2014 2go Conso - Pse

2GO Group, Inc.
[Formerly ATS Consolidated (ATSC), Inc.]

AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
(With Comparative Figures for 2013 and 2012)
2GO GROUP, INC.

AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2014
(Amounts in Thousands)
Note
2014
2013
6
7, 23
8
9
P1,235,052
3,973,094
877,542
1,209,253
7,294,941
P918,645
3,949,819
421,957
1,054,409
6,344,830
10, 13, 20
11
12
14
15
29
5
16
5,403,570
5,707
192,951
9,763
29,139
589,334
250,450
140,402
6,621,316
5,054,932
6,907
181,977
9,763
15,379
477,076
250,450
180,590
6,177,074
P13,916,257
P12,521,904
P1,415,651
4,612,088
18,009
5,988
P1,344,927
4,189,244
5,772
6,680
85,977
32,837
6,170,550
373
28,592
5,575,588
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables - net
Inventories - net
Other current assets
Total Current Assets
Noncurrent Assets
Property and equipment
Available-for-sale (AFS) investments
Investments in associates and joint ventures
Investment property
Software development costs
Deferred tax assets - net
Goodwill
Other noncurrent assets
Total Noncurrent Assets
TOTAL ASSETS
LIABILITIES AND EQUITY

Current Liabilities
Loans payable
Trade and other payables
Income tax payable
Redeemable preferred shares
Current portions of:
Long-term debts
Obligations under finance lease
Total Current Liabilities
Forward
17
18, 23
21, 24
19
13, 20
Noncurrent Liabilities
Long-term debts - net of current portion
Obligations under finance lease - net of
current portion
Accrued retirement benefits
Other noncurrent liabilities
Total Noncurrent Liabilities
Note
2014
2013
19
P3,519,186
P3,597,496
13, 20
28
103,165
217,558
14,079
3,853,988
89,192
167,243
9,369
3,863,300
10,024,538
9,438,888
Total Liabilities
Equity
Attributable to the equity holders of the
Parent Company:
Share capital
Additional paid-in capital
Acquisitions of non-controlling interests
Excess of net assets over cost of
investments
Other comprehensive losses - net
Retained earnings (deficit)
Treasury shares
Non-controlling interests
Total Equity
TOTAL LIABILITIES AND EQUITY
See Notes to Consolidated Financial Statements.
24
24
24
24
24
2,484,653
910,901
(3,243)
2,484,653
910,901
(3,243)
(9,835)
(120,257)
648,421
(58,715)
(9,835)
(86,405)
(179,314)
(58,715)
3,851,925
39,794
3,891,719
3,058,042
24,974
3,083,016
P13,916,257
P12,521,904
2GO GROUP, INC.

AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2014
[Amounts in Thousands, Except for Earnings (Loss) Per Common Share]
Years Ended December 31
REVENUES
Freight
Passage
Service fees
Sale of goods
Others
OPERATING COSTS AND

EXPENSES
Operating
Cost of goods sold
Terminal
Overhead
Note
2014
2013
2012
23
P5,573,683
3,145,253
2,886,979
2,489,011
332,069
14,426,995
P4,891,953
3,108,127
3,045,597
2,050,835
276,681
13,373,193
P5,880,775
3,190,366
2,293,305
2,128,009
161,176
13,653,631
8,665,726
2,087,071
1,405,330
1,113,304
13,271,431
8,574,141
1,720,991
1,356,859
1,231,108
12,883,099
9,598,108
1,761,564
1,065,765
1,106,706
13,532,143
1,155,564
490,094
121,488
10,974
(332,630)
44,846
(369,014)
37,694
(400,472)
54,205
(267,451)
60,606
486,241
222,679
143,434
(219,344)
888,113
712,773
(97,856)
45,558
P842,555
485,692
P227,081
257,899
(P355,755)
23
25
8
OPERATING INCOME
OTHER INCOME (CHARGES)
Equity in net earnings of
associates
12
Financing charges
26
Reversal of impairment losses on
assets held for sale and
property and
equipment - net
10, 13
Others - net
26
INCOME (LOSS) BEFORE

INCOME TAX
PROVISION FOR INCOME
TAX
NET INCOME (LOSS)
Forward
29
Attributable to:
Equity holders of the Parent
Company
Note
2014
2013
10, 13
12
P827,735
14,820
P842,555
P212,044
15,037
P227,081
(P366,084)
10,329
(355,755)
30
P0.3384
P0.0867
(P0.1497)
Basic/Diluted Earnings (Loss)

Per Share
See Notes to the Consolidated Financial Statements.
2012
2GO GROUP, INC.

AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note
NET INCOME (LOSS)
OTHER COMPREHENSIVE
INCOME (LOSS) - Net of tax
Items that will be reclassified
subsequently to profit or
loss:
Net changes in unrealized gain
on AFS investments
Item that will not be
reclassified subsequently to
profit or loss:
Remeasurement gains (losses)
on net defined benefit
liability
Income tax effect
Share in re-measurement gains
(losses) on retirement
benefits of associates and
joint ventures
TOTAL COMPREHENSIVE
INCOME (LOSS) FOR THE
YEAR
Attributable to:
Equity holders of the Parent
Company
2014
2013
2012
P842,555
P227,081
(P355,755)
11
38
137
28
(48,360)
14,508
(33,852)
(24,949)
7,485
(17,464)
9,860
(2,958)
6,902
(33,852)
2,225
(15,201)
309
7,348
P808,703
P211,880
(P348,407)
P793,883
14,820
P808,703
P196,843
15,037
P211,880
(P358,756)
10,349
(P348,407)
2GO GROUP, INC.

AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Note
P2,484,653
BALANCE AT JANUARY 1, 2012

Total comprehensive gain (loss)
Changes in ownership interest resulting in
the decrease of non-controlling interest
Dividend distribution to non-controlling
interests
24
24
BALANCES AT DECEMBER 31, 2013

Additional
Paid-in
Capital
P279
P5,294
117
6,902
2,484,653

Changes in ownership interest resulting in
the decrease of non-controlling interest
Dividends declared
Share
Capital
(Note 24)
P910,901
Excess of
Cost Over
Net Assets
(Excess of
Acquisition
Net Assets
of Noncontrolling Over Cost) of
Investments
Interests
(Note 24)
(Note 24)
910,901
P5,940
P13,208
Attributable to Equity Holders of the Parent Company

Other Comprehensive Income (Loss)
Share in Remeasurement
Gains
(Losses) on
ReAccrued
measurement
Retirement
Gains
Share in
Benefits of
(Losses) on
Cumulative
Unrealized
Associates
Accrued
Translation
Gain (Loss)
and Joint
Retirement
Adjustment
on AFS
Ventures
of Benefits - Net
Investments
(Note 11)
Associates
of tax
(Note 12)
(P81,322)
(74,420)
(2,474)
(71,204)
(391,358)
(58,715)
38
(17,464)
2,225
(15,201)
212,044
(9,183)
-
(23,043)
-
(3,243)
(9,835)
5,294
(91,884)
(33,852)
(P3,243)
(P9,835)
P434
P5,294
434
(P125,736)
(249)
(P249)
5,294
P910,901
396
P2,484,653
(P58,715)
(366,084)
(P25,274)
7,328
13,208
910,901
(P78,532)
309
Treasury
Shares
(Note 24)
5,940
2,484,653
(P2,783)
Subtotal
Retained
Earnings
(Deficit)
(Note 24)
Total
Noncontrolling
interests
Total
Equity
P3,252,181
P20,843
P3,273,024
(358,756)
-
10,349
(3,292)
(600)
(348,407)
(3,292)
(600)
2,893,425
27,300
2,920,725
196,843
15,037
211,880
(32,226)
-
(5,142)
(12,221)
(37,368)
(12,221)
(86,405)
(179,314)
(58,715)
(33,852)
827,735
(P120,257)
P648,421
(P58,715)
3,058,042
24,974
793,883
14,820
3,083,016
808,703
P3,851,925
P39,794
P3,891,719
2GO GROUP, INC.

AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
2014
2013
P888,113
P712,773
(P97,856)
13, 15
803,730
1,042,231
935,930
26
332,628
369,014
400,472
28
22,192
34,403
(21,411)
25
9,903
22,697
24,946
12
(10,974)
(44,846)
(37,694)
26
13, 26
26
(5,880)
(5,562)
(2,669)
(24,130)
(1,690)
(182,984)
(98,978)
(59,843)
26
(359)
(176)
(666)
-
(4,343)
(3,009)
Note
CASH FLOWS FROM
OPERATING
ACTIVITIES
Income (loss) before income
tax
Adjustments for:
Depreciation and
amortization of property
and equipment and
software development cost
Interest and financing
charges
Movement in accrued
retirement
Provision for cargo losses
and damages
associates and joint
ventures
Income from reversal of
liabilities
Interest income
Unrealized foreign exchange
gains
Dividend income
Write-off of carrying value
of sunk vessel
Writedown of vessel engine
and related parts
Recovery from insurance
claims
Reversal of impairment loss
on vessels in operation net
Gain from other insurance
claims
Loss (gain) on disposals of:
Assets held for sale
AFS investments
Forward
2012
26
227,743
26
221,900
26
(943,315)
10, 13
(60,606)
(2,086)
51,041
-
10, 26
26
201,715
-
Note
Operating cash flows before
working capital changes
Decrease (increase) in:
Trade and other receivables
Inventories
Other current assets
Increase (decrease) in trade
and other payables
Cash generated from
operations
Income taxes paid, including
creditable withholding
taxes
Net cash flows provided by
operating activities
CASH FLOWS FROM
INVESTING
ACTIVITIES
Additions to:
Software development
costs
Proceeds from:
Insurance claims
Sale of property and
equipment
Redemption of AFS
investments
Disposal of assets held for
sale
Sale of a subsidiary
Interest received
Dividends received
Receipts of various deposits
Net cash used in investing
activities
Forward
2014
2013
2012
(As restated,
Note 2)
P2,030,946
P1,606,549
P1,054,859
(604,426)
(153,262)
(154,844)
(534,577)
(50,178)
(124,921)
99,500
(15,305)
155,426
430,820
685,607
257,387
1,549,234
1,582,480
1,551,867
(110,179)
(168,031)
(163,162)
1,439,055
1,414,449
13
(1,460,570)
(1,696,880)
(861,428)
15
(16,491)
(7,157)
(7,929)
26
559,273
367,957
13
32,148
4,780
11
1,200
10
6,635
176
17,911
85,260
1,690
22,959
12, 26
(859,718)
(1,221,391)
1,388,705
160,785
1,200
151,950
59,698
15,822
33,091
(446,811)
Note
CASH FLOWS FROM
FINANCING
ACTIVITIES
Proceeds from availments of:
Loans payable
17
Long-term debts
19
Payments of:
Loans payable
17
charges
17, 20, 21
Obligations under finance
lease
20
Long-term debts
19
Debt transaction costs
19
Redemption of preferred
shares
21
Dividends paid
24
Dividends paid to noncontrolling interests
Net cash provided by (used
in) financing activities
EFFECT OF FOREIGN
EXCHANGE RATE
CHANGES ON CASH
AND CASH
EQUIVALENTS
NET INCREASE
(DECREASE) IN CASH
AND CASH
EQUIVALENTS
CASH AND CASH
EQUIVALENTS AT
BEGINNING OF YEAR
CASH AND CASH
EQUIVALENTS AT
END OF YEAR
2014
2013
2012
(As restated,
Note 2)
P1,730,747
1,164
P2,143,080
3,619,952
P1,121,343
-
(1,659,527)
(2,222,292)
(952,653)
(303,836)
(346,309)
(378,034)
(30,366)
(427)
-
(24,243)
(3,203,325)
(26,607)
(37,830)
(800,000)
-
(691)
-
(202)
-
(20,481)
(2,040)
(262,936)
(59,946)
(1,323)
(600)
(1,070,295)
1,683
316,407
131,789
(126,718)
918,645
786,856
913,574
P1,235,052
P918,645
P786,856
2GO GROUP, INC.

AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
(Amounts in Thousands, Except Number of Shares, Earning per Common Share,
Exchange Rate Data and When Otherwise Indicated)
1. Corporate Information, Status of Operations and Management Action Plans, and

Approval of the Consolidated Financial Statements
Corporate Information
2GO Group, Inc. [formerly ATS Consolidated (ATSC), Inc.] [2GO or the Company,
formerly ATS Consolidated (ATSC), Inc.] was incorporated in the Philippines on May
26, 1949 and registered with the Philippine Securities and Exchange Commission (SEC)
on May 26, 1949. Its corporate life was renewed on May 12, 1995 and will expire on
May 25, 2045. The Company is a public company under Section 17.2 of the Securities
Regulation Code and its shares of stocks are listed in the Philippine Stock Exchange
(PSE). The Company and its subsidiaries (collectively referred to as the Group) are
primarily engaged in the business of operating vessels, motorboats and other kinds of
watercrafts; aircrafts and trucks; and acting as agent for domestic and foreign shipping
companies for purposes of transportation of cargoes and passengers by air, land and sea
within the waters and territorial jurisdiction of the Philippines. The Companys registered
office address is 15th Floor, Times Plaza Building, United Nations Avenue corner Taft
Avenue, Ermita, Manila while its principal place of business is located at Pier 2 and
Pier 4, North Harbor, Tondo, Manila.
As at December 31, 2013 and 2012, the Company is 88.3%-owned subsidiary of Negros
Navigation Co., Inc. (NN or the Parent Company). Its ultimate parent is Negros
Holdings and Management Corporation (NHMC). NN and NHMC are both incorporated
and domiciled in the Philippines.
On December 1, 2010, the Board of Directors (BOD) of Aboitiz Equity Ventures, Inc.
(AEV) and Aboitiz and Company, Inc. (ACO) approved the sale of their shareholdings in
the Company to NN in accordance with the securities and purchase agreements executed
among AEV, ACO and NN. On December 28, 2010, the sale was finalized at P1.8813
per share. AEV sold its entire shareholdings in the Company comprising of
1,889,489,607 common shares of P3.6 billion. ACO, on the other hand, sold its entire
shareholdings in the Company comprising of 390,322,384 common shares for P734.0
million. This resulted to 93.2% NNs ownership of the outstanding common shares of
the Company, along with all the Companys non-controlling shares that may be tendered
to NN subsequent to December 31, 2010.
On February 22, 2011, in relation to the tender offer issued by NN for the outstanding
common shares held by public shareholders of the Company, NN acquired 120,330,004
common shares from the Companys non-controlling shareholders equivalents to 4.9%
additional ownership interest in the Company for a total purchase price of
P226.8 million. As a result, NNs ownership interest in the Company increased to
98.12%. On December 21, 2012, NN sold 240,000,000 common shares of the Company
at a price of P1.65 per share to the public shareholders. The sale of shares resulted to a
reduction in the ownership of NN in the Company from 98.12% to 88.31%.
In February and March 2012, the SEC approved the application of the Company and its
subsidiaries to amend their Articles of Incorporation and By-laws, which include, among
others, the change in their corporate names to 2GO Group, Inc. [formerly ATS
Consolidated (ATSC), Inc.] (formerly ATSC), 2GO Express, Inc. [formerly ATS
Express, Inc. (ATSEI)], and 2GO Logistics, Inc. [formerly ATS Distribution, Inc.
(ATSDI)].
On August 24, 2011, the SEC also approved the amendment to the Companys secondary
purpose to include rendering technical services requirement to customers for refrigerated
marine container vans and related equipment or accessories. This amendment was
previously approved by the BOD on April 28, 2011 and ratified by the stockholders on
June 22, 2011.
On November 27, 2014, the SEC approved the amendment of the Companys Second
Article of the Articles of Incorporation with the inclusion of merchandising materials
such as souvenirs, corporate gift items and products bearing the corporate logos and
brands, food and beverages in the Companys Secondary Purpose.
On the same date, the SEC also approved the amendment of the Companys Third Article
of the Articles of Incorporation to change the principal office address from Metropolitan
Manila, Philippines to 15th Floor, Times Plaza Building, U.N. Avenue cor. Taft
Avenue, Ermita Manila, Philippines.
Status of Operations and Management Action Plans
NN and subsidiaries (collectively referred as the Group) Net Profit after Tax increased
by 263% to P415.7 million in 2014 from a P255.4 million net loss in 2013. Likewise, its
operating income increased by 360% to P912.5 million in 2014 from P198.5 million in
2013. These positive results were achieved despite the severe effects of the port
congestion as a result of the Manila daytime truck ban. Management credits the strong
performance largely to the increasing customers acceptance of the integrated service
offerings by the different units within the Group that provide seamless end-to-end supply
chain solutions to their requirements. This is further strengthened by the combined
business expansion, realization of increased efficiencies as well as stringent management
of operating costs and expenses. Comparing this to the Groups performance in 2012,
NNs Operating Income increased by 751% or P805.2 million from 2012 to 2014.
NN thru its operating company, 2GO Group, Inc. [formerly ATS Consolidated (ATSC),
Inc.], has transformed its business model into a complete supply chain solutions provider,
capitalizing on the strengths of its various business units. During the year, the nonshipping group (or the logistics group) continues to steadily grow and increase its
revenue contribution to the Group. The share of the non-shipping group is expected to
further increase substantially in the months and years to come.
The Group is tapping its core competencies and expanding its reach by offering a
complete end-to-end platform by means of integrated, seamless solutions and services. It
capitalizes on its nationwide logistics infrastructure, domestic freight scale and
capability, integrated information technology and its last mile transportation capability to
seize opportunities in the growing domestic and international markets.
-2-
The Groups commercial approach is to strengthen its Key Accounts Management,

wherein it will establish collaborative relationships and partner with the Groups top
customers and key clients:
1. To reinforce its competency both at the strategic and tactical levels to address
customer-specific needs or challenges through developing focused and customized
solutions.
2. To drive value through higher on-shelf availability, expanded market reach and
efficiency
3. The Companys customer-focused approach, nationwide infrastructure and service
reliability differentiate 2GO from competition and provides a foundation for future
growth
The Group is continuously improving and synchronizing its operations to develop an
implementation roadmap in order to fulfill its vision of being the Philippines integrated
supply chain service provider of choice.
Approval of Consolidated Financial Statements
The consolidated financial statements as at and for the year ended December 31, 2014
were authorized for issue by the BOD on April 14, 2015.
2. Summary of Significant Accounting and Financial Reporting Policies

Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis
except for the following items, which are measured on an alternative basis on each
reporting date.
Items
Available-for-sale investments
Accrued retirement benefits
Measurement bases
Fair value
Fair value of the plan assets less the
present value of the defined benefit
retirement obligation
Statement of Compliance
The consolidated financial statements have been prepared in compliance with Philippine
Financial Reporting Standards (PFRSs). PFRSs are based on International Financial
Reporting Standards (IFRSs) issued by the International Accounting Standards Board
(IASB). PFRSs which are issued by the Philippine Financial Reporting Standards
Council (FRSC), consist of PFRSs, Philippine Accounting Standards (PASs), and
Philippine Interpretations.
-3-
Adoption of Amendments to Standards

The Group has adopted the following amendments to standards starting January 1, 2014
and accordingly, changed its accounting policies. The adoption of these amendments to
standards did not have any significant impact on the Groups consolidated financial
statements.
Offsetting Financial Assets and Financial Liabilities (Amendments to PAS 32). These
amendments clarify that:
an entity currently has a legally enforceable right to set-off if that right is:
o not contingent on a future event; and
o enforceable both in the normal course of business and in the event of default,
insolvency or bankruptcy of the entity and all counterparties; and
gross settlement is equivalent to net settlement if and only if the gross settlement
mechanism has features that:
o eliminate or result in insignificant credit and liquidity risk; and
o process receivables and payables in a single settlement process or cycle.
Recoverable Amount Disclosures for Non-Financial Assets (Amendments to PAS 36).

These narrow-scope amendments to PAS 36 address the disclosure of information
about the recoverable amount of impaired assets if that amount is based on fair value
less costs of disposal. The amendments clarified that the scope of those disclosures is
limited to the recoverable amount of impaired assets that is based on fair value less
costs of disposal.
Measurement of short-term receivables and payables (Amendment to PFRS 13). The

amendment clarifies that, in issuing PFRS 13 and making consequential amendments
to PAS 39 and PFRS 9, the intention is not to prevent entities from measuring shortterm receivables and payables that have no stated interest rate at their invoiced
amounts without discounting, if the effect of not discounting is immaterial.
Standards Issued But Not Yet Adopted

A number of new standards and amendments to standards are effective for annual periods
beginning after January 1, 2014. The Group has not applied the following new or
amended standards in preparing these consolidated financial statements. Unless otherwise
stated, none of these are expected to have a significant impact on the Groups
consolidated financial statements.
-4-
Effective July 1, 2014
Annual Improvements to PFRSs: 2010-2012 and 2011-2013 Cycles

Amendments were made to a total of nine standards, with changes made to the
standards on business combinations and fair value measurement in both cycles. Most
amendments will apply prospectively for annual periods beginning on or after July 1,
2014. Earlier application is permitted, in which case the related consequential
amendments to other PFRSs would also apply. Special transitional requirements have
been set for amendments to the following standards: PFRS 2, PAS 16, PAS 38 and
PAS 40. The following are the said improvements or amendments to PFRSs, which
are applicable the Group:
Disclosures on the aggregation of operating segments (Amendment to PFRS 8).

