UNITED COCONUT PLANTERS LIFE ASSURANCE CORPORATION

Transcription

1 UNITED COCONUT PLANTERS LIFE ASSURANCE CORPORATION SEPARATE FINANCIAL STATEMENTS December 31, 2014 and 2013

2 ABCD R.G. Manabat & Co. Telephone +63 (2) The KPMG Center, 9/F Fax +63 (2) Ayala Avenue Internet Makati City 1226, Metro Manila, Philippines Branches: Subic Cebu Bacolod Iloilo REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders United Coconut Planters Life Assurance Corporation Report on the Separate Financial Statements We have audited the accompanying separate financial statements of United Coconut Planters Life Assurance Corporation (the Parent Company ), which comprise the separate statements of financial position as at December 31, 2014 and 2013, and the separate statements of comprehensive income, separate statements of changes in equity and separate statements of cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Separate Financial Statements Management is responsible for the preparation and fair presentation of these separate financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these separate financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the separate financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the separate financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity s preparation and fair presentation of the separate financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the separate financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member p firm. All rights reserved. i a PRC-BOA Registration No. 0003, valid until December 31, 2016 SEC Accreditation No FR-4, Group A, valid until November 10, 2017 IC Accreditation No. F-2014/014-R, valid until August 26, 2017 BSP Accredited, Category A, valid until December 17, 2017

3 ABCD Basis for Qualified Opinion The Parent Company carries its investments in United Coconut Planters Bank (UCPB) shares as available-for-sale (AFS) financial assets at cost as disclosed in Note 11 of the notes to financial statements. As required under Philippine Financial Reporting Standards, such AFS financial assets should have been carried at cost less impairment losses. Had the Parent Company recognized such impairment losses, the carrying amounts of the AFS financial assets and retained earnings as of December 31, 2014 and 2013 should have been reduced by P552 million. Qualified Opinion In our opinion, except for the possible effects on the financial statements of the matter described in the Basis for Qualified Opinion paragraph, the separate financial statements present fairly, in all material respects, the unconsolidated financial position of the Parent Company as at December 31, 2014 and 2013, and its unconsolidated financial performance and its unconsolidated cash flows for the years then ended in accordance with Philippine Financial Reporting Standards. Emphasis of Matter Without qualifying our opinion, we draw attention to Note 11 to the financial statements which discusses the Executive Orders (EOs) issued by the President of the Republic of the Philippines regarding the inventory, reconveyance, utilization and privatization of coco levy assets that reference the decision rendered by the Supreme Court involving the ownership of certain sequestered shares in UCPB, and the ownership over the Coconut Industry Investment Fund (CIIF) Oil Mills Companies, the Fourteen (14) CIIF Holding Companies and the proceeds of the redeemed shares of stock in San Miguel Corporation (SMC) held by the 14 CIIF Holding Companies, together with all dividends declared, paid and issued thereon as well as any increments thereto arising from, but not limited to, exercise of pre-emptive rights, is owned by the Republic of the Philippines for the benefit of the coconut farmers, thus making it a part of the coco levy assets. Since the manner by which the reconveyance, utilization and privatization of the coco levy assets to be undertaken has not been defined by the implementing authorities, the Board of Directors and management will be assessing the impact of the EOs and the Supreme Court Decision on the Parent Company moving forward and believe that, as at December 31, 2014, it is reasonable to maintain the status quo and continue with its normal business operations. Report on the Supplementary Information Required Under Revenue Regulations No of the Bureau of Internal Revenue Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information in Note 40 to the financial statements is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such supplementary information is the responsibility of the management. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated, in all material respects in relation to the basic financial statements taken as a whole. April 29, 2015 Makati City, Metro Manila

