sec number 168736 file number easycall …sec17a) annual... · file number _____ easycall...

SEC Number 168736 File Number _______

EASYCALL COMMUNICATIONS PHILIPPINES, INC. (Company’s Full Name)

Mary Bachrach Building 25th St. corner A. C. Delgado St., Port Area Manila (Company’s Address)

(632) 754-8688 local 8351 (Telephone Number)

SEC Form 17-A

Form Type

December 31, 2011 (Year Ended Date)

__________________________________ (Secondary License Type and File Number)

EASYCALL COMMUNICATIONS PHILS. INC.

SEC FORM 17-A (2011)

of 39

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-A

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE REVISED SECURITIES ACT AND SECTION 141

OF CORPORATION CODE OF THE PHILIPPINES 1. For the year ended December 31, 2011

2. SEC Identification Number: SEC Registration No. 168736 3. BIR Tax Identification Code: TIN No. 000-586-363 4. Exact name of Issuer as specified in its charter:

EASYCALL COMMUNICATIONS PHILIPPINES, INC. 5. Province, country or other jurisdiction of incorporation or organization: Philippines 6. Industry Classification code: (SEC use only)

7. Address of principal office: Postal Code: 2ndFloorMaryBachrachBuilding 25th St. corner A. C. Delgado St. Port Area, Manila City, Metro Manila 1080

8. Issuer’s telephone number, including area code: (632) 754-8688 local 8351

9. Former name, former address, and former fiscal year, if changed since last report:

N/A

10. Securities registered pursuant to Sections 4 and 8 of the RSA

Common Shares/Warrants Exempt from registration under section 6(11) of the Revised Securities Act and confirmed by SEC on various dates with the first exemption issued on 15 January 1992.

11. Are any or all of these securities listed on the Philippine Stock Exchange. Yes [ x] No [ ]

Title of Each Class: Number of Shares of Common Stock issued and Subscribed:

Common Shares 150,000,000 Warrants Delisted on 07 December 2005



of 39

12. Check whether the registrant:

(a) has filed all reports required to be filed by Section 11 of the Revised Securities Act (RSA) and RSA

Rule 11(a)-1 there under and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding 12 months (or for such shorter period that the registrant was required to file such reports);

Yes [x ] No [ ]

(b) has subject to such filing requirements for the past ninety (90) days.

Yes [x ] No [ ]

13. Aggregate market value of the voting stock held by non-affiliates of the registrant: P= 1,740.617 (15,083,797 shares @Php as of 31 December 2011)

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN INSOLVENCY/SUSPENSION OF PAYMENTS PROCEEDINGS

DURING THE PRECEDING FIVE YEARS.

14. Check whether the registrant has filed all documents and reports required to be filed by Section 11 of the RSA subsequent to the distribution of securities under a plan confirmed by a court or the SEC.

Yes [ ] No [ ]N/A

DOCUMENTS INCORPORATED BY REFERENCE 1. If any of the following documents are incorporated by reference, briefly describe them and

identify the part of SEC Form 17-A in to which the document is incorporated:

(a) Any annual report to security holders: None

(b) Any proxy or information statement file pursuant to SRC Rule 20 and 17.1 (b); N/A

(c) Any prospectus filed pursuant to SRC Rule 8.1-1. N/A



of 39

EASYCALL COMMUNICATIONS PHILIPPINES, INC

TABLE OF CONTENTS SEC FORM 17-A

PART I BUSINESS AND GENERAL INFORMATION ........................................................................................ 5

ITEM 1 - BUSINESS ................................................................................................................................... 5 ITEM 2 - PROPERTIES .............................................................................................................................. 15 ITEM 3 - LEGAL PROCEEDINGS .................................................................................................................. 15 ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................................................................ 15

PART II OPERATIONAL AND FINANCIAL INFORMATION .....................................................................16-20

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY AND STOCKHOLDER RELATED MATTERS .................................. 16 ITEM 6 - MANAGEMENT’SDISCUSSION AND ANALYSIS OR PLAN OF OPERATION ............................................................ 17 ITEM 7 - FINANCIAL STATEMENTS ................................................................................................................................ 20 ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES ....... 20

PART III CONTROL AND COMPENSATION INFORMATION ...................................................................21-26

ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ............................................................................. 21 ITEM 10 -EXECUTIVE COMPENSATION ......................................................................................................................... 24 ITEM 11 -SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ............................................... 25 ITEM 12 -CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................................................................................. 26

PART IVCORPORATE GOVERNANCE .................................................................................................................27-29

ITEM 13 –DISCUSSION ON CORPORATE GOVERNANCE.................................................................................................. 27

PART V EXHIBITS AND SCHEDULES .........................................................................................................30-38

ITEM 14 - (A) EXHIBITS ............................................................................................................................................... 30

(B) REPORTS ON SEC FORM 17-C (CURRENT REPORT) ............................................................................30-38

SIGNATURES

STATEMENT OF MANAGEMENTS’ RESPONSIBILITY

ATTACHMENTS:

ANNEX A – INDEX TO CONSOLIDATED FINANCIAL STATEMENTS & SUPPLEMENTARY SCHEDULES

ANNEX B – CONSOLIDATED FINANCIAL STATEMENTS



of 39

PART I

BUSINESS AND GENERAL INFORMATION

Item 1 Description of Business (1) Business Background Francisco N. Cervantes (FNC) through Republic Act No, 5954 was granted the right to construct, install, establish and operate radio stations for domestic and international communications in the Philippines. In August 1988, FNC, single proprietorship engaged the services of EasyCall International, Inc (ECII), under which, ECII provided FNC with consultancy services (i.e. technical, marketing and financial) for a paging operation. In September 1989, Francisco N. Cervantes, Inc. (FNCI) was registered as a telecommunications company with the Securities and Exchange Commission. FNCI then started the paging operations pioneering the use of alphanumeric messages through the pagers. Republic Act No. 7110 was enacted by the Philippine Congress in 1991. This authorized the transfer and assignment of the franchise together with all properties and rights acquired by FNC under R.A. 5954 to FNCI. This also provided for the extension of the term of the franchise to year 2024. In February 1992, SEC approved the amendments of the Articles of Incorporation reflecting the change in corporate name from FNCI to EasyCall Communications Philippines., Inc. (The Company or ECPI). In May 1992, the Company had a successful Initial Public Offering, involving 12 Million EasyCall shares offered to the public at P 18 per share. Together with the shares, the Company offered detachable warrants, the first to be offered in the Philippine capital markets, which were subsequently availed off by the warrant holders. In July 1999, the Company acquired the Call Center business of Siemens, which included a major fast food restaurant chain as its first order taking call center client as its initial venture into business outsourcing business to replace paging revenues, which were anticipated to decline in the coming years. It expanded its clientele base and as of to-date, the Company is operating four (4) food chains, one LPG manufacturer and one pharmaceutical company as its local call center clients. In 2000, the Company secured the message transcription business of a US-based paging company, under which the paged messages are transmitted to the Philippines, transcribed here and then retransmitted to the US to be sent to the subscribers’ pagers. However, this service was terminated in early 2002 because of the client’s dwindling subscriber base as a result of competition from cellular phone companies’ text messaging business. As part of its expansion plan to replace revenues from the paging business, the Company, in mid-2000, invested in internet with the network systems provided by CISCO and Foundry, server systems by Sun Microsystems and caching engine by Cache flow. By September 2000, the Company officially launched the internet business and started offering consumer and corporate internet products and services in the market. To support the internet business’ revenue generating capability and increase utilization of the Company’s data center facility, the Board of directors, in its meeting on May 31, 2002, has approved a P 5 million investment in iAspire.Net (Phil), Inc. representing about 25% equity participation. In July 2002, the Company invested P4.2 million in iAspire Phil., Inc., representing about 20% of I-Aspire’s capital. However, this investment failed to achieve its objective and the Company had to provide for possible losses in this investment as of June 30, 2003.



of 39

In early 2001, the Company acquired the systems of TeamPOINT Information Systems and Genesys Computer Telephony Integration to enable it to go into the high-end eCRM market abroad. On July 6, 2001, The Board of Investment (BOI) approved the Company’s application under Executive Order No. 226 as a New IT Service Firm in the field of Electronic Customer Relationship Management (eCRM) on a pioneer status. Under the BOI rules and regulation, the Company is entitled to certain tax and non-tax incentives from the government. In October 2001, the Company started an outbound telemarketing campaign for the United Kingdom. However, in January 2002, the project was terminated for unpaid receivable. In early January 2002, the Company started an outbound telemarketing campaign for the United States. This was, however, terminated by mutual agreement in March 2002 as the Company was pursuing a long-term strategic alliance with an American call center Company to accelerate the Company’s penetration into the huge inbound and outbound contact center outsourcing market in the United States of America. On May 31, 2002, the Board of Directors, in line with the Company’s new direction, approved the 50/50 joint venture agreement between the Company and US-based Centralized Marketing Company (CMC). This is in line with the Company’s new direction to focus on the foreign call center market with initial thrust into the huge US call center market. In June 2002, the Company made an investment equivalent to US$500,000 into the new joint venture company, which was registered with the SEC under the name of ePerformax Contact Centers, Inc. (ePerformax). During the last half of 2002, there was a new capital call by ePerformax to support its funding requirements and the Company waived its right to subscribe to additional capital and this reduced the holding of the Company in ePerformax to 25%. ePerformax started its commercial operations in January 2003. ePerformax incurred losses during its first year of operations and started to realize profit in June 2004 and ended the year 2004 with a net income of P25.1 million. To date, ePerformax is operating with about 2,000 call center seats and is embarking on an expansion of its facilities to accommodate additional clients. On May 16, 2001, the Philippine Securities and Exchange Commission (SEC) approved the increase in the Company’s authorized capital stock by 100 million shares, thereby bringing the total authorized capital stock from 100 million to 200 million shares. The application for increase in authorized capital stock was in line with the Company’s plan to raise capital for the expansion in internet and call center business. The major shareholders subscribed to 25 million shares of the capital increase at a price of P2.84 per share. On September 1, 2003, these shares were approved for listing in the Philippine Stock Exchange (PSE). In October 2001, the Company and Global E-Business Solutions, Inc. (GEBSI) signed a memorandum of agreement for the subscription by GEBSI of 52 million shares at a price equivalent to P 1 par value. The 52 million shares subscription carries with it 40 million free subscription warrants which provide option to convert these warrants into additional 40 million shares at a strike price of P 1.15 per share within a period of three years from issuance of the warrants. On April 16, 2002, the SEC approved the increase in authorized capital stock from 200 million shares to 300 million shares at P 1 par value, subscription to which came from the private placement of GEBSI. In compliance with the requirements of the Philippine Stock Exchange, the Company successfully completed the stock rights offering involving 3,358,267 shares for the minority stockholders at the price of P1.00. The new issues are entitled to warrants equivalent to 0.76923 for every one common share. These shares together with the private placement of 52 million shares made by Global e-Business Solutions, Inc. were listed in the PSE on December 2, 2002. In July 2002, the new major shareholder, GEBSI provided an additional cash advance amounting to US$ 1 million to fund the expansion in its new venture and for working capital requirements of the Company. With the rapid decline in the subscriber base for the paging operations, the Company decided to completely shut down its paging operations starting December 1, 2002 when the subscriber base has reached a level that is not sufficient to cover direct cost. The Company, however, made arrangement for the smooth transfer of its loyal Metro Manila subscribers, to another paging company, Jaspage.



of 39

In January 2003, the Company has re-aligned its operations and centralized all foreign contact center outsourcing business with its associate ePerformax while the Company started to focus on the local call center and its internet business operations. Also with its available space and existing infrastructure, the Company started to tap the market to avail of its facilities leasing management services. While there were various inquiries for this new service offering from foreign as well as local BPO providers, the location of Mandaluyong was not considered as an attractive place by these prospective clients. With this development, the Company, in November 2003, finally decided to terminate its lease contract for the Mandaluyong center and transferred its local call center operations to e-Performax’s operating center in Makati City and the administrative operations were transferred to Mary Bachrach Building, Port Area, Manila. The Company also established its main internet infrastructure and data center at ePerformax’s network operating center and a secondary internet and data center infrastructure was established in the Company’s main office in Manila. The transfer of the facilities to its new location in BPI building and in Manila was completed in March 2004. Earlier, the Company, on July 18, 2003, terminated its lease agreement for its data center in Las Pinas City. On August 19, 2003, the Board of Directors approved the spin off of its operating assets used in the internet and call center businesses into a wholly-owned subsidiary to streamline the operations of the Company. The objective of the spin off is for Easycall to focus on identifying new business opportunities for the Company and to work on addressing its financial requirements, while its subsidiaries will focus on generating higher revenues and increasing operating profitability. The new subsidiary, Easycall e-Services (e-Serve) was incorporated and duly registered with the Securities and Exchange Commission as of December 31, 2003. During the same meeting, the Board likewise approved the sale of various non-operation related real estates of the Company consisting of the Galleria condominium units, State Center Condominium unit in Binondo, Manila, and several lots located in Tagaytay City, General Trias, Cavite and Quezon City as well as its subscriber’s investment in PLDT to support ECPI’s funding requirements. On September 17, 2003, the Board approved the change in accounting period of the Company from fiscal year ending June 30 to calendar year ending December 31 effective with the period ending December 31, 2003 to align the accounting period of the Company and its subsidiary. This was approved to minimize audit expenses. This was ratified on November 12, 2004 by the stockholders. The internet business of Easycall was transferred and absorbed by its wholly-owned subsidiary, e-Serve starting July 1, 2004. By October 31, 2004, the Company has terminated its last client for the local call center operations. Earlier during the first half of 2004, the Company re-negotiated its contract with all its local call center clients to improve the profitability of this business segments. However, the Company and its clients could not agree on the price adjustment and both parties mutually agreed to terminate its relationship and the Company worked out a smooth transition with all its local call center clients. The decision to close the local call center operations was made because of the low contribution margin, which is not sufficient to cover fixed overhead cost. On March 2, 2004, the Securities and Exchange Commission approved the capital restructuring of the Company that was approved by the Board of Directors on September 30, 2003 and ratified by the stockholders on November 12, 2003. The Capital restructuring consisted of the following;

1. A stock split was implemented whereby the authorized capital stock of the Company was reduced by a ratio of 5:1 from 300 million shares to 60 million shares and the par value of the capital stock was increased from P1 to P5 per share. Consequently, the issued and outstanding capital stock of the Company of 159,519,311 shares with a par value of P1 per share was replaced with new shares totaling 31,903,862 shares with a par value of P5 per share. This



of 39

resulted in a decrease in number of shares but the outstanding capital remained at P159,519,311.

2. After the stock split, the par value was reduced from P5 to P1 per share for both the authorized

capital of 60 million shares and the issued and outstanding capital of 31,903,862 shares. With this reduction in par value, a reduction surplus of P127,615,449, was recognized in the books of the corporation.

3. The reduction surplus of P127,615,449 was applied against the cumulative deficit of

P197,885,829 as of June 30, 2003, thus reducing the cumulative deficit to P100,506,359 as of December 31, 2003.

4. The 42,583,283 warrants issued to 55,358,267 common shares prior to the capital restructuring

mentioned above was maintained at this same level even after the 55,358,267 common shares were reduced to 11,071,653 common shares as a result of the capital restructuring.

5. After the capital restructuring, the authorized capital stock was increased from 60 million

common shares to 300 million common shares with a par value of P1 per share. One of the major shareholders, GEBSI subscribed to 60 million shares at par value of P1 and this subscription was paid through the conversion of its outstanding advances to the Company and the balance was paid for in cash.

The effects of the stock split and the offsetting of the reduction surplus against the cumulative deficit as mentioned above were reflected in the audited financial statements of the Company as of December 31, 2003. The additional 60 million shares issued to GEBSI from the capital increase mentioned above were approved for listing by the Philippine Stock Exchange on August 16, 2004. In the same Board meeting of September 30, 2003, GEBSI likewise committed to continue to support the financial requirements of the Company. On December 7, 2005 the warrants issued by virtue of the above re-structuring expired totaling 42,583,283 Warrants. These warrants were then delisted from the Official Registry of the Exchange on same date. The Board of Directors in its meeting on November 26, 2004 approved the following:

1. The integration, either through merger or acquisition, of Transnational e-Business Solutions Inc., (TESI), an information technology Company affiliated with its majority shareholder, GEBSI into ECPI.

2. The private placement by its majority shareholder, GEBSI, for 100 million shares at the par value

of P1.00 per share to be taken from the Company’s unsubscribed capital stock. The private placement shall be paid in the form of:

a) The conversion of outstanding advances and liabilities of Easycall to Global e-Business

Solutions, Inc. and its affiliates. Advances of GEBSI amounted to P20.07 million. b) The agreed valuation of TESI to be approved by the shareholders; and c) Balance shall be paid in cash.

On March 29, 2005, the Board of Directors appointed an independent director together with a senior officer of the Company to oversee the integration and valuation of TESI. To date, plans for merger



of 39

remain under evaluation. It is expected that during the next stockholders’ meeting, a more definite direction on the proposed merger plan On November 2005, a Management Agreement with TESI was entered into wherein TESI shall be the outsource provider for the Company’s Internet Data Center management requirements for the Company for a period of five (5) years retroactive from 01 November 2005. On July 19, 2006, the Board of Directors approved the Amendment of Articles of Incorporation by decreasing the number of Directors of the Corporation from the current nine (9) to seven (7) as such number could easily handle the matters that are being referred to by the Management. The Amendment of the Articles of Incorporation was approved by the Securities and Exchange Commission on October 19, 2006. Amendment of the Manual of the Corporate Governance was also approved on the grounds for temporary disqualifications of a Director from “being absent on more than 50% of the meetings” to non-attendance of ALL meetings. On July 19, 2007, the Company has offered to sell 90% of its investment and shareholdings in ePerformax Contact Centers,, Corp. or equivalent to 2,250,000 shares of stock with Par value of P10.00, to Global e-Business Solutions, Inc., (GEBSI) for Philippine Currency : Seventy Million Pesos (Php70,000,000.00). The proceeds to be received by ECPI from the said sale shall be used exclusively to fund the cash requirements of the Company for the settlement, resolution and payment of the latter’s liabilities to third parties. In the settlement of the various liabilities of ECPI, GEBSI agreed to have the last priority of payments for all the receivables and advances the latter has provided to ECPI. Priority for payments shall be the third party creditors and valid and legal claims against the company. The Board of Directors approved to increase the company’s capitalization from Pesos Ninety One Million Nine Hundred Twenty Five Thousand Nine Hundred Seventy-Five (Php91,929,975.00) to Pesos One Hundred Three Million Four Hundred Twenty Nine Thousand Nine hundred Seventy Five (Php103,429,975.00) to be able to subscribe to the additional shareholdings in ePerformax Contact Centers Corp. (ePerformax). The increase in subscribed and paid-up capital in the Corporation shall be effected by way of stocks rights offer whereby each shareholder shall be given the right to acquire one (1) share of the Corporation for One Peso (P1.00) for every eight (8) shares currently held by the shareholder. Philippine Stock Exchange in it’s letter dated 31 October 2007, disapproved the application for Stock Rights Offering of the Company to list additional 11,500,000 common shares.

In 2008, the company applied for a Certificate of Public Convenience and Necessity (CPCN) for a Nationwide Wireless Data Network with the NTC. This was subsequently approved in August 2009subject to the condition, that the company increase its paid up capital by Ten Million Pesos (P10,000,000.00) “not through loan.” To fund the initial start up of the company’s venture into wireless broadband and more value added internet services, a series of fund raising activities were conducted by the Company . The first of which was an approved Stock Rights Offering of Eleven Million Five Hundred Thousand (11,500,000) rights offer shares at a ratio of 8:1 for the Par Value of P1.00.This offering was concluded in February 2009 wherein the Company successfully raised P11,500,000.00.

In December 2009, the Board approved an additional capital increase from the current

capitalization of P103,429,975 to P150,000,000.00. This will be raised through a private placement of GEBSI. The application and listing of this private placement is pending approval of the PSE.

On April 14, 2010, the Philippine Stock Exchange approved the company’s application to list additional 46,570,025 common shares, with a par value of P1.00 per share, to cover the private



of 39

placement transaction with Global e-Business Solutions, Inc. (GEBSI), at a subscription price of P1.00 per share. The proceeds will be used for additional funding to support the plan of the Company’s for the roll-out of its Broadband Wireless operation.

(2) Business of Issuer

Description of Registrant The Company is the first to introduce alphanumeric paging technology in the Philippines in 1989. It became the No. 1 Paging Company in the country since 1992. However, with the new SMS technology that emerged and grew in popularity in the year 2000, the paging business was adversely affected and had been on a continuous decline since then. Due to the negative cash flow from provincial operations, the Company gradually closed down the 14 provincial sites from Zamboanga to Baguio, leaving Cebu as the only one operating provincial site. It eventually closed down the operations of its 5 e-shops, mainly located in malls and finally closed down its last paging operations in Metro Manila and Cebu starting December 1, 2002. As early as 1999, the Company has started to look at areas for business expansion to replace paging revenues, which were anticipated to decline in the coming years as a result of new technology in short messaging services offered by the cellular companies. The Company identified call center operation and the internet business as a natural expansion path because of the experience and expertise it has gained in call center operations and in network management. It first ventured into the local call center outsourcing business by acquiring the call center operations of Siemens together with its existing single client. From this beginning, the Company has expanded its clientele to four (4) major fast food restaurant companies, one (1) major liquefied petroleum gas (LPG) manufacturer and one pharmaceutical company. In early 2000, ECPI likewise invested in the internet business and invested about P100 million in high-end and redundant internet infrastructure at a time when this was booming in the Philippines and in the world. However, there was a sudden abrupt downturn in the world market for this technology product and the Company’s plan was adversely affected by this event. In early 2001, the Company acquired the systems of TeamPOINT Information Systems and Genesys Computer Telephony Integration to enable it to go into the high-end eCRM market abroad. On July 6, 2001, The Board of Investment (BOI) approved the Company’s application under Executive Order No. 226 as a New IT Service Firm in the field of Electronic Customer Relationship Management (eCRM) on a pioneer status. Under the BOI rules and regulation, the Company is entitled to certain tax and non-tax incentives from the government. In October 2001, the Company started an outbound telemarketing campaign for the United Kingdom. However, in January 2002, the project was terminated for unpaid receivable. In early January 2002, the Company started an outbound telemarketing campaign for the United States. This was, however, terminated by mutual agreement in March 2002 as the Company was pursuing a long-term strategic alliance with an American call center Company to accelerate the Company’s penetration into the huge inbound and outbound contact center outsourcing market in the United States of America. On May 31, 2002, the Board of Directors, in line with the Company’s new direction, approved the 50/50 joint venture agreement between the Company and US-based Centralized Marketing Company (CMC). This is in line with the Company’s new direction to focus on the foreign call center market with initial thrust into the huge US call center market. In June 2002, the Company made an investment equivalent to US$500,000 into the new joint venture company, which was registered with the SEC under the name of ePerformax Contact Centers, Corp. (ePerformax). During the last half of 2002, there was a new capital call by ePerformax to support its funding requirements and the Company waived its right to subscribe to additional capital and this reduced the holding of the Company in ePerformax to 25%. EPerformax started its commercial operations in January 2003. ePerformax incurred losses during its first year of operations and started to realize profit in June



of 39

2004 and ended the year 2004 with a net income of P25.1 million. Todate, ePerformax is operating with about 1,000 call center seats and is embarking on an expansion of its facilities to accommodate additional clients. To maximize its facilities and infrastructure in Mandaluyong, the Company started to offer to prospective BPO customers the lease of its facilities in Mandaluyong but the location of the facility was not attractive to foreign clients. Thus, the Company decided to terminate its lease in Mandaluyong and decided to transfer its local call center operations and internet business to BPI center, the operating center of e-Performax, and the administrative offices in Manila, which was completed by mid March 2004. A major retrenchment program was likewise implemented resulting in the reduction in manpower from 145 to 27as of February 28, 2004. These are meant to reduce its overhead cost. The local call center operations was sub-contracted with ePerformax starting February 1, 2004 in order to utilize its expertise in contact center operations. The Company also organized a wholly owned subsidiary, Easycall e-Services, Inc. (e-Serve), which was duly registered with the Securities and Exchange Commission on December 11, 2003, which will absorb the business and assets of ECPI in the local call center and internet business. In the early part of 2004, the Company re-negotiated its contract with all its local call center clients to improve the profitability of this business segment. However, the Company and its clients could not agree on the price adjustment and both parties mutually agreed to terminate its relationship and the Company worked out a smooth transition for all its local call center clients. On October 31, 2004, the Company has terminated its last client for the local call center operations. The decision to close the local call center operations was made because of the low contribution margin, which is not sufficient to cover fixed overhead cost. On July 1, 2004, the internet business of the Company was transferred to e-Serve. In the internet market, the Company continues to face the challenges of competition both in the corporate market and in the consumer market. The Company will continue to sell its current internet products and services as it develops other value added services to make them more competitive and more profitable for the Company. We continue to look at such products as ASP (application service provider) and web enabled services as value added services. We established a tie-up with Level-Up and launched the Easycall Ragnarok combo access and gaming card in June 2004, which provided the Ragnarok players better speed than a regular internet dial up player. However, sales from this new gaming prepaid card have not taken off as expected and the Company decided to terminate the service on February 28, 2005 to cut on its losses. The Board of Directors in its meeting on November 26, 2004 approved the private placement by its majority shareholder, GEBSI, for 100 million shares at the par value of P1.00 per share to be taken from the Company’s unsubscribed capital stock. The private placement shall be paid in the form of:

1. The conversion of outstanding advances and liabilities of Easycall to Global e-Business Solutions, Inc. and its affiliates. Advances of GEBSI amounted to P20.07 as of December 31, 2004.

