FCG - AFS For The Fiscal Year Ending 30 June 2022
FCG - AFS For The Fiscal Year Ending 30 June 2022
FCG - AFS For The Fiscal Year Ending 30 June 2022
Fiooro
CoPffee
Group
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
FOR SEPARATE FINANCIAL STATEMENTS
The Management of FIGARO COFFEE GROUP, lNC. is responsible for the preparation and fair
presentation of the separate financial statements including the schedules attached therein,
as at June 30,2022 and 2421 and each for the three years in the period ended June 30, 2022, in
accordance with the 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.
ln preparing the separate financial statements, Management is responsible for assessing the Parent
Company's ability to continue as going concern, disclosing, as applicable matters related to going
concern and using the going concern basis of accounting unless management intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Parent Company's financial reporting
process.
The Board of Directors reviews and approves the separate financial statements, including the
schedule attached therein, and submits the same to the stockholders.
R.S. Bernaldo & Associates, the independent auditor appointed by the stockholders,
has audited the separate financial statements of the Company in accordance with Philippine
Standards on Auditing, and in its report to the stockholders, has expressed its opinion on the fairness
of presentation upon completion of such audit.
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The Management of FIGARO COFFEE GROUP, lNC. is responsible for all information and
representations contained in the Annual lncome Tax Return for the year ended
June 30, 2A22. Management is likewise responsible for all information and representations contained in
the financial statements accompanying the Annual lncome Tax Return covering the same reporting
period. Furthermore, the Management is responsible for all information and representations contained
in all the other tax returns filed for the reporting period, including, but not limited to, the value added tax
and/ or percentage tax returns, withholding tax returns, documentary stamp tax returns, and any and all
other tax returns.
ln this regard, the Management affirms that the attached audited financial statements for the year ended
June 30, 2022 and the accompanying Annual lncome Tax Return are in accordance with the books and
records of FIGARO GOFFEE GROUP, lNC., complete and correct in all material respects. Management
likewise affirms that:
(a) the Annual lncome Tax Return has been prepared in accordance with the provisions of the
National lnternal Revenue Code, as amended, and pertinent tax regulations and other issuances
of the Department of Finance and the Bureau of lnternal Revenue;
(b) any disparity of figures in the submitted reports arising from the preparation of financial
statements pursuant to financial accounting standards and the preparation of the income tax
return pursuant to tax accounting rules has been reported as reconciling items and maintained
in the Company's books and records in accordance with the requirements of Revenue
Regulations No. 8-2007 and other relevant issuances, ,'l
(c) the FIGARO COFFEE GROUP,lNC. has filed allapplicable tax returns, reports and statements
required to be filed under Philippine tax laws for the reporting period, and all taxes and other
impositions shown thereon to be due and payable have been paid for the reporting period,
except those contested in good faith.
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Company Name
F I G A R o c o F F E E G R o U P I N c
Office
1 1 6 E A s T M A I N A V E P H A s E V- s E z
t A G U N A T E c H N o P A R K B I ft A N
L A G U N A
Form Type oepartment requiring the report Secondary License Type, lf Applicable
AFS s E c N A
COMPANY INFORMATION
Email Address Numberls ilobile N!mber
6130
ft1fi the occwrence thereof with intormation and conplete contact details of the new contact percon designated.
0f Deficiencies. Fwlher, nan-rcceipl of Notice af Deficoncies shall not excuse the corpofitian frcn tiability for its deficiencies.
FIGARO COFFEE GROUP, INC.
SEPARATE STATEMENTS OF FINANCIAL POSITION
June 30, 2022, 2021 and 2020
(In Philippine Peso)
ASSETS
Current Assets
Cash 6 2,183,916 -
Advances to related parties 10 718,900,455 67,872,936
Deferred input VAT 7 62,229 40,800
721,146,600 67,913,736
Non-current Asset
Investment in a subsidiary 8 441,565,564 441,565,564
TOTAL ASSETS 1,162,712,164 509,479,300
Additional Paid-
Note Capital Stock in Capital Deficit Total
1. CORPORATE INFORMATION
Figaro Coffee Group, Inc. (the Company) was incorporated and registered with the
Philippine Securities and Exchange Commission (SEC) on July 6, 2018. The principal
activities of the Company are to process, manufacture, and package all kinds of food
products; to establish, invest, develop, operate and maintain restaurants, coffee shops,
and refreshment parlors; to serve, arrange and cater foods, drinks, refreshments and
other food or commodities; to partner and/or collaborate with other players in the food
industry for the management and operation of food establishments; to acquire, invest,
organize, develop, promote, or otherwise undertake the management and operation of
commercial franchises in the food industry; to provide facilities and commissaries and
perform all other activities and services incidental thereto, necessary or desirable in
relation thereto, and offer and sell to public such products, franchises, services other
operation thereof, and to own shares in companies which are in furtherance of its
purposes, and to guarantee for and in behalf of the Corporation obligations of other
corporations or entities in which it has lawful interest in.