4 ABCD R.G. Manabat & Co. Telephone +63 (2) The KPMG Center, 9/F Fax +63 (2) Ayala Avenue Internet Makati City 1226, Metro Manila, Philippines Branches: Subic Cebu Bacolod Iloilo REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders United Coconut Planters Life Assurance Corporation Cocolife Building, 6774 Ayala Avenue Makati City Report on the Separate Financial Statements We have audited the accompanying separate financial statements of United Coconut Planters Life Assurance Corporation (the Parent Company ), which comprise the separate statements of financial position as at December 31, 2014 and 2013, and the separate statements of comprehensive income, separate statements of changes in equity and separate statements of cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Separate Financial Statements Management is responsible for the preparation and fair presentation of these separate financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these separate financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the separate financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the separate financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity s preparation and fair presentation of the separate financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the separate financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member p firm. All rights reserved. i a PRC-BOA Registration No. 0003, valid until December 31, 2016 SEC Accreditation No FR-4, Group A, valid until November 10, 2017 IC Accreditation No. F-2014/014-R, valid until August 26, 2017 BSP Accredited, Category A, valid until December 17, 2017

5 ABCD Basis for Qualified Opinion The Parent Company carries its investments in United Coconut Planters Bank (UCPB) shares as available-for-sale (AFS) financial assets at cost as disclosed in Note 11 of the notes to financial statements. As required under Philippine Financial Reporting Standards, such AFS financial assets should have been carried at cost less impairment losses. Had the Parent Company recognized such impairment losses, the carrying amounts of the AFS financial assets and retained earnings as of December 31, 2014 and 2013 should have been reduced by P552 million. Qualified Opinion In our opinion, except for the possible effects on the financial statements of the matter described in the Basis for Qualified Opinion paragraph, the separate financial statements present fairly, in all material respects, the unconsolidated financial position of the Parent Company as at December 31, 2014 and 2013, and its unconsolidated financial performance and its unconsolidated cash flows for the years then ended in accordance with Philippine Financial Reporting Standards. Emphasis of Matter Without qualifying our opinion, we draw attention to Note 11 to the financial statements which discusses the Executive Orders (EOs) issued by the President of the Republic of the Philippines regarding the inventory, reconveyance, utilization and privatization of coco levy assets that reference the decision rendered by the Supreme Court involving the ownership of certain sequestered shares in UCPB, and the ownership over the Coconut Industry Investment Fund (CIIF) Oil Mills Companies, the Fourteen (14) CIIF Holding Companies and the proceeds of the redeemed shares of stock in San Miguel Corporation (SMC) held by the 14 CIIF Holding Companies, together with all dividends declared, paid and issued thereon as well as any increments thereto arising from, but not limited to, exercise of pre-emptive rights, is owned by the Republic of the Philippines for the benefit of the coconut farmers, thus making it a part of the coco levy assets. Since the manner by which the reconveyance, utilization and privatization of the coco levy assets to be undertaken has not been defined by the implementing authorities, the Board of Directors and management will be assessing the impact of the EOs and the Supreme Court Decision on the Parent Company moving forward and believe that, as at December 31, 2014, it is reasonable to maintain the status quo and continue with its normal business operations.

6 ABCD Report on the Supplementary Information Required Under Revenue Regulations No of the Bureau of Internal Revenue Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information in Note 40 to the financial statements is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such supplementary information is the responsibility of the management. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated, in all material respects in relation to the basic financial statements taken as a whole. R.G. MANABAT & CO. DENNIS I. ILAN Partner CPA License No IC Accreditation No. SP-2014/023-R, Group A, valid until August 26, 2017 SEC Accreditation No A, Group A, valid until April 30, 2015 Tax Identification No BIR Accreditation No Issued September 26, 2014; valid until September 25, 2017 PTR No MC Issued January 5, 2015 at Makati City April 29, 2015 Makati City, Metro Manila

7 ABCD R.G. Manabat & Co. Telephone +63 (2) The KPMG Center, 9/F Fax +63 (2) Ayala Avenue Internet Makati City 1226, Metro Manila, Philippines Branches: Subic Cebu Bacolod Iloilo REPORT OF INDEPENDENT AUDITORS TO ACCOMPANY FINANCIAL STATEMENTS FOR FILING WITH THE BUREAU OF INTERNAL REVENUE The Board of Directors and Stockholders United Coconut Planters Life Assurance Corporation Cocolife Building, 6774 Ayala Avenue Makati City We have audited the accompanying separate financial statements of United Coconut Planters Life Assurance Corporation, as at and for the year ended December 31, 2014, on which we have rendered our report dated April 29, In compliance with Revenue Regulations V-20, we are stating that no partner of our Firm is related by consanguinity or affinity to the president, manager or principal stockholder of the Company. R.G. MANABAT & CO. DENNIS I. ILAN Partner CPA License No IC Accreditation No. SP-2014/023-R, Group A, valid until August 26, 2017 SEC Accreditation No A, Group A, valid until April 30, 2015 Tax Identification No BIR Accreditation No Issued September 26, 2014; valid until September 25, 2017 PTR No MC Issued January 5, 2015 at Makati City April 29, 2015 Makati City, Metro Manila 2015 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member p firm. All rights reserved. i a PRC-BOA Registration No. 0003, valid until December 31, 2016 SEC Accreditation No FR-4, Group A, valid until November 10, 2017 IC Accreditation No. F-2014/014-R, valid until August 26, 2017 BSP Accredited, Category A, valid until December 17, 2017