2. The agreed valuation of TESI, which will have to be approved by the Board of Directors and shareholders.

3. Balance shall be paid in cash.

The above program once implemented and the sale of the Galleria Condominium property on March 30, 2005 would help address the capital deficiency and working capital requirements of the Company.



of 39

The existing products and services of the Company are listed below:

Contact Center through its Investment in ePerformax:

Type of Service Description of Service

Customer Service

To handle certain areas or the entire process of a clients’ customer service function based on the clients’ requirements. The services include the organization, hiring, training and deploying the required contact center employees under a structure agreed upon with the customer and providing regular feedback and reporting to the clients.

Internet Services through its wholly owned Subsidiary, e-Serve

Corporate Solutions


Corporate DSL

Resellership

This gives the Company unlimited access via Digital Subscriber Line (DSL). This is recommended for companies that need multiple and simultaneous internet connections of up to 10 users. Beyond this number, the Leased Line set-up is preferred.

The service is provided via partnerships with leading Telecommunications Providers such as BAYAN, GLOBE and EASTERN Telecommunications..

Leased Line (“LL”)

This is for entities with multiple usage in excess of 10 users and who need the fastest possible access on the Internet, as well as, the ability to connect their in-house web, e-commerce and database systems to the Internet. The Leased Line package gives a group, organization or corporation with a seamless access to the Internet via a leased line from a telephone company. A leased line is a private dedicated circuit that will connect the client directly to the Company’s own data center and Internet backbone. Leased line subscribers shall enjoy speedy Internet access 24hours a day, 7 days a week.

With speeds of 64K, 128K and higher (in increments of 64K and subject to local availability), the Leased Line package offers the client with synchronous connection to the Internet. The Company can work together with the client in order to define the specific Internet needs of the client and shall design and build a solution to maximize its investment in technology.



of 39


Web Business Solutions

Thus, the client may ask the Company to undertake the following: Website Development To create an accessible web site to attract both future and current clients and friends by utilizing document layout, images, element design, site planning and navigation information. Web Hosting To provide its client with a web site that is available at high speed, 24 hours a day and in the most secure environment available anywhere by hosting it in the Company’s data center. Whether the client wants basic shared Linux hosting or specialized and dedicated hosting behind the Company’s own firewall, the Company’s Business Solution specialists shall work closely with the client to help determine their optimum requirements.

Web Application Development To customize the client’s web application depending on the needs. The Company can develop a system to fit the client’s requirements such as web ordering. In turn, the Company’s Call Center operations can handle the validation of orders.

Server Co-location

This is for clients who prefer to develop applications using their own machines. For this, the Company shall host the client’s server or servers within the Company’s IDC. Server co-location offers the client unlimited flexibility. The client can have its machines hosted behind the Company’s firewall or it can build and tailor its entire server and security infrastructure and have the complete setup hosted at the Company’s site.

The client can also utilize the IDC as its back-up site as part of its business continuity or disaster recovery plans.

The relative contribution of sales, gross margin and net income of the contact center and the internet business to total revenues are shown on pages 2-3 under Note 1 of the Audited Consolidated Financial Statements.

The internet business of the Company is duly registered with the National Telecommunications Commission. The Company’s telecommunications franchise will expire in 2024 and the franchise is currently not utilized since the termination of the Company’s paging operations.

COMPETITION Internet/IDC The Philippine INTERNET Industry is now showing signs maturity. Although the primary product is still INTERNET bandwidth, more ISP companies are providing packaged solutions which include managing an entire Corporate Data Center requirement. Strong players in the industry remain to be the Telecommunication Companies such as PLDT, Globe and Bayantel. Other players try to consolidate and maximize their relationship with the strong telecommunications company to provide more options to the market.



of 39

The major risks involved in the internet business remains to be pricing of the various products and services and the obsolescence of its equipment because of newer technologies introduced in the market. The Company would continue to maximize the utilization of its existing infrastructure by its affiliation with TDG (Transnational Diversified Group) to provide a consolidated INTERNET service to the organization and existing Corporate Clients

CUSTOMERS The company now caters to local corporate accounts for its ISP and Data Center requirements. TDG has now become its largest corporate customer.

SUPPLIERS Our suppliers are now limited to telecommunications companies and network infrastructure providers. In the past, our major suppliers of equipment were Wesolv Open Computing for CISCO equipment and parts; Sun Microsystem for Sun systems; Genesys and Team Point for contact center applications and programs; and Shellsoft for Hewlett Packard computers. There are no current contracts from these suppliers to supply new equipment. For services, parts and maintenance, we rely upon Remax International, Inc. for any new power, voice and data cabling job, DCDC for Liebert UPS parts and maintenance, Logic Solutions Inc. (LSI) for PBX equipment and PLDT, Globe, Bayantel, Eastern Telecomms and ComClark for telecommunications. Our major dependency is with the telecommunications companies. If any of the telecommunication companies will disconnect their services, the internet business of the Company will be adversely affected. Transactions with related parties are properly disclosed in the schedule I and under Note 10 of the Notes to the Audited Consolidated Financial Statements as of December 31, 2011. There are no major costs involved in complying with environmental laws since the Company is not involved in manufacturing concerns and it has stopped its paging operations.

EMPLOYEES It was 22nd of March 2006 to date that the board approved the nomination and election of Mr. Renato Vicente R. Martinez as the new General Manager of the Company. Manpower complement of the Company, stand as follows: Dec. 2010 Dec. 2011

Officers and managerial employee 2 2 Supervisory and staff employees 2 1 Rank and file and staff employees 7 7

T O T A L 11 10

We do not anticipate any increase in the number of employees of the Company in the next twelve months. The Company has no labor union since the start of its operations.



of 39

Item 2 Properties In 2007, operations and administrative offices of the Company remain to be consolidated in Bacharach Building in Manila City. The Company owns one small office unit at the State Center Building in Binondo, Manila. The Company also owns certain lots in Tagaytay City, General Trias, Cavite and Novaliches, Quezon City with a total area of 1,150 square meters. The Galleria condominium units were sold on March 30, 2005. Properties in the books consist of land, computers, transportation equipment, office furniture and fixtures, Contact Center facilities including software applications and internet facilities. These are recorded under Property and Equipment for those which are still being used in the operations and under Other Assets for those which are no longer used in the Company’s operations. The paging transmission equipment in the books of the Company has zero value as this was previously written down in the books in the fiscal year ended June 30, 2001. The Company physically retired and wrote down property and equipment with a net book value of Php7.7 million in December 2004. In 2006, additional equipment with a cost of Php33,562.00 has been acquired. All of the properties, except land, mentioned above generally go through regular maintenance and rehabilitation programs being undertaken by our IT Department or through authorized third party service contractors to ensure their good working condition and maintain a 99 % service level to our customers.

Item 3 Legal Proceedings There are no pending Legal Proceedings of the Company.

Item 4 Submission of Matters to a Vote of Security Holders There were no Matters submitted to a vote by the Company’s Security Holders in the last quarter covering the period October 1 to December 31, 2011.



of 39

PART II

OPERATIONAL AND FINANCIAL INFORMATION

Item 5 Market for Registrant's Common Equity and Related Stockholder Matters (1) Market Information ECPI shares are traded at the Philippine Stock Exchange since its Initial Public Offering in May 1992. Stock Market Prices (Source PSE) based on closing price.

CY 2009 HIGH LOW

4th qtr 3rd qtr 2nd qtr 1

st qtr

NT 2.22 1.80 2.80

NT 2.02 1.80 2.80

CY 2010 HIGH LOW 4th qtr 3rd qtr 2nd qtr 1st qtr

2.12 2.22 2.38 NT

1.72 2.04 2.38 NT

CY2011 HIGH

LOW

4th qtr 3

rd qtr

2nd qtr 1st qtr

5.90 2.10 1.70 1.80

1.60 1.45 1.70 1.70

*First traded price after the approval of the capital restructuring. **Last traded price on September 29, 2003 prior to the approval of the capital restructuring by the Board on 30 Sept 2003. ***Represents price for the private placement of GEBSI, which was approved for listing by the PSE in Dec 2002

(2) Top 20 Shareholders as of December 31, 2011.

NAME of STOCKHOLDER

NUMBER of SHARES

HELD

PERCENT to

TOTAL CAPITAL

CLASS of

SECURITIES

1 GLOBAL E-BUSINESS SOLUTIONS, INC. 100,639,830 67.0932% Common

2 STAR ASIA TECHNOLOGIES PTE LTD 31,256,192 20.8374% Common

3 PCD NOMINEE CORPORATION (FIL) 9,141,868 6.0945% Common

4 PALOS VERDE LAND CORP. 5,678,918 3.7859% Common

5 MODESTO N. CERVANTES 2,563,738 1.7091% Common

6 MODESTO N. CERVANTES 453,349 0.3022% Common

7 JOSE E. MADDATU 46,250 0.0308% Common

8 PCD NOMINEE CORP. (NON-FIL) 45,994 0.0306% Common

9 AIDA VERGARA LENON 25,000 0.0166% Common

10 IMELDA T. UY 22,000 0.0146% Common



of 39

11 MANUJ T. AMARNANI 20,493 0.0136% Common

12 FEBTC AS COSTUDIAN of YANKTON 7,170 0.0047% Common

13 JON PAUL CALDERON &/OR DON. P. 6,875 0.0045% Common

14 DANIEL NEWMAN 4,356 0.0029% Common

15 REMEDIOS V. KAPUNAN 4,050 0.0027% Common

16 SUSANETTE T. CU 4,000 0.0026% Common

16 MERLE CUSTODIO TAN 4,000 0.0026% Common

17 CARLOS Z. ORTOLL 3,828 0.0025% Common

18 AZUCENA K. CHOA 3,750 0.0025% Common

19 ASIA PACIFIC ADVISORY CORP. PTY. LTD 3,300 0.0022% Common

19 PETER ADRIAN HANLEY 3,300 0.0022% Common

20 JONATHAN CERVNATES 3,094 0.0018% Common

20 MICHAEL CERVANTES 3,094 0.0018% Common

TOTAL NO. OF OUTSTANDING SHARES 149,944,449 99.9615% Common

(3) Dividends

Cash P1 per share based on stockholders of record as of November 13, 1999 and payable in December 1999, P1 per share in 1998 and P 0.75 per share in 1997.

Stock 25% stock dividend based on stockholders of record as of April 24, 2000, none

from 1997 – 1999 (4) Recent Sales of Registered Securities

On April 14, 2010, the Philippine Stock Exchange approved the company’s application for to list additional 46,570,025 common shares, with a par value of P1.00 per share, to cover the private placement transaction with Global e-Business Solutions, Inc. (GEBSI), at a subscription price of P1.00 per share. The proceeds will be used for additional funding to support the plan of the Company’s for the roll-out of its Broadband Wireless operation. On November 2011, Global E-Business Solutions, Inc. (GEBSI) sold over 8,000,000 ECPI shares to the public to comply with the requirements of the Philippine Stock Exchange to maintain a minimum percentage owned by the public of 10%.

Item 6 Management’s Discussion and Analysis or Plan of Operation

SUMMARY For the year ending December 31, 2011, EasyCall Communications Philippines, Inc. (the Company) generated a consolidated net income of P3.84 million, compared to the P3.86 million net income recorded last year. Of the Company’s P3.84 million consolidated net income, equity in ePerformax International amounted to P3.85 million with an increase of 106.98% for this year.



of 39

During the year, EasyCall E-Services Inc., a wholly owned subsidiary, recorded P 14.13 million in service revenues.. Cost of services increased by 9.54%% compared to last year, from P6.92 million last year to P7.58 million this year. The Internet segment’s gross margins performance decreased to P6.54 million in net income, compared to P7.09 million of last year. General and administrative (G&A) expenses this year amounting to P5.42 million have also decreased from P5.57million of last year. The financial performances of its operating companies (i.e. eServe and ePerformax) are being assessed using the following key financial ratios.

One Year

Ended

Dec. 31,

2011

One Year

Ended

Dec. 31,

2010

One Year

Ended Dec.

31, 2011

One Year

Ended Dec. 31,

2010

Current Ratio 2.35 1.45 1.96 1.91

Gross Margin - Amt in 000 Php 6,544 7,090 180 152

Gross Profit Rate 46.32% 50.60% 8.38% 8.06%

Percentage of Operating

Expenses to Sales 38.39% 39.74% 3.85% 4.20%

Profit Ratio 5.63% 7.83% 4.70% 2.59%

Easycall E-Services Inc ePerformax International, Inc.

The Current Ratio is calculated by dividing current assets by current liabilities. Gross Margins are service revenues less cost of services (i.e., cost of leased line subscriptions for e-Serve; cost of services for ePerformax). The Gross Profit Rate is arrived at by dividing the gross margin by the total service revenues. Percentage of Operating Expense to Revenues is computed by dividing the total general and administrative expenses by the service revenues. The Profit ratio is the outcome of dividing the net income over total service revenues.

REVENUES

During the year 2011, the Company’s consolidated service income decreased to P18.61 million, compared to P18.64 million last year. The company’s revenue were generated from its own operations in the amount of P4.48 million, and its subsidiary, Easycall e-Services, amounting to P14.13 million.

COST AND EXPENSES

Correspondingly, the Company’s Direct Cost of services, increased by 8.09% compared with last year: Leased Line subscriptions increased by 7.62% from P5.25 million in 2010 to P5.65 million this year; depreciation and amortization increased by 4.21% from P2.85 million in 2010 to P2.97 million this year.

General and administrative expenses were at P9.14 million this year, compared to P7.69 million last year, for 18.86% increase.



of 39

A comparative trend analysis of audited consolidated cost and expenses by major cost elements

for the last two years is shown below:

(in million pesos) Dec. 2011 Dec 2010 Dec 2009 This Year Last Year

Cost of Services

Cost of Leaseline subscriptions 5.65 5.25 6.89 8% -24%

Depreciation and amortization 2.97 2.87 1.46 4% 97%

Personnel 1.94 1.66 - 17%

Charges from Affiliates

Communications

Rental

Repairs and maintenance

Others

Attributable to discontinued operations

Sub-total 10.56 9.77 8.35 8% 17%

General and Administrative

Personnel 1.42 1.86 2.32 -23% -20%

Depreciation and amortization 0.02 0.11 0.07 -81% 50%

Provision for probable losses

Rental - 0.05 -100%

Travel 1.35 0.78 0.26 73% 204%

Communications 0.21 0.87 0.81 -76% 7%

Taxes and licenses 0.45 0.75 0.65 -40% 16%

Professional fees 0.35 0.52 0.42 -33% 25%

Management and consultancy fees 1.07 1.42 1.42 -24% -1%

Repairs and maintenance 0.02 0.07 0.05 -71% 51%

Utilities 0.07 0.07 0.08 7% -19%

Miscellaneous net 4.18 1.25 1.46 234% -14%

Lawsuit Settlements

Sub-total 9.14 7.69 7.59 19% 1%

TOTAL 19.70 17.46 15.94 13% 10%

% Change vs. Prev. Yr.

EQUITY IN NET EARNINGS OF AN ASSOCIATE

Based on the company’s 3.8% interest in ePerformax International Inc., the Company recognized

equity in net earnings of P3.85 million for the year 2011, 105.91% increase from ofP1.86 million in 2010.

DEPRECIATION AND AMORTIZATION

Depreciation amounted to P3.00M, an increase of 1% from last year’s balance of P2.97M. OTHER INCOME



of 39

During this year, the company recognized other income of P 1.46 million, an interest income from its bank money placement. Other income for the year increased by 10.61%, compared to last year’s other income of P1.32million.

CASH

The Company’s total cash amounted to P56.37 million, as of December 31, 2011, an increase of 0.98% from P55.82 million, as of December 31, 2010.

RECEIVABLES

Accounts Receivables totaled P10.92 million as of December 31, 2011, compared to P10.28 million as of December 31, 2010, for a 6.23% increase.

INVESTMENTS

Total Investments in shares of stock was at P28.38M as of December 31, 2011, compared to P27.59M of last year. PROPERTY AND EQUIPMENT

The net value of property, plant and equipment decreased by 28%, from P10.24 million as of

December 31, 2010 to P7.33 million by the end of year 2011.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES There was an increase of 55% in Accounts Payable and Accrued Expenses from P4.10 million as of December 31, 2010 to P1.82 million as of December 31, 2011.

Item 7 Financial Statements The audited consolidated financial statements of the Company and subsidiary included in the Company’s report to Stockholders are incorporated herein for reference. Also, the schedules listed in the accompanying Index to Supplementary Schedules are filed as part of this Form 17-A.

Item 8 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes and/ or disagreement in Accounting and Financial Disclosure with the Company’s Accountant for the period under review.



of 39

PART III

CONTROL AND COMPENSATION INFORMATION

Item 9 Directors and Executive Officers of the Registrant (1) Directors, Executive Officers, Promoters and Control Persons.

a. The names and ages of the nominees for directors and the current officers of the Company are as follows:

Name Current Position Citizenship Age Years in Office

J. Roberto C. Delgado Chairman/CEO/Director Filipino 67 October 2001 to present

Modesto N. Cervantes Vice-Chairman/Director Filipino 74 1989 to present

Socorro Z. Niro President/Director Filipino 61 October 2001 to present

Jonathan M. Cervantes Director Filipino 47 1998 to present

Renato Vicente R. Martinez

General Manager Filipino 44 March 2006 to present

Carlo M. Severino Corporate Treasurer Filipino 46 June 2005 to present

Millicent Rose L. Sim Asuncion

Corporate Secretary Filipino 41 March 2004 to present

Felipe P. Araullo Independent Director Filipino 66 July 2007 to present

Rafael M. Garcia III Independent Director Filipino 67 July 2007 to present

Clifford W. Beek Director American 55 July 2008 to present

b. List of Position, offices and work experiences of director nominees and its current officers:

NAME OF DIRECTORS POSITION / OFFICES / WORK EXPERIENCES

MODESTO N. CERVANTES Chairman of the Board since October 1996 and a Director of the Company since incorporation. He was President of Easycall from 1989 until November 2001. He holds a Bachelor of Science Degree in Business Administration from the University of the Philippines. He is the Chairman and President of Bormaheco, Inc. from March 1975 to present, and the President of

Flowcrete International Philippines, Inc. from September 1976 to January 1995. He also served as a director of DBS Bank Philippines from 1999 until 2001.



of 39


J. ROBERTO C. DELGADO

Elected Director of the Company in October 2001 and also the Company's Chairman up to the present. His other experiences, which cover at least the last five years, are shown hereinafter which are currently being held until the present: Chairman and Chief Executive Officer of Transnational Diversified

Group, Inc., Transnational Diversified Corp., NYK Fil-Japan Shipping Corp., NYK Fil-Ship Management, Inc., Dolphin Ship Management Inc., Apex Philippines Equities Corp., Asiana Phils .GSA Inc., Transcontainer Ltd. Phils., NYK Logistics Phils., Inc. Transnational Plans, Inc, Transnational Medical & Diagnostics Centre Inc, Vision Air and Sea Support Inc., He is also the

Chairman of Yusen Air and Sea Services Phils., Inc. Mr. Delgado is a Director of The Silk Road Hotels in the People's Republic of China, Karlamar Shipping SA in Panama. Mr. Delgado is a graduate of Ateneo de Manila University (BA Economics) and he obtained his MBA in Stanford University and attended

Harvard Business School (Owner/President Management Program). SOCORRO Z. NIRO Elected Director of the Company in October 2001 up to the present and is currently ECPI's President since 2002. Her other experiences, which cover at least the last five years are shown hereinafter which are currently being held until the present: She is also currently the Group Chief Finance

Officer and Treasurer of Transnational Diversified Group, Inc., Transnational Diversified Corp. NYK Fil-Japan Shipping Corp., NYK Fil-Ship Management Inc., Dolphin Ship Management Inc., Emery Transnational Air Cargo Corp., Asiana Phils.GSA, Inc., Transnational Aero Corp., Transcontainer Ltd. Phils., Yusen Air and Sea Services Phils, Inc., NCT Transnational Corp., Adventure

International Tours Inc., Vision Air and Sea Support, Inc.. Antonelli Realty Holdings Inc. She is also the I.T. Division President of TDG, and President of TDG World Corporation, Global E-Business Solutions Inc., and Vice-Chairman & CEO of Transnational E-Business Solutions, Inc. Ms. Niro is a Magna cum laude graduate of the Philippine College of Commerce (BSC

Accounting) a CPA, with further studies in National University of Singapore (Stanford-NUS Executive Program) and in Harvard Business School (OPM Key Executive Program).

JONATHAN M. CERVANTES Elected Director of the Company on 30 October 2000 until the present. He joined EasyCall in May 1996 as the Technical Support Officer until 2000. He was promoted as the Company's Vice President for the Call Center Business effective 01 July 2000 and held the position until 2005. He is the General Manager of Logicall Incorporated (March 2007 to present). He is also a

Director of Bormaheco, Inc. from 1996 up to present. He graduated from De la Salle University with a Bachelor of Science degree in Computer Science.

FELIPE P. ARAULLO

Elected as an Independent Director of ECPI during the last Annual Stockholders’ Meeting held on July 2007. His initial job experience was with Bislig Bay Lumber Co. in 1966 to 1967 as a work methods analyst. Thereafter,

He worked with IBM for over 26 years, from 1968 to 1994 and assumed various job positions namely: programmer, systems engineer, instructor, advisory marketing representative and executive. The years spent in IBM were centered mainly in marketing, technical support and sales, education and training. On January 1982 to March 1985 he was sent on a foreign

assignment to IBM Hong Kong as a staff instructor. His second foreign assignment was on January 1991, he was a program manager to IBM International Sales Office based in Mt. Pleasant, NY. He graduated with a bachelor’s degree in Mechanical Engineering from De La Salle College in

1966. Passed the government board exams for mechanical engineers. He also holds a Masters Degree in Business Administration (MBA) from the University of the Philippines. He joined EEMC Asia, Inc. in May 1996 and was connected with the company until February 1999. He is currently involved in part-time consulting in the areas of information technology (IT) and

marketing training.



of 39


RAFAEL M. GARCIA, III Re-elected as an Independent Director in the last Organizational Meeting held on July 25, 2007. He is Chairman, CEO and Founder of Mega Computer Corporation (March 1983 to present), Mega Data Computer (August 1984 to present), Omega Computer Corporation (August 1983 to present), Ramega

Resources & Development Corporation (March 1994 to present), Home Data Corporation (June 1995 to present) and First Bloom Orchids, Incorporated (February 1995 to present). He is a graduate of the Washington State University with the degree of MS Computer Science, BS Mathematics, BA, Economics and BS Electronic Engineering. He took his Management

Development Program from The Asian Institute of Management. MS Strategic Business Economics from the University of Asia and Pacific and CEO/Top Management Program from WPO/Kellogg World Presidents Institute. CLIFFORD W. BEEK Elected as Director of the Company on 14 July 2008 up to the present. For over fifteen (15) Years, he worked with different Telecommunications

Companies in various parts of the US and Asia, namely, Terrestar Asia, as CEO and President (March 2007 to April 2008). Other previous work experience and position include CoCo Communications, as EVP Worldwide (October 2005 - March 2007); 360Networks, as SVP of Network Development & Sales (September 2002- September 2005); Teleglobe

International, Inc., as Director of Corporate Development (February 1997 - September 2002); Cable & Wireless PLC, as Sr. Marketing Manager (March 1995 - January 1997); Teletronics International, Inc., as General Manager (August 1993 - February 1995); Metropolitan Millwork Co., Inc.,

as President (September 1984 - August 1993). He graduated with a Bachelors Degree of Arts in Political Science Minor in Accounting from George Washington University in Washington D.C. in June 1978. He took his Masters Degree in Business Administration (MBA) from Wharton School University of Pennsylvania in May 1993.

CARLO M. SEVERINO Appointed Treasurer last 28 June 2005 up to the present. He is a graduate of Ateneo de Manila University with a degree of BS Physics, major in Computer Engineering and took his master in Business Management course from Asian Institute of Management, consistent Dean’s Lister and graduated with Distinction on May 1998. He joined TDG on January 2002 as Executive Vice

President up to 2003. He was the Senior Manager for Logistics of Emery Transnational Air Cargo Corporation from January 2000 to December 2001 and Vice President for TDG Corporate Center from June 1998 to December 1999. He currently holds the position of Deputy Chief Finance Officer of Transnational Diversified Group . RENATO VICENTE R. MARTINEZ

Elected as General Manager of the Company on 22 March 2006 up to the

present. He graduated from De La Salle University with a degree of B.S. Computer Science major in Information Technology. He took his master in Business Management course from Asian Institute of Management and graduated in 1998. He is holding various positions in Transnational

Diversified Group such as Deputy President of ICT Division from 2005 to present. He is also the President & General Manager of Transnational E-Business Solutions, Inc. from 2005 to present. He is tasked to assist the Division President in overseeing technology implementation of member companies. He was the Deputy President of Air and Travel Division from April

2003 to December 2005. Mr. Martinez was IT Manager of Transnational Diversified Group, Inc., from 1998 to 2001. He also worked with RFM Corporation as Senior Systems Analyst from 1994 to 1997. In 1990 to 1993 he was employed with Citibank N.A. and was in charge of Master Card Interchange Transaction processing.

