from January 1, 2017 up to December 31, 2019 and subject to renewal. It started commercial operations on July 1, 2016. The Commission on Filipinos Overseas estimated that there were 203,243 Filipinos in Singapore as of December 2013.

Hwa Kung Hong & Co. Ltd. (49% owned), an associate, is registered with the Ministry of Labor with a License of Private Employment Service Agency number 1278 valid from January 24, 2017 up to January 23, 2019 and subject to renewal. It has offices in Taipei and Kaohsiung. The Commission on Filipinos Overseas estimated that there were 89,195 Filipinos in Taiwan as of December 2013.

IRemit Singapore Pte Ltd, an affiliate, is a private limited company that was incorporated on May 11, 2001 and is registered with the Registrar of Companies and Businesses of the Accounting and Corporate Regulatory Authority with company number 200103087H. It is licensed by the Monetary Authority of Singapore to carry on

remittance business pursuant to Section 8(3) of the Money-changing and Remittance Businesses Act (Cap 187) with RA No. 01407 valid until December 31, 2016. It started commercial operations in October 2001. Investment in IRemit Singapore Pte Ltd was derecognized by the Parent Company effective December 31, 2013. IRemit Singapore Pte Ltd surrendered its license to the Monetary Authority of Singapore and ceased conducting its remittance business after June 30, 2016, and shall undergo liquidation for a minimum period of 5-6 months.

Principal Products and Services

Through the years, I-Remit has developed products and services that cater specifically to the various remittance needs of OFWs and other migrant workers as follows:

Bank-to-Bank A facility for “same-day” online crediting to bank account in the Philippines. A remittance transaction received before 12:00 noon Manila time may be withdrawn by the designated beneficiary from the bank branch or any automated teller machine (ATM) on the same day of the remittance transaction. There were 10,936 bank branches as of June 30, 2016 and 19,084 ATMs as of December 31, 2016 in the Philippines according to the BSP’s “Report on Economic and Financial Developments (Third Quarter 2016)” and “Banking Statistics”, respectively.

Door-to-Door Delivery of cash remittances to designated beneficiaries through third-party couriers. I-Remit has the capability to deliver remittances in cash, literally, at the doorstep of the beneficiaries of OFWs through in- house and third-party couriers. The Company has the widest coverage nationwide and can deliver remittances within the day in Metro Manila, Rizal and nearby provinces, and in two days or more in other areas depending on the specific location of the beneficiaries. I-Remit's door-to-door delivery is by far the most efficient in the remittance industry. Through its in-house messengers and couriers, I-Remit guarantees remittance delivery on the same day for areas in Metro Manila. Its provincial courier network is unequalled in terms of efficiency and timely delivery of remittance. Furthermore, I-Remit boasts of the widest coverage nationwide, reaching more beneficiaries in the Philippines than other remittance companies.

Notify-to-Pay Allows a beneficiary in the Philippines to pick-up a remittance in any of I-Remit’s 18,663 pay-out stations within 24 hours. These designated pay-out stations number 4,881 in Metro Manila; 6,799 in the rest of Luzon; 3,558 in the Visayas; and 3,425 in Mindanao. I-Remit has tied-up with the following commercial banks, thrift banks, rural banks, pawnshops and remittance agents which branches serve as pay-out stations for cash pick-up: Banco Santiago De Libon, Inc.; Bank of the Philippine Islands; BDO Unibank; BDO Remit Counters and SM Business Service Center; Cebuana Lhuillier Pera Padala; China Banking Corporation; CIS Bayad Center, Inc.; Development Bank of the Philippines; Eight Under Par, Inc. (Palawan Pawnshops) and Palawan Express Pera Padala Authorized Agents; First Consolidated Bank; Global Pinoy Remittance and Services; Global Access Financial Services, Inc.; Globe G-Cash (G-Xchange, Inc.); HJP Pawnshop; Land Bank of the Philippines; Maybank Philippines, Inc.; M Lhuillier Kwarta Padala; Opportunity Kauswagan, Remit Inc. (OK Remit); Philippine Savings Bank; Robinsons, Inc.; Security

Bank Corporation and E-Gift Cash ATM Locations; Security Bank Savings; Sterling Bank of Asia, Inc. (A Savings Bank); Tambunting Pawnshop Philippines; Union Bank of the Philippines; UCPB Savings Bank; United Coconut Planters Bank.

Visa Card I-Remit Visa Card is a “debit and ATM card in one” through which remitters can send money to their beneficiaries almost instantaneously. Cardholders may withdraw cash from more than 19,000 ATMs in the Philippines and over 2 million Visa ATMs worldwide. As a debit card, cardholders may use the I-Remit Visa Card to pay for their purchases from any of the over 37 million Visa-affiliated merchant establishments in over 200 countries and territories worldwide. In 2008, I- Remit introduced the I-Remit Shop ‘N’ Pay Card in partnership with Sterling Bank of Asia, Inc. (A Savings Bank). The I-Remit Shop ‘N’ Pay Card utilizes the EMV (Europay MasterCard Visa) technology, the standard for the interoperation of IC cards (“chip cards”) and IC capable POS terminals and ATMs, for authenticating credit and debit card payments.

Auxiliary Services I-Remit is authorized to accept payments, contributions, premiums, or donations from Filipinos abroad for the following government agencies, private companies, and organizations: Social Security System (SSS); Overseas Workers Welfare Administration (OWWA); Home Development Mutual Fund (HDMF or Pag-IBIG Fund); Philippine Retirement Authority (PRA); Philippine Health Insurance Corporation (PhilHealth); 8990 Holdings, Inc.; AMA Communities Inc.; AMA Land Development Corporation; Amaia Land Corporation; Astoria Vacation and Leisure Club, Inc.; Avida Land Corporation; Bellavita Land Corporation; Bayad Center; CBN Asia (The 700 Club Asia); BeamAndGo Philippines, Inc.; Bleaushea Properties Corporation; C&P Prime Properties International, Inc.; CDC Holdings, Inc.; Century Properties Group, Inc.; CHMI Land, Inc.; Citi Global Reality and Development Inc.; COL Financial Group, Inc.; Confed Properties, Inc.; Convergence Realty and Development Corp.; DMCI Project Developers, Inc.; Duraville Realty and Development Corporation; Durawood Lumber and Construction Supply; Dynamic Realty and Resources Corporation; Earth and Style Corporation; Earth Aspire Corporation; Earth Prosper Corporation; Eton Properties Philippines, Inc.; Extraordinary Development Corporation; Ferris Sobell Properties, Inc.; Fiesta Communities, Inc.; Generika Drugstore; Giftaway Inc.; Global Dominion Financing Incorporated; Hausland Development Corporation; Healthway Medical Corporation; Hi-Precision Diagnostics; Hellenes Land, Inc.; Homeowners Development Corporation; Imperial Homes Corporation; Jollibee Foods Corporation; Kabalikat ng Migranteng Pilipino, Inc. (KAMPI); Kids World Integrated School; Ledesco Development Corporation; LLSP Development Corporation; Major Homes, Inc.; Major Properties, Inc.; Malate Construction and Development Corporation; Maxicare Healthcare Corporation; Megaworld Corporation; Medicard; Merrytown Properties Corporation; New Pacific Resources Management Inc.; Northpine Land, Inc.; Ortigas & Company Limited Partnership; Pacific Avelex Realty Corporation; Phinma Property Holdings Corporation; PICAR Development, Inc.; Pinoy Health Plus; Pioneer Life, Inc.; Pueblo de Oro Development Corporation; Red Ribbon Bake Shop, Inc.; RCD Land,

Inc.; RJ Lhinet Development Corporation; Robinsons Homes, Inc.; Savers Appliance Depot (Sentine Development Corporation); SM Development Corporation; SM Synergy Property Holdings, Inc.; Suntrust Properties, Inc.; Surewell Equities, Inc.; The Insular Life Assurance Company, Ltd.; Twenty Two Forty One Properties Inc.; Ultimate Visa Corporation; Vistaland International Marketing, Inc.; Wee Community Developers, Inc.

SMS (Short Message Beneficiaries may encash remittances in more than Service) via Globe G- 5,000 Globe G-Cash and Smart Padala encashment Cash and Smart Padala centers and ATMs nationwide once received on their mobile phones. Beneficiaries may also use the facility for “cashless shopping” in G-Cash and Smart affiliated business establishments.

iRemit Direct Online iDOL is I-Remit’s Internet-based remittance service Remittance System that offers convenient and secure remittance services (iDOL) online. It is currently available to Filipinos in Australia, Canada, Hong Kong, Japan, Singapore and the United Kingdom.

I-Remit derives its income from remittance transactions in the form of: (i) service fees, and (ii) on the spread on the applicable foreign exchange rate for each conversion of any remittance to the Philippines. Service fees cover all logistical and operational expenses of the Company and its partner or tie-up company for each remittance transaction. These fees vary per country of operation depending on competition and the current foreign exchange situation. The timing of a remittance is also a consideration in applying a foreign exchange factor.

Percentage of Sales or Revenues Contributed by Foreign Sales

I-Remit operates in various countries through its subsidiaries and associates or through tie-ups. The former allows the Company to own up to 100% equity while the latter is through agent-partner agreements. Partnership arrangements are utilized when the volume of remittances do not justify incorporating new companies.

Due to the nature of its business, a substantial portion of the Company’s sales or revenues are from foreign sales.

The percentage shares of the Company’s major markets in terms of total value of inward remittances (in US dollar amounts) is as follows:

Share in Value (in USD) of Remittances Region 2016 2015 2014 Asia-Pacific 34% 34% 36% Europe 11% 13% 10% Middle East 36% 31% 24% North America 14% 15% 15% Others 5% 7% 15% Total 100% 100% 100%

The percentage shares of the Company’s major markets in terms of the volume (number of transactions) of inward remittance transactions is as follows:

Share in Volume (in No. of Transactions) of Remittances Region 2016 2015 2014 Asia-Pacific 37% 38% 42% Europe 11% 12% 11% Middle East 37% 34% 31% North America 13% 14% 14% Others 2% 2% 2% Total 100% 100% 100%

Distribution Methods of the Products or Services

I-Remit operates globally through a combined network of branches and tie-ups worldwide offering its products and services to overseas Filipino workers (OFWs). Currently, I-Remit is present in the following 27 countries and territories:

Asia Pacific Europe Middle East North America Australia Austria Bahrain Canada Brunei Germany Israel Hong Kong Greece Jordan Indonesia Italy Kingdom of Saudi Arabia Japan Spain Kuwait Malaysia United Kingdom Lebanon New Zealand Oman Philippines Qatar Saipan United Arab Emirates Singapore Taiwan

The Company’s general expansion plans in 2017 include the engagement of new tie- ups and partners in the Asia-Pacific (Saipan, Australia, Hong Kong), Middle East (Kuwait, Kingdom of Saudi Arabia, Bahrain, Jordan), Canada and Europe (Spain, Germany, Italy, Greece).

The distribution methods in the Philippines of the Company’s products or services are as described under “Principal Products and Services.”

Remittances may be credited to any bank account in the Philippines and the funds may be withdrawn from the branch of account or from automated teller machines (ATMs). There were 10,936 bank branches as of June 30, 2016 and 19,084 ATMs as of December 31, 2016 in the Philippines according to the BSP’s “Report on Economic and Financial Developments (Third Quarter 2016)” and “Banking Statistics”, respectively.

I-Remit has the capability to deliver remittances in cash literally at the doorstep of the beneficiaries of OFWs through in-house and third-party couriers. The Company has the widest coverage nationwide and can deliver remittances within the day in Metro Manila, Rizal and nearby provinces, and in two days or more in other areas depending on the specific location of the beneficiaries. I-Remit's door-to-door delivery is by far the most efficient in the remittance industry. Through our in-house messengers and couriers, I-Remit guarantees remittance delivery on the same day for areas in Metro Manila. Our provincial courier network is unequalled in terms of efficiency and timely delivery of remittance. Furthermore, I-Remit boasts the widest coverage nationwide, reaching more beneficiaries in the Philippines than other remittance companies.

Under the Company’s “Notify-to-Pay” services, remittances may be picked up by beneficiaries in any of I-Remit’s more than 18,600 designated pay-out stations nationwide.

Beneficiaries may also encash remittances in more than 5,000 Globe G-Cash and Smart Padala encashment centers nationwide once notified by “text” on their mobile phones.

New Products or Services

I-Remit Direct Online or IDOL, the Company’s Internet-based remittance service that offers convenient and secure remittance services online was made available to Filipinos in Australia, Canada, Hong Kong, Japan, Singapore and the United Kingdom. This online product feature has made sending money to the Philippines a lot simpler and hassle free.

There are other services planned for launching in 2017. I-Remit has partnered with various Electronic Money Institutions (EMIs) and multi payment gateways to come up with products such as multi-featured debit cards where funds can be transferred wallet- to-wallet in real time. I-Remit will also act as payout partners for other global remittance

companies and do bank-to-bank account credits and “notify-to-pay” credits to other payout channels such as big pawnshops. These products and services are intended to improve product delivery and enhance I-Remit’s competitiveness in the OFW remittance market. Among these are various payment and collection services. The Company also intends to offer its remittance services to other nationalities through partnerships with banks or remittance companies of countries that have large populations of overseas workers. Although many of the I-Remit customers still prefer the traditional way of sending money via brick and mortar locations, I-Remit is also preparing for the digital financial services which have taken off as an important development in the process of global transformation. A growing base of customers is now shifting to mobile devices with lower remittance transaction fees. I-Remit is currently working on enhancing its remittance product from a mere traditional utility to a strategic, valued-added service that can be offered with greater focus on a wider range of customer base, including the unbanked and the underbanked market.

There are no publicly-announced new products or services which completion of development would require a material amount of the resources of I-Remit. New products or services will be developed using internal resources.

Competition

Players

In its publication “Migration and Development Brief 26” (April 2016), the World Bank estimated that officially recorded remittances to developing countries reached USD 431.6 billion in 2015 growing by 0.4% compared with 2014 and may reach USD 484.7 billion by 2018. The money transfer or remittance industry has numerous players that are classified into two (2) major categories: the formal and informal channels.

Formal Channels

Formal funds transfer or remittance channels may be defined as composed of institutions that transfer value or funds from one geographic location to another and are operating within the regulated financial sector. These institutions are regulated and supervised by government agencies and by laws and regulations that determine their establishment and scope of operations. Based on the standards set by the Financial Action Task Force 40 Recommendations and the Basel Committee on Banking Supervision, aside from licensing and registration, formal remittance institutions must have in place mechanisms for customer due diligence and monitoring of transactions. The formal channels may include banks, money transfer operators, credit unions, and postal services.

Banks. The Philippine remittance industry is dominated today by the country’s five largest universal banks that lay claim to 85 percent of the total remittances flowing through the formal channels. There are over 20 commercial and thrift banks that are active players in the Philippine overseas remittance industry. Many remittance centers operating abroad are either subsidiaries or affiliates of domestic banks and are incorporated under the laws of their host countries. Some local banks have also established tie-up arrangements with banks and money transfer operators abroad. The major commercial banks in the Philippines involved in the remittance industry include BDO Unibank, Philippine National Bank, Metropolitan Bank and Trust Company, Bank of the Philippine Islands, and the Rizal Commercial Banking Corporation. These banks also subscribe to the SWIFT system for bank-to-bank transfers and have a combined international network of correspondent banks, overseas branches, and international remittance centers.

International Money Transfer Operators. International money transfer operators consist of companies whose subsidiaries or affiliates are licensed or registered with regulatory agencies. These operate under laws and regulations that are specific to money transfer operators or payment service providers. Among these companies are Western Union, MoneyGram, Trans-Fast, Xpress Money, and Ria Money Transfer.

Domestic Money Transfer Companies. The major domestic players include I-Remit, LBC Express, Lucky Money, 2GO, M. Lhuillier, and Cebuana Lhuillier.Most of the companies classified under this category are local logistics service providers, courier companies, or pawnshops that have branched out into the remittance business.

Telecommunications Companies. The continuing advances in information and telecommunications technologies allowed companies such as Smart Communications, Inc. and Globe Telecom, Inc. to offer innovative modes of sending and receiving remittances such as through short messaging system (SMS) or “text” or through e- money. Smart introduced Smart Padala in August 2004 while Globe introduced GCash in October 2004. International money transfer companies are also starting to utilize mobile phones for their money transfer businesses. In 2006, Internet payments innovator started its mobile SMS-based transfer system called PayPal Mobile. It has also developed applications for popular smart phones Blackberry, iPhone, and Android. In 2009, Twitter launched TwitPay, which interfaces with PayPal’s platform and uses the sender’s mobile-enabled Twitter account as a platform to send money to other Twitter users. The company TextPayMe was acquired in 2010 by Amazon.com which also offers Internet-based transfers through its Amazon Payments service. Through Amazon.com’s TextPayMe, users with an Amazon Payments account can send money to another person by sending an SMS text message with their mobile phone, or using their mobile phone’s Internet browser or one of several special applications designed for smartphone users. MasterCard also launched its MoneySend service in the United States which allows senders to make payments via SMS text message of their phone’s Internet browser.

Technology-Based Companies. The emerging new players in the industry are composed mostly of technology-based companies that utilize the Internet in offering remittance services. Their services may be availed of through traditional browers or via Web-enabled mobile phones. The online money transfer companies tapping the Philippine market are composed of Remit2Home, WorldRemit, Xoom, and PayPal. Many remittance companies are also expanding their operations through the Internet. Western Union and MoneyGram currently offer customers the option of sending money online, as do banks such as Wells Fargo and Citibank.

Informal Channels

Informal channels refer to institutions that engage in the remittance business outside of the regulated financial sector. Cash may be sent through the recruitment agency or through the local office of the employer, through friends, relatives, or fellow workers traveling back to the Philippines. Alternatively, OFWs can bring the cash themselves upon their return to the Philippines.

“Padala” System. The literal meaning of the local word “padala” is to send something through the courtesy of another person. In this practice, it is assumed that the person asked to bring the money to the Philippines is reliable and trustworthy, and the practice repeats as trust and confidence builds between the parties with each completed delivery.

“Kaliwaan” System. The system, despite its lack of popularity, operates through a well- tested network of currency exchanges. It involves the use of agents in the source and destination countries who operate outside of regulatory restrictions as they arrange currency transfers. The method has been the subject of congressional inquiries because of its use in laundering monetary proceeds from illegal activities such as “jueteng.”

Hand-carry System. This method refers to the practice of overseas Filipinos in bringing home cash themselves when they return to the Philippines for vacation or after the expiration of their work contracts.

OFW remittances continue to fuel the Philippine economy. The continuing upward trends in inward remittance flows are expected to be sustained by the increased deployment of OFWs. Likewise, there is an observed overall shift from the utilization of unregulated, informal channels to the more formal structured channels for remittances that emphasizes the growing need for reliability, efficiency and convenience.

As competition among industry players intensifies, banks, money transfer agents, and other similar service providers are expected to become more aggressive in their marketing and promotional activities to lure potential clients and capture larger shares of the market.

Advances in information and communications technology have allowed new players to roll-out a growing variety of products and services catering to the evolving needs and requirements of OFWs. Such innovative approaches are expected to fuel further industry growth, help reduce transaction costs, and improve service delivery. Due to rising competition from non-traditional players, banks and money transfer agents need to upgrade their technology, expand network coverage, and enhance their distribution structures.

Industry players, particularly banks and remittance agents, will always be on the look- out and competing for new tie-up arrangements with overseas partners, particularly in untapped geographic markets. Banks and other financial institutions will continue to seek partnership opportunities with correspondent banks, money transfer agents, and other types of partners overseas to expand their coverage while also planning to establish their own offshore units in key overseas markets like the Middle East, Canada, and the United States, that have a growing concentration of OFWs and Filipino immigrants. While the industry remains highly-competitive, industry players often link-up and have overlapping or complementary offerings with other service providers under revenue-sharing schemes.

I-Remit expects to encounter direct and indirect competition from domestic and foreign companies offering money remittance services locally and internationally.

The Company competes mainly in terms of pricing and service efficiency against the domestic commercial banks, Philippine-based money transfer agencies, international money transfer agencies, and telecommunications firms.

I-Remit is able to compete effectively against the major players in the industry because of its network of branches and tie-ups abroad, its local tie-ups with local and foreign banks, its flexibility to expand in other markets, its relatively faster decision-making process, and its marketing strategies that are customized for the Filipino populations in each country that it operates in.

The Company believes that its customer-centric model, complemented by its flexible and dynamic structure, will allow it to compete actively in the local and international markets by capitalizing on its strengths in its core business while offering value-added services to OFWs around the world. The Company similarly believes that with its relentless drive for innovation, its streamlined organization, and efficient cost structure in its local and foreign operations, it will be able to compete effectively in the global marketplace through the continuous establishment of foreign offices in strategic locations characterized by high-densities of OFW populations that will allow it to tap a broader market, and consequently, deliver potentially high-yield profits.

Sources and Availability of Raw Materials and Names of Principal Suppliers

The Company has a broad base of suppliers, both local and foreign. The Company is not dependent on one or a few suppliers in conducting its business.

Dependence Upon a Single Customer or a Few Customers

The Company serves a wide spectrum of overseas Filipino workers (OFWs) and Filipino immigrants of different occupational groups in 27 countries and territories around the world. It is not dependent on a single customer or a few customers. Neither is there a single customer that accounts for, or will account for 20% or more of the Company’s sales.

Preliminary data from the Philippine Overseas Employment Administration (POEA) also reported an increase in the number of workers deployed which in 2015 reached 1.8 million. Moreover, the POEA reported that deployed land-based new hires totaled 515,217 in 2015. About 92% of the deployed land-based new hires were intended for elementary occupations, service and sales, crafts and related trades, production, and professional, technical, and related workers with about 76% deployed in Saudi Arabia, Kuwait, Qatar, Taiwan, United Arab Emirates and Hong Kong.

In its publications “Migration and Development Brief 26” (April 2016), the World Bank estimated that officially recorded remittances to developing countries reached USD

431.6 billion in 2015 growing by 0.4% compared with 2014 and may reach USD 447.9 billion in 2016. The top recipients of officially recorded remittances for 2015 are India (USD68.9 billion), China (USD63.9 billion), the Philippines (USD28.5 billion), Mexico (USD24.8 billion), Nigeria (USD20.7 billion), and Egypt (USD19.7 billion).

The Bangko Sentral ng Pilipinas (BSP) reported that the 2016 full-year personal remittances of overseas Filipinos to the Philippines reached USD 29.7 billion, higher by 4.9% compared to the inflows recorded in 2015. The sustained growth in personal remittances during the year was driven by the expansion in remittances from land- based workers with work contracts of one year or more (by 7.6%), which made up for the decline in remittances from sea-based and land-based workers with short-term contracts (by 3.7%).

Cash remittances from overseas Filipinos coursed through banks posted a 5.0% increase and reached USD26.9 billion.

It is estimated that in 2016, personal remittances accounted for 9.8% of Gross Domestic Product (GDP). Remittances continue to draw strength from the continued deployment of skilled Filipino workers abroad, mostly in the Middle East.

Transactions and/or Dependence on Related Parties

The Company has transactions with its subsidiaries and associates abroad, i.e., the remittance centers that accept transactions from its customers, mostly OFWs, in Australia, Austria, Canada, Hong Kong, New Zealand, Singapore, the United Kingdom, and Japan. These transactions primarily consist of delivery services for a fee.

Pursuant to the Company’s usual course of business, it also advances funds to its subsidiaries, associates and affiliates. These are accounts receivable from subsidiaries, associates and affiliates pertaining to remittance transactions. It also consists of advances made to subsidiaries, associates, and affiliates for working capital to maintain cash balances in bank accounts and other financial and operating requirements. The account receivables are usually settled on the next banking day. On the other hand, advances for financial and operating requirements are due on demand.

The Company leases office space from Oakridge Properties, Inc., a related party.

The Company has office sharing arrangement with Surewell Equities Pte. Ltd. in Singapore, a related party.

The Company maintains peso deposit accounts with Sterling Bank of Asia, Inc. (A Savings Bank), a related party. The Company’s retirement benefit fund is maintained with Sterling Bank of Asia, Inc. (A Savings Bank), an affiliate due to common stockholders, as trustee. The said bank’s majority shareholders are: JTKC Equities, Inc., Surewell Equities, Inc. and Star Equities Inc. which are also the shareholders of the Company.

Please see also Item 12. Certain Relationships and Related Party Transactions.

Significant Agreements and/or Commitments

The Company conducts its remittance and collection business internationally by organizing wholly-owned corporations, entering into joint ventures, and signing Memoranda of Agreements (MOAs) with remittance or money transfer operators that are authorized or licensed in their respective countries and territories including Australia, Austria, Bahrain, Brunei, Canada, Germany, Greece, Hong Kong SAR, Indonesia, Israel, Italy, Japan, Jordan, Kuwait, Lebanon, Malaysia, New Zealand, Oman, Qatar, Saipan, Kingdom of Saudi Arabia, Singapore, Spain, Taiwan, United Kingdom, and the United Arab Emirates.

The Memoranda of Agreement entered into with individuals and corporations in various countries and territories follow a general format with minor variations. Generally, the MOAs entered into on or after 2004 provide that I-Remit retain exclusive proprietary rights over its I-Remit Foreign Remittance System which the foreign parties will use to implement the remittance arrangement. MOAs entered into on or before 2003 do not contain this provision. All MOAs, however, are aimed at limiting I-Remit’s exposure by specifying that: (i) the foreign parties are not agents but independent contractors; (ii) the

foreign parties shall be shall be responsible for compliance with all applicable laws in their respective countries and territories; and (iii) funds must first be deposited to an I- Remit bank account before the Company shall release the same to the intended beneficiaries in the Philippines. Contracts executed on or after 2004 also stipulate amicable settlement or arbitration as the mode of settlement of disputes and provides for the exclusive jurisdiction of the Philippine courts. New contracts with tie-ups require bond or advanced payment cover in order to fulfill the delivery of any transaction. The bond or “advanced payment cover” is deposited to an I-Remit-designated bank account that serves as collateral.

The bulk of the MOAs executed in the Philippines cover the arrangement between the Company and various companies and institutions, such as commercial banks, thrift banks, and pawnshops for the appointment of the latter to provide pay-out stations through their branches for the Company’s notify-to-pay services.

Certain MOAs also involve the appointment of the Company as a collection agent for the remittance of amortization payments, loan payments, premiums, and contributions for government financial institutions and agencies consisting of the Social Security System (SSS), Overseas Workers Welfare Administration (OWWA), Home Development Mutual Fund (HDMF or Pag-IBIG Fund), Philippine Retirement Authority (PRA) and the Philippine Health Insurance Corporation (PhilHealth), and various pre- need and real estate development companies.

Principal Terms and Expiration Dates of All Patents, Trademarks, Copyrights, Licenses, Concessions, and Royalty Agreements Held

I-Remit, Inc. is duly registered as a Remittance Agent with the Bangko Sentral ng Pilipinas (BSP), with Certificate No. FX-2005-000364 issued on May 10, 2005, pursuant to BSP Circular 471, Series of 2005, dated January 24, 2005. It is subject to the applicable provisions of laws and BSP rules and regulations, as well as the provisions of the Anti-Money Laundering Act of 2001 (Republic Act No. 9160 as amended by Republic Acts 9194, 10167, and 10365) and its revised implementing rules and regulations, and Republic Act No. 10168 or the Terrorism Financing Prevention and Suppression Act of 2012 and its implementing rules and regulations.

I-Remit, Inc. is duly registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) as a Remittance Network Provider, with registered remittance network provider number RNP100035640-001, pursuant to subsection 75C(2) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) of Australia with effect from April 13, 2012 and valid for three (3) years thereafter. It has been renewed for an additional three years to expire on April 13, 2018 under section 75J of the AML/CTF Act.

The Company’s subsidiaries and affiliates, and their branches are registered with or licensed by the relevant government regulatory bodies in their host countries in Australia, Austria, Canada, Hong Kong SAR, Italy, Japan, New Zealand, Singapore, Taiwan, and the United Kingdom. The said licenses and registrations have been granted subject to compliance with the applicable laws governing the operation of remittance companies or money transfer businesses and anti-money laundering and counter-terrorism financing.

I-Remit Australia Pty Ltd is registered with the Australian Securities and Investments Commission (ASIC) as an Australian proprietary company, limited by shares with ACN 103 107 982 and ABN 22 103 107 982 with registration date December 10, 2002 and next review date December 10, 2017.

Worldwide Exchange Pty Ltd is registered with the Australian Securities and Investments Commission (ASIC) as an Australian proprietary company, limited by shares with ACN 106 493 047 and ABN 35 106 493 047 with registration date September 29, 2003 and next review date September 29, 2017. Pursuant to subsection 75C(2) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) of Australia, Worldwide Exchange Pty Ltd is registered with AUSTRAC as an affiliate of I-Remit, Inc., with remittance affiliate number AFF100309950-001, with effect from September 28, 2012 and valid for three (3) years thereafter subject to renewal. Its registration with AUSTRAC has been renewed for another three years to expire on September 28, 2018 under section 75J of the AML/CTF Act 2006.

International Remittance (Canada) Ltd. is registered with Industry Canada, with registration number 392271-5, pursuant to the Canada Business Corporations Act with date of incorporation July 16, 2001. International Remittance (Canada) Ltd. is registered as an extraprovincial company with the Registrar of Companies of the Province of British Columbia with certificate of registration number A-60718 dated December 3, 2003. Pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, International Remittance (Canada) Ltd. is registered as a money services business (MSB) with the Financial Transactions and Reports Analysis Centre of Canada with registration number M08160706 valid until June 6, 2018 and subject to renewal every two (2) years. Effective February 3, 2015, it has been licensed to provide payday loans under the Payday Loans Act 2008 of Ontario with license number 4732971.

Lucky Star Management Limited (trading as “IRemit Hong Kong”) is registered as a limited liability company in the Companies Registry of Hong Kong pursuant to the Companies Ordinance (Cap 32). Lucky Star Management Limited (trading as “IRemit Hong Kong”) is a licensed money service operator pursuant to Section 30 of the Anti- Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Chapter 615) with License No. 12-07-00326 from August 9, 2016 to August 8, 2018 issued by the Customs and Excise Department-Money Service Supervision Bureau.

K.K. I-Remit Japan is registered as a “Kabushiki Kaisha” (joint stock corporation) with the Legal Affairs Bureau of the Ministry of Justice of Japan with company number 0100- 01-140611. Pursuant to the Payment Services Act of 2010, K.K. I-Remit Japan is registered with the Kanto Local Finance Bureau with Registration No. KLFB00019. K.K. I-Remit Japan is a member of the Japan Payment Services Association, a dispute resolution body, with membership number 00390.

I-Remit New Zealand Limited is registered with the Registrar of Companies of the Ministry of Economic Development with certificate number 1984331 effective September 11, 2007. I-Remit New Zealand Limited is registered in the Financial Service Providers Register of the Companies House of New Zealand with FSP number 45263. I-Remit New Zealand Limited is a participant to the Financial Services Complaints Limited, a dispute resolution organization.

I-Remittance Singapore Pte. Ltd., a wholly-owned subsidiary, is registered with the Registrar of Companies and Businesses of the Accounting and Corporate Regulatory Authority (ACRA) Singapore with company number 201404379N. I-Remittance Singapore Pte. Ltd. is licensed by the Monetary Authority of Singapore to carry on remittance business pursuant to Section 8(3) of the Money-changing and Remittance Businesses Act (Chapter 187) with RA No. 01456 valid from January 1, 2017 up to December 31, 2019 and subject to renewal. I-Remittance Singapore Pte. Ltd. started commercial operations on July 1, 2016.

IRemit Global Remittance Limited is registered with the Companies House of the United Kingdom with company number 04239974 pursuant to the Companies Act 2006. IRemit Global Remittance Limited has been granted authorization by the Financial Conduct Authority (FCA) to carry on payment services (money remittance) with Firm Reference Number 537568 effective April 15, 2011 pursuant to the Payment Services Regulations 2009. IRemit Global Remittance Limited is registered with Her Majesty’s Revenue & Customs with money laundering regulations (MLR) registration number 12130185 with certificate of registration issued on June 07, 2016 and expiring on June 1, 2017 subject to annual renewal.

The branches of IRemit Global Remittance Limited in Rome and Milan, Italy are registered in Albo of art. 114 septies TUB (Albo degli Istituti di Pagamento) under supervision of Banca D’Italia with identification code 36023.0. pursuant to Art. 1 Paragraph 1(b) of Legislative Decree 11/2010 of Italy with effect from July 7, 2011.

IREMIT Remittance Consulting GmbH is registered as an agent of IRemit Global Remittance Limited pursuant to Article 12 para. 6 of the Austrian Payment Services Act (Zahlungsdienstegesetz). IREMIT Remittance Consulting GmbH is registered in the Register of Payment Institutions of the Financial Conduct Authority of the United Kingdom with firm reference number 574797.

Hwa Kung Hong & Co. Ltd. is registered with the Ministry of Labor with a License of Private Employment Service Agency with license number 1278 valid from January 24,

2017 up to January 23, 2019 and subject to renewal.

IRemit Singapore Pte Ltd, an affiliate, is registered with the Registrar of Companies and Businesses of the Accounting and Corporate Regulatory Authority with company registration number 200103087H. IRemit Singapore Pte Ltd is licensed by the Monetary Authority of Singapore to carry on the remittance business pursuant to Section 8(3) of the Money-changing and Remittance Businesses Act (Cap 187) with RA No. 01407 valid until December 31, 2016. Investment in IRemit Singapore Pte Ltd was derecognized by the Parent Company effective December 31, 2013. IRemit Singapore Pte Ltd surrendered its license to the Monetary Authority of Singapore and ceased conducting its remittance business after June 30, 2016, and shall undergo liquidation for a minimum period of 5-6 months.

I-Remit, Inc. and its subsidiaries, associates, and affiliates offer their products and services through the “I-Remit” trademark, salesmark, and/or trade name.

I-Remit has registered the following patents, trademarks and/or trade names:

Name/Trademark Date Filed Date Registered I-Remit Name and Logo November 21, 2016 Renewal of Registration pending; Petition for Renewal of Registration No. 4-2004-000529 Registration Bureau of Trademarks, Intellectual (Original Application No. 4- Property Office of the Philippines 2004-000529 filed on January Originally Registered on December 20, 2004) 11, 2006 for a term of 10 years from date of registration I-Travel September 10, 2015 Renewal of Registration pending; Petition for Renewal of Registration No. 4-2004-0005252 Registration Bureau of Trademarks, Intellectual (Original Application No. 4- Property Office of the Philippines 2004-0005252 filed on June Originally Registered on October 1, 16, 2004) 2005 for a term of 10 years from date of registration I-Pay September 10, 2015 Renewal of Registration pending; Petition for Renewal of Registration No. 4-2004-0005253 Registration Bureau of Trademarks, Intellectual (Original Application No. 4- Property Office of the Philippines 2004-0005253 filed on June Originally Registered on October 1, 16, 2004) 2005 for a term of 10 years from date of registration iDol July 8, 2004 July 30, 2006 Application No. 4-2004- Registration No. 4-2004-006066 0006066 Bureau of Trademarks, Intellectual Property Office of the Philippines Registered for a term of 10 years from date of registration I-Serve February 14, 2008 December 15, 2008 Application No. 4-2008-001818 Registration No. 4-2008-001818 Bureau of Trademarks, Intellectual Property Office of the Philippines Registered for a term of 10 years from date of registration I-Value February 14, 2008 September 8, 2008 Application No. 4-2008-001819 Registration No. 4-2008-001819 Bureau of Trademarks, Intellectual Property Office of the Philippines Registered for a term of 10 years from date of registration I-Reward February 14, 2008 December 1, 2008 Application No. 4-2008-001816 Registration No. 4-2008-001816 Bureau of Trademarks, Intellectual Property Office of the Philippines Registered for a term of 10 years from date of registration

Name/Trademark Date Filed Date Registered iCare August 24, 2016 November 17, 2016 Application No. 4-2016- Registration No. 4-2016-00010195 00010195 Bureau of Trademarks, Intellectual Property Office of the Philippines Registered for a term of 10 years from date of registration iShop August 24, 2016 November 17, 2016 Application No. 4-2016- Registration No. 4-2016-00010196 00010196 Bureau of Trademarks, Intellectual Property Office of the Philippines Registered for a term of 10 years from date of registration I-Remit Trademark June 23, 2006 June 23, 2006 e-Filing No. 125586 Registration No. T06/12356G Registry of Trademarks, Intellectual Property Office of Singapore I-Remit Trademark December 20, 2013 Application No. 990202 Intellectual Property Office of New Zealand I-Remit Trademark September 18, 2009 July 15, 2010 Application No. 1452333 Registration No. TMA772071 Canadian Intellectual Property Office I-Remit Global Remittance December 14, 2007 Trademark Registration No. 1215720 IP Australia Registered for a term of 10 years from date of registration

I-Remit has licenses to the following information technology software and systems used in its operations:

Software / System, Acquisition and License / Renewal of Purpose Version Effectivity Maintenance Service Enterprise Resource The General Ledger Version 3.2 acquired Support agreement is Information and Control module serves as the in 2002; upgraded to renewed every year (ERIC) Financial Suite central financial data version 5.2 in 2006; (General Ledger & repository that allows for perpetual license Accounts Payable) convenient and accurate Version 5.2, Jupiter preparation of the Systems, Inc. Company’s financial statements. The Accounts Payable module manages supplier payables and disbursements. Enterprise Resource The Payroll module is used Acquired in 2007; Support agreement is Information and Control for employees’ pay perpetual license renewed every year (ERIC) Payroll, Human computation, payroll Resource Management, processing, and statutory Timecard, Version 5.2, reporting. The Human Jupiter Systems, Inc. Resource Management module is used for capturing 201-file information and record- keeping. The Timecard module is used in recording and processing employee working hours. Microsoft SQL Server A relational data base Version 2000, Software assurance 2000 (Standard Edition) management system used acquired on October ended on February for the “back-end” data 31, 2005; Version 28, 2011 base of I-Remit’s 2008, acquired on remittance system February 27, 2009; perpetual license Microsoft SQL Server – A relational data base Version 2008, Software assurance Enterprise Edition management system used acquired on February ended on February for the “back-end” data 27, 2009; perpetual 28, 2011 base of I-Remit’s license remittance system Microsoft SQL Server – A relational data base Version 2014, Software assurance Standard Edition 2014 management system used acquired on February ended on February for the “back-end” data 27, 2015; perpetual 28, 2017 base of I-Remit’s license remittance system Microsoft Windows Pro Operating system used in Acquired on February DVD Playback Windows workstation 27, 2015 Vista Business Microsoft Exchange A messaging and Version 2003, Server, 2003 – collaborative software acquired on August Enterprise Edition used for the electronic mail 11, 2006; additional system of I-Remit, Inc. licenses acquired on Microsoft Exchange September 27, 2007; Server 2007 CALS perpetual license

Microsoft Exchange Server 2010 CALS

Software / System, Acquisition and License / Renewal of Purpose Version Effectivity Maintenance Service Microsoft Exchange A messaging and Version 2013, Server Std, 2013 & collaborative software acquired on Exchange Server Ent used for the electronic mail December 22, 2014 2013 –Microsoft system of I-Remit, Inc. Exchange Server Std 2013 CALS

Microsoft Windows Operating system used in Version 2012, Server Std. 2012 R2 – servers acquired on Microsoft Windows December 22, 2014 Server CALs 2012

Microsoft Project, Visio Software tool used for Version 2003 Standard/Professional project management , process flow, layout Microsoft Visual Studio Software tool used for Version 2010 Professional Edition development Microsoft Office – Software used in creating Version 2003, Standard, Small documents, files and acquired on October Business reports 31, 2005; version 2007, acquired on November 20, 2008; perpetual license Microsoft Windows Operating system used in Version 2003, Server – Enterprise and servers acquired on October Standard Edition 31, 2005; additional licenses acquired on August 31, 2006, September 30 & October 31, 2007, March 31 & October 31, 2008; Version2008, acquired on February 27, 2009 Microsoft Windows Operating system used in Version 2012, Server Data Center 2012 servers on Virtual acquired on January R2 Environment 28, 2015 Power Builder Software development tool Version 11.1, acquired on November 18, 2008 Kaspersky Anti-Virus Anti-virus system Open space security, Support agreement is acquired in May 2009 renewed every year Adobe Acrobat Reader File management Version 8 and 9 Hitachi Data Protection Backup and replication Version 7, 8 and 9, Support agreement is Suite (Commvault) software acquired in 2009 renewed every year GlobalSign SSL Organization Wildcard SSL Acquired in 2012 Support agreement is Certificate for *.iremit-inc.com renewed every year GlobalSign SSL Organization Wildcard SSL Acquired in 2013 Support agreement is Certificate for *.myiremit-idol.com renewed every year

Software / System, Acquisition and License / Renewal of Purpose Version Effectivity Maintenance Service GlobalSign SSL Organization Wildcard SSL Acquired in 2014 Support agreement is Certificate for *.iremit-inc.com renewed every year VMware vCenter Server Provides a centralized and Acquired in 2011 Support agreement is 5 Standard for vSphere 5 extensible platform for renewed every year managing Virtual Infrastructure

VMware vSphere 5 Virtualization platform for Acquired in 2011 Support agreement is Standard building cloud renewed every year infrastructures VMware vSphere 5 Virtualization platform for Acquired in January Additional VMWare Standard building cloud 25, 2015 license infrastructures ApexSQL Software SQL Database Acquired in 2012 Support agreement is management and renewed every year development tools Xmind – Professional Professional and Powerful Acquired in 2013 Mind Map Software Mind Mapping Tool

Entrust Identity Guard Software Token used for I- Acquired in March Software renewal is Soft Token Remit’s Foreign system 2014 every year (IFS) for enhanced security Teamviewer 10 Used for Remote Acquired in February Software renewal is Corporate license administration (installation, 2015 every year troubleshooting, inventory) of Foreign offices GlobalSign SSL Organization Wildcard SSL Acquired in 2015 Software renewal is Certificate for *.iremit-inc.com on the 2nd year GlobalSign SSL Organization Wildcard SSL Acquired in 2015 Software renewal is Certificate for *.myiremit-idol.com on the 2nd year MS Exchange Server High Availability setup of I- Acquired in March Support agreement is 2013 in a Microsoft Remit’s Email Messaging 2015 renewed every year Hyper-V Infra and Collaboration System

Symantec Endpoint Antivirus System Acquired in June Software renewal is Protection v. 12.1 2015 every year QB Premier Accountant Accounting Software Acquired in Edition 2016 Version November 2015 Vmware Vcenter 6.0 Provides a centralized and Acquired in January Software renewal is Standard extensible platform for 2016 every year managing Virtual Infrastructure VMware vSphere 6 Virtualization platform for Acquired in January Software renewal is Standard building cloud 2016 every year infrastructures Tripwire Enterprise 8.3 Security Configuration Acquired in February Software renewal is Management 2016 every year BitDefender GravityZone Endpoint Protection / Acquired in June Software renewal is Business Security Antivirus System 2016 on the 3rd year ManageEngine Helpdesk Ticketing System Acquired in July 2016 Software renewal is ServiceDesk Plus 9.2 every year

Need for Any Government Approval of Principal Products or Services

There are no new products or services that require government approval.

Effect of Existing Probable Governmental Regulations on the Business

The normal operation of the Company is not adversely affected by any existing governmental regulation nor is it expected that any probable governmental regulation would have an adverse effect on the operations of the Company.

Other than the reportorial requirements of the Securities and Exchange Commission (SEC), the Bangko Sentral ng Pilipinas (BSP), the Anti-Money Laundering Council (AMLC), the Bureau of Internal Revenue (BIR), and the local permits that are required by the City Government of Pasig, there is no other governmental permit required of the Company for its operation in the Philippines. The Company is in full compliance with the requirements of the SEC, BSP, AMLC, BIR and of the local government.

The Company’s subsidiaries, affiliates, and associates are registered or have acquired licenses or authorization to operate the remittance or money transfer business in their respective host countries or territories. The said registrations, licenses, or authorizations are either valid until revoked or subject to periodic renewal subject to compliance with all applicable laws, rules, and regulations.

The deployment of overseas Filipino workers (OFWs) is subject to the strict monitoring or the limitation on the entry of foreign workers entering specific countries by their respective governments. Governments of some concerned nations have implemented strict monitoring measures on the number and types of foreign workers entering their respective countries because some of their citizens have incessantly blamed their inability to obtain jobs on the increasing competition from foreign migrant workers.

In 2011, the Philippine Overseas Employment Administration (POEA) banned the deployment of Filipino workers to 41 countries that have failed to ensure the protection of migrant workers. These countries are deemed as not having laws for the protection of migrant workers. The deployment ban is in pursuit of the provisions of Section 3 of Republic Act 10022, otherwise known as “The Migrant Workers and Overseas Filipinos Act of 1995” as amended, which states, thus: “The State shall likewise allow the deployment of overseas Filipino workers to companies and contractors with international operations: Provided, that they are compliant with standards, conditions and requirements, as embodied in the employment contracts prescribed by the POEA and in accordance with internationally-accepted standards.” In March 2013, the POEA lifted the ban on the deployment of Filipino workers to Yemen. In 2014, the POEA lifted the deployment ban to Venezuela.

By nature, the Philippine remittance industry relies heavily on the number of OFWs residing or working abroad, and sending money to the Philippines. Any decline in the growth of OFW deployment as a result of regulations or restrictions imposed by host countries or the ban of deployment to certain countries may hamper the overall growth of the remittance industry.

Amount Spent on Research and Development Activities

There is no material amount spent for research and development.

Costs and Effects of Compliance with Environmental Laws

The Company has not been subject to any penalties or legal or regulatory action and has not incurred any costs for non-compliance with environmental laws or regulations of the Philippines.

Employees

The Company has 330 employees including those directly employed by subsidiaries as of December 31, 2016. These consist of 91 officers and 239 non-officers as follows:

No. of Employees (December 31, 2016) Officers Non-Officers Total Parent Company 65 145 210 Subsidiaries 26 94 120 Total 91 239 330

The Company projects no new additional personnel in 2017.

No. of Employees (December 31, 2016) Type Parent Company Subsidiaries Total Administrative 43 - 43 Finance 60 5 65 Information Technology 17 - 17 Sales and Marketing 24 27 51 Service and Operations 66 88 154 Total 210 120 330

None of the Company, its subsidiaries, affiliates and associate companies is subject to any collective bargaining agreement (CBA). There has been no strike, nor any attempt to protest against the Company, its subsidiaries and associates during their entire histories.

The supplemental benefits that the Company grants to its employees include medical, dental and hospitalization benefits, per diem and travel allowances, group insurance, birthday bonuses, meal and overtime allowances, and bereavement assistance. Employees are also entitled to vacation, sick, maternity, paternity, and emergency leaves. The Company provides the health and medical insurance benefits to its employees through an independent health maintenance organization (HMO).

Retirement Benefits

The Group has a funded, noncontributory defined benefit retirement plan, administered by a trustee, covering substantially all of its regular employees. Under this retirement plan, all qualified employees are entitled to cash benefits after satisfying age and service requirements. Under Republic Act No. 7641, also known as Retirement Pay Law, its applicability is effective on the fifth year of an employee’s tenure, provided that the employee is 60 years old but not more than 65 years old.

The cost of providing benefits is determined using the Projected Unit Credit Method which reflects services rendered by employees to the date of valuation and incorporates assumptions concerning employees’ projected salaries. Post-employment expenses include current service cost, past service cost, and net interest on defined benefit asset/liability.

Re-measurements which include cumulative actuarial gains and losses, return on plan assets, and changes in the effects of asset ceiling are recognized directly in other comprehensive income and is also presented under equity in the consolidated statements of financial position.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

Past-service costs are recognized immediately in profit or loss.

At the end of each reporting period, the retirement assets recognized in the consolidated statements of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation less the fair value of plan assets.

The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method. The present value of the defined benefit obligation is determined

by discounting the estimated future cash outflows using market rates on government bond that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.

The asset that resulted from this calculation is a result of over funding or when an actuarial gain arises. It is recognized since it is a resource which the Group controls and is available in the form of reduction in future contributions.

The Group is not required to pre-fund the future defined benefits payable under the Retirement Plan before they become due. For this reason, the amount and timing of contributions to the Retirement Fund are at the Group’s discretion. However, in the event a benefit claim arises and the Retirement Fund is insufficient to pay the claim, the shortfall will then be due and payable from the Group to the Retirement Fund.

The determination of the retirement obligation and cost and other retirement benefits is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include among others, discount rates, mortality of plan members and rates of compensation increase. In accordance with PFRS, actual results that differ from the assumptions and the effects of changes in actuarial assumptions are recognized directly as re-measurements in other comprehensive income. While the Group believes that the assumptions are reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially affect the pension and other retirement obligations.

Based on the actuarial report as of December 31, 2016 and 2015, the Group recognized retirement asset, net of the present value of defined benefit obligation, as presented in its consolidated statements of financial position amounting to PHP 18.62 million and PHP 11.65 million, respectively. Retirement benefit expense recognized for the years ended December 31, 2016, 2015 and 2014 amounted to PHP 2.70 million, PHP 3.07 million and PHP 2.10 million, respectively. In 2016, 2015 and 2014, the re-measurement gain, net of related tax, amounted to PHP 6.77 million, PHP 0.82 million and PHP 1.16 million, respectively.

The Group’s funded defined benefit plans for qualifying employees are entitled to retirement benefits equal to 100% of Plan Salary for every year of credited service of a retirement age of sixty (60) and are not adjusted for inflationary increases once in payment, or provide adjustment for inflationary increases. The payments for the funded benefits are from trustee- administered funds. Plan assets held by trustee are governed by a trust agreement between the latter and the Group. Responsibility for governance of the plan assets including investment decision lies with the Board of Trustees while plan governance and contribution schedule lies with the Group.

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out on January 25, 2017 by Institutional Synergy, Inc. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

In accordance with the provisions of the Bureau of Internal Revenue Regulations No. 1-68, it is required that a formal Retirement Plan be Trusteed; that there must be no discrimination in benefits; that forfeitures shall be retained in the Retirement Fund and be used as soon as possible to reduce future contributions; and that no part of the corpus or income of the Retirement Fund shall be used for, or diverted to, any purpose other than for the exclusive benefit of the Plan members.

The Retirement Plan Trustee, as appointed by the Group in the Trust Agreement executed between the Group and the duly appointed Retirement Plan Trustee, is responsible for the general administration of the Retirement Plan and the management of the Retirement Fund. The Retirement Plan Trustee may seek the advice of counsel and appoint an investment manager or managers to manage the Retirement Fund, an independent accountant to audit the Fund and an actuary to value the Retirement Fund.

There was no plan amendment, curtailments, or settlement recognized in the financial years ended December 31, 2016, 2015 and 2014.

The principal assumptions used for the purposes of the actuarial valuations were as follows:

2016 2015 Discount rate 5.30% 5.05% Expected rate of salary increase 4.00% 4.00%

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience. These assumptions translate into an average life expectancy in years for a pensioner retiring at age sixty (60).

2016 2015 Retiring at the end of the reporting period Male 1 1 Female - - Retiring 20 years after the reporting period Male 24 19 Female 20 18

The sensitivity analysis of the defined benefit obligation of changes in the weighted principal assumption is as follows:

2015 Discount rate 100 bps Decrease by 7.9% Increase by 8.4% Salary increase rate 100 bps Increase by 9.0% Decrease by 7.9%

Assumed life expectancy is not applicable because under the Group’s Retirement Plan, benefits are paid in full in a lump sum upon retirement or separation of an employee.

Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:

2016 2015 2014 Current service cost PHP 3,285,494 PHP 3,625,872 PHP 2,772,955 Net interest on the retirement obligation (asset) (588,101) (558,392) (784,712) Interest on the effect of the asset ceiling - - 114,551 PHP 2,697,393 PHP 3,067,480 PHP 2,102,794

Amounts included in the consolidated statements of financial position arising from the Group’s obligation with respect to its defined benefit plans are as follows:

2016 2015 Present value of defined benefit obligation PHP 21,383,021 PHP 26,128,177 Fair value of plan assets (40,007,749) (37,773,751) Surplus (18,624,728 (11,645,574) Effect of the asset ceiling - - PHP (18,624,728) PHP (11,645,574)

Movements in the present value of the defined benefit obligation in both years are as follows:

2016 2015 Balance, January 1 PHP 26,128,177 PHP 20,339,495 Current service cost 3,285,494 3,625,872 Interest cost 1,319,473 929,515 Benefits paid from plans - - Actuarial gains: Changes in financial assumptions (600,604) (3,613,937) Changes in demographic assumptions - - Experience (8,749,519) 4,847,232 Balance, December 31 PHP 21,383,021 PHP 26,128,177

Movements in the fair value of the plan assets in both years are as follows:

2016 2015 Balance, January 1 PHP 37,773,751 PHP 32,558,133 Interest income 1,907,574 1,487,907 Employer’s contributions - 2,796,033 Re-measurements - 931,678 Benefits paid from plan assets 326,424 - Balance, December 31 PHP 40,007,749 PHP 37,773,751

Plan assets as of December 31, 2016 are comprised of the following:

Quoted Unquoted Total Percentage Equity securities: Preferred shares PHP 7,806,989 PHP - PHP 7,806,989 19.51% Available-for-sale 4,842,013 - 4,842,013 12.10% Government securities Available-for-sale 2,001,606 (9,129) 1,992,477 4.98% Unquoted debt securities classified as loans - 2,007,882 2,007,882 5.02% Other securities and debt instrument: Available-for-sale 13,817,631 - 13,817,631 34,54% Held to maturity - 1,003,941 1,003,941 2.51% Bank deposits - 8,306,804 8,306,804 20.76% Other assets - 230,012 230,012 0.58% PHP 28,468,239 PHP 11,539,510 PHP 40,007,749 100.00%

Plan assets as of December 31, 2015 are comprised of the following:

Quoted Unquoted Total Percentage Equity securities: Preferred shares PHP 7,467,115 PHP - PHP 7,467,115 19.77% Available-for-sale 3,925,488 - 3,925,488 10.39% Government securities Available-for-sale 1,945,707 (22,691) 1,923,016 5.09% Unquoted debt securities classified as loans - 4,008,222 4,008,222 10.61% Other securities and Debt instrument: Available-for-sale 11,353,692 - 11,353,692 30.06% Held to maturity - 1,001,445 1,001,445 2.65% Bank deposits - 7,721,689 7,721,689 20.44% Other assets - 373,084 373,084 0.99% PHP 24,692,002 PHP 13,081,749 PHP 37,773,751 100.00%

The fund is administered by a trustee bank under the supervision of the Retirement Committee. The Retirement Committee is responsible for the investment strategy of the plan in such a way that it will generate return to cover-up future payments of the defined benefits obligation and its interest costs.

Expected maturity analysis of undiscounted benefit obligation is as follows:

Less than One to less than Five years one year five years and above Total 2016 Undiscounted amount PHP 777,198 PHP 9,270,378 PHP 102,321,744 PHP 112,369,320 2015 Undiscounted amount PHP 2,521,249 PHP 11,060,504 PHP 93,943,610 PHP 107,525,363

The Group is exposed to a number of risks through its defined benefit plan. The most significant risks are detailed below:

Volatility Risk The plan liabilities are calculated using a discount rate from government bonds to create virtual zero coupon bonds as of the valuation dates. The government bonds represent investments in the Philippine government securities only.

As the plan mature, the Group intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The assets are composed of government securities, equity securities, other securities and debt instruments, bank deposits and other assets. The government bonds represent investments in Philippine government securities only.

However, the Group believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity investment is an appropriate element of the group’s long-term strategy to manage the plans efficiently.

Investment risk is mitigated through proper investment planning and concentration of investments. As of December 31, 2016 and 2015, plan assets are concentrated on government securities, equity securities, other securities and debt instruments, respectively, which account ranges from 78.66% and 78.57% in 2016 and 2015, respectively, of the total plan assets.

Inflation Risk Inflation risk is the risk that the equivalent purchasing power of the plan assets will not be able to match the recorded liabilities.

Payments for the defined benefit plan of the Group are not link to inflation, thus, the exposure to this risk is immaterial.

To cope-up with inflation, the plan has designed a versatile policy of having an appropriate mix of debt and equity securities in the portfolio of investments during high inflation rates.

The plan possess a minimal exposure to this risk since inflationary risk, which is directly associated to the plan’s sensitivity to life expectancy risk, is immaterial.

The Group does not expect to make a contribution to its retirement fund in the next financial year based on the most recent actuarial valuations of plan assets and the present value of the defined benefit obligation carried out on January 25, 2017 by Institutional Synergy, Inc.

The subsidiaries are not required to establish and accrue retirement obligation.

The Company continues to invest in its employees through various training programs strategically focused on the Company’s core values, team development, selling skills, customer service and product knowledge.

Transaction with Retirement Fund

The Group’s retirement benefit fund is maintained with Sterling Bank of Asia, Inc. (A Savings Bank), an affiliate due to common controlling parties, as trustee. The carrying amount and fair value of the fund both amounted to PHP 40.0 million and PHP 37.8 million as of December 31, 2016 and 2015, respectively.

The funds were invested in private equity securities, deposits in banks and government debt securities. In 2016 and 2015, the Group made contributions to the fund amounting to nil and PHP 2.8 million, respectively.

Private equity securities include 808,100 of the Group’s own equity securities bought back from resigned employees who held such securities, under the special stock purchase program. The retirement committee exercises the voting rights of the securities. The retirement committee is related to the Parent Company because they are member of key management personnel. Such transaction was authorized by the BOD of the Group through its SSP program.

The government debt securities consist of peso-denominated and USD-denominated securities. The Peso-denominated Government Securities (GS) of the Group’s Retirement Fund were purchased from accredited counterparties of SBA-Trust Group. These counterparties are Banks and Investment Houses allowed to trade government securities. Existing Peso GS accounts are all tax-exempt and are currently lodged under the Tax-exempt RoSS Account of SBA-Trust Group with the Bureau of the Treasury (BTr).

The USD-denominated debt securities are currently lodged with the Philippine Depository Trust Corporation (PDTC). These were also purchased from SBA-Trust’s accredited counterparties that are allowed to trade government securities.

Please see also Item 12. Certain Relationships and Related Party Transactions

Risk Management

The Company’s goal in risk management is to ensure that it understands, measures, and monitors the various risks that arise from its business activities, implements the appropriate risk mitigation measures, and that it adheres strictly to its established risk management policies.

Periodic strategic planning sessions and meetings by top management, and the various management and Board committees are being held to identify, assess, and formulate contingency plans to manage or minimize the adverse impact of risks to the Company.

The Board of Directors performs an oversight role for the Company’s risk management activities and approves I-Remit’s risk management policies and any revisions thereto. The Chief Executive Officer, as the overall risk executive, oversees the risk management activities of the Company and ensures that the responsibilities for managing risk are clear, the levels of risk taken on by the Company are acceptable, and that an effective control environment is in place. Risk management is an integral part of the day-to-day business management of the Company and each operating unit has a responsibility to measure, manage, and control the risks associated with the functions they perform.

The Company’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, fair value interest rate risk, and price risk), credit risk, liquidity risk, and operational risk.

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the Board of Directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non- derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the auditors on a continuing basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market Risk Management

Market risks (consisting of foreign currency risk, fair value interest rate risk, and price risk), are the risks that the value of a currency position or financial instrument will fluctuate due to changes in foreign exchange rates and interest rates. The Company also has various financial assets and liabilities such as accounts receivable from agents abroad and accounts payable to beneficiaries in the Philippines, which arise directly from its remittance operations.

I-Remit provides money transfer and remittance services in 27 countries and territories. The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Foreign exchange risk is managed through the structure of the business and an active risk management process. In the substantial majority of its transactions, I-Remit settles with its foreign offices, associates, and agents in their respective local currencies, and requires the foreign offices, associates, and agents to obtain settlement currency to provide to recipients. The Company’s policy prohibits speculating in foreign currencies. It is the Company’s policy that all foreign currencies that arise as a result of remittance transactions be traded daily with bank partners and only at prevailing foreign exchange rates in the market. The daily closing foreign exchange rates are used as the guiding rates in providing wholesale rates to subsidiaries, associates, affiliates, tie-ups, and agents. The trading proceeds are used to pay out bank loans and other obligations of the Company. The foreign currency exposure that exists is limited by the fact that the majority of transactions are settled within a day or two (2) days after these are initiated. In addition, in money transfer transactions involving different currencies received and paid in Philippine pesos, I-Remit generates revenue by receiving a foreign currency spread based on the difference between buying currencies at wholesale exchange rates and providing the currencies to its customers at retail exchange rates. This spread provides some protection against currency fluctuations.

The Company’s exposure to interest rate risk arises from its cash deposits in banks which are subject to variable interest rates. The interest rate risk arising from deposits with banks is managed by means of effective investment planning and analysis, and maximizing investment opportunities in various local banks and financial institutions. The Company’s exposure to interest rate risk is minimal.

The Company is also exposed to equity price risks arising from equity investments. The Company’s exposure to equity price risk is minimal.

Credit Risk Management

Credit risks are risks that arise when a counter-party in a transaction may potentially default and cause a possible loss to the Company. The nature of its business exposes the Company to potential risk from difficulties in recovering transaction money from its foreign partners, including tie-ups and agents. Accounts receivable from foreign offices and agents arise as a result of its remittance operations in various countries.

The Company has adopted a policy of dealing only with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

The Company only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Company uses other publicly-available financial information and its own trading records to rate its major counter-parties. The Company’s exposure and the credit ratings of its counter-parties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counter-parties. Credit exposure is also controlled by counter-party limits.

In addition, the Company is applying the following credit policies to its tie-ups and agents: (i) enforcing a contract that incorporates a bond and requiring that the full amount of the transactions be credited to the Company bank account prior to the delivery of funds to the beneficiaries and in certain cases, requiring advance funding equivalent to the average daily remittance transactions to fulfill or deliver their remittance transactions; (ii) requiring settlement on the next banking day, otherwise, the fulfillment or delivery of remittance transactions will be placed on hold; (iii) evaluation of individual potential partners and agents’ credit worthiness, as well as a close looking into the other pertinent aspects of their businesses which assures the Company of the financial soundness of its partner firms; (iv) active monitoring of receivable balances. The Company’s receivables from agents and tie-ups

have a high probability of collection which have turnovers ranging from one (1) to five (5) days. The other receivables which include advances to related parties have high probabilities of collection and are due in less than one (1) year.

Liquidity Risk Management

Liquidity risk is the risk that a firm will not be able to meet its current and future cash flow and cash needs, both expected and unexpected, without materially affecting its daily operations or overall financial condition. Liquidity risk management rests with the Board of Directors which has established an appropriate risk management framework for the management of the Company’s short-, medium-, and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecasts and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Operational Risk Management

Operational risks are risks of losses resulting from inadequate or failed internal processes, people and systems or from external events, such as those resulting from fraud or defalcations from internal or external sources, or actual financial losses arising from failed processes, systems and procedures.

The Company’s main goal in managing operational risk is to create and maintain an operating environment that ensures and protects the integrity of its financial resources, assets, transactions, records, and information resources. The Company attempts to mitigate operational risks by maintaining a comprehensive system of internal controls, establishing standard systems and procedures, implementing a system to monitor transactions, maintaining key back-up procedures, and undertaking regular contingency planning.

The Company’s internal control system is intended to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws, rules, and regulations. The internal control system is composed of policies, processes, systems, and activities to achieve these objectives. The internal control system consists of two major activities: (i) preventive control activities; and (ii) monitoring activities. Preventive control activities seek to prevent or deter undesirable acts from occurring. These are proactive controls, designed to prevent losses, errors, or omissions. These activities include segregation of duties and tasks, proper authorizations, rotation of duties, adequate documentation, or physical security measures over cash and other assets. Monitoring activities aim to detect undesirable acts that have already occurred. These provide evidence “after the fact” that a loss or error has occurred but do not actually prevent these from occurring. These activities consist of regular supervisory reviews of account activities, reports, and reconciliations; routine spot-checking of transactions, records, and reconciliations; variance analysis, including comparisons with budget and historical data; physical inventories; control self-assessment; and internal audit review of controls.

Standard systems and procedures pertain to the prescribed manner of processing transactions, handling cash and other assets, maintaining records, and preparing reports. The Company has operating manuals detailing the procedures for the processing of its remittance transactions, the implementation of its various business processes, and the use of its information technology resources. These operating manuals undergo periodic reviews and revisions, if needed. Amendments to these manuals are implemented through circulars sent to all divisions and offices of the Company. Management endeavors to implement a control- conscious environment that also supports ethical values and sound business practices. Management is responsible for “setting the tone” and encouraging the highest levels of integrity and ethical behavior, as well as exhibiting leadership behavior that promotes responsibility and accountability.

Independent reviews are regularly conducted by the Internal Audit Department to ensure that risk controls are in place and functioning effectively. The Internal Audit Department undertakes a comprehensive audit of all divisions and departments in accordance with a risk- based audit plan. It conceptualizes and recommends the implementation of an improved system of internal controls to minimize operational risks. The Audit Plan for each fiscal year is approved by the Audit Committee of the Board of Directors. These audits also include the area of information security that covers application systems, databases, networks, and operating systems. The results of internal audit activities are discussed with the Audit Committee and subsequently, submitted to the Board of Directors.

Recognizing the importance of customer service in its operations, the Company has a Customer Support Team composed of a dedicated and highly-trained team of frontline support officers who assist the Company’s subsidiaries, associates, affiliates, tie-ups and agents, and the Company’s customers and their beneficiaries. The Company provides 24 x 7 customer service support and minimizes operational risks by ensuring accuracy and effectiveness in operations and in the delivery of services.

The Company also has a Business Continuity Plan (BCP) that outlines the activities and the procedures to be undertaken in the event of abnormal or emergency conditions, or a disaster, to ensure that disruption to operations will be kept at a manageable level, financial losses will be minimized, the safety and security of employees, customers, and Company records will be maintained, and normal operations will be restored in the shortest time possible. I-Remit maintains a disaster recovery (DRP) site with Globe Telecom/Innove Communications in Makati City.

The other risks identified that the Company is exposed to include regulatory risk, legal risk, and technology risk.

Regulatory risk refers to the potential for the Company to suffer financial losses due to changes in the laws or monetary, tax or other governmental regulations of the Philippines or of another country where it has business operations. Losses may be in the form of regulatory sanctions for non-compliance, and in extreme cases, may involve not just mere loss in terms of reputation or financial penalties, but a revocation of the license, registration, or authorization to carry on its business activities.

The Company’s Compliance Program, the implementation of which is overseen and coordinated by the Compliance Officer, is the primary control process for regulatory risk issues. The Compliance Officer is responsible for communicating and disseminating new rules and regulations to all concerned units, analyzing and addressing compliance issues, and reporting compliance findings to the Management Committee, Executive Committee or the Board of Directors.

I-Remit’s subsidiaries, associates, affiliates, tie-ups and agents have and maintain all registrations or licenses and permits necessary to provide remittance and money transfer services in their host countries. Compliance officers are appointed in each of the Company’s foreign offices whose primary responsibility is to ensure compliance with all local laws, rules, regulations, and ordinances; and licensing, registration, and reporting requirements.

The Company is considered a “covered institution” pursuant to the Anti-Money Laundering Act (AMLA) of 2001 (Republic Act 9160 as amended by Republic Acts 9194, 10167, and 10365). I-Remit, Inc. is registered as a remittance agent with the Bangko Sentral ng Pilipinas pursuant to BSP Circular No. 471, Series of 2005 issued on January 24, 2005, that prescribes the registration and standards for the operation of foreign exchange dealers, money changers, and remittance agents. On January 5, 2011, the BSP issued BSP Circular 706 Series of 2011 that prescribes updated anti-money laundering rules and regulations. The revised anti-money laundering rules and regulations were adopted by the Company in its Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Compliance Manual that was approved by the Board of Directors on June 17, 2011. The manual includes policies and guidelines that cover areas such as the customer due diligence process (“Know Your Customer” rule), large cash transactions, record-keeping, suspicious transaction reporting, and training of employees. These policies and guidelines are also based on the revised Financial Action Task Force (FATF) 40 Recommendations.

I-Remit requires its subsidiaries, associates, affiliates, and agents to validate the true identity of a customer based on official or other reliable identity documents or records before accepting a transaction. The Company exercises due diligence when dealing with customers, persons appointed to act on a customer’s behalf, and beneficial owners. A “beneficial owner, in relation to a customer of I-Remit, refers to the natural person who ultimately owns or controls a customer or the person on whose behalf a transaction is being conducted and includes the person who exercises ultimate effective control over a legal person.

The Company and its subsidiaries, associates, and affiliates are also required to implement a risk-based approach in customer due diligence in which pre-determined criteria are used to assess potential money laundering and terrorism financing risks that will determine the proportionate measures and controls that will be applied to mitigate such risks. I-Remit applies enhanced due diligence measures when customers are assessed to be “high risk.” These measures include: (i) requiring additional documentary evidence of identity; (ii) verifying the identity and background of a customer by referring to publicly-available

information or verifying information provided with the relevant government bodies; (iii) establishing, by appropriate and reasonable means, the source of income or wealth, and the source of funds of the customer or the beneficial owner; (iv) determining the banks where an individual customer has maintained or is maintaining accounts and obtaining proof thereof such as bank statements or passbooks; (v) obtaining the approval of top management for a transaction where the customer or a beneficial owner is a politically-exposed person or subsequently becomes a politically-exposed person. The Company, on an ongoing basis, also monitors and continually assesses the transaction patterns of its customers and adjusts or makes changes to the risk classification or the level of due diligence applied on its customers when the situation warrants the same to manage money laundering or terrorism financing risks.

I-Remit checks each remittance transaction with the lists of specially-designated nationals or blocked persons, and lists of terrorists, terrorist organizations, or persons associated with terrorists or terrorist organizations. These lists are: (i) Office of Foreign Assets Control (OFAC) of the US Department of the Treasury (Specially Designated Nationals and Blocked Persons List); (ii) Office of the Superintendent of Financial Institutions (OSFI) of Canada (Consolidated List of Names Subject to the Regulations Establishing a List of Entities Made Under Subsection 83.05[1] of the Criminal Code or the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism or the United Nations Al-Qaida and Taliban Regulations); (iii) European Union (EU) (Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions); (iv) United Nations Security Council Consolidated List Established and Maintained by the 1267 Committee with respect to Al Qaida, and the Taliban, and other individuals, groups, undertakings and entities associated with them; (v) Israel Ministry of Defense Declaration of Terrorist Organizations, Unlawful Associations and Confiscation Orders; and, (vi) Australia Department of Foreign Affairs and Trade (DFAT) Consolidated List.

The Company is required to submit reports on “covered” transactions and “suspicious” transactions to the Anti-Money Laundering Council. Covered transactions involve single or multiple transactions in cash or other monetary instruments in excess of PHP 500,000 within one (1) banking day. Suspicious transactions are transactions that may involve money laundering or terrorism financing or attempts to circumvent or avoid any reporting requirement.

The BSP requires all registered remittance agents to maintain accurate and meaningful originator information on funds transferred or remitted by requiring the sender or remitter to fill-out and sign an application form, which shall contain minimum data and information, such as the complete name and of the remitter, permanent address, nationality, amount and currency to be remitted and source of funds for individuals. All records of transactions are required to be maintained and stored for five (5) years from the date of a transaction unless a longer period is required by the relevant regulator in a host country or a transaction or group of transactions becomes the subject of an investigation for money laundering or terrorism financing.

I-Remit’s foreign subsidiaries, associates, and agents are required to comply with the anti- money laundering regulations of their host countries to ensure that funds being sent are of lawful and verifiable origin. Among others, remitters are required to present documents such as proofs of identification, residency, and financial origin as required by local regulations of the host countries. Remitted amounts are also subject to the prescribed transmission limits of the monetary authorities or the financial intelligence units of each host country. Cash or non- cash transactions that amount to or exceed certain threshold amounts are also reported.