PFRS 8 has been amended to explicitly require the disclosure of judgments made
by management in applying the aggregation criteria. The disclosures include: a
brief description of the operating segments that have been aggregated; and the
economic indicators that have been assessed in determining that the operating
segments share similar economic characteristics. In addition, this amendment
clarifies that a reconciliation of the total of the reportable segments assets to the
entitys assets is required only if this information is regularly provided to the
entitys chief operating decision maker. This change aligns the disclosure
requirements with those for segment liabilities.
Scope of portfolio exception (Amendment to PFRS 13). The scope of the

PFRS 13 portfolio exception - whereby entities are exempted from measuring the
fair value of a group of financial assets and financial liabilities with offsetting
risk positions on a net basis if certain conditions are met - has been aligned with
the scope of PAS 39 and PFRS 9.
PFRS 13 has been amended to clarify that the portfolio exception potentially
applies to contracts in the scope of PAS 39 and PFRS 9 regardless of whether
they meet the definition of a financial asset or financial liability under PAS 32 e.g. certain contracts to buy or sell non-financial items that can be settled net in
cash or another financial instrument.
Definition of related party (Amendment to PAS 24). The definition of a related

party is extended to include a management entity that provides key management
personnel (KMP) services to the reporting entity, either directly or through a
group entity. For related party transactions that arise when KMP services are
provided to a reporting entity, the reporting entity is required to separately
disclose the amounts that it has recognized as an expense for those services that
are provided by a management entity; however, it is not required to look
through the management entity and disclose compensation paid by the
management entity to the individuals providing the KMP services. The reporting
entity will also need to disclose other transactions with the management entity
under the existing disclosure requirements of PAS 24 - e.g. loans.
Effective January 1, 2016
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to PFRS 10 and PAS 28). The amendments address an inconsistency
between the requirements in PFRS 10 and in PAS 28, in dealing with the sale or
contribution of assets between an investor and its associate or joint venture.
-5-
The amendments require that a full gain or loss is recognized when a transaction
involves a business (whether it is housed in a subsidiary or not). A partial gain or loss
is recognized when a transaction involves assets that do not constitute a business,
even if these assets are housed in a subsidiary.
The amendments apply prospectively for annual periods beginning on or after
January 1, 2016. Early adoption is permitted.
Accounting for Acquisitions of Interests in Joint Operations (Amendments to

PFRS 11). The amendments require business combination accounting to be applied
to acquisitions of interests in a joint operation that constitutes a business. Business
combination accounting also applies to the acquisition of additional interests in a
joint operation while the joint operator retains joint control. The additional interest
acquired will be measured at fair value. The previously held interests in the joint
operation will not be remeasured.
The amendments place the focus firmly on the definition of a business, because this
is key to determining whether the acquisition is accounted for as a business
combination or as the acquisition of a collection of assets. As a result, this places
pressure on the judgment applied in making this determination.
The amendments apply prospectively for annual periods beginning on or after
January 1, 2016. Early adoption is permitted.
Clarification of Acceptable Methods of Depreciation and Amortization (Amendments

to PAS 16 and PAS 38). The amendments to PAS 38 introduce a rebuttable
presumption that the use of revenue-based amortization methods for intangible assets
is inappropriate. This presumption can be overcome only when revenue and the
consumption of the economic benefits of the intangible asset are highly correlated,
or when the intangible asset is expressed as a measure of revenue.
The amendments to PAS explicitly state that revenue-based methods of depreciation
cannot be used for property, plant and equipment. This is because such methods
reflect factors other than the consumption of economic benefits embodied in the asset
- e.g. changes in sales volumes and prices.
The amendments are effective for annual periods beginning on or after January 1,
2016, and are to be applied prospectively. Early application is permitted.
-6-
Annual Improvements to PFRSs (2012-2014 Cycle).This cycle of improvements

contains amendments to four standards, none of which are expected to have
significant impact on the Companys separate financial statements. The amendments
are effective for annual periods beginning on or after January 1, 2016. Earlier
application is permitted.
Changes in method for disposal (Amendment to PFRS 5). PFRS 5 is amended to

clarify that:
o
if an entity changes the method of disposal of an asset (or disposal group) i.e. reclassifies an asset (or disposal group) from held-for-distribution to
owners to held-for-sale (or vice versa) without any time lag - then the change
in classification is considered a continuation of the original plan of disposal
and the entity continues to apply held-for-distribution or held-for-sale
accounting. At the time of the change in method, the entity measures the
carrying amount of the asset (or disposal group) and recognizes any writedown (impairment loss) or subsequent increase in the fair value less costs to
sell/distribute of the asset (or disposal group); and
if an entity determines that an asset (or disposal group) no longer meets the
criteria to be classified as held-for-distribution, then it ceases held-fordistribution accounting in the same way as it would cease held-for-sale
accounting.
Any change in method of disposal or distribution does not, in itself, extend the
period in which a sale has to be completed.
The amendment to PFRS 5 is applied prospectively in accordance with PAS 8 to
changes in methods of disposal that occur on or after January 1, 2016.
Effective January 1, 2018
PFRS 9, Financial Instruments (2014). PFRS 9 (2014) replaces PAS 39 Financial

Instruments: Recognition and Measurement and supersedes the previously published
versions of PFRS 9 that introduced new classifications and measurement
requirements (in 2009 and 2010) and a new hedge accounting model (in 2013).
PFRS 9 includes revised guidance on the classification and measurement of financial
assets, including a new expected credit loss model for calculating impairment,
guidance on own credit risk on financial liabilities measured at fair value and
supplements the new general hedge accounting requirements published in 2013.
PFRS 9 incorporates new hedge accounting requirements that represent a major
overhaul of hedge accounting and introduces significant improvements by aligning
the accounting more closely with risk management.
The new standard is to be applied retrospectively for annual periods beginning on or
after January 1, 2018 with early adoption permitted.
The Group is assessing the potential impact on its consolidated financial statements
resulting from the application of PFRS 9.
-7-
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Company
and the following wholly-owned and majority-owned subsidiaries, all incorporated and
operating in the Philippines, as at December 31 of each year:
Supercat Fast Ferry Corp. (SFFC)

Special Container and Value Added
Services, Inc. (SCVASI) (1)
2GO Express, Inc. (2GO Express)
2GO Logistics, Inc. (2GO Logistics)
Scanasia Overseas, Inc. (SOI)
Hapag-Lloyd Philippines, Inc. (HLP) (2)
WRR Trucking Corporation (WTC)
NN-ATS Logistics Management and
Holding Co., Inc. (NALMHCI) (3)
J&A Services Corporation (JASC)
Red.Dot Corporation (RDC)
North Harbor Tugs Corporation (NHTC)
Super Terminals, Inc. (STI) (4)
Sungold Forwarding Corporation (SFC)
Supersail Services, Inc. (SSI)
Astir Engineering Works, Inc. (AEWI) (5)
WG&A Supercommerce, Inc. (WSI) (6)
Nature of Business
Percentage of Ownership
2013
2012
2014
Transporting passenger
100.0
100.0
100.00
Transportation/logistics
Distribution
Transportation
Holding and logistics
management
Vessel support services
Manpower services
Tug assistance
Passenger terminal operator
Manpower provider and
vessel support services
Engineering services
Vessels hotel management
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
85.00
100.0
100.0
100.0
100.0
58.9
50.0
51.0
100.0
100.0
100.0
58.9
50.0
51.0
100.0
100.0
100.0
58.9
50.0
51.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
(1) SCVASI was incorporated on March 9, 2012 and started its commercial operation on January 1, 2013.
(2) In 2013, 2GO Express acquired additional 15% ownership interest in HLP, thus, making HLP a
100%-owned subsidiary.
(3) On November 22, 2011, NALMHCI, a wholly-owned subsidiary of 2GO, was incorporated to be the
holding company of JASC, RDC, NHTC, STI, SFC and SSI effective December 1, 2011.
(4) NALMHCI has control over STI since it has the power to cast the majority of votes at the BODs
meeting and the power to govern the financial and reporting policies of STI.
(5) In 2013, NN ownership in AEWI was transferred to NALMHCI.
(6) WSI ceased operations in February 2006.
The financial statements of the subsidiaries are prepared for the same reporting year as
the Company using consistent accounting policies.
Subsidiaries are all entities over which the Group has control. Control is achieved when
the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect that return through its power over the investee.
Specifically, the Group controls an investee if and only if the Group has:
Power over the investee (i.e., existing rights that give it the current ability to direct
the relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the
Group considers all relevant facts and circumstances in assessing whether it has power
over an investee, including:
The contractual arrangement with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
The Groups voting rights and potential voting rights.
-8-
The Group re-assesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary
and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and
expenses of a subsidiary acquired or disposed of during the year are included or excluded
in the consolidated financial statements from the date the Group gains control or until the
date the Group ceases to control the subsidiary.
Non-controlling interest represents a portion of profit or loss and net assets of
subsidiaries not held by the Group, directly or indirectly, and are presented separately in
the consolidated statement of income and within the equity section in the consolidated
balance sheet and consolidated statement of changes in equity, separately from the
Companys equity. However, the Group must recognize in the consolidated balance
sheet a financial liability (rather than equity) when it has an obligation to pay cash in the
future (e.g., acquisition of non-controlling interest is required in the contract or
regulation) to purchase the non-controllings shares, even if the payment of that cash is
conditional on the option being exercised by the holder. The Group will reclassify the
liability to equity if a put option expires unexercised.
Non-controlling interest shares in losses, even if the losses exceed the non-controlling
equity interest in the subsidiary. Changes in the controlling ownership interest,
i.e., acquisition of noncontrolling interest or partial disposal of interest over a subsidiary
that do not result in a loss of control, are accounted for as equity transactions.
Consolidated financial statements are prepared using uniform accounting policies for like
transactions and other events in similar circumstances. All intra-group balances,
transactions, income and expenses and profits and losses resulting from intra-group
transactions that are recognized in assets, liabilities and equities, are eliminated in full on
consolidation.
A change in ownership interest in a subsidiary without a loss of control is accounted for
as an equity transaction. If the Group loses control over a subsidiary, it:
Derecognizes the assets (including goodwill) and liabilities of the subsidiary;

Derecognizes the carrying amount of any non-controlling interest;
Derecognizes the related other comprehensive income, like cumulative translation
differences, recorded in equity;
Recognizes the fair value of the consideration received;
Recognizes the fair value of any investment retained;
Recognizes any surplus or deficit in profit or loss; and
Reclassifies the parents share of components previously recognized in other
comprehensive income to profit or loss or retained earnings, as appropriate, as would
be required if the Group had directly disposed of the related assets or liabilities.
Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. The cost of an
acquisition is measured as the aggregate of the consideration transferred, measured at
acquisition date fair value and the amount of any non-controlling interest in the acquiree.
For each business combination, the Group elects whether to measure the non-controlling
interest in the acquiree either at fair value or at the proportionate share of the acquirees
identifiable net assets. Acquisition-related costs incurred are expensed as incurred and are
included in operating expenses.
-9-
When the Group acquires a business, it assesses the financial assets and financial
liabilities assumed for appropriate classification and designation in accordance with the
contractual terms, economic circumstances and pertinent conditions as at the acquisition
date. This includes the separation of embedded derivatives in host contracts by the
acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the
acquirers previously held equity interest in the acquiree is remeasured to fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognized at fair
value at the acquisition date. Subsequent changes to the fair value of the contingent
consideration which is deemed to be an asset or liability will be recognized in accordance
with PAS 39 either in profit or loss or as a change to OCI. If the contingent consideration
is not within the scope of PAS 39, it is measured in accordance with the appropriate
PFRS. Contingent consideration that is classified as equity is not re-measured and
subsequent settlement is accounted for within equity.
Goodwill acquired in a business combination is initially measured at cost, being the
excess of the aggregate of the consideration transferred and the amount recognized for
non-controlling interest, and any previous interest held, over the fair values of net
identifiable assets acquired and liabilities assumed. If this consideration is lower than the
fair value of the net assets of the subsidiary acquired, the Group re-assesses whether it
has correctly identified all of the assets acquired and all of the liabilities assumed and
reviews the procedures used to measure the amounts to be recognized at the acquisition
date. If the re-assessment still results in an excess of the fair value of net assets acquired
over the aggregate consideration transferred, then the gain is recognized in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment
losses.
For the purpose of impairment testing, goodwill acquired in a business combination is,
from the acquisition date, allocated to each of the Groups cash-generating units (CGUs)
that are expected to benefit from the combination, irrespective of whether other assets or
liabilities of the acquire are assigned to those units.
Where goodwill forms part of a CGU or a group of CGUs and part of the operation
within that unit is disposed of, the goodwill associated with the operation disposed of is
included in the carrying amount of the operation when determining the gain or loss on
disposal of the operation. Goodwill disposed of in this circumstance is measured based
on the relative values of the operation disposed of and the portion of the CGU retained.
When subsidiaries are sold, the difference between the selling price and the net assets
plus any other comprehensive income, and fair value of retained interest is recognized in
profit or loss.
Where there are business combinations in which all the combining entities within the
Group are ultimately controlled by the same ultimate parties before and after the business
combination and that the control is not transitory (business combinations under common
control), the Group accounts for such business combinations under the purchase method
of accounting, if the transaction was deemed to have substance from the perspective of
the reporting entity. In determining whether the business combination has substance,
factors such as the underlying purpose of the business combination and the involvement
of parties other than the combining entities such as the non-controlling interest, shall be
considered.
- 10 -
In cases where the business combination has no substance, the Group accounts for the
transaction similar to a pooling of interests. The assets and liabilities of the acquired
entities and that of the Company are reflected at their carrying values. Comparatives shall
be restated to include balances and transactions as if the entities had been acquired at the
beginning of the earliest period presented and as if the companies had always been
combined.
Investments in Associates and Joint Ventures
The following are the significant associates and joint ventures of the Group as at
December 31, 2014 and 2013:
Nature of Business
Associates:
MCC Transport Philippines (MCCP)
Hansa Meyer Projects (Phils), Inc.
(HMPPI)(1)
Joint Ventures:
KLN Logistics Holdings Philippines Inc.
(KLN) (2)
Kerry Logistics (Phils), Inc. (KLI) (3)
Effective Percentage
of Ownership
2013
2014
Container transportation
33.0%
33.0%
Project logistics and consultancy
47.1%
47.1%
Holding Company
International freight and cargo
forwarding
78.4%
78.4%
62.5%
62.5%
(1) HMPPI is an associate of 2GO Express. On June 16, 2014, the Philippine SEC approved the amendment in its
Articles of incorporation and By-Laws to change its corporate name to HMPPI [formerly Hansa Meyer-ATS
Projects, Inc. (HATS)].
(2) KLN is 78.4% owned by 2GO Express.

(3) KLI is an associate of 2GO Express. On December 2, 2014, the Philippine SEC approved the amendment
in its Articles of incorporation and By-Laws to change its corporate name to KLI [Formerly KerryATS Logistics, Inc. (KALI)].
An associate is an entity over which the Group has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of the
investee, but has no control or joint control over those policies.
A joint arrangement is a contractual arrangement whereby two or more parties undertake
an economic activity that is subject to joint control. A joint venture is a type of joint
arrangement where the parties that have joint control of the arrangement have rights over
the net assets of the joint venture.
The considerations made in determining significant influence or joint control are similar
to those necessary to determine control over subsidiaries.
Investments in associates and joint ventures (investee companies) are accounted for
under the equity method of accounting. An investment is accounted for using the equity
method from the day it becomes an associate or joint venture. On acquisition of
investment, the excess of the cost of investment over the investors share in the net fair
value of the investees identifiable assets, liabilities and contingent liabilities is accounted
for as goodwill and included in the carrying amount of the investment and not amortized.
Any excess of the investors share of the net fair value of the investees identifiable
assets, liabilities and contingent liabilities over the cost of the investment is excluded
from the carrying amount of the investment, and is instead included as income in the
determination of the share in the earnings of the investees.
- 11 -
Under the equity method, the investments in the investee companies are carried in the
consolidated balance sheet at cost plus post-acquisition changes in the Groups share in
the net assets of the investee companies, less any impairment loss. The consolidated
statement of income reflects the share of the results of the operations of the investee
companies. The Groups share of post-acquisition movements in the investees equity
reserves is recognized directly in equity. Profits and losses resulting from transactions
between the Group and the investee companies are eliminated to the extent of the interest
in the investee companies and for unrealized losses to the extent that there is no evidence
of impairment of the asset transferred. Dividends received are treated as a reduction of
the carrying value of the investment.
The Group discontinues applying the equity method when their investments in investee
companies are reduced to zero. Accordingly, additional losses are not recognized unless
the Group has guaranteed certain obligations of the investee companies. When the
investee companies subsequently report net income, the Group will resume applying the
equity method but only after its share of that net income equals the share of net losses not
recognized during the period the equity method was suspended.
The reporting dates of the investee companies and the Group are identical and the
investee companies accounting policies conform to those used by the Group for like
transactions and events in similar circumstances.
Upon loss of significant influence over the associate, the Group measures and recognizes
any retaining investment at its fair value. Any difference between the carrying amount of
the associate upon loss of significant influence and the fair value of the retaining
investment and proceeds from disposal is recognized in the consolidated statement of
income.
Interest in a Joint Operation
The Group has an interest in a joint operation which is a jointly controlled entity,
whereby the joint venture partners have a contractual arrangement that establishes joint
control over the economic activities of the entity. The assets, liabilities, revenues and
expenses relating to its interest in the joint operation are recognized in the consolidated
financial statements of the Group.
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash, with original
maturities of three months or less, and are subject to an insignificant risk of change in
value.
Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. The fair
value measurement is based on the presumption that the transaction to sell the asset or
transfer the liability takes place either:
In the principal market for the asset or liability, or

In the absence of a principal market, in the most advantageous market for the asset or
liability.
The principal or the most advantageous market must be accessible to the Company.
- 12 -
The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a nonfinancial asset takes into account a market participant's
ability to generate economic benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated
financial statements are categorized within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as a
whole:
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; and
Level 3 - Valuation techniques for which the lowest level input that is significant to
the fair value measurement is unobservable.
For assets and liabilities that are recognized in the consolidated financial statements on a
recurring basis, the Group determines whether transfers have occurred between Levels in
the hierarchy by re-assessing categorization (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and
liabilities on the basis of the nature, characteristics and risks of the assets or liability and
the level of the fair value hierarchy.
Financial Instruments
Initial Recognition
Financial assets and financial liabilities are recognized in the consolidated balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the marketplace (regular way purchases or
sales) are recognized on the trade date, i.e., the date that the Group commits to purchase
or sell the asset.
Financial instruments are recognized initially at fair value, which is the fair value of the
consideration given (in case of an asset) or received (in case of a liability). If part of
consideration given or received is for something other than the financial instrument, the
fair value of the financial instrument is estimated using a valuation technique. The initial
measurement of financial instruments, except for those financial assets and liabilities at
fair value through profit or loss (FVPL), includes transaction costs.
- 13 -
Classification of Financial Instruments