MILLICENT L. SIM-ASUNCION Was appointed as the Corporate Secretary and Compliance Officer last July 2007 up to the present. She has been the Asst. Corporate Secretary July 2004 to July 2007. She graduated with the degree of Juris Doctor from Ateneo de Manila in 1996 and took her Master in Management from the

Asian Institute of Management in 2002. She is the corporate secretary of various member companies of Transnational Diversified Group since September 2002 up to the present and was the Manager for Contracts Administration Department of Clark Development Corporation from April

1999 to August 2001. She was an Associate Lawyer of Puno & Puno Law Offices from June 1997 to April 1999.



of 39

(2) Significant Employees -

There are no employees who are not Executive Officers but are expected by the company to make an important contribution to the business.

(3) Family Relationships

Mr. Jonathan M. Cervantes, a Director is the son of Mr. Modesto N. Cervantes, the Company’s Vice Chairman.

(4) Involvement in Certain Legal Proceedings There are no pending Legal Proceedings for the Company.

Item 10 Compensation of Directors and Executive Officers

None of the directors receive compensation for serving as directors of the Company, except reasonable per diems for attendance in Board meetings. The company expects the same number of attendees during Special and Regular Board Meetings and Annual Stockholders Meetings, thus the amount of per diems to be incurred for 2010 will be the same as that of the previous year.

The aggregate compensation and bonuses paid to executive officers are as follows:

Name Principal Position Calendar Year

Salary Bonus 2011 2010

A) Officers & Directors listed below (aggregate) 113,529.52 108,823.62 None None

Jose Roberto C. Delgado - Chairman of the Board** None None Modesto N. Cervantes - Vice Chairman of the Board* None None

Socorro Z. Niro - President None None

Jonathan M. Cervantes - Director

None None

Millicent S. Asuncion - Corporate Secretary None None

Felipe Araullo - Director None None Carlo M. Severino - Corporate Treasurer None None

Renato Vicente R. Martinez - General Manager None None

Rafael Garcia III - Director None None

Clifford W. Beek - Director None None

B) All Officers and Directors as a Group unnamed

** The above compensation represents merely per diem payment for their attendance in meeting, not exceeding P 10,000 per meeting.



of 39

Item 11 Security Ownership of Certain Beneficial Owners and Management As of December 31, 2011 the Company knows no one who beneficially owns in excess of 10% of the Company’s common shares, except as set forth in the table below:

Title of Class

Name and Address of Owner

Nature of owners

hip

Name of Beneficial Owner &Relationship

with the Record Owner

Citizenship

Amount & Nature of Beneficial

Ownership

% of Class

Common Global e-Business Solutions, Inc. (GEBSI) Mary Bachrach Building, A. C. Delgado cor. 25th St. Port Area, Manila

B Transnational Diversified Corporation- Parent Company *J. Roberto C. Delgado/ * Socorro Z. Niro, nominee shareholders of GEBSI

Filipino 100,639,830 67.0932%

Common Star Asia Technologies, PTE Ltd. (SAT) #78 Shenton Way #28-01 Lippo Center, Singapore 079120

B Star Asia Technologies, PTE Ltd. (SAT) ** Clifford W. Beek- Nominee shareholder of SAT

Singaporean 31,256,192 20.8374%

Common

Modesto N. Cervantes c/o ECPI Mary Bachrach Building, A. C. Delgado cor. 25th St., Port Area Manila

R Direct Ownership Filipino 3,017,087 2.0113%

Common Palos Verde Land Corp. No. 9 Libra St., Bel-air 3, Makati City

B ***Modesto N. Cervantes Filipino 5,678,918 3.7859%

TOTAL

140,592,027

93.7278%

Item 11 Security Ownership of Management:

Title of Class Name of Beneficial Owner Citizenship Amount and

Nature of Beneficial Owner

% of Class

Common J. Roberto R. Delgado Filipino 1 0.0000%

Chairman of the Board/CEO (Indirect)

Common Modesto N. Cervantes Filipino 3,017,087 2.0113% Vice-Chairman (Direct)

Common Socorro Z. Niro Filipino 1 0.0000% President/COO (Indirect)

Common Jonathan M. Cervantes Filipino 3,094 0.0020% Director (Direct)



of 39

Common Rafael M. Garcia III 1 0.0000% Independent Director (Indirect)

Common

Felipe P. Araullo Independent Director

Filipino

1 (Indirect)

0.0000%

Common

Clifford W. Beek Director

American 1 (Indirect)

0.0000%

TOTAL 3,020,186 2.0133%

Item 12 Certain Relationships and Related Transactions

Mr. J. Roberto C. Delgado and Ms. Socorro Z. Niro are nominees of GEBSI, a domestic corporation, which owns 60% of the outstanding capital stock of the Company. The Company’s related parties include its parent companies, stockholders, subsidiaries, affiliates of the Company’s key management and others as described below: Transnational Diversified Corp. (TDC) is the parent and holding company that wholly owns GEBSI and TESI. J. Roberto C. Delgado is the Chairman of the Board of the Company and is also the founder and Group Chairman of the Board of TDG. Socorro Z. Niro is the President of the Company, and is also the Vice-Chairman of TESI and Group Treasurer and Chief Finance Officer of TDG. Millicent Sim-Asuncion is the Corporate Secretary of the Company and its subsidiaries, and is also Chief Legal Counsel and Corporate Secretary of TDG. Carlo M. Severino is the Treasurer of the Company. He is concurrently the Assistant Treasurer and Deputy Chief Finance Officer of TDG.

Renato Vicente R. Martinez is the General Manager of the Company and the President of TESI. He is also the Deputy President for the ICT Division of TDG.

Felipe P. Araullo is an independent director of TDC.

During the past 5 years up to the latest date, no director of the Company has received or become entitled to receive any benefit by reason of a contract with the Company, a related corporation, a firm, of which the director is a member or a company in which a director has a substantial financial interest



of 39

PART IV

CORPORATE GOVERNANCE Item 13 Discussion on Corporate Governance The company is in compliance with leading practice on corporate governance and made NO deviations from the Company’s Manual of Corporate Governance. Satisfied with its present policy on corporate governance, the company sees NO need to improve it.

During the Annual Stockholders Meeting held 15 June 2011 the following were disclosed as follows: 1. Atty. Millicent L. Sim-Asuncion was elected as Corporate Secretary of the company during

the Stockholders Meeting last 15 June 2011. During the Stockholders meeting of the company on 15 June 2011 the following matters

were taken up and approved by the Board of Directors:

2. Election of the following as the members of the Board of Directors of the Company for the

ensuing years until their successors are qualified and elected:

a) Mr. J. Roberto C. Delgado

b) Mr. Modesto N. Cervantes

c) Ms. Socorro Z. Niro

d) Mr. Jonathan M. Cervantes

e) Mr. Clifford W. Beek

As Independent Directors:

a) Mr. Felipe P. Araullo

b) Mr. Rafael M. Garcia III

3. Appointment of the corporate officers and members of the Board Committees for the

ensuing years was approved, and they were as follows:

Election of the following officers of the Company for the ensuing year:

Chairman of the Board - Mr. J. Roberto C. Delgado Vice Chairman - Mr. Modesto N. Cervantes



of 39

President - Ms. Socorro Z. Niro General Manager - Mr. Renato Vicente R. Martinez Treasurer - Mr. Carlo M. Severino Corporate Secretary - Ms. Millicent L. Sim-Asuncion

4. Election of the members of various committees created by the Board in accordance with

its Manual of Corporate Governance. Nominations Committee: Chairman - Mr. J. Roberto C. Delgado Member - Mr. Modesto N. Cervantes Member - Mr. Rafael M. Garcia, III

Compensation Committee:

Chairman - Mr. J. Roberto C. Delgado Member - Mr. Modesto N. Cervantes Member - Mr. Felipe P. Araullo Audit Committee:

Chairman - Mr. Felipe P. Araullo Member - Ms. Socorro Z. Niro Member - Mr. Clifford W. Beek

Corporate Information Officer - Mr. Zaki Delgado Corporate Compliance Officer - Ms. Millicent L. Sim-Asuncion

On 27 January 2012, the company submitted a certification of attendance in the Board and Stockholders meetings of each director for the calendar year 2011 to the Securities and Exchange Commission as follows:

a. Mr. J. Roberto Delgado – attended two (2) out of three (3) board meetings and one (1) stockholders’ meeting;

b. Mr. Modesto N. Cervantes – attended three (3) board meetings and one (1)

stockholders’ meeting;

c. Ms. Socorro Z. Niro - attended three (3) board meetings and one (1) stockholders’ meeting;

d. Mr. Jonathan M. Cervantes - attended three (3) board meetings and one (1)

stockholders’ meeting;

e. Mr. Felipe Araullo – attended three (3) board meetings and one (1) stockholders’ meeting;

f. Mr. Rafael Garcia, III – attended three (3) board meetings and one (1) stockholders’

meeting;



of 39

g. Mr. Clifford Beek - attended two (2) out of three (3) board meetings and one (1) stockholders’ meeting;

On 27 January 2012, the company has submitted certificate of Corporate Governance to the Securities and Exchange Commission, generally complying with its Manual of Corporate Governance, stating the following:

1. Atty. Millicent L. Sim-Asuncion was re-elected as Corporate Secretary of the company during the Stockholders Meeting last 15 June 2011.

2. The Audit Committee met last 05 April 2011 to review and approve for submission to the

Board of Directors the 2010 Audited Financial Statements of the Company.

3. The Nomination Committee met last 05 April 2011 to recommend new nominees for the Board of Directors.

4. The Compensation Committee did not hold any meetings for the calendar year 2011.

5. During the Stockholders meeting of the company held last 02 March 2010 the following

were taken up and approved by the Board of Directors :

a. Appointment of Sycip, Gorres, Velayo and Co. (Ernst and Young Philippines) as the external auditors of the Company for the calendar year ending December 31, 2011.



of 39

PART V

EXHIBITS AND SCHEDULES

Item 14 Exhibits and Reports on SEC Form 17-C (a) Exhibits

See accompanying Index to Exhibits.

The other exhibits, as indicated in the Index to Exhibits are either not applicable to the Company or require no answer. (b) Reports on SEC Form 17-C `Following are the reports submitted under SEC Form 17-C during the last six months: On 25 January 2011 the following matters items were reported:

RESOLUTION 2011-01-01 “RESOLVED, that ATTY. J. JOHN S. SALIBA ¸ be appointed effective 25 January

2011 as Acting Corporate Secretary and be designated as the Authorized signatory for any and all disclosure documents with the Securities and Exchange Commission on behalf of the company’s Compliance Officer, ATTY. MILLICENT L. SIM-ASUNCION until she returns from maternity leave.”

RESOLUTION NO. 2011-01-02

“RESOLVED, that the President of Easycall Communications Philippines, Inc. (“the Corporation”), Ms. Socorro Z. Niro, be authorized, as she is hereby authorized to negotiate, sign and execute any and all documents, contracts and/or agreements necessary to engage and provide wireless head-end services to Star Asia Technologies, Pte Ltd. (SAT), Broadband Broadcast Services Pte. Ltd (BBS), and the latter’s Philippine affiliate, if any. “RESOLVED FURTHER, that the Board of Directors of the Corporation, hereby authorizes, Ms. Socorro Z. Niro and the General Manager of the Corporation, Mr. Renato Vicente R. Martinez to negotiate, transact with, apply for and sign any and all documents or applications with



of 39

any supplier or government agency for the purpose of importing, owning, establishing and operating the wireless head-end facility and all its related equipment. RESOLVED LASTLY, that the Board of Directors of the Corporation, hereby authorizes, Ms. Socorro Z. Niro and the General Manager of the Corporation, Mr. Renato Vicente R. Martinez to negotiate, transact with, apply for and sign any and all documents or applications to enable the Corporation to establish a co-location facility with BBS and register the same as a Subic Bay Metropolitan Authority (SBMA) registered enterprise.

SO RESOLVED.”

RESOLUTION 2011-01-04

“RESOLVED, AS IT IS HEREBY RESOLVED, that the Board of Directors of Easycall Communications Phils., Inc. (“the Corporation”) authorize, as it is hereby authorizes Bank of the Philippine Island, the Stock Transfer Agent, to handle the issuance and transfer of 1,524,365 uncertificated Easycall Communications Philippines, Inc. (ECP) shares;

RESOLVED FINALLY, that Ms. Socorro Z. Niro, President, Mr. Renato Vicente R. Martinez, General Manager and Ms. Millicent L. Sim-Asuncion, Corporate Secretary be designated as the Authorized signatories for any and all documents necessary to Carry out the intent of this resolution, for and on behalf of the Corporation; SO RESOLVED”

RESOLUTION 2011-01-05 “RESOLVED, that the annual stockholders meeting of the Company be postponed

to 15 June 2011 to be held at the TDG Lighthouse Theater at 10:00 a.m.” “RESOLVED FURTHER, that the record date of the stockholders who are allowed

to vote during the said meeting is set at 31 May 2011.

On 16 March 2011, the following matter was reported: We would like to inform you that Easycall Communications Philippines, Inc. will be announcing to the public that it has entered into an agreement with Samsung Electronics Co., Ltd. for a Mobile Wimax trial. For this, Samsung is proving Mobile Wimax Systems, terminals, and engineering support that will enable Easycall to provide high-quality and high-speed broadband services within 3.4Ghz band.



of 39

On 24 March 2011, the following items were reported:

RESOLUTION NO. SP2011-03-01

“WHEREAS, there is a need for the company to appoint an authorized

representative for the payment of the acquisition of one (1) share of The City Club at Alphaland Makati Place (TCCAMP); Thus, it is hereby- RESOLVED, AS IT IS HEREBY RESOLVED, that Ms. Socorro Z. Niro, company’s President, is hereby appointed as authorized representative for the payment of the acquisition of one (1) share of The City Club at Alphaland Makati Place (TCCAMP); and RESOLVED FINALLY, that all previous resolutions not consistent herewith are deemed revoked, cancelled and made void.”


RESOLVED, that METROPOLITAN BANK & TRUST COMPANY (hereinafter called “METROBANK”) be, and is hereby, designated a depository of the funds/monies of the CORPORATION and that the CORPORATION be, and is hereby, authorized to open savings, time, current and/or trust accounts with METROBANK, Head Office, and/or any of its branches.

RESOLVED, FURTHER, that any Two (2) of the following be authorized (i) to

sign, execute and/or deliver any and all documents in connection with the opening of any account(s) with or investment of any funds through METROBANK; (ii) to withdraw or transfer the funds/monies of the CORPORATION by checks, receipts, drafts, bills of exchange, withdrawal slips, orders for payment or otherwise, and (iii) to sign, endorse, draw, accept, make, execute and/or deliver, for negotiation, payment, deposit or collection, checks, receipts, drafts, bills of exchange, orders for payment and/or other similar instruments in connection with the account(s), including the authority to avail of all other banking services, apply for and enroll in electronic banking channels and appoint its authorized users:

Bank Position Specimen Signature

Socorro Z. Niro President __________________ Carlo M. Severino Treasurer __________________ Renato Vicente Martinez General Manager __________________

RESOLVED, FURTHERMORE, that METROBANK, its directors, officers, employees, agents or authorized representatives are each entitled and authorized to rely on these instructions as valid, binding, and effective upon the CORPORATION and that METROBANK, its directors, officers, employees, agents or authorized representatives shall not be liable for any act done or suffered by them in reliance of the above instructions, it being



of 39

understood that any and all risks and costs arising from the above instructions shall be for CORPORATION’s sole and exclusive account.

RESOLVED, FINALLY, that all things/acts done and documents executed and

entered into by the aforementioned signatories pursuant to and in accordance with the foregoing authorities are hereby confirmed, affirmed and ratified. Likewise all things/acts done and documents executed and entered into prior to this Resolution are hereby affirmed, confirmed and ratified.


RESOLVED, that the company be authorized to close the Saving/Current Account(s)

#00-072-200199-0 maintained with Union Bank, Ayala branch under the account name of Easycall Communications Philippines, Inc.

RESOLVED FINALLY, that all previous resolutions not consistent herewith are

deemed revoked, cancelled and made void.”


RESOLVED THAT, that the record date of the stockholders who are allowed to vote

during the said meeting is set at 01 May 2011.

RESOLVED” that the abovementioned resolution shall take effect immediately and until otherwise ordered, the authority granted by virtue of this resolution shall continue in full force and effect”.

On 25 March 2011 the following items were reported:


“WHEREAS, there is a need for the company to appoint an authorized

representative for the payment of the acquisition of one (1) share of The City Club at Alphaland Makati Place (TCCAMP); Thus, it is hereby- RESOLVED, AS IT IS HEREBY RESOLVED, that Ms. Socorro Z. Niro, company’s President, is hereby appointed as authorized representative for the payment of the acquisition of one (1) share of The City Club at Alphaland Makati Place (TCCAMP); and RESOLVED FINALLY, that all previous resolutions not consistent herewith are deemed revoked, cancelled and made void.”




of 39

RESOLVED, that METROPOLITAN BANK & TRUST COMPANY (hereinafter called “METROBANK”) be, and is hereby, designated a depository of the funds/monies of the CORPORATION and that the CORPORATION be, and is hereby, authorized to open savings, time, current and/or trust accounts with METROBANK, Head Office, and/or any of its branches.

RESOLVED, FURTHER, that any Two (2) of the following be authorized (i) to

sign, execute and/or deliver any and all documents in connection with the opening of any account(s) with or investment of any funds through METROBANK; (ii) to withdraw or transfer the funds/monies of the CORPORATION by checks, receipts, drafts, bills of exchange, withdrawal slips, orders for payment or otherwise, and (iii) to sign, endorse, draw, accept, make, execute and/or deliver, for negotiation, payment, deposit or collection, checks, receipts, drafts, bills of exchange, orders for payment and/or other similar instruments in connection with the account(s), including the authority to avail of all other banking services, apply for and enroll in electronic banking channels and appoint its authorized users:

Name Position Specimen Signature Socorro Z. Niro President _________________ Carlo M. Severino Treasurer _________________ Renato Vicente R. Martinez Gen. Manager _________________ RESOLVED, FURTHERMORE, that METROBANK, its directors, officers, employees,

agents or authorized representatives are each entitled and authorized to rely on these instructions as valid, binding, and effective upon the CORPORATION and that METROBANK, its directors, officers, employees, agents or authorized representatives shall not be liable for any act done or suffered by them in reliance of the above instructions, it being understood that any and all risks and costs arising from the above instructions shall be for CORPORATION’s sole and exclusive account.

RESOLVED, FINALLY, that all things/acts done and documents executed and

entered into by the aforementioned signatories pursuant to and in accordance with the foregoing authorities are hereby confirmed, affirmed and ratified. Likewise all things/acts done and documents executed and entered into prior to this Resolution are hereby affirmed, confirmed and ratified.


RESOLVED, that the company be authorized to close the Saving/Current Account(s)

#00-072-200199-0 maintained with Union Bank, Ayala branch under the account name of Easycall Communications Philippines, Inc.

RESOLVED FINALLY, that all previous resolutions not consistent herewith are

deemed revoked, cancelled and made void.”


RESOLVED THAT, that the record date of the stockholders who are allowed to vote

during the said meeting is set at 01 May 2011.



of 39

RESOLVED” that the abovementioned resolution shall take effect immediately and until otherwise ordered, the authority granted by virtue of this resolution shall continue in full force and effect”.

On 16 June 2011 the following items were reported.

We would like to inform you that more than two-thirds (2/3) of the stockholders of Easycall Communications Philippines, Inc. who attended the Annual Stockholders’ Meeting held on 15 June 2011, voted, approved, ratified and confirmed the following matters: The election of the following as the members of the Board of Directors of the Company for the ensuing years until their successors are qualified and elected:

1. Mr. J. Roberto C. Delgado 2. Mr. Modesto N. Cervantes 3. Ms. Socorro Z. Niro 4. Mr. Jonathan M. Cervantes 5. Mr. Clifford W. Beek

As Independent Directors: 1. Mr. Felipe P. Araullo 2. Mr. Rafael M. Garcia III

(Bio-data of the above Directors have been submitted to the Exchange as part of the SEC -20is Definitive Report and 17-C). Item 4 (b) – Election of Directors Right after the Annual Stockholders Meeting, the newly elected Board held its Organizational Meeting, where the appointment of the corporate officers and members of the Board Committees for the ensuing years was approved, and they were as follows:

1. The election of the following officers of the Company for the ensuing year:

Chairman of the Board - Mr. J. Roberto C. Delgado Vice Chairman - Mr. Modesto N. Cervantes President - Ms. Socorro Z. Niro General Manager - Mr. Renato Vicente R. Martinez Treasurer - Mr. Carlo M. Severino Corporate Secretary - Ms. Millicent L. Sim-Asuncion

2. Election of the members of various committees created by the Board in accordance with its Manual of Corporate Governance.

Nominations Committee:

Chairman - Mr. J. Roberto C. Delgado Member - Mr. Modesto N. Cervantes Member - Mr. Rafael M. Garcia, III



of 39

Compensation Committee: Chairman - Mr. J. Roberto C. Delgado Member - Mr. Modesto N. Cervantes Member - Mr. Felipe P. Araullo Audit Committee: Chairman - Mr. Felipe P. Araullo Member - Ms. Socorro Z. Niro Member - Mr. Clifford W. Beek Corporate Information Officer - Mr. Zaki Delgado Corporate Compliance Officer/s - Mr. Bienvenido S. Bautista

- Ms. Millicent L. Sim-Asuncion On 05 July 2011, the following matter was reported:

Easycall Communications Philippines, Inc. (ECPI) would like to inform you of the resignation of Mr. Bienvenido S. Bautista as Corporate Compliance Officer effective 04 July 2011 for health reasons. Considering that there were 2 Corporate Compliance Officers appointed, during the last Organizational Meeting of ECPI held last 15 June, 2011, Atty. Millicent L. Sim-Asuncion shall now act as the sole Corporate Compliance Officer of the Company until further notice. On 04 August 2011 the following items were reported:

Easycall Communications Philippines, Inc. (ECPI) would like to inform you that our major shareholder Global e-Business Solutions, Inc. (GEBSI) through its designated stock broker Apex Philippines Equities Corporation (APEX) will be selling 8,000,000 shares of ECPI at market price to the employees of the affiliate companies of the Transnational Diversified Group (TDG) and APEX clients. To initiate the marketing activities of GEBSI please find attached the marketing material for release upon the approval of the Exchange of this disclosure GGLLOOBBAALL EE--BBUUSSIINNEESSSS SSOOLLUUTTIIOONNSS,, IINNCC..

Good day Fellow TDGer's and APEX clients!

Global E-Business Solutions, Inc. (GEBSI) is the IT investments arm of the Transnational Diversified Group (TDG). It is also a major stockholder of Easycall Communications Philippines, Inc. (“ECPI” or the “Company”), a publicly listed company which is now venturing in the wireless broadband business.

In line with the requirement of the Philippine Stock Exchange that all publicly listed companies must have at least 10% of its shares held by the public, GEBSI is now selling 8,000,000 of its ECPI shares to interested TDGers and APEX clients at market price.



of 39

You may want to take a look at ECPI’s brief profile below should you wish to consider the said company in your securities investment portfolio.

COMPANY BACKGROUND:

(For more information, please visit www.easycall.com.ph.)

Easycall Communications Philippines, Inc. is a publicly-listed company whose vision is to be a world-class business solutions provider of cost-effective technology, connectivity, and interaction solutions to domestic and foreign markets.

The Company started commercial operations in May 1989, pioneering in the alphanumeric paging services. In 1992, ECPI became the market leader in the industry and has maintained this leadership since, achieving exceptional growth in its subscriber base until late 1999 when the SMS of cellular phone companies started to impact the paging industry.

In 2009, ECPI saw the entry of Star Asia Technologies PTE, Ltd (SAT) into the Company. SAT is a developer of integrated mobile satellite and terrestrial broadband wireless network services. SAT is working towards advancements in the development of an all IP-based integrated satellite and terrestrial mobile communications network throughout Southeast Asia.

Today, ECPI is a provider of telecommunication and data network services using 15MHz within the 3.4GHz band. The frequency allocation is intended to be used in conjunction with ECPI’s Nationwide Broadband Wireless Access license as issued by the National Telecommunications Commission. Current projects in the pipeline include a partnership with Samsung for the provision of Mobile WiMAX systems, terminals, and engineering support that will enable ECPI to provide high-quality and high-speed broadband services within the 3.4GHz spectrum and an on-going project with SAT and Broadband Broadcast Services PTE, Ltd for a head-end satellite co-location facility in Subic.

CONTACT PERSONS

For more information regarding ECPI, please get in touch with Atty. Millicent S. Asuncion at 02-8308888 loc. 8117 or email her at [email protected].

For stock trading related concerns and inquiries, kindly get in touch with BUTCH EDWIN MENESES of APEX PHILIPPINES EQUITIES CORPORATION at 09209786860 / 02-5275291 or email him at [email protected].

http://www.easycall.com.ph/

mailto:[email protected]

mailto:[email protected]

EASYCALL COMMUNICATIONS PHILIPPINES, INC.