I-Remit and its subsidiaries, associates, affiliates, and agents are licensed or registered with the various financial and central monetary authorities and/or the financial intelligence units of their host countries. These include the Australian Transaction Reports and Analysis Centre (AUSTRAC); Financial Transactions and Reports Analysis Centre (FINTRAC) of Canada; the Commissioner of Customs and Excise Department-Money Service Supervision Bureau (Hong Kong); the Financial Conduct Authority, Prudential Regulatory Authority and Her Majesty’s Revenue & Customs (United Kingdom); the Financial Services Agency (Japan); the Companies Office (New Zealand); the Monetary Authority of Singapore; and the Central Bank of China (Taiwan).

Regulatory risk also includes the strict monitoring or the limitation on the entry of foreign workers entering specific countries by their respective governments. Governments of some concerned nations have implemented strict monitoring measures on the number and types of foreign workers entering their respective countries because some of their citizens have incessantly blamed their inability to obtain jobs on the increasing competition from foreign

migrant workers. By nature, the Philippine remittance industry relies heavily on the number of OFWs residing or working abroad, and sending money to the Philippines. Any decline in the growth of OFW deployment as a result of regulations or restrictions imposed by host countries may hamper the overall growth of the remittance industry.

Legal risk pertains to the potential for loss arising from the uncertainty of the outcome of legal proceedings or potential legal proceedings. It also refers to the uncertainty of the enforceability of the obligations of the Company’s business partners, agents, tie-ups, and suppliers. Changes in law and regulations could adversely affect the Company. Legal risk is higher in new areas of business where the law is often untested by the courts. The Company seeks to minimize its legal risks by using stringent legal documentation, employing procedures designed to ensure that transactions are properly authorized and documented, and by constantly consulting its external legal counsels locally and in the countries it operates in.

Technology risk refers to the risk that customers may suffer service disruptions, or that customers or the Company may incur losses arising from system defects such as failures, faults, or incompleteness in computer operations, or illegal or unauthorized use of computer systems. The delivery of financial services is characterized by rapid technological change, changing customer preferences, the introduction of new products and services, and the emergence of new standards. The Company realizes the potential losses arising from the breakdown or malfunction of computer systems as well as from the misuse of its infrastructure and networks. The Company gives importance to computer security and has a comprehensive information technology security policy. The Company identifies and evaluates technology risks by setting specific standards that need to be complied with and implementing measures based on the evaluation to manage these risks. The Company ensures the implementation of an ongoing project management and control system in development and quality control.

The Company defines and maintains information security policies that follow industry standards, such as the use of firewalls, secure socket layer (SSL) encryption, anti-virus measures, and user-defined access controls. The Company’s major application systems have multiple security features to protect the integrity of applications and data. Access to I- Remit’s Foreign Remittance System via the Internet has several security restrictions including firewalls, secure socket layers using 128-bit encryption, digital certificates and password identification. All remittance transactions are encrypted with hash totals / test keys to ensure authenticity of transaction details.

Most of the information technology assets including critical servers are located in a centralized data center at the Company’s headquarters, which are subject to appropriate physical and logical access controls. Likewise, the systems are designed to be redundant to ensure continuity of business operations in the event of unforeseen events or disasters. The system also has parallel servers concurrently operating and connected to different ISP providers to ensure non-disruption of its operations.

Supporting the Company’s business processes is a dynamically-scaled network of virtualized servers and storage farms. The network is secured from malicious attacks, virus intrusions, and security threats internally and externally through the use of a multi-layered network setup consisting of VLANs, virtual private networks, security appliances, firewalls, anti-spam software, WAN router, Internet link load balancer, and anti-virus systems. The company has a state-of-the-art backup and replication protocol that runs every night while a more concentrated database replication process transpires between the company’s headquarters and the disaster recovery site in real time. A part of the Company’s strategy is to continuously upgrade its technology infrastructure to ensure that it is able to manage the risks associated with technology or any unforeseen natural or man-made risks that may hamper the continuity of its operations.

Other Information

No bankruptcy, receivership or similar proceedings have been instituted against the Company and its subsidiaries, affiliates or associates. Furthermore, no material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business has taken place.

Item 2. Properties

(B) Description of Property

I-Remit and its subsidiaries do not own any real estate properties. I-Remit is leasing its headquarters located at the 26th and 27th floors of the Discovery Centre, a condominium office and residential building, located at 25 ADB Avenue, Ortigas Center, Pasig City from Oakridge Properties, Inc.

I-Remit and Oakridge Properties, Inc. are related to each other by virtue of JTKC Equities, Inc.’s ownership of The Discovery Leisure Company, Inc. which in turn owns Oakridge Properties, Inc. JTKC Equities, Inc. is one of the Company’s major shareholders. Directors Ben C. Tiu (2001 to date), John Y. Tiu, Jr. (2002 to date) and Ruben C. Tiu (2007 to date) are brothers. Director Ben C. Tiu is Chairman and President of JTKC Equities, Inc. (1993 to date). Director John Y. Tiu, Jr. is a Director and Treasurer of JTKC Equities, Inc. (2002 to date), a Director and President of The Discovery Leisure Company, Inc. (2001 to date) and a Director of Oakridge Properties, Inc. (2003 to date). Director Ruben C. Tiu is a Director and President of Oakridge Properties, Inc. (1996 to date), a Director of The Discovery Leisure Company, Inc. (2000 to date) and a Director and Executive Vice- President of JTKC Equities, Inc. (1993 to date).

The lease on the unit at the 26th floor of the Discovery Centre (Unit 2603), consisting of an area of 199.70 square meters, is covered by an operating lease agreement with a term of two (2) years, commencing on December 1, 2015 and ending on November 30, 2017. The lease may be renewed under terms and conditions mutually agreed upon by the parties 90 days prior to the expiration of the contract of lease. I-Remit, as lessee, pays Oakridge Properties, Inc. every month the amount of PHP 798.60 per square meter or its equivalent monthly rental of PHP 159,480.42.

The lease on the units at the 26th floor of the Discovery Centre (Units 2604 and 2605), with an aggregate useable floor area of 278.00 square meters and 273.80 square meters, is covered by an operating lease agreement with a term of two (2) years, commencing on December 1, 2015 and expiring on November 30, 2017. The lease may be renewed under terms and conditions mutually agreed upon by the parties 90 days prior to the expiration of the contract of lease. I-Remit, as lessee, paid Oakridge Properties, Inc. every month the amount of PHP 827.21 per square meter or its equivalent monthly rental of PHP 456,454.48.

The lease on the unit at the 27th floor of the Discovery Centre (Unit 2703), with an aggregate useable floor area of 199.70 square meters, is covered by an operating lease agreement with a term of two (2) years, which commenced on November 1, 2015 and expires on October 31, 2017. The lease may be renewed under terms and conditions mutually agreed upon by the parties 90 days prior to the expiration of the contract of lease. I-Remit, as lessee, paid Oakridge Properties, Inc. every month the amount of PHP 738.10 per square meter or its equivalent monthly rental of PHP 147,398.57.

The lease on the units at the 27th floor of the Discovery Centre (Units 2704 and 2705), with an aggregate useable floor area of 278.00 square meters and 273.80 square meters, is covered by an operating lease agreement with a term of two (2) years, commencing on October 15, 2015 and expiring on October 14, 2017. The lease may be renewed under terms and conditions mutually agreed upon by the parties 90 days prior to the expiration of the contract of lease. I-Remit, as lessee, paid Oakridge Properties, Inc. every month the amount of PHP 797.21 per square meter or its equivalent monthly rental of PHP 439,900.48.

The above monthly rentals with respect to the lease contracts with Oakridge Properties, Inc. exclude charges for air-conditioning and electricity or generator set during brown-out, water, and other charges such as association dues, parking fees, overtime pay of janitors and technicians which are borne by I-Remit.

Rent expense pertaining to the above leased office spaces by the Parent Company, from Oakridge Properties, Inc. amounted to PHP 14.9 million, PHP 14.9 million and PHP 14.7 million in 2016, 2015, and 2014, respectively.

Current Rent Contract Period Area per Month Term Unit & Location Address (sq m) exclusive of (years) Start End VAT (PHP) Unit 2603, 26/F 25 ADB Avenue, Ortigas Dec. 1, Nov. 30, 199.70 159,480.42 2 Discovery Centre Center, Pasig City 2015 2017 Units 2604 & 2605, 25 ADB Avenue, Ortigas Dec. 1, Nov. 30, 26/F Discovery 551.80 456,454.48 2 Center, Pasig City 2015 2017 Centre Unit 2703, 27/F 25 ADB Avenue, Ortigas Nov. 1, Oct. 31, 199.70 147,398.57 2 Discovery Centre Center, Pasig City 2015 2017 Units 2704 & 2705, 25 ADB Avenue, Ortigas Oct. 15, Oct. 14, 27/F Discovery 551.80 439,900.48 2 Center, Pasig City 2015 2017 Centre

I-Remit has office sharing arrangement with Surewell Equities Pte. Ltd. in Singapore, a subsidiary of Surewell Equities, Inc., a stockholder of I-Remit, for the use of an office space in Singapore under a sub-lease agreement. Mr. Bansan C. Choa, Chairman and Chief Executive Officer of I-Remit, is Chairman of Surewell Equities, Inc.

I-Remit’s subsidiaries have their respective operating lease agreements for their office spaces. The lease contracts are for periods ranging from 1 to 10 years and may be renewed under the terms and conditions mutually agreed upon by the subsidiaries and the lessors.

The Group’s rent expense includes operating lease agreements entered into by the subsidiaries for the use of its office spaces. Rent expense of the Group amounted to PHP 68.5 million, PHP 66.9 million and PHP 65.8 million in 2016, 2015, and 2014, respectively.

The Group does not expect any purchase of significant properties in the next twelve (12) months.

Item 3. Legal Proceedings

The Parent Company is not involved in nor are any of its properties subject to, any material legal proceeding that could potentially affect its operations and financial capabilities.

Item 4. Submission of Matters to a Vote of Security Holders

Except for matters taken up during the annual meeting of stockholders, there were no matters submitted to a vote of security holders during the period covered by this report.

PART II. OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Issuer’s Common Equity and Related Stockholder Matters

(A) Market Price of and Dividends on Registrant’s Common Equity and Related Stockholder Matters

(1) Market Information

The common shares of the Parent Company are traded in the Philippine Stock Exchange (PSE).

Quarter-end stock price ranges for 2014, 2015, 2016 and first quarter 2017 are as follows:

Quarter Ending Date High Low Close Mar. 31, 2014 PHP 2.85 PHP 2.50 PHP 2.69 Jun. 30, 2014 PHP 2.68 PHP 2.23 PHP 2.35 Sep. 30, 2014 PHP 2.60 PHP 1.75 PHP 1.92 Dec. 31, 2014 PHP 2.20 PHP 1.73 PHP 1.82 Mar. 31, 2015 PHP 1.85 PHP 1.60 PHP 1.79 Jun. 30, 2015 PHP 2.00 PHP 1.02 PHP 1.79 Sep. 30, 2015 PHP 1.85 PHP 1.03 PHP 1.68 Dec. 31, 2015 PHP 2.95 PHP 1.60 PHP 1.85 Mar. 31, 2016 PHP 1.91 PHP 1.60 PHP 1.72 Jun. 30, 2016 PHP 2.62 PHP 1.63 PHP 1.99 Sep. 30, 2016 PHP 2.50 PHP 1.82 PHP 1.86 Dec. 31, 2016 PHP 1.96 PHP 1.74 PHP 1.74 Mar. 31, 2017 PHP 1.80 PHP 1.60 PHP 1.62

The stock prices of the Company’s common shares as of the latest practicable trading date, i.e., April 10, 2017, were: PHP 1.64 (High); PHP 1.64 (Low); PHP 1.64 (Close).

(2) Holders

There were twenty-one (21) common shareholders of record as of December 31, 2016. Common shares amounted to 617,725,800* as of December 31, 2016.

* Inclusive of 5,682,678 common shares purchased by the Company under its stock buy-back program.

The top twenty-one (21) common shareholders as of December 31, 2016, the number of shares held and the percentage of total shares held by each are as follows:

Name Citizenship Total Shares Percentage 1 PCD Nominee Corporation – Filipino Filipino * 227,214,025 36.78234 2 Star Equities Inc. Filipino 180,308,109 29.18902 3 Surewell Equities, Inc. Filipino 138,907,659 22.48694 4 JTKC Equities, Inc. Filipino 49,429,298 8.00182 5 JPSA Global Services Co. Filipino 19,349,022 3.13230 6 PCD Nominee Corporation – Non-Filipino Foreign 2,300,919 0.37248 7 Quality Investments & Securities Corp. Filipino 106,141 0.01718 8 Alba, Willy S. Filipino 90,749 0.01469 9 Lim, Nieves Q. &/or Charis Honeylet Q. Lim Filipino 10,312 0.00167 10 Ona, Edgardo V. Filipino 2,268 0.00037 11 Lim, Ernesto B. Filipino 2,214 0.00036 12 Soriano, Victor Martin J. Filipino 1,062 0.00017 13 Hapi Iloilo Corporation Filipino 1,034 0.00017 14 M. J. Soriano Trading, Inc. Filipino 1,034 0.00017 15 Sanvictores, Julius Victor Emmanuel D. Filipino 1,031 0.00017 16 Au, Owen Nathaniel S. ITF: Li Marcus Au Filipino 412 0.00007 17 GTS Insurance Brokers Inc. Filipino 173 0.00003 18 Gaw, Gilbert C. Filipino 113 0.00002 19 Herrera, Joselito C. Filipino 100 0.00002 20 Cruz, Napoleon D. Sr. and/or Luisa I. Cruz Filipino 94 0.00002 21 Navarro, Rodel Sy Filipino 31 0.00001 Total ** 617,725,800 100.00000

* Inclusive of 82,137,070 lodged common shares held by JTKC Equities, Inc., thus, its total shareholdings is 131,566,368 representing 21.29851% ownership, and 5,382,546 lodged common shares held by Surewell Equities, Inc., thus, its total shareholdings is 144,290,205 representing 23.35829% ownership.

** Inclusive of 5,682,678 common shares purchased by the Company under its stock buy-back program.

As required by the Amended Rule on Minimum Public Ownership of The Philippine Stock Exchange, Inc., Article XVIII, Section 3. (e), the level of the Company’s public float is 23.08921% as of December 31, 2016.

There were twenty-one (21) common shareholders-of-record as of March 31, 2017. Common shares amounted to 617,725,800* as of March 31, 2017.

* Inclusive of 6,082,678 common shares purchased by the Company under its stock buy-back program.

The top twenty-one (21) common shareholders as of March 31, 2017, the number of shares held and the percentage of total shares held by each are as follows:

Name Citizenship Total Shares Percentage 1 PCD Nominee Corporation – Filipino Filipino * 227,267,025 36.79092 2 Star Equities Inc. Filipino 180,308,109 29.18902 3 Surewell Equities, Inc. Filipino 138,907,659 22.48694 4 JTKC Equities, Inc. Filipino 49,429,298 8.00182 5 JPSA Global Services Co. Filipino 19,349,022 3.13230 6 PCD Nominee Corporation – Non-Filipino Foreign 2,302,919 0.37281 8 Alba, Willy S. Filipino 90,749 0.01469 7 Quality Investments & Securities Corp. Filipino 51,141 0.00828 9 Lim, Nieves Q. &/or Charis Honeylet Q. Lim Filipino 10,312 0.00167 10 Ona, Edgardo V. Filipino 2,268 0.00037 11 Lim, Ernesto B. Filipino 2,214 0.00036 12 Soriano, Victor Martin J. Filipino 1,062 0.00017 13 Hapi Iloilo Corporation Filipino 1,034 0.00017 14 M. J. Soriano Trading, Inc. Filipino 1,034 0.00017 15 Sanvictores, Julius Victor Emmanuel D. Filipino 1,031 0.00017 16 Au, Owen Nathaniel S. ITF: Li Marcus Au Filipino 412 0.00007 17 GTS Insurance Brokers Inc. Filipino 173 0.00003 18 Gaw, Gilbert C. Filipino 113 0.00002 29 Herrera, Joselito C. Filipino 100 0.00002 20 Cruz, Napoleon D. Sr. and/or Luisa I. Cruz Filipino 94 0.00002 21 Navarro, Rodel Sy Filipino 31 0.00001 Total ** 617,725,800 100.00000

** Inclusive of 6,082,678 common shares purchased by the Company under its stock buy-back program.

As required by the Amended Rule on Minimum Public Ownership of The Philippine Stock Exchange, Inc., Article XVIII, Section 3. (e), the level of the Company’s public float is 23.07979% as of March 31, 2017.

(3) Dividends

The Company’s Board of Directors is authorized to declare dividends. Pursuant to Sections 43 and 143 of the Corporation Code of the Philippines, Section 5 of the Securities Regulation Code, and SEC Memorandum Circular No. 11, Series of 2008 (Guidelines on the Determination of Retained Earnings Available for Dividend Declaration), dividends may be declared and paid out of the unrestricted retained earnings which shall be payable in cash, property, or stock to all stockholders on the basis of outstanding stock held by them, as often and at such time as the Board of Directors may determine and in accordance with law and applicable rules and regulations. Cash and property dividend declarations do not require any further approval from the Company’s shareholders. Any stock dividend declaration requires the approval of shareholders holding at least two-thirds of the Company’s total outstanding capital stock.

Pursuant to existing Philippine regulations, cash dividends declared by the Company must have a record date of not less than ten (10) days or more than thirty (30) days from the date the cash dividends are declared.

With respect to stock dividends, the record date is to be not less than ten (10) days or more than thirty (30) days from the shareholders’ approval, provided however, that the set record date is not to be less than ten (10) training days from receipt of the Philippine Stock Exchange of the notice of declaration of stock dividend. If no record date is set, under the Securities and Exchange Commission rules, the record date will be deemed fixed at fifteen (15) days from the date of stock dividend declaration. In the event that a stock dividend is declared in connection with an increase in authorized capital stock, the corresponding record date is to be fixed by the Securities and Exchange Commission.

The Board of Directors of the Company declared stock dividends worth PHP 43,000,000.00 to its shareholders on July 20, 2007, which declaration was subsequently ratified and confirmed by the Company’s shareholders during their annual meeting held on the same day, immediately after the Board meeting. The Record Date was set on August 19, 2007, thirty (30) days from the date of approval of the Company’s shareholders.

With the listing of the Company’s shares in the Philippine Stock Exchange, the Company intends to maintain an annual dividend payment ratio for its shares of up to 20 percent of its consolidated net income from the preceding fiscal year, subject to the requirements of applicable laws and regulations and the absence of circumstances which may restrict the payment of dividends. Circumstances which may restrict the payment of dividends include, but are not limited to, situations when the Company undertakes major projects and developments requiring substantial cash expenditures or when it is restricted from paying dividends by its loan covenants. The Company’s Board, may, at any time, modify such dividend payout ratio depending upon the results of operations and future projects and plans of the Company.

On April 25, 2008, the Board of Directors of the Parent Company declared cash dividend amounting to PHP 21,990,504.70 or PHP 0.0391 per share, payable to shareholders-of-record as of May 15, 2008, which declaration was subsequently ratified and confirmed by the Parent Company’ shareholders during their annual meeting held on July 31, 2008. It was paid and distributed to the shareholders on June 10, 2008.

On March 23, 2009, the Board of Directors of the Parent Company declared cash dividend amounting to PHP 26,012,383.29, representing 20 percent of the Company’s consolidated net income for the period ended December 31, 2008 or PHP 0.0471 per share, payable to shareholders-of-record as of April 7, 2009. It was paid and distributed to the shareholders on May 6, 2009.

On March 19, 2010, the Board of Directors of the Parent Company declared cash dividend amounting to PHP 26,603,532.77, representing 20 percent of the Company’s consolidated net income for the period ended December 31, 2009 or PHP 0.0481 per share, payable to shareholders-of-record as of April 8, 2010. It was paid and distributed to the shareholders on May 5, 2010.

On June 17, 2011, the Company’s Board of Directors of the Parent Company authorized the declaration of Fifty-Five Million, Three Hundred Eight Thousand, Eight Hundred (55,308,800) common shares stock dividend, with a par value of one peso (PHP 1.00) per share, out of the unrestricted retained earnings of the Company as of December 31, 2010. The stock dividend, which is equivalent to 10% of the issued and outstanding shares of the Company, was taken from its unissued capital stock. Pursuant to the provisions of the Corporation Code, the aforementioned stock dividend declaration was approved by the stockholders during their annual meeting on July 29, 2011. On September 6, 2011, the PSE approved the listing of additional 55,308,800 common shares to cover said stock dividend declaration. On September 08, 2011, the stock dividend was paid to all of the Company’s stockholders of record as of August 15, 2011.

On June 22, 2012, the Board of Directors of the Parent Company authorized the declaration of cash dividend of PHP0.1995 per share or PHP 119,980,856.11, payable to all of the Parent Company’s shareholders-of-record as of July 12, 2012. It was paid and distributed to the shareholders on August 7, 2012.

On July 19, 2013, the Company‘s Board of Directors approved the declaration of the following dividends: • Cash Dividend of PHP 0.0422 per share or PHP 25,031,512.35, payable to all of the Parent Company’s shareholders-of-record as of August 16, 2013. It was paid and distributed to the shareholders on September 11, 2013.

• Property dividend in the form of 20,586,985 shares of stock of the Company (net of fractional shares) lodged as Treasury Shares (from the buyback programs) as of December 31, 2012, payable to all of the Parent Company’s shareholders-of-record as of August 16, 2013. The Property Dividend Ratio is 0.034707107885, which was computed as 20,587,000 shares divided by 593,163,800 outstanding common shares. The shareholders, during the July 19, 2013 annual stockholders’ meeting, likewise approved the declaration of the said property dividend. It was paid and distributed to the shareholders on October 14, 2013, after the issuance of the Certificate of Filing the Notice of Property Dividend Declaration on October 7, 2013 by the Securities and Exchange Commission, net of the applicable withholding tax of certain individual shareholders which the Company paid to the BIR in their behalf in the form of 314,663 common shares or PHP 925,119.35. Accordingly, the said 314,663 shares are still included in the Company’s treasury shares. On July 22, 2014, the Board of Directors of the Parent Company authorized the declaration of cash dividend of PHP 0.05 per share or PHP 30,641,806.10, payable to all of the Parent Company’s shareholders-of-record as of August 20, 2014. It was paid and distributed to the shareholders on September 17, 2014.

On July 17, 2015, the Board of Directors of the Parent Company authorized the declaration of cash dividend of PHP 0.0326 per share or PHP 19,976,468.88, payable to all of the Parent Company’s shareholders-of-record as of August 14, 2015. It was paid and distributed to the shareholders on September 11, 2015. On June 17, 2016, the Board of Directors of the Parent Company authorized the declaration of cash dividend of PHP 0.0326 per share or PHP 19,959,386.48, payable to all of the Parent Company’s shareholders-of-record as of July 4, 2016. It was paid and distributed to the shareholders on July 15, 2016.

Other than statutory limitations, there are no restrictions that prevent the Parent Company from paying dividends on common equity.

(4) Recent Sales of Unregistered or Exempt Securities, Including Recent Issuances of Securities Constituting an Exempt Transaction

On August 21, 2007, the Company distributed stock dividends worth PHP 43,000,000.00 to the stockholders of record as of August 19, 2007.

The stock dividend declaration was approved by the Company’s Board of Directors on July 20, 2007 and was subsequently approved and ratified by the stockholders owning at least two- thirds (2/3) of the total outstanding capital stock of the Company on the same date of July 20, 2007 during the annual stockholders’ meeting. The issuance of the shares as stock dividend was exempt from the Securities Regulation Code (SRC) registration requirements pursuant to Section 10.1 (d). The shares were issued at the original par value of one hundred pesos (PHP 100.00) per share.

Thereafter, with the approval of the Securities and Exchange Commission (“SEC”) on August 22, 2007 of the Company’s application to increase its authorized capital stock to one billion pesos (PHP 1,000,000,000.00) and to reduce its par value per share to one peso (P1.00), the Company, on August 23, 2007, issued a total of two hundred ninety seven million (297,000,000) common shares at the reduced par value of one peso (PHP 1.00) out of the increase in the Company’s authorized capital stock to the following: (1) JPSA Global Services Company; (2) JTKC Equities, Inc.; (3) Star Equities Inc.; (4) Surewell Equities, Inc.

Since no expense was incurred, or no commission, compensation or remuneration was paid or given in connection with the issuance of the shares, the same was exempt from the SRC registration requirements pursuant to Section 10.1 (i).

Subsequent to the increase in authorized capital stock, the Company issued a total of 15,000,000 shares out of its unissued and authorized capital stock on September 20, 2007 to its Directors, key Officers, Employees, Consultants and Resource Persons under the Special Stock Purchase Plan (“SSPP”).

The foregoing issuance of the 15,000,000 new shares under the SSPP was the subject of an application for exemption from registration of the shares under Section 10.2 of the SRC, which application was granted by the SEC on September 13, 2007. Notwithstanding the aforesaid confirmation by the Commission of the exempt status of the SSPP shares, the Commission nonetheless required the Corporation to include the SSPP shares among the shares of I-Remit which were registered with the Commission prior to the conduct of its Initial Public Offering in October 2007. The registration of the I-Remit shares, together with the SSPP shares, was rendered effective on 5 October 2007. All 15,000,000 shares were subscribed and purchased. The shares subject of the SSPP were sold at par value or PHP1.00 per share. Total share purchases amounting to PHP11.74 million were paid in full, while the difference totaling PHP3.26 million were paid by way of salary loan. Shares acquired through the SSPP are subject to a lock-up period of two (2) years from the date of issue which ended on September 19, 2009. No underwriter was engaged in connection with the foregoing share issuance.

The sale is further subject to the condition that should the officer or employee resign from the Parent Company prior to the expiration of the lock-up period, the share purchased by such resigning employee or officer shall be purchased at cost by the Parent Company’s Retirement Fund for the benefit of the Parent Company’s retiring employees or officers. As of December 31, 2009, twenty-two (22) employees had resigned (seven in 2009, thirteen in 2008 and two in 2007) and their shares totaling to 808,100 (130,900 in 2009; 548,500 in 2008; and, 128,700 in 2007) were bought back by the Parent Company on behalf of the Retirement Fund. The total cost of the shares acquired amounting to PHP808,100 was recognized as treasury stock.

With the establishment of the I-Remit, Inc. Retirement Fund and after the expiration of the lock up period on September 19, 2009, the Company transferred to the Retirement Fund on September 24, 2009 the 808,100 shares it has bought back from its resigned employees and officers upon reimbursement of the advances made by the Company in acquiring such shares on behalf of the Retirement Fund. With this transfer, the Company’s outstanding capital stock stood at 553,088,000 shares from 552,279,900 shares.

Except for the above issuances, the Company has not issued or sold new shares within the past three (3) years which were not registered pursuant to the requirements of the Securities Regulation Code (“SRC”).

Item 6. Management’s Discussion and Analysis or Plan of Operation

(A) Management’s Discussion and Analysis (MD&A) or Plan of Operation

(1) Plan of Operation

The Company’s strategy is focused on making I-Remit a global brand and the preferred provider of remittance or money transfer services.

The key elements of the Company’s strategy are as follows:

Utilizing technological advances in creating value for money for its customers; Aggressive marketing of products and services to overseas Filipinos and other nationalities; Implementing strategic alliances with financial institutions and money transfer operators in the Philippines and around the world; Implementing technology solutions to streamline its business processes and minimize its operating costs.

The use of technology is interwoven in the company’s business strategy and operations. It was the first remittance company to be registered with the Board of Investments as an information technology service firm in the field of IT services. I-Remit was also named as the Business Mirror Most Innovative Company in the Asia CEO Awards – Philippines 2011. At the heart of its operation is a robust Web-enabled proprietary front-office system known as the I- Remit Foreign Remittance System (IFS) which enables its offices, partners, tie-ups, and agents to conduct business with the Philippine office 24x7. The system was designed to handle various remittance choices: credit to bank account; door-to-door delivery; cash-pick up; or debit card reloading. The system also allows I-Remit to accept contributions and payments to SSS, Pag-IBIG, PhilHealth, real estate developers, insurance companies, etc. The IFS is also enabled to accept host-to-host transactions for virtually instantaneous crediting of beneficiary bank accounts maintained in selected banks in the Philippines.

I-Remit’s IFS is linked with another proprietary system, the iRemit Local Remittance System (ILS) that allows transaction data to flow seamlessly from outlets abroad until final fulfillment of services. It allows transaction tracking for customers and immediate settlement reporting with the company’s counter-parties. I-Remit uses an aggregating engine that stores information in a data warehouse ready for data mining and analysis to allow it to serve its customers better.

The emerging new players in the industry are composed mostly of technology-based companies that utilize the Internet in offering remittance services. Their services may be availed of through traditional browers or via Web-enabled mobile phones. To strengthen its online presence, I-Remit launched iDOL (I-Remit Direct Online) that targets the more computer-savvy netizen market who are more comfortable transacting through the web. I- Remit’s customers may access the facility through any Internet-enabled device providing them with the capability to remit money from anywhere, anytime. iDOL is currently available to I- Remit’s customers in Australia, Canada, Hong Kong, Japan, Singapore and the United Kingdom.

Supporting I-Remit’s highly-interconnected and seamless business solution is a dynamically- scaled network of virtualized servers and storage farms. The network is secured from malicious attacks, virus intrusions, and security threats internally and externally through the use of a multi-layered network set-up consisting of VLANs, virtual private networks, security appliances, firewalls, anti-spam software, WAN router, Internet link load balancer, and antivirus systems. The company has a state-of-the-art backup and replication protocol that runs every night while a more concentrated database replication process transpires between the company’s headquarters and the disaster recovery site in real time. A part of the Company’s strategy is to continuously upgrade its technology infrastructure to ensure that it is able to manage the risks associated with technology or any unforeseen natural or man-made risks that may hamper the continuity of its operations.

I-Remit implements aggressive marketing strategies in the countries it operates in. The Company is being positioned as having the widest range of remittance or money transfer services that fulfill the specific money transmission needs of its customers. I-Remit is also being positioned as the only Filipino service provider that can address the need of Filipino overseas workers for continuity of access to Philippine social service programs such as those of the SSS, Pag-IBIG Fund, and PhilHealth. I-Remit’s pricing of its remittance services are always at par or even better than competition but with better levels of service and performance. I-Remit’s advantages over the competition are its superior service delivery systems and post-sale service capabilities. I-Remit’s products and services are promoted through several methods including participation in special events involving Filipino communities and sponsorship activities, print and broadcast advertisements, direct mail campaigns, and e-mail and social network promotional campaigns. I-Remit also continuously implements global and local marketing campaigns that are intended to promote customer loyalty.

In pursuit of its vision, I-Remit is positioning itself to be a global player in the money transfer business by opening new remittance corridors and establishing partnerships with financial institutions all over the world. I-Remit has established partnerships with the Industrial and Commercial Bank of China for remittances bound to mainland China and with Bank Internasional Indonesia for remittances to Indonesia. The Company intends to expand its target market and offer its remittance services to other foreign workers in all the countries that it operates in.

Recent official government estimates place the number of OFWs at around 10.489 million in 218 countries, territories, and jurisdictions around the world including those that are undocumented and the direct hires. I-Remit strives to establish partnerships or tie-ups in countries that have considerable number of Filipino workers particularly in countries where the market size does not economically justify establishing its own subsidiary or branch. The Company establishes partnerships with local money transfer firms that are authorized by regulatory bodies to conduct the remittance business in various countries. I-Remit’s subsidiary in London, IRemit Global Remittance Ltd. has acquired the status of an “authorized payment institution” from the Financial Conduct Authority of the United Kingdom under the European Payment Services Directive (PSD, 2007/64/EC) that provides the legal foundation for the creation of a Europe-wide single market for payment services, including money remittance. I- Remit’s subsidiary company has acquired the right to establish its presence and offer its services in any of the European Union and European Economic Area member states after proper notification of the regulatory authorities. In obtaining its authorization, I-Remit had passed a stringent examination process to ensure that it has sufficient capital resources, robust liquidity, sound governance practices, and adequate organizational, control, and IT security mechanisms. I-Remit has invoked its rights as a payment institution in the European Economic Area and established its presence in Vienna, Austria; Rome and Milan; and Frankfurt, Germany.

In addition, I-Remit also continuously engages the services of agents to augment the presence of its offices particularly in countries with large Filipino populations.

I-Remit also continuously seeks to expand the breadth and depth of its fulfillment capabilities in the Philippines through its ever-growing network of partners consisting of universal banks, commercial banks, thrift banks, rural banks, pawnshops, remittance agents, and other BSP- supervised and regulated institutions.

For many OFW households, remittances provide a considerable increase in income which in turn drives consumption and investment. The increase in disposable income of these households translates into improved standards of living as remittances find their way into investments in real estate and education, and in higher levels of consumption for food, clothing, and even luxury items. The spending patterns of OFWs and their families give rise to more opportunities for other remittance transactions. I-Remit has partnered with other companies such as Jollibee Foods Corporation, COL Financial Group, Inc., real estate developers, insurance companies, pre-need companies, and appliance distributors to expand the range of services it offers to OFWs. I-Remit’s plans include the expansion of its partnership portfolio to include schools and utility companies.

I-Remit’s strategy includes the use of technology to streamline its business processes, improve its delivery capabilities, and minimize its operating costs. The Company’s continuously reviews its processes and identifies activities that may be automated. These include high- volume and highly-repetitive tasks that present opportunities for the Company to leverage on its technology capabilities and reduce costs. The Company is also in the process of identifying non-core business activities that may be outsourced.

In conducting its business, I-Remit is fully aware that it must also contribute to the betterment of Filipino society. Its corporate social responsibility program is focused primarily on youth education. It is a constant contributor in sponsoring scholars of the Tuloy Aral project of the Overseas Workers’ Welfare Administration. It has also partnered with non-governmental organizations such as Synergeia and CBN Asia’s Operation Blessing. In cooperation with Synergeia, I-Remit provided assistance to grade one pupils of the P. Guevarra Elementary School in Tondo, Manila. The company’s employees also participated actively in tutoring sessions and other educational activities in the school. Likewise, in cooperation with CBN Asia and the 700 Club, I-Remit has provided assistance to the children of the Dumagat tribe in Rodriguez, Rizal by way of food, clothing, and school materials. The Company works closely with the Kabalikat ng Migranteng Pilipino, Inc. or KAMPI, and Kabalikat ng OFW, Inc., two non- governmental organization that extend financial, livelihood, and education assistance to families of OFWs. I-Remit also supports the Philippine embassies and consulates, the Philippine overseas labor offices, and Filipino communities and associations in its host countries to promote the welfare of overseas Filipinos, and if needed, to provide assistance to distressed OFWs.

(2) Management’s Discussion and Analysis

2016 compared to 2015

I-Remit realized a consolidated net income of PHP 37.2 million in 2016, an increase of PHP 24.5 million or 191.8% over the consolidated net income of PH 12.7 million in 2015. The consolidated net income in 2016 and 2015 were 5.0% and 1.9% of the 2016 and 2015 revenue, respectively.

Revenues increased by PHP 62.8 million or 9.2% from PHP 685.7 million in 2015 to PHP 748.5 million in 2016 mainly due to increases in delivery fees by PHP 58.0 million or 11.6%, and realized foreign exchange gains-net by PHP 4.9 million or 2.6%. Other revenue items remained constant at PHP 0.8 million. The increase in delivery fees by PHP 58.0 million or 11.6%% from PHP 499.0 million in 2015 to PHP 557.0 in 2016 was the result of higher transaction count by 304,081 or 10% from 3,033 million in 2015 to 3,337 million in 2016 and USD volume by USD 100.0 million or 7.8% from USD 1.282 billion in 2015 to USD 1,382 billion in 2016. The Company had new agents from the Middle East region in Q3- Q4 which have influenced the increase in transaction count towards the end of 2016. Foreign exchange margin on trading activities suffered by 0.013 from 0.076 in 2015 to 0.063 in 2016 while the average dollar-to-peso exchange rate improved by PHP 1.86 from PHP 45.63 in 2015 to PHP 47.49 in 2016.

Costs of services increased by PHP 25.7 million or 11.3% from PHP 228.5 million in 2015 to PHP 254.2 million in 2016. Total costs of services in 2016 and 2015 were 34.0% and 33.3% of the 2016 and 2015 revenue, respectively. Notify-to-pay transactions were dominantly high from the rest of the service modes in 2016 resulting to an increase of PHP 13.4 million in delivery charges while bank-to-bank drew close at PHP 2.9 million increase. After a thorough evaluation of its accounts directly connected to the fulfillment of its obligation (to deliver remittances in PHP value to beneficiaries), the Company recognized the inclusion of finance costs to costs of services starting in 2015. Finance cost in 2016 increased significantly by PHP 9.3 million from PHP 31.3 million in 2015 to PHP 40.6 million in 2016, on account of higher volume in transaction count and deferred collection of accounts from its foreign offices due to growing regulatory laws imposed to international banks on remittance companies operating in foreign countries such as UK, Australia and New Zealand. The annual interest rates on the Parent Company’s unsecured, short-term interest-bearing peso-denominated bank loans ranged from 3.50% to 5.8% and 3.15 to 6.0% in 2016 and 2015. Also included in this year’s figure for costs of services is the reproduction cost of visa electron cards (classified in the previous years as part of operating expenses).

The Company recognized a net trading gain of PHP 10.9 million in 2016, PHP 20.8 million or 209.5% higher than the PHP 9.9 million net trading loss recognized in 2015. Significantly on its inventory of debt and equity securities, Power Star Asia Group Limited (PSAGL) recognized a total of PHP 6.9 million unrealized holding gains in 2016, PHP 21.6 million higher than the PHP 14.7 million unrealized holding loss in 2015. On the sale of debt and equity securities, it recognized a realized holding gain of PHP 4.0 million in 2016, PHP 0.7 million lower than the PHP 4.7 million realized holding gain in 2015. Net trading gains (losses) were constant at 1.5% of the 2016 and 2015 revenue, respectively.

Other Income increased by PHP 5.4 million or 22.9% from PHP 23.6 million in 2015 to PHP 29.0 million in 2016. Other income in 2016 and 2015 were 3.9% and 3.5% of the 2016 and 2015 revenue, respectively. The Company recognized additional income through its foreign offices in the form of commission for phone in transaction, refunds from government agencies, teller’s overages, and dividend income.

Total operating expenses ended higher by PHP 37.9 million or 8.5% from PHP 445.8 million in 2015 to PHP 483.7 million in 2016. Total operating expenses in 2016 and 2015 were 64.6% and 65.0% of the 2016 and 2015 revenue, respectively. Cost incurred by the Company in producing visa electron cards were classified as part of costs of services effective in 2016.

Significant increases in operating costs were noted on short-term benefits, marketing expenses, depreciation and amortization, communication, light and water, professional fees, representation expenses, association dues, business development and bad debt expense. Decreases were apparent on office supplies, retirement benefit, transportation and travel, repairs and maintenance, and taxes and licenses.

Short-term benefits increased by PHP 14.8 million or 7.0% from PHP 212.1 million in 2015 to PHP 226.9 million in 2016 due to annual salary increase given to employees, effective April 2016. Employee-employer contributions to government agencies consequently increased on account of the annual salary increase. The Company also recognized the value of employees’ productivity for the whole year round and implemented the productivity incentive in December 2016 as allowed by RR No. 1-2015 dated January 5, 2015. Marketing expense was higher in 2016 by PHP 4.0 million due to increase in advertising and publication expenses by PHP 11.3 million, offset partly by the decrease in

marketing and promotion costs by PHP 7.3 million. The Company installed a light box ad at NAIA and billboard ad at Robinsons Galleria toward the last quarter of 2015, annual subscription of which was completed in 2016. The Company had several marketing initiatives in 2016 such as providing Iremit tent at the Philippine Consulate in Dubai, promo offers on special occasions like Valentine’s Day, Mother’s Day, Father’s Day and Christmas Day, and sponsorship for CBN Asia and ASIA CEO Awards 2016. Depreciation and amortization increased by PHP 2.4 million from PHP 9.3 million in 2015 to PHP 11.7 million in 2016 due to equipment bought in 2015 that were depreciated only in 2016. Communication, light and water increased by PHP 3.6 million from PHP 18.7 million in 2015 to PHP 22.3 million in 2016 on account of new mobile phone subscription for new marketing employees and officers of the Company, freight charges for marketing materials sent to new agents, and unbilled utility bills in 2015. Professional fees increased by PHP 4.0 million from PHP 50.8 million in 2015 to PHP 54.8 million in 2016, due to increase in management fee for the principal directors of the Company by PHP 2.7 million and salary of one expatriate official hired by the Company for its foreign office in Japan by PHP 2.8 million, offset partly by the decreases in other professional fees. Entertainment, amusement and recreation increased by PHP 1.2 million or 21.9% from PHP 5.4 million in 2015 to PHP 6.6 million in 2016 due to representation expenses incurred in developing new agents in the Middle East. Association dues increased by PHP 4.2 million or 85.2% from PHP 4.9 million in 2015 to PHP 9.1 million in 2016. Included in this account are dues and subscription paid for the 2FA Entrust Identity Guard Token Licenses, Fortinet Bundle renewal, and Anti-Virus licenses. Consequentially due to the implementation by the Company of its policy on impairment of trade and non-trade receivables, bad debt expense in 2016 increased by PHP 7.1 million or 188.1% from the PHP 3.8 million in 2015. Business development costs increased by PHP 3.8 million or 571.8% from PHP 0.6 million in 2015 to PHP 4.5 million in 2016 on account of the facilitation expense incurred in acquiring new agents from Saudi Arabia in the Middle East region. Unrealized foreign exchange loss of PHP 7.3 million was recognized for the mark to market value of the Company’s outstanding forward contracts as of December 31, 2016.

Photocopying and supplies expenses decreased by PHP 1.7 million or -18.7% from PHP 9.1 in 2015 to PHP 7.4 million in 2016 due to account reclassification of visa electron card expense to cost of services from operating expense in 2016. The Company recognized lower valuation on retirement expense for 2016 by PHP 0.37 million as recommended by its actuarial consultant. Transportation and travel decreased significantly by PHP 5.43 million or -35.6% from PHP 15.28 million in 2015 to PHP 9.85 million, partly due to cost reduction initiatives implemented and reclassification of transportation expenses to marketing expenses in 2016. Decrease in repairs and maintenance costs by PHP 2.0 million or -35.0% represents the quarterly payment for building repair and on-site IT support services paid in 2015 by UK (IGRL) foreign office. Largely for 2016, taxes and licenses went down by PHP 6.5 million or -72.8% due to the reversal of accrual recorded in 2015 on regional production tax by IGRL in 2016.

Equity in net earnings increased by PHP 0.3 million or 34.2% from PHP 1.0 million in 2015 to PHP 1.3 million in 2016. Total equity in net earnings in 2016 and 2015 were 0.18% and 0.14% of the 2016 and 2015 revenue, respectively.

The Company recognized a total of PHP 2,903 billion assets as at year-end 2016, PHP 325.0 million or 12.6% higher than the PHP 2,578 billion assets as at year-end 2015. Total current assets increased by PHP 286.2 million while non-current assets increased by PHP 39.1 million at year-end 2016.

Total current assets increased by PHP 286.2 million or 12.2% from PHP 2,350 billion at year-end 2015 to PHP 2,636.2 billion at year-end 2016. Total current assets in 2016 and 2015 were 90.8% and 91.2% of the total assets in 2016 and 2015, respectively.

Cash and cash equivalents increased by PHP 162.0 million or 10.2% from PHP 1,593 billion in 2015 to PHP 1,755 billion in 2016 essentially due to the PHP 323.1 million deposit in transit recognized against trade receivables in 2016, offset partly by the increase in funds advanced to fulfillment agents in December 2016 for holiday transactions. Cash and cash equivalents in 2016 and 2015 were 60.5% and 61.8% of the total assets in 2016 and 2015, respectively.

Trade and other receivables-net increased by PHP 117.9 million or 25.4% from PHP 464.8 million in 2015 to PH 582.7 million in 2016, partly on account of the PHP 208.2 million increase on receivable from agents’ accounts (net of the PHP 323.1 million deposit in transit recognized as collected), reduced by the settlement of advances by foreign offices to Parent Company. Trade and other receivables-net in 2016 and 2015 were 20.1% and 18.0% of the total assets in 2016 and 2015, respectively.

Financial assets at fair value through profit or loss amounted to PHP 259.5 million at year-end 2016, PHP 2.5 million or 1.0% higher than the PHP 257.0 million recognized at year-end 2016. These assets consist of forward contracts marked to market value at year-end 2016 and investments in debt and equity securities (listed overseas) held for trading by Power Star Asia Group Limited (PSAGL). The value of forward contracts decreased by PHP 1.4 million or -18.8% from PHP 7.9 million in 2015 to

PHP 6.5 million in 2016. Debt and equity securities moved upward by PHP 4.0 million or 12.1% from PHP 249.0 million in 2015 to PHP 253.0 million in 2016. Financial assets at fair value through profit or loss in 2016 and 2015 were 8.9% and 10.0% of the total assets in 2016 and 2015, respectively.

Prepayments and other current assets increased by PHP 4.0 million or 11.4% from PHP 34.9 million in 2015 to PHP 38.9 million in 2016. Prepayments and other current assets in 2016 and 2015 were 1.3% and 1.4% of the total assets in 2016 and 2015, respectively.

Total non-current assets increased by PHP 39.1 million or 17.2% from PHP 228.0 million at year-end 2015 to PHP 267.1 million at year-end 2016. Total non-current assets in 2016 and 2015 were 9.2% and 8.9% of the total assets in 2016 and 2015, respectively.

Investment in associate increased by PHP 1.3 million or 15.6% from PHP 8.5 million in 2015 to PHP 9.8 million in 2016. This increase in investment represents net equity recognized by the Parent Company on the net earnings of Hwa Kung Hong & Co., Ltd. (HKHCL) in 2016. Investment in associate in 2016 and 2015 were constant at 0.3% of the total assets in 2016 and 2015, respectively.

Property and equipment-net decreased by PHP 3.4 million or -11.33% from PHP 30.2 million at year- end 2015 to PHP 26.8 million at year-end 2016 due to full depreciation of some property and equipment. Property and equipment-net in 2016 and 2015 were 0.9% and 1.2% of the total assets in 2016 and 2015, respectively.

Intangible assets-net increased by PHP 7.3 million or 6.4% from PHP 113.9 million at year-end 2015 to PHP 121.2 million at year-end 2016 due to increases in goodwill by PHP 4.9 million and software by PHP 2.4 million. On February 17, 2015, the Parent Company invested SGD 100,000 or PHP 3,251,710 on I Remittance Singapore Pte. Ltd. (IRSPL) in Singapore. In 2016, IRSPL acquired the remittance business of I Remit Singapore Pte. Ltd. (ISNPL) including all its assets and liabilities in the amount of SGD 197,579.34. Net worth of ISNPL’s assets and liabilities amounted to SGD 54,784.59 - this resulted to the increase in goodwill by SGD 142,794.75 or PHP 4,897,055.99. Increase in software represents the acquisition of Tripwire Enterprise at PHP 3.3 million, offset partly by the recorded amortization on software in 2016. Total intangible assets in 2016 and 2015 were 4.2% and 4.4% of the total non-current assets in 2016 and 2015, respectively.

Retirement asset increased by PHP 7.0 million or 60.0% from PHP 11.6 million at year-end 2015 to PHP 18.6 million at year-end 2016 based on the latest actuarial valuation of the Parent Company’s retirement fund by Institutional Synergy, Inc. (INSYNC). Retirement asset in 2016 and 2015 were 0.6% and 0.5% of the total assets in 2016 and 2015, respectively.

Deferred tax assets increased by PHP 7.43 million or 66.7% from PHP 11.13 million at year-end 2015 to PHP 18.56 million at year-end 2016 due to unrealized foreign currency loss recognized by the Company out of its outstanding forward contracts as of December 31, 2016. Deferred tax assets in 2016 and 2015 were 0.6% and 0.4% of the total assets in 2016 and 2015, respectively.

Other non-current assets increased by PHP 19.4 million or 37.0% from PHP 52.7 million at year-end 2015 to PHP 72.1 million at year-end 2016 significantly on account of excess value added tax recognized by the Parent Company as receivable from the Bureau of Internal Revenue, increased by PHP 17.6 million or 76.8% from PHP 23.0 million at year-end 2015 to PHP 40.6 million at year-end 2016. Refundable deposits increased by PHP 1.8 million or 6.1% from PHP 29.6 million to PHP 31.4 million in 2016 due to annual escalation in rent. Other non-current assets in 2016 and 2015 were 2.5% and 2.0% of the total assets in 2016 and 2015, respectively.

The Company recognized a total of PHP 1,586.9 billion worth of liabilities at year-end 2016, PHP 284.1 million or 21.8% higher than the PHP 1,302.8 billion at year-end 2015. Current liabilities increased by PHP 281.2 million while non-current liabilities increased by PHP 2.9 million. Total liabilities in 2016 and 2015 were 54.7% and 50.5% of the total liabilities and equity in 2016 and 2015, respectively.

Total current liabilities increased by PHP 281.2 million or 21.7% from PHP 1,298.6 billion at year-end 2015 to PHP 1,579.8 billion at year-end 2016. Total current liabilities in 2016 and 2015 were 54.4% and 50.4% of the total liabilities and equity in 2016 and 2015, respectively.

Financial liabilities at fair value through profit or loss amounted to PHP 5.2 million at year-end 2016, PHP 4.0 million or 350.1% higher than the PHP 1.1 million recognized at year-end 2015. These liabilities consist of forward contracts marked to market value at year-end 2016. Financial liabilities at fair value through profit or loss in 2016 and 2015 were 0.2% and 0.0% of the total liabilities and stockholder’s equity in 2016 and 2015, respectively.

Beneficiaries and other payables increased by PHP 67.1 million or 37.0% from PHP 181.0 million at year-end 2015 to PHP 248.1 million at year-end 2016 on account of other payables which increased by

PHP 98.4 million, offset partly by the decrease in payable to beneficiaries. Other payables consist of vouchers payable to fulfillment agents for notify to pay transactions. Beneficiaries and other payables in 2016 and 2015 were 8.5% and 7.0% of the total liabilities and equity in 2016 and 2015, respectively.

No advances from stockholders were recognized at year-end 2015 and 2016.

Income tax payable increased significantly by PHP 13.1 million or 902.8% from PHP 1.5 million at year- end 2015 to PHP 14.6 million at year-end 2016. Increase in income tax was the result of higher deferred tax asset recognized as of December 31, 2016. Income tax payable in 2016 and 2015 were 0.5% and 0.1% of the total liabilities and equity in 2016 and 2015 respectively.

Interest-bearing loans increased by PHP 197.0 million or 17.7% from PHP 1,115 billion at year-end 2015 to PHP 1,312 billion at year-end 2016. The Parent Company resorted to additional bank loans pending its collection of accounts from its foreign office in UK (IGRL) due to restraints implemented on remittance companies by international banks situated on countries like the UK. Interest-bearing loans in 2016 and 2015 were 45.2% and 43.2% of the total liabilities and stockholder’s equity in 2016 and 2015, respectively.

Non-current liabilities increased by PHP 2.9 million or 70.0% from PHP 4.2 million at year-end 2015 to PHP 7.1 million at year-end 2016 due to increase in deferred tax liabilities in 2016. No retirement liability was recognized at year-ends 2015 and 2016. Non-current liabilities in 2016 and 2015 were 0.25% and 0.16%of the total liabilities and stockholder’s equity in 2016 and 2015, respectively.

The Company’s stockholders’ equity as of December 31, 2016 stood at PHP 1,316.4 billion, PHP 41.2 million or 3.2% higher than the year-end level in 2015 at PHP 1,275.2 billion. Total stockholders’ equity in 2016 and 2015 were 45.3% and 49.5% of the total liabilities and stockholders’ equity in 2016 and 2015, respectively.

Retained earnings increased by PHP 17.2 million or 7.0%, from PHP 244.8.0 million at year-end 2015 to PHP 262.0 million at year-end 2016. The increase in retained earnings consists of the recognized net income at year-end 2016 at PHP 37.2 million, offset by the amount of cash dividend paid to the stockholders of the Parent Company on September 11, 2016 at PHP 20.0 million. Retained earnings in 2016 and 2015 were 9.0% and 9.5% of the total liabilities and stockholders’ equity in 2016 and 2015, respectively.

Cumulative translation adjustment increased by PHP 17.7 million or 64.8% from PHP 27.3 million at year-end 2015 to PHP 45.0 million at year-end 2016.

Re-measurements of the retirement plan of the Parent Company increased to PHP 16.0 million at year- end 2016, PHP 6.8 million or 73.7% higher than the PHP 9.2 million recognized at year-end 2015. Additional re-measurement gain was recognized on retirement plan at PHP 9.7 million based on the latest actuarial assumptions in 2016 and applicable deferred tax of PHP 2.9 million.

Treasury stock increased by -PHP 0.4 million or 2.7% from -PHP 15.1 million at year-end 2015 to –PHP 15.5 million at year-end 2016. The increase in treasury stock in 2016 represents additional 208,000 treasury shares bought back in 2016 at PHP 1.97 per share. Treasury stock in 2016 and 2015 were - 0.53% and -0.58% of the total liabilities and stockholders’ equity in 2016 and 2015, respectively.

Below are the comparative key performance indicators of the Company (Parent Company and subsidiaries):

Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income* over average Return on Equity stockholders’ equity during the 2.9% 1.0% (ROE) period Return on Assets Net income* over average total 1.4% 0.4% (ROA) assets during the period Earnings per Share Net income* over average number 0.06 0.02 (EPS) of outstanding shares Total transaction value in USD in Sales Growth 8% -17% present year over previous year Revenue less total cost of Gross Income 494.3 457.2 services (PHP millions) Total current assets over total Current ratio 1.67 1.81 current liabilities Net income plus depreciation over Solvency ratio 0.03 0.02 total liabilities Solvency ratio Total assets over total liabilities 1.83 1.98 Total stockholders' equity over Solvency ratio 0.83 0.98 total liabilities Total liabilities over total Debt-to equity ratio 1.21 1.02 stockholders’ equity Total assets over total Asset-to-equity ratio 2.21 2.02 stockholders’ equity Interest rate Earnings before interest and taxes 2.28 1.83 coverage ratio over interest expense

* Net Income attributable to equity holders of the Parent Company and Minority Interest. EPS computed using Net Income attributable to equity holders of the Parent Company for the year

ended December 31, 2016 and for the year ended December 31, 2015 are PHP 0.06 and PHP 0.02, respectively.

Below are the comparative key performance indicators of the Company’s

subsidiaries:

International Remittance (Canada) Ltd. Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the 1% -52% (ROE) period Return on Assets Net income over average total 0.14% -13% (ROA) assets during the period Earnings per Share Net income over average number 0.29 -23.30 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -0.5% -7% present year over previous year Revenue less total cost of Gross Income 81.0 73.8 services (PHP millions)

Lucky Star Management Limited Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the 12% 97% (ROE) period Return on Assets Net income over average total -6% -28% (ROA) assets during the period Earnings per Share Net income over average number -3.51 -16.62 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -6% 15% present year over previous year Revenue less total cost of Gross Income 11.0 11.4 services (PHP millions)

IRemit Global Remittance Limited Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the 66% 132% (ROE) period Return on Assets Net income over average total -7% -22% (ROA) assets during the period Earnings per Share Net income over average number -11.01 -54.49 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -7% -19% present year over previous year Revenue less total cost of Gross Income 69.0 65.8 services (PHP millions)

I-Remit Australia Pty Ltd Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the -6.19% 3.99% (ROE) period Return on Assets Net income over average total -3.7% 2.0% (ROA) assets during the period Earnings per Share Net income over average number -113,860.47 74,467.56 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income 0.3 0.3 services (PHP millions)

Worldwide Exchange Pty Ltd Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the 172% -259% (ROE) period Return on Assets Net income over average total -9% -4% (ROA) assets during the period Earnings per Share Net income over average number -39.85 -21.38 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -8% -14% present year over previous year Revenue less total cost of Gross Income 29.1 29.6 services (PHP millions)

I-Remit New Zealand Limited Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the 3% 17% (ROE) period Return on Assets Net income over average total -7% -14% (ROA) assets during the period Earnings per Share Net income over average number -701.96 -3,099.81 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -100% -100% present year over previous year Revenue less total cost of Gross Income -0.003 - services (PHP millions)

IREMIT Remittance Consulting GmbH Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the 2% 12% (ROE) period Return on Assets Net income over average total -116% -240% (ROA) assets during the period Earnings per Share Net income over average number -5.48 -32.29 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income -0.05 -0.04 services (PHP millions)

Power Star Asia Group Limited Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the 5% 9% (ROE) period Return on Assets Net income over average total 5% 9% (ROA) assets during the period Earnings per Share Net income over average number 27.43 43.15 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income 6.8 49.4 services (PHP millions)

K.K. I-Remit Japan Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the 188% 18% (ROE) period Return on Assets Net income over average total 55% 3% (ROA) assets during the period Earnings per Share Net income over average number 14,116.13 796.85 (EPS) of outstanding shares Total transaction value in USD in Sales Growth 20% -23% present year over previous year Revenue less total cost of Gross Income 29.7 23.3 services (PHP millions)

I-Remittance Singapore Pte. Ltd. Performance Definition Dec. 31, 2016 Dec. 31, 2015 Indicator Net income over average Return on Equity stockholders’ equity during the -123% -16% (ROE) period Return on Assets Net income over average total -7.9% -6% (ROA) assets during the period Earnings per Share Net income over average number -23.99 -2.43 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income 12.97 -0.06 services (PHP millions)

2015 compared to 2014

I-Remit realized a consolidated net income of PHP 12.7 million in 2015, an increase of PHP 3.5 million or 37.9% over the consolidated net income of PH 9.2 million in 2014. The consolidated net income in 2015 and 2014 were 1.9% and 1.2% of the 2015 and 2014 revenue, respectively.

Revenues decreased by PHP 87.9 million or -11.4% from PHP 773.6 million in 2014 to PHP 685.7 million in 2015 mainly due to the decrease in delivery fees by PHP 72.88 million or -12.7%, decrease in realized foreign exchange gains-net by PHP 3.0 million or -2.4% and other revenue items by PHP 12.0 million or -15.5% in 2015. The decrease in delivery fees by PHP 72.88 million or -12.7% from PHP 571.83 million in 2014 to PHP 498.95 million in 2015 was the result of lower transaction count by 110,763 or -3.5% from 3.144 million in 2014 to 3,033 million in 2015 and USD volume by USD 266.0 million or -17.2% from USD 1.548 billion in 2014 to USD 1,282 billion in 2015. Average dollar-to-peso exchange rate improved in 2015 by PHP 1.22 from PHP 44.41 in 2014 to PHP 45.63 in 2015. Realized foreign exchange gains-net, consequentially went down by PHP 3.0 million or -2.4% from PHP 123.4 million in 2014 to PHP 120.4 million in 2015 due to lower USD volume generated from remittance transaction in 2015, coupled with lower foreign exchange margin by 0.001 on the same year. Decrease in other revenue items by PHP 12.0 million or -15.5% was mainly due to lower commission recognized by the foreign offices and other fees by the Parent Company.

Costs of services decreased by PHP 40.9 million or -15.2% from PHP 269.3 million in 2014 to PHP 228.5 million in 2015. Total costs of services in 2015 and 2014 were 33.3% and 34.8% of the 2015 and 2014 revenue, respectively. The decrease in cost of services was the result of lower remittance count fulfilled in 2015 which yielded a significant decrease in fulfillment charges by PHP 22.9 million or - 21.8% and finance cost by PHP 17.3 million or -35.5%. Bank service rates for bank-to-bank and notify- to-pay were generally constant in 2015. Significantly with IRemit Global Remittance Limited (IGRL) and I-Remit New Zealand Limited (INZL), recorded bank service charges dropped by PHP 7.01 million and PHP 2.8 million, respectively, due to bank account closure in 2015. The Parent Company maintained the number of service providers for door-to-door transactions at four in 2015. Finance cost was recognized by the Parent Company in 2015 as part of its costs of services on the ground that bank loans were incurred in connection with the fulfillment of the Parent Company’s core obligation to remitters’ beneficiaries in PHP equivalent. The Parent Company incurred lower finance cost in 2015 due to lower utilization of its credit lines with the banks. The annual interest rates on the Parent Company’s unsecured, short-term interest-bearing peso-denominated bank loans ranged from 3.15% to 6.0% both in 2015 and 2014.

The Company recognized a net trading loss of PHP 9.9 million in 2015, PHP 15.3 million or -284.5% lower than the PHP 5.4 million net trading gain recognized in 2014. Significantly on its inventory of debt and equity securities, Power Star Asia Group Limited (PSAGL) recognized a total of PHP 14.3 million unrealized holding loss in 2015 from the PHP 3.2 million unrealized holding gain in 2014, whereas on the sale of debt and equity securities, it recognized a realized holding gain of PHP 4.4 million in 2015 from the PHP 2.2 million in 2014. Net trading gains (losses) were -1.4% and 0.7% of the 2015 and 2014 revenue, respectively.

Other Income increased by PHP 0.7 million or 3.0% from PHP 22.9 million in 2014 to PHP 23.6 million in 2015. Other income in 2015 and 2014 were 3.4% and 3.0% of the 2015 and 2014 revenue, respectively. The Company recognized an unrealized foreign exchange gain-net of PHP 2.8 million in

2015 due to higher closing rate used in the revaluation of foreign currency denominated accounts from 44.720 to 47.060, offset partly by the decrease in finance income by PHP 1.8 million and service fees by PHP 0.3 million.

Total operating expenses ended lower by PHP 62.0 million or -12.2% from PHP 507.8 million in 2014 to PHP 445.8 million in 2015. Total other operating expenses in 2015 and 2014 were 65.0% and 65.6% of the 2015 and 2014 revenue, respectively.

Significant decreases in operating costs were noted on short-term benefits, unrealized foreign currency losses, fixed utility expenses and, depreciation and amortization expenses. Short-term benefits decreased by PHP 35.6 million or -14.4% from PHP 247.7 million in 2014 to PHP 212.1 million in 2015 due to high attrition in foreign offices of the Parent Company and temporary cessation in operation of INZL. No unrealized foreign currency loss was recognized in 2015 from the PHP 18.2 million unrealized foreign currency loss in 2014. Fixed utilities on communications, water and electricity decreased by PHP 6.6 million or -26.1% from PHP 25.3 million in 2014 to PHP 18.7 million in 2015 due to continued observance of cost-cutting measures within the entire organization. Depreciation and amortization costs were lower in 2015 by PHP 3.6 million or -27.9% from PHP 12.9 million in 2014 to PHP 9.3 million in 2015 on account of lower acquisition level and full depreciation of some of the fixed assets in 2015. Rental expense increased by PHP 1.1 million or 1.7% from PHP 65.8 million in 2014 to PHP 66.9 million in 2015 on account of the yearly escalation in rent of office premises, office equipment and storage areas. Professional fees increased by PHP 1.3 million or 2.6% from PHP 49.5 million in 2014 to PHP 50.8 million in 2015 on account of various professional fees paid by foreign offices for accounting and audit services, payroll maintenance, tax investigation, legal assistance, etc. Association dues increased by PHP 1.3 million or 38.4% from PHP 3.6 million to PHP 4.9 million in 2015 due to additional subscriptions engaged by the Parent Company. Bad debts decreased by PHP 2.5 million or -40.1% from PHP 6.3 million in 2014 to PHP 3.8 million in 2015 due to direct write-off of trade receivables deemed worthless and uncollectible in 2014. Business development expenses decreased by PHP 1.8 million or -72.7% from PHP 2.5 million in 2014 to PHP 0.7 million in 2015 due to various payments made by the Company for the incorporation of I-Remittance Singapore Pte. Ltd., payments of which include incorporation deposit, professional services, corporate secretarial services, license application and lawyer’s fee with the Monetary Authority of Singapore and annual return filing in 2014.

Equity in net earnings decreased by PHP 0.3 million or -24.8% from PHP 1.3 million in 2014 to PHP 1.0 million in 2015. Total equity in net earnings in 2015 and 2014 were 0.14% and 0.17% of the 2015 and 2014 revenue, respectively.

The Company recognized a total of PHP 2.578 billion assets as at year-end 2015, PHP 1.731 billion or -40.2% lower than the PHP 4.309 billion assets as at year-end 2014. Total current assets decreased by PHP 1.751 billion while non-current assets increased by PHP 0.020 billion at year-end 2015.

Total current assets decreased by PHP 1.751 billion or -42.7% from PHP 4.101 billion at year-end 2014 to PHP2.350 billion at year-end 2015. Total current assets in 2015 and 2014 were 91.2% and 95.2% of the total assets in 2015 and 2014, respectively.

Cash and cash equivalents decreased by PHP 376.0 million or -19.1% from PHP 1.969 billion in 2014 to PHP 1.593 billion in 2015 essentially due to the PHP 597.9 million deposit in transit recognized against trade receivables in 2014, partly offset by the increase in funds advanced to fulfillment agents in December 2015 due to long holidays. Cash and cash equivalents in 2015 and 2014 were 61.8% and 45.7% of the total assets in 2015 and 2014, respectively.

Trade and other receivables-net decreased by PHP 149.9 million or -24.4% from PHP 614.7 million in 2014 to PH 464.8 million in 2015, partly on account of the PHP 597.9 million deposit in transit recognized as collected and included in the cash in bank account at year-end 2014 and transactions recognized during the holidays in December 2015. Trade and other receivables-net in 2015 and 2014 were 18.0% and 14.3% of the total assets in 2015 and 2014, respectively.

Financial assets at fair value through profit or loss amounted to PHP 1.482 billion at year-end 2014, PHP 1.225 billion or -82.7% higher than the PHP 0.257 billion recognized at year-end 2015. These assets consist of forward trades initially recognized by the Parent Company as foreign currency receivable in 2014 and marked to market value at year-end 2015 and investments in debt and equity securities (listed overseas) held for trading by Power Star Asia Group Limited (PSAGL). Lower value of financial assets from forward contracts was the result of changing the manner of recording forward trades in 2015, in compliance with the instruction of the Bangko Sentral ng Pilipinas (BSP). Debt and equity securities moved downward by PHP 0.8 million or -0.3% from PHP 249.8 million in 2014 to PHP 249.0 million in 2015. Financial assets at fair value through profit or loss in 2015 and 2014 were 10.0% and 34.4% of the total assets in 2015 and 2014, respectively.

Prepayments and other current assets moved down slightly by PHP 0.6 million or-1.6% from PHP 35.5 million in 2014 to PHP 34.9 million in 2015. Prepayments and other current assets in 2015 and 2014 were 0.8% and 0.7% of the total assets in 2015 and 2014, respectively.

Total non-current assets increased by PHP 10.4 million or 5.3% from PHP 197.6 million at year-end 2014 to PHP 208.0 million at year-end 2015. Total non-current assets in 2015 and 2014 were 1.4% and 0.8% of the total assets in 2015 and 2014, respectively.

Total non-current assets increased by PHP 20.0 million or 9.6% from PHP 208.0 million at year-end 2014 to PHP 228.0 million at year-end 2015. Other non-current assets in 2015 and 2014 were 8.8% and 4.8% of the total assets in 2015 and 2014 respectively.

Investment in an associate increased by PHP 1.0 million or 13.1% from PHP 7.5 million in 2014 to PHP 8.5 million in 2015. This increase in investment represents the net equity recognized by the Parent Company on the net earnings of Hwa Kung Hong & Co., Ltd. (HKHCL) in 2015. Investment in an associate in 2015 and 2014 were 0.3% and 0.2% of the total assets in 2015 and 2014, respectively.

Property and equipment-net increased by PHP 4.97 million or 19.7% from PHP 25.26 million at year- end 2014 to PHP 30.23 million at year-end 2015. The Company recognized an increase of PHP 12.4 million for additional office and communication equipment purchased in 2015, offset partly by the decrease in leasehold improvements by P 6.1 million and other fixed assets by PHP 1.3 million. Property and equipment-net in 2015 and 2014 were 1.2% and 0.6% of the total assets in 2015 and 2014, respectively.

Intangible assets-net increased by PHP 1.6 million or 1.4% from PHP 112.3 million at year-end 2014 to PHP 113.9 million at year-end 2015 due to renewal of Microsoft Exchange Server and Team Viewer licenses in 2015. Intangible assets in 2014 and 2015 were 4.4% and 2.6% of the total non-current assets in 2015 and 2014, respectively.

Retirement asset increased by PHP 0.9 million or 8.4% from PHP 10.75 million at year-end 2014 to PHP 11.65 million at year-end 2015 as a result of the latest actuarial valuation of the Parent Company’s retirement fund based on the revised provisions of PAS 19. The Parent Company engaged a new consulting actuary in 2015 by the name of Institutional Synergy, Inc. (INSYNC). Retirement asset in 2015 and 2014 were 0.4% and 0.2% of the total assets in 2015 and 2014, respectively.

Deferred tax assets decreased by PHP 1.1 million or -8.7% from PHP 12.2 million at year-end 2014 to PHP 11.1 million at year-end 2015 on account of lower accrual of expenses towards the end of December 31, 2015. Deferred tax assets in 2015 and 2014 were 0.4% and 0.3% of the total assets in 2015 and 2014, respectively.

Other non-current assets increased by PHP 12.7 million or 31.7% from PHP 40.0 million at year-end 2014 to PHP 52.7 million at year-end 2015 significantly on account of excess value added tax recognized by the Parent Company as receivable from the Bureau of Internal Revenue, increased by PHP 10.6 million or 86.0% from PHP 12.4 million at year-end 2014 to PHP 23.0 million at year-end 2015. Other non-current assets in 2015 and 2014 were 2.0% and 0.9% of the total assets in 2015 and 2014, respectively.

The Company recognized a total of PHP 1.303 billion liabilities at year-end 2015, PHP 1.755 billion or - 57.4% lower than the PHP 3.058 billion at year-end 2014. The decrease in total liabilities was noted in current liabilities which went down by PHP 1.755 billion, offset partly by the increase in non-current liabilities by PHP 0.2 million. Total liabilities in 2015 and 2014 were 50.5% and 71.0% of the total liabilities and equity in 2015 and 2014, respectively.

Total current liabilities decreased by PHP 1.755 billion or -57.5% from PHP 3.054 billion at year-end 2014 to PHP 1.299 billion at year-end 2015. Total current liabilities in 2015 and 2014 were 50.4% and 70.9% of the total liabilities and equity in 2015 and 2014, respectively.

Financial liabilities at fair value through profit or loss amounted to PHP 1.231 billion at year-end 2014, PHP 1.230 billion or -99.9% higher than the PHP 0.001 billion recognized at year-end 2015. These liabilities consist of forward trades initially recognized by the Parent Company as foreign currency payable in 2014 and marked to market value at year-end 2015. Lower value of financial liabilities in 2015 was the result of changing the manner of recording forward trades in compliance with the instruction of Bangko Sentral ng Pilipinas (BSP). Financial liabilities at fair value through profit or loss in 2015 and 2014 were 0.04% and 28.6% of the total liabilities and stockholder’s equity in 2015 and 2014, respectively.

Beneficiaries and other payables decreased by PHP 330.0 million or -64.6% from PHP 511.0 million at year-end 2014 to PHP 181.0 million at year-end 2015 on account of the efficient liquidation of

advanced funds to fulfillment agents during the long holidays in December 2015. Beneficiaries and other payables in 2015 and 2014 were 7.0% and 11.9% of the total liabilities and equity in 2015 and 2014, respectively.

No advances from stockholders were recognized at year-end 2014 and 2015.

Income tax payable decreased by PHP 4.8 million or -76.7% from PHP 6.3 million at year-end 2014 to PHP 1.5 million at year-end 2015. Income tax payable in 2015 and 2014 were 0.06% and 0.14% of the total liabilities and equity in 2015 and 2014 respectively. The decrease in income tax payable was the result of lower revenue realized in 2015.

