COVER SHEET

for
AUDITED FINANCIAL STATEMENTS
SEC Registration Number

C S 2
Company Name
S E M I C O N D U C T O R

P H O E N I X
N E S

n e ,

P H I

8 5

L I

P P I

C r e

C O R P .

P a n d a y
e k s

Principal Office ( No./Street/Barangay/City/Town)Province)

P i r a
A v e n u e ,
c o r n e

i d e

R o a d ,

C l a r k

F r

p o

Z o

P a m p a n g a

Form Type

Department requiring the report

A A F S

M S R D

Secondary License Type, If Applicable

COMPANY INFORMATION
Company's Email Address

Company's Telephone Number/s

Mobile Number

carolssicat@bokwang.com

045-499-1742

0917-550-9041

No. of Stockholders

Annual Meeting
Month/Day
04/01

Fiscal Year
Month/Day
12/31

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation
Name of Contact Person

Email Address

Telephone Number/s

Mobile Number

Dongjoo Kim

djkim@bokwang.com

045-499-1822

0917-539-1733

Contact Person's Address

Panday Pira Avenue, corner Creekside Road, Clark Freeport Zone, Pampanga, Philippines
Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the
Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact
person designated.

*SGVFS010994*

SyCip Gorres Velayo & Co.

6760 Ayala Avenue
1226 Makati City
Philippines

Tel: (632) 891 0307

Fax: (632) 819 0872
ey.com/ph

BOA/PRC Reg. No. 0001,

December 28, 2012, valid until December 31, 2015
SEC Accreditation No. 0012-FR-3 (Group A),
November 15, 2012, valid until November 16, 2015

INDEPENDENT AUDITORS REPORT

The Stockholders and the Board of Directors

Phoenix Semiconductor Philippines Corp.
Panday Pira Avenue, Corner Creekside
Clark Freeport Zone, Pampanga
Report on the Financial Statements
We have audited the accompanying financial statements of Phoenix Semiconductor Philippines Corp.,
which comprise the statements of financial position as at December 31, 2014, and 2013, and the
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, 2014, and a summary of significant
accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with Philippine Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of 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 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 financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the 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 entitys 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 financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.

*SGVFS010994*
A member firm of Ernst & Young Global Limited

-2Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of
Phoenix Semiconductor Philippines Corp., as at December 31, 2014, and 2013, and its financial
performance and its cash flows for each of the three years in the period ended December 31, 2014 in
accordance with Philippine Financial Reporting Standards.
Report on the Supplementary Information Required Under Revenue Regulation 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 Regulation 15-2010 in
Note 26 to the 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 Phoenix Semiconductor Philippines Corp. 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.

Janet A. Paraiso
Partner
CPA Certificate No. 92305
SEC Accreditation No. 0778-AR-1 (Group A),
February 2, 2012, valid until March 31, 2015
Tax Identification No. 193-975-241
BIR Accreditation No. 08-001998-62-2012,
April 11, 2012, valid until April 10, 2015
PTR No. 4751252, January 5, 2015, Makati City
March 3, 2015

*SGVFS010994*
A member firm of Ernst & Young Global Limited

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

STATEMENTS OF FINANCIAL POSITION
(In U.S. Dollars)

December 31
2014

2013

$36,793,758
21,713,531
10,228,542
571,938
69,307,769

$23,105,776
21,141,915
11,587,418
985,483
56,820,592

108,541,291
21,675,793
130,217,084
$199,524,853

114,954,193
17,412,155
132,366,348
$189,186,940

Current Liabilities
Accounts payable and accrued expenses (Notes 9, 12, and 20)
Interest payable (Note 10)
Income tax payable
Current portion of loans payable (Notes 10, 19 and 20)
Total Current Liabilities

$19,342,296
724,429
438,208
24,375,000
44,879,933

$16,016,239
901,566
447,406
20,750,000
38,115,211

Noncurrent Liabilities
Loans payable - net of current portion (Notes 10, 19 and 20)
Retirement liability (Note 11)
Deferred income tax liability - net (Note 22)
Other noncurrent liability
Total Noncurrent Liabilities
Total Liabilities

56,128,981
200,593
13,393
185,770
56,528,737
101,408,670

80,291,487
106,014
39,523

80,437,024
118,552,235

48,637,525
7,432,715
42,088,536
(42,593)
98,116,183
$199,524,853

44,999,980

25,634,725

70,634,705
$189,186,940

ASSETS
Current Assets
Cash and cash equivalents (Notes 4 and 20)
Trade and other receivables (Notes 5 and 20)
Inventories (Note 6)
Prepayments and other current assets (Note 7)
Total Current Assets
Noncurrent Assets
Property, plant and equipment (Note 8)
Other noncurrent assets (Note 7)
Total Noncurrent Assets

LIABILITIES AND EQUITY

Equity
Capital stock (Notes 13 and 20)
Additional paid-in capital (Notes 13 and 20)
Retained earnings (Note 20)
Remeasurement loss on retirement plan (Note 11)
Total Equity

See accompanying Notes to Financial Statements.

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

STATEMENTS OF COMPREHENSIVE INCOME
(In U.S. Dollars)

Years Ended December 31

2013
2014
REVENUE
Sales
Warehousing
Others

2012

$233,331,369
768,290
262,151
234,361,810

$208,736,564
746,968
191,529
209,675,061

$195,143,042
693,784
332,412
196,169,238

152,002,922
17,815,182
4,568,097

136,463,909
17,829,616
4,556,013

126,693,029
14,253,332
4,570,641

22,015
30,725,642
205,133,858

(223,198)
23,390,518
182,016,858

(565,945)
29,112,435
174,063,492

GROSS PROFIT
General and Administrative
Expenses (Notes 12 and 15)

29,227,952

27,658,203

22,105,746

4,277,377

3,757,641

3,636,825

OPERATING INCOME

24,950,575

23,900,562

18,468,921

Finance Cost (Note 16)

(5,145,737)

(7,940,614)

(5,190,393)

Other Income (Note 16)

1,066,675

321,539

159,494

Other Expense (Note 16)

(1,912,409)

(812,445)

(370,653)

INCOME BEFORE INCOME TAX

18,959,104

15,469,042

13,067,369

1,505,293

1,875,627

585,329

17,453,811

13,593,415

12,482,040

(44,835)
2,242
(42,593)

$17,411,218

$13,593,415

$12,482,040

$0.0087

$0.0068

$0.0063

COST OF GOODS SOLD

Raw materials used (Notes 6 and 12)
Depreciation (Note 8)
Direct labor (Notes 12 and 17)
Changes in work-in-process and finished
goods inventories (Note 6)
Other manufacturing costs (Notes 12, 14 and 17)

PROVISION FOR INCOME TAX (Note 22)

NET INCOME
OTHER COMPREHENSIVE LOSS
Not to be reclassified to profit or loss in
subsequent periods:
Remeasurement loss on retirement
plan (Note 11)
Income tax effect
TOTAL COMPREHENSIVE INCOME

EARNINGS PER SHARE (Note 24)

Basic/diluted
See accompanying Notes to Financial Statements.

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

STATEMENTS OF CHANGES IN EQUITY
(In U.S. Dollars)

Balances as at January 1, 2014

Issuance of capital stock
Cash dividends (Note 13)
Net income
Other comprehensive loss
Balances as at December 31, 2014

Capital Stock (Notes 13 and 20)

Shares
Amount
2,002,644,109
$44,999,980
162,380,002
3,637,545

2,165,024,111
$48,637,525

Balances as at January 1, 2013

Net income/total comprehensive income
Balances as at December 31, 2013

2,002,644,109

2,002,644,109

$44,999,980

$44,999,980

Balances as at January 1, 2012

Issuance of capital stock
Net income/total comprehensive income
Balances as at December 31, 2012

1,786,394,109
216,250,000

2,002,644,109

$39,999,980
5,000,000

$44,999,980

Deposits for
Future Stock
Subscription
(Notes 13
and 20)

Additional
Paid-In
Capital
(Notes 13
and 20)

Retained
Earnings

$
7,432,715

$7,432,715

$25,634,725

(1,000,000)
17,453,811

$42,088,536

$12,041,310
13,593,415
$25,634,725

$57,041,290
13,593,415
$70,634,705

($440,730)

12,482,040
$12,041,310

$44,559,250

12,482,040
$57,041,290

$5,000,000
(5,000,000)

Remeasurement Loss on
Retirement
Plan (Note 11)
$

(42,593)
($42,593)

Total
$70,634,705
11,070,260
(1,000,000)
17,453,811
(42,593)
$98,116,183

See accompanying Notes to Financial Statements.

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

STATEMENTS OF CASH FLOWS
(In U.S. Dollars)

2014
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Depreciation (Note 8)
Interest expense (Note 16)
Unrealized foreign currency exchange
loss - net (Note 16)
Amortization of intangible assets (Note 7)
Loss (gain) on disposal of property, plant
and equipment
Interest income (Note 16)
Provision for valuation loss on nontrade receivable
from CDC (Notes 3 and 7)
Fair value loss (gain) on derivative (Note 16)
Operating income before changes in operating assets and
liabilities
Changes in operating assets and liabilities:
Decrease (increase) in:
Trade and other receivables
Inventories
Prepayments and other current assets
Increase (decrease) in:
Accounts payable and accrued expenses
Retirement liability
Other noncurrent liability
Net cash generated from operations
Interest paid
Income taxes paid
Interest received
Net cash provided by operating activities

Years Ended December 31

2013

2012

$18,959,104

$15,469,042

$13,067,369

18,701,023
4,294,115

18,375,283
5,256,137

14,721,645
4,433,675

209,962
120,960

812,397
121,492

74,500
66,802

(33,775)
(459,694)

2,144
(162,952)

80
(65,742)

1,044,972
244,756

1,772,028

43,081,423

41,645,571

31,653,417

(517,313)
1,358,876
365,405

(2,510,551)
2,870,117
413,965

(2,036,651)
(1,942,956)
91,121

(344,493)
50,866
185,770
44,180,534
(4,258,757)
(1,543,115)
128,414
38,507,076

(6,488,312)
106,014

36,036,804
(5,031,302)
(1,162,958)
162,952
30,005,496

(2,012,046)

25,752,885
(4,444,314)
(903,006)
65,742
20,471,307

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions of property, plant and
equipment (Notes 8 and 23)
Proceeds from sale of property, plant and equipment
Decrease (increase) in other noncurrent assets
Net cash used in investing activities

(9,174,136)
468,191
(5,423,877)
(14,129,822)

(4,308,652)

(17,446,262)
(21,754,914)

(32,837,501)

90,956
(32,746,545)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from:
Issuance of capital stock - net of direct costs related
to issuance (Note 13)
Bank loans (Note 10)
Payments of bank loans (Note 10)
Payment of dividends (Note 13)
Net cash provided by (used in) financing activities

11,070,260

(20,750,000)
(1,000,000)
(10,679,740)

28,525,074
(39,375,000)

(10,849,926)

29,999,743

29,999,743

(9,532)

(30,994)

14,288

13,687,982

(2,630,338)

17,738,793

23,105,776

25,736,114

7,997,321

$36,793,758

$23,105,776

$25,736,114

EFFECT OF EXCHANGE RATE CHANGES ON

CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS
AT JANUARY 1
CASH AND CASH EQUIVALENTS AT
DECEMBER 31 (Note 4)

(644,912)

See accompanying Notes to Financial Statements.

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

NOTES TO FINANCIAL STATEMENTS

1. Corporate Information
Phoenix Semiconductor Philippines Corp. (the Company), a subsidiary of STS Semiconductor &
Telecommunications Co., Ltd. (the Parent Company), was incorporated in the Philippines on
January 27, 2010.
The primary purpose of the Company is the construction, ownership and operation of a plant for
the manufacture, assembly, test and warehousing of semiconductor and memory devices and
applications and related products, as well as the performance of related or incidental activities
thereto. The Company started its commercial operation in February 2011.
The registered office address of the Company is Panday Pira Avenue, Corner Creekside, Clark
Freeport Zone, Pampanga.
The accompanying financial statements were approved and authorized for issue by the Board of
Directors (BOD) on March 3, 2015.

2. Summary of Significant Accounting Policies

Basis of Preparation
The accompanying financial statements have been prepared on a historical cost basis, except for
the derivative financial instrument that is measured at fair value. The financial statements are
presented in United States (U.S.) Dollars ($), which is also the Companys functional currency.
Statement of Compliance
The accompanying financial statements of the Company have been prepared in accordance with
Philippine Financial Reporting Standards (PFRS).
Changes in Accounting Policies and Disclosures
The Company adopted the following new and amended PFRS, Philippines Accounting Standards
(PAS) and Philippine Interpretations effective for financial year beginning January 1, 2014.
Except as otherwise indicated, these new, revised and amended standards, interpretations and
improvements to PFRS did not have any impact on the financial position or performance of the
Company.
Investment Entities (Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12,
Disclosure of Interests in Other Entities, and PAS 27, Separate Financial Statements)
These amendments provide an exception to the consolidation requirement for entities that meet the
definition of an investment entity under PFRS 10. The exception to consolidation requires
investment entities to account for subsidiaries at fair value through profit or loss. The amendments
must be applied retrospectively, subject to certain transition relief.
PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities (Amendments)
These amendments clarify the meaning of currently has a legally enforceable right to set-off and
the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for
offsetting and are applied retrospectively.

*SGVFS010994*

-2PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and
Continuation of Hedge Accounting (Amendments)
These amendments provide relief from discontinuing hedge accounting when novation of a
derivative designated as a hedging instrument meets certain criteria and retrospective application is
required.
PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets
(Amendments)
These amendments remove the unintended consequences of PFRS 13, Fair Value Measurement,
on the disclosures required under PAS 36. In addition, these amendments require disclosure of the
recoverable amounts for assets or cash-generating units (CGUs) for which impairment loss has
been recognized or reversed during the period.
Philippine Interpretation IFRIC 21, Levies (IFRIC 21)
IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers
payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching
a minimum threshold, the interpretation clarifies that no liability should be anticipated before the
specified minimum threshold is reached. Retrospective application is required for IFRIC 21. This
interpretation has no impact on the Company as it has applied the recognition principles under
PAS 37, Provisions, Contingent Liabilities and Contingent Assets, consistent with the
requirements of IFRIC 21 in prior years.
New standards and interpretations that have been issued but are not yet effective
Standards or interpretations issued but are not effective as of December 31, 2014 are listed below.
This is a listing of standards and interpretations issued, which the Company reasonably expects to
be applicable at a future date. The Company intends to adopt these standards and interpretation
when they become effective. Except as otherwise stated, the Company does not expect the
adoption of these new standards and interpretations to have a significant impact on the companys
financial statements.
PFRS 9, Financial Instruments - Classification and Measurement (2010 version)
PFRS 9 (2010 version) reflects the first phase on the replacement of PAS 39 and applies to the
classification and measurement of financial assets and liabilities as defined in PAS 39, Financial
Instruments: Recognition and Measurement. PFRS 9 requires all financial assets to be measured
at fair value at initial recognition. A debt financial asset may, if the fair value option (FVO) is not
invoked, be subsequently measured at amortized cost if it is held within a business model that has
the objective to hold the assets to collect the contractual cash flows and its contractual terms give
rise, on specified dates, to cash flows that are solely payments of principal and interest on the
principal outstanding. All other debt instruments are subsequently measured at fair value through
profit or loss. All equity financial assets are measured at fair value either through other
comprehensive income (OCI) or profit or loss. Equity financial assets held for trading must be
measured at fair value through profit or loss. For FVO liabilities, the amount of change in the fair
value of a liability that is attributable to changes in credit risk must be presented in OCI. The
remainder of the change in fair value is presented in profit or loss, unless presentation of the fair
value change in respect of the liabilitys credit risk in OCI would create or enlarge an accounting
mismatch in profit or loss. All other PAS 39 classification and measurement requirements for
financial liabilities have been carried forward into PFRS 9, including the embedded derivative
separation rules and the criteria for using the FVO. The adoption of the first phase of PFRS 9 will
have an effect on the classification and measurement of the Companys financial assets, but will
potentially have no impact on the classification and measurement of financial liabilities.