INDEX TO FINANCIAL STATEMENT AND SUPPLEMENTARY SCHEDULES

SEC FORM 17-A

AUDITED FINANCIAL STATEMENTS

Statement of Management's Responsibility for Financial Statements Exhibit A

Consolidated Financial Statements:

Report of Independent Public Accountants Exhibit B

Balance Sheets as of December 31, 2011 and 2010 Exhibit B

Statements of Income and Retained Earnings for the years Exhibit B

Ended December 31,2011 and December 31, 2010

Statements of Cash Flows Ended December 31, 2011 and Exhibit B

December 31, 2010

Notes to Consolidated Financial Statements Exhibit B

Audited Parent Company Financial Statements

Report of Independent Public Accountants

Balance Sheets as of December 31, 2011 and 2010

Statements of Income and Retained Earnings for the years

Ended Dec. 31,2011 and Dec. 31, 2010 and Dec. 31, 2009

Statements of Cash Flows Ended December 31, 2011,

December 31, 2010 and December 31, 2009

Notes to Financial Statements

SUPPLEMENTARY SCHEDULES

Report of Independent Public Accountants on Supplementary

Schedules of Consolidated Financial Statements

Schedule A - Financial Assets Schedule A

Schedule B - Amounts Receivable from Directors, Officers, Employees, NA

Related Parties, and Principal Stockholders (Other than Related parties)

Schedule C - Amounts Receivable from Related Parties which are Eliminated Schedule C

during the Consolidation of Financial Statements (New)

Schedule D - Intangible Assets - Other Assets NA

Schedule E - Long-Term Debt NA

Schedule F - Indebtedness to Related Parties Schedule F

Schedule G -Guarantees of Securities of Other Issuers NA

Schedule H - Capital Stock Schedule H

EASYCALL COMMUNICATIONS PHILIPPINES, INC.

Supplementary Schedules (In Pesos)

31-Dec-11

SCHEDULE A Schedule A - Financial Assets

Beginning Balance Additions Amount Paid/Settled/Adjusted Ending Balance

TRADE AND OTHER RECEIVABLES 10,279,415 639,109 - 10,918,524

TOTAL 10,279,415 639,109 - 10,918,524

SCHEDULE C

during the Consolidation of Financial Statements (New)

Beginning Balance Additions Amount Paid/Settled/Adjusted Ending Balance

EASYCALL E-SERVICES INC. 244,800 - 244,800

TOTAL - 244,800 - 244,800

SCHEDULE F Indebtedness to Related parties

Name of Related Party Beginning Balance Additions Amount Paid/Settled/Adjusted Ending Balance

GLOBAL E-BUSINESS SOLUTIONS INC. 19,543,135 232,851 19,310,284

TOTAL 19,543,135 - 232,851 19,310,284

SCHEDULE H Capital Stock

Title of Issue Number of Shares

Authorized

Number of

Shares Issued &

Outstanding

Number of Shares Held

by Affiliates

Number of Shares held by

Directors, Officers and Employees Others

Common Stock 300,000,000 150,000,000 131,896,022 3,020,186 15,083,792

Schedule C - Amounts Receivable from Related Parties which are Eliminated

Easycall Communications Philippines, Inc.

Parent Company Financial Statements As of December 31, 2011 and 2010 and for Each of the Three Years in the Period Ended December 31, 2011 and Independent Auditors’ Report SyCip Gorres Velayo & Co.

*SGVMC410157*

INDEPENDENT AUDITORS’ REPORT The Stockholders and the Board of Directors Easycall Communications Philippines, Inc. Report on the Parent Company Financial Statements We have audited the accompanying parent company financial statements of Easycall Communications Philippines, Inc., which comprise the parent company balance sheets as at December 31, 2011 and 2010, and the parent company statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31, 2011, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Parent Company Financial Statements Management is responsible for the preparation and fair presentation of these parent company financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of parent company 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 parent company financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the parent company financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the parent company financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the parent company financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the parent company 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 parent company financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

SyCip Gorres Velayo & Co. 6760 Ayala Avenue 1226 Makati City Philippines

Phone: (632) 891 0307 Fax: (632) 819 0872 www.sgv.com.ph BOA/PRC Reg. No. 0001 SEC Accreditat ion No. 0012-FR-2

A member firm of Ernst & Young Global Limited

*SGVMC410157*

- 2 -

Opinion

In our opinion, the parent company financial statements present fairly, in all material respects, the financial position of Easycall Communications Philippines, Inc. as at December 31, 2011 and 2010, and its financial performance and its cash flows for each of the three years in the period ended December 31, 2011 in accordance with Philippine Financial Reporting Standards. Report on the Supplementary Information Required Under Revenue Regulations 19-2011 and 15-2010 Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information required under Revenue Regulations 19-2011 and 15-2010 in Notes 18 and 19 to the parent company financial statements, respectively, is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such information is the responsibility of the management of Easycall Communications Philippines, Inc. 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. SYCIP GORRES VELAYO & CO. Maria Veronica Andresa R. Pore Partner CPA Certificate No. 90349 SEC Accreditation No. 0662-AR-1 (Group A), March 3, 2011, valid until March 2, 2014 Tax Identification No. 164-533-282 BIR Accreditation No. 08-001998-71-2009, June 1, 2009, valid until May 31, 2012 PTR No. 3174820, January 2, 2012, Makati City April 4, 2012

*SGVMC410157*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. PARENT COMPANY BALANCE SHEETS December 31 2011 2010

ASSETS

Current Assets Cash and cash equivalents (Note 4) P=54,989,650 P=54,324,526 Trade and other receivables - net (Note 5) 9,391,322 8,806,704 Prepaid expenses and other current assets 197,678 143,922 64,578,650 63,275,152 Assets held for sale (Note 8) 2,081,535 2,081,535 Total Current Assets 66,660,185 65,356,687

Noncurrent Assets Investments in shares of stock (Note 6) 19,479,788 19,479,788 Property and equipment - net (Note 7) 7,297,094 10,226,654 Input value-added tax (VAT) 1,873,490 1,901,744 Other noncurrent assets 450,000 – Total Noncurrent Assets 29,100,372 31,608,186

TOTAL ASSETS P=95,760,557 P=96,964,873

LIABILITIES AND EQUITY

Current Liabilities Trade and other payables (Note 9) P=561,185 P=1,877,761 Advances from a stockholder (Notes 1 and 10) 19,310,284 19,543,135 Total Current Liabilities 19,871,469 21,420,896

Equity Capital stock - P=1 par value (Notes 1 and 11) Authorized - 300,000,000 shares Issued - 150,000,000 shares 150,000,000 150,000,000 Deficit (Note 1) (74,110,912) (74,456,023) Total Equity 75,889,088 75,543,977

TOTAL LIABILITIES AND EQUITY P=95,760,557 P=96,964,873 See accompanying Notes to Parent Company Financial Statements.

*SGVMC410157*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31. 2011 2010 2009

SERVICE INCOME (Note 1) P=4,480,413 P=4,633,388 P=3,114,112

DEPRECIATION EXPENSE (Note 7) 2,971,560 2,847,197 1,340,860

GROSS PROFIT 1,508,853 1,786,191 1,773,252

GENERAL AND ADMINISTRATIVE EXPENSES (Note 12) (3,720,579) (2,123,722) (2,525,742)

OTHER INCOME (Note 13) 2,587,014 5,248,396 2,455,567

INCOME BEFORE INCOME TAX 375,288 4,910,865 1,703,077

PROVISION FOR CURRENT INCOME TAX (Note 15) 30,177 41,806 40,863

NET INCOME 345,111 4,869,059 1,662,214

OTHER COMPREHENSIVE INCOME – – –

TOTAL COMPREHENSIVE INCOME P=345,111 P=4,869,059 P=1,662,214 See accompanying Notes to Parent Company Financial Statements.

*SGVMC410157*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. PARENT COMPANY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 Capital Stock (Notes 1 Deficit and 11) (Note 1) Total

Balances at January 1, 2009 P=91,929,975 (P=80,987,296) P=10,942,679

Exercise of stock rights 11,500,000 – 11,500,000

Total comprehensive income – 1,662,214 1,662,214

Balances at December 31, 2009 103,429,975 (79,325,082) 24,104,893

Issuance of capital stock 46,570,025 – 46,570,025

Total comprehensive income – 4,869,059 4,869,059

Balances at December 31, 2010 150,000,000 (74,456,023) 75,543,977

Total comprehensive income – 345,111 345,111

Balances at December 31, 2011 P=150,000,000 (P=74,110,912) P=75,889,088 See accompanying Notes to Parent Company Financial Statements.

*SGVMC410157*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. PARENT COMPANY STATEMENTS OF CASH FLOWS

Years Ended December 31 2011 2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=375,288 P=4,910,865 P=1,703,077 Adjustments for: Depreciation (Note 7) 2,971,560 2,847,197 1,340,860 Interest income (Note 13) (1,444,014) (977,294) (133,111) Dividend income (Note 13) (1,143,000) (3,967,000) (2,052,540) Operating income before working capital changes 759,834 2,813,768 858,286 Decrease (increase) in: Trade and other receivables (584,618) 20,350 (3,950,583) Prepaid expenses and other current assets (53,756) (137,464) 434,621 Increase (decrease) in trade and other payables (Note 17) (1,316,576) 1,148,354 181,773 Net cash flows from (used in) operations (1,195,116) 3,845,008 (2,475,903) Interest received 1,444,014 854,042 133,111 Income taxes paid (30,177) (41,806) (61,646) Net cash flows from (used in) operating activities 218,721 4,657,244 (2,404,438)

CASH FLOWS FROM INVESTING ACTIVITIES Dividends received (Notes 6) 1,143,000 3,967,000 2,052,540 Decrease (increase) in: Input VAT 28,254 21,950 (1,923,694) Other noncurrent assets (450,000) – – Acquisitions of property and equipment (Notes 7 and 17) (42,000) (134,044) (14,012,578) Acquisition of investments in shares of stock

(Note 6) – (150,000) – Net cash flows from (used in) investing activities 679,254 3,704,906 (13,883,732)

CASH FLOW FROM FINANCING ACTIVITIES Increase (decrease) in advances from a stockholder

(Notes 10 and 17) (232,851) (2,849,197) 1,049,957 Proceeds from issuance of capital stock (Note 11) – 46,570,025 – Net cash flows from (used in) financing activities (232,851) 43,720,828 1,049,957

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 665,124 52,082,978 (15,238,213)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 4) 54,324,526 2,241,548 17,479,761

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) P=54,989,650 P=54,324,526 P=2,241,548 See accompanying Notes to Parent Company Financial Statements.

*SGVMC410157*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS 1. Corporate Information

Easycall Communications Philippines, Inc. (the Company) was registered with the Philippine Securities and Exchange Commission (SEC) on September 25, 1989 primarily to operate a paging business in the Philippines. The Company was listed in the Philippine Stock Exchange (PSE) in May 1992.

Since the closure of the paging business in 2002 as a result of the development of short messaging service of cellular phone companies, the Company engaged into the contact center outsourcing business and information technology related business. The operations of these businesses are carried out by the Company and its wholly owned subsidiary, Easycall e-Services, Inc. (e-Serve), a company engaged in information technology services. Starting November 2005, the management and administrative functions of the Company are being handled by Transnational e-Business Solutions, Inc. (TESI), a related party. Global e-Business Solutions, Inc. (GeBSI), a company organized in the Philippines, owns 67% and 72% interest in the Company in 2011 and 2010, respectively. The ultimate parent of the Company is Transnational Diversified Corporation (TDC), a company organized in the Philippines. In 2004, GeBSI carried out its financial commitment to support the operations of the Company by subscribing P=60,000,000 of the Company’s capital stock. On November 26, 2004, the Board of Directors (BOD) approved the following:

a. Merger of TESI with the Company. TESI is an information technology company, which is a

wholly-owned subsidiary of TDC. b. Private placement by GeBSI for 100 million shares or P=100,000,000 to be taken from the

Company’s unsubscribed capital stock in order to address and enhance the current capital deficiency of the Company.

The BOD further approved that this private placement shall be paid in the form of:

i. The conversion of outstanding advances and liabilities of the Company to GeBSI and its

related parties;

ii. The agreed valuation of TESI to be approved by the shareholders; and

iii. Additional cash infusion. This private placement shall be subject to the necessary clearance and authorization of governing regulatory agencies. Consequently, in 2005, GeBSI converted its advances amounting to P=22,310,284 into deposits for future stock subscriptions.

- 2 -

*SGVMC410157*

On July 19, 2006, the stockholders approved the indefinite suspension of the planned merger to seek further guidance in the documentation and compliance requirements of the plan since the Company is in the course of completing the valuation processes and reviewing the business model of the proposed merger. In October 2008, GeBSI reverted back its deposits for future stock subscriptions to advances from a stockholder (see Note 10). As of April 4, 2012, there is no new development on the planned merger. On April 14, 2010, the PSE approved the application of the Company to list additional 46,570,025 common shares with a par value of P=1.00 per share to cover the private placement with GeBSI at a subscription price at par. As of December 31, 2011, the Company has complied with the minimum public float requirement of the local regulators following the divestment of a portion of the shares owned by GeBSI. GeBSI sold 8 million common shares to the public through its designated stock broker, APEX (Philippines) Equities Corporation, raising the Company’s public float to 10.06 %.

The registered office address of the Company is 2nd Floor, Mary Bachrach Building, 25th corner A.C. Delgado Streets, Port Area, Manila.

The parent company financial statements as of December 31, 2011 and 2010 and for each of the three years in the period ended December 31, 2011 were authorized for issue by the BOD on April 4, 2012.

Segment Information The parent company has information technology services business segment in 2011, 2010 and 2009. The financial position and results of the information technology services business segment are reflected in the parent company financial statements.

2. Summary of Significant Accounting Policies

Basis of Preparation The parent company financial statements have been prepared under the historical cost basis. The parent company financial statements are presented in Philippine peso, which is the Company’s functional currency. The Company also prepares and issues consolidated financial statements for the same period as the parent company financial statements presented in accordance with Philippine Financial Reporting Standards (PFRS). The consolidated financial statements may be obtained at the Company’s principal place of business (see Note 1). Statement of Compliance The parent company financial statements have been prepared in compliance with PFRS.

- 3 -

*SGVMC410157*

Changes in Accounting Policies and Disclosures The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of the following revised and amended PFRS and Philippine Interpretations from International Financial Reporting Interpretations Committee (IFRIC) and improvements to PFRS, which the Company has adopted starting January 1, 2011. Adoption of these changes did not have any significant impact on the parent company’s financial statements: • Philippine Accounting Standards (PAS) 24 (Amendment), Related Party Disclosures • PAS 32 (Amendment), Financial Instruments: Presentation - Classification of Rights Issues • Philippine Interpretation IFRIC 14 (Amendment), Prepayments of a Minimum Funding

Requirement • Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity

Instruments

Improvements to PFRS • PFRS 3, Business Combination • PFRS 7, Financial Instruments: Disclosures • PAS 1, Presentation of Financial Statements • PAS 27, Consolidated and Separate Financial Statements • PAS 34, Interim Financial Statements • Philippine Interpretation IFRIC 13, Customer Loyalty Programmes

Revenue Recognition Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably. The following specific recognition criteria must also be met before revenue is recognized: Service Income Service income is recognized when related services have been rendered.

Interest Income Interest income from bank deposits is recognized as revenue as the interest accrues taking into account the effective yield of the asset. Dividend Income Dividend income is recognized when the shareholder’s right to receive payment is established. Other Income Other income is recognized when earned. Costs and Expenses Costs and expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. Costs and expenses are generally recognized when incurred.

General and Administrative Expenses General and administrative expenses are generally recognized when incurred.

- 4 -

*SGVMC410157*

Cash and Cash Equivalents Cash includes cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less from date of placement and that are subject to an insignificant risk of changes in value. Financial Instruments Financial instruments are recognized in the parent company financial statements when the Company becomes a party to the contractual provisions of the instrument. The Company determines the classification of their financial assets and financial liabilities on initial recognition and, where allowed and appropriate, re-evaluates this designation at each balance sheet date. All regular way purchases and sales of financial assets are recognized on the settlement date. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. Financial instruments are recognized initially at fair value of the consideration given (in the case of an asset) or received (in the case of a liability). Except for financial instruments at fair value through profit or loss (FVPL), the initial measurement of financial instruments includes transaction costs. Financial assets under PAS 39 are classified as either financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments or available-for-sale (AFS) financial assets. The Company’s financial assets are of the nature of loans and receivables. As of December 31, 2011 and 2010, the Company has no outstanding financial assets at FVPL, AFS financial assets and HTM investments. Also under PAS 39, financial liabilities are classified as financial liabilities at FVPL or other financial liabilities. The Company’s financial liabilities are of the nature of other financial liabilities. The Company has no outstanding financial liabilities at FVPL as of December 31, 2011 and 2010.

Loans and Receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They are not entered into with the intention of immediate or short-term resale and are not classified as financial assets held for trading, designated as AFS financial assets or designated at FVPL. This accounting policy applies primarily to the Company’s “Cash and cash equivalents” and “Trade and other receivables”. Loans and receivables are classified as current assets when these are expected to be realized within twelve months after the balance sheet date or within the normal operating cycle, whichever is longer. Otherwise, these are classified as noncurrent assets. Loans and receivables are recognized initially at fair value, which normally pertains to the billable amount. After initial measurement, loans and receivables are measured at amortized cost using the effective interest rate method, less allowance for impairment losses. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate. The amortization, if any, is included in the parent company statement of comprehensive income. The losses arising from impairment of loans and receivables are recognized in the parent company statement of comprehensive income. The level of allowance for impairment losses is evaluated by management on the basis of factors that affect the collectibility of accounts. Loans and receivables are presented as current assets when it is expected to be realized within twelve months after the balance sheet date or within the normal operating cycle, whichever is longer.

- 5 -

*SGVMC410157*

Other Financial Liabilities Issued financial liabilities or their components, which are not designated at FVPL are classified as other financial liabilities, where the substance of the contractual arrangement results in the Company having an obligation either to deliver cash or another financial asset 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. The components of issued financial instruments that contain both liability and equity elements are accounted for separately, with the equity component being assigned the residual amount after deducting from the instrument as a whole the amount separately determined as the fair value of the liability component on the date of issue. After initial measurement, other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any discount or premium on the issue and fees that are an integral part of the effective interest rate. This accounting policy applies primarily to the Company’s “Trade and other payables”, “Advances from a stockholder” and other obligations that meet the above definition (other than liabilities covered by other accounting standards such as income tax payable).

Other financial liabilities are classified as current liabilities when these are expected to be settled within twelve months from the balance sheet date or the Company has an unconditional right to defer settlement for at least twelve months from the balance sheet date or the Company does not have an unconditional right to defer settlement for at least twelve months from reporting date. Otherwise, these are classified as noncurrent liabilities. Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount is reported in the parent company balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Derecognition of Financial Instruments Financial Assets A financial asset (or, where applicable a part of a financial asset or part of a group of financial assets) is derecognized when:

1. the rights to receive cash flows from the asset have expired; 2. the Company retains the right to receive cash flows from the asset, but has assumed an

obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or

3. the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained the risks and rewards of the asset but has transferred the control of the asset.

Where the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Company’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount.

- 6 -

*SGVMC410157*

Financial Liabilities A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the parent company statement of comprehensive income. Investments in Shares of Stock

Investments in shares of stock represent investments in the following subsidiary and associate:

Nature of Percentage of Ownership Business 2011 2010 e-Serve Information Technology

Services 100 100 ePerformax International, Inc. (ePI) Information Technology

Services 3.8 3.8 Investments in shares of stock are accounted for under the cost method less any allowance for

impairment losses.

The Company recognizes income when its right to receive the dividend is established.

e-Serve is a wholly-owned subsidiary of the Company. A subsidiary is an entity in which the Company, directly or indirectly, holds more than half of the issued share capital, or controls more than half of the voting power, or exercises control over the operation and management of the entity. ePI is an associate of the Company. An associate is an entity in which the Company has significant influence, but not control, over the financial and operating policies of the entity. The Company exercises its significant influence in ePI through its representation in the BOD and participation in the policy making processes.

The Company performs impairment review on its investments in shares of stock whenever an impairment indicator exists. This requires an estimation of the value in use of the investments. Estimating the value in use requires the Company to make an estimate of the future cash flows of the investments and to use a suitable discount rate to calculate the present value of those future cash flows.

Assets Held for Sale Assets are classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. Assets held for sale is measured at the lower of its carrying amount and fair value less costs to sell. Any liabilities associated with these assets are presented separately in the parent company balance sheet. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and any impairment in value.

- 7 -

*SGVMC410157*

The initial cost of property and equipment comprises of its purchase price, including import duties and nonrefundable purchase taxes and any directly attributable costs of bringing the property and equipment to its working condition and location for its intended use. Such costs include the cost of replacing part of such property and equipment when that cost is incurred if the recognition criteria are met. Expenditures incurred after the property and equipment have been put into operations, such as repairs and maintenance, are normally charged to expense in the period 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. Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. Depreciation is computed on a straight-line method over the estimated useful lives of the assets of three (3) to five (5) years. The depreciation method and estimated useful lives are reviewed periodically to ensure that the method and periods of depreciation are consistent with the expected pattern of economic benefits from items of property and equipment. When property and equipment are retired or otherwise disposed of, both the cost and related accumulated depreciation and any allowance for impairment losses are eliminated from the accounts, and any gain or loss resulting from their disposal is included in the parent company statement of comprehensive income. Fully depreciated assets are retained as property and equipment until these are no longer in use. Input VAT Input VAT represents tax imposed on the Company by its suppliers and contractors for the acquisition of goods and services required under Philippine taxation laws and regulations. Input VAT is stated at its estimated net realizable values. Impairment of Financial Assets Financial Assets Carried at Amortized Cost The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. If there is objective evidence that an impairment loss on financial assets carried at amortized cost (e.g., trade and other receivables) has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. Objective evidences of impairment may include indications that the debtors or a group of debtor is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Time value is generally not considered when the effect of discounting is not material. The carrying amount of the asset shall be reduced either directly or through use of an allowance account. In case the receivable has proven to have no realistic prospect of future recovery, any allowance provided for such receivable is written off against the carrying value of the impaired receivable. The amount of the loss shall be recognized in the parent company statement of comprehensive income.

- 8 -

*SGVMC410157*

The Company assess whether objective evidences of impairment exists individually for financial assets that are individually significant and collectively for financial assets that are not individually significant. Those objective evidences are relevant to the estimation of future cash flows 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. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the parent company statement of comprehensive income to the extent that the carrying value of the asset at the reversal date does not exceed its amortized cost that would have been determined had no impairment loss been recognized in prior years. With respect to trade and other receivables, the Company maintains an allowance for impairment losses at a level considered adequate to provide for potential uncollectible receivables. The level of this allowance is evaluated by management on the basis of factors that affect the collectibility of the accounts. A review of the age and status of receivables, designed to identify accounts to be provided with allowance, is performed regularly. Impaired receivables are derecognized when they are assessed as uncollectible. Property and Equipment and Input VAT The carrying values of property and equipment and input VAT are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amounts, the assets are written down to their estimated recoverable amounts. The estimated recoverable amount is the greater of an asset’s fair value less costs to sell and value in use. The fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction less the costs of disposal while, value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

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 estimated recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment loss, if any, is recognized in the parent company statement of comprehensive income. Recovery of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. The recovery of impairment losses is recorded in the parent company statement of comprehensive income. However, the increased carrying amount of an asset due to a recovery of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for that asset in prior years.

- 9 -

*SGVMC410157*

Provisions Provisions, if any, are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are made by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as interest expense. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the parent company statement of comprehensive income, net of any reimbursement. Capital Stock The Company has issued capital stock that is classified as equity. Incremental costs directly attributable to the issue of new capital stock are shown in equity as a deduction, net of tax, from the proceeds.

Deficit The amount included in deficit includes accumulated profit and losses attributable to the Company’s stockholders and reduced by dividends on capital stock. Dividends on capital stock are recognized as a liability and deducted from equity when they are declared. Dividends for the year that are approved after the balance sheet date are dealt with as an event after the balance sheet date. Deficit also include effects of changes in accounting policy as may be required by the transitional provisions of new and amended standards. Income Taxes Current Income Tax Current income tax liabilities for the current and prior year periods are measured at the amount expected to be paid to the taxation authority. The income tax rates and tax laws used to compute the amount are those that have been enacted or substantively enacted as of balance sheet date.

Deferred Income Tax Deferred income tax is provided, using the balance sheet liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income tax assets are recognized for all deductible temporary differences and carryforward benefits of unused tax credits from excess minimum corporate income tax (MCIT) and unused net operating loss carryover (NOLCO) to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carryforward benefits of unused tax credits from excess MCIT and unused NOLCO can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax assets to be utilized in the future. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred income tax assets to be recognized in the future.

- 10 -

*SGVMC410157*

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Segment Reporting The Company’s operating businesses are recognized and managed according to the nature of the services offered, with each segment representing a strategic business unit that serves different markets. Segment assets include operating assets used by a segment and consist principally of operating cash, trade and other receivables, and property and equipment, net of allowances and provisions.

Segment liabilities include all operating liabilities and consist principally of trade and other payables and notes payable. Segment assets and liabilities do not include deferred income taxes. Operating Leases

Operating leases represent those leases under which substantially all risks and rewards of ownership of the leased assets remain with the lessor. Lease payments under an operating lease are charged to expense on a straight-line basis over the terms of the lease. Contingencies Contingent liabilities are not recognized in the parent company financial statements. These are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the parent company financial statements but are disclosed when an inflow of economic benefits is probable.