On October 22, 2021, the SEC approved the Company’s application for amendment of
its articles of incorporation to reflect the following primary purpose: invest in, purchase,
or otherwise acquire and own, hold, use, sell assign, transfer, mortgage, pledge,
exchange, or otherwise dispose of real and personal property of every kind and
description, including shares of stock, bonds, debentures, notes, evidences of
indebtedness, and other securities or obligations of any corporation or corporations,
association or associations, domestic or foreign, for whatever lawful purpose or
purposes the same may have been recognized and to pay thereof in money or by
exchanging therefor stocks, bonds or other evidences of indebtedness or securities of
this or any other corporation, and while the owner or holder of any such real or
personal property, stocks, bonds, debentures, contracts, or obligations, to receive,
collect and dispose of the interest, dividends, and income arising from such property;
and to possess and exercise in respect thereof all the rights, powers, and privileges of
ownership, including all voting powers of any stock so owned; to carry on, provide
support and manage the general business of any corporation, company, association or
joint venture; to exercise such powers, acts or functions as may be essential or
necessary to carry out the purpose stated herein; and to guarantee for and in behalf of
the Corporation obligations of other corporations or entities in which it has lawful
interest in.
On March 31, 2021, the Company’s Board of Directors and Stockholders approved the
following:
a. The Company’s change in registered office address from No. 33 Mayon St.,
Brgy. Malamig, Mandaluyong City, Metro Manila, Philippines to 116 E. Main
Avenue, Phase V, SEZ Laguna Technopark, Binan, Laguna.
b. The Company’s change in reporting period from calendar year to fiscal year which
shall begin on the first day of July and end on the last day of June.
The change in registered office address and reporting period was approved by SEC on
June 23, 2021.
1
On March 31, 2021, the Company’s Board of Directors and Stockholders approved:
(a) increase in authorized capital stock from P150,000,000 to P500,000,000; and
(b) the stock split through the reduction of the par value of the shares of the Company
from P100.00 per share to P0.10 per share. SEC approved the Company’s application
to increase authorized capital stock on June 23, 2021.
On September 16, 2021, the Securities and Exchange Commission approved the
Company’s increase in authorized capital stock to P660,000,000 divided into
6,600,000,000 shares with a par value of P0.10 per share.
At incorporation, Camertheus Holdings, Inc. (CHI) subscribed to P37,500,000 worth of
shares in the Parent Company. Out of such subscription, P9,375,000 had been paid by
CHI at incorporation of the Parent Company. During the period, CHI fully paid its
subscription receivable amounting to P28,125,000.
Camerton, Inc. (CI) subscribed to the following shares of the Company:
a. In support of the application for increase in authorized capital stock, Camerton, Inc.
(CI), on March 31, 2021, subscribed to 1,250,000,000 shares of the Parent Company
for a total subscription price of P125,000,000. The subscribed shares were fully
paid and issued June 22, 2021.
b. On June 20, 2021, the board of the Company approved the additional paid-in
capital in the amount of P83,138,000 paid by CI into the Parent Company.
c. 1,250,000,000 shares with par value of P0.10 per share for a total subscription price
of P228,800,000, or P0.18304 price per share. The said subscription resulted to an
additional capital stock of P125,000,000 and additional paid-in capital of
P103,800,000 in the Parent Company; and
d. 350,000,000 shares of the Parent Company with par value of P0.10 per share for a
total subscription price of P35,000,000.
As of June 30, 2021, the outstanding capital of the Company is P322,500,500 (excluding
the additional paid-in capital of P186,938,000 with 3,225,005,000 shares issued).
As of June 30, 2021, the Company is 88.37% owned by Camerton, Inc. and 11.63%
owned by Carmetheus Holdings, Inc.
As of June 30, 2021, the Company is in the process of compiling with the requirements
to file Registration Statement with SEC in accordance with the provisions of the
Securities Regulation Code of the Philippines (Republic Act No. 8799, the “SRC”) for
the registration of all the issued and outstanding Shares of the Company and the Offer
Shares.
On January 24, 2022, the Company completed its Initial Public Offering (IPO) and was
listed in the Philippine Stock Exchange (PSE) under stock symbol “FCG.” The Company
issued 93,016,000 common shares for a total consideration of P69,762,000 or at P0.75
per share. This resulted to an additional issuance of capital stock of 1,423,182,003 with
par value of P0.10 per share for a total of P142,318,200.
As of June 30, 2022, the outstanding capital of the Company is P464,818,700 (excluding
the additional paid-in capital of P697,831,235 with 4,648,187,003 shares issued).
As of June 30, 2022, the Company is 69.94% owned by Camerton, Inc. and 8.07% owned
by Carmetheus Holdings, Inc.
2
2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
The Philippine Financial Reporting Standards Council (FRSC) approved the issuance of
new and revised Philippine Financial Reporting Standards (PFRS). The term “PFRS” in
general includes all applicable PFRS, Philippine Accounting Standards (PAS),
and Interpretations issued by the Philippine Interpretations Committee (PIC),
Standing Interpretations Committee (SIC) and International Financial Reporting
Interpretations Committee (IFRIC) which have been approved by the FRSC and adopted
by SEC.