Interest-bearing loans decreased by PHP 190.0 million or -14.6% from PHP 1.305 billion at year-end 2014 to PHP 1.115 billion at year-end 2015 as a result of lower utilization of bank credit line facilities. Interest-bearing loans in 2015 and 2014 were 43.3% and 30.3% of the total liabilities and stockholder’s equity in 2015 and 2014, respectively.

Non-current liabilities increased by PHP 0.21 million or 5.4% from PHP 3.98 million at year-end 2014 to PHP 4.19 million at year-end 2015 due to the increase in deferred tax liabilities in 2015. No retirement liability was recognized at year-ends 2014 and 2015. Non-current liabilities in 2015 and 2014 were 0.16% and 0.09%of the total liabilities and stockholder’s equity in 2015 and 2014, respectively.

The Company’s stockholders’ equity as of December 31, 2015 stood at PHP 1.275 billion, higher by PHP 24.0 million or 1.9% against the year-end level in 2014 at PHP 1.251 billion. Total stockholders’ equity in 2015 and 2014 were 49.5% and 29.0% of the total liabilities and stockholders’ equity in 2015 and 2014, respectively.

Retained earnings decreased by PHP 7.23 million or -2.9%, from PHP 252.0 million at year-end 2014 to PHP 244.77 million at year-end 2015. The decrease in retained earnings consists of the paid cash dividend to the stockholders of the Parent Company on September 11, 2015 amounting to PHP 19.97 million, offset partly by the recognized net income from operation at PHP 12.74 million in 2015. Retained earnings in 2015 and 2014 were 9.5% and 5.8% of the total liabilities and stockholders’ equity in 2015 and 2014, respectively.

Cumulative translation adjustment’s negative balance increased by PHP 31.5 million or -747.1% from – PHP 4.2 million at year-end 2014 to PHP 27.3 million at year-end 2015.

Treasury stock increased by PHP 1.09 million or 7.8% from –PHP 13.96 million at year-end 2014 to – PHP 15.05 million at year-end 2015. The increase in treasury stock in 2015 represents additional 585,000 treasury shares bought back in 2015 at PHP 1.86 per share. Treasury stock in 2015 and 2014 were -0.6% and -0.3% of the total liabilities and stockholders’ equity in 2015 and 2014, respectively.

Below are the comparative key performance indicators of the Company (Parent Company and subsidiaries):

Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income* over average Return on Equity stockholders’ equity during the 1.0% 0.7% (ROE) period Return on Assets Net income* over average total 0.4% 0.3% (ROA) assets during the period Earnings per Share Net income* over average number 0.02 0.02 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -17% -5% present year over previous year Revenue less total cost of Gross Income 457.2 504.3 services (PHP millions) Total current assets over total Current ratio 1.81 1.34 current liabilities Net income plus depreciation over Solvency ratio 0.02 0.01 total liabilities Solvency ratio Total assets over total liabilities 1.98 1.41 Total stockholders' equity over Solvency ratio 0.98 0.41 total liabilities Total liabilities over total Debt-to equity ratio 1.02 2.44 stockholders’ equity Total assets over total Asset-to-equity ratio 2.02 3.44 stockholders’ equity Interest rate Earnings before interest and taxes 1.83 1.54 coverage ratio over interest expense

* Net Income attributable to equity holders of the Parent Company and Minority Interest. EPS computed using Net Income attributable to equity holders of the Parent Company for the year

ended December 31, 2015 and for the year ended December 31, 2014 are P 0.02 and P 0.02, respectively.

Below are the comparative key performance indicators of the Company’s

subsidiaries:

International Remittance (Canada) Ltd. Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the -52% -31% (ROE) period Return on Assets Net income over average total -13% -13% (ROA) assets during the period Earnings per Share Net income over average number -23.30 -22.72 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -7% -28% present year over previous year Revenue less total cost of Gross Income 73.8 89.3 services (PHP millions)

Lucky Star Management Limited Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the 97% 285% (ROE) period Return on Assets Net income over average total -28% -15% (ROA) assets during the period Earnings per Share Net income over average number -16.62 -9.56 (EPS) of outstanding shares Total transaction value in USD in Sales Growth 15% -4% present year over previous year Revenue less total cost of Gross Income 11.4 12.6 services (PHP millions)

IRemit Global Remittance Limited Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the 132% 296% (ROE) period Return on Assets Net income over average total -22% -21% (ROA) assets during the period Earnings per Share Net income over average number -54.49 -127.38 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -19% -4% present year over previous year Revenue less total cost of Gross Income 65.8 76.5 services (PHP millions)

I-Remit Australia Pty Ltd Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the 3.99% 1.2% (ROE) period Return on Assets Net income over average total 2.0% 0.5% (ROA) assets during the period Earnings per Share Net income over average number 74,467.56 22,010.36 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income 0.3 0.5 services (PHP millions)

Worldwide Exchange Pty Ltd Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the -259% -53% (ROE) period Return on Assets Net income over average total -4% -3% (ROA) assets during the period Earnings per Share Net income over average number -21.38 -14.19 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -14% -11% present year over previous year Revenue less total cost of Gross Income 29.6 33.7 services (PHP millions)

I-Remit New Zealand Limited Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the 17% 25% (ROE) period Return on Assets Net income over average total -14% -16% (ROA) assets during the period Earnings per Share Net income over average number -3,099.81 -4,011.44 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -100% 7% present year over previous year Revenue less total cost of Gross Income - 7.3 services (PHP millions)

IREMIT Remittance Consulting GmbH Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the 12% 27% (ROE) period Return on Assets Net income over average total -240% -62% (ROA) assets during the period Earnings per Share Net income over average number -32.29 -62.64 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income -0.04 -0.05 services (PHP millions)

Power Star Asia Group Limited Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the 9% 14% (ROE) period Return on Assets Net income over average total 9% 14% (ROA) assets during the period Earnings per Share Net income over average number 43.15 60.49 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income 49.4 50.1 services (PHP millions)

K.K. I-Remit Japan Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the 18% 48% (ROE) period Return on Assets Net income over average total 3% -13% (ROA) assets during the period Earnings per Share Net income over average number 796.85 -4,274.29 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -23% 49% present year over previous year Revenue less total cost of Gross Income 23.3 24.6 services (PHP millions)

I-Remittance Singapore Pte. Ltd. Performance Definition Dec. 31, 2015 Dec. 31, 2014 Indicator Net income over average Return on Equity stockholders’ equity during the -16% - (ROE) period Return on Assets Net income over average total -6% - (ROA) assets during the period Earnings per Share Net income over average number -2.43 - (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income -0.06 - services (PHP millions)

2014 compared to 2013

I-Remit realized a consolidated net income of PHP 9.2 million in 2014, a decrease of PHP 44.8 million or -82.9% over the consolidated net income of PHP 54.0 million in 2013. The consolidated net income in 2014 and 2013 were 1.2% and 6.7% of the 2014 and 2013 revenue, respectively.

Revenues decreased by PHP 29.3 million or -3.6% from PHP 802.9 million in 2013 to PHP 773.6 million in 2014 mainly due to the decrease in delivery fees by PHP 4.2 million or -0.7% and decrease in commission and realized foreign exchange gains-net by PHP 25.1 million or -23.0% in 2014. The decrease in delivery fees by PHP 4.2 million or -0.7% from PHP 576.0 million in 2013 to PHP 571.8 million in 2014 was a result of lower transaction count processed by -3.6% from 3.262 million in 2013 to 3.144 million in 2014 and lower transaction value by -4.8% from USD 1.625 billion in 2013 to USD 1.548 billion in 2014 offset partly by the increase in average dollar-to-peso exchange rate from PHP 42.14 in 2013 to PHP 44.41 in 2014. The decrease in realized foreign exchange gains-net by PHP 13.3 million or -9.7% was consequential to the lower volume of USD traded during the period and increase in average foreign exchange rate used in trading from 42.35 in 2013 to 44.33 in 2014. Foreign exchange spread was constant at 0.08 in 2013 and 2014. Other fees increased by PHP 0.07 million or 8.5% from PHP 0. 82 million in 2013 to PHP 0.89 million in 2014 due to increased number of amendments and retrievals recorded in 2014.

Costs of services decreased by PHP 11.8 million or -5.5% from PHP 215.0 million in 2013 to PHP 203.2 million in 2014. Total costs of services in 2014 and 2013 were 26.3% and 26.8% of the 2014 and 2013 revenue, respectively. This decrease was the result of lower remittance volume by 3.6% in 2014 and decrease in fulfillment charges. Bank service rates for bank-to-bank and notify-to-pay decreased significantly by 15-40% which contributed to the decline in cost equivalent to PHP 8.8 million or -4.3% from PHP 204.7 million in 2013 to PHP 195.9 million in 2014. From nine couriers for door-to-door transactions in 2013, the Company had four fulfillment partners only in 2014, thus adding to the decrease in cost by PHP 3.1 million or -29.9% from PHP 10.3 million in 2013 to PHP 7.2 million in 2014.

Net trading gains (losses) increased by PHP 13.5 million or -166.4% from PHP -8.1 million in 2013 to PHP 5.4 million in 2014 due to gains realized by PSAGL on the sale of debt and equity securities in 2014. As the market value of debt securities improved in 2014, unrealized holding losses decreased from PHP 8.9 million in 2013 to PHP 0.9 million in 2014. Net trading gains (losses) were 0.7% and - 1.0% of the 2014 and 2013 revenue, respectively.

Other Income decreased by PHP 7.0 million or -23.2% from PHP 29.9 million in 2013 to PHP22.9 million in 2014. Other income in 2014 and 2013 was 3.0% and 3.7% of the 2014 and 2013 revenue, respectively. The Company recognized an unrealized foreign exchange loss-net of PHP 18.2 million in 2014 compared with the unrealized foreign exchange gains-net of PHP 5.1 million in 2013 consequentially due to a higher closing rate used in the revaluation of foreign currency denominated accounts from 44.395 in 2013 to 44.720 in 2014. Refund of taxes, rent and other service fees correspondingly decreased in 2014.

Total operating expenses ended higher by PHP 26.6 million or 5.3% from PHP 498.7 million in 2013 to PHP 525.3 million in 2014. Total other operating expenses in 2014 and 2013 were 67.9% and 62.1% of the 2014 and 2013 revenue, respectively.

Increase in operating costs was significantly on account of unrealized foreign currency losses recognized in 2014 along with higher rental, professional fees, taxes and licenses, bad debts and business development expenses, which were offset partly by the decrease in retirement, entertainment and representation expenses. The Company recognized an unrealized foreign currency losses amounting to PHP 18.2 million in 2014 from zero amount in 2013 out of revaluating its assets and liabilities at year-end 2014. Rental expense increased by PHP 2.5 million or 3.9% from PHP 63.4 million in 2013 to PHP 65.8 million in 2014 on account of the yearly escalation in the rental of office premises, office equipment and storage areas. Professional fees increased by PHP 1.2 million or 2.4% from PHP 48.3 million in 2013 to PHP 49.5 million in 2014 on account of various professional fees paid by foreign offices for accounting and audit services, payroll maintenance, tax investigation, legal assistance, etc. Taxes and licenses increased by PHP 2.7 million or 24.2% from PHP 11.0 million in 2013 to PHP 13.7 million in 2014 on account of the office council tax and renewal of membership fee paid by IRemit Global Remittance to UK Money Transmitter Association (UKMTA) at PHP 2.6 million. Bad debts increased by PHP 3.8 million or 147.6% from PHP 2.6 million in 2013 to PHP 6.3 million in 2014 due to the write-off of trade receivables deemed worthless and uncollectible. Business development expenses also increased by PHP 2.4 million from PHP 0.08 million in 2013 to PHP 2.5 million in 2014 due to various payments made by the Company for the incorporation of I-Remittance Singapore Pte. Ltd., payments of which include incorporation deposit, professional services, corporate secretarial services, license application and lawyer’s fee with the Monetary Authority of Singapore and annual return filing.

Finance costs increased by PHP 16.0 million or 49.1% from PHP 32.6 million in 2013 to PHP 48.6 million 2014. Finance costs in 2014 and 2013 were 6.3% and 4.1% of the 2014 and 2013 revenue, respectively. Increase in finance cost in 2014 was the result of higher utilization level of bank credit lines. The annual interest rates on the Parent Company’s unsecured, short-term interest-bearing peso- denominated bank loans ranged from 3.15% to 7.125% both in 2014 and 2013.

The total assets of the Company increased by PHP 1.249 billion or 40.8% from PHP 3.059 billion as of December 31, 2013 to PHP 4.308 billion as of December 31, 2014. The increase in total assets comprised of the increase in current assets by PHP 1.238 billion and increase in non-current assets by PHP 10.4 million in 2014.

Total current assets increased by PHP 1.238 billion or 43.3% from PHP 2.862 billion at year-end 2013 to PHP 4.100 billion at year-end 2014. Total current assets in 2014 and 2013 were 95.2% and 93.5% of the total assets in 2014 and 2013, respectively.

Cash and cash equivalents increased by PHP 1.025 billion or 108.7% from PHP 0.943 billion in 2013 to PHP 1.969 billion in 2014 essentially due to the PHP 597.9 million deposit in transit recognized against trade receivables in 2014 and increase in funding requirement due to long holidays in December 2014. Cash and cash equivalents in 2014 and 2013 were 45.7% and 30.8% of the total assets in 2014 and 2013, respectively.

Trade and other receivables-net decreased by PHP 464.5 million or -43.0% from PHP 1.079 billion in 2013 to PHP 0.614 billion in 2014 on account of the PHP 597.9 million deposit in transit recognized as collected and included in the cash in bank account as of December 31, 2014. Trade and other receivables-net in 2014 and 2013 were 14.3% and 35.3% of the total assets in 2014 and 2013, respectively.

Financial assets at fair value through profit or loss amounted to PHP 1.481 billion at year-end 2014 against PHP 0.817 billion at year-end 2013, an increase of PHP 664.2 million or 81.3%. These assets consist of foreign currency receivable arising out of the forward transactions of the Parent Company and investments in debt and equity securities (listed overseas) held for trading by Power Star Asia Group Limited (PSAGL). Foreign currency receivable increased by PHP 661.7 million or 116.1% from PHP 0.570 billion in 2013 to PHP 1.231 billion in 2014 on account of higher USD held for forward trading. Debt and equity securities slightly moved upward by PHP 2.5 million or 1.0% from PHP 247.3 million in 2013 to PHP 249.8 million in 2014. Financial assets at fair value through profit or loss in 2014 and 2013 were 34.4% and 26.7% of the total assets in 2014 and 2013, respectively.

Prepayments and other current assets increased by PHP 13.2 million or 59.2% from PHP 22.3 million in 2013 to PHP 35.5 million in 2014 on account of various advances paid by the Company on computer equipment, advertising and marketing materials, business taxes and installation of multi-layer internet security system. Prepayments and other current assets in 2014 and 2013 were 0.8% and 0.7% of the total assets in 2014 and 2013, respectively.

Total non-current assets increased by PHP 10.4 million or 5.3% from PHP 197.6 million at year-end 2013 to PHP 208.0 million at year-end 2014. Total non-current assets in 2014 and 2013 were 4.8% and 6.5% of the total assets in 2014 and 2013, respectively.

The increase was contributed largely by the increase in other non-current assets by PHP 9.9 million or 32.9% which comprised of increases in refundable deposits by PHP 8.7 million and input VAT receivable by 1.2 million. Significantly on refundable deposits, International Remittance (Canada) Ltd. paid the sum of CAD 150,000 to Royal Bank of Canada representing security deposit for its forward trade activities while the Company paid additional deposits on rented office premises simultaneous with the yearly 10% escalation in rent, office equipment and storage areas. Other non-current assets in 2014 and 2013 were 0.9% and 1.0% of the total assets in 2014 and 2013 respectively.

Investment in an associate increased by PHP 1.3 million or 21.2% from PHP 6.2 million at year-end 2013 to PHP 7.5 million at year-end 2014 which represents share on equity income from Hwa Kung Hong & Co., Ltd. Investment in an associate in 2014 and 2013 was constant at 0.2% of the total assets in 2014 and 2013, respectively.

Property and equipment-net decreased by PHP 1.8 million or -6.7% from PHP 27.1 million at year-end 2013 to PHP 25.3 million at year-end 2014. Property and equipment-net in 2014 and 2013 were 0.6% and 0.9% of the total assets in 2014 and 2013, respectively.

Intangible assets-net increased by PHP 0.2 million or 0.2% from PHP 112.1 million at yer-end 2013 to PHP 112.3 million at year-end 2014 due to the amortization of patents. Intangible assets in 2013 and 2014 were 2.6% and 3.7% of the total non-current assets in 2014 and 2013, respectively.

Retirement asset decreased by PHP 0.4 million or -3.9% from PHP 11.2 million at year-end 2013 to PHP 10.8 million at year-end 2014 as a result of the latest actuarial valuation of the Parent Company's retirement fund based on the revised provisions of PAS 19. Retirement asset in 2014 and 2013 were 0.2% and 0.4% of the total assets in 2014 and 2013, respectively.

Deferred tax asset increased by PHP 1.2 million or 10.8% from PHP 11.0 million at year-end 2013 to PHP 12.2 million at year-end 2014 on account of higher accrual of expenses towards the end of December 31, 2014. Deferred tax asset in 2014 and 2013 were 0.3% and 0.4% of the total assets in 2014 and 2013, respectively.

Total liabilities increased by PHP 1.265 billion or 70.6% from PHP 1.792 billion at year-end 2013 to PHP 3.057 billion at year-end 2014. The increase in total liabilities comprised of the increases in current liabilities by PHP 1.265 billion and in non-current liabilities by PHP 0.5 million. Total liabilities in 2014 and 2013 were 71.0% and 58.6% of the total liabilities and equity in 2014 and 2013, respectively.

Total current liabilities increased by PHP 1.265 billion or 70.7% from PHP 1.788 billion at year-end 2013 to PHP 3.053 billion at year-end 2014. Total current liabilities in 2014 and 2013 were 70.9% and 58.5% of the total liabilities and equity in 2014 and 2013, respectively.

Beneficiaries and other payables increased by PHP 296.3 million or 138.0% from PHP 214.7 million at year-end 2013 to PHP 511.0 million at year-end 2014 on account of the long holidays in December 2014. Funds for the fulfillment of remittances were advanced by or to fulfillment agents subject to reimbursement or liquidation. Beneficiaries and other payables in 2014 and 2013 were 11.9% and 7.0% of the total liabilities and equity in 2014 and 2013, respectively.

Financial liabilities at fair value through profit or loss amounted to PHP 1,231.4 million at year-end 2014 against PHP 569.6 million at year-end 2013, an increase of PHP 661.8 million or 116.2%. Financial liabilities at fair value through profit or loss in 2014 and 2013 were 28.6% and 18.6% of the total liabilities and stockholder’s equity in 2014 and 2013, respectively. These liabilities consist of foreign currency payables arising out of the forward transactions of the Company which increased on account of higher USD held for forward trading.

Advances from stockholders in the amount of PHP 7.3 million as at year-end 2013 were paid off in 2014.

Income tax payable decreased by PHP 2.7 million or -30.2% from PHP 8.9 million at year-end 2013 to PHP 6.2 million at year-end 2014. Income tax payable in 2014 and 2013 were 0.1% and 0.3% of the total liabilities and equity in 2014 and 2013 respectively. The decrease in income tax payable was the result of lower revenue realized in 2014.

Interest-bearing loans increased by PHP 317.0 million or 32.1% from PHP 988.0 million at year-end 2013 to PHP 1.305 billion at year-end 2014. The Parent Company availed of additional unsecured bank loans towards year-end 2014 to facilitate the fulfillment of remittances on long holidays in December 2014. Interest-bearing loans in 2014 and 2013 were 30.3% and 32.3% of the total liabilities and stockholder’s equity in 2014 and 2013, respectively.

Non-current liabilities increased by PHP 0.54 million or 15.6% from PHP 3.44 million at year-end 2013 to PHP 3.98 million at year-end 2014. The increase in non-current liabilities was attributable to the increase in deferred tax liabilities, which in 2014 and 2013 were constant at 0.1% of the total liabilities and stockholder’s equity in 2014 and 2013, respectively.

The Company’s stockholders’ equity as of December 31, 2014 stood at PHP 1.251 billion, lower by PHP 16.6 million or -1.3% against the year-end 2013 level of PHP 1.267 billion. Total stockholders’ equity in 2014 and 2013 were 29.0% and 41.4% of the total liabilities and stockholders’ equity in 2014 and 2013, respectively.

Retained earnings decreased by PHP 21.4 million or -7.8%, from PHP 273.4 million at year-end 2013 to PHP 252.0 million at year-end 2014. The decrease in retained earnings consists of the paid cash dividend to the stockholders of the Parent Company on September 17, 2014 amounting to PHP 30.6 million offset partly by the recognized net income from operation at PHP 9.2 million in 2014. Retained earnings in 2014 and 2013 were 5.8% and 8.9% of the total liabilities and stockholders’ equity in 2014 and 2013, respectively.

Cumulative translation adjustment’s negative balance decreased by PHP 5.2 million or -55.2% from - PHP 9.4 million at year-end 2013 to -PHP 4.2 million at year-end 2014.

Treasury stock increased by PHP 1.56 million or 12.6% from -PHP 12.4 million at year-end 2013 to - PHP 13.96 million at year-end 2014. The increase in treasury stock in 2014 represents additional 600,000 treasury shares bought back in 2014 at PHP 1.56 million. Treasury stock in 2014 and 2013 were -0.3% and -0.4% of the total liabilities and stockholders’ equity in 2014 and 2013, respectively.

Below are the comparative key performance indicators of the Company (Parent Company and subsidiaries):

Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income* over average Return on Equity stockholders’ equity during the 0.7% 4% (ROE) period Return on Assets Net income* over average total 0.3% 2% (ROA) assets during the period Earnings per Share Net income* over average number 0.02 0.09 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -5% -1% present year over previous year Revenue less total cost of Gross Income 504.3 587.9 services (PHP millions) Total current assets over total Current ratio 1.34 1.60 current liabilities Net income plus depreciation over Solvency ratio 0.01 0.04 total liabilities Solvency ratio Total assets over total liabilities 1.41 1.71 Total stockholders' equity over Solvency ratio 0.41 0.71 total liabilities Total liabilities over total Debt-to equity ratio 2.44 1.41 stockholders’ equity Total assets over total Asset-to-equity ratio 3.44 2.41 stockholders’ equity Interest rate Earnings before interest and taxes 1.54 3.44 coverage ratio over interest expense

* Net Income attributable to equity holders of the Parent Company and Minority Interest. EPS computed using Net Income attributable to equity holders of the Parent Company for the year

ended December 31, 2014 and for the year ended December 31, 2013 are P 0.02 and P 0.09, respectively.

Below are the comparative key performance indicators of the Company’s

subsidiaries:

International Remittance (Canada) Ltd. Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the -31% -6% (ROE) period Return on Assets Net income over average total -13% -2% (ROA) assets during the period Earnings per Share Net income over average number -22.72 -5.02 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -28% 12% present year over previous year Revenue less total cost of Gross Income 89.3 103.2 services (PHP millions)

Lucky Star Management Limited Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the 285% -162% (ROE) period Return on Assets Net income over average total -15% -15% (ROA) assets during the period Earnings per Share Net income over average number -9.56 -12.37 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -4% 12% present year over previous year Revenue less total cost of Gross Income 12.6 11.3 services (PHP millions)

IRemit Global Remittance Limited Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the 296% -3574% (ROE) period Return on Assets Net income over average total -21% -2% (ROA) assets during the period Earnings per Share Net income over average number -127.38 -16.13 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -4% -5% present year over previous year Revenue less total cost of Gross Income 76.5 87.0 services (PHP millions)

I-Remit Australia Pty Ltd Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the 1.2% 3.1% (ROE) period Return on Assets Net income over average total 0.5% 1.4% (ROA) assets during the period Earnings per Share Net income over average number 22,010.36 60,330.36 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income 0.5 0.5 services (PHP millions)

Worldwide Exchange Pty Ltd Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the -53% -36% (ROE) period Return on Assets Net income over average total -3% -4% (ROA) assets during the period Earnings per Share Net income over average number -14.19 -15.76 (EPS) of outstanding shares Total transaction value in USD in Sales Growth -11% -9% present year over previous year Revenue less total cost of Gross Income 33.7 35.5 services (PHP millions)

I-Remit New Zealand Limited Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the 25% 10% (ROE) period Return on Assets Net income over average total -16% -10% (ROA) assets during the period Earnings per Share Net income over average number -4,011.44 -1,306.69 (EPS) of outstanding shares Total transaction value in USD in Sales Growth 7% 23% present year over previous year Revenue less total cost of Gross Income 7.3 7.0 services (PHP millions)

IREMIT Remittance Consulting GmbH Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the 27% 27% (ROE) period Return on Assets Net income over average total -62% -24% (ROA) assets during the period Earnings per Share Net income over average number -62.64 -47.37 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - -79% present year over previous year Revenue less total cost of Gross Income -0.05 0.3 services (PHP millions)

Power Star Asia Group Limited Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the 14% 14% (ROE) period Return on Assets Net income over average total 14% 14% (ROA) assets during the period Earnings per Share Net income over average number 60.49 49.85 (EPS) of outstanding shares Total transaction value in USD in Sales Growth - - present year over previous year Revenue less total cost of Gross Income 50.1 54.5 services (PHP millions)

K.K. I-Remit Japan Performance Definition Dec. 31, 2014 Dec. 31, 2013 Indicator Net income over average Return on Equity stockholders’ equity during the 48% 71% (ROE) period Return on Assets Net income over average total -13% -57% (ROA) assets during the period Earnings per Share Net income over average number -4,274.29 -121,072.44 (EPS) of outstanding shares Total transaction value in USD in Sales Growth 49% 552% present year over previous year Revenue less total cost of Gross Income 24.6 5.1 services (PHP millions)

The Company is not aware of any known trends, commitments, events or uncertainties that will have a material impact on the Company’s liquidity. The Company has not defaulted in paying its currently maturing obligations. In addition, obligations of the Company are guaranteed up to a certain extent by the Company’s majority stockholders.

The Company is not aware of any events that will trigger a direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation.

There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons created during the reporting period.

The Company has no material commitments for capital expenditures.

Except as discussed above, the Company is not aware of any trends, events or uncertainties that have had or that are reasonably expected to have a material favorable or unfavorable impact on sales, revenues or income from continuing operations.

Except as discussed above, there are no other significant elements of income or loss that did not arise from the Company’s continuing operations.

There are no seasonal aspects that had a material effect on the financial condition or results of operations.

The Company does not expect any purchase of significant equipment in the next twelve (12) months.

The Company does not expect any significant changes in the number of employees in the next twelve (12) months.

Item 7. Financial Statements

The consolidated financial statements and schedules listed in the accompanying Index to Financial Statements and Supplementary Schedules are filed as part of this Form 17-A.

Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

I-Remit and its subsidiaries had no disagreement with the auditors on any matter of accounting principles or practices, financial statements disclosure, or auditing scope or procedure as of December 31, 2016, December 31, 2015 and December 31, 2014.

Appointment of and Review of the Performance of the External Auditor

The Board of Directors and the stockholders approve the Audit Committee’s recommendation for the appointment and the review of the performance of the external auditors. In appointing its external auditors, the Company considers the technical competence, training, experience and professional reputation of the audit firm’s partners and staff, its capacity to perform the requirements of the audit engagement, its correspondent and other professional relationships with reputable firms in other jurisdictions, and the general reputation of the firm for integrity and efficiency.

Pursuant to the General Requirements of SRC Rule 68, Par. 3 (Qualifications and Reports of Independent Auditors), I-Remit engaged the services of R.S. Bernaldo & Associates (RSBA) (BOA/PRC Reg. No. 0300; SEC Group A Accreditation No. 0153-FR-2) for the audit of the Group’s and Parent Company’s financial statements which comprise the statements of financial position as of December 31, 2016 and 2015, December 31, 2015 and 2014, and the statements of income, changes in equity, and cash flows for each of the three (3) years in the period ended December 31, 2016 and December 31, 2015.

R.S. Bernaldo & Associates (a correspondent firm of Panell Kerr Forster International) has served as the Company’s external auditors since 2012. Romeo A. De Jesus, Jr. (CPA Certificate No. 86071; SEC Group A Accreditation No. 1135-AR-1), partner, is the audit partner assigned for the Company from 2015 to 2016. Rosario S. Bernaldo (CPA Certificate No. 25927; SEC Group A Accreditation No. 1192-A), managing partner, is the audit partner for the Company from 2012 to 2014.

External Audit Fees and Services

For the audit of the Group and Parent Company’s annual financial statements and services provided in connection with statutory and regulatory filings or engagements, the aggregate amounts to be billed/billed, exclusive of value-added tax (VAT) and out-of-pocket expenses, by RSBA amounts to PHP 600,000, PHP 600,000, and PHP 600,000 for 2016, 2015, and 2014, respectively.

RSBA did not render professional services for tax accounting, compliance, advice, planning and any other form of tax services.

RSBA did not provide products and services other than the services reported above.

The Company’s Board of Directors approved the audit fees as recommended by the Audit Committee and the Management Committee.

Changes in Accounting Policies

The Philippine Financial Reporting Standards Council (PFRSC) approved the issuance of new and revised Philippine Financial Reporting Standards (PFRS). The term “PFRS” in general includes all applicable PFRS, Philippine Accounting Standards (PAS), and Interpretations issued by the Philippine Interpretations Committee (PIC), Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) approved by the PFRSC and adopted by the SEC.

These new and revised PFRS prescribe new accounting recognition, measurement and disclosure requirements applicable to the Group. When applicable, the adoption of the new standards was made in accordance with their transitional provisions, otherwise the adoption is accounted for as change in accounting policy under PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors.

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of the following new and revised PFRS.

The following new and revised PFRSs have been adopted in the consolidated financial statements. The application of these new and revised PFRS has not had any material impact on the amounts reported for the current and prior years but may affect the accounting of future transactions or arrangements:

• Amendments to PFRS 10, PFRS 12 and PAS 28, 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 of its subsidiaries at fair value.

In addition, it clarifies that a subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity.

And, an investment entity measuring all of its subsidiaries at fair value shall provide the disclosures relating to investment entities as required by PFRS 12.

The amendments are effective for annual periods beginning on or after January 1, 2016 and must be applied retrospectively. Earlier application is permitted.

• PFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations

Amendments in PFRS 11 require an acquirer of an interest in a joint operation in which the activity constitutes a business to apply the accounting principles and disclosure requirements in PFRS 3 and other PFRS for business combinations. This is applicable in initial acquisition and acquisition of initial interest in a joint operation. This is applicable prospectively to annual periods beginning January 1, 2016.

• PFRS 14, Regulatory Deferral Accounts

PFRS 14 issued on January 30, 2014, provides temporary guidance for first-time adopters of PFRS on accounting for regulatory deferral account balances. Regulatory deferral account balances are describe as amounts of expense or income that would not be recognized as assets or liabilities in accordance with other Standards, but that qualify to be deferred because the amount is included, or is expected to be included, by the rate regulator in establishing the price(s) that an entity can charge to customers for rate-regulated goods or services.

PFRS 14 permits an entity that adopts PFRS to continue to use, in its first and subsequent PFRS financial statements, its previous generally accepted accounting principles (GAAP) accounting policies for the recognition, measurement, impairment, and derecognition of regulatory deferral account balances without specifically considering the requirements of paragraph 11 of PAS 8. PFRS 14 requires entities to present regulatory deferral account balances as separate line items in the statement of financial position and to present movements in those account balances as separate line items in the statement of profit or loss and other comprehensive income. PFRS 14 also requires specific disclosures to identify the nature of, and risks associated with, the rate regulation that has resulted in the recognition of regulatory deferral account balances in accordance with this Standard.

PFRS 14 is effective for a period beginning on or after January 1, 2016. Earlier application is permitted.

• Amendments to PAS 1, Disclosure Initiative

The amendments clarify that information should not be obscured by aggregating or by providing immaterial information. Materiality considerations shall apply to all parts of the financial statements even if when a standard requires a specific disclosure.

In addition, the amendments introduce a clarification that the list of line items to be presented in the statement of financial position and statement of comprehensive income can be disaggregated and aggregated as relevant. Also, it clarifies that an entity's share of other comprehensive income (OCI) of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss.

Further, the amendments add additional examples of possible ways of ordering the notes to clarify

that understandability and comparability should be considered when determining the order of the notes. The IASB also removed guidance and examples with regard to the identification of significant accounting policies that were perceived as being potentially unhelpful.

The amendments are effective beginning on or after January 1, 2016. Earlier application permitted.

• PAS 16, Property, Plant and Equipment and PAS 38, Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortization

The amendments clarify that revenue-based depreciation is not appropriate for property, plant and equipment. Revenue-based amortization is allowed only when the intangible assets are expressed as a measure of revenue or when it can be demonstrated that revenue and the consumption of economic benefits of the intangible asset are highly correlated. This is effective prospectively from January 1, 2016. Earlier application is permitted.

• PAS 16, Property, Plant and Equipment and PAS 41, Agriculture – Bearer Plants

The amendments include bearer plants, which are living plants that are used in the production or supply of agricultural produce over a several periods and has a remote likelihood of being sold as agricultural produce, to be within the scope of PAS 16 instead of PAS 41 and consequently be accounted for in the same way as property, plant and equipment. However, the produce growing on bearer plants will remain within the scope of PAS 41. The amendments are applicable for annual periods beginning on or after January 1, 2016. Earlier application is permitted.

• PAS 27, Separate Financial Statements – Equity Method in Separate Financial Statements

The amendments in PAS 27 permit an entity to account its investments in subsidiaries, joint ventures and associates using the equity method as described in PAS 28 in its separate financial statements. The amendments shall be applied for annual periods beginning January 1, 2016 retrospectively. Earlier application is permitted.

• Improvements to PFRS (2014) – Effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted.

PFRS 5, Non-current Assets Held for Sale and Discontinued Operations – The amendments require that an asset reclassified directly from being held for sale to being held for distribution, or directly from being held for distribution to being held for sale, the requirements for classification, presentation and measurement shall continue to be applied in accordance with this standard.

PFRS 7, Financial Instruments: Disclosure – The amendments clarify that the right to service a financial asset transferred may be retained for a fee that is included in the servicing contract. The right to earn a fee for servicing the financial asset is generally continuing involvement for the purpose of applying the disclosure requirements. The service contract must be assessed to determine whether there is a continuing involvement in the financial asset transferred.

Further, the additional disclosure required by amendments to PFRS 7, Disclosure – Offsetting Financial Assets and Financial Liabilities is not specifically required for all interim periods. For condensed financial interim financial statements, the disclosure requirements are required to be given if the financial statements are prepared in accordance with PAS 34, Interim Financial Reporting when the inclusion would be required by the standard.

PAS 19, Employee Benefits – It clarifies that the high quality corporate bonds used to estimate the discount rate for post-employment benefit obligations should be denominated in the same currency as the liability and that the depth of the market for high quality corporate bonds should be assessed at the currency level.

PAS 34, Interim Financial Reporting – It clarifies that information shall be disclosed either in the notes to the interim financial statements or elsewhere in the interim financial report, by incorporating cross-reference from the interim financial statements to the other part of the interim financial report which is available to users on the same terms as the interim financial statements and at the same time.

• PIC Q&A No. 2015-01 Conforming Changes in PIC Q&As – Cycle 2015

This Q&A No. 2015-01 sets out the amendments to certain PIC Q&As. These changes are made as a consequence of the issuance of new Philippine Financial Reporting Standards (PFRS) and amendments to certain existing PFRS that are effective as of January 1, 2013.

The effective date of the amendments is included in the Q&As affected.

• PIC Guidance on Financial Reporting.

This guidance is issued to help preparers of financial statements identify and address some of the common pitfalls and difficult interpretative issues arising from application of PAS 7, Statement of Cash Flows.

The Group will adopt the following standards and interpretations enumerated below when they become effective. Except as otherwise indicated, the Group does not expect the adoption of these new and amended PFRS to have significant impact on the consolidated financial statements.

Standard Adopted by the PFRSC and Approved by the Board of Accountancy (BOA):

• PFRS 9, Financial Instruments (2014)

PFRS 9, amended on July 24, 2014, made limited amendments to the requirements for classification and measurement of financial assets and requirements for impairment.

The amendments introduce a ‘fair value through other comprehensive income measurement category for particular simple debt instruments. Also, it introduced impairment requirements relating to the accounting for an entity’s expected credit losses on its financial assets and commitments to extend credit. These requirements eliminate the threshold that was in PAS 39 for the recognition of credit losses. Under the impairment approach in PFRS 9 it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses, and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition and, consequently, more timely information is provided about expected credit losses.

PFRS 9 supersedes PFRS 9 (2009), PFRS 9 (2010) and PFRS 9 (2013) and is effective retrospectively for annual periods beginning on or after January 1, 2018, with earlier application permitted.

• 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 clarify the treatment of the sale or contribution of assets between an investor and its associate and joint venture. This requires an investor in its financial statements to recognize in full the gains and losses arising from the sale or contribution of assets that constitute a business while recognize partial gains and losses if the assets do not constitute a business (i.e. up to the extent only of unrelated investor share).

On January 13, 2016, the FRSC decided to postpone the original effective date of January 1, 2016 of the said amendments until the IASB has completed its broader review of the research project on equity accounting that may result in the simplification of accounting for such transactions and of other aspects of accounting for associates and joint ventures.

• PFRS 16, Leases

Introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments.

On the other hand, it substantially carries forward the lessor accounting requirements in PAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.

Effective for annual periods beginning on or after January 1, 2019, however, earlier application is not permitted until the FRSC has adopted the new revenue recognition standard.

Currently, the result will be an increase in recognized assets and liabilities and more lease expenses recognized in the early periods of a lease and less in the later periods. Further impact of this standard will be assessed by the Company once it becomes effective.

• IFRIC 15, Agreements for the Construction of Real Estate

The Interpretation addresses how entities should determine whether an agreement for the construction of real estate is within the scope of PAS 11, Construction Contracts, or PAS 18, Revenue, and when revenue from the construction of real estate should be recognized. The requirements have not affected the accounting for the Company’s construction activities.

Effectivity of this interpretation has been deferred until the final Revenue standard is issued by International Accounting Standards Board (IASB), and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed.

• Amendments to PAS 7, Disclosure Initiative

The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash charges.

Effective for annual periods beginning on or after January 1, 2017 and shall be applied prospectively, with earlier application permitted.

• Amendments to PAS 12, Recognition of Deferred Tax Assets for Unrealized Losses

The amendments clarify that unrealized losses on debt instruments measured at fair value in the financial statements but at cost for tax purposes can give rise to deductible temporary differences.

In addition, these clarify that the carrying amount of an asset does not limit the estimation of probable future taxable profits and that when comparing deductible temporary differences with future taxable profits, the future taxable profits excludes tax deductions resulting from the reversal of those deductible temporary differences.

Effective for annual periods beginning on or after January 1, 2017 and shall be applied retrospectively, with earlier application permitted.

Standard Adopted by the PFRSC but pending for Approval of the BOA:

• Amendments to PAS 2, Classification and Measurement of Share-based Payment Transactions

The amendments clarify the accounting for the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and modification to the terms and conditions of share-based payment transactions that will result to change in classification from cash-settled to equity-settled.

The amendments are effective for annual periods beginning on or after January 1, 2018. Retrospective application is permitted if elected for all of the aforementioned amendments and other criteria are met.

• PIC Q&A No. 2016-02, PAS 32 and PAS 38 – Accounting Treatment of Club Shares Held by an Entity

A non-proprietary club share, though an equity instrument in its legal form, is not an equity instrument in the context of PAS 32. Furthermore, it does not entitle the holder to a contractual right to receive cash or another financial asset from the issuing corporation. The holder of the share, in substance, only paid for the privilege to enjoy the club facilities and services but not for ownership of the club. In such case, the holder must account for the share as an intangible asset under PAS 38.

PART III. CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Issuer

(A) Directors, Executive Officers, Promoters and Control Persons

(1) Directors, Including Independent Directors and Control Persons

Bansan C. Choa, 63, Filipino Director, Chairman and Chief Executive Officer Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such August 16, 2002 to date

Mr. Choa has served as Chairman and Chief Executive Officer of I-Remit, Inc. since 2005, Vice Chairman from 2002 to 2004 and has been a Director since 2002. He is involved in various businesses in the manufacturing, and construction and property development sectors. He currently holds the following positions: Chairman, Confed Properties, Inc. (1991 to date); Chairman, Surewell Equities, Inc. (2001 to date); Director and Chairman of Loan Committee, Sterling Bank of Asia, Inc. (A Savings Bank) (2007 to date); President, Philippine Retirement, Inc. (2009 to date); Treasurer, Six Alps Corporation (1997 to date); Treasurer, Banwood Construction Center, Inc. (1976 to date); Chairman, Flexi Woodworks, Inc. (1991 to date); Chairman, Sure Fortune Properties, Inc. (2001 to date); Chairman, Ferris Sobell Properties, Inc. (2011 to date); Chairman, Merrytown Properties Corporation (2013 to date); and, Chairman, OLGC Psychological Services (2001 to date). He is also a President of Bleaushea Properties Corporation (2014 to present).

Mr. Choa is a licensed real estate broker (Professional Regulation Commission License No. 00002), appraiser (Professional Regulation Commission License No. 00002), and real estate consultant (Professional Regulation Commission License No. 00002). He is a certified public accountant (Professional Regulation Commission License No. 030924). He is active in the real property development and property management field and has served and continues to hold board and officer positions in housing and real property development organizations including the Organization of Socialized Housing Developers of the Philippines as President (2008 to 2009), Board Member (2000 to 2008) and Board Adviser (2009 to date), and; Subdivision and Housing Developers Association as Board Governor (2000 to 2001), (2006 to 2007), Treasurer (2001 to 2002 and 2003 to 2004), Auditor (2002 to 2003), First Vice President (2007 to 2008), Chairman (2004 to 2005), Board Adviser (2005 to 2006), President (2009 to 2010), and Board Advisor (2009 to date); Grandeur Realty Specialists, Inc. as Chairman (1995 to 2001); Multi Dealers Inc. as President (1987 to 1990); and, Gold Palm Properties, Inc. as Vice President (1989 to 1996). Mr. Choa also holds the position of Treasurer for the following companies: Tri- B Construction and Industrial Corporation (1979 to 1989), and Banner International Corp. (1984 to 1989). He is also the Chairman of the Board of Trustees of Kassel Condominium Corporation (2001 to date). Mr. Choa is a member of the National Real Estate Association since 1998 and a Board Member of the Professional Regulation Commission on Real Estate Service (2010 to 2012).

He was one of the finalists of the 2006 Entrepreneur of the Year award of the Ernst & Young global accounting firm. He was a nominee for Global Filipino Executive of the Year in the 2011 Asia CEO Awards Philippines. He is also the Chairman of the Board of Trustees since 2002 of the Kabalikat ng Migranteng Pilipino, Inc. (KAMPI), a non-stock non-profit organization serving overseas Filipino workers.

Mr. Choa obtained his master in business administration degree from the Ateneo de Manila University Graduate School of Business in 1985 and his bachelor’s degree in commerce from the De La Salle University in 1974. He is a member of the Philippine Institute of Certified Public Accountants (PICPA) since 1976. He was connected with the accounting firm of SyCip Gorres Velayo & Co. from 1974 to 1976. He has also completed a course of study in housing finance of The Wharton Real Estate Center of the University of Pennsylvania (USA) in 2014.

Harris D. Jacildo, 55, Filipino Director, President & Chief Operating Officer Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such August 8, 2002 to date

Mr. Jacildo joined I-Remit, Inc. as Executive Vice President and Chief Operating Officer in February 2002. He has been a Director and the President and Chief Operating Officer of the Company since April 2002. He also currently holds the following positions: Director, Sterling

Bank of Asia, Inc. (A Savings Bank) (2007 to date), Lucky Star Management Ltd. (Hong Kong) (2003 to date), IRemit Global Remittance Limited (United Kingdom) (2003 to date), I-Remit New Zealand Ltd. (2011 to date), I-Remittance Singapore Pte. Ltd. (2014 to date) and Worldwide Exchange Pty. Ltd. (2015 to date).

He is also a Trustee of the Kabalikat ng Migranteng Pilipino, Inc. (KAMPI) (2003 to date), a non-stock non-profit organization serving overseas Filipino workers.

Prior to joining I-Remit, he spent 20 years in the banking industry where he was initially working in the field of information technology while employed by the Pacific Banking Corporation (1982 to 1985). In 1985, he joined the remittance division of the Rizal Commercial Banking Corporation (RCBC) where he was a Systems Analyst until 1991 and was the head of its TeleMoney Asia-Pacific operations until 2002.

Mr. Jacildo obtained his bachelor of science in applied economics degree from the De La Salle University in 1982. He also completed the basic management program of the Asian Institute of Management in 1991 and completed two years in the school of law in the Ateneo de Manila University (1982 to 1984).

Gilbert C. Gaw, 67, Filipino Director Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such August 16, 2002 to date

Mr. Gaw has been a Director of I-Remit, Inc. since 2002. He has a business engaged in steel manufacturing. He is currently a partner of JPSA Global Services (2003 to date), and a Director of Treasure Steelworks Corporation (2004 to date) and Zhangzhou Stronghold Steel Works Co., Ltd. (China) (2003 to date). His past work experiences include: President and General Manager of Philshine Industrial Corp. (1982 to 2001); Plant Manager of Seton Industrial Corp. (1980 to 1982); Partner in Harden Pipe Trading Co. (1975 to 1978); Sales in Union Hardware (1969 to 1975); and, Trainee – Purchasing in D. P. Marketing Co. (1967 to 1969).

He obtained his bachelor of science in electronics and communications engineering degree from the University of the East in 1973. He also took a vocational course in Samson Technical School in 1962. Mr. Gaw obtained his bachelor of theology degree in the Biblical Seminary of the Philippines (1978 to 1980) and MSC at UPISSI at the University of the Philippines in 1982.

A. Bayani K. Tan, 61, Filipino Director Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such May 18, 2007 to date

Atty. Tan was the Corporate Secretary of I-Remit, Inc. from 2001 until 2004 and has been a Director since May 2007. He is currently a Director and Corporate Secretary of the following reporting companies: First Abacus Financial Holdings Corporation (1994 to date); TKC Steel Corporation (2007 to date); Tagaytay Highlands International Golf Club, Inc. (1993 to date); Destiny Financial Plans, Inc. (2003 to date); Asia United Bank Corporation (June 2014 to date as a Director and February 2014 to date as a Corporate Secretary); and, Discovery World (2013 to date as Director and 2003 to date as Corporate Secretary). He is also a Director of Premium Leisure Corp. (1993 to date).

Atty. Tan has also been a Corporate Secretary and a Director of Sterling Bank of Asia, Inc. (A Savings Bank) (2009 to date as a Director and 2006 to date as a Corporate Secretary); FHE Properties, Inc. (1995 to date); Club Asia, Inc. (1999 to date); City Cane Corporation (1993 to date); Belle Bay Plaza Corporation (1996 to date); Campanilla Mineral Resources, Inc. (2011 to date); Foundation Capital Resources, Inc. (2011 to date); Mandalore Manila Bay Dev’t Corp. (2012 to date); SCT Electro Component Corp. (1988 to date); SCT Furnishing Corporation (1977 to date); Loto Pacific Leisure Corporation (2010 to date as a Director and 2007 to date as a Corporate Secretary); S.C. Tan Export Corporation (1985 to date as a Director and 1977 to date as a Corporate Secretary); Sinophil Leisure & Resorts Corp. (2010 to date as a Director and 2008 to date as a Corporate Secretary); Yoshita Corporation (1995 to date as a Director and 1994 to date as a Corporate Secretary); and, Sinophil Leisure and Resorts Corp. (2010 to date as a Director and 2008 to date as a Corporate Secretary).

He is also a Director for the following private companies: Destiny LendFund, Inc. (2005 to

date); Coal Asia Holdings, Inc. (2012 to date); Metropolitan Leisure & Tourism Corp. (1996 to date); Parallax Resources, Inc. (2001 to date); SLW Development Corporation (2001 to date); Yehey! Money, Inc. (2001 to date); Pascual Laboratories, Inc. (2014 to date); Northpond Holdings and Development Corporation (2000 to date); Yek Holdings, Inc. (1995 to date); T&V Realty Holdings, Inc. (1997 to date); Premium Leisure & Amusement, Inc. (2015 to date); and Pure Energy Holdings Corporation (2016 to date).

Atty. Tan is the Chairman and President of Trifels, Inc. (1989 to date). He is the Corporate Secretary of the following companies: Belle Corporation (1994 to date); Pacific Online Systems Corporation (2007 to date); Vantage Equities, Inc. (1993 to date); Philequity Fund, Inc. (1997 to date); Philequity Peso Bond Fund, Inc. (2000 to date); Philequity Dollar Income Fund, Inc. (1999 to date); Philequity PSE Index Fund, Inc. (1999 to date); Philequity Balanced Fund, Inc. (2010 to date); Philequity Dividend Yield Fund, Inc. (2013 to date); Tagaytay Midlands Golf Club, Inc. (1997 to date); The Country Club at Tagaytay Highlands, Inc. (1995 to date); The Spa and Lodge at Tagaytay Highlands, Inc. (1999 to date); E-Business Services, Inc. (2001 to date); Hella-Phil., Inc. (1992 to date); JTKC Equities, Inc. (1998 to date); Goodyear Steel Pipe Corporation (1999 to date); Star Equities Inc. (2006 to date); Tera Investments, Inc. (2001 to date); The Discovery Leisure Company, Inc. (2001 to date); Karen Marie L. Ty Foundation, Inc. (2005 to date); Aldex Realty Corporation (1998 to date); British Wire Industries Corporation (1998 to date); Cay Islands Corporation (2008 to date); Dakota Residences Condominium Corporation (2011 to date); Demikk Holdings, Inc. (1998 to date); Demikk Realty, Inc. (1998 to date); Dining Systems Inc. (1998 to date); Discovery Country Suites, Inc. (2004 to date); Discovery Fleet Corporation (2012 to date); Donau Deli, Inc. (2001 to date); Donau Gourmet, Inc. (2007 to date); Goodway Marketing Corp. (1999 to date); Hotel Systems Asia, Inc. (1998 to date); International Interiors, Inc. (1998 to date); JT Perle Corporation (2007 to date); JTKC Land, Inc. (2003 to date); Lucky Circle Corporation (2008 to date); More Coal Corporation (2008 to date); More Minerals Corporation (2008 to date); More Oil & Gas Corporation (2008 to date); More Reedbank Corporation (2008 to date); Oakridge Properties, Inc. (1998 to date); One Cerrada Corporation (2007 to date); One Urdaneta Corporation (2010 to date); Palawan Cove Corporation (2008 to date); Philequity Foreign Currency Fixed Income Fund, Inc. (2010 to date); Philequity Strategic Growth Fund, Inc. (2008 to date); Philequity Resources Fund, Inc. (2010 to date); Philippine Calcium Industries Co., Inc. (1999 to date); Philippine Creative Licensing Group, Inc. (1998 to date); Sonoran Corporation (2008 to date); Union Pacific Ace Industries, Inc. (1998 to date); eBiz Financial Services, Inc. (2007 to date) and, Philippine Jesuit Aid Association, Inc. (2011 to date).

He also holds the following positions: a Trustee and Corporate Secretary of Wellington Dee Ty Foundation, Inc. (2004 to date); a Trustee and Treasurer (2013 to date) of Rebisco Foundation, Inc.; a Trustee and Corporate Secretary (2011 to date) of St. Scholastica’s Hospital, Inc.; a Trustee (2013 to date) of Wills International Foundation, Inc.; a Trustee and Executive Vice President of UP Law ’80 Foundation, Inc. (2004 to date); and, President (2012 to date) of Catarman Chamber Elementary School Foundation, Inc.

Atty. Tan is also the Managing Partner of the law firm of Tan Venturanza Valdez since 1988. He also concurrently holds the following positions: Managing Director, Shamrock Development Corporation (1988 to date); Managing Trustee, SC Tan Foundation, Inc. (1986 to date); and, Legal Counsel, Xavier School, Inc. (2005 to date).

In the previous years, he has held the following positions: Director, National Grid Corporation of the Philippines (2008 to 2009), Palm Concepcion Power Corporation (2013 to 2014), Peakpower Energy, Inc. (2013 to 2014), Peakpower San Francisco, Inc. (2013 to 2014), Peakpower Soccsargen, Inc. (2013 to 2014), Core Lifestyle Clothing, Inc. (2005 to 2014); Director and Corporate Secretary, Metro Manila Turf Club, Inc. (1995 to 2010), Monte Oro Resources and Energy, Inc. (2005 to 2008 / 2014); Chairman and President, Mercury Ventures, Inc. (1999 to 2014), T&V Realty Holdings, Inc. (1997 / 2003 to 2014); Corporate Secretary, International Exchange Bank (1995 to 2006), JTKC Leisure Holdings Corporation (1998 to 2015), Monte de Oro Grid Resources Corporation (2006 to 2009), Touch Solutions, Inc. (2007 to 2013), Treasure Steel Works Corporation (2010 to 2014), Winsteel Manufacturing Corp. (1998 to 2014), Pan Asean Multi-Resources Corporation (1998 to 2016), Premium Leisure Corp. (1993 to 2015), Winstone Industrial Corporation (1999 to 2015); and Independent Director, Pharex Health Corporation (2012 to 2014), Yehey! Corporation (2004 to 2015).

Atty. Tan holds a master of laws degree from New York University, USA (class of 1988). He earned his bachelor of laws degree from the University of the Philippines (class of 1980) where he was a member of the Order of the Purple Feather (the U.P. College of Law Honor Society) and ranked ninth in his class. Atty. Tan was admitted to the Philippine Bar in 1981 after placing sixth in the examinations. He also has a bachelor of arts degree (majored in political

science) from San Beda College (class of 1976) from where he graduated class valedictorian and was awarded the medal for academic excellence.

Ben C. Tiu, 64, Filipino Director Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such May 18, 2001 to date

Mr. Ben Tiu has been a Director of I-Remit, Inc. since 2001 and has also served as the Chairman and Chief Executive Officer of I-Remit, Inc. from 2001 to 2004. He is the Corporate Nominee in the Philippine Stock Exchange of Fidelity Securities, Inc. (1998 to date). He also concurrently holds the following positions: Chairman, Tera Investments, Inc. (2001 to date); President, JTKC Equities, Inc. (1993 to date); and, President, Philippine Calcium Industries Company, Inc. (1988 to date). Mr. Tiu was also formerly the Vice Chairman of the Board and Chairman of the Executive Committee of the International Exchange Bank (1995 to 2006).

He obtained his master in business administration degree from the Ateneo de Manila University Graduate School of Business in 1977 and his bachelor’s degree in mechanical engineering from the Loyola Marymount University, USA, in 1975.

John Y. Tiu, Jr., 40, Filipino Director Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such August 16, 2002 to date

Mr. John Tiu has served as Director of I-Remit, Inc. since 2002. He is presently the Director, Chairman and President of Tera Investments, Inc. (2003 to date). He is also a Director of Sterling Bank of Asia, Inc. (A Savings Bank) (2006 to date), Oakridge Properties, Inc. (2003 to date), Enderun Colleges, Inc. (2005 to date), and Sagesoft Solutions, Inc. (2004 to date). He is a Director and Treasurer of the following companies: Star Equities Inc. (2006 to date); JTKC Equities, Inc. (2002 to date); Touch Solutions, Inc. (2001 to 2013), and JTKC Land, Inc. (2003 to date). He is a Director and First Vice President of JTKC Realty Corporation (2006 to date). He is also a Director and President of Fidelity Securities, Inc. (2000 to date), The Discovery Leisure Company Inc. (2001 to date), Discovery Country Suites Inc. (2004 to date), JT Perle Corporation (2007 to date), One Cerrada Corporation (2007 to date), One Urdaneta Corporation (2010 to date), Palawan Cove Corporation (2008 to date), Sonoran Corporation (2008 to date), Discovery World Corporation (2003 to date), and Cay Islands (2008 to date).

He also holds the position of Director and Treasurer of Touch Solutions, Inc. (2001 to 2013).

Mr. John Tiu obtained his bachelor of science in electrical engineering degree (minor in mathematics) from the University of Washington, USA, in 1998.

Ruben C. Tiu, 61, Filipino Director Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such May 18, 2007 to date

Mr. Ruben Tiu has served as Director of I-Remit, Inc. from 2002 to 2004 and was reappointed as such on May 18, 2007. He currently holds the following positions: Chairman of the Board, Sterling Bank of Asia, Inc. (A Savings Bank) (2013 to date), and Discovery World Corporation (2012 to date); Director, Tera Investments, Inc. (2001 to date), Palawan Cove Corporation (2008 to date), Cay Islands Corporation (2008 to date), Discovery Country Suites Inc. (2004 to date), The Discovery Leisure Company, Inc. (2000 to date), and Sonoran Corporation (2008 to date); Director and President, JTKC Leisure Holdings Corporation (formerly JTKC Realty Corporation) (1988 to date); President, Pan-Asean Multi Resources Corporation (1988 to date), Oakridge Properties, Inc., and Club Asia, Inc. (1999 to date) (1996 to date); Director, President and Chairman, Star Equities Inc. (2006 to date); President and Chairman, Aldex Realty Corporation (1988 to date), Hotel Systems Asia, Inc. (1996 to date), and JTKC Land, Inc. (2003 to date); Director and Executive Vice President, JTKC Equities, Inc. (1993 to date); and Executive Vice President, Union Pacific Ace Industries, Inc. (1988 to date). He was also the Director of International Exchange Bank (1995 to 2006) and Sterling Bank of Asia, Inc. (A Savings Bank) (2006 to 2012).

Mr. Ruben Tiu obtained his bachelor of science in business administration degree from the De

La Salle University in 1976.

Calixto V. Chikiamco, 67, Filipino Director Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such August 16, 2002 to date

Mr. Chikiamco has been a Director of I-Remit, Inc. since 2002. He is a former columnist of the Manila Standard and the Manila Times. He has authored two (2) books: “Reforming the System” (Orange Publications and Kalikasan Press, 1992) and “Why We Are Who We Are” (Foundation for Economic Freedom, 1998). In 2001, he was awarded by the Archdiocese of Manila for the Best Business Column (“Agriculture, Not IT”, Manila Standard) in the Catholic Mass Media Awards. He is the founder and President of Mobilemoco, Inc. (2010 to date) and MRM Studios, Inc., a company involved in mobile entertainment, digital musical services, and e-commerce (2001 to date). He also concurrently holds the following positions: Vice Chairman, CBY, Inc. (1999 to date); Director, Golden Sunrise (1984 to date); Director, APMC (1985 to date); Director, Idea Inc. (2009 to date); Director, Heirs of Calixto Chikiamco Inc. (2000 to date); President, Foundation for Economic Freedom (2010 to date); and, President, Four Seas Trading Inc. (2008 to date). He is also presently a property rights consultant to The Asia Foundation. He is a member of the Philippine Internet Commerce Society and the Syracuse University Alumni Association.

Mr. Chikiamco holds a master’s degree in professional studies in media administration from the Newhouse School of Public Communications and Crouse Hinds School of Management, Syracuse University (New York, USA). He obtained his bachelor’s degree in economics summa cum laude from the De La Salle University.

In accordance with the requirements of Section 38 of the Securities Regulation Code, the Revised SRC Rules, and the Company’s Manual on Corporate Governance, the following Directors were nominated and elected as Independent Directors of the Company during the Annual Stockholders’ Meeting held on July 1, 2016:

Jose Joel Y. Pusta, 64, Filipino Independent Director Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such August 16, 2002 to date

Mr. Pusta has been a Director of I-Remit since 2002. He was a Director and Vice President of Confed Properties, Inc. (1997 to 2009). He was also the Corporate Secretary and a Trustee of the Kabalikat ng Migranteng Pilipino, Inc. (KAMPI) (2003 to 2009), the President and a Trustee of the Kassel Condominium Corporation (2002 to 2009), and the Vice President - Financial Controller of Green Bank, Inc. (A Rural Bank) (2010 to 2011). Mr. Pusta previously held the following positions: Senior Administrative and Logistics Manager of Digital Telecommunications Philippines, Inc. (1994 to 1997); Senior Internal Audit Manager of Metromedia Times Corporation (1992 to 1994), and Universal Robina Corporation (1985 to 1992); Internal Audit Manager of Manila Midtown Hotel, Inc. (1984 to 1985), Robinsons, Inc, (1983 to 1984), and Litton Mills, Inc. (1979 to 1983); Internal Audit Supervisor of CFC Corporation (1978 to 1979); Semi-Senior Staff Auditor of SyCip Gorres Velayo & Co. (1975 to 1978); and, Foreign Remittance Clerk in Philippine Banking Corporation (1975). Mr. Pusta is also a Consultant – Financial and Property Management in One Sapphire Condominium Corporation (2012 to 2013) and Financial & Audit Consultant in Cheng Ban Yek & Company, Inc. (2014 to 2015).

Mr. Pusta obtained his bachelor of science in commerce degree (majored in accounting) from the University of San Carlos in Cebu City in 1974. He has also earned units leading to the master in business administration degree at the Ateneo de Manila University Graduate School of Business from 1981 to 1983. He is a certified public accountant (CPA) and a member of the Philippine Institute of Certified Public Accountants (PICPA) and the Institute of Internal Auditors, Philippines.

Gregorio T. Yu, 58, Filipino Independent Director Director’s Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such May 18, 2007 to date

Mr. Yu was a Director of I-Remit, Inc. from 2001 to 2004 and was re-elected as an Independent Director of the Company on May 18, 2007. He is currently the Chairman of CATS Automobile Corporation (2004 to date), American Motorcycles, Inc. (2012 to date), and Auto Nation Group, Inc. (2011 to date), and President of the Domestic Satellite Corporation (2001 to date). He is also a Director, the Vice Chairman of the Board and, Chairman of the Executive Committee of Sterling Bank of Asia, Inc. (A Savings Bank) (2007 to date) and the Chairman and President of Lucky Star Network Communications Inc. (1994 to date). He is also concurrently a Director of the following companies: CATS Asian Cars, Inc. (Mazda Greenhills) (2004 to date); Prople BPO, Inc. (formerly Summersault, Inc.) (2006 to date); CMB Partners, Inc. (2003 to date); Philippine National Reinsurance Corporation (2010 to date); Jupiter Systems, Inc. (2001 to date); Wordtext Systems, Inc. (2001 to date); Philequity Management Inc. (2013 to date); Philippine Airlines, Inc. (2011 to date); Glyph Studios, Inc. (2011 to date); Philippine Bank of Communications (2011 to date); Unistar Credit and Finance Corporation (2012 to date); Nexus Technologies Inc. (2012 to date); and PAL Holdings Inc. (2014 to date). He is the Independent Director of the following companies: Vantage Equities Inc. (2013 to date) and E-Business Services, Inc. (2015 to date). He is also a Board Member of Ballet Philippines (2009 to date) and Manila Symphony Orchestra (2009 to date), and a Trustee of the Xavier School, Inc. (1998 to date) and a Trustee and the Chairman, Ways and Means Committee of the Xavier School Educational and Trust Fund, Inc. (1998 to date).

Mr. Yu was formerly the President and Chief Executive Officer of Belle Corporation (1989 to 2001). He was also a Director and a Member of the Executive Committee of The International Exchange Bank (1995 to 2006). He was also a Director of the following companies: Nexus Technologies, Inc. (2001 to 2011); Philequity Strategic Growth Fund Inc. (2009 to 2013); Philequity Foreign Currency Fixed Income Income Fund Inc. (2009 to 2013); Philippine Balanced Fund Inc. (2009 to 2013); Philequity Resources Fund Inc. (2009 to 2013); R.S. Lim & Co., Inc. (1997 to 2008); Vantage Equities, Inc. (formerly iVantage Corporation) (1993 to 2006); Cebu Holdings Inc. (1994 to 1996), Filcredit Finance and Capital Devt. Corp. (2004 to 2008); Yehey! Corporation (2001 to 2015); E-Business Services, Inc. (2002 to 2005) and (2013 to 2015); and, IRipple Inc, (2010 to 2015). He was also the President of the following organizations: Tagaytay Highlands International Golf Club (1991 to 2001); Tagaytay Midlands Golf Club (1997 to 2001); and, The Country Club at Tagaytay Highlands (1995 to 2001). He was also the President and Chief Executive Officer of Sinophil Corporation (1993 to 2001) and Pacific Online Systems Corporation (1994 to 2001). He was also the Vice Chairman of Philippine Global Communications, Inc. (1996 to 2001), APC Group, Inc. (1994 to 2001), and E- Business Services, Inc. (1999 to 2002). He was also connected with the Chase Manhattan Asia Limited Hong Kong as Director of Corporate Finance (1988 to 1999), and with The Chase Manhattan Bank, NA Asia Pacific Regional Headquarters Hong Kong as Vice President – Area Credit (1986 to 1988). He was also a Second Vice President of the Chase Manhattan Bank, N.A. Manila Offshore Banking Unit (1983 to 1986). He was also a Director (1994 to 1996) and (2006 to 2013) and Chairman and President (1996) of Philequity Fund Inc. He was also a Director (2006 to 2013) and Chairman and President (2000 to 2004) of Philequity Peso Bond Fund Inc. He was also a Director (2006 to 2013) and Chairman and President (2001 to 2004) of Philequity Dollar Income Fund Inc. He was also a Director (2006 to 2013) and Chairman and President (2000 to 2004) of Philequity PSE Index Fund Inc. He was also a Chairman of the CATS Motors Inc. (2004 to 2015). He was also the Assistant Vice President of R.S. Lim and Company, Inc. (Member: Makati Stock Exchange, Inc.) (1978 to 1981). Mr. Yu was a Lecturer in Economics in the De La Salle University from 1978 to 1980 and previously a Trustee of the Government Service Insurance System (2010 to 2016).

Mr. Yu obtained his master of business administration degree from The Wharton School, Graduate of the University of Pennsylvania in 1983. He obtained his bachelor of arts degree in economics summa cum laude from the De La Salle University in 1978.

The above directors shall hold office from their date of election until the next annual shareholders meeting or their resignation unless sooner terminated or removed in accordance with law.

The names, ages, citizenship, present positions, previous positions, terms of office, and period served by the Corporate Secretary and the Assistant Corporate Secretary are as follows:

Anna Francesca C. Respicio, 31, Filipino Corporate Secretary Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such August 16, 2013 to date

Atty. Respicio is the incumbent Corporate Secretary of I-Remit, Inc. She is likewise the

Corporate Secretary or Assistant Corporate Secretary of the following reporting and/or listed companies: A Brown Company, Inc. (2012 to date); Discovery World Corporation (2013 to date); First Abacus Financial Holdings Corporation (2013 to date); Jolliville Holdings Corporation (2014 to date); Sterling Bank of Asia, Inc. (A Savings Bank) (2013 to date); Tagaytay Highlands International Golf Club, Inc. (2013 to date); The Spa and Lodge at Tagaytay Highlands, Inc. (2013 to date).

Atty. Respicio obtained her bachelor of arts degree (majored in philosophy) in 2007 and her Juris Doctor degree in 2011 from the Ateneo de Manila University. She likewise passed the real estate brokers licensure examination in 2015. She is currently an Associate at Tan Venturanza Valdez. She was admitted to the Philippine bar in April 2012.

Celine Melanie A. Dee, 29, Filipino Assistant Corporate Secretary Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such July 17, 2015 to date

Atty. Dee is the incumbent Assistant Corporate Secretary of I-Remit, Inc. She is the Corporate Secretary of Expresspay Inc. (2015 to date). She is also Assistant Corporate Secretary of the following companies: Oakridge Properties, Inc. (2015 to date); Aldex Realty Corporation (2015 to date); Demikk Holdings, Inc. (2015 to date); JTKC Leisure Holdings Corporation (2015 to present); Tagaytay Highlands Community Condominium Association, Inc. (2015 to date); Tagaytay Midlands Community Homeowners Association, Inc. (2015 to date); Greenlands Community Homeowners Association, Inc. (2015 to date); Hella-Phil. Inc. (2015 to date); Sagesoft Solutions, Inc. (2015 to date); and Pan-Asean Multi-Resources Corporation (2016).

Atty. Dee obtained her bachelor of science degree (majored in Management) in 2009 and her Juris Doctor degree in 2014 from the Ateneo de Manila University. She is currently a Junior Associate at Tan Venturanza Valdez. She was admitted to the Philippine Bar in April 2015.

The names, ages, citizenship, present positions, previous positions, terms of office, and period served of all Executive Officers are as follows:

Bansan C. Choa, 63, Filipino Director, Chairman and Chief Executive Officer Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such 2005 to date

(see above for business experience and positions held under “Directors”)

Harris D. Jacildo, 55, Filipino Director, President and Chief Operating Officer Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such February 4, 2002 to date

(see above for business experience and positions held under “Directors”)

Ronald A. Benito, 46, Filipino Executive Vice President and Head, International Treasury Period Served as Such November 15, 2010 to date

Mr. Benito joined I-Remit, Inc. in 2010 and currently heads the Company’s international treasury unit in charge of trading its foreign currencies. He was previously connected with ICAP AP (Singapore) as associate director of new business initiatives (2007 to 2010), vice president–chief dealer and deputy treasurer of Banco Santander Central Hispano (2001 to 2004), assistant vice president and chief dealer (1997 to 2001) and assistant manager (1994 to 1997) of Union Bank of the Philippines and senior financial analyst of Philippine Commercial International Bank (1991 to 1994). He became also the managing consultant of Best Intermodel (Oakland, California and Singapore) in year 2005.

He obtained his bachelor of arts degree in economics cum laude from the University of Santo Tomas in 1991. He obtained his master of arts degree in international relations (school of politics) in 2005 from the University of Durham, United Kingdom and his master of science degree in economics and international business in 2007 from City University London.

Ma. Elizabeth G. Yao, 47, Filipino Executive Vice President and Head, Service and Operations Period Served as Such August 12, 2002 to date

Ms. Yao joined I-Remit in 2002 and has since been in charge of its Service and Operations Division. She was previously an equities sales officer of Belson Securities, Inc. (1997 – 2002). She was previously connected with the institutional sales group of Belson PrimeEast Capital (1996 – 1997) and was also a money market trader of the Security Bank Corporation (1995 – 1996).

She obtained her bachelor’s degree in business administration from the University of the Philippines in 1994 and business administration program of the University of New Mexico (USA) from 1988 to 1990. She attended her master in computational finance in the De La Salle University from 2000 to 2004.

Bernadette Cindy C. Tiu, 38, Filipino Senior Vice President and Chief Financial Officer; Head, Finance Division Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such April 1, 2005 to date

Ms. Tiu has been the Chief Financial Officer of I-Remit since 2006. She was previously the Finance Manager of IRemit Global Remittance Limited in the United Kingdom from 2003 to 2004 and International Remittance (Canada) Ltd. from 2004 to 2005, both wholly-owned subsidiaries of the Company. She joined I-Remit, Inc. in Manila in 2005 as Treasurer and Corporate Governance Head. Ms. Tiu is a Director of Sterling Bank of Asia, Inc. (A Savings Bank) since 2013 and the Vice President of Fidelity Securities, Inc. since 2000.

She obtained her bachelor’s degree in business administration (majored in accounting and finance) from the Boston University School of Management in 2001.

Fitzgerald S. Duba, 53, Filipino Senior Vice President and Compliance Officer Term of Office July 1, 2016 until the next annual stockholders’ meeting Period Served as Such November 16, 2007 to date

Mr. Duba was a Vice President and the head of the Corporate Strategy Division of the Rizal Commercial Banking Corporation (RCBC) from 2000 to 2005. He was the assistant vice president and head, market research and product development from 1993 to 2000 where he was employed for 12 years. He was also a senior management consultant in the Management Services Division of SyCip Gorres Velayo & Co (SGV) from 1987 to 1992 and later, the Manila office of Andersen Consulting, Inc. from 1992 to 1993.

He obtained his bachelor’s degree in industrial engineering from the University of the Philippines in 1987 and completed the basic banking course of the Asian Institute of Management in 1996. He also completed the corporate governance seminar of the Bangko Sentral ng Pilipinas (BSP) in 2000, and the corporate governance and anti-money laundering act seminar of the Philippine Securities Consultancy Corporation in 2012. He is a member of the Philippine Institute of Industrial Engineers.