Events After the Balance Sheet Date Post year-end events that provide additional information about the Company’s position at the balance sheet date (adjusting events) are reflected in the parent company financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the parent company financial statements when material.

New Accounting Standards, Interpretations and Amendments to Existing Standards Effective Subsequent to December 31, 2011 Standards and interpretations issued but not yet effective up to the date of issuance of the Company’s parent company financial statements are listed below. The Company does not expect the adoption of these new and amended PFRS and Philippine Interpretation from IFRIC to have significant impact on the parent company financial statements. The Company will adopt these standards and interpretations when these become effective.

Effective in 2012 Amendment to PAS 12, Income Taxes - Deferred Tax: Recovery of Underlying Assets The amendment to PAS 12 is effective for annual periods beginning on or after January 1, 2012. The amendment provides a practical solution to the problem of assessing whether recovery of an asset will be through use or sale. It introduces a presumption that recovery of the carrying amount of an asset will, normally, be through sale.

- 11 -

*SGVMC410157*

Amendment to PFRS 7, Financial Instruments: Disclosures - Transfers of Financial Assets The amendments to PFRS 7 are effective for annual periods beginning on or after July 1, 2011. The amendments will allow users of financial statements to improve their understanding of transfer transactions of financial assets (for example, securitizations), including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. Effective in 2013 Amendment to PAS 1, Financial Statement Presentation - Presentation of Items of Other

Comprehensive Income The amendment to PAS 1 is effective for annual periods beginning on or after July 1, 2012. The amendment will allow the management to present separately those items that could be reclassified (or “recycled”) to profit or loss at a future point in time from those items that will never be reclassified.

Amendment to PAS 19, Employee Benefits Amendments to PAS 19 range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. The amendment becomes effective for annual periods beginning on or after January 1, 2013. The Company is currently assessing the impact of the amendment to PAS 19. Amendment to PAS 27, Separate Financial Statements The amendment to PAS 27 becomes effective for annual periods beginning on or after January 1, 2013. As a consequence of the new PFRS 10, Consolidated Financial Statements and PFRS 12, Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. Amendment to PAS 28, Investments in Associates and Joint Ventures The amendment to PAS 28 becomes effective for annual periods beginning on or after January 1, 2013. As a consequence of the new PFRS 11, Joint Arrangements and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates.

Amendment to PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and

Financial Liabilities The amendments require entities to disclose information that will enable users to evaluate the effect or potential effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognized financial instruments that are set-off in accordance with PAS 32 and recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set-off in accordance with PAS 32. The amendments require entities to disclose, in a tabular format unless another format is

- 12 -

*SGVMC410157*

more appropriate, the following minimum quantitative information. This is presented separately for financial assets and financial liabilities recognized at the end of the reporting period: a) The gross amounts of those recognized financial assets and recognized financial liabilities; b) The amounts that are set-off in accordance with the criteria in PAS 32 when determining the

net amounts presented in the statement of financial position; c) The net amounts presented in the statement of financial position; d) The amounts subject to an enforceable master netting arrangement or similar agreement that

are not otherwise included in (2) above, including: i. Amounts related to recognized financial instruments that do not meet some or all of

the offsetting criteria in PAS 32; and ii. Amounts related to financial collateral (including cash collateral); and

e) The net amount after deducting the amounts in (4) from the amounts in (3) above. PFRS 10, Consolidated Financial Statements PFRS 10 replaces the portion of PAS 27, Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12, Consolidation - Special Purpose Entities. PFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by PFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS 27. PFRS 11, Joint Arrangements PFRS 11 replaces PAS 31, Interests in Joint Ventures and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. PFRS 12, Disclosure of Involvement with Other Entities PFRS 12 includes all of the disclosures that were previously in PAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required.

PFRS 13, Fair Value Measurement PFRS 13 establishes a single source of guidance under PFRS 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 when fair value is required or permitted.

Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine This interpretation applies to waste removal costs that are incurred in surface mining activity during the production phase of the mine (“production stripping costs”) and provides guidance on the recognition of production stripping costs as an asset and measurement of the stripping activity asset.

- 13 -

*SGVMC410157*

Effective in 2014 Amendments to PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and

Financial Liabilities These amendments to PAS 32 clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous.

Effective in 2015 PFRS 9, Financial Instruments: Classification and Measurement PFRS 9 as issued reflects the first phase of the International Accounting Standards Board’s (IASB) work on the replacement of PAS 39 and applies to classification and measurement of financial assets as defined in PAS 39. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition. The adoption of the first phase of PFRS 9 will have an effect on the classification and measurement of the Company’s financial assets. The Company will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture. Deferred Effectivity Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate This interpretation covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The interpretation requires that revenue on construction of real estate be recognized only upon completion, except when such contract qualifies as construction contract to be accounted for under PAS 11, Construction Contracts, or involves rendering of services in which case revenue is recognized based on stage of completion. Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will also be accounted for based on stage of completion. The Philippine SEC and the FRSC have deferred the effectivity of this interpretation until the final Revenue standard is issued by International Accounting Standards Board and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed.

3. Significant Accounting Judgments, Estimates and Assumptions

The parent company financial statements prepared in accordance with PFRS require management to make judgments, estimates and assumptions that affect amounts reported in the parent company financial statements and related notes. The judgments, estimates and assumptions used in the parent company financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the parent company financial statements. Actual results could differ from such estimates. Judgments, estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

- 14 -

*SGVMC410157*

Judgments Determining Functional Currency The functional currency of the Company has been determined to be the Philippine peso. The Philippine peso is the currency of the primary economic environment in which the Company operates.

Operating Lease - the Company as a Lessee The Company has entered into an operating lease agreement as a lessee and determined that the lessors retain all significant risks and rewards of ownership of this property (see Note 14).

Determining Whether Significant Influence Exists for Purposes of Applying PAS 28 The Company evaluates various factors in determining whether significant influence exists. Under PAS 28, there is a presumption that if ownership is below 20%, significant influence does not exist unless otherwise supported. Among the factors being considered by management in the assessment are, degree of representation in the BOD of the investee, corporate governance arrangements, and power to veto significant operating and financial decisions. Under the exercise of this judgment, the Company classified its 3.8% investment in ePI as an investment in associate. The carrying value of this investment amounted to P=19,229,788 as of December 31, 2011 and 2010 (see Note 6).

Estimates and Assumptions Estimating Impairment of Trade and Other Receivables Management reviews the age and status of trade and other receivables and identifies accounts that are to be provided with allowances on a continuous basis. The Company maintains allowance for impairment losses at a level considered adequate to provide for potential uncollectible trade and other receivables. Allowance for impairment losses on trade and other receivables amounted to P=3,520,453 as of December 31, 2011 and 2010. The Company considers factors such as the age of the receivable, payments status and collection experience in determining individually impaired financial assets. Management believes that the allowance is sufficient to cover the trade and other receivable balances which are specifically identified to be doubtful of collection. The Company also determines receivables to be written-off based on assessments and result of earnest efforts exerted by management to collect such receivables. Trade and other receivables, net of allowance for impairment losses, amounted to P=9,391,322 and P=8,806,704 as of December 31, 2011 and 2010, respectively (see Note 5).

Estimating Useful Lives of Property and Equipment The Company estimates the useful lives of property and equipment based on the period over which these assets are expected to be available for use. The estimated useful lives are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of these assets. In addition, estimation of the useful lives is based on collective assessment of industry practice, internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. The net book value of property and equipment amounted to P=7,297,094 and P=10,226,654 as of December 31, 2011 and 2010, respectively (see Note 7).

- 15 -

*SGVMC410157*

Estimating Realizability of Deferred Income Tax Assets The Company reviews the carrying amounts of deferred income tax assets at each balance sheet date and reduces the amounts to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax assets to be utilized in the future. However, there is no assurance that the Company will generate sufficient taxable income to allow all or part of its deferred tax assets to be utilized in the future. The Company has deductible temporary differences, excess MCIT and unused NOLCO totaling P=5,655,937 and P=4,079,685 as of December 31, 2011 and 2010, respectively, for which no deferred income tax assets were recognized (see Note 15). Estimating Impairment of Investment in Shares of Stock The Company performs an impairment review on its investments whenever an impairment indicator exists. This requires an estimation of the value in use of the investments. Estimating the value in use requires the Company to make an estimate of the expected future cash flows of the investments and to make use of a suitable discount rate to calculate the present value of those future cash flows. Management has determined that there are no events or circumstances that may indicate that the carrying amounts of the investments are not recoverable for each of the three years in the period ended December 31, 2011; thus, no impairment losses were recognized for the years then ended. As of December 31, 2011 and 2010, the carrying amounts of the investment in shares of stock amounted to P=19,479,788 (see Note 6).

Estimating Impairment of Property and Equipment and Input VAT The Company assesses impairment on assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Company considers important which could trigger an impairment review include the following:

• Significant underperformance relative to expected historical or projected operating results;

• Significant changes in the manner of use of the acquired assets or the strategy for overall

business; and

• Significant negative industry or economic trends.

An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. The fair value less costs to sell is the amount obtainable from the sale of assets in an arms’ length transaction while value in use is the present value of estimated future cash flows expected to rise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which the asset belongs. For impairment loss on specific assets, the recoverable amount represents the net selling price.

- 16 -

*SGVMC410157*

In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets, the Company is required to make estimates and assumptions that can materially affect the parent company financial statements. No impairment loss was recognized for each of the three years in the period ended December 31, 2011. The aggregate carrying amounts of property and equipment and input VAT amounted to P=9,170,584 and P=12,128,398 as of December 31, 2011 and 2010, respectively.

Estimating Fair Value Less Costs to Sell The Company estimates the fair value of assets held for sale based on the available market price of a similar assets less estimated costs to sell. The carrying amount of assets held for sale amounted to P=2,081,535 as of December 31, 2011 and 2010. The fair value of the assets held for sale amounted to P=3,012,000 and P=3,027,000 as of December 31, 2011 and 2010, respectively (see Note 8).

Estimating Contingencies The Company evaluates legal and administrative proceedings to which it is involved based on analysis of potential results. Management and its legal counsels do not believe that any current proceedings will have material adverse effects on its financial position and results of operations. It is possible, however, that future results of operations could be materially affected by changes in the estimates or in the effectiveness of strategies relating to these proceedings.

4. Cash and Cash Equivalents

2011 2010 Cash with banks P=6,264,167 P=6,919,772 Short-term placements 48,725,483 47,404,754 P=54,989,650 P=54,324,526

Cash with banks earn interest at the respective bank deposit rates. Short-term placements are

made for varying periods up to three months depending on the immediate cash requirements of the Company and earn interest at the respective short-term placements rates.

Interest income earned from cash with banks and short-term placements amounted to

P=1,444,014, P=977,294 and P=133,111 in 2011, 2010 and 2009, respectively (see Note 13). For the purpose of the parent company statements of cash flows, cash and cash equivalents

comprise the following as at January 1:

2010 2009 Cash with banks P=2,241,548 P=11,799,314 Short-term placements – 5,680,447 P=2,241,548 P=17,479,761

- 17 -

*SGVMC410157*

5. Trade and Other Receivables

2011 2010 Trade Unimpaired P=190,791 P=100,761 Impaired 784,796 784,796 Advances to officers and employees Impaired 1,018,363 1,018,363 Due from a related party (see Note 10) Unimpaired – 500,000 Others Unimpaired 9,200,531 8,205,943 Impaired 1,717,294 1,717,294 12,911,775 12,327,157 Less allowance for impairment losses 3,520,453 3,520,453 P=9,391,322 P=8,806,704

Trade receivables are noninterest-bearing and generally have a 30-day term. The allowance for impairment losses is attributable to the individual impairment of certain trade, advances to officers and employees and other receivables. The Company’s management believes that unimpaired receivables are collectible and in good standing. Total gross amounts of individually impaired receivables as of December 31, 2011 and 2010 before deducting impairment allowance amounted to P=3,520,453. These receivables were fully provided with allowance for impairment losses as of December 31, 2011 and 2010.

As of December 31, the aging analysis of unimpaired trade and other receivables is as follows: Past due but not impaired

Neither past due Less than 30 31 to 60.. 61 to 90.. More than 90 nor impaired days past due days past due days past due days past due Total

2011 P=823,178 P=562,500 P=– P=– P=8,005,644 P=9,391,322 2010 1,913,196 – – – 6,893,508 8,806,704

6. Investments in Shares of Stock

Investment in shares of stock represents investments in the following entities:

2011 2010 ePI (3.8%) P=19,229,788 P=19,229,788 e-Serve (100%) 250,000 250,000 P=19,479,788 P=19,479,788

In 2010, the Company provided additional investment in e-Serve amounting to P=150,000. On July 15, 2009, the BOD of ePI approved the declaration of cash and stock dividends to the stockholders of records as of December 31, 2008 out of ePI’s unappropriated retained earnings. The Company’s share in cash dividend amounted to P=2,052,540 and was recorded as “Other income” in the 2009 parent company statement of comprehensive income.

- 18 -

*SGVMC410157*

On July 23, 2010, the BOD of ePI approved the declaration of cash and stock dividends to the stockholders of records as of December 31, 2009 out of ePI’s unappropriated retained earnings. The Company’s share in cash dividend amounted to P=2,667,000 and was recorded as part of “Other income” in the 2010 parent company statement of comprehensive income. On September 24, 2010, the BOD of e-Serve approved the declaration of cash dividend to the stockholders of records as of December 31, 2009 out of e-Serve’s unappropriated retained earnings amounting to P=1,300,000, and was recorded as part of “Other income” in the 2010 parent company statement of comprehensive income. On June 15, 2011, the BOD of ePI approved the declaration of cash and stock dividends to the stockholders of records as of December 31, 2010 out of ePI’s unappropriated retained earnings. The Company’s share in cash dividend amounted to P=1,143,000 and was recorded as part of “Other income” in the 2011 parent company statement of comprehensive income.

7. Property and Equipment

As of December 31, 2011 and 2010, property and equipment consists on internet equipment as follows:

2011 2010 Cost: Balances at beginning of year P=14,414,711 P=14,012,578 Additions 42,000 402,133 Balances at end of year 14,456,711 14,414,711 Accumulated Depreciation: Balances at beginning of year 4,188,057 1,340,860 Depreciation 2,971,560 2,847,197 Balances at end of year 7,159,617 4,188,057 Net Book Values P=7,297,094 P=10,226,654

8. Assets Held for Sale

Assets held for sale represent the carrying amount, which is lower than the fair value less costs to sell, of land and condominium units included in the paging business of the Company. As discussed in Note 1, the Company’s paging business discontinued its commercial operations in 2002. A portion of land and the condominium units were disposed in 2005 through sale transactions. The remaining piece of land is expected to be disposed through a sale transaction in 2012. Management continues to commit itself to pursue its plan to sell the remaining piece of land given the extension of the period to complete the sale. The fair value of the assets held for sale amounted to P=3,012,000 and P=3,027,000 as of December 31, 2011 and 2010, respectively.

- 19 -

*SGVMC410157*

9. Trade and Other Payables

2011 2010 Trade P=383,844 P=1,695,138 Accrued expenses 170,800 179,301 Others 6,541 3,322 P=561,185 P=1,877,761

There have been no guarantees received for trade and other payables. Accrued expenses consist of the following:

2011 2010 Accrued professional fee P=166,800 P=127,832 Accrued telephone and communication 4,000 6,469 Accrued transportation and travel – 45,000 P=170,800 P=179,301

10. Related Party Transactions Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. In addition to those mentioned in Notes 1, 5 and 6 to the financial statements, related party transactions in the ordinary course of business, which are made at terms equivalent to those that prevail in arm’s length transactions, are as follows: The following unsecured intercompany balances represent noninterest-bearing cash advances for working capital requirements, which are due and demandable:

Due from a related party Advances from a stockholder 2011 2010 2011 2010 e-Serve (see Note 5) P=– P=500,000 P=– P=– GeBSI (see Note 1) – – 19,310,284 19,543,135 P=– P=500,000 P=19,310,284 P=19,543,135

There have been no guarantees provided or received for any related party receivables or payables.

11. Capital Stock

The BOD approved 42,557,170 (net of 26,113 exercised in 2005) warrants issued to the stockholders in 2003. The exercise price of the warrant is P=1.15 per share. A warrant represents an entitlement to subscribe and be allotted one (1) common share. The warrants shall be the direct obligations of the Company to the registered owners of the warrants, subject to the terms and conditions of the warrant certificate. There were no warrants exercised in 2011 and 2010.

- 20 -

*SGVMC410157*

On September 11, 2008, the BOD approved the issuance of 11,500,000 stock rights to all stockholders of record as of January 8, 2009 at an offer price of P=1.00 per share. Each shareholder shall be given one share of the Company for every 8 shares currently held by them. The proceeds will be utilized to fund the expansion and enhancement of the Company’s delivery of its Internet Protocol-based internet products and services.

The issuance of the stock rights offer was approved by the Philippine SEC on December 23, 2008. Effective January 23, 2009, 11,500,000 stock rights were exercised by the stockholders at P=1.00 per share or for a total par value of P=11,500,000. As discussed in Note 1, on April 14, 2010, the PSE approved the application of the Company to list additional 46,570,025 common shares with a par value of P=1.00 per share to cover the private placement with GeBSI at a subscription price at par.

As of December 31, 2011 and 2010, the movement in subscribed capital stock is as follows:

2011 2010 No. of shares Amounts No. of shares Amounts Balances at beginning of year 150,000,000 P=150,000,000 103,429,975 P=103,429,975 Issuance of shares – – 46,570,025 46,570,025 Balances at end of year 150,000,000 P=150,000,000 150,000,000 P=150,000,000

Based on the Company’s track record of registration of securities under the Securities Regulation Code of the Philippine SEC, the Company has 3,000,000 authorized shares at P=1.00 par value or a total par value of P=3,000,000 since its date of registration (see Note 1). As of December 31, 2011 and 2010, there were no movements in the Company’s registered securities. As of December 31, 2011, there are 301 shareholders who hold 150,000,000 shares.

12. General and Administrative Expenses

2011 2010 2009 Subscription dues P=2,037,548 P=805,960 P=401,460 Professional fees 354,768 276,508 388,642 Travel 330,874 17,135 22,062 Taxes and licenses 308,204 595,947 497,423 Entertainment amusement and recreation 241,802 35,521 626,158 Communications 117,181 146,794 118,445 Material and supplies 77,997 51,982 51,742 Utilities 69,621 65,617 80,927 Rent (see Note 14) – – 54,153 Miscellaneous 182,584 128,258 284,730 P=3,720,579 P=2,123,722 P=2,525,742

Subscription dues increased in 2011 as a result of the increase in subscribed capital stock of the company in 2010 (see Note 11). Miscellaneous expenses include insurance and bond premium, bank charges and other expenses.

- 21 -

*SGVMC410157*

13. Other Income

2011 2010 2009 Interest income (see Note 4) P=1,444,014 P=977,294 P=133,111 Dividend income (see Note 6) 1,143,000 3,967,000 2,052,540 Miscellaneous – 304,102 269,916 P=2,587,014 P=5,248,396 P=2,455,567

Miscellaneous income in 2010 and 2009 mainly represents income generated from utilities’ refund. 14. Operating Leases

The Company subleases its warehouse space from Diversified Holdings, Inc. The sublease agreement is renewable on a year-to-year basis. Rent charged to operations for the year ended December 31, 2009 amounted to P=54,153. The Company has not renewed its contract in 2011 and 2010.

15. Income Taxes

For each of the three years in the period ended December 31, 2011, the provision for current income tax represents MCIT. As of December 31, 2011 and 2010, the Company has the following deductible temporary differences, excess MCIT and unused NOLCO for which no deferred income tax assets were recognized since management believes that it is not probable that sufficient taxable profit will be available to allow all or part of the deferred income tax assets to be utilized in the future:

2011 2010 Allowance for impairment losses (see Note 5) P=3,520,453 P=3,520,453 NOLCO 2,022,638 455,780 MCIT 112,846 103,452 P=5,655,937 P=4,079,685

As of December 31, 2011, the Company has NOLCO and MCIT that can be claimed against future taxable income and future income tax liabilities, respectively, as follows:

Year Incurred Available up to NOLCO MCIT 2011 2014 P=2,014,728 P=30,177 2010 2013 7,910 41,806 2009 2012 – 40,863 P=2,022,638 P=112,846

- 22 -

*SGVMC410157*

The following are the movements in NOLCO and MCIT:

NOLCO: 2011 2010 Balances at beginning of year P=455,780 P=23,740,878 Additions 2,014,728 7,910 Expirations (447,870) (23,293,008) Balances at end of year P=2,022,638 P=455,780

MCIT: 2011 2010 Balances at beginning of year P=103,452 P=61,646 Additions 30,177 41,806 Expiration (20,783) – Balances at end of year P=112,846 P=103,452

The reconciliation of income before income tax computed at the statutory tax rate to provision for income tax is as follows:

2011 2010 2009 Income tax at statutory income tax rate of 30% P=112,586 P=1,473,260 P=510,923 Additions to (reductions in) income taxes resulting from: Changes in unrecognized deferred

income tax assets 634,595 44,179 (54,619) Nondeductible expenses 59,100 7,655 240,254 Interest income subjected to final tax (433,204) (293,188) (39,933) Dividend income exempt from

income tax (342,900) (1,190,100) (615,762) P=30,177 P=41,806 P=40,863

16. Financial Instruments and Capital Risk Management

The Company’s financial instruments comprise of cash and cash equivalents, trade and other receivables, trade and other payables and advances from a stockholder. The BOD has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and manage the Company’s exposure to financial risks, to set appropriate transaction limits and controls, and to monitor and assess risks and compliance to internal control policies. Risk management policies and structure are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company has exposure to liquidity risk and credit risk from the use of its financial instruments. The BOD reviews and approves the policies for managing each of these risks.

- 23 -

*SGVMC410157*

Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet their financial obligations as they fall due. The Company’s objective in managing liquidity risk is to ensure, as far as possible, that they will always have sufficient liquidity to meet their liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking adverse effect to the Company’s credit standing.

The Company manages liquidity risk by maintaining a balance between continuity of funding and flexibility. As part of its liquidity risk management, the Company regularly evaluates its projected and actual cash flows.

Based on the Company’s assessment, the carrying values of cash and cash equivalents and trade and other receivables as of December 31, 2011 and 2010 are readily available for liquidity purposes. The outstanding balances of trade and other payables and advances from a stockholder are due and demandable as of December 31, 2011 and 2010. Credit Risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s trade and other receivables. The Company trades only with recognized, creditworthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, trade and other receivables balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant. The Company’s maximum exposure to credit risk is the carrying amount of its financial assets. The Company grants advances to its related parties after the BOD reassessed the Company’s strategies for managing credits and view that they remain appropriate for the Company’s circumstances. In addition, these advances are monitored on an ongoing basis with the result that the Company’s exposure to account discrepancies is not significant. Cash equivalents are money market placements made with reputable banks duly approved by the BOD. All unimpaired receivables are collectible and in good standing. Management believes that all financial assets are of good credit quality.

Fair Values of Financial Instruments The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables and advances from a stockholder approximate their fair values due to the short-term maturities of these financial instruments.

- 24 -

*SGVMC410157*

Capital Risk Management The Company considers total equity presented on the face of the balance sheet as capital. The primary objective of the capital management is to ensure that the Company maintains strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes as of December 31, 2011 and 2010.

17. Notes to Parent Company Statements of Cash Flows

Noncash investing and operating activities in 2010 pertain to unpaid additions of property and equipment amounting to P=268,089 (see Note 7). Noncash financing activity in 2009 pertains to the exercise of 11,500,000 stock rights by the stockholders at P=1 per share or for a total par value of P=11,500,000 which was applied against advances from a stockholder (see Notes 10 and 11).

18. Supplementary Tax Information Required Under Revenue Regulations 19-2011

The Company reported the following for the year ended December 31, 2011: a. Net sales/receipts amounted to P=4,480,413.

b. Cost of services amounted to P=2,971,560.

c. Expenses under itemized deductions amounted to:

Subscription dues P=2,037,548 Professional fees 354,768 Travel 330,874 Taxes and licenses 308,204 Communications 117,181 Material and supplies 77,997 Utilities 69,621 Entertainment amusement and recreation 44,804 Miscellaneous 260,581 P=3,523,581

d. Taxes and licenses under general and administrative expenses amounted to: PSE fees P=250,000 License and permit fees 41,521 Real property tax 7,265 Others 9,418 P=308,204

- 25 -

*SGVMC410157*

19. Supplementary Tax Information Required under Revenue Regulations 15-2010 The Company reported and/or paid the following types of taxes as of and for the year ended December 31, 2011: VAT The National Internal Revenue Code of 1997 provides for the imposition of VAT on sales of services. Accordingly, the Company’s sales of services are subject to VAT of 12%. Purchases from other VAT-registered individuals or corporations are subject to input VAT of 12% The following are the details of the Company’s net sales/receipts, output VAT and input VAT: a. Net sales/receipts and output VAT declared in the Company’s VAT returns:

Net Sales/

Receipts Output

VAT Taxable sales of services P=784,971 P=94,196 Zero-rated Sales 3,213,418 – P=3,998,389 P=94,196

The Company’s sales that are subject to VAT are lodged under the “Service income” account presented in the parent company statement of comprehensive income.

b. Input VAT

Balances at beginning of year P=1,901,744 Domestic purchases of goods other than for services lodged under other accounts 65,942 Applications against output VAT (94,196) Balances at end of year P=1,873,490

Input VAT is lodged under the noncurrent assets section in the parent company balance sheet.

