SEC Form 20-IS - iRemit Global Remittance

Interest income increased by 10.8% or PHP 1.3 million from PHP 12.5 million in 2010 to PHP 13.9 million in
2011. Interest income in 2011 and 2010 are 1.8% and 1.6% of the 2011 and 2010 revenue, respectively.
These are mainly due to higher deposits resulting from higher volume of transactions in 2011.
Interest expense increased by 31.2% or PHP 9.1 million from PHP 29.2 million in 2010 to PHP 38.3 million
2011. Interest expense in 2011 and 2010 are -4.9% and -3.8% of the 2011 and 2010 revenue, respectively.
These are mainly due to higher availment of loans from bank partners during 2011 and higher annual interest
rates on the Parent Company’s unsecured, short-term interest-bearing peso-denominated bank loans ranging
from 5.00% to 7.00% in 2011 and 5.50% to 6.00% in 2010.
In February 2010, IREMIT Remittance Consulting GmbH (formerly IREMIT EUROPE Remittance Consulting
AG) started its remittance business in Italy. On April 28, 2011, IREMIT Remittance Consulting GmbH
(IRCGmbH) stopped its money remittance operations in Rome and Milan in Italy in accordance with Article 75
of the Transitional and Final Provisions of Austrian Payment Services Act, which stipulated that credit
institutions that have held authorizations pursuant to Article 1 paragraph 1 no 23 BWG, as amended by the
Federal Act Federal Law Gazette No. 35/2003, prior to December 25, 2009, have only until April 30, 2011 to
carry out their money remittance operations.
In December 2011, IRCGmbH sold assets relating to its operations in Italy to a third party. These assets, with
an aggregate carrying amount of PHP 7.29 million, were sold for a consideration of PHP 72.43 million thereby
resulting to a gain on sale of PHP 65.14 million.
The results of IRCGmbH’s operation in Italy follow:
2011 2010
Delivery fees PHP5,289,202 PHP7,486,658
Realized foreign exchange gains - net 1,006,867 673,204
6,296,069 8,159,862
Cost of services 596,703 3,749,195
Gross income 5,699,366 4,410,667
Other income - net 615,909 38,935
Operating expenses (45,024,921) (34,754,501)
Loss from operations (PHP38,709,646) (PHP30,304,899)
Gain on sale of assets 65,139,395 −
Income (Loss) from discontinued operations PHP26,429,749 (PHP30,304,899)
The total assets of the Company decreased by PHP 82.1 million or 3.5% to PHP 2.273 billion as of December
31, 2011 against PHP 2.356 billion as of December 31, 2010. Cash and cash equivalents increased by PHP
7.4 million or 0.8% from PHP 883.8 million in 2010 to PHP 891.2 million in 2011. Financial assets at fair value
through profit or loss amounted to PHP 125.2 million at end-2011 against PHP 102.9 million at end-2010,
increasing by PHP 22.3 million or 21.6%. Financial assets at fair value through profit or loss in 2011 and 2010
are 5.5% and 4.4% of the total assets in 2011 and 2010, respectively. These assets consist mainly of
investments in debt securities (listed overseas) held for trading. Power Star Asia Group Limited started
investing on stocks in 2011. Accounts receivable declined by PHP 125.8 million or 11.9% from PHP 1,059.3
million in 2010 to PHP 933.5 million in 2011. Accounts receivable in 2011 and 2010 are 41.0% and 45.0% of
the total assets in 2011 and 2010, respectively. These are mainly due to improved collection of advances to
agents and foreign subsidiaries in 2011. Other receivables increased by PHP 31.0 million or 37.1% from PHP
83.4 million in 2010 to PHP 114.4 million in 2011. Other receivables in 2011 and 2010 are 5.0% and 3.5% of
the total assets in 2011 and 2010, respectively. These are mainly due to nontrade receivable from the sale of
various assets of IREMIT Remittance Consulting GmbH related to the discontinued operations in Italy which
was subsequently collected in March 2012 and partly offset by the application of receivables from noncontrolling
shareholders of IREMIT Remittance Consulting GmbH and Worldwide Exchange Pty Ltd amounting
to PHP 12.3 million and PHP 25.01 million, respectively, against the acquisition costs. Other current assets
declined by PHP 7.4 million or 20.4% from PHP 36.3 million in 2010 to PHP 28.9 million in 2011. Other
current assets in 2011 and 2010 are 1.3% and 1.5% of the total assets in 2011 and 2010, respectively. These
are mainly due to lower balances of prepaid expenses and visa cards inventory.
The Company’s non-current assets declined by PHP 9.7 million or 5.1% from PHP 190.3 million at end-2010
to PHP 180.6 million at end-2011. Total noncurrent assets in 2011 and 2010 are 7.9% and 8.0% of the total
assets in 2011 and 2010, respectively. These are mainly due to the equity in net earnings of IRemit Singapore
Pte Ltd of PHP 1.5 million and Hwa Kung Hong & Co., Ltd. of PHP 0.6 million in 2011, lesser investment on
fixed assets in 2011, deferred tax asset on additional net loss of I-Remit New Zealand Limited in 2011 and
issuance of tax credit certificates by the BIR for Input VAT for the years 2005 and 2006 amounting to PHP
1.71 million and PHP 3.82 million, respectively.
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