PERFAST

Corporation

Financial Statements

DECEMBER 31, 2016

PERFAST CORPORATION
CORPORATION NOTES TO FINANCIAL STATEMENTS

1. Corporate Information

Perfast Corporation (the Company) is a domestic corporation registered with the Securities and
Exchange Commission (SEC) on January 16, 2010. The Companys registered address is
Miputak Ave., Dipolog City, Philippines.

The Company serves customers of motorcycle vehicles through selling of Kawasaki, Yamaha,
Honda, Kymco, and Suzuki motor units in Zamboanga Del Norte.

2. Summary of Significant Accounting Policies

Basis of Preparation
The accompanying financial statements of the Company have been prepared using the historical
cost.

The accompanying financial statements are presented in Philippine peso (P=), which is also
the Companys functional currency.

All values are rounded to the nearest centavo unless otherwise stated.

The accompanying financial statements provide comparative information in respect of the

previous period.

Statement of Compliance
The financial statements of the Company have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS).

Presentation of Financial Statements

The Company presents its statement of financial position broadly in order of liquidity

PFRS 13, Fair Value Measurement

PFRS 13 establishes a single source of guidance under PFRSs for all fair value measurements.
PFRS 13 does not change when an entity is required to use fair value, but rather provides guidance
on how to measure fair value under PFRS.

As a result of the guidance in PFRS 13, the Company re-assessed its policies for measuring fair
values, in particular, its valuation inputs such as non-performance risk for fair value measurement
of liabilities. The Company has assessed that the application of PFRS 13 does not materially
impact the fair value measurements of the Company. Additional disclosures, where required, are
provided in the individual notes relating to the assets and liabilities whose fair values were
determined.

.
PAS 19, Employee Benefits (Revised)
On 1 January 2013, the Company adopted the Revised PAS 19 Employee Benefits. For defined
benefit plans, the Revised PAS 19 requires all actuarial gains and losses to be recognized in other
comprehensive income and unvested past service costs previously recognized over the average
vesting period to be recognized immediately in profit or loss when incurred.

Annual Improvements to PFRSs (2011-2015 cycles)

The Annual Improvements to PFRSs (2011-2015 cycles) contain non-urgent but
necessary amendments to PFRSs. The Company adopted these amendments for the
current year.

PAS 1, Presentation of Financial Statements Clarification of the requirements

for comparative information
These amendments clarify the requirements for comparative information that are disclosed
voluntarily and those that are mandatory due to retrospective application of an accounting
policy, or retrospective restatement or reclassification of items in the financial statements. An
entity must include comparative information in the related notes to the financial statements
when it voluntarily provides comparative information beyond the minimum required
comparative period. The additional comparative period does not need to contain a complete
set of financial statements. On the other hand, supporting notes for the third balance sheet
(mandatory when there is a retrospective application of an accounting policy, or retrospective
restatement or reclassification of items in the financial statements) are not required. The
amendment does not have any significant impact on the Companys financial position or
performance.

PAS 16, Property, Plant and Equipment Classification of servicing equipment

The amendment clarifies that spare parts, stand-by equipment and servicing equipment
should be recognized as property, plant and equipment when they meet the definition of
property, plant and equipment and should be recognized as inventory if otherwise. The
amendment does not have any significant impact on the Companys financial position or
performance.

PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets
(Amendments)
These amendments remove the unintended consequences of PFRS 13 on the disclosures required
under PAS 36. In addition, these amendments require disclosure of the recoverable amounts for
the assets or cash-generating units (CGUs) for which impairment loss has been recognized or
reversed during the period. These amendments are effective retrospectively for annual periods
beginning on or after January 1, 2014 with earlier application permitted, provided PFRS 13 is also
applied. The amendments affect disclosures only and have no impact on the Companys financial
position or performance.