Other Taxes and Licenses Taxes and licenses, local and national taxes, licenses and permit fees, which are presented under the “Taxes and licenses” account in the parent company statement of comprehensive income, are as follows:

PSE fees P=250,000 License and permit fees 41,521 Real property tax 7,265 Others 9,418 P=308,204

Withholding Taxes The Company’s expanded withholding taxes paid for the year ended December 31, 2011 amounted to P=24,651.

Easycall Communications Philippines, Inc. and Subsidiary

Consolidated Financial Statements As of December 31, 2011 and 2010 and for Each of the Three Years in the Period Ended December 31, 2011 and Independent Auditors’ Report SyCip Gorres Velayo & Co.

*SGVMC410156*

INDEPENDENT AUDITORS’ REPORT The Stockholders and the Board of Directors Easycall Communications Philippines, Inc. We have audited the accompanying consolidated financial statements of Easycall Communications Philippines, Inc. and its Subsidiary, which comprise the consolidated balance sheets as at December 31, 2011 and 2010, and the consolidated statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31, 2011, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated 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 consolidated financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated 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 consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

SyCip Gorres Velayo & Co. 6760 Ayala Avenue 1226 Makati City Philippines

Phone: (632) 891 0307 Fax: (632) 819 0872 www.sgv.com.ph BOA/PRC Reg. No. 0001 SEC Accreditat ion No. 0012-FR-2

A member firm of Ernst & Young Global Limited

*SGVMC410156*

- 2 -

Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Easycall Communications Philippines, Inc. and its Subsidiary as at December 31, 2011 and 2010, and their financial performance and their cash flows for each of the three years in the period ended December 31, 2011 in accordance with Philippine Financial Reporting Standards. SYCIP GORRES VELAYO & CO. Maria Veronica Andresa R. Pore Partner CPA Certificate No. 90349 SEC Accreditation No. 0662-AR-1 (Group A), March 3, 2011, valid until March 2, 2014 Tax Identification No. 164-533-282 BIR Accreditation No. 08-001998-71-2009, June 1, 2009, valid until May 31, 2012 PTR No. 3174820, January 2, 2012, Makati City April 4, 2012

*SGVMC410156*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS December 31 2011 2010

ASSETS

Current Assets Cash and cash equivalents (Note 4) P=56,370,355 P=55,819,941 Trade and other receivables - net (Note 5) 10,918,524 10,279,415 Prepaid expenses and other current assets 570,611 625,872 67,859,490 66,725,228 Assets held for sale (Note 8) 2,081,535 2,081,535 Total Current Assets 69,941,025 68,806,763

Noncurrent Assets Investment in shares of stock (Note 6) 28,378,430 27,587,198 Property and equipment - net (Note 7) 7,332,389 10,244,284 Retirement benefit asset (Note 16) 184,946 217,997 Input value-added tax (VAT) 1,873,490 1,901,744 Other noncurrent assets 450,000 – Total Noncurrent Assets 38,219,255 39,951,223

TOTAL ASSETS P=108,160,280 P=108,757,986

LIABILITIES AND EQUITY

Current Liabilities Trade and other payables (Note 9) P=1,815,803 P=4,103,040 Advances from a stockholder (Notes 1 and 10) 19,310,284 19,543,135 Total Current Liabilities 21,126,087 23,646,175

Noncurrent Liability Deferred income tax liability (Note 18) 55,484 65,399 Total Liabilities 21,181,571 23,711,574

Equity Capital stock - P=1 par value (Notes 1 and 11) Authorized - 300,000,000 shares Issued - 150,000,000 shares 150,000,000 150,000,000 Share in cumulative translation adjustments (CTA) of an associate (Note 6) (574,834) 1,336,069 Deficit (Note 1) (62,446,457) (66,289,657) Total Equity 86,978,709 85,046,412

TOTAL LIABILITIES AND EQUITY P=108,160,280 P=108,757,986 See accompanying Notes to Consolidated Financial Statements.

*SGVMC410156*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 2011 2010 2009

SERVICE INCOME (Note 1) P=18,609,091 P=18,644,173 P=16,294,180

COSTS OF SERVICES (Note 12) 10,556,222 9,768,348 8,348,077

GROSS PROFIT 8,052,869 8,875,825 7,946,103

GENERAL AND ADMINISTRATIVE EXPENSES (Note 13) (9,144,029) (7,692,183) (7,589,264)

EQUITY IN NET EARNINGS OF AN ASSOCIATE (Note 6) 3,845,135 1,862,000 2,442,085

OTHER INCOME (Note 14) 1,459,274 1,322,854 670,198

INCOME BEFORE INCOME TAX 4,213,249 4,368,496 3,469,122

PROVISION FOR (BENEFIT FROM) INCOME TAX (Note 18)

Current 379,964 465,680 397,071 Deferred (9,915) 41,369 1,294 370,049 507,049 398,365

NET INCOME 3,843,200 3,861,447 3,070,757

OTHER COMPREHENSIVE INCOME (LOSS) Share in CTA of an associate (Note 6) (1,910,903) (1,828,822) 4,955,289

TOTAL COMPREHENSIVE INCOME P=1,932,297 P=2,032,625 P=8,026,046

Basic Earnings Per Share (Note 19) P=0.03 P=0.03 P=0.03

Diluted Earnings Per Share (Note 19) P=0.02 P=0.02 P=0.02 See accompanying Notes to Consolidated Financial Statements.

*SGVMC410156*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Year Ended December 31, 2011

Capital Stock

(Note 11)

Share in CTA of an Associate

(Note 6) Deficit (Note 1) Total

Balances at January 1, 2011 P=150,000,000 P=1,336,069 (P=66,289,657) P=85,046,412

Share in CTA of an associate (Note 6) – (1,910,903) – (1,910,903)

Net income for the year – – 3,843,200 3,843,200

Total comprehensive income (loss) for the year – (1,910,903) 3,843,200 1,932,297

Balances at December 31, 2011 P=150,000,000 (P=574,834) (P=62,446,457) P=86,978,709 For the Year Ended December 31, 2010

Capital Stock

(Note 11)


(Note 6) Deficit

(Note 1) Total

Balances at January 1, 2010 P=103,429,975 P=3,164,891 (P=70,151,104) P=36,443,762

Exercise of stock rights (Note 11) 46,570,025 – – 46,570,025

Share in CTA of an associate (Note 6) – (1,828,822) – (1,828,822)

Net income for the year – – 3,861,447 3,861,447

Total comprehensive income (loss) for the year – (1,828,822) 3,861,447 2,032,625

Balances at December 31, 2010 P=150,000,000 P=1,336,069 (P=66,289,657) P=85,046,412 For the Year Ended December 31, 2009

Capital Stock

(Note 11)


(Note 6) Deficit

(Note 1) Total

Balances at January 1, 2009 P=91,929,975 (P=1,790,398) (P=73,221,861) P=16,917,716

Reversal of deposits for future stock subscriptions 11,500,000 – – 11,500,000

Share in CTA of an associate (Note 6) – 4,955,289 – 4,955,289

Net loss for the year – – 3,070,757 3,070,757

Total comprehensive income for the year – 4,955,289 3,070,757 8,026,046

Balances at December 31, 2009 P=103,429,975 P=3,164,891 (P=70,151,104) P=36,443,762 See accompanying Notes to Consolidated Financial Statements.

*SGVMC410156*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31 2011 2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax P=4,213,249 P=4,368,496 P=3,469,122 Adjustments for: Depreciation (Note 7) 2,995,570 2,974,219 1,527,705 Equity in net earnings of an associate (Note 6) (3,845,135) (1,862,000) (2,442,085) Interest income (Note 14) (1,446,936) (989,116) (138,852) Operating income before working capital changes 1,916,748 4,491,599 2,415,890 Decrease (increase) in: Trade and other receivables (639,109) (555,257) (1,297,667) Prepaid expenses and other current assets 55,261 27,395 478,415 Increase (decrease) in trade and other payables (Note

22) (2,287,237) 453,999 (1,638,623) Decrease (increase) in retirement benefit asset 33,051 (137,897) (183,400) Net cash from (used in) operations (921,286) 4,279,839 (225,385) Interest received 1,446,936 865,864 138,852 Income taxes paid (379,964) (465,680) (395,118) Net cash flows from (used in) operating activities 145,686 4,680,023 (481,651)

CASH FLOWS FROM INVESTING ACTIVITIES

Dividends received (Note 6) 1,143,000 2,667,000 2,052,540 Decrease (increase) in: Input VAT 28,254 21,950 (1,923,694) Other noncurrent assets (450,000) – – Additions to property and equipment (Notes 7 and 22) (83,675) (143,152) (14,083,221) Net cash flows from (used in) investing activities 637,579 2,545,798 (13,954,375)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in advances from a stockholder (Notes 10 and 22) (232,851) (2,849,197) 1,049,957

Proceeds from issuance of shares of stock (Note 11) – 46,570,025 – Net cash flows from (used in) financing activities (232,851) 43,720,828 1,049,957

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 550,414 50,946,649 (13,386,069)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 4) 55,819,941 4,873,292 18,259,361

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) P=56,370,355 P=55,819,941 P=4,873,292

See accompanying Notes to Consolidated Financial Statements.

*SGVMC410156*

EASYCALL COMMUNICATIONS PHILIPPINES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Corporate Information

Easycall Communications Philippines, Inc. (the Company) was registered with the Philippine Securities and Exchange Commission (SEC) on September 25, 1989 primarily to operate a paging business in the Philippines. The Company was listed in the Philippine Stock Exchange (PSE) in May 1992.

Since the closure of the paging business in 2002 as a result of the development of short messaging service of cellular phone companies, the Company engaged into the contact center outsourcing business and information technology related business. Starting 2009, the operations of these businesses are carried out by the Company, its wholly-owned subsidiary, Easycall e-Services, Inc. (e-Serve), a company engaged in information technology services and its associate ePerformax International Inc. (ePI), a company engaged in contact center outsourcing business. Starting November 2005, the management and administrative functions of the Company are being handled by Transnational e-Business Solutions, Inc. (TESI), a related party. The Company is a subsidiary of Global e-Business Solutions, Inc. (GeBSI), a company organized in the Philippines. The ultimate parent of the Company is Transnational Diversified Corporation (TDC), a company organized in the Philippines. In 2004, GeBSI carried out its financial commitment to support the operations of the Company by subscribing P=60,000,000 of the Company’s capital stock. On November 26, 2004, the Board of Directors (BOD) approved the following: a. Merger of TESI with the Company. TESI is an information technology company, which is a

wholly-owned subsidiary of TDC. b. Private placement by GeBSI for 100 million shares or P=100,000,000 to be taken from the

Company’s unsubscribed capital stock in order to address and enhance the current capital deficiency of the Company and e-Serve (collectively referred to as “the Group”).

The BOD further approved that this private placement shall be paid in the form of:

i. The conversion of outstanding advances and liabilities of the Company to GeBSI and its related parties;

ii. The agreed valuation of TESI to be approved by the shareholders; and

iii. Additional cash infusion.

This private placement shall be subject to the necessary clearance and authorization of governing regulatory agencies. Consequently, in 2005, GeBSI converted its advances amounting to P=22,310,284 into deposits for future stock subscriptions.

- 2 -

*SGVMC410156*

On July 19, 2006, the stockholders approved the indefinite suspension of the planned merger to seek further guidance in the documentation and compliance requirements of the plan since the Company is in the course of completing the valuation processes and reviewing the business model of the proposed merger. In October 2008, GeBSI reverted back its deposits for future stock subscriptions to advances from a stockholder (see Note 10). As of April 5, 2011, there is no new development on the planned merger. On April 14, 2010, the PSE approved the application of the Company to list additional 46,570,025 common shares with a par value of P=1.00 per share to cover the private placement by GeBSI at a subscription price at par (see Note 11). As of December 31, 2011, the Company has complied with the minimum public float requirement of the local regulators following the divestment of a portion of the shares owned by GeBSI. GeBSI sold 8 million common shares to the public through its designated stock broker, APEX (Philippines) Equities Corporation, raising the Company’s public float to 10.06 %. The registered office address of the Company is 2nd Floor, Mary Bachrach Building, 25th corner A.C. Delgado Streets, Port Area, Manila. The consolidated financial statements of the Group as of December 31, 2011 and 2010 and for each of the three years in the period ended December 31, 2011 were authorized for issue by the BOD on April 4, 2012. Segment Information The Group has information technology services and contact center outsourcing business segments in 2011, 2010 and 2009. The financial position and results of the information technology services and contact center outsourcing business segments are reflected in the consolidated financial statements.

2. Summary of Significant Accounting Policies

Basis of Preparation The consolidated financial statements have been prepared under the historical cost basis. The consolidated financial statements are presented in Philippine peso (P=), which is the Company’s functional currency. All amounts are rounded to the nearest P= except when otherwise stated. Statement of Compliance The accompanying consolidated financial statements have been prepared in accordance with Philippine Financial Reporting Standards (PFRS). Basis of Consolidation The consolidated financial statements include the accounts of the Company and e-Serve, a 100% owned subsidiary. A subsidiary is consolidated from the date of acquisition, being the date on which control is transferred to the Group and continue to be consolidated until the date that such control ceases. When there is a loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting year during which the Company has control.

- 3 -

*SGVMC410156*

The financial statements of a subsidiary are prepared for the same reporting year as the parent company. Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All intercompany balances and transactions, including intercompany profits and losses are eliminated.

Changes in Accounting Policies and Disclosures The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of the following revised and amended PFRS and Philippine Interpretations from International Financial Reporting Interpretations Committee (IFRIC) and improvements to PFRS, which the Group has adopted starting January 1, 2011. Adoption of these changes did not have any significant impact on the consolidated financial statements: • Philippine Accounting Standard (PAS) 24 (Amendment), Related Party Disclosures • PAS 32 (Amendment), Financial Instruments: Presentation - Classification of Rights Issues • Philippine Interpretation IFRIC 14 (Amendment), Prepayments of a Minimum Funding

Requirement • Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity

Instruments

Improvements to PFRS • PFRS 3, Business Combination • PFRS 7, Financial Instruments: Disclosures • PAS 1, Presentation of Financial Statements • PAS 27, Consolidated and Separate Financial Statements • PAS 34, Interim Financial Statements • Philippine Interpretation IFRIC 13, Customer Loyalty Programmes

Revenue Recognition Revenue is recognized to the extent it is probable that the economic benefits will flow to the Group and the revenue can be measured reliably. The following specific recognition criteria must be met before revenue is recognized: Service Income Service income is recognized when the related services have been rendered.

Interest Income Interest income from bank deposits is recognized as revenue as the interest accrues taking into account the effective yield of the asset. Costs and Expenses Costs and expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. Costs and expenses are generally recognized when incurred.

Costs of Services Costs of services, which comprise mainly of costs of providing information technology services, are recognized when incurred.

General and Administrative Expenses General and administrative expenses are recognized when incurred.

- 4 -

*SGVMC410156*

Cash and Cash Equivalents Cash includes cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less from date of placement and that are subject to an insignificant risk of changes in value. Financial Instruments Financial instruments are recognized in the consolidated financial statements when the Group becomes a party to the contractual provisions of the instrument. The Group determines the classification of its financial assets on initial recognition and, where allowed and appropriate, re-evaluates this designation at each balance sheet date. All regular way purchases and sales of financial asset are recognized on the settlement date. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. Financial instruments are recognized initially at fair value of the consideration given (in the case of an asset) or received (in the case of a liability). Except for financial instruments at fair value through profit or loss (FVPL), the initial measurement of financial instruments includes transaction costs. Financial assets under PAS 39 are classified as either financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments and AFS financial assets. The Group’s financial assets are of the nature of loans and receivables. As of December 31, 2011 and 2010, the Group has no outstanding financial assets at FVPL, HTM investments and AFS financial assets. Also, under PAS 39, financial liabilities are classified as financial liabilities at FVPL or other financial liabilities. The Group’s financial liabilities are of the nature of other financial liabilities. The Group has no outstanding financial liabilities at FVPL as of December 31, 2011 and 2010.

Loans and Receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They are not entered into with the intention of immediate or short-term resale and are not classified as financial assets held for trading, designated as AFS financial assets or designated at FVPL. This accounting policy applies primarily to the Group’s “Cash and cash equivalents” and “Trade and other receivables”. Loans and receivables are classified as current assets when these are expected to be realized within twelve months after the balance sheet date or within the normal operating cycle, whichever is longer. Otherwise, these are classified as noncurrent assets. Loans and receivables are recognized initially at fair value, which normally pertains to the billable amount. After initial measurement, loans and receivables are measured at amortized cost using the effective interest rate method, less allowance for impairment losses. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate. The amortization, if any, is included in the consolidated statement of comprehensive income. The losses arising from impairment of loans and receivables are recognized in the consolidated statement of comprehensive income. The level of allowance for impairment losses is evaluated by management on the basis of factors that affect the collectibility of accounts. Loans and receivables are presented as current assets when it is expected to be realized within twelve months after the balance sheet date or within normal operating cycle, whichever is longer.

- 5 -

*SGVMC410156*

Other Financial Liabilities Issued financial liabilities or their components, which are not designated at FVPL are classified as other financial liabilities, where the substance of the contractual arrangement results in the Group having an obligation either to deliver cash or another financial asset 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. The components of issued financial instruments that contain both liability and equity elements are accounted for separately, with the equity component being assigned the residual amount after deducting from the instrument as a whole the amount separately determined as the fair value of the liability component on the date of issue. After initial measurement, other financial liabilities are measured at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any discount or premium on the issue and fees that are an integral part of the effective interest rate. Any effects of restatement of foreign currency-denominated liabilities are recognized in the consolidated statement of comprehensive income. This accounting policy applies primarily to the Group’s “Trade and other payables”, “Advances from a stockholder” and other obligations that meet the above definition (other than liabilities covered by other accounting standards such as retirement benefit obligation and income tax payable). Other financial liabilities are classified as current liabilities when these are expected to be settled within twelve months from the balance sheet date or the Group has an unconditional right to defer settlement for at least twelve months from the balance sheet date or the Group does not have an unconditional right to defer settlement for at least twelve months from reporting date. Otherwise, these are classified as noncurrent liabilities. Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Derecognition of Financial Instruments Financial Assets A financial asset (or, where applicable a part of a financial asset or part of a group of financial assets) is derecognized when: 1. the rights to receive cash flows from the asset have expired; 2. the Group retains the right to receive cash flows from the asset, but has assumed an obligation

to pay them in full without material delay to a third party under a “pass-through” arrangement; or

3. the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained the risks and rewards of the asset but has transferred the control of the asset.

Where the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount.

- 6 -

*SGVMC410156*

Financial Liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statement of comprehensive income.

Investment in Shares of Stock Investment in shares of stock pertains to the Group’s investment in ePI, which represents 3.8% ownership. Investment in shares of stock is accounted for under the equity method of accounting. Under the equity method, the investment is carried in the consolidated balance sheet at cost adjusted for the equity in net income or losses and changes in the investee’s equity account since the date of acquisition. Dividends received are treated as a reduction in the carrying value of the investment. Unrealized intercompany profits or losses are eliminated to the extent of the Group’s proportionate share thereof. Where there has been a change recognized directly in the equity of the associate, the Group recognizes its share of any changes and discloses this, when applicable, in the consolidated statement of changes in equity. Profits or losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. The financial statements of the associate are prepared for the same reporting period as the consolidated financial statements of the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. ePI is an associate of the Group. An associate is an entity in which the Group has significant influence, but not control, over the financial and operating policies of the entity. The Group exercises its significant influence in ePl through its representation on the BOD and participation in the policy-making processes.

Assets Held for Sale Assets are classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. Assets held for sale is measured at the lower of its carrying amount and fair value less costs to sell. Any liabilities associated with these assets are presented separately in the consolidated balance sheet. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and any allowance for impairment in value. The initial cost of property and equipment comprises of its purchase price, including import duties and nonrefundable purchase taxes and any directly attributable costs of bringing the property and equipment to its working condition and location for its intended use. Such costs include the cost of replacing part of such property and equipment when that cost is incurred if the recognition criteria are met. Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance, are normally charged to expense in the period 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.

- 7 -

*SGVMC410156*

Each part of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. Depreciation is computed on a straight-line method over the estimated useful lives of the assets of three (3) to five (5) years.

The depreciation method and estimated useful lives are reviewed periodically to ensure that the method and periods of depreciation are consistent with the expected pattern of economic benefits from items of property and equipment. When property and equipment are retired or otherwise disposed of, their cost, accumulated depreciation and any allowance for impairment in value are eliminated from the accounts, and any gain or loss resulting from their disposal is included in the consolidated statement of comprehensive income. Fully depreciated assets are retained as property and equipment until these are no longer in use. Input VAT Input VAT represents tax imposed on the Group by their suppliers and contractors for the acquisition of goods and services required under Philippine taxation laws and regulations. Input VAT is stated at its estimated net realizable value.

Impairment of Assets Financial Assets Carried at Amortized Cost The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. If there is objective evidence that an impairment loss on financial assets carried at amortized cost (e.g., trade and other receivables) has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. Objective evidences of impairment may include indications that the debtors or a group of debtor is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Time value is generally not considered when the effect of discounting is not material. The carrying amount of the asset shall be reduced either directly or through use of an allowance account. In case the receivable has proven to have no realistic prospect of future recovery, any allowance provided for such receivable is written off against the carrying value of the impaired receivable. The amount of loss shall be recognized in the consolidated statement of comprehensive income. The Group assesses whether objective evidences of impairment exists individually for financial assets that are individually significant or collectively for financial assets that are not individually significant. Those objective evidences are relevant to the estimation of future cash flows 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. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the consolidated statement of comprehensive income to the extent that the carrying

- 8 -

*SGVMC410156*

value of the asset at the reversal date does not exceed its amortized cost that would have been determined had no impairment loss been recognized in prior years. With respect to trade and other receivables, the Group maintains an allowance for impairment losses at a level considered adequate to provide for potential uncollectible receivables. The level of this allowance is evaluated by management on the basis of factors that affect the collectibility of the accounts. A review of the age and status of receivables, designed to identify accounts to be provided with allowance, is performed regularly. Impaired receivables are derecognized when they are assessed as uncollectible.

Investment in Shares of Stock The Group performs an impairment review on its investment in shares of stock whenever an impairment indicator exists. After application of the equity method, the Group determines whether it is necessary to recognize an additional impairment loss of the Group’s investment in its associate. The Group determines at each balance sheet date whether there is any objective evidence that the investment in associate is impaired. If this is the case, the Group calculates the amount of impairment as being the difference between the fair value of the associate and the acquisition cost and recognizes the amount in the consolidated statement of comprehensive income.

Property and Equipment and Input VAT The carrying values of property and equipment and input VAT are reviewed for impairment whenever 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 estimated recoverable amounts. The estimated recoverable amount is the greater of an asset’s fair value less costs to sell and value in use. The fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction less the costs of disposal while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. 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 estimated recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment loss, if any, is recognized in the consolidated statement of comprehensive income. Recovery of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. The recovery of impairment losses is recorded in the consolidated statement of comprehensive income. However, the increased carrying amount of an asset due to a recovery of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for that asset in prior years.

Provisions Provisions, if any, are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are made by

- 9 -

*SGVMC410156*

discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as interest expense. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of comprehensive income, net of any reimbursement.

Retirement Benefits The Group has a defined retirement benefit plan which requires contributions to be made to separately administered fund. The cost of providing benefits under the defined retirement benefit plan is determined using the projected unit credit actuarial valuation method. Actuarial gains and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses for the plan at the end of the previous reporting year exceeded 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognized over the expected average remaining working lives of the employees participating in the plan. The past service cost is recognized as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits are already vested immediately following the introduction of, or changes to, a pension plan, past service cost is recognized immediately. The defined retirement benefit asset is the aggregate of the present value of the defined benefit obligation and actuarial gains and losses not recognized reduced by past service cost not yet recognized and the fair value of plan assets out of which the obligations are to be settled directly. If such aggregate is negative, the asset is measured at the lower of such aggregate or the aggregate of cumulative unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan. The net pension asset in respect of the defined benefit pension plan is the lower of: (a) the present value of the defined benefit obligation at the balance sheet date less the fair value of the plan assets together with adjustments for unrecognized actuarial gains or losses and past service costs that shall be recognized in later periods or (b) the total of any cumulative unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. If there is no change or increase in the present value of the economic benefits, the past service cost of the current period shall be recognized immediately. Capital Stock The Company has issued capital stock that is classified as equity. Incremental costs directly attributable to the issue of new capital stock are shown in equity as a deduction, net of tax, from the proceeds.