These new and revised PFRS prescribe new accounting recognition, measurement and
disclosure requirements applicable to the Company. When applicable, the adoption of
the new standards was made in accordance with their transitional provisions,
otherwise the adoption is accounted for as change in accounting policy under PAS 8,
Accounting Policies, Changes in Accounting Estimates and Errors.
2.01 New and Revised PFRSs Applied with No Material Effect on the Separate Financial
Statements
The following new and revised PFRSs have also been adopted in these separate
financial statements. The application of these new and revised PFRSs has not had any
material impact on the amounts reported for the current and prior years but may affect
the accounting for future transactions or arrangements.
The amendments are effective for annual reporting periods beginning on or after
April 1, 2022.
3
• Amendments to PFRS 3, Reference to the Conceptual Framework
• Amendments to PAS 16, Property, Plant and Equipment - Proceeds before Intended
Use
The amendments prohibit a company from deducting from the cost of property,
plant and equipment amounts received from selling items produced while the
company is preparing the asset for its intended use. Instead, a company will
recognize such sales proceeds and related cost in profit or loss.
The amendments are effective for annual periods beginning on or after
January 1, 2022, with earlier application permitted. An entity applies the
amendments retrospectively only to items of property, plant and equipment that
are brought to the location and condition necessary for them to be capable of
operating in the manner intended by management on or after the beginning of the
earliest period presented in the financial statements in which the entity first applies
the amendments.
The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs
that relate directly to the contract’. Costs that relate directly to a contract can either
be incremental costs of fulfilling that contract (examples would be direct labor,
materials) or an allocation of other costs that relate directly to fulfilling contracts (an
example would be the allocation of the depreciation charge for an item of property,
plant and equipment used in fulfilling the contract).
The amendments are effective for annual periods beginning on or after
January 1, 2022, with earlier application permitted. Entities apply the amendments
to contracts for which the entity has not yet fulfilled all its obligations at the
beginning of the annual reporting period in which the entity first applies the
amendments. Comparatives are not restated.
4
translation differences using the amounts reported by its parent, based on the
parent’s date of transition to PFRSs.
Amendments to PFRS 9, Fees in the ‘10 per cent’ test for derecognition of financial
liabilities - The amendment clarifies which fees an entity includes when it applies
the ‘10 per cent’ test in paragraph B3.3.6 of PFRS 9 in assessing whether to
derecognize a financial liability. An entity includes only fees paid or received
between the entity (the borrower) and the lender, including fees paid or received by
either the entity or the lender on the other’s behalf.
The amendments are effective for annual reporting periods beginning on or after
January 1, 2022.
2.02 New and Revised PFRSs in Issue but Not Yet Effective
The Company will adopt the following standards and interpretations enumerated
below when they become effective. Except as otherwise indicated, the Company does
not expect the adoption of these new and amended PFRS, to have significant impact
on the separate financial statements.
2.02.01 Standard Adopted by FRSC and Approved by the Board of Accountancy (BOA)
5
The amendments defer the effective date of the January 2021 Classification of
Liabilities as Current or Non-Current (Amendments to PAS 1) to annual reporting
periods beginning on or after January 1, 2023. Earlier application of the
January 2021 amendments continues to be permitted.
The amendments are effective for annual reporting periods beginning on or after
January 1, 2023 and changes in accounting policies and changes in accounting
estimates that occur on or after the start of that period., with earlier application
permitted.
6
In addition, PFRS Practice Statement 2 has been amended by adding guidance and
examples to explain and demonstrate the application of the ‘four-step materiality
process’ to accounting policy information in order to support the amendments to
PAS 1.
The amendments are effective for annual reporting periods beginning on or after
January 1, 2023, with earlier application permitted.
• Amendment to PAS 12, “Deferred tax related to assets and liabilities arising from a
single transaction”
The initial recognition exemption was initially included within PAS 12 to prevent a
lack of reporting transparency for transactions which are not business combinations
and, at the time of the transaction, do not affect either accounting or taxable profits.
Under this exemption, deferred tax assets/liabilities would neither be recognized at
initial recognition of the underlying asset/liability, nor subsequently.
The amendments apply to transactions that occur on or after the beginning of the
earliest comparative period presented. In addition, the amendments also apply to
taxable and deductible temporary differences associated with right-of-use assets
and lease liabilities, and decommissioning obligations and corresponding amounts
recognized as assets at the beginning of the earliest comparative period presented.
The amendments are effective for annual reporting periods beginning on or after
January 1, 2023. Early application of the amendments is permitted.
PFRS 17 sets out the requirements that an entity should apply in reporting
information about insurance contracts it issues and reinsurance contracts it holds.
It requires an entity that issues insurance contracts to report them on the balance
sheet as the total of the fulfilment cash flows and the contractual service margin. It
requires an entity to provide information that distinguishes two ways insurers earn
profits from insurance contracts: the insurance service result and the financial
result. It requires an entity to report as insurance revenue the amount charged for
insurance coverage when it is earned, rather than when the entity receives
premium. It requires that insurance revenue to exclude the deposits that represent
the investment of the policyholder, rather than an amount charged for services.