On initial recognition, the Group classifies its financial assets in the following categories:
financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments and
AFS investments. The Group also classifies its financial liabilities into FVPL and other
financial liabilities. The classification depends on the purpose for which the investments
are acquired and whether they are quoted in an active market. Management determines
the classification of its financial assets and financial liabilities at initial recognition and,
where allowed and appropriate, reevaluates such designation at the end of each reporting
period.
Financial instruments are classified as liabilities or equity in accordance with the
substance of the contractual arrangement. Interest, dividends, gains and losses relating to
a financial instrument or a component that is a financial liability are reported as expense
or income. Distributions to holders of financial instruments classified as equity are
charged directly to equity, net of any related income tax benefits.
The Group has no financial assets classified as financial assets at FVPL and HTM
investments.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market, they are not entered into with the
intention of immediate or short-term resale and are not designated as AFS investments or
financial assets at FVPL. Loans and receivables are carried at amortized cost using the
effective interest method, less impairment loss. Amortized cost is calculated by taking
into account any discount or premium on acquisition and fees that are integral part of the
effective interest rate. Gains and losses are recognized in profit or loss when the loans
and receivables are derecognized or impaired, as well as through the amortization
process. Loans and receivables are included in current assets if maturity is within 12
months from the end of reporting period.
As at December 31, 2014 and 2013, financial assets included under this classification are
the Groups cash in banks, cash equivalents, trade and other receivables excluding
advances to suppliers, officers and employees, and refundable deposits (presented as part
of Other current assets and Other noncurrent assets in the consolidated balance
sheet).
AFS Investments
AFS investments are those non-derivative financial assets which are designated as such
or do not qualify to be classified as financial assets designated at FVPL, HTM
investments or loans and receivables. They are purchased and held indefinitely, and may
be sold in response to liquidity requirements or changes in market conditions. After
initial measurement, AFS investments are measured at fair value with unrealized gains or
losses recognized in the consolidated statement of comprehensive income and
consolidated statement of changes in equity in the Unrealized gain or loss on AFS
investments until the AFS investments is derecognized, at which time the cumulative
gain or loss recorded in equity is recognized in profit or loss. Assets under this category
are classified as current assets if expected to be realized within 12 months from the end
of reporting period and as noncurrent assets if maturity date is more than a year from the
end of reporting period.
Investments in equity instruments whose fair value cannot be reliably measured are
measured at cost less impairment loss.
- 14 -
As at December 31, 2014 and 2013, the Groups AFS investments include investments in
quoted and unquoted shares of stock and club shares.
Other Financial Liabilities
This classification pertains to financial liabilities that are not designated as at FVPL upon
the inception of the liability. Included in this category are liabilities arising from
operations or borrowings.
The financial liabilities are recognized initially at fair value and are subsequently carried
at amortized cost, taking into account the impact of applying the effective interest method
of amortization (or accretion) for any related premium (discount) and any directly
attributable transaction costs.
As at December 31, 2014 and 2013, financial liabilities included in this classification are
the Groups loans payable, trade and other payables excluding provision for cargo losses
and damages and unearned revenue, long-term debts, obligations under finance lease,
restructured debts, redeemable preferred shares of a subsidiary and other noncurrent
liabilities.
Classification of Financial Instruments between Debt and Equity
Financial instruments are classified as liabilities or equity in accordance with the
substance of the contractual arrangement. Interest relating to a financial instrument or a
component that is a financial liability is reported as expenses.
A financial instrument is classified as debt if it provides for a contractual obligation to:
deliver cash or another financial asset to another entity; or
exchange financial assets or financial liabilities with another entity under conditions
that are potentially unfavorable to the Group; or
satisfy the obligation other than by the exchange of a fixed amount of cash or another
financial asset for a fixed number of own equity shares.
If the Group does not have an unconditional right to avoid delivering cash or another
financial asset to settle its contractual obligation, the obligation meets the definition of a
financial liability.
The components of issued financial instruments that contain both liability and equity
elements are accounted for separately, with the equity component being assigned the
residual amount after deducting from the instrument as a whole the amount separately
determined as the fair value of the liability component on the date of issue.
Redeemable Preferred Shares (RPS)
The component of the RPS that exhibits characteristics of a liability is recognized as a
liability in the consolidated balance sheet, net of transaction costs. The corresponding
dividends on those shares are charged as interest expense in profit or loss. On issuance of
the RPS, the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond; and this amount is carried as a long term liability on the
amortized cost basis until extinguished on conversion or redemption.
- 15 -
Day 1 Difference
Where the transaction price in a non-active market is different from the fair value of
other observable current market transactions in the same instrument or based on a
valuation technique whose variables include only data from observable market, the
Group recognizes the difference between the transaction price and fair value (a Day 1
profit and loss) in profit or loss unless it qualifies for recognition as some other type of
asset. In cases where use is made of data which is not observable, the difference between
the transaction price and model value is only recognized in profit or loss when the inputs
become observable or when the instrument is derecognized. For each transaction, the
Group determines the appropriate method of recognizing the Day 1 profit or loss amount.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount reported in the
consolidated balance sheet if, and only if, there is a currently enforceable legal right to
offset the recognized amounts and there is an intention to settle on a net basis, or to
realize the assets and settle the liabilities simultaneously. This is not generally the case
with master netting agreements, and the related assets and liabilities are presented at
gross amounts in the consolidated balance sheet.
Derecognition of Financial Assets and Liabilities
Financial Asset
A financial asset (or, where applicable, a part of a financial asset or part of a group of
similar financial assets) is derecognized when:
the rights to receive cash flows from the asset have expired;
the Group 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 Group has transferred its rights 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 risks and rewards of the asset, but has
transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has
entered into a pass-through agreement, 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 Groups continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum
amount of consideration that the Group could be required to repay.
In such case, the Group also recognizes an associated liability. The transferred asset and
the associated liability are measured on a basis that reflects the rights and obligations that
the Group has retained.
Financial Liability
A financial liability is derecognized when the obligation under the liability is discharged,
or cancelled or has expired.
When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognized in profit or loss.
- 16 -
Impairment of Financial Assets

The Group assesses at the end of each reporting period whether a financial asset or group
of financial assets is impaired.
Loans and Receivables
For loans and receivables carried at amortized cost, the Group first assesses individually
whether objective evidence of impairment exists for financial assets that are individually
significant, or collectively for financial assets that are not individually significant. If the
Group determines that no objective evidence of impairment exists for an individually
assessed financial asset, whether significant or not, the asset is included in a group of
financial assets with similar credit risk characteristics and that group of financial assets is
collectively assessed 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.
If there is objective evidence that an impairment loss has been incurred, the amount of
the loss is measured as the difference between the assets carrying amount and the
present value of estimated future cash flows (excluding future expected credit losses that
have not yet been incurred). The carrying amount of the asset is reduced through the use
of an allowance account and the amount of the loss is recognized in profit or loss. Interest
income continues to be accrued on the reduced carrying amount based on the original
effective interest rate of the financial asset. Loans together with the associated allowance
are written off when there is no realistic prospect of future recovery and all collateral has
been realized or has been transferred to the Group. If, in a subsequent period, the amount
of the impairment loss increases or decreases because of an event occurring after the
impairment was recognized, the previously recognized impairment loss is increased or
decreased by adjusting the allowance account. Any subsequent reversal of an impairment
loss is recognized in profit or loss, to the extent that the carrying value of the asset does
not exceed its amortized cost at the reversal date.
Assets Carried at Cost
If there is objective evidence that an impairment loss on an unquoted equity instrument
that is not carried at fair value because its fair value cannot be reliably measured, or on a
derivative asset that is linked to and must be settled by delivery of such an unquoted
equity instrument has been incurred, the amount of the loss is measured as the difference
between the assets carrying amount and the present value of estimated future cash flows
discounted at the current market rate of return for a similar financial asset.
If there is objective evidence (such as significant adverse changes in the business
environment where the issuer operates, probability of insolvency or significant financial
difficulties of the issuer) that an impairment loss on financial assets carried at cost had
been incurred, the amount of the loss is measured as the difference between the assets
carrying amount and the present value of estimated future cash flows discounted at the
current market rate of return for a similar financial asset. Such impairment losses are not
reversed in subsequent periods.
AFS Investments
For AFS investments, the Group assesses at the end of each reporting period whether
there is objective evidence that an investment or group of investment is impaired.
- 17 -
In the case of quoted equity investments classified as AFS investments, objective

evidence of impairment would include a significant or prolonged decline in the fair value
of the investments below its cost. The Group treats significant generally as 20% or
more and prolonged as greater than 12 months for quoted equity securities. Where
there is evidence of impairment, the cumulative loss (measured as the difference between
the acquisition cost and the current fair value, less any impairment loss on that financial
asset previously recognized in profit or loss) is removed from equity and recognized in
profit or loss. Impairment losses on equity investments are not reversed through profit or
loss. Increases in fair value after impairment are recognized in OCI.
In the case of debt instruments classified as AFS investments, impairment is assessed
based on the same criteria as financial assets carried at amortized cost. Future interest
income is based on the reduced carrying amount and is accrued based on the rate of
interest used to discount future cash flows for the purpose of measuring impairment loss.
Such accrual is recorded as part of Interest income in profit or loss. If, in subsequent
period, the fair value of a debt instrument increased and the increase can be objectively
related to an event occurring after the impairment loss was recognized in profit or loss,
the impairment loss is reversed through profit or loss.
Inventories
Inventories are valued at the lower of cost and net realizable value (NRV). Cost
comprises all cost of purchase and other costs incurred in bringing the inventories to their
present location or condition. Cost is determined using weighted average method for
trading goods, moving average method for materials, parts and supplies, flight
equipment, expendable parts and supplies, and the first-in, first-out method for truck and
trailer expendable parts, fuel, lubricants and spare parts. NRV of the trading goods is the
estimated selling price in the ordinary course of business, less estimated costs necessary
to make the sale. NRV of materials and supplies is the current replacement costs. An
allowance for inventory obsolescence is provided for damaged goods based on analysis
and physical inspection.
Assets Held for Sale and Discontinued Operation
Assets and disposal groups classified as held for sale are measured at the lower of
carrying amount and fair value less costs to sell. Noncurrent assets and disposal groups
are classified as held for sale if their carrying amount will be recovered through a sale
transaction rather than through continuing use. This condition is regarded as met only
when the sale is highly probable and the asset or disposal group is available for
immediate sale in its present condition. Management must be committed to the sale
which should be expected to qualify for recognition as a completed sale within 12 months
from the date of classification.
Property and equipment once classified as held for sale are not depreciated or amortized.
If there are changes to a plan of sale, and the criteria for the asset or disposal group to be
classified as held for sale are no longer met, the Group ceases to classify the asset or
disposal group as held for sale and it shall be measured at the lower of: (a) its carrying
amount before the asset was classified as held for sale adjusted for any depreciation,
amortization or revaluations that would have been recognized had the asset not been
classified as held for sale, and (b) its recoverable amount at the date of the subsequent
decision not to sell.
The Group includes any required adjustment to the carrying amount of a noncurrent asset
or disposal group that ceases to be classified as held for sale in profit or loss from
continuing operations in the period in which the criteria for the asset or disposal group to
be classified as held for sale are no longer met. The Group presents that adjustment in the
same caption in profit or loss used to present a gain or loss recognized, if any.
- 18 -
In the consolidated statement of income of the reporting period, and of the comparable
period of the previous year, income and expenses from discontinued operations are
reported separately from normal income and expenses down to the level of profit after
taxes, even when the Group retains a non-controlling interest in the asset after the sale.
The resulting profit or loss (after taxes) is reported separately in profit or loss.
Property and Equipment
Property and equipment, other than land, are carried at cost, less accumulated
depreciation, amortization and impairment losses, if any. The initial cost of property and
equipment consists of its purchase price and costs directly attributable to bringing the
asset to its working condition for its intended use. When significant parts of property and
equipment are required to be replaced in intervals, the Group recognizes such parts as
individual assets with specific useful lives and depreciation, respectively. Land is carried
at cost less accumulated impairment losses.
Subsequent expenditures relating to an item of property and equipment that have already
been recognized are added to the carrying amount of the asset when the expenditures
have resulted in an increase in the future economic benefits, in excess of the originally
assessed standard of performance of the existing asset, will flow to the Group.
Expenditures for repairs and maintenance are charged to the operations during the year in
which they are incurred.
Drydocking costs, consisting mainly of main engine overhaul, replacement of steel plate
of the vessels hull and related expenditures, are capitalized as a separate component of
Vessels in operations. When significant drydocking costs are incurred prior to the end
of the amortization period, the remaining unamortized balance of the previous
drydocking cost is derecognized in profit or loss.
Vessels under refurbishment, if any, include the acquisition cost of the vessels, the cost
of ongoing refurbishments and other direct costs. Construction in progress represents
structures under construction and is stated at cost. This includes cost of construction and
other direct costs. Borrowing costs that are directly attributable to the refurbishment of
vessels and construction of property and equipment are capitalized during the
refurbishment and construction period. Vessels under refurbishment and construction in
progress are not depreciated until such time the relevant assets are complete and available
for use. Refurbishment of existing vessels is capitalized as part of vessel improvements
and depreciated at the time the vessels are put back into operation.
Vessel on lay-over, if any, represents vessel for which drydocking has not been done
pending availability of the necessary spare parts. Such vessels, included under the
Property and equipment account in the consolidated balance sheet are stated at cost less
accumulated depreciation and any impairment in value.
- 19 -
Depreciation and amortization are computed using the straight-line method over the
following estimated useful lives of the property and equipment:
In Years
Vessels in operation, excluding drydocking
costs and vessel equipment and improvements
Drydocking costs(1)
Vessel equipment and improvements
Containers and reefer vans
Terminal and handling equipment
Furniture and other equipment
Land improvements
Buildings and warehouses
Transportation
15 - 30
2-5
3-5
5 - 10
5 - 10
3-5
5 - 10
5 - 20
5 - 10
(1) Drydocking cost are included under various property and equipment classification
Leasehold improvements are amortized over their estimated useful lives of 5-20 years or
the term of the lease, whichever is shorter. Flight equipment is depreciated based on the
estimated number of flying hours.
Depreciation or amortization commences when an asset is in its location or condition
capable of being operated in the manner intended by management. Depreciation or
amortization ceases at the earlier of the date that the item is classified as held for sale in
accordance with PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations,
and the date the asset is derecognized.
The assets residual values, useful lives and depreciation and amortization methods are
reviewed at each reporting period, and adjusted prospectively if appropriate.
When property and equipment are sold or retired, their cost and accumulated depreciation
and amortization and any allowance for impairment in value are eliminated from the
accounts and any gain or loss resulting from their disposal is included in profit or loss.
Fully depreciated assets are retained in the accounts until these are no longer in use.
Investment Property
Investment property, consisting of a parcel of land of 2GO Express, is measured at cost
less any impairment loss. The Group used the fair value of the land as the cost in the
consolidated financial statements at the date the Company acquired 2GO Express.
Subsequent costs are included in the assets carrying amount only when it is probable that
future economic benefits associated with the asset will flow to the Group and the cost of
the item can be measured reliably.
Derecognition of an investment property will be triggered by a change in use or by sale
or disposal. Gain or loss arising on disposal is calculated as the difference between any
disposal proceeds and the carrying amount of the related asset, and is recognized in the
consolidated statement of income. Transfers are made to investment property when, and
only when, there is change in use, evidenced by cessation of owner-occupation,
commencement of an operating lease to another party or completion of construction or
development, transfers are made from investment property when, and only when, there is
a change in used, evidenced by commencement of owner-occupation or commencement
of development with a view to sale.
- 20 -
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost
of intangible assets acquired in a business combination is its fair value as at the date of
the acquisition. Following initial recognition, intangible assets are carried at cost less
any accumulated amortization and any accumulated impairment losses. Internally
generated intangible assets, excluding capitalized development costs, are not capitalized
and expenditure is reflected in profit or loss in the year in which the expenditure is
incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets are regarded to have an indefinite useful life when, based on analysis of
all of the relevant factors, there is no foreseeable limit to the period over which the asset
is expected to generate net cash inflows for the Group.
Software Development Costs
Software development costs are initially recognized at cost. Following initial recognition,
the software development costs are carried at cost less accumulated amortization and any
accumulated impairment loss.
The software development costs is amortized on a straight-line basis over its estimated
useful economic life of three to five years and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The amortization commences
when the software development costs is available for use. The amortization period and
the amortization method for the software development costs are reviewed at each
financial year end. Changes in the estimated useful life is accounted for by changing the
amortization period or method, as appropriate, and treated as changes in accounting
estimates. The amortization expense is recognized in profit or loss in the expense
category consistent with the function of the software development costs.
Intangible assets with indefinite useful lives are not amortized, but are tested for
impairment annually either individually or at the cash generating unit level. The
assessment of indefinite life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life from indefinite to finite is
made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the
difference between the net disposal proceeds and the carrying amount of the asset and are
recognized in profit or loss when the asset is derecognized.
Impairment of Nonfinancial Assets
The Group assesses at the end of each reporting period whether there is an indication that
nonfinancial asset may be impaired. If any such indication exists, or when annual
impairment testing for nonfinancial asset is required, the Group makes an estimate of the
assets recoverable amount. An assets estimated recoverable amount is the higher of an
assets or CGUs fair value less costs of disposal and its value in use (VIU) and is
determined for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets. Where the
carrying amount of an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount. In assessing VIU,
the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. In determining fair value less costs of disposal, an appropriate
valuation model is used. These calculations are corroborated by valuation multiples,
quoted share prices for publicly traded subsidiaries or other available fair value
indicators. Impairment losses of continuing operations are recognized in profit or loss in
those expense categories consistent with the function of the impaired asset.
- 21 -
A previously recognized impairment loss is reversed only if there has been a change in
the assumptions used to determine the assets recoverable amount since the last
impairment loss was recognized. If that is the case, the carrying amount of the asset is
increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation or amortization, had no
impairment loss been recognized for the asset in prior years. Such reversal is recognized
in profit or loss unless the asset is carried at revalued amount, in which case the reversal
is treated as a revaluation increase. After such a reversal, the depreciation or amortization
expense is adjusted in future periods to allocate the assets revised carrying amount, less
any residual value, on a systematic basis over its remaining useful life.
The Groups nonfinancial assets consist of creditable withholding taxes (CWTs), input
value added tax (VAT), prepaid expense, advances to suppliers, officers and employees,
other current assets, assets held for sale, property and equipment, investment property,
investments in associates and joint ventures, software development costs, and deferred
input VAT.
Goodwill
Goodwill is tested annually for impairment and when circumstances indicate that the
carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU
(or group of CGU) to which the goodwill relates. Where the recoverable amount of CGU
(or group of CGUs) is less than their carrying amount, an impairment loss is recognized
immediately in profit or loss of the CGU (or the group of CGUs) to which goodwill has
been allocated. Impairment losses relating to goodwill cannot be reversed in future
periods.
Provisions and Contingencies
Provisions are recognized when: (a) the Group has a present obligation (legal or
constructive) as a result of a past event; (b) it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation; and (c) a reliable
estimate can be made of the amount of the obligation.
Contingent liabilities are not recognized in the consolidated financial statements. They
are disclosed unless the possibility of an outflow of resources embodying economic
benefits is remote. Contingent assets are not recognized in the consolidated financial
statements but disclosed in the notes to consolidated financial statements when an inflow
of economic benefits is probable.
Equity
Share capital is measured at par value for all shares issued. When the Company issues
more than one class of stock, a separate account is maintained for each class of stock and
the number of shares issued. Incremental costs incurred directly attributable to the
issuance of new shares are shown in equity as a deduction from proceeds, net of tax.
Additional paid-in capital (APIC) is the difference between the proceeds and the par
value when the shares are sold at a premium. Contributions received from shareholders
are recorded at the fair value of the items received with the credit going to share capital
and any excess to APIC.
Retained earnings (deficit) represents the cumulative balance of net income or loss, net of
any dividend declaration and other capital adjustments.
- 22 -
Treasury shares are own equity instruments that are reacquired. Treasury shares are
recognized at cost and deducted from equity. No gain or loss is recognized in profit or
loss on the purchase, sale, issuance or cancellation of the Groups own equity
instruments. Any difference between the carrying amount and the consideration, if
reissued, is recognized as APIC. Voting rights related to treasury shares are nullified for
the Group and no dividends are allocated to them.
Other Comprehensive Income comprises items of income and expenses that are not
recognized in profit or loss for the year. Other comprehensive income of the Group
includes net changes in fair value of AFS investments, share in other comprehensive
income of associates and remeasurement gains (losses) on accrued retirement benefits.
Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will
flow to the Group and the revenue can be reliably measured. Revenue is measured at the
fair value of the consideration received or receivable, excluding discounts, rebates VAT
or duties. The Group assesses its revenue arrangement against specific criteria in order to
determine if it is acting as principal or agent. The Group has concluded that it is acting
as a principal in all of its revenue arrangements. The specific recognition criteria for
each type of revenue are as follows:
Freight and passage revenues are recognized when the related services are rendered.
Customer payments for services which have not yet been rendered are classified as
unearned revenue under Trade and other payables in the consolidated balance sheet.
Service fees are recognized when the related services have been rendered. Service fees
are also recognized when cargoes are received by either shipper or consignee for export
and import transactions. These amounts are presented, net of certain costs which are
reimbursed by customers.
Revenue from the sale of goods is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer, which is upon delivery of the goods
and acceptance by the buyer.
Revenue from sale of food and beverages is recognized upon delivery and acceptance by
customers.
Vessel lease revenues from short-term leasing arrangements are recognized in accordance
with the terms of the lease agreements.
Manning and crewing services revenue is recognized upon embarkation of qualified