*SGVFS010994*

-3PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1, 2015. This
mandatory adoption date was moved to January 1, 2018 when the final version of PFRS 9 was
adopted by the Philippine Financial Reporting Standards Council (FRSC). Such adoption,
however, is still for approval by the Board of Accountancy (BOA).
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 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 Securities and Exchange Commission (SEC) and the Financial
Reporting Standards Council (FRSC) have deferred the effectivity of this interpretation until the
final Revenue standard is issued by the International Accounting Standards Board (IASB) and an
evaluation of the requirements of the final Revenue standard against the practices of the Philippine
real estate industry is completed.
The following new standards and amendments issued by the IASB were already adopted by the
FRSC but are still for approval by Board of Accountancy:
PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions (Amendments)
PAS 19 requires an entity to consider contributions from employees or third parties when
accounting for defined benefit plans. Where the contributions are linked to service, they should be
attributed to periods of service as a negative benefit. These amendments clarify that, if the amount
of the contributions is independent of the number of years of service, an entity is permitted to
recognize such contributions as a reduction in the service cost in the period in which the service is
rendered, instead of allocating the contributions to the periods of service. This amendment is
effective for annual periods beginning on or after January 1, 2015. It is not expected that this
amendment would be relevant to the Company, since none of the entities within the Company has
defined benefit plans with contributions from employees or third parties.
Annual Improvements to PFRSs (2010-2012 cycle)
Effective January 1, 2015:
PFRS 2, Share-based Payment - Definition of Vesting Condition
This improvement is applied prospectively and clarifies various issues relating to the definitions of
performance and service conditions which are vesting conditions, including:
A performance condition must contain a service condition
A performance target must be met while the counterparty is rendering service
A performance target may relate to the operations or activities of an entity, or to those of
another entity in the same group
A performance condition may be a market or non-market condition
If the counterparty, regardless of the reason, ceases to provide service during the vesting
period, the service condition is not satisfied.

*SGVFS010994*

-4PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business

Combination
The amendment is applied prospectively for business combinations for which the acquisition date
is on or after July 1, 2014. It clarifies that a contingent consideration that is not classified as equity
is subsequently measured at fair value through profit or loss whether or not it falls within the
scope of PAS 39, Financial Instruments: Recognition and Measurement .
PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the
Total of the Reportable Segments Assets to the Entitys Assets
The amendments are applied retrospectively and clarify that:
An entity must disclose the judgments made by management in applying the aggregation
criteria in the standard, including a brief description of operating segments that have been
aggregated and the economic characteristics (e.g., sales and gross margins) used to assess
whether the segments are similar.
The reconciliation of segment assets to total assets is only required to be disclosed if the
reconciliation is reported to the chief operating decision maker, similar to the required
disclosure for segment liabilities.
PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Revaluation Method Proportionate Restatement of Accumulated Depreciation and Amortization
The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the asset may
be revalued by reference to the observable data on either the gross or the net carrying amount. In
addition, the accumulated depreciation or amortization is the difference between the gross and
carrying amounts of the asset.
PAS 24, Related Party Disclosures - Key Management Personnel
The amendment is applied retrospectively and clarifies that a management entity, which is an
entity that provides key management personnel services, is a related party subject to the related
party disclosures. In addition, an entity that uses a management entity is required to disclose the
expenses incurred for management services.
Annual Improvements to PFRSs (2011-2013 cycle)
Effective January 1, 2015:
PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements
The amendment is applied prospectively and clarifies the following regarding the scope exceptions
within PFRS 3:
Joint arrangements, not just joint ventures, are outside the scope of PFRS 3.
This scope exception applies only to the accounting in the financial statements of the joint
arrangement itself.
PFRS 13, Fair Value Measurement - Portfolio Exception
The amendment is applied prospectively and clarifies that the portfolio exception in PFRS 13 can
be applied not only to financial assets and financial liabilities, but also to other contracts within the
scope of PAS 39.
PAS 40, Investment Property
The amendment is applied prospectively and clarifies that PFRS 3, and not the description of
ancillary services in PAS 40, is used to determine if the transaction is the purchase of an asset or
business combination. The description of ancillary services in PAS 40 only differentiates between
investment property and owner-occupied property (i.e., property, plant and equipment).

*SGVFS010994*

-5Effective January 1, 2016:

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of
Acceptable Methods of Depreciation and Amortization (Amendments)
The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of
economic benefits that are generated from operating a business (of which the asset is part) rather
than the economic benefits that are consumed through use of the asset. As a result, a revenuebased method cannot be used to depreciate property, plant and equipment and may only be used in
very limited circumstances to amortize intangible assets. The amendments are effective
prospectively for annual periods beginning on or after January 1, 2016, with early adoption
permitted. These amendments are not expected to have any impact to the Company given that the
Company has not used a revenue-based method to depreciate its non-current assets.
PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants (Amendments)
The amendments change the accounting requirements for biological assets that meet the definition
of bearer plants. Under the amendments, biological assets that meet the definition of bearer plants
will no longer be within the scope of PAS 41. Instead, PAS 16 will apply. After initial recognition,
bearer plants will be measured under PAS 16 at accumulated cost (before maturity) and using
either the cost model or revaluation model (after maturity). The amendments also require that
produce that grows on bearer plants will remain in the scope of PAS 41 measured at fair value less
costs to sell. For government grants related to bearer plants, PAS 20, Accounting for Government
Grants and Disclosure of Government Assistance, will apply. The amendments are retrospectively
effective for annual periods beginning on or after January 1, 2016, with early adoption permitted.
These amendments are not expected to have any impact to the Company as the Company does not
have any bearer plants.
PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements
(Amendments)
The amendments will allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. Entities already
applying PFRS and electing to change to the equity method in its separate financial statements will
have to apply that change retrospectively. For first-time adopters of PFRS electing to use the
equity method in its separate financial statements, they will be required to apply this method from
the date of transition to PFRS. The amendments are effective for annual periods beginning on or
after January 1, 2016, with early adoption permitted.
PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint
Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
These amendments address an acknowledged inconsistency between the requirements in PFRS 10
and those in PAS 28 (2011) in dealing with the sale or contribution of assets between an investor
and its associate or joint venture. The amendments require that a full gain or loss is recognized
when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain
or loss is recognized when a transaction involves assets that do not constitute a business, even if
these assets are housed in a subsidiary. These amendments are effective from annual periods
beginning on or after 1 January 2016.

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-6PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations
(Amendments)
The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an
interest in a joint operation, in which the activity of the joint operation constitutes a business must
apply the relevant PFRS 3 principles for business combinations accounting. The amendments also
clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an
additional interest in the same joint operation while joint control is retained. In addition, a scope
exclusion has been added to PFRS 11 to specify that the amendments do not apply when the
parties sharing joint control, including the reporting entity, are under common control of the same
ultimate controlling party.
The amendments apply to both the acquisition of the initial interest in a joint operation and the
acquisition of any additional interests in the same joint operation and are prospectively effective
for annual periods beginning on or after January 1, 2016, with early adoption permitted.
PFRS 14, Regulatory Deferral Accounts
PFRS 14 is an optional standard that allows an entity, whose activities are subject to rateregulation, to continue applying most of its existing accounting policies for regulatory deferral
account balances upon its first-time adoption of PFRS. Entities that adopt PFRS 14 must present
the regulatory deferral accounts as separate line items on the statement of financial position and
present movements in these account balances as separate line items in the statement of profit or
loss and other comprehensive income. The standard requires disclosures on the nature of, and risks
associated with, the entitys rate-regulation and the effects of that rate-regulation on its financial
statements. PFRS 14 is effective for annual periods beginning on or after January 1, 2016. Since
the Company is an existing PFRS preparer, this standard would not apply.
Annual Improvements to PFRSs (2012-2014 cycle)
Effective January 1, 2016:
PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in Methods of
Disposal
The amendment is applied prospectively and clarifies that changing from a disposal through sale
to a disposal through distribution to owners and vice-versa should not be considered to be a new
plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption
of the application of the requirements in PFRS 5. The amendment also clarifies that changing the
disposal method does not change the date of classification.
PFRS 7, Financial Instruments: Disclosures - Servicing Contracts
PFRS 7 requires an entity to provide disclosures for any continuing involvement in a transferred
asset that is derecognized in its entirety. The amendment clarifies that a servicing contract that
includes a fee can constitute continuing involvement in a financial asset. An entity must assess the
nature of the fee and arrangement against the guidance in PFRS 7 in order to assess whether the
disclosures are required. The amendment is to be applied such that the assessment of which
servicing contracts constitute continuing involvement will need to be done retrospectively.
However, comparative disclosures are not required to be provided for any period beginning before
the annual period in which the entity first applies the amendments.
PFRS 7, Applicability of the Amendments to PFRS 7 to Condensed Interim Financial Statement
This amendment is applied retrospectively and clarifies that the disclosures on offsetting of
financial assets and financial liabilities are not required in the condensed interim financial report
unless they provide a significant update to the information reported in the most recent annual
report.

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-7PAS 19, Employee Benefits - regional market issue regarding discount rate
This amendment is applied prospectively and clarifies that market depth of high quality corporate
bonds is assessed based on the currency in which the obligation is denominated, rather than the
country where the obligation is located. When there is no deep market for high quality corporate
bonds in that currency, government bond rates must be used.
PAS 34, Interim Financial Reporting - disclosure of information elsewhere in the interim
financial report
The amendment is applied retrospectively and clarifies that the required interim disclosures must
either be in the interim financial statements or incorporated by cross-reference between the interim
financial statements and wherever they are included within the greater interim financial report
(e.g., in the management commentary or risk report).
Effective January 1, 2018:
PFRS 9, Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and
PAS 39 (2013 version)
PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which
pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge accounting
model of PAS 39 with a more principles-based approach. Changes include replacing the rulesbased hedge effectiveness test with an objectives-based test that focuses on the economic
relationship between the hedged item and the hedging instrument, and the effect of credit risk on
that economic relationship; allowing risk components to be designated as the hedged item, not
only for financial items but also for non-financial items, provided that the risk component is
separately identifiable and reliably measurable; and allowing the time value of an option, the
forward element of a forward contract and any foreign currency basis spread to be excluded from
the designation of a derivative instrument as the hedging instrument and accounted for as costs of
hedging. PFRS 9 also requires more extensive disclosures for hedge accounting.
PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of
January 1, 2018 was eventually set when the final version of PFRS 9 was adopted by the FRSC.
The adoption of the final version of PFRS 9, however, is still for approval by BOA. The Company
is currently assessing the impact of adopting this standard.
PFRS 9, Financial Instruments (2014 or final version)
In July 2014, the final version of PFRS 9, Financial Instruments, was issued. PFRS 9 reflects all
phases of the financial instruments project and replaces PAS 39, Financial Instruments:
Recognition and Measurement, and all previous versions of PFRS 9. The standard introduces new
requirements for classification and measurement, impairment, and hedge accounting. PFRS 9 is
effective for annual periods beginning on or after January 1, 2018, with early application
permitted. Retrospective application is required, but comparative information is not compulsory.
Early application of previous versions of PFRS 9 is permitted if the date of initial application is
before February 1, 2015. The Company is currently assessing the impact of adopting this standard.
Significant Accounting Policies
Cash and Cash Equivalents
Cash consists of cash on hand and in banks denominated in U.S. Dollar and Philippine Peso. 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 dates of placement and are
subject to an insignificant risk of change in value.

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-8Financial Instruments
Date of recognition
Financial instruments within the scope of PAS 39 are recognized in the statement of financial
position when the Company becomes a party to the contractual provisions of the instrument.
Purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace are recognized using the settlement
date accounting.
Initial recognition of financial instruments
Financial instruments are initially recognized at fair value. Except for financial assets and
liabilities at fair value through profit or loss (FVPL), the initial measurement of financial
instruments includes transaction costs. The Company classifies its financial assets into the
following categories: financial assets at FVPL, held-to-maturity (HTM) investments, availablefor-sale (AFS) investments and loans and receivables.
The Company classifies its financial liabilities into financial liabilities at FVPL and other financial
liabilities carried at cost or amortized cost. The classification depends on the purpose for which
the investments were acquired and whether they are quoted in an active market. Management
determines the classification of its financial assets at initial recognition and, where allowed and
appropriate, re-evaluates such designation at every reporting date.
The Company has no financial liabilities at FVPL, and HTM and AFS investments as of
December 31, 2014, and 2013.
Determination of fair value
The fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction in the principal market at the measurement date under current market
conditions (i.e., an exit price) regardless of whether that price is directly observable or estimated
using another valuation technique. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability, or

In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming that market participants act in their
economic best interest
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at
fair value if their economic characteristics and risks are not closely related to those of the host
contracts and the host contracts are not held for trading or designated at fair value though profit or
loss. These embedded derivatives are measured at fair value with changes in fair value recognized
in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that
significantly modifies the cash flows that would otherwise be required.
For financial instruments that are recognized at fair value on a recurring basis, the Company
determines whether transfers have occurred between Levels in the hierarchy by re-assessing
categorization (based on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each reporting period.