Similarly, it requires the entity to present deposit repayments as settlements of
liabilities rather than as insurance expense.
7
PFRS 17 is effective for annual periods beginning on or after January 1, 2025.
Early application is permitted for entities that apply PFRS 9 Financial Instruments
and PFRS 15 Revenue from Contracts with Customers on or before the date of initial
application of PFRS 17.
An entity shall apply PFRS 17 retrospectively unless impracticable, except that an
entity is not required to present the quantitative information required by
paragraph 28(f) of PAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors and an entity shall not apply the option in paragraph B115 for periods before
the date of initial application of PFRS 17. If, and only if, it is impracticable, an entity
shall apply either the modified retrospective approach or the fair value approach.
2.02.02 Deferred
The amendments clarify the treatment of the sale or contribution of assets between
an investor and its associate and joint venture. This requires an investor in its
financial statements to recognize in full the gains and losses arising from the sale
or contribution of assets that constitute a business while recognize partial gains and
losses if the assets do not constitute a business (i.e. up to the extent only of
unrelated investor share).
8
On January 13, 2016, the FRSC decided to postpone the original effective date of
January 1, 2016 of the said amendments until the IASB has completed its broader
review of the research project on equity accounting that may result in the
simplification of accounting for such transactions and of other aspects of
accounting for associates and joint ventures.
The separate financial statements have been prepared in conformity with PFRS and are
under the historical cost convention, except for certain financial instruments that are
carried at amortized cost.
Items included in the separate financial statements of the Company are measured using
Philippine Peso (P), the currency of the primary economic environment in which the
Company operates (the “functional currency”).
The Company chose to present its separate financial statements using its functional
currency.
These separate financial statements were based from the Company’s own transactions,
exclusive of transactions of its subsidiary, the latter transactions are being used in the
preparation of the consolidated financial statements, which are also available for public
use.
The accompanying separate financial statements of the Company have been prepared
on a historical cost basis. The Company’s separate financial statements are presented
in Philippine Peso, the Company’s functional and presentation currency, and all values
are rounded to the nearest Peso except when otherwise stated.
9
• The liability is due to be settled within twelve (12) months after the reporting
period; or
• It does not have an unconditional right to defer settlement of the liability for at
least twelve (12) months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities,
respectively.
Principal accounting and financial reporting policies applied by the Company in the
preparation of its separate financial statements are enumerated below and are applied
to the period presented, unless otherwise stated.
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.
When measuring fair value the Company takes into consideration the characteristics of
the asset or liability if market participants would take those characteristics into account
when pricing the asset or liability at the measurement date.
A fair value measurement assumes that the transaction to sell the asset or liability is
exchanged in an orderly transaction between market participants to sell the asset or
transfer the liability at the measurement date under current market conditions.
In addition, it assumes that the transaction takes place either: (a) in the principal market;
or (b) in the absence of a principal market, in the most advantageous market.
The Company considers the fair value of an asset or a liability 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 non-financial 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.
A fair value measurement assumes that a financial or non-financial liability or an
entity’s own equity instruments (e.g. equity interests issued as consideration in a
business combination) is transferred to a market participant at the measurement date.
The transfer of a liability or an entity’s own equity instrument assumes the following:
• A liability would remain outstanding and the market participant transferee
would be required to fulfil the obligation. The liability would not be settled with
the counterparty or otherwise extinguished on the measurement date.
• An entity’s own equity instrument would remain outstanding and the market
participant transferee would take on the rights and responsibilities associated
with the instrument. The instrument would not be cancelled or otherwise
extinguished on the measurement date.
10
The Company uses valuation techniques that are appropriate in the circumstances and
for which sufficient date are available to measure fair value, maximizing the use of
relevant observable inputs and minimizing the use of unobservable inputs.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to unobservable inputs.
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date.
• Level 2 inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly.
• Level 3 inputs are unobservable inputs for the asset or liability.
4.02.02 Classification
Financial Asset at Amortized Cost
A financial asset shall be measured at amortized cost if both of the following
conditions are met:
• the financial asset is held within a business model whose objective is to hold
financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.
The Company’s financial asset at amortized cost includes advances to related
parties only.
11
4.02.03 Reclassification
When, and only when, the Company changes its business model for managing financial
assets, it shall reclassify all affected financial assets in accordance with Note 4.02.02.
If the Company reclassifies financial assets, it shall apply the reclassification
prospectively from the reclassification date. The Company shall not restate any
previously recognized gains, losses (including impairment gains or losses) or interest.
4.02.05 Impairment
The Company measures expected credit losses of a financial instrument in a way that
reflects:
• An unbiased and probability-weighted amount that is determined by evaluating a
range of possible outcomes;
• The time value of money; and
• Reasonable and supportable assumption that is available without undue cost or
effort at the reporting date about past events, current conditions and forecast of
future economic conditions.
The Company adopted the general approach in accounting for impairment.
General Approach
The Company applies general approach to advances to related parties. At each
reporting date, the Company measures the loss allowance for a financial asset at
an amount equal to the lifetime expected credit losses if the credit risk on that
financial asset has increased significantly since initial recognition.