vessel crew based on agreed rates and when the corresponding training courses have been
conducted.
Arrastre and stevedoring revenue is recognized when related services are rendered.
Management fee is recognized when the related services are rendered.
Commissions are recognized as revenue in accordance with the terms of the agreement
with the principal and when the related services have been rendered.
Rental income arising from operating leases is recognized on a straight-line basis over the
lease term.
- 23 -
Interest income is recorded using the effective interest rate (EIR), which is the rate that
exactly discounts the estimated future cash payments or receipts through the expected life
of the financial instrument or a shorter period, where appropriate, to the net carrying
amount of the financial asset or liability.
Dividend income is recognized when the shareholders rights to receive the payment is
established.
Costs and Expenses
Costs and expenses are recognized in profit or loss when a decrease in future economic
benefits related to a decrease in an asset or an increase of a liability has arisen that can be
measured reliably.
Leases
The determination of whether an arrangement is, or contains, a lease is based on the
substance of the arrangement at inception date of whether the fulfillment 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 the inception of the lease
only if any of the following applies:
a. there is a change in contractual terms, other than a renewal or extension of the
arrangement;
b. a renewal option is exercised and extension granted, unless the term of the renewal or
extension was initially included in the lease term;
c. there is a change in the determination of whether fulfillment is dependent on a
specified asset; or
d. there is a substantial change to the asset.
When a reassessment is made, lease accounting shall commence or cease from the date
when the change in circumstances give rise to the reassessment for scenarios (a), (c) or
(d) and at the date of renewal or extension period for scenario (b).
The Group as a Lessee
Finance leases, which transfer to the Group substantially all the risks and benefits
incidental to ownership of the leased item, are capitalized at the inception of the lease at
the fair value of the leased property or, if lower, at the present value of the minimum
lease payments. Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are recognized directly in profit or loss.
Capitalized leased assets are depreciated over the shorter of the estimated useful life of
the asset and the lease term, if there is no reasonable certainty that the Group will obtain
ownership by the end of the lease term.
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 as
expense in profit or loss on a straight-line basis over the lease term.
The Group as a Lessor
Leases where the Group does not transfer substantially all the risks and benefits of
ownership of the asset are classified as operating leases. Initial direct costs incurred in
negotiating an operating lease are added to the carrying amount of the leased asset and
recognized over the lease term on the same bases as rental income. Contingent rentals are
recognized as revenue in the period in which they are earned.
- 24 -
Borrowing Costs
Borrowing costs are capitalized if they are directly attributable to the acquisition,
construction or production of a qualifying asset. Capitalization of borrowing costs
commences when the activities necessary to prepare the asset for intended use are in
progress and expenditures and borrowing costs are being incurred. Borrowing costs are
capitalized until the asset is available for their intended use. If the resulting carrying
amount of the asset exceeds its recoverable amount, an impairment loss is recognized.
Borrowing costs include interest charges and other costs incurred in connection with the
borrowing of funds, as well as exchange differences arising from foreign currency
borrowings used to finance these projects, to the extent that they are regarded as an
adjustment to interest costs. All other borrowing costs are expensed as incurred.
Retirement Benefits
The net defined benefit liability or asset is the aggregate of the present value of the
defined benefit obligation at the end of the reporting period reduced by the fair value of
plan assets (if any), adjusted for any effect of limiting a net defined benefit asset to the
asset ceiling. The asset ceiling is the present value of any economic benefits available in
the form of refunds from the plan or reductions in future contributions to the plan.
The cost of providing benefits under the defined benefit plans is actuarially determined
using the projected unit credit method.
Defined benefit costs comprise the following:
- Service cost
- Net interest on the net defined benefit liability or asset
- Remeasurements of net defined benefit liability or asset
Service costs which include current service costs, past service costs and gains or losses
on nonroutine settlements are recognized as expense in profit or loss. Past service costs
are recognized when plan amendment or curtailment occurs. These amounts are
calculated periodically by independent qualified actuaries.
Net interest on the net defined benefit liability or asset is the change during the period in
the net defined benefit liability or asset that arises from the passage of time which is
determined by applying the discount rate based on government bonds to the net defined
benefit liability or asset. Net interest on the net defined benefit liability or asset is
recognized as expense or income in profit or loss.
Remeasurements comprising actuarial gains and losses, return on plan assets and any
change in the effect of the asset ceiling (excluding net interest on defined benefit
liability) are recognized immediately in other comprehensive income in the period in
which they arise. Remeasurements are not reclassified to profit or loss in subsequent
periods.
Taxes
Current income tax
Current income tax assets and liabilities for the current periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates
and tax laws used to compute the amount are those that are enacted at the end of each
reporting period, in the countries where the Group operates and generates taxable
income.
- 25 -
Current income tax relating to items recognized directly in equity is recognized in equity
and not in profit or loss. Management periodically evaluates positions taken in the tax
returns with respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.
Deferred Income Tax
Deferred income tax is provided, using the balance sheet liability method, on all
temporary differences at the financial reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets are recognized for deductible temporary differences,
carryforward benefits of unused tax credits from excess of minimum corporate income
tax (MCIT) over regular corporate income tax (RCIT) and unused net operating loss
carryover (NOLCO), to the extent that it is probable that sufficient future taxable profits
will be available against which the deductible temporary differences, carryforward
benefits of unused tax credits from excess of MCIT over RCIT and unused NOLCO can
be utilized. Deferred income tax liabilities are recognized for all taxable temporary
differences.
Deferred income tax, however, is not recognized when it arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit or loss nor taxable
profit or loss.
Deferred income tax liabilities are not provided on non-taxable temporary differences
associated with investments in domestic subsidiaries, associates and interest in joint
ventures. With respect to investments in other subsidiaries, associates and interests in
joint ventures, deferred income tax liabilities are recognized except when the timing of
the reversal of the temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred income tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient future taxable profit will
be available to allow all or part of the deferred income tax asset to be utilized.
Unrecognized deferred income tax assets are reassessed at the end of each reporting
period and are recognized to the extent that it has become probable that sufficient future
taxable profits will allow the deferred income tax asset to be recovered. It is probable that
sufficient future taxable profits will be available against which a deductible temporary
difference can be utilized when there are sufficient taxable temporary difference relating
to the same taxation authority and the same taxable entity which are expected to reverse
in the same period as the expected reversal of the deductible temporary difference. In
such circumstances, the deferred income tax asset is recognized in the period in which
the deductible temporary difference arises.
Deferred income tax assets and liabilities are measured at the tax rates that are expected
to apply in the year when the asset is realized or the liability is settled, based on tax rate
and tax laws that have been enacted or substantively enacted at the end of the reporting
period.
Deferred income tax relating to items recognized in OCI or directly in equity is
recognized in the consolidated statements of comprehensive income and consolidated
statement of comprehensive income and consolidated statement of changes in equity and
not in profit or loss.
- 26 -
Deferred income tax assets and liabilities are offset, if there is a legally enforceable right
to offset current income tax assets against current income and consolidated statement of
changes in equity and not in profit or loss.
Deferred income tax assets and liabilities are offset, if there is a legally enforceable right
to offset current income tax assets against current income tax liabilities and they relate to
income taxes levied by the same tax authority and the Group intends to settle its current
income tax assets and liabilities on a net basis.
VAT
Revenue, expenses, assets and liabilities are recognized, net of the amount of VAT,
except where the VAT incurred as a purchase of assets or service is not recoverable from
the tax authority, in which case VAT is recognized as part of the cost acquisition of the
asset or as part of the expense item as applicable.
The net amount of VAT recoverable from, or payable to, the taxation authority is
included as part of Other current assets or Trade and other payables in the
consolidated balance sheet.
Creditable withholding taxes
Creditable withholding taxes (CWT), included in Other current assets account in the
consolidated balance sheet, are amounts withheld from income subject to expanded
withholding taxes. CWTs can be utilized as payment for income taxes provided that these
are properly supported by certificates of creditable tax withheld at source subject to the
rule on Philippine income taxation. CWTs which are expected to be utilized as payment
for income taxes within 12 months are classified as current assets.
Foreign Currency-denominated Transactions and Translations
The Groups consolidated financial statements are presented in Philippine Peso, which is
the Companys functional and presentation currency. Each entity in the Group determines
its own functional currency and items included in the financial statements of each entity
are measured using that functional currency.
Transactions in foreign currencies are initially recorded at the functional currency rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the functional currency rate of exchange ruling at
the end of the reporting period. All differences are taken to the profit or loss except for
the exchange differences arising from translation of the balance sheets of subsidiaries and
associates which are considered foreign entities into the presentation currency of the
Company (Peso) at the closing exchange rate at the end of the reporting period and their
statement of income translated using the weighted average exchange rate for the year.
These are recognized in OCI until the disposal of the net investment, at which time they
are recognized in profit or loss. Tax charges and credits attributable to exchange
differences on those monetary items are also recorded in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rates as at the dates of the initial transactions and are
not retranslated. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was determined.
Earnings Per Common Share
Basic earnings per common share are determined by dividing net income by the weighted
average number of common shares outstanding, after retroactive adjustment for any stock
dividends and stock splits declared during the year.
- 27 -
Diluted earnings per common share amounts are calculated by dividing the net income
for the year attributable to the ordinary equity holders of the parent by the weighted
average number of common shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued for any outstanding common share
equivalents. The Group has no potential dilutive common shares.
Dividends on Common Shares
Dividends on common shares are recognized as a liability and deducted from retained
earnings when approved by the respective shareholders of the Company and subsidiaries.
Dividends for the year that are approved after the reporting period are dealt with as an
event after the reporting period.
Segment Reporting
The Groups operating businesses are organized and managed separately according to the
nature of the products and services provided, with each segment representing a strategic
business unit that offers different products and serves different markets. Financial
information on business segments is presented in Note 4.
Events After the Reporting Period
Post year events that provide evidence of conditions that existed at balance sheet date are
reflected in the consolidated financial statements. Subsequent events that are indicative
of conditions that arose after reporting period are disclosed in the notes to consolidated
financial statements when material.
3. Significant Judgments, Accounting Estimates and Assumptions

The preparation of the consolidated financial statements in compliance with PFRSs
requires management to make judgments, accounting estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying
notes. The judgments, estimates and assumptions are based on managements evaluation
of relevant facts and circumstances as at the date of the consolidated financial statements.
Actual results could differ from these estimates and assumptions used.
Judgments
In the process of applying the Groups accounting policies, management has made the
following judgments, apart from those involving estimations, which have the most
significant effect on the amounts recognized in the consolidated financial statements:
Determination of Functional Currency
Based on the economic substance of the underlying circumstances relevant to the Group,
the functional currency is determined to be the Peso. It is the currency that mainly
influences the sale of services and the cost of rendering the services.
Determination if Significant Influence or Control Exists in an Investee Company
Control is presumed to exist when the parent company owns, directly or indirectly
through subsidiaries, more than half of the voting power of an entity unless, in
exceptional circumstances, it can be clearly demonstrated that such ownership does not
constitute control. Management has determined that despite only having 50% ownership
in STI, it has control by virtue of its power to cast the majority votes at meetings of STIs
BOD and control of the entity is by that BOD.
- 28 -
Classification of Financial Instruments

The Group classifies a financial instrument, or its component parts, on initial recognition
as a financial asset, a financial liability or an equity instrument in accordance with the
substance of the contractual agreement and the definitions of a financial asset, a financial
liability or an equity instrument. The substance of a financial instrument, rather than its
legal form, governs its classification in the consolidated balance sheet. The Groups
classification of financial instruments is presented in Note 33.
Classification of Leases - the Group as a Lessee
The Group has entered into commercial property leases on its distribution warehouses,
sales outlets, trucking facilities and administrative office locations. Based on an
evaluation of the terms and conditions of the arrangements, management assessed that
there is no transfer of ownership of the properties by the end of the lease term and the
lease term is not a major part of the economic life of the properties. Thus, the Group does
not acquire all the significant risks and rewards of ownership of these properties and so
accounts for these as operating leases.
The Group has also entered into finance lease agreements covering certain property and
equipment. The Group has determined that it bears substantially all the risks and benefits
incidental to ownership of said properties based on the terms of the contracts (such as
existence of bargain purchase option and the present value of minimum lease payments
amount to at least substantially all of the fair value of the leased asset). As at
December 31, 2014 and 2013, the carrying amount of the property and equipment under
finance lease amounted to P153.2 million and P135.4 million, respectively (see Note 20).
Classification of Leases - the Group as a Lessor
The Group has entered into short-term leases or chartering arrangements, which provide
no transfer of ownership to the lessee. The Group has determined that, based on an
evaluation of the terms and conditions of the arrangements, it retains all the significant
risks and rewards of ownership of these equipment and accounts for these as operating
leases.
Classification and Valuation of Assets Held for Sale
Management assessed whether its existing vessels met the criteria as assets held for sale
based on the following: (1) the related assets are available for immediate sale; (2)
preliminary negotiations with willing buyers were executed; and (3) the sale is expected
to be completed within 12 months from the end of reporting period.
In June 2013, the Group sold one of the vessels held for sale for total cash proceeds of
P85.3 million, which resulted to a loss amounting to P51.0 million (see Note 10). In
December 2013, the Group decided to put back into operation the other vessel held for
sale to property and equipment due to certain incidents that happened in 2013 that have a
significant impact on the passage and cargo capacity of the Group (see Note 13). Thus, as
at December 31, 2014 and 2013, there were no vessels classified as held for sale.
Classification of Redeemable Preferred Shares (RPS)
The Group has RPS which is redeemable at any time, in whole or in part, within a period
not exceeding 10 years from the date of issuance. If not redeemed, the RPS may be
converted to a bond over prevailing treasury bill rate to be issued by the Company. The
Company classified this RPS amounting to P6.0 million and P6.7 million as liability as at
December 31, 2014 and 2013, respectively (see Note 21).
- 29 -
Evaluation of Legal Contingencies

The Group is a party to certain lawsuits or claims arising from the ordinary course of
business. The Groups management and legal counsel believe that the eventual liabilities
under these lawsuits or claims, if any, will not have material effect on the consolidated
financial statements. Accordingly, no provision for probable losses arising from legal
contingencies was recognized in 2014 and 2013 (see Note 22).
Evaluation of Events After the Reporting Period
Management exercises judgment in determining whether an event, favorable or
unfavorable, occurring between the end of the reporting period and the date when the
financial statements are authorized for issue, is an adjusting event or nonadjusting event.
Adjusting events provide evidence of conditions that existed at the end of the reporting
period whereas nonadjusting events are events that are indicative of conditions that arose
after the reporting period.
Estimates and Assumptions
The following are the key assumptions concerning the future and other key sources of
estimation uncertainty, at the end of reporting period that have a significant risk of
causing a material adjustment to the carrying amount of assets and liabilities within the
next financial year.
Determination of Fair Value of Financial Instruments
Where the fair value of financial assets and liabilities recorded in the consolidated
balance sheet cannot be derived from active markets, they are determined using valuation
techniques including the discounted cash flows model. The inputs to the models are taken
from observable markets where possible, but where this is not feasible, a degree of
judgment is required in establishing the fair values. The judgments include considerations
of inputs such as liquidity risk and credit risk. Changes in assumptions about these
factors could affect the reported fair value of financial instruments.
The carrying values and corresponding fair values of financial assets and financial
liabilities and the manner in which fair values were determined are described in Note 34.
Estimation of allowance for doubtful receivables
The Group maintains allowances for doubtful accounts on trade and other receivables at a
level considered adequate to provide for potential uncollectible receivables. The level of
this allowance is evaluated by the Group on the basis of factors that affect the
collectibility of the accounts. These factors include, but are not limited to, the length of
the Groups relationship with debtors, their payment behavior and known market factors.
The Group reviews the age and status of the receivables, and identifies accounts that are
to be provided with allowance on a continuous basis. The amount and timing of recorded
expenses for any period would differ if the Group made different judgment or utilized
different estimates. An increase in the Groups allowance for impairment losses would
increase the Groups recorded expenses and decrease current assets.
The main considerations for impairment assessment include whether any payments are
overdue or if there are any known difficulties in the cash flows of the counterparties. The
Group assesses impairment into two areas: individually assessed allowances and
collectively assessed allowances.
- 30 -
The Group determines allowance for each significant receivable on an individual basis.
Among the items that the Group considers in assessing impairment is the inability to
collect from the counterparty based on the contractual terms of the receivables.
Receivables included in the specific assessment are the accounts that have been endorsed
to the legal department, non-moving account receivables, accounts of defaulted agents
and accounts from closed stations.
For collective assessment, allowances are assessed for receivables that are not
individually significant and for individually significant receivables where there is no
objective evidence of individual impairment. Impairment losses are estimated by taking
into consideration the age of the receivables, past collection experience and other factors
that may affect collectibility.
As at December 31, 2014 and 2013, trade and other receivables amounted to
P3,973.1 million and P3,949.8 million, respectively, net of allowance for doubtful
receivables of P395.6 million and P379.4 million, respectively (see Note 7).
Determination of NRV of Inventories
The Groups estimates of the NRV of inventories are based on the most reliable evidence
available at the time the estimates are made, of the amount that the inventories are
expected to be realized. These estimates consider the fluctuations of price or cost directly
relating to events occurring after the end of the period to the extent that such events
confirm conditions existing at the end of the period. A new assessment is made of NRV
in each subsequent period. When the circumstances that previously caused inventories to
be written down below cost no longer exist or when there is a clear evidence of an
increase in NRV because of change in economic circumstances, the amount of the writedown is reversed so that the new carrying amount is the lower of the cost and the revised
NRV.
As at December 31, 2014 and 2013, the carrying values of inventories amounted to
P877.5 million and P422.0 million, net of inventory write-down amounting to
P66.7 million and P55.7 million, respectively (see Note 8).
Estimation of Useful Lives of Property and Equipment
The useful life of each of the Groups item of property and equipment is estimated based
on the period over which the asset is expected to be available for use until it is
derecognized. Such estimation is based on a collective assessment of similar businesses,
internal technical evaluation and experience with similar assets. The estimated useful life
of each asset is reviewed periodically and updated if expectations differ from previous
estimates due to physical wear and tear, technical or commercial obsolescence and legal
or other limits on the use of the asset. It is possible, however, that future results of
operations could be materially affected by changes in the amounts and timing of recorded
expenses brought about by changes in the factors mentioned above. A reduction in the
estimated useful life of any item of property and equipment would increase the recorded
depreciation expenses and decrease the carrying value of property and equipment. There
were no changes in the estimated useful lives of property and equipment in 2014 and
2013.
As at December 31, 2014 and 2013, property and equipment amounted to P5,403.6
million and P5,054.9 million, net of accumulated depreciation, amortization and
impairment loss of P6,830.0 million and P6,171.2 million, respectively (see Note 13).
- 31 -
Estimation of Useful Life of Software Development Costs

The estimated useful life used as a basis for amortizing software development costs was
determined on the basis of managements assessment of the period within which the
benefits of these costs are expected to be realized by the Group.
As at December 31, 2014 and 2013, the carrying value of software development costs
amounted to P29.1 million and P15.4 million (see Note 15).
Impairment Assessment of AFS Investments
The Group considers AFS investments as impaired when there has been a significant or
prolonged decline in the fair value of such investments below their cost or where other
objective evidence of impairment exists. The determination of what is significant or
prolonged requires judgment. The Group treats significant generally as 20% or more
and prolonged as greater than 12 months. In addition, the Group evaluates other
factors, including normal volatility in share price for quoted equities and future cash
flows and discount factors for unquoted equities in determining the amount to be
impaired.
As at December 31, 2014 and 2013, the carrying value of AFS investments amounted to
P5.7 million and P6.9 million, respectively (see Note 11). No impairment loss was
recognized in 2014 and 2013.
Estimation of Probable Losses on Prepaid Taxes
The Group makes an estimate of the provision for probable losses on its CWTs and input
VAT. Managements assessment is based on historical experience and other
developments that indicate that the carrying value may no longer be recoverable. The
aggregate carrying values of CWTs, input VAT and deferred input VAT amounting to
P1,120.9 million and P1,028.9 million as at December 31, 2014 and 2013, respectively,
are fully recoverable (see Notes 9 and 16).
Assessment of Impairment of Nonfinancial Assets and Estimation of Recoverable Amount
The Group assesses at the end of each reporting period whether there is any indication
that the nonfinancial assets listed below may be impaired. If such indication exists, the
entity shall estimate the recoverable amount of the asset, which is the higher of an assets
fair value less costs to sell and its value-in-use. In determining fair value less costs to sell,
an appropriate valuation model is used, which can be based on quoted prices or other
available fair value indicators. In estimating the value-in-use, the Group is required to
make an estimate of the expected future cash flows from the CGU and also to choose an
appropriate discount rate in order to calculate the present value of those cash flows.
Determining the recoverable amounts of the nonfinancial assets, which involves the
determination of future cash flows expected to be generated from the continued use and
ultimate disposition of such assets, requires the use of estimates and assumptions that can
materially affect the consolidated financial statements. Future events could indicate that
these nonfinancial assets are impaired. Any resulting impairment loss could have a
material adverse impact on the financial condition and results of operations of the Group.
The preparation of estimated future cash flows involves significant judgment and
estimations. While the Group believes that its assumptions are appropriate and
reasonable, significant changes in these assumptions may materially affect its assessment
of recoverable values and may lead to future additional impairment changes under PFRS.
- 32 -
Assets that are subject to impairment testing when impairment indicators are present
(such as obsolescence, physical damage, significant changes to the manner in which the
asset is used, worse than expected economic performance, a drop in revenues or other
external indicators) are as follows:
Note
2013
2014
(In Thousands)
Property and equipment - net

Investment property
Investments in associates and joint
ventures
Software development costs
13
14
P5,403,570
9,763
P5,054,932
9,763
12
15
192,951
29,139
181,977
15,379
The Group recognized provision for impairment losses on property and equipment
amounting to nil and P234.8 million in 2014 and 2013, respectively (see Note 13).
As at December 31, 2014 and 2013, no impairment losses were recognized on the
groups investment property, investment in associates and joint ventures and software
development costs as their recoverable values are higher than their carrying values.
Impairment of Goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This
requires an estimation of the value in use of the CGUs to which the goodwill is allocated.
Estimating the value-in-use requires the Group to make an estimate of the expected
future cash flows from the CGU and also to choose a suitable discount rate in order to
calculate the present value of those cash flows. The significant assumptions used in
estimating for the recoverable amount of goodwill are described in Note 5.
The carrying amount of goodwill as at December 31, 2014 and 2013 amounted to P250.5
million (see Note 5).
Estimation of Retirement Benefits Costs and Obligation
The determination of the obligation and cost for pension and other retirement benefits is
dependent on the selection of certain assumptions used by actuaries in calculating such
amounts. Those assumptions were described in Note 28 and include among others,
discount rate and rate of compensation increase. While it is believed that the Groups
assumptions are reasonable and appropriate, significant differences in actual experience
or significant changes in assumptions may materially affect the groups pension and other
retirement obligations.
The discount is determined based on the market prices prevailing on that date, applicable
to the period over which the obligation is to be settled.
As at December 31, 2014 and 2013, the Groups pension asset amounted to P0.8 million
and P1.4 million while the Groups accrued retirement benefits amounted to
P217.6 million and P167.2 million, respectively (see Notes 16 and 28).
Recognition of Deferred Tax Assets
The carrying amount of deferred tax assets is reviewed at the end of each reporting
period and reduced to the extent that it is no longer probable that sufficient future taxable
income will be available to allow all or part of the deferred tax assets to be utilized.
- 33 -
As at December 31, 2014 and 2013, the Group has recognized deferred tax assets on its
temporary differences, carryforward benefits of NOLCO and excess MCIT amounting to
P591.1 million and P481.9 million, respectively (see Note 29). Tax effect of the
temporary difference and carryforward benefits of unused NOLCO and MCIT for which
no deferred income tax assets were recognized amounted to P26.1 million and
P454.4 million as at December 31, 2014 and 2013, respectively (see Note 29).
4. Operating Segment Information