*SGVFS010994*

-9As of December 31, 2014, and 2013, the Company has embedded prepayment option derivative
financial asset related to the loans payable.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments and
fixed maturities that are not quoted in an active market. After initial measurement, loans and
receivables are subsequently carried at amortized cost using the effective interest method, less any
allowance for credit losses. Amortized cost is calculated by taking into account any discount or
premium on the issue, and includes fees that are an integral part of the effective interest rate (EIR)
and transaction costs. The level of allowance for credit losses is evaluated by management on the
basis of factors that affect the collectability of accounts. Gains and losses are recognized in profit
or loss, when the loans and receivables are derecognized or impaired, as well as through the
amortization process. Any effects of restatement of foreign currency-denominated loans and
receivables are recognized in profit or loss.
Loans and receivables are classified as current assets if maturity is within 12 months from the
reporting date. Otherwise, these are classified as noncurrent assets.
This accounting policy applies primarily to the Companys Cash and cash equivalents, Trade
and other receivables, Nontrade receivables from CDC, Loan receivable from employees and
Refundable deposits.
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.
After initial measurement, other financial liabilities are subsequently measured at amortized cost
using the effective interest method (EIR). Amortized cost is calculated by taking into account any
discount or premium on the issue and fees that are an integral part of the EIR.
This accounting policy applies primarily to the Companys Accounts payable and accrued
expenses, Interest payable, Loans payable, and Other noncurrent liability.
Derecognition of Financial Assets and Financial Liabilities
Financial Asset
A financial asset (or, where applicable a part of a financial asset or part of a group of similar
financial assets) is derecognized where (a) the rights to receive cash flows from the asset have
expired; (b) 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 (c) the Company has transferred its rights to receive cash flows from the asset and
either has transferred substantially all the risks and rewards of the asset, or has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
Where the Company has transferred its right to receive cash flows from an asset 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 Companys continuing involvement in the
asset.

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- 10 Financial Liability
A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or has expired.
Impairment of Financial Assets
The Company assesses at each reporting date whether a financial asset or a group of financial
assets is impaired.
For loans and receivables, the Company first assesses whether objective evidence of impairment
exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the assets carrying amount and the amount that the Company
reasonably believes will be collected, for specific customer balances.
The carrying amount of the asset is reduced through the use of an allowance account and the
amount of loss is charged to profit or loss. If, in a subsequent year, the amount of the estimated
impairment loss decreases because of an event occurring after the impairment was recognized, the
previously recognized impairment loss is reduced by adjusting the allowance account. If a future
write-off is later recovered, any amounts formerly charged are credited to profit or loss.
If the Company determines that no objective evidence of impairment exists for individually
assessed financial asset, whether significant or not, it includes the asset in a group of financial
assets with similar credit risk characteristics and collectively assesses these assets for impairment.
Assets that are individually assessed for impairment and for which an impairment loss is, or
continues to be, recognized are not included in a collective assessment for impairment.
Offsetting of Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial
position if, and only if, there is an 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. This is not generally the case with master netting agreements, where the related
assets and liabilities are presented at gross amounts in the statement of financial position.
Inventories
Inventories are valued at the lower of cost and net realizable value (NRV). NRV is the estimated
selling price in the ordinary course of business, less the costs of completion and the estimated
costs necessary to make the sale. Cost is determined using weighted average method. For
manufactured inventories, cost includes the applicable allocation of fixed and variable overhead
costs.
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation and impairment
losses, if any. The initial cost of an item of property and equipment comprises purchase price and
any cost attributable in bringing the asset to its intended location and working condition. Cost also
includes interest and other financing charges on borrowed funds used to finance the acquisition of
property, plant and equipment to the extent incurred during the period of installation and
construction.

*SGVFS010994*

- 11 Subsequent costs are capitalized as part of property, plant and equipment account only when it is
probable that future economic benefits associated with the item will flow to the Company and the
cost of the item can be measured reliably. All other expenses related to repairs and maintenance is
charged to profit or loss as incurred.
Depreciation of property, plant and equipment commences once the property, plant and equipment
are available for use and are computed using the straight-line method over the estimated useful
lives (EUL) of the assets.
The EUL of the Companys property, plant and equipment follow:
Building and Improvements
Machinery
Transportation Equipment
Production Equipment
Furniture and Other Equipment

Years
40
7
5
5
2-5

The useful lives and depreciation method are reviewed at least at each reporting period to ensure
that the period and method of depreciation are consistent with the expected pattern of economic
benefits from items of property, plant and equipment.
Construction in progress (CIP) represents plant, administration office and certain machineries and
equipment under construction. CIP is stated at cost and includes the cost of construction and any
directly attributable costs. CIP is not depreciated until such time that the relevant assets are
completed and available for use.
An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included in profit or loss in the year the item of
property, plant and equipment is derecognized.
Impairment of Nonfinancial Assets
The carrying values of assets (i.e., property, plant and equipment) are reviewed for impairment
when events or changes in circumstances indicate that the carrying values may not be recoverable.
If any such indication exists and where the carrying values exceed the estimated recoverable
amounts, the assets or cash-generating units are written down to their recoverable amounts. An
assets recoverable amount is the higher of an assets or cash-generating units fair value less costs
to sell and its value in use. Where the carrying amount of an asset exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. Impairment losses of continuing operations are recognized in
profit or loss in those expense categories consistent with the function of the impaired asset.

*SGVFS010994*

- 12 Equity
Capital stock is measured at par value for all shares issued and outstanding. When the shares are
sold at premium, the difference between the proceeds and the par value is credited to additional
paid-in capital. Direct costs incurred related to equity issuance, such as underwriting, accounting
and legal fees, printing costs and taxes are chargeable to additional paid-in capital. If additional
paid-in capital is not sufficient, the excess is charged against (to) the retained earnings (deficit).
Retained earnings (deficit) represent accumulated income (losses) of the Company.
Cash Dividends
Cash dividends on capital stock are recognized as a liability and deducted from equity when they
are approved by the BOD. Dividends for the year that are approved after the financial reporting
date are dealt with as an event after the financial reporting date.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognized.
Sale of Goods
Sale of goods is recognized upon shipment when the risks and rewards of ownership of the goods
have passed to the buyer and the amount of revenue can be measured reliably.
Warehousing
Income is recognized upon performance of the obligation related to warehousing services and
recorded in the accounting period in which the related services are rendered.
Realized Gains and Losses
Realized gains and losses on the sale of property and equipment are calculated as the difference
between net sales proceeds and the net book value. Realized gains and losses are recognized in
profit or loss when the sale transaction occurs.
Interest income
Interest is recognized as the interest accrues using the effective interest method.
Expense Recognition
Expenses are recognized in profit or loss when decrease in future economic benefit related to a
decrease in an asset or an increase in a liability has arisen that can be measured reliably.
Expenses are recognized in profit or loss:
On the basis of a direct association between the costs incurred and the earning of specific
items of income;
On the basis of systematic and rational allocation procedures when economic benefits are
expected to arise over several accounting periods and the association can only be broadly or
indirectly determined; or
Immediately when expenditure produces no future economic benefits or when, and to the
extent that, future economic benefits do not qualify or cease to qualify, for recognition in the
statement of financial position as an asset.

*SGVFS010994*

- 13 The following specific recognition criteria must be met before costs and expenses are recognized:
Cost of Goods Sold
Cost of goods sold includes all expenses associated with the specific sale of goods. Cost of goods
sold include all materials and supplies used, direct labor, depreciation of production equipment
and other expenses related to production. Such costs are recognized when the related sales have
been recognized.
General and Administrative Expenses
General and administrative expenses constitute costs of administering the business and are
recognized when incurred.
Leases
Company as lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease payments are recognized as an expense in profit or
loss on a straight-line basis over the lease term.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in
the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in
connection with the borrowing of funds.
Retirement Benefits
Defined benefit plan
The Company does not maintain a formal retirement plan. The Company has recognized
retirement liability in the statement of financial position calculated based on the requirements of
the Retirement Law. The retirement liability under the defined benefit plan of the Company is
accounted for in accordance with PAS 19, Employee Benefits, as revised.
The net defined benefit liability or asset is the aggregate of the present value of the defined benefit
obligation at the end of the reporting period reduced by the fair value of plan assets (if any),
adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The asset ceiling
is the present value of any economic benefits available in the form of refunds from the plan or
reductions in future contributions to the plan.
The cost of providing benefits under the defined benefit plans is actuarially determined using the
projected unit credit method.
Defined benefit costs comprise the following:
- Service cost
- Net interest on the net defined benefit liability or asset
- Remeasurements of net defined benefit liability or asset
Service costs which include current service costs, past service costs and gains or losses on nonroutine settlements are recognized as expense in profit or loss. Past service costs are recognized
when plan amendment or curtailment occurs. These amounts are calculated periodically by
independent qualified actuaries.

*SGVFS010994*

- 14 Net interest on the net defined benefit liability or asset is the change during the period in the net
defined benefit liability or asset that arises from the passage of time which is determined by
applying the discount rate based on government bonds to the net defined benefit liability or asset.
Net interest on the net defined benefit liability or asset is recognized as expense or income in
profit or loss.
Remeasurements comprising actuarial gains and losses, return on plan assets and any change in
the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized
immediately in other comprehensive income in the period in which they arise. Remeasurements
are not reclassified to profit or loss in subsequent periods.
Income Tax
Current Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted at the reporting date.
Deferred Tax
Deferred tax is provided using the liability method on all temporary differences at the reporting
date between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, with few exceptions.
Deferred tax assets are recognized for all deductible temporary differences, carryforward benefit
of the excess of minimum corporate income tax (MCIT) over regular corporate income tax (RCIT)
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
MCIT and unused NOLCO can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting 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 tax assets to be utilized. Unrecognized deferred tax assets are reassessed at each
reporting date and are recognized to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
year 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 reporting date.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive),
where, 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.
Foreign Currency-denominated Transactions and Translations
The Companys financial statements are presented in U.S. Dollars, its functional currency.
Transactions in foreign currencies are initially recorded at the functional currency rate prevailing
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the functional currency spot rate of exchange ruling at the reporting date. All
differences are taken to profit or loss.

*SGVFS010994*

- 15 Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rates as of the dates of the initial transactions. Non-monetary items
measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value is determined.
Earnings Per Share (EPS)
The Company presents basic and diluted EPS data for its ordinary shares. Basic EPS is calculated
by dividing the net income attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares issued and outstanding during the period after giving
retroactive effect to stock dividends declared and stock rights exercised during the year, if any.
Diluted EPS is calculated in the same manner, adjusted for the effects of any dilutive potential
ordinary shares. If the number of ordinary shares outstanding increases as a result of a
capitalization, bonus issue or share split, or decreases as a result of a reverse share split, the
calculation of basic and diluted earnings per share for all periods presented shall be adjusted
retrospectively. If these changes occur after the reporting period but before the financial
statements are authorized for issue, the per share calculations for those and any prior period
financial statements presented shall be based on the new number of shares.
Operating Segment
For management purposes, the Company is organized and managed as one business segment. The
Companys business is the manufacture, assembly, test and warehousing of semiconductor and
memory devices and applications and related products which accounted for the majority of the
Companys total revenue. Accordingly, the Company operates mainly in one reportable business
and geographical segment which is the Philippines.
Contingencies
Contingent liabilities are not recognized in the financial statements but are disclosed unless the
possibility of an outflow of assets embodying economic benefits is remote. Contingent assets are
not recognized in the financial statements but disclosed when an inflow of economic benefits is
probable. If it is virtually certain that an inflow of economic benefits will arise, the asset and the
related income are recognized in the financial statements.
Events after the Reporting Date
Post year-end events up to the date of approval of the BOD of the financial statements that provide
additional information about the Companys position at reporting date (adjusting events) are
reflected in the financial statements. Post year-end events that are not adjusting events, if any, are
disclosed when material to the financial statements.

3. Significant Accounting Judgments and Estimates

The preparation of the financial statements in accordance with PFRS requires the Company to
make judgments and estimates that affect the reported amounts of assets, liabilities, income and
expenses and disclosure of contingent assets and liabilities. Future events may occur which will
cause the judgments and assumptions used in arriving at the estimates to change. The effects of
any change in judgments and estimates are reflected in the financial statements as they become
reasonably determinable.
Judgments and estimates are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be determinable under
the circumstances.

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- 16 Judgments
In the process of applying the Companys accounting policies, management has made the
following judgments, apart from those involving estimations, which has the most significant effect
on the amounts recognized in the financial statements:
Recognition of receivable from Clark Development Corporation (CDC)
Pursuant to Executive Order No. 856 (Expanding the Coverage of Executive Order No. 666,
Series of 2007, In Support of the Power Requirement of Clark Freeport Zone) dated January 2010
signed by the then President of the Philippines Gloria Macapagal-Arroyo, the Philippine
Government agreed to provide electricity to the Company at a discounted or subsidized rate, in
line with the Philippine Governments thrust to support power-intensive industries with substantial
investments in recognition of the corresponding benefit of their investments to the economy.
Subsequently, in March 2010, the Company entered into a lease agreement with CDC that, among
others, further embodied the grant of incentives to the Company as a foreign locator in the Clark
Freeport Zone, including the power subsidy.
The grant of the power subsidy to the Company has not been implemented yet, which resulted in
the accumulation of unpaid electricity charges. To address the then power disconnection threats
against the Company and its adverse impact on the business of the Company, the Company was
constrained to pay for its power consumptions from 2011 to date at commercial rates, inclusive of
the amount corresponding to the subsidized portion of the Companys electricity charges. The
payments do not constitute waivers of the Companys existing rights under the law and the
March 2010 lease agreement with CDC and were made on the understanding (and with the express
reservation) that the Company will be able to claim reimbursement of the advances/payments
covering the power subsidy.
In a letter dated December 2, 2013, CDC informed the Company that the National Government
has included in its 2014 National Budget an amount for the power subsidy of the Company. The
amount will prioritize the reimbursement of the Companys power subsidy advances for year
2014, while the remaining amount will be for the reimbursement of advances made for previous
years (i.e., 2011, 2012 and 2013). The advances that will not be paid from the 2014 National
Budget will be requested for inclusion in the 2015 and 2016 National Budgets. With these
developments, the Company assessed that the Government will fulfill its power subsidy
commitment and has accordingly recognized the fair value of the receivable from CDC
corresponding to the amount of the power subsidy advances.
In another letter dated April 3, 2014, CDC advised the inclusion of the amount for the power
subsidy in the 2014 National Budget as part of the unprogrammed funds that will be released
when the revenue collections of the Government exceed the original revenue targets submitted by
the President of the Philippines to Congress.
On July 1, 2014, the Supreme Court (SC) promulgated its decision in the Disbursement
Acceleration Program (DAP) case (in Araullo, et al., v. Aquino, et al., GR. Nos. 209287
/209135/ 209136/ 209155/ 209164/ 209260/ 209442/ 209517/ 209569, July 1, 2014) which
included a ruling and statements relating to the disbursement of unprogrammed funds. The SC
declared void (for noncompliance with the conditions provided in the General Appropriations Acts
or GAAs) the use of the unprogrammed funds from the GAAs of 2011, 2012 and 2013 for the
DAP despite the absence of a certification by the National Treasurer that the revenue collections
exceeded the revenue targets. Specifically, based on the language of the GAAs, the SC declared
that, in determining whether or not the revenue collections exceeded the revenue targets, the total
revenue collections must exceed the total revenue targets. A motion for reconsideration was filed
by the office of the Solicitor General on July 25, 2014.