However, if the credit risk has not increased significantly, the Company measures
the loss allowance equal to 12-month expected credit losses.
The Company compares the risk of default occurring as at the reporting date with
the risk of default occurring as at the date of initial recognition and consider the
macro-economic factors such as GDP, interest, and inflation rates, the performance
of the counterparties’ industry, and the available financial information of each
counterparty to determine whether there is a significant increase in credit risk or
not since initial recognition.
The Company determines that there has been a significant increase in credit risk
when there is a significant decline in the factors.
The Company did not apply the 30 days past due rebuttable presumption because
the Company determines that there have been no significant increases in credit
risk even if collections before contractual payments are more than 30 days past
due.
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If the Company has measured the loss allowance at an amount equal to lifetime
expected credit losses in the previous reporting period, but determines at the
current reporting date, that the credit quality improves (i.e. there is no longer a
significant increase in credit risk since initial recognition), then the Company shall
measure the loss allowance at an amount equal to 12-month expected credit losses
at the current reporting date.
The Company recognizes in profit or loss, as an impairment gain or loss, the
amount of expected credit losses (or reversal) that is required to adjust the loss
allowance at the reporting date.
The Company performs the assessment of significant increases in credit risk on an
individual basis.
The Company did not apply the 90 days past due rebuttable presumption in
determining whether a financial asset is credit-impaired or not. The Company
determines that financial asset is credit-impaired if it became past due for more
than one (1) year.
The Company determines that a financial asset is credit-impaired when one or more
events that have a detrimental impact on the estimated future cash flows of that
financial asset have occurred. Evidence that a financial asset is credit-impaired
includes observable data about the following events:
Significant financial difficulty of the counterparty;
A breach of contract, such as a default or past due event;
The lender(s) of the counterparty, for economic or contractual reasons relating
to the counterparty’s financial difficulty, having granted to the borrower a
concession(s) that the lender(s) would not otherwise consider; and
It is becoming probable that the counterparty will enter bankruptcy or other
financial reorganization.
4.02.06 Derecognition
The Company derecognizes a financial asset when, and only when the contractual
rights to the cash flows the financial asset expire or it transfers the financial asset and
the transfer qualifies for derecognition. The difference between the carrying amount
and the consideration received is recognized in profit or loss.
4.02.07 Write-off
The Company directly reduces the gross carrying amount of a financial asset when the
Company has no reasonable expectations of recovering a financial asset in its entirety
or a portion thereof. A write-off constitutes a derecognition event.
Deferred input VAT arises from the purchase of goods or services. This is recognized
as input VAT upon receipt of official receipts and applied against output VAT.
The remaining balance is recoverable in future periods. This is carried at cost less
allowance for impairment loss, if any. Impairment loss is recognized when input VAT
can no longer be recovered.
13
4.04 Investment in a Subsidiary
At each reporting date, the Company assesses whether there is any indication that any
assets other than financial assets that are within the scope of PFRS 9,
Financial Instruments may have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss, if any. Where it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs. When a reasonable and consistent
basis of allocation can be identified, assets are also allocated to individual cash-
generating units, or otherwise they are allocated to the smallest group of cash-
generating units for which a reasonable and consistent allocation basis can be
identified.
Recoverable amount is the higher of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less
than its carrying amount, the carrying amount of the asset or cash-generating unit is
reduced to its recoverable amount. An impairment loss is recognized as an expense.
14
4.06.02 Classification
The Company classifies all financial liabilities as subsequently measured at amortized,
except for:
• financial liabilities at fair value through profit or loss;
• financial liabilities that arise when a transfer of a financial asset does not qualify
for derecognition or when the continuing involvement approach applies;
• financial guarantee contracts;
• commitments to provide a loan at a below-market interest rate; and
• contingent consideration recognized by an acquirer in a business combination.
The Company’s financial liability measured at amortized cost includes accrued
professional fees only.
The Company has no financial liabilities at fair value through profit or loss.
4.06.03 Derecognition
An entity shall remove a financial liability (or part of a financial liability) from its
separate statements of financial position when, and only when, it is extinguished (i.e.
when the obligation in the contract is discharged or cancelled or expires).
The difference between the carrying amount of a financial liability (or part of a financial
liability) extinguished or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed, shall be recognized in
profit or loss.
An equity instrument is any contract that evidences a residual interest in the assets of
an entity after deducting all of its liabilities. Equity instruments issued by the Company
are recognized at the proceeds received, net of direct issue costs.
Ordinary shares are classified as equity. Incremental costs directly attributable to the
issue of new shares or options are shown in equity as a deduction from the proceeds,
net of tax.
Financial assets and liabilities are offset, and the net amount is reported in the separate
statements of financial position if, and only if, there is a currently enforceable legal right
to offset the recognized amounts and there is an intention to settle on a net basis, or to
realize the assets and settle the liabilities simultaneously.
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4.10 Expense Recognition
Expense encompasses losses as well as those expenses that arise in the course of the
ordinary activities of the Company.
The Company recognizes expenses in the separate statements of comprehensive
income when a decrease in future economic benefits related to a decrease in an asset
or an increase of a liability has arisen that can be measured reliably.
