Annual Report 2015

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Annual Report 2015

INSIDE 3 5 6 8 10 12 14 24 25 26 28 74

Corporate Ideals

Message from the Chairman

Success Story of Lydia Malot

Rebuilding KMBI on Solid Foundation KMBI Products & Services

Comparative Performance Analysis Year in Review

Board of Trustees

Partners & Affiliations Management Team

Independent Auditor’s Report KMBI Branch Directory

Building on Solid Foundation 2

Annual Report 2015

CORPORATEIDEALS

OUR VISION

OUR MISSION

To see people in communities live in abundance with strengthened faith in God and in right relationship with their fellowmen and the rest of creation.

KMBI is a Christ-centered development organization existing to advocate and work for the integral transformation of the lives of its clients and their communities, by providing sustainable microfinance and responsive non-financial services.

CORE VALUES Christian Faith People’s Well-Being Good Governance Continuous Improvement Teamwork

Kabalikat para sa Maunlad na Buhay Inc.

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Message of the

CHAIRMAN 2015 was another year of God’s faithfulness to KMBI. We made several key decisions, which required the time, expertise, and commitment from all the Board of Trustees, Management and staff.

Despite the significantly challenging times we had in 2014, we were able to have a solid financial position in 2015.

One significant milestone for KMBI is the implementation of the new organizational structure 2015-2020.

The organizational structure aims to strengthen our organizational leadership and succession. It is also intended to increase our operational efficiency and effectiveness, and rebuild KMBI’s institutional competiveness in the Microfinance Industry.

With the passage of the Republic Act 10693 also known as the Microfinance NGOs Act, we have stopped the collection of VAT payment from our clients; this gives our clients the chance to maximize their loan proceeds.

The Board of Trustees, management and some key officers had also undergone a series of strategic planning sessions, and were able to come up with a five-year business plan, “Paghandom sa Damlag” or Vision 2020. The process of

developing the five-year plan is a significant move in KMBI over the past years. Coming in the wake of the intra-corporate dispute in January 2014 and amidst organizational transitions, the process required not only looking into what the organization had enjoyed doing and achieved in the first 29 years and the challenges it had overcome. The development process also demanded looking at what KMBI could become over the next 30 years as true to its mission, Christ-centered organization.

We are well underway in bringing back KMBI as the leading microfinance organization in the Philippines. In the coming years, as we implement our five-year plan, we will continue to expand our operations and launch new financial and non-financial services.

We will remain dedicated to our vision and mission as a Christ-centered development organization existing to advocate and work for the integral transformation of the lives of our clients and their communities, by providing sustainable microfinance and responsive non-financial services.

To God be the glory!

David D. Gutierrez Chairman and Vice-President Board of Trustees

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Annual Report 2015

Message of the

PRESIDENT We are truly blessed to have come this far. We have managed to survive this year’s challenges that attempted to cancel out the fruits of endeavors we have painstakingly sowed for the past 29 years. And we can all agree that those years are overflowing with the richness of KMBI’s history; how we stood together through the thick and thin, and how we acquired the aspiration to grow stronger along the way. It is high time that we finally put the shadows of the past far behind us as we reconstruct history in the next five years.

And as we go through the process of reconstruction, we are reminded of the force that drives us to transcend our limits: the poor. The force of poverty has continuously pinned down economic progress for the masses and kept them vulnerable. For sure, we are unable to fight off this massive work alone, but I guarantee that we can, with the help of our partner organizations who share the same lofty goals we have.

Through the indispensable efforts of the Client Services Group, we have created new products and services available for our program members. We made further innovations in our Micro insurance products and Unilever’s PureIt loan program.

To help meet the needs of our front liners, the Management Services Group doubled its efforts in providing support to our branches.

To ensure we can deliver integral transformation to our program members and provide more communities with financial and non-financial services, three new

branches were opened and will become fully operational.

The collective efforts of the Credit Operations Group continuously keep us thriving and moving forward.

KMBI was also recognized when two of our program members bag the plum prizes from the 2015 Citi Micro Entrepreneurship Award (CMA): Mrs. Maternidad Salili who won the Mindanao Award; and Mrs. Lydia Malot who was awarded as the National Winner of the 2015 Citi Micro Entrepreneurship Award.

Lest we forget the most significant aspect as we flip over the pages, that the love of Christ our Savior is what fuses together each and every page of this report. This all would not be written without His undying love for us. We have to maintain that we are a piece of His puzzle intended to complete the transformation of the lives of people.

As we approach our 30th anniversary in 2016, KMBI is committed to improve its systems, processes and services for our program members. We look forward to celebrating 30 years of God’s faithfulness in serving the poor with our partner organizations, other institutions, staff, and program members.

I am absolutely certain that the best is yet to come!

Eduardo C. Jimenez President and Vice-Chairman Board of Trustees Kabalikat para sa Maunlad na Buhay Inc.

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Annual Report 2015

STORY OF TRANSFORMATION

LYDIA MALOT’sStory Dec 2, 2015 -- Mrs. Lydia Esquivel Malot of Calinan, Davao City won the National Category of the Citi Microentrepreneurship Awards, the first hailing from Mindanao in the program’s 12 year history.

The recognitions were not always there, since, Mrs. Malot’s story had always been a case of overcoming obstacles.

The first few roadblocks to Mrs. Malot’s success were the hardships she had to endure as a working student. Money was hard to come by when she was younger since her father died early. Lydia, along with three other siblings had to help her mother make ends meet.

Things got a a little better when she graduated from college, started working as a teacher and got married . Then, the 8 children came. While working, she would often find ways to augment the family income. She skimmed an article from a magazine on how to make “Nata De Coco”. Using basic tools on hand, she managed to create her first Nata de coco batch using a small pail and utensils from the kitchen.

Empowered with the success of her first batch, she replicated the system again. She further improved and scheduled making the nata during mornings, as she juggled her responsibilities at Calinan High School. When she got bulk orders, she decided to quit teaching and concentrate on growing the business.

From 300 trays that morphed to 8 tonnes a week, Lydia was on a roll. That was, until her biggest client, Crown Fruits International shut down its operations. Even her multicab business was not doing well. By 2003, her house and lot were foreclosed due to mounting debts.

Despite the struggles, the family kept the faith and continued to remain positive on the Nata de coco production. In the same year, DOLE Philippines signed her up to supply Nata De Coco at 8 tonnes a week. She has been serving other big clients from Davao and Cagayan De Oro.

During this time, KMBI asked Mrs. Malot to join the individual loan program to further expand her business. Unfortunately, the health of Lydia’s husband deteriorated, and was diabetic for 15 years. Income from the business was siphoned to pay for his dialysis and other medical expenses. Mrs. Malot started getting delayed in her loan payments due to this.

With the grace of God and the family’s fortitude, the family of Mrs. Malot had survive the ordeal. Lydia’s husband passed away eventually. But instead of grieving and stopping, Lydia pushed herself harder to expand her knowledge in business and improve herself.

In all her interviews, she always professes about her faith and how this has become her Rock during trials and tribulations. She sees challenges as litmus tests of her trust in the Lord.

Mrs. Malot challenged assumptions, made tough decisions, fought hard, and won.

It is no wonder why she was recognized by the CMA awards!

Mrs. Malot continues to be a blessing and inspiration in her community. She recently expanded her business to accommodate 16 local women to work for her so that the children in their area will be better provided for. She dreams of further expanding her business so she can give back to her community in Calinan.

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I

f 2014 was about regrouping and introspection, 2015 became a year of planning and setting of new directions.

During 2015, the organization was still reeling from the aftermath of its corporate dispute. Sacrifices were made during the year that was critical for the organization’s survival. After the dust had settled, it became clear that the organization needed to revisit the foundations from which it stands upon.

Committed to rise up and build a better version of itself anchored through three tenets, KMBI emphasized on focusing on: 1. Building a solid foundation in Christ. 2. Building a solid foundation anchored on its corporate identity and 3. Building a solid foundation anchored on building healthy relationships.

It is through these beliefs that the leadership forged a new vision during lean times. These gave

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Annual Report 2015

REBUILDING KMBI ON

SOLID FOUNDATION new hope and directions that the people clamored for and laid to rest uncertainties.

1. Solid Foundation #1: “Building our solid foundation in Christ” This paradigm focuses on building the organization’s internal policies and principles to reflect the teachings of Christ. It encourages full dependence in Him… As KMBI claims to be a Christ-centered organization, KMBI’s strength does not come from the collective, but from the basic foundation of knowing, growing and communing with God and His word.

2. Solid Foundation #2: “Building our solid foundation on our corporate identity”.

Having a clear understanding of what KMBI is as an institution is crucial. The knowledge of this identity helps determine the possibilities and inspirations for the future. Knowing the mission, vision and values of the organization helps its staff align their personal values to the org for the best fit in what it does, to move the organization to where it aims to go .

3. Solid Foundation #3: “Building our solid foundation on healthy relationships.”

A strong foundation does not happen overnight; worthy foundations take work, time, patience, humility, knowledge and confidence of nurturing healthy relationships with one another.

If the staff can understand to appreciate & accept individual differences, learn to complement one another with respect, kindness and trust, then everyone can learn to understand each other better, and learn“why the org does what the org does” as the institution relates internally and the community.

These three pronged approach helped in guiding the formulation of the new mission and strategic directions which were revealed in the “Paghandom sa Damlag 2016-2020” Business Plan. Arriving at the said plan was one of the most exhaustive and participative planning stints ever taken by the organization. It had to be as such, to encourage program ownership from all stakeholder levels: clients , branch staff, management and Board of Trustees.

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PRODUCTS AND SERVICES FINANCIAL Group Loan The Group Loan program helps existing micro businesses in its expansion and development by providing loans and empowering women micro entrepreneurs with below Php50,000 additional capital requirement.

Individual Loan

The Individual Loan aims to further assist graduated program members from its Group Loan Program and as well as new member from the micro enterprise segment by providing additional working capital to expand and further develop their existing businesses.

Agriculture MicroďŹ nance

The Agricultural Loan exists to aid and develop the agricultural sector of the country by providing loans that will serve as working capital for farming or within the agricultural allied sector.

Micro-Insurance

Micro-insurance is an add-on service given to the program members of the organization. Along with the Group Loan and Capital Build-Up, all clients aged 18 to 63 years of old are required to enrol in this program to be protected in cases of death in the family.

Capital Build-Up (CBU) Capital Build-Up is an opportunity for program members to begin accumulating their own financial resources and lessen their vulnerability to crisis and dependence on outside credit sources. It is also a reserve fund that a member may use as additional capital for the existing business, or capital for a new business when she graduates from the program.

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Annual Report 2015

Non - Financial Entrepreneurship Development Services The Entrepreneurship Development Services help strengthen the core knowledge and skills of entrepreneur members of KMBI through knowledge sharing programs and capacity building programs such as client trainings and followthrough activities. It also strives to perform its consolidator functions through networking and linkaging with business development service offices to assist our clients’ needs as entrepreneurs.

Mass Wedding

KMBI values the sanctity of marriage and the role of family as an important unit of society. Annual wedding is offered as one of our services for unmarried cohabitating members to legalize their union.

Wellness Program

We at KMBI take into heart the health and wellness of our program members. KMBI Wellness Program includes Wellness Caravans for branches, Wellness Bulletins, Emergency Care Program, and Basic health orientations during center meetings.

Disaster Preparedness & Response Management (DPRM)

We understand that our clients are extremely vulnerable to economic downturns, disaster and health hazards. The DPRM was set-up to address these vulnerabilities to help out our clients when they need it the most.

Adopt-a-Daycare Program

As part of KMBI’s Corporate social responsibility, KMBI adopted Hope Daycare Center of Davao City. The Program aims to improve the welfare and quality of education received by the students through donations of school supplies and other necessities projected by the daycare Kabalikat para sa Maunlad na Buhay Inc.

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COMPARATIVE PERFORMANCE ANALYSIS Operational Performance

T

he loan releases closed at 586,792,291 in 2015. It posted a 1.5% growth from the 578,304,584 posted loan portfolio in 2014. Ten from the twelve areas had increased their individual portfolios topped by Bulacan (17%), SOCKSARGEN (17%) and Cebu (10%).

Part of the growth is the increased client outreach to 12,688. This can be attributed to the increased number of staff and the opening of 3 additional branches at Bogo City, Cebu, Tanay, Rizal and Bacoor, Cavite.

Another notable figure is the increased in Capital Build-up posting a 4% increase. We can credit this to the increasing confidence coming from our program members as former doubts subside.

Client Outreach and Loan Portfolio numbers are expected to increase further next year as satellite units are poised to open in 2016.

OPERATIONAL INDICATORS Client Outreach Loan Portfolio

Total Amount Disbursed Average Loan Size

Portfolio at Risk (%) Capital Build Up No. of Branches No. of Centers

No. of Program Assistants Total no. of Staff

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Annual Report 2015

2015

2014

Increase (Decrease)

132,065

119,377

12,688

586,792,291

578,304,584

8,487,707

2,023,898,287

1,924,118,194

99,780,094

9.44%

6.00%

0

9,798

10,168

(370)

302,011,280

290,316,053

11,695,228

4,570

4,437

133

814

745

69

45

505

42

477

3

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Financial Performance

N

umbers from the 2015 shows a stronger and more liquid KMBI as it posts a strong FSS and OSS at 125.47% and 125.95% respectively. These strong numbers signify that the organization has stabilized from the corporate dispute in 2014.

The CBU to outstanding loan ratio was maintained. This can be explained by taking a more conservative stance in disbursing loans, prioritizing on getting quality portfolio to mitigate a rise in PAR rates.

Expenses and Investments of KMBI were mainly spread out on the following items: expansion, capacity building, CAPEX and non financial services to clients.

OPERATIONAL INDICATORS Total Assets

2015

2014

Increase (Decrease)

Php1.05B

Php925.2M

Php125M

Php341.9M

Php252M

Total Liabilities

Php708.4M

Net (loss)/income

Fund Balance

ASSET/LIABILITY RATIOS Current Ratio

Debt to equity Ratio

Php673M

Php35.4M

Php92.8M

(Php169.6M)

Php262.4M

2015

2014

1.11

.99

2.07

2.67

CBU to Outstanding Loan Ratio

51.47%

50.20%

Financial Self Sufficiency

125.47%

70.45%

LR to Total Assets

Operational Self Sufficiency

60.38%

125.95%

Php89.9M

94.57% 71.14%

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Year in Review: Group Achievements CLIENT SERVICES GROUP: Championing our Program Members

The Client Services Group (CSG) continues to champion our program members by finding ways to further enhance our portfolio of products and services that are in tuned to clients’ needs. In 2015, CSG’s unwavering efforts yielded remarkable insights and innovate solutions that added value to our clients’ health and well-being.

