AYALA FOUNDATION, INC. 10F Ayala Wing, BPI Building 6768 Ayala Avenue corner Paseo de Roxas Makati City, 1226 Philippines www.ayalafoundation.org TABLE OF CONTENTS 2 Message from the Chairmen 8 Education: Overview and Highlights 16 Youth Leadership: Overview and Highlights 3 Message from the President 10 Center of Excellence in Public 18 Ayala Young Leaders Congress 4 AFI Overview, AFI Program Map Elementary Education 21 Leadership Communities 6 AFI Program Criteria and Project Spending 13 Text2Teach 24 Arts and Culture: Overview and Highlights VISION Communities where people are productive, creative, self-reliant and proud to be Filipino.
MISSION people in the change process and business aspirations and private groups, civil society and Ayala to achieve impact, scale, and sustainability for everyone involved. VALUES We have a deep love of country. We believe in shared prosperity. We are creative and innovative. We act with integrity. We strive for excellence. We collaborate and work as a team. PROGRAM PILLARS Education Youth Leadership Sustainable Livelihood Arts and Culture
26 Ayala Museum 36 Special Projects 89 Acknowledgement notice 29 Filipinas Heritage Library 38 90 AFI Annual Report team 32 Sustainable Livelihood: Overview and Highlights 40 Financial Statements 91 Directory 34 Iraya Mangyan, Calauan Project, 88 AFI Management and Staff Message froM the ChairMen
Dear Stakeholders, The Ayala Foundation marked several milestones in 2012, as the organization took new and innovative steps toward expanding its reach and impact, and providing more opportunities for inclusive growth and empowerment for the communities it serves. We are proud of what the foundation and its partner communities, organizations, and individuals have achieved in the past 50 years. From being a foundation dedicated to science and research, the Ayala Foundation later took on the challenge of developing and sustaining ways to contribute to the eradication of poverty in all its forms. As we marked our 51st anniversary in 2012, we are, once again, thrilled to see the Ayala Foundation reinventing itself and making itself more relevant to the constantly changing times, and making itself more responsive to Filipinos’ evolving needs. The Ayala Foundation is stepping up its game, and streamlining its programs by focusing on Education, Youth Leadership, Sustainable Livelihood, and Arts and Culture. This decision to refocus and realign our programs brings us closer to our stakeholders at the serving our stakeholders better. Foundation now envisions “communities where people are productive, creative, self-reliant, and proud to be Filipino.” We at the Ayala Foundation have also adopted “creating shared value” as a framework, which opens up greater opportunities for synergy between business and social development. This is a great of working closely with the rest of the Ayala group of companies. Through this, the communities where both our business and social-development initiatives have gained a foothold can become centers for equitable Jaime Augusto Zobel de Ayala and inclusive growth. “Creating shared value” also provides opportunities for participation for other stakeholders and partners— truly a strategic way to harness our collective dream of seeing our people and country move toward progress. We at the Ayala Foundation recognize that nothing Fernando Zobel de Ayala could be possible without you and your ceaseless and wholehearted support and participation. With a greater focus on clear outcomes, greater impact, and Co-Chairmen ayala Foundation, inC. more communities that are productive, self-reliant, and proud to be Filipino. Once again, we thank you for supporting the Ayala Foundation and its various initiatives, and we look forward to partnering with you in 2013 and beyond.
2 Message froM the PresiDent
Dear Stakeholders, In 2012, the Ayala Foundation focused on reaching new heights and serving our fellow Filipinos in meaningful ways. The Ayala Foundation took steps to provide greater impact, clearer outcomes, and sustainable solutions shared value” framework, we synergized business and philanthropy, providing opportunities for growth for our diverse businesses and the communities in which they operate. We scored several victories in 2012, proving that genuine partnerships bring strong results. In Education, our Text2Teach project (the Philippine example of how partnerships can bring quality education across the country. Implemented by a consortium composed of Nokia, the Department of Education, Pearson Foundation, Globe Telecom, and the Ayala Foundation, Text2Teach has successfully entered its fourth phase in 2012. Since 2004, Text2Teach has reached 552 schools nationwide, and now aims to reach an additional 850 schools, 90,000 students, and 4,250 teachers. Our Center of Excellence in Public Elementary projects in target communities, we aspire to train households in livelihood consistently show great results: CENTEX students scored way above the national average in the We are proud of these and many other achievements and projects in 2012, Department of Education’s National Achievement Test which of course would not have been possible without your commitment. As we move forward, we are committed to working closely with partners and the Ayala group to better understand community realities. We continue to Our Youth Leadership projects continue to make build and nurture partnerships with public and private groups and civil society waves, not only in empowering the country’s top to meet three critical metrics: Impact, Scale, and Sustainability. student leaders who had participated in the 14th Ayala As there is still a lot to be done, we look forward to working with you toward our vision of communities where people are productive, creative, self-reliant, inspiration to community-based youth leaders through and proud to be Filipino. Let us build on the successes we have started and carry on with our As a way to bring the AYLC experience to the regions, collective effort to create shared value together. LeadCom covered 10 provinces, reaching 55 schools, 192 facilitators, and 808 student leaders in just one year. In Arts and Culture, we are proud of the integration of the Filipinas Heritage Library and the Ayala Museum, bringing two of the country’s leading cultural institutions under one roof. This will make Philippine art and culture more accessible to the public. The Ayala Museum earned another accolade by becoming the Maria Lourdes Heras-de Leon only Philippine museum to participate in the Google Art Project, which gives the rest of the world access to our PreSident “Dioramas of Philippine History” collection via high- ayala Foundation, inC. resolution images. The Ayala Foundation also entered a new space: Sustainable Livelihood. Through sustainable livelihood
3 aYaLa foUnDation
to serving as a catalyst for inclusive growth, which geared toward impact, clear outcomes, and sustainability. AFI adopted “creating shared value” as a framework, blurring distinctions between business and philanthropy, and hopes to gain greater participation from donors, partners, To achieve this, AFI refocused its Mission, Vision, and Values, highlighting the community as a program unit. Today, AFI envisions “communities where people are productive, creative, self-reliant, and proud to be Filipino.” AFI now focuses on its four program pillars: Education, Youth Leadership, Sustainable Livelihood, and Arts and Culture.
oUr reaCh The Ayala Foundation Program Map 2012
EDUCATION SUSTAINABLE LIVELIHOOD Center of Excellence in Public Iraya Mangyan Project Elementary Education Calauan Project Text2Teach Enabling Education Communities
YOUTH LEADERSHIP SPECIAL PROJECTS Ayala Young Leaders Congress Ayala Young Leaders Alumni Association Strengthening the Capacity of Leadership Communities Civil Society Organizations TEN Moves! ARTS AND CULTURE Ayala Museum Filipinas Heritage Library
4 5 6 afi ProJeCt sPenDing, 2012
7 EDUCATION
Education remains to be one of the Ayala Foundation’s key pillars. Through its continuing commitment to improving the quality of basic education in the country, particularly in the public sector, the foundation strengthened its main education projects—the Center of Excellence in Public Elementary Education
HIGHLIGHTS 968 students in its two schools—in in the 2012 National Achievement Test of the DepEd (80.3 average for CENTEX Manila, 81.6 for much as £160,000 for CENTEX. from 2004 to 2012; from 2012 to 2014, Text2Teach targets 850 new schools. schools in 2012, but an additional 139 schools signed memorandums of agreement. curriculum-based educational videos, supported by 455 lesson guides.
8 EDUCATION
9 Center of exCeLLenCe in PUbLiC eLeMentarY eDUCation
In keeping with its vision of serving as a model public learning environment for public elementary students, CENTEX, together with the Department of Education quality education for bright children from economically disadvantaged families. CENTEX implements an enhanced DepEd curriculum that emphasizes Language, Math, Science, Values, eem are special CENTEX Language Arts, and Self-Est subjects that promote holistic development.
10 OUTCOMES distinguished guests and raised For School Year 2011–2012, CENTEX funding support for the two CENTEX had a cohort survival rate (grade one schools. students who successfully completed CENTEX also provides a nurturing climate that jointly develops student percent, far exceeding the national talent, self-esteem, and servant leadership through after-hours The functional literacy rate is 100 programs in Music, Dance, and percent, compared with the national Sports. average of 86.4 percent. Twenty-four students continued For the 2012 National Achievement their training under acclaimed Tests administered by the DepEd to all grade six students, CENTEX the Pundaquit Virtuosi, and CASA students had an average of 80.95 San Miguel Foundation. Another 24 percent. The national average was students continued their training Lights 68.15 percent. in ballet, jazz, and modern dance Centex high with Steps Dance Foundation. The PARTNERSHIPS & scholars, together with other Steps 100% graduated COLLABORATION students, received the Philippine from elementary CENTEX’s success is built on school vs collaborations and partnerships that 74% national serve as important drivers for many dance cup. average of its activities. JPMorgan Chase & Co. employee volunteers also served as trainers philanthropy organization, held in basketball, volleyball, badminton, 95% graduated the London Philippine Fashion and table tennis for CENTEX from high school vs Show in March, drawing over 300 students. 58% national average
89% enrolled in college vs 23% national average
85% are expected to graduate from college in 2013
11 TEACHER-TRAINING CENTEX believes that effective teacher training will ensure quality instruction, improve student performance, and help students stay in school. CENTEX organized the annual teacher-training program for its teachers with the theme “A Mind Awake.” The three-day seminar held focused on developing critical thinking skills (with Dr. Zosimo Lee and Mr. Lumberto Mendoza of the entex was as well as values integration (with Dr. “My childhood at C very enjoyable. i felt the security The strong partnership with JPMorgan Chase & Co. also allowed i didn’t have in my previous CENTEX to provide training for 100 school. We had privileges a lot of teachers from 30 DepEd Manila schools, covering classroom students must have wished they management, out-of-the-box had, and the quality of education could compete with that of a private school.”
ManiLa batangas 508 ENROLLMENT 460 PROJECTED NUMBER OF 73 GRADE 6 GRADUATES 59
12 text2teaCh
Since 2003, Text2Teach has helped public elementary students and teachers gain access to multimedia educational materials in Mathematics, Science, English, and, starting in 2012, Values Education. completed three phases of the program and reached 552 schools. In 2012, the program entered its fourth phase, where it targets 850 schools, 90,000 students, and 4,250 teachers. Text2Teach phase 4 will run until 2014.
13 OUTCOMES PARTNERSHIP & The 2012 target was to reach COLLABORATION 150 new schools. Forty schools The Ayala Foundation, together with were reached in the last quarter all the members of the Text2Teach of the year, but memorandums of alliance, believes in the power agreement were signed for 139 of public–private partnerships schools, with launches scheduled in January 2013. sustainability of its programs. The alliance worked with the DepEd fourth phase, Text2Teach aimed to in designing the teacher-training develop 150 new curriculum-based program, which drew 116 education materials, as a way to supplement, supervisors and ICT coordinators, update, or replace existing materials. from the regional and division levels. On top of the 150, Text2Teach “the teachers’ training stake in funding the project. The of which resulted from partnerships ended up very successful with different organizations—15 for the T2T alliance and 30 percent and i am very grateful new videos for Values Education for this extraordinary classes, based on the lives and work support was increased to 38 percent nced of Ramon Magsaysay awardees, of the total project cost. This way, experience where i enha developed in partnership with the public sector will have a greater the Ramon Magsaysay Award sense of ownership for the project. my profession and grew Text2Teach also drew support as a school principal. integrating peace education into from private-sector partners, English classes produced by the indeed, money can’t buy the partnership with Toshiba. In this experience—this is a videos were supported by 455 lesson a memorandum of agreement guides aligned with the DepEd basic wonderful blessing.” education curriculum. Corporation committed to donate a Ms. Hazel V. Luna, principal, Agripina Elementary School, Text2Teach also hoped to raise total of 853 32-inch LED television Sta. Cruz, Davao del Sur, during the Text2Teach teachers’ P6.9 million that would be used for sets, to be distributed between 2012 training held in Sta. Cruz, Davao del Sur and 2014. P1,905,455 was remitted for 40 schools in Visayas and Mindanao. Text2Teach partnered with ClinicIT, an IT solutions company, to develop a web-based schools contact and validation system. The system automates the validation report processing and stores a database of school-related information. Text2Teach also participated in international learning sessions, most notable of which was the webinar “ICT as an Educational Tool.” The webinar drew over 6,800 participants from 24 countries and was organized Institute for Educational Planning– Latinoamericana de Ciencias
14 text2teaCh phase 4 TargeTs and reach
text2teaCh Training for Trainers, 2012
15 AFI strongly believes in the power of the youth to effect positive change in the country. AFI’s commitment to youth leadership is manifested in two major projects—the Ayala leadership program of the Ayala group of companies, and gathers 81 of the country’s most promising student leaders for a three-day training program on servant- leadership. Meanwhile, LeadCom is AFI’s effort to bring the AYLC brand of servant-leadership into local communities, and is implemented in partnership with local colleges and universities, local government units, and other community-based youth champions.
HIGHLIGHTS February 2012, with 80 of the country’s top student leaders. mentoring activities so alumni may be encouraged to initiate and sustain “change projects” in their respective schools and communities. YOUTH successfully trained 192 teacher- facilitators and 808 students from 55 partner schools in 10 provinces/areas. organized for students to cultivate their sense of responsibility and personal drive, collaborative mind set, critical thinking and problem- solving skills, and their desire to serve the local community. LEADERSHIP 16 YOUTH LEADERSHIP 17 aYaLa YoUng LeaDers Congress s from across the country. nurturing future leader
18 OUTCOMES This initiative culminated in the sessions, supported by Ayala group holding of the 14th AYLC at the San executives, were held as a way to Miguel Management Training Center hatch fresh ideas, provide practical tips, and open up new avenues for to 10. The theme for the three-day collaboration. congress was “Winning Hearts and Among the alumni who pursued Minds: Changing Paradigms,” with school or community-based projects DepEd Secretary Armin Luistro serving as the keynote speaker. Mendoza, who initiated an island- Eighty delegates, representing 56 wide writing camp for high school schools and universities nationwide, students in his hometown, Alabat were selected from among a total Island, Quezon; and Angel Ysik, who, of 845 applicants, 15-percent more together with other students from than the applicants for the 2011 expanded her vermicasting (worm percent of the delegates were male, and the remaining were female. earned her a citation from the Ten The delegates came from 13 of the Accomplished Youth Organizations country’s 14 regions. Prior to the holding of the strongly advocated The Entire Nation congress, the Ayala Foundation’s Youth Leadership group put in place schools. several measures to improve the AYLC 2010 alumnus Tobit Cruz, was screening process. The improved one of the winners of TAYO Awards, online application system ensured for its two-year creek rehabilitation that 100 percent of the applications project in Taytay, Rizal. were coursed online, compared with At the end of 2012, there were a the 38-percent online applications total of 1,043 AYLC alumni. The Ayala for the 2011 congress. Young Leaders Alumni Association The 2012 alumni initiated and implemented “change projects” for AYLC alumni, was registered in their respective schools or with the Securities and Exchange communities. A system was put Commission as a non-stock, in place to monitor and follow up on the status of these change move to empower the growing AYLC projects. In addition, several learning alumni community.
“My aYLC experience is a ‘paradigm shift’ from the usual leadershipacademy]. i have had in the [Philippine Military training experiences it gave me the rare opportunity to be with the future leaders of our society—to interact with them, hear their aspirations and insights, see different leadership styles and struggles, and become a friend to them. aYLC was a character-building and life-changing experience.” Joselyn Advincula, Philippine Military Academy cadet and squad leader, AYLC 2012
19 aYLC aLUMni 1999–2012
aYLC 2012 DeLegates, ProfiLe bY region
20 LeaDershiP CoMMUnities initiative to bring the Ayala Young Leaders strides since it started in 2011. C style of servant- As it shares the AYL leadership with colleges, universities, and communities outside of the National Capital Region, LeadCom also reaches out to teachers, of whom have a role to play in developing leaders who serve our communities.
21 LeaDCoM reaCh 2012
OUTCOMES LeadCom reached the following Aside from the strong relationships areas in 2012—Samar; Capiz; that were established with the partner schools, LeadCom raised support from such partner organizations as Active Aid Partners, area, LeadCom trained school- Mitsubishi Corporation, Globe based facilitators, conducted Telecom and Philippine Center for servant-leadership camps, engaged Civic Education and Democracy. the youth leaders to develop and LeadCom will expand the program implement community projects, and set up structures that would sustain establishing new partnerships, or the program in the area. building on existing ones. LeadCom For each project area, LeadCom also hopes to strengthen the impact of the youth community projects. schools, and provided training for In the coming year, a LeadCom for 80 to 100 youth leaders and 20 groups such as indigenous people facilitators. and out-of-school youth will be LeadCom ended the year by developed. reaching 50 schools, 191 facilitators, scale. After holding its own three- 100 student-leaders, each area conducted a two-day citizenship workshop, and encouraged the participants to initiate and sustain a post-camp change community project for at least three months. Participating schools were asked to integrate LeadCom into their leadership development curriculum or program of activities, as a way to sustain the program in their “LeadCom gave us a better understanding respective areas. At the same time, through LeadCom, the community projects served of servant leadership. as a way to apply the values and we learned to put ourselves in the shoes strategies they had learned from the also, our school became camp. of other people. more aware of effective ways to develop the leadership of our students.” Sheryl Mercado, LeadCom Oriental Mindoro, Student Council President, Mindoro State College of Agriculture and Technology
22 23 With its goal of strengthening its reach and impact, the Ayala Foundation strategically integrated the two institutions under its Arts and Culture division—the Ayala Museum and the Filipinas Heritage Library. Aside from its permanent collections, the Ayala Museum actively promotes Philippine art, history, and culture through innovative exhibitions and events, as well as educational programs. Meanwhile, the Filipinas Heritage Library is a one-stop electronic Filipiniana library. Aside from its key collections of rare and contemporary materials, FHL also helps develop community-based libraries through its OurLibrary program.
HIGHLIGHTS three exhibitions based on the Pioneers of Philippine Art collection, and developed 11 changing and traveling exhibits. Ayala Museum strengthened its presence in social media, as “The Filipino spirit is waterproof” ARTS & campaign. Manila International Literary Festival. Link Conference, which discussed the pressing issue of protecting intellectual property among authors, publishers, and other copyright owners. community libraries for the OurLibrary program in two sites— Infanta, Quezon, and Taguig. CULTURE 24 ARTS & CULTURE 25 aYaLa MUseUM
As one of the two institutions under Ayala Foundation’s Arts and Culture division, the Ayala Museum further strengthened its position as a leading private museum for Philippine history, art, and culture through creative programming, innovative marketing, and strategic partnerships. The museum also helped with the preparations for the transfer of the Filipinas Heritage Library museum and the library is intended to make the appreciation of Philippine art and culture more accessible to the community we serve through programs that elevate the spirit, enlarge thought and feeling, stretch the imagination, and offer an enchanting experience.