PAS 19, Employee Benefits Defined Benefit Plans: Employee Contributions (Amendments) The
amendments apply to contributions from employees or third parties to defined benefit plans.
Contributions that are set out in the formal terms of the plan shall be accounted for as reductions
to current service costs if they are linked to service or as part of the remeasurements of the net
defined benefit asset or liability if they are not linked to service. Contributions that are
discretionary shall be accounted for as reductions of current service cost upon payment of these
contributions to the plans. The amendments to PAS 19 are to be retrospectively applied for annual
periods beginning on or after July 1, 2014. The amendments have no impact on the Companys
financial position or performance.

Annual Improvements to PFRSs (2010-2012 cycle)

The Annual Improvements to PFRSs (2010-2012 cycle) contain non-urgent but necessary
amendments to the following standards:

PFRS 2, Share-based Payment Definition of Vesting Condition

The amendment revised the definitions of vesting condition and market condition and added
the definitions of performance condition and service condition to clarify various issues. This
 amendment shall be prospectively applied to share-based payment transactions for which the
grant date is on or after July 1, 2014. This amendment does not apply to the Company as it
has no share-based payments.

PFRS 13, Fair Value Measurement Short-term Receivables and Payables

The amendment clarifies that short-term receivables and payables with no stated interest rates
can be held at invoice amounts when the effect of discounting is immaterial.

PAS 16, Property, Plant and Equipment Revaluation Method Proportionate Restatement
of Accumulated Depreciation
The amendment clarifies that, upon revaluation of an item of property, plant and equipment,
the carrying amount of the asset shall be adjusted to the revalued amount, and the asset shall
be treated in one of the following ways:

a. The gross carrying amount is adjusted in a manner that is consistent with the revaluation
of the carrying amount of the asset. The accumulated depreciation at the date of
revaluation is adjusted to equal the difference between the gross carrying amount and the
carrying amount of the asset after taking into account any accumulated impairment losses.
b. The accumulated depreciation is eliminated against the gross carrying amount of the asset.

The amendment is effective for annual periods beginning on or after July 1, 2014. The
amendment shall apply to all revaluations recognized in annual periods beginning on or after
the date of initial application of this amendment and in the immediately preceding annual
period. The amendment has no significant impact on the Companys financial position or
performance.

PAS 38, Intangible Assets Revaluation Method Proportionate Restatement of Accumulated

Amortization
The amendments clarify that, upon revaluation of an intangible asset, the carrying amount of
the asset shall be adjusted to the revalued amount, and the asset shall be treated in one of the
following ways:

a. The gross carrying amount is adjusted in a manner that is consistent with the revaluation
of the carrying amount of the asset. The accumulated amortization at the date of
revaluation is adjusted to equal the difference between the gross carrying amount and the
carrying amount of the asset after taking into account any accumulated impairment losses.
b. The accumulated amortization is eliminated against the gross carrying amount of the asset.

The amendments also clarify that the amount of the adjustment of the accumulated
amortization should form part of the increase or decrease in the carrying amount accounted for
in accordance with the standard.

Annual Improvements to PFRSs (2014-2016 cycles)

The Annual Improvements to PFRSs (2011-2013 cycles) contain non-urgent but
necessary amendments to the following standards:

PAS 40, Investment Property

The amendment clarifies the interrelationship between PFRS 3 and PAS 40 when classifying
property as investment property or owner-occupied property. The amendment stated that
judgment is needed when determining whether the acquisition of investment property is the
acquisition of an asset or a group of assets or a business combination within the scope of
PFRS 3. This judgment is based on the guidance of PFRS 3. This amendment is effective for
annual periods beginning on or after July 1, 2014 and is applied prospectively. The
amendment has no impact on the Companys financial position or performance.
Significant Accounting Policies

Foreign Currency Translations

Transactions denominated in foreign currencies are recorded using the applicable exchange rate at
the date of the transaction. Foreign currency-denominated assets and liabilities are translated to
Philippine peso using the Philippine Dealing System (PDS) closing rate prevailing at the reporting
date. Foreign exchange gains or losses arising from foreign currency transactions and revaluation
of foreign currency-denominated assets and liabilities are credited to or charged to profit or loss in
the year in which the rates change.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments and
fixed maturities that are not quoted in an active market. These are not entered into with the
intention of immediate or short-term resale and as such are not classified as financial assets at
FVPL and AFS investments. They also do not include those for which the company may not
recover substantially as its initial investments, other than because of credit deterioration.