Research and Development

Intervention Workshop The CSG through its Research and Development (R&D) arm completed the recommendations for the Enhanced Loan Program (GLP v.2) coming from previous assessments conducted during the second quarter of 2014. The recommendation was based on the review conducted from previous studies and validated through center visits. Connected to this effort is the Intervention Workshop held last July 1 – 3, 2015 at La Breza Hotel in Quezon City. The workshop brought together representatives from various levels within the organization. The 3-day event was a consultative exercise that focused on looking into the organization’s existing Group Loan Program methodologies, on how are they relevant and how it can be further improved.

This was synthesized through the insights gained from the participants of the workshop as well as the inputs of the consultant, Ms. Mila Bunker. Ms. Bunker is the current President of Bridge Investment Asia and a member of MCPI’s Advisory Board. The workshop was highly appreciated by the attendees as this was the first of its kind that had members of the Board, Management and staff collaborate together to come up with products and programs for our program members. Total investment for the Intervention Workshop was at Php 293,500.00.

Area Study Writeshop

The R & D also spearheaded an Area Study Writeshop for selected Area Managers last June 19, 2015. The writeshop zeroed into preparing/writing area studies with an area expansion proposal as an end goal. This endeavor was aimed to help the participants present a well – organized 14

Annual Report 2015

Photo: Intervention Workshop facilitated by Ms. Mila Bunker, held at La Breza Hotel in Mother Ignacia St., Quezon City

SOLID FOUNDATION area study. This writeshop was followed by a proofreading exercise which was held last August 24, 2015.

Its focus was on improving the area study papers submitted by the Client Operations Group. These documents will be the basis of our expansion efforts in the coming years. It is important that we be able to properly identify areas for growth and present them accordingly in order to justify why our organization’s presence in an area that would be beneficial to both community and the organization’s ministry. Total budget spent for the writeshop was at Php 87,800.00.

Pure-It Loan Program

One notable innovation was the pilot testing of the Pure-It Loan Program in collaboration with Unilever last November 2015. A kick-off activity held in Brgy. Sto Cristo, Angeles City Pampanga. The activity is congruent to KMBI’s Health and Sanitation program that emphasizes the importance of having access to safe drinking water. We believe that taking care of our client’s health and their families will translate to good business and help clients increase their productivity and wealth in the long run.

Photo Left: Jay Wijesekara -Senior Channel Development Manager,Unilever; Ms. Cecile Wee of KMBI CSG-R&D, lucky program member who got to win a PureIt Unit and Ms. Cashmere Cayaban of KMBI Area Manager for Pampanga. Photo Middle: Ms. Hazel Christine R. Bayaca, Deputy Executive Director for Client Services Group graces the PureIt Kick-off in Pampanga. Photo Right: A KMBI Program Member tests the PureIt unit during the kick-off event

Exposure Visit In efforts to enhance existing products and programs of KMBI, the R & D arm of CSG embarked on an exposure visit in areas serviced by our friends in Alalay Sa Kaunlaran, Incorporated (ASKI) last December 2015. New perspectives were gained from ASKI’s approach and best practices in their agricultural and individual loan programs. These new learnings and perspectives will be applied to enhance existing products and programs to improve client benefits. Budget allocation of this endeavor was at Php 98,100.00.

Strategic Planning

The most significant undertaking of R & D in 2015 was the mounting of the Strategic Planning that ran from October to December of 2015. The planning involved the Board of Trustees and Management Committee.

Output of the said activity was the 5-year plan dubbed as “Paghandom sa Damlag 2020, Our Vision for the Future”. The plan aims to move the whole organization forward, still mission true.

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Social Protection The organization works for the benefit of its program members. We constantly provide products and services that go beyond our loan programs. We work with our partners organizations to add value to our financial services.

Microinsurance

Our partnership with First Life Financial Co., Inc. was renewed last June 16, 2015 in our KMBI Panay Office in Quezon City. This continued partnership brought about new changes and enhancements that resulted to a superior microinsurance product, the first in the Philippines. These enhancements were as follows: (1) Additional Hospital Income Benefit (HIB) 100.00/per maximum 5-days of confinement; (2) Inclusion of parents as dependents for married member following the hierarchy rule; and (3) Coverage for security guards of the organization. These enhancements were set in place starting July 01, 2015.

Our commitment to strengthen ties with industry partners was solidified during the Leadership Enhancement and Development Camp (LEaDCamp) 2015. Industry partners include Charter Ping (Property Insurance for KMBI Program Members), First Life Financial (Life Insurance to our clients), and lastly, Pinoy Ako Insurance Services (PAIS)(for Credit Group Life Insurance).

It was also during the LEaD Camp 2015 that KMBI and First Life awarded the top 3 branches for their exemplary performance for microinsurance. The basis was the number of enrolled program members and their dependents in micro insurance against the number of actual claims. The branches that were awarded were Goa, San Fernando and Tuguegarao.

Photo: KMBI Chairman , Mr. David D. Gutierrez shakes the hand of Pinoy Ako Insurance Each branch was given a plaque of recognition and Services President, Mr. Caleb Jimenez during the third day of the LEaD Camp 2015. cash prize.

APPEND

KMBI Program Members also had the opportunity to benefit from projects of APPEND Party-List (APL) through the auspices of government agencies. We were able to extend medical assistance to some of our program members and their families through APL and Department Of Health (DOH). Some 10 children of our program members were able to get educational assistance from APL and Department of Social Welfare and Development (DSWD).

Dalawang Iskolar per PUS Scholarship Program

Our own efforts to help our program members to send their children to school were on a high in 2015. Dalawang Iskolar per PUS, the KMBI Scholarship Program 2015 was able to grant a total of 1.8 million pesos in scholarship grants to 83 graduating students.

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Annual Report 2015

Mass Wedding We also initiated mass weddings in our branches nationwide. This project benefitted 132 couples who were able to solemnized their union through our initiative.

Photo: KMBI’s Ecumenical Mass Wedding participated by 16 couples at Una Monte Mountain Resort in Angono Rizal. The Mass Wedding was officiated by Pastor Arnold Saflor. (August 01, 2015)

Wellness Caravan We were also able to mount a Wellness Caravan last December and participated by close to 250 program members from NCR. This one-day event was made possible through the generosity of our sponsors. Through this event we were able to impart the importance of wellness to our program members. Around Php 150,000.00 was allocated for this project.

Photos: KMBI Wellness Caravan participated by close to 250 program members from NCR. The event was held at Circle Events place last December 04, 2015.

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Entrepreneurial Development Services Uplifting the condition of our program members is the heart of KMBI’s mission. This is why tools are developed to probe into the heart and needs of our clients. Programs and interventions developed will have ownership amongst its beneficiaries.

Developing these interventions are tasked to The Entrepreneurial Development Services arm of the CSG. They focus on client profiling and needs assessment for capacity building. With such a design in place, we can look forward to more Lydia Malots and Maternidad Salilis rising from our roster of clients. These two inspiring and remarkable women had been recognized in the recent 2015 Citi Microentrepreneurship Awards (CMA), last December 02, 2015.

Photo: Maternidad Salili and Lydia Malot (2nd and 3rd from left from sofa); respectively was awarded plum prizes from the recent Citi Microentrepreneurship Awards held at the Bangko Central ng Pilipinas, Vito Cruz, Manila

The CMA program aims to raise awareness about the importance of microentrepreneurship and microfinance. This is congruent to the award’s goals in increasing financial inclusion and economic empowerment of low-income individuals. The award was sponsored by Citi Foundation, Citibank, Bangko Sentral ng Pilipinas and MCPI. Mrs. Malot was chosen as the National Winner of the 2015 CMA while Mrs. Salili was hailed the Regional Awardee for Mindanao. The triumphs of these two women are true testaments of our dedication to our vision and mission.

KMBI’s CSG will continue to champion our program members, as it shares the organization’s vision and mission.

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Annual Report 2015

MANAGEMENT SERVICES GROUP:

Strengthening the servant-leaders within

The Management Services Group (MSG) is tasked to strengthen the servant-leaders within. MSG brings together the following departments: Finance and Accounting, General Services and Human Capital. These 3 departments provide the administrative, financial and manpower support that the organization needs. The various undertakings of these departments amplify the core values of the organization.

Finance and Accounting

The department’s role is vital in trust building for the organization. In 2015, the department worked double time in ensuring the efficacy and effectiveness of its processes. One example is the implementation of the on-line payment of BIR remittances. We utilized Security Bank’s DigiBanker FPS Real Time Module for the centralization of all KMBI payments of BIR remittances. We went full-blast on this endeavor last May of 2015.

The organization also made sure that it remained compliant to government mandates and contributed its own share in nation building. We had implemented the collection of Value Added Tax on the interest of program members’ loans to adhere to existing laws during that period. This effort is an example of how we exercise good governance in our organization. The implementation of VAT started last April 2015 until December 2015. A total of 1.57 million pesos was spent for this project that went into the training, travel costs and incentives to staff and program members.

To cultivate a culture of teamwork and excellence within the department, we mounted the semi-annual BAs and BAAs’ Area Meeting. The endeavor aimed to enhance the capabilities of our branch accountants and branch accounting assistants thereby empowering them in the process. These Area Meetings were held during the first 2 weeks of July and last week of November until the 1st week of December 2015. Total cost incurred for these meetings was Php 86,000. Another activity that promoted skills development and ensure good governance was the much-anticipated installment of the BA Conference. This conference was first held in Manila in 2014.

The succeeding one was held last September 14 – 15, 2015 in Baguio City. KMBI branch accountants from all over the country converged into one venue to learn best practices, latest guidelines , empowerment exercises and leadership skills to hone them to become better accountants.

Another effort towards continuous improvement is the

vital positioning of senior accountants for every region.

This was done to strategically strengthen internal control through continuous training of branch accounting staff. This is following the move in 2014 for branch accounting staff to report directly to the Head Office. We have invested Php 145,000 towards this effort. The amount was mainly used for branch visits.

One major achievement of the department for 2015 was the on time filing of the organization’s 2014 Audited Financial Study to the Bureau of Internal Revenue and the Security and Exchange Commission considering how 2014 was a challenging year for the organization. The department was able to comply with the government agencies’ requirement.

This is a testament of the department’s integrity and adherence to good governance.

Photo: The BA Conference was mounted last Sept 14 and 15 at the Azalea Hotels and Residences, Baguio City. The conference helped reiterate procedures and imparted leadership skills to Branch Accountants to help them become more efficient in their jobs.

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Human Capital The Human Capital Department (HCD) is composed of various working units working towards creating an environment in the organization that fosters career advancement, staff well being and teamwork as it maintains its stance on good governance.

The HCD finds ways to reward the people within the organization and hone home-grown talents as they step into bigger responsibilities.

Staff Benefits

Last 2015, the organization invested more than 2 million pesos on all regular employees of KMBI on their corporate uniforms.

This project was an initiative of the Total Rewards Management (TRM) Unit. Addition to this, clothing and laundry allowance of more than 60 officers was also released in September of 2015. TRM also started the job rationalization scheme to come up with an organizational structure that looks into compensating the staff based on competencies, skills in relation to the requirement of one’s job position. The implementation of the new structure was set on the first quarter of 2016. A 10% across the board salary increase in 2015 was also enjoyed. This was announced on July 1, 2015 following the approval of a board resolution stating the increase.

758 KMBI staff or 93% of the total number of KMBI staff received an anniversary cash gift. Members of the staff who have been with the organization for three years or less received Php 1,500 while those with tenure of more than 3 years received Php 3,000. The board encouraged the staff to make good use of the cash gift through the announcement of the “Pay it Forward Contest” in connection with the 30th anniversary celebration of the organization in 2016.

ONE Program

To better prepare new hires, HCD through Staff Development Division (SDD) revitalized the Basic Operations Training Program (BOTP). Which is now called the “ONE Program”, which stands for Orientation of New Employees. The program consists of five modules designed to give an overview and prepare new hires for their life in KMBI. The modules are spread out into 10 days of intensive discussions and exposure trips to centers.

KMBI invests a lot to add hard and soft skills to its growing manpower. This comes in the form of seminars, trainings and workshops. For 2015, KMBI spent around 11.5 Million for seminars, trainings and workshops conducted here and abroad.

Photo: New graduates show their certificate of completion after undergoing the “ONE Program” at the KMBI Head Office in Valenzuela. Included in the program is a run down of KMBI’s history, overview of its operations and exposure trips to branches.

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Annual Report 2015

Photo: The Leadership Enhancement and Development Camp 2015 (LEaD Camp 2015) was held at the CAP Convention Center in Camp John Hay from September 16 – 18, 2015. Three KMBI Trustees were invited to speak about the three main pillars of “Building a Strong Foundation”.

Bulk of the amount mentioned earlier was used for the staging of our Leadership Enhancement and Development Camp 2015, popularly called as LEaD Camp 2015. What was truly remarkable about LEaD Camp 2015 was that it brought together almost 650 management and staff under roof for the first time after the challenging events of 2014. The 3-day Camp was the culminating activity of a weeklong reunion of KMBI staff and management from all over the Philippines. It was preceded by the BA and BM Conferences which were also held in Baguio City. A common theme ran on the three events: “Building on Solid Foundation”. This theme was reiterated through the Camp sessions as a call for reflection as well as a call to action to make Jesus as the firm foundation from which our lives will be based on.

It is also interesting to note that 70.32% of hired employees from July 2014 were retained and accorded regular employment status. This accounts to 218 employees out of 310 employees on probation. We also saw some 161 employees given promotions or appointments to key positions. We could also surmise that based on KMBI’s employee retention rate of 77.6% and an attrition rate of 22.4% for 2015 that it is fun to work here at KMBI. Kabalikat para sa Maunlad na Buhay Inc.

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General Services The General Services Department (GSD) of KMBI continues to provide administrative support to the various working groups within the organization. The people behind GSD are constantly working on improving internal systems and processes to enhance efficiency and speed of delivery of services to other working groups.

GSD’s milestones include the inauguration of the KMBI Panay Office after its renovation last June 16, 2015. Total expenditures for this project amounted to 3.7 million pesos.

The KMBI Panay Office now houses the following offices: Executive Management, Legal, Finance and Accounting, Information Technology and Credit Operations. It was envisioned that in the future, all working support groups within the organization will be transferred to Panay Office.

For the time being , the Head Office in Valenzuela is still regarded as home to a number of departments and units.

Hence, the need for renovation and repair work that amounted to roughly Php 1.3 million.

The organization through the efforts of GSD purchased 2 condominium units at Futurepoint Plaza 3 and added some improvements to the property. These units now serve as offices for the staff of KMBI APPEND Advocacy. Total expenditures for this real estate amount to Php 5.6 million. There were also Photo: KMBI Chairman, Dave Gutierrez gives his opening remarks during the Panay Office Dedication.