26 OUTCOMES The museum attracted 83,892 guests for its various exhibitions and events in 2012. Aside from the museum on regular days, there were also the 1,304 guests who enjoyed touring the museum for free on May 18, in celebration of International Museum Day. To sustain interest in its collections, the museum offered a fresh take on some of its permanent exhibitions. In support of its “Pioneers of Philippine Art” collection, the Ayala Museum presented “Fernando Zóbel in the 1960s,” “Postura: Portraits by strong multimedia components. “Conectados”—which featured Peque Gallaga. Amorsolo Portraits of the Filipino.” the works of top Filipino, Mexican, Other notable exhibits included The museum also became the only and Spanish artists, and was co- “Sharaku Interpreted by Japan’s Philippine museum to participate organized by the Spanish Embassy Contemporary Artists,” co-presented in the Google Art Project, which in the Philippines—projected by the Japanese Embassy, Japan presents high-resolution images the featured artists’ works on Foundation–Philippines, and Muji; the façades of landmarks in the the homecoming show for the international art institutions. Filipino participants at the 26th Through the Google Art Project, The exhibit also featured a “laser Asian International Art Exhibition; the Ayala Museum presents to the the 45th Shell National Student Art rest of the world 15 high-resolution Spanish multimedia artist Suso33. Competition; and “Timeless: Swiss images from the “Dioramas of Philippine History.” Francisco: A Nation Imagined”—an co-presented by the Swiss Embassy Aside from these, the museum exhibition of major works by National in the Philippines in celebration of presented 11 changing or traveling Artist for Visual Arts Francisco exhibits, some of which had Swiss Relations.
aYaLa MUseUM visitorshiP, 2012 twitter.com/twitzeroll
“the fiLiPino sPirit is WaterProof” CaMPaign
132 digital art submissions
4,629 retweets on Twitter 581 favorites on Twitter
203 likes on Facebook 969 shares on Facebook
27 EDUCATION PROGRAMS AND SOCIAL MEDIA 2012 was also a robust year for the Ayala Museum’s educational programs, which featured its “History Comes Alive” and “DesignTalks” lecture series. Popular historian Ambeth Ocampo spoke about the Japayuki: Japan in Philippine History” and “Fernando Amorsolo: Portrait of an Artist as Historian.” Meanwhile, DesignTalks featured automobile designer Wini Camacho, graphic design group InkSurge, and photographers MangoRed Studios. In addition, the museum organized 13 art workshops for its “St’Art” program, and six lectures for its “Conversations in Art” series. Social media became an important platform for the Ayala Museum’s promotion of Philippine Twitter, 203 likes and 969 shares art and culture. This was strongly on Facebook, and 132 digital art demonstrated during the height submissions. of the heavy monsoon rains that The Ayala Museum also continued to provide assistance for the Manila and neighboring provinces development of other museums, as in August. As a way to inspire well as curatorial services. Among the institutions that the museum Facebook accounts released Founder’s Wing (inaugurated on the slogan, “The Filipino spirit is waterproof,” and invited artists to Diocesano de Pasig (inaugurated share artworks based on the slogan. The response was tremendous—the is the work on Museo Enrique Zobel announcement received 4,629 retweets and 581 favorites on sharaku interpreted “Undoubtedly, the exhibit ( artists) and the lecture/ by Japan’s Contemporary demonstrations generated greater awareness and appreciation of the traditional Japaneseaya artla of Museum ukiyo-e; thus, the partnership with the through the years is indeed highly regarded, and we extend our gratitude to everyone responsible for always showcasing aesthetically pleasing projects.” Shuji Takatori, director, Japan Foundation Manila
28 fiLiPinas heritage LibrarY to promote literacy, literature, art, history, and culture, the Filipinas Heritage Library relocation to its modern new home. As part of the Ayala Foundation’s strategic initiative to integrate its Arts and Culture division for greater reach and impact, FHL began in December its transformation into a modern research facility with greater focus on information technology and cutting-edge research. The new FHL, which is located scheduled to reopen in the summer of 2013.
29 OUTCOMES In 2012, 1,961 individuals used FILIPINAS HERITAGE LIBRARY VISITORSHIP 2010–2012 the library’s facilities at Nielson Tower. This is slightly lower than the visitorship data logged in 2011, which reached 2,081 researchers and tour participants. Part of the decline could be attributed to the fact that the library was closed in November and December in preparation for the move to its new location. However, the number of actual researchers who used the library’s facilities remained consistent over the past three years. FHL hosted the third LibraryLink conference focused on protecting intellectual property of the authors, Australia-based Filipino novelist and local government units and other publishers, and other copyright organizations, was launched in two owners. areas—City of Taguig and Infanta, FHL, together with the Ayala among others. Quezon. OurLibrary in Taguig was Museum, continued its partnership The library also partnered with Ayala Land in celebration of the supported by the city government and Ayala Land Inc. Meanwhile, International Literary Festival. A total OurLibrary in Infanta, Quezon, of 245 readers, writers, teachers, international commercial airport. An was launched on November 29 and other literary enthusiasts outdoor exhibit, entitled “Flight to in partnership with the municipal participated in the event, which Progress,” was seen by hundreds of featured some of the best writers visitors and passersby at the Ayala Foundation. in the country and in the world, Triangle Gardens. AFI signed two memorandums including award-winning Nigerian- The OurLibrary program, of agreement for two other areas American novelist Chris Abani, implemented in partnership with in Quezon province—Lucena City
THE FILIPINAS HERITAGE LIBRARY TIMELINE
1974 1996
Ayala Museum and Iconographic Archives inaugurates its own The Filipinas Heritage Library (formerly the Ayala building, designed by National Artist Leandro Locsin; one of its key facilities is the Ayala Museum Library.
30 (supported by the city government Tayabas City (supported by the city As parts of its educational and cultural activities, FHL organized workshops in photography, technical and creative writing, book design, and others. Fifteen writing and photography workshops were conducted in 2012. The Filipinas Heritage Library, in Ayala Museum, expands its role as a one-stop electronic Filipiniana library and offers a “contemporary space for the contemporary researcher.” It will open in March 2013.
“it has been my dream to see a Wlibrarye have that arrived is open at thisto all our children and constituents. point because of the generosity and hard work of many people. i would like to express my heartfelt gratitude to bPi foundation for reaching out, ayala foundation and extending their arms and grasping our hands to move forward, ‘kapit-kamay,’ to make this dream a reality.” Filipina Grace America, mayor, Infanta, Quezon
2004 2013
The Ayala Museum inaugurates its new building. The Filipinas Heritage Library moves to the
31 AFI’s commitment to shared prosperity is manifested by its Livelihood. AFI envisions households with the opportunity to have gainful sources, through sustainable livelihood skills training, and also the chance to be part of the business supply chain in local communities. As it enters this new space, AFI targets to pilot the program in the following sites: Manila, Quezon Oriental Mindoro (particularly for the indigenous Iraya-Mangyan
HIGHLIGHTS skills programs for the Iraya- Mangyans of Oriental Mindoro. Community Assistance Program for International Development out-of-school youths to complete alternative learning courses, and enter various skills-training programs. SUSTAINABLE Project in Calauan, Laguna— particularly with the Salesian start-ups in two technology incubation facilities. Incubator organized 19 sessions
32 LIVELIHOOD SUSTAINABLE
LIVELIHOOD 33 Through Sustainable Livelihood programs, AFI and its partners hope to provide households in target communities access to skills training programs, connection to markets. The success of this undertaking will depend on whether it successfully leads to gainful As the foundation ventures into this new area, it also continues the implementation, as well as possible expansion, of ongoing community-based projects, including the Iraya-Mangyan project in Oriental Incubator in Quezon City.
34 IRAYA-MANGYAN PROJECT AFI’s Mindoro project is committed to the education and skills training of the indigenous Iraya-Mangyan community. With the assistance of the Sisters of Charity of St. Anne, received educational and feeding assistance. In addition, three high school scholars of the program UP-AYALA TECHNOLOGY are now enrolled in a dressmaking BUSINESS INCUBATOR course with the Technical Education AFI hosts technology start-ups in two facilities of the and Skills Development Authority Incubator. It continues to host eight start-ups at the earned a degree in education passed the licensure examination in CALAUAN, LAGUNA June last year. PROJECT along Commonwealth Avenue, Quezon City. AFI is coordinating with various Aside from hosting these technology start-ups, AFI Community Assistance Program also organized several forums and discussions in in Calauan, Laguna, to develop it into a support of budding techno-entrepreneurs. It held a total for International Development model resettlement site. In particular, AFI is facilitating the school youth to complete a course development of a master plan for with the Department of Education’s Alternative Learning System. A total of 104 youth and young which will guide the establishment of adults completed various TESDA- projects and structures in the area. the incubation ecosystem, particularly in the areas of administered basic skills training A portion of the property is already (dressmaking, beauty care, masonry, donated to the Salesians of Don subsidiary of Globe Telecom. Seventy-eight of the graduates took to the Franciscan sisters. The rest will be used to provide livelihood opportunities for the relocated exam. families. Among the initiatives being In addition to skills training, the pursued are the hydroponics and Mindoro program also facilitated the aquaponics farms, green village, and leadership training of 149 youth. electronics recycling facility. Other This was the program’s way of projects being considered for the encouraging the youth to get involved development may include industrial in community development. and commercial fair, factories for sewing, shoe-making and bamboo crafts, and social tourism.
35 sPeCiaL ProJeCts
TEN Moves! raise P60 million cash and in-kind donations as a contribution to than just raising funds, what TEN Moves! seeks is to engage as many individuals as possible in taking part in a campaign to help improve the quality of basic education in the country. P49.2 million worth of donations—P25.2 million in cash and P24 million worth of in-kind from various groups and individuals, in the form of pro bono services—including advertising and public relations support—with an estimated value of P111.85 million. In addition, the campaign received marketing and administrative support worth P5 million. built 1,219 classrooms across the country, with an additional 3,093 pledged. On the part of TEN Moves!, a two-story, four-classroom school building was completed in Cagayan de Oro City, while another two-story, four-classroom school building is nearing completion in Iligan City. Several campaign donors built classrooms in the following To generate continuing interest in the campaign, TEN Moves! maximized its information dissemination efforts, using traditional and new media, with the support of various organizational and individual also held several roadshows and community launches in several locations—a way not only to promote the campaign but also to interact with local partners. In 2012, TEN Moves! was brought to the following areas—Cebu, Cagayan de Oro, Iligan, Dumaguete, Davao City, Tagum,
36 STRENGTHENING THE CAPACITY OF CIVIL SOCIETY ORGANIZATIONS IN THE PHILIPPINES (SCCSOP) organizational development of participating CSOs. The framework covers the following areas: governance and leadership; strategic planning and management; resource mobilization and development; program design, management and administrative and personnel management. Further, an assessment tool based on the capacity-building framework was designed to evaluate the “health” status of participating organizations. The project selected 120 organizations in Luzon, Visayas, and Mindanao from a list of almost a thousand submitted by CSO networks. One hundred eighteen of these organizations participated in the organizational diagnosis and personnel-management training. The module on effective board governance was also launched in 2012. Forty volunteer mentors were recruited and trained in organizational- their assigned CSO mentees in 2013. Development.
ENABLING EDUCATION COMMUNITIES EEC was implemented in four areas—Tiwi and Ligao City, Albay; Camiguin; personally checked on these kids, and encouraged their parents to enroll them. To address literacy issues, the core groups distributed instructional third-graders, and 1,004 high school freshmen and sophomores in Tiwi. In addition, the core groups in Malaybalay and Camiguin developed a reading Malaybalay and Camiguin, the EEC core groups helped organize a teachers’ federation, which is now registered with the Securities and Exchange Commission.
37 aYaLa foUnDation boarD of trUstees 2012
Jaime Augusto Zobel de Ayala and Fernando Zobel de Ayala CO-CHAIRMEN
Maria Lourdes Heras-de Leon Gerardo Ablaza Antonino Aquino PRESIDENT MEMBER MEMBER
38 Ernest Cu Victoria Garchitorena Aurelio Montinola MEMBER MEMBER MEMBER
Mercedita Nolledo Arthur Tan MEMBER MEMBER
39 rePort of inDePenDent aUDitors
40
STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of Ayala Foundation, Inc. is responsible for the preparation and fair presentation of the financial statements for the years ended December 31, 2012 and 2011, including the additional components attached therein, in accordance with the Philippine Financial Reporting Standards. This responsibility includes designing and implementing internal controls relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.
The Board of Trustees reviews and approves the financial statements and submits the same to the members.
Sycip Gorres Velayo & Co., the independent auditors appointed by the members, has examined the financial statements of the company in accordance with Philippine Standards on Auditing and in its report to the members, has expressed its opinion on the fairness of presentation upon completion of such examination.
JAIME AUGUSTO ZOBEL DE AYALA FERNANDO ZOBEL DE AYALA Co-Chairman Co-Chairman
MARIA LOURDES HERAS – DE LEON President
ADITAS VIVIAN L. SANTAMARIA Chief Financial Officer
Signed this 26th day of March, 2013
41
INDEPENDENT AUDITORS’ REPORT
The Board of Trustees Ayala Foundation, Inc. 10th Floor, BPI Main Building Ayala Avenue corner Paseo de Roxas Legaspi Village, Makati City
Report on the Financial Statements
We have audited the accompanying financial statements of Ayala Foundation, Inc. (a non-stock, non-profit corporation), which comprise the statements of financial position as at December 31, 2012, 2011 and January 1, 2011, and the statements of activities, statements of changes in fund balances and statements of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
42
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Ayala Foundation, Inc. as at December 31, 2012, 2011 and January 1, 2011, and the statements of activities and its cash flows for the years then ended in accordance with Philippine Financial Reporting Standards.
Report on the Supplementary Information Required Under Revenue Regulations 19-2011 and 15-2010
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information required under Revenue Regulations 19-2011 and 15-2010 in Notes 15 and 16 to the financial statements, respectively, is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such information is the responsibility of the management of the Foundation. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
SYCIP GORRES VELAYO & CO.
Jessie D. Cabaluna Partner CPA Certificate No. 36317 SEC Accreditation No. 0069-AR-3 (Group A), February 14, 2013, valid until February 13, 2016 Tax Identification No. 102-082-365 BIR Accreditation No. 08-001998-10-2012, April 11, 2012, valid until April 10, 2015 PTR No. 3669666, January 2, 2013, Makati City
March 26, 2013
43
AYALA FOUNDATION, INC. (A Non-Stock, Non-Profit Corporation) STATEMENTS OF FINANCIAL POSITION
December 31 January 1 2011 2011 (As restated - (As restated - see Notes 2 see Notes 2 2012 and 11) and 11)
ASSETS
Current Assets Cash and cash equivalents (Notes 4 and 13) P= 9 3,752,612 P= 362,443,496 P=130,605,151 Receivables (Notes 5 and 13) 37,765,927 20,508,891 21,569,385 Merchandise inventories - net (Note 6) 16,284,204 16,447,334 16,417,710 Other current assets (Note 7) 8,501,607 5,115,445 6,793,803 Total Current Assets 156,304,350 404,515,166 175,386,049
Noncurrent Assets Restricted cash equivalents (Note 12) – 68,900,000 – Property and equipment (Note 8) 148,202,196 161,230,907 169,430,034 Available-for-sale financial assets (Notes 9 and 13) 1,715,356,905 1,060,853,530 1,168,621,910 Total Noncurrent Assets 1,863,559,101 1,290,984,437 1,338,051,944 P= 2,019,863,451 P= 1,695,499,603 P=1,513,437,993
LIABILITIES AND NET ASSETS
Current Liability Accounts and other payables (Notes 10 and 13) P= 93,848,333 P= 82,542,789 P=109,621,401
Noncurrent Liability Pension liability (Note 11) 32,114,399 7,444,568 6,753,553 Total Liabilities 125,962,732 89,987,357 116,374,954
Net Assets (Note 12) Unrestricted 1,113,186 125,411,454 115,816,939 Temporarily restricted 190,570,834 445,941,291 651,560,581 Permanently restricted 1,653,150,699 954,809,584 541,383,373 Unrealized gain on available-for-sale financial assets (Note 9) 83,954,992 83,597,752 87,894,577 Remeasurement gain (loss) on defined benefit plan (Note 11) (34,888,992) (4,247,835) 407,569 Total Net Assets 1,893,900,719 1,605,512,246 1,397,063,039 P= 2,019,863,451 P= 1,695,499,603 P=1,513,437,993
See accompanying Notes to Financial Statements.