8 ABCD R.G. Manabat & Co. Telephone +63 (2) The KPMG Center, 9/F Fax +63 (2) Ayala Avenue Internet Makati City 1226, Metro Manila, Philippines Branches: Subic Cebu Bacolod Iloilo REPORT OF INDEPENDENT AUDITORS TO ACCOMPANY FINANCIAL STATEMENTS FOR FILING WITH THE SECURITIES AND EXCHANGE COMMISSION The Board of Directors and Stockholders United Coconut Planters Life Assurance Corporation Cocolife Building, 6774 Ayala Avenue Makati City We have audited the accompanying separate financial statements of United Coconut Planters Life Assurance Corporation, as at and for the year ended December 31, 2014, on which we have rendered our report dated April 29, In compliance with Securities Regulation Code Rule 68, As Amended, we are stating that the said Company has nine (9) stockholders owning one hundred (100) or more shares each. R.G. MANABAT & CO. DENNIS I. ILAN Partner CPA License No IC Accreditation No. SP-2014/023-R, Group A, valid until August 26, 2017 SEC Accreditation No A, Group A, valid until April 30, 2015 Tax Identification No BIR Accreditation No Issued September 26, 2014; valid until September 25, 2017 PTR No MC Issued January 5, 2015 at Makati City April 29, 2015 Makati City, Metro Manila 2015 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member p firm. All rights reserved. i a PRC-BOA Registration No. 0003, valid until December 31, 2016 SEC Accreditation No FR-4, Group A, valid until November 10, 2017 IC Accreditation No. F-2014/014-R, valid until August 26, 2017 BSP Accredited, Category A, valid until December 17, 2017

9 ABCD R.G. Manabat & Co. Telephone +63 (2) The KPMG Center, 9/F Fax +63 (2) Ayala Avenue Internet Makati City 1226, Metro Manila, Philippines Branches: Subic Cebu Bacolod Iloilo REPORT OF INDEPENDENT AUDITORS ON SUPPLEMENTARY INFORMATION The Board of Directors and Stockholders United Coconut Planters Life Assurance Corporation Cocolife Building, 6774 Ayala Avenue Makati City We have audited the accompanying separate financial statements of United Coconut Planters Life Assurance Corporation as at and for the year ended December 31, 2014, on which we have rendered our report dated April 29, Our audit was made for the purpose of forming an opinion on the basic financial statements of the Parent Company taken as a whole. The supplementary information included in the following accompanying additional components is the responsibility of the management: Reconciliation of Retained Earnings Available for Dividend Declaration Schedule of Philippine Financial Reporting Standards These supplementary information are presented for purposes of complying with the Securities Regulation Code Rule 68, As Amended, and are not a required part of the basic financial statements. Such information have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. R.G. MANABAT & CO. DENNIS I. ILAN Partner CPA License No IC Accreditation No. SP-2014/023-R, Group A, valid until August 26, 2017 SEC Accreditation No A, Group A, valid until April 30, 2015 Tax Identification No BIR Accreditation No Issued September 26, 2014; valid until September 25, 2017 PTR No MC Issued January 5, 2015 at Makati City April 29, 2015 Makati City, Metro Manila 2015 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member p firm. All rights reserved. i a PRC-BOA Registration No. 0003, valid until December 31, 2016 SEC Accreditation No FR-4, Group A, valid until November 10, 2017 IC Accreditation No. F-2014/014-R, valid until August 26, 2017 BSP Accredited, Category A, valid until December 17, 2017