22

Annual Report 2015

leasehold improvements completed for 11 current branches that comply to the new KMBI Branch Office layout. A total of Php3.6 million was spent for these improvement. The department also completed and turned over three (3) new branch offices: Bacoor in Cavite, Tanay in Rizal and Bogo in Cebu. Total investment for these 3 new branches cost Php 3.6 million. Finally, the organization also purchased two (2) new sedans to augment the existing number of vehicles in our motor pool. The investment we made for the 2 sedans amount to Php 1.5 million.

All these improvements, purchases and investment are deemed necessary to aid the working groups and departments of KMBI for the sustained servicing of our program members. Our actions are in consonance with the core value of good governance wherein we are called to be stewards of the organization’s properties and resources.

On a final note, the MSG along with its working departments will continue to provide the needed support to hasten and improve the work of our servant-leaders within the organization. In doing so, we are ensuring that our program members will receive the best products and services that can be possibly offered.

Photo: Blessing of the Sedans at the Panay Office last August 2015

CREDIT OPERATIONS GROUP: Enriching the lives of our Program Members The Credit Operations Group (COG) leads the transformation movement being in the forefront of customer service. The COG enriches the lives of its clients by pursuing branch initiatives that add value to the financial services being offered by KMBI. This is made through the strengthening of ENTREP center meetings and innovations on non-financial services.

During the second quarter of the year, to comply with BIR ruling, the COG along with other departments implemented an organization-wide campaign to disseminate VAT collection on interest in loans. Key staff were briefed and trained on the nuances of VAT collection in Eurotel Edsa, Quezon City. The implementation of the campaign was a success, posting a 96% payment rate amongst KMBI’s 118,000 clientele.

Regional Directors were also installed for Luzon and VizMin Operations. This move tightened monitoring & support for branches, facilitated faster administerial transactions (leaves, rotations, sanctions etc.) and strengthened reporting, planning and budgeting within the regions.

2015 was the time where the strengthening of the Center Meeting and attendance was pivotal in the efficient delivery of KMBI’s various programs and services. It was inculcated in every field staff the impact of the center meeting in the triple bottom line of their work (outreach, sustainability, transformation).

To strengthen Christian Faith, KMBI earmarked a total investment of Php 1,008,000 for the Monthly Corporate Devotion of its 42 branches. This activity enriches the camaraderie and spiritual lives of its staff. This is further manifested in the communities where our Program Assistant administers to.

On the client side, the Branch Initiated Activity is the best vehicle to bring Non-Financial Services to clients and improve their psycho-social and spiritual wellbeing. Gatherings like Family Day, SummerSaya, Center Leader’s Conferences and other team building activities improve community building and increase the soft skills of our program members. A total of more than Php 369,000 was invested in this endeavor which benefitted around 11,874 clients.

Lastly, KMBI through the COG stands amongst its members during times of vulnerability. A total of Php396,000 was allotted to mobilize construction materials and relief goods to clients that were victimized by unfortuitous events such as fire and typhoons. A total of 2009 KMBI members were recipient of this aid.

Kabalikat para sa Maunlad na Buhay Inc.

23

Board of Trustees

MR. DAVID D. GUTIERREZ

MR. EDUARDO C. JIMENEZ

Chairman and Vice-President

MR. EDGARDO F. GARCIA

ATTY. ROMEL R. BAGARES

DR. VIRGINIA P. JUAN

BISHOP JOSE D. DALINO

ATTY. RAINEER Q. CHU

EDUARDO SERGIO EDEZA

Corporate Treasurer

Member and Trustee

24

President and Vice-Chairman

Annual Report 2015

Corporate Secretary

Member and Trustee

Member and Trustee

Member and Trustee

PARTNERS & AFFILIATION Agricultural Credit and Policy Council Alalay sa Kaunlaran, Inc. Alliance of Philippine Partners in Enterprise Development (APPEND) Asia Pacific Rural and Agricultural Credit Association Bank of Commerce Banking with the Poor Bayan Academy Bicol Microfinance Council, Inc. Card Bank Card NGO Center for Small Entrepreneurs Central Luzon Association of Microfinance Charter Ping-An China Banking Corporation Citi Foundation Department of Social Welfare and Development Department of Trade and Industry First Life Financial Company, Incorporated For His Glory Credit Cooperative Hagdan sa Pag-uswag Foundation, Inc. Katuwang Resource Cooperative Inc. Land Bank of the Philippines Land Bank Countryside Development Foundation, Inc. Micah Challenge Microcredit Summit Campaign Microfinance Challenge Microfinance Council of the Philippines, Inc. Microfinance Management Institute Mindanao Microfinance Council Opportunity Kauswagan Bank Unilever Rangtay sa Pagrang-ay, Inc. Taytay sa Kauswagan, Inc. Technical Education and Skill Development Authority Visayas Association of Microfinance Institutions

Kabalikat para sa Maunlad na Buhay Inc.

25

EXECUTIVE MANAGEMENT OFFICE

PRINCES O. DACCA

Acting Manager, Corporate Affairs Office

JOFEL P. GANDEZA

Manager, Information Technology Department

MAYLANIE D. APAWAN Manager, Legal Services Office

MANAGEMENT SERVICES GROUP

MADELYN P. FRIJILLANO

REGINOLD R. DELOS REYES

ANSELMO EDWIN B. ARUELO

MARIA WILMA VELARDE

MARVIN E. BARRIETA

SHARON O. DIONCO

Deputy Executive Director, Management Services Group

Manager, Finance Division

26

Annual Report 2015

Director, General Services Departmnet

Manager, Accounting Division

Director, Human Capital Department

Manager, Total Rewards Management Division

CLIENT SERVICES GROUP

HAZEL CHRISTINE R. BAYACA Deputy Executive Director, Client Services Group

MA. CECILE V. WEE

Acting Manager, Client Services for Research and Development

ANNA MARIA BARCELON

Manager, Entrepreneurial Development Division

CREDIT OPERATIONS GROUP

RHANY P. BARRERA

Deputy Executive Director, Credit Operations Group

RACHELLE M. BASIYA

Acting Regional Director, Luzon Operations

AMELITA ANIDILAB

Acting Regional Director, VisMin Operations

Kabalikat para sa Maunlad na Buhay Inc.

27

INDEPENDENT AUDITOR’S

REPORT Kabalikat para sa Maunlad na Buhay, Inc. (A Non-stock, Non-profit Organization) Financial Statements December 31, 2015 and 2014

28

Annual Report 2015

INDEPENDENT AUDITOR’S REPORT The Members and the Board of Trustees Kabalikat Para sa Maunlad na Buhay, Inc. No. 12 San Franacisco Street Karuhatan, Valenzuela City

Report on the Financial Statements We have audited the accompanying financial statements of Kabalikat Para sa Maunlad na Buhay, Inc. (a non-stock, non-profit organization) (KMBI or the Organization), which comprise the statements of assets, liabilities and fund balance as at December 31, 2015 and 2014, and the statements of comprehensive income, statements of changes in fund balance 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.

Auditor’s 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 the risks assessment, 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.

Kabalikat para sa Maunlad na Buhay Inc.

29

Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Kabalikat Para sa Maunlad na Buhay, Inc. as at December 31, 2015 and 2014, and its financial performance and its cash flows for the years then ended in accordance with Philippine Financial Reporting Standards.

Other Matter

In our report dated April 9, 2015, we did not express an opinion on the financial statements of Kabalikat Para sa Maunlad na Buhay, Inc. as at and for the year ended December 31, 2014 because we were unable to determine whether any adjustment might have been found necessary in respect to the assets, liabilities and fund balance of the branches affected by the intracorporate dispute and pendency of the cases as discussed in Note 1 to the financial statements. The dispute resulted in the takeover of the operations and management of thirty-eight branches (Takeover Branches) of the Organization by three former corporate members (Takeover Group) in the first quarter of 2014. The Organization filed civil, administrative and criminal cases to recover the Takeover Branches including the assets and properties of these branches. Actions were also taken to demand the collection of loans receivables from program members of the Takeover Branches. The demand to the program members includes notice that the Organization is not responsible for the Capital Build-Up (CBU).

With two (2) years that have elapsed after the takeover, the management assessed that it has lost control of the assets of the Takeover Branches. Cases filed against the Takeover Group were directed towards recovering the losses incurred by the Organization from the takeover. Moreover, there were no executed claims against the Organization either by the Takeover Group or program members of the Takeover Branches. Accordingly, the Organization has completely derecognized the assets and liabilities of the Takeover Branches and has recognized losses arising from such transaction. As disclosed in Note 1 to the financial statements, the Organization restated its financial statements as at and for the years ended December 31, 2014 and 2013 to apply the CBU as collateral to the loans receivables from program members of Takeover Branches, to derecognize the other assets and liabilities from the Takeover Branches and to recognize the losses arising from the takeover.

We have assessed the effects of the adjustments and the matters discussed above in the Organization’s financial statements and accordingly, our present opinion on the restated 2014 financial statements, as presented herein, is different from that expressed in our previous report.

30

Annual Report 2015

Report on the Supplementary Information Required under Revenue Regulations Nos. 15-2010 and 19-2011 of the Bureau of Internal Revenue Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on taxes and licenses and the schedule of taxable income and deductible expenses in Note 29 to the financial statements 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 Kabalikat Para sa Maunlad na Buhay, Inc. This information has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

REYES TACANDONG & CO.

JOSEPH C. BILANGBILIN Partner CPA Certificate No. 102884 Tax Identification No. 210-181-965-000 BOA Accreditation No. 4782; Valid until December 31, 2018 SEC Accreditation No. PA-A-707-A Valid until April 30, 2016 BIR Accreditation No. 08-005144-11-2014 Valid until March 31, 2017 PTR No. 5321845 Issued January 5, 2016, Makati City April 5, 2016 Makati City, Metro Manila

Kabalikat para sa Maunlad na Buhay Inc.

31

INDEPENDENT AUDITOR’S REPORT

The Members and the Board of Trustees Kabalikat Para sa Maunlad na Buhay, Inc. We have audited the accompanying financial statements of Kabalikat Para sa Maunlad na Buhay, Inc. (a non-stock, non-profit organization) (KMBI or the Organization), which comprise the statements of assets, liabilities and fund balance as at December 31, 2015 and 2014, and the statements of comprehensive income, statements of changes in fund balance 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.

Auditor’s 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 the risks assessment, 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.

32

Annual Report 2015

Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Kabalikat Para sa Maunlad na Buhay, Inc. as at December 31, 2015 and 2014, and its financial performance and its cash flows for the years then ended in accordance with Philippine Financial Reporting Standards.

Other Matter

In our report dated April 9, 2015, we did not express an opinion on the financial statements of Kabalikat Para sa Maunlad na Buhay, Inc. as at and for the year ended December 31, 2014 because we were unable to determine whether any adjustment might have been found necessary in respect to the assets, liabilities and fund balance of the branches affected by the intracorporate dispute and pendency of the cases as discussed in Note 1 to the financial statements. The dispute resulted in the takeover of the operations and management of thirty-eight branches (Takeover Branches) of the Organization by three former corporate members (Takeover Group) in the first quarter of 2014. The Organization filed civil, administrative and criminal cases to recover the Takeover Branches including the assets and properties of these branches. Actions were also taken to demand the collection of loans receivables from program members of the Takeover Branches. The demand to the program members includes notice that the Organization is not responsible for the Capital Build-Up (CBU).

With two (2) years that have elapsed after the takeover, the management assessed that it has lost control of the assets of the Takeover Branches. Cases filed against the Takeover Group were directed towards recovering the losses incurred by the Organization from the takeover. Moreover, there were no executed claims against the Organization either by the Takeover Group or program members of the Takeover Branches. Accordingly, the Organization has completely derecognized the assets and liabilities of the Takeover Branches and has recognized losses arising from such transaction. As disclosed in Note 1 to the financial statements, the Organization restated its financial statements as at and for the years ended December 31, 2014 and 2013 to apply the CBU as collateral to the loans receivables from program members of Takeover Branches, to derecognize the other assets and liabilities from the Takeover Branches and to recognize the losses arising from the takeover.

We have assessed the effects of the adjustments and the matters discussed above in the Organization’s financial statements and accordingly, our present opinion on the restated 2014 financial statements, as presented herein, is different from that expressed in our previous report.

REYES TACANDONG & CO. JOSEPH C. BILANGBILIN Partner

CPA Certificate No. 102884 Tax Identification No. 210-181-965-000 BOA Accreditation No. 4782; Valid until December 31, 2018 SEC Accreditation No. PA-A-707-A Valid until April 30, 2016 BIR Accreditation No. 08-005144-11-2014 Valid until March 31, 2017 PTR No. 5321845 Issued January 5, 2016, Makati City

April 5, 2016 Makati City, Metro Manila 

Kabalikat para sa Maunlad na Buhay Inc.

33

REPORT OF INDEPENDENT AUDITOR TO ACCOMPANY FINANCIAL STATEMENTS FOR FILING WITH THE BUREAU OF INTERNAL REVENUE

The Members and the Board of Trustees Kabalikat Para sa Maunlad na Buhay, Inc. No. 12 San Francisco Street Karuhatan, Valenzuela City We have audited the accompanying financial statements of Kabalikat Para sa Maunlad na Buhay, Inc. (a non-stock, non-profit organization) (KMBI or the Organization) as at and for the year ended December 31, 2015, on which we have rendered our report dated April 5, 2016.

In compliance with Revenue Regulations V-20, we are stating that no partner of our Firm is related by consanguinity or affinity to the president or the members of the Board of Trustees of the Organization.

REYES TACANDONG & CO.

JOSEPH C. BILANGBILIN Partner

CPA Certificate No. 102884 Tax Identification No. 210-181-965-000 BOA Accreditation No. 4782; Valid until December 31, 2018 SEC Accreditation No. PA-A-707-A Valid until April 30, 2016 BIR Accreditation No. 08-005144-11-2014 Valid until March 31, 2017 PTR No. 5321845 Issued January 5, 2016, Makati City

April 5, 2016 Makati City, Metro Manila

34

Annual Report 2015

REPORT OF INDEPENDENT AUDITOR TO ACCOMPANY FINANCIAL STATEMENTS FOR FILING WITH THE SECURITIES AND EXCHANGE COMMISSION

The Members and the Board of Trustees Kabalikat Para sa Maunlad na Buhay, Inc. No. 12 San Francisco Street Karuhatan, Valenzuela City We have audited the accompanying financial statements of Kabalikat Para sa Maunlad na Buhay, Inc. (a non-stock, non-profit organization) (KMBI or the Organization) as at and for the year ended December 31, 2015, on which we have rendered our report dated April 5, 2016.