44
– Total (92,565) 357,240 5,533,084 9,042,956 1,148,377 41,836,330 (30,641,157) 317,046,598 496,123,890 635,811,553 133,006,202 266,167,312 288,388,473 318,764,955 1,893,900,719 1,605,512,246 P=
)
)
– – – – – – – – – – – – 1) P= – P= (Note1 (4,247,835) 34,888,992) (30,641,157 (30,641,157 Benefit Plan Benefit Loss on Defined on Loss Remeasurement (P=
– – – – – – – – – – – – P= – Assets 357,240 357,240 (Note9)
83,954,992 83,597,752 Unrealized Gain on AFS on Gain Financial Financial P=
– – – – – – – – – December 31, 2012 31, December (Note12) Restricted 74,608,081 330,008,081 255,400,000 954,809,584 368,333,034 698,341,115 330,008,081 Permanently 1,653,150,699
P= )
P=
– – – – (Note12) 9,042,956 5,533,084 9,042,956 1,148,377 Restricted 33,200,108 190,570,834 158,507,361 122,098,098 240,723,890 445,941,291 113,055,142 (255,370,457) (368,425,599) Temporarily
P= )
– 1 ( – – – 3 – – P= – P= (Note12) 1,113,186 25,198,01 41,836,330 P= 158,507,36 308,003,642 183,705,374 266,167,312 125,411,454 (124,298,268) (124,298,268 Unrestricted
)
)
and 9
4 : s sale financialsale -
or -f Profit Corporation) Profit - on defined benefit plan benefit defined on : END OF YEAR OF END
ased from restrictions fromrestrictions ased administrative
Stock, Non Stock, eral and eral - of revenue, gains and other supports over over supports other and gains revenue, of Investmentand interest (Note rele assets Net Project Gen 14 (Note activities other from loss Net assets Public support Public Project revenue) over (expenses losses and expenses Others
CHANGES IN NET ASSETS NET IN CHANGES AT ASSETS NET
Unrealized gain on available on gain Unrealized loss Remeasurement AYALA FOUNDATION, INC. (ANon STATEMENTSACTIVITIES OF supports other and gains Revenue, losses and Expenses Excess (disbursements) allocation Fund YEAR OF BEGINNING AT ASSETS NET
45
– Total Total Total (92,565) 357,240 306,390 (995,372) (995,372) 9,828,923 5,345,223 (4,655,404) (4,296,825) (4,655,404) (4,296,825) 34,554,206 94,377,432 (30,641,157) 264,209,161 219,826,032 218,396,808 482,605,969 208,449,207 318,764,955 218,396,808 382,576,924 1,397,063,039 1,605,512,246 1,893,900,719 1,397,063,039 1,605,512,246 1,605,512,246 P P = = = = P P
P=
) ) ) – – – – – – – – – – – – – – – – – – P= – P= Loss Loss 407,569 407,569 P = (Note11 4,247,835) 4,247,835) 4,247,835) (4,655,404) (4,655,404) (4,655,404) on Defined on 34,888,992) on Defined on P = = P Gain ( Gain Gain ( Gain (30,641,157) ( ( Benefit Plan Benefit Benefit Plan Benefit = P Benefit Plan Benefit ( Remeasurement Remeasurement Loss on Defined on Loss Remeasurement
(P=
– – – – – – – – – – – – – – – – – –
P= –
) 1) 1) 1 (Loss) Assets (Loss)
on AFSon on AFSon on AFSon 357,240 (Note9)
, 2011 (4,296,825) (4,296,825) (4,296,825) 1 Unrealized Unrealized 87,894,577 83,597,752 83,954,992 87,894,577 83,597,752 83,597,752 Unrealized Gain Gain Gain P P = = = = P P Gain Financial Assets Financial Financial Assets Financial Financial
P=
– – – – – – – – – – – – – – see Notes 2 and 1 see Notes 2 and 1 - - December 31, 201 31, December (Note12) Restricted Restricted Restricted 135,000,000 541,383,373 135,000,000 278,426,211 413,426,211 954,809,584 330,008,081 368,333,034 541,383,373 135,000,000 278,426,211 954,809,584 954,809,584 135,000,000 Permanently Permanently Permanently P P = = = P 1,653,150,699 Year Ended December 31 December Ended Year Year Ended December 31, 2012 31, December Ended Year (Asrestated (Asrestated = P
)
P=
P=
– – – – – – – –
306,390 (Note12) 9,828,923 9,828,923 5,345,223 5,345,223 Restricted Restricted Restricted 73,802,293 73,802,293 83,631,216 23,594,358 23,594,358 Temporarily 651,560,581 445,941,291 445,941,291 113,055,142 368,425,599 190,570,834 651,560,581 445,941,291 247,576,924 Temporarily (205,619,290) ( (279,421,583) (279,421,583) (193,191,679)
Temporarily P P = = = = P P
P=
– – – – – – – – – – – – P= – P= (Note12) 9,594,515 1,113,186 9,594,515 9,594,515 34,554,206 70,783,074 70,783,074 = P Unrestricted Unrestricted 254,380,238 125,411,454 125,411,454 115,816,939 125,411,454 219,826,032 115,816,939 263,974,753 193,191,679 (124,298,268) Unrestricted P= P P = = = P
)
)
and 9
supportsover 4 : s sale financial sale
-
or (Note CHANGES IN FUND BALANCES -f
defined benefit plan benefit defined
Profit Corporation) Profit -
:
ased from restrictions fromrestrictions ased loss on available
Stock, Non Stock, eral and administrative and eral - Gen 14 (Note activities other from loss Net assets expenses and losses (expenses over revenue) over (expenses losses and expenses assets revenue) over (expenses losses and expenses assets Public support Public Project revenue) over (expenses losses and expenses Others Investmentand interest Project rele assets Net
YEAR OF END AT ASSETS NET CHANGES IN NET ASSETS NET IN CHANGES Unrealized Unrealized (ANon supports other and gains Revenue, losses and Expenses other and gains revenue, of Excess (disbursements) allocation Fund YEAR OF BEGINNING AT ASSETS NET AYALA FOUNDATION, INC. STATEMENTSOF FUNDBALANCES year of beginning at assets Net over supports other and gains revenue, of Excess (disbursements) allocation Fund net in recognized year the for gain unrealized Net plan benefit defined on loss Remeasurement year of end at assets Net FUNDBALANCES year of beginning at assets Net over supports other and gains revenue, of Excess (disbursements) allocation Fund net in recognized year the for loss unrealized Net on losses Remeasurement year of end at assets Net Remeasurement loss on defined benefit plan benefit defined on loss Remeasurement
Statements. Financial to Notes accompanying See Statements. Financial to Notes accompanying See
46
– Total Total Total (92,565) 357,240 306,390 (995,372) (995,372) 5,345,223 9,828,923 (4,655,404) (4,296,825) (4,655,404) (4,296,825) 94,377,432 34,554,206 (30,641,157) 318,764,955 382,576,924 482,605,969 219,826,032 264,209,161 218,396,808 208,449,207 218,396,808 P = 1,893,900,719 1,605,512,246 1,397,063,039 1,605,512,246 1,605,512,246 1,397,063,039 P = P=
P=
P=
P=
) ) ) – – – – – – – – – – – – – – – – – – – P = Loss Loss 407,569 407,569 (Note11 4,247,835) 4,247,835) 4,247,835) (4,655,404) (4,655,404) (4,655,404) on Defined on 34,888,992) on Defined on P = Gain ( Gain Gain ( Gain (30,641,157) ( Benefit Plan Benefit Benefit Plan Benefit Benefit Plan Benefit Remeasurement Remeasurement Loss on Defined on Loss Remeasurement
(P=
(P= (P= P=
– – – – – – – – – – – – – – – – – – –
P =
) 1 1) 1) (Loss) Assets (Loss) on AFSon on AFSon on AFSon 357,240 (Note9)
, 2011 (4,296,825) (4,296,825) (4,296,825) 1 Unrealized Unrealized 83,954,992 83,597,752 83,597,752 87,894,577 83,597,752 87,894,577 Unrealized Gain Gain Gain P = Gain Financial Assets Financial Financial Assets Financial Financial P=
P= P=
P=
– – – – – – – – – – – – – – see Notes 2 and 1 see Notes 2 and 1 - - December 31, 201 31, December (Note12) Restricted Restricted Restricted 954,809,584 330,008,081 954,809,584 135,000,000 135,000,000 135,000,000 278,426,211 413,426,211 541,383,373 954,809,584 368,333,034 278,426,211 135,000,000 541,383,373 Permanently Permanently Permanently P P = = 1,653,150,699 Year Ended December 31 December Ended Year Year Ended December 31, 2012 31, December Ended Year (Asrestated (Asrestated
P=
P= P= ) P=
– – – – – – – –
306,390 (Note12) 5,345,223 5,345,223 9,828,923 9,828,923 Restricted Restricted Restricted 23,594,358 23,594,358 83,631,216 73,802,293 73,802,293 190,570,834 Temporarily 445,941,291 445,941,291 113,055,142 368,425,599 247,576,924 651,560,581 445,941,291 651,560,581 Temporarily (193,191,679) (279,421,583) (205,619,290) (279,421,583)
Temporarily P P = =
P=
P=
P= P=
– ( – – – – – – – – – – – – P = (Note12) 1,113,186 9,594,515 9,594,515 9,594,515 70,783,074 70,783,074 34,554,206 P= Unrestricted Unrestricted 125,411,454 193,191,679 263,974,753 219,826,032 254,380,238 115,816,939 125,411,454 125,411,454 115,816,939 (124,298,268) Unrestricted P= P P= = P=
)
)
and 9 supportsover 4
: s sale financial sale
-
or f (Note CHANGES IN FUND BALANCES -
defined benefit plan benefit defined
Profit Corporation) Profit -
: ased from restrictions fromrestrictions ased from other activities (Note 14 loss on available
Stock, Non Stock, eral and administrative and eral - expenses and losses (expenses over revenue) over (expenses losses and expenses assets assets Public support Public Investmentand interest Project rele assets Net Others Project Gen loss Net revenue) over (expenses losses and expenses assets expenses and losses (expenses over revenue) over (expenses losses and expenses
Net assets at end of year of end at assets Net Net assets at end of year of end at assets Net Excess of revenue, gains and other supports over over supports other and gains revenue, of Excess (disbursements) allocation Fund Net unrealized gain for the year recognized in net net in recognized year the for gain unrealized Net plan benefit defined on loss Remeasurement net in recognized year the for loss unrealized Net (ANon supports other and gains Revenue, losses and Expenses other and gains revenue, of Excess (disbursements) allocation Fund Unrealized plan benefit defined on loss Remeasurement ASSETS NET IN CHANGES YEAR OF BEGINNING AT ASSETS NET YEAR OF END AT ASSETS NET AYALA FOUNDATION, INC. STATEMENTSOF FUNDBALANCES year of beginning at assets Net FUNDBALANCES year of beginning at assets Net (disbursements) allocation Fund Remeasurement losses on on losses Remeasurement See accompanying Notes to Financial Statements. Financial to Notes accompanying See over supports other and gains revenue, of Excess Statements. Financial to Notes accompanying See
47
AYALA FOUNDATION, INC. AYALA FOUNDATION, INC. (A Non-Stock, Non-Profit Corporation) (A Non-Stock, Non-Profit Corporation) STATEMENTS OF CASH FLOWS NOTES TO FINANCIAL STATEMENTS
Years Ended December 31 1. Organization and Tax Exemption 2011 (As restated - Ayala Foundation, Inc. (the Foundation) was registered with the Securities and Exchange see Notes 2 Commission (SEC) on December 28, 1961 as a non-stock, non-profit corporation primarily for the 2012 and 11) following purposes:
CASH FLOWS FROM OPERATING ACTIVITIES a. To provide financial support or scholarships; Changes in net assets P= 288,388,473 P= 208,449,207 Adjustments for: b. To undertake ventures together with organized rural communities for the transfer of Remeasurement loss on defined benefit plan (Note 11) 30,641,157 4,655,404 appropriate technologies; Depreciation and amortization (Notes 8 and 12) 15,492,425 14,443,096 Loss on disposal of property and equipment (Note 8) 10,665,840 – c. To undertake integrated community organization and development programs; Provision for doubtful accounts (Notes 5 and 12) 5,283,010 3,606,873 Unrealized loss (gain) on AFS financial assets (Note 9) (357,240) 4,296,825 d. To encourage the establishment of urban and rural micro, cottage and small enterprises as a Investment and interest income (133,006,202) (94,377,432) means of creating employment among the poor; Changes in net assets before changes in working capital 217,107,463 141,073,973 Decrease (increase) in: e. To undertake social services; and Receivables (22,334,279) (2,542,656) Merchandise inventories 163,130 (29,624) f. To preserve and enhance Philippine arts and culture as a means of developing national pride Other current assets (3,386,162) 1,678,358 and patriotism. Increase (decrease) in: Accounts and other payables 11,305,544 (27,078,612) On February 15, 2010, the Foundation amended its Articles of Incorporation: (a) extending the Pension liability (Note 11) (5,971,326) (3,964,389) term for which the Foundation is to exist for another fifty (50) years from December 28, 2011 and Net cash provided by operating activities 196,884,370 109,137,050 (b) to declassify the Foundation as a science and research foundation.
CASH FLOWS FROM INVESTING ACTIVITIES As a non-stock, non-profit organization, the Foundation falls under Section 30 (E) of the Republic Net disposals (additions): Act No. 8424 entitled, “An Act Amending the National Internal Revenue Code, as Amended, and AFS financial assets (Note 9) (654,146,135) 103,471,555 for Other Purposes”. The receipts from activities conducted in pursuit of the objectives for which Property and equipment (Note 8) (13,129,554) (6,243,969) the Foundation was established are exempt from income tax. However, any income arising from Decrease (increase) in restricted cash equivalents (Note 12) 68,900,000 (68,900,000) its real or personal properties, or from activities conducted for profit, regardless of the disposition Investment income received (Notes 4 and 9) 122,473,067 83,956,466 made of such income, is subject to income tax. Interest income received 10,327,368 10,417,243 Net cash provided by (used in) investing activities (465,575,254) 122,701,295 The Foundation was registered with the Bureau of Internal Revenue (BIR) as a donee institution in accordance with the BIR-NEDA Regulations No. 1-81 and is entitled to the benefits set forth in NET INCREASE (DECREASE) IN CASH AND CASH Section 30 (h) of the National Internal Revenue Code. EQUIVALENTS (268,690,884) 231,838,345 The Foundation is duly accredited by the Philippine Council for Non-Government Organization CASH AND CASH EQUIVALENTS AT Certification (PCNC) and renewed its registration as a donee institution on August 6, 2010 in BEGINNING OF YEAR 362,443,496 130,605,151 accordance with the provisions of Revenue Regulation No. 13-98. Donations received shall entitle the donors to full or limited deduction pursuant to Section 34 (H) (paragraphs 1 or 2) and CASH AND CASH EQUIVALENTS AT exemption from donor’s tax pursuant to Section 101 (A) (3) of the National Internal Revenue END OF YEAR (Note 4) P= 93,752,612 P= 362,443,496 Code of 1997. The Certificate of Registration shall be valid until July 01, 2015 unless sooner revoked by the Bureau of Internal Revenue (BIR) or upon withdrawal of the Certificate of See accompanying Notes to Financial Statements. Accreditation by PCNC.
48
AYALA FOUNDATION, INC. (A Non-Stock, Non-Profit Corporation) NOTES TO FINANCIAL STATEMENTS
1. Organization and Tax Exemption
Ayala Foundation, Inc. (the Foundation) was registered with the Securities and Exchange Commission (SEC) on December 28, 1961 as a non-stock, non-profit corporation primarily for the following purposes:
a. To provide financial support or scholarships;
b. To undertake ventures together with organized rural communities for the transfer of appropriate technologies;
c. To undertake integrated community organization and development programs;
d. To encourage the establishment of urban and rural micro, cottage and small enterprises as a means of creating employment among the poor;
e. To undertake social services; and
f. To preserve and enhance Philippine arts and culture as a means of developing national pride and patriotism.
On February 15, 2010, the Foundation amended its Articles of Incorporation: (a) extending the term for which the Foundation is to exist for another fifty (50) years from December 28, 2011 and (b) to declassify the Foundation as a science and research foundation.
As a non-stock, non-profit organization, the Foundation falls under Section 30 (E) of the Republic Act No. 8424 entitled, “An Act Amending the National Internal Revenue Code, as Amended, and for Other Purposes”. The receipts from activities conducted in pursuit of the objectives for which the Foundation was established are exempt from income tax. However, any income arising from its real or personal properties, or from activities conducted for profit, regardless of the disposition made of such income, is subject to income tax.
The Foundation was registered with the Bureau of Internal Revenue (BIR) as a donee institution in accordance with the BIR-NEDA Regulations No. 1-81 and is entitled to the benefits set forth in Section 30 (h) of the National Internal Revenue Code.
The Foundation is duly accredited by the Philippine Council for Non-Government Organization Certification (PCNC) and renewed its registration as a donee institution on August 6, 2010 in accordance with the provisions of Revenue Regulation No. 13-98. Donations received shall entitle the donors to full or limited deduction pursuant to Section 34 (H) (paragraphs 1 or 2) and exemption from donor’s tax pursuant to Section 101 (A) (3) of the National Internal Revenue Code of 1997. The Certificate of Registration shall be valid until July 01, 2015 unless sooner revoked by the Bureau of Internal Revenue (BIR) or upon withdrawal of the Certificate of Accreditation by PCNC.
49
The Foundation’s registered office address is at 10th Floor, BPI Main Building, Ayala Avenue corner Paseo de Roxas, Legaspi Village, Makati City.
The financial statements of the Foundation for the years ended December 31, 2012 and 2011 were approved and authorized for issue by the Board of Trustees on March 26, 2013.
2. Summary of Significant Accounting Policies
Basis of Preparation The financial statements of the Foundation have been prepared using the historical cost basis, except for available-for-sale (AFS) financial assets that have been measured at fair value. The accompanying financial statements are presented in Philippine Peso (P= ) which is the Foundation’s presentation and functional currency. All amounts are rounded off to the nearest peso unit unless otherwise indicated.
Consistent with the requirement of Philippine Accounting Standard (PAS) 8, Accounting Policies, Changes in Accounting Estimates and Errors, the Foundation applied Statement of Financial Accounting Standards No. 117, Financial Statements of Not-for-Profit Organizations. This Statement establishes standards for general-purpose external financial statements provided by a not-for-profit organization. It specifies that those statements include a statement of financial position, a statement of activities, statement of changes in fund balances and a statement of cash flows.
Statement of Compliance The accompanying financial statements have been prepared in compliance with Philippine Financial Reporting Standards (PFRS).
Adoption of New and Amended Accounting Standards and Interpretations The Foundation will adopt the following amended standards and Philippine Interpretations enumerated below when these become effective. Except as otherwise indicated, the adoption of the new and amended Standards and Interpretations did not have a significant impact on the Foundation’s financial statements.
PAS 19, Employee Benefits (Revised) On January 1, 2012, the Foundation opted to early adopt the revised PAS 19.
For defined benefit plans, the revised PAS 19 requires all actuarial gains and losses to be recognized in other comprehensive income and unvested past service costs previously recognized over the average vesting period to be recognized immediately in profit or loss when incurred.
Prior to adoption of the revised PAS 19, the Foundation recognized actuarial gains and losses as income or expense when the net cumulative unrecognized gains and losses for each individual plan at the end of the previous period exceeded 10% of the higher of the defined benefit obligation and the fair value of the plan assets and recognized unvested past service costs as an expense on a straight-line basis over the average vesting period until the benefits become vested. Upon adoption of the revised PAS 19, the Foundation changed its accounting policy to recognize all actuarial gains and losses in other comprehensive income and all past service costs in profit or loss in the period they occur.
50
The revised PAS 19 replaced the interest cost and expected return on plan assets with the concept of net interest on defined benefit liability or asset which is calculated by multiplying the net balance sheet defined benefit liability or asset by the discount rate used to measure the employee benefit obligation, each as at the beginning of the annual period.
The revised PAS 19 also amended the definition of short-term employee benefits and requires employee benefits to be classified as short-term based on expected timing of settlement rather than the employee’s entitlement to the benefits. In addition, the revised PAS 19 modifies the timing of recognition for termination benefits. The modification requires the termination benefits to be recognized at the earlier of when the offer cannot be withdrawn or when the related restructuring costs are recognized.
Changes to definition of short-term employee benefits and timing of recognition for termination benefits do not have any impact to the Foundation’s financial position and financial performance.
The transition provision of revised PAS 19 requires retrospective application, in accordance with PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The effects of adoption on the financial statements are as follows:
December 31, January 1, 2011 2011 (As restated) (As restated) Increase (decrease) in: Statement of financial position Pension liability - net P= 4,154,143 (P=501,262) Unrestricted net assets 424,700 354,710 Other comprehensive income (4,247,835) 407,569
Statement of activities Retirement expense (P=424,700) (P=354,710) Remeasurement gain (loss) on defined benefit plan (4,655,404) 4,428,344
PFRS 7, Financial Instruments: Enhanced Derecognition Disclosure Requirements The amendments require additional disclosures about financial assets that have been transferred but not derecognized to enhance and enable the user of the Foundation’s financial statements to understand the relationship between those assets that have not been derecognized and their associated liabilities. In addition, the amendments require disclosures about continuing involvement in derecognized assets to enable users of financial statements to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those derecognized assets.
PAS 12, Income Taxes - Deferred Tax: Recovery of Underlying Assets (Amendments) This amendment to PAS 12 clarifies the determination of deferred tax on investment property measured at fair value. The amendment introduces a rebuttable presumption that the deferred tax on investment property measured using the fair value model in PAS 40, Investment Property, should be determined on the basis that its carrying value will be recovered through sale. Furthermore, the amendment introduces the requirement that deferred tax on non- depreciable assets measured using the revaluation model in PAS 16, Property, Plant and Equipment, always be measured on a sale basis of the asset.
51
Future Changes in Accounting Policies The Foundation will adopt the following amended standards and Philippine Interpretations enumerated below when these become effective. Except as otherwise indicated, the Foundation does not expect the adoption of these new and amended PFRS and Philippine Interpretations to have significant impact on the Foundation’s financial statements.
Effective 2013
PFRS 7, Financial instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments) These amendments require an entity to disclose information about rights of set-off and related arrangements (such as collateral agreements). The new disclosures are required for all recognized financial instruments that are set off in accordance with PAS 32. These disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or ‘similar agreement’, irrespective of whether they are set-off in accordance with PAS 32. The amendments require entities to disclose, in a tabular format unless another format is more appropriate, the following minimum quantitative information. This is presented separately for financial assets and financial liabilities recognized at the end of the reporting period:
a) The gross amounts of those recognized financial assets and recognized financial liabilities; b) The amounts that are set off in accordance with the criteria in PAS 32 when determining the net amounts presented in the statement of financial position; c) The net amounts presented in the statement of financial position; d) The amounts subject to an enforceable master netting arrangement or similar agreement that are not otherwise included in (b) above, including: i) Amounts related to recognized financial instruments that do not meet some or all of the offsetting criteria in PAS 32; and ii) Amounts related to financial collateral (including cash collateral); and e) The net amount after deducting the amounts in (d) from the amounts in (c) above.
The amendments to PFRS 7 are to be retrospectively applied for annual periods beginning on or after January 1, 2013. The amendment affects disclosures only on the Foundation’s financial position or performance.
PFRS 10, Consolidated Financial Statements PFRS 10 replaces the portion of PAS 27, Consolidated and Separate Financial Statements, which addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12, Consolidation - Special Purpose Entities. PFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by PFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS 27.
PFRS 11, Joint Arrangements PFRS 11 replaces PAS 31, Interests in Joint Ventures and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method.
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PFRS 12, Disclosure of Interests with Other Entities PFRS 12 includes all of the disclosures that were previously in PAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28, Investment in Associates. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required.
PFRS 13, Fair Value Measurement PFRS 13 establishes a single source of guidance under PFRS for all fair value measurements. PFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under PFRS when fair value is required or permitted. This Standard should be applied prospectively as of the beginning of the annual period in which it is initially applied. Its disclosure requirements need not be applied in comparative information provided for periods before initial application of PFRS 13.
PAS 1, Presentation of Financial Statements - Presentation of Items of Other Comprehensive Income or OCI (Amendments) The amendments to PAS 1 change the grouping of items presented in OCI. Items that can be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon derecognition or settlement) will be presented separately from items that will never be recycled. The amendments affect presentation only and have no impact on the Foundation’s financial position or performance. The amendment becomes effective for annual periods beginning on or after July 1, 2012. The amendments will be applied retrospectively and will result to the modification of the presentation of items of OCI.