10 UNITED COCONUT PLANTERS LIFE ASSURANCE CORPORATION SEPARATE STATEMENTS OF FINANCIAL POSITION December 31 Note ASSETS Cash and cash equivalents 8 P1,482,796,582 P1,799,306,327 Insurance receivables - net 9 419,153, ,997,141 Financial assets at fair value through profit or loss (FVPL) 10 1,144,533, ,326,450 Available-for-sale (AFS) financial assets 11 9,050,899,343 8,342,194,838 Loans and receivables - net 12 7,682,506,264 6,635,832,631 Accrued income - net 13 61,789,064 62,204,505 Reinsurance assets 14 44,740,721 28,698,683 Investments in subsidiaries and associate 15 1,128,915,018 1,128,915,018 Real estate inventories 16 31,818,136 34,561,536 Investment properties ,983, ,578,393 Property and equipment - net ,702, ,897,192 Intangible assets - net 19 14,067,581 11,692,106 Other assets ,697, ,816,743 P21,967,603,582 P19,740,021,563 LIABILITIES AND EQUITY LIABILITIES Insurance contract liabilities 21 P10,367,802,789 P9,065,494,491 Reserve for policyholders dividends ,631, ,309,755 Premium deposit funds ,652, ,017,613 Insurance payables ,479,629 29,548,393 Accounts payable and accrued expenses 25 1,368,411,574 1,196,433,521 Deferred tax liabilities - net ,130, ,088,381 Net pension liability ,790,290 59,002,114 Other liabilities 25 34,108,756 32,708,264 13,573,006,900 11,841,602,532 EQUITY Capital stock ,000, ,000,000 Contributed surplus 10,000,000 10,000,000 Reserve for fluctuation on available-for-sale financial assets 11 5,379,901,156 5,307,349,442 Reserve for net pension liability (129,662,069) (26,912,347) Retained earnings 26 2,584,357,595 2,057,981,936 8,394,596,682 7,898,419,031 P21,967,603,582 P19,740,021,563 See Notes to the Separate Financial Statements.

11 UNITED COCONUT PLANTERS LIFE ASSURANCE CORPORATION SEPARATE STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 Note NET PREMIUMS 27 Gross premiums on insurance contracts P4,325,822,330 P3,613,870,136 Reinsurance premiums ceded (525,941,470) (40,602,862) 3,799,880,860 3,573,267,274 OTHER REVENUE Investments income 28 1,227,003,109 1,105,994,396 Service fees ,354,483 84,202,855 Other income 28 98,954, ,868,639 1,516,311,725 1,309,065,890 NET BENEFITS AND CLAIMS 30 Gross benefits and claims 1,903,331,231 1,898,678,528 Reinsurers share on benefits and claims (17,071,367) (26,539,374) Gross change in insurance contract liabilities 593,499, ,570,915 Reinsurers share on gross change in insurance contract liabilities (26,452,735) (262,402) 2,453,306,820 2,367,447,667 OPERATING AND ADMINISTRATIVE EXPENSES General and administrative expenses ,294, ,953,075 Policyholders dividends 429,327, ,622,032 Commissions 525,112, ,676,695 Investment expenses ,425, ,005,779 Insurance taxes 76,433,282 62,816,458 Interest expenses 2,085,402 3,121,636 Increase (decrease) in loading and cost of collection 33,688,798 (3,918,558) Foreign exchange loss (gain) - net (4,046,926) 5,617,646 2,315,320,913 2,033,894,763 INCOME BEFORE INCOME TAX 547,564, ,990,734 INCOME TAX 33 Current 10,506,407 5,928,813 Final 10,682,786 8,978,734 21,189,193 14,907,547 NET INCOME P526,375,659 P466,083,187 OTHER COMRPEHENSIVE INCOME Item that will never be reclassified subsequently to profit or loss Remeasurement of net pension liability 32 (P146,785,317) P135,094,121 Income tax effect 44,035,595 (40,528,236) (102,749,722) 94,565,885 Item that may be reclassified to profit or loss Fair value adjustments on available-for-sale financial assets 11 75,629,436 (306,312,291) Income tax effect (3,077,722) 5,064,602 72,551,714 (301,247,689) TOTAL OTHER COMPREHENSIVE INCOME - Net of tax (30,198,008) (206,681,804) TOTAL COMPREHENSIVE INCOME P496,177,651 P259,401,383 See Notes to the Separate Financial Statements.