*SGVFS010994*

- 17 In July 2014, CDC advised that the Department of Budget and Management (DBM), through the
Philippine Economic Zone Authority (PEZA), requested for the documents supporting the
Companys claims on the power subsidy. The Company submitted these documents on July 21,
2014 through CDC.
On December 23, 2014, the 2015 National Budget was signed into law. It expressly recognizes
that the unprogrammed funds for Budgetary Support to Government-Owned or -Controlled
Corporations includes the payment of subsidies and other incentives to retain and attract
productive foreign investments. Further, it categorically states that the unprogrammed funds shall
be released upon the satisfaction of any one of the following conditions, subject to compliance
with the conditions under the pertinent special provisions set out in the 2015 National Budget:
i) When there are excess revenue collections in any one of the identified non-tax revenue
sources from its corresponding revenue collection target, as reflected in Tables C.1 and C.4 of
the Budget of Expenditures and Sources of Financing (BESF) submitted by the Philippine
President to Congress;
ii) When there are new revenue collections, i.e., those arising from new tax laws or new non-tax
sources which are not part of nor included in the original revenue sources reflected in the
Tables C.3 and C.4 of the BESF; or
iii) When there are newly approved loans for foreign-assisted projects.
Releases from item (i) above shall be subject to the issuance of a certification from the Department
of Finance (DOF) or Bureau of Treasury (BTR) as the case may be, that the actual collections
from a particular revenue source has exceeded its corresponding revenue collection target, as
reflected in Tables C.1 and C.4 of the BESF.
Releases from item (ii) above shall be subject to certification by the DOF or BTR, as the case may
be, that the collections identified were not part of nor included in the original revenue collection
targets reflected in Tables C.3 and C.4 of the BESF.
Releases from item (iii) above shall be supported by a perfected loan agreement, which shall be
sufficient basis for the issuance of a Special Allotment Release Order covering the loan proceeds.
As of December 31, 2014, the subsidy included in the 2014 National Budget was not released
although the relevant government agencies have continued to indicate the Philippine governments
commitment to honor the power subsidy granted to the Company.
In a letter dated January 22, 2015 to the Company, CDC advised that an amount has indeed been
allocated in the 2015 National Budget under the unprogrammed funds for the reimbursement of
the Companys power subsidy advances.
In a letter dated January 26, 2015 to the Company, PEZA confirmed that the National Government
has included in the 2015 National Budget under the unprogrammed funds, an amount for the
power subsidy reimbursements . The allocated amount will prioritize the 2015 power subsidy
while the remaining amount will be for the reimbursement of the power subsidy advances made by
the Company in the previous years. The release of the allocation is subject to the special
provisions of the 2015 GAA.

*SGVFS010994*

- 18 The PEZA letter also advised that while the release of the allocation in the 2014 National Budget
is no longer possible due to the recent decision in the DAP case, which purportedly imposed an
additional condition of the use of unprogrammed funds, the relevant government agencies will ask
for a higher subsidy in the 2016 National Budget to cover the arrears.
On February 3, 2015, the SC resolved the Motion for Reconsideration filed in the DAP case (SC
Resolution), affirming its earlier decision on the unprogrammed funds based on the specific
provisions of the GAAs that are the subject of the DAP case.
The Company and its legal counsel believe that the release and use of the unprogrammed funds
under the 2015 National Budget shall be determined by the language of the special provisions
under the 2015 National Budget itself. These special provisions are differently worded from the
special provisions set out in the GAAs that are the subject of the DAP case, and appear to provide
for less stringent conditions for the release and use of unprogrammed funds (see above discussion
on these conditions) compared to the GAAs that are the subject of the DAP case.
In the SC Resolution, the SC also clarified that the release of unprogrammed funds may take place
even prior to the end of the fiscal year, indicating that this could be done on a quarterly basis, so
long as the requirements for the release of the funds under the relevant National Budgets are
complied with.
With the foregoing developments, the Company reassessed the estimated timing of collections of
the receivable from CDC. The Company considers the appropriated amount in the 2015 GAA to
cover a portion of the advance made in prior years and that the remaining amount in arrears,
including the amount that should have been paid out of the 2014 National Budget, will be covered
in the 2016 GAA. As a result of the change in the expected timing of collection, the Company
recognized a provision for valuation loss on the receivable from CDC amounting to $1,044,972 in
2014.
The carrying amount of receivable recognized under Other noncurrent assets amounted to
$18.88 million and $14.28 million as of December 31, 2014 and 2013, respectively (see Note 7).
Determination of functional currency
The Company determines the functional currency based on economic substance of underlying
circumstances relevant to the Company. The functional currency has been determined to be the
U.S. Dollar since the Companys revenues and expenses are substantially denominated in U.S.
Dollar.
Operating lease commitments - as lessee
The Company has entered into commercial property leases on land for its plant and administration
office. The Company has determined, based on an evaluation of the terms and conditions of the
arrangements, that it does not acquire all the significant risks and rewards of ownership of these
properties and so accounts for the contracts as operating leases. The Company considers retention
of ownership title to the leased property and option to purchase the leased asset, among others.

*SGVFS010994*

- 19 Managements Use of Estimates

The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below:
Useful lives and impairment of property, plant and equipment
The Company reviews on an annual basis the estimated useful lives of property, plant and
equipment based on expected asset utilization as anchored on business plans and strategies that
also consider expected future technological developments and market behavior. It is possible that
future results of operations could be materially affected by changes in these estimates brought
about by changes in the factors mentioned. A reduction in the estimated useful lives of property,
plant and equipment would increase the recorded depreciation expense and decrease the related
asset accounts.
The carrying value of property, plant and equipment amounted to $108,541,291 and $114,954,193
as of December 31, 2014 and 2013, respectively (see Note 8).
Fair value of derivative financial asset
When the fair value of financial assets and financial liabilities recorded in the statement of
financial position cannot be derived from active markets, their fair value is determined using
valuation techniques. The inputs to these models are taken from observable markets where
possible, but where this is not feasible, a degree of judgment is required in establishing the fair
value.
The fair value of the Companys derivative financial asset is measured using the interest rate
binomial tree method for valuing call, put and prepayment options embedded in host debt
contracts as disclosed in Note 19. Changes in assumptions about these factors could affect the
reported fair value of the derivative financial asset.
The carrying value of derivative financial asset amounted to $206,291 and $451,047 as of
December 31, 2014, and 2013 respectively (see Note 7).
Retirement Cost
The determination of the Companys obligation and cost for pension and other retirement benefits
is dependent on selection of certain assumptions used by actuaries in calculating such amounts.
Those assumptions are described in Note 12 and include among others, discount rates and salary
rate increase. While the Company believes that the assumptions are reasonable and appropriate,
significant differences in actual experience or significant changes in assumptions materially affect
retirement obligations.
The retirement liability amounted to $200,593 and $106,014 as of December 31, 2014 and 2013,
respectively (see Note 11).

*SGVFS010994*

- 20 -

4. Cash and Cash Equivalents

This account consists of:
Cash on hand
Cash in banks (Note 21)
Time deposits
Debt service account

2014
$10,789
25,289,818
5,000,000
6,493,151
$36,793,758

2013
$22,822
3,365,437
12,950,450
6,767,067
$23,105,776

Cash in banks earns interest at the prevailing bank deposit rates. In 2014, and 2013, the Company
earns interest of 0.25% to 0.50% on all Peso (PHP) accounts, and 0.10% and 0.25% on Dollar
(USD) accounts. Time deposits are generally made on 30-day term and earn interest at 1.375% to
2.75% in 2013 for PHP accounts and 0.875% to 1.50% in 2014, and 0.75% to 0.875% in 2013 for
USD accounts.
Debt Service Account maintained with the BDO Unibank, Inc. - Trust and Investments Group
(trustee) is to be used solely for the next quarterly payment of interest, and principal due that is
related to facility loan granted by BDO Unibank, Inc. (BDO) to the Company (see Note 10).
Interest income from cash and cash equivalents recognized in profit or loss amounted to $128,414,
$162,952 and $65,742 in 2014, 2013 and 2012, respectively (see Note 16).

5. Trade and Other Receivables

This account consists of:
Trade accounts receivables
Others (Note 12)

2014
$21,213,101
500,430
$21,713,531

2013
$19,858,783
1,283,132
$21,141,915

Trade receivables are non-interest bearing and are generally on a 15-day term.
Other receivables include lease of equipment to STS, receivables from suppliers and advances to
employees.
The carrying amount of all trade accounts receivable as of December 31, 2014, and 2013 are
pledged, through execution of Assignment Agreement, for the loan with BDO (see Note 10).

*SGVFS010994*

- 21 -

6. Inventories
This account consists of:
At cost:
Raw materials
Raw materials in transit
Work in process
Finished goods

2014

2013

$7,936,162
631,650
1,053,213
607,517
$10,228,542

$8,489,808
1,414,865
1,510,329
172,416
$11,587,418

The amount of inventories recognized in cost of goods sold amounted to $152,024,937,

$136,240,711 and $126,127,084 in 2014, 2013 and 2012, respectively.

7. Prepayments and Other Current Assets/Other Noncurrent Assets

Prepayments and other current assets consist of:
Advances to suppliers (Note 12)
Prepayments
Derivative financial asset
Refundable deposits (Note 20)
Advance rental
Others

2014
$232,717
153,740
82,516
31,461
71,504
$571,938

2013
$375,413
167,824
130,804
169,187
78,789
63,466
$985,483

Advances to suppliers pertain to cash payments to various suppliers and the Parent Company for
inventories returned but has been previously paid.
Prepayments, on the other hand, pertain to unamortized portion of prepaid insurance, house rentals
and other prepaid expenses.
Other noncurrent assets consist of:
Nontrade receivable from CDC, net of allowance
for valuation loss
Refundable deposits (Notes 18 and 20)
Other investment
Intangible assets
Derivative financial asset
Loan receivable from employees

2014

2013

$18,876,550
1,428,374
990,878
249,508
123,775
6,708
$21,675,793

$14,280,473
1,438,370
969,662
370,468
320,243
32,939
$17,412,155

*SGVFS010994*

- 22 Nontrade receivable from CDC represents the Companys advances in 2014 and previous years to
the electricity service provider covering the Governments subsidy for electricity charges. In 2014,
the Company recognized a provision for valuation loss amounting to $1,044,972 as a result of
changes in the managements assessment of the estimated timing of collection. As of
December 31, 2014, the allowance for valuation loss amounted to $1,328,101 (see Note 3).
The advance rental and portion of refundable deposits pertain to operating lease agreement with
CDC (see Note 18).
As of December 31, 2014 and 2013, the net book value of intangible asset amounted to $249,508
and $370,468, respectively. Amortization in 2014, 2013 and 2012 amounted to $120,960,
$121,492, and $66,802 respectively.
The derivative financial asset pertains to the prepayment option that was separated from the loans
payable and carried at fair value through profit or loss.
The table below shows the movements of the derivative financial asset in 2014 and 2013:
Balances at January 1
Fair value loss on derivative, included in Finance
cost (see Note 16)
Balances at December 31

2014
$451,047

2013
$2,223,075

(244,756)
$206,291

(1,772,028)
$451,047

8. Property, Plant and Equipment

The rollforward analysis of this account follows:
2014
Building and
Improvements
Cost
Balances at beginning of year
Acquisitions
(Notes 12 and 13)
Disposals
Balances at end of year
Accumulated depreciation
Balances at beginning of year
Depreciation
Disposals
Balances at end of year
Net book values

$51,483,785

Transportation
Machinery
Equipment
$77,664,851

$459,441

Production
Equipment

Furniture and
Other
Equipment

Construction
in Progress

Total

$10,378,871

$16,074,206

$2,436

$156,063,590

72,695

51,556,480

8,847,740
(630,544)
85,882,047

(27,366)
432,075

922,457
(66,306)
11,235,022

2,171,799
(2,665)
18,243,340

760,640

763,076

12,775,331
(726,881)
168,112,040

3,730,537
1,288,534

5,019,071
$46,537,409

23,583,843
11,317,579
(217,474)
34,683,948
$51,198,099

260,684
87,778
(11,858)
336,604
$95,471

4,864,879
2,146,721
(8,469)
7,003,131
$4,231,891

8,669,454
3,860,411
(1,870)
12,527,995
$5,715,345

$763,076

41,109,397
18,701,023
(239,671)
59,570,749
$108,541,291

*SGVFS010994*

- 23 2013

Cost
Balances at beginning of year
Acquisitions
(Notes 12 and 13)
Disposals
Transfers
Adjustments
Balances at end of year
Accumulated depreciation
Balances at beginning of year
Depreciation
Disposals
Balances at end of year
Net book values

Building and
Improvements
$51,442,336
41,449

51,483,785
2,443,525
1,287,012

3,730,537
$47,753,248

Machinery

Transportation
Equipment

Production
Equipment

Furniture and
Other
Equipment

Construction
in Progress

Total

$75,790,512

$454,592

$9,877,079

$14,225,103

$88,741

$151,878,363

4,849

459,441

503,493
(1,697)

(4)
10,378,871

1,967,267
(4,783)

(113,381)
16,074,206

(86,305)

2,436

4,391,408
(6,480)
(86,305)
(113,396)
156,063,590

169,607
91,077

260,684
$198,757

2,850,963
2,014,227
(311)
4,864,879
$5,513,992

4,628,699
4,042,965
(2,210)
8,669,454
$7,404,752

$2,436

22,736,635
18,375,283
(2,521)
41,109,397
$114,954,193

1,874,350

(11)
77,664,851
12,643,841
10,940,002

23,583,843
$54,081,008

Items under construction in progress include certain machinery and equipment which have been
delivered but are yet to be tested before they become available for use as intended by the
management.
The carrying amounts of all items of property, plant and equipment as of December 31, 2014 and
2013 are subject to first ranking mortgage to secure the Companys loan with BDO (see Note 10).

9. Accounts Payable and Accrued Expenses

Trade accounts payable
Related parties (Note 12)
Third parties
Accrued expenses
Payable to government agencies
Others

2014

2013

$9,861,308
7,428,899
17,290,207
1,712,637
261,687
77,765
$19,342,296

$8,841,147
5,439,048
14,280,195
1,439,285
236,173
60,586
$16,016,239

Trade accounts payable are non-interest bearing and are generally on 30-day term.
Accrued expenses primarily include salaries of employees, utilities and payable to third party
service providers.
Payable to government agencies includes withholding taxes payable, fringe benefit tax payable,
statutory liabilities and other taxes payable.