PAS 27, Separate Financial Statements (as revised in 2011) As a consequence of the new PFRS 10, Consolidated Financial Statements, and PFRS 12, Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements.
PAS 28, Investments in Associates and Joint Ventures (as revised in 2011) As a consequence of the new PFRS 11, Joint Arrangements and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates.
Effective 2014
PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (Amendments) These amendments to PAS 32 clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The amendments affect presentation only on the Foundation’s financial position or performance. The amendments to PAS 32 are to be retrospectively applied for annual periods beginning on or after January 1, 2014.
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Effective 2015 PAS 1, Presentation of Financial Statements - Clarification of the Requirements for Comparative Information PFRS 9, Financial Instruments The amendments clarify the requirements for comparative information that are disclosed PFRS 9, as issued, reflects the first phase on the replacement of PAS 39 and applies to the voluntarily and those that are mandatory due to retrospective application of an accounting classification and measurement of financial assets and liabilities as defined in PAS 39, policy, or retrospective restatement or reclassification of items in the financial statements. An Financial Instruments: Recognition and Measurement. Work on impairment of financial entity must include comparative information in the related notes to the financial statements instruments and hedge accounting is still ongoing, with a view to replacing PAS 39 in its when it voluntarily provides comparative information beyond the minimum required entirety. PFRS 9 requires all financial assets to be measured at fair value at initial recognition. comparative period. The additional comparative period does not need to contain a complete A debt financial asset may, if the fair value option (FVO) is not invoked, be subsequently set of financial statements. On the other hand, supporting notes for the third balance sheet measured at amortized cost if it is held within a business model that has the objective to hold (mandatory when there is a retrospective application of an accounting policy, or retrospective the assets to collect the contractual cash flows and its contractual terms give rise, on specified restatement or reclassification of items in the financial statements) are not required. dates, to cash flows that are solely payments of principal and interest on the principal outstanding. All other debt instruments are subsequently measured at fair value through profit PAS 16, Property, Plant and Equipment - Classification of Servicing Equipment or loss. All equity financial assets are measured at fair value either through profit or loss. The amendment clarifies that spare parts, stand-by equipment and servicing equipment should Equity financial assets held for trading must be measured at fair value through profit or loss. be recognized as property, plant and equipment when they meet the definition of property, For FVO liabilities, the amount of change in the fair value of a liability that is attributable to plant and equipment and should be recognized as inventory if otherwise. The amendment will changes in credit risk must be presented in OCI. The remainder of the change in fair value is not have any significant impact on the Foundation’s financial position or performance. presented in profit or loss, unless presentation of the fair value change in respect of the liability’s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. PAS 32, Financial Instruments: Presentation - Tax Effect of Distribution to Holders of Equity All other PAS 39 classification and measurement requirements for financial liabilities have Instruments been carried forward into PFRS 9, including the embedded derivative separation rules and the The amendment clarifies that income taxes relating to distributions to equity holders and to criteria for using the FVO. The adoption of the first phase of PFRS 9 will have an effect on transaction costs of an equity transaction are accounted for in accordance with PAS 12, the classification and measurement of the Foundation’s financial assets, but will potentially Income Taxes. The Foundation expects that this amendment will not have any impact on its have no impact on the classification and measurement of financial liabilities. financial position or performance.
Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate PAS 34, Interim Financial Reporting - Interim Financial Reporting and Segment Information This Interpretation covers accounting for revenue and associated expenses by entities that for Total Assets and Liabilities undertake the construction of real estate directly or through subcontractors. The SEC and the The amendment clarifies that the total assets and liabilities for a particular reportable segment Financial Reporting Standards Council have deferred the effectivity of this interpretation until need to be disclosed only when the amounts are regularly provided to the chief operating the final Revenue standard is issued by International Accounting Standards Board and an decision maker and there has been a material change from the amount disclosed in the entity’s evaluation of the requirements of the final Revenue standard against the practices of the previous annual financial statements for that reportable segment. The amendment has no Philippine real estate industry is completed. impact on the Foundation’s financial position or performance.
Improvements to PFRSs (2009-2011 cycle) Cash and Cash Equivalents Improvements to PFRSs, contains non-urgent but necessary amendments to PFRS. The Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid amendments are effective for annual periods beginning on or after January 1, 2013 and are applied investments that are readily convertible to known amounts of cash with original maturities of three retrospectively. Earlier application is permitted. months from dates of acquisitions or less and that are subject to an insignificant risk of changes in value. PFRS 1, First-time Adoption of PFRS - Borrowing Costs The amendment clarifies that, upon adoption of PFRS, an entity that capitalized borrowing Restricted Cash Equivalents costs in accordance with its previous generally accepted accounting principles, may carry Restricted cash equivalents represent investments in cash equivalents which are permanently forward, without any adjustment, the amount previously capitalized in its opening statement of restricted. The principal will be kept intact by the Foundation, upon instruction of the donor, only financial position at the date of transition. Subsequent to the adoption of PFRS, borrowing the interest earned can be utilized to support the initiatives and projects of the Foundation. costs are recognized in accordance with PAS 23, Borrowing Costs. The amendment does not apply to the Foundation as it is not a first-time adopter of PFRS. Financial Instruments Date of recognition The Foundation recognizes a financial asset or a financial liability in the statement of financial position when it becomes a party to the contractual provisions of the instrument. Purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace are recognized on the trade date.
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PAS 1, Presentation of Financial Statements - Clarification of the Requirements for Comparative Information The amendments clarify the requirements for comparative information that are disclosed voluntarily and those that are mandatory due to retrospective application of an accounting policy, or retrospective restatement or reclassification of items in the financial statements. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The additional comparative period does not need to contain a complete set of financial statements. On the other hand, supporting notes for the third balance sheet (mandatory when there is a retrospective application of an accounting policy, or retrospective restatement or reclassification of items in the financial statements) are not required.
PAS 16, Property, Plant and Equipment - Classification of Servicing Equipment The amendment clarifies that spare parts, stand-by equipment and servicing equipment should be recognized as property, plant and equipment when they meet the definition of property, plant and equipment and should be recognized as inventory if otherwise. The amendment will not have any significant impact on the Foundation’s financial position or performance.
PAS 32, Financial Instruments: Presentation - Tax Effect of Distribution to Holders of Equity Instruments The amendment clarifies that income taxes relating to distributions to equity holders and to transaction costs of an equity transaction are accounted for in accordance with PAS 12, Income Taxes. The Foundation expects that this amendment will not have any impact on its financial position or performance.
PAS 34, Interim Financial Reporting - Interim Financial Reporting and Segment Information for Total Assets and Liabilities The amendment clarifies that the total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change from the amount disclosed in the entity’s previous annual financial statements for that reportable segment. The amendment has no impact on the Foundation’s financial position or performance.
Cash and Cash Equivalents Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months from dates of acquisitions or less and that are subject to an insignificant risk of changes in value.
Restricted Cash Equivalents Restricted cash equivalents represent investments in cash equivalents which are permanently restricted. The principal will be kept intact by the Foundation, upon instruction of the donor, only the interest earned can be utilized to support the initiatives and projects of the Foundation.
Financial Instruments Date of recognition The Foundation recognizes a financial asset or a financial liability in the statement of financial position when it becomes a party to the contractual provisions of the instrument. Purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace are recognized on the trade date.
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Initial recognition of financial instruments All financial assets and financial liabilities are initially recognized at fair value. Except for financial assets and financial liabilities at fair value through profit or loss (FVPL), the initial measurement of financial assets and liabilities includes transaction costs. The Foundation classifies its financial assets in the following categories: financial assets at FVPL, held-to-maturity (HTM) financial assets, AFS financial assets, and loans and receivables. The Foundation classifies its financial liabilities into financial liabilities at FVPL and other financial liabilities. The classification depends on the purpose for which the investments were acquired or liabilities incurred and whether they are quoted in an active market. The Foundation determines the classification of its investments at initial recognition and, where allowed and appropriate, re- evaluates such designation at every reporting date.
The financial assets of the Foundation are of the nature of loans and receivables and AFS financial assets, while its financial liabilities are of the nature of other financial liabilities (other than liabilities covered by other accounting standards such as pension liability).
Determination of fair value The fair value for financial instruments traded in active markets at the reporting date is based on their quoted market price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. When current bid and asking prices are not available, the price of the most recent transaction provides evidence of the current fair value as long as there has not been a significant change in economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include net present value techniques, comparison to similar instruments for which market observable prices exist, options pricing models, and other relevant valuation models.
“Day 1” difference Where the transaction price in a non-active market is different to the fair value from other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Foundation recognizes the difference between the transaction price and fair value (a “Day 1” difference) in the statement of activities under the “Investment and interest income” account. In cases where use is made of data which is not observable, the difference between the transaction price and model value is only recognized in the statement of activities when the inputs become observable or when the instrument is derecognized. For each transaction, the Foundation determines the appropriate method of recognizing the “Day 1” difference amount.
Loans and receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments and fixed maturities that are not quoted in an active market. They are not entered into with the intention of immediate or short-term resale and are not designated as AFS financial assets or financial assets at FVPL. This accounting policy relates to the statement of financial position captions “Cash and cash equivalents,” “Receivables” and “Restricted cash equivalents.”
After initial measurement, the loans and receivables are subsequently measured at amortized cost using the effective interest rate (EIR) method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the EIR. The amortization is included in the “Investment and interest” account in
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the statement of activities. The losses arising from impairment of such loans and receivables are recognized in the statement of activities.
Loans and receivables are included in current assets if maturity is within twelve (12) months from the reporting date, otherwise these are classified as noncurrent assets.
AFS financial assets AFS financial assets are those nonderivative financial assets which are designated as such or do not qualify to be classified in any of the other three categories. They are purchased and held indefinitely, and may be sold in response to liquidity requirements or changes in market conditions. AFS financial assets include equity investments.
After initial measurement, AFS financial assets are measured at fair value. The unrealized gains and losses arising from the fair valuation of AFS financial assets are excluded from reported earnings and are reported as “Unrealized gain (loss) on AFS financial assets” account in the statement of activities.
When the security is disposed of, the cumulative gain or loss previously recognized in the statement of activities under the “Revenue, gains and other supports” account. Where the Foundation holds more than one investment in the same security these are deemed to be disposed of on a first-in first-out basis. Interest earned on holding AFS financial assets are reported as investment income using the EIR. Dividends earned on holding AFS financial assets are recognized in the statement of activities when the right to receive payment is established. The losses arising from impairment of such investments are recognized under “Unrealized gain (loss) on AFS financial asset” account in the statement of activities.
When the fair value of AFS financial assets cannot be measured reliably because of lack of reliable estimates of future cash flows and discount rates necessary to calculate the fair value of unquoted equity instruments, these investments are carried at cost, less any allowance for impairment losses.
AFS financial assets are classified as noncurrent assets unless the intention is to dispose such assets within twelve (12) months from reporting date.
Other financial liabilities Other financial liabilities pertain to issued financial instruments that are not classified or designated at FVPL and contain contractual obligations to deliver cash or other financial assets to the holder or to settle the obligation other than the exchange of a fixed amount of cash or another financial asset for a fixed number of own equity shares. After initial measurement, other financial liabilities are subsequently measured at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on the issue and fees that are an integral part of the EIR.
This accounting policy applies primarily to the Foundation’s accounts and other payables and other obligations that meet the above definition.
Impairment of Financial Assets The Foundation assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’)
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and that loss event (or events) has an impact on the estimated future cash flows of the financial In case of equity investments classified as AFS financial assets, this would include a significant or asset or the group of financial assets that can be reliably estimated. prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss measured as the difference between the acquisition cost and the Evidence of impairment may include indications that the borrower or a group of borrowers is current fair value, less any impairment loss on that financial asset previously recognized in the experiencing significant financial difficulty, default or delinquency in interest or principal statements of activities - is removed from the “Unrealized gain (loss) on AFS financial assets” payments, the probability that they will enter bankruptcy or other financial reorganization and account and recognized as an expense. Impairment losses on equity investments are not reversed where observable data indicate that there is measurable decrease in the estimated future cash through revenue. Increases in fair value after impairment are recognized directly under flows, such as changes in arrears or economic conditions that correlate with defaults. “Unrealized gain (loss) on AFS financial assets” account in the statements of activities.
Loans and receivables In the case of debt instruments classified as AFS financial assets, impairment is assessed based on For loans and receivables carried at amortized cost, the Foundation first assesses whether objective the same criteria as financial assets carried at amortized cost. Future interest income is based on evidence of impairment exists individually for financial assets that are individually significant, or the reduced carrying amount and is accrued using the rate of interest used to discount future cash collectively for financial assets that are not individually significant. If the Foundation determines flows for the purpose of measuring impairment loss and is recorded as part of “Investment that no objective evidence of impairment exists for individually assessed financial asset, whether income” account in the statements of activities. If, in subsequent year, the fair value of a debt significant or not, it includes the asset in a group of financial assets with similar credit risk instrument increases and the increase can be objectively related to an event occurring after the characteristics and collectively assesses for impairment. Those characteristics are relevant to the impairment loss was recognized in the statements of activities, the impairment loss is reversed estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability through the statements of activities. to pay all amounts due according to the contractual terms of the assets being evaluated. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to Derecognition of Financial Assets and Liabilities be recognized are not included in a collective assessment for impairment. Financial asset A financial asset (or, where applicable a part of a financial asset or part of a group of similar If there is objective evidence that an impairment loss has been incurred, the amount of the loss is financial assets) is derecognized when: measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred). The a. the rights to receive cash flows from the asset has expired; carrying amount of the asset is reduced through use of an allowance account and the amount of b. the Foundation retains the right to receive cash flows from the asset, but has assumed an loss is charged to the statement of activities. Interest income continues to be recognized based on obligation to pay them in full without material delay to a third party under a ‘pass-through’ the original EIR of the asset. Loans and receivables, together with the associated allowance arrangement; or accounts, are written off when there is no realistic prospect of future recovery and all collateral has c. the Foundation has transferred its rights to receive cash flows from the asset and either (i) has been realized. If, in a subsequent year, the amount of the estimated impairment loss decreases transferred substantially all the risks and rewards of the asset, or (ii) has neither transferred nor because of an event occurring after the impairment was recognized, the previously recognized retained substantially all the risks and rewards of the asset, but has transferred control of the impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in asset. statement of activities, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date. Where the Foundation has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of of such credit risk characteristics as industry, past-due status and term. the Foundation’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of original carrying amount of Future cash flows in a group of financial assets that are collectively evaluated for impairment are the asset and the maximum amount of consideration that the Foundation could be required to estimated on the basis of historical loss experience for assets with credit risk characteristics similar repay. to those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss Financial liability experience is based and to remove the effects of conditions in the historical period that do not exist A financial liability is derecognized when the obligation under the liability is discharged or currently. The methodology and assumptions used for estimating future cash flows are reviewed cancelled or expired. Where an existing financial liability is replaced by another from the same regularly by the Foundation to reduce any differences between loss estimates and actual loss lender on substantially different terms, or the terms of an existing liability are substantially experience. modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is AFS financial assets recognized in the statement of activities. For AFS financial assets, the Foundation assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired.
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In case of equity investments classified as AFS financial assets, this would include a significant or prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in the statements of activities - is removed from the “Unrealized gain (loss) on AFS financial assets” account and recognized as an expense. Impairment losses on equity investments are not reversed through revenue. Increases in fair value after impairment are recognized directly under “Unrealized gain (loss) on AFS financial assets” account in the statements of activities.
In the case of debt instruments classified as AFS financial assets, impairment is assessed based on the same criteria as financial assets carried at amortized cost. Future interest income is based on the reduced carrying amount and is accrued using the rate of interest used to discount future cash flows for the purpose of measuring impairment loss and is recorded as part of “Investment income” account in the statements of activities. If, in subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in the statements of activities, the impairment loss is reversed through the statements of activities.
Derecognition of Financial Assets and Liabilities Financial asset A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when: a. the rights to receive cash flows from the asset has expired; b. the Foundation retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or c. the Foundation has transferred its rights to receive cash flows from the asset and either (i) has transferred substantially all the risks and rewards of the asset, or (ii) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Where the Foundation has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Foundation’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of original carrying amount of the asset and the maximum amount of consideration that the Foundation could be required to repay.
Financial liability A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the statement of activities.
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Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Merchandise Inventories Merchandise inventories consist of books and other items held for sale. Merchandise inventories are valued at the lower of cost or net realizable value (NRV). Cost is determined using the first-in, first-out method. NRV is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale.
Property and Equipment Property and equipment except for land, are carried at cost less accumulated depreciation and amortization and any impairment in value. Land is carried at cost less any impairment in value.
The initial cost of property and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance, are normally charged to expense in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an additional cost of property and equipment.
Depreciation and amortization of property and equipment commences once the property and equipment are available for use and is computed using the straight-line method over the following estimated useful lives of the property and equipment:
Years Leasehold improvements 5-25 Office furniture and equipment 3-5 Transportation equipment 5
Leasehold improvements are amortized over the estimated useful life (EUL) of the improvements or the terms of the lease, whichever is shorter.
The useful lives and depreciation and amortization method are reviewed annually based on expected asset utilization to ensure that the period and method of depreciation and amortization are consistent with the expected pattern of economic benefits from items of property and equipment.
Construction in progress is stated at cost. This includes cost of construction of property and equipment and other direct costs. Construction in progress is not depreciated until such time the relevant assets are complete and are put into operational use.
When property and equipment are retired or otherwise disposed of, the cost and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is credited to or charged against current operations.
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Fully depreciated property and equipment are retained in the accounts until they are no longer used and no further depreciation is charged against current operations.
Impairment of Non-financial Assets The Foundation assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Foundation makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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. Impairment losses of continuing operations are recognized in the statement of activities in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of activities unless the asset is carried at revalued amount, in which case, the reversal is treated as a revaluation increase. After such reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining EUL.
Provisions Provisions are recognized when the Foundation has a present obligation (legal or constructive) as a result of a past event, it is probable (i.e., more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Foundation expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. Provisions, if any, are reviewed at each reporting date and adjusted to reflect the current best estimate.
Restricted Net Assets The Foundation reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.
Donations consisting of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted net assets.
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Revenue Recognition Revenue is recognized on the following bases:
Public Support Public support revenue represents contributions received by the Foundation. Unconditional contributions received, including unconditional promises to give cash or other assets, are recognized as revenue in the period received at their fair value. Conditional promises to give are recognized when the conditions are met. Assets received subject to conditions are accounted for as refundable advances until the conditions are met.
Investment and interest income Investment income represents interest income earned on cash equivalents and AFS financial assets and realized gains or losses on sale of investments. Income is recognized on a time proportion basis computed on the outstanding principal using the applicable rate.
Project revenue Project revenue account represents income generated from the sale of books and catalogues, paper products, and other shop items such as home decors and giftwares, and desk accessories. The account consists of revenues arising from space rentals from various events held at the Ayala Museum and Filipinas Heritage Library.
Museum Collections Artworks, ethnographic, archeological and rare book collections purchased for or donated to the museum are not included in the accompanying financial statements. Gifts of cash or property used for the purchase of the museum collections are classified as public support revenue when acquisitions are made in accordance with the terms of the gifts. The cost of objects purchased or donated is reported as a project expense.
Defined benefit plan Pension cost and defined benefit liability is calculated annually by independent actuaries using the projected unit credit method.
Pension costs comprise the following:
Service cost Net interest on the net defined benefit liability or asset Remeasurements of net defined benefit liability or asset
Service costs which include current service costs, past service costs and gains or losses on non- routine settlements are recognized as expense in profit or loss. Past service costs are recognized when plan amendment or curtailment occurs.
Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on the single-weighted present value approach using bootstrapped-derived zero-coupon bond yield from the Philippine Dealing System Treasury Reference Rate PM or PDST-R2 index. Net interest on the net defined benefit liability or asset is recognized as expense or income in statement of activities.
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Remeasurements comprising actuarial gains and losses and return on plan assets are recognized immediately in other comprehensive income in the period in which they arise. Remeasurements are not reclassified to statement of activities in subsequent periods.
Plan assets are assets that are held by a long-term employee benefit fund. Plan assets are not available to the creditors of the Foundation, nor can they be paid directly to the Foundation. Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date
The liability recognized in the Foundation’s statement of financial position in respect of the defined benefit pension plan is the aggregate of the present value of the defined benefit liability at the reporting date less the fair value of the plan assets. The present value of the defined benefit liability is determined by discounting the estimated future cash outflows using risk-free interest rates of government bonds that have terms to maturity approximating to the terms of the related pension liability.
Foreign Currency Transactions Transactions denominated in foreign currencies are recorded using the exchange rate at the date of the transactions. Outstanding foreign currency-denominated monetary assets and liabilities at year-end are translated to Philippine peso at prevailing Philippine Dealing System (PDS) rate at reporting dates. Exchange gains or losses arising from foreign currency transactions are credited to or charged against changes in net assets.
Contingencies Contingent liabilities are not recognized in the financial statements. These are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but disclosed when an inflow of economic benefits is probable.
Events after the Reporting Period Post year-end events that provide additional information about the Foundation’s position at the reporting date (adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes to financial statements when material.
3. Significant Accounting Judgments and Estimates
The preparation of the accompanying financial statements in conformity with PFRS requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the financial statements. Actual results could differ from such estimates.
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Judgments In the process of applying the Foundation’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognized in the financial statements:
Impairment of AFS financial assets The Foundation treats AFS financial assets as impaired when there has been a significant or prolonged decline in the fair value below its cost or where other objective evidence of impairment exists. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. The Foundation treats ‘significant’ generally as 20% or more and ‘prolonged’ as greater than 6 months for quoted equity securities. In addition, the Foundation evaluates other factors, including normal volatility in share price for quoted equities and the future cash flows and the discount factors for unquoted equities.
If there is an objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, the amount of the loss is measured as the difference between the carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Management’s Use of Estimates The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
Estimating allowance for impairment losses The Foundation maintains allowance for impairment losses based on the result of the individual and collective assessment under PAS 39. Under the individual assessment, the Foundation is required to obtain the present value of estimated cash flows using the receivable’s original EIR. Impairment loss is determined as the difference between the receivables’ carrying balance and the computed present value. The collective assessment would require the Foundation to group its receivables based on the credit risk characteristics (industry, past-due status and term) of the customers. Impairment loss is then determined based on historical loss experience of the receivables grouped per credit risk profile. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. The methodology and assumptions used for the individual and collective assessments are based on management's judgment and estimate. Therefore, the amount and timing of recorded expense for any period would differ depending on the judgments and estimates made for the year.
The carrying values of receivables amounted to P= 37.77 million, P=20.51, and P= 21.57 million as of December 31, 2012, 2011, and January 1, 2011 respectively (see Note 5).
Estimating allowance for inventory loss The Foundation estimates its allowance for inventory loss based on periodic specific identification. The Foundation provides 100% for previous year calendar, 10% for books and catalogs and 50% allowance for inventory loss for other specifically identified as obsolete inventories. Merchandise inventories of the Foundation, net of allowance for inventory loss as of December 31, 2012, 2011, and January 1, 2011 amounted to P= 16.28 million, P=16.45 million, and P= 16.42 million, respectively. Allowance for inventory loss amounted to P= 0.76 million as of December 31, 2012, 2011 and January 1, 2011 (see Note 6).
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Estimating useful lives of property and equipment The Foundation estimates the useful lives of its property and equipment based on the period over which these assets are expected to be available for use. The estimated useful lives of property and equipment are reviewed at least annually and are updated if expectations differ from previous estimates due to physical wear and tear and technical or commercial obsolescence on the use of these assets. It is possible that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above.
As of December 31, 2012, 2011 and January 1, 2011, the carrying values of property and equipment amounted to P= 148.20 million, P= 161.23 million, and P= 169.43 million, respectively (see Note 8).
Evaluation of asset impairment The Foundation reviews property and equipment and other current assets for impairment. This includes considering certain indications of impairment such as significant changes in asset usage, significant decline in assets’ market value, obsolescence or physical damage of an asset, significant underperformance relative to expected historical or projected future operating results and significant negative industry or economic trends. If such indications are present and where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
As described in the accounting policy, the Foundation estimates the recoverable amount as the higher of the net selling price and value in use. In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets, the Foundation is required to make estimates and assumptions that may affect property and equipment and other noncurrent assets. The Foundation believes that the carrying amounts of its assets approximate the recoverable amounts and, as such, no impairment loss was recognized for the years ended December 31, 2012, 2011, and January 1, 2011.
Estimating pension obligation and other retirement benefits The cost of defined benefit pension plans and other retirement benefits as well as the present value of the pension obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. Those assumptions are described in Note 11 and include, among others, discount rates, expected rates of return on plan assets, future salary increases, mortality rates, turn-over rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, defined benefit liability are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting dates. As of December 31, 2012, 2011 and January 1, 2011, the pension liability amounted to P= 32.11 million and P= 7.44 million, and P= 6.75 million, respectively (see Note 11).
In determining the appropriate discount rate, management considers the interest rates of zero coupon bonds with the zero yield curve derived by applying bootstrapping procedures on the bonds included in the PDST-R2 index as of reporting date. Present values of cash flows as of reporting date was determine using the rates from derived zero yield curve.
The mortality rate is based on unisex annuity table and is modified accordingly with estimates of mortality improvements (if any). Future salary increases are derived from the Foundation’s estimated salary expenses for the next period.
Further details about the assumptions used are provided in Note 11.
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Fair value of financial instruments Trade receivables are collectibles from various entities arising from purchase of products and Where the fair values of financial assets and financial liabilities recorded and disclosed in the availment of program services provided by the Foundation. These are collectible within one year. statement of financial position cannot be derived from active markets, they are determined using internal valuation techniques using generally accepted market valuation models. The inputs to Advances pertain to Foundation’s cash advance for social credits which are collectible within one these models are taken from observable markets where possible, but where this is not feasible, year. estimates are used in establishing fair values. These estimates may include considerations of liquidity, volatility, and correlation. See Note 13 for the related balances. Advances to officers and employees pertain to loans of employees and advances made by regular employees of the Foundation for business related expenses and are subject for liquidation. This amount is collectible within one year. 4. Cash and Cash Equivalents Other receivables pertains to amounts collectible from entities other than those related to the This account consists of: projects of the Foundation which are noninterest bearing and are due and demandable.
December 31 January 1, Receivables amounting to P= 11.65 million, P=6.37 million and P= 5.66 million as of December 31, 2012 2011 2011 2012, 2011 and January 1, 2011, respectively, were individually impaired and fully provided for. Cash on hand and in banks P= 27,752,612 P= 39,778,496 P=50,280,153 Movements in the allowance for impairment losses follow: Cash equivalents 66,000,000 322,665,000 80,324,998 P= 93,752,612 P= 362,443,496 P=130,605,151 December 31 January 1, 2012 2011 2011
Cash in banks earn interests at the respective bank deposit rates. Cash equivalents are made for Balance at beginning of year P=6,368,394 =P5,661,601 =P5,661,601 varying periods of up to three months depending on the immediate cash requirements of the Provisions during the year (Note 12) 5,283,010 3,606,873 – Foundation and earn interest at the respective short-term investment rates to 3.75% and 3.35% in Written off during the year – (2,900,080) – 2012 and 2011, respectively. Balance at end of year P=11,651,404 =P6,368,394 =P5,661,601
As of December 31, 2012 and 2011, interest income earned on cash in banks and cash equivalents amounted to P= 10.33 million and P= 10.42 million, respectively. 6. Merchandise Inventories
Inventories consist of books, catalogs and other merchandise. 5. Receivables Movements in the inventories account are as follows: This account consists of the following: December 31 January 1, December 31 January 1, 2012 2011 2011 2012 2011 2011 Inventories at beginning of year P=17,205,194 =P17,175,570 =P14,782,550 Receivable from investment Add: Net cost of purchases 3,996,613 6,303,284 6,790,946 activities P= 19,500,922 P= – P= – Total goods available for sale 21,201,807 23,478,854 21,573,496 Trade: Less: Cost of sales 4,159,743 6,273,660 4,397,926 Services 12,227,898 8,814,993 6,129,677 17,042,064 17,205,194 17,175,570 Products 1,915,152 3,788,949 4,805,326 Less: Allowance for inventory loss (757,860) (757,860) (757,860) Advances 6,263,147 6,943,799 7,831,338 P=16,284,204 =P16,447,334 =P16,417,710 Advances to officers and employees 1,876,713 1,665,387 1,877,687 Accrued interest 205,767 64,124 60,401 Others 7,427,732 5,600,033 6,526,557 49,417,331 26,877,285 27,230,986 Less allowance for impairment losses 11,651,404 6,368,394 5,661,601 P= 37,765,927 P= 20,508,891 P=21,569,385
Receivable from investment activities pertains to collectibles from different financial institutions that the fund manager transacted into.
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Trade receivables are collectibles from various entities arising from purchase of products and availment of program services provided by the Foundation. These are collectible within one year.
Advances pertain to Foundation’s cash advance for social credits which are collectible within one year.
Advances to officers and employees pertain to loans of employees and advances made by regular employees of the Foundation for business related expenses and are subject for liquidation. This amount is collectible within one year.
Other receivables pertains to amounts collectible from entities other than those related to the projects of the Foundation which are noninterest bearing and are due and demandable.
Receivables amounting to P= 11.65 million, P=6.37 million and P= 5.66 million as of December 31, 2012, 2011 and January 1, 2011, respectively, were individually impaired and fully provided for. Movements in the allowance for impairment losses follow:
December 31 January 1, 2012 2011 2011 Balance at beginning of year P= 6,368,394 P= 5,661,601 P=5,661,601 Provisions during the year (Note 12) 5,283,010 3,606,873 – Written off during the year – (2,900,080) – Balance at end of year P= 11,651,404 P= 6,368,394 P=5,661,601
6. Merchandise Inventories
Inventories consist of books, catalogs and other merchandise.
Movements in the inventories account are as follows:
December 31 January 1, 2012 2011 2011 Inventories at beginning of year P= 17,205,194 P= 17,175,570 P=14,782,550 Add: Net cost of purchases 3,996,613 6,303,284 6,790,946 Total goods available for sale 21,201,807 23,478,854 21,573,496 Less: Cost of sales 4,159,743 6,273,660 4,397,926 17,042,064 17,205,194 17,175,570 Less: Allowance for inventory loss (757,860) (757,860) (757,860) P= 16,284,204 P= 16,447,334 P=16,417,710
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7. Other Current Assets
This account consists of:
December 31 January 1, 2012 2011 2011 Input tax P= 4,111,240 P= 2,645,345 P=804,262 Deposits to suppliers 3,848,100 2,213,925 5,293,764 Prepaid expenses 542,267 256,175 695,777 P= 8,501,607 P= 5,115,445 P= 6,793,803
Deposits to suppliers pertain to advance payments made by the Foundation to suppliers and other entities.
Prepaid expenses include prepayments for insurance, rent, subscription fees, repairs and maintenance and others.
8. Property and Equipment
The rollforward analysis of this account follows:
December 31, 2012 Office Leasehold Furniture and Transportation Construction- Land Improvements Equipment Equipment in-Progress Total
Cost At January 1 P= 99,218,375 P=73,517,264 P=81,820,357 P=2,992,048 P= – P= 257,548,044 Additions 150,000 331,135 4,086,817 – 8,561,602 13,129,554 Disposals – (30,577,805) (1,076,117) – – (31,653,922) At December 31 99,368,375 43,270,594 84,831,057 2,992,048 8,561,602 239,023,676
Accumulated Depreciation and Amortization At January 1 – 29,939,006 63,972,383 2,405,748 – 96,317,137 Depreciation and amortization – 3,105,355 12,215,470 171,600 – 15,492,425 Disposals – (20,096,113) (891,969) – – (20,988,082) At December 31 – 12,948,248 75,295,884 2,577,348 – 90,821,480 Net Book Value P= 99,368,375 P=30,322,346 P=9,535,173 P=414,700 P=8,561,602 P=148,202,196
December 31, 2011 Office Leasehold Furniture and Transportation Land Improvements Equipment Equipment Total Cost At January 1 P= 99,218,375 P=72,675,218 P=76,418,434 P=2,992,048 P=251,304,075 Additions – 842,046 5,401,923 – 6,243,969 At December 31 99,218,375 73,517,264 81,820,357 2,992,048 257,548,044
Accumulated Depreciation and Amortization At January 1 – 26,874,457 52,858,186 2,141,398 81,874,041 Depreciation and amortization – 3,064,549 11,114,197 264,350 14,443,096 At December 31 – 29,939,006 63,972,383 2,405,748 96,317,137 Net Book Value P= 99,218,375 P=43,578,258 P=17,847,974 P=586,300 P=161,230,907
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January 1, 2011 Office Leasehold Furniture and Transportation Land Improvements Equipment Equipment Total
Cost At January 1 P= 94,454,075 P=70,951,771 P=73,428,683 P=2,626,873 P=241,461,402 Additions 4,764,300 1,723,447 2,989,751 871,175 10,348,673 Disposals – – – (506,000) (506,000) At December 31 99,218,375 72,675,218 76,418,434 2,992,048 251,304,075
Accumulated Depreciation and Amortization At January 1 – 23,937,810 41,781,386 2,375,123 68,094,319 Depreciation and amortization – 2,936,647 11,076,800 272,275 14,285,722 Disposals – – – (506,000) (506,000) At December 31 – 26,874,457 52,858,186 2,141,398 81,874,041 Net Book Value P= 99,218,375 P=45,800,761 P=23,560,248 P=850,650 P=169,430,034
Depreciation and amortization charged against unrestricted net assets amounted to P= 15.49 million and P= 14.44 million in 2012 and 2011, respectively.
Land amounting to P= 92.65 million, which was donated in 2003, is subject to a leasehold right existing thereon with a third party.
9. Available-for-sale Financial Assets
This account consists of investments in:
December 31 January 1, 2012 2011 2011 Common trust fund P= 1,141,650,989 P= 932,000,930 P=849,208,670 Shares of stock: Quoted securities 571,774,215 126,765,018 317,324,955 Unquoted securities 1,931,701 2,087,582 2,088,285 P= 1,715,356,905 P= 1,060,853,530 P=1,168,621,910
The rollforward of unrealized gain on AFS financial assets are as follows:
December 31 January 1, 2012 2011 2011 Balance at beginning of year P= 83,597,752 P= 87,894,577 (P=1,817,599) Unrealized gain recognized directly in net assets 68,966,203 33,946,515 89,712,176 Realized gain transferred to income (68,608,963) (38,243,340) – Balance at end of year P= 83,954,992 P= 83,597,752 P=87,894,577
The investments also earned income from other activities amounting to P= 54.05 million and P= 45.71 million for 2012 and 2011, respectively, which consists of dividend income and interest earned from long-term government securities and other loans.