12 UNITED COCONUT PLANTERS LIFE ASSURANCE CORPORATION SEPARATE STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 Capital Stock (see Note 26) Contributed Surplus Reserve for Fluctuation on Available-for- Sale Financial Assets (see Note 11) Reserve for Net Pension Liability Retained Earnings (see Note 26) Balance at January 1, 2014 P550,000,000 P10,000,000 P5,307,349,442 (P26,912,347) P2,057,981,936 P7,898,419,031 Total Comprehensive Income Net income for the year ,375, ,375,659 Other comprehensive income Item that will never be reclassified subsequently to profit or loss (102,749,722) - 72,551,714 Item that may be reclassified to profit or loss ,551, (102,749,722) ,551,714 (102,749,722) 526,375, ,177,651 Balance at December 31, 2014 P550,000,000 P10,000,000 P5,379,901,156 (P129,662,069) P2,584,357,595 P8,394,596,682 Balance at January 1, 2013 P550,000,000 P10,000,000 P5,608,597,131 (P121,478,232) P1,591,898,749 P7,639,017,648 Total Comprehensive Income Net income for the year ,083, ,083,187 Other comprehensive income Item that will never be reclassified subsequently to profit or loss ,565,885 - (301,247,689) Item that may be reclassified to profit or loss - - (301,247,689) ,565, (301,247,689) 94,565, ,083, ,401,383 Balance at December 31, 2013 P550,000,000 P10,000,000 P5,307,349,442 (P26,912,347) P2,057,981,936 P7,898,419,031 Total See Notes to the Separate Financial Statements

13 UNITED COCONUT PLANTERS LIFE ASSURANCE CORPORATION SEPARATE STATEMENTS OF CASH FLOWS Years Ended December 31 Note CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P547,564,852 P480,990,734 Adjustments for: Changes in insurance contact liabilities 1,302,308,298 1,564,917,614 Depreciation and amortization 31 32,132,175 28,771,406 Provision for impairment losses 31 55,122,776 46,228,017 Retirement benefit expense 32 34,153,645 48,449,088 Gain on sale of financial assets at FVPL (785,662) (548,331) Gain on sale of AFS financial assets 28 (130,151,547) (244,949,510) Loss (gain) on sale of investment properties 28 1,424,423 (12,075,644) Loss on sale of real estate inventories 6,875,000 2,381,821 Gain on sale of loans and receivables 28 (1,630,000) (68,919,561) Interest income 28 (928,821,105) (765,954,379) Dividend income 28 (84,606,304) (73,648,643) Unrealized foreign exchange gain - net (8,468,069) (28,693,640) Rental income (6,514,309) (6,742,034) Unrealized fair value loss (gain) - net 28 (73,964,845) 66,843,706 Gain on sale of property and equipment (673,916) (535,700) Operating income before working capital changes 743,965,412 1,036,514,944 Decrease (increase) in: Insurance receivables (215,156,413) 15,938,603 Loans and receivables (1,090,166,409) (995,514,064) Accrued income 830,882 8,149,324 Reinsurance assets (16,042,038) (8,432,662) Real estate inventories 16 (21,924,457) 40,774,679 Other assets (85,880,754) (28,962,438) Increase (decrease) in: Reserve for policyholders dividends 22 9,321,371 6,887,894 Premium deposit funds (3,365,385) (53,012,459) Insurance payables 149,931,236 (6,220,358) Accounts payable and accrued expenses 175,055,775 51,539,132 Other liabilities 1,400,492 (38,645,803) Net cash flows provided by (used in) operations (352,030,288) 29,016,792 Income tax paid (21,189,193) (14,907,547) Net cash flows provided by (used in) operating activities (373,219,481) 14,109,245 CASH FLOWS FROM INVESTING ACTIVITIES Additional capital contribution to subsidiaries - (100,000,000) Interest received 928,777, ,954,380 Dividend received 84,593,054 66,943,421 Rental income received 8,109,123 6,701,121 Contributions to retirement fund (40,150,786) (38,910,871) Acquisitions of: Financial assets at FVPL 10 (335,638,453) (118,923,862) AFS financial assets 11 (1,738,418,230) (2,182,976,319) Investment properties 17 (107,709,846) (103,834,689) Property and equipment 18 (27,095,550) (40,562,788) Computer software 19 (5,189,000) (6,190,498) Forward