Operating segments are components of the Group: (a) that engage in business activities
from which they may earn revenue and incur expenses (including revenues and expenses
relating to transactions with other components of the Group); (b) whose operating results
are regularly reviewed by the Groups BOD to make decisions about resources to be
allocated to the segment and assess its performance; and (c) for which discrete financial
information is available. The Groups Chief Operating Decision Maker is the Parent
Companys BOD.
For purposes of management reporting, the Group is organized into business units based
on their products and services. The Group has the following segments:
The shipping segment renders passage transportation and cargo freight services.
The non-shipping segment provides logistics services and supply chain management.
The Groups BOD regularly reviews the operating results of its business units separately
for the purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on operating profit or loss and is
measured consistently with operating profit or loss in the consolidated financial
statements.
The Group has the Philippines as its only geographical segment as all of its assets are
located in the Philippines. The Group operates and derives principally all its revenue
from domestic operations. Thus, geographical business information is not required.
Transfer prices between operating segments are on an arms length basis in a manner
similar to transactions with third parties. Segment revenue includes transfer of goods and
services between operating segments. Such transfers are eliminated in the consolidation.
Further, there were no revenue transactions with a single customer that accounts for 10%
or more of total revenue.
Further, the measurement of the segments is the same as those described in the summary
of significant accounting and financial reporting policies, except for the land property of
2GO Express, which is carried at cost in the Companys consolidated financial
statements but was measured to fair value in the NNs consolidated financial statements
at the date of the business combination of the Company and NN. There have been no
changes in the measurement methods used to determine repented profit or loss from prior
periods
- 34 -
Segment revenue, expenses, results, assets, liabilities and other information about the
business segments follows:
Shipping
2014
Non- Eliminations/ Consolidated
shipping Adjustments
Balances
(In Thousands)
Revenues
Operating Costs and
Expenses
Operating
Terminal
Cost of goods sold
Overhead
Total Cost and Expenses
Operating income (loss)
before interest and
others
charges
Others - net
Income before income tax
Provision for income tax
Segment profit (loss)
Segment assets
Segment liabilities
Other information:
Depreciation and
amortization
Investments in
ventures
ventures
P8,538,222
P7,205,921
5,510,581
1,446,408
670,070
7,627,058
4,93,740
2,087,071
614,949
6,995,760
911,165
210,161
(337,846)
156,475
729,793
(36,518)
P766,311
(34,644)
62,803
238,319
82,077
P156,243
(P1,317,149) P14,426,995
(1,138,595)
(41,078)
(171,715)
(1,351,387)
34,239
39,860
(154,098)
(80,000)
(P80,000)
8,665,726
1,405,330
2,087,071
1,113,304
13,271,431
1,155,564
(332,630)
65,179
888,113
45,558
P842,555
P11,807,625
8,509,319
P4,712,350
3,695,709
749,019
54,711
529,864
72,791
(409,705)
192,951
1,224
9,751
(1)
10,974
- 35 -
(P2,603,718) P13,916,257
(2,180,489) 10,024,538
803,730
2013
Eliminations/
Shipping Non-shipping Adjustments
Parent
Balances
(In Thousands)
Revenues
Operating Costs and
Expenses
Operating
Terminal
Cost of goods sold
Overhead
Total Cost and Expenses
Operating income (loss)
before interest and others
charges
Others - net
Income before income tax
Segment profit (loss)
Segment assets
Segment liabilities
Other information:
Depreciation and
amortization
Reversal of vessel
impairment loss
Investments in associates
and joint ventures
ventures
P8,556,276
P6,103,731
(P1,286,814) P13,373,193
6,174,827
1,401,229
777,967
8,354,023
3,523,627
1,472
1,720,991
569,625
5,815,715
(1,124,313)
(45,842)
(116,484)
(1,286,639)
8,574,141
1,356,859
1,720,991
1,231,108
12,883,099
202,253
288,016
(175)
490,094
(364,728)
573,688
411,213
418,076
(P6,863)
(53,721)
84,116
318,411
67,616
P250,795
P11,201,978
(8,777,183)
P3,560,781
(2,543,062)
49,435
(66,111)
(16,851)
(P16,851)
(369,014)
591,693
712,773
485,692
P227,081
(P2,240,855) P12,521,904
1,881,357
(9,438,888)
966,167
76,064
(5,640)
60,606
16,500
62,473
32,427
12,419
103,004
1,036,591
60,606
181,977
44,486
5. Business Combinations
Acquisition of SOI and Impairment Testing of Goodwill
On June 3, 2008, 2GO Express acquired 100% ownership in SOI in line with the Groups
business strategy to provide total supply chain solutions to clients and to further improve
the effectiveness and efficiency of its delivery services. Goodwill resulting from this
acquisition amounted to P250.5 million.
Impairment Testing of Goodwill
The amount of goodwill acquired from the acquisition of SOI hence attributed to SOI a
CGU. The recoverable amount of goodwill has been determined based on a VIU
calculation using cash flow projections based on financial budgets approved by senior
management covering a five-year period. The discount rate applied to cash flow
projections is 11% in 2014 and 2013. Cash flows beyond the five-year period are
extrapolated using a zero percent growth rate.
Key Assumptions Used in Value in Use Calculations
The following describes each key assumption on which management has based its cash
flow projections to undertake impairment testing of goodwill.
- 36 -
Budgeted Earnings Before Interest, Tax, Depreciation and Allowance (EBITDA)

Budgeted EBITDA has been based on past experience adjusted for the following:
Passage and Cargo Volume. Management based the passage and cargo volume on
the number of round trips per year. The increase in volume is based on the
assumption that traffic will grow in relation with the expected gross domestic product
(GDP) growth of 5% to 6%.
Rates, Exclusive of VAT. Management expects an increase in passage and freight

rates by 3% in 2015 and in subsequent years based on the history of rates increases.
Fuel Prices. Management expects an increase in fuel prices of 5% starting on the 2nd
year and every year onwards. Management expects to recover from the Groups
customers any change in fuel prices that are beyond budget through implementation
of surcharge. Management believes the fuel surcharge would not cause any material
change in the forecasted passenger and cargo volume.
Fixed Operating Costs and Expenses. Based on the cost savings analysis made by
Management, terminal operations fixed costs are expected to decrease due to
consolidation of ports and container yards in various locations in the Philippines.
General and Administrative Expenses. Management expects that the general and
administrative expenses for 2015 are expected to further decline due to the cost
cutting initiatives undertaken.
Other Operating Expenses. Management expects that costs and expenses, in general,
will increase by 3% on the second year and remains steady until the fifth year.
Budgeted Capital Expenditure

Budgeted capital expenditure is based on managements plan to expand the Groups
supply chain segment.
Sensitivity to Changes in Assumptions
Other than as disclosed above, management believes that any reasonably possible change
in any of the above key assumptions would not cause the carrying value of goodwill to
exceed its recoverable amount.
As at December 31, 2014 and 2013, the Group has not recognized any impairment on the
goodwill.
6. Cash and Cash Equivalents

2013
2014
(In Thousands)
Cash on hand and in banks

Cash equivalents
P986,853
248,199
P1,235,052
P869,215
49,430
P918,645
Cash in banks earn interest at the respective bank deposit rates. Cash equivalents are
made for varying periods of up to three months depending on the immediate cash
requirements of the Group.
- 37 -
Interest income earned by the Group from cash in banks and cash equivalents amounted
to P2.7 million in 2014 and P1.7 million in 2013 (see Note 26).
7. Trade and Other Receivables

Note
2013
2014
(In Thousands)
Trade:
Freight
Service fees
Distribution
Passage
Others
Nontrade
Insurance and other claims
Advances to officers and employees
Due from related parties
23
P1,525,869
722,717
471,528
56,281
629,013
582,722
324,543
31,575
24,462
4,368,710
395,6196
P3,973,094
23
13, 22
23
Less allowance for doubtful receivables
P1,403,534
586,874
281,738
46,037
503,068
414,429
908,358
25,746
159,418
4,329,202
379,383
P3,949,819
Trade receivables are noninterest-bearing and are generally on 45 days terms.

Nontrade receivables include advances to suppliers, passage bonds and receivable from
trustee fund. These receivables are non-interest bearing and payable on demand.
Insurance and other claims pertain to the Groups claims for reimbursement of losses
against insurance coverages for hull and machinery, spare parts, cargo, and personal
accidents. In 2013, the Group recognized insurance claims receivables relating to the
sunk and damaged vessels amounting to P943.3 million, of which P642.5 million and
P300.8 million were collected in 2014 and 2013, respectively (see Note 13).
Freight receivables of the Group amounting to P1,189.3 million and P1,274.0 million as
at December 31, 2014 and 2013, respectively, were assigned to secure the long-term
debts (see Note 19).
Trade and other receivables that are individually determined to be impaired at the end of
reporting period relate to debtors that are in significant financial difficulties and have
defaulted on payments and whose accounts are under dispute and legal proceedings.
These receivables are not secured by any collateral or credit enhancements. The
following tables sets out the rollforward of the allowance for doubtful receivables as at
December 31:
2014
Note
Freight
Trade
Service Fees
Distribution
Others
Nontrade
Insurance
and Other
Claims
Total
(In Thousands)
Beginning
Provision
Accounts written off
Ending
25
P175,643
14,179
(46)
P117,907
-
P15,344
195
-
P8,037
77
-
P11,077
1,902
(80)
P51,375
6
-
P379,383
16,359
(126)
P189,776
P117,907
P15,539
P8,114
P12,899
P51,381
P395,616
- 38 -
2013
Note
Freight
Trade
Service Fees
Distribution
Others
Nontrade
Insurance
and Other
Claims
Total
(In Thousands)
Beginning
Provision
Accounts written off
25
Ending
P126,086
49,557
-
P114,396
3,511
-
P15,344
-
P4,768
3,461
(192)
P175,643
P117,907
P15,344
P8,037
P6,665
4,431
(19)
P11,077
P21,375
-
P318,634
60,960
(211)
P51,375
P379,383
The following table sets out the analysis of collective and individual impairment of trade
and other receivables as at December 31:
Collectively
Impaired
2014
Individually
Impaired
Total
Collectively
Impaired
2013
Individually
Impaired
Total
P268,030
11,077
P316,931
11,077
(In Thousands)
Trade
Nontrade
Insurance and other
claims
P20,663
P20,663
P310,673
P12,899
P331,336
P12,899
P51,381
P51,381
P374,953
P395,616
P48,901
P48,901
51,375
51,375
P330,482
P379,383
8. Inventories
2013
2014
(In Thousands)
At NRV:
Materials, parts and supplies
At cost:
Trading goods
Fuel, oil and lubricants
P501,320
P102,761
265,458
110,764
P877,542
194,026
125,170
P421,957
The inventory write-down as at December 31, 2014 and 2013 amounted to P66.7 million
and P55.7 million, respectively.
The cost of inventories recognized as Cost of goods sold in the consolidated statements
of income pertains to the trading goods sold by the non-shipping segment and food and
beverages sold by the shipping segment totaling to P2,087.0 million in 2014 and
P1,721.0 million in 2013 (see Note 25).
9. Other Current Assets

Note
2013
2014
(In Thousands)
CWT
Prepaid expenses
Input VAT
Others
P967,837
128,186
71,683
41,547
P1,209,253
- 39 -
P881,693
107,274
38,304
27,138
P1,054,409
Outstanding CWT pertains mainly to the amounts withheld from income derived from
freight, sale of goods and service fees for logistics and other services. The CWTs can be
applied against any income tax liability of a company in the group to which the CWTs
relate. Others pertain to current portion of recoverable deposit.
Prepaid expenses include prepaid insurance and prepaid taxes.
10. Assets Held for Sale

As at January 1, 2013, the Company has two vessels held for sale with recoverable
amount of P359.2 million, which is based from quotations obtained from prospective
buyers, net of estimated costs to sell.
In June 2013, the Group sold one of the vessels held for sale for total cash proceeds of
P85.3 million, resulting to a loss of P51.0 million (see Note 23).
In December 2013, the Company reclassified the remaining one vessel from assets held
for sale to property and equipment in consideration of the change in the Companys
operating requirement, which is significantly affected by the incidents on the damaged
and sunk vessels in 2013.
Consequently, the Company assessed that the vessel will be recoverable through
continuing use rather than through sale. The Company recorded depreciation of
P131.6 million as if the Company had not classified the vessel as asset held for sale.
Further, the Company reversed portion of the previously recognized impairment loss
amounting to P73.5 million on the basis that the value in use of the vessel is higher than
its carrying value as if it was not previously reclassified to assets held for sale.
As at December 31, 2014 and 2013, management assessed that there are no vessels that
would qualify as asset held for sale (see Note 26).
11. AFS Investments

2014
2013
(In Thousands)
Unquoted equity investments - at cost

Quoted equity investments - listed shares
of stocks
P5,067
P6,267
640
P5,707
640
P6,907
a. Listed shares of stocks are carried at market value. The recurring fair value is
classified under Level 1 as disclosed in Note 34 to the consolidated financial
statements. Unrealized gains or losses on AFS investments are recognized in the
consolidated statements of comprehensive income and included in the Equity
section of the consolidated balance sheets.
b. Unquoted shares of stocks pertain to fixed number of shares that are subject to
mandatory redemption every year.
- 40 -
c. The following table shows the movement of Unrealized gain on AFS investments
account:
2013
2014
(In Thousands)
At beginning of year
Net fair value changes of AFS
investments
At end of year
Attributable to non-controlling interest
P798
P760
798
364
P434
38
798
364
P434
12. Investments in Associates and Joint Ventures

The Group has the power to participate in the financial and operating policy decisions in
MCCP and HMPPI, which does not constitute control or joint control. The Group also
has interest in KLN and KLI, which are joint ventures.
The Groups investments in its associates and joint ventures are accounted for using
equity method of accounting as at December 31:
2014
Ownership
Interest
Carrying
Values
(In Thousands)
Associates:
MCCP
HMPPI
Joint Ventures:
KLN
KLI
2013
Ownership
Interest
Carrying
Values
(In Thousands)
33.0%
47.1%
P120,727
32,199
33.0%
47.1%
P119,504
32,075
78.4%
62.5%
40,025
78.4%
62.5%
30,398
P181,977
P192,951
Details of investment in associates and joint ventures are as follows:

2013
2014
(In Thousands)
Acquisition - at beginning of year

Accumulated equity in net earnings:
Balances at beginning of year
Equity in net earnings during the year
Dividends received
Balances at end of year
Share in remeasurement loss on retirement
benefits of associates and joint ventures
Share in cumulative translation adjustment
of associates
- 41 -
P28,175
P28,175
148,757
10,974
159,731
109,520
44,846
(5,609)
148,757
(249)
5,294
P192,951
(249)
5,294
P181,977
Joint Ventures
On March 18, 2009, 2GO Express and KLN Investments Holdings Philippines, Inc.
(KLN Investments) formed KLN Logistics Holdings Philippines, Inc. (KLN Holdings), a
joint venture. In accordance with the Joint Venture Agreement, 2GO Express and KLN
Investments (the venturers) will hold ownership interests of 78.4% and 21.6%,
respectively, in KLN Holdings. However, the venturers exercise joint control over the
financial and operating policies of KLN Holdings.
On March 30, 2009, KLN Holdings and KLN Investments formed another joint venture
entity, Kerry Logistics (Phils), Inc. (KLI) [formerly Kerry-ATS Logistics, Inc. (KALI)]
to engage in the business of international freight and cargo forwarding. In accordance
with the Joint Venture Agreement, KLN Holdings and KLN Investments will hold 62.5%
and 37.5% interest in KLI, respectively, thus giving the Group a 49.0% indirect
ownership interest in KLI.
2014
Associates
MCCP
HMPPI
Joint Ventures
KLN/KLI
Total
(In Thousands)
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Equity
Revenue
Net income
Group share of net income
for the year
P2,541
18,526
2,790
15,616
2,661
20,107
3,708
P107,950
12,727
57,361
11,506
51,811
206,208
263
P184,206
19,302
77,499
56,756
69,253
608,557
19,647
P294,697
50,555
137,650
83,878
123,725
834,872
23,618
1,224
123
9,627
10,974
2013
Associates
Joint Ventures
MCCP
HMPPI
KLN/KLI
Total
(In Thousands)
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Equity
Revenue
Net income
Group share of net income
for the year
P188,080
414,963
311,674
6,691
284,678
1,254,268
98,264
P128,129
7,084
81,198
1,296
52,719
348,907
9,961
P160,906
9,162
108,953
4,642
56,473
591,976
15,934
P477,115
431,209
501,825
12,629
393,870
2,195,151
124,159
32,427
4,693
7,726
44,846
- 42 -
13. Property and Equipment

2014
Vessels in
Operation
Containers
Handling
Equipment
Flight
Equipment
Furniture
and Other
Equipment
Land
Improvements
(In Thousands)
P418,935
9,217
(8,250)
Buildings and
Warehouses
Cost
January 1, 2014
Additions
Disposals/retirements
Reclassifications
P6,201,468
1,211,219
(99,935)
(268,000)
P1,582,873
108,345
(78,531)
17,044
P1,260,678
13,002
(9)
25,722
P -
P785,901
43,040
(14,052)
(7,741)
Balance
7,044,752
1,629,731
1,299,392
P -
807,148
2,223,252
613,887
(13,343)
11,487
-
1,331,713
34,604
(76,999)
(6,583)
-
1,201,333
43,062
(9)
-
693,372
33,936
(24,422)
(65)
-
2,835,283
1,282,736
1,244,386
702,822
120,393
221,234
P4,209,469
P346,995
P55,006
P -
P104,326
P299,509
P67,889
Accumulated Depreciation,
Amortization and
Impairment Loss
January 1, 2014
Depreciation and amortization
Disposals/Retirements
Reclassifications
mpairment for the year
Balance
NBV as of December 31, 2014
- 43 -
Transportation
Equipment
Leasehold
Improvements
Construction
in Progress
Total
P268,425
26,119
(916)
(4,505)
P289,938
24,813
(14,438)
(666)
P394,150
24,591
(4,791)
(7,951)
P23,754
223
(223)
14,136
P11,226,122
1,460,570
(212,896)
(240,212)
419,902
289,123
299,647
405,999
37,890
12,233,584
112,642
7,751
-
207,132
17,871
(10,352)
6,583
-
85,351
30,623
(23,684)
-
316,431
19,265
(4,790)
-
92,254
(P23,723)
330,906
P75,093
P37,890
6,171,190
801,000
(153,599)
8,693
6,830,014
P5,403,570
2013
Note
Vessels in
Operation
(Notes 19
and 20)
Containers
and Reefer
Vans
(Note 20)
Terminal and
Handling
Equipment
Flight
Equipment
Furniture
and Other
Equipment
Land
Improvements
Buildings and
Warehouses
Transportation
Equipment
Leasehold
Improvements
Construction
in Progress
Total
(In Thousands)
Cost
January 1, 2013
Additions
Disposals
Retirements/reclassifications
Reclassification from asset held
for sale
P6,160,707
1,357,487
(1,149,283)
(1,205,301)
10
December 31, 2013

Accumulated Depreciation,
Amortization and
Impairment Loss
January 1, 2013
Disposals/retirements
Reclassification from asset held
for sale
Reclassification from assets
held for sale
Impairment for the year
25
1,037,858
P1,289,930
16,769
(50,159)
4,138
-
P4,999
(4,999)
-
P771,929
37,922
(25,666)
1,716
-
P410,685
8,250
-
P261,470
10,523
(219)
(3,349)
-
P103,709
199,826
(13,597)
-
P365,773
28,395
(2,525)
2,507
-
P49,042
54,654
(79,942)
P10,947,687
1,787,780
(1,261,973)
(1,205,288)
957,916
6,201,468
1,582,873
1,260,678
785,901
418,935
268,425
289,938
394,150
23,754
2,499,697
849,929
(808,995)
1,326,051
25,108
(19,446)
1,203,895
43,542
(50,157)
4,781
-
679,654
39,161
(26,458)
104,790
7,852
-
190,255
17,349
(113)
65,538
30,611
(10,384)
295,720
23,039
(2,410)
6,370,381
1,036,591
(918,413)
(1,205,291)
(1,205,301)
10
P1,529,443
73,954
(20,524)
-
653,161
234,761
4,053
(4,781)
1,015
(359)
-
82
-
December 31, 2013
2,223,252
1,331,713
1,201,333
693,372
112,642
207,132
85,315
316,431
Net Book Value
P3,978216
P251,160
P59,345
P -
P92,529
P306,293
P61,293
P204,623
P77,719
- 44 -
P23,754
11,226,122
653,161
234,761
6,171,190
P5,054,932
Noncash Additions - Property and Equipment under Finance Lease

Vessels in operations, containers and reefer vans, include units acquired under finance
lease arrangements (see Note 20). In 2014 and 2013, noncash additions include costs of
those leased assets amounting to P43.7 million and P90.9 million, respectively. The
related depreciation of the leased containers amounting to P16 million and P12.1 million
in 2013 were computed on the basis of the Groups depreciation policy for owned assets.
Capitalization of Drydocking Costs
Vessels in operation also include capitalized drydocking costs incurred amounting to
P252.4 million and P377.7 million for the vessels drydocked in 2014 and 2013,
respectively. The related depreciable life of drydocking costs ranges from two to two
and half years.
Disposal, Retirement and Impairment of Property and Equipment
In 2014 and 2013, the Group disposed certain property and equipment for net cash
proceeds of P32.1 million and P4.8 million, respectively (see Note 26).
In July 2013, one of the Groups operating passenger-cargo vessels was damaged. Thus,
the Group wrote off the carrying value of the damaged vessels engine and the related
component parts amounting to P221.9 million (see Note 26), which represents the
estimated repair cost of the damaged vessel. In September 2014, Group sold the
damaged vessel for P66.7 million resulting to a net gain from disposal amounting to
P5.6M.
In August 2013, a passenger-cargo vessel of the Group sunk after colliding with a cargo
vessel. As a result, the carrying value of the sunk vessel as at the date amounting to
P227.7 million was written off (see Note 26).
Subsequent to the above incidents which happened in 2013, management filed the
insurance claims with the insurance company to recover the insured values of the
damaged vessel and sunken vessel and cargoes on board, and other related expenses
which were incurred by the group as a result of the incidents. The total recovery from the
insurance company amounting to P943.3 million in 2013 is included under Others - net
in the consolidated statements of income (see Note 26).
In 2013, the Group also recognized impairment loss of P12.9 million included under
Reversal of (provision for) impairment loss on assets held for sale and property and
equipment - net on two non-operating vessels to write down their carrying values to
their salvage values.
In 2014, the Group did not recognize any impairment loss on property and equipment.
Depreciation and Amortization
Depreciation and amortization were recognized and presented in the following accounts
in the consolidated statements of income (see Note 25):
2013
2014
(In Thousands)
Operating expenses
Terminal expenses
Overhead expenses
P672,100
93,474
35,426
P801,000
- 45 -
P886,032
76,833
73,726
P1,036,591
Property and Equipment Held As Collateral