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The amounts recognized under pension liability in the statements of financial position for the 10. Accounts and Other Payables pension plan are as follows:
This account consists of: December 31 January 1, 2011 2011 December 31 January 1, 2012 (As restated) (As restated) 2012 2011 2011 Benefit obligations P=79,723,128 =P41,697,676 =P31,735,889 Trade P= 60,859,088 P= 51,323,070 P=76,559,090 Plan assets (47,608,729) (34,253,108) (24,982,336) Accrued expenses 24,364,230 23,301,224 25,558,855 Liability recognized in the Advances 6,700,376 5,951,215 6,622,415 statements of financial position P=32,114,399 =P7,444,568 =P6,753,553 Others 1,924,639 1,967,280 881,041 P= 93,848,333 P= 82,542,789 P=109,621,401 Changes in the present value of the defined benefit obligation are as follows:
Trade payable and accrued expenses include payables to consignors and suppliers that are December 31 January 1, noninterest-bearing and are normally settled on 30 to 60 day terms. 2011 2011 2012 (As restated) (As restated) Advances pertain to unpaid purchases of goods which are normally payable within one year. Balance at January 1 P=41,697,676 =P31,735,889 =P27,090,768 Remeasurement loss (gain) arising Other payables are non-interest bearing and are normally settled within one year. from changes in financial assumptions 34,970,452 4,712,577 (1,789,034) Current service cost 5,312,448 4,474,767 4,199,167 11. Defined Benefit Plan Interest expense 2,960,535 2,761,022 2,234,988 Benefits paid (4,410,904) (1,986,579) – The Foundation has funded, noncontributory defined benefit retirement plan covering substantially Net transferred obligation (807,079) – – all of its regular employees. The benefits are generally based on defined contribution formula Balance at December 31 P=79,723,128 =P41,697,676 =P31,735,889 with minimum lump-sum guarantee of 1.5 months’ basic salary per year of service. Changes in the fair value of plan assets are as follows: The Foundation’s annual contributions to the plan consist principally of payments which covers the current service cost for the year and the required funding relative to the guaranteed minimum December 31 January 1, benefits as applicable. The funds are administered by a trustee bank of the Foundation and subject 2011 2011 to the investment objectives and guidelines established by the Foundation’s Employee Welfare 2012 (As restated) (As restated) and Retirement Fund Investment Committee (the Committee) and rules and regulations issued by Balance at January 1 P=34,253,108 =P24,982,336 =P20,881,334 Bangko Sentral ng Pilipinas covering assets under trust and fiduciary agreements. The Committee Contributions 9,048,603 9,451,414 – is responsible for investment strategy of the plan. Remeasurement gain on plan assets 4,329,295 57,173 2,639,310 Expected interest income 2,431,971 2,173,464 1,722,709 Republic Act 7641, The New Retirement Law, requires a provision for retirement pay to qualified Transferred asset 1,990,909 – – private sector employees in the absence of any retirement plan in the entity, provided however that Remeasurement on interest expense (34,253) (424,700) (261,017) the employee’s retirement benefits under any collective bargaining and other agreements shall not Benefits paid (4,410,904) (1,986,579) – be less than those provided under the law. The law does not require minimum funding of the plan. Balance at December 31 P=47,608,729 =P34,253,108 =P24,982,336
The components of pension expense included in employee benefits and welfare under “General The fair value of plan assets by each classes as at the end of the reporting period are as follows: and administrative expenses” in the statements of activities are as follows (see Note 12):
December 31 January 1, December 31 2011 2011 2011 2012 (As restated) (As restated) 2012 (As restated) Debt instrument - Current service cost P= 5,312,448 P= 4,474,767 Government securities P=35,468,503 =P27,642,258 =P18,919,123 Net interest expense 528,564 587,558 Equity instrument - Transferred obligation (2,797,988) – Financial institutions - quoted shares 12,140,226 6,610,850 6,063,213 Total pension expense P= 3,043,024 P= 5,062,325 Balance at end of year P=47,608,729 =P34,253,108 =P24,982,336
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The amounts recognized under pension liability in the statements of financial position for the pension plan are as follows:
December 31 January 1, 2011 2011 2012 (As restated) (As restated) Benefit obligations P= 79,723,128 P= 41,697,676 P=31,735,889 Plan assets (47,608,729) (34,253,108) (24,982,336) Liability recognized in the statements of financial position P= 32,114,399 P= 7,444,568 P=6,753,553
Changes in the present value of the defined benefit obligation are as follows:
December 31 January 1, 2011 2011 2012 (As restated) (As restated) Balance at January 1 P= 41,697,676 P= 31,735,889 P=27,090,768 Remeasurement loss (gain) arising from changes in financial assumptions 34,970,452 4,712,577 (1,789,034) Current service cost 5,312,448 4,474,767 4,199,167 Interest expense 2,960,535 2,761,022 2,234,988 Benefits paid (4,410,904) (1,986,579) – Net transferred obligation (807,079) – – Balance at December 31 P= 79,723,128 P= 41,697,676 P=31,735,889
Changes in the fair value of plan assets are as follows:
December 31 January 1, 2011 2011 2012 (As restated) (As restated) Balance at January 1 P= 34,253,108 P= 24,982,336 P=20,881,334 Contributions 9,048,603 9,451,414 – Remeasurement gain on plan assets 4,329,295 57,173 2,639,310 Expected interest income 2,431,971 2,173,464 1,722,709 Transferred asset 1,990,909 – – Remeasurement on interest expense (34,253) (424,700) (261,017) Benefits paid (4,410,904) (1,986,579) – Balance at December 31 P= 47,608,729 P= 34,253,108 P=24,982,336
The fair value of plan assets by each classes as at the end of the reporting period are as follows:
December 31 January 1, 2011 2011 2012 (As restated) (As restated) Debt instrument - Government securities P= 35,468,503 P= 27,642,258 P=18,919,123 Equity instrument - Financial institutions - quoted shares 12,140,226 6,610,850 6,063,213 Balance at end of year P= 47,608,729 P= 34,253,108 P=24,982,336
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The following table shows the maturity profile of the Foundation’s defined benefit obligation All equity instruments held have quoted prices in active market while debt instruments do not based on undiscounted benefit payments: have quoted market prices in active market. The plan assets do not have any concentration on
risk. December 31 January 1,
2011 2011 The assumptions used to determine pension benefits for the Foundation for the years ended 2012 (As restated) (As restated) December 31, 2012 and 2011 are as follows: More than 1 year to 5 years P=18,407,682 =P10,178,317 =P14,719,335 More than 5 years to 10 years 34,359,906 37,263,653 38,590,287 December 31 January 1, More than 10 years to 15 years 28,288,108 14,417,800 – 2011 2011 P=81,055,696 =P61,859,770 =P53,309,622 2012 (As restated) (As restated) Discount rate 5.80% 7.10% 8.70% Salary increase rate 7.00 7.00 7.00 Experience adjustments on plan assets and obligation are as follows: Expected rate of return on plan assets 7.00 7.00 7.00 2011 2010 2009 2012 (As restated) (As restated) (As restated) Turn-over rate 0.50 to 100.00 0.50 to 100.00 0.50 to 100.00 Gain (loss) on experience adjustments Mortality rate 0.1 to 1.2 0.1 to 1.2 0.1 to 1.2 on plan liabilities (P=24,665,252) =P1,339,268 =P294,644 =P5,013,633 Gain (loss) on experience adjustments Below shows the sensitivity analysis determined based on reasonably possible changes of each on plan assets (10,305,200) (6,051,845) 2,639,310 213,673 significant assumptions stated above, assuming all other assumptions were held constant: Compensation of key management personnel by benefit type (included in the “Salaries and December 31, 2012 benefits” account) in the Foundation expenses (see Note 12) follows: Discount Rate Salary Increase Rate +5.00% (5.00%) +5.00% (5.00%) 2011 Accrued liability P= 75,500,261 P= 84,311,763 P=83,859,479 P=75,866,225 2012 (As restated) Current fund assets 47,608,729 47,608,729 47,608,729 47,608,729 Short term employee benefits P=11,338,022 =P7,233,222 Unfunded accrued liability P=27,891,532 P=36,703,034 P=36,250,750 P=28,257,496 Post-employment benefits 7,087,685 658,922
P=18,425,707 =P7,892,144 The management performed an Asset-Liability Matching Study (ALM) annually. The principal technique of the Foundation’s ALM is to ensure the expected return on assets to be sufficient to support the desired level of funding arising from the defined benefit plans. The Foundation’s current strategic investment strategy consists of 75% of debt instruments, 20% of equity 12. Net Assets instruments, and 5% cash and cash equivalents. Permanently restricted net assets are those assets that the donor stipulates must be maintained by The Foundation expects to make additional contributions of P= 5.88 million to its retirement fund in the Foundation in perpetuity. Permanently restricted net assets increase when Foundation receives 2013. contributions for which donor-imposed restrictions limiting the Foundation’s use of an asset or its economic benefits neither expire with the passage of time nor can be removed by the Foundation’s The average duration of the defined benefit liability at the end of the reporting period is 14 years meeting certain requirements. Permanently restricted net assets generally come from: (2011: 13.5 years, and 2010: 13 years) (1) contributions, with donor-imposed permanent restrictions; (2) increase or decrease in existing assets that are subject to permanent restrictions by donor or by law (such as unrealized gains, Amounts for the current and the previous periods follow: interest income); and (3) reclassification from another net asset class as a result of donor stipulation or by law. 2011 2010 2009 2008 2012 (As restated) (As restated) (As restated) (As restated) Temporarily restricted net assets refer to those net assets whose use by the Foundation is limited Benefit obligation P= 79,723,128 P= 41,697,676 P=31,735,889 P=27,090,768 P=20,877,668 by donors to later periods of time or after specified dates or specified purposes. Plan assets (47,608,729) (34,253,108) (24,982,336) (20,881,334) (16,867,990) Deficit P= 32,114,399 P= 7,444,568 P=6,753,553 P=6,209,434 P=4,009,678 Unrestricted net assets are those net assets that are neither temporarily restricted nor permanently restricted. It includes all net assets with uses not restricted by donors, by Board of Trustees or by law.
Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors.
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The following table shows the maturity profile of the Foundation’s defined benefit obligation based on undiscounted benefit payments:
December 31 January 1, 2011 2011 2012 (As restated) (As restated) More than 1 year to 5 years P= 18,407,682 P= 10,178,317 P=14,719,335 More than 5 years to 10 years 34,359,906 37,263,653 38,590,287 More than 10 years to 15 years 28,288,108 14,417,800 – P= 81,055,696 P= 61,859,770 P=53,309,622
Experience adjustments on plan assets and obligation are as follows:
2011 2010 2009 2012 (As restated) (As restated) (As restated) Gain (loss) on experience adjustments on plan liabilities (P=24,665,252) P= 1,339,268 P=294,644 P= 5,013,633 Gain (loss) on experience adjustments on plan assets (10,305,200) (6,051,845) 2,639,310 213,673
Compensation of key management personnel by benefit type (included in the “Salaries and benefits” account) in the Foundation expenses (see Note 12) follows:
2011 2012 (As restated) Short term employee benefits P= 11,338,022 P= 7,233,222 Post-employment benefits 7,087,685 658,922 P= 18,425,707 P= 7,892,144
12. Net Assets
Permanently restricted net assets are those assets that the donor stipulates must be maintained by the Foundation in perpetuity. Permanently restricted net assets increase when Foundation receives contributions for which donor-imposed restrictions limiting the Foundation’s use of an asset or its economic benefits neither expire with the passage of time nor can be removed by the Foundation’s meeting certain requirements. Permanently restricted net assets generally come from: (1) contributions, with donor-imposed permanent restrictions; (2) increase or decrease in existing assets that are subject to permanent restrictions by donor or by law (such as unrealized gains, interest income); and (3) reclassification from another net asset class as a result of donor stipulation or by law.
Temporarily restricted net assets refer to those net assets whose use by the Foundation is limited by donors to later periods of time or after specified dates or specified purposes.
Unrestricted net assets are those net assets that are neither temporarily restricted nor permanently restricted. It includes all net assets with uses not restricted by donors, by Board of Trustees or by law.
Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors.
73
Details of the Foundation’s net assets are as follows: General and Administrative Expenses
December 31 January 1, 2011 2011 2011 2012 (As restated) 2012 (As restated) (As restated) Salaries, wages and employee benefits (Note 11) P=22,644,711 =P16,952,779 Unrestricted P= 1,113,186 P= 125,411,454 P=115,816,939 Repairs and maintenance 5,284,867 4,452,224 Temporarily restricted: Provision for doubtful accounts (Note 5) 5,283,010 3,606,873 Property and equipment 148,202,196 161,230,907 166,905,191 Professional and service fees 1,904,174 1,457,896 Education programs 35,223,796 82,201,745 69,673,502 Advocacy and public information services 1,426,830 3,677,402 Programs for community development 7,144,842 27,947,216 31,440,190 Depreciation and amortization 1,240,857 1,218,585 Entrepreneurship programs – 12,192,162 7,009,859 Communication and postage 1,092,779 1,019,678 Environment & sustainability Trainings and seminars 628,708 243,408 programs – 13,167,552 8,825,555 Supplies 343,443 566,459 Support to administrative units – 134,233,775 85,394,194 Transportation and travel 322,723 104,403 Any activities of the organization Taxes and licenses 27,319 660,008 subject to donor approval – 14,967,934 282,312,090 Miscellaneous 1,636,909 594,491 190,570,834 445,941,291 651,560,581 P=41,836,330 =P34,554,206 Permanently restricted: Investment in perpetuity, the income of which is expendable Capital management to support education and other The primary objectives of the Foundation’s capital management policies are to devote its funds to programs 704,994,160 567,476,211 154,050,000 charitable projects, scholarship grants and cultural activities, to afford the financial flexibility to Endowment requiring income to be support its operations and to maximize the funds available. added to original gift to build up the fund 948,156,539 387,333,373 387,333,373 The Foundation’s source of capital is its total net assets, which is composed of unrestricted, 1,653,150,699 954,809,584 541,383,373 temporarily restricted and permanently restricted net assets, less net unrealized gain on AFS Unrealized gain on AFS financial assets 83,954,992 83,597,752 87,894,577 financial assets. Remeasurement gain (loss) on defined benefit plan (34,888,992) (4,247,835) 407,569 December 31 January 1, P= 1,893,900,719 P= 1,605,512,246 P=1,397,063,039 2011 2011 2012 (As restated) (As restated) As of December 31, 2012, 2011, and January 1, 2011, permanently restricted net assets includes Net Assets cash equivalents amounting to nil, P=68.90 million, and nil, respectively, representing investments Unrestricted P=1,113,186 =P125,411,454 =P115,816,939 in money markets for period up to three months and earn interest at the short-term investment rate Temporarily restricted 190,570,834 445,941,291 651,560,581 of 3.75%. The principal will be kept intact by the Foundation, upon instruction of the donor, only Permanently restricted 1,653,150,699 954,809,584 541,383,373 the interest earned can be utilized to support the initiatives and projects of the Foundation. Unrealized gain on AFS financial
assets (Note 9) 83,954,992 83,597,752 87,894,577 Details of the Foundation’s expenses as of December 31 follow: Remeasurement gain (loss) on Project Expenses defined benefit plan (Note 11) (34,888,992) (4,247,835) 407,569 Total Net Assets P=1,893,900,719 =P1,605,512,246 =P1,397,063,039 2011 2012 (As restated) Project implementation: Education P= 84,056,776 P= 71,901,820 Special projects 68,607,392 62,030,452 Entrepreneurship 4,071,759 1,901,051 Environment 115,354 905,401 Project management: Salaries and wages 40,550,731 34,173,140 Monitoring and administrative 20,218,528 15,625,192 Employee benefits and welfare 15,007,224 7,992,603 Building overhead 33,539,548 25,296,373 P= 266,167,312 P= 219,826,032
74
General and Administrative Expenses
2011 2012 (As restated) Salaries, wages and employee benefits (Note 11) P= 22,644,711 P= 1 6 , 952,779 Repairs and maintenance 5,284,867 4,452,224 Provision for doubtful accounts (Note 5) 5,283,010 3,606,873 Professional and service fees 1,904,174 1,457,896 Advocacy and public information services 1,426,830 3,677,402 Depreciation and amortization 1,240,857 1,218,585 Communication and postage 1,092,779 1,019,678 Trainings and seminars 628,708 243,408 Supplies 343,443 566,459 Transportation and travel 322,723 104,403 Taxes and licenses 27,319 660,008 Miscellaneous 1,636,909 594,491 P= 41,836,330 P= 34,554,206
Capital management The primary objectives of the Foundation’s capital management policies are to devote its funds to charitable projects, scholarship grants and cultural activities, to afford the financial flexibility to support its operations and to maximize the funds available.
The Foundation’s source of capital is its total net assets, which is composed of unrestricted, temporarily restricted and permanently restricted net assets, less net unrealized gain on AFS financial assets.
December 31 January 1, 2011 2011 2012 (As restated) (As restated) Net Assets Unrestricted P= 1,113,186 P= 125,411,454 P=115,816,939 Temporarily restricted 190,570,834 445,941,291 651,560,581 Permanently restricted 1,653,150,699 954,809,584 541,383,373 Unrealized gain on AFS financial assets (Note 9) 83,954,992 83,597,752 87,894,577 Remeasurement gain (loss) on defined benefit plan (Note 11) (34,888,992) (4,247,835) 407,569 Total Net Assets P= 1,893,900,719 P= 1,605,512,246 P=1,397,063,039
75
– –
60,401
881,041 The methods and assumptions used by the Foundation in estimating the fair value of each class of 2,088,285 7,451,375 7,831,338 6,622,415 4,348,584 Fair Value Fair 76,559,090 25,558,855 financial instruments are as follows:
130,310,500 849,208,670 317,324,955 109,621,401 150,002,198
1,168,621,910 1,318,624,108
2011 Loans and receivables and other financial liabilities - Carrying amounts approximate fair values
P= P= P=
P=
– – due to the relative short-term nature of these investments and liabilities. January1 60,401
881,041 AFS quoted financial assets - Fair values are based on quoted prices published in markets. 2,088,285 7,451,375 7,831,338 6,622,415 4,348,584 76,559,090 25,558,855 130,310,500 849,208,670 317,324,955 109,621,401 150,002,198 1,168,621,910 1,318,624,108
Carrying Value Carrying AFS unquoted financial assets - Fair values are based on estimates of future cash flows and the
P= P= P=
P= discount rates necessary for the unquoted equities. –
64,124 Fair Value Hierarchy 2,087,582 7,737,567 6,943,799 5,951,215 1,967,280 4,098,014 As at December 31, 2012, the Foundation held the following financial instruments measured at Fair Value Fair 51,323,070 23,301,224 82,542,789 68,900,000
362,145,336 932,000,930 126,765,018 449,888,840 fair value. 1,060,853,530 1,510,742,370 2011
P= P= P=
P=
– The Foundation uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation technique:
64,124 2,087,582 7,737,567 6,943,799 5,951,215 1,967,280 4,098,014 Level 1: quoted (unadjusted prices) in active markets for identical assets and liabilities 51,323,070 23,301,224 82,542,789 68,900,000 362,145,336 932,000,930 126,765,018 449,888,840 P= P=
P= 1,060,853,530 1,510,742,370 Carrying Value Carrying P= Level 2: other techniques for which all inputs which have a significant effect on the recorded
– December 31 December fair value are observable, either directly or indirectly
205,767 Level 3: techniques which use inputs which have a significant effect on the recorded fair value 3,486,592 1,931,701 5,812,177 6,263,147 6,700,376 1,924,639 4,107,201 19,500,922 60,859,088 24,364,230 93,848,333 Fair Value Fair that are not based on observable market data
571,774,215 129,375,806
1,141,650,989 1,715,356,905 1,844,732,711 2012
P=9 P= P=
P= Assets Measured at Fair Value – Fair Value as of
205,767 December 31, values of the Foundation’s financial assets and liabilities: 3,486,592 1,931,701 5,812,177 6,263,147 6,700,376 1,924,639 4,107,201 19,500,922 60,859,088 24,364,230 93,848,333 Level 1 Level 2 2012 571,774,215 129,375,806 P= 9 P= P=
1,141,650,989 1,715,356,905 1,844,732,711 AFS financial assets (Note 9) P= Carrying Value Carrying Common trust fund P=1,141,650,989 P=– P=1,141,650,989 Shares of stock Quoted securities 571,774,215 – 571,774,215 Unquoted securities – 1,931,701 1,931,701
Total AFS financial assets P=1,713,425,204 P=1,931,701 P=1,715,356,905
Fair Value as of
December 31,
) Level 1 Level 2 2011 )
AFS financial assets (Note 9) Common trust fund =P932,000,930 =P– =P932,000,930 )
Shares of stock (Note12
Quoted securities 126,765,018 – 126,765,018
Unquoted securities – 2,087,582 2,087,582
(Note 9
Total AFS financial assets =P1,058,765,948 =P2,087,582 =P1,060,853,530
equivalents (excluding cash on hand)on cash (excluding equivalents
Financial Liabilities Financial Financial Assets Financial Receivable from investment activities investment from Receivable fund trust Common Trade Trade securities Quoted securities Unquoted expenses Accrued Advances interest Accrued Advances Others Others
The table below set forth the carrying values and estimated fair estimated and values carrying the forth set below table The Instruments Financial Information Value Fair Assets Financial receivables and Loans cash and Cash 5) (Note Receivables assets financial AFS Total Other 10 (Note payables other and Accounts assets financial AFS Total
Restricted cash equivalents equivalents cash Restricted Liabilities Financial Other Total Total loans and receivables and loans Total
13.
76
– –
60,401
881,041 The methods and assumptions used by the Foundation in estimating the fair value of each class of 7,451,375 7,831,338 4,348,584 2,088,285 6,622,415 Fair Value Fair
76,559,090 25,558,855 financial instruments are as follows:
130,310,500 150,002,198 849,208,670 317,324,955 109,621,401 P = P P = =
1,168,621,910 1,318,624,108 P =
2011 Loans and receivables and other financial liabilities - Carrying amounts approximate fair values
– – due to the relative short-term nature of these investments and liabilities. January1 60,401
881,041 AFS quoted financial assets - Fair values are based on quoted prices published in markets. 7,451,375 7,831,338 4,348,584 2,088,285 6,622,415
76,559,090 25,558,855 130,310,500 150,002,198 849,208,670 317,324,955 109,621,401 P = P P = = 1,168,621,910 1,318,624,108
Carrying Value Carrying AFS unquoted financial assets - Fair values are based on estimates of future cash flows and the P =
discount rates necessary for the unquoted equities. –
64,124 Fair Value Hierarchy
7,737,567 6,943,799 4,098,014 2,087,582 5,951,215 1,967,280 As at December 31, 2012, the Foundation held the following financial instruments measured at Fair Value Fair 68,900,000 51,323,070 23,301,224 82,542,789
362,145,336 449,888,840 932,000,930 126,765,018 P P = = fair value. P = 1,060,853,530 1,510,742,370 P = 2011
– The Foundation uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation technique:
64,124
7,737,567 6,943,799 4,098,014 2,087,582 5,951,215 1,967,280 Level 1: quoted (unadjusted prices) in active markets for identical assets and liabilities 68,900,000 51,323,070 23,301,224 82,542,789 362,145,336 449,888,840 932,000,930 126,765,018 P P = = P = 1,060,853,530 1,510,742,370 Carrying Value Carrying P = Level 2: other techniques for which all inputs which have a significant effect on the recorded
– December 31 December fair value are observable, either directly or indirectly
205,767 Level 3: techniques which use inputs which have a significant effect on the recorded fair value 3,486,592 5,812,177 6,263,147 4,107,201 1,931,701 6,700,376 1,924,639 9 19,500,922 60,859,088 24,364,230 93,848,333 Fair Value Fair that are not based on observable market data
129,375,806 571,774,215 = = = P P P
1,141,650,989 1,715,356,905 1,844,732,711 = P 2012
Assets Measured at Fair Value –
4,230 Fair Value as of
205,767 700,376 December 31, values of the Foundation’s financial assets and liabilities: 3,486,592 5,812,177 6,263,147 4,107,201 1,931,701 6, 1,924,639
9 19,500,922 60,859,088 24,36 93,848,333 Level 1 Level 2 2012 129,375,806 571,774,215 = = = P P P
1,141,650,989 1,715,356,905 1,844,732,711 AFS financial assets (Note 9) = P Carrying Value Carrying Common trust fund P= 1,141,650,989 P= – P= 1,141,650,989 Shares of stock Quoted securities 571,774,215 – 571,774,215 Unquoted securities – 1,931,701 1,931,701
Total AFS financial assets P= 1,713,425,204 P=1,931,701 P=1,715,356,905
Fair Value as of
December 31,
)
Level 1 Level 2 2011 )
AFS financial assets (Note 9) Common trust fund P= 932,000,930 P= – P= 932,000,930
)
Shares of stock (Note12
Quoted securities 126,765,018 – 126,765,018
Unquoted securities – 2,087,582 2,087,582
(Note 9
payables (Note 10 (Note payables Total AFS financial assets P= 1,058,765,948 P=2,087,582 P=1,060,853,530 equivalents (excluding cash on hand)on cash (excluding equivalents
Financial Liabilities Financial Financial Assets Financial Receivable from investment activities investment from Receivable Trade Advances interest Accrued Others fund trust Common securities Quoted securities Unquoted Trade expenses Accrued Advances Others
Instruments Financial Information Value Fair fair estimated and values carrying the forth set below table The Assets Financial receivables and Loans cash and Cash 5) (Note Receivables equivalents cash Restricted receivables and loans Total assets financial AFS assets financial AFS Total Total Other other and Accounts Liabilities Financial Other Total
13.