- 10 -

*SGVMC410156*

Deficit Deficit represents accumulated profits and losses incurred by the Company. Deficit may also include effect of changes in accounting policy as may be required by transitional provisions of new and amended standards. Foreign Currency Translation The functional currency of the entities of the Group is the Philippine peso, except for a subsidiary of the associate, which the functional currency is the United States Dollar. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The assets and liabilities of a subsidiary of the associate whose functional currency is other than the Philippine peso, are translated into Philippine peso at the rate of exchange ruling at the balance sheet date, and its income and expenses are translated to Philippine peso at average exchange rates. The exchange differences arising on the translation are taken directly to “Share in CTA of an associate” account, a separate component of equity. Income Taxes Current Income Tax Current income tax liabilities for the current and prior year periods are measured at the amount expected to be recovered from or paid to the taxation authority. The tax rates and tax laws used to compute the amount are those that have been enacted or substantively enacted as at the balance sheet date. Deferred Income Tax Deferred income tax is provided, using the balance sheet liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income tax assets are recognized for all deductible temporary differences and carryforward of unused tax credits from excess minimum corporate income tax (MCIT) and unused net operating loss carryover (NOLCO) to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carryforward of unused tax credits from excess MCIT and unused NOLCO can be utilized in the future. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax assets to be utilized in the future. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred income tax assets to be recognized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax assets and deferred income tax liabilities are offset, if and only if, a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities, which intend to either settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each

- 11 -

*SGVMC410156*

future period in which significant amounts of deferred income tax assets or liabilities are expected to be settled or recovered. Subsidiaries operating in the Philippines file income tax returns on an individual basis. Thus, the deferred income tax assets and liabilities are offset on a per entity basis.

Earnings Per Share Earnings per share is determined by dividing net earnings by the weighted average number of shares issued during the year after retroactive adjustment for any stock dividends declared and stock split. Diluted earnings per share amounts are calculated by dividing the net earnings attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding, adjusted for any stock dividends declared during the year plus weighted average number of ordinary shares that would be issued on the conversion of all the dilutive ordinary shares into ordinary shares. Segment Reporting The Group’s operating businesses are recognized and managed according to the nature of the services offered, with each segment representing a strategic business unit that serves different markets. Segment assets include operating assets used by a segment and consist principally of operating cash, trade and other receivables, and property and equipment, net of allowances and provisions. Segment liabilities include all operating liabilities and consist principally of trade and other payables and notes payable. Segment assets and liabilities do not include deferred income taxes. Operating Leases Operating leases represent those leases under which substantially all risks and rewards of ownership of the leased assets remain with the lessor. Lease payments under an operating lease are charged to expense on a straight-line basis over the terms of the lease.

Contingencies Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the consolidated financial statements but are disclosed when an inflow of economic benefits is probable. Events After the Balance Sheet Date Post year-end events that provide additional information about the Group’s position at the balance sheet date (adjusting events) are reflected in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the consolidated financial statements when material. New Accounting Standards, Interpretations and Amendments to Existing Standards Effective Subsequent to December 31, 2011 Standards and interpretations issued but not yet effective up to the date of issuance of the Company’s financial statements are listed below. Except as otherwise indicated, the Group does not expect the adoption of these new and amended PFRS and Philippine Interpretation from IFRIC to have significant impact on the consolidated financial statements. The Group will adopt these standards and interpretations when these become effective.

- 12 -

*SGVMC410156*

Effective in 2012 Amendment to PAS 12, Income Taxes - Deferred Tax: Recovery of Underlying Assets The amendment provides a practical solution to the problem of assessing whether recovery of an asset will be through use or sale. It introduces a presumption that recovery of the carrying amount of an asset will, normally, be through sale.

Amendment to PFRS 7, Financial Instruments: Disclosures - Transfers of Financial Assets The amendments will allow users of financial statements to improve their understanding of transfer transactions of financial assets (for example, securitizations), including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. Effective in 2013 Amendment to PAS 1, Financial Statement Presentation - Presentation of Items of Other

Comprehensive Income The amendment will allow the management to present separately those items that could be reclassified (or “recycled”) to profit or loss at a future point in time from those items that will never be reclassified.

Amendment to PAS 19, Employee Benefits Amendments to PAS 19 range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. The Group is currently assessing the impact of the amendment to PAS 19. Amendment to PAS 27, Separate Financial Statements As a consequence of the new PFRS 10, Consolidated Financial Statements and PFRS 12, Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. Amendment to PAS 28, Investments in Associates and Joint Ventures As a consequence of the new PFRS 11, Joint Arrangements and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities The amendments require entities to disclose information that will enable users to evaluate the effect or potential effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognized financial instruments that are set-off in accordance with PAS 32 and recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set-off in accordance with PAS 32. The amendments require entities to disclose, in a tabular format unless another format is more appropriate, the following minimum quantitative information. This is presented separately for financial assets and financial liabilities recognized at the end of the reporting period: a) The gross amounts of those recognized financial assets and recognized financial liabilities; b) The amounts that are set-off in accordance with the criteria in PAS 32 when determining the

net amounts presented in the statement of financial position; c) The net amounts presented in the statement of financial position;

- 13 -

*SGVMC410156*

d) The amounts subject to an enforceable master netting arrangement or similar agreement that are not otherwise included in (b) above, including:

i. Amounts related to recognized financial instruments that do not meet some or all of the offsetting criteria in PAS 32; and

ii. Amounts related to financial collateral (including cash collateral); and e) The net amount after deducting the amounts in (c) from the amounts in (d) above. PFRS 10, Consolidated Financial Statements PFRS 10 replaces the portion of PAS 27, Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12, Consolidation - Special Purpose Entities. PFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by PFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS 27. PFRS 11, Joint Arrangements PFRS 11 replaces PAS 31, Interests in Joint Ventures and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. PFRS 12, Disclosure of Involvement with Other Entities PFRS 12 includes all of the disclosures that were previously in PAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. PFRS 13, Fair Value Measurement PFRS 13 establishes a single source of guidance under PFRS 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 when fair value is required or permitted. Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine This interpretation applies to waste removal costs that are incurred in surface mining activity during the production phase of the mine (“production stripping costs”) and provides guidance on the recognition of production stripping costs as an asset and measurement of the stripping activity asset. Effective in 2014 PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities These amendments to PAS 32 clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous.

- 14 -

*SGVMC410156*

Effective in 2015 PFRS 9, Financial Instruments: Classification and Measurement PFRS 9 as issued reflects the first phase of the International Accounting Standards Board’s (IASB) work on the replacement of PAS 39 and applies to classification and measurement of financial assets as defined in PAS 39. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition. The adoption of the first phase of PFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture. Deferred Effectivity Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate This interpretation covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The interpretation requires that revenue on construction of real estate be recognized only upon completion, except when such contract qualifies as construction contract to be accounted for under PAS 11, Construction Contracts, or involves rendering of services in which case revenue is recognized based on stage of completion. Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will also be accounted for based on stage of completion. The Philippine SEC and the Financial Reporting Standards Council have deferred the effectivity of this interpretation until the final Revenue standard is issued by IASB and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed.

3. Significant Accounting Judgments, Estimates and Assumptions

The consolidated financial statements prepared in accordance with PFRS require management to make judgments, estimates and assumptions that affect amounts reported in the consolidated financial statements and related notes. The judgments and estimates used in the consolidated financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the consolidated financial statements. Actual results could differ from such estimates. Judgments, estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgments Determining Functional Currency The functional currency of the Company has been determined to be the Philippine peso. The Philippine peso is the currency of the primary economic environment in which the Company operates. Operating Lease - the Group as a Lessee The Group has entered into an operating lease agreement as a lessee and determined that the lessor retains all significant risks and reward of ownership of the related property (see Note 17).

- 15 -

*SGVMC410156*

Determining Whether Significant Influence Exists for Purposes of Applying PAS 28 The Group evaluates various factors in determining whether significant influence exists. Under PAS 28, there is a presumption that if ownership is below 20%, significant influence does not exist unless otherwise supported. Among the factors being considered by management in the assessment are, degree of representation in the BOD of the investee, corporate governance arrangements, and power to veto significant operating and financial decisions. Under the exercise of this judgment, the Company classified its 3.8% investment in ePI as an investment in associate. The carrying value of this investment amounted to P=28,378,430 and P=27,587,198 as of December 31, 2011 and 2010, respectively (see Note 6). Estimates and Assumptions Estimating Impairment of Trade and Other Receivables Management reviews the age and status of trade and other receivables and identifies accounts that are to be provided with allowances on a continuous basis. The Group maintains allowance for impairment losses at a level considered adequate to provide for potential uncollectible receivables. The Group evaluates specific accounts where the Group has information that certain customers or third parties are unable to meet their financial obligations. Factors, such as the Group’s length of relationship with the customers or other parties and the customers’ or other parties’ current credit status, are considered in determining the amount of impairment loss that will be recorded. The allowance is re-evaluated and adjusted as additional information is received. Allowance for impairment losses on trade and other receivables amounted P=3,520,453 as of December 31, 2011 and 2010. Management believes that the allowance is sufficient to cover the trade and other receivable balances which are specifically identified to be doubtful of collection. The Group also determines receivables to be written-off based on assessments and results of earnest efforts exerted by management to collect such receivables. Trade and other receivables, net of allowance for impairment losses, amounted to P=10,918,524 and P=10,279,415 as of December 31, 2011 and 2010, respectively (see Note 5).

Estimating Useful Lives of Property and Equipment The Group estimates the useful lives of property and equipment based on the period over which these assets are expected to be available for use. The estimated useful lives are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of these assets. In addition, estimation of the useful lives is based on collective assessment of industry practice, internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. The net book values of property and equipment amounted to P=7,332,389 and P=10,244,284 as of December 31, 2011 and 2010, respectively (see Note 7).

Estimating Realizability of Deferred Income Tax Assets The Group reviews the carrying amounts of deferred income tax assets at each balance sheet date and reduced the amounts to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax assets to be utilized in the future. However, there is no assurance that the Group will generate sufficient taxable income to allow all or part of its deferred income tax assets to be utilized in the future. The Group has deductible temporary differences, excess MCIT and unused NOLCO totaling P=5,655,937 and P=4,079,685 as of December 31, 2011 and 2010, respectively, for which no deferred income tax assets were recognized (see Note 18).

- 16 -

*SGVMC410156*

Estimating Impairment of Property and Equipment and Input VAT The Group assesses impairment on assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Group considers important which could trigger an impairment review include the following:

• Significant underperformance relative to expected historical or projected operating results;

• Significant changes in the manner of use of the acquired assets or the strategy for overall

business; and

• Significant negative industry or economic trends.

An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. The fair value less costs to sell is the amount obtainable from the sale of assets in an arms’ length transaction while value in use is the present value of estimated future cash flows expected to rise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which the asset belongs. For impairment loss on specific assets, the recoverable amount represents the fair value less costs to sell. In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets, the Group is required to make estimates and assumptions that can materially affect the consolidated financial statements. No impairment loss was recognized in 2011, 2010 and 2009. The aggregate carrying amounts of property and equipment and input VAT amounted to P=9,205,879 and P=12,146,028 as of December 31, 2011 and 2010, respectively.

Estimating Impairments of Investment in Shares of Stock The Group performs an impairment review on its investment whenever an impairment indicator exists. After applying the equity method, the Group determines whenever it is necessary to recognize an impairment loss on the Group’s investment in shares of stock. This requires an estimation of the value in use of the investment. Estimating the value in use requires the Group to make an estimate of the expected future cash flows of the investment and to make use of a suitable discount rate to calculate the present value of those future cash flows.

Management has determined that there are no events or circumstances that may indicate that the carrying amount of the investment may not be recoverable as of December 31, 2011, 2010 and 2009; thus, no impairment loss were recognized for the years then ended. As of December 31, 2011 and 2010, the carrying amounts of the investment in shares of stock amounted to P=28,378,430 and P=27,587,198, respectively (see Note 6).

Estimating Fair Value Less Costs to Sell The Group estimates the fair value of assets held for sale based on the available market price of similar assets less estimated costs to sell. The carrying amount of assets held for sale amounted to P=2,081,535 as of December 31, 2011 and 2010. The fair value of the assets held for sale amounted to P=3,012,000 and P=3,027,000 as of December 31, 2011 and 2010, respectively (see Note 8).

- 17 -

*SGVMC410156*

Estimating Retirement Benefits The determination of the Group’s obligation and cost for retirement is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. These assumptions are described in Note 16 to the consolidated financial statements. Retirement benefit expense (income) amounted to P=33,051, P=4,307 and (P=34,100) in 2011, 2010 and 2009, respectively. Retirement benefit asset amounted to P=184,946 and P=217,997 as of December 31, 2011 and 2010, respectively (see Note 16).

Estimating Contingencies The Group evaluates legal and administrative proceedings to which it is involved based on analysis of potential results. Management and its legal counsels do not believe that any current proceedings will have material adverse effects on its financial position and results of operations. It is possible, however, that future results of operations could be materially affected by changes in the estimates or in the effectiveness of strategies relating to these proceedings.

4. Cash and Cash Equivalents

2011 2010 Cash with banks P=7,644,872 P=8,415,187 Short-term placements 48,725,483 47,404,754 P=56,370,355 P=55,819,941

Cash with banks earn interest at the respective bank deposit rates. Short-term placements are

made for varying periods usually up to three months depending on the immediate cash requirements of the Group and earn interest at the respective short-term placements rates.

Interest income earned from cash with banks and short-term placements amounted to P=1,446,936,

P=989,116 and P=138,852 in 2011, 2010 and 2009, respectively (see Note 14). For the purpose of the consolidated statements of cash flows, cash and cash equivalents comprise

the following as at January 1:

2010 2009 Cash with banks P=4,873,292 P=12,578,914 Short-term placements – 5,680,447 P=4,873,292 P=18,259,361

- 18 -

*SGVMC410156*

5. Trade and Other Receivables

2011 2010 Trade Unimpaired P=1,505,219 P=1,564,159

Impaired 784,796 784,796 Advances to officers and employees Unimpaired 23,311 24,182

Impaired 1,018,363 1,018,363 Due from a related party (see Note10) 34,089 – Others Unimpaired 9,355,905 8,691,074

Impaired 1,717,294 1,717,294 14,438,977 13,799,868 Less allowance for impairment losses 3,520,453 3,520,453 P=10,918,524 P=10,279,415

Trade receivables are noninterest-bearing and generally have a 30-day term. The allowance for impairment losses is attributable to the individual impairment of certain trade, advances to officers and employees and other receivables. The Group’s management believes that unimpaired receivables are collectible and in good standing. Total gross amounts of individually impaired receivables as of December 31, 2011 and 2010 before deducting impairment allowance amounted to P=3,520,453. These receivables were fully provided with allowance for impairment losses as of December 31, 2011 and 2010.

As of December 31, the aging analysis of unimpaired trade and other receivables is as follows: Neither Past Past Due But Not Impaired Due Nor Less than 30 to 60 60 to 90 More than 90 Impaired 30 days days days days Total 2011 P=1,685,794 P=1,203,775 P=23,311 P=– P=8,005,644 P=10,918,524 2010 2,784,523 73,292 19,238 24,340 7,378,022 10,279,415

6. Investment in Shares of Stock

The movements of the investment in ePI are as follows:

2011 2010 Acquisition cost P=21,948,203 P=21,948,203 Accumulated equity in net earnings: Balances at beginning of year 4,302,926 5,107,926 Equity in net earnings 3,845,135 1,862,000 Dividends received (1,143,000) (2,667,000) Balances at end of year 7,005,061 4,302,926 Share in CTA: Balances at beginning of year 1,336,069 3,164,891 Reductions (1,910,903) (1,828,822) Balances at end of year (574,834) 1,336,069 P=28,378,430 P=27,587,198

- 19 -

*SGVMC410156*

The Company’s share in net earnings in ePI amounted to P=2,442,085 for the year ended December 31, 2009. Dividends received by the Company from ePI amounted to P=2,052,540 in 2009.

The summarized financial information of ePI as of December 31, 2011, 2010 and 2009, and for each of the three years in the period ended December 31, 2011 are as follows (in thousands):

2011 2010 2009 Total assets P=1,073,726 P=1,039,328 P=1,138,513 Total liabilities 326,158 312,728 389,949 Net income 101,317 49,000 64,265

The undistributed earnings of ePI included in the consolidated retained earnings amounted to

P=7,005,061 and P=4,302,926 as of December 31, 2011 and 2010, respectively, which is not currently available for dividend distribution unless declared by such investee.

7. Property and Equipment

2011 Furniture, Fixtures and Internet Equipment Equipment Total Cost: Balances at beginning of year P=236,135 P=15,202,274 P=15,438,409 Additions – 83,675 83,675 Balances at end of year 236,135 15,285,949 15,522,084 Accumulated depreciation: Balances at beginning of year 236,135 4,957,990 5,194,125 Depreciation (see Notes 12 and 13) – 2,995,570 2,995,570 Balances at end of year 236,135 7,953,560 8,189,695 Net book values P=– P=7,332,389 P=7,332,389

2010

Furniture, Fixtures and Internet Equipment Equipment Total Cost: Balances at beginning of year P=236,135 P=14,791,033 P=15,027,168 Additions (see Note 22) – 411,241 411,241 Balances at end of year 236,135 15,202,274 15,438,409 Accumulated depreciation: Balances at beginning of year 236,135 1,983,771 2,219,906 Depreciation – 2,974,219 2,974,219 Balances at end of year 236,135 4,957,990 5,194,125 Net book values P=– P=10,244,284 P=10,244,284

Cost of fully depreciated property and equipment which are still being used in the operation amounted to P=1,226,044 and P=1,079,255 as of December 31, 2011 and 2010, respectively.

- 20 -

*SGVMC410156*

Depreciation is presented in the following accounts within the consolidated statements of comprehensive income:

2011 2010 2009 Costs of services (see Note 12) P=2,971,560 P=2,866,349 P=1,455,769 General and administrative expenses (see Note 13) 24,010 107,870 71,936 P=2,995,570 P=2,974,219 P=1,527,705

8. Assets Held for Sale

Assets held for sale represent the carrying amount, which is lower than the fair value less costs to sell, of land and condominium units included in the paging business of the Company. As discussed in Note 1, the Company’s paging business discontinued its commercial operations in 2002.

A portion of land and the condominium units were disposed in 2005 through sale transaction. The remaining piece of land is expected to be disposed through a sale transaction in 2012. Management continues to commit itself to pursue its plan to sell the remaining piece of land given the extension of the period to complete the sale. The fair value of the assets held for sale amounted to P=3,012,000 and P=3,027,000 as of December 31, 2011 and 2010, respectively.

9. Trade and Other Payables

2011 2010 Trade P=821,027 P=3,169,279 Accrued expenses 668,770 661,940 Others 326,006 271,821 P=1,815,803 P=4,103,040

There have been no guarantees received for trade and other payables. Trade and other payables are unsecured liabilities. Accrued expenses consist of the following:

2011 2010 Accrued direct costs P=201,341 P=202,041 Accrued salaries 189,508 165,176 Accrued professional fee 183,000 146,882 Accrued telephone and communications 23,288 9,926 Accrued transportation and travel 14,737 110,650 Others 56,896 27,265 P=668,770 P=661,940

Other payables consist mainly of deferred output VAT, amounts due to Social Security System and Home Development Mutual Fund, among others.

- 21 -

*SGVMC410156*

10. Related Party Transactions

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

In addition to those mentioned in Note 1, related party transactions in the ordinary course of business, which are made at terms equivalent to those that prevail in arm’s length transactions, are as follows: a. Unsecured intercompany balances represent noninterest-bearing cash advances from GeBSI, a

stockholder, presented as Advances from a stockholder, amounting to P=19,310,284 and P=19,543,135 as of December 31, 2011 and 2010, respectively, for working capital requirements. Due from a related party represents receivable for the services rendered by the Group to TESI, a related party, amounting to P=34,089 as of December 31, 2011. These advances are due and demandable. There have been no guarantees provided or received for any related party receivables or payables.

b. Compensation of key management personnel of the Group (see Notes 15 and 16).

c. Participation by the Group in the Transnational Diversified Group of Companies Retirement Plan (the Group Plan; see Note 16).

11. Capital Stock

The BOD approved 42,557,170 (net of 26,113 exercised in 2005) warrants issued to the stockholders in 2003. The exercise price of the warrant is P=1.15 per share. A warrant represents an entitlement to subscribe and be allotted one (1) common share. The warrants shall be the direct obligations of the Company to the registered owners of the warrants, subject to the terms and conditions of the warrant certificate. There were no warrants exercised in 2011 and 2010. On September 11, 2008, the BOD approved the issuance of 11,500,000 stock rights to all stockholders of record as of January 8, 2009 at an offer price of P=1.00 per share. Each shareholder shall be given one share of the Company for every 8 shares currently held by them. The proceeds will be utilized to fund the expansion and enhancement of the Company’s delivery of its Internet Protocol-based internet products and services. The issuance of the stock rights offer was approved by the Philippine SEC on December 23, 2008. Effective January 23, 2009, 11,500,000 stock rights were exercised by the stockholders at P=1.00 per share or for a total par value of P=11,500,000 (see Note 10). As discussed in Note 1 to the consolidated financial statements, on April 14, 2010, the PSE approved the application of the Company to list additional 46,570,025 common shares with a par value of P=1.00 per share to cover the private placement by GeBSI at a subscription price at par.

- 22 -

*SGVMC410156*

As of December 31, 2011 and 2010, the movement in capital stock is as follows:

2011 2010 No. of shares Amounts No. of shares Amounts Balances at beginning of year 150,000,000 P=150,000,000 103,429,975 P=103,429,975 Issuance of shares – – 46,570,025 46,570,025 Balances at end of year 150,000,000 P=150,000,000 150,000,000 P=150,000,000

Based on the Company’s track record of registration of securities under the Securities Regulation Code of the Philippine SEC, the Company has 3,000,000 authorized shares at P=1.00 par value or a total par value of P=3,000,000 since its date of registration (see Note 1). As of December 31, 2011 and 2010, there were no movements in the Company’s registered securities. As of December 31, 2011, there are 301 shareholders who hold 150,000,000 shares.

12. Costs of Services

2011 2010 2009 Cost of leaseline subscriptions P=5,645,823 P=5,246,833 P=6,892,308 Depreciation (see Note 7) 2,971,560 2,866,349 1,455,769 Employee-related (see Note 15) 1,938,839 1,655,166 – P=10,556,222 P=9,768,348 P=8,348,077

13. General and Administrative Expenses

2011 2010 2009 Subscription dues P=2,037,548 P=805,960 P=401,460 Employee-related (see Note 15) 1,422,560 1,855,585 2,319,791 Travel 1,353,424 779,105 256,422 Communications 1,093,144 871,326 814,715 Management and consultancy fees 1,066,219 1,415,144 1,423,420 Taxes and licenses 454,756 750,528 647,530 Professional fees 384,768 524,708 418,642 Utilities 69,621 65,617 80,927 Repairs and maintenance 24,867 69,584 46,119 Depreciation (see Note 7) 24,010 107,870 71,936 Rental (see Note 17) – – 54,153 Miscellaneous 1,213,112 446,756 1,054,149 P=9,144,029 P=7,692,183 P=7,589,264

Subscription dues increased in 2011 as a result of the increase in subscribed capital stock of the Company in 2010 (see Note 11). Miscellaneous expenses include insurance and bond premium, bank charges and other expenses.

- 23 -

*SGVMC410156*

14. Other Income

2011 2010 2009 Interest income P=1,446,936 P=989,116 P=138,852 Miscellaneous (see Note 16) 12,338 333,738 531,346 P=1,459,274 P=1,322,854 P=670,198

Miscellaneous income in 2010 and 2009 mainly represents income generated from utilities’ refund, and is not a result of a related party transaction. This also includes retirement benefit income in 2009 amounting to P=34,100 (see Note 16). 15. Employee-related Expenses

2011 2010 2009 Salaries and wages P=2,829,066 P=2,846,431 P=1,842,980 Employees benefits 499,282 660,013 476,811 Retirement benefit expense (see Note 16) 33,051 4,307 – P=3,361,399 P=3,510,751 P=2,319,791

Employee-related expenses are broken down as follows:

2011 2010 2009 Costs of services (see Note 12) P=1,938,839 P=1,655,166 P=– General and administrative expenses (see Note 13) 1,422,560 1,855,585 2,319,791 P=3,361,399 P=3,510,751 P=2,319,791

16. Retirement Benefit Plan

The Group participates in the Group Plan, which is managed by a Board of Trustees and is funded by contributions of each participating company. The fund assets of each participating company are determined on the basis of each company’s contribution to the Group Plan. The annual contribution to be paid to the Group Plan is based on the unfunded actuarial liability computed individually for each participating company. The benefits are based on a certain percentage of the final monthly basic salary for every year of credited service of the employees. The following tables summarize the amounts recognized in the consolidated balance sheets, the components of net retirement benefit expense (income) recognized in the consolidated statements of comprehensive income and the funded status, based on the latest actuarial valuation as of December 31.

- 24 -

*SGVMC410156*

Components of net retirement benefit expense (income) recognized in the consolidated statements of comprehensive income are as follows:

2011 2010 2009 Current service cost P=56,300 P=33,000 P=2,900 Interest cost 24,203 13,090 2,300 Expected return on plan assets (37,116) (26,897) (17,600) Actuarial gains (10,336) (14,886) (21,700) Retirement benefit expense (income) P=33,051 P=4,307 (P=34,100) Actual return on plan assets P=11,792 P=62,176 P=36,247

Retirement benefit expense is presented under “Cost of services” account in the 2011 and 2010 consolidated statement of comprehensive income (see Note 12). Retirement benefit income is presented under “Other income” account in the 2009 consolidated statement of comprehensive income (see Note 14). The components of retirement benefit asset recognized in the consolidated balance sheets are as follows:

2011 2010 Fair value of plan assets P=754,106 P=742,314 Present value of defined benefit obligation (486,300) (253,700) Funded status 267,806 488,614 Unrecognized actuarial gains (82,860) (270,617) Retirement benefit asset P=184,946 P=217,997

Changes in the present value of the defined benefit obligation are as follows:

2011 2010 Balances at beginning of year P=253,700 P=121,200 Current service cost 56,300 33,000 Interest cost 24,203 13,090 Net actuarial losses (gains) due to: Change in actuarial assumptions 204,600 103,500 Experience adjustments (52,503) (17,090) Balances at end of year P=486,300 P=253,700

Changes in the fair value of plan assets are as follows:

2011 2010 Balances at beginning of year P=742,314 P=537,934 Expected return on plan assets 37,116 26,897 Contributions – 142,204 Actuarial gains (loss) (25,324) 35,279 Balances at end of year P=754,106 P=742,314

The Group expects to contribute P=154,194 to the Group Plan in 2012.