14 Years Ended December 31 Note Proceeds from disposal of: Financial assets at FVPL P22,001,686 P27,169,355 AFS financial assets 1,238,111,255 2,254,447,932 Investment properties 16,884, ,168,175 Property and equipment 4,641,741 5,230,413 Loans and receivables (10,000,000) 452,172,837 Real Estate inventories 17,792,857 Net cash flows provided by investing activities 56,709,736 1,106,388,607 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (316,509,745) 1,120,497,852 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8 1,799,306, ,808,475 CASH AND CASH EQUIVALENTS AT END OF YEAR 8 P1,482,796,582 P1,799,306,327 See Notes to the Separate Financial Statements.

15 UNITED COCONUT PLANTERS LIFE ASSURANCE CORPORATION NOTES TO THE SEPARATE FINANCIAL STATEMENTS 1. Reporting Entity The United Coconut Planters Life Assurance Corporation (the Parent Company ) was incorporated on March 20, 1978 and is domiciled in the Republic of the Philippines. The Parent Company was formed to undertake life insurance business, including accident and health insurance; to write insurance contracts providing for all risks, hazards, guarantees and contingencies to which life, accident or health insurance is applicable; to grant endowment and annuities; to issue insurance policies providing for participation or nonparticipation of profits; to reinsure all or part of the risks underwritten by the Parent Company; to undertake all kinds of reinsurance to the extent allowed by the law; and to act as agent or general agent of another insurance company. The Parent Company has a Certificate of Authority No. 2013/86R issued by the Insurance Commission (IC) to transact in life insurance business until December 31, The registered office address of the Parent Company is at Cocolife Building, 6774 Ayala Avenue, Makati City. 2. Basis of Preparation Statement of Compliance The separate 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. In accordance with PFRS 10, Consolidated Financial Statements, the Parent Company also prepares and issues consolidated financial statements for the same period in which it consolidates its investments in subsidiaries. Such consolidated financial statements provide information about the economic activities of the Parent Company and its subsidiaries. The separate financial statements should be read together with the Parent Company s consolidated financial statements as at and for the years ended December 31, 2014 and 2013 in order to obtain full information on the consolidated financial position and financial performance of the Parent Company and its subsidiaries. The separate financial statements of the Parent Company are intended for management s use and for filing with the Bureau of Internal Revenue (BIR). These financial statements account for the Parent Company s investments in subsidiaries at cost (see Note 15) in accordance with the provisions of PAS 27, Separate Financial Statements. The accompanying separate financial statements of the Parent Company were authorized for issue by the Board of Directors (BOD) on April 29, 2015.

16 Basis of Preparation The separate financial statements have been prepared on the historical cost basis except for the following accounts which are measured on each reporting date as follows: Items Financial assets at fair value through profit or loss (FVPL) Available-for-sale (AFS) financial assets Net pension liability Measurement bases Fair value through profit or loss Fair value through other comprehensive income Present value of the defined benefit obligation less the fair value of the plan assets Functional and Presentation Currency The separate financial statements are presented in Philippine peso, which is the Parent Company s functional currency. All financial information presented in Philippine peso has been rounded off to the nearest peso, except as otherwise indicated. Use of Judgments and Estimates The preparation of the separate financial statements in accordance with PFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities, if any. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying amounts of assets, liabilities, income and expenses that are not readily apparent from other sources. Actual results may however differ from estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively. Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the separate financial statements are described in Note 4 to the separate financial statements. 3. Summary of Significant Accounting Policies The accounting policies set out below have been applied consistently to all years presented in these separate financial statements. Certain comparative amounts in the separate statements of comprehensive income have been reclassified as a result of a change in the classification of certain accounts in the current year (see Note 39)