10. Loans Payable

On March 23, 2011, the Company entered into a loan agreement with BDO to finance the
procurement costs of various items of equipment. BDO established loan facility in favor of the
Company in the amount of $83,000,000. The Company made three (3) drawdowns and four (4)
drawdowns totaling to $30,000,000 and $53,000,000 in 2012 and 2011, respectively, totaling
$83,000,000. Principal is payable in sixteen (16) equal quarterly installments commencing on the
27th month from initial drawdown date. Interest is paid quarterly based on current LIBOR rates
plus applicable spread of 3.90%.

*SGVFS010994*

- 24 The Company may at its option prepay the loan with minimum amount of $5,000,000 anytime
from the date of drawdown. If the prepayment is made on interest payment date, no penalty shall
be imposed. Otherwise, the Company shall pay a penalty of one and a half per cent (1.50%) for
each month and fraction thereof.
The prepayment option derivative has been separated from loans payable and carried at fair value
through profit or loss.
In May and June 2013, the Company obtained a new loan with BDO amounting to $29,000,000
which contains majority of the provisions in the $83,000,000 loan with BDO.
The Company and the Parent Company have agreed to provide certain collateral security to be
held by the BDO Security Trustee in trust and for the benefit of the BDO. Collaterals include
assignment of accounts receivable from Samsung Electronics Co., Ltd. (Samsung) (see Note 5),
assignment of CDC agreements (leasehold rights) (see Note 19), and establishment of first ranking
Chattel and Real Estate Mortgage over the Companys property, plant and equipment (see Note 8).
In addition, the Parent Company has agreed to guarantee the performance of the payment of the
obligations of the Company under the agreement. As Pledgor, the Parent Company pledges,
through execution of Pledge Supplement, its shares in the Company, including additional shares of
stock, subscription, options, warrants or other rights to purchase or acquire such shares of stock.
On May 19, 2014, in connection with the Companys initial public offering as discussed in
Note 14, BDO consented through a Deed of Release of Pledge made and executed by BDO
Unibank, Inc. - Trust and Investment Group, to the release from the said pledge a total of
353,408,000 common shares of the Company registered in the name of the Parent Company.
Loan agreement with BDO requires the Company to maintain the following financial ratios:
Debt Service Coverage Ratio (DSCR) of 1.2 times, except in 2013, where DSCR is 1.1 times.
DSCR shall be based on the annual audited financial statements of the Company, as well as
the unaudited financial statements as of the end of the first quarter of the current year.
Leverage Ratio of 3 times from 2011 to 2012 and 2 times from 2013 to 2016 for the
$83,000,000 loan and 2 times from 2013 to 2018 for the $29,000,000 loan based on the
audited or unaudited financial statements of the Company.
On September 29, 2014, BDO consented , subject to the fulfillment of all the conditions set forth
below, to the declaration and payment of cash dividends equivalent to not more than (a) 50% of
the companys net income based on the Companys audited financial statements as of and for the
year ended December 31, 2013, inclusive of the cash dividends of $1,000,000 subject of BDO s
letter dated May 8, 2014, (b) 50% of the Companys net income based on the Companys audited
financial statements as of and for the year ended December 31, 2014 and (c) 20% of the
Companys net income based on the Companys audited financial statements for every subsequent
year, provided, that, the total cash dividends to be declared and paid by the company under
(a) and (b) shall in no case exceed $12,700,000.
In addition, all of the following conditions must be met before any declaration and payment of
dividends may be made by the Company:
No event has occurred and in continuing which constitutes an event of default, or which upon
a lapse of time or giving of notice or both, would become an event of default, under or in
respect of the agreement;
The DSCR of 1.5x is maintained;
The required maintaining balance in the debt service account is maintained; and
The Companys capital expenditures for the preceding year do not exceed US$15,000,000.

*SGVFS010994*

- 25 As of December 31, 2014 and 2013, the Company is in compliance with its loan covenants related
to the loan facility with BDO.
As of December 31, 2014 and 2013, total BDO loan guaranteed by the Parent Company amounted
to $51,875,000 and $72,625,000, respectively (see Note 12).
In 2014 and 2013, the Company made principal payments on the $83,000,000 loan, resulting to an
outstanding balance of the old loan of $51,875,000 and $72,625,000 as of December 31, 2014 and
2013, respectively.
The carrying value of loans payable as of December 31, 2014 and 2013 follows:
2014
$24,375,000
56,128,981
$80,503,981

Current portion
Noncurrent portion

2013
$20,750,000
80,291,487
$101,041,487

Interest expense charged to profit or loss amounted to $4,294,115, $5,256,137 and $4,433,675 in
2014, 2013 and 2012, respectively (see Note 16). Interest payable as of December 31, 2014 and
2013 amounted to $724,429 and $901,566, respectively.
11. Retirement Liability
The Company obtained the services of an independent actuary to calculate the amount of
retirement benefit obligation based on the provisions provided by PAS 19, as revised. The
Companys liability for retirement benefits is based solely on the requirements under RA No. 7641,
otherwise known as The Philippine Retirement Pay Law of the Philippines, as the Company does
not have a formal retirement plan.
The unfunded post-employment benefits in 2014 and 2013 are as follows:
2014
Net benefit cost in statement of comprehensive income

Present value
of defined
benefit
obligation

January 1,
2014

Current
service cost

Interest
cost

Subtotal

Benefits paid

Actuarial
changes arising
from changes in
demographic
assumptions

$106,014

$43,690

$6,055

$155,759

($16,391)

Net benefit cost in statement of comprehensive income

Present value of
defined benefit
obligation

Remeasurements in other comprehensive income

January 1,
2013

Current
service cost

Interest
cost

Subtotal

$106,014

$106,014

Actuarial
changes arising
from changes
in financial
assumptions

December
31, 2014

$61,225

$200,593

2013
Remeasurements in other comprehensive income
Actuarial changes
arising from
changes in
demographic
assumptions
Benefits paid

Actuarial
changes arising
from changes in
financial December 31,
assumptions
2013

$106,014

*SGVFS010994*

- 26 The cumulative remeasurement loss in 2014 recognized in the statement of comprehensive income
follows:
Balance as at January 1
Remeasurement loss during the year
Balance as at December 31
Income tax effect
Cumulative amount of remeasurement net of tax

$
44,835
44,835
(2,242)
$42,593

The cost of defined benefit pension plan as well as the present value of the retirement liability is
determined using actuarial valuation which involves making various assumptions.
The principal actuarial assumptions used in determining the retirement obligation are shown
below:
Discount rate
Salary increase

2014
4.63%
5.00%

2013
5.84%
5.00%

The sensitivity analysis for 2014 and 2013 below has been determined based on reasonably
possible changes of each significant assumption on the defined benefit obligation as of the end of
the reporting period, assuming if all other assumptions were held constant.
Increase
(decrease)
Discount rates
2014
2013
Future salary increases
2014
2013

Effect on
retirement
obligation

+1%
(1%)

($41,159)
53,195

+1%
(1%)

(21,761)
28,064

+2%
(2%)

51,077
(40,528)

+2%
(2%)

61,797
(38,840)

The average duration of the defined benefit obligation for the year ended December 31, 2014 is
26.78 years.

12. Related Party Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the
other party in making financial and operating decisions or the parties are subject to common
control or common significant influence, referred to as affiliates. Related parties may be
individuals or corporate entities.

*SGVFS010994*

- 27 The Companys transactions with the related parties in 2014, 2013 and 2012 follow:
2014
Amount/volume

Outstanding
balance

$86,091,729
9,762,474

346,371

2,851,559

9,861,308

General and administrative

expenses

412,466

Finance cost

606,866

Other income
Prepaid and other current
assets
Trade and other receivables

403,732

224,667

279,232

Bokwang Jeju Co., Ltd. Affiliate

Other non-current assets

21,215

Payment for transaction tax on

the purchase of other
investment, fully paid by the
Company as of
December 31, 2014

Phoenix Semiconductor
Telecommunications
(Suzhou) Co., Ltd. Affiliate
Other income

38,580

Gain on sale of machinery

Category
Parent Company
Raw materials used
Property, plant and
equipment
Direct labor

Other manufacturing costs

Accounts payable and
accrued expenses

Nature, terms and conditions

Purchases of raw materials
Purchases of property and
equipment
Secondment fees for the salaries
and other charges incurred
as a consequence of
secondment of certain
employees
Purchases of various
production-related items
and expenses
Outstanding balance related to
above transactions; 20-day
non-interest bearing,
unsecured
Secondment fees for the salaries
and other charges incurred
as a consequence of
secondment of certain
employees
Guarantee fee related to the
facility loan agreement
Equipment lease rental
Returns of raw materials and
PPE
Outstanding balance on
equipment lease rental, and
Reimbursement to be paid
by STS for defective UPS

*SGVFS010994*

- 28 2013
Amount/volume

Outstanding
balance

$83,561,344
3,556,579

484,467

3,419,240

8,841,147

General and administrative

expenses

418,066

Finance cost

912,449

373,574

969,663

Category
Parent Company
Raw materials used
Property, plant and
equipment
Direct labor

Other manufacturing costs

Accounts payable and
accrued expenses

Prepaid and other current

assets
Bokwang Jeju Co., Ltd. Affiliate
Other noncurrent assets

Nature, terms and conditions

Purchases of raw materials
Purchases of property
and equipment
Secondment fees for the salaries
and other charges incurred
as a consequence of
secondment of certain
employees
Purchases of various
production-related items
and expenses
Outstanding balance related to
above transactions; 20-day
non-interest bearing,
unsecured
Secondment fees for the salaries
and other charges incurred
as a consequence of
secondment of certain
employees
Guarantee fee related to the
facility loan agreement
Returns of raw materials and
property and equipment;
30-day non-interest bearing,
unsecured
Payment for membership fee
for villa condominium units;
20-year period and
automatically extended
unless a written objection is
made by the member within
30 days prior to expiration

2012
Category
Parent Company
Raw materials used
Property, plant and
equipment
Direct labor

Other manufacturing costs

General and administrative
expenses
Finance cost

Amount/volume

Outstanding
balance

$93,496,867
14,934,342

603,477

5,174,963

423,444

1,401,630

Nature, terms and conditions

Purchases of raw materials
Purchases of property
and equipment
Secondment fees for the salaries
and other charges incurred
as a consequence of
secondment of certain
employees
Purchases of various
production-related items
and expenses
Secondment fees for the salaries
and other charges incurred
as a consequence of
secondment
Guarantee fee related to the
facility loan agreement

*SGVFS010994*

- 29 Remuneration of key management personnel

Key management personnel are those persons having the authority and responsibility for planning,
directing and controlling the activities of the Company, directly or indirectly. The Company
considers chief executives to constitute key management personnel. Total remunerations of key
management personnel are as follows:
Short-term employee benefits
Post-employment benefits
Other long term benefits

2014
$3,047,119

$3,047,119

2013
$3,470,332

$3,470,332

2012
$3,579,752

$3,579,752

There are no agreements between the Company and any of its directors and key officers providing
for benefits upon termination of employment.

13. Equity
The authorized capital stock of the Company is $65,000,000 (P
=2,925,000,000) divided into
2,925,000,000 shares with par value of $0.022286 (equivalent to =
P1.00). As of
December 31, 2014 and 2013, the Company has 2,165,024,111 and 2,002,644,109 shares issued
and outstanding.
On April 1, 2014, the BOD approved the declaration of cash dividends amounting to $1,000,000
($0.0005 per share) to stockholders of record as of April 1, 2014, in proportion to, and on the basis
of outstanding shares of stock respectively held by the shareholders, payable on May 12, 2014. On
the same day, the BOD also approved the amendment to the Articles of Incorporation of the
Company to include specific reference to Common shares, among others.
On April 1, 2014, the BOD of the Company authorized the issuance of 572,186,000 new and
existing common shares (286,093,000 new common shares and 286,093,000 issued and
outstanding common shares) with par value of P1.00 per share. Further, it was resolved that the
Company is authorized to apply with the SEC and any relevant government agencies for the
registration of the common shares to be issued, offered, sold, and distributed to the public by way
of an IPO, and with the Philippine Stock Exchange and any relevant government agencies for the
listing of the said shares.
On April 22, 2014, the SEC approved the increase in the number of the Companys BOD. On the
same date, the Company issued one common share each at the subscription price of =
P1.00 per
share to the two independent directors.
On May 8, 2014, the BOD approved that the Company, the Parent Company and the Issue
Manager and Lead Underwriter for the IPO have an option exercisable in whole or in part upon
their mutual agreement, to increase the offer size by up to an additional 134,630,000 new and
existing common shares during the offer period, on the same terms and conditions with the listing
above, solely to cover oversubscriptions, if any. In the event the oversubscription option is
exercised, the Company may issue up to an additional 67,315,000 new common shares, and/or the
Parent Company may sell up to an additional 67,315,000 existing common shares.
On December 1, 2014, the Company offered to sell to the public 324,760,000 new and existing
Common Shares with par value of P1.00 per share at an offer price of P3.15 per share.

*SGVFS010994*

- 30 The Common Stock is comprised of: (a) 162,380,000 new Common Shares, issued for
subscription by the Company from its authorized and unissued capital stock by way of a primary
offer; and (b) 162,380,000 issued and outstanding Common Shares, offered for sale by the Parent
Company, the selling stockholder, pursuant to a secondary offer. The total net proceeds from the
issuance of new shares amounted $11,070,260 (P
=494,507,193), net of the direct cost amounting to
$388,006 (P
=16,989,807) charged to Additional paid-in capital. Other IPO costs not directly
related to the issuance of new shares and charged to profit and loss amounted to $647,746
(P
=27,801,228).