In compliance with Securities Regulation Code Rule 68, as amended, we are stating that the Organization has no stockholders being a non-stock, non-profit organization.

REYES TACANDONG & CO.

JOSEPH C. BILANGBILIN Partner

CPA Certificate No. 102884 Tax Identification No. 210-181-965-000 BOA Accreditation No. 4782; Valid until December 31, 2018 SEC Accreditation No. PA-A-707-A Valid until April 30, 2016 BIR Accreditation No. 08-005144-11-2014 Valid until March 31, 2017 PTR No. 5321845 Issued January 5, 2016, Makati City

April 5, 2016 Makati City, Metro Manila

Kabalikat para sa Maunlad na Buhay Inc.

35

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A Non-Stock, Non-Profit Organization) STATEMENTS OF ASSETS, LIABILITIES AND FUND BALANCE Note ASSETS Current Assets Cash and cash equivalents Financial assets at fair value through profit or loss (FVPL) Loans receivables Other receivables Other current assets

Total Current Assets

Noncurrent Assets Available-for-sale (AFS) financial assets Investment in an associate Property and equipment Other noncurrent assets

Total Noncurrent Assets

December 31, 2015

7

P118,118,897

8 9 10 11

1,727,133 586,792,291 33,885,073 6,872,433 747,395,827

12 12 13 14

400,000 – 92,006,839 210,505,135 302,911,974

Noncurrent Liabilities Retirement benefit liability Deferred tax liability

Total Noncurrent Liabilities Total Liabilities Fund Balance Initial contribution and retained earnings Cumulative remeasurement gains on retirement benefit liability

Total Fund Balance See accompanying Notes to Financial Statements.

Annual Report 2015 36

P29,528,875

P13,207,248

1,749,891 1,250,000 72,817,964 209,530,000 285,347,855

1,449,891 1,250,000 71,192,952 154,811,926 228,704,769

2,397,789 578,304,584 23,695,345 5,967,141 639,893,734

2,513,920 622,217,398 24,820,573 7,976,755 670,735,894

P1,050,307,801

P925,241,589

P899,440,663

15 16 25 28

P25,437,318 302,777,799 709,973 343,020,217 671,945,307

17 25

36,196,520 255,379 36,451,899 708,397,206

P24,097,350 291,505,358 – 330,381,670 645,984,378

P38,751,271 226,117,355 – 190,313,285 455,181,911

137,814,627

307,444,898

P925,241,589

P899,440,663

LIABILITIES AND FUND BALANCE Current Liabilities Trade and other payables Capital build-up (CBU) Income tax payable Provision for probable losses

Total Current Liabilities

December 31, 2014 January 1, 2014 (As Restated -Note 5) (As Restated -Note 5)

230,677,395 17

111,233,200 341,910,595 P1,050,307,801

26,930,320 – 26,930,320 672,914,698

114,512,264 252,326,891

22,983,862 – 22,983,862 478,165,773

113,829,992 421,274,890

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A Non-Stock, Non-Profit Organization) STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 Note

REVENUE Interest income Service income Foreign exchange gains Other income EXPENSES Operating expenses Administrative expenses Provision for probable losses Impairment losses Interest expense Unrealized losses on fair value changes of financial assets at FVPL INCOME (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE Current Deferred

9 19 21 22 28 20 16 8

25

NET INCOME (LOSS)

OTHER COMPREHENSIVE INCOME (LOSS) Not to be reclassified to profit or loss in subsequent periods Remeasurement gains (losses) on retirement benefit TOTAL COMPREHENSIVE INCOME (LOSS)

See accompanying Notes to Financial Statements.

17

2015

P399,606,913 45,270,170 249,407 5,626,791 450,753,281 229,261,907 97,501,281 12,638,547 10,700,178 6,152,592 670,656 356,925,161

2014

P369,993,075 46,028,835 32,579 2,127,760 418,182,249 202,102,879 78,086,179 140,068,385 162,165,358 5,273,588 116,131 587,812,520

93,828,120

(169,630,271)

709,973 255,379 965,352

– – –

92,862,768

(169,630,271)

(3,279,064)

682,272

P89,583,704

(P168,947,999)

Kabalikat para sa Maunlad na Buhay Inc.

37

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A Non-Stock, Non-Profit Organization) STATEMENTS OF CHANGES IN FUND BALANCE

Note

Initial Contribution and Retained Earnings (Deficit) Balance at beginning of year, as previously reported Prior period adjustments Balance at beginning of year, as restated Net income (loss) Balance at end of year Cumulative Remeasurement Gains on Retirement Benefit Liability Balance at beginning of year Remeasurement gains (losses) Balance at end of year

See accompanying Notes to Financial Statements.

38

Annual Report 2015

Years Ended December 31 2015 2014 (As Restated Note 5

5

(P72,114,399) 209,929,026 137,814,627 92,862,768 230,677,395

P97,515,872 209,929,026 307,444,898 (169,630,271) 137,814,627

17

114,512,264 (3,279,064) 111,233,200 P341,910,595

113,829,992 682,272 114,512,264 P252,326,891

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A Non-Stock, Non-Profit Organization) STATEMENTS OF CHANGES IN FUND BALANCE Note

CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax Adjustments for:

Provision for probable losses

Impairment losses

Depreciation and amortization

Retirement benefit costs

Unrealized losses on fair value changes

of financial assets at FVPL

Interest income

Gain on disposal of property and equipment

Unrealized foreign exchange gains

Interest expense Operating income before working capital changes Decrease (increase) in:

Loans receivable

Other receivables

Other current assets

Other noncurrent assets Increase (decrease) in:

Trade and other payables CBU Net cash generated from operations Interest received Interest paid Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of:

Property and equipment

AFS financial assets Trademark Proceeds from disposal of property and equipment Net cash used in investing activities NET INCREASE IN CASH EFFECTS OF FOREIGN EXCHANGE RATE CHANGES ON CASH CASH AT BEGINNING OF YEAR CASH AT END OF YEAR OPERATIONAL CASH FLOW FROM INTEREST Interest received Interest paid

See accompanying Notes to Financial Statements.

Years Ended December 31 2015 2014 (As Restated Note 5

P93,828,120 28 20 13 17 8 9 13 16

12,638,547 10,700,178 6,687,719 5,987,136 670,656 (612,658) (299,373) (249,407) 56,953 129,407,871 (50,806,793) (18,190,015) (905,292) (936,183) 1,339,968 53,591,527 113,501,083 612,658 (56,953) 114,056,788

13 12 14

(25,873,933) (100,000) (41,613) 299,373 (25,716,173) 88,340,615 249,407 29,528,875 P118,118,897 P396,003,452 5,916,929

(P169,630,271) 140,068,385 162,165,358 5,993,340 4,628,730

116,131 (604,470) – (32,579) 151,163 142,855,787

(316,283,612) (1,258,045) 183,290 (54,711,841) (14,653,921) 267,628,668 23,760,326 604,470 (151,163) 24,213,633 (7,618,137) (300,000) (6,448) – (7,924,585) 16,289,048

32,579 13,207,248 P29,528,875

P375,017,528 5,966,686

Kabalikat para sa Maunlad na Buhay Inc.

39

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A Non-Stock, Non-Profit Organization) NOTES TO FINANCIAL STATEMENTS

1.

General Information Corporate Information Kabalikat Para sa Maunlad na Buhay, Inc. (“KMBI” or the “Organization”) is a non-stock, non-profit, charitable, cultural and civic services organization incorporated in the Philippines and registered with the Securities and Exchange Commission (SEC) on November 27, 1986. The Organization conducts microfinance operations pursuant to Republic Act (R.A.) No. 8425, “Social Reform and Poverty Alleviation Act”. As a microfinance non-government organization (NGO), the Organization also provides nonfinancial services, seminars, lectures and trainings to low-income Filipinos by inviting resource persons in various fields of industry such as, farming, fishing and other agricultural activities and extends financial assistance at reasonable interest rates.

Since no part of the Organization’s net income inures to the benefit of any private individual or member, the Organization falls under Section 30 (g) of the Tax Reform Act of 1997. Accordingly, income from activities in pursuit of the purpose of the Organization is exempt from income tax. The exemption, however, does not apply to income of whatever kind and character derived from the use of the Organization’s properties, real or personal, or from any of its activities conducted for profit regardless of the dispositions made of such income.

Effective on November 23, 2015, the Organization being a microfinance NGO, is subject to two percent (2%) tax on its gross receipts from microfinance operations in lieu of all national taxes (including Value-Added Taxes). This is in accordance with R.A. No. 10693, “The Microfinance NGOs Act”, which was approved by the President of the Philippines on November 3, 2015.

The Organization will comply with the requirements of R.A. No. 10693 upon finalization of the Act’s Implementing Rules and Regulations.

The registered office address of the Organization is No. 12 San Francisco Street, Karuhatan, Valenzuela City.

The financial statements of the Organization as at and for the year ended December 31, 2015 were approved and authorized for issuance by the Board of Trustees (BOT) on April 5, 2016.

Status of Operation In the first quarter of 2014, an intra-corporate dispute resulted in the takeover of the operations and management of thirty-eight branches (Takeover Branches) out of seventy-one branches of the Organization by three of its former corporate members (Takeover Group). Consequently, the Takeover Group took control of the records of transactions, including contracts and agreements with program members. The summarized financial information of these branches as of the date of takeover is as follows:

Current Assets Noncurrent Assets Total Liabilities 40

Annual Report 2015

2013 P454,602,093 3,430,566 287,818,963

The Organization filed civil, administrative and criminal cases against the Takeover Group to recover the Takeover Branches including the properties and assets of these branches. Actions were also taken to demand collections of loans receivables from program members of the Takeover Branches. The demand to the program members of the Takeover Branches includes notice that the Organization is not responsible for the Capital Build-Up (CBU). In the Organization’s financial statements as at and for the years ended December 31, 2014 and 2013, the Organization recognized impairment losses on the assets of these branches as follows: Loans receivables Other receivables Other current assets Cash on hand and in banks Property and equipment

2014 P157,955,761 2,383,273 1,826,324 – –

2013 P345,109,792 2,092,153 4,647,998 7,637,502 3,430,567

With two years that have elapsed after the takeover, management has assessed that it has lost control of the assets of the Takeover Branches. Cases filed against the Takeover Group were directed toward recovering the losses incurred by the Organization. Moreover, there were no executed claims against the Organization either by the program members of the Takeover Branches and the Takeover Group. The BOT enforced the application of the CBU as collateral to the loans receivables from program members of Takeover Branches and has recognized this transaction in the financial statements of the Organization. Accordingly, the Organization has completely derecognized the assets and liabilities of the Takeover Branches and has recognized losses arising from the takeover. These adjustments were taken up by restating the financial statements of the Organization as at and for the years ended December 31, 2014 and as at January 1, 2014. The restatements are presented as follows: Trade and other payables CBU Initial contribution and retained earnings (deficit) Cash Loans receivable Other receivables Other current assets Property and equipment Trade and other payables CBU Initial contribution and retained earnings (deficit)

As Previously Reported P31,785,711 493,746,023

Effect of Restatement (P7,688,361) (202,240,665)

As Restated P24,097,350 291,505,358

As Previously Reported P13,207,248 622,217,398 24,820,573 7,976,755 71,192,952 46,439,632 428,358,020 97,515,872

Effect of Restatement P– – – – – (7,688,361) (202,240,665) 209,929,026

As Restated P13,207,248 622,217,398 24,820,573 7,976,755 71,192,952 38,751,271 226,117,355 307,444,898

(72,114,399)

209,929,026

137,814,627

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Tax Assessments The Organization has pending tax assessments for the taxable years 2007, 2009, 2010, 2011 and 2012 aggregating P=528.4 million, principally on Value-Added Tax (VAT). The Organization has a pending appeal with the Supreme Court on the ruling to CTA Case No. 8336 which subjects the Organization to 12% VAT. The Organization has appealed that KMBI is a non-stock, non-profit organization engaged in microfinance and related services and should not be subjected to VAT. Consequently, there is a pending petition for review with CTA 2nd Division docketed as CTA Case No. 9003 on the Organization’s 2012 VAT assessment. Management believes that these tax cases will be settled in favor of the Organization.

2.

Basis of Preparation and Statement of Compliance The financial statements of the Organization have been prepared on a historical cost basis, except for the financial assets at FVPL which have been measured at fair value. The financial statements are presented in Philippine Peso, the Organization’s functional currency. All values are in absolute amounts, unless otherwise stated.

Moreover, the financial statements of the Organization have been prepared in compliance with the Philippine Financial Reporting Standards (PFRS) issued by the Financial Reporting Standards Council and adopted by the SEC. This financial framework includes PFRS, Philippine Accounting Standards (PAS) and Philippine interpretations from the International Financial Reporting Interpretations Committee.

3.

Summary of Changes in PFRS Adoption of New and Revised PFRS The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of the following new and revised PFRS which the Organization adopted effective for annual periods beginning on or after January 1, 2015:

• Amendment to PAS 24, Related Party Disclosures - Key Management Personnel – The amendment clarifies how payments to entities providing key management personnel services are to be disclosed.

• Amendment to PFRS 13, Fair Value Measurement - Short-term Receivables and Payables and Portfolio Exception – The amendment clarifies that the portfolio exception in PFRS 13 - allowing an entity to measure the fair value of a group of financial assets and financial liabilities on a net basis - applies to all contracts (including non-financial) within the scope of PAS 39, Financial Instruments: Recognition and Measurement or PFRS 9, Financial Instruments.

The adoption of the foregoing new and revised PFRS did not have any material effect on the financial statements.

Additional disclosures have been included in the notes to financial statements, as applicable.

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Annual Report 2015

New and Revised PFRS Not Yet Adopted Relevant new and revised PFRS which are not yet effective for the year ended December 31, 2015 and have not been applied in preparing the financial statements are summarized below.

Effective for annual periods beginning on or after January 1, 2016:

• Amendment to PAS 19, Employee Benefit – The amendment clarifies that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid.

Effective for annual periods beginning on or after January 1, 2018:

• PFRS 9, Financial Instruments – This standard will replace PAS 39 (and all the previous versions of PFRS 9).

It provides requirements for the classification and measurement of financial assets and financial liabilities, impairment, hedge accounting and derecognition.

PFRS 9 requires all recognized financial assets to be subsequently measured at amortized cost or fair value (through profit or loss or through other comprehensive income), depending on their classification by reference to the business model within which they are held and their contractual cash flow characteristics.

For financial liabilities, the most significant effect of PFRS 9 relates to cases where the fair value option is taken: the amount of change in fair value of a financial liability designated as at fair value through profit or loss that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income (rather than in profit or loss), unless this creates an accounting mismatch.