After initial measurement, loans and receivables are subsequently measured at amortized cost
using the effective interest method less allowance for credit losses. Amortized cost is calculated
by taking into account any discount or premium on acquisition cost and fees that are an integral
part of the effective interest rate (EIR). The amortization is included in profit or loss under
Interest income. The losses arising from impairment are recognized in profit or loss under
Provision for credit and impairment losses.

Other financial liabilities

Issued financial instruments or their components, which are not designated at FVPL, are classified
as loans payable, accounts payable and other liabilities, deposits on lease contracts and
subordinated debt where the substance of the contractual arrangement results in the Company
having an obligation either to deliver cash or another financial assets to the holder, or to satisfy the
obligation other than by the exchange of a fixed amount of cash or another financial asset for a
fixed number of own equity shares.

After initial measurement, these financial liabilities not qualified as and not designated at FVPL
are subsequently measured at amortized cost using the effective interest method.

Loans and receivables

For loans and receivables, carried at amortized cost, the Company first assesses whether objective
evidence of impairment exists individually for financial assets that are individually significant, or
collectively, for financial assets that are not individually significant. If the Company determines
that no objective evidence of impairment exists for individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses for impairment. Those characteristics are relevant to the
estimation of future cash flows for groups of such assets by being indicative of the debtors ability
to pay all amounts due according to the contractual terms of the assets being evaluated. Assets
that are individually assessed for impairment and for which an impairment loss is, or continues to
be, recognized are not included in a collective assessment for impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the assets carrying amount and the present value of the
estimated future cash flows (excluding future credit losses that have not been incurred). The
carrying amount of the asset is reduced through use of an allowance account and the amount of
loss is charged to profit or loss. Interest income continues to be recognized based on the original
EIR of the asset. The financial assets, together with the associated allowance accounts, are written
off when there is no realistic prospect of future recovery and all collateral has been realized. If, in
a subsequent year, the amount of the estimated impairment loss decreases because of an event
occurring after the impairment was recognized, the previously recognized impairment loss is
reduced by adjusting the allowance account. If a future write-off is later recovered, any amounts
formerly charged are credited to Other income in profit or loss.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation and amortization and
impairment loss, if any.

The initial cost of property and equipment consists of its purchase price, any directly attributable
costs of bringing the asset to its working condition and location for its intended use and the initial
estimate of the costs of dismantling and removing the item and restoring the site on which it is
located to the extent it had recognized an obligation for that cost.

Expenditures incurred after an item of property and equipment has been put into operation, such as
repairs and maintenance, are normally charged to operations in the year in which the costs are
incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in
an increase in the future economic benefits expected to be obtained from the use of an item of
property and equipment beyond its originally assessed standard of performance, the expenditures
are capitalized as an additional cost of property and equipment. When the property and equipment
are retired or otherwise disposed of, the cost and the related accumulated depreciation and
amortization are removed from the accounts and any resulting gain or loss is reflected in profit or
loss.

Depreciation and amortization is computed using the straight-line method over the estimated
useful lives of the property and equipment

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

An item of property and equipment is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the
assets, which is calculated as the difference between the net disposal proceeds and the carrying
amount of the asset, is included in profit or loss in the year the asset is derecognized.

Intangible Assets
This consists of software costs, stated at acquisition cost and is amortized on a straight-line basis
over estimated useful life of five (5) years.

An intangible asset is recognized only when its cost can be measured reliably and it is
probable that the expected future economic benefits that are attributable to it will flow to the
Company.