Dennis L. Sobrepeña, 45, Filipino Vice President and Head, Information Technology Period Served as Such June 1, 2015 to date

Mr. Sobrepeña joined I-Remit, Inc. in 2015 and currently heads the Company’s Information Technology Division covering Software Development, Quality Assurance and Infrastructure Support Services. Prior to joining the company, he was the Chief Technology Officer and Assistant Vice President of the first mobile-based micro-finance company in the Philippines, BPI Globe BanKO, involved in product development and project management including cloud computing and Agile software development.

He obtained his bachelor’s degree in electronics and communications engineering in Mapua Institute of Technology in 1995. He has 19 years of IT experience covering various industries including Banking, Business Process Outsourcing, Manufacturing and Supply Chain,

Healthcare and Government.

Dax L. Camarsi, 43, Filipino Vice President and Head, Global Sales Period Served as Such September 19, 2016 to date

Mr. Camarsi was a consultant for different companies prior to joining I-Remit. He was the Assistant Country Head for a Multinational Media Intelligence company, Vice President of Retail Banking Group for one of the Philippines premiere banking institution. He also was the General Manager for one of the Country’s leading car and motorcycle distribution company. He was the National Sales Manager for a Multinational confectionary company and a key accounts manager, handling distributors nationwide, for the Philippines largest Pharmaceutical Company.

He graduated with a degree of Bachelor of Science in Business Administration, major in Marketing in the Philippine School of Business Administration. After which he pursued higher education by taking Bachelor of Laws for three years in Arellano Law Foundation.

Regina L. Shimamoto, 55, Filipino Vice President and Administrator for Executive Affairs Period Served as Such November 16, 2016 to date

Ms. Shimamoto joined I-Remit, Inc. in 2012 and previously heads the Company’s Human Capital Management Division in charge of HR planning & acquisition, performance management, employee compensation & benefits, employee engagement, training, and organizational development. She was formerly the Training Manager; then the Recruitment & Training Manager; and eventually, the HR Director of Amanpulo resort by the Amanresorts (the luxury hotels group) in Pamalican Island, Cuyo, Palawan from 2008 to 2012. Her affiliation with the Philippine’s most premier resort started when she conducted weekend courses under the English for Specific Purposes programs (English for Hotels & Restaurants Professionals) for all frontliners of the resort from February 2006 to May 2007. Before then, Professor Shimamoto has also served as Faculty member in the Department of English and Applied Linguistics of the De La Salle University’s College of Education from 1998 to 2008, as Faculty member in the Languages Department of the University of Santo Tomas’ College of Arts & Letters from 2007 to 2008, as Lay Formator/Faculty member in the English Department of the Rogationist Seminary’s Father Hannibal Formation Center from 2001 to 2006, and as Faculty member in the Languages Department of the Philippine Christian University’s College of Arts, Sciences, & Social Work from 1993 to 1998.

She obtained her bachelor of arts degree in English from the Philippine Christian University, Manila. Also, she has completed a certification for professional education from 1991 to 1993 and the master of education in language teaching (TESL) from the University of the Philippines from 1993 to 1997, respectively. She has acquired some academic units under the Doctor of Philosophy in Applied Linguistics program from 2005 to 2007 in De La Salle University, Manila. Ms. Shimamoto has attended and completed several programs, seminars, and workshops on Human Resource & Labor Relations, change management, situational leadership, corporate training, organizational development, learning & development, and performance management from 2008 to present.

Eva P. Hermogenes, 47, Filipino Vice President and Head, Human Capital Management Period Served as Such November 21, 2016 to date

Prior to joining I-Remit, Ms. Hermogenes was the First Assistant Vice President of Human Resource Management Division of Laus Group of Companies from September 2015 to October 2016. She was also the Assistant Vice President of Human Resource Management Division of Personal Collection Direct Selling Inc. from 2013 to 2015. She worked in Ajinomoto Philippines as Senior Manager from 2007 to 2013 and with First Life Financial from 1993 to 2007 where her last held position was Assistant Manager and Human Resource Head.

Ms. Hermogenes graduated with a Bachelor of Science Degree in Psychology from the University of Sto. Tomas in 1987 and took her Masteral Studies in Industrial Relations from the University of the Philippines.

(2) Significant Employees

There is no person other than the entire human resources as a whole, and the executive officers who are expected to make a significant contribution to the Company.

(3) Family Relationships

Directors Ben C. Tiu, John Y. Tiu, Jr. and Ruben C. Tiu are brothers. Bernadette Cindy C. Tiu, First Vice President and Chief Financial Officer of the Company, is a daughter of Director Ben C. Tiu.

There are no other family relationships among the directors or the officers listed.

(4) Involvement in Certain Legal Proceedings

As a result of the delay in the delivery of the facilities of the Universal Leisure Club, Inc. (ULCI), some of its members initiated a Complain for Estafa (I.S. No. 08K-19713) against ULCI, the Universal Rightfield Property Holdings, Inc. and the Universal Leisure Corp., as well as their respective officers and directors, including their former Corporate Secretary, Atty. A. Bayani K. Tan, an incumbent Director and Corporate Secretary of the Corporation. The Complaint was submitted for resolution in 2009 and was acted upon and dismissed by the City Prosecutor of Manila (OCP) only on March 18, 2013. Complainants belatedly filed motion for reconsideration for which reason, among others, the OCP denied motion in June 16, 2014. A Petition for Review dated March 31, 2014 was filed by the Complainant before the Department of Justice (DOJ). On August 7, 2014, Atty. Tan filed his Comment to the said Petition. In a Resolution dated April 17, 2015, the Petition for Review was denied and the DOJ dismissed the complaint for Estafa.

Except as provided above, the Company is not aware of any of the following events wherein any of its directors, executive officers, nominees for election as director, executive officers, underwriter or control persons were involved during the past five (5) years up to the latest date.

(1) Any bankruptcy petition filed by or against any business of which any of the above persons was a general partner or executive officer either at the time of bankruptcy or within two years prior to that time;

(2) Any order or judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting the involvement of any of the above persons in any type of business, securities, commodities, or banking activities; and

(3) Any findings by a domestic or foreign court of competent jurisdiction (in civil action), the SEC or comparable foreign body, or a domestic or foreign exchange or electronic marketplace or self-regulatory organization, that any of the above persons has violated a securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

The Company and its major subsidiaries and associates are not involved in, nor are any of their properties subject to, any material legal proceedings that could potentially affect their operations and financial capabilities.

Item 10. Executive Compensation

(B) Executive Compensation

(1) Summary Compensation Table

The following table summarizes the aggregate compensation paid or accrued during the last two (2) calendar years and to be paid in the ensuing calendar year to the Company’s Chief Executive Officer and four (4) other most highly compensated officers:

Aggregate Year Name Principal Position Compensation Bansan C. Choa Chairman & CEO Harris D. Jacildo President & COO 2017 Ma. Elizabeth G. Yao EVP 16,185,202.10 (Estimate) Ronald A. Benito EVP Bernadette Cindy C. Tiu SVP & CFO All other officers and directors as a group unnamed 21,777,639.46 Bansan C. Choa Chairman & CEO Harris D. Jacildo President & COO 2016 Ma. Elizabeth G. Yao EVP 15,303,210.41 (Actual) Ronald A. Benito EVP Bernadette Cindy C. Tiu SVP & CFO All other officers and directors as a group unnamed 19,406,237.36 Bansan C. Choa Chairman & CEO Harris D. Jacildo President & COO 2015 Ma. Elizabeth G. Yao SVP 13,095,950.48 (Actual) Ronald A. Benito SVP Bernadette Cindy C. Tiu FVP & CFO All other officers and directors as a group unnamed 13,241,950.57

(2) Compensation of Directors

The directors receive per diems for attendance in meetings of the Board but do not receive compensation from the Company for services rendered. There are no other standard arrangements, including consultancy contracts, pursuant to which any Director of the Company was compensated, or is to be compensated, directly or indirectly, for any services provided as a Director, including any additional amounts payable for committee participation, or special assignments, during the Company’s last completed fiscal year, and the ensuing year.

(3) Employment Contracts and Termination of Employment and Change-in-Control Arrangements

There was no compensatory plan or arrangement with respect to named Executive Officers that resulted or will result from the resignation, retirement or termination of such executive officer from a change-in-control of the Company.

(4) Warrants and Options Outstanding: Repricing

No warrants or options on the Company’s shares of stock have been issued to the Directors or Executive Officers as a form of compensation for services rendered.

Item 11. Security Ownership of Certain Beneficial Owners and Management

(1) Security Ownership of Certain Record and Owners

The following are known to the registrant to be directly or indirectly the record or beneficial owner of more than five per cent (5%) of registrant’s voting securities (registrant has only one class of voting security, i.e., common shares) as of December 31, 2016:

Name and Address of Name and Address of Record Beneficial Owner and Owner and Relationship with Relationship with Number of Per cent Class Issuer Record Owner Citizenship Shares Held Common PCD Nominee Corporation (Please see note below) Filipino 227,214,025¹ 36.78234 G/F Makati Stock Exchange Building, 6767 Ayala Avenue, Makati City (stockholder) Common Star Equities Inc. Same as record owner Filipino 180,308,109 29.18902 2/F JTKC Center 2155 Chino Roces Street Makati City Common Surewell Equities, Inc. Same as record owner Filipino 138,907,659 22.48694 690-A Quirino Ave. Tambo, Paranaque City Common JTKC Equities, Inc. Same as record owner Filipino 49,429,298 8.00182 130 Amorsolo Street Legaspi Village Makati City

NOTE: PCD Nominee Corporation (“PCDNC”) is a wholly-owned subsidiary of the Philippine Central Depository, Inc. The beneficial owners of such shares of the Company registered under the name of PCDNC are PCD’s participants who hold the shares in there own behalf or in behalf of their clients. No PCD participant currently owns more than five per cent (5%) of the Corporation’s shares forming part of the PCNDC account except Fidelity Securities, Inc., viz:

Name and Address of Owner Class and Relationship with Issuer Citizenship Number of Shares Per cent Held Common Fidelity Securities, Inc.* Filipino 150,347,388² 24.33886 2/F JTKC Centre 2155 Chino Roces Street, Makati City

* Fidelity Securities, Inc. (“Fidelity”) is a registered broker and dealer in securities and holds the shares of the Company in favor of beneficial owners who hold the shares in their own behalf or on behalf of their respective clients.

1 Includes 5,955,000, 10,000,000 and 10,000,000 Treasury shares purchased from the stock market under the Buy-back Program that were approved by the Board on September 21, 2012, September 16, 2011 and August 15, 2008, respectively, and excludes 20,272,322 shares, net of withholding tax in the form of shares, distributed as property dividend on October 14, 2013.

2 Includes 82,137,070 shares in favor of beneficial owner JTKC Equities, Inc. which owns a total of 131,566,368 shares or per cent held of 21.29851% and 5,382,546 shares in favor of beneficial owner Surewell Equities, Inc. which owns a total of 144,290,205 shares or per cent held of 23.35829%.

(2) Security Ownership of Management (Individual Directors and Executive Officers)

Title of Nature of Legal & Per cent of Class Name of Beneficial Owner Number of Shares Beneficial Ownership Citizenship Class 883,563 Direct 0.14303 Common Bansan C. Choa Filipino 41,964,094 Indirect 6.79332 Common Harris Edsel D. Jacildo 18,490 Direct Filipino 0.00299 Common Calixto V. Chikiamco 113 Direct Filipino 0.00002 339,470 Direct 0.05495 Common Gilbert C. Gaw Filipino 10,043,568 Indirect 1.62589 Common Jose Joel Y. Pusta 113 Direct Filipino 0.00002 Common A. Bayani K. Tan 586,779 Direct Filipino 0.09499 1,232,037 Direct 0.19945 Common Ben C. Tiu Filipino 15,983,881 Indirect 2.58754 429,877 Direct 0.06959 Common Ruben C. Tiu Filipino 15,983,881 Indirect 2.58754 79,190 Direct 0.01282 Common John Y. Tiu, Jr. Filipino 15,983,881 Indirect 2.58754 Common Gregorio T. Yu 113 Direct Filipino 0.00002 159,831 Direct 0.02587 Common Bernadette Cindy C. Tiu Filipino 481,535 Indirect 0.07795

The aggregate number of shares owned of-record by all Directors and Executive Officers as a group named herein as of December 31, 2016 is 104,170,416 common shares or approximately 16.86354% of the Company’s common shares. This includes the indirect ownership of 100,440,840 shares representing 16.25978% of the Company’s common shares.

(3) Voting Trust of 5% or More

The Company is not aware of any voting trust agreement executed granting any person the right to exercise the voting rights of a holder of 5% or more of the securities.

(4) Changes In Control

There are no arrangements, existing or otherwise, which may result in a change in control of the Company.

Item 12. Certain Relationships and Related Party Transactions

A related party is a person or entity that is related to the Group that is preparing its financial statements. A person or a close member of that person’s family is related to the Group if that person has control or joint control over the Group, has significant influence over the Group, or is a member of the key management personnel of the Group or of a parent of the Group.

An entity is related to the Group if any of the following conditions applies: • The entity and the Group are members of the same group (which means that a parent, subsidiary and fellow subsidiary are related parties to each other); or • One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); or • Both entities are joint ventures of the same third party; or • One entity is a joint venture of a third entity and the other entity is an associate of the third entity; or • The entity holds a post-employment benefit plan for the benefit of the employees of either the Group or an entity related to the Group; or • The entity is controlled or jointly controlled by a person identified above; or • A person identified above has significant influence over the entity or is a member of the key management personnel of the entity (or of an entity); or • Management entity providing key management personnel services to a reporting entity.

Close members of the family of a person are those family members, who may be expected to influence, or be influenced by, that person in their dealings with the Group and include that person’s children and spouse or domestic partner; children of that person’s spouse or domestic partner; and dependents of that person or that person’s spouse or domestic partner.

A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged.

Nature of relationship of the Group and its related parties are disclosed below:

Related Parties Nature of Relationship Hwa Kung Hong & Co., Ltd. (HKHCL) Associate Sterling Bank of Asia, Inc. (A Savings Bank) Under common controlling party Oakridge Properties, Inc. Under common controlling party Surewell Equities, Inc. Investor with significant influence Stockholders Key Management Personnel

Balances and transactions between the Group and its related parties are disclosed below:

Due from Related Parties

Balance of due from related parties presented in the consolidated statement of financial position are summarized per category as follows:

Associate December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balances Volume Balances HKHCL Remittance PHP 8,002,550,954 PHP 28,941,597 PHP 6,182,882,509 PHP 17,141,833 Advances from 8,315,128 - 2,629,519 3,176,353 Delivery fees 66,155,816 536,336 45,869,455 436,632 PHP 8,077,021,898 PHP 29,477,933 PHP 6,231,381,483 PHP 20,754,818

The following are the nature, terms and conditions of the following accounts:

• Remittance pertains to the principal amount of transaction accepted by a foreign subsidiary or associate office from a remitter, delivery of which is fulfilled by the Group to intended beneficiary in the Philippines. Account is collectible within five (5) days from date of transaction.

• Advances from account refers to operating funds and marketing materials advanced to a foreign subsidiary or associate office. Account is collectible within thirty (30) days from date of funding.

• Delivery fee is the share in service fee collected by a foreign subsidiary or associate office apart from the principal amount of remittance. Account is collectible within five (5) days from date of transaction.

The amounts outstanding are non-interest bearing, unsecured and will be settled in cash. No guaranty was required. No provision made for doubtful accounts as these accounts are all collectible. Provision for doubtful account is recognized only upon the lapse of one (1) year period where the subject is transactional or upon the lapse of five (5) years from date of inception of the business where the subject is operational.

Under Common Controlling Parties December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Category Volume Balances Volume Balances Sterling Bank of Asia, Inc. Cash deposits PHP 217,905,038 PHP 217,905,038 PHP 200,275,215 PHP 200,275,215 Finance income 246,789 - 189,277 - Oakridge Properties, Inc. 14,928,763 - 14,935,089 - . PHP 233,080,590 PHP 217,905,038 PHP 215,399,581 PHP 200,275,215

The following are the nature, terms and conditions of the following accounts:

• Transaction with Sterling Bank of Asia, Inc. (A Savings Bank) (SBA) pertains to income earned from the Group’s depositary accounts in Peso and USD (FCDU) with SBA, an affiliate of the Parent Company through common controlling stockholders. Principal stockholders of SBA and the Group are JTKC Equities, Inc., Star Equities, Inc. and Surewell Equities, Inc.

The Group has deposits amounting to PHP 217.9 million, PHP 200.3 million and PHP 322.5 million with SBA as of December 31, 2016, 2015 and 2014, respectively. These deposits earned interest income amounting to PHP 0.25 million, PHP 0.19 million and PHP 0.21 million in 2016, 2015 and 2014, respectively.

• Transaction with Oakridge Properties, Inc. (OPI) pertains to the cost of rental paid to OPI by the Group for the use of office spaces at Discovery Centre, a building owned by OPI, an affiliate of the Group. OPI is owned by The Discovery Leisure Company, Inc. (TDLCI), an entity owned by JTKC Equities, Inc., and JTKC Realty Corporation. Lease contract with OPI includes security deposit of two (2) months and one (1) month advance rental. Rent is paid monthly with provision for yearly escalation. Rent expense amounted to PHP 14.9 million, PHP 14.9 million and PHP 14.7 million for 2016, 2015 and 2014, respectively.

Investor with Significant Influence December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Category Volume Balances Volume Balances Rental PHP 218,438 PHP - PHP 870,956 PHP -

The Group paid rent to Surewell Equities, Inc. in favor of its affiliate, Surewell Equities Pte. Ltd. (SEPL) for the sharing of its office in Singapore with the Group under a sub-lease agreement in the amounts of PHP 0.22 million, PHP 0.87 million and PHP 0.92 million in 2016, 2015 and 2014, respectively. SEPL is a foreign subsidiary office of Surewell Equities, Inc., one of the principal stockholders of the Group. There is no security deposit paid and without provision for escalation. Rent is paid monthly.

Key Management Personnel December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Category Volume Balances Volume Balances Advances PHP - PHP 8,196,508 PHP 436,215 PHP 7,299,957

Advances pertain to sum of money advanced to key management personnel. The amount outstanding is non- interest bearing, unsecured, collectible on demand and will be settled in cash. There is no guaranty required and no provision was made for doubtful account as the account is deemed collectible. Provision for doubtful account is recognized only upon the resignation of an employee with unsettled obligation to the Company within a one-year period.

Remuneration of Key Management Personnel

The remuneration of the directors and other members of key management personnel of the Group is shown below in aggregate amount for each of the categories specified in PAS 24, Related Party Disclosures:

2016 2015 2014 Short-term employee benefits PHP 37,461,828 PHP 40,123,906 PHP 42,403,844 Retirement benefits 1,189,445 1,244,663 1,168,696 PHP 38,651,273 PHP 41,368,569 PHP 43,572,540

Transaction with Retirement Fund

The Group’s retirement benefit fund is maintained with Sterling Bank of Asia, Inc. (A Savings Bank), an affiliate due to common controlling parties, as trustee. The carrying amounts and fair values of the fund both amounted to PHP 40.0 million and PHP 37.8 million as of December 31, 2016 and 2015, respectively

The government debt securities consist of peso-denominated and USD-denominated securities. The Peso- denominated Government Securities (GS) of the Group’s Retirement Fund were purchased from accredited counterparties of SBA-Trust Group. These counterparties are Banks and Investment Houses allowed to trade government securities. Existing Peso GS accounts are all tax-exempt and are currently lodged under the Tax-exempt RoSS Account of SBA-Trust Group with the Bureau of the Treasury (BTr).

The law firm of Tan Venturanza Valdez is among the firms engaged by the Company to render legal services. Atty. A. Bayani K. Tan, a Director of the Company, is a managing partner of this firm while Atty. Anna Francesca C. Respicio, the Corporate Secretary, and Atty. Celine Melanie A. Dee, the Assistant Corporate Secretary, are associates. During the year, the Company paid Tan Venturanza Valdez certain legal fees that the Company believes to be reasonable for the services rendered.

PART IV. CORPORATE GOVERNANCE

Item 13. Corporate Governance

Pursuant to Item V. of SEC Memorandum Circular No. 5, Series of 2013: Annual Corporate Governance Report, dated March 20, 2013, the Corporate Governance section in this Annual Report (SEC Form 17-A) has been deleted.

PART V. EXHIBITS AND SCHEDULES

The other exhibits, as indicated in the Index to Exhibits, are either not applicable to the Company or require no answer.

(a) Exhibit A – Aging of Consolidated Receivables, Unaudited, December 31, 2016

(b) Reports on SEC Form 17-C

Reports under SEC Form 17-C (Current Report) that were filed during the last six (6) months covered by this report and first quarter 2017:

Date Report

July 1, 2016 Commencement of the remittance business of I-REMITTANCE SINGAPORE PTE. LTD. on July 1, 2016

“Further to our disclosure dated 24 February 2014, kindly be advised that I-REMITTANCE SINGAPORE PTE. LTD., a wholly-owned subsidiary of I-REMIT, INC. (the “Corporation”), commenced the operation of its remittance business today.

I-REMITTANCE SINGAPORE PTE. LTD. was established to be able to open more branches and strengthen the Corporation’s presence in Singapore.

The Corporation’s affiliate, IREMIT SINGAPORE PTE LTD, surrendered its license to the Monetary Authority of Singapore and ceased conducting its remittance business, and shall undergo liquidation.”

July 1, 2016 Election of directors in the 2016 Annual Stockholders’ Meeting and the appointment of officers and committee members in the subsequent organizational meeting of the Board of Directors

“During the Annual Stockholders’ Meeting of I-Remit, Inc. (the “Corporation”) held on July 1, 2016, the following stockholders were elected as members of the Board of Directors of the Corporation for the year 2016-2017 to hold office as such until their successors shall have been duly elected and qualified:

Jose Joel Y. Pusta - Independent Director Gregorio T. Yu - Independent Director Calixto V. Chikiamco - Director Bansan C. Choa - Director Armin V. Demetillo - Director Gilbert C. Gaw - Director Harris D. Jacildo - Director A. Bayani K. Tan - Director Ben C. Tiu - Director John Y. Tiu, Jr. - Director Ruben C. Tiu - Director

Messrs. Gregorio T. Yu and Jose Joel Y. Pusta were elected as the Corporation’s independent directors in accordance with the requirements of the Securities Regulation Code.

During the same meeting, the shareholders approved the audited financial statements of the Corporation as of year-end 2015, as well as the re-appointment of R.S. Bernaldo & Associates as the Corporation’s external auditor for the year 2016.

In the organizational meeting of the Board of Directors held immediately after the shareholders’ meeting, the following persons were elected officers of the Corporation for the year 2016-2017 to serve as such until their successors shall have been duly elected and qualified:

Bansan Choa - Chairman and Chief Executive Officer Harris D. Jacildo - President and Chief Operating Officer Anna Francesca C. Respicio - Corporate Secretary

Celine Melanie A. Dee - Assistant Corporate Secretary Bernadette Cindy C. Tiu - First Vice-President and Chief Financial Officer Fitzgerald S. Duba - First Vice-President and Compliance Officer

The following directors and officers, on the other hand, were elected as members of the various Committees of the Board of Directors of the Corporation:

Executive Committee 1. Armin V. Demetillo (Chairman) 2. Bansan C. Choa 3. Gilbert C. Gaw 4. Harris D. Jacildo 5. Ben C. Tiu

Audit Committee 1. Gregorio T. Yu (Chairman) 2. Calixto V. Chikiamco 3. Bansan C. Choa 4. Harris D. Jacildo 5. Jose Joel Y. Pusta 6. John Y. Tiu, Jr.

Nomination Committee 1. Bansan C. Choa 2. Armin V. Demetillo 3. Gregorio T. Yu

Compensation and Remuneration Committee 1. Bansan C. Choa 2. Armin V. Demetillo 3. Gregorio T. Yu

Finance Committee 1. Gregorio T. Yu (Chairman) 2. Calixto V. Chikiamco 3. Bansan C. Choa 4. Harris D. Jacildo 5. John Y. Tiu, Jr. 6. Jose Joel Y. Pusta

Bids and Awards Committee 1. John Y. Tiu, Jr. (Chairman) 2. Bansan C. Choa 3. Armin V. Demetillo 4. Harris D. Jacildo

Information Technology (IT) Steering Committee 1. John Y. Tiu, Jr. (Chairman) 2. Calixto V. Chikiamco 3. Harris D. Jacildo 4. Ma. Elizabeth G. Yao, Senior Vice-President 5. Dennis L. Sobrepeña, Vice-President 6. Alfredo S. Vitangcol, Jr. (Advisor)

Risk Oversight Committee 1. Jose Joel Y. Pusta (Chairman) 2. Ruben C. Tiu 3. Calixto V. Chikiamco”

July 5, 2016 Certificate of Qualification of all independent directors pursuant to Section 38 of the Securities Regulation Code and in compliance with the Securities and Exchange Commission Notice dated October 20, 2006, RE: Certificate of Qualification of all independent directors

“Certificate of Qualification of all independent directors under oath executed and signed by the Company’s Independent Directors, Messrs. Jose Joel Y. Pusta and Gregorio T. Yu”.

July 15, 2016 Resignation of Director

“Please be advised of the receipt from Mr. Armin V. Demetillo of his resignation letter as Director and Chairman of the Executive Committee of I-Remit, Inc. (the “Corporation”) effective July 15, 2016 to pursue other endeavors. His replacement will be elected by the Board of Directors pursuant to the Corporation’s By-Laws.”

July 29, 2016 Certificates of attendance to corporate governance training with SEC-accredited training provider in compliance with SEC Memorandum Circular No. 20, Series of 2013

“Certificates of attendance to corporate governance training issued by The Institute of Corporate Directors to Mr. Bansan C. Choa (Chairman of the Board and Chief Executive Officer), Mr. Harris D. Jacildo (Director, President and Chief Operating Officer), Mr. Ruben C. Tiu (Director), Mr. John Y. Tiu, Jr. (Director, Chairman of Bids and Awards Committee and Information Technology Steering Committee), Mr. Gibert C. Gaw (Director), Mr. Bayani K. Tan (Director), Mr. Calixto V. Chikiamco (Director), Mr. Joel Y. Pusta (Independent Director), Ms. Anna Francesca C. Respicio (Corporate Secretary), Ms. Celine Melanie A. Dee (Assistant Corporate Secretary), Ms. Elizabeth G. Yao (Senior Vice President), Mr. Ronald A. Benito (Senior Vice President), Ms. Bernadette Cindy C. Tiu-Wong (First Vice President and Chief Finance Officer), Mr. Fitzgerald S. Duba (First Vice President and Compliance Officer) and Mr. Dennis L. Sobrepeña (Vice President) of I-Remit, Inc. in relation to the Annual Corporate Governance Training Program held on July 29, 2016 in San Juan City.”

October 19, 2016 Certificate of Attendance to Corporate Governance Seminar pursuant to SEC Memorandum Circular No. 20, Series of 2013

“Certificate of attendance to corporate governance training with SEC-accredited training provider issued by the Center for Global Best Practices to Mr. Ben C. Tiu (Director) of I-Remit, Inc. in relation to the seminar on Best Practices in Parliamentary Procedures for Board of Directors and Top Management held on October 19, 2016 in Makati City.”

October 21, 2016 Appointment of Mr. Ben C. Tiu, as Chairman of the Executive Committee

“IRemit,Inc. (the “Corporation”) has announced during its regular board meeting on October 21, 2016 the appointment of its Founder, Ben C. Tiu, as Chairman of the Executive Committee effective immediately. Mr. Tiu served as the Corporation’s Chairman & CEO from 2001-2004. He is presently the Corporate Nominee in the Philippine Stock Exchange of Fidelity Securities, Inc., Chairman & CEO of TKC Metals Corporation, Chairman & President of JTKC Equities, Inc. and an Independent Director of MacroAsia Corporation.”

December 19, 2016 Assessment of the Performance of the Audit Committee of I-Remit, Inc.

“In compliance with SEC Memorandum Circular No. 4, Series of 2012 titled Guidelines for the Assessment of the Performance of Audit Committees of Companies Listed on the Exchange, the Issuer submitted its Audit Committee’s Self-Assessment Worksheet.”

March 17, 2017 Resignation and Election of Officer

“At the meeting of the Board of Directors held today, the Corporation accepted the resignation of Atty. Celine Melanie A. Dee as Assistant Corporate Secretary of the Corporation to take effect upon the qualification of her successor. In view of the foregoing resignation, the Board elected Atty. Ann Margaret K. Lorenzo as Assistant Corporate Secretary to replace Atty. Celine Melanie A. Dee, and to serve as such for the unexpired term of her predecessor, and until such time that her successor is duly elected and qualified.”

Exhibit A

I-REMIT, INC. AND SUBSIDIARIES Aging of Consolidated Receivables Unaudited December 31, 2016 (In Philippine Peso)

Total 0-60 Days 61-180 Days 181-360 Days Over 360 Days Agents 397,423,777 396,067,824 48,250 - 1,307,703 Couriers 143,351,720 143,351,720 - - - Related Parties 9,049,904 - - 5,636,033 3,413,871 Others 32,899,006 6,149,055 397,683 337,855 26,014,413 582,724,407 545,568,599 445,933 5,973,888 30,735,987 SIGNATURES

Pursuant to the requirements of Section 17 of the Code and Section 14 of the Corporation Code, this report is signed on behalf of the Issuer by the undersigned, thereunto duly authorized, in the City of Pasig APR 1 1 2617 ' 2017.

By:

ANNA FRANCESCA C. RESPICIO Corporate Secretary

SUBSCRIBED AND SWORN to before me this APR 1 2 2017 , affiants exhibiting to me their Competent Evidences of Identity (CEI) and TIN as follows:

Name CEI No.; Date and Place of Issue TIN BANSAN C. CHOA Passport No. EB8610642; July 9,2013; Manila TIN 159-305-537 HARRIS D. JACILDO Passport No. EB7789412; April 4, 2013; Manila TIN 126-967-441 BERNADETTE CINDY C. TIU Passport No. EB6965382; December 18, 2012; Mandaluyong City TIN 203-338-548 ANNA FRANCESCA C. RESPICIO Passport No. P0286448A; September 16,2016; Mandaluvonq City TIN 419-191-112 ANALIE M. ANGELES Unified Multi-Purpose ID No. CRN-0111..Q971734-5 TIN 102-789-384

ISAlK G. SM~ fiH':::;UEL Notary Pub!' for Cities af PaslQ and San Juan and n the MuniCipality of Pateros . ointment No. 105 (.101t5-J(17) Comrrnss+on Expire. on December 31 2017 2704 Eaet Tower, PSE Centre Eln:hang~ ROad Document No. Ortigas Center, 1605 Pasig City I Page No. PTR No. 2553925 101.09.2017 I Mandaluyong Book No. IBP No. lRN-013775 I 04.22.15 I PPlM Series of 2017. Roll of Attorneys No. 64234

94 '!I~!1!lT

STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS

The management of I-REMIT INC. AND SUBSIDIARIES is responsible for the preparation and fair presentation of the consolidated financial statements including the schedules attached therein, for the years ended December 31, 2016, 2015 and 2014, in accordance with the Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as going concern, disclosing, as applicable matters related to going concern and using the going concern basis of accounting unless management intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Group's financial reporting process.

The Board of Directors reviews and approves the consolidated financial statements including the schedules attached therein, and submits the same to the stockholders.

R.S. Bernaldo & Associates, the independent auditor appointed by the stockholders, has audited the consolidated financial statements of the Group in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has expressed its opinion on the fairness of presentation upon completion of such audit.

B SAN C. CHOA Chairm and Chief Executive Officer

avBERNADETI 7 Chief Fin

SUBSCRIBED AND SWORN to before me this FEBdcft l>f 2011 2017 affiants exhibiting to me their respective Passport Identification Card Number (Passport ID), ~s follows:

Name Passport ID No. Date of Issue Place of Issue BANSAN C. CHOA EB8471111 AUG. 2, 2016 MANILA HARRIS E. D. JACILDO EB7789412 APR. 4,2013 MANILA BERNADETTE CINDY C. TIU EB6965382 EC.18,2012 NCR EAST

Doc. No. kit> ; Page No __ I~~ ; _~ _ Book No. 1$f- ,; 'J; ;~: • lISAI. G. SAN MIGUEL Series.of2t9Ht'~ ,,~', -':.," Notary Pub!' for Cities Qf Pasig and San Ju.n I ',~L'...:":'.,>;'Vtr:,· ' . Opd n the Municipality of Pateros Ap (,mtmen! No. 105 (2016-2017) Jate I Lll)~ 0 3 L.~:17 • C~mmL.(,01'1 Expires on December 31,2017 '.i\ . - :lYO. Eo~t Tower, PSE Centre Exchange Road, . 9rt1yos Canter, 1605 Pasig City I-R it I - .., ('";- '! v ,- '-',:. ~ ~TR N~ 25~:l9~5 / 01.09.2017 J Mandaluyon emu, nc. _ i: I ~.. " ,. IBP ~o lRN """'~75 In .• 22 4 26/F Discovery Centre 25 ADB Aven e Ortiglas Center, Pasig --elty 1605 Philippine .''''''' 'oJi • ..,.... - .5/ PPLM Telephone: (632) 706-9999 and (6~:?),7.QEG7~~\~ r: ' I~: I,'" i -. ~'T' l' r R()IIof AUOfneys No, 642~ Facsimile: (632) 706-2767 .- . ,'_,J~_" '--u Website: www.myiremit.com Facebook: www.facebook.com/iremitinc Twitter: www.twitter.com/iremitinc COVER SHEET for AUDITED FINANCIAL STATEMENTS

SEC Registration Number

Principal Office (No.lStreetlBarangay/City/Town)Province) 2 6 / F D I 5 C 0 V E R Y C E N TR E

2 5 A D B A V E N U E , 0 R T I G A 5 C E NTR E

Form Type Department requiring the report Secondary License Type, If Applicable

COMPANY INFORMATION Company's Email Address Company's Telephone Number/s Mobile Number

investor [email protected] I 7 0 6 9 9 9 91 9178537405

No, of Stockholders Annual Meeting Fiscal Year Month/Day Month/Day

Twenty-one (21) July 31 December 31

CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Email Address Telephone Number/s Mobile Number

____ M_R_,_B_A_N_SA_N_C_C_H_O_A, I I bCChOa@mYiremit,comI1706-999911 N_/_A _

Contact Person's Address

26/F Discovery Centre, 25 ADB Avenue, Ortigas Center, 1605 Pasig City, Metro Manila

Note: 1:In case of death, resgination or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated,

2: All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation's records with the Commission and/ or non-receipt of Notice of Deficiencies. Furlher, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies. Stephen Uy Que Certified Public Accountant Lie, No. 32028 Tin. No. 110-025-648-000

PRACTITIONER'S COMPILATION REPORT

To Management of I-REMIT, INC. AND SUBSIDIARIES

We have compiled the accompanying consolidated financial statements of I-REMIT, INC. AND SUBSIDIARIES based on information you have provided. These consolidated financial statements comprise the statement of financial position of I-REMIT, INC. AND SUBSIDIARIES as at December 31, 2016, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

We performed this compilation engagement in accordance with Philippine Standard on Related Services 4410 (Revised), Compilation Engagements.

We have applied our expertise in accounting and financial reporting to assist you in the preparation and presentation of these consolidated financial statements in accordance with Philippine Financial Reporting Standards (PFRS). We have complied with relevant ethical requirements, including principles of integrity, objectivity, professional competence and due care.

These consolidated financial statements and the accuracy and completeness of the information used to compile them are your responsibility.

Since a compilation engagement is not an assurance engagement, we are not required to verify the accuracy or completeness of the information you provided to us to compile these consolidated financial statements. Accordingly, we do not express an audit opinion or a review conclusion on whether these consolidated financial statements are prepared in accordance with Philippine Financial Reporting Standards (PFRS).

T PHEN . QUE Certified Public Accountant CPA Certificate Number: 32028 BOA Accreditation Number: 2276 Valid from March 3, 2015 until December 31, 2017 PTR Number: 4025233 Issued on January 23, 2017 BIR Accreditation Number: 07-001137-001-2017 Valid from January 5, 2017 until January 5, 2020

February 17, 2017

L/G Madison 101 Hotel 1 Madison St. Corner Aurora Blvd. Quezon City, Philippines 1112 RSB R.S. BERNALDO & ASSOCIATES

INDEPENDENT AUDITORS' REPORT

The Board of Directors and the Stockholders I-REMIT INC. AND SUBSIDIARIES 26/F Discovery Centre, 25 ADB Avenue Ortigas Centre, Pasig City

Opinion

We have audited the consolidated financial statements of I-REMIT INC. AND SUBSIDIARIES (the "Group"), which comprise the consolidated statements of financial position as at December 31, 2016 and 2015, and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for each of the three years in the period ended December 31, 2016, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2016 and 2015, and its financial performance and its cash flows for each of the three years in the period ended December 31, 2016 in accordance with Philippine Financial Reporting Standards (PFRSs).

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to our audits of the consolidated financial statements in Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. - h -:": i' (j, I': r . 't, .~:Ili I

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T: +632812-1718 to 24 BOA/L No" ..o~o~ . ~ ,~ < .•• A: 18/F Cityland Condominium 10 Tower 1 Rc F: +632 813-6539 156 HV. dela Costa Street, Ayala North, SEeJour A ~CCC:dit~d'I 1 I.!\ r I J. I SSP ~B ~di't:!'" I.\ .. ..J E: [email protected] Makati City, Philippines 1226 CDA CEA Accredited W: www.rsbernaldo.com lC Accredited Revenue Recognition

The amount of revenue recognized in the year on the services rendered for delivery fees are dependent on the volume of remittance transactions from Philippines, Asia Pacific, Europe and North America. Due to time zones differences, significant judgement is applied in determining the appropriate cut-off period. In our view, revenue recognition is significant to our audit as Company might inappropriately account for revenues not yet actually earned. Moreover, revenue is a measure of the Company's financial performance. The accounting policies for revenue recognition are set out in Note 4 in the financial statements and the different revenue streams for the Group have been disclosed in Note 6.

Our response

In order to address the risks of material misstatement relating to revenue recognition, we decided to perform test of control to ascertain that risks are mitigated. Upon testing, we identified that controls on revenue is effectively implemented, duties were properly segregated, documents throughout the transactions were duly signed by the responsible officers and amounts are consistent from the global settlement reports. We reviewed transactions before and after the reporting periods and obtained reasonable assurance that all delivery fees were properly recorded in the correct cut-off period from all regions in accordance with established policies for recognition. Moreover, we perform gross profit analysis to determine reasonableness of profit margins. Furthermore, we analyzed volumes and amounts of remittance transactions on a monthly and annual basis to determine any significant and unusual fluctuation.

Other Information

Management is responsible for the other information. The other information comprises the information included in SEC Form 17-A and Annual Report for the year ended December 31, 2016, but does not include the consolidated financial statements and our auditor's report thereon. The SEC Form 17 -A and Annual Report for the year ended December 31, 2016 are expected to be made available to us after the date of this auditor's report.

Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with PFRSs and for such internal control as management determines is necessary to enable the preparation of consolidated financial stajernentg jjjat are free from material misstatement whether due to fraud or efrro?.'~/' ~)c 't:,; {,,'t .. -'Jtt:Ut- , I 11f' ;.' \;, 'I.l f !-',~ <:;.1 ~ r \/1 C r ~L ~(: I ,;,.(i·'\Vt:; I~' I\~: .r i/ 'H_" J ~ J. Jr/J~ In preparing the consolidated financial statements, management is r,esponsible fm assessing Group's ability to continue as a going concern, disclosing, ~r,af;li~abl f)1Jlq{wr~J.fl.1ate?, to"" going concern and using the going concern basis of accouht,~g tj!}les rm~n'1lg'eme!~t eitHer ,- ~~esno~sto liquidate the Group or to cease operations, or has n~"J~~I~.S!i~; ~~1er,~a•~. iv;:: b~~ ~o ,

Ii 1'1.\.G, /d '!r. 1\' I It',. I, .t ST LI 0 -- - ,::.\\ .VI\ 1:",:.....1 Those charged with governance are responsible for overseeing Group's financial reporting process.

Auditors r Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audits. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audits of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors' report is ROMEO A. DE JESUS, JR.

RO~JV& ,JR. Partner CPA Certificate o. 86071 SEC Group A Accredited Accreditation No. 1135-AR-1 Valid until August 4, 2017 BIR Accreditation No. 08-004744-001-2015 Valid from March 27, 2015 until March 26, 2018 Tax Identification No.1 09-227-897 IC Accreditation No. SP-2016/007-R Valid until August 30, 2019 PTR No. 5929421 Issued on January 15, 2017 at Makati City

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NOTES 2016 2015 2014

ASSETS Current Assets Cash and cash equivalents 7 1,755,129,715 1,593,244,644 1,969,048,590 Financial assets at fair value through profit or loss 9 259,448,441 256,920,610 1.481,530,014 Trade and other receivables - net 8 582,724.407 464,845,362 614,701.489 Prepayments and other current assets 10 38,930.496 34,938,712 35.494,097

2,636,233,059 2,349,949,328 4,100,774,190 Non-current Assets Investment in an associate 11 9,802,353 8.480,274 7.495.453 Property and equipment - net 12 26,809,790 30,233,846 25,255,946 Software - net 13 4,861,231 2.422,090 865,048 Goodwill 14 116,338,247 111.441,191 111.441,191 Retirement asset 25 18,624,728 11,645,574 10,747,784 Deferred tax assets 30 18,557,899 11,134,058 12,190,196 Other non-current assets 15 72,139,607 52,672.417 39,991,059

267,133,855 228,029.450 207,986,677

TOTAL ASSETS 2,903,366,914 2,577,978,778 4,308,760,867

LIABILITIESAND STOCKHOLDERS' EQUITY

LIABILITIES

Current Liabilities Financial liability at fair value through profit or loss 17 5.155,050 1,145,299 1,231,359,673 Beneficiaries and other payables 16 248,062,347 181,025,268 511,012,713 Loans payable 18 1,312,000,000 1,115,000,000 1,305,000,000 Income tax payable 14,598,219 1.455,817 6,249,089

1,579,815,616 1,298,626,384 3,053,621.475

Non-current Liability Deferred tax liabilities 30 7.120,603 4,194,853 3,978,977

TOTAL LIABILITIES 1,586,936,219 1,302,821,237 3,057,600.452

STOCKHOLDERS'EQUITY Capital Stock 19 617,725.800 617,725.800 617,725,800 Additional Paid-in'Capital 19 391.232,478 391,232.478 391,232,478 Unappropriated Retained Earnings 246.528.867 229.718.733 238.040,455 Appropriated Retained Earnings 19 15,458,113 15.048.173 13.960.353 Cumulative Translation Adjustment 19 44.973.624 27,284.187 (4.216.195) Remeasurements - net 25 15.969.926 9,196.343 8,377.877 Treasury Stock 19 (15,458.113) (15.048,173) (13,960,353)

TOTAL STOCKHOLDERS' EQUITY 1.316,430.695 1,275,157,541 1,251,160.415

TOTAL LIABILITIESAND STOCKHOLDERS' EQUITY 2.903.366.914 2,577,978,778 4,308,760,867

(See Notes to Consolidated Financial Statementsl

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.~, I-REMIT INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended December 31,2016,2015 and 2014 (In Philippine Peso)

NOTES 2016 2015 2014 REVENUES 20 748,487,090 685,685,520 773,614,092 COST OF SERVICES 21 254,192,237 228,488,735 269,348,170 GROSS PROFIT 494,294,853 457,196,785 504,265,922 NET TRADING GAINS (LOSSES) 9 10,911,858 (9,926,117) 5,379,333 OTHER INCOME 22 29,045,212 23,642,137 22,945,072 534,251,923 470,912,805 532,590,327 OPERATING EXPENSES 23 483,724,613 445,777,807 507,761,509 EQUITY IN NET EARNINGS 11 1,322,079 984,821 1,310,107

PROFIT BEFORETAX 51,849,389 26,119,819 26,138,925 INCOME TAXES 29 14,669,929 13,377,252 16,900,002 I PROFIT 37,179,460 12,742,567 9';238,923

OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS Translation adjustment 19 17,689,437 31,500,382 5,185,150

OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS Remeasurements - net 25 6,773,583 818,466 1,163,653 24,463,020 32,318,848 6,348,803

TOTAL COMPREHENSIVE INCOME 61,642,480 45,061,415 15,587,726 EARNINGS PER SHARE Basic Earnings per Share 0.0607 0.0208 0.0151

(See Notes to Consolidated Financial Statements)

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(In Philippine Peso)

Additional Paid-in Unappropriated Appropriated Cumulative Translation Remeasurements Notes Capital Stock Capital Retained Eamings Retained Eamings Adjustment Treasury Stock - net Total

Balance, January 1,2014 617,725,800 391,232,478 261,003,338 12,400,309 (9,401,345) (12,400,309 ) 7,214,224 1,267,774,495 Profit 9,238,923 9,238,923 Cash dividends 19 (30,641,806) (30,641,806) Purchase of own stock 19 (1,560,044) (1,560,044) Appropriations of retained earnings 19 (1,560,000) 1,560,044 44 Other comprehensive income 19,25 5,185,150 1,163,653 6,348,803

Balance, December 31, 2014 19 617,725,800 391,232,478 238,040,455 13,960,353 (4,216,195) (13,960,353) 8,377,877 1,251,160,415 Profit 12,742,567 12,742,567 Cash dividends 19 (19,976,469) (19,976,469) Purchase of own stock 19 (1,087,820) (1,087,820) Appropriations of retained earnings 19 (1,087,820) 1,087,820 Other comprehensive income 19 31,500,382 818,466 32,318,848

Balance, December 31,2015 19 617,725,800 391,232,478 229,718,733 15,048,173 27,284,187 (15,048,173) 9,196,343 1,275,157,541 Profit 37,179,460 37,179,460 Cash dividends 19 (19,959,386) (19,959,386) Purchase of own stock 19 (409,940) (409,940) Appropriations of retained earnings 19 (409,940) 409,940 Other comprehensive income 19,25 17,689,437 6,773,583 24,463,020

Balance, December 31,2016 19 617,725,800 391,232,478 246,528,867 15,458,113 44,973,624 (15,458,113) 15,969,926 1,316,430,695

(See Notes to Consolidated Financial Statements)

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NOTES 2016 2015 2014 CASH FLOWS FROM OPERATINGACTIVITIES Profit before tax 51,849,389 26,119,819 26,138,925 Adjustments for: Finance costs 18 40,573,044 31,340,694 48,609,172 Provision for bad debts 8,23 10,939,434 3,797,602 6,337,077 Depreciation 12,23 10,459,894 8,885,638 12,178,388 Unrealized foreign exchange (gain) loss - net 22,23 7,253,883 (2,838,435) 18,243,161 Retirement benefits 23,25 2,697,393 3,067,480 2,102,794 Amortization 13,23 1,204,286 421,081 725,724 Loss on sale of property and equipment 12,23 32,981 Equity in net earnings of associates 11 (1,322,079) (984,821) (1,310,107) Dividend income 9,22 (1,657,718) (1,210,342) (844,441) Gain on disposal of financial asset at FVTPL 9 (3,586,576) (4,430,779) (2,227,794) Fair value loss (gain) on financial asset at FVTPL 9 (7,325,282) 14,356,896 (3,151,539) Finance income 7,9,22 (11,416,729) (13,351,305) (15,184,919) Gain on sale of property and equipment 12,22 (18,934) (77,690)

Operating cash flows before changes in working capital 99,668,939 65,187,575 91,538,751 Decrease (Increase) in operating assets: Financial assets at FTVPL 5,983,658 1,210,435,992 (659,426,664) Trade and other receivables (122,496,796) 146,058,524 457,737,861 Prepayments and other current assets (8,142,181) 555,386 (13,482,347) Other non-current assets (18,922,918) (12,681,359)(11,353,802) Increase (Decrease) in operating liabilities: Beneficiaries and other payables 49,839,164 (329,262,442) 311,318,185 Financial liability at fair value through profit or loss (1,145,299) (1,231,359,673) 661,765,815

Cash generated from (used in) operations 4,784,567 (151,065,997) 838,097,799 Income taxes paid (8,070,791) (18,128,692)(20,966,364) Finance cost paid 18 (40,958,447) (32,065,697) (49,060,596)

Net cash from (used in) operating activities (44,244,671 ) (201,260,386) 768,070,839

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial assets at FVTPL 9 97,463,893 102,158,846 92,954,647 Finance income received 13,120,831 13,116,477 14,894,289 Dividend income received 9,22 1,657,718 1,210,342 844,441 Proceedsfrom disposals of property and equipment 12 76,082 2,789,978 320,308 Payment for net asset acquisition 14 (813,821 ) Additions to software 13 (3,642,427) (1,980,236) (945,000) Additions to property and equipment 12 (6,720,731) (17,361,656) (12,243,698) Additions to financial asset at FVTPL 9 (81,159,432) (102,342,330) (90,823,754) Contributions to retirement fund 25 (2,796,033) Payment of advances from stockholders (7,289,480)

Net cash from (used in) investing activities 19,982,113 (5,204,612) (2,288,247)

CASH FLOWS FROM FINANCING ACTIVITIES Proceedsfrom loans 18 1,312,000,000 1,115,000,000 1,305,000,000 Purchase of own stock 19 (409,940) (1,087,820) (1,560,000) Payment of cash dividends 19 (19,959,386) (19,976,469) (30,641,806) Payments of loans 18 (1,115,000,000) (1,305,000,000) (988,000,000)

Net cash from (used in) financing activities 176,630,674 (211,064,289) 284,798,194

EFFECTSOF FOREIGNEXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 9,516,955 41,725,341.00 (24,848,738) NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 161,885,071 (375,803,946) 1,025,732,048 CASH AND CASH EQUIVALENTS AT BEGINNINGOF YEAR 1,593,244,644 1,969,048,590 943,316,542 CASH AND CASH EQUIVALENTS AT END OF YEAR 1,755,129,715 1,593,244,644 1,969,048,590

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1. CORPORATE INFORMATION

I-Remit Inc. (the "Parent Company") was incorporated in the Philippines and registered with the Securities and Exchange Commission (SEC) on March 5, 2001 and started commercial operations on November 11, 2001. The Parent Company and its subsidiaries (collectively referred to as the "Group", except Power Star Asia Group Limited (PSAGL), are engaged in the business of fund transfer and remittance services of any form or kind of currencies or monies, either by electronic, telegraphic, wire or any other mode of transfer; delivery of such funds or monies, both in domestic and international market, by providing either courier or freight forwarding services; and conduct of foreign exchange transactions as may be allowed by law and other allied activities relative thereto. PSAGL, on the other hand, provides financial advisory and other services.

The Parent Company's common shares were listed with the Philippine Stock Exchange on October 17, 2007.

The Parent Company is 29.46% owned by STAR Equities, Inc., 21.50% owned by JTKC Equities, Inc., 23.58% owned by Surewell Equities Inc., 3.28% owned by JPSA Global Services Co., and the rest by the public.

The Group, which is domiciled in the Philippines, has its registered office address and principal place of business at the 26/F Discovery Centre, 25 ADB Avenue, Ortigas Center, Pasig City.

The Group's subsidiaries and associate are as follows:

Effective Percentage of Principal Country of Functional Ownership Subsidiaries Activities Incorporation Currency (2014 to 2016) International Remittance Fund transfer and (Canada) Ltd. remittance Canadian (IRCL) services Canada Dollar (CAD) 100% Fund transfer and I-Remit Australia remittance Australian Pty Ltd (IAPL) services Australia Dollar (AUD) 100% IRemit Global Fund transfer and Remittance remittance United Great Britain Limited (lGRL) services Kingdom Pound (GBP) 100% I-Remit New Fund transfer and Zealand Limited remittance New Zealand (INZL) services New Zealand Dollar (NZD) 100%

Fund transfer and ~ - ,:~,~. : •j I l ,.' I;, , l t .. ;t " (!'I~::' "~''\,·,.I~ ~'_f .i.: IREMIT Remittance remittance 't., ,:~\: ,,·,;(.·;~Y'.I~.' ' I.' , ,. Consulting services and • GmbH management . (lRCGmbH) consultancy Austria \IJete E~uro~f~~3P:"17 1do%" . I

•,J!.,."f" ' •• ~. '; ., ':: '~', Effective Percentage of Principal Country of Functional Ownership Subsidiaries Activities Incorporation Currency (2014 to 2016) I-Remittance Fund transfer and Singapore Pte. remittance Singapore Ltd. (IRSPL) services Singapore Dollar (SGD) 100% Fund transfer and K.K. Iremit Japan remittance Japanese (KKIJ) services Japan Yen (JPY) 100% Lucky Star Fund transfer and Management remittance Hong Kong Limited (LSML) services Hong Kong Dollar (HKD) 100% Power Star Asia Financial advisory Group Limited and other Hong Kong (PSAGL) services Hong Kong Dollar (HKD) 100% Worldwide Fund transfer and Exchange Pty remittance Australian Ltd (WEPL) services Australia Dollar (AUD) 100%

Effective Percentage of Country of Functional Ownership Associate Principal Activity Incorporation Currency (2014 to 2016) Fund transfer Hwa Kung Hong & and remittance New Taiwan Co., Ltd. (HKHCL) services Taiwan Dollar (NTD) 49%

The summarized financial information of the subsidiaries is as follows:

2016 2015 IRCL Total assets P 87,762,255 P 69,467,545 Total liabilities 75,385,540 58,162,950 Net assets 12,376,715 11,304,595 Revenue 90,787,637 83,560,938 Income (Loss) 109,082 (8,620,904)

LSML Total assets 11,782,785 12,089,195 Total liabilities 18,114,586 17,293,900 Net liabilities (6,331,801) (5,204,705) Revenue 11,016,416 11,412,862 Loss (701,586) (3,324,703)

IGRL Total assets 212,267,834 198,090,933 Total liabilities 229,277,651 225,989,200 Net liabilities (17,009,817) (27,898,267) Revenue 71,937,017 67,079,926 Loss (14,843,794) (41,360,892)

2016 2015 IAPL Total assets P 5,129,754 P 7,195,522 Total liabilities 1,517,569 3,454,886 Net assets 3,612,185 3,740,636 Revenue 256,186 284,587 Income (Loss) (227,721) 148,935

WEPL Total assets 44,512,963 41,934,677 Total liabilities 48,852,029 42,221,563 Net liabilities (4,339,066) (286,886) Revenue 29,613,886 30,691,619 Loss (3,984,659) (2,138,209)

IRCGmbH Total assets 289,915 371,587 Total liabilities 19,663,890 19,267,149 Net liabilities (19,373,975) (18,895,562) Loss (383,763) (2,260,606)

INZL Total assets 9,969,717 11,173,305 Total liabilities 31,172,109 30,607,740 Net liabilities (21,202,392) (19,434,435) Revenue - 1,541 Loss (701,956) (3,099,807)

PSAGL Total assets 615,740,790 532,665,940 Total liabilities 34,653,564 8,156,688 Net assets 581,087,226 524,509,252 Revenue 6,921,565 49,637,241 Income 27,431,838 43,150,272

KKIJ Total assets 41,176,271 97,022,663 Total liabilities 17,214,126 80,795,875 Net assets 23,962,145 16,226,788 Revenue 30,458,045 23,888,248 Income 37,795,938 2,675,014

IRSPL Total assets 52,603,942 8,447,674 Total liabilities 51,789,559 5,348,351 Net assets 814,383 3,099,323 Revenue 14,306,441 - Loss (2,398,746) (243,450)

The summarized financial information of the Company’s associate is as follows:

2016 2015 HKHCL Total assets P 31,891,138 P 33,960,413 Total liabilities 20,471,304 24,277,987 Net assets 11,419,834 9,682,426 Revenue 17,296,369 16,176,383 Income 2,698,119 2,009,839

The Group’s ownership to WEPL consists of direct voting interest of 70% and indirect voting interest through IAPL of 30%. On March 25, 2011, the Group acquired 35% ownership interest in WEPL from the non-controlling stockholders for a consideration of P12,303,818. The carrying value of the non-controlling interest at acquisition was P1,090,315. The difference of P11,213,503 between the consideration paid and the carrying value of the non- controlling interest was recognized as equity adjustment and deducted from additional paid-in capital. The acquisition increased the Group’s effective ownership in WEPL from 65% to 100%. IRCGmbH is formerly known as IREMIT EUROPE Remittance Consulting AG (IERCAG). On May 5, 2011, the Group acquired the 25.10% ownership interest in IERCAG from the non-controlling stockholder for a consideration of P25,014,743. The carrying value of the non-controlling interest at acquisition was P2,052,777 deficit. The difference of P27,067,520 between the consideration paid and the carrying value of the non-controlling interest was recognized as equity adjustment and deducted from additional paid-in capital. The acquisition increased the Group’s ownership interest in IERCAG to 100% from 74.90%. Consequently, on October 11, 2011, IERCAG changed its legal name to IREMIT Remittance Consulting GmbH (IRCGmbH) and changed its legal status from a stock company to a limited liability company. It also amended its Articles of Incorporation to include management consultancy in its business activities. On June 10, 2011, the Group incorporated KKIJ in Japan to provide remittance services. KKIJ started its commercial operations last May 23, 2012. On February 11, 2014, the Board of Directors (BOD) of IGRL approved the increase of its authorized shares to 438,000 with which the Parent Company invested GBP111,000 or P8,209,659 for the additional capital. The increase in the said investment did not change the ownership status of the Parent Company because IGRL is 100% owned by the Parent Company. On March 31, 2014, the BOD of KKIJ approved the increase of its authorized shares to 40,000,000 with which the Parent Company invested JPY30,000,000 or P13,041,165 for the additional capital. Moreover, on September 1, 2014, the BOD approved another increase of KKIJ’s authorized shares to 167,850,000 with the Parent Company investing JPY127,850,000 or P53,645,860. The total additional investments were made through conversion of the Parent Company’s due from KKIJ into equity interest. The increase of the said investment did not change the ownership status of the Parent Company because KKIJ is 100% owned by the Parent Company.

On February 11, 2015, the BOD of IGRL approved the increase of its authorized shares to 1,080,000 with which the Parent Company invested GBP642,000 or P43,430,465 for the additional capital. The increase in said investment did not change the ownership status of the Parent Company because IGRL is 100% owned by the Parent Company. On February 12, 2016, the BOD of IGRL approved the increase of its authorized shares to 1,617,000 with which the Parent Company invested GBP537,000 or P35,838,789 for the additional capital. The increase in said investment did not change the ownership status of the Parent Company because IGRL is 100% owned by the Parent Company. On February 27, 2015, the Parent Company invested SGD100,000 or P3,251,710 on I-Remittance Singapore Pte. Ltd. (IRSPL), a company situated in Singapore and incorporated in accordance with the provisions of the Singapore Companies Act, Chapter 50 on February 17, 2014. The Parent Company acquired hundred percent (100%) ownership over IRSPL for a total of 100,000 ordinary shares fully paid at a subscription price equivalent to SGD 1.00 for each share. On July 31, 2016, the BOD of the Group approved the acquisition of I-Remit Singapore PTE. Ltd. (ISPL) at SGD197,579 or its equivalent P6,775,859 from its recorded net assets of SGD 54,785 as of the close of the same period.

2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS

The Philippine Financial Reporting Standards Council (PFRSC) approved the issuance of the new and revised Philippine Financial Reporting Standards (PFRS). The term “PFRS” in general includes all applicable PFRS, Philippine Accounting Standards (PAS), and Interpretations issued by the Philippine Interpretations Committee (PIC), Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) approved by the PFRSC and adopted by SEC. These new and revised PFRS prescribe new accounting recognition, measurement and disclosure requirements applicable to the Group. When applicable, the adoption of the new standards was made in accordance with their transitional provisions, otherwise the adoption is accounted for as change in accounting policy under PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors.

2.01 New and Revised PFRSs Applied with No Material Effect on the Consolidated Financial Statements

The following new and revised PFRSs have been adopted in these consolidated 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.

Moreover, it clarifies that 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. And, an investment entity measuring all of its subsidiaries at fair value shall provide the disclosures relating to investment entities as required by PFRS 12. The amendments are effective for annual periods beginning on or after January 1, 2016 and must be applied retrospectively. Earlier application is permitted.

 PFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations Amendments in PFRS 11 require an acquirer of an interest in a joint operation in which the activity constitutes a business to apply the accounting principles and disclosure requirements in PFRS 3 and other PFRS for business combinations. This is applicable in initial acquisition and acquisition of initial interest in a joint operation. This is applicable prospectively to annual periods beginning January 1, 2016.

 PFRS 14, Regulatory Deferral Accounts PFRS 14 issued on January 30, 2014, provides temporary guidance for first-time adopters of PFRS on accounting for regulatory deferral account balances. Regulatory deferral account balances are describe as amounts of expense or income that would not be recognized as assets or liabilities in accordance with other Standards, but that qualify to be deferred because the amount is included, or is expected to be included, by the rate regulator in establishing the price(s) that an entity can charge to customers for rate-regulated goods or services. PFRS 14 permits an entity that adopts PFRS to continue to use, in its first and subsequent PFRS financial statements, its previous generally accepted accounting principles (GAAP) accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral account balances without specifically considering the requirements of paragraph 11 of PAS 8. PFRS 14 requires entities to present regulatory deferral account balances as separate line items in the statement of financial position and to present movements in those account balances as separate line items in the statement of profit or loss and other comprehensive income. PFRS 14 also requires specific disclosures to identify the nature of, and risks associated with, the rate regulation that has resulted in the recognition of regulatory deferral account balances in accordance with this Standard. PFRS 14 is effective for a period beginning on or after January 1, 2016. Earlier application is permitted.

 Amendments to PAS 1, Disclosure Initiative The amendments clarify that information should not be obscured by aggregating or by providing immaterial information. Materiality considerations shall apply to all parts of the financial statements even if when a standard requires a specific disclosure. In addition, the amendments introduce a clarification that the list of line items to be presented in the statement of financial position and statement of comprehensive income can be disaggregated and aggregated as relevant. Also, it clarifies that an entity's share of other comprehensive income (OCI) of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss. Further, the amendments add additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes. The IASB also removed guidance and examples with regard to the identification of significant accounting policies that were perceived as being potentially unhelpful. The amendments are effective beginning on or after January 1, 2016. Earlier application permitted.

 PAS 16, Property, Plant and Equipment and PAS 38, Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortization The amendments clarify that revenue-based depreciation is not appropriate for property, plant and equipment. Revenue-based amortization is allowed only when the intangible assets are expressed as a measure of revenue or when it can be demonstrated that revenue and the consumption of economic benefits of the intangible asset are highly correlated. This is effective prospectively from January 1, 2016. Earlier application is permitted.

 PAS 16, Property, Plant and Equipment and PAS 41, Agriculture – Bearer Plants The amendments include bearer plants, which are living plants that are used in the production or supply of agricultural produce over a several periods and has a remote likelihood of being sold as agricultural produce, to be within the scope of PAS 16 instead of PAS 41 and consequently be accounted for in the same way as property, plant and equipment. However, the produce growing on bearer plants will remain within the scope of PAS 41. The amendments are applicable for annual periods beginning on or after January 1, 2016. Earlier application is permitted.

 PAS 27, Separate Financial Statements – Equity Method in Separate Financial Statements The amendments in PAS 27 permit an entity to account its investments in subsidiaries, joint ventures and associates using the equity method as described in PAS 28 in its separate financial statements. The amendments shall be applied for annual periods beginning January 1, 2016 retrospectively. Earlier application is permitted.

 Improvements to PFRS (2014) – Effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted. PFRS 5, Non-current Assets Held for Sale and Discontinued Operations – The amendments require that an asset reclassified directly from being held sale to being held for distribution, or directly from being held for distribution to being held for sale, the requirements for classification, presentation and measurement shall continue to be applied in accordance with this standard PFRS 7, Financial Instruments: Disclosure – The amendments clarify that the right to service a financial asset transferred may be retained for a fee that is included in the servicing contract. The right to earn a fee for servicing the financial asset is generally continuing involvement for the purpose of applying the disclosure requirements. The service contract must be assessed to determine whether there is a continuing involvement in the financial asset transferred. Further, the additional disclosure required by amendments to PFRS 7, Disclosure – Offsetting Financial Assets and Financial Liabilities is not specifically required for all interim periods. For condensed financial interim financial statements, the disclosure requirements are required to be given if the financial statements are prepared in accordance with PAS 34, Interim Financial Reporting when the inclusion would be required by the standard. PAS 19, Employee Benefits – It clarifies that the high quality corporate bonds used to estimate the discount rate for post-employment benefit obligations should be denominated in the same currency as the liability and that the depth of the market for high quality corporate bonds should be assessed at the currency level. PAS 34, Interim Financial Reporting – It clarifies that information shall be disclosed either in the notes to the interim financial statements or elsewhere in the interim financial report, by incorporating cross-reference from the interim financial statements to the other part of the interim financial report which is available to users on the same terms as the interim financial statements and at the same time.

 PIC Q&A No. 2015-01 Conforming Changes in PIC Q&As – Cycle 2015 This Q&A No. 2015-01 sets out the amendments to certain PIC Q&As. These changes are made as a consequence of the issuance of new Philippine Financial Reporting Standards (PFRS) and amendments to certain existing PFRS that are effective as of January 1, 2013. The effective date of the amendments is included in the Q&As affected.

 PIC Guidance on Financial Reporting This guidance is issued to help preparers of financial statements identify and address some of the common pitfalls and difficult interpretative issues arising from application of PAS 7, Statement of Cash Flows.

2.02 New and Revised PFRSs in Issue but Not Yet Effective

The Group will adopt the following standards and interpretations enumerated below when they become effective. Except as otherwise indicated, the Group does not expect the adoption of these new and amended PFRS, to have significant impact on the financial statements.

2.02.01 Standard Adopted by FRSC and Approved by the Board of Accountancy (BOA)

 PFRS 9, Financial Instruments (2014) PFRS 9, amended on July 24, 2014, made limited amendments to the requirements for classification and measurement of financial assets and requirements for impairment. The amendments introduce a ‘fair value through other comprehensive income’ measurement category for particular simple debt instruments. Also, it introduced impairment requirements relating to the accounting for an entity’s expected credit losses on its financial assets and commitments to extend credit. These requirements eliminate the threshold that was in PAS 39 for the recognition of credit losses. Under the impairment approach in PFRS 9 it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses, and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition and, consequently, more timely information is provided about expected credit losses. PFRS 9 supersedes PFRS 9 (2009), PFRS 9 (2010) and PFRS 9 (2013) and is effective retrospectively for annual periods beginning on or after January 1, 2018, with earlier application permitted.

 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 clarify the treatment of the sale or contribution of assets between an investor and its associate and joint venture. This requires an investor in its financial statements to recognize in full the gains and losses arising from the sale or contribution of assets that constitute a business while recognize partial gains and losses if the assets do not constitute a business (i.e. up to the extent only of unrelated investor share). On January 13, 2016, the FRSC decided to postpone the original effective date of January 1, 2016 of the said amendments until the IASB has completed its broader review of the research project on equity accounting that may result in the simplification of accounting for such transactions and of other aspects of accounting for associates and joint ventures.

 PFRS 16, Leases Introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. On the other hand, it substantially carries forward the lessor accounting requirements in PAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. Effective for annual periods beginning on or after January 1, 2019, however, earlier application is not permitted until the FRSC has adopted the new revenue recognition standard. Currently, the result will be an increase in recognized assets and liabilities and more lease expenses recognized in the early periods of a lease and less in the later periods. Further impact of this standard will be assessed by the Company once it becomes effective.

 IFRIC 15, Agreements for the Construction of Real Estate The Interpretation addresses how entities should determine whether an agreement for the construction of real estate is within the scope of PAS 11, Construction Contracts, or PAS 18, Revenue, and when revenue from the construction of real estate should be recognized. The requirements have not affected the accounting for the Company’s construction activities. Effectivity of this interpretation has been deferred until the final Revenue standard is issued by International Accounting Standards Board (IASB), and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed.

 Amendments to PAS 7, Disclosure Initiative The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash charges. Effective for annual periods beginning on or after January 1, 2017 and shall be applied prospectively, with earlier application permitted.

 Amendments to PAS 12, Recognition of Deferred Tax Assets for Unrealized Losses The amendments clarify that unrealized losses on debt instruments measured at fair value in the financial statements but at cost for tax purposes can give rise to deductible temporary differences. In addition, these clarify that the carrying amount of an asset does not limit the estimation of probable future taxable profits and that when comparing deductible temporary differences with future taxable profits, the future taxable profits excludes tax deductions resulting from the reversal of those deductible temporary differences. Effective for annual periods beginning on or after January 1, 2017 and shall be applied retrospectively, with earlier application permitted.

2.02.02 Standard Adopted by FRSC but pending for Approval of the BOA

 Amendments to PFRS 2, Classification and Measurement of Share-based Payment Transactions The amendments clarify the accounting for the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and modification to the terms and conditions of share-based payment transactions that will result to change in classification from cash-settled to equity-settled. The amendments are effective for annual periods beginning on or after January 1, 2018. Retrospective application is permitted if elected for all of the aforementioned amendments and other criteria are met.

 PIC Q&A No. 2016-02, PAS 32 and PAS 38 – Accounting Treatment of Club Shares Held by an Entity

A proprietary club share entitles the shareholder to a residual interest in the net assets upon liquidation which justifies that such instrument is an equity instrument and thereby qualifies as a financial asset to be accounted for under PAS 39, Financial Instruments: Recognition and Measurement. A non-proprietary club share, though an equity instrument in its legal form, is not an equity instrument in the context of PAS 32. Furthermore, it does not entitle the holder to a contractual right to receive cash or another financial asset from the issuing corporation. The holder of the share, in substance, only paid for the privilege to enjoy the club facilities and services but not for ownership of the club. In such case, the holder must account for the share as an intangible asset under PAS 38.

3. BASIS FOR THE PREPARATION AND PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

3.01 Statement of Compliance

The consolidated financial statements have been prepared in conformity with PFRS and are under the historical cost convention except for certain financial assets carried at fair value or at amortized cost.

3.02 Functional and Presentation Currency

Items included in the consolidated financial statements of the Group are measured using Philippine Peso (P), the currency of the primary economic environment in which the Parent Company operates (the “functional currency”). The Group chose to present its consolidated financial statements using the Parent Company’s functional currency.

3.03 Basis of Consolidation

The consolidated financial statements include the financial statements of the Parent’s Company and its subsidiaries. The consolidated financial statements incorporate the financial statements of the Parent Company and the entities controlled by the Parent Company (its subsidiaries) up to December 31 of each year. Control is achieved when the Parent Company has exposure or rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over an investee. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. Subsidiaries are consolidated from the date when control is transferred to the Parent Company and ceases to be consolidated from the date when control is transferred out of the Parent Company. At acquisition, the assets and liabilities and the contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the assets acquired is recognized as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the profit and loss in the period of acquisition. Goodwill is initially measured at cost, being the excess of the aggregate of fair value of the consideration transferred and the amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash- generating units (CGU) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. Inter-group balances and transactions, including inter-group profits and unrealized profits and losses, are eliminated. When necessary, adjustments are made to the financial statements of the subsidiary to bring the accounting policies used in line with those used by the Group. All inter-group transactions, balances, income and expenses are eliminated during consolidation. Non-controlling interests represent the portion of profit or loss and net assets not held by the Parent Company and are presented in the consolidated statements of comprehensive income and within equity in the consolidated statements of financial position, separately from the Group’s equity attributable to equity holders of the Parent Company. Upon the loss of control, the Group derecognizes the assets and liabilities of the subsidiary, any non-controlling interests and other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of controls is recognized in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date the control is lost. Subsequently, it is accounted for as entity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

4. SIGNIFICANT ACCOUNTING POLICIES

Principal accounting and financial reporting policies applied by the Group in the preparation of its consolidated financial statements are enumerated below and are consistently applied to all the years presented, unless otherwise stated.