For the impairment of financial assets, PFRS 9 introduces an “expected credit loss” model based on the concept of providing for expected losses at inception of a contract; it will be no longer necessary for objective evidence of impairment before a credit loss is recognized.

The derecognition provisions are carried over almost unchanged from PAS 39.

Under prevailing circumstances, the adoption of the foregoing new and revised PFRS is not expected to have any material effect on the financial statements of the Organization except for PFRS 9. The Organization anticipates the application of PFRS 9 might have a significant effect on amounts reported in respect of the Organization’s financial instruments. However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed. Additional disclosures will be included in the financial statements, as applicable.

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4.

Summary of Significant Accounting Policies The significant accounting policies that have been used in the preparation of these financial statements are summarized below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Financial Assets and Financial Liabilities Financial assets and financial liabilities are accounted for as follows: a. Recognition

Financial instruments are recognized in the statements of assets, liabilities and fund balance when the Organization becomes a party to the contractual provisions of an instrument. Financial instruments are initially measured at fair value which includes transaction costs directly attributable to the acquisition (e.g. fees, commissions, transfer taxes etc.). However, transaction costs related to the acquisition of instruments classified as FVPL are recognized immediately in profit or loss. The Organization uses trade date accounting for financial instruments.

“Day 1” Difference. The best evidence of the fair value of a financial instrument at initial recognition is its transaction price unless the transaction price differs from its fair value. The best evidence of fair value is its quoted price in an active market. If the market for a financial instrument is not active, the Organization determines fair value by using a valuation technique whose variables include data from observable markets. The difference between the transaction price and the fair value (a “day 1” difference) is recognized in profit or loss, unless it qualifies for recognition as some other type of asset. In cases where the valuation model uses unobservable data, the difference between the transaction price and the fair value is only recognized in profit or loss when the inputs become observable, or when the instrument is derecognized. For each transaction, the Organization determines the appropriate method of recognizing the “day 1” difference.

b. Classification

The Organization classifies its financial assets at initial recognition under the following categories: (a) financial assets at FVPL, (b) held-to-maturity (HTM) investments, (c) loans and receivables and (d) available-for-sale (AFS) financial assets. Financial liabilities, on the other hand, are classified as either financial liabilities at FVPL or other financial liabilities at amortized cost. The classification of a financial instrument largely depends on the Organization’s intention at acquisition or issuance date.

As at December 31, 2015 and 2014, the Organization does not have HTM investments and financial liabilities at FVPL.

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Annual Report 2015

Financial Assets at FVPL. Financial assets at FVPL are either classified as held for trading or designated at FVPL. A financial instrument is classified as held for trading if it meets either of the following conditions: • it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;

• on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

• it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

After initial recognition, financial assets at FVPL are subsequently measured at fair value. Unrealized gains or losses arising from the fair valuation of financial assets at FVPL are recognized in profit or loss.

As at December 31, 2015 and 2014, the Organization’s investments in quoted equity securities are classified under this category.

Loans and Receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments and fixed maturities that are not quoted in an active market, other than those held for trading or classified as AFS financial assets. After initial recognition, loans and receivables are subsequently measured at amortized cost using the effective interest method, less allowance for impairment, if any. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate. The amortization and losses arising from impairment are recognized in profit or loss.

The Organization’s cash, loans receivables, other receivables and refundable rental deposits are classified under this category.

AFS Financial Assets. AFS financial assets are those non-derivative financial assets that are designated as such or are not classified as another category of financial asset. AFS financial assets are initially measured at fair value plus transaction costs. After initial recognition, AFS financial assets are measured at fair value with unrealized gains or losses recognized in other comprehensive income (OCI). These fair value changes are recognized in equity until the investment is derecognized or until the investment is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is reclassified to profit or loss. Investment in equity instruments that do not have a quoted market price and whose fair value cannot be reliably measured are carried at cost less allowance for impairment, if any.

The Organization’s investment in an unquoted equity securities are classified under this category.

Other Financial Liabilities at Amortized Cost. Financial liabilities are classified in this category if these are not held for trading or not designated as FVPL upon the inception of the liability. These include liabilities arising from operations or through borrowing.

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Other financial liabilities are initially recognized at fair value less any directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any related issue costs, discount or premium. Gains and losses are recognized in profit or loss when the liabilities are derecognized, as well as through the amortization process.

The Organization’s trade and other payables (excluding statutory payables) and CBU are classified under this category. c. Reclassifications

A financial instrument cannot be reclassified into or out of the FVPL category after initial recognition.

For a financial asset reclassified out of the AFS category to loans and receivables or HTM investments, any gain or loss previously recognized in equity, and any difference between the new amortized cost and maturity amount, are amortized to profit or loss over the remaining life of the investment using the effective interest method. If the financial asset is subsequently impaired, any gain or loss that has been recognized in equity is reclassified to profit or loss.

In the case of a financial asset that does not have a fixed maturity, the gain or loss is recognized in profit or loss when the financial asset is sold or otherwise disposed of. If the financial asset is subsequently impaired, any previous gain or loss that has been recognized in equity is reclassified to profit or loss.

d. Impairment of Financial Assets Loans and Receivables. The Organization 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 group of financial assets is deemed impaired if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The Organization first assesses whether objective evidence of impairment exists individually for its financial assets that are individually significant, and individually or collectively for its financial assets that are not individually significant. If the Organization determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment.

The impairment loss is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. Impairment losses are recognized in full in profit or loss.

Interest income continues to be recognized on the reduced carrying amount using the interest rate used to discount the future cash flows for the purpose of measuring the impairment loss. Financial assets at amortized cost, together with the related allowance account, are written off when there is no realistic prospect of future recovery and all collateral has been realized.

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Annual Report 2015

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in profit or loss, to the extent that the resulting carrying amount will not exceed the amortized cost determined had no impairment loss been recognized in prior years.

Financial Assets Carried at Cost. If there is objective evidence that an impairment loss on an unquoted equity instrument measured at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

e. Derecognition

A financial asset (or where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized by the Organization when: • the right to receive cash flows from the asset has expired; or

• the Organization 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 • the Organization has transferred its right to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risk and rewards of the assets, but has transferred control over the asset.

Where the Organization has transferred its right to receive cash flows from an asset or has entered into a passthrough 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 Organization’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset, if any, is measured at the lower of original carrying amount of the asset and the maximum amount of consideration that the Organization could be required to pay.

f. Offsetting

Financial assets and liabilities are offset and the net amount reported in the statements of assets, liabilities and fund balance 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.

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Fair Value Measurement The Organization uses market observable data to the extent possible when measuring the fair value of an asset or a liability. Fair values are categorized into different levels in a fair value hierarchy based on inputs used in the valuation techniques as follows: • •

•

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; or Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Organization recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes to the financial statements: • •

Note 8 - Financial assets at FVPL Note 27 - Fair Value Measurement

Prepayments Prepayments are expenses paid in advance and recorded as assets before these are utilized. Prepayments are apportioned over the period covered by the payment and included in profit or loss when incurred. Prepayments that are expected to be realized within 12 months after the financial reporting period are classified as current asset.

Otherwise these are classified as noncurrent asset.

Investment in an Associate Investment in an associate is accounted for under equity method.

An associate is an entity in which the Organization has significant influence, but not control, over the entity’s financial and operating policies. Significant influence is presumed to exist when the Organization holds between 20% and 50% of the voting power of another entity.

Under the equity method, the investment in an associate is carried in the statements of assets, liabilities and fund balance at cost plus post-acquisition changes in the Organization’s share of net assets of the associate. After application of the equity method, the Organization determines whether it is necessary to recognize any additional impairment loss with respect to the Organization’s net investment in an associate. The statements of comprehensive income reflect the share of the results of operations of the associate. Where there has been a change recognized directly in the equity of the associate, the Organization recognizes its share of any changes in the statements of comprehensive income.

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Annual Report 2015

Property and Equipment Property and equipment, except land, are stated at cost less accumulated depreciation, amortization and any impairment in value. Land is stated at cost less any impairment in value.

The initial cost of property and equipment comprises its purchase price, after deducting trade discounts and rebates, and any directly attributable costs of bringing the asset to its working condition and location for its intended use. The cost of self-constructed assets includes the cost of materials and direct labor, any other directly attributable costs. The initial cost of property and equipment also includes the costs of dismantling and removing the items and restoring the site on which the assets are located and capitalized borrowing costs.

Expenditures incurred after the property and equipment have been put into operation, such as repairs, maintenance and overhaul costs, are normally recognized in profit or loss in the year 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 additional costs of property and equipment. The cost of replacing a component of an item of property and equipment is recognized if it is probable that the future economic benefits embodied within the component will flow to the Organization, and its cost can be measured reliably. The carrying amount of the replaced component is derecognized.

When significant parts of an item of property and equipment have different useful lives, these are accounted for as separate items (major components) of property and equipment.

Depreciation and amortization are calculated on a straight-line basis over the following estimated useful lives of the property and equipment: Building Building improvements Transportation equipment Leasehold improvements Furniture and equipment

Number of Years 40 3 5 3 or term of the lease, whichever is shorter 3

The estimated useful lives and depreciation and amortization method are reviewed periodically to ensure that these are consistent with the expected pattern of economic benefits from items of property and equipment.

When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation, amortization and any impairment in value are removed from the accounts. Any resulting gain or loss is recognized in profit or loss.

Other Noncurrent Assets Other noncurrent assets pertain to the Organization’s cash and cash equivalents restricted for use in the current operations and withdrawal and trademark. Restricted cash and cash equivalents are measured at face value less any allowance for impairment. Trademark is stated at cost less accumulated amortization and any impairment in value.

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Trademark represents cost of the Organization’s trademark, trade names and other intellectual properties. Cost includes registration and other directly attributable costs. Trademark, which is an intangible asset, is determined to have a finite life and amortized over its useful life on a straight-line basis and assessed for impairment whenever there is an indication that the asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the intangible asset with finite useful life are recognized in profit or loss.

The useful life of an intangible asset arising from contractual or other legal rights should not exceed the period of those rights, but may be shorter depending on the period over which the intangible asset is expected to be used by the Organization. Trademark is amortized on a straight-line basis over ten (10) years.

When the trademark is retired or otherwise disposed of, the cost and the related accumulated amortization and any impairment in value are removed from the accounts. Any resulting gain or loss is recognized in profit or loss.

Impairment of Nonfinancial Assets The carrying amounts of property and equipment and other nonfinancial assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such indication exists and when the carrying amounts exceed the estimated recoverable amounts, the assets or cash-generating units are written down to their recoverable amounts. The recoverable amount of the asset is the greater of the fair value less cost to sell or value in use. The fair value less cost to sell is the amount obtainable from the sale of an asset in an arm’s-length transaction. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in profit or loss.

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. In such instance, the carrying amount of the asset is increased to its recoverable amount. However, that increased amount cannot exceed the carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit or loss. After such reversal, the depreciation and amortization charges are adjusted in future years to allocate the asset’s revised carrying amount, on a systematic basis over its remaining useful life.

Value-Added Tax (VAT) Revenue, expenses and assets are recognized net of the amount of VAT. The net amount of VAT payable to the taxation authority is included as part of “Trade and other payables” account in the statements of assets, liabilities and fund balance.

Fund Balance Fund balance represents the cumulative balance of the Organization’s net income or loss, contributions and other comprehensive income or loss.

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Annual Report 2015

Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Organization and the amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties.

The Organization is acting as the principal in all of its revenue arrangements.

Interest Income. Interest income is recognized as it accrues, taking into account the effective yield on the asset.

Service Income. Income related to the administration and servicing of a loan is recognized as income as the services are provided.

Other Income. Income from other sources is recognized when earned during the period.

Costs and Expenses Recognition Costs and expenses are recognized in profit or loss when a decrease in future economic benefit related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably.

Operating Expenses. Operating expenses are recognized as expense when the services are rendered.

Administrative Expenses. Administrative expenses constitute cost of administering the business and cost incurred to sell and market the services. These are expensed as incurred.

Interest Expense. Interest expense for interest-bearing financial liabilities is recognized in profit or loss using the effective interest method.

Retirement Benefits Retirement benefit costs are actuarially determined using the projected unit credit method. This method reflects services rendered by employees up to the date of valuation and incorporates assumptions concerning employees’ projected salaries. The calculation of defined benefit obligations is performed annually by a qualified actuary.

The Organization recognizes service costs, comprising of current service costs, past service costs, and interest expense in profit or loss.

The Organization determines the interest expense by applying the discount rate to the defined benefit liability at the beginning of the year, taking into account any changes in the defined benefit liability during the period as a result of benefit payments.

Remeasurements of the net retirement benefit liability, which comprise actuarial gains and losses are recognized immediately in OCI and are not reclassified to profit or loss in subsequent periods

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The retirement benefit liability recognized by the Organization is the aggregate of the present value of the defined benefit obligation which is determined by discounting the estimated future cash outflows using risk-free interest rates of government bonds that have terms to maturity approximating the terms of the related retirement benefit liability.

Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: a. b.

c. d.

there is a change in contractual terms, other than a renewal or extension of the arrangement; a renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term; there is a change in the determination of whether fulfilment is dependent on a specified asset; or there is a substantial change to the asset.

Where reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) and at the date of renewal or extension period for scenario (b).

Organization as Lessee. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized in profit or loss on a straight-line basis over the lease term.

Foreign Currency-Denominated Transactions Transactions denominated in foreign currencies are recorded using the exchange rate at the date of the transaction.

Outstanding monetary assets and liabilities denominated in foreign currencies are translated using the closing exchange rate at reporting date. All differences are recognized in profit or loss.

Related Parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control.

Provisions Provisions are recognized when the Organization has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Organization expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense.

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Contingencies Contingent liabilities are not recognized in the financial statements. These are disclosed in the notes to financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed in the notes to financial statements when an inflow of economic benefits is probable.

Events After the Reporting Date Post year-end events that provide additional information about the Organization’s financial position at 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.