As at December 31, 2014 and 2013, the Groups vessels in operations with total carrying
value of P3,907.0 million and P3,490.6 million are mortgaged to secure certain
obligations, respectively (see Note 19). As at December 31, 2014 and 2013, containers
and other equipment held as collateral for finance lease amounted to P511.5 million and
P555.4 million, respectively (see Note 20).
Fair Value of Vessels in Operation
The Companys vessels in operation were appraised for the purpose of determining their
market values. Based on the latest appraisal with various dates in 2014 made by
independent appraisers, the related vessels in operation have an aggregate market value
of P4,220.0 million against net book value of P3,322.1 million. The fair values of the
vessels in operations are categorized under Level 3 hierarchy (see Note 34).
14. Investment Property

The Groups investment property as at December 31, 2014 and 2013 amounting to P9.8
million pertains to a parcel of land not currently being used in operations. The recurring
fair value of the investment property as at February 16, 2014, the latest appraisal report,
amounted to P59.8 million. This was determined based on the valuation performed by
independent appraisers using the Market Data Approach. Under the Market Data
Approach, the value of the land is based on sales and listings to a common denominator.
This is done by adjusting the differences between the subject property and those actual
sales and listings regarded as comparable. The properties used as basis of comparison are
situated within the immediate vicinity of the subject property.
The Group assessed that the fair value determination for the investment properties as
Level 3 since significant unobservable inputs were used in the valuation. Significant
increase (decrease) in estimated price per square meter in isolation would result in a
significantly higher (lower) fair value (see Note 34).
As at December 31, 2014 and 2013, there were no income and expenses arising from the
Groups investment property.
15. Software Development Costs

Software development costs amounted to P29.1 million and P15.4 million, net of
accumulated amortization of P85.6 million and P82.9 million, as at December 31, 2014
and 2013, respectively.
The Group recognized additions to software amounting to P16.5 million and P7.2 million
in 2014 and 2013, respectively. Amortization of software costs included under
Overhead expenses in the consolidated statement of income amounting to P2.7 million
and P5.6 million in 2014 and 2013, respectively (see Note 25).
- 46 -
16. Other Noncurrent Assets

Note
2013
2014
(In Thousands)
Deferred input VAT

Refundable deposits - net of current portion
Pension asset
Others
28
P81,351
50,195
825
8,030
P140,401
P108,896
65,788
1,354
4,552
P180,590
a. Deferred input VAT relates primarily to the major capital expenditures and dry
docking of vessels.
b. Noncurrent refundable deposits consist of amounts beyond one year arising from
rental deposits which can be applied as rental payment at the end of the lease term or
can be paid out in cash upon termination of the lease.
17. Loans Payable

As at December 31, 2014 and 2013, the loans payable amounting to P1,415.7 million and
P1,344.9 million, respectively, pertain to unsecured short-term peso-denominated notes
payable obtained by the Group from local banks with annual interest rates ranging from
5% to 8.5 % in 2014 and 4.5% to 7.9% in 2013.
Loans payable outstanding as at December 31, 2014 will mature on various dates in
2015. Total interest expense incurred by the Group for the loans amounted to
P87.5 million and P90.6 million in 2014 and 2013, respectively (see Note 26).
18. Trade and Other Payables

Note
2013
2014
(In Thousands)
Trade
Nontrade
Accrued expenses
Unearned revenue - net of deferred
discounts
Dividends payable
Due to related parties
Provision for cargo losses and damages
23
23
23
24
23
P2,439,392
1,042,300
1,016,527
P2,166,704
735,503
1,213,333
61,286
20,787
16,564
15,232
P4,612,088
22,144
8,566
31,354
11,640
P4,189,244
Trade and other payables are non-interest bearing and are normally on 30-45 days term
except for advances to related parties which are classified under nontrade payables and
are payable on demand.
- 47 -
Details of accrued expenses are as follows:

Note
2013
2014
(In Thousands)
Freight and handling

Fuel and lube
Outside services
Pick-up and delivery
Co-loading
Rent
Repairs and maintenance
Interest
Salaries and wages
Communication, light and water
Professional fees
Advertising and promotions
Pilotage and berthing
Steward supplies
Insurance
Taxes and licenses
Others
P255,400
269,765
133,713
93,158
66,332
76,337
68,125
62,255
34,061
15,094
8,711
11,255
2,321
4,870
47,602
5,896
58,438
P1,213,333
P195,602
266,589
92,315
99,155
73,890
64,411
52,810
33,048
31,464
26,842
12,841
12,399
2,803
1,591
1,356
1,308
48,103
P1,016,527
a. Nontrade payables consist of customers deposits and payables due to government

agencies.
b. Provision for cargo losses and damages refers to the cost of claims for breakages,
cargo losses, cargo short weight or passenger claims which are not covered by
insurance. In 2014 and 2013, provisions recognized amounted to P9.9 million and
P22.7 million (see Note 25) while actual claims during the year amounted to
P8 million and P4.8 million, respectively.
19. Long-term Debts

Note
2013
2014
(In Thousands)
Omnibus Loan and Security Agreement

(OLSA)
Banco de Oro Unibank, Inc. (BDO)
RCBC Savings Bank
Unamortized debt arrangement fees
Current portion
- 48 -
P 3,619,952
3,836
(18,625)
3,605,163
(85,977)
P3,519,186
P3,619,952
1,863
(23,946)
3,597,869
(373)
P3,597,496
Omnibus Loan and Security Agreement dated February 24, 2011

2GO, SFFC, HLP and NN entered into an Omnibus Loan and Security Agreement dated
February 24, 2011 (2011 Omnibus Loan) with BDO, which consists of term loans of P4.0
billion and omnibus line of P400.0 million. In March 2011, the Company availed the
P4.0 billion term loans, which was used for the refinancing of its short-term loans
payable and the early redemption of its long-term debt on March 15, 2011 amounting to
P2.0 billion in accordance with the provision of the 2011 Omnibus Loan. The omnibus
line, on the other hand, amounting to P400.0 million shall be used by 2GO and HLP for
working capital requirements and to secure their obligations with BDO.
The P4.0 billion term loans consist of Series A and Series B Term Loans amounting to
P2.0 billion each. The interest on each of the Series A and Series B Term Loans is a
combination of fixed and floating rates. Fifty percent (50%) of the principal amount of
each of the Series A Term Loan and Series B Term Loan, respectively, have a fixed
interest rate, and the remaining fifty percent (50%) have a quarterly floating annual
interest rate, provided, such floating interest rate shall have a minimum of 5.0% per
annum. The principal of the loans is subject to 16 quarterly amortizations which
commenced at the end of the third quarter from the drawdown date until March 2016.
Prior to the refinancing as discussed below, 2GO paid the principal of the loan amounting
to P800.0 million in various dates in 2012.
2011 Omnibus Loan - Suretyship Agreement, Mortgage Trust Indenture and Assignment
of Receivables
In accordance with the 2011 Omnibus Loan, the Company and NN executed a
Continuing Suretyship in favor of BDO. As a result, upon the happening of an event of
default, the creditor shall have the right to set-off or apply to payment of the credit
facility any and all moneys of the sureties which may be in possession or control of the
creditor bank. Further, the creditor bank shall likewise have the full power against all the
sureties properties upon which the creditor bank has a lien. The Continuing Suretyship
also applies with respect to the Facility Agreement entered by NN and the creditor bank
on January 26, 2011.
The Company, NN and SFFC also executed a Mortgage Trust Indenture (MTI) under the
OLSA whereby the Group creates and constitutes a first ranking mortgage on the
collaterals for the benefit of BDO. The Group shall at all times maintain the required
collateral value, which is equivalent to 200% of the obligations.
Further, as required by the OLSA, the Company, NN and SFFC shall assigned customer
receivables sufficient to cover the availed credit facility in excess of P3.66 billion.
Notwithstanding such assignment, the Company, NN and SFFC shall have the right to
collect the assigned customer receivables and appropriate the proceeds therefrom for
their benefit, provided that the assignors shall replace the collected receivables in
accordance with the required terms and condition and there is no happening of an event
of default under the OLSA. The customer receivables shall refer to all outstanding
receivables of the assignors as at the date of the execution of the OLSA, and the future
customer receivables of the assignors, which shall be valued at 50% of their face value
expressed in Peso.
As at December 31, 2014 and 2013, NN, 2GO and SFFC collateralized their vessels
under MTI with carrying values amounting to P3,907.0 million and P3,118.5 million,
assets held for sale amounting to nil and P75.4 million, and certain outstanding customers
receivables amounting to P1,189.3 million and P1,274.0 million, respectively
(see Notes 7 and 13).
- 49 -
2011 Omnibus Loan Covenants

The 2011 Omnibus Loan is subject to certain covenants such as but not limited to the
following:
Maintenance of the following required financial ratios of the Company: minimum

quarterly current ratio of 1:1; maximum quarterly debt-to-equity ratio of 2.5:1 for the
first year and 2:1 for the succeeding years; and, minimum yearly debt service
coverage ratio (DSCR) of 1.2:1 for first and second years and 1.5:1 for the
succeeding years, provided, however, that the consolidated yearly DSCR of the
Company and NN shall not fall below 1.5:1 for the first and second years, and 1.75:1
for the succeeding years;
Prohibition on any change in control in the Company or its business or majority
ownership of its capital stock (except with respect to the majority investors in the
case of NN) or a change in the Chief Executive Officer;
Prohibition to declare or pay any dividends to its common and preferred stockholder
or make any other capital or asset distribution to its stockholders, unless the financial
ratios above are fully satisfied; and
Prohibition to sell, lease, transfer or otherwise dispose of its properties and assets,
divest any of its existing investments therein, or acquire all or substantially all of the
properties or assets of any other third party, except those in the ordinary course of
business.
As at December 31, 2012, the Company breached the minimum current ratio, maximum
debt-to-equity ratio and minimum DSCR, which likewise constitute events of default.
Due to the cross-default provisions in accordance with the NN/BDO Facility Agreement,
this resulted in an event of default also on the long-term debt of NN.
The Company obtained a letter from BDO dated December 28, 2012, which states that
the Company shall not be declared in default by BDO should there be breach in
minimum current ratio of 1.0, maximum debt to equity ratio of 2.0 and minimum DSCR
of 1.2 and that the Company is given 12 months from December 31, 2012 to remedy the
default. In view of this, the cross-default provision would not take into effect, thus, the
noncurrent portion of the loans remains presented as noncurrent liability in the
consolidated balance sheet as at December 31, 2012.
Refinancing of the Companys 2011 Omnibus Loan with 2013
Omnibus Loan and Security Agreement dated June 11, 2013
On June 13, 2013, the Company (as Borrower and Assignor), BDO (as Lender), NN,
SOI, 2GO Express, 2GO Logistics (as Sureties and Assignors), and SFFC (as Assignor)
executed an Omnibus Loan and Security Agreement (2013 Omnibus Loan) effective
June 11, 2013 (i) to refinance the Companys existing loan with the lender with original
maturity date on March 15, 2016 under the 2011 Omnibus Loan and (ii) to fund various
capital expenditures such as, but not limited to, drydocking, major repairs of various
vessel, and other capital expenditures related to the Companys supply chain business, as
well as other general corporate requirements of the Company.
In June 2013, the Company availed of P3.6 billion of the P4.0 billion term loans, which
was used for the early redemption of its outstanding long-term debt based on the 2011
Omnibus Loan.
- 50 -
The P4.0 billion term loans consist of Series A and Series B Term Loans amounting to
P2.0 billion each. The interest on each of the Series A and Series B Term Loans is a
combination of fixed and floating rates. Fifty percent (50%) of the principal amount of
each of the Series A Term Loan and Series B Term Loan, respectively, have a fixed
interest rate, and the remaining fifty percent (50%) have a quarterly floating annual
interest rate, provided, such floating interest rate shall have a minimum of 5.0% per
annum. The principal of the loans is subject to 13 quarterly amortizations which
commenced at the end of the eighth quarter from the first drawdown date until June 2018.
2013 Omnibus Loan - Supplemental Indenture to the Suretyship Agreement, Mortgage
Trust Indenture and Assignment of Receivables
The Borrower and the parties to the MTI executed a Supplemental Indenture to
(i) include in the 2013 Omnibus Loan as part of the obligations covered and secured by
the MTI, (ii) to include the vessels based on the revised list as collateral under the MTI
and (iii) ensure that the Secured Obligations enjoyed the same ranking as the obligations
under the term loan of the 2013 Omnibus Loan with respect to the collateral under the
MTI.
The Borrower and the parties to the MTI also executed a Second Supplemental Indenture
to include the real properties as collateral under the MTI.
Further, as required by 2013 Omnibus Loan, in the event the availed amount of the longterm debt exceeds the loan value of the collaterals under the MTI, as determined by the
lender, each of the Assignors assigns, conveys, sets over and transfers unto the Lender
the absolutely and unconditionally all of its respective rights, title, and interest in and to
the Customers Receivables to cover the availment of the long-term debt that exceeds the
loan value of the collaterals under the MTI. All other conditions with respect to the
assignment of receivables under the 2013 Omnibus Loan are the same with the
assignment provisions under the 2011 Omnibus Loan.
2013 Omnibus Loan Covenants
In accordance with the Section 7 of the 2013 Omnibus Loan, the Group is now required
to maintain the following financial ratio based on NN consolidated financial statements at
each testing date: minimum current ratio of 1.0 times; maximum debt-to-equity ratio of
2.2 times; and, minimum DSCR of 2 times. Testing date means (i) with respect to any
December 31 consolidated audited financial statements of the Company, April 30 of the
succeeding year, (ii) with respect to any June 30 consolidated unaudited financial
statements of the Company, September 30 of the same year.
For the year end December 31, 2014 and 2013, the Group is in compliance with the debt
covenants.
Borrowing Cost and Debt Transaction Costs
Interests from long-term borrowings of the Group recognized as expense amounted to
P209.6 million in 2014 and P210.9 million in 2013 and P263.7 million in 2012 (see
Note 26).
In 2013 and 2011, the Group incurred debt transaction costs amounting to P26.6 million
and P48.9 million, respectively. Amortization of these debt transaction costs included
under interest and financing charges amounted to P5.3 million in 2014, P26.7 million in
2013 and P14.9 million in 2012 (see Note 26).
- 51 -
20. Obligations under Finance Lease

The Group has various finance lease arrangements with third parties for the lease of
vessels, containers, and reefer vans, terminal equipment denominated in US dollars and
an office space. The lease agreements provide for the transfer of ownership to the Group
at the end of the lease term, which among other considerations met the criteria for a
finance lease. Therefore, the leased assets were capitalized.
The future minimum lease payments on the obligations under finance lease together with
the present value of the net minimum lease payments are as follows:
2013
2014
(In Thousands)
Minimum lease payments due within one year

Beyond one year but not later than five years
Later than 5 years
Total minimum lease obligation
Less amount representing interest
Present value of minimum lease payment
Less current portion
Noncurrent portion
P19,618
103,448
123,066
5,282
117,784
28,592
P89,192
P38,283
109,878
2,081
150,241
14,238
136,003
32,837
P103,165
The net carrying value of property and equipment held by the Group under finance lease
are summarized as follows (see Note 13).
2013
2014
(In Thousands)
Cost
Less accumulated depreciation
Net book value
P224,440
71,248
P153,192
P181,032
45,611
P135,421
The interest expense recognized related to these leases amounted to P5.5 million and
P6.1 million in 2014 and 2013, respectively (see Note 26).
Leased assets are pledged as security for the related finance lease liabilities.
21. Redeemable Preferred Shares (RPS)

On January 7, 2003, the Company issued 374,520,487 RPS in the form of stock
dividends out of capital in excess of par value at the rate of one share for every four
common shares held by the shareholders.
The RPS has the following features:
non-voting;
preference on dividends at the same rate as common share;
redeemable at any time, in whole or in part, as may be determined by the BOD
within a period not exceeding 10 years from the date of issuance at a price of not
lower than P6 per share as may be determined by the BOD. The shares must be
redeemed in the amount of a least P250,000 per calendar year;
- 52 -
if not redeemed in accordance with the foregoing, the RPS may be converted to a
bond bearing interest at 4% over prevailing treasury bill rate to be issued by the
Company; and
preference over assets in the event of liquidation.
On June 15, 2006, the SEC approved 2GOs application for the amendment of its
Articles of Incorporation to add a convertibility feature to the RPS so as to allow holders
of RPS at their option, to convert every RPS into two (2) common shares of 2GO.
During the Conversion Period from September 1 to October 13, 2006, a total of
70,343,670 preferred shares or 93.91% were converted to common shares.
On October 25, 2012, the BOD of the Company approved the redemption of all
remaining outstanding RPS held by each eligible stockholder of such shares at a price of
P6.00 per share.
On March 27, 2013, the BOD approved the retirement of 4,564,330 RPS due to the
mandatory redemption by the Company of the RPS. On the same date, the BOD also
approved the amendment of the Articles of Incorporation of the Company to decrease its
authorized capital stock as a result of the retirement of the RPS. As at December 31,
2014 and 2013, unredeemed RPS amounted to P6.0 million and P6.7 million,
respectively.
As at December 31, 2014 and 2013, the total redeemed shares of 3,540,505 are
recognized as treasury shares.
22. Provisions and Contingencies

a. There are certain legal cases filed against the Group in the normal course of business.
Management and its legal counsel believe that the group has substantial legal and
factual bases for its position and are of the opinion that losses arising from these
cases, if any, will not have a material adverse impact on the consolidated financial
statements.
b. The Company has pending insurance claims (presented as part of Insurance and
other claims) amounting to P324.5 million and P908.4 million as at December 31,
2014 and 2013, respectively, which management believes is virtually certain of
collection (see Note 7).
- 53 -
23. Related Party

In the normal course of business, the Group has transacted with the following related
party:
Relationship
Name
Ultimate Parent
Intermediate Company
Parent Company
Significant stockholder
Subsidiaries of the Parent Company
Negros Holdings & Management Corporation (NHMC)

KGLI - NM Holdings, Inc. (KGLI-NM)
Negros Navigation Co., Inc. (NN)
China-ASEAN Marine B.V. (CAMBV)
Negrense Marine Integrated Services, Inc. (NMISI)
Brisk Nautilus Dock Integrated Services, Inc. (BNDISI)
Sea Merchants Inc. (SMI)
Bluemarine Inc. (BMI)
2GO Express, Inc. (Express)
2GO Logistics, Inc. (Logistics)
Scan Asia Overseas, Inc. (SOI)
Hapag-Lloyd Philippines, Inc. (HLP)
WRR Trucking Corporation (WTC)
The Supercat Fast Ferry Corporation (SFFC)
Special Container and Value Added Services, Inc. (SCVASI)
NN-ATS Logistics Management and Holdings Corporation, Inc.
(NALMHCI)
Super Terminals, Inc. (STI)
J&A Services Corporation (J&A)
Red.Dot Corporation (RDC)
North Harbor Tugs Corporation (NHTC)
Sungold Forwarding Corporation (SFC)
Supersail Corporation (SSI)
Astir Engineering Works, Inc. (AEWI)
United South Dockhandlers, Inc. (USDI)
W G & A Supercommerce, Inc. (WSI)
MCC Transport Philippines, Inc. (MCCP)
Hansa Meyer Projects Philippines, Inc. (HMPPI)
Vestina Securities Services, Inc. (VSSI)
Subsidiary
Associates
The following are the revenue and income (cost and expenses) included in the
consolidated statements of income with related parties which are not eliminated:
Nature
2014
2013
(In Thousands)
Parent Company
Associates
Interest income
Vessel leasing
Outside services
Freight revenue
Shared cost
Freight expense
Trucking income
Rent income
Outside services
Service income
Entities under Common