17 Adoption of New or Revised Standards, Amendments to Standards and Interpretations The Parent Company has adopted the following amendments to standards and interpretations starting January 1, The adoption of these amendments to standards and interpretations did not have any significant impact on the Parent Company s separate financial statements. Offsetting Financial Assets and Financial Liabilities (Amendments to Financial Instruments: Disclosure and Presentation - PAS 32). These amendments clarify that: An entity currently has a legally enforceable right to set-off if that right is: - not contingent on a future event; and - 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: - eliminate or result in insignificant credit and liquidity risk; and - process receivables and payables in a single settlement process or cycle. Recoverable Amount Disclosures for Non-financial Assets (Amendments to Impairment of Assets - 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 Fair Value Measurement - PFRS 13). Amendment to PFRS 13 is part of the Annual Improvements to PFRSs Cycle. The amendment clarifies that, in issuing PFRS 13 and making consequential amendments to Financial Instruments: Recognition and Measurement (PAS 39) and Financial Instruments (PFRS 9), the intention is not to prevent entities from measuring short-term receivables and payables that have no stated interest rate at their invoiced amounts without discounting, if the effect of not discounting is immaterial. The amendment to PFRS 13 is effective immediately. New or Revised Standards, Amendments to Standards and Interpretations Not Yet Adopted A number of new standards and amendments to standards are effective for annual periods beginning after January 1, However, the Parent Company have not applied the following new or amended standards in preparing these separate financial statements. The Parent Company is assessing the potential impact on its financial statements resulting from the application of the new standards

18 Effective July 1, 2014 Annual improvements to PFRSs and 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, Earlier application is permitted, in which case the related consequential amendments to other PFRSs would also apply. Special transition requirements have been set for amendments to the following standards: Share-based Payment (PFRS 2), Property, Plant and Equipment (PAS 16), Intangible Assets (PAS 38) and Investment Property (PAS 40). Below is the amendment to PFRSs, which may be applicable to the Parent Company: 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 management entity and disclose compensation paid by management entity to the individuals providing the KMP services. The reporting entity will also need to disclose other transactions with management entity under the existing disclosure requirements of PAS 24 - e.g. loans. Effective January 1, 2016 Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to PAS 16 and PAS 38). The amendments to PAS 38, Intangible Assets 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 16, Property, Plant and Equipment 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. Equity Method in Separate Financial Statements (Amendments to PAS 27). The amendments allow the use of the equity method in separate financial statements, and apply to the accounting not only for associates and joint ventures, but also for subsidiaries. The amendments apply retrospectively for annual periods beginning on or after January 1, Early adoption is permitted

19 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 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. Insurance Contracts Production Classification Insurance contracts are defined as those contracts under which the Parent Company (the insurer) accepts significant insurance risk from another party (the policyholders) by agreeing to compensate the policyholders if a specified uncertain future event (the insured event) adversely affects the policyholder. As a general guideline, the Parent Company defines significant insurance risk as the possibility of having to pay benefits on the occurrence of an insured event that is significantly greater than the benefits payable if the insured event did not occur. Insurance contracts can also transfer financial risk. Investment contracts are those contracts that transfer significant financial risk and no significant insurance risk. Financial risk is the risk of a possible future change in one or more of a specified interest rate, security price, commodity price, foreign exchange rate, index of price or rates, credit rating or credit index or other variables, provided in the case of non-financial variable that the variable is not specific to a party to the contract. Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance risk reduces significantly during the period, unless all rights and obligations are extinguished or expired. Investment contracts can, however, be reclassified as insurance contracts after inception if the insurance risk becomes significant. Insurance and investment contracts are further classified as being with and without Discretionary Participation Feature (DPF). DPF is a contractual right to receive, as a supplement to guaranteed benefits, additional benefits that are: Likely to be a significant portion of the total contractual benefits; The amount or timing of which is contractually at the discretion of the issuer; and Contractually based on the following: Performance of a specified pool of contracts or a specified type of contract; or Realized or an unrealized investment returns on a specified pool of assets held by the issuer; or The profit or loss of the Parent Company, fund or other entity that issues the contract