77
Fair Value as of January 1, December 31, 2012 Level 1 Level 2 2011 More than AFS financial assets (Note 9) Within 1 Year 1-5 Years 5 Years Total Gross Common trust fund P= 849,208,670 P= – P= 849,208,670 AFS financial assets (Note 9) Common trust fund P=– P=1,141,650,989 P=– P=1,141,650,989 Shares of stock Quoted securities – 571,774,215 – 571,774,215 Quoted securities 317,324,955 – 317,324,955 Unquoted securities – – 1,931,701 1,931,701 Unquoted securities – 2,088,285 2,088,285 Total Financial Assets P=129,375,806 P=1,713,425,204 P=1,931,701 P=1,844,732,711 Total AFS financial assets P= 1,166,533,625 P=2,088,285 P=1,168,621,910 Other Financial Liabilities Accounts and other payables (Note 10) Financial Risk Management Objectives and Policies Trade P=60,859,088 P=– P=– P=60,859,088 The Foundation has various financial instruments such as cash and cash equivalents, receivables, Accrued expenses 24,364,230 – – 24,364,230 restricted cash equivalents, AFS financial assets, accounts and other payables which arise directly Advances 6,700,376 – – 6,700,376 from its operations. Others 1,924,639 – – 1,924,639 Total Other Financial Liabilities P=93,848,333 P=– P=– P=93,848,333 The main purpose of the Foundation’s financial instruments is to fund its operational and capital expenditures. The main risks arising from the use of financial instruments are liquidity risk, credit December 31, 2011 More than risk and foreign exchange risk. Within 1 Year 1-5 Years 5 Years Total Gross Financial Assets The Foundation’s risk management policies are summarized below: Loans and receivables Cash and cash equivalents (Note 4) =P362,145,336 =P– =P– =P362,145,336 Receivables (Note 5) Liquidity risk Trade 7,737,567 – – 7,737,567 Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet Advances 6,943,799 – – 6,943,799 commitments associated with financial instruments. Liquidity risk may result from either the Accrued interest 64,124 – – 64,124 inability to sell financial assets quickly at their fair values; or the counterparty failing on Others 4,098,014 – – 4,098,014 repayment of a contractual obligation; or inability to generate cash inflows as anticipated. Restricted cash equivalents (Note 12) 68,900,000 – – 68,900,000 Total loans and receivables 449,888,840 – – 449,888,840 AFS financial assets (Note 9) The Foundation maintains a level of cash and cash equivalents deemed sufficient to finance Common trust fund – 281,335,611 420,424,629 701,760,240 operations. As part of its liquidity risk management, the Foundation regularly evaluates its Quoted securities – 126,765,018 – 126,765,018 projected and actual cash flows. It also continuously assesses conditions in the financial markets Unquoted securities – – 2,087,582 2,087,582 for opportunities to pursue fund-raising activities. Fund-raising activities may include investments Total Financial Assets =P449,888,840 =P408,100,629 =P422,512,211 =P830,612,840 in quoted and unquoted securities. Other Financial Liabilities Accounts and other payables (Note 10) As of December 31, 2012, 2011 and January 1, 2011, the carrying amounts of accounts and other Trade =P51,323,070 =P– =P– =P51,323,070 payables will be settled within one year. Accrued expenses 23,301,224 – – 23,301,224 Advances 5,951,215 – – 5,951,215 Others 1,967,280 – – 1,967,280 The following table shows the maturity profile of the Foundation’s financial assets and liabilities Total Other Financial Liabilities =P82,542,789 =P– =P– =P82,542,789 based on contractual undiscounted payments: January 1, 2011 December 31, 2012 More than More than Within 1 Year 1-5 Years 5 Years Total Gross Within 1 Year 1-5 Years 5 Years Total Gross Financial Assets Financial Assets Loans and receivables Loans and receivables Cash and cash equivalents (Note 4) =P130,310,500 =P– =P– =P130,310,500 Cash and cash equivalents (excluding Receivables (Note 5) cash on hand) P= 9 3,486,592 P= – P= – P= 9 3,486,592 Trade 7,451,375 – – 7,451,375 Receivables (Note 5) Advances 7,831,338 – – 7,831,338 Receivable from investment activities 19,500,922 – – 19,500,922 Accrued interest 60,401 – – 60,401 Trade 5,812,177 – – 5,812,177 Others 4,348,584 – – 4,348,584 Advances 6,263,147 – – 6,263,147 Restricted cash equivalents (Note 12) 68,900,000 – – 68,900,000 Accrued interest 205,767 – – 205,767 Total loans and receivables 218,902,198 – – 218,902,198 Others 4,107,201 – – 4,107,201 Total loans and receivables 129,375,806 – – 129,375,806 (Forward)
(Forward)
78
December 31, 2012 More than Within 1 Year 1-5 Years 5 Years Total Gross AFS financial assets (Note 9) Common trust fund P= – P= 1,141,650,989 P= – P= 1,141,650,989 Quoted securities – 571,774,215 – 571,774,215 Unquoted securities – – 1,931,701 1,931,701 Total Financial Assets P= 129,375,806 P=1,713,425,204 P= 1,931,701 P= 1,844,732,711
Other Financial Liabilities Accounts and other payables (Note 10) Trade P= 60,859,088 P= – P= – P= 60,859,088 Accrued expenses 24,364,230 – – 24,364,230 Advances 6,700,376 – – 6,700,376 Others 1,924,639 – – 1,924,639 Total Other Financial Liabilities P=93,848,333 P= – P= – P= 93,848,333
December 31, 2011 More than Within 1 Year 1-5 Years 5 Years Total Gross Financial Assets Loans and receivables Cash and cash equivalents (Note 4) P=362,145,336 P= – P= – P= 362,145,336 Receivables (Note 5) Trade 7,737,567 – – 7,737,567 Advances 6,943,799 – – 6,943,799 Accrued interest 64,124 – – 64,124 Others 4,098,014 – – 4,098,014 Restricted cash equivalents (Note 12) 68,900,000 – – 68,900,000 Total loans and receivables 449,888,840 – – 449,888,840 AFS financial assets (Note 9) Common trust fund – 281,335,611 420,424,629 701,760,240 Quoted securities – 126,765,018 – 126,765,018 Unquoted securities – – 2,087,582 2,087,582 Total Financial Assets P= 449,888,840 P=408,100,629 P=422,512,211 P=830,612,840
Other Financial Liabilities Accounts and other payables (Note 10) Trade P= 51,323,070 P= – P= – P= 51,323,070 Accrued expenses 23,301,224 – – 23,301,224 Advances 5,951,215 – – 5,951,215 Others 1,967,280 – – 1,967,280 Total Other Financial Liabilities P= 82,542,789 P= – P= – P= 82,542,789
January 1, 2011 More than Within 1 Year 1-5 Years 5 Years Total Gross Financial Assets Loans and receivables Cash and cash equivalents (Note 4) P=130,310,500 P= – P= – P= 130,310,500 Receivables (Note 5) Trade 7,451,375 – – 7,451,375 Advances 7,831,338 – – 7,831,338 Accrued interest 60,401 – – 60,401 Others 4,348,584 – – 4,348,584 Restricted cash equivalents (Note 12) 68,900,000 – – 68,900,000 Total loans and receivables 218,902,198 – – 218,902,198
(Forward)
79
Market Risk January 1, 2011 Market risk is the risk that the fair value or future cash flows of a financial instrument will More than Within 1 Year 1-5 Years 5 Years Total Gross fluctuate because of changes in market prices. AFS financial assets (Note 9) Common trust fund P= – P= 348,356,527 P=382,189,349 P=730,545,876 The Foundation’s exposure to the risk for change in market value relates primarily to the Quoted securities – 317,324,955 – 317,324,955 Foundation’s AFS financial assets. The Foundation’s AFS financial assets are managed by a Unquoted securities – – 2,088,285 2,088,285 trustee bank. Total Financial Assets P= 218,902,198 P=665,681,482 P=384,277,634 P=1,049,959,116 Other Financial Liabilities The following table demonstrates the sensitivity to a reasonably possible change in the market Accounts and other payables (Note 10) prices, with all variables held constant, of the Foundation’s equity on December 31, 2012 and Trade P= 76,559,090 P= – P= – P= 76,559,090 2011. Accrued expenses 25,558,855 – – 25,558,855 Advances 6,622,415 – – 6,622,415 Others 881,041 – – 881,041 Effect on Net Assets Total Other Financial Liabilities P= 109,621,401 P= – P= – P= 109,621,401 Increase (decrease) 2012 2011 5% P=85,671,260 =P52,938,297 Credit risk (5%) (85,671,260) (52,938,297) Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Foundation’s holding of cash and cash equivalents exposes the Foundation to credit risk of the counterparty. Credit risk management involves dealing only with institutions for which credit limits have been established. The treasury policy sets credit limits for each counterparty. Given the Foundation’s diverse base of counterparties, it is not exposed to large concentrations of credit risk.
The table below shows the maximum exposure to credit risk for the components of the statements of financial position:
December 31 January 1, 2012 2011 2011 Cash and cash equivalents (excluding cash on hand) P= 9 3,486,592 P= 362,145,336 P=130,310,500 Receivables (Note 5): Receivable from investment activities 19,500,922 – – Trade 5,812,177 7,737,567 7,451,375 Advances 6,263,147 6,943,799 7,831,338 Accrued interest receivable 205,767 64,124 60,401 Others 4,107,201 4,098,014 4,348,584 Restricted cash equivalents (Note 12) – 68,900,000 – AFS financial assets (Note 9): Common trust fund 1,141,650,989 932,000,930 849,208,670 Quoted securities 571,774,215 126,765,018 317,324,955 Unquoted securities 1,931,701 2,087,582 2,088,285 P= 1,844,732,711 P= 1,510,742,370 P=1,318,624,108
The carrying amounts of financial assets represents its maximum exposure to credit risk except for other receivables with financial effect of collateral amounting to nil, P= 0.51 million, and nil and total net exposure of P= 4.1 million, P= 3.49 million, and P= 4.35 million as of December 31, 2012, 2011, and January 1, 2011, respectively.
80
Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
The Foundation’s exposure to the risk for change in market value relates primarily to the Foundation’s AFS financial assets. The Foundation’s AFS financial assets are managed by a trustee bank.
The following table demonstrates the sensitivity to a reasonably possible change in the market prices, with all variables held constant, of the Foundation’s equity on December 31, 2012 and 2011.
Effect on Net Assets Increase (decrease) 2012 2011 5% P= 85,671,260 P= 52,938,297 (5%) (85,671,260) (52,938,297)
81
3 12 82 Total Total Total Total Total 60,401 64,124 64,124 205,767 205,767 7,427,732 5,600,03 0,935,003 6,263,147 6,943,799 7,831,338 6,526,557 25,211,898 25,353,299 19,500,922 12,603,942 47,540,618 14,143,050 3,752,6 6,263,147 7,427,732 1,931,701 6,943,799 5,600,033 2,087,5 9 19,500,922 14,143,050 12,603,942 68,900,000 571,774,215 362,443,496 932,000,930 126,765,018 = P P =
P= P= P= P=1 P=
1,141,650,989 1,856,650,135 1,517,408,924 – – – – – – P = = P P= – P=
– – – – – – – – – – – – – – P = = P Impaired Impaired Impaired 6,368,394 3,320,531 5,661,601 4,866,375 1,502,019 3,483,628 2,177,973 8,330,873 11,651,404 Individually Individually Individually Impaired Impaired 8,330,873 3,320,531 4,866,375 1,502,019 6,368,394
P=
P= P= P= P=
11,651,404 P = – – – – – Individually = P Individually P= – ,985 Total Total Total 41,070
– – – – – – – – – – – – – 9,297,276 4,103,046 3,476,522 7,301,798 5,779,684 5,330,813 1,970 8,490,552 4,387,506 P = = P 41,070
P=
P= P= P= P=
– – – – – P= – 4,387,506 4,103,046 8,490,552 5,779,684 3,476,522 9,297,276 P = = P Past Due but Due Past 41,070 Not Impaired Not Past Due but Due Past Not Impaired Not
3,546,639 6,785,669 2,077,164 5,743,223 4,667,435 1,742,678 4,808,383 4,000,545 1,261,744 >120 Days >120 Days >120 >120 Days >120
1
P= P= P= P= 1 – – – – – – Total 4,155 Total P= – P= P= – 23,054 1, 201 1, 205,767 621,492 53,904 65,084 11,180 3,752,612 1,424,671 6,263,147 1,931,701 1,957,883 6,943,799 2,087,582 203,241 250,640 250,640 363,922 160,681 9 19,500,922 68,900,000
120 Days 120 Days 120 120 Days 120 571,774,215 362,443,496 932,000,930 126,765,018
- - = P - P = 1,141,650,989 1,836,508,179 1,501,743,254 91 91 91 P = = P January1, 201 December 31, 2011 31, December
P=
P= P=
P= December 31, 2012 31, December
December 3 December December 31, 2012 31, December – – – – – – – – – – – – – – – – – – – – – P= – P = = P 5,295 48,924 54,066 59,361
54,076 54,076 74,316 143,409 329,855 982,129 186,446 933,205 90 Days 90 Days 90 90 Days 90 - - - 117,261 191,577 = P
P = 61 61 61
Low Grade Low Low Grade Low :
P= P= P= P= P=
– – – – – – paired P= –
Past Due but not Impaired not but Due Past Impaired not but Due Past – – – – – – – – – – – – – – Past Due but not Impaired 56,807 P = = P 177,150 282,395 388,875 106,480 948,133 60 Days 60 Days 60
60 Days 60 - - - 1,125,283 1,064,229 1,007,422 s: 6,866 30 30 30 754,114 754,114 45 = P 1,036,356 1,493,222
P= P= P= P= P=
P = – – – – – – P= – Medium Grade Medium Medium Grade Medium 63,530 127,092 722,914 369,901 819,323 306,371
<30 Days <30 Days <30 <30 Days <30 1,210,835 1,542,237 1,083,743 Neither Past Due nor Impaired nor Due Past Neither 4,155 Neither Past Due nor Im 23,054 47,365
P= P=
P= P= P=
616,481 205,767 847,211 or 3,752,612 6,263,147 1,931,701 6,943,799 2,087,582 9 19,500,922 68,900,000 High Grade High 4,155 571,774,215 362,443,496 932,000,930 126,765,018 High Grade High = P 23,054 60,401 P = Due nor Due n Due 621,492 205,767 1,141,650,989 1,835,699,989 1,500,058,455 Due nor Due Impaired Impaired P = = P Impaired 2,377,599 9,546,228 1,424,671 1,957,883 2,120,562 6,263,147 6,943,799 7,831,338 27,398,662 12,389,900 19,500,922 P= P= P= Neither Past Neither Past Neither P= P= P=
Neither Past Neither
eceivables presented per class, are as follow as are class, per presented eceivables
r
: : es
: :
erest
Receivable from investment activities investment from Receivable Trade Advances interest Accrued Others fund trust Common securiti Quoted securities Unquoted Trade Advances interest Accrued Others fund trust Common securities Quoted securities Unquoted he aging analysis of analysis aging he
Others Others
Others Accrued int Accrued receivable interest Accrued receivable interest Accrued
T assets financial Foundation’s the of quality credit the shows below table The Receivable from investment activities investment from Receivable Trade Advances Trade Advances Trade Advances equivalents cash and Cash Receivables assets financial AFS equivalents cash and Cash Receivables equivalents cash Restricted assets financial AFS
82
3 Total Total Total Total Total 64,124 60,401 64,124 205,767 205,767 6,263,147 7,427,732 6,943,799 5,600,03 0,935,003 7,831,338 6,526,557 19,500,922 14,143,050 47,540,618 12,603,942 25,211,898 1 25,353,299 3,752,612 6,943,799 6,263,147 5,600,033 7,427,732 2,087,582 1,931,701 P P P P = = = = 19,500,922 12,603,942 14,143,050 68,900,000 = = P P 362,443,496 932,000,930 126,765,018 571,774,215
1,856,650,135 1,141,650,989 1,517,408,924 – – – – – – – = P
P=
P= – – – – – – – – – – – – P= – P= P= – P= 9 Impaired Impaired Impaired 8,330,873 3,320,531 4,866,375 1,502,019 6,368,394 3,483,628 2,177,973 5,661,601 11,651,404 P P P P = = = = Individually Individually = P Individually Impaired Impaired 4,866,375 8,330,873 1,502,019 3,320,531 6,368,394
11,651,404 – – – – – – Individually Individually = P ,985 Total Total Total 41,070 330,813
P=
P= – – – – – – – – – – – 4,387,506 4,103,046 8,490,552 5,779,684 3,476,522 9,297,276 5, 1,970 7,301,798 P= – P= – P P P P = = = = = P 41,070
– – – – – – = P 5,779,684 4,387,506 8,490,552 3,476,522 4,103,046 9,297,276 Past Due but Due Past 41,070 Not Impaired Not Past Due but Due Past Not Impaired Not
1,261,744 3,546,639 4,808,383 4,667,435 2,077,164 6,785,669 4,000,545 1,742,678 5,743,223 >120 Days >120 Days >120 >120 Days >120 P P P P = = = = = P
P=
P=
1
1 – – – – – – – – Total Total 4,155 P = = P 23,054 1, 201 1, , 201 205,767 621,492 11,180 53,904 65,084 3,752,612 1,957,883 6,943,799 1,424,671 6,263,147 2,087,582 1,931,701 160,681 203,241 363,922 250,640 250,640 P P = = 19,500,922 68,900,000
120 Days 120 Days 120 P = 120 Days 120 = P 362,443,496 932,000,930 126,765,018 571,774,215
- - - 1,836,508,179 1,141,650,989 1,501,743,254 91 91 91 January1 December 31, 2011 31, December
December 31, 2012 31, December
P= P= December 3 December December 31, 2012 31, December – – – – – – – – – – – – – – – – – – – – = P P= – P= P= – P= 9 5,295 48,924 54,066 59,361 P =
74,316 54,076 54,076 933,205 982,129 186,446 143,409 329,855 90 Days 90 Days 90 P = 90 Days 90 - - - 117,261 191,577 P P = = = P
61 61 61
Low Grade Low Low Grade Low :
– – – – – – – paired = P
P= P= Past Due but not Impaired not but Due Past Impaired not but Due Past – – – – – – – – – – – – Past Due but not Impaired 56,807 P= – P= – 948,133 177,150 106,480 282,395 388,875 60 Days 60 Days 60
60 Days 60 - - - P P = = 1,125,283 1,007,422 1,064,229 s: P P = = = P 30 30 30 754,114 456,866 754,114 1,036,356 1,493,222
– – – – – – – = P Medium Grade Medium Medium Grade Medium 63,530 127,092 819,323 722,914 306,371 369,901
P= P= P P P = = = <30 Days <30 Days <30 <30 Days <30 1,083,743 1,210,835 1,542,237 P = = P Neither Past Due nor Impaired nor Due Past Neither 4,155 Neither Past Due nor Im 23,054 47,365
847,211 616,481 205,767 or 3,752,612 6,943,799 6,263,147 2,087,582 1,931,701 19,500,922 68,900,000 High Grade High 4,155 362,443,496 932,000,930 126,765,018 571,774,215 High Grade High P= 9 23,054 60,401 P= Due nor Due n Due 205,767 621,492 1,141,650,989 1,835,699,989 1,500,058,455 Due nor Due Impaired Impaired P= P= Impaired 1,424,671 6,263,147 1,957,883 6,943,799 9,546,228 2,120,562 7,831,338 2,377,599 19,500,922 27,398,662 12,389,900 P P P = = = Neither Past Neither Past Neither P = = = P P
Neither Past Neither
eceivables presented per class, are as follow as are class, per presented eceivables
r
: : es
: :
erest
Receivable from investment activities investment from Receivable Trade Trade Advances interest Accrued Advances interest Accrued Others fund trust Common Others fund trust Common securities Quoted securities Unquoted Quoted securiti Quoted securities Unquoted he aging analysis of analysis aging he
T assets financial Foundation’s the of quality credit the shows below table The Receivable from investment activities investment from Receivable Trade Advances int Accrued Others Trade Advances receivable interest Accrued Others Trade Advances receivable interest Accrued Others equivalents cash and Cash Receivables equivalents cash and Cash Receivables
equivalents cash Restricted assets financial AFS assets financial AFS
83
–
Total In translating the foreign currency-denominated monetary assets into peso amounts, the exchange 60,401 rate used was P= 41.05:$1 and P= 43.84:$1, based on the Philippine Peso - U.S. dollar exchange rate 7,831,338 6,526,557 2,088,285 10,935,003 130,310,500 849,208,670 317,324,955 as of December 31, 2012 and 2011, respectively.