4.01 Segment Information

An operating segment is a component of the Group: (a) that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses relating to transactions with other components of the Group; (b) whose operating results are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and (c) for which discrete financial information is available. The Group reports separately, information about an operating segment that meets any of the following quantitative thresholds: (a) its reported revenue, including both sales to external customers and inter-segment sales or transfers, is ten percent (10%) or more of the combined revenue, internal and external, of all operating segments, provided that; (b) the absolute amount of its reported profit or loss is ten percent (10%) or more of the greater, in absolute amount, of the combined reported profit of all operating segments that did not report a loss and the combined reported loss of all operating segments that reported a loss; and (c) its assets are ten percent (10%) or more of the combined assets of all operating segments. Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if Management believes that information about the segment would be useful to users of the consolidated financial statements. The remittance business of the Group is currently organized into four (4) regions namely as: Philippines, Asia Pacific, Europe and North America. These regions are the basis on which the Group reports its primary segment information.

4.02 Financial Assets

Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets that are subsequently measured at amortized cost, and where the purchase or sale are under a contract whose terms require delivery of such within the timeframe established by the market concerned are initially recognized on the trade date. Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments (HTM), ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. The Group’s financial assets include cash and cash equivalents, trade and other receivables, financial assets at FVTPL, guaranteed investment certificates presented under prepayments and other current assets and refundable deposits presented under ‘other non-current assets’.

4.02.01 Effective Interest Method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating finance income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts, through the expected life of the debt instrument, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Income is recognized on an effective interest method for debt instruments other than those financial assets carried at fair value through profit or loss.

4.02.02 Amortized Cost Amortized cost is computed using the effective interest rate method less any allowance for impairment and principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of effective interest rate.

4.02.03 Financial Assets at FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. A financial asset is classified as held for trading if:  it has been acquired principally for the purpose of selling it in the near term; or  on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or  it is a derivative that is not designated and effective as a hedging instrument. Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss subsequently. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the consolidated statements of comprehensive income. Fair value is determined in the manner described in Note 31.

4.02.04 Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash in banks and cash equivalents. Cash on hand is measured at face value and cash deposits held at call with bank are subject to insignificant risk of change in value. This shall be measured at the undiscounted amount of the cash or other consideration expected to be paid or received. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with maturities of three months or less from the date of acquisition and that are subject to an insignificant risk of change in value.

4.02.05 Trade and Other Receivables Trade and other receivables are measured at amortized cost using the effective interest method, less any impairment. Finance income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

4.02.06 Impairment of Financial Assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. Objective evidence of impairment could include:  significant financial difficulty of the issuer or counterparty; or  default or delinquency in interest or principal payments; or  it becoming probable that the borrower will enter bankruptcy or financial re-organization; or  the lender, for economic or legal reasons relating to the borrower’s financial difficulty, grants the borrower a concession that the lender would not otherwise consider; or  the disappearance of an active market for that financial asset because of financial difficulties; or  observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group, including (i) adverse changes in the payment status of borrowers in the group (e.g. an increased number of delayed payments or an increased number of credit card borrowers who have reached their credit limit and are paying the minimum monthly amount); or (ii) national or local economic conditions that correlate with defaults on the assets in the group (e.g. an increase in the unemployment rate in the geographical area of the borrowers, a decrease in property prices for mortgages in the relevant area, a decrease in oil prices for loan assets to oil producers, or adverse changes in industry conditions that affect the borrowers in the group). Other factors may also be evidenced of impairment, including significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates. For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

4.02.07 Derecognition of Financial Assets The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

4.03 Prepayments and Other Current Assets

Prepayments and other current assets represent expenses not yet incurred but already paid in cash. These are initially recorded as assets and measured at the amount of cash paid. Subsequently, these are charged to profit or loss as they are consumed in operations or expire with the passage of time. Prepayments and other current assets are classified in the consolidated statements of financial position as current assets when the expenses related to these are expected to be incurred within one year or the Group’s normal operating cycle whichever is longer. Otherwise, these are classified as non-current assets. The Group’s other current assets includes short-term guaranteed investment certificates. These investments cannot be withdrawn before its maturity date and may be reinvested for the principal and the related finance income earned.

4.04 Investment in an Associate

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with PFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in an associate is initially recognized in the consolidated statements of financial position at cost and adjusted thereafter to recognize Group’s share of the profit or loss and other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. The requirements of PAS 39 are applied to determine whether it is necessary to recognize any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with PAS 36, Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with PAS 36 to the extent that the recoverable amount of the investment subsequently increases. An entity loses significant influence over an investee when it loses the power to participate in the financial and operating policy decisions of that investee. The loss of significant influence can occur with or without a change in absolute or relative ownership levels. The Group measures and recognizes any remaining investments at fair value. Any difference between the carrying amount, the associate upon loss of significant influence and the fair value of investment retained and proceeds from disposal is recognized in profit or loss.

4.05 Property and Equipment

Property and equipment are initially measured at cost. The cost of an asset consists of its purchase price and costs directly attributable to bringing the asset to its working condition for its intended use. Subsequent to initial recognition, property and equipment are carried at cost less accumulated depreciation and accumulated impairment losses. Subsequent expenditures relating to an item of property and equipment that have already been recognized are added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Group. All other subsequent expenditures are recognized as expenses in the period in which those are incurred. Depreciation is computed using straight-line method based on the estimated useful lives of the assets as follows:

Office and communication equipment 3 – 5 years Transportation and delivery equipment 3 – 5 years Furniture and fixtures 3 – 5 years

Leasehold improvements are depreciated over the shorter period between the improvements’ useful life of five (5) years or the lease term. The property and equipment’s residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, if there is an indication of a significant change since the last reporting date.

An item of property and equipment is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of a property and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss.

4.06 Intangible Assets

Intangible assets acquired separately are initially carried at cost. Subsequently, intangible assets with definite useful lives are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The estimated residual value, useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The amortization expense on the intangible assets with finite useful lives is recognized in the consolidated statements of comprehensive income as operating expenses consistent with the function of the intangible asset. Intangible assets with indefinite lives are tested for impairment annually either individually or at the CGU level. Such intangibles are not amortized. The useful life of an intangible asset with an indefinite useful life is reviewed annually to ensure the carrying amount does not exceed the recoverable amount regardless of whether an indicator of impairment is present. An intangible asset is derecognized on disposal or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss.

4.06.01 Software Software is carried at cost less accumulated amortization and any impairment in value. The cost of the asset is the amount of cash or cash equivalents paid or the fair value of the other considerations given up to acquire the asset at the time of acquisition or production. Amortization of software is computed using straight-line method based on the estimated useful lives of three (3) to five (5) years of the assets.

4.06.02 Goodwill Any excess of the acquisition cost over the fair values of the identifiable net assets acquired is recognized as goodwill. Goodwill represents the excess of the acquisition cost over the fair value of their identifiable net assets at the date of acquisition of IGRL, LSML, IAPL, IRCL, WEPL and IRSPL. Following initial recognition, goodwill is reviewed for impairment annually or frequently if events or changes in circumstances indicate that the carrying value may be impaired. Goodwill is not amortized but tested for impairment at least on an annual basis.

4.07 Derivative Financial Instruments

The Group enters into a variety of derivative financial instruments to manage its foreign exchange rate risk, primarily foreign exchange forward contracts. Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than twelve (12) months and it is not expected to be realized or settled within twelve (12) months. Other derivatives are presented as current assets or current liabilities.

4.07.01 Forward Contract Transaction Forward contract is an agreement between a buyer and a seller in which the buyer has the right and obligation to buy a specified asset on a specified future date and at a specified price. The seller is also under an obligation to perform as per the terms of the contract. The underlying asset can be a stock, a commodity, or a bond. The basis of the Group in valuing its forward contract transactions is Market Rate, which is the current or prevailing average exchange rate in the financial market for the foreign currency to be trade. Forward contract are initially recognized at fair value using market rate at the date a forward contract is entered. Subsequently, it will be measured to its fair value at the end of each reporting period and at value date which pertains to completion of the contract. Resulting unrealized gain or loss is recognized in profit or loss at the end of each reporting period, while realization of gain or loss is recognized in profit or loss at value date.

4.08 Impairment of Assets

At each reporting date, the Group assesses whether there is any indication that any assets other than deferred tax assets, assets arising from employee benefits and financial assets that are within the scope of PAS 39, Financial Instruments: Recognition and Measurement, may have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible asset with indefinite useful life are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized as an expense. The amount of impairment is applied first to the goodwill attributable to the cash- generating unit then to the identifiable net assets. For assets other than goodwill, when an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized as an income. With respect to goodwill, amounts recognized as impairment shall not be reversed in a subsequent period.

4.09 Borrowing Costs

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

4.10 Financial Liabilities and Equity Instruments

4.10.01 Classification as Debt or Equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

4.10.02 Financial Liabilities Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’. The Group’s financial liabilities consist of financial liabilities at FVTPL, beneficiaries and other payables (except payable to government agencies) and loans payable.

4.10.03 Financial Liability at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:  such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;  the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or  it forms part of a contract containing one or more embedded derivatives, and PAS 39, Financial Instruments: Recognition and Measurement permits the entire combined contract to be designated as at FVTPL. Financial liability at FVTPL is stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss subsequently. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the consolidated statements comprehensive income. Fair value is determined in the manner described in Note 31.

4.10.04 Other Financial Liabilities Other financial liabilities, including borrowings, are initially measured at fair value inclusive of directly attributable transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with finance cost recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating finance cost over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

4.10.05 Derecognition of Financial Liabilities The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or expired. When an existing 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 de-recognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

4.10.06 Equity Instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds, net of tax. The cost of acquiring the Group‘s own shares are shown as a deduction from equity until the shares are cancelled or reissued. When such shares are subsequently sold or reissued, any consideration received, net of directly attributable incremental transaction costs and the related income tax effects, is included in equity.

4.11 Offsetting of Financial Instruments Financial assets and 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 assets and settle the liabilities simultaneously.

4.12 Employee Benefits

4.12.01 Short-term Benefits The Group recognizes a liability net of amounts already paid and an expense for services rendered by employees during the accounting period. Short-term benefits include salaries and wages, de-minimis fringe benefits, sick and vacation leave pay, training and development and 13th month pay.

4.12.02 Post-employment Benefits Contributions to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit plans are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. The Group has a funded, non-contributory defined benefit retirement plan. This benefit defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The cost of providing benefits is determined using the Projected Unit Credit Method which reflects services rendered by employees to the date of valuation and incorporates assumptions concerning employees’ projected salaries. Post-employment expenses include current service cost, past service cost, and net interest on defined benefit asset/liability. Re-measurements which include cumulative actuarial gains and losses, return on plan assets, and changes in the effects of asset ceiling are recognized directly in other comprehensive income and is also presented under equity in the consolidated statements of financial position. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognized immediately in profit or loss. At the end of each reporting period, the retirement assets recognized in the consolidated statements of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation less the fair value of plan assets. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market rates on government bond that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. The asset that resulted from this calculation is a result of over funding or when an actuarial gain arises. It is recognized since it is a resource which the Group controls and is available in the form of reduction in future contributions.

4.13 Provisions

Provisions are recognized when the Group has a present obligation, whether legal or constructive, as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate and presented in the Group’s consolidated statements of comprehensive income.

4.14 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business.

4.14.01 Rendering of Services Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract. Revenue from rendering of services is recognized when all the following conditions are satisfied:  the amount of revenue can be measured reliably;  it is probable that the economic benefits associated with the transaction will flow to the Group;  the stage of completion of the transaction can be measured reliably; and  the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. Revenue from rendering pertains to delivery fees and other fees.

4.14.02 Dividend and Finance Income Dividend income from investments is recognized when the shareholder’s right to receive payment has been established, provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Finance income is recognized when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Finance income is accrued on a time proportion basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

4.15 Expense Recognition

Expense encompasses losses as well as those expenses that arise in the course of the ordinary activities of the Group. The Group recognizes expenses in the consolidated statements of comprehensive income when a decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably.

4.16 Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

4.16.01 The Group as a Lessee Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

4.17 Foreign Currency Transactions and Translation

In preparing the consolidated financial statements of the Group, transactions in currencies other than the Parent’s functional currency, i.e. foreign currencies, are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit or loss in the period in which they arise except for exchange differences arising on non-monetary assets and liabilities where the gains and losses of such non-monetary items are recognized directly in equity. Assets and liabilities from foreign operation are translated at exchange rates at the end of the reporting period. Exchange differences are recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment. On the other hand, income and expenses for each consolidated statement presenting profit or loss and other comprehensive income are translated at the average exchange rate for the period. All the resulting exchange differences are recognized in the other comprehensive income.

4.18 Related Parties and Related Party Transactions

A related party is a person or entity that is related to the Group that is preparing its financial statements. A person or a close member of that person’s family is related to Group if that person has control or joint control over the Group, has significant influence over the Group, or is a member of the key management personnel of the Group or of a parent of the Group. An entity is related to the Group if any of the following conditions applies:  The entity and the Group are members of the same group (which means that a parent, subsidiary and fellow subsidiary are related parties to each other); or  One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); or  Both entities are joint ventures of the same third party; or  One entity is a joint venture of a third entity and the other entity is an associate of the third entity; or  The entity holds a post-employment benefit plan for the benefit of the employees of either the Group or an entity related to the Group; or  The entity is controlled or jointly controlled by a person identified above; or  A person identified above has significant influence over the entity or is a member of the key management personnel of the entity (or of an entity); or  Management entity providing key management personnel services to a reporting entity. Close members of the family of a person are those family members, who may be expected to influence, or be influenced by, that person in their dealings with the Group and include that person’s children and spouse or domestic partner; children of that person’s spouse or domestic partner; and dependents of that person or that person’s spouse or domestic partner. A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged.

4.19 Taxation

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

4.19.01 Current Tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statements of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

4.19.02 Deferred Tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, carry forward of unused tax credits from excess Minimum Corporate Income Tax (MCIT) over Regular Corporate Income Tax (RCIT) and unused Net Operating Loss Carryover (NOLCO), to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and carry forward of unused MCIT and unused NOLCO can be utilized. Deferred income tax, however, is not recognized when it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction that affects neither the accounting profit nor taxable profit or loss. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets arising from deductible temporary differences are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

4.19.03 Current and Deferred Tax for the Period Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate to items that are recognized outside profit or loss, whether in other comprehensive income or directly in equity, in which case the tax is also recognized outside profit or loss.

4.20 Earnings per Share

The Group computes its basic earnings per share by dividing net income or loss attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the period.

4.21 Events after the Reporting Period

The Group identifies subsequent events as events that occurred after the reporting date but before the date when the consolidated financial statements were authorized for issue. Any subsequent events that provide additional information about the Group’s position at the reporting period, adjusting events, are reflected in the consolidated financial statements, while subsequent events that do not require adjustments, non-adjusting events, are disclosed in the notes to consolidated financial statements when material.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTIES

In the application of the Group’s accounting policies, which are disclosed in Note 4, Management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

5.01 Critical Judgments in Applying Accounting Policy

The following are the critical judgments, apart from those involving estimations that Management has made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognized in consolidated financial statements.

5.01.01 Functional Currency PAS 21 requires Management to use its judgment to determine the entity’s functional currency such that it most faithfully represents the economic effects of the underlying transactions, events and conditions that are relevant to the entity. In making this judgment, the Group considers the following:  the currency that mainly influences sales prices for financial instruments and services (this will often be the currency in which sales prices for its financial instruments and services are denominated and settled);  the currency in which funds from financing activities are generated; and  the currency in which receipts from operating activities are usually retained. The Group determined its functional currency to be Philippine peso, being the currency that mainly influences the Parent Company’s revenues and cost and expenses. Each entity in the Group determines its own functional currency, as disclosed in Note 1.

5.01.02 Assessment of Control The Group determines whether an entity qualifies as a subsidiary when it has control over an entity. The Group controls an entity when it has the three elements of control as disclosed in Note 4. In making its judgments, the Group considers all facts and circumstances when assessing control over an investee. A reassessment of control is conducted when there are changes to one or more of the three elements of control. Any changes from at least one of the elements would result to lose or gain of control over an entity. The Group having one hundred percent (100%) ownership and voting interest assessed that it has control over its subsidiaries since it has power over the subsidiaries, exposure or rights to variable returns from its involvement and ability to use its power to affect the component of its returns. The Group has forty-nine percent (49%) ownership and voting rights over HKHCL. Group assessed that it does not have control over HKHCL. The 49% ownership and voting rights of the Group represents only significant influence over the associate. The Group has only the power to participate in the financial and operating policy decisions over the investee. 5.01.03 Assessment of Principal-Agency Arrangement Revenue includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases in equity. Therefore, they are excluded from revenue. The Group is in an agency relationship where the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the entity. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission. In 2016 and 2015, the Company assessed that it is acting as an agent in its remittance with the Group’s operating segments. The Group recognized commission income amounting to P36,553,837, P65,488,183 and P77,480,816, respectively, as disclosed in Note 20.

5.01.04 Aggregation of Operating Segments In accordance with the provisions of PFRS 8, Operating Segments, the Group’s reporting segment is based on the management approach with regard to the segment identification, under which information regularly provided to the chief operating decision maker for decision-making purposes is considered as decisive. The segments are also evaluated under the management approach. The Group reports its segment based on geographic areas. The Management identifies its operating segments as generally based on nature and location of its customers. The Group has four (4) reportable segments: Philippines, Asia Pacific, North America and Europe. The accounting policies of the reportable segments are the same as the Group’s accounting policies. Segment profit represents the profit earned by each segment without allocation of other income, equity in net earnings, foreign exchange gain or loss, operating expenses, and income tax.

5.02 Key Sources of Estimation Uncertainties

The following are the key assumptions concerning the future, and other key sources of estimation uncertainties at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

5.02.01 Reviewing Residual Values, Useful Lives and Depreciation Method of Property and Equipment The residual values, useful lives and depreciation method of the Group’s property and equipment are reviewed at least annually, and adjusted prospectively if appropriate, if there is an indication of a significant change in, how an asset is used; significant unexpected wear and tear; technological advancement; and changes in market prices since the most recent annual reporting date. The useful lives of the Group’s assets are estimated based on the period over which the assets are expected to be available for use. In determining the useful life of an asset, the Group considers the expected usage, expected physical wear and tear, technical or commercial obsolescence arising from changes or improvements in production, or from a change in the market demand for the product or service output and legal or other limits on the use of the Group’s assets. In addition, the estimation of the useful lives is based on Group’s collective assessment of industry practice, internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of property and equipment would increase the recognized operating expenses and decrease non-current assets. The Group uses a depreciation method that reflects the pattern in which it expects to consume the asset’s future economic benefits. If there is an indication that there has been a significant change in the pattern used by which the Group expects to consume an asset’s future economic benefits, the Group shall review its present depreciation method and, if current expectations differ, it shall change the depreciation method to reflect the new pattern. In both years, Management assessed that there is no significant change from the previous estimates. The carrying amounts of property and equipment amounted to P26,809,790 and P30,233,846 as of December 31, 2016 and 2015, respectively, as disclosed in Note 12.

5.02.02 Reviewing Residual Values, Useful Lives and Amortization Method of Software The residual values, useful lives and amortization method of the Group’s software are reviewed at least annually, and adjusted prospectively if appropriate, if there is an indication of a significant change in, how an asset is used; technological advancement; and changes in market prices since the most recent annual reporting date. Amortization begins when the intangible asset is available for use, i.e. when it is in the location and condition necessary for it to be usable in the manner intended by Management. Amortization ceases when the asset is derecognized. The Group uses a straight-line method of amortization since it cannot determine reliably the pattern in which it expects to consume the asset’s future economic benefits. In both years, Management assessed that there is no significant change from the previous estimates. The carrying amounts of software amounted to P4,861,231 and P2,422,090 as of December 31, 2016 and 2015, respectively, as disclosed in Note 13.

5.02.03 Asset Impairment The Group performs an impairment review when certain impairment indicators are present. In determining the fair values of property and equipment, investment in an associate and intangible asset which requires the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such assets, the Group makes use of estimates and assumptions that can materially affect the consolidated financial statements. Future events could cause the Group to conclude that property and equipment, investment in associate and intangible assets are impaired. Any resulting impairment loss could have a material adverse impact on the financial condition and results of operations. The preparation of the estimated future cash flows involves significant judgment and estimations. While the Group believes that its assumptions are appropriate and reasonable, significant changes in the assumptions may materially affect the assessment of recoverable values and may lead to future additional impairment charges under PFRS. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit (CGU) (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or group of CGUs) to which goodwill has been allocated, an impairment loss is recognized immediately in the consolidated statements of comprehensive income. Impairment losses relating to goodwill cannot be reversed for subsequent increases in its recoverable amount in future periods. The Group performs its annual impairment test of goodwill at the reporting date. The recoverable amounts of the CGUs have been determined based on value-in-use calculation using cash flow projections from financial budgets approved by senior management covering a five-year period. The discount rates applied to cash flow projections ranges from 7.37% to 8.60% in 2016, 7.07% to 8.50% in 2015 and 8.15% to 9.69% in 2014, and cash flows beyond the five year-period was extrapolated using a steady growth rate of 1.00% in 2016, 2015 and 2014. The calculations of the value-in-use of the CGUs are most sensitive to the following assumptions: • Growth rate – The forecasted growth rate is based on a very conservative steady growth rate that does not exceed the long-term average rate for the industry. • Pre-tax discount rates – Discount rates reflect management’s estimate of the risks specific to each CGU. This is the benchmark used by management to assess operating performance. The Group determined that there is no indication that impairment has occurred on its property and equipment, investment in an associate and intangible assets. As of December 31, 2016 and 2015, the aggregate carrying amounts of investment in an associate, property and equipment, software and goodwill amounted to P157,811,621 and P152,577,401, respectively, as disclosed in Notes 11, 12, 13 and 14.

5.02.04 Estimating Allowances for Doubtful Accounts Allowance for doubtful accounts is maintained at a level considered adequate to provide for potential uncollectible receivables. The Group estimates the allowance for doubtful accounts related to its trade and other receivables based on assessment of specific accounts where the Group has information that certain counterparties are unable to meet their financial obligations. In these cases, judgment used was based on the best available facts and circumstances including but not limited to, the length of relationship with the counterparties and the counterparty’s current credit status based on third party credit reports and known market factors. The Group used judgment to record specific reserves for counterparties against amounts due to reduce the expected collectible amounts. These specific reserves are re-evaluated and adjusted as additional information received impacts the amounts estimated. The amounts and timing of recorded expenses for any period would differ if different judgments were made or difference estimate were utilized. An increase in the allowance for doubtful accounts would increase the recognized operating expenses and decrease current assets. In 2016 and 2015, Management believes that the recoverability of some receivables are uncertain. As a result, the Group recognized provision for doubtful accounts amounting to P10,939,434 and P3,797,602 in 2016 and 2015, respectively, as disclosed in Notes 8 and 23. As of December 31, 2016 and 2015, the Group has trade and other receivables amounting to P582,724,407 and P464,845,362, respectively, as disclosed in Note 8.

5.02.05 Deferred Tax Assets The Group reviews the carrying amounts at each reporting period and reduces deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized prior to its expiration. As of December 31, 2016 and 2015, the Group recognized deferred tax assets from NOLCO, reversal of temporary difference, accumulated depreciation, unused tax credits and foreign exchange adjustments amounting to P18,557,899 and P11,134,058, respectively, as disclosed in Note 30. Management believes that future taxable profits will be available to allow all or part of deferred tax assets to be utilized prior to expiration.

5.02.06 Post-employment Benefits The determination of the retirement obligation and cost and other retirement benefits is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include among others, discount rates, mortality of plan members and rates of compensation increase. In accordance with PFRS, actual results that differ from the assumptions and the effects of changes in actuarial assumptions are recognized directly as re-measurements in other comprehensive income. While the Group believes that the assumptions are reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially affect the pension and other retirement obligations. Based on the actuarial report as of December 31, 2016 and 2015, the Group recognized retirement asset, net of the present value of defined benefit obligation, as presented in its consolidated statements of financial position amounting to P18,624,728 and P11,645,574 , respectively, as disclosed in Note 25.

In 2016, 2015 and 2014, the retirement benefit expense recognized amounted to P2,697,393, P3,067,480 and P2,102,794, respectively, as disclosed in Notes 23 and 25. In 2016, 2015 and 2014, the re-measurement gain, net of related tax, amounted to P6,773,583, P818,466, and P1,163,653, respectively, as disclosed in Note 25.

6. SEGMENT INFORMATION

6.01 Segment Revenue and Results The following is an analysis of the Group‘s revenue and results of operations by reportable segments (amounts in thousands):

2016 Segment Segment Segment Revenue Cost Profit Philippines P 493,446 P 238,709 P 254,737 Asia Pacific 92,573 2,762 89,811 Europe 71,937 2,975 68,962 North America 90,788 9,746 81,042 Adjustment and elimination (257) - (257) Total P 748,487 P 254,192 P 494,295 2015 Segment Segment Segment Revenue Cost Profit Philippines P 419,413 P 215,437 P 203,976 Asia Pacific 115,916 2,021 113,895 Europe 83,561 9,727 73,834 North America 67,080 1,304 65,776 Adjustment and elimination (284) - (284) Total P 685,686 P 228,489 P 457,197

2014 Segment Segment Segment Revenue Cost Profit Philippines P 453,595 P 243,470 P 210,125 Asia Pacific 135,029 6,151 128,878 North America 100,690 11,366 89,324 Europe 84,772 8,361 76,411 Adjustment and elimination (472) - (472) Total P 773,614 P 269,348 P 504,266

Revenue reported above represents amounts generated from external customers. There were no inter-segment sales in 2016, 2015 and 2014.

Segments’ profit and the Group’s profit are reconciled as follows (amounts in thousands):

2016 2015 2014 Philippines P 254,737 P 203,976 P 210,125 Asia Pacific 89,811 113,895 128,878 Europe 68,962 73,834 89,324 North America 81,042 65,776 76,411 Adjustments and eliminations (257) (284) (472) Total for continuing operations 494,295 457,197 504,266 Net trading gains (losses) 10,912 (9,926) 5,379 Other income 29,045 23,642 22,945 Equity in net earnings 1,322 985 1,310 Operating expenses (483,725) (445,778) (507,761) Income tax (14,670) (13,377) (16,900) Profit P 37,179 P 12,743 P 9,239

The accounting policies of the reportable segments are the same as the Group‘s accounting policies disclosed in Note 4. Segment profit represents the profit earned by each segment without allocation of other income, operating expenses, foreign exchange loss and income tax. This is the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

6.02 Geographical Information The Group operates in four (4) principal geographical areas. The Group‘s revenue from external customers and information about its non-current assets by geographical location are detailed below:

2016 Revenue from External Non-current Customers Assets Philippines P 493,446,083 P 522,691,026 Asia Pacific 92,572,539 36,464,051 Europe 71,937,017 8,455,925 North America 90,787,637 5,121,178 Adjustments and eliminations (256,186) (305,598,325) Total P 748,487,090 P 267,133,855 2015 Revenue from External Non-current Customers Assets Philippines P 419,413,146 P 484,736,631 Asia Pacific 115,916,097 26,147,814 Europe 83,560,938 11,575,235 North America 67,079,926 5,839,382 Adjustments and eliminations (284,587) (300,269,612) Total P 685,685,520 P 228,029,450

2014 Revenue from External Non-current Customers Assets Philippines P 453,594,776 P 412,851,707 Asia Pacific 135,028,895 19,154,176 North America 100,689,806 14,779,926 Europe 84,772,243 15,773,121 Adjustments and eliminations (471,628) (254,572,253) Total P 773,614,092 P 207,986,677

6.03 Segment Assets and Liabilities

The following is an analysis of the Group’s asset and liabilities:

2016 2015 2014 Segment Assets Philippines P 2,634,980 P 2,535,076 P 4,244,894 Asia Pacific 780,916 710,529 674,783 Europe 212,558 198,463 179,768 North America 87,762 69,468 63,884 Total segment assets 3,716,216 3,513,536 5,163,329 Unallocated (812,849) (935,557) (854,568) Total assets 2,903,367 2,577,979 4,308,761 Segment Liabilities Philippines 1,546,614 1,451,335 3,163,788 Asia Pacific 203,314 187,879 220,646 Europe 248,942 245,256 231,904 North America 75,386 58,163 41,832 Total segment liabilities 2,074,256 1,942,633 3,658,170 Unallocated (487,320) (639,812) (600,570) Total liabilities P 1,586,936 P 1,302,821 P 3,057,600

For the purpose of monitoring segment performance and allocating resources between segments:  All assets are allocated to reportable segments other than inter-segment receivables.  All liabilities are allocated to reportable segments other than inter-segment payables.

7. CASH AND CASH EQUIVALENTS

For the purpose of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, in banks and cash equivalents. Cash and cash equivalents at the end of each reporting period as shown in the consolidated statements of cash flows can be reconciled to the related items in the consolidated statements of financial position as follows:

2016 2015 Cash on hand P 50,026,891 P 34,771,050 Cash in banks 1,484,526,267 1,490,949,933 Cash equivalents 220,576,557 67,523,661 P 1,755,129,715 P 1,593,244,644

Cash in banks includes deposits with SBA, a related party under common controlling party, amounting to P217,905,038 and P200,275,215 as of December 31, 2016 and 2015, respectively, as disclosed in Note 27. These deposits earned interest income amounting to P246,789 and P189,277 in 2016 and 2015, respectively, as disclosed in Note 27. In 2016 and 2015, cash in banks earned interest ranging from 0.50% to 2% and 0.19% and 0.31%; respectively, while cash equivalents earn interest at the rate of 1.75%. Finance income earned from these accounts amounted to P1,724,394, P1,588,138, and P1,104,218 in 2016, 2015 and 2014, respectively, as disclosed in Note 22.

8. TRADE AND OTHER RECEIVABLES – net

The Group’s trade and other receivables consist of:

2016 2015 Agents P 365,896,657 P 236,213,013 Couriers 143,351,720 139,031,300 Advances to trading clients 34,138,106 19,101,843 Advances to related parties (Note 27) 8,196,508 10,476,310 Officers and employees 5,359,383 8,782,999 Finance receivable (Note 9) 2,755,963 4,460,064 Others 38,197,687 53,515,295 597,896,024 471,580,824 Allowance for doubtful accounts (15,171,617) (6,735,462) P 582,724,407 P 464,845,362

Receivables from couriers pertain to the amount of funds advanced to courier providers in fulfilling door-to-door remittance obligations of the Parent Company. These receivables are in the form of advances, liquidated within one (1) week from transaction date. Advances to trading clients pertain to advances made to banks in relation to the trading activities of the Group. These receivables are due within five (5) days from transaction date. Advances to related parties include operating funds and marketing materials advanced to associate offices by the Group. These advances are collected in one (1) month from date of funding. The amount outstanding is non-interest bearing, unsecured, collectible on demand and will be settled in cash. There is no guaranty required and no provision was made for doubtful account as the account is deemed collectible. Receivable from officers and employees pertain to the sum of money advanced to officers and employees in connection with their official functions. The amount outstanding is non-interest bearing, unsecured, collectible on demand and will be settled in cash. There is no guaranty required and no provision was made for doubtful account as the account is deemed collectible. Finance receivable pertains to uncollected finance income from debt securities classified as financial assets at FVPTL. Others include advances to trading client, receivables from SSS and suppliers. The outstanding receivables from suppliers are due within thirty (30) days from transaction date and advances to trading client are due within five (5) days from transaction date. Receivables disclosed above include amounts which are past due at the end of each reporting period. The Group does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Group to the counterparties. The Group’s trade and other receivables that are past due but not impaired as of December 31, 2016 and 2015 are the following:

2016 2015 61 – 180 days P 445,933 P 18,816,721 181 – 360 days 5,973,888 5,362,175 over 360 days 30,735,987 26,560,711 P 37,155,808 P 50,739,607

The components of allowance for doubtful accounts are as follows:

2016 2015 Allowance for doubtful accounts-agents P 4,701,110 P 5,786,592 Allowance for doubtful accounts-officers and employees 1,387,471 948,870 Allowance for doubtful accounts-others 9,083,036 - P 15,171,617 P 6,735,462

The movements in the allowance for doubtful accounts:

2016 2015 Balance, January 1 P 6,735,462 P 3,029,316 Provision for doubtful accounts (Note 23) 10,939,434 3,797,602 Amounts written-off as uncollectible (2,500,000) - Foreign exchange translation adjustment (3,279) (91,456) Balance, December 31 P 15,171,617 P 6,735,462

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting period. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, Management believes that there is credit provision required. Allowance for doubtful accounts pertains to individually impaired trade receivables with a balance of P15,171,617 and P6,735,462 as of December 31, 2016 and 2015, respectively, which are all outstanding for over sixty (60) days. The Group does not hold any collateral over these balances.

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)

The Group’s financial assets at FVTPL are as follows:

2016 2015 Non-derivatives: Debt Securities P 180,285,068 P 185,798,622 Equity Securities 72,715,539 63,183,180 253,000,607 248,981,802 Derivative: Foreign Contracts 6,447,834 7,938,808 P 259,448,441 P 256,920,610

Movements in the non-derivative financial assets at FVTPL are presented below:

2016 2015 Balance, January 1 P 248,981,802 P 249,830,509 Addition 81,159,432 102,342,330 Disposal (97,463,893) (102,158,846) Fair value gain (loss) 7,325,282 (14,356,896) Foreign exchange adjustments 12,997,984 13,324,705 Balance, December 31 P 253,000,607 P 248,981,802

Non-derivative debt securities are bonds issued by various foreign private corporations and foreign government and are listed overseas with interest rates ranging from 4% to 8% and 6% to 13% in 2016 and 2015, respectively. Non-derivative equity securities are shares purchased from various foreign private corporations that are listed in Hong Kong and overseas that provides steady income as dividends. Dividend income earned in 2016, 2015 and 2014 amounted to P1,657,718, P1,210,342 and P844,441, respectively as disclosed in Note 22. Foreign contract derivatives are contracts to buy or sell foreign currencies at a future date. Net trading gains (losses) in the consolidated statements of comprehensive income arise from the following:

2016 2015 2014 Net unrealized gain from changes in fair value: Equity instrument unrealized gain (loss) P 3,214,942 P (7,308,563) P 4,080,783 Debt instrument unrealized gain (loss) 4,110,340 (7,048,333) (929,244) 7,325,282 (14,356,896) 3,151,539 Gain on disposal 3,586,576 4,430,779 2,227,794 Balance, December 31 P 10,911,858 P (9,926,117) P 5,379,333

Finance income earned in 2016, 2015 and 2014 amounted to P9,692,335, P11,763,167 and P14,080,701, respectively, as disclosed in Note 22. Financial assets at FVTPL which includes foreign currency receivable pertains to US Dollar and Philippine Peso receivables from the bank partners of the Parent Company as a result of its forward transaction. The Parent Company sets up the foreign currency receivable account when it enters into forward contract with its bank partners on US Dollar and third currencies which include but not limited to Canadian Dollar (CAD), Great Britain pound (GBP), European Dollar (EURO), New Zealand Dollar (NZD), Australian Dollar (AUD) and Japanese Yen (JPY). As of December 31, 2016 and 2015, finance receivable from uncollected finance income from debt securities classified as financial assets at FVPTL amounted to P2,755,963 and P4,460,064, respectively, as disclosed in Note 8. In 2016, 2015 and 2014, the unrealized gain from forward transactions amounted to P1,292,785, P6,793,509 and P329,629, respectively, as disclosed in the “Others” account in Note 17. The basis of fair values of these financial assets at FVTPL is based on quoted prices (Level 1), as disclosed in Note 31.

10. PREPAYMENTS AND OTHER CURRENT ASSETS

The details of the Group’s prepayments and other current assets are shown below:

2016 2015 Receivable from BIR P 13,160,534 P 13,160,534 Prepaid expenses 9,851,959 11,540,145 Prepaid taxes 7,186,468 687,221 Guaranteed investment certificate (GIC) 5,698,519 5,141,723 Advances to suppliers and contractors 2,144,179 2,975,079 Visa cards inventory - 920,056 Office supplies - 175,607 Others 888,837 338,347 P 38,930,496 P 34,938,712

Receivable from BIR pertains to the excess payments made by the Group in 2007 for the Initial Public Offering (IPO) percentage tax. As of December 31, 2014, the case on the recoverability of tax on IPO is pending resolution with the Court of Tax Appeals. The Group believes that it will be able to obtain the refund from the BIR. Prepaid expenses include prepayments for insurance, business development, office supplies, internet connection and association dues among others. Prepaid taxes pertain to the Group’s advance tax funding to government institutions in foreign offices. GIC pertains to fixed term investments that cannot be withdrawn before its maturity date and may be reinvested for the principal and the related finance income earned. As of December 31, 2016 and 2015, the Group’s guaranteed investment certificate has a maturity of one (1) year with interest rates of 0.9% and 0.85%, respectively. In 2016 and 2015, the Group earned finance income from these investments amounting to P75,767 and P68,333, respectively, presented as finance income from cash in banks, cash equivalents and GIC under “Other Income” in Note 22. Advances to suppliers and contractors pertain to payments made to providers of information security, employee healthcare and certain professional services.

11. INVESTMENT IN AN ASSOCIATE

In both years, the Group owns 49% investment in Hwa Kung Hong & Co., Ltd. HKHCL, a company engaged in remittance business incorporated under the laws of Taiwan. Movements in the investment in an associate are presented below:

2016 2015 Acquisition cost P 3,573,974 P 3,573,974 Accumulated equity in net income Balance, January 1 8,480,274 7,495,453 Equity in profit 1,322,079 984,821 Balance, December 31 P 9,802,353 P 8,480,274

The summarized financial information of the associate is as follows:

2016 2015 Current assets P 30,770,218 P 32,691,808 Non-current assets 1,120,920 1,268,605 Current liabilities 8,189,668 12,795,347 Non-current liabilities 12,281,636 11,482,640 Revenue 17,296,369 16,176,383 Profit 2,698,119 2,009,839 Total comprehensive income 2,698,119 2,009,839 Group’s share in profit of associate 49% 49%

12. PROPERTY AND EQUIPMENT — net

The carrying amounts of the Group’s property and equipment are as follows:

Office and Transportation Communication and Delivery Furniture and Leasehold Equipment Equipment Fixtures Improvements Total January 1, 2015 Cost P 61,109,063 P 8,909,224 P 10,489,048 P 45,711,741 P 126,219,076 Accumulated depreciation (53,314,506) (5,951,533) (8,246,601) (33,450,490) (100,963,130) Carrying amount 7,794,557 2,957,691 2,242,447 12,261,251 P 25,255,946 Movements during 2015 Balance, January 1, 2015 P 7,794,557 P 2,957,691 P 2,242,447 P 12,261,251 P 25,255,946 Additions 16,272,221 613,471 271,492 204,472 17,361,656 Disposal Cost - (971,781) - (2,608,741) (3,580,522) Accumulated depreciation - 680,062 - 652,185 1,332,247 Reclassification Cost - - - - - Accumulated depreciation - - - (269,402) (269,402) Exchange adjustments Cost (615,925) (2,487,970) (458,944) (2,022,485) (5,585,324) Accumulated depreciation 454,491 2,257,511 316,164 1,576,717 4,604,883 Depreciation (Note 23) (3,727,908) (927,416) (594,973) (3,635,341) (8,885,638) Balance, December 31, 2015 20,177,436 2,121,568 1,776,186 6,158,656 30,233,846 December 31, 2015 Cost 76,765,359 6,062,944 10,301,596 41,284,987 134,414,886 Accumulated depreciation (56,587,923) (3,941,376) (8,525,410) (35,126,331) (104,181,040) Carrying amount (Balance forwarded) P 20,177,436 P 2,121,568 P 1,776,186 P 6,158,656 P 30,233,846

Office and Transportation Communication and Delivery Furniture and Leasehold Equipment Equipment Fixtures Improvements Total Balance carried forward (carrying amount) Movements during 2016 Balance, December 31, 2015 P 20,177,436 P 2,121,568 P 1,776,186 P 6,158,656 P 30,233,846 Additions 6,052,370 - 238,842 429,519 6,720,731 Disposal Cost (6,060,284) - (571,960) (2,811,192) (9,443,436) Accumulated depreciation 6,038,110 - 571,960 2,757,284 9,367,354 Reclassification Cost 469,023 - 27,223 315,159 811,405 Accumulated depreciation (244,382) - (34,285) (186,954) (465,621) Exchange adjustments Cost (263,604) 354,141 264,660 485,419 840,616 Accumulated depreciation 448,428 (228,144) (206,709) (808,786) (795,211) Depreciation (Note 23) (6,468,527) (605,121) (466,567) (2,919,679) (10,459,894) Balance, December 31, 2016 20,148,570 1,642,444 1,599,350 3,419,426 26,809,790 December 31, 2016 Cost 76,962,864 6,417,085 10,260,361 39,703,892 133,344,202 Accumulated depreciation (56,814,294) (4,774,641) (8,661,011) (36,284,466) (106,534,412) Carrying amount P 20,148,570 P 1,642,444 P 1,599,350 P 3,419,426 P 26,809,790

In 2016, the Group disposed certain property and equipment with an aggregate carrying amount of P76,082 for the same consideration. In 2015, the Group disposed certain property and equipment with a carrying amount of P2,248,275 for a consideration of P2,267,209 which resulted to a gain on disposal of P18,934, as disclosed in Note 22 and another sale with a carrying amount of P555,750 with a consideration of P522,769 which resulted to a loss of P32,981, as disclosed in Note 23. In 2014, the Group disposed an equipment with a carrying amount of P242,618 for a consideration of P320,308 which resulted to a gain on disposal of P77,690 as disclosed in Note 22. The Group’s consolidated depreciation of property and equipment amounted to P10,459,894, P8,885,638 and P12,178,388 in 2016, 2015 and 2014, respectively, as disclosed in Note 23. In 2016, 2015 and 2014, the Group determined that there is no indication that an impairment loss has occurred on its property and equipment.

13. SOFTWARE – net

Movements in software are as follows:

2016 2015 January 1 Cost P 17,116,389 P 15,139,725 Accumulated amortization (14,694,299) (14,274,678) 2,422,090 865,047 Movements during the year Balance, January 1 2,422,090 865,047 Additions 3,642,427 1,980,236 Foreign exchange adjustment Cost (3,805) (3,572) Accumulated amortization 4,805 1,460 Amortization (Note 23) (1,204,286) (421,081) Balance, December 31 4,861,231 2,422,090 December 31 Cost 20,755,011 17,116,389 Accumulated amortization (15,893,780) (14,694,299) P 4,861,231 P 2,422,090

As of December 31, 2016 and 2015, software has one (1) year and two (2) years remaining amortization periods, respectively. In 2016, 2015 and 2014, the Group has determined that there was no indication that any impairment has occurred on its intangible assets.

14. GOODWILL

The Group’s goodwill relating to the excess of the acquisition cost over the ownership interest acquired by the Group in IGRL, IAPL, IRCL, LSML, WEPL and IRSPL. Goodwill acquired through business combinations have been allocated to six (6) individual CGUs as follows:

2016 2015 IGRL P 69,982,505 P 69,982,505 LSML 20,668,154 20,668,154 IAPL 7,678,564 7,678,564 IRCL 7,526,653 7,526,653 WEPL 5,585,315 5,585,315 IRSPL 4,897,056 - P 116,338,247 P 111,441,191

14.01.01 IGRL and IAPL On June 2, 2007, the Group’s BOD approved the acquisition of 100% ownership interest in both IGRL and IAPL for a consideration of P71,200,000 and P8,552,000, respectively. IGRL and IAPL are based in United Kingdom and Australia, respectively. These entities, which are in the remittance business, have the same operations as the Group. Accordingly, on June 29, 2007, the Group acquired 100% ownership interest in IGRL and IAPL through the execution of deeds of assignment by the previous stockholders (who are also the stockholders of the Group) of both entities. Under the deeds of assignment, the existing advances by the Group to certain stockholders were applied as payment for the purchase of IGRL and IAPL.

14.01.02 WEPL On June 2, 2007, the Group’s BOD also approved the acquisition of 20% ownership interest in WEPL for a consideration of P5,600,000. WEPL was incorporated on September 29, 2003 and based in Australia. WEPL has the same operations as the Group. Accordingly, on June 29, 2007 the Group acquired 20% ownership interest in WEPL through execution of a deed of assignment by the previous stockholders (who are also stockholders of the Group) of the entity. Under the deed of assignment, the existing advances of the Group to certain stockholders were applied 15% ownership interest in WEPL was acquired by the Group for a consideration of P3,433,072. On March 25, 2011, the Group’s BOD approved the acquisition of another 35% ownership interest in WEPL for a consideration of AUD0.27 million (P12,303,818). As discussed in Note 1, WEPL is effectively 100% owned by the Group through its direct interest of 70% and indirect interest of 30% through IAPL.

14.01.03 IRCL On October 1, 2004, the Group’s BOD approved the acquisition of 65% of IRCL for a consideration of P10,344,000. IRCL, was incorporated on July 16, 2001 and based in Canada. IRCL has the same operations as the Group. The fair value of the net assets of IRCL at acquisition date is P8,247,612 and the fair value of the 65% ownership interest was P5,360,948. The difference of P4,983,052 between the consideration paid and the fair value of the interest acquired in IRCL was recognized as goodwill.

On July 26, 2006, the additional 30% ownership interest from a non-controlling stockholder in IRCL was transferred to the Group at no additional cost. On June 2, 2007, the Group’s BOD approved the acquisition of 5% ownership interest from a non-controlling stockholder for a consideration of P3,100,000 putting its ownership in IRCL to 100%. Accordingly, on June 29, 2007, IRCL’s non-controlling stockholder executed a deed of assignment to transfer the ownership interest to the Group. Under the deed of assignment, the existing advances from the Group to a certain stockholder were applied as payment for the purchase of IRCL. The fair value of the net assets of IRCL at acquisition date was P11,126,780, and the fair value of the additional interest acquired was P556,339. The difference of P2,543,601 between the consideration paid and the non-controlling interest acquired in IRCL was recognized as goodwill.

14.01.04 LSML LSML was incorporated on March 16, 2001 and based in Hong Kong. LSML has the same operations as the Group. On June 2, 2007, the Group’s BOD approved the acquisition of 49% ownership interest in LSML for a consideration of P24,700,000, thereby putting its ownership in LSML to 100%. Accordingly, on June 29, 2007, the non-controlling stockholder of LSML (who is also a stockholder of the Group) executed a deed of assignment to transfer its ownership interest to the Group. Under the deed of assignment, the existing advances by the Group to the stockholder were applied as payment for the purchase of LSML. The fair value of the net assets of LSML at acquisition date was P8,228,257 and the fair value of the additional interest acquired was P4,031,846. The difference of P20,668,154 between the consideration paid and the non-controlling interest acquired in LSML was recognized as goodwill.

14.01.05 IRSPL The BOD of the Group approved the incorporation of I-Remittance Singapore PTE. Ltd. (IRSPL) in Singapore under the Companies Act (Cap 50) on and from February 17, 2014. IRSPL was registered as Private Company Limited by Shares and 100% owned by I-Remit, Inc. with a total capital stock of 100,000 shares fully paid at subscription price equivalent to SGD1 per share or its equivalent P3,251,710. On July 31, 2016, the BOD of the Group entered into a Business Sale Agreement (BSA) with I-Remit Singapore PTE. Ltd. (ISPL) at SGD197,579 or its equivalent P6,775,859 from its recorded net assets of SGD 54,784 as of the close of the same period. Consequentially due to higher acquisition cost of the net assets of ISPL, IRSPL recognized in its book, goodwill amounting to SGD142,795 or its equivalent, P4,897,056. IRSPL paid SGD23,306 or its equivalent, P813,821 The remaining SGD174,273 or its equivalent P5,962,038 was recognized in the book of IRSPL as part of its outstanding liability towards the end of December 31, 2016.

15. OTHER NON-CURRENT ASSETS – net

Below is the composition of the Group’s other non-current assets.

2016 2015 Refundable deposits (Note 26) P 31,451,320 P 29,638,332 Input VAT – net 40,644,150 22,989,926 Others 44,137 44,159 P 72,139,607 P 52,672,417

The Group has applied for tax credits on its input VAT with the BIR and is currently waiting for the issuance of related Tax Credit Certificates (TCCs). Management of the Group believes that it will be able to collect the rest of the TCCs applicable to its outstanding claims.

16. BENEFICIARIES AND OTHER PAYABLES

The components of beneficiaries and other payables account are as follows:

2016 2015 Beneficiaries P 62,680,889 P 83,409,312 Payable to suppliers 102,746,727 4,376,873 Agents, couriers and trading clients 23,389,735 27,981,195 Accrued expenses 23,313,741 23,030,324 Payable to government agencies 5,420,675 5,547,988 Others 30,510,580 36,679,576- P 248,062,347 P 181,025,268

Payable to beneficiaries are normally settled within one (1) to three (3) days from transaction date. Payable to suppliers pertain to outstanding amounts owed to the tie ups who advance fulfilment in behalf of the Group. Moreover, these also include payments owed to providers of human resource services, employee healthcare, freight, utilities and certain professional services. Payable to agents, couriers and trading clients are non-interest bearing and are normally settled within thirty (30) days. Accrued expenses include accruals on various operating expenses, courier charges, training and development, professional fees, utilities and finance cost from couriers and loans. As of December 31, 2016 and 2015, the accrued finance cost from loans presented as part of accrued expenses amounted to P1,854,250 and P2,239,653, respectively, as disclosed in Note 18. Others pertain to health care and payable to remitters through visa cards issued by the Group.

17. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)

As disclosed in Note 9, in November 2013, the Group started its forward trading transactions. As a result, the Group recognized financial liabilities at FVTPL which includes foreign currency payable. Financial liabilities at FVTPL which includes foreign currency payable pertains to US Dollar and Third Currency payables to the bank partners of the Parent Company as a result of its forward transactions. The Parent Company sets up the foreign currency payable account when it enters into forward contract with its bank partners on US dollar (USD), Canadian dollar (CAD), Great Britain pound (GBP), European Dollar (EURO), New Zealand Dollar (NZD), Australian Dollar (AUD) and Japanese Yen (JPY). As of December 31, 2016 and 2015, the financial liabilities at FVTPL amounted to P5,155,050 and P1,145,299, respectively. In 2016, 2015 and 2014, the unrealized gain from forward transactions amounted to P1,292,785, P6,793,509 and P329,629, respectively, as disclosed in Note 9 and as included under “Others” account of other income in Note 22.

18. LOANS PAYABLE

As of December 31, 2016 and 2015, the Parent Company obtained an unsecured, short-term interest-bearing peso-denominated bank loans and promissory notes with an aggregate amount of P1,312,000,000 and P1,115,000,000, respectively. In 2016 and 2015, loans payable have interest rates of 3.50% to 5.80% and 3.15% to 6%, respectively, have maturities of less than one (1) year. The related finance cost from these loans payable amounted to one P40,573,044, P31,340,694 and P48,609,172 in 2016, 2015 and 2014, respectively. In 2016 and 2015, the Group’s accrued finance cost amounting to P1,854,250 and P2,239,653, respectively, as part of accrued expenses in Note 16. In 2016 and 2015, finance costs paid amounted to P40,958,447 and P32,065,697, respectively. The Group has unused credit facilities with various banks amounting to P2,340,000,000 and P2,150,000,000 as of December 31, 2016 and 2015, respectively, as disclosed in Note 32.03. Movements of loans payable are as follows:

2016 2015 Balance, January 1 P 1,115,000,000 P 1,305,000,000 Proceeds from additional loans 1,312,000,000 1,115,000,000 Payments for short-term loans (1,115,000,000) (1,305,000,000) Balance, December 31 P 1,312,000,000 P 1,115,000,000

As of the reporting period, the Group is compliant with the terms and conditions of the loans.

19. CAPITAL STOCK

The capital stock of the Group is as follows:

2016 2015 Ordinary shares P 617,725,800 P 617,725,800 Additional paid-in capital 391,232,478 391,232,478 P 1,008,958,278 P 1,008,958,278

19.01 Ordinary Shares

The ordinary shares of the Group are described as follows:

2016 2015 Shares Amount Shares Amount Authorized: 1,000,000,000 shares at P1 par value per share 1,000,000,000 P 1,000,000,000 1,000,000,000 P 1,000,000,000 Issued and fully paid: Balance January 1 612,251,122 612,251,122 612,836,122 612,836,122 Reacquisitions (208,000) (208,000) (585,000) (585,000)

Balance December 31 612,043,122 P 612,043,122 612,251,122 P 612,251,122 Treasury stock 5,682,678 5,682,678 5,474,678 5,474,678

Total issued 617,725,800 P 617,725,800 617,725,800 P 617,725,800

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

19.01.01 Additional Paid-in Capital The Group’s additional paid-in capital in excess of par value is composed of excess of proceeds on issuance of the Group’s shares amounting to P391,232,478 as of December 31, 2016 and 2015.

19.02 Treasury Stock

Details of the Group’s treasury stock are as follows:

2016 2015 Shares Amount Shares Amount Balance, January 1 5,474,678 P 15,048,173 4,889,678 P 13,960,353 Acquisitions 208,000 409,940 585,000 1,087,820 Balance, December 31 5,682,678 P 15,458,113 5,474,678 P 15,048,173

Details of the remaining ten million (10,000,000) treasury stock buy-back program of the Parent Company in 2012 are as follows:

2016 2015 Balance, January 1 5,747,000 5,162,000 Acquisition 208,000 585,000 Balance, December 31 5,955,000 5,747,000

In 2016, the Group purchased a total of Two Hundred Eight Thousand (208,000) shares at an average rate of P1.97 per share. The shares purchased are still under the buy-back program of 2012. In 2015, the Group purchased a total of Five Hundred Eighty Five Thousand (585,000) shares at an average rate of P1.86 per share. The shares purchased are still under the buy-back program of 2012. On March 19, 2014, the Group purchased Three Hundred Thousand (300,000) shares at P2.70 per share or P810,000. On May 22, 2014, additional purchase was made for Three Hundred Thousand (300,000) shares at P2.50 per share or P750,000. The shares purchased were under the buy-back program of 2012. Moreover, an adjustment amounting to P44 was recorded in 2014 to correct the balance of treasury stock as of December 31, 2014 in reference to the declaration of Property Dividend in October 2013. On July 19, 2013, the BOD of the Group has approved the declaration of property dividend in the form of treasury shares. As of the date of declaration, the Corporation had twenty million and five hundred eighty seven thousand (20,587,000) shares of stock lodged as Treasury Shares from its buy-back program amounting to P69,209,688, out of which number of treasury shares, twenty million five hundred eighty six thousand and nine hundred eighty five (20,586,985) shares as computed by the Professional Stock Transfer, Inc. (the Corporation’s stock transfer agent) and the Philippine Depository & Trust Corp., were distributed pro-rata to stockholders on October 14, 2013 based on their respective shareholdings as of record date on August 16, 2013. The property dividend of 20,586,985 shares over the outstanding number of common shares of the Corporation at 593,163,800 as of August 16, 2013 concluded a property dividend ratio of 0.03. Withholding tax applicable to the property dividend was computed and paid by the Corporation on the account of the stockholders at P925,119 or its equivalent, three hundred fourteen thousand and six hundred sixty three (314,663) shares. Net property dividend distributed to stockholders was at twenty million, two hundred seventy two thousand and three hundred twenty two (20,272,322) shares. In 2013, the Group purchased a total of 3,975,000 shares or P11,475,190 equivalent from the buy-back program of 2012. On September 21, 2012, the BOD of the Group adopted a resolution authorizing another buy-back program of up to ten million (10,000,000) of its shares in the market. The Group purchased the remaining balance of 5,127,000 shares (P14,560,680) from the buy-back program of 2011 and 587,000 shares (P1,661,800) from the latest buy-back program authorized in 2012.

19.03 History of Registration of Securities

On September 13, 2007, the Group filed a registration statement with the SEC in accordance with the Securities Regulation Code for the registration of a total of 562,417,000 common shares. A pre-effective clearance was issued by the SEC on October 5, 2007. The application for listing was approved by the BOD of the PSE on September 27, 2007. The Group was listed in the first board (now main board) of the PSE last October 17, 2007. On October 17, 2007, the Group completed its initial public offering (IPO) of 107,417,000 new common shares at an offer price of P4.68 per share for a total gross proceeds of P502,711,560. The Group intends to use the majority of its net proceeds from the offer to finance, in part, its expansion in existing and new countries and to cover working capital requirements as well as partially retire some of the Group’s short-term interest-bearing loans. When such proceeds shall be used to pay off debts, the Group shall pay off loan payables, or portions of the same, to banks with which the Group has existing credit lines. The retirement of the Group’s debts has the underlying intention of reducing debt service burden and consequently improving profitability. Direct costs incurred relative to the IPO amounting to P36,513,103 were charged against the additional paid-in capital. As of December 31, 2016 and 2015, Group has a total number of twenty-two (22) and twenty-one (21) stockholders, respectively, holding the above registered securities, respectively.

19.04 Appropriation of Retained Earnings

As of December 31, 2016 and 2015, appropriated retained earnings pertains to treasury stock amounting to P15,458,113 and P15,048,173, respectively. This is in accordance with the legal requirement of Section 41 of the Corporation Code of the Philippines which requires an entity to have sufficient retained earnings to support the acquisition of treasury shares.

19.05 Cumulative Translation Adjustment

Shown below are the movements on the Group’s cumulative translation adjustment:

2016 2015 Balance, January 1 P (27,284,187) P 4,216,195 Exchange differences arising on translating the net assets of foreign operations (17,631,284) (31,442,230) Others (58,153) (58,152) Balance, December 31 P (44,973,624) P (27,284,187)

19.06 Dividends Declared

The following table shows details related to the Group’s cash dividends to its equity holders:

No. of Shares Issued and Dividends Total Date of Declaration Outstanding per share Dividends Date of Record June 17, 2016 612,251,122 P 0.0326 P 19,959,386 July 4, 2016 July 17, 2015 612,775,122 0.0326 19,976,469 August 14, 2015 July 22, 2014 612,836,122 0.05 30,641,806 August 20, 2014

20. REVENUES

An analysis of the Group’s revenue for the year is as follows:

2016 2015 2014 Delivery fees P 556,923,885 P 498,951,408 P 571,831,393 Foreign exchange gains 154,181,019 120,399,439 123,414,966 Commission 36,553,837 65,488,183 77,480,816 Other fees 828,349 846,490 886,917 P 748,487,090 P 685,685,520 P 773,614,092

The Group’s primary operation is to engage in fund transfer and remittance. Delivery fees pertain to revenues derived from remittance transactions. Foreign exchange gains pertain to income from forward and spot trading foreign currencies. The Parent Company’s forward trading transactions started in November 2013.

21. COST OF SERVICES

An analysis of the Group’s cost of services for the year is as follows:

2016 2015 2014 Bank charges P 189,537,980 P 173,793,470 P 195,940,940 Delivery charges 5,031,337 6,464,434 7,219,519 Other direct costs 59,622,920 48,230,831 66,187,711 P 254,192,237 P 228,488,735 P 269,348,170

Other direct costs pertain to directly attributable finance costs, salaries and wages and taxes and licenses. In 2016, 2015 and 2014, salaries and wages under cost of services amounted to P14,461,749, P 13,301,246 and P12,852,760, respectively, as disclosed in Note 25.

22. OTHER INCOME

An analysis of the Group’s other income for the year is as follows:

2016 2015 2014 Finance income on financial assets at FVTPL (Note 9) P 9,692,335 P 11,763,167 P 14,080,701 Rebates 3,849,186 - - Finance income from cash in banks, cash equivalents and GIC (Notes 7 and 10) 1,724,394 1,588,138 1,104,218 Dividend income (Note 9) 1,657,718 1,210,342 844,441 Service fees 1,640,902 1,698,244 1,983,905 Unrealized foreign exchange gain – net - 2,838,435 - Refunds - - 2,826,556 Gain on disposal (Note 12) - 18,934 77,690 Premium on contracts - - 27,174 Others 10,480,677 4,524,877 2,000,387 P 29,045,212 P 23,642,137 P 22,945,072

Service fees pertain to the sum of money collected from Social Security System (SSS) for remittance transactions processed by the Parent Company on its behalf. Also included in the account are replacement fees for visa cards and other fees collected by the Group. Refunds pertain to refund of taxes from the government and suppliers. Others pertain to income received from finance and warehousing charges recognized by the subsidiary offices and unrealized gain from forward transactions recognized by the Parent Company as disclosed in Notes 9 and 17.

23. OPERATING EXPENSES

The Group’s operating expenses for the year are the following:

2016 2015 2014 Short-term benefits (Note 25) P 226,850,887 P 212,051,395 P 247,680,125 Rental (Note 26) 68,492,868 66,933,035 65,832,888 Professional fees 54,754,417 50,808,402 49,527,736 Marketing (Note 24) 31,182,495 27,168,552 22,030,907 Communication, light and water 22,350,124 18,712,729 25,336,799 Provision for bad debts (Note 8) 10,939,434 3,797,602 6,337,077 Depreciation (Note 12) 10,459,894 8,885,638 12,178,388 Transportation and travel 9,845,681 15,281,549 16,687,223 Association dues 9,140,559 4,935,160 3,565,049 Photocopying and supplies 7,356,407 9,050,155 10,949,865 Unrealized foreign exchange loss – net 7,253,883 - 18,243,161 Entertainment, amusement and recreation 6,644,016 5,451,998 4,806,145 Business development 4,515,414 672,182 2,458,928 Repairs and maintenance 3,776,858 5,812,179 5,023,064 Retirement benefits (Note 25) 2,697,393 3,067,480 2,102,794 Taxes and licenses 2,431,514 8,928,135 8,934,317 Insurance 2,396,855 2,234,282 2,288,552 Amortization (Note 13) 1,204,286 421,081 725,724 Loss on write-off of assets 68,217 - - Loss on disposal (Note 12) - 32,981 - Others 1,363,411 1,533,272 3,052,767 P 483,724,613 P 445,777,807 P 507,761,509

Unrealized foreign exchange loss–net pertains to currency exchange loss accruing from the revaluation of foreign currency denominated monetary assets and liabilities.

24. MARKETING EXPENSES

The account as disclosed in Note 23 is composed of the following:

2016 2015 2014 Advertising and publicity P 16,158,134 P 4,813,017 P 4,853,932 Marketing and promotions 15,024,361 22,355,535 17,176,975 P 31,182,495 P 27,168,552 P 22,030,907

25. EMPLOYEE BENEFITS

Aggregate employee benefits expense is comprised of the following:

2016 2015 2014 Short-term benefits: Cost of services (Note 21) P 14,461,749 P 13,301,246 P 12,852,760 Operating expense (Note 23) 226,850,887 212,051,395 247,680,125 Retirement benefits 2,697,393 3,067,480 2,102,794 P 244,010,029 P 228,420,121 P 262,635,679

25.01 Short-term Employee Benefits

Short-term benefits include salaries and wages, de-minimis fringe benefits, sick and vacation leave pay, training and development and 13th month pay.

25.02 Post-employment Benefits

The Group has a single retirement plan under the regulatory framework of the Philippines. Under R.A. 7641, the Group is legally obliged to provide a minimum retirement pay for qualified employees upon retirement. The framework, however, does not have a minimum funding requirement. The Group’s benefit plan is aligned with this framework. The Group’s funded defined benefit plans for qualifying employees are entitled to retirement benefits equal to one hundred percent (100%) of Plan Salary for every year of credited service of a retirement age of sixty (60) and are not adjusted for inflationary increases once in payment, or provide adjustment for inflationary increases. The payments for the funded benefits are from trustee-administered funds. Plan assets held by trustee are governed by a trust agreement between the latter and the Group. Responsibility for governance of the plan assets including investment decision lies with the Board of Trustees while plan governance and contribution schedule lies with the Group. The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out last January 25, 2017 by Institutional Synergy, Inc. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method (PUCM). In accordance with the provisions of the Bureau of Internal Revenue Regulations No. 1-68, it is required that a formal Retirement Plan be Trusteed; that there must be no discrimination in benefits; that forfeitures shall be retained in the Retirement Fund and be used as soon as possible to reduce future contributions; and that no part of the corpus or income of the Retirement Fund shall be used for, or diverted to, any purpose other than for the exclusive benefit of the Plan members.

The Retirement Plan Trustee, as appointed by the Group in the Trust Agreement executed between the group and the duly appointed Retirement Plan Trustee, is responsible for the general administration of the Retirement Plan and the management of the Retirement Fund. The Retirement Plan Trustee may seek the advice of counsel and appoint an investment manager or managers to manage the Retirement Fund, an independent accountant to audit the Fund and an actuary to value the Retirement Fund. There was no plan amendment, curtailments, or settlement recognized in the financial years ended December 31, 2016, 2015 and 2014. The principal assumptions used for purposes of the actuarial valuations were as follows:

2016 2015 Discount rate 5.30% 5.05% Expected rate of salary increase 4.00% 4.00%

2016 2015 Retiring at the end of the reporting period Male 1 1 Retiring 20 years after the reporting period Male 24 19 Female 20 18

The sensitivity analysis of the defined benefit obligation of changes in the weighted principal assumption is as follows:

Impact on Defined Benefit Obligation Change in Increase in Decrease in Assumption Assumption Assumption 2016 Discount rate 100 bps Decrease by 10.0% Increase by 11.7% Salary increase rate 100 bps Increase by 12.5% Decrease by 10.8% 2015 Discount rate 100 bps Decrease by 7.9% Increase by 8.4% Salary increase rate 100 bps Increase by 9.0% Decrease by 7.9%

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognized within the consolidated statements of financial position. Assumed life expectancy is not applicable because under the Group’s Retirement Plan, benefits are paid in full in a lump sum upon retirement or separation of an employee.

Amounts recognized in profit or loss with respect of these defined benefit plan are as follows:

2016 2015 2014 Current service cost P 3,285,494 P 3,625,872 P 2,772,955 Net interest on the retirement obligation (asset) (588,101) (558,392) (784,712) Interest on the effect of the asset ceiling - - 114,551 P 2,697,393 P 3,067,480 P 2,102,794

Reconciliation of remeasurements recognized in OCI is as follows:

Return on Plan Change on Change on Assets Demographic Financial Experience excluding Deferred Tax Re-measurement Assumption Assumption Adjustment Interest Re-measurements Liability Gain – net Gain (loss) Balance at January 1, 2014 P 9,585,110 P (1,513,912) P 11,104,480 P (8,869,644) P 10,306,034 P (3,091,810) P 7,214,224 Amount recognized during the year 1,538,861 2,003,036 291,887 (2,171,423) 1,662,361 (498,708) 1,163,653

Gain (loss) Balance at December 31, 2014 11,123,971 489,124 11,396,367 (11,041,067) 11,968,395 (3,590,518) 8,377,877 Amount recognized during the year - 3,613,938 (4,847,233) 2,402,532 1,169,237 (350,771) 818,466 Gain (loss) Balance at December 31, 2015 11,123,971 4,103,062 6,549,134 (8,638,535) 13,137,632 (3,941,289) 9,196,343 Amount recognized during the year - 600,604 8,749,519 326,424 9,676,547 (2,902,964) 6,773,583 Gain (loss) Balance at December 31, 2016 P 11,123,971 P 4,703,666 P 15,298,653 P (8,312,111) P 22,814,179 P (6,844,253) P 15,969,926

Amounts included in the consolidated statements of financial position arising from the Group’s obligation with respect to its defined benefit plans are as follows:

2016 2015 Present value of defined benefit obligation P 21,383,021 P 26,128,177 Fair value of plan assets (40,007,749) (37,773,751) Surplus P (18,624,728) P (11,645,574)

Movements in the present value of the defined benefit obligation in both years are as follows:

2016 2015 Balance, January 1 P 26,128,177 P 20,339,495 Current service cost 3,285,494 3,625,872 Interest cost 1,319,473 929,515 Benefits paid from plans - Actuarial gains: Changes in financial assumptions (600,604) (3,613,937) Experience (8,749,519) 4,847,232 Balance, December 31 P 21,383,021 P 26,128,177

Movements in the fair value of the plan assets in both years are as follows:

2016 2015 Balance, January 1 P 37,773,751 P 32,558,133 Interest income 1,907,574 1,487,907 Benefits paid from plan assets 326,424 - Employer’s contributions (Note 26) - 2,796,033 Re-measurements - 931,678 Balance, December 31 P 40,007,749 P 37,773,751

Plan assets as of December 31, 2016 are comprised of the following:

Quoted Unquoted Total Percentage Equity securities: Preferred shares P 7,806,989 P - P 7,806,989 19.51% Available-for-sale 4,842,013 - 4,842,013 12.10% Government securities: Available-for-sale 2,001,606 (9,129) 1,992,477 4.98% Unquoted debt securities classified as loans - 2,007,882 2,007,882 5.02% Other securities and Debt instrument: Available-for-sale 13,817,631 - 13,817,631 34.54% Held to maturity - 1,003,941 1,003,941 2.51% Bank deposits - 8,306,804 8,306,804 20.76% Other assets - 230,012 230,012 0.58%

P 28,468,239 P 11,539,510 P 40,007,749 100%

Plan assets as of December 31, 2015 are comprised of the following:

Quoted Unquoted Total Percentage Equity securities: Preferred shares P 7,467,115 P - P 7,467,115 19.77% Available-for-sale 3,925,488 - 3,925,488 10.39% Government securities Available-for-sale 1,945,707 (22,691) 1,923,016 5.09% Unquoted debt securities classified as loans - 4,008,222 4,008,222 10.61% Other securities and Debt instrument: Available-for-sale 11,353,692 11,353,692 30.06% Held to maturity - 1,001,445 1,001,445 2.65% Bank deposits - 7,721,689 7,721,689 20.44% Other assets - 373,084 373,084 0.99%

P 24,692,002 P 13,081,749 P 37,773,751 100%

Less than One to less than Five years one year five years and above Total 2016 Undiscounted amount P 777,198 P 9,270,378 P 102,321,744 P 112,369,320 2015 Undiscounted amount P 2,521,249 P 11,060,504 P 93,943,610 P 107,525,363

The Group is exposed to a number of risks through its defined benefit plan. The most significant risks are detailed below:

Volatility Risk

The plan liabilities are calculated using a discount rate from government bonds to create virtual zero coupon bonds as of the valuation dates. The government bonds represent investments in the Philippine government securities only. As the plan mature, the Group intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The assets are composed of government securities, equity securities, other securities and debt instruments, bank deposits and other assets. The government bonds represent investments in Philippine government securities only. However, the Group believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity investment is an appropriate element of the group’s long-term strategy to manage the plans efficiently.

Investment Risk Investment risk is the risk that investments on plan assets will result to a lower return than originally expected. This risk emanates on the premise that funded defined benefit plans should arranged on the basis of Asset-Liabilities Matching principle. Thus, plan assets and future contributions are invested in such a way that it will generate return to cover-up future payments of defined benefit obligations and interest costs. These plan activities exposes the Group to sensitivity in investment risks that would result to lower plan assets and higher defined benefit obligations should the performance of the investment portfolio falls below the inflation rate, interest rates and other economic conditions. Investment risk is mitigated through proper investment planning and concentration of investments. Plan assets as of December 31, 2016 and 2015, are concentrated on government securities, equity securities, other securities and debt instruments, respectively, which account for 78.66% and 78.57% respectively, of the total plan assets.

Inflation Risk Inflation risk is the risk that the equivalent purchasing power of the plan assets will not be able to match the recorded liabilities. Payments for the defined benefit plan of the Group are not link to inflation, thus, the exposure to this risk is immaterial. To cope-up with inflation, the plan has designed a versatile policy of having an appropriate mix of debt and equity securities in the portfolio of investments during high inflation rates.

Life Expectancy Risk The majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities. This risk is closely associated with inflation risk wherein inflationary increases result in higher sensitivity to changes in life expectancy. The plan posses a minimal exposure to this risk since inflationary risk, which is directly associated to the plan’s sensitivity to life expectancy risk, is immaterial.