14. Other Manufacturing Costs

This account consists of:
Utilities
Production consumables
Spare parts, tools and jigs
Service fee
Indirect labor (Note 17)
Repairs and maintenance
Insurance
Production supplies
Rent (Note 18)
Jigs and tools
Entertainment and representation
Taxes and dues
Travel
Communications
Miscellaneous

2014
$8,016,895
6,486,874
4,879,910
4,615,297
2,587,432
1,645,752
497,148
335,715
259,725
185,708
128,864
124,011
98,593
97,163
766,555
$30,725,642

2013
$4,477,334
5,779,201
2,414,074
4,827,080
2,607,551
1,122,984
483,245
200,247
271,046
116,677
141,409
161,180
99,096
103,448
585,946
$23,390,518

2012
$8,706,280
6,694,668
3,188,958
4,551,240
2,191,961
1,355,935
392,204
310,067
328,440
135,682
193,370
160,489
109,059
128,792
665,290
$29,112,435

2014

2013

2012

$1,518,885
915,038
481,250
320,043
171,603
146,929

$1,519,245
719,576
480,084
147,742
175,755
72,964

$1,352,140
684,096
443,758
261,705
181,422
58,521

138,054
132,945
72,371
68,890
61,241
38,513
211,615
$4,277,377

111,022
125,520
90,418
39,182
39,367
32,268
204,498
$3,757,641

160,123
73,373
91,029
66,877
35,166
59,762
168,853
$3,636,825

15. General and Administrative Expenses

This account consists of:
Salaries, wages and
benefits (Note 17)
Outside services
Depreciation (Note 8)
Professional fees
Insurance
Taxes and licenses
Entertainment, amusement
and recreation
Repairs and maintenance
Supplies
Communications, light and water
Rent (Note 18)
Transportation and travel
Miscellaneous

*SGVFS010994*

- 31 -

16. Finance Cost/Other Income/Other Expense

Finance cost consists of:
Interest expense
Guarantee fee (Note 12)
Fair value loss (gain) on
derivative

2014
$4,294,115
606,866

2013
$5,256,137
912,449

2012
$4,433,675
1,401,630

244,756
$5,145,737

1,772,028
$7,940,614

(644,912)
$5,190,393

2014
$459,694
433,072
134,296
39,613
$1,066,675

2013
$162,952
23,774
73,778
61,035
$321,539

2012
$65,742
24,494
59,339
9,919
$159,494

2014

2013

2012

$1,044,972
270,704

144,271
452,462
$1,912,409

570,424
242,021
$812,445

283,920
86,733
$370,653

2013
$6,012,307
2,670,502
$8,682,809

2012
$5,740,987
2,373,755
$8,114,742

Other income consists of:

Interest income
Rental income (Note 12)
Income from sale of scrap
Miscellaneous

Other expense consists of:

Provision for valuation loss nontrade receivable

from CDC
Loss on sale of scrap
Foreign currency exchange
loss - net
Miscellaneous

17. Salaries and Employee Benefits

The details of salaries and employee benefits follow:
Salaries and wages
Employee benefits

2014
$5,852,579
2,821,835
$8,674,414

Salaries and wages and employee benefits included in cost of goods sold and general and
administrative expenses amounted to $7,155,529 and $1,518,885, respectively, in 2014,
$7,163,564 and $1,519,245, respectively, in 2013 and $6,762,602 and $1,352,140, respectively, in
2012.

*SGVFS010994*

- 32 -

18. Operating Lease Agreements

On March 24, 2010, the Company entered into a non-cancellable operating lease agreement with
CDC covering the land where its plant and administration offices are being constructed. The lease
is for a term of fifty (50) years starting from the date of signing, renewable subject to mutual
agreement of both parties.
The lease agreement contains an escalation clause of 10.00% p. a. starting the fourth year and
every three (3) years thereafter. The Company is also entitled to non-payment of lease rentals for
a period of seventy (70) months.
Pursuant to the lease agreement, the Company made an advance rental covering lease term from
the 71st month to 18th year amounting to $1,070,884.
Future minimum lease payments under operating leases as of December 31, 2014 and 2013 are as
follows:
Within one year
More than one year but less than five years
More than five years

2014
$

12,157,048
$12,157,048

2013
$

12,157,048
$12,157,048

19. Fair Value Measurement

PFRS 13 requires disclosures relating to fair value measurements using a three-level fair value
hierarchy. The level within which the fair value measurement is categorized in its entirety is
determined on the basis of the lowest level input that is significant to the fair value measurement.
Assessing the significance of a particular input requires judgment, considering factors specific to
the asset or liability.
The following table shows financial instruments recognized at fair value, categorized between
those whose fair value is based on:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair
value are observable, either directly or indirectly; and
Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that
are not based on observable market data.
The Companys financial assets consist of cash and cash equivalents, trade and other receivables, ,
loans receivable from employees and refundable deposits. The financial liabilities consist of
accounts payable and accrued expenses, interest payable, loans payable and other noncurrent
liability. Due to the short term nature of the Companys financial assets and liabilities, the
carrying amount approximates their fair value as of December 31, 2014 and 2013.

*SGVFS010994*

- 33 As of December 31, 2014 and 2013, the carrying value of the nontrade receivable from CDC
approximates its fair value, and is categorized under Level 2 in the fair value hierarchy. In 2014,
with the developments discussed in Note 3, the Company reassessed the expected timing of
collection and has accordingly computed the present value of the receivable as of December 31,
2014 using a risk free rate as the discount rate, which also represents its fair value. The present
value technique captures the estimate of future cash flows, time value of money as represented by
the rate on risk free monetary assets that have maturity dates or durations that coincide with the
period covered by the cash flows.
The Derivative financial asset amounting $206,291 and $451,047 as of December 31, 2014 and
2013, respectively, in the statements of financial position is the only financial instrument carried at
fair value classified under Level 3 in the fair value hierarchy. There were no transfers between
levels of the fair value hierarchy in 2014, and 2013.
Loans payable carried at amortized cost which fair value is disclosed amounting to $81,244,549,
and $98,193,447, as of December 31, 2014 and 2013, respectively, is categorized under Level 3 in
the fair value hierarchy.
The fair value of the Companys embedded derivative financial asset and loans payable which fair
value is disclosed, are measured using interest rate binomial tree method for valuing call, put and
prepayment options embedded in host debt contracts.
The method incorporates various inputs such as the following:
a) USD yield curve
b) Volatility of USD interest rates based on historical data
c) Credit spread from most recent quotes from banks
Valuation is performed on a quarterly basis for internal reporting purposes and is performed by the
Companys own internal valuer. The Company decides whether the fair value can be determined
reliably, which valuation method should be applied and the assumptions made for unobservable
inputs used in the valuation methods. The Company further performs an analysis to determine if
the change in fair value is reasonable by comparing the change in fair value with relevant external
resources.
In 2014, 2013 and 2012, the Company used the volatility of 25.00% and credit spread of 3.90% in
the valuation which are considered as significant unobservable inputs. The 5.00% increase in the
volatility used in the valuation of derivative financial asset would result in increase in fair value of
$38,704, $80,620, and $253,977; while the decrease in the volatility of 5% would result in
decrease in fair value of $38,105, $81,126, and $263,756 in 2014, 2013 and 2012, respectively.
The 1% increase in credit spread would result in increase in fair value of $29,527, $69,397, and
$278,093, while the decrease in credit spread would decrease the fair value by $27,948, $70,890,
and $298,093 in 2014, 2013, and 2012, respectively.

*SGVFS010994*

- 34 -

20. Financial Risk Management Objectives and Policies

The Company has various financial assets such as cash and cash equivalents, trade and other
receivables, nontrade receivables and refundable deposits, which arise directly from normal
operations.
The Companys principal financial liabilities consist of accounts payable and accrued expenses,
interest payable and loans payable. The main purpose of these financial liabilities, except loans
payable, is to raise working capital for the Companys operations. The main purpose of the loan
payable is to finance the construction of the Companys plant and administration office and
purchase and installation of machinery and equipment.
The main risks arising from the Companys financial instruments are market risk, credit risk and
liquidity risk. The management reviews the procedures and agrees policies for managing each of
these risks as summarized below:
Market Risk
Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may
result from changes in the price of a financial instrument. The value of a financial instrument may
change as a result of changes in foreign currency exchange rates, interest rates, commodity prices
or other market changes.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. Exposure to foreign currency risk
arises mainly when receivables and payables are denominated in a currency other than the
Companys functional currency.
As of the December 31, 2014, 2013 and 2012, the foreign-currency denominated financial assets
and financial liabilities in original currencies and their U.S. Dollar equivalents are as follows:
2014
Financial assets
Cash and cash equivalents
Loans and receivables:
Nontrade receivables from
CDC
Refundable deposits
Receivable from employees
Other receivables
Financial liabilities
Accounts payable and accrued
expenses
Trade
Accrued expenses
Others (nontrade)

PHP

JPY

Equivalents in
USD

P
=480,114,830

JPY

$10,736,020

844,159,318
63,149,181
300,000
5,546,233
1,393,269,562

JPY

18,876,550
1,412,102
6,708
124,021
31,155,401

21,930,300
64,799,401
3,281,225
90,010,926
P
=1,303,258,636

89,100,900

89,100,900
(JPY89,100,900)

1,230,494
1,448,999
73,373
2,752,865
$28,402,535

*SGVFS010994*

- 35 2013
JPY Equivalents in USD

PHP
Financial assets
Cash and cash equivalents
Loans and receivables:
Nontrade receivables from
CDC
Refundable deposits
Receivable from employees
Other receivables

Financial liabilities
Accounts payable and accrued
expenses
Trade
Accrued expenses
Others (nontrade)

=30,333,187
P

JPY

$683,187

634,052,985
63,502,881
1,462,500
6,496,169
735,847,722

14,280,473
1,430,245
32,939
146,310
16,573,154

17,871,753
60,066,051
2,494,064
80,431,868
=655,415,854
P

6,063,650

6,063,650
(JPY6,063,650)

460,393
1,309,147
56,173
1,825,713
$14,747,441

2012
Financial assets
Cash and cash equivalents
Loans and receivables:
Refundable deposits
Receivable from employees

Financial liabilities
Accounts payable and accrued
expenses
Trade
Accrued expenses

PHP

JPY

Equivalents in
USD

=26,406,668
P

JPY

$641,094

7,726,400
13,467,172
47,600,240

187,580
326,952
1,155,626

15,980,099
298,790,776
314,770,875
(P
=267,170,635)

16,687,660

16,687,660
(JPY16,687,660)

581,890
7,253,964
7,835,854
($6,680,228)

The following table demonstrates the sensitivity to a reasonably possible change in the U. S.
Dollar-Philippine Peso exchange rate, with all variables held constant, of the Companys income
before income tax (due to changes in the fair value of monetary assets and liabilities):

2014
2013
2012

Increase/decrease in
PHP rate
+1%
-1%

Effect on income
before income tax
($291,426)
291,426

+1%
-1%

($148,053)

+1%
-1%

$64,863
(64,863)

148,053

*SGVFS010994*

- 36 -

Increase/decrease in
JPY rate
+1%
-1%

Effect on income
before income tax
$7,401
(7,401)

2013

+1%
-1%

$579
(579)

2012

+1%
-1%

$1,939
(1,939)

2014

The sensitivity analysis has been prepared on the basis that the proportion of financial instruments
in foreign currencies is constant.
The exchange rate used to restate the Companys PHP-denominated assets and liabilities is P
=44.72
to $1.00 as of December 31, 2014, =
P44.40 to $1.00 as of December 31, 2013 and P
=41.19 to $1.00
as of December 31, 2012. For the Companys JPY-denominated liabilities, the exchange rate used
is JPY120.39 to $1.00 as of December 31, 2014, JPY104.77 to $1.00 as of December 31, 2013 and
JPY86.05 to $1.00 as of December 31, 2012. There are no impact on the Companys other
comprehensive income other than those already affecting the income before income tax.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Companys exposure to the risk of
changes in market interest rates relates primarily to the Companys loans payable with BDO with
floating interest rate.
The following table sets forth, for the period indicated, the sensitivity to reasonably changes in
interest rates with all other variables held constant:
Changes in basis
points
+1%
-1%

Effect on income
before income tax
($578,273)
621,403

2013

+1%
-1%

(674,232)
734,007

2012

+1%
-1%

(705,691)
705,465

2014

Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Company is exposed to credit risk from its
operating activities (primarily trade receivables) and from its investing activities, including deposit
in banks and financial institutions, foreign exchange transactions and other financial instruments.
Maximum exposure to credit risk
The Company trades only with recognized, creditworthy third parties. The Companys maximum
exposure to credit risk, without taking into account any collateral held or other credit
enhancements, equals the carrying values of financial assets.

*SGVFS010994*

- 37 Collateral and other credit enhancements

The amount and type of collateral required depends on the assessment of the credit risk of the
borrower or counterparty. As of December 31, 2014, 2013 and 2012, the Company has no
collateral held and other credit enhancements.
Risk concentrations of the maximum exposure to credit risk
Concentrations arise when a number of counterparties are engaged in similar business activities or
activities in the same geographic region or have similar economic features that would cause their
ability to meet contractual obligations to be similarly affected by changes in economic, political or
other conditions. Concentrations indicate the relative sensitivity of the Companys performance to
developments affecting a particular industry or geographical location.
As of December 31, 2014, 2013 and 2012, the Companys only customer is Samsung, which
specializes in digital appliances and media, semiconductors, memory and system integration.
Receivables from Samsung as of December 31, 2014, and 2013 amounted to $21,213,101 and
$19,858,783, respectively.
Credit quality per class of financial assets
The table below shows the credit quality of the Companys neither past due nor impaired loans
and receivables.
2014
Cash in banks
Loans and receivables:
Trade and other receivables
Refundable deposits
Nontrade receivables from CDC

Neither past due nor impaired

High grade
Standard grade
$36,793,758
$
21,213,101
1,459,835
18,876,550
$78,343,244

Total
$36,793,758

500,430

$500,430

21,713,531
1,459,835
18,876,550
$78,843,674

Neither past due nor impaired

High grade
Standard grade
$23,082,955
$

Total
$23,082,955

19,858,783
1,607,557
14,280,473
$58,829,768

21,141,915
1,607,557
14,280,473
$60,112,900

2013
Cash in banks
Loans and receivables:
Trade and other receivables
Refundable deposits
Nontrade receivables from CDC

1,283,132

$1,283,132

The Companys bases in grading its financial assets are as follows:

High grade - accounts with a high degree of certainty in collection, where counterparties have
consistently displayed prompt settlement practices, and have little to no instances of defaults or
discrepancies in payment.
Standard grade - active accounts with minimal to regular instances of payment default, due to
ordinary/common collection issues, but where the likelihood of collection is still moderate to high
as the counterparties are generally responsive to credit actions initiated by the Company.