Rent
Control
Outside services
Professional and management fee
Arraste and stevedoring
Steward supplies
Food and subsistence
Rent expense
Hustling and shifting
Transportation and delivery
Short-term employee benefits
Key Management
Post-employment benefits
Personnel
- 54 -
P (312,000)
1,887
(32,897)
-
P (527,759)
(58,535)
1,488
11,464
(523)
1,413
7
(38,792)
44,322
(143,846)
(41,654)
(30,201)
(2,112)
(14,572)
-
1,875
(194,330)
(38,466)
2,250
(2,769)
(26,571)
(28)
(5,396)
(1,018)
46,673
4,343
The consolidated balance sheets include the following amounts with respect to the
balances with related parties:
Financial Statement
Account
Terms and Conditions
2013
2014
(In Thousands)
Parent Company
Trade receivables
Nontrade receivables
Trade payables
Accrued expenses
Nontrade payables
Associate
Trade receivables
Trade payables
Accrued expenses
Nontrade payables
Entities under
Common Control
Trade receivables
Trade payables
Accrued expenses
Nontrade payables
30 to 60 days; noninterestbearing
On demand; noninterestbearing
P -
P3,061
3,447
146,068
61,653
(201,008)
(450,923)
(19,357)
(35,791)
(16,564 )
(29,507)
(26,229)
26,162
13,293
33,966
(32)
(5,980)
(12,611)
(148)
(6,324)
(400)
316
21,015
57
12,213
69,925
(45,939)
(51,909)
(43,534)
(56,514)
(1,699)
(1,223)
The outstanding related party balances are unsecured and settlement is expected to be in
cash, unless otherwise indicated. The Group has not recorded any impairment of
receivables relating to amounts owed by related parties. This assessment is undertaken
each financial year through examining the financial position of the related parties and the
market in which these related parties operate.
- 55 -
Other terms and conditions related to the above related party balances and transactions
are as follows:
Transactions with NN
Effective December 1, 2011, the Company entered into vessel leasing arrangements
with NN involving six of NNs vessels at a fixed daily rate for a period of one year,
subject to renewal as agreed by the parties. The vessel agreement was revised
effective June 1, 2013 for a fixed monthly fee totaling P26.0 million for four vessels
(see Note 32).
NN charges shared cost to the Company and its subsidiaries.
Transactions with Associates and Other Related Parties under Common Control
Effective August 2011, the Company pays NMISI an agency fee for its manpower
services and for the management of the Companys food and beverage business.
NMISI also provides housekeeping and manpower pooling services to the Company
and SFFC.
BNDISI provides container and vessel repairs and trucking to the Company.
Transactions with other associates and related companies consist of shipping
services, charter hire, management services, ship management services, purchase of
steward supplies, availment of stevedoring, arrastre, trucking, and repair services and
rental.
Transactions and Balances with Related Parties Eliminated during Consolidation
The following are the transactions and balances among related parties which are
eliminated in the consolidated financial statements:
Nature
2013
2014
(In Thousands)
2GO
2GO Express
2GO
2GO Logistics
KLI
2GO Express
SFFC
NALMHCI
2GO
KALI/J&A/STI/SSI
2GO
Freight
Interest
Shared cost
Shared cost
Freight
Shared cost
Interest
Shared cost
Commission
Services fees
Shared cost
Freight
Purchase/sale of water
Passage terminal
Outside services
- 56 -
P262,734
50,377
35,090
32,897
1,944
30,247
40,773
140,781
-
P256,717
21,439
10,692
33,613
6,927
195
17,731
23,133
4,629
2,975
10,885
23,889
14,298
December 31
2013
2014
Terms and Conditions
(In Thousands)
Amounts owed to:
2GO
AEWI
Amounts owed by:

2GO Express
SFFC
2GO Express/2GO
Logistics/SOI/Others
2GO Express/2GO
Logistics/SOI/Others
2GO
2GO Express
2GO
SCVASI
2GO Logistics
2GO
SOI
RDC
KALI
2GO
SFFC
2GO/2GO Express
NALMHCI
2GO/2GO Express/2GO
Logistics
USDI
2GO/NHTC
2GO
Logistics/SOI/NALMH
CI
2GO/2GO Express/2GO
Logistics
2GO
2GO/J&A
2GO/2GO Express/2GO
Logistics/NALMHCI
2GO
J&A
RDC
SSI
STI
NHTC
SFC
SCVASI
7% interest-bearing
9% interest-bearing
30 days; noninterest-bearing
P456,853
482,124
P132,410
78,597
358,117
126
226,250
37,468
5,916
23,464
1,842
12,491
6,207
2,665
5
11
5,916
10,941
117,809
13,366
4,121
2,756
47,869
1,946
1,802
8,104
The Companys transactions with 2GO Express Group include shipping and
forwarding services, commission and trucking services.
The Company provided management services to SFFC, 2GO Express, 2GO
Logistics, HLP, KALI and SOI at fees based on agreed rates.
24. Equity
a. Share Capital
Details of share capital as at December 31, 2014 and 2013 follow:
Authorized common shares

Issued and outstanding common shares of
P1.00 per value each
- 57 -
Number of Shares
4,070,343,670
Amount
(In Thousands)
P4,070,344
2,446,136,400
P2,484,653
Movements in authorized capital stocks follow:

Date
Activity
May 26, 1949
Authorized capital stocks as at

incorporation date
Increase in authorized capital stocks
Reclassification of common shares to
preferred shares
Redemption of preferred shares
Reclassification of preferred shares to
common shares
Reclassification of preferred shares to
common shares
December 10,1971
October 21, 1975
September 3, 1982
August 18, 1989
December 29, 1993
September 8, 1994
November 21,1994
October 26, 1998
December 6, 2002
November 18, 2003
September 6, 2004
November 22, 2004
October 24, 2005
October 24, 2005
August 7, 2008
Common Shares
Number of Shares
Preferred Shares
5,000
5,000
4,990,000
5,000,000
10,000,000
20,000,000
60,000,000
900,000,000
1,000,000,000
(375,000,000)
750,000,000
1,624,524,400
5,000
5,000
4,990,000
5,000,000
10,000,000
20,000,000
60,000,000
900,000,000
1,000,000,000
375,000,000
(224,712,374)
(74,904,026)
-
475,600
(475,600)
70,343,670
(70,343,670)
4,070,343,670
Total
4,564,330
(224,712,374)
750,000,000
(74,904,026)
1,624,524,400
4,074,908,000
Movements in issued and outstanding capital stocks follow:

Number of Shares
Issue Price Common Shares Preferred Shares
Total
Date
Activity
May 26, 1949
Authorized capital stocks as at

incorporation date
December 10,1971
to October 26, 1998
December 6, 2002
February 10, 2003
November 18, 2003
September 6, 2004
November 22, 2004
December 31, 2004
October 24, 2005
August 22 to
October 13, 2006
December 6-31, 2012

Reclassification of common shares
to preferred shares
December 31, 2001
1,000.00
1,000.00
1,002
1,002
1,496,597,636
40,000,000
393,246,555
(756)
414,121,123
374,520,535
(48)
(224,712,374)
(74,904,026)
-
1,496,597,636
414,520,535
(48)
(224,712,374)
393,246,555
(74,904,026)
(756)
414,121,123
6.00
140,687,340
-
(70,343,670)
(3,413,467)
70,343,670
(3,413,467)
1.50
2,484,652,900
(38,516,500)
1,146,950
-
2,485,799,850
(38,516,500)
2,446,136,400
1,146,950
2,447,283,350
1.00
1.00
6.67
1.00
6.67
1.00
1.76
3.20
*The carrying value of treasury shares is inclusive of transaction cost amounting to P0.9 million.
Issued and outstanding common shares are held by 1925 and 1,940 equity holders as
at December 31, 2014 and 2013, respectively.
b. Deficit
Deficit is net of undistributed earnings amounting to P202.6 million in 2013,
representing accumulated equity in net earnings of subsidiaries and associates, which
are not available for dividend declaration until received in the form of dividends from
such subsidiaries and associates.
- 58 -
c. Excess of cost over net asset value of investment - net

The pooling of interest method was applied to account for the following acquisitions
since these involved entities under common control:
On August 30, 2007, the Company acquired SFFC from its affiliate, Accuria,
Inc. for a total consideration of P13.7 million. The excess of cost over SFFCs
net assets during the time of acquisition, amounting to P11.7 million is recorded
in equity as Excess of cost over net assets of investments.
On December 1, 2011, NALHMCI acquired from NN, six of its subsidiaries for a
total consideration of P29.4 million. These subsidiaries are J&A, RDC, NHTC,
STI, SFC and SSI. The excess of the combined net assets of NNs subsidiaries at
the time of acquisition over the total cost of the investment amounted to P0.8
million and is presented under equity as Excess of cost over net assets value of
investments.
In 2013, NALHMCI acquired from NN one of its subsidiaries, AEWI, for a total
consideration of P14.3 million. The excess of AEWIs net assets over cost during
the time of acquisition amounted to P1.1 million.
25. Operating Costs and Expenses

Note
2014
2013
2012
(In Thousands)
Operating Expenses
Outside services
Personnel costs
Rent
Vessel leasing
Food and beverage
Insurance
Material and supplies used
Food and subsistence
Sales concessions
Commissions
Provision for cargo losses and
damages
Others
Terminal Expenses
Transportation and delivery
Outside services
Personnel costs
Rent
Insurance
Others
23
13
27, 28
23
23
8
23
18
23
27, 28
13
- 59 -
P2,818,692
2,506,380
672,100
471,512
371,752
312,000
298,966
255,044
163,227
118,286
110,566
72,004
65,403
55,470
P2,748,764
2,056,054
886,032
589,688
418,636
527,759
221,200
145,842
241,714
118,469
126,055
91,643
27,493
33,172
P3,884,963
1,937,183
767,558
526,480
329,593
830,166
171,272
157,583
289,347
133,283
92,911
87,717
64,137
31,386
9,903
364,422
22,697
318,923
24,946
269,583
8,665,726
8,574,141
9,598,108
534,843
292,151
117,616
109,503
93,474
91,911
75,274
15,916
3,268
71,374
401,766
358,869
108,265
98,427
76,833
115,375
61,846
24,268
15,126
96,084
167,203
369,663
113,292
51,015
73,471
118,854
60,289
22,210
10,226
79,542
1,405,330
1,356,859
1,065,765
Overhead Expenses
Personnel costs
Outside services
Advertising and promotion
Taxes and licenses
Rent
Entertainment, amusement and
recreation
Provision for doubtful accounts
Transportation and travel
Office supplies
Computer charges
Others
27, 28
23
13, 15
23
Cost of Goods Sold
466,574
148,932
118,637
63,211
38,156
35,597
33,363
435,825
191,739
131,307
74,733
79,366
47,112
39,651
442,033
103,111
115,784
89,085
94,901
43,846
40,903
30,831
16,353
15,435
12,420
10,537
6,202
116,979
31,544
60,960
15,842
13,289
12,084
27,703
69,953
16,079
22,311
13,966
18,520
13,189
24,491
68,487
1,113,304
1,231,108
1,106,706
2,087,071
1,720,991
1,761,564
P13,271,431
P12,883,099
P13,532,143
26. Other Income (Charges)

Financing Charges
Interest expense on:

Long-term debt
Loans payable
Bank charges
Amortization of:
Debt transaction cost
Obligation under finance lease
RPS
Other financing charges
2013
(In Thousands)
2012
Note
2014
19
17
P209,566
87,529
8,659
P210,923
90,579
23,469
P263,722
89,136
18,114
19
20
21
5,321
3,013
18,541
P332,629
26,705
6,050
11,288
P369,014
14,872
6,407
1,425
6,796
P400,472
- 60 -
Others - net
Note
Rental income
Income from reversal of liabilities
Gain (loss) on disposal of:
AFS investments
Assets held for sale
Interest income
Foreign exchange gains
Recovery (loss) of inventory
obsolescence
Write-off of carrying value of skunk
vessel
Write-down of vessel component
parts
Recovery from insurance claims
Reversal of impairment on
receivables
Gain on other insurance claims
Dividend income
Others - net
13
11
10
6, 23
2013
(In Thousands)
P P10,844
24,130
5,880
2014
2012
P 182,984
5,562
2,669
(2,315)
(51,041)
1,690
6,203
(1,672)
13
(227,743)
13
7, 13
(221,900)
943,315
12
31,564
P54,204
13,259
P486,241
98,978
(201,715)
59,843
(149)
343
2,086
3,009
(1,945)
P143,434
27. Personnel Costs

Details of personnel costs are as follows:
Note
Salaries and wages
Crewing cost
Retirement benefit cost
Other employee benefits
28
2013
2014
(In Thousands)
P798,023
P732,626
95,415
92,091
33,131
35,163
207,209
195,900
P1,055,780 P1,133,778
2012
P765,986
118,638
11,041
186,140
P1,081,805
28. Retirement Benefits

The Group has a funded defined benefit pension plan covering all regular and permanent
employees. The benefits are based on employees projected salaries and number of years
of service. The Companys retirement plan meets the minimum requirement specified
under Republic Act 76421.
The fund is administered by a trustee bank under the supervision of the board of trustee
of the plan. The board of trustees is responsible for the investment strategy of the plan.
The funded status and amounts recognized in the consolidated balance sheets include the
retirement benefits of SGF as at December 31, 2013 and of SGF and SOI as at
December 31, 2012.
- 61 -
The following tables summarize the components of the net retirement benefits cost
recognized in the parent company statements of income and comprehensive income and
the funded status and amounts recognized in the parent company balance sheets.
2014
January 1
Net retirement benefits cost in
profit or loss:
Current service cost
Curtailment gain
Net interest cost
Defined
Benefit
Obligation
P272,548
Benefits paid
Re-measurements losses (gains)
in other comprehensive
income - actuarial changes
arising from changes in:
Financial assumptions
Demographic assumptions
Experience adjustments
Actual contributions
December 31
Fair Value
of Plan Assets
(P106,659)
Accrued
Retirement
Benefits
P165,889
33,815
(4,336)
13,623
43,102
(7,939)
(7,939)
33,815
(4,336)
5,684
35,163
(30,862)
28,168
(2,694)
35,271
8,784
15,717
59,772
(11,412)
(11,412)
23,859
8,784
15,717
48,360
(29,160)
(29,190)
P344,560
(P127,002)
P217,558
2013
January 1
Net retirement benefits cost in
profit or loss:
Current service cost
Curtailment gain
Net interest cost
Defined
Benefit
Obligation
P229,044
Benefits paid
Re-measurements losses (gains)
in other comprehensive
income - actuarial changes
arising from changes in:
Financial assumptions
Demographic assumptions
Experience adjustments
Actual contributions
December 31
Accrued
Retirement
Benefits
P131,486
31,331
(4,684)
12,527
39,174
(6,043)
(6,043)
31,331
(4,684)
6,484
33,131
(16,281)
10,679
(5,602)
(11,025)
6,992
24,644
20,611
4,338
4,338
(6,687)
6,992
24,644
24,949
(18,075)
(18,075)
P272,548
- 62 -
Fair Value
of Plan Assets
(P97,558)
(P106,659)
P165,889
The plan assets available for benefits follow:

December 31
2013
2014
(In Thousands)

Receivables
Investments in debt securities
Others
Fair value of plan assets
P11,932
32,760
56,971
4,996
P106,659
P10,766
50,973
46,111
19,152
P127,002
As at December 31, 2014 and 2013, the Group has no transactions with its retirement
funds such as loans, investments, gratuities, or surety. The fund also does not have
investments in debt or equity securities of the companies in the Group.
The Group expects to contribute P21.9 million to the retirement fund in 2015.
The principal assumptions used in determining pension benefit obligations for the
Groups plans are shown below:
2014
4.30%
6.14%
17.00%
Discount rate
Future salary increases
Turnover rate
2013
6.04%
7.83%
17.00%
The accrued retirement benefits is subject to several key assumptions. Shown below is
the sensitivity analysis of the retirement obligation to reasonably possible changes on
each significant assumption:
Increase
(Decrease)
Impact on
Accrued
Retirement
Benefits
(In Thousands)
Discount rate
+1%
-1%
+1%
-1%
+1%
-1%
Salary increase rate

Turnover rate
- 63 -
(P19,079)
23,104
21,884
(18,520)
(5,577)
6,403
29. Income Tax

a. The components of provision for income tax are as follows:
2014
2013
2012
(In Thousands)
Current:
RCIT
MCIT
P55,323
36,666
91,989
(46,431)
P45,558
Deferred
P98,804
40,617
139,421
346,271
P485,692
P66,997
14,293
81,290
176,609
P257,899
b. The components of the Groups recognized net deferred income tax assets and
liabilities are as follows:
2014
2013
(In Thousands)
Directly recognized in profit or loss

Deferred income tax assets on:
NOLCO
MCIT
Allowances for:
Impairment losses on receivables
Inventory obsolescence
Accrued retirement costs and others
Accruals and others
Deferred income tax liabilities:

Pension asset
Others
Directly recognized in equity
Deferred income tax asset on remeasurement
of retirement costs
- 64 -
P248,397
108,593
P250,370
23,528
100,479
9,811
32,868
51,383
551,531
100,945
16,698
20,456
40,065
425,137
(1,758)
(1,758)
39,561
P589,334
(406)
(4,372)
(4,778)
29,717
P477,076
c. Details of the Groups NOLCO and MCIT which can be carried forward and claimed
as tax credit against regular taxable income and regular income tax due, respectively,
are as follows:
NOLCO
Year Incurred
Available
Until
Amount
Applied
Balances as at
December 31, 2014
Tax
Amount
Effect
Expired
(In Thousands)
2014
2017
P27,323
P -
P -
P27,323
P8,197
2012
2011
2015
2014
851,550
1,333,510
(685,275)
(646,997)
851,550
-
255,465
-
P2,212,383
(P686,513)
(P646,997)
P878,873
P263,662
MCIT
Year Incurred
Available
Until
Amount
Applied
Balance as at
Expired December 31, 2014
(In Thousands)
2014
2013
2012
2011
2017
2016
2015
2014
P42,838
47,742
21,919
3,092
(1)
(11,596)
P42,838
47,742
28,832
-
P131,369
P1
(P11,596)
P119,412
d. The following are the Groups NOLCO and MCIT and other deductible temporary
differences for which no deferred income tax assets have been recognized. In
compliance with PFRS. Management, however, believes that there will be sufficient
future taxable income that would substantially utilizes the NOLCO in the future:
2013
2014
(In Thousands)
NOLCO
MCIT
P50,883
10,819
- 65 -
P1,350,493
49,225
e. Reconciliation between the income tax expense (benefit) computed at statutory

income tax rate of 30% in the provision for income tax expense as shown in profit or
loss is as follows:
2014
2012
2013
(In Thousands)
Tax effect of income at statutory

rates
Derecognition of deferred tax assets
on NOLCO
Income tax effects of:
Changes in unrecognized deferred
income tax assets
Income tax holiday (ITH) incentive
on registered activities
Equity in net loss (earnings) of
associates
Interest income already subjected
to a lower final tax
Dividend income
MCIT derecognized
Application of NOLCO for which
no deferred tax asset was
recognized
MCIT incurred for the year for
which no deferred tax asset was
recognized
Others
P266,433
P213,832
(P29,357)
4,254
381,631
334,877
9,045
806
(36,123)
3,292
(13,454)
(11,308)
(680)
(34,813)
-
(619)
(10,987)
13,576
(1,449)
(903)
624
(200,319)
(146,787)
(1,654)
P45,558
39,306
8,388
P485,692
1,538
P257,899
30. Earnings Per Common Share

Basic and diluted earnings per common share were computed as follows:
Note
2013
2014
(In Thousands, except EPS)
Net earnings for the year attributable to equity

holders of the parent
P827,735
P212,044
Weighted average number of common shares

outstanding for the year
2,446,136
2,446,136
Earnings per common share
P0.3384
P0.0867
There are no potentially dilutive common shares as at December 31, 2014 and 2013.
- 66 -
31. Registration with the Board of Investments (BOI)

a. With the effectivity of the merger of the Company and ZIP, the Parent Company
assumed ZIPs outstanding BOI registration as an expanding operator of
logistics service facility on a non-pioneer status under Certificate of Registration
No. 2008-179. The ITH incentive for a period of three years, which expired in July
2011, provided that for purpose of availment, a base figure of P924.1 million will be
used in the computation of the ITH for the said expansion.
b. On January 27, 2011, BOI approved the Companys application for registration of
the modernization of two (2) second-hand RORO vessels, M/V St. Gregory the Great
and M/V St. Leo the Great. The Company was granted ITH incentive for a period of
three years from March 2011 or actual start of operations. The ITH incentive shall be
limited only to the sales/revenues generated by the registered project. As at
December 31, 2014, 2GOs ITH has already expired.
c. SFFC is registered with BOI as a New Operator of Domestic Shipping (Passenger
Vessel) on a Non-Pioneer status. The Company is entitled to four years ITH from
date of registration until February 2012.
32. Agreements and Commitments

a. The Company has a Memorandum of Agreement (Agreement) with Asian Terminals,
Inc. (ATI) for the use of the latters facilities and services at the South Harbor for the
embarkation and disembarkation of the Companys domestic passengers, as well as
loading, unloading and storage of cargoes. The Agreement shall be for a period of
five years, which shall commence from the first scheduled service of the Company at
the South Harbor. The Agreement is renewable for another five years under such
terms as may be agreed by the parties in writing. If the total term of the Agreement is
less than ten years, then the Company shall pay the penalty equivalent to
unamortized reimbursement of capital expenditures and other related costs incurred
by ATI in the development of South Harbor. The Agreement became effective on
January 14, 2003.
Under the terms and conditions of the Agreement, the Company shall avail of the
terminal services of ATI, which include, among others, stevedoring, arrastre, storage,
warehousing and passenger terminal. Domestic tariff for such services (at various
rates per type of service as enumerated in the Agreement) shall be subject to an
escalation of 5% every year.
The agreement expired in January 2013 but was extended until April 2013 upon
complete transfer of the Companys shipping operation from South Harbor to North
Harbor.
b. On December 31, 2012, the Company and Manila North Harbour Port, Inc. (MNHPI)
entered into an agreement to engage the services of MNHPI to handle all the freight,
passenger terminal and allied port services requirements of the former and in
particular, to consolidate all its operations at Manila North Harbor. The agreement is
effective upon signing and shall remain in effect for 10 years, renewable for another
5 years upon such terms and conditions as the parties may agree.
- 67 -
c. The Group has entered into various operating lease agreements for its office spaces.
The future minimum rentals payable under the noncancellable operating leases are as
follows:
2014
2013
(In Thousands)
Within one year