26. OPERATING LEASE AGREEMENTS

26.01 The Group as a Lessee

Operating leases pertain to rental of office, storage and parking spaces by the Group with its lessors.

26.01.01 Oakridge Properties, Inc. (OPI) In 2012, the Group entered into a lease agreement with OPI for the use of hallways and office spaces in 26th and 27th floor at Discovery Centre for an initial term of three (3) years with ten percent (10%) escalation rate on the second and third year of the term of contract. In 2015, the Group renewed its lease agreement with OPI for another two (2) years with no escalation rates. The lease may be renewed under the terms and condition mutually agreed upon by both parties prior to the expiration of the contract.

26.01.02 Surewell Equities Inc. (SEI) In 2016 and 2015, SEI entered into lease agreement with Surewell Equities Pte. Ltd. (SEPL) for its office in Singapore. The Parent Company also entered into with SEI under a sublease agreement, as disclosed in Note 27. SEPL is a foreign subsidiary office of SEI, one of the principal stockholders of the Parent Company. There is no security deposit paid and provisions for any escalation rate. Rent is paid monthly.

26.01.03 Third Party (TP) The subsidiaries have their respective operating lease agreements for their office spaces. The lease contracts are for periods ranging from one (1) to ten (10) years and may be renewed under the terms and conditions mutually agreed upon by the subsidiaries and the lessors. As of December 31, 2016 and 2015, Group’s refundable deposits amounted to P31,451,320 and P29,638,332, respectively, as disclosed in Note 15. The composition of rent expense as disclosed in Note 23 is as follows:

2016 2015 2014 TP P 53,345,667 P 51,126,990 P 50,182,120 OPI (Note 27) 14,928,763 14,935,089 14,731,479 SEI (Note 27) 218,438 870,956 919,289 P 68,492,868 P 66,933,035 P 65,832,888

At each reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancelable operating leases, which fall due as follows:

2016 2015 Not later than one year P 53,094,727 P 48,764,465 Later than one year but not later than five years 46,103,161 36,418,152 P 99,197,888 P 85,182,617

27. RELATED PARTY TRANSACTIONS

Nature of relationship of the Group and its related parties are disclosed below:

Related Parties Nature of Relationship Hwa Kung Hong & Co., Ltd. (HKHCL) Associate Sterling Bank of Asia (SBA) Under common controlling party Oakridge Properties, Inc. (OPI) Under common controlling party Surewell Equities Inc. (SEI) Investor with significant influence Stockholders Key management personnel

Balances and transactions between the Group and its related parties are disclosed below:

27.01 Due from Related Parties

Balance of due from related parties presented under trade and other receivables in Note 8 are summarized per category as follows:

Receivable Advances to from Agents Related Parties Total December 31, 2016 Associate P 29,477,933 P - P 29,477,933 Key management personnel - 8,196,508 8,196,508 P 29,477,933 P 8,196,508 P 37,674,441 December 31, 2015 Associate P 17,578,465 P 3,176,353 P 20,754,818 Key management personnel - 7,299,957 7,299,957 P 17,578,465 P 10,476,310 P 28,054,775

Receivable from agents includes remittances and delivery fees, while advances to related parties include due from and service income.

27.01.01 Associate Transactions with an associate are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balances Volume Balances HKHCL Remittance P 8,002,550,954 P 28,941,597 P 6,182,882,509 P 17,141,833 Advances 8,315,128 - 2,629,519 3,176,353 Delivery fees 66,155,816 536,336 45,869,455 436,632

P 8,077,021,898 P 29,477,933 P 6,231,381,483 P 20,754,818

The following are the nature, terms and conditions of the following accounts: • Remittance pertains to the principal amount of transaction accepted by a foreign subsidiary or associate office from a remitter, delivery of which is fulfilled by the Group to intended beneficiary in the Philippines. Account is collectible within five (5) days from date of transaction. • Advances account refers to operating funds and marketing materials advanced to a foreign subsidiary or associate office. Account is collectible within thirty (30) days from date of funding. • Delivery fee is the share in service fee collected by a foreign subsidiary or associate office apart from the principal amount of remittance. Account is collectible within five (5) days from date of transaction. The amounts outstanding are non-interest bearing, unsecured and will be settled in cash. No guarantee was required. No provision made for doubtful accounts as these accounts are all collectible.

27.01.02 Key Management Personnel Transactions with the key management personnel are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balance Volume Balance Advances P - P 8,196,508 P 436,215 P 7,299,957

Advances pertain to the sum of money advanced to key management personnel. The amount outstanding is non-interest bearing, unsecured, collectible on demand and will be settled in cash. There is no guaranty required and no provision was made for doubtful account as the account is deemed collectible.

27.02 Other Related Parties

27.02.01 Under Common Controlling Parties

Transactions under common controlling parties are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balances Volume Balances SBA Cash deposits P 217,905,038 P 217,905,038 P 200,275,215 P 200,275,215 Finance income 246,789 - 189,277 - OPI Rental (Note 26) 14,928,763 - 14,935,089 - P 233,080,590 P 217,905,038 P 215,399,581 P 200,275,215

Movements of this account are as follows:

2016 2015 Balance, January 1 P - P - Rentals 14,928,763 14,935,089 Interest 246,789 189,277 Payments made (15,175,552) (15,124,366) Balance, December 31 P - P -

The following are the nature, terms and conditions of the above transactions: • Transaction with Sterling Bank of Asia (SBA) pertains to income earned from the Group’s depositary accounts in Peso and USD (FCDU) with SBA, an affiliate of the Parent Company through common controlling stockholders. Principal stockholders of SBA and the Group are JTKC Equities, Inc., Star Equities, Inc. and Surewell Equities Inc. • The Group has deposits amounting to P217,905,038, P200,275,215 and P322,494,577 with SBA as of December 31, 2016, 2015 and 2014, respectively. These deposits earned interest income amounting to P246,789, P189,277 and P207,301 in 2016, 2015 and 2014, respectively.

• Transaction with Oakridge Properties, Inc. (OPI), pertains to the cost of rental paid to OPI by the Group for the use of office spaces at Discovery Centre, a building owned by OPI, an affiliate of the Group, as disclosed in Note 26. OPI is owned by The Discovery Leisure Company, Inc, (TDLCI), an entity owned by JTKC Equities, Inc., and JTKC Realty Corporation. Lease contract with OPI includes security deposit of two (2) months and one (1) month advance rental. Rent is paid monthly with provision for yearly escalation. Rent expense amounted to P14,928,763, P14,935,089 and P14,731,479 for 2016, 2015 and 2014, respectively, as disclosed in Note 26.

26.02.02 Investor with Significant Influence Transactions with investor with significant influence are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balance Volume Balance SEI Rental P 218,438 P - P 870,956 P -

Movements of this account are as follows:

2016 2015 Balance, January 1 P - P - Rentals 218,438 870,956 Payments made (218,438) (870,956) Balance, December 31 P - P -

The Group paid rent to Surewell Equities Inc. in favor of its affiliate, Surewell Equities Pte. Ltd. (SEPL) for the sharing of its office in Singapore with the Group under a sublease agreement in the amounts of P218,438 and P870,956 in 2016 and 2015, respectively, as disclosed in Note 26. SEPL is a foreign subsidiary office of Surewell Equities Inc., one of the principal stockholders of the Group. There is no security deposit paid and without provision for escalation. Rent is paid monthly.

27.03 Remuneration of Key Management Personnel

2016 2015 Short-term benefits P 37,461,828 P 40,123,906 Retirement benefits 1,189,445 1,244,663 P 38,651,273 P 41,368,569

27.04 Transaction with Retirement Fund

The Group’s retirement benefit fund is maintained with Sterling Bank of Asia (SBA), an affiliate due to common controlling parties, as trustee. The carrying amount and fair value of the fund both amounted to P40,007,749 and P37,773,751 as of December 31, 2016 and 2015, respectively, as disclosed in Note 25. The funds were invested in private equity securities, deposits in banks and government debt securities. In 2016 and 2015, the Group made contributions to the fund amounting to nil and P2,796,033, respectively, as disclosed in Note 25. Private equity securities include 808,100 of the Group’s own equity securities bought back from resigned employees who held such securities, under the special stock purchase program. The retirement committee exercises the voting rights of the securities. The retirement committee is related to the Parent Company because they are member of key management personnel. Such transaction was authorized by the BOD of the Group through its SSP program. The government debt securities consist of peso denominated and USD denominated securities. The Peso-denominated Government Securities (GS) of the Group’s Retirement Fund were purchased from accredited counterparties of SBA-Trust Group. These counterparties are Banks and Investment Houses allowed to trade government securities. Existing Peso GS accounts are all tax-exempt and are currently lodged under the Tax-exempt RoSS Account of SBA-Trust Group with the Bureau of the Treasury (BTr). The USD denominated debt securities are currently lodged with the Philippine Depository Trust Corporation (PDTC). These were also purchased from SBA-Trust’s accredited counterparties that are allowed to trade government securities.

28. EARNINGS PER SHARE

The Group’s earnings per share is P0.0607, P0.0208, and P0.0151 in 2016, 2015 and 2014, respectively. The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

2016 2015 2014 a. Net income from operations/ attributable to ordinary equity holders of the Group for earnings P 37,179,460 P 12,742,567 P 9,238,923 b. Weighted average number of ordinary shares for the purposes of earnings per share 612,147,122 612,147,122 612,147,122 c. Earnings per share (a/b) 0.0607 0.0208 0.0151

29. INCOME TAXES

29.01 Income Tax Recognized in Profit or Loss

Components of income taxes are as follows:

2016 2015 2014 Current tax expense P 21,209,006 P 13,149,339 P 18,735,089 Deferred tax benefit (6,728,723) 41,832 (1,997,839) Final tax 189,646 186,081 162,752 P 14,669,929 P 13,377,252 P 16,900,002

The table below shows the income tax rates provided on the assessable profit for the year of each subsidiary:

2016 2015 2014 IAPL 30.00% 30.00% 30.00% IGRL 20.00% 20.00% 20.00% INZL 28.00% 28.00% 28.00% IRCGmbH 25.00% 25.00% 25.00% IRCL 26.50% 34.20% 34.20% IRSPL 17.00% - - KKIJ 23.40% 25.50% 25.50% LSML 16.50% 16.50% 16.50% PSAGL 16.50% 16.50% 16.50% WEPL 30.00% 30.00% 30.00%

A numerical reconciliation between tax expense and the product of accounting profit multiplied by the tax rate in 2016, 2015 and 2014 is as follows:

2016 2015 2014 Accounting profit P 51,849,389 P 26,119,819 P 26,138,925 Tax expense at 30% 15,554,817 7,835,946 7,841,678 Tax effects of: Non-recognition of deferred tax assets 4,875,117 9,288,376 14,589,252 Derecognition of DTL – others 3,181,275 (3,181,275) Non-deductible expenses 312,463 3,942,739 677,648 Difference in statutory rates (707,548) (6,306,236) (6,743,721) Non-taxable income (4,226,169) (5,217,957) (6,333,092) Adjustments made due to consolidation (4,320,026) 7,015,659 6,880,291 Derecognition of DTL from pension cost - - (12,054) P 14,669,929 P 13,377,252 P 16,900,002

Non-deductible expenses pertain to accounts written off during the period and offshore transaction of PSAGL. Non-recognition of DTA pertains to unrecognized deferred tax asset on unrealized loss on foreign currency. Recognition of previous unrecognized DTA pertains to unrecognized deferred tax asset on temporary differences such as accrued finance cost, accrued courier charges and other accruals.

30. DEFERRED TAXES

The components of the Group’s deferred taxes and their respective movements are as follows:

Charge (credit) Charge Charge (credit) Charge (credit) to other (credit) to to other At January to profit or loss comprehensive At December 31, profit or loss comprehensive At December 31, 1, 2015 for the year income 2015 for the year income 2016 Deferred tax assets NOLCO P 8,733,736 P - P - P 8,733,736 P - P - - P 8,733,736 Reversal of temporary difference 3,304,738 (1,449,990) - 1,854,748 6,811,626 - 8,666,374 Accumulated depreciation (117,506) - - (117,506) - - (117,506) Unused tax credits 79,757 - - 79,757 - - 79,757 Foreign exchange adjustments 189,471 393,852 - 583,323 612,215 - 1,195,538 P 12,190,196 P (1,056,138) P - P 11,134,058 P 7,423,841 P - P 18,557,899 Deferred tax liabilities Unrealized foreign exchange gain – net P 183,978 P (183,978) - - - - P - Retirement asset 3,590,518 - 350,771 3,941,289 2,902,964 - 6,844,253 Capital allowance 205,257 - - 205,257 44,307 - 249,564 Foreign exchange adjustments (776) 49,083 - 48,307 (21,521) - 26,786 P 3,978,977 P (134,895) P 350,771 P 4,194,853 P 2,925,750 P - P 7,120,603

31. FAIR VALUE MEASUREMENTS

31.01 Fair Value of Financial Assets and Liabilities

The carrying amounts and estimated fair values of the Group’s financial assets and financial liabilities as of December 31, 2016 and 2015 are presented below:

2016 2015

Carrying Amount Fair Value Carrying Amount Fair Value Financial Assets: Cash and cash equivalents P 1,755,129,715 P 1,755,129,715 P 1,593,244,644 P 1,593,244,644 Financial assets at FVTPL 259,448,441 259,448,441 256,920,610 256,920,610 Trade and other receivables 582,724,407 582,724,407 464,845,362 464,845,362 Guaranteed investment certificate 5,698,519 5,698,519 5,141,723 5,141,723 Refundable deposits 31,451,320 31,451,320 29,638,332 29,638,332

P 2,634,452,402 P 2,634,452,402 P 2,349,790,671 P 2,349,790,671 Financial Liabilities: Financial liability at FVTPL P 5,155,050 P 5,155,050 P 1,145,299 P 1,145,299 Beneficiaries and other payables 242,641,672 242,641,672 175,477,280 175,477,280 Loans payable 1,312,000,000 1,312,000,000 1,115,000,000 1,115,000,000

P 1,559,796,722 P 1,559,796,722 P 1,291,622,579 P 1,291,622,579

The fair values of financial assets and financial liabilities are determined as follows:  Due to short-term nature of cash and cash equivalents, trade and other receivables, refundable deposits, beneficiaries and other payables (excluding payable to government agencies), and loans payable, their carrying amounts approximate their fair values.  The financial assets and liabilities at FVTPL are non-derivatives forward contracts measured using quoted foreign currency exchange rates.

31.02 Fair Value Measurements Recognized in the Consolidated Statements of Financial Position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:  Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;  Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and  Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Financial Assets at Financial Liability at Fair Value Through Fair Value Through Profit or Loss Profit or Loss December 31, 2016 Level 1 P 259,448,441 P 5,155,050 December 31, 2015 Level 1 P 256,920,610 P 1,145,299

There were no transfers between level 1 and level 2 in the period.

32. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk, including currency risk, fair value interest rate risk and price risk, credit risk and liquidity risk. The Group seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Corporate Treasury function reports quarterly to the Group’s risk management committee, an independent body that monitors risks and policies implemented to mitigate risk exposures.

32.01 Market Risk Management

32.01.01 Foreign Currency Risk Management The Group undertakes transactions denominated in foreign currencies; consequently exposures to exchange rate fluctuations arise. It is the Group’s policy that all daily foreign currencies, which arise as a result of its remittance transactions, must be traded daily with bank partners only at prevailing foreign exchange rates in the market. The daily closing foreign exchange rates shall be the guiding rate in providing wholesale rates and retail rates to foreign offices and agents, respectively. The trading proceeds will be used to pay out bank loans and other obligations of the Group.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Assets Liabilities 2016 2015 2016 2015 United States Dollar (USD) P 755,656,118 P 561,648,359 P 95,856 P 3,905,567 Hong Kong Dollar (HKD) 348,540,499 108,446,072 2,290,661 3,849,294 Europe (EUR) 258,748,011 263,881,199 7,437,666 10,684,862 Canadian Dollar (CAD) 186,282,810 225,662,057 5,081,228 5,904,814 United Kingdom Pound (GBP) 147,134,746 60,733,273 3,333,603 3,191,240 Australia Dollar (AUD) 75,454,986 142,747,608 3,772,688 4,621,096 Japan Yen (JPY) 60,440,978 88,890,084 1,848,874 1,684,523 Singapore Dollar (SGD) 48,847,277 25,109,548 500,157 97,326 New Taiwan Dollar (NTD) 29,477,933 17,578,465 - - New Zealand Dollar (NZD) 1,127,020 2,643,799 - 50,160 Indonesia Rupiah (IDR) 555,274 688,304 - -

The Group is mainly exposed to changes in USD, HKD, EUR, CAD, GBP, AUD, SGD, NTD, NZD and IDR. The following table details the Group’s sensitivity to increase and decrease for its USD, HKD, EUR, CAD, GBP, AUD, SGD, NTD, NZD and IDR transactions in 2016 and 2015, respectively, in the Philippine Peso against USD, HKD, EUR, CAD, GBP, AUD, SGD, NTD, NZD and IDR.

2016 2015 JPY 3.88% 1.29% GBP 2.91% 2.05% NZD 2.57% 2.83% AUD 2.48% 2.38% CAD 2.29% 2.70% SGD 1.74% 1.38% IDR 1.67% 2.18% EUR 1.58% 2.79% NTD 1.48% 1.09% USD 1.30% 0.75% HKD 1.26% 0.76%

The sensitivity rates above are used when reporting foreign currency risk internally to key management personnel and represents Management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes outstanding USD, HKD, EUR, CAD, GBP, AUD, SGD, NTD, NZD and IDR denominated monetary items and adjusts their translation at the period end for a change in foreign currency rates. A positive number below indicates an increase in profit where the Philippine Peso strengthens against the relevant currency. For a weakening of the Philippine Peso against the relevant currency, there would be a comparable impact on the profit, and the balances below would be negative. Note that all other variables are held constant.

Monetary Asset Monetary Liabilities Net Effect to Profit (in thousands) (in thousands) (in thousands)

Change Increase/(Decrease) (Increase)/Decrease Increase in Decrease in assumption in assumption in assumption assumption in assumption 2016 JPY 3.88% 2,341/(2,341) (72)/72 2,269 (2,269) GBP 2.91% 4,287/(4,287) (94)/94 4,193 (4,193) NZD 2.57% 29/(29) - 29 (29) AUD 2.48% 1,872/(1,872) (179)/179 1,693 (1,693) CAD 2.29% 4,260/(4,260) (202)/202 4,058 (4,058) SGD 1.74% 850/(850) (9)/9 841 (841) IDR 1.67% - - - - EUR 1.58% 4,319/(4,319) (118)/118 4,201 (4,201) NTD 1.48% 435/(435) - 435 (435) USD 1.30% 33,485/(33,485) (2)/2 33,483 (33,483) HKD 1.26% 4,401/(4,401) (41)/41 4,360 (4,360) 2015 JPY 1.29% 1,146/(1,146) (22)/22 1,124 (1,124) GBP 2.05% 1,244/(1,244) (63)/63 1,181 (1,181) NZD 2.83% 75/(75) (5)/5 70 (70) AUD 2.38% 3,394/(3,394) (164)/164 3,230 (3,230) CAD 2.70% 6,092/(6,092) (260)/260 5,832 (5,832) SGD 1.38% 346/(346) (1)/1 345 (345) IDR 2.18% - - - - EUR 2.79% 7,674/(7,674) (552)/552 7,122 7,122 NTD 1.09% 192/(192) - 192 (192) USD 0.77% 16,622/(16,622) (227)/227 16,395 (16,395) HKD 0.76% 827/(827) (33)/33 794 (794)

The Group's sensitivity to foreign currency has decreased during the current period mainly due to decrease in average currency rate used. In Management’s opinion, the sensitivity analysis is representative of the inherent foreign exchange risk exposure during the year. The Group mitigates its exposure to foreign currency risk by closely monitoring its foreign currency cash flows.

32.01.02 Interest Rate Risk Management The Group’s exposure to interest rate risk arises from its cash deposits in banks, cash equivalents, financial assets at FVTPL and borrowings. The interest rate risk arising from deposits with banks which are subject to variable interest rates is managed by means of effective investment planning and analysis and maximizing investment opportunities in various local banks and financial institutions. The interest rate risks on financial assets at FVTPL classified as debt securities are immaterial since these are subject to fixed rates.

Moreover, the Group’s interest rate risks on borrowings are immaterial since these are also subject to fixed rates. The Group’s sensitivity to interest rates has not changed significantly from the prior year. In Management’s opinion, the sensitivity analysis is representative of the inherent interest rate risk exposure during the year. The Group mitigates its exposure to interest rate risk by closely monitoring its outstanding cash deposits in banks, cash equivalents, financial assets at FVTPL and borrowings.

32.01.03 Other Price Risk Management The Group is exposed to equity price risks arising from equity investments. The sensitivity analyses below have been determined based on the exposure to equity price risks at the end of the reporting period. If equity prices had been 5% higher/lower:  Net profit for the years ended December 31, 2016 and 2015 would have been affected as the equity investments are classified as financial assets at FVTPL and no investments were disposed of or impaired; and  Based on the historical movement of the stock exchange index, Management’s assessment of reasonable possible change was determined to be a decrease and increase of P3,625,325 and P3,159,159 in the 2016 and 2015 in the consolidated statements of comprehensive income, respectively. The Group’s sensitivity to other price risk has not changed significantly from the prior year. In Management’s opinion, the sensitivity analysis is representative of the inherent other price risk exposure during the year. The Group mitigates its exposure to interest rate risk by closely monitoring its equity investments.

32.02 Credit Risk Management

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually. The Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities.

The carrying amount of financial assets recognized in the financial statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk, without taking into account collateral or other credit enhancements held.

2016 2015 Cash in banks and cash equivalents P 1,705,102,824 P 1,558,473,594 Financial assets at FVTPL 259,448,441 256,920,610 Trade and other receivables 582,724,407 464,845,362 Guaranteed investment certificate 5,698,519 5,141,723 Refundable deposits 31,451,320 29,638,332 P 2,584,425,511 P 2,315,019,621

The Group does not hold any collateral or other credit enhancements to cover this credit risk. The table below shows the credit quality by class of financial assets of the Group:

Neither Past Due nor Impaired High Grade December 31, 2016 Cash in banks and cash equivalents P 1,705,102,824 Financial assets at FVTPL 259,448,441 Trade and other receivables 573,385,913 Guaranteed investment certificate 5,698,519 Refundable deposits 31,451,320 P 2,575,087,017 December 31, 2015 Cash in banks and cash equivalents P 1,558,473,594 Financial assets at FVTPL 256,920,610 Trade and other receivables 455,366,366 Guaranteed investment certificate 5,141,723 Refundable deposits 29,638,332 P 2,305,540,625

Maximum exposure for financial instruments recorded at fair value as shown above represent the risk exposure as of respective reporting sheet dates but not the maximum risk exposure that could arise in the future as a result of changes in value.

The table below shows the maximum credit exposure of the Group per geographical classification as of December 31, 2016 and 2015:

2016 2015 Philippines P 1,341,718,853 P 1,475,476,234 Asia Pacific 735,420,389 473,112,214 Middle East 307,304,978 181,080,137 Europe 125,152,547 127,176,459 North America 74,828,744 58,174,577 P 2,584,425,511 P 2,315,019,621

The credit quality of the financial assets was determined as follows: Trade and other receivables  High grade – These are receivables from counterparties with no default in payment.  Medium grade – These are receivables from counterparties with up to three defaults in payment.  Low grade – These are receivables from counterparties with more than three defaults in payment. Investments at FVTPL  High grade – Companies that are consistently profitable, have strong fundamentals and pays out dividends and interest.  Medium grade – Companies that recently turned profitable and have the potential of becoming a high grade company. These companies have sound fundamentals.  Low grade – Companies that are not yet profitable, speculative in nature but have the potential to turn around fundamentally.

32.03 Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Group’s remaining contractual maturity for its non- derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Group may be required to pay.

Weighted Average Effective 1 – 5 Interest Rate Within 1 year years Total December 31, 2016 Beneficiaries and other payables - P 242,641,672 P - P 242,641,672 Loans payable 3.50% - 5.80% 1,312,000,000 - 1,312,000,000

P 1,554,641,672 P - P 1,554,641,672 December 31, 2015 Beneficiaries and other payables - P 175,477,280 P - P 175,477,280 Loans payable 3.15% - 6.00% 1,115,000,000 - 1,115,000,000

P 1,290,477,280 P - P 1,290,477,280

The following table details the Group’s liquidity analysis for its derivative financial instruments. The table has been drawn up based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.

Weighted Average Effective Interest Rate Within 1 Year

December 31, 2016 Gross settled: Foreign exchange forward contracts Financial asset at FVPTL n/a P 6,447,834 Financial liability at FVPTL n/a 5,155,050

December 31, 2015 Gross settled: Foreign exchange forward contracts Financial asset at FVPTL n/a P 7,938,808 Financial liability at FVPTL n/a 1,145,299

The following table details the Group’s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group’s liquidity risk management as the liquidity is managed on a net asset and liability basis.

Weighted Average Effective Interest Rate On Demand Within 1 Year 1-5 Years Total December 31, 2016 Cash on hand - P 50,026,891 P - P - P 50,026,891 Cash in banks 0.50% to 2% 1,484,526,267 - - 1,484,526,267 Cash equivalents 1.75% 220,576,557 - - 220,576,557 Financial assets at FVTPL 4%-8% - 259,448,441 - 259,448,441 Trade and other receivables - - 582,724,407 - 582,724,407 Guaranteed investment certificate 0.9% - 5,698,519 - 5,698,519 Refundable deposit - - - 31,451,320 31,451,320

P 1,755,129,715 P 847,871,367 P 31,451,320 P 2,634,452,402 December 31, 2015 Cash on hand - P 34,771,050 P - P - P 34,771,050 0.19% to Cash in banks 31% 1,490,949,933 - - 1,490,949,933 Cash equivalents 1.75% 67,523,661 - - 67,523,661 Financial assets at FVTPL 6% to 13% - 256,920,610 - 256,920,610 Trade and other receivables - - 464,845,362 - 464,845,362 Guaranteed investment certificate 0.85% - 5,141,723 - 5,141,723 Refundable deposit - - - 29,638,332 29,638,332

P 1,593,244,644 P 726,907,695 P 29,638,332 P 2,349,790,671

The Group’s financing facilities are as follows:

2016 2015 Unsecured bank loan facilities with various maturity dates and which may be extended by mutual agreement: Amount used P 1,312,000,000 P 1,305,000,000 Amount unused 2,340,000,000 2,150,000,000 P 3,652,000,000 P 3,455,000,000

32.04 Translation Risk

The Group’s consolidated statements of financial position is exposed to foreign exchange fluctuations as these affect the translation of subsidiaries’ net assets and income and expenses denominated in foreign currencies. The following tables set forth for the year indicated the impact of reasonably possible changes in the rates of other currencies on equity.

Change in Nominal Change in Nominal Foreign Currency Foreign Currency Currency Exchange rate Effect on Equity Exchange Rate Effect on Equity 2016 HKD +0.02 1,876,479 -0.50 (44,708,300) CAD +0.87 292,451 -4.31 (1,442,804) EUR +2.25 (3,723,114) -1.56 2,587,801 NZD +34.28 (21,108,881) 28.96 (17,829,524) AUD +1.75 (46,479) -2.97 78,810 GBP +8.33 9,402,107 -2.33 (2,634,577) JPY +0.06 3,250,367 -0.03 (1,919,755) 2015 HKD -4.61 (393,985,202) -0.41 (34,861,874) CAD -27.73 (9,260,583) -0.13 (42,896) EUR +2.44 (4,086,248) -5.26 8,799,699 NZD +2.90 (1,746,831) -2.95 1,779,258 AUD +2.61 243,339 -1.90 (176,659) GBP +3.31 2,763,402 -4.97 (4,151,519) JPY +33.35 1,385,515,606 -0.03 (1,370,851)

The Group manages translation risk by maintaining adequate level and balance between monetary and non monetary assets that will counter the effect of any change in foreign currency during the periods where there is volatile movement in foreign currency. The Group’s sensitivity to various exchange rates significantly decreases due to increase in net asset (liability) of the foreign operations. In Management’s opinion, the sensitivity analysis is representative of the inherent translation risk as the year-end exposure reflects the exposure during the year. The Group mitigates its exposure to translation risk by closely monitoring its net assets and income and expenses denominated in foreign currencies.

33. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Group manages its capital to ensure that the Parent Company and its subsidiaries will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Group’s overall strategy remains unchanged from 2015. The capital structure of the Group consists of net debt (borrowings as detailed in Notes 16, 17, 18, 28 and 30 offset by cash and bank balances) and equity of the Group (comprising capital paid-in, retained earnings, cumulative translation adjustment, re-measurements and treasury stock as disclosed in Notes 19 and 25. Pursuant to Section 43 of the Corporation Code of the Philippines, stock corporations are prohibited from retaining surplus plus profits in excess of 100% of their paid-in capital stock, except: 1) when justified by definite corporate expansion projects or programs approved by the board of directors; or 2) when the corporation is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign, from declaring dividends without its/his consent, and such consent has not yet been secured; or 3) when it can be clearly shown that such retention is necessary under special circumstances obtaining in the corporation, such as when there is a need for special reserve for probable contingencies. The Group is in compliance with the above requirements. The Group’s risk management committee reviews the capital structure of the Group on an annual basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital. The Group has a target gearing ratio of 1:1 determined as the proportion of net debt to equity. The gearing ratio at end of the reporting periods is as follows:

2016 2015 Debt P 1,586,936,219 P 1,302,821,237 Cash and cash equivalents 1,755,129,715 1,593,244,644 Net debt (cash and cash equivalents) (168,193,496) (290,423,407) Equity 1,316,430,695 1,275,157,541 Net debt to equity ratio (0.13:1) (0.23:1)

Debt is defined as total liabilities, as described in Notes 16, 17, 18 and 30, while equity includes all capital and reserves of the Group that are managed as capital.

34. RECLASSIFICATIONSOF COMPARATIVE AMOUNTS

Certain amounts in the comparative consolidated financial statements and notes disclosure have been reclassified to conform to the current year's presentation. Details are as follows:

Current Year Classification Previous Year Classification Amount Goodwill Intangible assets - net Goodwill Goodwill 111,44 1,19 1 Prepayments and other current Prepayments and other assets current 'assets Prepaid taxes Others 687,221 Guaranteed investment certificate Others 5,141,723

Management believes that the above reclassifications resulted to a better presentation of accounts and did not have any impact on prior year's profit or loss.

35. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

These consolidated financial statements were approved and authorized for issuance by the Board of Directors on February 17, 2017.

-,.

"17 .' - -

80 R.S. BERNALDO & ASSOCIATES

INDEPENDENT AUDITORS' REPORT ON THE SUPPLEMENTARY SCHEDULES

The Board of Directors and the Stockholders I-REMIT INC. AND SUBSIDIARIES 26/F Discovery Centre, 25 ADB Avenue Ortigas Centre, Pasig City

We have issued our report dated February 17, 2017 on the basic consolidated financial statements of I-REMIT INC. AND SUBSIDIARIESas of and for the year December 31, 2016. Our audit was conducted for the purpose of forming an opinion on the basic consolidated financial statements of I-REMIT INC. AND SUBSIDIARIEStaken as a whole. The information in the index to the consolidated financial statements and supplementary schedules as of and for the year December 31, 2016, which are not required parts of the consolidated financial statements, are required to be filed with the Securities and Exchange Commission. Such information is the responsibility of the Management of I-REMIT INC. AND SUBSIDIARIES. The information has been subjected to the auditing procedures applied in our audit of the basic consolidated financial statements. In our opinion, the information is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.

R.S. BERNALDO & ASSOCIATES BOA/PRCNo. 0300 Valid until December 31, 2018 SECGroup A Accredited Accreditation No. 0153-FR-2 Valid until September 1, 2017 BSP Group B Accredited Valid until 2018 audit period CDA CEA No. O"013-AF Valid until December 12, 2019 IC Accreditation No. F-2016/002- Valid tn: t 30, 2019 Ro/efU Partner CPA Certifica No. 86071 SEC Group A Accredited Accreditation No. 1135-AR-1 Valid until August 4, 2017 BIRAccreditation No. 08-004744-001-2015 Valid from March 27, 2015 until March 26, 2018 Tax Identification No.1 09-227-897 IC Accreditation No. SP-2016/007-R Valid until August 30, 2019 PTR No. 5929421 Issued on January 15, 2017 at Makati City

February 17, 2017

T: +632812-1718 to 24 A: 18fFCityland Condominium 10 Tower 1 BOA/PRC No. 0300 F: +632 813-6539 SEe Group A Accredited 156 HV. dela Costa Street, Ayala North, asp Group B Accredited E: [email protected] Makati City, Philippines 1226 CDA CEA Accredited W: www.rsbernaldo.com Ie Accredited I-REMIT INC. INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES DECEMBER 31, 2016

Schedule Content Page No.

Part 1 Schedule of Retained Earnings Available for Dividend I Declaration 2 (Part 1 4C, Annex 68-C) Schedule of all effective standards and interpretations under II PFRS 3 (Part 1 4J) Map showing relationships between and among parent, III 7 subsidiaries, an associate, and joint venture (Part 1 4H)

Part 2 A Financial Assets 8 Amounts Receivable from Directors, Officers, Employees, B Related Parties and Principal Stockholders (Other than 9 Affiliates) Receivable from Related Parties Eliminated during the C 12 Consolidation of Financial Statements D Intangible Assets - Other Assets 13 E Long-Term Debt 14 Indebtedness to Related Parties (included in the consolidated F 15 statement of position) G Guarantees of Securities of Other Issuers 16 H Capital Stock 17

Other Required Information IV Schedule of Financial Soundness Indicators (Part 1 4D) 18 Schedule I

I-REMIT INC. SCHEDULE OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION DECEMBER 31, 2016

Unappropriated Retained Earnings, Beginning P 20,010,759

Net income based on the face of audited financial statements 21,755,345

Less: Dividend declarations during the year - Cash 19,959,386 Appropriations of retained earnings 409,940 Sub-total 20,369,326

Add: Unrealized foreign exchange loss - net 14,136,852 Realized income categorized as unrealized in previous years 10,604,250 Sub-total 24,741,102

Net loss actual/realized 26,127,121 Unappropriated Retained Earnings, Ending P 46,137,880 Schedule II

I-REMIT INC. AND SUBSIDIARIES SCHEDULE OF EFFECTIVE STANDARDS AND INTERPRETATIONS DECEMBER 31, 2016

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as of December 31, 2016 Not Adopted Not Adopted Applicable

Framework for the Preparation and Presentation of Financial Statements a Conceptual Framework Phase A: Objectives and Qualitative Characteristics PFRSs Practice Statement Management Commentary a

Philippine Financial Reporting Standards First-time Adoption of Philippine Financial Reporting Standards a Amendments to PFRS 1: Additional Exemptions for First-time Adopters a Amendment to PFRS 1: Limited Exception from Comparative PFRS 7 Disclosures a PFRS 1 (Revised) for First-time Adopters Amendments to PFRS 1: Severe Hyperinflation and Removal of Fixed Date for First- a time Adopters Amendments to PFRS 1: Government Loans a Share-based Payment a Amendments to PFRS 2: Vesting Conditions and Cancellations a Amendments to PFRS 2: Group Cash-Settled Share-based Payment Transactions a PFRS 2 Amendment to PFRS 2: Definitin of Vesting Condition a Amendments to PFRS 2: Classification and Measurement of Share-based Payment a Transactions Business Combinations a Amendment to PFRS 3: Accounting for Contingent Consideration in a Business PFRS 3 (Revised) a Combination Amendment to PFRS 3: Scope Exceptions for Joint Ventures a Insurance Contracts a PFRS 4 Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts a Non-current Asset Held for Sale and Discontinued Operations a PFRS 5 Amendments to PFRS 5: Changes in Methods of Disposal a PFRS 6 Exploration for and Evaluation of Mineral Resources a Financial Instruments: Disclosures a Amendments to PFRS 7: Transition a Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets a Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets - a Effective Date and Transition Amendments to PFRS 7: Improving Disclosures about Financial Instruments a Amendments to PFRS 7: Disclosures - Transfer of Financial Assets a PFRS 7 Amendments to PFRS 7: Disclosures - Offsetting Financial Assets and Financial a Liabilities Amendments to PFRS 7: Mandatory Effective Date of PFRS 9 and Transition a Disclosures Amendments to PFRS 7: Hedge Accounting a Amendments to PFRS 7: Servicing Contracts a Amendments to PFRS 7: Applicability of the amendments to PFRS 7 to condensed a interim financial statements Operating Segments a Amendment to PFRS 8: Aggregation of Operating Segments a PFRS 8 Amendment to PFRS 8: Reconciliation of the Total of the Reportable Segments' a Assets to the Entity's Assets PFRS 9 (2014) Financial Instruments a Consolidated Financial Statements a Amendments to PFRS 10: Transition Guidance a Amendments to PFRS 10: Investment Entities a PFRS 10 Amendments to PFRS 10: Sale or Contribution of Assets between an Investor and a its Associate or Joint Venture Amendments to PFRS 10: Investment Entities: Applying the Consolidation a Exception Joint Arrangements a PFRS 11 Amendments to PFRS 11: Transition Guidance a Amendments to PFRS 11: Accounting for Acquisitions of Interests in Joint a Operations Disclosure of Interest in Other Entities a Amendments to PFRS 12: Transition Guidance a PFRS 12 Amendments to PFRS 12: Investment Entities a Amendments to PFRS 12: Invesment Entities: Applying the Consolidation Exception a Fair Value Measurements a PFRS 13 Amendment to PFRS 13: Portfolio Exception a PFRS 14 Regulatory Deferral Accounts a PFRS 16 Leases a Philippine Accounting Standards

Presentation of Financial Statements a Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations a PAS 1 (Revised) Arising on Liquidation Amendments to PAS 1: Presentation of items Other than Comprehensive Income a Amendments to PAS 1: Disclosure Initiative a PAS 2 Inventories a Statement of Cash Flows a PAS 7 Amendments to PAS 7 - Disclosure Initiative a PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors a PAS 10 Events After the Reporting Period a PAS 11 Construction Contracts a Income Taxes a Amendments to PAS 12 - Deferred Tax: Recovery of Underlying Assets a PAS 12 Amendments to PAS 12 - Recognition of Deferred Tax Assets for Unrealized Losses a

Property, Plant and Equipment a Amendment to PAS 16: Revaluation Method - Proportionate Restatement of PAS 16 a Accumulated Depreciation Amendments to PAS 16: Bearer Plants a Amendments to PAS 16: Clarification of Acceptable Methods of Depreciation a PAS 17 Leases a PAS 18 Revenue a Employee Benefits a PAS 19 (Amended) Amendments to PAS 19 (Revised): Defined Benefit Plans: Employee Contributions a Amendment to PAS 19: Discount Rate: Regional Market Issue a PAS 20 Accounting for Government Grants and Disclosure of Government Assistance a The Effects of Changes in Foreign Exchange Rates a PAS 21 Amendment: Net Investment in a Foreign Operation a PAS 23 (Revised) Borrowing Costs a Related Party Disclosures a PAS 24 (Revised) Amendment to PAS 24: Key Management Personnel a PAS 26 Accounting and Reporting by Retirement Benefit Plans a Separate Financial Statements a Amendments to PAS 27 (Amended): Investment Entities a PAS 27 (Amended) Amendments to PAS 27 (Amended): Equity Method in Separate Financial a Statements Investments in Associates and Joint Ventures a Amendments to PAS 28: Sale or Contribution of Assets between an Investor and a PAS 28 (Amended) its Associate or Joint Venture Amendments to PAS 28: Invesment Entities: Applying the Consolidation Exception a

PAS 29 Financial Reporting in Hyperinflationary Economies a Financial Instruments: Disclosure and Presentation a Financial Instruments: Presentation a Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations PAS 32 a Arising on Liquidation Amendments to PAS 32: Classification of Right Issues a Amendment to PAS 32: Offsetting Financial Assets and Financial Liabilities a PAS 33 Earnings Per Share a Interim Financial Reporting a PAS 34 Amendment to PAS 34: Disclosure of Information 'elsewhere in the interim a financial report' Impairment of Assets a PAS 36 Amendments to PAS 36: Recoverable Amount Disclosures for Non-Financial Assets a PAS 37 Provisions, Contingent Liabilities and Contingent Assets a Intangible Assets a Amendment to PAS 38: Revaluation Method - Proportionate Restatement of PAS 38 a Accumulated Amortization Amendments to PAS 38: Clarification of Acceptable Methods of Amortization a Financial Instruments: Recognition and Measurement a Amendments to PAS 39: Transition and Initial Recognition of Financial Assets and a Financial Liabilities Amendments to PAS 39: Cash Flow Hedge Accounting of Forecast Intragroup a Transactions Amendments to PAS 39: The Fair Value Option a Amendments to PAS 39: Financial Guarantee Contract a PAS 39 Amendments to PAS 39: Reclassification of Financial Assets a Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets - a Effective Date and Transition Amendments to PAS 39: Embedded Derivatives a Amendment to PAS 39: Eligible Hedged Items a Amendments to PAS 39: Novation of Derivatives and Continuation of Hedge a Accounting Amendments to PAS 39: Hedge Accounting a Investment Property a PAS 40 Amendment to PAS 40: Clarifying the Interrelationship between PFRS 3 and PAS a 40 when Classifying Property as Investment Property or Owner-occupied Property

Agriculture a PAS 41 Amendments to PAS 41: Bearer Plants a Philippine Interpretations

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities a IFRIC 2 Member's Share in Co-operative Entities and Similar Instruments a IFRIC 4 Determining Whether an Arrangement Contains a Lease a Rights to Interests arising from Decommissioning, Restoration and Environmental IFRIC 5 a Rehabilitation Funds Liabilities arising from Participating in a Specific Market-Waste Electrical and IFRIC 6 a Electronic Equipment Applying the Restatement Approach under PAS 29 Financial Reporting in IFRIC 7 a Hyperinflationary Economies Reassessment of Embedded Derivatives a IFRIC 9 Amendments to Philippine Interpretation IFRIC-9 and PAS 39: Embedded a Derivatives IFRIC 10 Interim Financial Reporting and Impairment a IFRIC 12 Service Concession Arrangements a IFRIC 13 Customer Loyalty Programs a The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their a Interaction IFRIC 14 Amendments to Philippine Interpretations IFRIC - 14, Prepayments of a Minimum a Funding Requirement IFRIC 15 Agreements for the Construction of Real Estate a IFRIC 16 Hedges of a Net Investment in a Foreign Operation a IFRIC 17 Distribution of Non-Cash Assets to Owners a IFRIC 18 Transfer of Assets from Customers a IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments a IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine a IFRIC 21 Levies a SIC - 7 Introduction of the Euro a SIC - 10 Government Assistance - No Specific Relation to Operating Activities a SIC - 15 Operating Leases - Incentives a SIC - 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders a SIC - 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease a SIC - 29 Service Concession Arrangements: Disclosures a SIC - 31 Revenue - Barter Transaction Involving Advertising Services a SIC - 32 Intangible Assets - Web Site Costs a Schedule III

I-REMIT INC. MAP SHOWING RELATIONSHIPS BETWEEN AND AMONG PARENT, SUBSIDIARIES, AN ASSOCIATE, AND JOINT VENTURE I-REMIT INC. AND SUBSIDIARIES Schedule A – Financial Assets DECEMBER 31, 2016

Name of issuing entity and Number of shares or principal Amount shown on the Income accrued amount of bonds or notes balance sheet association of each issue Debt Securities FIRST PACIFIC CO LTD 100,000 5,108,730 171,109 FTP FINANCE LTD 100,000 5,372,345 81,878 FTP FINANCE LTD 100,000 5,372,345 81,878 ABN AMRO BANK 200,000 10,167,740 184,713 INDO ENERGY FINANCE II 200,000 7,604,575 278,207 PETRON CORPORATION 200,000 10,398,242 298,302 PETRON CORPORATION 200,000 10,398,242 298,302 BANK OF CEYLON 80,000 4,010,336 43,536 BANK OF CEYLON 120,000 6,015,503 65,304 FPC TREASURY LTD 110,000 5,433,158 50,588 FPC TREASURY LTD 90,000 4,445,311 41,390 MILLICOM INTL CELLULAR 20,000 1,009,415 4,986 MILLICOM INTL CELLULAR 200,000 10,094,154 49,857 MTS INTL FUNDING LTD 165,000 8,422,595 34,190 MTS INTL FUNDING LTD 35,000 1,786,611 7,253 VEDANTA RESOURCES PLC 40,000 2,004,810 8,953 VEDANTA RESOURCES PLC 45,000 2,255,411 10,072 VEDANTA RESOURCES PLC 115,000 5,763,828 25,740 THETA CAPITAL 200,000 10,424,295 152,744 OAS SA 200,000 363,354 133,000 NATIONAL SAVINGS BANK 170,000 8,469,981 23,471 ROYAL CAPITAL 200,000 9,437,254 205 NATIONAL SAVINGS BANK 30,000 1,494,703 319,361 ROYAL CAPITAL 200,000 9,437,254 11,457 WACHOVIA CAP TRUST III 100,000 4,884,990 161,036 HSBC Holding PLC 201,000 10,803,211 71,659 FRN PETROBRAS GLOBAL FINANCE B.V. 200,000 9,869,420 74,059 ROYAL CAPITAL 200,000 9,437,254 72,713 3,821,000 180,285,068 2,755,964 Equity securities (shares) Global X Silver 1,000 1,596,509 - SHS Apple Inc. 1,400 8,061,999 - SHS Apple Inc. 497 2,862,009 - SHS Apple Inc. 1,134 6,530,219 - SHS Apple Inc. 1,134 6,530,219 - HSBC Holding PLC 10,000 3,990,071 - HSBC Holding PLC 4,800 1,915,234 - CNOOC Limited 15,000 932,619 - JP Morgan Funds 190 1,529,584 - Black Rock Global Funds 2,465 1,293,048 - HSBC Holding PLC 6,400 2,553,646 - Fiat Chrysler Automobile 1,550 715,241 - CK Hutchison Holding Ltd 3,500 1,971,961 - New Capital China EQ Ordin CCC 1,094 6,724,468 - Hang Seng Investment Index Fund 1,600 968,129 - Cheung Kung Property Holding 3,000 914,351 - Hang Seng Investment Index Fund 1,600 968,129 - China Unicom Hong Kong Ltd 18,000 1,041,841 - Apple Inc 210 1,218,801 - Apple Inc 210 1,218,801 - Apple Inc 874 5,072,535 - Sanofi-ADR 550 1,085,910 - General Motors 760 1,327,842 - Ferrari NV 155 445,186 - Ping An 6,500 1,616,540 - HSBC Holding PLC 3,600 1,436,426 - Facebook Inc - A 88 503,385 - Facebook Inc - A 44 251,693 - Facebook Inc - A 300 1,735,477 - Alibaba Group Holding Ltd. - ADR 272 1,244,251 - Facebook Inc - A 365 2,213,276 - Facebook Inc - A 88 523,810 - Alibaba Group Holding Ltd. - ADR 286 1,241,826 - Facebook Inc - A 84 480,504 - 88,749 72,715,539 - I-REMIT INC. AND SUBSIDIARIES Schedule B - Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties) DECEMBER 31, 2016

Balance at Amounts Written- Balance at end of Name of Debtor beginning of Additions Amounts Collected Current Non- Current off period period

Alejandro Pepino Jr. P 5,546.56 P - 5,546.56 P - P 0.00 P - P 0.00 Alfred C. Piajo - 3,919.00 2,642.68 - 1,276.32 - 1,276.32 Analie Angeles 291,674.24 90.00 291,764.24 - (0.00) - (0.00) Arlene De Guia - 57,205.00 52,288.00 - 4,917.00 - 4,917.00 Arlene Salinas 6,795.92 530.00 7,325.92 - - - - Armin Demetillo 631,619.98 - 631,619.98 - (0.00) - (0.00) Bansan Choa - 869,701.74 827,564.40 - 42,137.34 - 42,137.34 Bernadette Cindy Tiu 65,849.71 719,125.20 779,907.91 - 5,067.00 - 5,067.00 Charlene Mae A. Halcon - 16,309.05 15,077.37 - 1,231.68 - 1,231.68 Claire Matagay 30.00 100.00 130.00 - - - - Danilo Belleza 3,970.91 111,640.84 115,611.75 - - - - Edward Labios 953.71 0.03 953.74 - - - - Elbert Mallete 31,361.88 - 31,361.88 - (0.00) - (0.00) Emelyn Bonayon 10.00 1,995,052.47 1,995,062.47 - - - - Emmanuel Catahan 3,000.00 180.00 3,180.00 - - - - Fitzgerald Duba 361,666.57 - 361,666.57 - (0.00) - (0.00) Geraldine Joy A. Guisper 1,172.50 - 1,172.50 - - - - Gilbert Gaw - 2,210,530.79 1,684,954.90 - 525,575.89 - 525,575.89 Griselda Marie M. Martin 446,062.77 - 446,062.77 - - - - Harris Jacildo 259,259.08 105,780.75 340,289.83 - 24,750.00 - 24,750.00 Ireneo Rodriguez 33,987.96 224,172.60 258,160.56 - - - - Jacqueline Juliano 3,271.66 - 3,271.66 - - - - Jessa G. Apolinario 3,400.00 210,415.00 213,215.00 - 600.00 - 600.00 Jodalyn Mallari - 6,000.00 2,000.00 - 4,000.00 - 4,000.00 Joey Chua 450,000.02 90.00 450,090.02 - (0.00) - (0.00) Jorie Perena 2.00 13,850.00 13,852.00 - - - - Jose III Maceda 275,000.09 804.00 275,804.09 - (0.00) - (0.00) Junell Dassun 16,086.31 - 16,086.31 - - - - Kristie Anne Hernandez 21,920.40 - 21,920.40 - (0.00) - (0.00)

Kristine Alexis M. Fuentes - 150,034.40 67,157.09 - 82,877.31 - 82,877.31

Leo Zuniga 2,607.00 - 2,607.00 - 0.00 - 0.00 I-REMIT INC. AND SUBSIDIARIES Schedule B - Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties) DECEMBER 31, 2016

Balance at Amounts Written- Balance at end of Name of Debtor beginning of Additions Amounts Collected Current Non- Current off period period

Lourdjenn Padlan 10,143.27 - 10,143.27 - 0.00 - 0.00 Lovely G. Danan - 4,590.00 923.33 - 3,666.67 - 3,666.67 Luisito Banting 41,066.43 980,863.32 1,019,706.94 - 2,222.81 - 2,222.81 Marc Rey Calaguian 1,666.68 2,035,895.63 2,037,562.31 - - - - Marco Salangsang 5,189.37 373,446.28 369,133.92 - 9,501.73 - 9,501.73 Maria Celeste Armas - 1,807,243.05 1,764,043.05 - 43,200.00 - 43,200.00 Maria Cristina Castillejo 66,504.20 678,582.79 745,086.99 - - - - Marie Fe Oporto 4,448.78 - 4,448.78 - - - - Marilou Hazel T. Angeles - 25,363.00 23,896.34 - 1,466.66 - 1,466.66 Mary Jean Ocan 25.00 90.00 115.00 - - - - Mhark Pascual 39,618.15 45,356.89 84,975.04 - (0.00) - (0.00) Patricia S. Pascual - 76,506.41 17,088.00 - 59,418.41 - 59,418.41 Rachel Ann Reyles 28,534.15 - 28,534.15 - - - - Regina Shimamoto 240,900.00 - 240,900.00 - - - - Richona Tubosa 1,582.50 190.00 1,772.50 - - - - Rociel Dimaculangan 6,113.48 - 6,113.48 - - - - Ronald Benito 664,999.99 - 664,999.99 - (0.00) - (0.00) Rosario C. Pahayahay - 301,949.00 24,216.97 - 277,732.03 - 277,732.03 Rovic Garcia 3,000.00 77,294.08 80,294.08 - - - - Ruby Anne Enriquez 3,000.00 1,290.00 4,290.00 - - - - Severino Lagan 392,376.76 5,979.06 398,355.82 - 0.00 - 0.00 Voltaire Lopez 1,666.68 - 1,666.68 - - - - William Joseph Gerald 10,000.00 90.00 10,090.00 - - - - Reyes Accounting FO - 528.13 - - 528.13 - 528.13 Analyn Villanueva (IGRL) 2,800.82 - - 2,800.82 - - - Artemio Panganiban 1,578.39 - 1,578.39 - - - - (LSML) Carmen Baladad (IRCL) - 4,185.90 - - 4,185.90 - 4,185.90 DMU (WEPL) - 1,197.68 - - 1,197.68 - 1,197.68 Evelyn Galo (IGRL) - 6,112.58 - - 6,112.58 - 6,112.58 Florence Pamintuan 3,795,484.39 - - 1,218,749.52 2,576,734.87 - 2,576,734.87 (WWE) I-REMIT INC. AND SUBSIDIARIES Schedule B - Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties) DECEMBER 31, 2016

Balance at Amounts Written- Balance at end of Name of Debtor beginning of Additions Amounts Collected Current Non- Current off period period

GICF (IGRL) - 62,153.29 - - 62,153.29 - 62,153.29 GICF (WEPL) - 1,089.12 - - 1,089.12 - 1,089.12 Gina Herminigildo (IRCL) 511.89 - 511.89 - - - - Glenda Beranda - 1,666.54 - - 1,666.54 - 1,666.54 Jodalyn Mallari (IGRL) 21,426.30 - 21,426.30 - - - -

Jose Verne Vasquez (IRCL) 239.02 - 239.02 - - - -

Joycelyn Pangilinan (IRCL) 245.11 - 245.11 - - - -

Kristine Alexis M. Fuentes - 535.63 - - 535.63 - 535.63 (WEPL) Leopoldo Mosada Jr. 9,452.78 - 9,452.78 - - - - (IGRL) Makoto Kinoshita (KKIJ) 199,820.42 16,457.67 - - 216,278.09 - 216,278.09 Manuel Ignacio (IRCL) - 488.54 - - 488.54 - 488.54 Maria Angelica Lallana 164,131.57 - - 164,131.57 - - - (IRCL) Maria Josefina Sy (IRCL) (211.25) - (211.25) - - - - Mariefe Oporto (IGRL) 88,627.14 - - 88,627.14 - - - Non Voice DMA - 84.99 - - 84.99 - 84.99 Pinoymart (UKMART) 5,058.29 - 5,058.29 - - - - (IGRL) Querobin Camet (LSML) 15,263.66 - - 10,905.54 4,358.12 - 4,358.12 Ronald Guinto (IRCL) 108,335.88 - 108,335.88 - - - - Ruby Anne Enriquez - 1,071.27 - - 1,071.27 - 1,071.27 (WEPL) Sarah Grace Tindugan - 535.63 - - 535.63 - 535.63 (WEPL) Tsai Pak Foo (LSML) - 3,845.85 - - 3,845.85 - 3,845.85 Violeta Miranda (WEPL) - 1,405.15 - - 1,405.15 - 1,405.15 TOTAL P 8,848,849.11 P 13,211,618.35 P 16,603,340.63 P 1,485,214.60 P 3,971,912.23 P - P 3,971,912.23 I-REMIT INC. AND SUBSIDIARIES Schedule C - Receivable from Related Parties which are eliminated during the consolidation of financial statements DECEMBER 31, 2016

Balance at beginning Amounts Amounts Balance at the end of Name and Designation of debtor Additions Current Non Current of period collected written off the period

Lucky Star management Limited Remittance P 2,855,336 P 1,268,687,383 P 1,271,542,718 P - P 1 P - P 1 Due from 12,677,134 33,692,284 30,119,178 - 16,250,240 - 16,250,240 Delivery fee 92,364 5,762,722 5,855,086 - - - - IRemit Global Remittance Limited Remittance 17,427,798 7,086,570,236 7,032,452,389 - 71,545,645 - 71,545,645 Due from 148,546,659 80,506,485 156,538,601 - 72,514,542 - 72,514,542 Delivery fee 274,703 20,816,027 20,518,122 - 572,608 - 572,608 Service income ------Worldwide Exchange Pty Ltd Remittance 31,267,723 4,750,431,021 4,744,571,148 - 37,127,596 - 37,127,596 Due from 448,007 4,862,851 5,215,175 - 95,683 - 95,683 Delivery fee 597,638 38,981,928 39,089,276 - 490,290 - 490,290 International Remittance (Canada) Ltd. Remittance 46,666,765 9,721,291,612 9,703,072,993 - 64,885,384 - 64,885,384 Due from 309,666 3,009,809 3,319,475 - - - - Delivery fee 1,448,064 52,034,900 51,910,357 - 1,572,606 - 1,572,606 I-Remit New Zealand Limited Remittance 4,597,294 1,075,047 5,672,341 - - - - Due from 25,819,235 5,676,086 323,212 - 31,172,109 - 31,172,109 Delivery fee - 3,745 3,745 - - - - IREMIT Remittance Consulting GmbH Remittance ------Due from 18,947,676 801,442 269,711 - 19,479,406 - 19,479,406 Delivery fee ------K.K. Iremit Japan Remittance 36,299,827 1,717,204,937 1,739,125,833 - 14,378,931 - 14,378,931 Due from 41,888,429 36,254,692 48,752,691 - 29,390,430 - 29,390,430 Delivery fee 132,114 5,489,422 5,459,933 - 161,604 - 161,604 I-Remit Australia Pty Ltd - Remittance 2,140,842 74,119,514 76,012,203 - 248,153 - 248,153 Due from - 761,162 761,162 - - - - Iremittance Singapore Pty Ltd. Sales - 2,878,837,628 2,853,477,170 - 25,360,458 - 25,360,458 Due from 5,251,025 21,660,570 7,700,573 - 19,211,021 - 19,211,021 Rent income - 11,242,945 9,707,477 - 1,535,468 - 1,535,468 Management fees ------Shared services ------Power Star Asia Group Limited Remittance ------Due from - 33,271,028 - - 33,271,028 - 33,271,028 397,688,297 27,853,045,476 27,811,470,570 - 439,263,204 - 439,263,204

(i) If collection was other than in cash, explain. In 2016, the Parent Company applied a part of its receivable (due from) accounts from its subsidiary, IRemit Global Remittance Limited as additional investment in the amount of P35,838,789 thus, increasing its investment to IRemit Global Remittance Limited from P144,878,066 as at December 31, 2015 to P180,716,856 as at December 31, 2016. I-REMIT INC. AND SUBSIDIARIES Schedule D - Intangible Assets - Other Assets DECEMBER 31, 2016

Charged to cost and Charged to other Other changes Description Beginning Balance Additions at Cost Ending Balance expenses accounts additions (deductions) Goodwill 111,441,191 4,897,055.99 - - - 116,338,247 Software 2,422,090 3,642,427 (1,204,286) - 1,000 4,861,231 I-REMIT INC. AND SUBSIDIARIES Schedule E - Long-Term Debt DECEMBER 31, 2016

Amount shown under caption Amount shown under caption Interest Rate Title of issue and type Amount authorized by “Current portion of long-term debt’ “Long-Term Debt” in related Maturity Date of obligation indenture in related balance sheet balance sheet %

None to Report I-REMIT INC. AND SUBSIDIARIES Schedule F - Indebtedness to Related Parties (Included in the consolidated financial statement of position) DECEMBER 31, 2016

Name of Related Parties Balance at beginning of period Balance at end of period

None to Report I-REMIT INC. AND SUBSIDIARIES Schedule G - Guarantees of Securities of Other Issuers DECEMBER 31, 2016

Name of issuing entity of securities Title of issue of each class of securities Total amount of guaranteed and Amount owned by person of which guaranteed by the company for which Nature of guarantee guaranteed outstanding statement is filed this statement is filed

None to Report I-REMIT INC. AND SUBSIDIARIES Schedule H - Capital Stock DECEMBER 31, 2016

Number of shares issued and Number of shares reserved for Number of shares Number of shares held by Directors, officers and Title of Issue outstanding as shown under the options, warrants, conversion and Others authorized related parties employees related balance sheet caption other rights

Common stock - 1 par 1,000,000,000 612,043,122 - 476,251,817 4,230,759 131,560,546 value I-REMIT INC. AND SUBSIDIARIES SCHEDULE IV - FINANCIAL SOUNDNESS INDICATORS For the Years Ended December 31, 2016, 2015 and 2014

2016 2015 2014

A. SHORT-TERM LIQUIDITY RATIO

CURRENT RATIO 1.67 1.81 1.34

Current Assets 2,636,233,059 2,349,949,328 4,100,774,190 Current Liabilities 1,579,815,616 1,298,626,384 3,053,621,475

WORKING CAPITAL TO ASSETS 0.36 0.41 0.24

(Current Assets - Current Liabilities) 1,056,417,443 1,051,322,944 1,047,152,715 Total Assets 2,903,366,914 2,577,978,778 4,308,760,867

B. LONG-TERM SOLVENCY

DEBT TO EQUITY 1.21 1.02 2.44

Total Liabilities 1,586,936,219 1,302,821,237 3,057,600,452 Shareholders' Equity 1,316,430,695 1,275,157,541 1,251,160,415

LONG-TERM DEBT TO EQUITY - - -

Long-Term Debt - - - Shareholders' Equity 1,316,430,695 1,275,157,541 1,251,160,415

FIXED ASSETS TO EQUITY 0.020 0.024 0.02

(Fixed Assets - Accumulated Depreciation) 26,809,790 30,233,846 25,255,946 Shareholders' Equity 1,316,430,695 1,275,157,541 1,251,160,415

CREDITORS EQUITY TO TOTAL ASSETS 0.55 0.51 0.71

Total Liabilities 1,586,936,219 1,302,821,237 3,057,600,452 Total Assets 2,903,366,914 2,577,978,778 4,308,760,867

FIXED ASSETS TO LONG-TERM DEBT - - -

(Fixed Assets - Accumulated Depreciation) 26,809,790 30,233,846 25,255,946 Long-Term Debt - - -

C. RETURN ON INVESTMENTS

RATE OF RETURN ON TOTAL ASSETS 0.01 0.00 0.00

Net Income 37,179,460 12,742,567 9,238,923 Average Total Assets 2,740,672,846 3,443,369,823 3,684,271,668

RATE OF RETURN ON EQUITY 0.03 0.01 0.01

Net Income 37,179,460 12,742,567 9,238,923 Average Stockholders' Equity 1,295,794,118 1,263,158,978 1,259,467,455 I-REMIT INC. AND SUBSIDIARIES SCHEDULE IV - FINANCIAL SOUNDNESS INDICATORS For the Years Ended December 31, 2016, 2015 and 2014

2016 2015 2014

D. PROFITABILITY RATIOS

GROSS PROFIT RATIO 0.66 0.67 0.65

Gross Income 494,294,853 457,196,785 504,265,922 Revenues 748,487,090 685,685,520 773,614,092

OPERATING INCOME TO REVENUES 0.05 0.02 0.01

Income from Operations 37,179,460 12,742,567 9,238,923 Revenues 748,487,090 685,685,520 773,614,092

PRETAX INCOME TO REVENUES 0.07 0.04 0.03

Pretax Income 51,849,389 26,119,819 26,138,925 Revenues 748,487,090 685,685,520 773,614,092

NET INCOME TO COMMISSION INCOME 0.05 0.02 0.01

Net Income 37,179,460 12,742,567 9,238,923 Revenues 748,487,090 685,685,520 773,614,092

E. INTEREST COVERAGE RATIO

INTEREST COVERAGE RATIO 2 2 2

Eanings Before Interest and Tax 92,422,433 57,460,513 74,748,097 Interest Expense 40,573,044 31,340,694 48,609,172 STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR SEPARATE FINANCIAL STATEMENTS

The Management of I-REMIT INC. is responsible for the preparation and fair presentation of the separate financial statements including the schedules attached therein, as at December 31, 2016 and 2015 and for each of the three years in the period ended December 31,2016, in accordance with the Philippine Financial Reporting Standards (PFRS), and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate financial statements, management is responsible for assessing the Parent Company's ability to continue as going concern, disclosing, as applicable matters related to going concern and using the going concern basis of accounting unless management intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Parent Company's separate financial reporting process.

The Board of Directors reviews and approves the separate financial statements including the schedules attached therein and submits the same to the stockholders.

R.S. Bernaldo & Associates, the independent auditor appointed by the stockholders, has audited the separate financial statements of the Parent Company in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has expressed its opinion on the fairness of presentation upon completion of such audit.

B SAN C. CHOA and Chief Executive Officer

SUBSCRIBED AND SWORN to before me thist B\ ~ay~~\l 2017 affiants exhibiting to me their respective Passport Identification Card Number (Passport ID), as follows:

Name Passport ID No. Date of Issue Place of Issue BANSAN C. CHOA EB8471111 AUG. 2, 2016 MANILA HARRIS E. D. JACILDO EB7789412 PRo4,2013 MANILA BERNADETTE CINDY C. TIU EB6965382 EC.18,2012 NCR EAST

Doc. No. r}.j , page>NP.~~ __ BOOK N8! H ~ i ;~; !N' '-~~'/'< )1- 'it::, 'lNot , L P,VI:: c ". \FeE a Seriesof2011 '" !\T,_>-{",·',t:, .1 ii '<11': , ,;~J~{ ~~~~l: ~~;I- (f:: I )IV!S!O~ Ap ointment N::-. '05 (2016-2017) . !. Commi sion Expires on December 31,2017 I . ,~' APR 03 2017 'J' ~!C4 as! Tower, PSE Centre Exc.r,anqc Head, I)~ e . li s., Ortigas Center, 1605 Pasi£ City PTR 0 2553925 I 01.09.2017 I M::ndaluyong I-Remit, Inc. _ ~ i"C: .", - "~ ~ -;~ IP No. lRN-0137i5 I 04.22.15 I PPLM 26/F Discovery Centre 25 ADS Av ue(632O)M'7b&:2~73rf3n~er-", ' ~t'flst,.lg.::-.':Citv/.. 606 ~ifipt'~~ ReI'•• of Attcrnevs• ~ ., "'~ 6~ -"4 Telephone: (632) 706-9999 a .~v. ,,~u Facsimile: (632) 706·2767 I'ACIAA HA. CASTILLO Website: www.myiremit.co Facebook: www.facebook.com/iremitinc Twitter: www.twitter.com/iremitinc COVER SHEET for AUDITED FINANCIAL STATEMENTS

SEe Registration Number

Form Type Department requiring the report Secondary License Type, If Applicable

N/A

COMPANY INFORMATION Company's Email Address Company's Telephone Numberls Mobile Number investouelationship@iremit·inc.ocm 706-9999 09178537405

No. of Stockholders Annual Meeting Fiscal Year MonthlDay Month/Day 21 JULY I 31 DECEMBER I 31

CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Email Address Telephone Numberls Mobile Number

'--- M_R_,_B_A_N_SA_N_C_,C_H_O_A II bCChOa@mYiremit,comI1706-999911 N_/_A _

Contact Person's Address 26/F Discovery Centre, 25 ADB Avenue, Ortigas Centre, 1605 Pasig City, Metro Manila

2: All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation's records with the Commission and/ or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies. Stephen Uy Que Certified Public Accountant Lie, No. 32028 Tin. No. 110-025-648-000

PRACTITIONER'S COMPILATION REPORT

To Management of I-REMIT, INC.

We have compiled the accompanying separate financial statements of I-REMIT, INC. based on information you have provided. These separate financial statements comprise the statement of financial position of I-REMIT, INC. as at December 31, 2016, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

We performed this compilation engagement in accordance with Philippine Standard on Related Services 4410 (Revised), Compilation Engagements.

We have applied our expertise in accounting and financial reporting to assist you in the preparation and presentation of these separate financial statements in accordance with Philippine Financial Reporting Standards (PFRS). We have complied with relevant ethical requirements, including principles of integrity, objectivity, professional competence and due care.

These separate financial statements and the accuracy and completeness of the information used to compile them are your responsibility.

Since a compilation engagement is not an assurance engagement, we are not required to verify the accuracy or completeness of the information you provided to us to compile these separate financial statements. Accordingly, we do not express an audit opinion or a review conclusion on whether these separate financial statements are prepared in accordance with Philippine Financial Reporting Standards (PFRS).

ST PHEN . QUE Certified Public Accountant CPA Certificate Number: 32028 BOA Accreditation Number: 2276 Valid from March 3, 2015 until December 31, 2017 PTR Number: 4025233 Issued on January 23, 2017 BIR Accreditation Number: 07-001137-001-2017 Valid from January 5, 2017 until January 5, 2020

- ft- .-~ .,' February 17, 2017

L/G Madison 101 Hotel 1 Madison St. Corner Aurora Blvd. Quezon City, Philippines 1112 R.S. BERNALDO & ASSOCIATES

INDEPENDENT AUDITORS' REPORT

The Board of Directors and the Stockholders I-REMIT INC. 26/F Discovery Centre, 25 ADB Avenue Ortigas Centre, Pasig City

Report on the Audit of the Separate Financial Statements

Opinion

We have audited the separate financial statements of I-REMIT INC. (the "Parent Company"), which comprise the separate statements of financial position as at December 31, 2016 and 2015, and the separate statements of comprehensive income, separate statements of changes in equity and separate statements of cash flows for each of the three years in the period ended December 31, 2016, and notes to the separate financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the financial position of the Parent Company as at December 31, 2016 and 2015, and its financial performance and its cash flows for each of the three years in the period ended December 31, 2016 in accordance with Philippine Financial Reporting Standards (PFRSs).

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Parent Company in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to our audits of the separate financial statements in Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

- ,-- -

T: +632812-1718 to 24 BOA/PRe No. 0300 A: 18/F Cityland Condominium 10 Tower 1 F: +632 813-6539 SEe Group A Accredited 156 l-l.V. dela Costa Street, Ayala North, asp Group B Accredited E: [email protected] Makati City, Philippines 1226 CDACEA Accredited W: www.rsbernaldo.eom tC Accredited Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of ours audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matter described below to be the key audit matters to be communicated in our report.

Revenue Recognition

The amount of revenue recognized in the year on the services rendered for delivery fees are dependent on the volume of remittance transactions from Asia Pacific, Europe and North America. Due to time zones differences, significant judgement is applied in determining the appropriate cut-off period. In our view, revenue recognition is significant to our audit as Company might inappropriately account for revenues not yet actually earned. Moreover, revenue is a measure of the Company's financial performance. The accounting policies for revenue recognition are set out in Note 4 in the financial statements and the different revenue streams for the Group have been disclosed in Note 21.

In order to address the risks of material misstatement relating to revenue recognition, we decided to perform test of control to ascertain that risks are mitigated. Upon testing, we identified that controls on revenue is effectively implemented, duties were properly segregated, documents throughout the transactions were duly signed by the responsible officers and amounts are consistent from the global settlement reports. We reviewed transactions before and after the reporting periods and obtained reasonable assurance that all delivery fees were properly recorded in the correct cut-off period from all regions in accordance with established policies for recognition. Moreover, we perform gross profit analysis to determine reasonableness of profit margins. Furthermore, we analysed volumes and amounts of remittance transactions on a monthly and annual basis to determine any significant and unusual fluctuation.

Other Information

Management is responsible for the other information. The other information comprises the information included in SEC Form 17-A. and Annual Report for the year ended December 31, 2016, but does not include the separate financial statements and our auditor's report thereon. The SEC Form 17-A and Annual Report for the year ended December 31, 2016 are expected to be made available to us after the date of this auditor's report.