A related party is a person or entity that is related to the Company that is preparing its
separate financial statements. A person or a close member of that person’s family is
related to Company if that person has control or joint control over the Company,
has significant influence over the Company, or is a member of the key management
personnel of the Company or of a parent of the Company
An entity is related to the Company if any of the following conditions applies:
• The entity and the Company are members of the same group (which means that
each parent, subsidiary and fellow subsidiary is related to the others).
• One entity is an associate or joint venture of the other entity (or an associate or
joint venture of a member of a group of which the other entity is a member).
• Both entities are joint ventures of the same third party.
• One entity is a joint venture of a third entity and the other entity is an associate of
the third entity.
• The entity is a post-employment benefit plan for the benefit of employees of either
the Company or an entity related to the Company. If the Company is itself such a
plan, the sponsoring employers are also related to the Company.
• The entity is controlled or jointly controlled by a person identified above.
• A person identified above has significant influence over the entity or is a member
of the key management personnel of the entity (or of a parent of the entity).
• Management entity providing key management personnel services to a reporting
entity.
Close members of the family of a person are those family members, who may be
expected to influence, or be influenced by, that person in their dealings with the
Company and include that person’s children and spouse or domestic partner; children
of that person’s spouse or domestic partner; and dependents of that person or that
person’s spouse or domestic partner.
A related party transaction is a transfer of resources, services or obligations between
related parties, regardless of whether a price is charged.
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4.12 Taxation
4.13 Provisions
Provisions are recognized when the Company has a present obligation, whether legal
or constructive, as a result of a past event, it is probable that the Company will be
required to settle the obligation, and a reliable estimate can be made of the amount of
the obligation.
The amount recognized as a provision is the best estimate of the consideration required
to settle the present obligation at the end of the reporting period, taking into account
the risks and uncertainties surrounding the obligation. Where a provision is measured
using the cash flows estimated to settle the present obligation, its carrying amount is
the present value of those cash flows.
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When some or all of the economic benefits required to settle a provision are expected
to be recovered from a third party, a receivable is recognized as an asset if it is virtually
certain that reimbursement will be received and the amount of the receivable can be
measured reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best
estimate.
The Company identifies subsequent events as events that occurred after the reporting
period but before the date when the separate financial statements were authorized for
issue. Any subsequent events that provide additional information about the Company’s
position at the reporting period, adjusting events, are reflected in the separate financial
statements, while subsequent events that do not require adjustments, non-adjusting
events, are disclosed in the notes to separate financial statements when material.
The adoption of the new and revised standards and interpretations as disclosed in
Note 2.01 was made in accordance with their transitional provisions, otherwise the
adoption is accounted for as change in accounting policy under PAS 8,
Accounting Policies, Changes in Accounting Estimates and Errors.
In the application of the Company’s accounting policies, which are described in Note 4,
Management is required to make judgments, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimate
is revised if the revision affects only that period or in the period of the revision and
future periods if the revision affects both current and future periods.
The following are the critical judgments, apart from those involving estimations that
Management has made in the process of applying the entity’s accounting policies and
that have the most significant effect on the amounts recognized in separate financial
statements.
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Management assessed that the contractual terms of its financial assets are solely
payments of principal and interest and consistent with the basic lending arrangement.
The Company’s financial assets amounted to P718,900,455 and P67,872,936 as of June
30, 2022 and 2021, as disclosed in Note 15.01.
The following are the key assumptions concerning the future, and other key sources of
estimation uncertainties at the end of the reporting period that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year.
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The preparation of the estimated future cash flows involves significant judgment and
estimations. While the Company believes that its assumptions are appropriate and
reasonable, significant changes in the assumptions may materially affect the
assessment of recoverable values and may lead to future additional impairment
charges under PFRS.
Management determined that there was no indication of impairment that occurred on
deferred input VAT and investment in a subsidiary. As of June 30, 2022 and 2021,
the carrying amounts of aforementioned assets amounted to P441,627,793 and
P441,606,364, as disclosed in Notes 7 and 8.
6. CASH
For the purpose of the statements of cash flows, cash include cash on hand only.
Cash at the end of each reporting period as shown in the statements of cash flows that
can be reconciled to the related items in the statements of financial position amounted
to P2,183,916 and nil as of June 30, 2022 and 2021, respectively.
The Company’s deferred input VAT from professional fee amounted to P62,229 and
P40,800, as of June 30, 2022 and 2021, respectively.
8. INVESTMENT IN A SUBSIDIARY
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In both years, no impairment loss was recognized on investment in a subsidiary.
The summarized financial information of the subsidiary as of and for the periods ended
June 30, 2022 and 2021 is as follows:
2022 2021
Total assets P 1,445,451,784 P 966,728,621
Total liabilities 572,069,130 690,902,388
Net assets 873,382,654 275,826,233
Revenue 2,397,089,485 862,986,583
Direct costs 1,242,315,613 410,614,771
Operating expense 658,507,607 293,714,005
Finance cost 1,608,491 488,136
Profit before tax 123,739,626 158,169,671
On June 21, 2021, F Coffee Holdings Corporation, the ‘Seller’ agreed to sell and the
Company, the ‘Buyer’ agreed to buy, all the seller’s rights, title and interests to a total
of 2,500 common shares with a par value of P50.00 per share or an aggregate par value
of P125,000 of Figaro Coffee Systems, Inc. (FCSI) for and in consideration of
P1,851.0256 per share or total purchase price of P4,627,564.