*SGVFS010994*

- 38 The credit quality of financial assets was determined as follows:

Cash in banks - consists of bank deposits made with reputable financial institutions, thus classified
as high grade.
Trade receivables - consists of receivables from customers, with no delay in payment based on
historical experience, thus classified as high grade.
Other receivables - consists of receivables from sale of scrap and other non-operating income and
receivables from employees, thus classified as standard grade.
Refundable deposits - represent mostly deposits with CDC, a government-owned and controlled
corporation. Default is considered highly unlikely, thus the deposits are classified as high grade.
Nontrade receivable from CDC - represents the Companys advances to the electricity service
provider covering the Governments subsidy for its electricity charges. Default is considered
unlikely, thus, this receivable is classified as high grade.
Liquidity Risk
Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet
commitments associated with financial assets and liabilities. Liquidity risk may result from a
counterparty failing on repayment of a contractual obligation or inability to generate cash inflows
as anticipated.
The Companys objective is to maintain a balance between continuity of funding and flexibility
through collection of receivables and cash management.
The table below summarizes the maturity profile of the Companys financial assets and liabilities
as of December 31, 2014, and 2013 based on undiscounted cash flows:
2014

Financial assets
Cash and cash equivalents
Loans and receivables
Trade and other receivables
Nontrade receivable from CDC
Refundable deposits
Financial liabilities
Accounts payable and accrued
expenses**
Trade
Accrued expenses
Others
Loans payable

On demand

Less than 3
months

3 to
12 months

More than
12 months

Total

$25,300,607

$11,496,867

$36,797,474

$25,300,607

21,213,101

$32,709,968

500,430

31,461
$531,891

18,876,550
1,428,374
$20,304,924

21,713,531
18,876,550
1,459,835
$78,847,390

$17,290,207
1,547,780
73,373
6,113,159
$25,024,519

$
11,073

21,550,471
$21,561,544

$
153,784
4,392
59,902,876
$60,061,052

$17,290,207
1,712,637
77,765
87,566,506
$106,647,115

**Excluding statutory liabilities amounting to $261,687

*SGVFS010994*

- 39 2013

Financial assets
Cash and cash equivalents
Loans and receivables
Trade and other receivables
Nontrade receivable from CDC
Refundable deposits
Financial liabilities
Accounts payable and accrued
expenses**
Trade
Accrued expenses
Others
Loans payable

On demand

Less than 3
months

3 to
12 months

More than
12 months

Total

$3,388,259

$19,786,407

$23,174,666

$3,388,259

19,858,783

$39,645,190

1,283,132

169,187
$1,452,319

14,862,542
1,438,370
$16,300,912

21,141,915
14,862,542
1,607,557
$60,786,680

$14,280,195
1,430,773
56,127
6,523,836
$22,290,931

$
321
44
19,278,243
$19,278,608

$
8,191
4,415
89,311,554
$89,324,160

$14,280,195
1,439,285
60,586
115,113,633
$$130,893,699

**Excluding statutory liabilities amounting to $236,173

Capital management
The primary objective of the Companys capital management is to ensure that it maintains healthy
capital ratios in order to support its business and maximize shareholder value.
The Companys capital as of December 31, 2014 and 2013 follows:
Capital stock
Additional paid in capital
Retained earnings
Remeasurement loss on
retirement plan

2014
$48,637,525
7,432,715
42,088,536

2013
$44,999,980

25,634,725

2012
$44,999,980

12,041,310

(42,593)
$98,116,183

$70,634,705

$57,041,290

The Company manages its capital structure and makes adjustments to these ratios in light of
changes in economic conditions and the risk characteristics of its activities. In order to maintain
or adjust the capital structure, the Company may adjust the amount of dividend payment to
shareholders, return capital structure or issue capital securities. No changes were made in the
objectives, policies or processes for managing capital during the years ended December 31, 2014,
2013, and 2012.
The Company is not subject to externally imposed capital requirements.

21. Registration as a Freeport Zone Enterprise

On March 24, 2010, the Company registered with CDC as Clark Freeport Zone (CFZ) enterprise
pursuant to the provisions of Republic Act (R.A.) 7227 known as the Bases Conversion and
Development Act of 1992, as amended by R.A. 9400.
As a CFZ enterprise, the Company is entitled to certain tax benefits and non-tax incentives such as
exemption from national and local taxes. In lieu thereof, the Company shall be imposed with
three percent (3.00%) and two percent (2.00%) special income tax rates based on gross income to
be remitted to the affected National and Local Government units, respectively.

*SGVFS010994*

- 40 -

22. Income Taxes

Provision for income tax in 2014, 2013 and 2012 consists of:
Gross income tax at 5%
MCIT at 2%
Current tax
Deferred tax
Provision for income tax

2014
$1,524,480
4,701
1,529,181
(23,888)
$1,505,293

2013
$1,424,793

1,424,793
450,834
$1,875,627

2012
$985,743

985,743
(400,414)
$585,329

The components of the Companys net deferred income tax assets and liabilities are as follows:
Deferred tax assets:
Unamortized accretion of
interest on nontrade
receivable from CDC
Accrued interest
Provision for bonuses and
other benefits
MCIT
Remeasurement loss on
retirement plan
Deferred tax liability:
Effect of changes in foreign
exchange rates on
nonmonetary assets

2014

2013

$66,405
36,221

$30,720
45,078

13,932
4,701

10,730

2,242

(136,894)
($13,393)

(126,051)
($39,523)

The reconciliation of the provision for income tax at statutory tax rate to the provision for income
tax in profit or loss in 2014, 2013 and 2012 follows:
Income tax at statutory
income tax rate
Additions to (reductions in)
income taxes resulting from:
Effect of income from CFZ
registered activities
Nontaxable income
Income subjected to final tax
Nondeductible expenses
Functional currency
differences
Provision for income tax

2014

2013

2012

$5,687,731

$4,640,713

$3,920,211

(4,146,789)
(61,093)
(38,524)
53,125

(3,383,782)
(171,180)
(48,886)
362,030

(2,839,991)
(226,543)
(19,723)
93,456

10,843
$1,505,293

476,732
$1,875,627

(342,081)
$585,329

*SGVFS010994*

- 41 -

23. Note to Cash Flow Statements

The Company acquired certain property, plant and equipment that remained unpaid as of
December 31, 2014, 2013 and 2012 amounting to $3,601,195, $82,756, and $38,211,
respectively.

24. Earnings Per Share (EPS)

Basic and diluted EPS in 2014, 2013 and 2012 were computed as follows:
Net income for basic and diluted EPS
Weighted average number of shares
outstanding for basic and diluted
EPS
Basic/diluted earnings per share

2014
$17,453,811

2013
$13,593,415

2012
$12,482,040

2,015,990,412
$0.0087

2,002,644,109
$0.0068

1,977,237,688
$0.0063

As of December 31, 2014, 2013 and 2012, there were no outstanding dilutive potential shares.

25. Events After the Reporting Date

On March 3, 2015, the BOD approved the declaration of cash dividends amounting to
$11,700,000 ($0.0054 per share), out of the Companys unrestricted retained earnings as of
December 31, 2014, to stockholders of record as of April 2, 2015, in proportion to, and on the
basis of outstanding shares respectively held by the shareholders, payable on April 22, 2015.

26. Supplementary Tax Information Under Revenue Regulations 15-2010

In compliance with the requirements set forth under RR 15-2010, following is the information on
taxes, duties and license fees paid or accrued during 2014:
a. Value added tax (VAT)
Pursuant to its registration with CDC as a CFZ enterprise, the Companys sales and purchases
are not subject to VAT (see Note 21).
b. Information on the Companys importations
Total landed cost of imports amounted to $156,439,926. As a CFZ enterprise, the Companys
imports are free from custom duties and tariffs.

*SGVFS010994*

- 42 c. Other taxes and licenses

Taxes and licenses, local and national lodged under Cost of goods sold and General and
administrative expenses
National
Fringe benefit taxes
Local
License and permit fees

USD

PHP

$152,635

=6,727,499
P

118,305
$270,940

5,152,615
=11,880,114
P

d. Withholding taxes
USD

Withholding taxes on compensation

and benefits
Expanded withholding taxes
Final withholding taxes
Total

Remittances

Balance as of
December 31,
2014

Total

$1,302,300
163,585
150,726
$1,616,611

$186,737
15,012
3,740
$205,489

$1,489,037
178,597
154,466
$1,822,100

Remittances

Balance as of
December 31,
2014

Total

P
=57,754,223
7,257,076
6,727,631
P
=71,738,930

P
=8,347,697
671,170
167,042
P
= 9,185,909

P
=66,101,920
7,928,246
6,894,673
P
=80,924,839

PHP

Withholding taxes on compensation

and benefits
Expanded withholding taxes
Final withholding taxes
Total

e. The Company has no pending tax assessments as of December 31, 2014.

*SGVFS010994*

SyCip Gorres Velayo & Co.

6760 Ayala Avenue
1226 Makati City
Philippines

Tel: (632) 891 0307

Fax: (632) 819 0872
ey.com/ph

BOA/PRC Reg. No. 0001,

December 28, 2012, valid until December 31, 2015
SEC Accreditation No. 0012-FR-3 (Group A),
November 15, 2012, valid until November 16, 2015

INDEPENDENT AUDITORS REPORT

ON SUPPLEMENTARY SCHEDULE

The Stockholders and the Board of Directors

Phoenix Semiconductor Philippines Corp.
Panday Pira Avenue, Corner Creekside
Clark Freeport Zone, Pampanga
We have audited in accordance with Philippine Standards on Auditing, the financial statements of
Phoenix Semiconductor Philippines Corp. (the Company) as at December 31, 2014 and 2013 and for
each of the three years in the period ended December 31, 2014 and have issued a report thereon dated
March 3, 2015. Our audits were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying schedules are the responsibility of the Companys
management. This schedule is presented for the purpose of complying with Securities Regulation
Code Rule 68, As Amended (2011) and is not part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states, in all material respects, the information required to be set forth therein in
relation to the basic financial statements taken as a whole.
SYCIP GORRES VELAYO & CO.

Janet A. Paraiso
Partner
CPA Certificate No. 92305
SEC Accreditation No. 0778-AR-1 (Group A),
February 2, 2012, valid until March 31, 2015
Tax Identification No. 193-975-241
BIR Accreditation No. 08-001998-62-2012,
April 11, 2012, valid until April 10, 2015
PTR No. 4751252, January 5, 2015, Makati City
March 3, 2015

*SGVFS010994*
A member firm of Ernst & Young Global Limited

Phoenix Semiconductor Philippines Corp.

Index to the Financial Statements
December 31, 2014

Schedule 1
Schedule 2
Schedule 3
Schedule 4

Schedule 5

Reconciliation of Retained Earnings Available for Dividend Declaration

Conglomerate Map
Schedule of Philippine Financial Reporting Standards (PFRS), Philippine
Accounting Standards (PAS) and Philippine Interpretations effective as at
December 31, 2014
Supplementary Schedules Required Under Annex 68-E
Schedule A. Financial assets
Schedule B. Amounts receivable from directors, officers, employees, related
parties and principal stockholders (other than related parties)
Schedule C. Amounts receivable from Related Parties which are eliminated
during the consolidation of financial statements
Schedule D. Intangible assets - other assets
Schedule E. Long-term debt
Schedule F. Indebtedness to related parties
Schedule G. Guarantees of securities of other issuers
Schedule H. Capital stock
Financial soundness indicators

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

ANNEX 68-C
RECONCILIATION OF RETAINED EARNINGS
AVAILABLE FOR DIVIDEND DECLARATION
December 31, 2014

Unappropriated Retained Earnings, as adjusted to available

for dividend distribution, beginning
Net Income during the period closed to Retained Earnings
Less:
Dividend declarations during the period
TOTAL RETAINED EARNINGS, END
AVAILABLE FOR DIVIDEND

$25,634,725
17,453,811
(1,000,000)
$42,088,536*

*On March 3, 2015, the BOD approved the declaration of dividends amounting to $11,700,000 ($0.0054 per share) to
stockholders of record as of April 2, 2015, in proportion to, and on the basis of outstanding shares of stock respectively held
by the shareholders, payable on April 22, 2015. In accordance with the covenants on the BDO loan, the Companys
declaration and payment of cash dividends in 2014 and 2013 shall in no case exceed $12,700,000 (see Note 10 to the Audited
Financial Statements).

*SGVFS010994*

Exhibit D

Conglomerate Map

Bokwang Group

27.40%
STS Semiconductor &
Telecommunications Co., Ltd.

88.55%
Phoenix Semiconductor
Telecommunications (Suzhou)
Co., Ltd.

85.00%
Phoenix Semiconductor
Philippines Corp.

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

SUPPLEMENTARY SCHEDULE OF ALL PHILIPPINE FINANCIAL
REPORTING STANDARDS (PFRSs) [which consist of PFRSs, Philippine
Accounting Standards (PAS) and Philippine Interpretations] effective as at
December 31, 2014

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

INTERPRETATIONS
Effective as of December 31,2014

Adopted

Framework for the Preparation and Presentation of Financial

Statements
Conceptual Framework Phase A: Objectives and qualitative
characteristics

PFRSs Practice Statement Management Commentary

Not
Adopted

Not
Applicable

Philippine Financial Reporting Standards

PFRS 1
(Revised)

PFRS 2

First-time Adoption of Philippine Financial Reporting

Standards
Amendments to PFRS 1 and PAS 27: Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or
Associate

Amendments to PFRS 1: Additional Exemptions for Firsttime Adopters

Amendment to PFRS 1: Limited Exemption from

Comparative PFRS 7 Disclosures for First-time Adopters

Amendments to PFRS 1: Severe Hyperinflation and

Removal of Fixed Date for First-time Adopters

Amendments to PFRS 1: Government Loans

Amendments to PFRS 1: Borrowing Costs

Amendments to PFRS 1: Meaning of Effective PFRS

Share-based Payment

Amendments to PFRS 2: Vesting Conditions and

Cancellations

Amendments to PFRS 2: Group Cash-settled Share-based

Payment Transactions

Amendments to PFRS 2: Definition of Vesting Condition

PFRS 3
(Revised)

PFRS 4

PFRS 5

3
3

Business Combinations
Amendment to PFRS 3: Accounting for Contingent
Considerations in a Business Combination

Amendment to PFRS 3: Scope Exceptions for Joint

Arrangements

Insurance Contracts

Amendments to PAS 39 and PFRS 4: Financial Guarantee

Contracts

Non-current Assets Held for Sale and Discontinued

Operations

Amendments to PFRS 5: Changes in Methods of Disposal

PFRS 6

Exploration for and Evaluation of Mineral Resources

3
3

*SGVFS010994*

-2-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

INTERPRETATIONS
Effective as of December 31,2014

Adopted

Financial Instruments: Disclosures

PFRS 7

Amendments to PAS 39 and PFRS 7: Reclassification of

Financial Assets - Effective Date and Transition

3
3

Amendments to PFRS 7: Disclosures - Transfers of

Financial Assets

Amendments to PFRS 7: Disclosures - Offsetting

Financial Assets and Financial Liabilities

Amendments to PFRS 7: Mandatory Effective Date of

PFRS 9 and Transition Disclosures

3
3

Financial Instruments: Disclosures - Servicing Contracts

PFRS 9**

PFRS 10

Operating Segments

Amendments to PFRS 8: Aggregation of Operating

Segments and Reconciliation of the Total of the
Reportable Segments Assets to the Entitys Assets

Financial Instruments (2010 version)

Amendments to PFRS 9: Mandatory Effective Date of

PFRS 9 and Transition Disclosures

Financial Instruments (2013 version)

Financial Instruments (2014 version)

Consolidated Financial Statements

Amendments to PFRS 10, PFRS 12 and PAS 27:

Investment Entities

3
3

Amendments to PFRS 10: Investments in Associates and

Joint Ventures - Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
PFRS 11

Joint Arrangements

Amendments to PFRS 11: Investment Entities

3
3

Amendments to PFRS 11: Joint Arrangements Accounting for Acquisitions of Interests in Joint
Operations
PFRS 12
PFRS 13