After one year but not more than five years
P258,292
215,710
P474,002
P175,050
217,069
P392,119
d. The Company entered into several vessel leasing agreements for a period ranging
from three to 15 months. In 2013 and 2014, vessel lease rates are based on agreed
monthly rate of P26.0 million.
33. Financial Risk Management Objectives and Policies

Risk Management Structure
The Groups overall risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the Companys
financial performance. It is, and has been throughout the year under review, the
Companys policy that no trading in financial instruments shall be undertaken. There has
been no change to the Groups exposure to credit, liquidity, foreign exchange interest rate
and equity price risks on the manner in which it manages and measures the risks since
prior years.
Credit Risks Management Objectives and Procedures
The Groups principal financial instruments comprise of cash in banks, loans payable,
longterm debt, obligations under finance lease, restructured debts and redeemable
preferred shares. The main purpose of these financial instruments is to raise financing
for the Groups operations. The Group has other various financial assets and liabilities
such as trade and other receivables and trade and other payables, which arise directly
from operations.
The main risks arising from the Groups financial instruments are credit risk involving
possible exposure to counter-party default, primarily, on its trade and other receivables;
liquidity risk in terms of the proper matching of the type of financing required for
specific investments and maturing obligations; foreign exchange risk in terms of foreign
exchange fluctuations that may significantly affect its foreign currency denominated
placements and borrowings; and interest rate risk resulting from movements in interest
rates that may have an impact on interest bearing financial instruments.
Credit Risk
To manage credit risk, the Group has policies in place to ensure that all customers that
wish to trade on credit terms are subject to credit verification procedures and approval of
the Credit Committee. In addition, receivable balances are monitored on an ongoing basis
to reduce the Groups exposure to bad debts. The Group has policies that limit the
amount of credit exposure to any particular customer.
The Group does not have any significant credit risk exposure to any single counterparty.
The Groups exposures to credit risks are primarily attributable to cash and collection of
trade and other receivables with a maximum exposure equal to the carrying amount of
these financial instruments.
- 68 -
As at December 31, 2014 and 2013, the Group did not hold collateral from any
counterparty.
The credit quality per class of financial assets that are neither past due nor impaired is as
follows:
December 31, 2014
Neither Past Due nor Impaired
Past Due and/or
High
Medium
Low
Impaired
Total
(In Thousands)
Loans and receivables
Cash in banks
Cash equivalents
Trade and other receivables:
Service fees
Distribution
Freight
Passage
Others
Advances to officers and
employees
AFS investments
Total
P954,727
248,199
P -
P -
722,717
471,528
230,486
56,281
629,013
221,264
24,262
38,042
31,575
5,133
574
P3,633,227
P574
P -
P -
P954,727
248,199
1,295,383
361,458
286,501
722,717
471,528
1,525,869
56,281
629,013
582,722
24,262
324,543
31,575
5,707
P1,943,342
P5,577,143
Past Due and/or

Impaired
Total
December 31, 2013

Neither Past Due nor Impaired
High
Medium
Low
(In Thousands)
Cash in banks
Cash equivalents
Trade and other receivables:
Freight
Passage
Service fees
Distribution
Others
employees
AFS investments
Total
P837,089
49,430
P -
P -
P -
P837,089
49,430
45,734
11,214
17,550
169,513
179,333
5,654
14,651
856,944
156,215
96
56,104
49,045
38,978
39
291,879
94,568
-
909,706
34,727
418,652
112,225
274,690
369,797
144,767
51,375
1,403,534
46,037
586,874
281,738
503,068
414,429
159,418
908,358
20,913
6,333
2,805
574
2,028
-
25,746
6,907
P2,214,358
P303,856
P2,317,967
P5,222,628
P386,447
High quality receivables pertain to receivables from related parties and customers with
good favorable credit standing. Medium quality receivables pertain to receivables from
customers that slide beyond the credit terms but pay a week after being past due. Low
quality receivables are accounts from new customers and forwarders. For new customers,
the Group has no basis yet as far as payment habit is concerned. With regards to the
forwarders, most are either under litigation or suspension. In addition, their payment
habits extend beyond the approved credit terms because their funds are not sufficient to
conduct their operations.
The Group evaluated its cash in banks as high quality financial assets since these are
placed in financial institutions of high credit standing. It also evaluated its advances to
officers and employees as high grade since these are deductible from their salaries.
- 69 -
The aging per class of financial assets that were past due but not impaired is as follows:
As at December 31, 2014
Neither
Past Due
nor
Impaired
Less than
30 Days
Past Due but not Impaired

31 to 60
61 to 90
Days
Days
More than
90 Days
Impaired
Financial
Assets
Total
(In Thousands)
Cash in banks
Cash equivalents
Trade and other
receivables:
Freight
Passage
Service fees
Distribution
Others
Insurance and other
claims
employees
AFS investments
Total
P954,727
248,199
P -
P -
P -
P -
P -
P954,727
248,199
480,680
56,281
478,420
455,989
314,507
211,264
24,262
415,553
112,243
31,451
-
145,038
125,803
-
61,831
4,313
157,253
-
232,992
9,834
310,077
-
189,775
117,907
15,539
8,114
12,899
-
1,525,869
56,281
722,717
471,528
629,013
582,722
24,262
38,042
188,096
47,024
51,381
324,543
31,575
5,707
31,575
5,707
P3,309,653
P747,343
P317,865
P223,397
P552,903
P395,615
P5,577,143
Less than
30 Days
Past Due but not Impaired

31 to 60
61 to 90
Days
Days
More than
90 Days
Impaired
Financial
Assets
Total
P -
P -
P837,089
49,430
283,844
5,235
114,817
35,102
17,872
344,500
135,775
175,643
117,907
15,344
8,037
11,077
-
1,403,534
46,037
586,874
281,738
503,068
414,429
159,418
51,375
908,358
25,746
6,907
As at December 31, 2013

Neither
Past Due
nor
Impaired
(In Thousands)
Cash in banks
Cash equivalents
Trade and other
receivables:
Freight
Passage
Service fees
Distribution
Others
Insurance and other
claims
employees
AFS investments
Total
P837,089
49,430
P -
P -
493,828
11,310
168,222
169,513
228,378
44,632
14,651
222,759
11,274
93,562
38,946
91,560
2,517
4,047
142,977
14,427
58,029
15,974
57,546
5,748
2,931
856,983
P -
84,483
3,791
34,337
6,859
99,675
5,955
2,014
23,718
6,907
836
-
597
-
403
-
192
-
P2,904,661
P465,501
P298,229
P237,517
P937,337
P379,383
P5,222,628
Liquidity Risk
The Group manages its liquidity profile to be able to finance its capital expenditures and
service its maturing debt by maintaining sufficient cash during the peak season of the
passage business. The Group regularly evaluates its projected and actual cash flow
generated from operations.
The Groups existing credit facilities with various banks are covered by the Continuing
Suretyship for the accounts of the Group.
- 70 -
The liability of the Surety is primary and solidary and is not contingent upon the pursuit
by the bank of whatever remedies it may have against the debtor or collaterals/liens it
may possess. If any of the secured obligations is not paid or performed on due date
(at stated maturity or by acceleration), the Surety shall, without need for any notice,
demand or any other account or deed, immediately be liable therefore and the Surety
shall pay and perform the same.
The following table summarizes the maturity profile of the Groups financial assets and
financial liabilities based on contractual repayment obligations and the Groups cash to
be generated from operations and the Groups financial assets as at December 31:
Less than
1 Year
2014
1 to 5
Years
Over
5 Years
Total
(In Thousands)
Financial Liabilities
Trade and other payables*
Loans payable
Long-term debts
Obligations under capital
lease
P4,285,709
1,415,651
85,977
P 3,519,186
32,837
5,988
P5,826,162
101,084
14,079
P3,634,349
P -
P4,285,709
1,415,651
3,605,163
2,081
P2,081
136,022
5,988
14,079
P9,462,612
Over
5 Years
Total
* Excludes nonfinancial liabilities amounting to P326.4 million as at December 31, 2014.
Less than
1 Year
2013
1 to 5
Years
(In Thousands)
Trade and other payables*
Loans payable
Long-term debts
Obligations under capital
lease
P3,839,604
1,344,927
373
P 3,597,496
P -
P3,839,604
1,344,927
3,597,869
28,592
6,680
P5,220,176
89,192
9,369
P3,696,057
P -
117,784
6,680
9,369
P8,916,233
* Excludes nonfinancial liabilities amounting to P349.6 million as at December 31, 2013.
- 71 -
Less than
1 Year
2014
1 to 5
Years
Over
5 Years
Total
(In Thousands)
Financial Assets
AFS investments
P1,235,052
3,973,094
5,707
P5,213,853
Less than
1 Year
P P 2013
1 to 5
Years
P P -
Over
5 Years
P1,235,052
3,973,094
5,707
P5,213,853
Total
(In Thousands)
Financial Assets
AFS investments
P918,645
3,949,819
6,907
P4,875,371
P P -
P P -
P918,645
3,949,819
6,907
P4,875,371
Trade and other payables and maturing other liabilities are expected to be settled using
cash to be generated from operations, drawing from existing and new credit lines, and
additional capital contribution of the shareholders.
Foreign Exchange Risk
Foreign currency risk arises when the Group enters into transactions denominated in
currencies other than their functional currency. Management closely monitors the
fluctuations in exchange rates so as to anticipate the impact of foreign currency risks
associated with the financial instruments. To mitigate the risk of incurring foreign
exchange losses, the Group maintains cash in banks in foreign currency to match its
financial liabilities.
- 72 -
The Groups significant foreign currency-denominated financial assets and financial

liabilities as at December 31 are as follows:
2014
Financial Asset
Cash in banks
Trade receivables
Insurance receivables
Trade and other
payables
Obligations under
finance lease
Net foreign currency
denominated assets
(liabilities)
EUR2
$1
-
USD4
Total Peso
Equivalent
Kr183
-
$66
342
1
P4,480
15,260
45
183
409
19,785
DKK3
(In Thousands)
82
2,969
1,588
70,857
82
1,588
73,826
($1,179)
(P54,041)
USD4
Total Peso
Equivalent
$9
-
$219
266
13
P9,944
11,809
577
498
22,330
9,680
(3)
($82)
$1 = P36.21
1 = P54.34
AUD1
(Kr183)
Kr1 = P7.30
$1 = P44.662
2013
AUD1
EUR2
NZD3
(In Thousands)
Financial Asset
Cash in banks
Trade receivables
Insurance receivables
Trade and other
payables
Obligations under
finance lease
Net foreign currency
denominated assets
(liabilities)
1
$1 = P39.46
1 = P60.82
$1
-
65
117
986
43,773
65
117
986
53,453
($64)
(114)
$9
($488)
(P31,123)
$1 = P36.21
$1 = P44.40
The Group has recognized foreign exchange revaluation loss amounting to P2.3 million
in 2014 and foreign exchange revaluation gain amounting to P1.3 million in 2013.
- 73 -
The following table demonstrates the sensitivity to a reasonably possible change in the
foreign currency exchange rates, with all other variables held constant, of the Groups
profit before tax as at December 31, 2014 and 2013.
Appreciation/
(Depreciation) of
Foreign Currency
Effect on Income Before Tax

2013
2014
(In Thousands)
Australian Dollar (AUD)
+5%
-5%
+5%
-5%
+5%
-5%
+5%
-5%
+5%
-5%
Euro (EUR)
Danish Kroner (DKK)
US Dollar (USD)
New Zealand Dollar (NZD)
(P146)
146
8
(8)
67
()
(2,630)
2,630
-
(P126)
126
(347)
347
(1,083)
1,083
16
(16)
There is no other impact on the Groups equity other than those already affecting profit
or loss.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of the Groups
financial instruments will fluctuate because of changes in market interest rates.
Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The
Groups borrowings are subject to fixed interest rates ranging from 4.5% to 8.5% for 10
years in 2013 and in 2014.
The Groups P4.0 billion loans under the OLSA includes P2.0 billion loans which bear
variable interest rates and exposes the Group to cash flow interest rate risk.
The sensitivity of the consolidated statement of income is the effect of the assumed
changes in interest rates on the income before income tax for one year, based on the
floating rate non-trading financial liabilities held at December 31, 2014 with other
variables held constant:
Changes in
Interest Rates
Effect on Income Before Tax

2013
2014
(In Thousands)
For more than one year
+80 basis points

-80 basis points
Changes in
Interest Rates
(P28,841)
28,841
(P28,762)
28,762
Effect on Equity
2013
2014
(In Thousands)
For more than one year
+80 basis points

-80 basis points
(P20,189)
20,189
(P20,133)
20,133
Equity Price Risk

Equity price risk is the risk that the fair value of traded equity instruments decreases as
the result of the changes in the levels of equity indices and the value of the individual
stocks.
- 74 -
As at December 31, 2014 and 2013, the Groups exposure to equity price risk is minimal.
The effect on equity (as a result of a change in fair value of equity instruments held as
AFS investments as at December 31, 2014 and 2013) due to reasonably possible change
in equity indices, with all other variables held constant, follows:
Increase
(decrease) in
PSE Index
Effect on
Equity
(In Thousands)
2014
55%
(55%)
55%
(55%)
2013
P291
(291)
352
(352)
The impact on the Groups equity excludes the impact of transactions affecting the
consolidated statements of comprehensive income.
Capital Risk Management Objectives and Procedures
The Groups capital management objectives are to ensure the Groups ability to continue
as a going concern, so that it can continue to provide returns for shareholders and benefits
for others stakeholders and produce adequate and continuous opportunities to its
employees; and to provide an adequate return to shareholders by pricing
products/services commensurately with the level of risk.
The Group sets the amount of capital in proportion to risk. It manages the capital
structure and makes adjustments in the light of changes in economic conditions and the
risk characteristics of the underlying assets. The Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares, or sell
assets to reduce debt. The Groups overall strategy in managing its capital remains
unchanged since prior year.
The Group considers its total equity as its capital. The Group monitors capital on the
basis of the carrying amount of equity as presented on the face of the balance sheet. The
capital ratios are as follows:
2014
2013
(In Thousands)
Assets financed by:

Creditors
Stockholders
72%
28%
75%
25%
As at December 31, 2014 and 2013, the Group met its capital management objectives. As
discussed in Note 19, the Group is compliant with its loan covenants.
- 75 -
34. Fair Value of Financial Instruments and Nonfinancial Assets

The table below presents a comparison by category of the carrying amounts and fair
values of the Groups financial instruments as at December 31, 2014 and 2013. Financial
instruments with carrying amounts reasonably approximating their fair values are no
longer included in the comparison.
2014
Carrying
Value
Fair Value
2013
Carrying
Value
Fair Value
(In Thousands)
Long-term debts
Obligations under finance
lease
Nonfinancial Assets
Vessels in operations
Investments property
P3,605,163
P4,119,646
P3,597,869
P4,111,311
136,002
P3,741,165
144,523
P4,264,169
117,784
P3,715,653
125,164
P4,236,475
P3,639,758
9,763
P4,209,469
59,818
P3,978,216
9,763
P4,855,000
66,900
The following methods and assumptions are used to estimate the fair value of each class
of financial instruments and nonfinancial assets:
Financial Instruments
Cash and Cash Equivalents, Trade and Other Receivables, Trade and Other Payables,
Refundable Deposits and RPS
The carrying amounts of these financial instruments approximate their respective fair
values due to their relatively short-term maturities.
Loans Payable
The carrying value of loans payable that reprice every three (3) months, approximates
their fair value because of recent and regular repricing based on current market rate. For
fixed rate loans, the carrying value approximates fair value due to its short term
maturities, ranging from three months to twelve months.
AFS Investments
The fair values of AFS investments are based on quoted market prices, except for
unquoted equity shares which are carried at cost since fair values are not readily
determinable.
Long-term Debts
Discount rate of 2.6% was used in calculating the fair value of the long term debt as at
December 31, 2014 and 2013.
Obligations Under Finance Lease
The fair values of obligation under finance lease are based on the discounted net present
value of cash flows using discount rate 3.5% to 3.7% as at December 31, 2014 and 2013.
Nonfinancial Assets
The fair values of the Groups vessels in operations and investment property have been
determined by the appraisal method by independent external appraisers based on the
highest and best use of property being appraised.
- 76 -
Vessels in Operations
The fair values of the vessels in operations are determined using the replacement fixed
asset approach. This method requires an analysis of the vessels by breaking them down
into major components. Bills of quantities for each component developed on the basis of
current costs of materials, labor, plant and equipment prevailing in the locality to arrive at
the direct costs of the components. Accrued depreciation was based on the observed
condition.
Investment Property
The fair value of the investment property is determined using the Market Data Approach,
which is a process of comparing the subject property being appraised to similar
comparable properties recently sold or being offered for sale.
Investment in equity securities carried at cost
Fair value information has not been disclosed for the Groups investments in equity
securities that are carried at cost because fair value cannot be measured reliably. These
equity securities represent ordinary shares in an (nature of the investee company)
company that is not quoted on any market and does not have any comparable industry
peer that is listed. In addition, the variability in the range of reasonable fair value
estimates derived from valuation techniques is significant. The Group does not intend to
dispose of this investment in the foreseeable future. The Group intends to eventually
dispose of this investment through sale to institutional investors.
Fair Value Hierarchy
Only the Groups AFS investments, which are classified under Level 1, are measured at
fair value. During the year ended December 31, 2014 and 2013, there were no transfers
between Level 1 and Level 2 fair value measurements, and no transfers into and out of
Level 3 fair value measurements.
- 77 -
COVER SHEET
For
AUDITED FINANCIAL STATEMENTS
SEC Registration Number
Company Name
2 G O
G R O U P ,
[ F o r m e r
( A T S C )
l y
I N C .
A T S
I n c
C o n s o l
A N D
i d a
t e d
S U B S I D I A R I E S
Principal Office ( No./Street/Barangay/City/Town)Province)

1 5 t h
B u i
F l o o r
l d i n g ,
T i m e s
U n i
A v e n u e
c o r n e r
E r m i
M a n i
t a
Form Type
t e d
,
P l a z a
N a
T a f
i o n s
A v e n u e
l a
Secondary License Type, If
Applicable
Department requiring the report
COMPANY INFORMATION
Company's Email Address
Company's Telephone Number/s
Mobile Number
No. of Stockholders
Annual Meeting
Month/Day
Fiscal Year
Month/Day
1,931
December 31
CONTACT PERSON INFORMATION
The designated contact person MUST be an Officer of the Corporation

Name of Contact Person
Email Address
Telephone
Number/s
Mobile Number
Contact Person's Address
Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission
within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.

2014 2go Conso - Pse

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2GO Group, Inc.

[Formerly ATS Consolidated (ATSC), Inc.]

2GO GROUP, INC.

LIABILITIES AND EQUITY

See Notes to Consolidated Financial Statements.

2GO GROUP, INC.

Years Ended December 31

OPERATING COSTS AND

INCOME (LOSS) BEFORE

Years Ended December 31

Basic/Diluted Earnings (Loss)

See Notes to the Consolidated Financial Statements.

2GO GROUP, INC.

See Notes to the Consolidated Financial Statements.

2GO GROUP, INC.

BALANCE AT JANUARY 1, 2012

BALANCES AT DECEMBER 31, 2013

See Notes to the Consolidated Financial Statements.

BALANCES AT DECEMBER 31, 2012

Attributable to Equity Holders of the Parent Company

2GO GROUP, INC.

Years Ended December 31

Years Ended December 31

2GO GROUP, INC.

1. Corporate Information, Status of Operations and Management Action Plans, and

The Groups commercial approach is to strengthen its Key Accounts Management,

2. Summary of Significant Accounting and Financial Reporting Policies

Adoption of Amendments to Standards

Recoverable Amount Disclosures for Non-Financial Assets (Amendments to PAS 36).

Measurement of short-term receivables and payables (Amendment to PFRS 13). The

Standards Issued But Not Yet Adopted

Effective July 1, 2014

Annual Improvements to PFRSs: 2010-2012 and 2011-2013 Cycles

Disclosures on the aggregation of operating segments (Amendment to PFRS 8).

Scope of portfolio exception (Amendment to PFRS 13). The scope of the

Definition of related party (Amendment to PAS 24). The definition of a related

Effective January 1, 2016

Accounting for Acquisitions of Interests in Joint Operations (Amendments to

Clarification of Acceptable Methods of Depreciation and Amortization (Amendments

Annual Improvements to PFRSs (2012-2014 Cycle).This cycle of improvements

Changes in method for disposal (Amendment to PFRS 5). PFRS 5 is amended to

PFRS 9, Financial Instruments (2014). PFRS 9 (2014) replaces PAS 39 Financial

Supercat Fast Ferry Corp. (SFFC)

Derecognizes the assets (including goodwill) and liabilities of the subsidiary;

Business Combinations and Goodwill

Project logistics and consultancy

(2) KLN is 78.4% owned by 2GO Express.

In the principal market for the asset or liability, or

Classification of Financial Instruments

deliver cash or another financial asset to another entity; or

Impairment of Financial Assets

In the case of quoted equity investments classified as AFS investments, objective

Manning and crewing services revenue is recognized upon embarkation of qualified

3. Significant Judgments, Accounting Estimates and Assumptions

Classification of Financial Instruments

Evaluation of Legal Contingencies

Estimation of Useful Life of Software Development Costs

Property and equipment - net

4. Operating Segment Information

Budgeted Earnings Before Interest, Tax, Depreciation and Allowance (EBITDA)

Rates, Exclusive of VAT. Management expects an increase in passage and freight

Budgeted Capital Expenditure

6. Cash and Cash Equivalents