20 The additional benefits include policy dividends that are declared annually, the amounts of which are computed using actuarial methods and assumptions, and are included under Policyholders dividends account in profit or loss with the corresponding liability recognized under the Reserve for policyholders dividends account in the separate statements of financial position. For financial options and guarantees which are not closely related to the host insurance contract, bifurcation is required to measure these embedded financial derivatives separately at FVPL. Bifurcation is not required if the embedded derivative itself is an insurance contract or when the host insurance contract itself is measured at FVPL. As such, the Parent Company does not separately measure options to surrender insurance contracts for a fixed amount (or an amount based on a fixed amount and an interest rate). Likewise, the embedded derivative in unit-linked insurance contracts linking the payments on the contract to units of an internal investment fund meets the definition of an insurance contract and is not, therefore, accounted for separately from the host insurance contract. Reinsurance Contracts Held Contracts entered into by the Parent Company with reinsurers under which the Parent Company is compensated for losses on one or more insurance contracts are classified as reinsurance contracts held. The benefits to which the Parent Company is entitled under its insurance contracts held are recognized as reinsurance assets. These assets consist of short-term balances due from reinsurers, as well as longer term receivables that are dependent on the expected claims and benefits arising under the related reinsured insurance contracts. Amounts recoverable from or due to reinsurers are measured consistently with the amounts associated with the reinsured insurance contracts and in accordance with the terms of each reinsurance contracts. Liabilities arising from these contracts are primarily premiums payable and are recognized as an expense when due. These liabilities are presented under Insurance payables account in the separate statements of financial position. An impairment review is performed at each reporting date or more frequently when an indication of impairment arises during the reporting year. Impairment occurs when objective evidence as a result of an event that occurred after initial recognition that the Parent Company may not recover outstanding amounts under the terms of the contract and when the impact on the amounts that the Parent Company will receive from the reinsurer can be measured reliably. Any impairment loss determined is recognized in profit or loss. Ceded reinsurance arrangements do not relieve the Parent Company from their obligations to the policyholders. The Parent Company also assumes reinsurance risk in the normal course of its business. Premiums and claims on assumed reinsurance are recognized as income and expense in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business. The liabilities arising from these contracts are primarily claims and benefits payables and estimated in a manner consistent with the associated reinsurance contracts. These liabilities are presented under Insurance payables account in the separate statements of financial position. Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance

21 Assets or liabilities from these contracts are derecognized when the contractual right is extinguished or expired or when the contract is transferred to another party. Insurance Contact Liabilities Legal Policy Reserves. Life insurance contract liabilities are recognized when the contracts are entered into and the premiums are recognized. These are determined by the Parent Company s actuary in accordance with the requirements of the Insurance Code (the Code ) and are calculated on the basis of a prudent prospective actuarial valuation method where the assumptions used depend in the operation of each life insurance product. These reserves represent the amounts which, together with future premiums and investment income, are required to discharge the obligations of the insurance contracts and to pay expenses related to the administration of those contracts. These reserves are determined using generally accepted actuarial practices and have been approved by the Insurance Commission (IC) at the product approval stage. Insurance Contracts with Fixed and Guaranteed Terms. A liability for contractual benefit expected to be incurred in the future is recorded when premiums are recognized. The liability is determined as the expected discounted value of the benefit payment less the expected discounted value of the theoretical premiums that would be required to meet the benefits based on the valuation assumptions used. The liability is based on mortality, morbidity and investments income assumptions that are established at the time the contract is issued. The Parent Company has different assumptions for different products. However, liabilities for contractual benefits are computed to comply with statutory requirements using the standard table of mortality with interest to be determined by IC. Reserves are computed per thousand of sum insured and depend on the issue age and policy duration. Unit-linked Insurance Contracts. A unit-linked insurance contract is an insurance contract linking payments to units of an internal investment fund set up by the Parent Company with the consideration received from the policyholders. The investment funds supporting the linked policies are maintained in segregated accounts in conformity with Philippine laws and regulations. The liability for such contracts is the higher amount between the policyholder s investment fund balance and the minimum guaranteed amount stated in the policy contract. Revenue from unit-linked insurance contracts consists of premiums received and policy administration fees. The reserve for unit-linked liabilities are increased by additional deposits and changes in unit prices and decreased by policy administration fees, fund charges, mortality and surrender charges and any withdrawals. As at the reporting date, this reserve is computed on the basis of the number of units allocated to the policyholders multiplied by the unit price of the underlying investment funds. Liability Adequacy Test. Liability adequacy tests are performed annually to ensure the adequacy of the insurance contract liabilities. In performing these tests, current best estimates of future contractual cash flows, claims handling and policy administration expenses are used. Any deficiency is immediately charged against the Parent Company s profit or loss initially by establishing a provision for losses arising from the liability adequacy tests