- 25 -

*SGVMC410156*

The major categories of the Group Plan’s plan assets as a percentage of the fair value of the total plan assets are as follows:

2011 2010 Cash and cash equivalents 29% 27%FVPL investments 14% 12%Investments in shares of stock 3% 3%Others 54% 58%

Principal actuarial assumptions used to determine retirement benefits in 2011 and 2010 are as follows:

2011 2010 Discount rate 6.98% 9.54%Investment yield 5.00% 5.00%

Retirement date Age 60 and 10 years

of serviceAge 60 and 10 years

of serviceWages and salary increases

Rank and file and non-managers 5.00% 5.00%Managers and up 5.00% 5.00%

Turnover rate (voluntary separation)

Ranging from 10% atAge 20 and decreasing to

0% after age 45

Ranging from 10% atAge 20 and decreasing to

0% after age 45 The overall expected rate of return on plan assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Amounts for the current and previous four years are as follows:

2011 2010 2009 2008 2007 Fair value of plan assets P=754,106 P=742,314 P=537,934 P=352,387 P=418,000 Defined benefit

obligation (486,300) 253,700 121,200 8,137 357,100 Funded status 267,806 488,614 416,734 344,250 60,900 Experience adjustments

on plan liabilities (52,503) (17,090) (637) (123,800) 97,900 17. Operating Leases

The Group subleases its warehouse space from Diversified Holdings, Inc. The sublease agreement is renewable on a year-to-year basis. Rent charged to operations for the year ended December 31, 2009 amounted to P=54,153. The Group has not renewed its contract in 2011 and 2010.

- 26 -

*SGVMC410156*

18. Income Taxes In 2011, 2010 and 2009, the provision for current income tax represents the Company’s MCIT and e-Serve’s regular corporate income tax.

As of December 31, 2011 and 2010, e-Serve recognized deferred income tax liability on retirement benefit asset amounting to P=55,484 and P=65,399, respectively. As of December 31, 2011 and 2010, the Group has the following deductible temporary differences, excess MCIT and unused NOLCO for which no deferred income tax assets were recognized since management believes that it is not probable that sufficient taxable profit will be available to allow all or part of the deferred income tax assets to be utilized in the future:

2011 2010 Allowance for impairment losses P=3,520,453 P=3,520,453 NOLCO 2,022,638 455,780 MCIT 112,846 103,452 P=5,655,937 P=4,079,685

As of December 31, 2011, the Group has NOLCO and MCIT that can be claimed against future taxable income and income tax liabilities, respectively, as follows:

Year incurred Available up to NOLCO MCIT 2011 2014 P=2,014,728 P=30,177 2010 2013 7,910 41,806 2009 2012 – 40,863 P=2,022,638 P=112,846

The following are the movements in NOLCO and MCIT:

NOLCO 2011 2010 Balances at beginning of year P=455,780 P=23,740,878 Addition 2,014,728 7,910 Expirations (447,870) (23,293,008) Balances at end of year P=2,022,638 P=455,780 MCIT 2011 2010 Balances at beginning of year P=103,452 P=61,646 Additions 30,177 41,806 Expiration (20,783) – Balances at end of year P=112,846 P=103,452

- 27 -

*SGVMC410156*

The reconciliation of income before income tax computed at the statutory tax rate to provision for income tax is as follows:

2011 2010 2009 Income tax at statutory income tax rate at

30% P=1,263,975 P=1,310,549 P=1,040,737 Additions to (reductions in) income taxes

resulting from: Change in unrecognized deferred

income taxes 634,595 44,179 (108,345) Nondeductible expenses 59,100 7,656 240,255 Equity in net earnings of an associate (1,153,541) (558,600) (732,626) Interest income subjected to

final tax (434,080) (296,735) (41,656) P=370,049 P=507,049 P=398,365

19. Earnings Per Share

The following reflects the consolidated net income and share data used in the basic and diluted earnings per share computations:

Basic earnings per share:

2011 2010 2009 Net income P=3,843,200 P=3,861,447 P=3,070,757 Divided by weighted average number of outstanding shares 150,000,000 136,417,076 102,471,642 Basic earnings per share P=0.03 P=0.03 P=0.03

Diluted earnings per share:

2011 2010 2009 Net income P=3,843,200 P=3,861,447 P=3,070,757 Divided by: Weighted average number of

ordinary shares for basic earnings per share 150,000,000 136,417,076 102,471,642

Effect of dilution: Exercisable warrants (see Note 11) 42,557,170 42,557,170 42,557,170 192,557,170 178,974,246 145,028,812 Diluted earnings per share P=0.02 P=0.02 P=0.02

20. Segment Information

PFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker. For management purposes, the Group’s operating segments are determined to be business segments as the risks and rates of return are affected predominantly by differences in the services rendered. The operating businesses are organized and managed separately according to the nature

- 28 -

*SGVMC410156*

of the services provided, with each segment representing a strategic business unit that serves different markets. The information technology services segment is engaged to operate as Internet Services Provider in the Philippines.

The contact center outsourcing business segment is engaged in contact center operations, software development, back-office processing and system integration. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment revenues and cost of services are measured in accordance with PFRS. Segment performance is evaluated based on operating income or loss and is measured consistently with income before income tax as reported in the consolidated financial statements.

Business Segments The following tables present revenue and profit and certain asset and liability information regarding the Group’s business segments for the years ended December 31, 2011, 2010 and 2009 (in thousands): 2011

Information Technology

Services

Contact Center

Outsourcing Business

Total Segments

Adjustments and

eliminations Consolidated Service income P=18,609 P=2,154,490 P=2,173,099 (P=2,154,490) P=18,609 Costs of services 10,556 1,973,962 1,984,518 (1,973,962) 10,556 Gross profit 8,053 180,528 188,581 (180,528) 8,053 General and administrative expenses (9,144) (82,940) (92,084) 82,940 (9,144) Equity in net earnings of an associate 3,845 – 3,845 – 3,845 Dividend income 1,143 – 1,143 (1,143) – Other income - net 1,459 6,546 8,005 (6,546) 1,459 Income before income tax 5,356 104,134 109,490 (105,277) 4,213 Provision for (benefit from) income taxes

Current 380 2,926 3,306 (2,926) 380 Deferred (10) (108) (118) 108 (10)

370 2,818 3,188 (2,818) 370 Net income (loss) P=4,986 P=101,316 P=106,302 (P=102,459) P=3,843 Operating assets P=74,866 P=931,483 P=1,006,104 (P=931,728)) P=74,621 Operating liabilities P=2,061 P=294,051 P=295,867 (P=294,296) P=1,816 Investment in an associate P=28,378 P=– P=28,378 P=– P=28,378 Capital expenditures P=84 P=142,913 P=142,997 (P=142,913) P=84

- 29 -

*SGVMC410156*

2010


Services

Contact Center Outsourcing

Business Total Segments

Adjustments and

eliminations Consolidated Service income P=18,644 P=1,887,841 P=1,906,485 (P=1,887,841) P=18,644 Costs of services 9,768 1,725,355 1,735,123 (1,725,355) 9,768 Gross profit 8,876 162,486 171,362 (162,486) 8,876 General and administrative expenses (7,692) (89,687) (97,379) 89,687 (7,692) Equity in net earnings of an associate 1,862 – 1,862 – 1,862 Dividend income 3,967 – 3,967 (3,967) – Other income (expenses) - net 1,323 (20,980) (19,657) 20,980 1,323 Income before income tax 8,336 51,819 60,155 (55,786) 4,369 Provision for income taxes

Current 466 2,653 3,119 (2,653) 466 Deferred 41 166 207 (166) 41

507 2,819 3,326 (2,819) 507 Net income P=7,829 P=49,000 P=56,829 (P=52,967) P=3,862 Operating assets P=76,844 P=802,775 P=879,619 (P=803,275) P=76,344 Operating liabilities P=4,603 P=295,798 P=300,401 (P=296,298) P=4,103 Investment in an associate P=27,587 P=– P=27,587 P=– P=27,587 Capital expenditures P=411 P=79,907 P=80,318 (P=79,907) P=411

2009


Services

Contact Center Outsourcing

Business Total Segments

Adjustments and

eliminations Consolidated Service income P=16,294 P=1,979,048 P=1,995,342 (P=1,979,048) P=16,294 Costs of services 8,348 1,767,195 1,775,543 (1,767,195) 8,348 Gross profit 7,946 211,853 219,799 (211,853) 7,946 General and administrative expenses (7,589) (114,489) (122,078) 114,489 (7,589) Equity in net earnings of an associate 2,442 – 2,442 – 2,442 Dividend income 2,053 – 2,053 (2,053) – Other income (expenses) - net 670 (32,861) (32,191) 32,861 670 Income before income tax 5,522 64,503 70,025 (66,556) 3,469 Provision for income taxes

Current 397 – 397 – 397 Deferred 1 239 240 (239) 1

398 239 637 (239) 398 Net income P=5,124 P=64,264 P=69,388 (P=66,317) P=3,071 Operating assets P=30,500 P=820,067 P=847,348 (P=823,286) P=27,281 Operating liabilities P=6,600 P=357,698 P=361,079 (P=360,917) P=3,381 Investment in an associate P=30,221 P=– P=30,221 P=– P=30,221 Capital expenditures P=14,083 P=48,800 P=62,883 (P=48,800) P=14,083

Capital expenditures consist of additions to property and equipment.

- 30 -

*SGVMC410156*

21. Financial Instruments and Capital Risk Management

Financial Risk Management Objectives and Policies The Group’s financial instruments comprised of cash and cash equivalents, trade and other receivables, trade and other payables and advances from a stockholder. The BOD has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and manage the Group’s exposure to financial risks, to set appropriate transaction limits and controls, and to monitor and assess risks and compliance to internal control policies. Risk management policies and structure are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group has exposure to liquidity risk and credit risk from the use of its financial instruments. The BOD reviews and approves the policies for managing each of these risks.

Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet their financial obligations as they fall due. The Group’s objectives to managing liquidity risk is to ensure, as far as possible, that they will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking adverse effect to the Group’s credit standing. The Group manages liquidity risk by maintaining a balance between continuity of funding and flexibility. As part of its liquidity risk management, the Group regularly evaluates its projected and actual cash flows. The carrying values of cash and cash equivalents and trade and other receivables as of December 31, 2011 and 2010 are readily available for liquidity purposes. The outstanding balances of trade and other payables and advances from a stockholder are due and demandable as of December 31, 2011 and 2010.

Credit Risk Credit risk is the risk of financial loss to the Group would incur if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the Group’s trade and other receivables. The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, trade and other receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debt is not significant. The Group’s maximum exposure to credit risk is the carrying amount of its financial assets. As of December 31, 2011 and 2010, the Group has no significant concentration of credit risk. The Group grants advances to its related parties after the BOD reassessed the Group’s strategies for managing credits and view that they remain appropriate for the Group’s circumstances. In addition, these advances are monitored on an ongoing basis with the result that the Group’s exposure to account discrepancies is not significant. Cash equivalents are money market placements made with reputable banks duly approved by BOD. All unimpaired receivables are collectible and in good standing. Management believes that all financial assets are of good credit quality.

- 31 -

*SGVMC410156*

Fair Values of Financial Instruments The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables and advances from a stockholder approximate their fair values due to the short-term maturities of these financial instruments. Capital Management The primary objective of the Group’s capital management is to ensure that the Group maintains strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes as of December 31, 2011 and 2010.

The Group considers the following as its core capital:

2011 2010 Capital stock P=150,000,000 P=150,000,000 Deficit (62,446,457) (62,289,657) P=87,553,543 P=87,710,343

22. Note to Consolidated Statements of Cash Flows

2010 Noncash investing and operating activities pertain to additions to property and equipment amounting to P=268,089 which was still unpaid as of December 31, 2010 (see Note 7).

2009

Noncash financing activity pertains to the exercise of 11,500,000 stock rights by the stockholders at P=1 per share or for a total par value of P=11,500,000 which was applied against advances from a stockholder (see Notes 10 and 11).

of 4

EASYCALL COMMUNICATIONS PHILIPPINES, INC. AND SUBSIDIARY SUPPLEMENTARY SCHEDULE REQUIRED UNDER SRC RULE 68, AS AMENDED (2011)

I. List of Philippine Financial Reporting Standards (PFRSs) effective as at December 31, 2011

PFRSs Adopted/Not adopted/Not applicable PFRS 1, First-time Adoption of Philippine Financial Reporting

Standards Adopted PFRS 2, Share-based Payment Not applicable PFRS 3, Business Combinations Not applicable PFRS 4, Insurance Contracts Not applicable PFRS 5, Non-current Assets Held for Sale and Discontinued

Operations Adopted PFRS 6, Exploration for and Evaluation of Mineral Resources Not applicable PFRS 7, Financial Instruments: Disclosures Adopted PFRS 8, Operating Segments Adopted PAS 1, Presentation of Financial Statements Adopted PAS 2, Inventories Not applicable PAS 7, Statement of Cash Flows Adopted PAS 8, Accounting Policies, Changes in Accounting Estimates

and Errors Adopted PAS 10, Events after the Reporting Period Adopted PAS 11, Construction Contracts Not applicable PAS 12, Income Taxes Adopted PAS 16, Property, Plant and Equipment Adopted PAS 17, Leases Adopted PAS 18, Revenue Adopted PAS 19, Employee Benefits Not applicable PAS 20, Accounting for Government Grants and Disclosure of

Government Assistance Not applicable PAS 21, The Effects of Changes in Foreign Exchange Rates Adopted PAS 23, Borrowing Costs Not applicable PAS 24, Related Party Disclosures Adopted PAS 26, Accounting and Reporting by Retirement Benefit

Plans Not applicable PAS 27, Consolidated and Separate Financial Statements Adopted PAS 28, Investments in Associates Adopted PAS 29, Financial Reporting in Hyperinflationary Economies Not applicable PAS 31, Interests in Joint Ventures Not applicable

of 4

PFRSs Adopted/Not adopted/Not applicable

PAS 32, Financial Instruments: Presentation Adopted PAS 33, Earnings per Share Adopted PAS 34, Interim Financial Reporting Not applicable PAS 36, Impairment of Assets Adopted PAS 37, Provisions, Contingent Liabilities and Contingent

Assets Adopted PAS 38, Intangible Assets Not applicable PAS 39, Financial Instruments: Recognition and

Measurement Adopted PAS 40, Investment Property Not applicable PAS 41, Agriculture Not applicable Philippine Interpretation IFRIC–1, Changes in Existing

Decommissioning, Restoration and Similar Liabilities Not applicable Philippine Interpretation IFRIC–2, Members' Shares in Co-

operative Entities and Similar Instruments Not applicable Philippine Interpretation IFRIC–4, Determining whether an

Arrangement contains a Lease Not applicable Philippine Interpretation IFRIC–5, Rights to Interests arising

from Decommissioning, Restoration and Environmental Rehabilitation Funds Not applicable

Philippine Interpretation IFRIC–6, Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment Not applicable

Philippine Interpretation IFRIC–7, Applying the Restatement Approach under PAS 29, Financial Reporting in Hyperinflationary Economies Not applicable

Philippine Interpretation IFRIC–9, Reassessment of Embedded Derivatives Not applicable

Philippine Interpretation IFRIC–10, Interim Financial Reporting and Impairment Not applicable

Philippine Interpretation IFRIC–12, Service Concession Arrangements Not applicable

Philippine Interpretation IFRIC–13, Customer Loyalty Programmes Not applicable

Philippine Interpretation IFRIC–14, PAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Not applicable

Philippine Interpretation IFRIC–16, Hedges of a Net Investment in a Foreign Operation Not applicable

Philippine Interpretation IFRIC–17, Distributions of Non-cash Assets to Owners Not applicable

Philippine Interpretation IFRIC–18, Transfers of Assets from Customers Not applicable

of 4

PFRSs Adopted/Not adopted/Not applicable Philippine Interpretation IFRIC–19, Extinguishing Financial

Liabilities with Equity Instruments Not applicable Philippine Interpretation SIC–7, Introduction of the Euro Not applicable Philippine Interpretation SIC–10, Government Assistance - No

Specific Relation to Operating Activities Not applicable Philippine Interpretation SIC–12, Consolidation - Special

Purpose Entities Not applicable Philippine Interpretation SIC–13, Jointly Controlled Entities -

Non-Monetary Contributions by Venturers Not applicable Philippine Interpretation SIC–15, Operating Leases – Incentives Not applicable Philippine Interpretation SIC–21, Income Taxes - Recovery of

Revalued Non-Depreciable Assets Not applicable Philippine Interpretation SIC–25, Income Taxes - Changes in

the Tax Status of an Entity or its Shareholders Not applicable Philippine Interpretation SIC–27, Evaluating the Substance of

Transactions Involving the Legal Form of a Lease Not applicable Philippine Interpretation SIC–29, Service Concession

Arrangements: Disclosures Not applicable Philippine Interpretation SIC–31, Revenue - Barter Transactions

Involving Advertising Services Not applicable Philippine Interpretation SIC–32, Intangible Assets - Web Site

Costs Not applicable PIC Q&A No. 2006-01: PAS 18, Appendix, paragraph 9 –

Revenue recognition for sales of property units under pre-completion contracts Not applicable

PIC Q&A No. 2006-02: PAS 27.10(d) – Clarification of criteria for exemption from presenting consolidated financial statements Not applicable

PIC Q&A No. 2007-03: PAS 40.27 – Valuation of bank real and other properties acquired (ROPA) Not applicable

PIC Q&A No. 2008-01 (Revised): PAS 19.78 – Rate used in discounting post-employment benefit obligations Not applicable

PIC Q&A No. 2008-02: PAS 20.43 – Accounting for government loans with low interest rates under the amendments to PAS 20 Not applicable

PIC Q&A No. 2009-01: Framework.23 and PAS 1.23 – Financial statements prepared on a basis other than going concern Not applicable

PIC Q&A No. 2010-01: PAS 39.AG71-72 – Rate used in determining the fair value of government securities in the Philippines Not applicable

PIC Q&A No. 2010-02: PAS 1R.16 – Basis of preparation of financial statements Adopted

PIC Q&A No. 2011-01: PAS 1.10(f) – Requirements for a Third Statement of Financial Position Not applicable

of 4

II. List of New and Amended Standards and Interpretations and Improvements to PFRS that became effective as at January 1, 2011

PFRSs Adopted/Not adopted/Not applicable

New and Amended Standards and Interpretations PAS 24 (Amended), Related Party Disclosures Not applicable PAS 32, Financial Instruments: Presentation (Amendment) –

Classification of Rights Issues Not applicable Philippine Interpretation IFRIC 14 (Amendment),

Prepayments of a Minimum Funding Requirement Not applicable PFRS 1, First-time Adoption of IFRS – Limited Exemption

from Comparative IFRS 7 Disclosures for First-time Adopters Not applicable

Improvements to PFRS PFRS 1, First-time Adoption of IFRS:

• Accounting policy changes in the year of adoption

• Revaluation basis as ‘deemed cost’ • Use of ‘deemed cost’ for operations subject to rate

regulation Not applicable

PFRS 3, Business Combinations: • Transition requirements for contingent

consideration from a business combination that occurred before the effective date of the revised IFRS.

• Measurement of non-controlling interests • Un-replaced and voluntarily replaced share-

based payment rewards Not applicable

PFRS 7, Financial Instruments: Disclosures – Clarification of disclosures

Not applicable

PAS 1, Presentation of Financial Statements – Clarification of statement of changes in equity

Not applicable

PAS 27, Consolidated and Separate Financial Statements – Transition requirements for amendments made as a result of IAS 27 Consolidated and Separate Financial Statements Not applicable

PAS 34, Interim Financial Reporting – Significant events and transactions Not applicable

Philippine Interpretation IFRIC 13, Customer Loyalty Programmes – Fair value of award credits Not applicable

Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments Not applicable

Note: Standards and interpretations tagged as “Not applicable” are those standards which were adopted and have no significant covered transaction as of and for the years ended December 31, 2011 and 2010.

Global e-Business Solutions, Inc.

EASYCALL COMMUNICATIONS PHILPPINES, INC.

60%

Easycall e-Services, Inc.

100% 4%

ePerformax Contact Centers Corp. EPERFORMAX CONTACT CENTERS (CEBU) CORP.

Transnational Diversified Corporation

Information Communication and Technology Division

TRANSNATIONAL DIVERSIFIED GROUP OF COMPANIES GROUP STRUCTURE DIAGRAM DECEMBER 31, 2011

Transnational e-Business Solutions, Inc.

ePerformax International, Inc.

ePERFORMAX INTERNATIONAL TRAINING ACADEMY, INC.

100%

Logistics Division

PLEASE SEE ATTACHMENT

60%

Ship Management Division

PLEASE SEE

ATTACHMENT

Investment and Corporate Division

PLEASE SEE

ATTACHMENT

44%

Travel and Tourism Division

PLEASE SEE

ATTACHMENT

TRANSNATIONAL DIVERSIFIED GROUP OF COMPANIES Group Structure Diagram - Attachment

Logistics Division 1 NCT Transnational Corp. 2 NYK Auto Logistics Philippines, Inc. 3 NYK Fil-Japan Shipping Corporation 4 NYK Kool Corporation 5 NYK TDG eBusiness Corporation 6 Transcontainer (TCL) Philippines, Inc. 7 Transnational Logistics Brokerage, Inc. 8 Transnational Logistics, Inc. 9 Transnational Logistics Solutions Corp.

10 YAS Brokerage, Inc. 11 Yusen Logistics Philipines, Inc. 12 Yusen Logistics Center, Inc.

Ship Management Division 13 Intramuros Properties and Services, Inc. 14 NYK-Fil Maritime E-Training Inc. 15 NYK-Fil Ship Management, Inc. 16 NYK-Transnational Institute Foundation, Inc. 17 NYK-Transnational Land Corp. 18 NYK-Transnational Land Corp. 19 Transnational Financial Services, Inc. 20 Transnational Medical and Diagnostic Center, Inc. 21 Transnational Plans, Inc. 22 Dolphin Ship Management, Inc. – not SGV client 23 Alamat Shipping Corporation – not SGV 24 Cadenza Marine Corporation – not SGV client 25 Dakila Shipping Corporation – not SGV client 26 Dynamic Asset Corporation – not SGV client 27 Exito Maritime, Inc. – not SGV client 28 Harmony Maritime Management, Inc. – not SGV client 29 Ideal Maritime Corporation – not SGV client 30 Jubilee Shipping Corporation – not SGV client 31 Kagitingan Shipping Corporation – not SGV client 32 Kapalaran Shipping Corporation – not SGV client 33 Lawin Maritime Corporation – not SGV client 34 Matatag Shipping Corporation – not SGV client 35 Maunlad Navigation, Inc. – not SGV client 36 Neo Maritime Shipping Corporation – not SGV client

37 Oceancrew Marine Services, Inc. – not SGV client 38 Philippine Pacific Ocean Lines, Inc. – not SGV client 39 Prosperidad Shipping, Inc. – not SGV client 40 Sinagtala Maritime Management, Inc. – not SGV client 41 Transnational Learning Institute, Inc. – not SGV client 42 Transnational Business Process Outsourcing – not SGV client 43 Transnational Resources, Inc. – not SGV client 44 Transnational Ship Management, Inc. – not SGV client 45 Transnational Uyeno Maritime, Inc. – not SGV client

Travel & Tourism Division Adventure International Tours, Inc. doing business under

1 the name and style of American Express Transnational 2 Asiana Philippines GSA, Inc. 3 Clark Airport Support Services Corp. 4 Transnational Air Services Corp. 5 Transnational Aero Corporation – not SGV client 6 Universal Holidays, Inc. 7 Vision Air and Sea Services, Inc.

Investment and Corporate Division 1 Antonelli Realty Holdings, Inc. 2 APEX (Philippines) Equities Corporation 3 Destiny Properties, Inc. 4 Energy Logics Solar Holdings, Inc. 5 Energy Logics Solar One, Inc. 6 Energy Logics Solar Three, Inc. 7 Energy Logics Solar Two, Inc. 8 First Asia Pacific Holdings, Inc. 9 Fort East Asia, Inc.

10 Fort Prosperity, Inc. 11 International Limoservices, Inc. 12 Marmalade Land Inc. 13 NYK-TDG Friendship Foundation, Inc. 14 OZ Resources, Inc. 15 Tanji Land, Inc. 16 TDG Asia Corp. 17 TDGWorld Corporation 18 Transam Food Services Corporation 19 Transnational Diversified Group, Inc. 20 Transnational Inter-Pacific Property Services, Inc. 21 Transnational Renewable Energy Corp. 22 Transnational Uyeno Solar Corporation

sec number 168736 file number easycall …sec17a) annual... · file number _____ easycall...

Documents