Impairment of Non-financial Assets

The carrying values of non-financial assets (i.e. property and equipment, assets held for sale,
software cost) are reviewed for impairment when events or changes in circumstances indicate that
the carrying values may not be recoverable. If any such indication exists and where the carrying
values exceed the estimated recoverable amounts, the assets or cash-generating units are written
down to their recoverable amounts. The recoverable amount of an asset is the greater of its net
selling price 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
assessment of the time value of money and the risks specific to the asset. For an asset that does
not generate largely independent cash inflows, the recoverable amount is determined for the cash-
generating unit to which the asset belongs. Impairment loss is recognized under Provision for
credit and impairment losses in profit or loss.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the income can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognized:

Interest income
Interest and financing fees on finance leases and loans and receivables (including dealers and
manufacturers subsidy) are initially credited to unearned interest income and amortized over the
term using effective interest method. Any direct costs to acquire finance leases and loans and
receivables are capitalized and amortized using the effective interest method.

Interest income on impaired receivables is recognized based on the rate used to discount future
cash flows to their net present value. Interest income from cash in bank is accrued as earned.

Service fees
Service fees earned for the provision of transaction services such as processing fees are recognized
upon completion of the underlying transaction.

Recoveries of accounts written off

Recoveries of accounts written off are recognized as income upon actual collection.

Income Taxes
Current taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted at the reporting date.

Financial Risk Management Objectives and Policies

The Companys principal financial instruments are composed of cash in banks, loans and
receivables, loans payable, accounts payable and accrued expenses and subordinated debt. These
financial instruments are used in operations. Financial instruments used in financing are bank
loans, subordinated debt and notes payable. The main risks arising from the use of financial
instruments are credit risk, liquidity risk and market risk.

Risk Management Structure

The Company's organizational structure includes the Risk Management Unit (RMU), responsible
for developing, recommending and implementing policies and strategies. It is also in charge of
periodically monitoring, reporting to management and to the BOD Corporate Governance
Committee, the state of company-wide risk position and effectiveness of the framework. In
addition, the Company adopts the basic risk tenet that risks are owned by the process owners and
have the primary responsibility for identifying, managing and reporting risks.

Risk Management Strategy

The Executive Committee establishes and oversees execution of business strategies and has the
accountability to identify and manage the embedded risks. Business strategies and business plans
are thus aligned and BOD, defined in the form of risk tolerances for a set of selected key risk
indicators. These plans are executed by management and are reviewed by the President.
Quarterly performances and risks are reviewed together with the appropriate Board Committees.
 Credit Risk
Credit risk is the possibility that the Company suffers losses when counterparty to a credit
transaction fails to meet its financial obligation.

The Credit Committee establishes and oversees the execution of the Companys credit risk
management program. The Committee sets out objectives related to overall quality and
diversification of investments. It establishes policies for the selection of counterparties,
outsources providers as well as accreditation of insurance companies.

Credit officers' conduct credit risk review on the prospective borrower based on verified
information. Team heads evaluate the prospective borrower based on the recommendation of the
credit officers.

Loan amounts that exceed the approval limit of the loan division head are brought up to the Credit
Committee. Loan amounts that exceed the limit of Credit Committee are elevated to the Executive
Committee and recommended to the BOD for approval.

Market Risk
Market risk is exposure to changes in market rates that may adversely affect the Company
value and ability to meet obligations as they mature. Market risks cover interest rate and
foreign exchange risks.

Interest rate risk

Interest rate risk arises from interest margin compression due to an adverse movement in the
market interest rates. This risk applies only to accrual positions as the Company has no trading
portfolio.

Foreign currency risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate as a result
of changes in the value of foreign currencies which include volatility in exchange rates,
correlations across currencies and changes in currency regime.

Note to Statements of Cash Flows

Noncash investing activities pertain to transfer of repossessed vehicles classified as assets held for
sale to property and equipment.