Our opinion on the separate financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audits of the separate financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the separate financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. Responsibilities of Management and Those Charged with Governance for the Separate Financial Statements

Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with PFRS, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate financial statements, management is responsible for assessing the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Parent Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Parent Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audits. We also:

• Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances, but not for, the purpose of expressing an opinion on the effectiveness of the Parent Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- E:lUREP,l) 0 - i~HE .r' t.L i('-'r~f\'L':~: LARGE TAXP/WFF~S SET\'ICE~ L/l,RGE TAXPAYErS t,,(',,;iSTI\i'~CE. DIViSIQ,',

MA. GRACIA A If-:' n,'\ I.. CASTILLO • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in separate the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Parent Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audits of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Our audits were conducted for the purpose of forming an opinion on the basic separate financial statements taken as a whole. The supplementary information required under Revenue Regulations 15-2010 and 19-2011 in Notes 36 and 37, respectively, to the separate financial statements, are presented for purposes of filing with Bureau of Internal Revenue and are not required parts of the basic separate financial statements. Such information is the responsibility of the Management of I-REMIT INC. The information has been subjected to the auditing procedures applied in our audits of the basic separate financial statements. In our opinion, the information is fairly stated in all material respects in relation to the basic separate financial statements taken as a whole.

The engagement partner on the audit resulting in this independent auditors' report is ROMEO A. DE JESUS, JR. R.S. BERNALDO & ASSOCIATES BOA/PRC No. 0300 Valid until December 31, 2018 SEC Group A Accredited Accreditation No. 01 53-FR-2 Valid until September 1, 2017 BSP Group B Accredited Valid until 2018 audit period CDA CEA No. 0013-AF Valid until December 12, 2019 IC Accreditation No. F-20 16/002- Valid j7~~ ust 30, 2019

RO,j.jjf-D J, JR. Partner CPA Certificate No. 86071 SEC Group A Accredited Accreditation No. 1135-AR-1 Valid until August 4, 2017 BIR Accreditation No. 08-004744-001-2015 Valid from March 27, 2015 until March 26, 2018 Tax Identification No.1 09-227-897 IC Accreditation No. SP-2016/007-R Valid until August 30, 2019 PTR No. 5929421 Issued on January 15, 2017 at Makati City

February 17, 201 7

-- --.. - _ .._- •....,- ua~;t~~,R~:;~~·.'I';5'~',,; MA•.Qr\A~l!~lf'.Ol~, I • .c~TilJ:-Q.j c'...q•.~...;..••_ ·~-.,."tr••~.•~••••"-.•••••• • ~ ay:-;-. I-REMIT INC. A_P_R _1_2 _20_17-..1@ SEPARATE STATEMENTS OF FINANCIAL POSITION l&aiVU!O !CTreu . December 31,2016 and 2015 lOUl AM COtlllJln V1IW01 (In Philippine Peso)

NOTES 2015

ASSETS Current Assets Cash and cash equivalent 6 1,128,446,630 1,234,787,674 Financial assets at fair value through profit or loss 7 6,447,834 7,938,808 Trade and other receivables - net 8 964,667,704 792,732,743 Prepayments and other current assets 9 19,571,194 18,189,967 2,119,133,362 2,053,649,192 Non-current Assets Investments in subsidiaries 10 421.974.555 415,323,760 Investment in an associate 11 3.573.974 3,573,974 Property and equipment - net 12 18.294,208 18,883,229 Intangible assets - net 13 4,832.870 2,389,622 Retirement asset 25 18.624,728 11,645,574 Deferred tax assets - net 28 3,276,250 Other non-current assets 14 45,270.189 29,611,594 515.846,774 481,427,753 TOTAL ASSETS 2,634,980,136 2,535,076,945

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES Current Liabilities Financial liabilities at fair value through profit or loss 15 5.155.050 1.145.299 Beneficiaries and other pay abies 16 208.328.058 329.886.900 Loans payable 17 1.312.000.000 1.115.000.000 Income tax payable 14.286.730 1.361.639

1.539.769.838 1,447.393.838 Non-current Liability Deferred tax liabilities - net 28 632,412

TOTAL LIABILITIES 1.539.769.838 1,448,026,250 STOCKHOLDERS' EQUITY Capital Stock 19 617.725.800 617,725,800 Additional Paid-in Capital 19 429.513.501 429.513.501 Unappropriated Retained Earnings 32.001.071 30.615.051 Appropriated Retained Earnings 19 15,458.113 15.048.173 Remeasurements - net 25 15.969.926 9.196.343 1.110.668.411 1.102.098.868 Treasury Stock 19 (15.458.113) (15.048.173)

TOTAL STOCKHOLDERS' EQUITY 1,095.210.298 1.087,050.695 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY r ,,.;-. 2;~S4.,98o,.1-g6'·-. z'.53!),.076,945 u , i_I.( •....), ,,I C .• ' .....•. , l M~~ r.::1A),'J,I.,! r:.::~~, r ~'\;IU (See Notes to Separate Financial Statements) e L/', [ l/lXhWEr~ f...,,~:i t: J' . r,. I, ('., I-REMIT INC. SEPARATE STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended December 31, 201 6, 201 5 and 2014 (In Philippine Peso)

NOTES 2016 2015 2014 REVENUE 21 493,446,083 419,413,146 453,594,776 COST OF SERVICES 22 238,709,301 216,557,649 245,175,858

GROSS PROFIT 254,736,782 202,855,497 208,418,918 OTHER INCOME 23 1,790,915 12,380,667 2,256,233

256,527,697 215,236,164 210,675,151 OPERATING EXPENSES 24 220,984,670 182,450,458 177,267,127

PROFIT BEFORE TAX 35,543,027 32,785,706 33,408,024 INCOME TAXES 27 13,787,681 6,595,072 9,982,011

PROFIT 21,755,346 26,190,634 23,426,013

OTHER COMPREHENSIVE INCOME

ITEM THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS: REMEASUREMENTS - net 25 6,773,583 818,466 1,163,653

TOTAL COMPREHENSIVE INCOME 28,528,929 27,009,100 24,589,666

EARNINGS PER SHARE Basic Earnings per Share 29 0.0355 0.0428 0.0382

(See Notes to Separate Financial Statements)

au r~[/\LJ o.: IN If ~~i':t,!~,< r" ,"7':: ;:-1, l! f-~G;-TA>: '" y ~ -~s.~l :t'\!iC~ LI\R\.JE-I[Xf-AYE·'~ ';.,,''.~ ,"( 'i"I, i. - .. . I-REMIT INC. SEPARATE STATEMENTS OF CHANGES IN EQUITY For the Years Ended December 31, 2016, 2015 and 2014 (In Philippine Peso)

Additional Paid- Unappropriated Appropriated Remeasurements - Notes Capital Stock . in Capital Retained Earnings Retained Earnings Treasury Stock net Total

Balance, January 1, 2014 617,725,800 429,513,501 34,264.499 12.400,309 (12.400,309) 7,214,224 1,088,718,024 Profit 23,426,013 23,426,013 Cash dividends (30,641,806) (30,641,806) Purchase of own stock (1,560,044) (1,560,044) Appropriations of retained earnings (1,560,000) 1,560,044 44 Other comprehensive income 25 1,163,653 1,163,653 Balance, December 31,2014 617,725,800 429,513,501 25.488,706 13,960,353 (13,960,353) 8,377,877 1,081,105,884 Profit 26,190,634 26,190,634 Cash dividends 20 (19,976,469) (19,976,469) Purchase of own stock 19 (1,087,820) (1,087,820) Appropriations of retained earnings 19 (1,087,820) 1,087,820 Other comprehensive income 25 818,466 818,466 Balance, December 31,2015 19,25 617,725,800 429,513,501 30,615,051 15,048,173 (15,048,173) 9,196,343 1,087,050,695 Profit 21,755,346 21,755,346 Cash dividends 20 (19,959,386) (19,959,386) Purchase of own stock 19 (409,940) (409,940) Appropriations of retained earnings 19 (409,940) 409,940 Other comprehensive income 25 6,773,583 6,773,583 Balance, December 31,2016 19,25 617,725,800 429,513,501 32,001,071 15,458,113 (15,458,113) 15,969,926 1.095,210,298

rlSee.t:Jotes to Separate ~ial Statements) ~ ~ '1.,,-;. . ;;.J i> :; .:> ,::t;. ;.... [jjl ?J-Sj ...> IX;;' I ._ ~.LJ. ,; :..-i I o -'i'Jl --~ ~....-.<.- en l.J..J :-"'-'-~,_I 2:=.:,:- It -i p. < ( ,,_"" (7) ri! C 6 I'i I-REMIT INC. SEPARATE STATEMENTS OF CASH FLOWS For the Years Ended December 31.2016.2015 and 2014 (In Philippine Peso)

NOTES 2016 2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 35.543.027 32.785.706 33,408.024 Adjustments for: Finance costs 17.22 40.573.044 31.340.694 48.609.172 Unrealized foreign exchange loss (gain) - net 23.24 20.195.503 (10.604.250) (283.632) Depreciation 12.24 5.775.387 3.060.788 4.377.351 Retirement benefits 24.25 2.697.393 3.067,480 2.102.794 Amortization 13.24 1.119.252 416.841 720.773 Provision for bad debts 8.24 445.881 2.855.795 4.802.780 Loss on sale of property and equipment 12.24 32.981 Finance income 6.23 (1.224.611) (1.221.122) (950.723)

Operating cash flows before changes in working capital 105.124.876 61.734.913 92.786.539 Decrease (Increase) in operating assets: Financial assets at fair value through profit or loss 1.231.810.861 (661.654,459) Trade and other receivables 1179.719.588) 186.148,488 421.657.715 Prepayments and other current assets 11.381.226) 2.760.866 12.716.857) Other non-current assets 115.658.595) (10.547.836) (3.370.154) Increase (Decrease) in operating liabilities: Financia( liabilities at fair value through profit or loss 11.231.359.673) 661.765.815 Beneficiaries and other payables 1117.137.251) (289,453.649) 318.327.069

Cash generated from (used in) operations 1208.771.784) (48.906.030) 826.795.668 Income taxes paid 17.674.216) (10.213.165) (10.579.259) Finance cost paid 17 140.958.447) (32.065.697) (49.060.596)

Net cash from (used in) operating activities 1257.404.447) (91.184.892) 767.155.813

CASH FLOWS FROM INVESTING ACTIVITIES Finance income received 6.23 1.224.611 1.221.122 950.723 Proceeds from disposal of property and equipment 12 958 522.769 Payments of advances from stockholders (7.289,480) Contributions to retirement fund 25 (2.796.033) Additions to investment in subsidiaries 10 (3.251.710) (8.209.659) Additions to intangible assets 13 (3.562.500) (1.980.235) (945.000) Additions to property and eguipment 12 15.187.324) (17.260.256) (1.397.059)

Net cash used in investing activities 17.524.255) (23.544.343) (16.890,475)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loans 17 1.312.000.000 1.115.000.000 1.305.000.000 Purchase of own stock 19 (409.940) (1.087.820) (1.560.000) Payment of cash dividends 20 119.959.386) (19.976,469) (30.641.806) Payments of loans 17 11.115.000.000) (1.305.000.000) (988.000.000)

Net cash from (used in) financing activities 176.630.674 (211.064.289) 284.798.194

EFFECTSOF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENT 118.043.016) .8.118.139 (706.817)

NET INCREASE IDECREASE) IN CASH AND CASH EQUIVALENT 1106.341.044) (317.675.385) 1.034.356.715

CASH AND CASH EQUIVALENT AT BEGINNING OF YEAR 1.234.787.674 1.552,463.059 518.106.344

CASH AND CASH EQUIVALENT AT END OF YEAR 1.128.446.630 1.234.787.674 1.552,463.059

(See Notes to Separate Financial Statements! I-REMIT INC. NOTES TO SEPARATE FINANCIAL STATEMENTS December 31, 2016 and 2015

1. CORPORATE INFORMATION

I-Remit Inc. (the "Parent Company") was incorporated in the Philippines and registered with the Securities and Exchange Commission (SEC) on March 5, 2001 and started its commercial operations on November 11, 2001. The Parent Company is primarily engaged in the business of fund transfer and remittance services of any form or kind of currencies or monies, either by electronic, telegraphic, wire or any other mode of transfer; delivery of such funds or monies, both in the domestic and international market, by providing either courier or freight forwarding services; and conduct of foreign exchange transactions as may be allowed by law and other allied activities relative thereto, respectively. The Parent Company's common shares were listed with the Philippine Stock Exchange (PSE)on October 17, 2007. The Parent Company is 29.46% owned by STAR Equities, Inc., 21.50% owned by JTKC Equities, Inc., 23.58% owned by Surewell Equities, Inc., 3.28% owned by JPSA Global Services Co. and the 22.19% owned by the public. The Parent Company which is domiciled in the Philippines has its registered office and principal place of business at 26/F Discovery Centre, 25 ADS Avenue, Ortigas Centre, Pasig City.

2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS

The Philippine Financial Reporting Standards Council (FRSC) approved the issuance of new and revised Philippine Financial Reporting Standards (PFRS). The term "PFRS" in general includes all applicable PFRS, Philippine Accounting Standards (PAS), and Interpretations issued by the Philippine Interpretations Committee (PIC), Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) which have been approved by the FRSC and adopted by SEC. These new and revised PFRS'prescribe new accounting recognition, measurement and disclosure requirements applicable to the Company. When applicable, the adoption of the new standards was made in accordance with their transitional provisions, otherwise the adoption is accounted for as change in accounting policy under PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. 2.01 New and Revised PFRSs Applied with No Material Effect on the Financial Statements

The following new and revised PFRSs have 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.

 Amendments to PFRS 10, PFRS 12 and PAS 28, 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 of its subsidiaries at fair value. In addition, it clarifies that a subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity. Moreover, it clarifies that 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. And, an investment entity measuring all of its subsidiaries at fair value shall provide the disclosures relating to investment entities as required by PFRS 12. The amendments are effective for annual periods beginning on or after January 1, 2016 and must be applied retrospectively. Earlier application is permitted.

2 PFRS 14 permits an entity that adopts PFRS to continue to use, in its first and subsequent PFRS financial statements, its previous generally accepted accounting principles (GAAP) accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral account balances without specifically considering the requirements of paragraph 11 of PAS 8. PFRS 14 requires entities to present regulatory deferral account balances as separate line items in the statement of financial position and to present movements in those account balances as separate line items in the statement of profit or loss and other comprehensive income. PFRS 14 also requires specific disclosures to identify the nature of, and risks associated with, the rate regulation that has resulted in the recognition of regulatory deferral account balances in accordance with this Standard. PFRS 14 is effective for a period beginning on or after January 1, 2016. Earlier application is permitted.

 Amendments to PAS 1, Disclosure Initiative The amendments clarify that information should not be obscured by aggregating or by providing immaterial information. Materiality considerations shall apply to all parts of the financial statements even if when a standard requires a specific disclosure. In addition, the amendments introduce a clarification that the list of line items to be presented in the statement of financial position and statement of comprehensive income can be disaggregated and aggregated as relevant. Also, it clarifies that an entity's share of other comprehensive income (OCI) of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss. Further, the amendments add additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes. The IASB also removed guidance and examples with regard to the identification of significant accounting policies that were perceived as being potentially unhelpful. Amendments to PAS 1 are effective beginning on or after January 1, 2016. Earlier application is permitted.

3  PAS 27, Separate Financial Statements – Equity Method in Separate Financial Statements The amendments in PAS 27 permit an entity to account its investments in subsidiaries, joint ventures and associates using the equity method as described in PAS 28 in its separate financial statements. The amendments shall be applied for annual periods beginning January 1, 2016 retrospectively. Earlier application is permitted. Currently, the Parent Company did not opt to apply the equity method for its investments in subsidiaries and an associate in its separate financial statements.

4 2.02 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.

2.02.01 Standard Adopted by FRSC and Approved by the Board of Accountancy (BOA)

 PFRS 9, Financial Instruments (2014) PFRS 9, amended on July 24, 2014, made limited amendments to the requirements for classification and measurement of financial assets and requirements for impairment. The amendments introduce a ‘fair value through other comprehensive income’ measurement category for particular simple debt instruments. Also it introduced impairment requirements relating to the accounting for an entity’s expected credit losses on its financial assets and commitments to extend credit. These requirements eliminate the threshold that was in PAS 39 for the recognition of credit losses. Under the impairment approach in PFRS 9 it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses, and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition and, consequently, more timely information is provided about expected credit losses. PFRS 9 supersedes PFRS 9 (2009), PFRS 9 (2010) and PFRS 9 (2013) and is effective retrospectively for annual periods beginning on or after January 1, 2018, with earlier application permitted.

5 On the other hand, it substantially carries forward the lessor accounting requirements in PAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. Effective for annual periods beginning on or after January 1, 2019, however, earlier application is not permitted until the FRSC has adopted the new revenue recognition standard. Currently, the result will be an increase in recognized assets and liabilities and more lease expenses recognized in the early periods of a lease and less in the later periods. Further impact of this standard will be assessed by the Company once it becomes effective.

6 2.02.02 Standard Adopted by FRSC but pending for Approval of the BOA

 PIC Q&A No. 2016-02, PAS 32 and PAS 38 – Accounting Treatment of Club Shares Held by an Entity

3. BASIS FOR THE PREPARATION AND PRESENTATION OF SEPARATE FINANCIAL STATEMENTS

3.01 Statement of Compliance

The separate financial statements have been prepared in conformity with PFRS and are under the historical cost convention, except for certain financial instruments that are carried at fair value or at amortized cost.

3.02 Functional and Presentation Currency

Items included in the separate financial statements of the Parent Company are measured using Philippine Peso (P), the currency of the primary economic environment in which the Parent Company operates (the “functional currency”). The Parent Company chose to present its separate financial statements using its functional currency.

7 3.03 Basis of Preparation These separate financial statements were based from the Parent Company’s own transactions, exclusive of transactions of the Parent Company’s subsidiaries, the latter transactions being used in the preparation of the consolidated financial statements, which are also available for public use.

4. SIGNIFICANT ACCOUNTING POLICIES

Principal accounting and financial reporting policies applied by the Parent Company in the preparation of its separate financial statements are enumerated below and are consistently applied to all the years presented, unless otherwise stated.

4.01 Financial Assets

Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets that are subsequently measured at amortized cost, and where the purchase or sale are under a contract whose terms require delivery of such within the timeframe established by the market concerned are initially recognized on the trade date. Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ (HTM) investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. The Parent Company’s financial assets include cash and cash equivalent, financial assets at FVTPL, trade and other receivables, and refundable deposits presented under other non-current assets.

4.01.01 Effective Interest Method The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating finance income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts, through the expected life of the debt instrument, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Income is recognized on an effective interest basis.

8 4.01.02 Amortized Cost Amortized cost is computed using the effective interest rate method less any allowance for impairment and principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of effective interest rate.

4.01.03 Cash and Cash Equivalent Cash and cash equivalent include cash on hand, cash in banks and cash equivalent. Cash includes cash deposits held at call with bank that are subject to insignificant risk of change in value. This shall be measured at the undiscounted amount of the cash or other consideration expected to be paid or received. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with maturities of three months or less from the date of acquisition and that are subject to an insignificant risk of change in value. 4.01.04 Financial Assets at FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. A financial asset is classified as held for trading if:  it has been acquired principally for the purpose of selling it in the near term; or  on initial recognition it is part of a portfolio of identified financial instruments that the Parent Company manages together and has a recent actual pattern of short- term profit-taking; or  it is a derivative that is not designated and effective as a hedging instrument. Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss subsequently. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the separate statements of comprehensive income. Fair value is determined in the manner described in Note 30.

4.01.05 Trade and Other Receivables Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘trade and other receivables’. Trade and other receivables are measured at amortized cost using the effective interest method, less any impairment. Finance income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

9 4.01.06 Impairment of Financial Assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. Objective evidence of impairment could include:  significant financial difficulty of the issuer or counterparty; or  default or delinquency in interest or principal payments; or  it becoming probable that the borrower will enter bankruptcy or financial re-organization; or  the lender, for economic or legal reasons relating to the borrower’s financial difficulty, grants the borrower a concession that the lender would not otherwise consider; or  the disappearance of an active market for that financial asset because of financial difficulties; or  observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group, including (i) adverse changes in the payment status of borrowers in the group (e.g. an increased number of delayed payments or an increased number of credit card borrowers who have reached their credit limit and are paying the minimum monthly amount); or (ii) national or local economic conditions that correlate with defaults on the assets in the group (e.g. an increase in the unemployment rate in the geographical area of the borrowers, a decrease in property prices for mortgages in the relevant area, a decrease in oil prices for loan assets to oil producers, or adverse changes in industry conditions that affect the borrowers in the group). Other factors may also be evidenced of impairment, including significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates. For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Parent Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of five (5) days, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.

10 If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

4.01.07 Derecognition of Financial Assets The Parent Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Parent Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Parent Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Parent Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Parent Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

4.02 Prepayments and Other Current Assets

Prepayments and other current assets represent expenses not yet incurred but already paid in cash. Prepayments and other current assets are initially recorded as assets and measured at the amount of cash paid. Subsequently, these are charged to profit or loss as they are consumed in operations or expire with the passage of time. Prepayments and other current assets are classified in the separate statements of financial position as current assets when the expenses related to prepayments are expected to be incurred within one year or the Parent Company’s normal operating cycle whichever is longer. Otherwise, prepayments are classified as non-current assets.

4.03 Investment in an Associate

An associate is an entity over which the Parent Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Any excess of the cost of acquisition over the Parent Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Parent Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. The Parent Company accounts the investment under the cost method. The Parent Company recognizes as income the dividends received that are distributed from net accumulated earnings of the investee since the date of acquisition by the investor. Dividends received that are in excess of the earnings subsequent to the date of acquisition are not income and therefore considered as return or reduction of investment.

11 The requirements of PAS 39, Financial Instruments: Recognition and Measurement are applied to determine whether it is necessary to recognize any impairment loss with respect to the Parent Company’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with PAS 36, Impairment of Assets, as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with PAS 36 to the extent that the recoverable amount of the investment subsequently increases. The Company loses significant influence over an investee when it loses the power to participate in the financial and operating policy decisions of that investee. If the retained interest is a financial asset, such interest will be measured at fair value and will be accounted in accordance with PAS 39. Any difference between the carrying amount at the date of discontinuance of cost method and the fair value of retained interest and proceeds from disposal of part of investment is recognized in profit or loss.

4.04 Investments in Subsidiaries

A subsidiary is an entity, including an unincorporated entity such as partnership controlled by another entity known as parent. Control is the exposure or rights, to variable returns from the involvement with an investee and the ability to affect that return through its power over an investee. Investments in subsidiaries are accounted under the cost method. Under the cost method, the Parent Company recognizes as income the dividends received that are distributed from net accumulated earnings of the investee since the date of acquisition by the investor. Dividends received that are in excess of the earnings subsequent to the date of acquisition are not income and therefore considered as return or reduction of investment. If the Parent Company loses control of a subsidiary, the Parent Company recognizes any investment retained in the former subsidiary at its fair value at the date when control is lost or recognizes any resulting difference as a gain or loss in profit or loss attributable to the Parent Company.

4.05 Property and Equipment

Property and equipment are initially measured at cost. The cost of an asset consists of its purchase price and costs directly attributable to bringing the asset to its working condition for its intended use. Subsequent to initial recognition, property and equipment are carried at cost less accumulated depreciation and accumulated impairment losses. Subsequent expenditures relating to an item of property and equipment that have already been recognized are added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Parent Company. All other subsequent expenditures are recognized as expenses in the period in which those are incurred.

12 Depreciation is computed on a straight-line method based on the estimated useful lives of the assets as follows:

Office and communication equipment 3 – 5 years Transportation and delivery equipment 3 – 5 years Furniture and fixtures 3 – 5 years

Leasehold improvements are depreciated over the shorter period between the improvements’ useful life of five (5) years or the lease term. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, if there is an indication of a significant change since the last reporting date. An item of property and equipment is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of a property and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss.

4.06 Intangible Assets

4.07 Derivative Financial Instruments

The Company enters into a variety of derivative financial instruments to manage its foreign exchange rate risk, primarily foreign exchange forward contracts. Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than twelve (12) months and it is not expected to be realized or settled within twelve (12) months. Other derivatives are presented as current assets or current liabilities.

13 4.07.01 Forward Contracts Forward contract is an agreement between a buyer and a seller in which the buyer has the right and obligation to buy a specified asset on a specified future date and at a specified price. The seller is also under an obligation to perform as per the terms of the contract. The underlying asset can be a stock, a commodity, or a bond. The basis of the Parent Company in valuing its forward contract transactions is Market Rate, which is the current or prevailing average exchange rate in the financial market for the foreign currency to be trade. Forward contract are initially recognized at fair value using market rate at the date a forward contract is entered. Subsequently, it will be measured to its fair value at the end of each reporting period and at value date which pertains to completion of the contract. Resulting unrealized gain or loss is recognized in profit or loss at the end of each reporting period, while realization of gain or loss is recognized in profit or loss at value date.

4.08 Impairment of Assets

At each reporting date, the Parent Company assesses whether there is any indication that any assets other than retirement asset, deferred tax assets and financial assets that are within the scope of PAS 39, Financial Instruments: Recognition and Measurement, may have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Parent Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized as an expense. When an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but the increased carrying amount should not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized as income.

4.09 Borrowing Costs

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

14 4.10 Financial Liabilities and Equity Instruments

4.10.01 Classification as Debt or Equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements.

4.10.02 Financial Liabilities Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’. The Parent Company’s financial liabilities include financial liabilities at FVTPL, beneficiaries and other payables (excluding payable to government agencies) and loans payable.

4.10.03 Financial Liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:  it has been acquired principally for the purpose of repurchasing it in the near term;  on initial recognition it is part of a portfolio of identified financial instruments that the Parent Company manages together and has a recent actual pattern of short- term profit-taking; or  it is a derivative that is not designated and effective as a hedging instrument. A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:  such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;  the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Parent Company's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or  it forms part of a contract containing one or more embedded derivatives, and PAS 39, Financial Instruments: Recognition and Measurement permits the entire combined contract to be designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss subsequently. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the separate statements of comprehensive income. Fair value is determined in the manner described in Note 30.

15 The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating finance cost over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition.

4.10.05 Derecognition of Financial Liabilities The Parent Company derecognizes financial liabilities when, and only when, the Parent Company’s obligations are discharged, cancelled or expired. When an existing 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 de-recognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

4.10.06 Equity Instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Parent Company are recognized at the proceeds received, net of direct issue costs. Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are shown in equity as a deduction from the proceeds, net of tax. The cost of acquiring the Parent Company‘s own shares are shown as a deduction from equity until the shares are cancelled or reissued. When such shares are subsequently sold or reissued, any consideration received, net of directly attributable incremental transaction costs and the related income tax effects, is included in equity.

4.11 Offsetting of Financial Instruments

Financial assets and liabilities are offset and the net amount is reported in the separate statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

4.12 Employee Benefits

4.12.01 Short-term Benefits The Parent Company recognizes a liability net of amounts already paid and an expense for services rendered by employees during the accounting period. Short-term benefits given by the Parent Company to its employees include salaries and wages, de minimis fringe benefits, sick and vacation leave pay, training and development and 13th month pay.

4.12.02 Post-employment Benefits The Parent Company has a funded, non-contributory defined benefit retirement plan. This benefit defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

16 The cost of providing benefits is determined using the Projected Unit Credit Method which reflects services rendered by employees to the date of valuation and incorporates assumptions concerning employees’ projected salaries. Post-employment expenses include current service cost, past service cost, and net interest on defined benefit asset/liability. Remeasurements which include cumulative actuarial gains and losses, return on plan assets, and changes in the effects of asset ceiling are recognized directly in other comprehensive income and is also presented under equity in the separate statements of financial position. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognized immediately in profit or loss. The retirement assets recognized in the separate statements of financial position in respect of defined benefit pension plans is the fair value of plan assets less the present value of the defined benefit obligation at the end of each reporting period. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government securities that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. The Parent Company uses different interest rates to discount future benefits with risk-free market rates regardless of the Retirement Fund’s performance. The asset that resulted from this calculation is a result of over funding or when an actuarial gain arises. It is recognized since it is a resource which the Parent Company controls and is available in the form of reduction in future contributions. The Parent Company is not required to pre-fund the future defined benefits payable under the Retirement Plan before they become due. For this reason, the amount and timing of contributions to the Retirement Fund are at the Parent Company’s discretion. However, in the event a benefit claim arises and the Retirement Fund is insufficient to pay the claim, the shortfall will then be due and payable from the Company to the Retirement Fund.

4.13 Provisions

Provisions are recognized when the Parent Company has a present obligation, whether legal or constructive, as a result of a past event, it is probable that the Parent Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

17 Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate and presented in the Parent Company’s separate statements of comprehensive income.

4.14 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Parent Company and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business.

4.14.01 Rendering of Services Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract. Revenue from rendering of services is recognized when all the following conditions are satisfied:  the amount of revenue can be measured reliably;  it is probable that the economic benefits associated with the transaction will flow to the Parent Company;  the stage of completion of the transaction can be measured reliably; and  the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. Revenue from rendering of services encompasses delivery and other fees.

4.14.02 Finance Income Finance income is recognized when it is probable that the economic benefits will flow to the Parent Company and the amount of revenue can be measured reliably. Finance income is accrued on a time proportion basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

4.15 Expense Recognition

Expense encompasses losses as well as those expenses that arise in the course of the ordinary activities of the Parent Company. The Parent Company recognizes expenses in the separate statements of comprehensive income when a decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably.

18 4.16 Leases

4.16.01 The Parent Company as a Lessee Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

4.17 Foreign Currency Transactions

In preparing the separate financial statements of the Parent Company, transactions in currencies other than the Parent Company’s functional currency, i.e. foreign currencies, are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences are recognized in profit or loss in the period in which they arise.

4.18 Related Parties and Related Party Transactions

A related party is a person or entity that is related to the Parent Company that is preparing its separate financial statements. A person or a close member of that person’s family is related to Parent Company if that person has control or joint control over the Parent Company, has significant influence over the Parent Company, or is a member of the key management personnel of the Parent Company. An entity is related to the Parent Company if any of the following conditions applies:  The entity and the Parent Company are members of the same group (which means that a parent, subsidiary and fellow subsidiary are related parties to each other).  One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).  Both entities are joint ventures of the same third party.  One entity is a joint venture of a third entity and the other entity is an associate of the third entity.  The entity holds a post-employment benefit plan for the benefit of the employees of either the Parent Company or an entity related to the Parent Company.  The entity is controlled or jointly controlled by a person identified above.  A person identified above has significant influence over the entity or is a member of the key management personnel of the entity (or of an entity).  Management entity providing key management personnel services to a reporting entity. Close members of the family of a person are those family members, who may be expected to influence, or be influenced by, that person in their dealings with the Parent Company and include that person’s children and spouse or domestic partner; children of that person’s spouse or domestic partner; and dependents of that person or that person’s spouse or domestic partner.

19 A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged.

4.19 Taxation

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

4.19.01 Current Tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the separate statements of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Parent Company’s liability for current tax is calculated using tax rate that have been enacted or substantively enacted by the end of the reporting period.

4.19.02 Deferred Tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the separate financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, carry forward of unused tax credits from excess Minimum Corporate Income Tax (MCIT) over Regular Corporate Income Tax (RCIT) and unused Net Operating Loss Carryover (NOLCO), to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and carry forward of unused MCIT and unused NOLCO can be utilized. Deferred income tax, however, is not recognized when it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction that affects neither the accounting profit nor taxable profit or loss. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets arising from deductible temporary differences are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Parent Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

20 Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Parent Company intends to settle its current tax assets and liabilities on a net basis.

4.19.03 Current and Deferred Taxes for the Period Current and deferred taxes are recognized as an expense or income in profit or loss, except when they relate to items that are recognized outside profit or loss, whether in OCI or directly in equity, in which case the tax is also recognized outside profit or loss.

4.20 Earnings per Share

The Parent Company computes its basic earnings per share by dividing net income or loss attributable to ordinary equity holders of the Parent Company by the weighted average number of ordinary shares outstanding during the period.

4.21 Events after the Reporting Period

The Parent Company identifies subsequent events as events that occurred after the reporting period but before the date when the separate financial statements were authorized for issue. Any subsequent events that provide additional information about the Parent Company’s position at the reporting period, adjusting events, are reflected in the separate financial statements, while subsequent events that do not require adjustments, non-adjusting events, are disclosed in the notes to separate financial statements when material.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTIES

In the application of the Parent Company’s accounting policies, which are disclosed in Note 4, Management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

21 5.01 Critical Judgments in Applying Accounting Policy

The following are the critical judgments, apart from those involving estimations that Management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognized in financial statements.

5.01.01 Functional Currency PAS 21 requires Management to use its judgment to determine the entity’s functional currency such that it most faithfully represents the economic effects of the underlying transactions, events and conditions that are relevant to the entity. In making this judgment, the Parent Company considers the following:  the currency that mainly influences sales prices for financial instruments and services (this will often be the currency in which sales prices for its financial instruments and services are denominated and settled);  the currency in which funds from financing activities are generated; and  the currency in which receipts from operating activities are usually retained. Functional currency is the currency of the primary economic environment in which the Parent Company operates. The Parent Company has determined that its functional currency is the Philippine Peso. The Parent Company’s functional currency is evidenced by its costs of labor, and other costs of providing services and majority of its remittance transactions are settled in Philippine Peso.

5.01.02 Assessment of Control The Parent Company determines whether an entity qualifies as a subsidiary when it has control over an entity. The Parent Company controls an entity when it has the three elements of control as disclosed in Note 4. In making its judgments, the Parent Company considers all facts and circumstances when assessing control over an investee. A reassessment of control is conducted when there are changes to one or more of the three elements of control. Any changes from at least one of the elements would result to lose or gain of control over an entity. The Parent Company, having one hundred percent (100%) ownership and voting interest, assessed that it has control over its subsidiaries since it has power over the subsidiaries, exposure or rights to variable returns from its involvement and ability to use its power to affect the component of its returns. The carrying amounts of investments in subsidiaries amounted to P421,974,555 and P415,323,760 as of December 31, 2016 and 2015, respectively, as disclosed in Note 10. The Parent Company has forty-nine percent (49%) ownership and voting rights over Hwa Kung Hong & Co., Ltd. (HKHCL), as disclosed in Note 11. Parent Company assessed that it does not have a control over HKHCL. The 49% ownership and voting rights of the Parent Company represents only significant influence over the associate. The Parent Company has only the power to participate in the financial and operating policy decisions over the investee. The carrying amounts of investment in an associate amounted to P3,573,974 in both years, as disclosed in Note 11.

22 5.01.03 Assessment of Principal-Agency Arrangement Revenue includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the Parent Company and do not result in increases in its equity. Therefore, they are excluded from revenue. The Parent Company is in an agency relationship where the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the Parent Company. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission. In 2016 and 2015, the Parent Company assessed that it is acting as an agent in its remittances. The Parent Company recognized commission income amounting to P214,079,703 and P201,738,019, respectively.

5.02 Key Sources of Estimation Uncertainties

5.02.01 Reviewing Residual Values, Useful Lives and Depreciation Method of Property and Equipment The residual values, useful lives and depreciation method of the Parent Company’s property and equipment are reviewed at least annually, and adjusted prospectively if appropriate, if there is an indication of a significant change in, how an asset is used; significant unexpected wear and tear; technological advancement; and changes in market prices since the most recent annual reporting date. The useful lives of the Parent Company’s assets are estimated based on the period over which the assets are expected to be available for use. In determining the useful life of an asset, the Parent Company considers the expected usage, expected physical wear and tear, technical or commercial obsolescence arising from changes or improvements in production, or from a change in the market demand for the product or service output and legal or other limits on the use of the Parent Company’s assets. In addition, the estimation of the useful lives is based on Parent Company’s collective assessment of industry practice, internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of property and equipment would increase the recognized operating expenses and decrease non-current assets. The Parent Company uses a depreciation method that reflects the pattern in which it expects to consume the asset’s future economic benefits. If there is an indication that there has been a significant change in the pattern used by which an Parent Company expects to consume an asset’s future economic benefits, the Parent Company shall review its present depreciation method and, if current expectations differ, it shall change the depreciation method to reflect the new pattern. In both years, Management assessed that there is no indication of change from previous estimates since the most recent annual reporting period. The carrying amounts of property and equipment amounted to P18,294,208 and P18,883,229 as of December 31, 2016 and 2015, respectively, as disclosed in Note 12.

23 5.02.02 Reviewing Residual Values, Useful Lives and Amortization Method of Intangible Assets The residual values, useful lives and amortization method of the Parent Company’s intangible assets are reviewed at least annually, and adjusted prospectively if appropriate, if there is an indication of a significant change in, how an asset is used; technological advancement; and changes in market prices since the most recent annual reporting date. Amortization begins when the intangible asset is available for use, i.e. when it is in the location and condition necessary for it to be usable in the manner intended by management. Amortization ceases when the asset is derecognized. The Parent Company uses a straight-line method of amortization since it cannot determine reliably the pattern in which it expects to consume the asset’s future economic benefits. In both years, Management assessed that there is no significant change from the previous estimates. The carrying amounts of intangible assets amounted to P4,832,870 and P2,389,622 as of December 31, 2016 and 2015, respectively, as disclosed in Note 13.

5.02.03 Asset Impairment The Parent Company performs an impairment review when certain impairment indicators are present. In determining the fair values of property and equipment, investment in subsidiaries, investment in an associate and intangible assets which require the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such assets, the Parent Company makes use of estimates and assumptions that can materially affect the separate financial statements. Future events could cause the Parent Company to conclude that property and equipment, investments in subsidiaries, investment in an associate and intangible assets are impaired. Any resulting impairment loss could have a material adverse impact on the financial condition and results of operations. The preparation of the estimated future cash flows involves significant judgment and estimations. While the Parent Company believes that its assumptions are appropriate and reasonable, significant changes in the assumptions may materially affect the assessment of recoverable values and may lead to future additional impairment charges under PFRS. Two subsidiaries of the Parent Company, IRCGmbH in Austria and INZL in New Zealand have temporarily stopped its operation in 2016 on account of rising regulatory compliance among international banks in arresting terrorism funding and money laundering. Based on the three (3) year cash projections prepared by the Parent Company on all of its subsidiaries, no impairment is concluded on its capital investments. The Parent Company determined that there is no indication that impairment has occurred on its property and equipment, investments in subsidiaries, investment in an associate and intangible assets. The aggregate carrying amounts of investments in subsidiaries, investment in an associate, property and equipment and intangible assets amounted to P448,675,607 and P440,170,585 as of December 31, 2016 and 2015, respectively, as disclosed in Notes 10, 11, 12 and 13.

24 5.02.04 Estimating Allowances for Doubtful Accounts The Parent Company estimates the allowance for doubtful accounts related to its trade and other receivables based on assessment of specific accounts where the Parent Company has information that certain counterparties are unable to meet their financial obligations. In these cases, judgment used was based on the best available facts and circumstances including but not limited to, the length of relationship with the counterparty and the counterparty’s current credit status based on third party credit reports and known market factors. The Parent Company used judgment to record specific reserves for counterparties against amounts due to reduce the expected collectible amounts. These specific reserves are re-evaluated and adjusted as additional information received impacts the amounts estimated. The amounts and timing of recorded expenses for any period would differ if different judgments were made or different estimates were utilized. An increase in the allowance for bad debts would increase the recognized operating expenses and decrease current assets. In 2016 and 2015, Management believes that the recoverability of certain receivables were uncertain, thus, provisions for bad debts amounting to P445,881 and P2,855,795, respectively, were recognized as disclosed in Notes 8 and 24. In 2016, receivables amounting to P2,500,000 were written-off as uncollectible, as disclosed in Note 8. The carrying amounts of trade and other receivables amounted to P964,667,704 and P792,732,743 as of December 31, 2016 and 2015, respectively, as disclosed in Note 8.

5.02.05 Deferred Tax Assets At each reporting date, the Parent Company reviews and reduces the carrying amounts of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. In both years, Management believes that the Parent Company would be able to generate future taxable profit that would allow all of its deferred tax assets to be fully utilized. The carrying amounts of deferred tax assets amounted to P10,120,503 and P3,308,877 as of December 31, 2016 and 2015, respectively, as disclosed in Note 28.

5.02.06 Post-employment Benefits The determination of the retirement obligation and cost and other retirement benefits is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include among others, discount rates, mortality of plan members and rates of compensation increase. In accordance with PFRS, actual results that differ from the assumptions and the effects of changes in actuarial assumptions are recognized directly as re-measurements in other comprehensive income. While the Parent Company believes that the assumptions are reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially affect the pension and other retirement obligations. The carrying amount of the Parent Company’s retirement asset, net of the present value of defined benefit obligation, amounted to P18,624,728 and P11,645,574 as of December 31, 2016 and 2015, respectively, as disclosed in Note 25.

25 In 2016, 2015 and 2014, the retirement benefit expense recognized amounted to P2,697,393, P3,067,480 and P2,102,794, respectively, as disclosed in Notes 24 and 25. In 2016, 2015 and 2014, the remeasurement gain, net of related tax, amounted to P6,773,583, P818,466 and P1,163,653, respectively, as disclosed in Note 25.

6. CASH AND CASH EQUIVALENT

For the purpose of the separate statements of cash flows, cash and cash equivalent include cash on hand, in banks and cash equivalent. Cash at the end of each reporting period as shown in the separate statements of cash flows can be reconciled to the related items in the separate statements of financial position as follows:

2016 2015 Cash on hand P 17,917,616 P 12,987,962 Cash in banks 1,010,529,014 1,221,799,712 Cash equivalent 100,000,000 - P 1,128,446,630 P 1,234,787,674

Cash in banks includes deposits with SBA, a related party under common controlling party, amounted to P217,905,038 and P200,275,215 as of December 31, 2016 and 2015, respectively. These deposits earned interest income amounting to P246,789 and P189,277 in 2016 and 2015, respectively, as disclosed in Note 18. In 2016 and 2015, cash in banks earn interest ranging from 0.125% to 0.50%. Cash equivalent earns interest of 1.125% in 2016. Finance income earned on these accounts amounted to P1,224,611, P1,221,122 and P950,723 in 2016, 2015 and 2014, respectively, as disclosed in Note 23.

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)

In November 2013, the Parent Company started its forward trading transactions that resulted to recognition of financial assets at FVTPL which includes foreign currency receivable, as disclosed in Note 15. Foreign currency receivable pertains to US Dollar and Philippine Peso receivables from the bank partners of the Parent Company as a result of its forward transaction. The Parent Company sets up the foreign currency receivable account when it enters into forward contract with its bank partners on US dollar and third currencies which include but not limited to Canadian Dollar (CAD), Great Britain Pound (GBP), European Dollar (Euro), New Zealand Dollar (NZD), Australian Dollar (AUD) and Japanese Yen (JPY), as further disclosed in Note 15. The Parent Company’s financial assets at FVTPL amounted to P6,447,834 and P7,938,808 as of December 31, 2016 and 2015, respectively. In 2016, 2015 and 2014, the unrealized foreign exchange gain from forward transactions amounted to P1,292,785, P6,793,509 and P329,629, respectively, as disclosed in Notes 15 and 23.

26 8. TRADE AND OTHER RECEIVABLES — net

The Parent Company’s trade and other receivables consist of:

2016 2015 Agents P 577,275,953 P 369,070,864 Couriers 143,351,720 139,031,300 Allowance for bad debts (2,943,522) (4,997,641) 717,684,151 503,104,523 Advances to related parties (Note 18) 221,384,460 257,064,184 Officers and employees 1,089,641 4,436,085 Others 24,509,452 28,127,951 P 964,667,704 P 792,732,743

Receivables from agents pertain to the amount of funds advanced by the Parent Company on the account of agents and related parties (foreign offices) in fulfilling remittance obligations to beneficiaries. Due from related parties included under agents account amounted to P247,356,676 and P161,378,933 as of December 31, 2016 and 2015, respectively, as disclosed in Note 18. Receivables from couriers pertain to the amount of funds advanced to courier providers in fulfilling door-to-door remittance obligations of the Parent Company. These receivables are in the form of advances, liquidated within one (1) week from transaction date. Advances to related parties include operating funds and marketing materials advanced to foreign subsidiaries and associate offices by the Parent Company. These advances are collectible in one (1) month from the date of funding. Receivable from officers and employees pertain to the sum of money advanced to officers and employees in connection with their official functions. These include related party balances amounting to P597,530 and P65,850 as of December 31, 2016 and 2015, respectively, as disclosed in Note 18. These are settled within five (5) days from transaction date. No interests were charged on these receivables. Others include advances to trading client, receivables from SSS and suppliers. The outstanding receivables from suppliers are due within thirty (30) days from transaction date and advances to trading client are due within five (5) days from transaction date. Trade receivables disclosed above include amounts which are past due at the end of the reporting period. The Parent Company does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Parent Company to the counterparty. The Parent Company’s trade and other receivables that are past due but not impaired as of December 31, 2016 and 2015 are the following:

2016 2015 61 – 180 days P 6,564,317 P 33,646,699 181 – 360 days 52,273,402 48,330,183 over 360 days 118,910,460 220,145,697 P 177,748,179 P 302,122,579

27 The movements in the allowance for bad debts:

2016 2015 Balance, January 1 P 4,997,641 P 2,141,846 Provision for bad debts (Note 24) 445,881 2,855,795 Amounts written-off as uncollectible (2,500,000) - Balance, December 31 P 2,943,522 P 4,997,641

In determining the recoverability of trade receivables, the Parent Company considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting period. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Management believes that there is no further credit provision required in excess of the allowance for bad debts. Allowance for bad debts pertains to individually impaired trade receivables with a balance of P2,943,522 and P4,997,641 as of December 31, 2016 and 2015, respectively, which are all outstanding for over sixty (60) days. The Parent Company does not hold any collateral over these balances. In 2016 and 2015, the Company recognized provision for bad debts amounting to P445,881 and P2,855,795, respectively, due to uncertainty of its collectability, as disclosed in Note 24. In 2016, Management decided to write-off certain impaired receivables considered as uncollectible amounting to P2,500,000.

9. PREPAYMENTS AND OTHER CURRENT ASSETS

The Parent Company’s prepayments and other current assets consist of:

2016 2015 Receivable from BIR P 13,160,534 P 13,160,534 Prepaid expenses 5,004,358 3,358,584 Advances to suppliers and contractors 1,406,302 750,792 Visa cards inventory - 920,057 P 19,571,194 P 18,189,967

Receivable from BIR pertains to the excess payments made by the Parent Company in 2007 for the Initial Public Offering (IPO) percentage tax. As of December 31, 2016 and 2015, the resolution for the case on the recoverability of tax on IPO is still pending with the Court of Tax Appeals. The Parent Company believes that it will be able to obtain the refund from the BIR. Prepaid expenses include prepayments for insurance, business development, office supplies, internet connection and association dues among others. Advances to suppliers and contractors pertain to payments made to providers of information security, employee healthcare and certain professional services.

28 10. INVESTMENTS IN SUBSIDIARIES

Details of the Parent Company’s investments in subsidiaries accounted at cost are as follows:

Name of Subsidiaries Principal Activity IRemit Global Remittance Limited (IGRL) Fund transfer and remittance services IREMIT Remittance Consulting GmbH (IRCGmbH) Fund transfer and remittance services K.K. Iremit Japan (KKIJ) Fund transfer and remittance services Lucky Star Management Limited (LSML) Fund transfer and remittance services Worldwide Exchange Pty Ltd (WEPL) Fund transfer and remittance services International Remittance (Canada) Ltd. (IRCL) Fund transfer and remittance services I-Remit Australia Pty Ltd (IAPL) Fund transfer and remittance services Power Star Asia Group Limited (PSAGL) Foreign currencies trading services I-Remittance Singapore Pte. Ltd. (IRSPL) Fund transfer and remittance services I-Remit New Zealand Limited (INZL) Fund transfer and remittance services

Proportion of Ownership Interest Place of Incorporation Name of Subsidiaries and Operation 2016 2015 IGRL United Kingdom 100% 100% IRCGmbH Austria 100% 100% KKIJ Japan 100% 100% LSML Hong Kong 100% 100% WEPL Australia 100% 100% IRCL Canada 100% 100% IAPL Australia 100% 100% PSAGL Hong Kong 100% 100% IRSPL Singapore 100% 100% INZL New Zealand 100% 100%

This account consists of:

2016 2015 IGRL P 180,716,856 P 144,878,066 IRCGmbH 103,215,084 103,215,084 KKIJ 42,912,151 72,100,145 LSML 42,554,665 42,554,665 WEPL 21,336,889 21,336,890 IRCL 13,444,000 13,444,000 IAPL 8,552,000 8,552,000 PSAGL 5,958,800 5,958,800 IRSPL 3,251,710 3,251,710 INZL 32,400 32,400 P 421,974,555 P 415,323,760

29 Movements of investments in subsidiaries are as follows:

2016 2015 Balance, January 1 P 415,323,760 P 368,641,585 Acquisition of additional shares through cash - 3,251,710 Acquisition of additional shares through conversion of receivables (Note 33) 35,838,789 43,430,465 Reduction in capital (29,187,994) - Balance, December 31 P 421,974,555 P 415,323,760

10.01 Additional Investment to Subsidiaries

10.01.01 IRSPL On February 27, 2015, the Parent Company invested SGD100,000 or P3,251,710 on I-Remittance Singapore Pte. Ltd. (IRSPL), a company situated in Singapore and incorporated in accordance with the provisions of the Singapore Companies Act, Chapter 50 on February 17, 2014. The Parent Company acquired a total of 100,000 authorized ordinary shares at SGD1.00 per share or SGD100,000, making IRSPL a wholly owned subsidiary. 10.01.02 IGRL In 2016 and 2015, the Board of Directors of IGRL has approved the increase in its authorized shares as follows:

Amount Date Total Authorized Shares GBP Php February 12, 2016 1,617,000 537,000 35,838,789 February 11, 2015 1,080,000 642,000 43,430,465 In both years, the ownership status of the Parent Company did not change as IGRL is 100% owned subsidiary. The said increase in authorized shares in 2016 and 2015 was made in order to maintain a suitable level of capital.

11. INVESTMENT IN AN ASSOCIATE

In both years, the Parent Company owned 49% investment in Hwa Kung Hong & Co., Ltd. (HKHCL), a company engaged in remittance business incorporated under the laws of Taiwan. The carrying amount of investment of the Parent Company in HKHCL amounted to P3,573,974 as of December 31, 2016 and 2015.

30 12. PROPERTY AND EQUIPMENT — net

The carrying amounts of the Parent Company’s property and equipment are as follows:

Office and Transportation Communication and Delivery Furniture and Leasehold Equipment Equipment Fixtures Improvements Total January 1, 2015 Cost P 35,711,461 P 3,618,311 P 4,218,278 P 16,169,203 P 59,717,253 Accumulated depreciation (33,558,399) (3,422,147) (4,004,223) (13,492,973) (54,477,742) Carrying amount 2,153,062 196,164 214,055 2,676,230 5,239,511 Movements during 2015 Balance 2,153,062 196,164 214,055 2,676,230 5,239,511 Additions 15,848,637 1,198,471 172,898 40,250 17,260,256 Disposal: Cost - (2,521,814) - - (2,521,814) Accumulated depreciation - 1,966,064 - - 1,966,064 Depreciation (Note 24) (1,825,291) (235,631) (120,796) (879,070) (3,060,788) Balance, December 31, 2015 16,176,408 603,254 266,157 1,837,410 18,883,229 December 31, 2015 Cost 51,560,098 2,294,968 4,391,176 16,209,453 74,455,695 Accumulated depreciation (35,383,690) (1,691,714) (4,125,019) (14,372,043) (55,572,466) Carrying amount 16,176,408 603,254 266,157 1,837,410 18,883,229 Movements during 2016 Balance 16,176,408 603,254 266,157 1,837,410 18,883,229 Additions 4,996,895 - 190,429 - 5,187,324 Disposal: Cost (1,499) - (44,817) - (46,316) Accumulated depreciation 541 - 44,817 - 45,358 Depreciation (Note 24) (4,658,254) (122,694) (116,618) (877,821) (5,775,387) Balance, December 31, 2016 16,514,091 480,560 339,968 959,589 18,294,208 December 31, 2016 Cost 56,555,494 2,294,968 4,536,788 16,209,453 79,596,703 Accumulated depreciation (40,041,403) (1,814,408) (4,196,820) (15,249,864) (61,302,495) Carrying amount P 16,514,091 P 480,560 P 339,968 P 959,589 P 18,294,208

In 2016, the Parent Company sold certain property and equipment at an amount equivalent to its carrying value of P958. In 2015, the Parent Company sold certain property and equipment with a carrying amount of P555,750 for a total consideration of P522,769 resulting to a loss on sale amounting to P32,981, as disclosed in Note 24. Depreciation charged to operating expenses amounted to P5,775,387, P3,060,788 and P4,377,351 in 2016, 2015 and 2014, respectively, as disclosed in Note 24. In 2016, 2015 and 2014, the Parent Company determined that no indication of any impairment has occurred on its property and equipment.

31 13. INTANGIBLE ASSETS — net

The carrying amounts of the Parent Company’s intangible assets are as follows:

2016 2015 January 1 Cost P 17,051,455 P 15,071,220 Accumulated amortization (14,661,833) (14,244,992) Carrying amount 2,389,622 826,228 Movements during the year Balance, January 1 2,389,622 826,228 Additions 3,562,500 1,980,235 Amortization (Note 24) (1,119,252) (416,841) Balance, December 31 4,832,870 2,389,622

December 31 Cost 20,613,955 17,051,455 Accumulated amortization (15,781,085) (14,661,833) Carrying amount P 4,832,870 P 2,389,622

The Parent Company’s intangible assets pertain to software used in its business activities. Amortization charged to operating expenses amounted to P1,119,252, P416,841 and P720,773 in 2016, 2015 and 2014, respectively, as disclosed in Note 24. As of December 31, 2016 and 2015, the remaining amortization period is five (5) years and three (3) years, respectively. In 2016 and 2015, the Parent Company has determined that there is no indication of any impairment has occurred on its intangible assets.

14. OTHER NON-CURRENT ASSETS

The components of other non-current assets account are as follows:

2016 2015 Input VAT — net P 40,644,150 P 22,989,925 Refundable deposits (Note 26) 4,582,039 6,577,669 Others 44,000 44,000 P 45,270,189 P 29,611,594

The Parent Company has applied for tax credits on its input VAT with the BIR and is currently waiting for the issuance of related Tax Credit Certificates (TCCs). The management of the Parent Company believes that it will be able to collect the rest of the TCCs applicable to its outstanding claims. Input VAT is net of output VAT amounting to P73,433 and P117,460 in 2016 and 2015, respectively.

32 15. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)

In November 2013, the Parent Company started its forward trading transactions that resulted to recognition of financial liabilities at FVTPL which includes foreign currency payable, as disclosed in Note 7. Foreign currency payable pertains to US Dollar and third currency payables to the bank partners of the Parent Company as a result of its forward transactions. The Parent Company sets up the foreign currency payable account when it enters into forward contract with its bank partners on US Dollar (USD), Canadian Dollar (CAD), Great Britain Pound (GBP), European Dollar (Euro), New Zealand Dollar (NZD), Australian Dollar (AUD) and Japanese Yen (JPY), as further disclosed in Note 7. The Parent Company’s financial liabilities at FVTPL amounted to P5,155,050 and P1,145,299 as of December 31, 2016 and 2015, respectively. In 2016, 2015 and 2014, the unrealized foreign exchange gain from forward transactions amounted to P1,292,785, P6,793,509 and P329,629, respectively, as disclosed in Notes 7 and 23.

16. BENEFICIARIES AND OTHER PAYABLES

The components of beneficiaries and other payables account are as follows:

2016 2015 Payable to suppliers P 101,431,618 P 2,955,003 Beneficiaries 62,680,889 78,636,300 Agents, couriers and trading clients 9,163,395 1,913,561 Accrued expenses 6,406,534 4,935,892 Payable to government agencies 2,544,589 2,362,214 Due to related parties (Note 18) 527,571 202,501,680 Others 25,573,462 36,582,250 P 208,328,058 P 329,886,900

Payable to suppliers pertain to outstanding amounts owed to the tie ups who advance fulfillment in behalf of the Parent Company. Moreover, these also include payments owed to providers of human resource services, employee healthcare, freight, utilities and certain professional services. Payables to beneficiaries are normally settled within one (1) to three (3) days from transaction date. Payables to agents, couriers and trading clients are non-interest bearing and are normally settled within thirty (30) days. Accrued expenses include accruals on various operating expenses, courier charges, training and development, professional fees, utilities and finance cost from couriers and loans. As of December 31, 2016 and 2015, the Parent Company’s accrued finance cost from loans presented as part of accrued expenses amounted to P1,854,250 and P2,239,653, respectively, as disclosed in Note 17. Payable to government agencies include SSS, Philhealth, Pag-ibig and HDMF contributions. Others include payables to remitters through Visa cards issued by the Parent Company.

33 17. LOANS PAYABLE

In 2016 and 2015, the Parent Company obtained an unsecured, short-term interest-bearing peso-denominated bank loans and promissory notes with an aggregate amount of P1,312,000,000 and P1,115,000,000, respectively. In 2016 and 2015, loans payable have interest rates ranging from 3.50% to 5.80% and 3.15% to 6%, respectively, and have maturities of less than one (1) year. The related finance cost from these loans payable amounted to P40,573,044, P31,340,694 and P48,609,172 in 2016, 2015 and 2014, respectively, as disclosed in Note 22. As of December 31, 2016 and 2015, the Parent Company’s accrued finance cost amounting to P1,854,250 and P2,239,653, respectively, are presented as part of accrued expenses, as disclosed in Note 16. The Parent Company has unused credit facilities with various banks amounting to P2,243,000,000 and P2,340,000,000 as of December 31, 2016 and 2015, respectively. Movements of loans payable are as follows:

2016 2015 Balance, January 1 P 1,115,000,000 P 1,305,000,000 Additional loans obtained 1,312,000,000 1,115,000,000 Payments for short-term loans (1,115,000,000) (1,305,000,000) Balance, December 31 P 1,312,000,000 P 1,115,000,000

As of the reporting period, the Parent Company is compliant with the terms and conditions with the above loans.

18. RELATED PARTY TRANSACTIONS

Nature of relationship of the Parent Company and its related parties are disclosed below:

Related Parties Nature of Relationship

International Remittance (Canada) Ltd. (IRCL) Subsidiary I-Remit Australia Pty Ltd (IAPL) Subsidiary IRemit Global Remittance Limited (IGRL) Subsidiary I-Remit New Zealand Limited (INZL) Subsidiary IREMIT Remittance Consulting GmbH (IRCGmbH) Subsidiary I-Remittance Singapore Pte. Ltd. (IRSPL) Subsidiary K.K. Iremit Japan (KKIJ) Subsidiary Lucky Star Management Limited (LSML) Subsidiary Power Star Asia Group Limited (PSAGL) Subsidiary Worldwide Exchange Pty Ltd (WEPL) Subsidiary Hwa Kung Hong & Co., Ltd. (HKHCL) Associate Oakridge Properties, Inc. (OPI) Under common controlling party Sterling Bank of Asia (SBA) Under common controlling party Surewell Equities Inc. (SEI) Investor with significant influence Members of key management Stockholders personnel

34 Balances and transactions between the Parent Company and its related parties are disclosed below:

18.01 Due from Related Parties

Balances of due from related parties presented under trade and other receivables, as disclosed in Note 8, are summarized per category as follows:

2016 Receivable Advances to from Agents Related Parties Total Subsidiaries P 217,878,743 P 221,384,460 P 439,263,203 Associate 29,477,933 - 29,477,933 Key management personnel - 597,530 597,530

P 247,356,676 P 221,981,990 P 469,338,666 2015 Receivable Advances to from Agents Related Parties Total Subsidiaries P 143,800,468 P 253,887,831 P 397,688,299 Associate 17,578,465 3,176,353 20,754,818 Key management personnel - 65,850 65,850

P 161,378,933 P 257,130,034 P 418,508,967

Receivable from agents includes remittances and delivery fees, while advances to related parties include due from and service income.

35 18.01.01 Subsidiaries

Transactions with subsidiaries are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balances Volume Balances

LSML Remittance P 1,268,687,383 P - P 1,255,592,805 P 2,855,336 Due from 33,692,284 16,250,241 6,490,100 12,677,134 Delivery fee 5,762,722 - 6,157,940 92,364

IGRL Remittance 7,086,570,236 71,545,645 7,044,511,932 17,427,798 Due from 80,506,485 72,514,542 111,807,124 148,546,659 Delivery fee 20,816,027 572,608 22,705,792 274,703

WEPL Remittance 4,750,431,021 37,127,596 4,427,209,232 31,267,723 Due from 4,862,851 95,683 5,533,483 448,007 Delivery fee 38,981,928 490,290 19,628,272 597,638

IRCL Remittance 9,721,291,612 64,885,384 9,146,200,134 46,666,765 Due from 3,009,809 - 5,771,078 309,666 Delivery fee 52,034,900 1,572,606 49,497,139 1,448,064

INZL Remittance 1,075,047 - 1,276,919 4,597,294 Due from 5,676,086 31,172,109 233,241 25,819,235 Delivery fee 3,745 - 12,948 -

IRCGmbH Due from 801,442 19,479,406 506,551 18,947,676

KKIJ Remittance 1,717,204,937 14,378,931 1,422,968,890 36,299,827 Due from 36,254,692 29,390,430 35,713,989 41,888,429 Delivery fee 5,489,422 161,604 4,258,465 132,114

IAPL Remittance 74,119,514 248,153 87,628,171 2,140,842 Due from 761,162 - 145,588 -

PSAGL Due from 33,271,028 33,271,028 - -

IRSPL Remittance 2,878,837,628 25,360,458 - - Due from 21,660,570 19,211,021 - - Delivery fee 11,242,945 1,535,468 8,489,804 5,251,025

P 27,853,045,476 P 439,263,203 P 23,662,339,597 P 397,688,299

36 Movements of this account are as follows:

2016 2015 Balance, January 1 P 397,688,299 P 463,964,917 Remittance 27,498,217,378 23,385,388,083 Due from 220,496,409 174,690,958 Delivery fee 134,331,688 102,260,556 Payments received (27,811,470,571) (23,728,616,215) Balance, December 31 P 439,263,203 P 397,688,299

The following are the natures, terms and conditions of the above transactions:  Remittance pertains to the principal amount of transaction accepted by a foreign subsidiary or associate office from a remitter, delivery of which is fulfilled by the Parent Company to intended beneficiary in the Philippines. Account is collectible within five (5) days from date of transaction.  Due from account refers to operating funds and marketing materials advanced to a foreign subsidiary or associate office. Account is collectible within thirty (30) days from date of funding.  Delivery fee is the share in service fee collected by a foreign subsidiary or associate office apart from the principal amount of remittance. Account is collectible within five (5) days from date of transaction. Transactions with subsidiaries are non-interest bearing, unsecured, and will be settled in cash. No guarantees have been received. No provisions have been made for doubtful debts in respect of the amounts owed by the related parties.

18.01.02 Associate Transactions with an associate are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balances Volume Balances HKHCL Remittance P 8,002,550,954 P 28,941,597 P 6,182,882,509 P 17,141,833 Due from 8,315,128 - 2,629,519 3,176,353 Delivery fees 66,155,816 536,336 45,869,455 436,632

P 8,077,021,898 P 29,477,933 P 6,231,381,483 P 20,754,818

37 Movements of this account are as follows:

2016 2015 Balance, January 1 P 20,754,818 P 23,744,694 Remittance 8,002,550,954 6,182,882,509 Due from 8,315,128 2,629,519 Delivery fee 66,155,816 45,869,455 Payments received (8,068,298,783) (6,234,371,359) Balance, December 31 P 29,477,933 P 20,754,818

The following are the natures, terms and conditions of the following accounts:  Remittance pertains to the principal amount of transaction accepted by a foreign subsidiary or associate office from a remitter, delivery of which is fulfilled by the Parent Company to intended beneficiary in the Philippines. Account is collectible within five (5) days from date of transaction.  Delivery fee is the share in service fee collected by a foreign subsidiary or associate office apart from the principal amount of remittance. Account is collectible within five (5) days from date of transaction.  Due from account refers to operating funds and marketing materials advanced to a foreign subsidiary or associate office. Account is collectible within thirty (30) days. The amounts outstanding are non-interest bearing, unsecured, and will be settled in cash. No guarantee was required. No provision made for doubtful accounts as these accounts are all collectible.

18.01.03 Key Management Personnel Transactions with the key management personnel are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balance Volume Balance Advances P 4,230,247 P 597,530 P 65,850 P 65,850

Movements of this account are as follows:

201 6 2015 Balance, January 1 P 65,850 P 72,143 Advances 4,230,247 65,850 Payments received (3,698,567) (72,143) Balance, December 31 P 597,530 P 65,850

Advances pertain to the sum of money advanced to key management personnel subject to liquidation within the Parent Company’s prescribed period of liquidation. The amount outstanding is non-interest bearing and unsecured. There is no guaranty required and no provision was made for doubtful account as the account is deemed collectible.

38 18.02 Due to Related Parties

Balances of due to related parties presented under beneficiaries and other payables as disclosed in Note 16, are summarized per category as follows:

18.02.01 Subsidiaries Transactions with subsidiaries are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balances Volume Balances PSAGL P 90,290,362 P 350,676 P 62,224,406 P 194,088,408 IGRL 2,916,334 - 4,773,012 4,773,012 IAPL 760,451 25,425 1,331,515 3,640,260 IRCL 11,244 11,244 - - P 93,978,391 P 387,345 P 68,328,933 P 202,501,680

Movements of this account are as follows:

2016 2015 Balance, January 1 P 202,501,680 P 159,418,097 Advances 93,978,390 68,328,933 Payments made (296,092,725) (25,245,350) Balance, December 31 P 387,345 P 202,501,680

The following are the nature, terms and conditions:  Due to PSAGL represents charges on various treasury assistance and advisory services rendered by PSAGL to the Parent Company. Term of settlement within thirty (30) days from date of obligation.  Due to IGRL, IAPL and IRCL represents operating funds and marketing materials payable to foreign subsidiary offices. Term of settlement within thirty (30) days from date of obligation. The amounts outstanding are unsecured, non-interest bearing, and will be settled in cash. No guarantees have been given in respect of the amount owed to related parties.

18.02.02 Associate Transactions with an associate are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balance Volume Balance HKHCL Due to P 140,226 P 140,226 P - P -

39 18.03 Other Related Parties

18.03.01 Under Common Controlling Parties Transactions with related parties under common controlling parties are detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balances Volume Balances SBA Cash deposits P 217,905,038 P 217,905,038 P 200,275,215 P 200,275,215 Finance income (Note 6) 246,789 - 189,277 - OPI Rental (Note 26) 14,928,763 - 14,935,089 - P 233,080,590 P 217,905,038 P 215,399,581 P 200,275,215

Movements of this account are as follows:

2016 2015 Balance, January 1 P - P - Rentals 14,928,763 14,935,089 Interest 246,789 189,277 Payments made (15,175,552) (15,124,366) Balance, December 31 P - P -

The following are the nature, terms and conditions of the above transactions:  Transaction with SBA pertains to cash deposits and finance income earned from the Parent Company’s depositary accounts in Peso and USD (FCDU) with the related party, as disclosed in Note 6. Principal stockholders of SBA and the Parent Company are JTKC Equities, Inc., Star Equities, Inc. and Surewell Equities Inc.  Transaction with OPI pertains to the cost of rental paid by the Parent Company for the use of hallways and office spaces in 26th and 27th floor at Discovery Centre, a building owned by the related party, as disclosed in Note 26. OPI is owned by The Discovery Leisure Company, Inc, (TDLCI), an entity owned by JTKC Equities, Inc., and JTKC Realty Corporation. Lease contract with OPI includes security deposit of two (2) months and one (1) month advance rental. Rent is paid monthly with provision for yearly escalation.

40 18.03.02 Investor with Significant Influence Transaction with an investor with significant influence is detailed as follows:

December 31, 2016 December 31, 2015 Amount/ Outstanding Amount/ Outstanding Volume Balance Volume Balance SEI Rental P 218,438 P - P 870,956 P -

Movements of this account are as follows:

201 6 2015 Balance, January 1 P - P - Rentals 218,438 870,956 Payments made (218,438) (870,956) Balance, December 31 P - P -

 Transaction with SEI pertains to the cost of rental paid to Surewell Equities Pte. Ltd. (SEPL) for the sharing of its office in Singapore with the Parent Company under a sublease agreement, as disclosed in Note 26. SEPL is a foreign subsidiary office of SEI, one of the principal stockholders of the Parent Company. There is no security deposit paid and provisions for any escalation rate. Rent is paid monthly.

18.04 Remuneration of Key Management Personnel

The remuneration of the directors and other members of key management personnel of the Parent Company is set out below in aggregate for each of the categories specified in PAS 24, Related Party Disclosures:

2016 2015 Short-term benefits P 29,316,033 P 29,859,476 Post-employment benefits 1,189,445 1,274,725 P 30,505,478 P 31,134,201

18.05 Transactions with Retirement Fund

The Parent Company’s retirement benefit fund is maintained with SBA, a related party due to common controlling parties, as trustee. The carrying amount and fair value of retirement fund both amounted to P40,007,749 and P37,773,751 as of December 31, 2016 and 2015, respectively, as disclosed in Note 25. The funds were invested in private equity securities, deposits in banks and government debt securities. In 2016 and 2015, the Parent Company made contributions to the fund amounting to nil and P2,796,033, respectively, as disclosed in Note 25. Private equity securities includes P808,100 of the Parent Company’s own equity securities bought back from resigned employees who held such securities, under the special stock purchase program. The retirement committee exercises the voting rights of the securities. The retirement committee is related to the Parent Company because they are member of key management personnel. Such transaction was authorized by the BOD of the Parent Company through its Special Stock Purchase Program (SSPP).

41 The government debt securities consist of Peso-denominated and USD denominated securities. The Peso-denominated Government Securities (GS) of the Parent Company’s Retirement Fund were purchased from accredited counterparties of SBA-Trust Group. These counterparties are Banks and Investment Houses allowed to trade government securities. Existing Peso GS accounts are all tax-exempt and are currently lodged under the Tax-exempt RoSS Account of SBA-Trust Group with the Bureau of the Treasury (BTr). The USD denominated debt securities are currently lodged with the Philippine Depository Trust Corporation (PDTC). These were also purchased from SBA-Trust’s accredited counterparties that are allowed to trade government securities.

19. CAPITAL STOCK

The components of the capital stock of the Parent Company are as follows:

2016 2015 Ordinary shares P 617,725,800 P 617,725,800 Additional paid-in capital 429,513,501 429,513,501 P 1,047,239,301 P 1,047,239,301

19.01 Ordinary Shares

The ordinary shares of the Parent Company are described as follows:

Balance December 31 612,043,122 P 612,043,122 612,251,122 P 612,251,122 Treasury stock 5,682,678 5,682,678 5,474,678 5,474,678

Total issued 617,725,800 P 617,725,800 617,725,800 P 617,725,800

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

19.01.01 Additional Paid-in Capital In both years, the Parent Company’s additional paid-in capital in excess of par value is composed of excess of proceeds on issuance of the Parent Company’s shares amounted to P429,513,501.

42 19.02 Treasury Stock Details of the Parent Company’s treasury stock are as follows:

Details of the remaining ten million (10,000,000) treasury stock buy-back program of the Parent Company in 2012 are as follows:

2016 2015 Balance, January 1 5,747,000 5,162,000 Acquisitions 208,000 585,000 Balance, December 31 5,955,000 5,747,000

In 2016, the Parent Company purchased a total of Two Hundred Eight Thousand (208,000) shares at an average rate of P1.97 per share. The shares purchased are still under the buy-back program of 2012. In 2015, the Parent Company purchased a total of Five Hundred Eighty Five Thousand (585,000) shares at an average rate of P1.86 per share. The shares purchased are still under the buy-back program of 2012. On March 19, 2014, the Parent Company purchased Three Hundred Thousand (300,000) shares at P2.70 per share or P810,000. On May 22, 2014, additional purchase was made for Three Hundred Thousand (300,000) shares at P2.50 per share or P750,000. The shares purchased were under the buy-back program of 2012. Moreover, an adjustment amounting to P44 was recorded in 2014 to correct the balance of treasury stock as of December 31, 2014 in reference to the declaration of Property Dividend in October 2013. On July 19, 2013, the BOD of the Parent Company approved the declaration of property dividend in the form of treasury shares. As of the date of declaration, the Corporation had twenty million and five hundred eighty seven thousand (20,587,000) shares of stock lodged as Treasury Shares from its buy-back program amounting to P69,209,688, out of which number of treasury shares, twenty million five hundred eighty six thousand and nine hundred eighty five (20,586,985) shares as computed by the Professional Stock Transfer, Inc. (the Corporation’s stock transfer agent) and the Philippine Depository & Trust Corp., were distributed pro-rata to stockholders on October 14, 2013 based on their respective shareholdings as of record date on August 16, 2013. The property dividend of 20,586,985 shares over the outstanding number of common shares of the Corporation at 593,163,800 as of August 16, 2013 concluded a property dividend ratio of 0.03. Withholding tax applicable to the property dividend was computed and paid by the Corporation on the account of the stockholders at P925,119 or its equivalent, three hundred fourteen thousand and six hundred sixty three (314,663) shares. Net property dividend distributed to stockholders was at twenty million, two hundred seventy two thousand and three hundred twenty two (20,272,322) shares.