5. Prior Period Adjustments The following is the summary of the financial impact of prior period adjustments in the Organization’s financial statements: As Previously Reported

P31,785,711 Trade and other payables 493,746,023 CBU Initial contribution and retained earnings (deficit) (72,114,399)

Cash Allowance for impairment losses Loans receivable Allowance for impairment losses Other receivables Allowance for impairment losses Other current assets Allowance for impairment losses Property and equipment- cost Accumulated depreciation Allowance for impairment losses

As Previously Reported P20,844,750 (7,637,502) 13,207,248

991,039,048 (368,821,650) 622,217,398 31,022,914 (6,202,341) 24,820,573 12,624,753 (4,647,998) 7,976,755

126,579,726 (51,956,207) (3,430,567) 71,192,952

46,439,632 Trade and other payables 428,358,020 CBU Initial contribution and retained earnings (deficit) 97,515,872

December 31, 2014 Effect of Effect of Reclassification Restatement P– – –

(P7,688,361) (202,240,665)

P– – – – – – – – – – – – – – – – – – –

Ref

P24,097,350 291,505,358

c.5 a

209,929,026

137,814,627

b, c.5

Effect of Restatement

As Restated

Ref

January 1, 2014

Effect of Reclassification

As Restated

(P7,637,502) 7,637,502 –

(202,240,665) 202,240,665 – (5,386,089) 5,386,089 –

(4,647,998) 4,647,998 –

(17,951,271) 14,520,704 3,430,567 –

(7,688,361) (202,240,665) 209,929,026

P13,207,248 – 13,207,248 788,798,383 (166,580,985) 622,217,398 25,636,825 (816,252) 24,820,573 7,976,755 – 7,976,755 108,628,455 (37,435,503) – 71,192,952 38,751,271 226,117,355 307,444,898

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c.1 a, b c.2 c.3

c.4

c.5 a b, c

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The following are the nature of restatements in the December 31, 2014 and January 1, 2014 financial statements of the Organization: (a) (b) (c)

Application of CBU against loans receivables of Takeover Branches amounting to P=202.2 million in 2013.

Reversal of allowance for impairment losses on loans receivables amounting P=202.2 million in 2013.

Write off of the following accounts as at January 1, 2014:

Cash Other receivables Other current assets Property and equipment Trade and other payables

c.1 c.2 c.3 c.4 c.5

P7,637,502 5,386,089 4,647,998 3,430,567 (7,668,361)

6. Significant Accounting Judgments and Estimates The preparation of the financial statements in compliance with PFRS requires management to make judgments and estimates that affect the amounts reported in the financial statements and related notes. The judgments and estimates used in the financial statements are based upon management’s evaluation of relevant facts and circumstances as at the reporting date. While the Organization believes that the assumptions are reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially affect the estimated amounts. Actual results could differ from such estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the significant accounting judgments and estimates made by the Organization:

Determination of Functional Currency. Based on management’s assessment, the functional currency of the Organization has been determined to be the Philippine Peso. The Philippine Peso is the currency of the primary economic environment in which the Organization operates. It is the currency that mainly influences the operations of the Organization.

Operating Lease Commitments - Organization as Lessee. The Organization has operating lease agreements for its branch office spaces. The Organization has determined that the risks and benefits related to the leased properties are retained by the lessors. Accordingly, the leases are accounted for as operating leases.

Rental expense amounted to P12.3 million and P13.2 million in 2015 and 2014, respectively (see Note 24).

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Determination of Fair Value of Financial Instruments. The fair values of investments that are actively traded in organized financial markets are determined by reference to quoted market prices at the close of business on the reporting date. Where the fair values of financial assets recorded in the statements of assets, liabilities and fund balance cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of liquidity and model inputs such as correlation and volatility.

The fair value of financial assets at FVPL is P1.7 million and P2.4 million as at December 31, 2015 and 2014, respectively (see Note 8).

Assessment for Impairment of AFS Financial Assets Carried at Cost. The Organization determines that AFS financial assets are impaired when there is objective evidence that an impairment loss on an unquoted equity instruments measured at cost has been incurred. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The Organization evaluates, among other factors, the future cash flows and the discount factors. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, dismal industry and sector performance, adverse changes in technology, and negative operational and financing cash flows.

As at December 31, 2015 and 2014, the allowance for impairment losses on AFS financial assets amounted to P8.6 million and P7.1 million, respectively. The carrying amount of AFS financial assets is P0.4 million and P1.7 million as at December 31, 2015 and 2014, respectively (see Note 12).

Assessment for Impairment of Loans and Other Receivables. The Organization reviews its loans and other receivables portfolio to assess impairment at each reporting date. The allowance for probable losses, which consists of both specific and collective provisioning, represents management’s estimate for probable losses inherent in the loan portfolio after consideration of specific loan credit status, prevailing and anticipated economic conditions and prior loss experience.

Allowance for impairment losses on loans receivables amounted to P47.4 million and P94.4 million as at December 31, 2015 and 2014, respectively. The carrying amount of loans receivables is P586.8 million and P578.3 million as at December 31, 2015 and 2014, respectively (see Note 9).

Allowance for impairment losses on other receivables amounted to P11.2 million and P3.2 million as at December 31, 2015 and 2014, respectively. The carrying amount of other receivables is P33.9 million and P23.7 million as at December 31, 2015 and 2014, respectively (see Note 10).

Estimation of Useful Lives of Property and Equipment and Trademark. The Organization reviews annually the estimated useful lives of property and equipment and trademark based on the period over which the assets are expected to be available for use and are updated if expectations differ from previous estimates due to physical wear and tear, and technical or commercial obsolescence. It is possible that future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in the estimated useful lives of property and equipment and trademark would increase the recorded depreciation and amortization expenses and decrease noncurrent assets.

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The carrying amount of property and equipment is P92.0 million and P72.8 million as at December 31, 2015 and 2014, respectively (see Note 13).

Trademark amounted to P45,185 and P6,233 as at December 31, 2015 and 2014, respectively (see Note 14).

Assessment for Impairment of Property and Equipment and Other Nonfinancial Assets. The Organization assesses impairment on property and equipment and other nonfinancial assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. The factors that the Organization considers important which could trigger an impairment review include the following: • • •

significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets or the strategy for overall business; and significant negative industry or economic trends.

In determining the present value of the estimated future cash flows expected to be generated from the continued use of the assets, the Organization is required to make estimates and assumptions on the timing and amount of cash flows that can materially affect the financial statements.

The Organization recognized impairment losses on its investment in an associate amounting to P1.3 million in 2015 (see Note 12). Impairment losses on other current assets amounting to P1.8 million was also subsequently written off in 2014 (see Note 11).

Determination of Retirement Benefits. The determination of the liability and cost of retirement benefit is dependent on the assumptions used by the actuary in calculating such amounts. These assumptions are described in Note 17 to the financial statements and include, among others, discount rates and salary increase rates. Actual results that differ from the Organization’s assumptions are recognized in OCI and therefore, generally affect the recognized expense and recorded liability in such future periods. While the Organization believes that the assumptions are reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially affect the retirement benefit liability.

The retirement benefit liability amounted to P36.2 million and P26.9 million as at December 31, 2015 and 2014, respectively (see Note 17).

Determination and Estimation of Provision for Probable Losses. The Organization is currently involved in various civil, administrative, and criminal cases which the Organization believes to have material effect on its financial position. It is possible however, that changes in estimates relating to these cases may materially affect the results of operations of the Organization.

The Organization recognized provision for probable losses amounting to P=343.0 million and P330.4 million as at December 31, 2015 and 2014, respectively (see Note 28).

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Annual Report 2015

7. Cash This account consists of: 2014 P240,000 29,288,875 P29,528,875

2015 P270,000 117,848,897 P118,118,897

Cash on hand Cash in banks

Cash in banks earn interest at the respective bank deposit rates and are immediately available for use in the current operations. Interest income earned from cash in banks, including those from restricted accounts, amounted to P0.6 million in 2015 and 2014 (see Notes 9 and 14).

8. Financial Assets at FVPL Financial assets at FVPL amounting to P1.7 million and P2.4 million as at December 31, 2015 and 2014, respectively, consist of quoted equity securities.

Unrealized losses from changes in fair value amounting to P0.7 million and P0.1 million were recognized in 2015 and 2014, respectively.

The fair value of financial assets at FVPL is based on quoted market prices from the Philippine Stock Exchange as at December 31, 2015 and 2014. The fair value measurement for these financial assets has been categorized under Level 1 (quoted prices in active markets) (see Note 27).

9. Loans Receivables This account consists of:

2014 P672,731,412 (94,426,828) P578,304,584

2015 P634,145,001 (47,352,710) P586,792,291

Loans receivables Allowance for impairment losses

Loans receivables pertain to loans granted to qualified program members from the different communities where the Organization operates. Loans receivables are collected weekly and earn an interest of 20% for one (1) loan cycle or a period of six (6) months.

Details of interest income are as follows: Loans receivables Cash in banks and restricted accounts

Note

7, 14

2015 P398,994,255 612,658 P399,606,913

2014 P369,388,605 604,470 P369,993,075

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The aging analysis of the gross loan portfolio is as follows: Current 1-30 days 31-60 days 61-90 days More than 90 days

2015 P574,300,003 8,542,644 8,601,253 5,964,989 36,736,112 P634,145,001

Percentage to Total 90.56% 1.35% 1.36% 0.94% 5.79% 100.00%

Percentage to Total 85.19% 1.09% 0.44% 0.40% 12.88% 100.00%

2014 P573,091,635 7,353,400 2,980,576 2,660,157 86,645,644 P672,731,412

Loans are considered past due when one (1) amortization payment has fallen due and remained unpaid. Under the loan program, payments are applied first to interest then to the principal. No further accruals on interest are made after the loans have become past due.

The Organization collects CBU from its program members for purposes of maintaining the compensating balances in relation to the loans receivable. CBU amounting to P42.3 million was applied as program members’ payment of the loans receivables in 2015 (see Note 16).

The balance and movements of allowance for impairment losses on loans receivables are as follows: Balance at beginning of year Impairment losses Write-off during the year Reversal Balance at end of year

Note 20 20 19

2015 P94,426,828 – (42,048,548) (5,025,570) P47,352,710

2014 P166,580,985 157,955,761 (228,381,211) (1,728,707) P94,426,828

2015 P24,281,278 12,768,971 8,034,636 45,084,885 (11,199,812) P33,885,073

2014 P9,626,157 10,245,806 7,022,907 26,894,870 (3,199,525) P23,695,345

10. Other Receivables This account consists of:

Accounts receivable Interest receivable Receivable from officers and employees Allowance for impairment losses

Other receivables are noninterest-bearing and are generally collectible within one (1) year or on demand.

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CBU amounting to P0.5 million was applied as program members’ payment of interest receivable in 2015 (see Note 16).

Annual Report 2015

The balance and movement of the allowance for impairment losses on other receivables are as follows: Note

Balance at beginning of year Impairment losses Balance at end of year

20

11. Other Current Assets This account consists of:

2015 P3,199,525 8,000,287 P11,199,812

2014 P816,252 2,383,273 P3,199,525

2015 P3,553,001 3,075,408 244,024 P6,872,433

2014 P3,471,387 2,394,321 101,433 P5,967,141

Note 24

Refundable rental deposits Office supplies Prepayments

Refundable rental deposits are related to the Organization’s rental of branch office spaces.

Impairment losses on other current assets amounted to P=1.8 million in 2014. This was subsequently written off by the Organization in 2014 (see Note 20).

12. Investments

The Organization holds unquoted equity securities issued by Opportunity Kauswagan Bank, Inc. (A Microfinance Thrift Bank) (OK Bank), Opportunity Kauswagan Remit, Inc. (OK Remit) and Pinoy Ako Insurance Services, Inc. (Pinoy Ako).

AFS Financial Assets The balances and movements in this account as at and for the years ended December 31, 2015 and 2014 are as follows: Cost Balances at beginning of year Acquisitions during the year Balances at end of year Allowance for Impairment Losses Balances at beginning of year Impairment losses Balances at end of year

Note

20

OK Bank

2015 Pinoy Ako

Total

P8,590,100 – 8,590,100

P300,000 100,000 400,000

P8,890,100 100,000 8,990,100

7,140,209 1,449,891 8,590,100 P–

– – – P400,000

7,140,209 1,449,891 8,590,100 P400,000

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Cost Balances at beginning of year Acquisitions during the year Balances at end of year Allowance for Impairment Losses Balances at beginning and end of year

OK Bank

P8,590,100 – 8,590,100 7,140,209 P=1,449,891

2014 Pinoy Ako

P– 300,000 300,000 – P=300,000

Total

P8,590,100 300,000 8,890,100 7,140,209 P1,749,891

OK Bank In 2000, the Organization, together with other member partners of APPEND Inc., established Opportunity Microfinance Bank (OMB), a microfinance bank, wherein the Organization fully participated as the lead party with an initial cash investment of P=0.1 million.

Effective January 1, 2009, OMB and Kauswagan Bank merged into a single banking corporation, as “Opportunity Kauswagan Bank, Inc. (A Microfinance Thrift Bank)” operating under the trade name of “OK Bank (A Microfinance Thrift Bank)”. As a result of the merger, the Organization owned 69,208 shares of OK Bank at a par value of P=100 per share.

In March 2011, the Organization subscribed and paid for 16,693 additional shares. The Organization’s total subscribed shares of 85,901 is equivalent to 2.52% of OK Bank’s total issued capital.

The Organization assessed that its investment in OK Bank is fully impaired as at December 31, 2015.

Pinoy Ako In 2009, the Board and Executive Directors of APPEND Inc. established Pinoy Ako Insurance Services, Inc. (Pinoy Ako) to protect their staffs and members from any casualties arising from calamities. On May 5, 2014, the Organization subscribed to Pinoy Ako’s 4,000 shares at P=100 par value amounting to P=0.4 million. The Organization’s investment in Pinoy Ako is equivalent to 9.10% ownership.

Investment in an Associate On June 26, 2013, the Organization subscribed and paid for 12,500 shares at P=100 par value of OK Remit, a company incorporated in the Philippines, resulting in 24.90% ownership. OK Remit has not started its commercial operations as at December 31, 2015.

In 2015, the Organization recognized impairment losses on this investment amounting to P=1.3 million (see Note 20).