On June 23, 2021, FCGI subscribed 7,500 shares of the Company at P27,751.73 per
share resulting to issuance of shares amounting to P375,000 and additional paid-in
capital of P207,763,000.
On June 27, 2021, the Company subscribed additional 4,576,000 shares of FCSI at
P50.00 par value resulting to capital stock of P228,800,000.
As of June 30, 2021, FCSI became wholly-owned subsidiary of the Company.
Nature of relationship of the Company and its related party are disclosed below:
Balances and transactions between the Company and its related parties are disclosed
below:
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10.01.01 Ultimate Parent
The Company collected advances amounting to nil and P9,375,500 in 2022 and 2021,
respectively.
The amounts outstanding are non-interest bearing, unsecured, will be settled in cash
and collectible on demand. No guarantees have been received. No provisions have
been made for expected credit loss in respect of the amounts owed by related parties.
10.01.02 Parent
Transactions with parent are as follows:
Stockholders
Advances P - P - P - P 500
The Company collected advances amounting to P500 in 2022 and 2021, respectively.
The amounts outstanding are unsecured, non-interest bearing, collectible on demand
and will be settled in cash or through offsetting. No guarantees have been received in
respect of the amounts owed by related party. No provisions have been made for
expected credit losses in respect of the amounts owed by a related party.
The Company is not covered by the requirements and procedures for related party
transactions provided in RR 34-2020.
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11. CAPITAL STOCK
2022 2021
Capital stock P 464,818,700 P 322,500,500
Additional paid-in capital 697,831,235 186,938,000
P 1,162,649,935 P 509,438,500
2022 2021
On March 31, 2021, the Parent Company’s Board of Directors and Stockholders
approved: (a) the increase in authorized capital stock from P150,000,000 to
P500,000,000; and (b) the stock split through the reduction of par value of the shares of
the Company from P100.00 per share to P0.10 per share. SEC approved the Company’s
application to increase authorized capital stock of June 23, 2021.
On September 16, 2021, the Securities and Exchange Commission approved the
Company’s increase in authorized capital stock to P660,000,000 divided into
6,600,000,000 shares with a par value of P0.10 per share.
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c. 1,250,000,000 shares with par value of P0.10 per share for a total subscription price
of P228,800,000, or P0.18304 price per share. The said subscription resulted to an
additional capital stock of P125,000,000 and an additional paid-in capital of
P103,800,000 in the Company; and
d. 350,000,000 shares of the Company with par value of P0.10 per share for a total
subscription price of P35,000,000.
As of June 30, 2021, the outstanding capital of the Company is P322,500,500 (excluding
the additional paid-in capital of P186,938,000 with 3,225,005,000 shares issued).
As of June 30, 2021, the Company is 88.37% owned by Camerton, Inc. and 11.63%
owned by Carmetheus Holdings, Inc.
On January 24, 2022, the Company completed its IPO and was listed in the PSE under
stock symbol “FCG.” The Company issued 93,016,000 common shares for a total
consideration of P69,762,000 or at P0.75 per share. This resulted to an additional
issuance of capital stock of 1,423,182,003 with par value of P0.10 per share for a total
of P142,318,200.
As of June 30, 2022, the outstanding capital of the Company is P464,818,700 (excluding
the additional paid-in capital of P697,831,235 with 4,648,187,003 shares issued).
As of June 30, 2022, the Company is 69.94% owned by Camerton, Inc. and 8.07% owned
by Carmetheus Holdings, Inc.
11.03 Track record of registration of securities under the Securities Regulation Code
As of June 30, 2021, the Company is in the process of compiling with the requirements
to file Registration Statement with SEC in accordance with the provisions of the
Securities Regulation Code of the Philippines (Republic Act No. 8799, the “SRC”) for
the registration of all the issued and outstanding Shares of the Company and the Offer
Shares.
The number of shares to be registered, issue/offer price and the approval or date when
the registration statement covering such securities was rendered effective by the
Commission, and the number of holders of such securities is to be determined.
On January 24, 2022, the Company completed its IPO and was listed in the PSE under
stock symbol “FCG.” The Company issued 93,016,000 common shares for a total
consideration of P69,762,000 or at P0.75 per share.
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12. INCOME TAXES
Applied Applied
Year Previous Current Expiry
Incurred Amount Year Year Expired Unapplied Date
2019 P 80,000 P - P - P 80,000 P - 2022
2020 80,000 - - - 80,000 2023
P 160,000 P - P - P 80,000 P 80,000
The Bureau of Internal Revenue (BIR) has issued Revenue Regulations (RR) 25-2020 to
inform all concerned on the longer period for claiming NOLCO from taxable years 2021
and 2022.