1,324,285,709
P= The following table demonstrates the sensitivity to a reasonably possible change in the US dollar
– – – – – –
P= – P= rate, with all variables held constant, of the Foundation’s result of activities (due to changes in the fair value of monetary assets) as of December 31, 2012 and 2011:
Impaired 3,483,628 2,177,973 5,661,601 Effect on Net Assets Individually US$ depreciates (appreciates) 2012 2011
P= =P1.0 P=42,579 =P193,081 – – – – – –
P= – (1.0) (42,579) (193,081) million in 2012 and 2011, 46
5,330,813 1,970,985 7,301,798 P= 8 . Past Due but Due Past
Not Impaired Not 14. Other Activities
P=
– Statements of revenue and expenses on the Foundation’s museum and library operations for the years ended December 31, 2012 and 2011 are as follows: Total 60,401 2012 2011 2,120,562 7,831,338 2,377,599 2,088,285 1.75 million and and million 1.75 130,310,500 849,208,670 317,324,955 Revenue P=22,092,147 =P17,582,542 P= 1,311,322,310
January20111, Expenses 31,135,103 27,411,465
P= – – – – – – Net loss P=9,042,956 =P9,828,923 P= – P=
269,625 1,419,303 1,688,928
Low Grade Low 15. Supplementary Information Required Under Revenue Regulations (RR) 19-2011
Below is the additional information required by RR No. 19-2011. This information is presented
P=
– – – – – –
P= – for purposes of filing with the BIR and is not a required part of the basic financial statements.
673,254 a. The summary of the Foundation’s revenue are as follows: 1,563,080 2,236,334 Exempt Regular Rate Total Medium Grade Medium Public support =P496,123,890 =P– =P496,123,890
P=
– Investment and interest income 133,006,202 – 133,006,202
Neither Past Due nor Impaired nor Due Past Neither Sale of services 5,341,134 20,430,073 25,771,207 60,401 287,857 285,042 Sale of goods 191,950 1,662,074 1,854,024 7,831,338 2,088,285
High Grade High Other income 1,148,377 – 1,148,377 130,310,500 849,208,670 317,324,955 P= 1,307,397,048 =P635,811,553 =P22,092,147 =P657,903,700 P=
denominated financial instruments are included in cash and cash equivalents amounting to US$0.04 million in 2012 in million US$0.04 to amounting equivalents cash and cash in included are instruments financial denominated b. The Foundation’s direct costs are summarized as follows: - Exempt Regular Rate Total based on the nature of the counterparty and the Foundation’s internal rating system. based on the nature of the counterparty and the Foundation’s internal rating system. rating internal Foundation’s the and counterparty the of nature the on based 1. The Philippine peso values of these instruments amounted to to amounted instruments these of values peso Philippine The 1. - Direct charges – education and other supports =P131,189,293 =P715,396 =P131,904,689 - Direct charges – salaries and wages 55,517,777 8,640,093 64,157,870
Direct charges – materials and facilities 43,754,670 10,107,351 53,862,021
the quoted and unquoted financial assets are unrated. -
Direct charges – professional and service fees 8,789,093 2,1922,136 10,981,229
to receivables with more than 3 defaults in payment. Direct charges – exhibition and related costs 8,610,145 422,411 59,032,556 million in 201 in million high grade pertains to receivables with no default in payment; medium grade pertains to receivables with up to 3 defaults in payment; and Direct charges – depreciation and
-
amortization 8,227,927 1,768,420 9,996,347
cash equivalents
exchange risk Direct charges – transportation and communication 7,481,797 435,401 7,917,198 US$0.19 Trade Advances interest Accrued Others fund trust Common Quoted securities Quoted securities Unquoted Direct charges - others 2,596,610 26,448 2,623,058
Cash and cash equivalents cash and Cash Receivables follows: as determined was assets financial the of quality credit The equivalents cash and Cash Receivables low grade pertains Restricted assets financial AFS (US$). Dollar States United the against Peso Philippine the of movements from primarily results risk exchange foreign Foundation’s The currency foreign Foundation’s The and respectively.
equivalents cash Restricted assets financial AFS Foreign =P266,167,312 =P24,307,656 =P290,474,968
84
–
Total In translating the foreign currency-denominated monetary assets into peso amounts, the exchange 60,401 rate used was P= 41.05:$1 and P= 43.84:$1, based on the Philippine Peso - U.S. dollar exchange rate 7,831,338 6,526,557 2,088,285 10,935,003
130,310,500 849,208,670 317,324,955 as of December 31, 2012 and 2011, respectively. P = 1,324,285,709 P =
The following table demonstrates the sensitivity to a reasonably possible change in the US dollar
– – – – – – – P = rate, with all variables held constant, of the Foundation’s result of activities (due to changes in the fair value of monetary assets) as of December 31, 2012 and 2011:
Impaired 3,483,628 2,177,973 5,661,601 P = Effect on Net Assets Individually US$ depreciates (appreciates) 2012 2011
P= 1.0 P= 42,579 P= 193,081 – – – – – – – P = (1.0) (42,579) (193,081) million in 2012 and 2011, 46
5,330,813 1,970,985 7,301,798 P= 8 . P = Past Due but Due Past
Not Impaired Not 14. Other Activities
– Statements of revenue and expenses on the Foundation’s museum and library operations for the years ended December 31, 2012 and 2011 are as follows: Total 60,401 2012 2011 2,120,562 7,831,338 2,377,599 2,088,285 1.75 million and and million 1.75 130,310,500 849,208,670 317,324,955 Revenue P= 22,092,147 P= 17,582,542 P= P = 1,311,322,310 January20111, P = Expenses 31,135,103 27,411,465
– – – – – – – Net loss P= 9,042,956 P= 9,828,923 P =
269,625 1,419,303 1,688,928
Low Grade Low P = 15. Supplementary Information Required Under Revenue Regulations (RR) 19-2011
Below is the additional information required by RR No. 19-2011. This information is presented
– – – – – – – P = for purposes of filing with the BIR and is not a required part of the basic financial statements.
673,254 a. The summary of the Foundation’s revenue are as follows:
1,563,080 2,236,334 P = Exempt Regular Rate Total Medium Grade Medium Public support P= 496,123,890 P= – P= 496,123,890
– Investment and interest income 133,006,202 – 133,006,202
Neither Past Due nor Impaired nor Due Past Neither Sale of services 5,341,134 20,430,073 25,771,207 60,401
287,857 285,042 Sale of goods 191,950 1,662,074 1,854,024 7,831,338 2,088,285
High Grade High Other income 1,148,377 – 1,148,377 130,310,500 849,208,670 317,324,955 P = 1,307,397,048 P= 635,811,553 P=22,092,147 P=657,903,700 P =
denominated financial instruments are included in cash and cash equivalents amounting to US$0.04 million in 2012 in million US$0.04 to amounting equivalents cash and cash in included are instruments financial denominated b. The Foundation’s direct costs are summarized as follows: - Exempt Regular Rate Total based on the nature of the counterparty and the Foundation’s internal rating system. based on the nature of the counterparty and the Foundation’s internal rating system. rating internal Foundation’s the and counterparty the of nature the on based 1. The Philippine peso values of these instruments amounted to to amounted instruments these of values peso Philippine The 1. - Direct charges – education and other supports P= 131,189,293 P=715,396 P=131,904,689 - Direct charges – salaries and wages 55,517,777 8,640,093 64,157,870
Direct charges – materials and facilities 43,754,670 10,107,351 53,862,021
the quoted and unquoted financial assets are unrated. -
Direct charges – professional and service fees 8,789,093 2,1922,136 10,981,229
to receivables with more than 3 defaults in payment. Direct charges – exhibition and related costs 8,610,145 422,411 59,032,556 million in 201 in million high grade pertains to receivables with no default in payment; medium grade pertains to receivables with up to 3 defaults in payment; and Direct charges – depreciation and
-
amortization 8,227,927 1,768,420 9,996,347
cash equivalents
exchange risk Direct charges – transportation and communication 7,481,797 435,401 7,917,198 US$0.19 Trade Advances interest Accrued Others fund trust Common securities Quoted securities Unquoted Direct charges - others 2,596,610 26,448 2,623,058
Cash and cash equivalents cash and Cash Receivables equivalents cash Restricted assets financial AFS follows: as determined was assets financial the of quality credit The equivalents cash and Cash Receivables low grade pertains Restricted assets financial AFS Foreign (US$). Dollar States United the against Peso Philippine the of movements from primarily results risk exchange foreign Foundation’s The currency foreign Foundation’s The and respectively. P= 2 66,167,312 P=24,307,656 P=290,474,968
85
b. Input VAT c. Other taxable income not subjected to final tax in 2012 amounted to nil. Balance at January 1 =P4,942,233 d. Itemized deductions in 2012 consists of: Current year’s domestic purchases/payments for: Services lodged under other accounts 5,092,573 Exempt Regular Rate Total Goods other than for resale or manufacture 681,957 Salaries, wages, and employee benefits P=22,644,711 P=2,665,485 P=25,310,196 Capital goods not subject to amortization – Repairs and maintenance 5,284,867 1,714,326 6,999,193 10,716,763 Provision for doubtful accounts 5,283,010 – 5,283,010 Claims for tax credit/refund and other adjustments 6,605,523 Professional and service fees 1,904,174 – 1,904,174 Balance at December 31 =P4,111,240 Advocacy and public information services 1,426,830 – 1,426,830 Depreciation and amortization 1,240,857 1,342,840 2,583,697 c. Importations Communication, light and water 1,092,779 792,523 1,885,302 Meetings and conferences 628,708 – 628,708 The Foundation did not have any purchases from outside the country. Outside services – 103,481 103,481 Supplies 343,443 81,920 425,363 d. Excise Tax Insurance – 53,330 53,330 Transportation and travel 322,723 36,409 359,132 The Foundation did not enter into any transaction subject to excise tax. Taxes and licenses 27,319 24,636 51,955 Miscellaneous 1,636,909 12,497 1,649,406 e. Documentary stamp tax P= 41,836,330 P=6,827,447 P=48,663,777 The Foundation did not enter into any transaction which requires payment of any documentary stamp taxes. 16. Supplementary Tax Information Under Revenue Regulations (RR) 15-2010 f. All other local and national taxes RR No. 15-2010 are promulgated to amend certain provisions of RR No. 21-2002 prescribing the manner of compliance with any documentary and/or procedural requirements in connection with This includes all other taxes, local and national, including real estate taxes, licenses and permit the preparation and submission of financial statements accompanying tax returns. In addition to fees lodged under the ‘Project Expenses’ and ‘General and administrative expenses’ accounts the disclosures mandated under PFRS, RR No. 15-2010 requires disclosures regarding information both in the Foundation’s statement of activities: on taxes, duties and license fees paid or accrued during the taxable year. Details consist of the following: The Foundation also reported and/or paid the following types of taxes for 2012: General and Value-added Tax (VAT) Project Administrative The NIRC of 1997 also provides for the imposition of VAT on sales of goods and services. Expenses Expenses Total Accordingly, the Foundation’s sales from other activities are subject to output VAT while its Real estate taxes =P218,800 =P– =P218,800 importations and purchases from other VAT-registered individuals or corporations are subject to License and permits fees 10,138 41,663 51,801 input VAT. RA No. 9337 increased the value added tax rate from 10.0% to 12.0%, effective Others – 18,293 18,293 February 1, 2006. =P228,938 =P59,956 =P288,894
a. Output VAT The Foundation’s sales of services are based on actual collections received, hence, may not be the same as amounts accrued in the statement of activities. Net Sales/ Receipts Output VAT g. Withholding Taxes Taxable sales Leasing income P= 13,168,024 P=1,580,163 Withholding taxes on compensation and benefits =P13,889,627 Sales of services 7,231,331 867,760 Expanded withholding taxes 3,790,928 Sale of goods 2,713,358 325,603 =P17,680,555 Others 9,479 1,137 P= 23,122,192 P=2,774,663 h. Tax assessments
As of December 31, 2012 and 2011, the Foundation has not received any final assessment notice from the BIR.
86 b. Input VAT
Balance at January 1 P= 4,942,233 Current year’s domestic purchases/payments for: Services lodged under other accounts 5,092,573 Goods other than for resale or manufacture 681,957 Capital goods not subject to amortization – 10,716,763 Claims for tax credit/refund and other adjustments 6,605,523 Balance at December 31 P= 4,111,240 c. Importations
The Foundation did not have any purchases from outside the country. d. Excise Tax
The Foundation did not enter into any transaction subject to excise tax. e. Documentary stamp tax
The Foundation did not enter into any transaction which requires payment of any documentary stamp taxes. f. All other local and national taxes
This includes all other taxes, local and national, including real estate taxes, licenses and permit fees lodged under the ‘Project Expenses’ and ‘General and administrative expenses’ accounts both in the Foundation’s statement of activities:
Details consist of the following:
General and Project Administrative Expenses Expenses Total Real estate taxes P= 218,800 P= – P= 218,800 License and permits fees 10,138 41,663 51,801 Others – 18,293 18,293 P= 228,938 P=59,956 P=288,894
The Foundation’s sales of services are based on actual collections received, hence, may not be the same as amounts accrued in the statement of activities. g. Withholding Taxes
Withholding taxes on compensation and benefits P= 13,889,627 Expanded withholding taxes 3,790,928 P= 17,680,555 h. Tax assessments
As of December 31, 2012 and 2011, the Foundation has not received any final assessment notice from the BIR.
87 aY aLa foUnDation Manage Ment & staff Jaime Augusto Zobel de Ayala Fernando Zobel de Ayala 2012* Co-Chairmen
Maria Lourdes Heras-de Leon PreSident
artS and Culture Community develoPment Joysen Accad Ma. Elizabeth Gustilo Christian Martin Andrada Senior direCtor Maricar de Chavez Arwin Ayson StaFF Teresita Cailo Ma. Antonia Ortigas Rizza Erika Dangan direCtor, Filipinas Heritage Library eduCation and leaderShiP Imelda Fatalla develoPment Mario Deriquito Shirley Grospe Suzanne Yupangco Senior direCtor Jocelyn Hernandez Senior managerS Niño Carlo Nevado Gina Estipona Escolastica Nonog Cecilia Cruz Archimedes Velasco Renie Pensotes Jin Paul de Guzman Senior managerS Maria Cindy Poyaoan Monet Villanueva Dino Rey Abellanosa Michael Villegas Aprille Tijam StaFF Judy Villacruz Maria Sergia Rosario Catangay managerS Chiara Cruza human reSourCeS and Joseph Anthony Quesada adminiStration Miguel Carlos Acosta managerS Tyne Dignadice Jr. Verne Alexander Ahyong direCtor Maria Cecilia Ayson Zyriel Abejero Francis Estolano Mark Anthony Mariano Roland Cruz John Tobit Cruz StaFF Faye Johanna Cura Florence Ann de Castro Gilbert de Jesus Ireneo Demecais Jr. Strengthening the CaPaCity oF Civil Felicia Marie de Vera Erika Dimaguila SoCiety organizationS in Marie Julienne Ente John Christopher Paul Gulay the PhiliPPineS Lucky Esteban Sarah Lazaro Ma. Socorro Camacho Paula Nikola Fernandez Romecito Madronio Jr. ChieF oF Party Rosemarie Figuerres Rodellyn Mañalac Jo Ann Gando Mary Grace Parungao Ma. Victoria Alcoseba Micaella Angelica Gonzales Pepito Rabago Cecilia Palma Arnaldo Legaspi Mary Ann Santiago Rhandy Rowan Jaime Martinez Melissa Yamson managerS Marinella Andrea Mina Maricar Yulo Carla Margarita Muñoz StaFF Rosalinda Navera Rowena Lalunio Clareese Aila Nilo entrePreneurShiP Michael Anthony Santos Antonio Par StaFF Senior manager Elena Robles Strategy, CommuniCationS, Pablo Ruiz and donor Care January Salvador Dennis Mateo Nature Marie Calderon Arnold Torrecampo Mary Rose Rontal direCtor StaFF StaFF Jin Paul de Guzman FinanCe and CorPorate ServiCeS manager Center oF exCellenCe in Aditas Vivian Santamaria PubliC elementary eduCation Senior direCtor and Ramon Miranda ChieF FinanCial oFFiCer StaFF direCtor oFFiCe oF the PreSident Mariecar Fernando Leonardo Lim Sarah Sevilla maSter teaCher Senior managerS exeCutive aSSiStant
Maria Mia Farrah Falcis Chaffee Alpha Jessieree Anne Matienzo Erwin Gopez Christine Joy Sarigumba managerS * As of December 2012 Josie Viaña StaFF
88 UL Year for 2012 Was a WonDerf CoLLaborations. PartnershiPs anD Ayala Foundation would like to thank the donors, partners, benefactors, and supporters who ensured the success of its endeavors. To see a list www.ayalafoundation.org
89 Ayala Foundation 2012 Annual Report
editorial and art direCtion Ayala Foundation Strategy, Communications, and Donor Care
internal audit Ayala Foundation Finance and Corporate Services
deSign, layout, and illuStrationS Studio Dialogo
PhotograPhy Erik Liongoren
additional PhotograPhy Ayala Foundation
Portraiture Wig Tysmans
Cover ConCePt and deSign
90 DIRECTORY
ayala Foundation, inC. Makati City, Philippines www.ayalafoundation.org
ayala Foundation, inC. Visayas Operations Gorordo Avenue, Lahug Cebu City, Philippines
ayala Foundation, inC. Mindanao Operations Tiano Pacana Street, Cagayan de Oro City, Philippines
ayala muSeum Makati Avenue corner De la Rosa Street Greenbelt Park Makati City, Philippines www.ayalamuseum.org
FiliPinaS heritage library 6F Ayala Museum Makati Avenue corner de la Rosa Street Greenbelt Park Makati City, Philippines
91 The cover of the 2012 Ayala Foundation cent Mohawk Via, which is made with 30-per recycled post-consumer waste. The main section of the report is printed on Freelife Cento, which is made with 60-percent recy- this report is printed on Econobond, which is 100-percent recycled uncoated paper made from post-consumer collected waste.
92 93 AYALA FOUNDATION, INC. 10F Ayala Wing, BPI Building 6768 Ayala Avenue corner Paseo de Roxas Makati City, 1226 Philippines www.ayalafoundation.org
94