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Annual Report 2015

13. Property and Equipment The balances and movements in this account as at and for the years ended December 31, 2015 and 2014 are as follows: 2015

Cost Balances at beginning of year Additions Disposal Balances at end of year Accumulated Depreciation and Amortization Balances at beginning of year Depreciation and amortization Disposal Balances at end of year Carrying Amount

Cost Balances at beginning of year Additions Disposal Balances at end of year Accumulated Depreciation and Amortization Balances at beginning of year Depreciation and amortization Disposal Balances at end of year Carrying Amount

Land

Building and Building Improvements

Transportation Equipment

P49,098,434 – – 49,098,434

P23,160,290 12,077,195 – 35,237,485

P6,192,204 1,353,393 (1,115,276) 6,430,321

P9,213,105 4,805,195 (905,289) 13,113,011

P27,481,560 7,638,150 (410,621) 34,709,089

P115,145,593 25,873,933 (2,431,186) 138,588,340

– – – – P49,098,434

7,834,276 1,068,151 – 8,902,427 P26,335,058

5,789,544 330,779 (1,115,276) 5,005,047 P1,425,274

7,255,091 1,442,565 (905,289) 7,792,367 P5,320,644

21,448,718 3,843,563 (410,621) 24,881,660 P9,827,429

42,327,629 6,685,058 (2,431,186) 46,581,501 P92,006,839

Land

Building and Building Improvements

Transportation Equipment

Leasehold Improvements

Furniture and Equipment

Total

P49,098,434 – – 49,098,434

P20,889,250 2,271,040 – 23,160,290

P6,170,220 21,984 – 6,192,204

P7,790,982 1,815,182 (393,059) 9,213,105

P24,679,579 3,509,931 (707,950) 27,481,560

P108,628,465 7,618,137 (1,101,009) 115,145,593

– – – – P49,098,434

7,479,830 354,446 – 7,834,276 P15,326,014

5,390,790 398,754 – 5,789,544 P402,660

5,699,103 1,949,047 (393,059) 7,255,091 P1,958,014

18,865,790 3,290,878 (707,950) 21,448,718 P6,032,842

37,435,513 5,993,125 (1,101,009) 42,327,629 P72,817,964

Leasehold Furniture and Improvements Equipment

Total

2014

Depreciation and amortization of property and equipment and trademark were recorded as follows: Administrative expenses:

Property and equipment Trademark Operating expenses

Note 22 14 21

2015

2014

P3,691,686 2,661 2,993,372 P6,687,719

P3,364,956 215 2,628,169 P5,993,340

In 2015, the Organization recognized a gain on disposal of property and equipment amounting to P=0.3 million (see Note 19).

14.

Other Noncurrent Assets

This account consists of:

Restricted cash and cash equivalents Trademark

2015 P210,459,950 45,185 P210,505,135

2014 P209,523,767 6,233 P209,530,000

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Restricted cash and cash equivalents pertain to certain bank accounts and short-term placements which were restricted for use in the current operations and withdrawal because of the on-going intra-corporate dispute. These restricted accounts continue to earn interest ranging from 0.2% to 1.2% per annum in 2015 and 0.2% to 4.75% per annum in 2014.

Interest income earned from restricted cash and cash equivalents, including those from unrestricted cash in banks, amounted to P=0.6 million in 2015 and 2014 (see Notes 7 and 9).

Trademark represents the cost of registration of the Organization’s trademark, trade names and other intellectual properties.

Cost Balance at beginning of year Additions Balance at end of year Accumulated Amortization Balance at beginning of year Amortization Balance at end of year Carrying Amount

Note

13

2015

2014

P6,448 41,613 48,061

P– 6,448 6,448

215 2,661 2,876 P45,185

– 215 215 P6,233

15. Trade and Other Payables This account consists of: Trade payables Accruals for:

Utilities and outside services

Salaries and employee benefits

Interest payable

Transportation and travel Others Output VAT Withholding taxes Microinsurance payable Note payable Others

2015 P8,596,121 2,152,941 1,583,643 1,507,970 582,599 525,852 1,929,261 1,795,513 1,197,715 – 5,565,703 P25,437,318

2014 (As restated see Note 5) P10,995,516 630,955 220,392 1,329,260 263,832 – – 1,654,350 5,353,398 1,757,504 1,892,143 P24,097,350

Trade payables are generally settled in varying periods, within one (1) year, depending on arrangements with suppliers.

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Annual Report 2015

Microinsurance payable pertains to payments by program members availing of the Organization’s microinsurance program. This is remitted to the insurance service provider who is liable to the program members’ beneficiaries for insurance benefits when certain conditions are met.

On June 27, 2014, the Organization obtained a short-term, interest-bearing note payable from For His Glory Multipurpose Cooperative amounting to P3.8 million. The note is payable monthly within one (1) year and bears an annual interest of 5.47%. This was fully paid by the Organization in 2015. Interest expense related to the note payable amounted to P0.1 million and P0.2 million in 2015 and 2014, respectively (see Note 16).

Other payables are noninterest-bearing and are normally settled within one (1) year.

16.

Capital Build-Up (CBU)

The balance and movements in this account as at and for the years ended December 31, 2015 and 2014 are as follows: Balance at beginning of year Collections Withdrawals Applications to:

Loans receivable

Interest receivable Balance at end of year

Note

2015 P291,505,358 218,550,422 (164,491,257)

9 10

(42,319,086) (467,638) P302,777,799

2014 (As restated see Note 5) P226,117,355 214,777,359 (149,389,356) – – P291,505,358

CBU represents cash deposits required from the program members who obtained loans from the Organization. CBU is collected for purposes of maintaining the compensating balance in relation to the loan receivables from the program members. This is equivalent to 5.00% of the initial loan amount and mandatory weekly deposit of P=40 per program member. The fund earns interest at a rate of 1.00% per loan cycle or 2.00% per annum. This will be returned to program members when they leave the program or upon withdrawal after the loan cycle, provided that loans availed have been fully paid.

Details of interest expense are as follows: CBU Note payable

Note 15

2015 P6,095,639 56,953 P6,152,592

2014 P5,122,425 151,163 P5,273,588

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17.

Retirement Benefit Liability The Organization has an unfunded, noncontributory defined benefit retirement plan covering all its qualified regular employees. The latest actuarial report of the Organization was dated December 18, 2015.

The principal actuarial assumptions used in determining the retirement benefit liability of the Organization are shown below: Discount rate Salary increase rate

2015 5.01% 7.00%

2014 4.49% 7.00%

The components of retirement benefit costs recorded as part of “Personnel costs” under “Operating expenses” and “Administrative expenses” accounts in the statements of comprehensive income are as follows: Current service cost Interest cost The movements in the retirement benefit liability are as follows: Balance at beginning of year Retirement benefit costs Remeasurement losses (gains) Balance at end of year

2015 P4,777,965 1,209,171 P5,987,136

2014 P3,405,989 1,222,741 P4,628,730

2015 P26,930,320 5,987,136 3,279,064 P36,196,520

2014 P22,983,862 4,628,730 (682,272) P26,930,320

The changes in the present value of the retirement benefit liability are as follows: Balance at beginning of year Current service cost Interest cost Remeasurement losses (gains) recognized in OCI:

Experience adjustments

Change in financial assumptions Balance at end of year

2015 P26,930,320 4,777,965 1,209,171 5,326,576 (2,047,512) P36,196,520

2014 P22,983,862 3,405,989 1,222,741

(1,893,787) 1,211,515 P26,930,320

The cumulative remeasurement gains on retirement benefit liability recognized in the statements of assets, liabilities and fund balances are as follows: Balance at beginning of year Remeasurement gains (losses) recognized in OCI Balance at end of year

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Annual Report 2015

2015 P114,512,264 (3,279,064) P111,233,200

2014 P113,829,992 682,272 P114,512,264

As at December 31, 2015, the maturity analysis of the undiscounted benefit payments is as follows: Amount P– 409,204 2,718,998 P3,128,202

Less than 1 year More than 1 year to 5 years More than 5 years to 10 years

Sensitivity analyses on retirement benefit liability as at December 31, 2015 are as follows: Change in Assumption +0.5% -0.5% +1.0% -1.0%

Discount rate

Salary increase rate

Effect on retirement benefit liability (P1,840,242) 1,966,077 3,584,017 (3,231,470)

Each sensitivity analysis on the significant actuarial assumptions was prepared by remeasuring the retirement benefit liability at the end of each reporting date after adjusting one of the current assumptions according to the applicable sensitivity increment or decrement (based on changes in the relevant assumption that were reasonably possible at the valuation date) while all other assumptions remained unchanged. The corresponding change in the retirement benefit liability was expressed as a percentage change from the base retirement benefit liability

18. Related Party Transactions The details of the Organization’s transactions with its related party as at and for the years ended December 31, 2015 and 2014 are as follows: Other receivables Officers with significant influence Personnel costs Key management personnel

Nature of Transaction Advances

Short-term benefits Retirement benefits

Amount of Transaction 2015 2014

Outstanding Balance 2015 2014

P11,729

P7,022,907

P7,034,636

P7,022,907

P4,390,416 58,842 P4,449,258

P6,404,355 45,491 P6,449,846

P61,391 355,740 P417,131

P99,927 264,671 P364,598

Terms and Conditions

Noninterest-bearing; unsecured; unimpaired settled in cash

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19. Other Income This account consists of:

Reversal of allowance for impairment losses on loans receivables Gain on disposal of property and equipment Others

2015

Note 9

P5,025,570

13

299,373 301,848 P5,626,791

– 399,053 P2,127,760

Note 10 12 12 9 11

2015 P8,000,287 1,449,891 1,250,000 – – P10,700,178

2014 P2,383,273 – – 157,955,761 1,826,324 P162,165,358

20. Impairment Losses This account consists of impairment on: Other receivables AFS financial assets Investment in an associate Loans receivables Other current assets

2014 P1,728,707

As a result of the intra-corporate dispute discussed in Note 1, the Organization recognized impairment losses on all unrecovered assets from the Takeover Branches under the control of the Takeover Group in 2013. These assets were also written off in 2013.

The Organization’s BOT approved and authorized the write-off of the following accounts as at and for the years ended December 31, 2015 and 2014: Loans receivables Other current assets

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Annual Report 2015

Note 9 11

2015 P42,048,548 – P42,048,548

2014 P228,381,211 1,826,324 P230,207,535

21. Operating Expenses This account consists of:

Personnel costs Transportation and travel Rental Outside services Utilities Supplies Taxes and licenses Depreciation and amortization Repairs and maintenance Meetings, trainings and conferences Insurance Others

Note 23 24

13

2015 P165,087,776 15,773,047 12,193,818 9,313,455 8,703,197 6,504,909 4,399,059 2,993,372 2,138,332 1,359,542 610,859 184,541 P229,261,907

2014 P145,596,525 14,866,565 12,204,383 5,090,118 8,650,510 6,149,606 3,768,224 2,628,169 1,656,319 505,062 798,726 188,672 P202,102,879

2015 P51,128,226 20,493,608 6,785,801 4,366,894 3,694,347 3,560,449 3,243,422 1,591,399 848,586 591,353 120,722 87,105 989,369 P97,501,281

2014 P22,728,513 11,093,831 17,347,035 11,784,254 3,365,171 3,688,047 3,396,968 1,297,291 1,093,895 1,003,218 172,874 983,624 131,458 P78,086,179

2015 P143,794,817 66,434,049 5,987,136 P216,216,002

2014 P128,383,729 35,312,579 4,628,730 P168,325,038

22. Administrative Expenses This account consists of:

Personnel costs Meetings, trainings and conferences Professional fees Outside services Depreciation and amortization Utilities Transportation and travel Taxes and licenses Supplies Repairs and maintenance Insurance Rental Others

Note 23 13

24

23. Personnel Costs This account consists of:

Salaries and wages Other employee benefits Retirement benefit costs

Note

17

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This is classified in the statements of comprehensive income as follows: Operating expenses Administrative expenses

Note 21 22

2015 P165,087,776 51,128,226 P216,216,002

24. Leases

2014 P145,596,525 22,728,513 P168,325,038

The Organization, as a lessee, has cancellable operating lease agreements primarily for its branch office spaces.

The lease agreements are effective for one (1) year and contain renewal options and escalation clause.

Rental expense is classified in the statements of comprehensive income as follows: Operating expenses Administrative expenses

Note 21 22

2015 P12,193,818 87,105 P12,280,923

Refundable rental deposits related to the lease agreements amounted to P=3.6 million and P3.5 million as at December 31, 2015 and 2014, respectively (see Note 11).

2014 P12,204,383 983,624 P13,188,007

25. Income Taxes The Organization’s current tax expense amounting to P=709,973 in 2015 is based on R.A. No. 10693 which subjects the Organization to a two percent (2%) tax based on its gross receipts from microfinance operations in lieu of all national taxes. R.A. No. 10693 was approved on November 3, 2015 and took effect on November 23, 2015. Pending the necessary revenue regulations to be issued to implement the tax-related provisions of R.A. No. 10693, the Organization elected to recognize the two percent (2%) tax on gross receipts as a regular income tax.

The Organization’s deferred tax liability as at December 31, 2015 amounting P=255,379 pertains to interest receivable on loans.

The reconciliation between the income tax expense based on statutory income tax rate and the effective income tax rate on income before income tax is as follows: Income tax expense at statutory tax rate Increase (decrease) in income tax resulting from tax effects of:

Nontaxable income

Nondeductible expense

Interest income subjected to final tax Income tax expense at effective tax rate 68

Annual Report 2015

2015 P1,876,562

(8,037,460) 7,138,503 (12,253) P965,352

26. Financial Risk Management Objectives and Policies Risk Management Framework The BOT has overall responsibility for the establishment and oversight of the Organization’s risk management framework. The BOT has delegated to the senior management the responsibility for developing and monitoring the Organization’s financial risk in line with the strategies, policies and limits set by the BOT.

The Organization’s risk management policies are established to identify and analyze the risks faced by the Organization, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and procedures are reviewed regularly to reflect changes in market conditions, products and services offered. The Organization, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations.

The senior management is responsible for monitoring compliance with the Organization’s risk management policies and procedures and for reviewing the adequacy of the risk management framework in relation to the risks faced by the Organization.

The main financial risks arising from the Organization’s use of financial instruments include market risk, credit risk and liquidity risk. The BOT regularly reviews and approves the appropriate policies for managing these financial risks, as summarized below.

Market Risk The Organization is exposed to market risks, primarily those related to foreign currency, interest rate and equity price risk. The Organization’s market risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plan, limits on investments in each sector and market.

Management actively monitors these exposures as follows:

Foreign Currency Risk. The Organization’s foreign exchange risk results primarily from movements of the Philippine Peso against the US Dollar with respect to US Dollar-denominated cash in banks.

To manage the risk, the Organization’s policy is to maintain foreign currency exposure within acceptable limits and existing regulatory guidelines. As at December 31, 2015 and 2014, the foreign exchange risk of the Organization is minimal.

Interest Rate Risk. Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. The Organization follows a prudent policy on managing its financial assets and liabilities so as to ensure that exposures to fluctuations in interest rate are kept within acceptable limits.

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Equity Price Risk. The Organization’s equity price risk exposure at year-end relates to financial assets whose values will fluctuate as a result of changes in market prices, principally, its quoted equity securities. As at December 31, 2015 and 2014, quoted equity instruments that are subject to equity price risk included in “Financial assets at FVPL” account in the statements of assets, liabilities and fund balance amounted to P=1.7 million and P=2.4 million, respectively (see Note 8). The equity price risk of the Organization is minimal.