Pursuant to Section 4 (bbb) of Bayanihan II and as implemented under RR 25-2020,
the net operating losses of a business or enterprise incurred for taxable years 2020 and
2021 can be carried over as a deduction from gross income for the next five (5)
consecutive taxable years following the year of such loss. Ordinarily, NOLCO can be
carried over as deduction from gross income for the next three consecutive years only.
Management believes that the Company will not generate sufficient taxable profit to
allow all or part of its deferred tax asset to be utilized. The Company’s unrecognized
deferred tax asset from NOLCO amounted to P89,643 and P65,000 as of June 30, 2022
and 2021, respectively.
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13. BASIC LOSS PER SHARE
The Company’s basic loss per share is nil in 2022, 2021and 2020.
The weighted average number of ordinary shares for the periods 2022, 2021 and 2020
used for the purposes of basic earnings per share were computed as follows:
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14. FAIR VALUE MEASUREMENT
The carrying amounts and estimated fair values of the Company’s financial assets and
liability as of June 30, 2022 and 2021 are presented below:
Carrying Carrying
Amounts Fair Values Amounts Fair Values
Financial assets:
Cash P 2,183,916 P 2,183,916 P - P -
Advances to related
parties 718,900,455 718,900,455 67,872,936 67,872,936
The fair values of other financial assets and financial liabilities are determined as
follows:
• Due to short-term nature and demand features, Management believes that the
carrying amounts of cash, advances to related parties and accrued professional fee
approximate their fair values due to either the demand feature or relative short-
term duration of these asset and liability.
The Company’s Corporate Treasury function provides services to the business, co-
ordinates access to domestic and international financial markets, monitors and
manages the financial risks relating to the operations of the Company through internal
risk reports which analyze exposures by degree and magnitude of risks. These risks
include market risk, including currency risk, fair value interest rate risk, credit risk and
liquidity risk.
Credit risk is the risk of financial loss to the Company if a counterparty to a financial
instrument fails to meet its contractual obligations. The Company is exposed to credit
risks from advances to stockholders, all at amortized cost.
The Company considers the following policies to manage its credit risk:
Advances to related parties
The Company transacts with creditworthy stockholders. The Company assesses
the current and forecast information of the counterparty’s industry and the
macro-economic factors such as GDP rate, inflation rate and foreign exchange
rate to determine the possible impact to the counterparty.
Financial asset measured at amortized cost pertaining to advances to related parties
amounted to P718,900,455 and P67,872,936 as of June 30, 2022 and 2021, respectively.
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The calculation of allowance for expected credit losses are based on the following three
(3) components:
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15.02 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors,
which has established an appropriate liquidity risk management framework for the
management of the Company’s short, medium and long-term funding and liquidity
management requirements. The Company manages liquidity risk by continuously
monitoring forecast and actual cash flows, and by matching the maturity profiles of
financial assets and liabilities.
The Company’s remaining contractual maturity for its non-derivative financial liabilities
with agreed repayment periods. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest date on which the
Company can be required to pay. The tables include both interest and principal cash
flows. To the extent that interest flows are floating rate, the undiscounted amount is
derived from interest rate curves at the end of the reporting period. The contractual
maturity is based on the earliest date on which the Company may be required to pay.
Weighted
Average
Effective
Interest Rate Within One (1) Year
June 30, 2022
Accrued professional fee - P 580,800
June 30, 2021
Accrued professional fee - P 380,800
The following table details the Company’s expected maturity for its non-derivative
financial assets. The table has been drawn up based on the undiscounted contractual
maturities of the financial assets including interest that will be earned on those assets.
The inclusion of information on non-derivative financial assets is necessary in order to
understand the Company’s liquidity risk management as the liquidity is managed on a
net asset and liability basis.
Weighted
Average
Effective
Interest Rate On demand
June 30, 2022
Cash - P 62,229
Advances to related parties - 718,900,455
- P 718,962,684
June 30, 2021
Advances to related parties - P 67,872,936
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16. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES
The Company manages its capital to ensure that the Company will be able to continue
as going concern while maximizing the return to stakeholders through the optimization
of the debt and equity balance.
The Management reviews the capital structure of the Company on an annual basis.
As part of this review, the committee considers the cost of capital and the risks
associated with each class of capital. The Company has a target gearing ratio of 1:1
determined as the proportion of debt to equity.
2022 2021
Debt P 580,800 P 380,800
Cash 2,183,916 -
Net Debt (1,603,116) (380,800)
Equity 1,162,131,364 509,098,500
These separate financial statements were approved and authorized for issuance by the
Board of Directors on October 12, 2022.
The Company has not paid or accrued taxes and licenses during the taxable period.
The amount of documentary stamp tax paid relating to the initial public offering
amounted to P7,673,865.
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19. SUPPLEMENTARY INFORMATION UNDER REVENUE REGULATIONS NO. 19–2011
Pursuant to Section 244 in relation to Section 6(H) of the National Internal Revenue
Code of 1997 (Tax Code), as amended, these Regulations are prescribed to revise
BIR Form 1702 setting forth the following schedules. Below is the disclosure required
by the said Regulation:
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