43 In 2013, the Parent Company purchased a total of 3,975,000 shares or P11,475,190 equivalent from the buy-back program of 2012. On September 21, 2012, the BOD of the Parent Company adopted a resolution authorizing another buy-back program of up to ten million (10,000,000) of its shares in the market. The Parent Company purchased the remaining balance of 5,127,000 shares (P14,560,680) from the buy-back program of 2011 and 587,000 shares (P1,661,800) from the latest buy-back program authorized in 2012.

19.03 History of Registration of Securities

On September 13, 2007, the Parent Company filed a registration statement with the SEC in accordance with the Securities Regulation Code for the registration of a total of 562,417,000 common shares. A pre-effective clearance was issued by the SEC on October 5, 2007. The application for listing was approved by the BOD of the Philippine Stock Exchange (PSE) on September 27, 2007. The Parent Company was listed in the first board (now main board) of the PSE on October 17, 2007. On October 17, 2007, the Parent Company completed its Initial Public Offering (IPO) of 107,417,000 new common shares at an offer price of P4.68 per share for a total gross proceeds of P502,711,560. The Parent Company intends to use the majority of its net proceeds from the Offer to finance, in part, its expansion in existing and new countries and to cover working capital requirements as well as partially retire some of the Parent Company’s short-term interest-bearing loans. When such proceeds shall be used to pay off debts, the Parent Company shall pay off loan payables, or portions of the same, to banks with which the Parent Company has existing credit lines. The retirement of the Parent Company’s debts has the underlying intention of reducing debt service burden and consequently improving profitability. Direct costs incurred relative to the IPO amounting to P36,513,103 were charged against the additional paid-in capital. As of December 31, 2016 and 2015, Parent Company has a total number of twenty-one (21) stockholders holding the above registered securities.

19.04 Appropriation of Retained Earnings

As of December 31, 2016 and 2015, appropriated retained earnings pertaining to treasury stock amounted to P15,458,113 and P15,048,173, respectively. This is in accordance with the legal requirement of Section 41 of the Corporation Code of the Philippines which requires an entity to have sufficient retained earnings to support for the treasury shares.

20. DIVIDENDS DECLARED

The following table shows details related to the Parent Company’s cash dividends to its equity holders:

44 21. REVENUE

The following are the components of the Parent Company’s revenue:

2016 2015 2014 Delivery fees P 338,436,716 P 298,167,217 P 329,292,893 Foreign exchange gains 154,181,018 120,399,439 123,414,966 Others 828,349 846,490 886,917 P 493,446,083 P 419,413,146 P 453,594,776

The Parent Company’s primary operation is to engage in fund transfer and remittances. Delivery fees pertain to revenues derived from remittance transactions. Foreign exchange gains pertain to income from forward and spot trading of foreign currencies. The Parent Company’s forward trading transactions started in November 2013, as disclosed in Notes 7 and 15.

22. COST OF SERVICES

The following are the components of the Parent Company’s cost of services:

2016 2015 2014 Bank charges P 174,055,044 P 161,862,384 P 171,768,628 Finance cost (Note 17) 40,573,044 31,340,694 48,609,172 Salaries, wages and employee benefits (Note 25) 14,461,749 13,301,246 12,852,760 Delivery charges 5,031,337 6,464,434 7,219,519 Taxes and licenses 4,588,127 3,588,891 4,725,779 P 238,709,301 P 216,557,649 P 245,175,858

23. OTHER INCOME

Components of other income are as follows:

2016 2015 2014 Finance income (Note 6) P 1,224,611 P 1,221,122 P 950,723 Service fees 566,304 555,295 590,066 Unrealized foreign exchange gain – net - 10,604,250 613,260 Others - - 102,184 P 1,790,915 P 12,380,667 P 2,256,233

Of the total amount of service fees, certain amount pertain to the sum of money collected from Social Security System (SSS) for remittance transactions processed by the Parent Company on its behalf amounting to P566,304, P555,295 and P575,996 in 2016, 2015 and 2014, respectively. Also, included in the account are replacement fees for Visa cards and other fees.

45 Unrealized foreign exchange gain – net represents currency exchange income (net of losses) arising from revaluation of foreign currency denominated monetary assets and liabilities and marked to market of forward trade transactions. Unrealized foreign exchange gain from forward transactions amounted to P1,292,785, P6,793,509 and P329,629 in 2016, 2015 and 2014, respectively, as disclosed in Notes 7 and 15.

24. OPERATING EXPENSES

The Parent Company’s operating expenses are as follows:

2016 2015 2014 Salaries, wages and employee benefits (Note 25) P 91,177,841 P 80,358,422 P 77,772,179 Marketing 23,829,235 20,689,060 15,465,027 Unrealized foreign exchange loss – net 20,195,503 - - Professional fees 17,624,927 14,151,401 9,221,847 Rental (Note 26) 16,507,585 16,447,455 16,182,646 Communication, light and water 14,790,477 12,052,565 15,317,904 Association dues 9,034,744 4,919,737 3,565,049 Depreciation (Note 12) 5,775,387 3,060,788 4,377,351 Business development 4,515,414 672,182 2,458,928 Transportation and travel 3,513,150 12,643,636 12,929,450 Taxes and licenses 2,744,461 3,024,175 3,044,804 Retirement benefits (Note 25) 2,697,393 3,067,480 2,102,794 Entertainment, amusement and recreation 2,585,798 3,113,830 2,464,726 Supplies 1,989,174 2,287,189 2,584,983 Amortization (Note 13) 1,119,252 416,841 720,773 Repairs and maintenance 726,470 746,932 809,781 Provision for bad debts (Note 8) 445,881 2,855,795 4,802,780 Insurance 348,566 404,675 399,401 Loss on sale of property and equipment (Note 12) - 32,981 - Miscellaneous 1,363,412 1,505,314 3,046,704 P 220,984,670 P 182,450,458 P 177,267,127

25. EMPLOYEE BENEFITS

Aggregate employee benefits expense comprised:

2016 2015 2014 Short-term benefits: Cost of services (Note 22) P 14,461,749 P 13,301,246 P 12,852,760 Operating expenses (Note 24) 91,177,841 80,358,422 77,772,179 Retirement benefits (Note 24) 2,697,393 3,067,480 2,102,794 P 108,336,983 P 96,727,148 P 92,727,733

46 25.01 Short-term Employee Benefits

Short-term benefits include salaries and wages, de-minimis fringe benefits, sick and vacation leave pay, training and development and 13th month pay.

25.02 Post-employment Benefits

The Parent Company has a single retirement plan under the regulatory framework of the Philippines. Under Republic Act (RA) 7641 “The Retirement Pay Law”, the Parent Company is legally obliged to provide a minimum retirement pay for qualified employees upon retirement. The framework, however, does not have a minimum funding requirement. The Parent Company’s benefit plan is aligned with this framework. The Parent Company’s funded defined benefit plans for qualifying employees are entitled to retirement benefits equal to one hundred percent (100%) of Plan Salary for every year of credited service of a normal retirement age of sixty (60) and are not adjusted for inflationary increases once in payment, or provide adjustment for inflationary increases. The payments for the funded benefits are from trustee- administered funds. Plan assets held by trustee are governed by a trust agreement between the latter and the Parent Company. Responsibility for governance of the plan assets including investment decision lies with the Board of Directors while plan governance and contribution schedule lies with the Parent Company. The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out last January 25, 2017 by Institutional Synergy, Inc. The present value of the defined benefit obligation, and the related current service cost, were measured using the Projected Unit Credit Actuarial Cost Method (PUCM). In accordance with the provisions of the Bureau of Internal Revenue Regulations No. 1-68, it is required that a formal Retirement Plan be Trusteed; that there must be no discrimination in benefits; that forfeitures shall be retained in the Retirement Fund and be used as soon as possible to reduce future contributions; and that no part of the corpus or income of the Retirement Fund shall be used for, or diverted to, any purpose other than for the exclusive benefit of the Plan members. The Retirement Plan Trustee, as appointed by the Parent Company in the Trust Agreement executed between the Parent Company and the duly appointed Retirement Plan Trustee, is responsible for the general administration of the Retirement Plan and the management of the Retirement Fund. The Retirement Plan Trustee may seek the advice of counsel and appoint an investment manager or managers to manage the Retirement Fund, an independent accountant to audit the Fund and an actuary to value the Retirement Fund. There were no plan amendment, curtailments, or settlement recognized in the financial years ended December 31, 2016 and 2015. The principal assumptions used for purposes of the actuarial valuations were as follows:

2016 2015 Discount rate 5.30% 5.05% Expected rate of salary increase 4.00% 4.00%

47 Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience. These assumptions translate into an average life expectancy in years for a pensioner retiring at the age of sixty (60).

2016 2015 Retiring at the end of the reporting period Male 1 1 Female - - Retiring 20 years after the reporting period Male 24 19 Female 20 18

The sensitivity analysis of the defined benefit obligation of changes in the weighted principal assumption is as follows:

2015 Discount rate 100 bps Decrease by 7.9% Increase by 8.4% Salary increase rate 100 bps Increase by 9.0% Decrease by 7.9%

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognized within the separate statements of financial position. Assumed life expectancy is not applicable because under the Parent Company’s Retirement Plan, benefits are paid in full in a lump sum upon retirement or separation of an employee. Amounts recognized in profit or loss with respect of these defined benefit plans are as follows:

2016 2015 2014 Current service cost P 3,285,494 P 3,625,872 P 2,772,955 Net interest on the retirement asset (588,101) (558,392) (784,712) Interest on the effect of the asset ceiling - - 114,551 P 2,697,393 P 3,067,480 P 2,102,794

48 Reconciliation of re-measurements recognized in OCI is as follows:

Re- Return on Plan measurement Change on Change on Assets gain – net demographic financial Experience excluding Re- Deferred tax deferred tax assumption assumption adjustment interest measurements liability asset Gain (loss) Balance at January 1, 2014 P 9,585,110 P (1,513,912) P 11,104,480 P (8,869,644) P 10,306,034 P (3,091,810) P 7,214,224 Amount recognized during the year 1,538,861 2,003,036 291,887 (2,171,423) 1,662,361 (498,708) 1,163,653 Gain (loss) Balance at December 31, 2014 11,123,971 489,124 11,396,367 (11,041,067) 11,968,395 (3,590,518) 8,377,877 Amount recognized during the year (Note 28) - 3,613,938 (4,847,233) 2,402,532 1,169,237 (350,771) 818,466 Gain (loss) Balance at December 31, 2015 11,123,971 4,103,062 6,549,134 (8,638,535) 13,137,632 (3,941,289) 9,196,343 Amount recognized during the year (Note 28) - 600,604 8,749,519 326,424 9,676,547 (2,902,964) 6,773,583 Gain (loss) Balance at December 31, 2016 P 11,123,971 P 4,703,666 P 15,298,653 P (8,312,111) P 22,814,179 P (6,844,253) P 15,969,926

49 Amounts included in the separate statements of financial position arising from the entity’s obligation with respect to its defined benefit plans are as follows:

2016 2015 Present value of defined benefit obligation P 21,383,021 P 26,128,177 Fair value of plan assets (Note 18) (40,007,749) (37,773,751) P (18,624,728) P (11,645,574)

Movements in the present value of the defined benefit obligation in both years were as follows:

2016 2015 Balance, January 1 P 26,128,177 P 20,339,495 Current service cost 3,285,494 3,625,872 Interest cost 1,319,473 929,515 Actuarial (gains) / loss: Changes in financial assumptions (600,604) (3,613,937) Experience (8,749,519) 4,847,232 Balance, December 31 P 21,383,021 P 26,128,177

Movements in the fair value of the plan assets in both years were as follows:

2016 2015 Balance, January 1 P 37,773,751 P 32,558,133 Interest income 1,907,574 1,487,907 Remeasurements 326,424 931,678 Employer’s contributions (Note 18) - 2,796,033 Balance, December 31 P 40,007,749 P 37,773,751

50 Plan assets as of December 31, 2016 are comprised of the following:

Quoted Unquoted Total Percentage Equity securities: Preferred shares P 7,806,989 P - P 7,806,989 20% Available-for-sale 4,842,013 - 4,842,013 12% Government securities: Available-for-sale 2,001,606 (9,129) 1,992,477 5% Unquoted debt securities classified as loans - 2,007,882 2,007,882 5% Other securities and debt instrument: Available-for-sale 13,817,631 - 13,817,631 35% Held to maturity - 1,003,941 1,003,941 3% Bank deposits - 8,306,804 8,306,804 21% Other assets - 230,012 230,012 1%

P 28,468,239 P 11,539,510 P 40,007,749 100%

Plan assets as of December 31, 2015 are comprised of the following:

Quoted Unquoted Total Percentage Equity securities: Preferred shares P 7,467,115 P - P 7,467,115 20% Available-for-sale 3,925,488 - 3,925,488 10% Government securities: Available-for-sale 1,945,707 (22,691) 1,923,016 5% Unquoted debt securities classified as loans - 4,008,222 4,008,222 11% Other securities and debt instrument: Available-for-sale 11,353,692 - 11,353,692 30% Held to maturity - 1,001,445 1,001,445 3% Bank deposits - 7,721,689 7,721,689 20% Other assets - 373,084 373,084 1%

P 24,692,002 P 13,081,749 P 37,773,751 100%

Less than one One to less Five years and year than five years above Total 2016 Undiscounted amount P 777,198 P 9,270,378 P 102,321,744 P 112,369,320 2015 Undiscounted amount P 2,521,249 P 11,060,504 P 93,943,610 P 107,525,363

51 The Parent Company is exposed to a number of risks through its defined benefit plan. The most significant risks are detailed below: Volatility Risk The plan liabilities are calculated using a discount rate from government bonds to create virtual zero coupon bonds as of the valuation dates. The government bonds represent investments in the Philippine government securities only. As the plan mature, the Parent Company intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The assets are composed of government securities, equity securities, other securities and debt instruments, bank deposits and other assets. The government bonds represent investments in Philippine government securities only. However, the Parent Company believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity investment is an appropriate element of the group’s long term strategy to manage the plans efficiently.

Investment Risk Investment risk is the risk that investments on plan assets will result to a lower return than originally expected. This risk emanates on the premise that funded defined benefit plans should arranged on the basis of Asset-Liabilities Matching principle. Thus, plan assets and future contributions are invested in such a way that it will generate return to cover-up future payments of defined benefit obligations and interest costs. These plan activities exposes the Parent Company to sensitivity in investment risks that would result to lower plan assets and higher defined benefit obligations should the performance of the investment portfolio falls below the inflation rate, interest rates and other economic conditions. Investment risk is mitigated through proper investment planning and concentration of investments. Plan assets as of December 31, 2016 and 2015, are concentrated on government securities, equity securities, other securities and debt instruments, respectively, which account for 78% and 79% respectively, of the total plan assets.

Inflation Risk Inflation risk is the risk that the equivalent purchasing power of the plan assets will not be able to match the recorded liabilities. Payments for the defined benefit plan of the Parent Company are not link to inflation, thus, the exposure to this risk is immaterial. To cope-up with inflation, the plan has designed a versatile policy of having an appropriate mix of debt and equity securities in the portfolio of investments during high inflation rates.

Life Expectancy Risk The majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities. This risk is closely associated with inflation risk wherein inflationary increases result in higher sensitivity to changes in life expectancy. The plan possess a minimal exposure to this risk since inflationary risk, which is directly associated to the plan’s sensitivity to life expectancy risk, is immaterial.

52 26. OPERATING LEASE AGREEMENTS

26.01 The Parent Company as a Lessee

Operating leases pertain to rental of office, storage and parking spaces by the Parent Company with its lessors.

26.01.01 Oakridge Properties, Inc. (OPI) In 2012, the Parent Company entered into a lease agreement with OPI for the use of hallways and office spaces in 26th and 27th floor at Discovery Centre for an initial term of three (3) years with ten percent (10%) escalation rate on the second and third year of the term of contract. In 2015, the Parent Company renewed its lease agreement with OPI for another two (2) years with no escalation rates. The lease may be renewed under the terms and condition mutually agreed upon by both parties prior to the expiration of the contract.

26.01.02 Surewell Equities Inc. (SEI) SEI entered into lease agreement with Surewell Equities Pte. Ltd. (SEPL) for its office in Singapore. The Parent Company also entered into with SEI under a sublease agreement, as disclosed in Note 18. SEPL is a foreign subsidiary office of SEI, one of the principal stockholders of the Parent Company. There is no security deposit paid and provisions for any escalation rate. Rent is paid monthly.

26.01.03 Others Others pertain to rentals of storage spaces, parking lots and office space in Singapore from third parties. Storage spaces were rented based on the rates agreed upon by both parties and shall be valid for a term of one (1) year. This contract will be automatically renewed unless the Parent Company cancels in writing within thirty days prior to the expiration of the contract. Parking lots were rented based on actual usage and office space in Singapore was rented monthly, as disclosed in Note 18. The Parent Company has refundable deposits amounting to P4,582,039 and P6,577,669 as of December 31, 2016 and 2015, respectively, as disclosed in Note 14. The composition of rent expense as disclosed in Note 24 is as follows:

2016 2015 2014 OPI (Note 18) P 14,928,763 P 14,935,089 P 14,731,479 SEI (Note 18) 218,438 870,956 919,289 Others 1,360,384 641,410 531,878 P 16,507,585 P 16,447,455 P 16,182,646

53 At each reporting date, the Parent Company had outstanding commitments for future minimum lease payments under non-cancelable operating leases, which fall due as follows:

2016 2015 Not later than one year P 12,773,536 P 14,932,674 Later than one year but not later than five years - 12,773,536 P 12,773,536 P 27,706,210

27. INCOME TAXES

27.01 Income Tax Recognized in Profit or Loss

Components of income taxes are as follows:

2016 2015 2014 Current tax expense P 20,409,663 P 5,142,980 P 10,356,549 Deferred tax expense (benefit) (6,811,626) 1,266,010 (537,290) Final tax 189,644 186,082 162,752 P 13,787,681 P 6,595,072 P 9,982,011

A numerical reconciliation between tax expense and the product of accounting profit multiplied by the tax rate in 2016, 2015 and 2014 is as follows:

2016 2015 2014 Accounting profit P 35,543,027 P 32,785,706 P 33,408,024 Tax expense at 30% 10,662,908 9,835,711 10,022,407 Tax effects of: Non-deductible finance cost 121,237 120,891 - Non-taxable finance income (177,739) (180,255) (122,465) Non-recognition of DTL – others 3,181,275 (3,181,275) - Non-deductible expenses - - 94,123 Derecognition of DTL from pension cost - - (12,054) P 13,787,681 P 6,595,072 P 9,982,011

Non-deductible expenses include accounts written off during the period.

54 28. DEFERRED TAXES

Below is the table for the offsetting of deferred tax assets and deferred tax liabilities:

2016 2015 Deferred tax assets P 10,120,503 P 3,308,877 Deferred tax liabilities (6,844,253) (3,941,289) P 3,276,250 P (632,412)

55 28.01 Deferred Tax Assets

The components of the Parent Company’s deferred tax assets charge to profit or loss and their respective movements are as follows:

Unrealized Accrued Foreign Courier Accrued Accrued – Exchange Retirement Charges Interest others loss – net Bad Debts Expense Total Balance, January 1, 2015 P 330,821 P 899,531 P 2,519,777 P - P 642,554 P 366,183 P 4,758,866 Recognized in profit or loss (326,363) (216,347) (1,845,451) - 856,738 81,434 (1,449,989) Balance, December 31, 2015 4,458 683,184 674,326 - 1,499,292 447,617 3,308,877 Recognized in profit or loss 93,798 (121,363) 587,558 6,058,651 (616,236) 809,218 6,811,626 Balance, December 31, 2016 P 98,256 P 561,821 P 1,261,884 P 6,058,651 P 883,056 P 1,256,835 P 10,120,503

56 28.02 Deferred Tax Liabilities

The components of the Parent Company’s deferred tax liabilities and their respective movements are as follows:

Re- Profit or Loss measurement Total Balance, January 1, 2015 P 183,979 P 3,590,518 P 3,774,497 Recognized during the year (183,979) 350,771 166,792 Balance, December 31, 2015 - 3,941,289 3,941,289 Recognized during the year - 2,902,964 2,902,964 Balance, December 31, 2016 P - P 6,844,253 P 6,844,253

28.02.01 Deferred Tax Liability Charged to Profit Or Loss The Company’s deferred tax liability charge to profit or loss from unrealized foreign exchange gain amounted to nil and P183,979 in 2016 and 2015, respectively.

29. EARNINGS PER SHARE

The Parent Company’s earnings per share are P0.0355, P0.0428 and P0.0382 in 2016, 2015 and 2014, respectively. The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

2016 2015 2014 Earnings used in the calculation of total earnings per share P 21,755,346 P 26,190,634 P 23,426,013 Weighted average number of ordinary shares for the purposes of basic earnings per share 612,147,122 612,641,122 613,036,122

The Parent Company did not have any potential dilutive instruments as of December 31, 2016, 2015 and 2014.

57 30. FAIR VALUE MEASUREMENTS

30.01 Fair Value of Financial Assets and Liabilities

The carrying amounts and estimated fair values of the Parent Company’s financial assets and financial liabilities as of December 31, 2016 and 2015 are presented below:

2016 2015 Carrying Carrying Amount Fair Value Amount Fair Value

Financial Assets: Cash and cash equivalent P 1,128,446,630 P 1,128,446,630 P 1,234,787,674 P 1,234,787,674 Financial assets at FVTPL 6,447,834 6,447,834 7,938,808 7,938,808 Trade and other receivables 964,667,704 964,667,704 792,732,743 792,732,743 Refundable deposits 4,582,039 4,582,039 6,577,669 6,577,669 P 2,104,144,207 P 2,104,144,207 P 2,042,036,894 P 2,042,036,894

Financial Liabilities: Financial liabilities at FVTPL P 5,155,050 P 5,155,050 P 1,145,299 P 1,145,299 Beneficiaries and other payables 205,783,469 205,783,469 327,524,686 327,524,686 Loans payable 1,312,000,000 1,312,000,000 1,115,000,000 1,115,000,000 P 1,522,938,519 P 1,522,938,519 P 1,443,669,985 P 1,443,669,985

Due to short-term nature or demand feature of cash and cash equivalent trade and other receivables, refundable deposits which is reported under other non-current assets, beneficiaries and other payables (except payable to government agencies) and loans payable, Management estimates that their carrying amounts approximate their fair values. The financial assets and liabilities at FVPTL are non-derivatives forward contracts measured using quoted foreign currency exchange rates.

30.02 Fair Value Measurements Recognized in the Separate Statements of Financial Position

58 There were no transfers between level 1 and level 2 in the period.

31. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Parent Company’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Parent Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk, including currency risk and fair value interest rate risk, credit risk and liquidity risk. The Parent Company seeks to minimize the effects of these risks through appropriate and dedicated investment planning aimed to reduce risk exposure. These parameters include monitoring cash flows and investigation of counterparty’s credit quality. Compliance with policies and exposure limits is reviewed by the Treasury on a continuous basis. The Treasury reports quarterly and monitors risks and policies implemented to mitigate risk exposures.

31.01 Market Risk Management

31.01.01 Foreign Currency Risk Management The Parent Company undertakes transactions denominated in foreign currencies; consequently exposures to exchange rate fluctuations arise. It is the Parent Company’s policy that all daily foreign currencies, which arise as a result of its remittance transactions, must be traded either through spot or forward trading transactions with bank partners only at prevailing foreign exchange rates in the market. The daily closing foreign exchange rates shall be the guiding rate in providing wholesale rates and retail rates to foreign offices and agents, respectively. The trading proceeds are used to fulfill remittance obligations to remitters’ beneficiaries, to pay out bank loans and other obligations of the Parent Company.

59 The carrying amounts of the Parent Company’s foreign currency denominated monetary assets at the end of the reporting period are as follows:

2016 Advances Receivable Payable - from Cash Receivable - FCCY Total FCCY Agents Net PESO US dollar (USD) 3,413,101 6,318,427 67,970 9,799,498 83,312 896 9,715,290 483,044,251 European Dollar (EURO) 2,576,033 801,936 1,754 3,379,723 191 109,663 3,269,869 170,137,763 Canadian Dollar (CAD) 3,107,640 1,793,934 4,873 4,906,447 21,485 - 4,884,962 180,795,222 Singaporean Dollar (SGD) 388,168 784,267 - 1,172,435 - 39,442 1,132,993 38,855,254 Australian Dollar (AUD) 966,810 1,064,444 - 2,031,254 3,508 - 2,027,746 72,408,590 Pound (GBP) 2,897,793 602,461 45,754 3,546,008 285 - 3,545,723 216,735,088 Taiwan Dollar (NTD) - 19,201,308 - 19,201,308 - - 19,201,308 29,477,933 Yen (JPY) 65,408,889 34,385,467 - 99,794,356 153,673 - 99,640,683 42,134,916 New Zealand Dollar (NZD) 8 - - 8 - - 8 275 Hong Kong Dollar (HKD) 1,473,631 - - 1,473,631 - - 1,473,631 9,445,611 Rupiah (IDR) 150,919,245 - - 150,919,245 - - 150,919,245 555,274

2015 Advances Receivable Payable - from Cash Receivable - FCCY Total FCCY Agents Net PESO US dollar (USD) 2,658,819 4,036,099 152,214 6,847,132 24,337 397 6,822,398 321,062,097 European Dollar (EURO) 3,135,265 67,769 27,923 3,230,957 - 92,497 3,138,460 162,008,253 Canadian Dollar (CAD) 5,104,701 1,375,653 6,089 6,486,443 - - 6,486,443 219,598,841 Singaporean Dollar (SGD) 218,661 420,212 - 638,873 - - 638,873 21,364,460 Australian Dollar (AUD) 3,082,511 998,507 - 4,081,018 37,044 - 4,043,974 138,253,539 Pound (GBP) 808,397 252,819 10,989 1,072,205 - - 1,072,205 75,069,893 Taiwan Dollar (NTD) - 12,246,985 - 12,246,985 - - 12,246,985 17,578,465 Yen (JPY) 408,889 93,272,215 - 93,681,104 891,123 - 92,789,981 36,243,036 New Zealand Dollar (NZD) 8 142,676 - 142,684 - - 142,684 4,597,552 Hong Kong Dollar (HKD) 2,495,378 485,559 - 2,980,937 - - 2,980,937 18,096,492 Rupiah (IDR) 146,260,933 - - 146,260,933 - - 146,260,933 688,304

61 The following table details the Parent Company’s sensitivity to increase and decrease for its USD, CAD, SGD, EURO, NTD, JPY, GBP, AUD, NZD, HKD and IDR transactions in 2016 and 2015, respectively, in the Philippine Peso against USD, CAD, SGD, EURO, NTD, JPY, GBP, AUD, NZD, HKD and IDR.

2016 2015 USD 1.30% 0.77% EUR 1.58% 2.79% CAD 2.29% 2.70% SGD 1.74% 1.38% AUD 2.48% 2.38% GBP 2.91% 2.05% NTD 1.48% 1.09% JPY 3.88% 1.29% NZD 2.57% 2.83% HKD 1.26% 0.76% IDR 1.67% 2.18%

62 The sensitivity rates above are used when reporting foreign currency risk internally to key management personnel and represents Management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes outstanding USD, CAD, SGD, EURO, NTD, JPY, GBP, AUD, NZD, HKD and IDR denominated monetary items and adjusts their translation at the period end for a change in foreign currency rates. A positive number below indicates an increase in profit where the Philippine Peso strengthens against the relevant currency. For a weakening of the Philippine Peso against the relevant currency, there would be a comparable impact on the profit, and the balances below would be negative. Note that all other variables are held constant.

Monetary Asset Monetary Liabilities Net Effect to Profit

Change (Increase) in Increase in (Decrease) in in Decrease in Increase in Decrease in assumption assumption assumption assumption assumption assumption assumption

2016

USD 1.30% 6,334,622 (6,334,622) (54,434) 54,434 6,280,188 (6,280,188) EUR 1.58% 2,785,254 (2,785,254) (90,531) 90,531 2,694,723 (2,694,723) CAD 2.29% 4,152,606 (4,152,606) (18,184) 18,184 4,134,422 (4,134,422) SGD 1.74% 699,275 (699,275) (23,524) 23,524 675,751 (675,751) AUD 2.48% 1,799,503 (1,799,503) (3,108) 3,108 1,796,395 (1,796,395) GBP 2.91% 6,316,070 (6,316,070) (508) 508 6,315,562 (6,315,562) NTD 1.48% 434,913 (434,913) - - 434,913 (434,913) JPY 3.88% 1,639,049 (1,639,049) (2,524) 2,524 1,636,525 (1,636,525) NZD 2.57% 7 (7) - - 7 (7) HKD 1.26% 119,280 (119,280) - - 119,280 (119,280) IDR 1.67% 186 (186) - - 186 (186)

2015 USD 0.77% 2,468,196 (2,468,196) (8,916) 8,916 2,459,280 (2,459,280) EUR 2.79% 4,658,697 (4,658,697) (133,371) 133,371 4,525,326 (4,525,326) CAD 2.70% 5,928,534 (5,928,534) - - 5,928,534 (5,928,534) SGD 1.38% 294,593 (294,593) - - 294,593 (294,593) AUD 2.38% 3,317,508 (3,317,508) (30,114) 30,114 3,287,394 (3,287,394) GBP 2.05% 1,537,192 (1,537,192) - - 1,537,192 (1,537,192) NTD 1.09% 192,367 (192,367) - - 192,367 (192,367) JPY 1.29% 472,705 (472,705) (4,497) 4,497 468,208 (468,208) NZD 2.83% 130,322 (130,322) - - 130,322 (130,322) HKD 0.76% 137,979 (137,979) - - 137,979 (137,979) IDR 2.18% 232 (232) - - 232 (232)

The Parent Company's sensitivity to foreign currency has decreased during the current period mainly due to increase in foreign currency denominated liabilities. In Management’s opinion, the sensitivity analysis is representative of the inherent foreign exchange risk in both years. The Parent Company mitigates its exposure to foreign currency risk by closely monitoring its Pound, European, Singaporean, Canadian and US dollar cash flows.

63 31.01.02 Interest Rate Risk Management The Parent Company’s exposure to interest rate risk arises from its cash deposits in banks which are subject to variable interest rates while its loans payable at fixed interest rates. The risk is managed by the Parent Company by maintaining appropriate fixed rate loans payable. The interest rate risk arising from deposits with banks is managed by means of effective investment planning and analysis and maximizing investment opportunities in various local banks and financial institutions. Profit for the years ended December 31, 2016 and 2015 would have been unaffected since the Parent Company has no loans payable at variable rates and interest rate risk exposure for its cash in bank, which is subject to variable rate, is very immaterial.

31.02 Credit Risk Management

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Parent Company. The Parent Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Parent Company only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Parent Company uses other publicly available financial information and its own trading records to rate its major customers. The Parent Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. The carrying amount of financial assets recognized in the separate financial statements, represents the Parent Company’s maximum exposure to credit risk, without taking into account collateral or other credit enhancements held.

2016 2015 Cash and cash equivalent P 1,110,529,014 P 1,221,799,712 Financial assets at FVPTL 6,447,834 7,938,808 Trade and other receivables 964,667,704 792,732,743 Refundable deposit 4,582,039 6,577,669 P 2,086,226,591 P 2,029,048,932

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

64 The table below shows the credit quality by class of financial assets of the Parent Company:

Neither Past Due nor Impaired High Grade December 31, 2016 Cash in banks P 1,010,529,014 Cash equivalent 100,000,000 Financial assets at FVPTL 6,447,834 Trade and other receivables 786,919,525 Refundable deposit 4,582,039 P 1,908,478,412 December 31, 2015 Cash in banks P 1,221,799,712 Financial assets at FVPTL 7,938,808 Trade and other receivables 490,610,164 Refundable deposits 6,577,669 P 1,726,926,353

31.03 Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the BOD, which has established an appropriate liquidity risk management framework for the management of the Parent Company’s short, medium and long-term funding and liquidity management requirements. The Parent Company manages liquidity risk by maintaining adequate, banking facilities and borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

65 The following tables detail the Parent Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Parent Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Parent Company may be required to pay.

Weighted Average Effective Interest Rate Within 1 year December 31, 2016 Beneficiaries and other payables n/a P 205,783,469 Loans payable 3.50% - 5.80% 1,312,000,000 P 1,517,783,469 December 31, 2015 Beneficiaries and other payables n/a P 327,524,686 Loans payable 3.15% - 6.00% 1,115,000,000 P 1,442,524,686

The following table details the Company’s liquidity analysis for its derivative financial instruments. The table has been drawn up based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.

Weighted Average Effective Interest Rate Within 1 Year

December 31, 2016 Gross settled: Foreign exchange forward contracts Financial asset at FVPTL n/a P 6,447,834 Financial liability at FVPTL n/a 5,155,050 December 31, 2015 Gross settled: Foreign exchange forward contracts Financial asset at FVPTL n/a P 7,938,808 Financial liability at FVPTL n/a 1,145,299

66 The following table details the Parent Company’s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Parent Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis.

Weighted Average Effective 1 – 5 Interest Rate On Demand Within 1 Year Years Total December 31, 2016 Cash on hand n/a P 17,917,616 P - P - P 17,917,616 0.125% to Cash in banks 0.50% 1,010,529,014 - - 1,010,529,014 Cash equivalent 1.125% 100,000,000 - - 100,000,000 Trade and other - receivables n/a 964,667,704 - 964,667,704 Refundable deposit n/a - - 4,582,039 4,582,039 P 1,128,446,630 P 964,667,704 P 4,582,039 P 2,097,696,373 December 31, 2015 Cash on hand n/a P 12,987,962 P - P - P 12,987,962 0.125% to Cash in banks 2.50% 1,221,799,712 - - 1,221,799,712 Trade and other - receivables n/a 792,732,743 - 792,732,743 Refundable deposit n/a - - 6,577,669 6,577,669 P 1,234,787,674 P 792,732,743 P 6,577,669 P 2,034,098,086

The amounts included above for variable interest rate instruments for non-derivative financial asset is subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period. The Parent Company’s financing facilities which pertain to unsecured bank loan facilities with various maturity dates and which may be extended by mutual agreement are as follows:

2016 2015 Amount used P 1,312,000,000 P 1,115,000,000 Amount unused 2,243,000,000 2,340,000,000 P 3,555,000,000 P 3,455,000,000

32. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Parent Company manages its capital to ensure that the Parent Company will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Parent Company’s overall strategy remains unchanged from 2015. The capital structure of the Parent Company consists of net debt offset by cash and bank balances and equity of the Parent Company.

67 Pursuant to Section 43 of the Corporation Code of the Philippines, stock corporations are prohibited from retaining surplus plus profits in excess of 100% of their paid-in capital stock, except: 1) when justified by definite corporate expansion projects or programs approved by the board of directors; or 2) when the corporation is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign, from declaring dividends without its/his consent, and such consent has not yet been secured; or 3) when it can be clearly shown that such retention is necessary under special circumstances obtaining in the corporation, such as when there is a need for special reserve for probable contingencies. The Parent Company is in compliance with the above requirements. The BOD has overall responsibility for monitoring capital in proportion to risk. Profiles for capital ratios are set in the light of changes in the Parent Company’s external environment and the risks underlying the Parent Company’s business, operation and industry. The Parent Company has a target gearing ratio of 1:1 determined as the proportion of net debt to equity. The gearing ratio at the end of each reporting periods was as follows:

2016 2015 Debt P 1,539,769,838 P 1,448,026,250 Cash 1,128,446,630 1,234,787,674 Net debt 411,323,208 213,238,576 Equity 1,095,210,298 1,087,050,695 Net debt to equity ratio P 0.38:1 P 0.20:1

Debt is defined as total liabilities, as described in Notes 15, 16, 17, 18 and 28, while equity includes all capital, retained earnings, re-measurements and treasury stocks of the Parent Company, as described in Notes 19 and 25, that are managed as capital.

33. NON-CASH TRANSACTIONS

In 2016 and 2015, an aggregate amount of P35,838,789 and P43,430,465, respectively, was invested by the Parent Company in its subsidiary IGRL. Investments were made through conversion of the Parent Company’s due from IGRL into equity interest as disclosed in Note 10.

34. RECLASSIFICATION OF COMPARATIVE AMOUNTS

Certain amounts in the comparative financial statements and note disclosures have been reclassified to conform to the current year’s presentation. The reclassification include comparative amount of P1,120,579 previously presented in the Company’s financial statements as part of bank charges under operating expenses which has been reclassified to supplies under cost of service.

Management believes that the above reclassification resulted to a better presentation of accounts and did not have any impact on prior year’s profit or loss.

35. APPROVAL OF SEPARATE FINANCIAL STATEMENTS

These separate financial statements were approved and authorized for issuance by the Board of Directors on February 17, 2017.

68 36. SUPPLEMENTARY INFORMATION UNDER REVENUE REGULATIONS NO. 15–2010

The Bureau of Internal Revenue (BIR) released revenue regulation dated November 25, 2010 amending Revenue Regulations No. 21-2002 setting forth additional disclosures on Notes to Separate Financial Statements. Below are the disclosures required by the said regulation:

36.01 Taxes and Licenses Paid or Accrued

The details of the Parent Company’s taxes, duties and licenses paid or accrued in 2016 are as follows:

36.01.01 Output VAT

The Parent Company is VAT-registered with output VAT declaration of P73,433 for the year based on the amount reflected in the revenue. Zero-rated sales of goods and services consist of export sales and those rendered to persons or entities whose exemptions are provided under special laws or international agreements to which the Philippines is a signatory. The Parent Company, being engaged in the business of fund transfer and remittance services of any form or kind of currencies or monies, is registered as a zero-rated VAT taxpayer under Section 108 (B) (2) of NIRC. Revenue from rendering of services such as delivery fees, realized foreign exchange gains and other fees are zero-rated.

36.01.02 Input VAT An analysis of the Parent Company’s input VAT claimed during the year is as follows:

Balance, January 1 P 22,989,925 Current year’s domestic purchases/payments for services lodged under other accounts 17,699,064 Creditable input VAT 28,594 Total available input VAT 40,717,583 Output VAT 73,433 P 40,644,150

69 36.01.03 Documentary Stamp Tax An analysis on the Parent Company’s documentary stamp tax paid during the year is as follows:

Loans P 4,588,127 Others 40,550 P 4,628,677

36.01.04 Taxes and Licenses An analysis on the Parent Company’s taxes and licenses and permit fees paid or accrued during the year is as follows:

Licenses and permits P 2,326,551 Others 377,360 P 2,703,911

36.01.05 Withholding Taxes An analysis on the Parent Company’s withholding taxes paid or accrued during the year is as follows:

Withholding tax on compensation and benefits P 11,367,535 Expanded withholding taxes 6,995,168 Final withholding taxes 829,001 P 19,191,704

Expanded withholding tax pertains to rentals, professional and contractors fees. Final withholding taxes pertain to final tax withheld on dividend income declared and paid.

37. SUPPLEMENTARY INFORMATION UNDER REVENUE REGULATIONS NO. 19–2011

Pursuant to Section 244 in relation to Section 6(H) of the National Internal Revenue Code of 1997 (Tax Code), as amended, these Regulations are prescribed to revise BIR Form 1702 setting forth the following schedules. Below are the disclosures required by the said regulation:

37.01 Revenues

The Parent Company’s revenue for the taxable year, which pertains to rendering of services, amounted to P493,446,083.

70 37.02 Cost of Services

The following is an analysis of the Parent Company's cost of services for the taxable year:

Bank charges ~ 173,891,347 Finance cost 40,554,325 Salaries, wages and employee benefits 14,461,749 Delivery charges 4,737,817 Taxes and licenses 4,588,127 P 238,233,365

37.03 Non-operating and Taxable Other Income

The Parent Company's non-operating and taxable other incomes for the taxable year are as follows:

Realized foreign exchange gain P 10,604,250 Service fees 566,304

P 11,170,554

37.04 Itemized Deductions

The following is an analysis of the Parent Company's itemized deductions for the taxable year:

Salaries, wages and employee benefits P 90,419,466 Marketing 24,104,276 Professional fees 17,293,936 Rental 16,507,585 Communication, light and water 13,999,091 Association dues 8,981,845 Depreciation 5,775,387 Business development 4,515,414 Transportation and travel 3,513,150 Taxes and licenses 2,744,461 Entertainment, amusement and recreation 2,585,798 Write-off of allowance for bad debts 2,500,000 Supplies 1,852,954 Amortization 1,119,252 Repairs and maintenance 726,470 Insurance 348,566 Miscellaneous 1,363,412

r'~- P 198,351,063

71 R.S. BERNALDO & ASSOCIATES

INDEPENDENT AUDITORS' REPORT TO ACCOMPANY INCOME TAX RETURN

The Board of Directors and the Stockholders I-REMIT INC. 26/F Discovery Centre, 25 ADB Avenue Ortigas Centre, Pasig City

We have examined the separate financial statements of I-REMIT INC. as of the years ended December 31, 2016 and 2015 and for each of the three years in the period ended December 31, 2016 on which we have rendered the attached report dated February 17, 2017.

In compliance with Revenue Regulation V-20, we are stating that no partner of our Firm is related by consanguinity or affinity to the president, manager or principal stockholders of the Company.

R.S. BERNALDO & ASSOCIATES BOA/PRC No. 0300 Valid until December 31, 2018 SEC Group A Accredited Accreditation No. 0153-FR-2 Valid until September 1, 2017 SSP Group B Accredited Valid until 2018 audit period CDA CEA No. 0013-AF Valid until December 12, 2019 IC Accreditation No. F-2016/002-R Valid UA/flUg 5130, 2019

RO~O~E-IESlY~ Partner CPA Certificat No. 86071 SEC Group A Accredited Accreditation No. 1135-AR-1 Valid until August 4, 2017 BIR Accreditation No. 08-004744-001-2015 Valid from March 27, 2015 until March 26,2018 Tax Identification No.1 09-227-897 IC Accreditation No. SP-2016/007-R Valid until August 30, 2019 PTR No. 5929421 Issued on January 15, 2017 at Makati City

February 17, 201 7

T: +632812-1718 to 24 BOA/PRe No, 0300 A: 18/F Cityland Condominium 10 Tower 1 F: +632 813-6539 SEe Group A Accredited 156 HV dela Costa Street, Ayala North, SSP Group B Accredited E: rsbassoe@rsbernaldo,eom Makati City, Philippines 1226 CDACEA Accredited W: www.rsbernaldo.com IC Accredited RSB R.S. BERNALDO & ASSOCIATES

REPORT ON THE INDEX AND SUPPLEMENTARY SCHEDULES

The Board of Directors and the Stockholders I-REMIT INC. 26/F Discovery Centre, 25 ADB Avenue Ortigas Centre, Pasig City

We have issued our report dated February 17, 2017 on the basic separate financial statements of I-REMIT INC. as of and for the year December 31, 2016. Our audit was conducted for the purpose of forming an opinion on the basic separate financial statements of I-REMIT INC. taken as a whole. The information in the index to the separate financial statements and supplementary schedules as of and for the year December 31, 2016, which are not required parts of the separate financial statements, are required to be filed with the Securities and Exchange Commission. Such information is the responsibility of the Management of I-REMIT INC. The information has been subjected to the auditing procedures applied in our audit of the basic separate financial statements. In our opinion, the information is fairly stated in all material respects in relation to the basic separate financial statements taken as a whole.

R~EO~!fgE ~itffiCfi Partner CPA Certificate o. 86071 SEC Group A Accredited Accreditation No. 1135-AR-1 Valid until August 4, 2017 BIR Accreditation No. 08-004744-001-2015 Valid from March 27, 2015 until March 26, 2018 Tax Identification No.1 09-227-897 IC Accreditation No. SP-2016/007-R Valid until August 30, 2019 PTR No. 5929421 Issued on January 15, 2017 at Makati City

T: +632812-1718 to 24 A: 18/F City land CSA9sR'liAiuR'I 10 Towell BOA/PRC No. 0300 F: +632 813-6539 SEe Group A Accredited 156 HV dela EebBmF¥etJ ~ya~Qt~h. asp Group B Accredited E: [email protected] Makati City, Philippines 1226 CDACEA Accredited W: www.rsbernaldo.com IC Accredited I-REMIT INC. INDEX TO THE SEPARATE FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES DECEMBER 31.2016

Schedule Content Page No.

Part 1 Schedule of Retained Earnings Available for Dividend Declaration 2 (Part 1 4C, Annex 68-C) Schedule of all effective standards and interpretations under II PFRS 3 (Part 1 4J) Map showing relationships between and among parent. III 9 subsidiaries. an associate. and joint venture (Part 1 4H)

Part 2 A Financial Assets 10 Amounts Receivable from Directors. Officers. Employees. B Related Parties and Principal Stockholders (Other than 11 Affiliates) Receivable from Related Parties Eliminated during the C 13 Consolidation of Financial Statements D Intangible Assets - Other Assets 14 E Long-Term Debt 15 Indebtedness to Related Parties (included in the consolidated F 16 statement of position) G Guarantees of Securities of Other Issuers 17 H Capital Stock 18

Other Required Information IV Schedule of Financial Soundness Indicators (Part 1 4D) 19 Schedule I

I-REMIT INC. SCHEDULE OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION DECEMBER 31, 2016

Unappropriated Retained Earnings, Beginning P 20,010,759

Net income based on the face of audited financial statements 21,755,345

Less: Dividend declarations during the year - Property Dividend declarations during the year - Cash 19,959,386 Derecognition of Dividend Income from an Associate Unrealized FX Gains (Loss) this last year -reversal (2007) Appropriations of retained earnings 409,940 Sub-total 20,369,326

Add: Reissuance of treasury stock Unrealized foreign exchange loss - net 14,136,852 Realized income categorized as unrealized in previous years 10,604,250 Prior Year Adjustment on Revised PAS 19 Sub-total 24,741,102

Net loss actual/realized 26,127,121 Unappropriated Retained Earnings, Ending p 46,137,880 I-REMIT INC. SCHEDULE OF EFFECTIVE STANDARDS AND INTERPRETATIONS DECEMBER 31,2016

PHILIPPINEFINANCIALillREPORTINGSTANDARDSAND 'TIl ,%\W" 'lj;; Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, ?P16J1b F ;:i1l!\1Ii; mdh\\\&_ ,1&*;", ,JIb I. \\\& 'Tlh Framework for the Preparation and Presentation of Financial Statements 0,1 Conceptual Framework Phase A: Objectives and Qualitative Characteristics PFRSsPractice Statement Management Commentary 0,1

Philippine Financial Reporting Standards

First-time Adoption of Philippine Financial Reporting 0,1 Standards Amendments to PFRS1: Additional Exemptions for First- 0,1 time Adopters

Amendment to PFRS1: Limited Exception from PFRS1 0,1 (Revised) Comparative PFRS7 Disclosures for First-time Adopters

Amendments to PFRS1: Severe Hyperinflation and 0,1 Removal of Fixed Date for First-time Adopters

Amendments to PFRS1: Government Loans 0,1 Share-based Payment 0,1 . Amendments to PFRS2: Vesting Conditions and Cancellations "

Amendments to PFRS2: Group Cash-Settled Share-based 0,1 Payment Transactions' PFRS2 Amendment to PFRS2: Definitin of Vesting Condition "

Amendments to PFRS2: Classification and Measurement of Share-based Payment Transactions "

Business Combinations 0,1

Amendment to PFRS3: Accounting for Contingent PFRS3 Consideration in a Business Combination (Revised) "

Amendment to PFRS3: Scope Exceptions for Joint 0,1 Ventures

Insurance Contracts PFRS4 " Amendments to PFRS4: Financial Guarantee Contracts " PHILIPPINEFINANCIAL REPORTINGSTANDARDSAND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2016 Non-current Asset Held for Sale and Discontinued .., Operations PFRS5 Amendments to PFRS5: Changes in Methods of Disposal ..,

PFRS6 Exploration for and Evaluation of Mineral Resources ..,

Financial Instruments: Disclosures .., Amendments to PFRS7: Transition .., Amendments to PFRS7: Reclassification of Financial .., Assets

Amendments to PFRS7: Reclassification of Financial .., Assets - Effective Date and Transition

Amendments to PFRS7: Improving Disclosures about .., Financial Instruments Amendments to PFRS7: Disclosures - Transfer of .., PFRS7 Financial Assets

Amendments to PFRS7: Disclosures - Offsetting Financial .., Assets and Financial Liabilities Amendments to PFRS7: Mandatory Effective Date of .., PFRS9 and Transition Disclosures Amendments to PFRS7: Hedge Accounting .., Amendments to PFRS7: Servicing Contracts .., Amendments to PFRS7: Applicability of the amendments .., to PFRS7 to condensed interim financial statements

Operating Segments .., Amendment to PFRS8: Aggregation of Operating .., Segments PFRS8 Amendment to PFRS8: Reconciliation of the Total of the II Reportable Segments' Assets to the Entity's Assets

PFRS9 (2014) Financial Instruments II

Consolidated Financial Statements .., Amendments to PFRS10: Transition Guidance .., Amendments to PFRS10: Investment Entities ..,

PFRS10 Amendments to PFRS10: Sale or Contribution of Assets II between an Investor and its Associate or Joint Venture

Amendments to PFRS10: Investment Entities: Applying .., the Consolidation Exception

Joint Arrangements .., PHILIPPINE,FI «Not INTE~~REf,'m Applicable Effective as of December 31, 2016 Amendments to PFRS11: Transition Guidance PFRS11 Amendments to PFRS11: Accounting for Acquisitions of Interests in Joint Operations Disclosure of Interest in Other Entities Amendments to PFRS12: Transition Guidance PFRS12 Amendments to PFRS12: Investment Entities

Amendments to PFRS12: Invesment Entities: Applying the Consolidation Exception

Fair Value Measurements PFRS13 Amendment to PFRS13: Portfolio Exception PFRS14 Regulatory Deferral Accounts

PFRS16 Leases

Philippine Accounting Standards

Presentation of Financial Statements v

Amendments to PAS1: Puttable Financial Instruments v PAS1 and Obligations Arising on Liquidation (Revised) Amendments to PAS1: Presentation of items Other than v Comprehensive Income Amendments to PAS1: Disclosure Initiative v PAS2 Inventories II Statement of Cash Flows v PAS7 Amendments to PAS7 - Disclosure Initiative v Accounting Policies, Changes in Accounting Estimates and PASS v Errors PAS10 Events After the Reporting Period v PAS11 Construction Contracts v Income Taxes v Amendments to PAS12 - Deferred Tax: Recovery of v PAS12 Underlying Assets Amendments to PAS12 - Recognition of Deferred Tax v Assets for Unrealized Losses Property, Plant and Equipment v

Amendment to PAS16: Revaluation Method - v Proportionate Restatement of Accumulated Depreciation PAS16 Amendments to PAS16: Bearer Plants v Amendments to PAS16: Clarification of Acceptable v Methods of Depreciation PHILIPPINEFINANCiAL REPORTINGWSTANDARDS!iJtND.!jii~*!0 ., ¥ fc' Not Not INTERPRETATIONS • Adopted Adopted Applicable Effective as of December 31, 2016 PAS17 Leases 0,1 PAS18 Revenue 0,1 Employee Benefits 0,1 Amendments to PAS19 (Revised): Defined Benefit Plans: PAS19 0,1 Employee Contributions (Amended) Amendment to PAS19: Discount Rate: Regional Market 0,1 Issue Accounting for Government Grants and Disclosure of PAS20 0,1 Government Assistance

The Effects of Changes in Foreign Exchange Rates 0,1 PAS21 Amendment: Net Investment in a Foreign Operation .;

PAS23 Borrowing Costs 0,1 (Revised)

Related Party Disclosures 0,1 PAS24 (Revised) Amendment to PAS24: Key Management Personnel .;

PAS26 Accounting and Reporting by Retirement Benefit Plans 0,1

Separate Financial Statements 0,1

PAS27 Amendments to PAS27 (Amended): Investment Entities 0,1 (Amended) . Amendments to PAS27 (Amended): Equity Method in .; Separate Financial Statements Investments in Associates and Joint Ventures 0,1

Amendments to PAS28: Sale or Contribution of Assets PAS28 0,1 between an Investor and its Associate or Joint Venture (Amended) Amendments to PAS28: Invesment Entities: Applying the .; Consolidation Exception

PAS29 Financial Reporting in Hyperinflationary Economies .; 1}' PHllI~PINE FIN~N~!Al R~ff:P'1~N'i{'AR9:.~"?1"I!;"Jt'. .KNot INTERPRE-omd\s+> ~. ,* tcioPted' 11} ~ot nl~~ Adopted Applicable Effective as of December 31, 2016

Financial Instruments: Disclosure and Presentation II

Financial Instruments: Presentation II

Amendments to PAS32: Puttable Financial Instruments II PAS32 and Obligations Arising on Liquidation

Amendments to PAS32: Classification of Right Issues II

Amendment to PAS32: Offsetting Financial Assets and II Financial Liabilities PAS33 Earnings Per Share II

Interim Financial Reporting II

PAS34 Amendment to PAS34: Disclosure of Information II 'elsewhere in the interim financial report'

Impairment of Assets II PAS36 Amendments to PAS36: Recoverable Amount Disclosures II for Non-Financial Assets

PAS37 Provisions, Contingent Liabilities and Contingent Assets II

Intangible Assets II

Amendment to PAS38: Revaluation Method - II PAS38 Proportionate Restatement of Accumulated Amortization

Amendments to PAS38: Clarification of Acceptable II Methods of Amortization

Financial Instruments. Recognition and Measurement II

Amendments to PAS39: Transition and Initial Recognition >I of Financial Assets and Financial Liabilities

Amendments to PAS39: Cash Flow Hedge Accounting of >I Forecast Intragroup Transactions

Amendments to PAS39: The Fair Value Option >I

Amendments to PAS39: Financial Guarantee Contract >I

PAS39 Amendments to PAS39: Reclassification of Financial >I Assets

Amendments to PAS39: Reclassification of Financial >I Assets - Effective Date and Transition Amendments to PAS39: Embedded Derivatives

Amendment to PAS39: Eligible Hedged Items

Amendments to PAS39: Novation of Derivatives and Continuation of Hedge Accounting

Amendments to PAS39: Hedge Accounting Investment Property

Amendment to PAS40: Clarifying the Interrelationship PAS40 between PFRS3 and PAS40 when Classifying Property as Investment Property or Owner-occupied Property

Agriculture PAS41 Amendments to PAS41: Bearer Plants

Philippine Interpretations

Changes in Existing Decommissioning, Restoration and IFRIC 1 .; Similar Liabilities Member's Share in Co-operative Entities and Similar IFRIC 2 .; Instruments

IFRIC4 Determining Whether an Arrangement Contains a Lease II

Rights to Interests arising from Decommissioning, IFRICS .; Restoration and Environmental Rehabilitation Funds

Liabilities arising from Participating in a Specific Market- IFRIC 6 .; Waste Electrical and Electronic Equipment PHILIPPINEFINANCIAL REPORTINGSTANDARDSAND Not Not INTERPRETATIONS Adopted Adopted Applicable

Effective as of Decerriber 31, 201~' " .:r:Kj~fl~lijllllj·. .%

Applying the Restatement Approach under PAS29 IFRIC7 .; Financial Reporting in Hyperinflationary Economies

Reassessment of Embedded Derivatives .; IFRIC9 Amendments to Philippine Interpretation IFRIC-9: .; Embedded Derivatives

IFRIC10 Interim Financial Reporting and Impairment .; IFRIC12 Service Concession Arrangements .;

IFRIC13 Customer Loyalty Programs .;

PAS19 - The Limit on a Defined Benefit Asset, Minimum .; Funding Requirements and their Interaction

IFRIC14 Amendments to Philippine Interpretations IFRIC- 14, II Prepayments of a Minimum Funding Requirement

IFRIC15 Agreements for the Construction of Real Estate II

IFRIC16 Hedges of a Net Investment in a Foreign Operation II

IFRIC17 Distribution of Non-Cash Assets to Owners .; IFRIC18 Transfer of Assets from Customers .;

IFRIC19 Extinguishing Financial Liabilities with Equity Instruments .;

IFRIC20 Stripping Costs in the Production Phase of a Surface Mine II

IFRIC21 Levies II SIC-7 Introduction of the Euro .; Government Assistance - No Specific Relation to SIC-10 II Operating Activities SIC-15 Operating Leases- Incentives .; Income Taxes - Changes in the Tax Status of an Entity or SIC- 25 II its Shareholders Evaluating the Substance of Transactions Involving the SIC- 27 II Legal Form of a Lease

SIC- 29 Service Concession Arrangements: Disclosures II

Revenue - Barter Transaction Involving Advertising SIC- 31 II Services

SIC- 32 Intangible Assets - Web Site Costs II Schedule III

I-REMIT INC. MAP SHOWING RELATIONSHIPS BETWEEN AND AMONG PARENT, SUBSIDIARIES, AN ASSOCIATE, AND JOINT VENTURE

STAR Equ.iHes Inc. JTKC Equities, Inc. Surewell Equities. lnc JPSA Global Services Co: I. Public I 29A60034 % I 21.496258% 23.575170% I 3.281980% I I 22.186558% I ! I i I I Ii-Remit, Inc. I

Internalfonal Remittances (~rta.oo) Ltd. IREMIT ~mitiam;(I Cons'Ui!ing GmbH (Au~lrfa} 10()<,'{' 100%

Lucky Star Managelnent limaed (Hong Koog) I-Remit New Zealand limfWd tOO% 100% ~

IRemit Grobal Remittance limited (UK! Hwa Koog Hong & Co. Ltd. (Taiwan)'" 100% 49% ~

Wortdwlde Exohange pty Ltd (AlISllatia), KK I-Remit Japa.n tOO% 100% I ~ P.ower Slar Asia Group limil.ed J..Rernillance Singapore p.te. Ltd. to()% i I 1 100% ~

"Consisting of 70% direct ov-mers.hip and 30% indirect ownership through I"'Remit Australia Ply Ltd, a v..'holfy·o' •••n•ee subsidiary. ". An associate I-REMIT INC. Schedule A - Financial Assets DECEMBER 31,2016

Name of issuing entity and Number of shares or principal Amount shown on the balance Income accrued amount of bonds or notes sheet association of each issue I I Financial assets at fair value through profit or loss I not applicable II Php 6,447,83411 Php -I I-REMIT INC. Schedule B - Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Affiliates) DECEMBER 31,2016

Amounts Name of Debtor Additions IUI Amoun:~ Written- Current Non- Current I IU IUI Collected I Alejandro Pepino Jr. P 5,546.56 P P 5,546.56 P P 0.00 P p 0.001 Alfred C. Piajo 3,919.00 2,642.68 1,276.32 1,276.32 Analie Angeles 291,674.24 90.00 291,764.24 (0.00) (0.00) Arlene De Guia 57,205.00 52,288.00 4,917.00 4,917.00 Arlene Salinas 6,795.92 530.00 7,325.92 Armin Demetillo 631,619.98 631,619.98 (0.00) (0.00) Bansan Choa 869,701.74 827,564.40 42,137.34 42,137.341 Bernadette Cindy Tiu 65,849.71 719,125,20 779,907.91 5,067.00 5,067.00 Charlene Mae A. Halcon 16,309.05 15,077.37 1,231.68 1,231.68 Claire Matagay 30.00 100.00 130.00 Danilo Belleza 3,970.91 111,640.84 115,611.75 Edward Labios 953.71 0.03 953.74 Elbert Mallete 31,361.88 31,361.88 (0.00) (0.00) Emelyn Bonayon 10.00 1,995,052.47 1,995,062.47 Emmanuel Catahan 3,000.00 180.00 3,180.00 Fitzgerald Duba 361,666.57 361,666.57 (0.00) (0.00) Geraldine Joy A. Guisper 1,172.50 1,172.50 Gilbert Gaw 2,210,530.79 1,684,954.90 525,575.89 525,575.89 Griselda Marie M. Martin 446,062.77 446,062.77 Harris Jacildo 259,259.08 105,780.75 340,289.83 24,750.00 24,750.001 Ireneo Rodriguez 33,987.96 224,172.60 258,160.56 Jacqueline Juliano 3,271.66 3,271.66 Jessa G. Apolinario 3,400.00 210,415.00 213,215.00 600.00 600.00 Jodalyn Mallari 6,000.00 2,000.00 4,000.00 4,000.00 Joey Chua 450,000.02 90.00 450,090.02 (0.00) (0.00) Jorie Perena 2.00 13,850.00 13,852.00 Jose IIIMaceda 275,000.09 804.00 275,804.09 (0.00) (0.00) Junell Dassun 16,086.31 16,086.31 Kristie Anne Hernandez 21,920.40 21,920.40 (0.00) (0.00) Kristine Alexis M. Fuentes 150,034.40 67,157.09 82,877.31 82,877.31 Leo Zuniga 2,607.00 2,607.00 0.00 0.00 Lourdjenn Padlan 10,143.27 10,143.27 0.00 0.00 Lovely G. Danan 4,590.00 923.33 3,666.67 3,666.67 Luisito Banting 41,066.43 980,863.32 1,019,706.94 2,222.81 2,222.81 I-REMIT INC_ Schedule B - Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Affiliates) DECEMBER 31,2016

Amounts Balance at end of Name of Debtor 101 Balance at ~eginning 101 Additions 101 Amoun:~ written-IDI Current Non- Current 1 of period 101 Collected 101 101 neriod

Marc Rey Calaguian 1,666.68 2.035.895.63 2.037,562.31 - Marco Salangsang 5.189.37 373.446.28 369,133.92 - 9.501.73 9.501.73 Maria Celeste Armas 1.807.243.05 1.764,043.05 - 43.200.00 43.200.00 Maria Cristina Castillejo 66,504.20 678,582.79 745.086.99 - Marie Fe Oporto 4.448.78 - 4.448.78 - Marilou Hazel T. Angeles - 25.363.00 23.896.34 - 1,466.66 1,466.66 Mary Jean Ocan 25.00 90.00 115.00 - - - Mhark Pascual 39.618.15 45.356 ..89 84.975.04 - (0.00) (0.00) Patricia S. Pascual - 76.506.41 17.088.00 - 59,418.41 59,418.41 Rachel Ann Reyles 28,534.15 - 28.534.15 - - Regina Shimamoto 240,900.00 - 240,900.00 - - Richona Tubosa 1,582.50 190.00 1.772.50 - - Rociel Dimaculangan 6.113.48 - 6.113.48 - - Ronald Benito 664.999.99 - 664.999.99 - (0.00) (0.00) Rosario C. Pahayahay - 301.949.00 24.216.97 - 277,732.03 277.732.03 Rovic Garcia 3.000.00 77.294.08 80.294.08 - - Ruby Anne Enriquez 3.000.00 1.290.00 4.290.00 - Severino Lagan 392.376.76 5.979.06 398.355.82 - 0.00 0.00 Voltaire Lopez 1.666.68 - 1.666.68 - - William Joseph Gerald 10.000.00 90.00 10.090.00 - - Reyes

ITOTAL 101 4.436.084.71101 13. 110.260.381~1 16,456, 704.241~1 j~1 1,089.640.85[}I1 jl~1 1.089.640.851 I-REMITINC_ Schedule C - Receivable from Related Parties which ere eliminated during the consolidation of financial statements DECEMBER31. 2016

Balance at beginning Name and Designationof debtor Add' . II Amounts II Amounts II C II NC II Balance at the end of the of oeriod nI, 't'_o_n_s___ collected , written off, urrent on urrent period

Lucky Star management Limited Remittance p 2.B55.336 P 1.268.687.383 P 1.271.542.719 P P o P P 0 Due from 12.677.134 33.692.284 30.119.177 16.250.241 16.250.241 Delivery fee 92.364 5.762.722 5.855.086 IRemit Global Remittance Limited Remittance 17.427.798 7.086.570.236 7.032.452.389 71.545.645 71.545.645 Due from 148.546.659 80.506.485 156.538.601 72.514.542 72.514.542 Delivery fee 274.703 20.816.027 20.518.122 572.608 572.608 Service income Worldwide Exchange Ply Ltd Remittance 31.267.723 4.750.431.021 4.744.571.148 37.127.596 37.127.596 Due from 448.007 4.862.851 5.215.175 95.683 95.683 Delivery fee 597.638 38.981.928 39.089.276 490.290 490.290 International Remittance (Canada) Ltd. Remittance 46.666.765 9.721.291.612 9.703.072.993 64.8B5.384 64.885.384 Due from 309.666 3.009.B09 3.319.475 Delivery fee 1.448.064 52.034.900 51.910.357 1.572.606 1.572.606 l-Bemit New Zealand Limited Remittance 4.597.294 1.075.047 5.672.341 Due from 25.819.235 5.676.086 323.212 31.172.109 31.172.109 Delivery fee 3.745 3.745 IREMIT Remittance Consulting GmbH Remittance Due from 18.947.676 801.442 269.711 19.479.406 19.479.406 Delivery fee K.K. Iremit Japan Remittance 36.299.B27 1.717 .204.937 1.739.125.833 14.378.931 14.378.931 Due from 41.888.429 36.254.692 48.752.691 29.390.430 29.390.430 Delivery fee 132.114 5.489.422 5.459.933 161.604 161.604 I-Remit Australia Pty Ltd Remittance 2.140.842 74.119.514 76.012.203 248.153 248.153 Due from 761.162 761.162 I-Remittance Singapore Pte. Ltd. Remittance 2.878.837.628 2.853.477 .170 25.360.458 25.360.458 Due from 5.251.025 21.660.570 7.700.573 19.211.021 19.211.021 Delivery fee 11.242.945 9.707.477 1.535.468 1.535.468 Power Star Asia Group Limited Remittance P - P P 33.271.028 P P 33.271.028 27.811.470.57011 -II 439.263.20411 -II 439.263.2041 0.00 0.00

(i) If collection was other than in cash. explain. in 2016, the Parent Company applied a part of its receivable (due froml accounts from its subsidiary, IRemit Global Remittance Limited as additional investment in the amount of P 35,838,789 thus increasing its investment to IRemit Global Remittance limited from P 144,878,066 as at December 31. 2015 to P 180.716.856 as at December 31. 2016.

Iii)Give reasons for write off. I-REMIT INC. Schedule D - Intangible Assets - Other Assets DECEMBER 31, 2016

Charged to other Description Beginning Balance Additions at Cost II Charged to cost and II II Other changes II Ending Balance I II II expenses accounts additions (deductions) I ISOftW,,, 2,389,62211 3,562,5001 -1, 119'252~ 4,832,8701 II 011 01 I-REMIT INC. Schedule E - Long-Term Debt DECEMBER 31,2016

Amount shown under caption Amount shown under caption Interest Rate Title of issue and type of Amount authorized by "Current portion of long-term debt' "Long-Term Debt" in related Maturity Date obligation indenture in related balance sheet balance sheet %

None to Report I-REMIT INC. Schedule F - Indebtedness to Related Parties (Included in the consolidated financial statement of position) DECEMBER 31, 2016

I Name of Related Parties I Balance at beginning of period Balance at end of period

None to Report I-REMIT INC. Schedule G - Guarantees of Securities of Other Issuers DECEMBER31, 2016

None to Report I-REMIT INC. Schedule H - Capital Stock DECEMBER31.2016

Number of shares issued and Number of shares reserved for Number of shares Number of shares held by Directors. officers and Title of Issue outstanding as shown under the options. warrants. conversion and Others authorized related parties employees related balance sheet caption other rights

Common stock - 1 par 1.000.000.000 122 817 759 546 value I 612.043. 1 476.251. 1 4.230. 1 131.560. 1 -II I-REMIT INC_ SCHEDULE IV - FINANCIAL SOUNDNESS INDICATORS For the Years Ended December 31,2016,2015 and 2014

CURRENT RATIO 1.38 1.42 1.21

Current Assets 2,119,133,362 2,053,649,192 3,832,042,045 Current liabilities 1,539,769,838 1,447,393,838 3,160,013,371

WORKING CAPITAL TO ASSETS 0.22 0.24 0.16

(Current Assets - Current liabilities) 579,363,524 606,255,354 672,028,674 Total Assets 2,634,980,136 2,535,076,945 4,241,119,255

ASSET TO EQUITY 2.41 2.33 3.92

Total Asset 2,634,980,136 2,535,076,945 4,241,119,255 Shareholders' Equity 1,095,210,298 1,087,050,695 1,081,105,884

DEBT TO EQUITY 1.41 1.33 2.92

Total Liabilities 1,539,769,838 1,448,026,250 3,160,013,371 Shareholders' Equity 1,095,210,298 1,087,050,695 1,081,105,884

LONG-TERM DEBT TO EQUITY 0.001

Long-Term Debt 632,412 Shareholders' Equity 1,095,210,298 1,087,050,695 1,081,105,884

FIXED ASSETS TO EQUITY 0.02 0.02 0.00

(Fixed Assets -Accumulated Depreciation) 18,294,208 18,883,229 5,239,611 Shareholders' Equity 1,095,210,298 1,087,050,695 1,081,105,884

CREDITORS EQUITY TO TOTAL ASSETS 0.58 0.57 0.75

Total Liabilities 1,539,769,83B 1,448,026,250 3,160,013,371 Total Assets 2,634,980,136 2,535,076,945 4,241,119,255

FIXED. ASSETS TO LONG-TERM DEBT 29.86

(Fixed Assets - Accumulated Depreciation) 18,294,208 18,883,229 5,239,511 Long-Term Debt 632,412

C. RETURN ON INVESTMENTS

RATE OF RETURN ON TOTAL ASSETS 0.01 0.01 0.01

Net Income 21,755,346 26,190,634 23,426,013 Average Total Assets 2,585,028,540 3,067,678,130 3,600,279,314

RATE OF RETURN ON EQUITY 0.02 0.02 0.02

Net Income 21,755,346 26,190,634 23,426,013 Average Stockholders' Equity 1,091,130,497 1,085,981,325 1,084,911,954

D. PROFITABILITY RATIOS

GROSS PROFIT RATIO 0.52 0.48 0.46

Gross Income 254,736,782 202,855,497 208,418,918 Revenues 493,446,083 419,413,146 453,594,776 OPERATING INCOME TO REVENUES 0.07 0.08 0.07

Income from Operations 35,543,027 32,785,706 33,408,024 Revenues 493,446,083 419,413,146 453,594,776

PRETAX INCOME TO REVENUES 0.07 0.08 0.07

Pretax Income 35,543,027 32,785,706 33,408,024 Revenues 493,446,083 419,413,146 453,594,776

NET INCOME TO REVENUE 0.04 0.06 0.05

Net Income 21,755,346 26,190,634 23,426,013 Revenues 493,446,083 419,413,146 453,594,776

"is,' E. INTEREST COVERAGE RATIO '~b"% P'

INTEREST COVERAGE RATIO 1.876 2.046 1.687

Earnings Before Interest and Tax 76,116,071 64,126,400 82,017,196 Interest Expense 40,573,044 31,340,694 48,609,172

Securities and Exchange Commission Sec Form 17­A, As Amended

Securities and Exchange Commission Sec Form 17A, As Amended