Credit Risk The Organization’s exposure to credit risk arises from the failure on the part of its counterparty in fulfilling its financial commitments to the Organization under the prevailing contractual terms. Financial instruments that potentially subject the Organization to credit risk consist primarily of cash in banks, loans receivables, other receivables and refundable rental deposits. The Organization limits its exposure to credit risk by depositing its cash with highly reputable and pre-approved financial institutions. In addition, loans receivables balances are monitored on an ongoing basis with the result that the carrying amount of the loans receivables reflects its maximum exposure to credit losses. With respect to credit risk arising from other financial assets of the Organization, the maximum exposure related to the transaction is equal to the carrying amount of these financial instruments. Accordingly, exposure on these financial instruments is minimal since no default in payments was made by the counterparties.

The Organization has no significant concentration of credit risk with any single counterparty or group of counterparties having similar characteristics.

The tables below show the credit quality per class of financial asset and an aging analysis of financial assets that are past due but not impaired as at December 31, 2015 and 2014.

December 31, 2015 Neither Past Due nor Impaired

Standard Grade P– 563,683,405 32,934,209 3,553,001 P600,170,615

Substandard Grade P– – – – P–

Past Due but not Cash in banks Impaired Loans receivables P– Other receivables 23,108,886 Refundable rental deposits* 950,864 – P24,059,750 *Included under “Other current assets” account in the statements of assets, liabilities and fund balance.

High Grade P117,848,897 – – – P117,848,897

Cash in banks Loans receivables Other receivables Refundable rental deposits*

High Grade P29,288,875 – – – P29,288,875

December 31, 2014 Neither Past Due nor Impaired

Standard Grade P– 542,386,787 15,604,434 3,471,387 P561,462,608

Substandard Grade P– 22,923,665 – – P22,923,665

Past Due but not Impaired P– 12,994,132 8,090,911 – P21,085,043

*Included under “Other current assets” account in the statements of assets, liabilities and fund balance.

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Impaired P– 47,352,710 11,199,812 – P58,552,522

Impaired P– 94,426,828 3,199,525 – P97,626,353

Total P117,848,897 634,145,001 45,084,885 3,553,001 P800,631,784

Total P29,288,875 672,731,412 26,894,870 3,471,387 P732,386,544

The credit quality of the loans receivables is managed by the Organization using internal credit quality ratings.

High grade and low risk loans are neither past due nor impaired loans and with good loan collection status. High grade loans are those which have no default history, thus, have a high probability of collection, as evidenced by counterparties having the ability to readily discharge their obligations. Standard grade and medium risk loans are neither past due nor impaired loans and includes loans for which collections are probable due to the reputation and the financial stability of the counterparty but have been outstanding for a considerable length of time. These loans had instances of default in the past but were already regularized.

Aging Analysis of Financial Assets that are Past Due but not Impaired

December 31, 2015 Days Past Due Loans receivables Other receivables

Loans receivables Other receivables

1 to 30 Days P8,542,644 – P8,542,644

1 to 30 Days P7,353,400 868,238 P8,221,638

31 to 60 Days P8,601,253 795,138 P9,396,391 December 31, 2014 Days Past Due

31 to 60 Days P2,980,576 351,927 P3,332,503

Over 60 Days P5,964,989 155,726 P6,120,715

Total P23,108,886 950,864 P24,059,750

Over 60 Days P,660,156 6,870,746 P9,530,902

Total P12,994,132 8,090,911 P21,085,043

Liquidity Risk Liquidity risk arises from the possibility that the Organization may encounter difficulties in raising adequate funds to meet its financial commitments at a reasonable cost. The Organization’s objectives in effectively managing its liquidity are: (a) to ensure that adequate funding is available at all times; (b) to meet the commitments as they arise without incurring unnecessary costs; and (c) to be able to access funding when needed at the least possible cost.

The following tables present the maturity profile of the Organization’s financial liabilities as at December 31, 2015 and 2014 based on contractual undiscounted payments: December 31, 2015 Contractual Cash Flow Other financial liabilities at amortized cost: Trade and other payables* CBU

Carrying Amount

On Demand

Less than 1 Year

Total

P20,134,417 302,777,799 P322,912,216

P20,134,417 – P20,134,417

P– 302,777,799 P302,777,799

P20,134,417 302,777,799 P322,912,216

*Excluding statutory payables amounting to P=5.3 million.

Other financial liabilities at amortized cost: Trade and other payables* CBU

Carrying Amount

P19,451,854 291,505,358 P310,957,212

*Excluding statutory payables amounting to P5.3 million.

December 31, 2014 Contractual Cash Flow On Demand Less than 1 Year

P19,451,854 – P19,451,854

P– 291,505,358 P291,505,358

Total

P19,451,854 291,505,358 P310,957,212

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The primary objectives of the Organization’s capital management are to ensure its ability to continue as a going concern and to ensure that it maintains strong and healthy financial position to support its current business operations and drive its expansion and growth in the future.

The Organization considers its initial contribution and retained earnings aggregating P=341.9 million and P=252.3 million as at December 31, 2015 and 2014, respectively, as its capital employed. The Organization manages its capital structure and makes adjustments to it in light of changes in economic conditions, its business activities, expansion programs, and the risk characteristics of the underlying assets. No changes were made in the objectives, policies or processes in 2015 and 2014.

27. Fair Value Measurement The following table presents the carrying amount and fair value of the Organization’s asset measured at fair value and the corresponding fair value hierarchy: 2015 Fair Value

Recurring fair value measurements Asset measured at fair value Financial assets at FVPL

Recurring fair value measurements Asset measured at fair value Financial assets at FVPL

Note 8

Note 8

Carrying Amount

Quoted prices in active markets (Level 1)

Significant observable inputs (Level 2)

Significant unobservable inputs (Level 3)

P1,727,133

P1,727,133

P–

P–

Carrying Amount

Quoted prices in active markets (Level 1)

P2,397,789

P2,397,789

2014 Fair Value Significant observable inputs (Level 2)

Significant unobservable inputs (Level 3)

P–

P–

The Organization’s financial assets at FVPL as at December 31, 2015 and 2014 are carried at fair value based on sources classified under the Level 1 category. The fair value of financial assets at FVPL is based on quoted market prices from active markets as at the reporting date.

During the reporting period ended December 31, 2015 and 2014, there were no transfers between Level 1, Level 2 and Level 3 fair value measurements.

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The table below presents the financial assets and liabilities of the Organization whose carrying amounts approximate their fair values: Financial Assets Loans and receivables: Cash

Loans receivables

Other receivables

Refundable rental deposits Financial Liabilities Other financial liabilities at amortized cost:

Trade and other payables* CBU

2015

2014

P118,118,897 586,792,291 33,885,073 3,553,001 P742,349,262

P29,528,875 578,304,584 23,695,345 3,471,387 P635,000,191

P20,134,417 302,777,799 P322,912,216

P19,451,854 291,505,358 P310,957,212

*Excluding statutory payables amounting to P=5.3 million and P=4.6 million as at December 31, 2015 and 2014, respectively.

Current Financial Assets and Liabilities. The carrying amounts of cash, other receivables, refundable rental deposits, trade and other payables and CBU approximate their fair values due to the short-term nature of these financial instruments.

Loans receivables. The fair value of loans receivables is determined based on the discounted cash flow analysis using an interest rate of 20% for one (1) loan cycle or a period of six (6) months.

AFS Financial Assets. The unquoted AFS financial assets are carried at cost less accumulated impairment losses.

28. Provisions and Contingencies The Organization is either a defendant or plaintiff in several litigations, claims, and disputes arising from its business operations.

The balance and movement of provision for probable losses as at and for the years ended December 31, 2015 and 2014 are as follows: Balance at beginning of year Provisions during the year Balance at end of year

2015 P330,381,670 12,638,547 P343,020,217

2014 P190,313,285 140,068,385 P330,381,670

The information for the provision for probable losses required under the standards is not disclosed on the ground that it can be expected to prejudice the resolutions of the matters.  

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KMBI BRANCH DIRECTORY ANGELES Amlonzo-Cortez Bldg. Sto Cristo Magalang Road, Angeles City Tel No: (045) 458-0449

ANGONO 3/F Aurora Building, Quezon Avenue, Brgy. San Isidro, Angono, Rizal Tel No: (02) 295-2802 ANTIPOLO 2/F E and E Building, M.L. Quezon Street, Antipolo City, Rizal Tel No: (02) 584-7179

BACOLOD 3/F VSB Building, 6th and 7th Street, Lacson Avenue, Bacolod City, Negros Occidental Tel No: (034) 434-2577 BALIWAG 3/F Writ Building, 1733 Ano Street, corner Roberto Chico Street, Baliwag, Bulacan Tel No: (044) 761-1958 BACOOR O.M.V Building, Bahayang Pagasa Subd., Molino V, Bacoor Cavite Tel No: 0922-8460393 BOGO Unit N1 Sim Bogo Building, Bogo Business Park, Bogo City Tel No: (032) 564-9779

BUTUAN 2/F Chicara Building J.C Aquino, Butuan City, Agusan Del Norte Tel No: (085) 816-2630

CAUAYAN 3/F Room 303, CLU Building, National Highway, Cauyan City, Isabela Tel No: (078) 652-3910 CAVITE UPPER 3/F VLHMC Building, Old Road Pala-pala, Sampaloc I, Dasmarinas, Cavite. Front of Asia Medic Hospital beside Mercedez Village Tel No: (046) 852-3273 CEBU NORTH 4/F Martinez Building, Osmena Boulevard Street, Cebu City Tel No: (032) 266-1690

DAET 2nd Floor, Lacson Building, Governor Panotes Avenue, Barangay 8, Daet, Camarines Norte Tel No: (054) 440-7788 74

Annual Report 2015

DIGOS 2/F JMC Building 2, Rizal Avenue, Digos, Davao Del Sur Tel No: (082) 272-0973

GENERAL SANTOS 1 Door 206-207 2nd floor GP Johnston Bldg. Magsaysay Ave. cor Beatiles St., Brgy South, General Santos City.

Tel No: (083) 552-0686 GENERAL SANTOS 2 3/F Panlaque Building, Papaya Street, Brgy. Dadiangas West, General Santos City Tel No: (083) 552-0687

GOA 2/F Bentoy Square Building, San Jose St., Goa, Camarines Sur Tel No: (054) 453-0335 IRIGA L T Building, Lot 2-A, Gonzales St., San Francisco, Iriga City Tel No: (054) 456-6012

KABANKALAN G/F POS Marketing Building, corner Guanzon & Lirazan Streets, Kabankalan City, Negros Occidental Tel No: (034) 471-3313 KIDAPAWAN 3rd Floor ROMA Bldg., Brgy. Sudapin, Quezon Blvd., Kidapawan, North Cotabato Tel No: (064) 572-0928

KORONADAL 3rd Floor UGA Bldg. Zone IV, GenSan Drive, Koronadal City, South Cotobato Tel No: (083) 520-0280

LAOAG 2/F Mezzanine, GTY Building, Paco Roman Street corner Gen. Luna Street, Poblacion, Laoag City, Ilocos Norte Tel No: (077) 670-7452 MABALACAT 2/F China Bank Savings Building, Mac Arthur Hi-Way, Dau, Mabalacat, Pampanga Tel No: (045) 892-1296

MANDAUE 3/F Cotiaoking Building, along Cebu North Road, Basak, Mandaue Cebu City Tel No: (032) 239-8281

METRO DAVAO 1 2/F VAB Building, Mac Arthur Hi-way Ulas, Davao City Tel No: (082) 297-4518 METRO DAVAO 2 2nd Floor Mitra Bldg., #160 San Pedro St., Davao City Tel No: (082) 222-4781

MANILA 3/F TRP Bldg.#801 Gonzalo Puyat st., Quiapo, Manila Tel No: (02) 254-7855

MARILAO 3rd Floor RL Building beside Town Country Subd., Marilao, Bulacan Tel No: (044) 913-7368 NAGA 2/F Frieto Bldg. Panganiban Drive, Naga City, Camarines Sur Tel No: (054)472-2761

NOVALICHES 3/F Room 306-309, Our Lady of Mercy Building, #970 Quirino Highway corner Ramirez Street, Novaliches, Quezon City Tel No: (02) 355-7244

OLONGAPO G/F Rementilla Building,1630 Rizal Avenue, East Tapinac, Olongapo City Tel No: (047) 611-0477 ROXAS 2/F Hernandez Building, Roxas Avenue, Roxas City, Capiz Tel No: (036) 632-0990

SAN FERNANDO Unit 1-A 3/F Brgy. Dolores, City of San Fernando, Pampanga Tel No: (045) 409 - 3513

SAN CARLOS 2/F Rosario Building (SYM Motors) Rizal Street, San Carlos City, Pangasinan Tel No: (075) 634-1785 SAN FRANCISCO 3rd Floor Paqueo Bldg, Brgy 4, San Francisco, Agusan Del Sur Tel No: (085) 839-3348

SAN JOSE 3/F Umerez Building, Tungko, San Jose Del Monte City, Bulacan Tel No: (044) 815-0076

SANTIAGO 3/F 17 City Road, Calao East Santiago City, Isabela Tel No: (078) 305-1072

SURIGAO 3/F R&E Laurente Building II, 1057 corner Rizal-Gonzales Streets, Washington, Surigao City Tel No: (086) 826-2442 TACURONG 2/F Bernardo, General Ramon Magsaysay Avenue, Tacurong City, Sultan Kudarat Tel No: (064) 477-0099 TAGUM 2/F Door 12-A, Suarez Plaza, corner Sobrecary & Mabini Streets, Tagum City, Davao Del Norte Tel No: (084) 216-3292 TANAY # 19 J.M Catolos St. Brgy., Katipunan Bayani, Tanay, Rizal Tel No: (02) 997-3072

TANDANG SORA 2/F Units 201-203, D&B Royal Midway Plaza, 419, Tandang Sora Avenue, Culiat, Quezon City Tel No: (02) 952-4210 TUGUEGARAO 4th Floor Matammu Bldg., J. Rizal St., Cor P. Gomez St., Centro 7, Tuguegarao City Tel No: (078) 3961354 VALENZUELA #12 San Francisco St. Karuhatan, Valenzuela City Tel No: (02) 291-1484

VICTORIAS Jomabo Bldg., Magsaysay St. cor. Osmeña Ave., Brgy. 5, Victorias City Tel No: (034)399-3404 WEST AVENUE 3/F Unit F Carbal Building, No. 68 West Avenue, Quezon City Tel No: (02) 441-2363 KMBI PANAY OFFICE 130 Panay Avenue., Quezon City Tel No: (02) 373-1339

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Kabalikat para sa Maunlad na Buhay, Inc.

#12 San Francisco Street, Karuhatan Valenzuela City, Metro Manila, Philippines 1441 76

Annual Report 2015