PFRS 14

Not
Applicable

Amendments to PAS 39 and PFRS 7: Reclassification of

Financial Assets

Amendments to PFRS 7: Improving Disclosures about

Financial Instruments

PFRS 8

Not
Adopted

Disclosure of Interests in Other Entities

Amendments to PFRS 12: Investment Entities

Fair Value Measurement (2013 Version)

Amendment to PFRS 13: Short-term Receivables and

Payables

Amendment to PFRS 13: Portfolio Exception

Regulatory Deferral Accounts

*SGVFS010994*

-3-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

INTERPRETATIONS
Effective as of December 31,2014

Adopted

Not
Adopted

Not
Applicable

Philippine Accounting Standards

PAS 1
(Revised)

Presentation of Financial Statements

Amendment to PAS 1: Capital Disclosures

3
3

Amendments to PAS 32 and PAS 1: Puttable Financial

Instruments and Obligations Arising on Liquidation
Amendments to PAS 1: Presentation of Items of Other
Comprehensive Income

Amendments to PAS 1: Clarification of the Requirements

for Comparative Presentation

PAS 2

Inventories

PAS 7

Statement of Cash Flows

PAS 8

Accounting Policies, Changes in Accounting Estimates

and Errors

PAS 10

Events after the Reporting Period

PAS 11

Construction Contracts

PAS 12

Income Taxes

3
3
3

Amendment to PAS 12 - Deferred Tax: Recovery of

Underlying Assets
PAS 16

Property, Plant and Equipment

3
3

Amendment to PAS 16: Classification of Servicing

Equipment
Amendment to PAS 16: Revaluation Method
Proportionate Restatement of Accumulated Depreciation

Amendments to PAS 16: Clarification of Acceptable

Methods of Depreciation and Amortization

PAS 17

Leases

PAS 18

Revenue

PAS 19
(Amended)

Employee Benefits

3
3

Amendments to PAS 19: Defined Benefit Plans:

Employee Contributions
3

Amendments to PAS 19: Employee Benefits - regional

market issue regarding discount rate
PAS 20

Accounting for Government Grants and Disclosure of

Government Assistance

PAS 21

The Effects of Changes in Foreign Exchange Rates

3
3
3

Amendment: Net Investment in a Foreign Operation

PAS 23
(Revised)

Borrowing Costs

PAS 24
(Revised)

Related Party Disclosures

PAS 26

Accounting and Reporting by Retirement Benefit Plans

PAS 27

Separate Financial Statements

Amendments to PAS 24: Key Management Personnel

*SGVFS010994*

-4-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

INTERPRETATIONS
Effective as of December 31,2014
(Amended)

Adopted

Not
Adopted

Amendments to PFRS 10, PFRS 12 and PAS 27:

Investment Entities
3

Amendments to PAS 27: Separate Financial Statements Equity Method in Separate Financial Statements
PAS 28
(Amended)

Investments in Associates and Joint Ventures

PAS 29

Financial Reporting in Hyperinflationary Economies

PAS 32

Financial Instruments: Disclosure and Presentation

3
3

Amendments to PAS 28: Investments in Associates and

Joint Ventures - Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture

3
3

Amendments to PAS 32 and PAS 1: Puttable Financial

Instruments and Obligations Arising on Liquidation

Amendment to PAS 32: Classification of Rights Issues

Amendments to PAS 32: Offsetting Financial Assets and

Financial Liabilities

PAS 33

Earnings per Share

PAS 34

Interim Financial Reporting

3
3

Amendment to PAS 34: Interim Financial Reporting and

Segment Information for Total Assets and Liabilities
3

Amendment to PAS 34: Interim Financial Reporting disclosure of information elsewhere in the interim
financial report
PAS 36

Not
Applicable

Impairment of Assets

3
3

Amendments to PAS 36: Impairment of Assets Recoverable Amount Disclosures for Non-Financial
Assets
3

PAS 37

Provisions, Contingent Liabilities and Contingent Assets

PAS 38

Intangible Assets

Amendments to PAS 38: Revaluation Method

Proportionate Restatement of Accumulated Amortization

3
3

Amendments to PAS 38: Intangible Assets - Clarification

of Acceptable Methods of Depreciation and Amortization
PAS 39

Financial Instruments: Recognition and Measurement

Amendments to PAS 39: Transition and Initial

Recognition of Financial Assets and Financial Liabilities

Amendments to PAS 39: Cash Flow Hedge Accounting of

Forecast Intragroup Transactions

Amendments to PAS 39: The Fair Value Option

Amendments to PAS 39 and PFRS 4: Financial Guarantee

Contracts

Amendments to PAS 39 and PFRS 7: Reclassification of

Financial Assets

*SGVFS010994*

-5-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

INTERPRETATIONS
Effective as of December 31,2014
PAS 39
(contd)

Not
Applicable
3

Amendment to PAS 39: Eligible Hedged Items

Amendment to PAS 39: Novation of Derivatives and

Continuation of Hedge Accounting

Investment Property

3
3

Amendment to PAS 40: Investment Property

PAS 41

Not
Adopted

Amendments to PAS 39 and PFRS 7: Reclassification of

Financial Assets Effective Date and Transition
Amendments to Philippine Interpretation IFRIC9 and
PAS 39: Embedded Derivatives

PAS 40

Adopted

Agriculture
3

Amendments to Pas 41: Agriculture - Bearer Plants

Philippine Interpretations
IFRIC 1

Changes in Existing Decommissioning, Restoration and

Similar Liabilities

IFRIC 2

Members' Share in Co-operative Entities and Similar

Instruments

IFRIC 4

Determining Whether an Arrangement Contains a Lease

IFRIC 5

Rights to Interests arising from Decommissioning,

Restoration and Environmental Rehabilitation Funds

IFRIC 6

Liabilities arising from Participating in a Specific Market

- Waste Electrical and Electronic Equipment

IFRIC 7

Applying the Restatement Approach under PAS 29

Financial Reporting in Hyperinflationary Economies

IFRIC 8

Scope of PFRS 2

IFRIC 9

Reassessment of Embedded Derivatives

Amendments to Philippine Interpretation IFRIC9 and

PAS 39: Embedded Derivatives

IFRIC 10

Interim Financial Reporting and Impairment

IFRIC 11

PFRS 2- Group and Treasury Share Transactions

IFRIC 12

Service Concession Arrangements

IFRIC 13

Customer Loyalty Programmes

IFRIC 14

The Limit on a Defined Benefit Asset, Minimum Funding

Requirements and their Interaction

Amendments to Philippine Interpretations IFRIC- 14,

Prepayments of a Minimum Funding Requirement

3
3

IFRIC 15

Agreements for the Construction of Real Estate

IFRIC 16

Hedges of a Net Investment in a Foreign Operation

IFRIC 17

Distributions of Non-cash Assets to Owners

IFRIC 18

Transfers of Assets from Customers

IFRIC 19

Extinguishing Financial Liabilities with Equity

Instruments

IFRIC 20

Stripping Costs in the Production Phase of a Surface Mine

*SGVFS010994*

-6-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

INTERPRETATIONS
Effective as of December 31,2014

Adopted

Not
Adopted

Not
Applicable

IFRIC 21

Levies

SIC-7

Introduction of the Euro

SIC-10

Government Assistance - No Specific Relation to

Operating Activities

SIC-12

Consolidation - Special Purpose Entities

SIC-13

Amendment to SIC - 12: Scope of SIC 12

Jointly Controlled Entities - Non-Monetary Contributions

by Venturers

SIC-15

Operating Leases - Incentives

SIC-25

Income Taxes - Changes in the Tax Status of an Entity or

its Shareholders

SIC-27

Evaluating the Substance of Transactions Involving the

Legal Form of a Lease

SIC-29

Service Concession Arrangements: Disclosures.

SIC-31

Revenue - Barter Transactions Involving Advertising

Services

SIC-32

Intangible Assets - Web Site Costs

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E
SCHEDULE A. FINANCIAL ASSETS
Number of Shares
or principal
Name of issuing entity and association of amount of bonds Amount shown in the Income received
and notes
each issue
balance sheet
and accrued
Cash and cash equivalent
USD BDO Cent'l Savings
Account-573-023-1912
Debt Service Account-BDO
USD Metro Savings
Account- 377-2-377008264
USD KEB Savings Account-5402072029
Peso Metro Checking
Account-37750912-5
PESO BDO Paseo 539-801-2550 /
539-0006-2109
PESO BDO Cent'l -573-024-9676/
5738-003866
Peso Metro Savings Account-37750912-0
Peso Metro Savings Account-37747847-0
Peso KEB Savings Account-5401020570
Time Deposit - USD-BDO
Time Deposit - Peso-BDO
Cash on Hand

$14,397,431
6,493,151

$20,188
46,858

12,441
150,618

14
141

224

10,711,617
7,768
549
9,170
5,000,000
10,789

2,437
43
16
37
58,199
481

Trade accounts receivable

Samsung Electronics Co., Ltd.
Other Non-trade receivables
Receivables from Officers and Employees

21,213,101
324,461
175,969

Prepayments and other current/other

non-current assets
Clark Development Corp.
Refundable Deposits
Receivables from Officers and Employees

18,876,550
1,459,835
6,708
$78,850,382

$128,414

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E
SCHEDULE B. AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS, EMPLOYEES, RELATED PARTIES AND PRINCIPAL STOCKHOLDERS
(OTHER THAN RELATED PARTIES)
Balance at
Name and designation of
beginning
of period
debtor (i)
Byung Sun Kang, Team Head
Cheolwoo Kim, Team Head
Dong Hwan Im, Part Head
Gil Young Koh, Team Head
Hansol Kim, Team Head
In Tae Hwang, Team Head
Jae Won Kim, Team Head
Joon Sang Kang, Team Head
Kyuho Han, Team Head
Minyong Kim, Part Head
Oshin Kwon, Part Head
Sanghoon Ha, Team Head
Wan Seok Cho, Team Head
Yu Jin Kim, Part Head

$4,584
4,774
5,266
4,599
4,389
4,367
4,804
4,367
3,349
4,367
4,367
3,349
4,367
4,368
$61,317

Additions
$

Amounts collected Amounts written

(ii)
off (iii)
$2,069
2,091
2,919
4,599
1,874
2,020
2,120
2,019
2,007
2,019
2,019
2,007
2,019
2,018
$31,800

Current

Not current

Balance at end of
period

$2,012
2,012
2,012

2,012
2,012
2,013
2,013
1,342
2,013
2,013
1,342
2,013

$22,809

$503
671
335

503
335
671
335

335
335

335
2,350
$6,708

$2,515
2,683
2,347

2,515
2,347
2,684
2,348
1,342
2,348
2,348
1,342
2,348
2,350
$29,517

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E
SCHEDULE C. AMOUNTS RECEIVABLE FROM RELATED PARTIES WHICH ARE ELIMINTATED DURING THE CONSOLIDATION OF FINANCIAL
STATEMENTS
Name and designation of
Balance at
debtor (i) beginning of period

Additions

Amounts collected Amounts written

(ii)
off (iii)

Current

Not current

Balance at end of
period

Nothing to Report

*SGVFS010994*

ANNEX VII
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E
SCHEDULE D. INTANGIBLE ASSETS - OTHER ASSETS
Beginning
balance
Description (i)
Jeonsoft Payroll System
PC Security System
WinPro ALNG UpgrdSAPk MVL
Office Pro Plus ALNG LicSAPk MVL
SQLSvrStd 2008R2 SNGL MVL
Sage ACCPAC ERP System
Security Manangement System
Tool Life Management System
Cost Management System
Module OnLine System
In-Process Quality Monitoring System

$29,425
26,538
1,007
3,478
38
52,083
34,166
83,809
22,388
93,749
23,787
$370,468

Additions to cost
Other changes
(ii) Charged to costs Charged to other
additions
and expenses
accounts (deductions) (iii)
$
$16,049
$
$

12,248

1,006

3,477

37

23,148

9,318

23,388

5,166

21,634

5,489

$
$120,960
$
$

Ending balance
$13,376
14,290
1
1
1
28,935
24,848
60,421
17,222
72,115
18,298
$249,508

iii. Account being charged in the amortization of the above intangible assets is Account Code 123201-Software.

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E
SCHEDULE E. LONG-TERM DEBT

Title of issue and type of obligation

$83M CONTRACT FACILITY LOAN-BDO
$29M CONTRACT 2013 LOAN-BDO

Amount
authorized by
indenture

Amount shown
under caption Amount shown
under caption
Current portion
Long-term
of long-term
debt in related Debt in related
balance sheet
balance sheet
$20,750,000
$31,054,308
3,625,000
25,074,673
$24,375,000
$56,128,981

Amounts above represent the carrying amounts at the amortized cost. The total gross amount of the loans
amounted to $80,875,000.

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E
SCHEDULE F. INDEBTEDNESS TO RELATED PARTIES
Name of related party

Balance at beginning of
period Balance at end of period
Nothing to Report

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E
SCHEDULE G. GUARANTEES OF SECURITES OF OTHER ISSUERS
Name of issuing entity of
securities guaranteed by the
Company for which this
statement is filed

Title of issue of each Total amount of Amount owned by

guaranteed and person for which
class of securities
outstanding statement is filed Nature of guarantee
guaranteed
Nothing to Report

*SGVFS010994*

PHOENIX SEMICONDUCTOR PHILIPPINES CORP.

SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E
SCHEDULE H. CAPITAL STOCK

Common stock

Number of shares Number of shares

authorized
issued and Number of shares
outstanding at
reversed for
shown under options, warrants, Number of shares
related balance conversion and
held by related Directors, officers
sheet caption
Title of issue (i)
parties (ii)
other rights
and employees
2,925,000,000
2,165,024,111

1,840,264,104
1,000,007

Others (iii)
323,760,000

*SGVFS010994*

Financial Soundness Indicator

2014

2013

1. Current/Liquidity Ratios
a. Current Ratio
b. Quick Ratio

1.54
1.30

1.49

2. Debt Equity Ratio

1.03

1.68

3. Asset to Equity Ratio

2.03

2.68

4. Interest Rate Coverage Ratio

8.76

6.79

7.45%
8.98%
20.69%

6.48%
7.12%
21.29%

122014

122013

69,307,769.00
44,879,933.00
1.54

56,820,592.00
38,115,211.00
1.49

5. Profitability ratios
a. Net Income Margin
b. Return on Assets
C. Return on Equity

Computations:
1. Current/Liquidity Ratios
a. Current Ratio (Current Assets/Current liabilities)
Current Assets
Current Liabilities
a. Current Ratio

1.16

b. Quick Ratio (Cash and Cash Equivalents + Trade and Other Receivables)/Current
Liabilities)
Cash and Cash Equivalents
36,793,758
23,105,776
Trade and Other Receivables
21,713,531
21,141,915
Total
Current Liabilities
Quick Ratio
2. Debt Equity Ratio (Total liabilities/SHE)
Total liabilites
Stockholder's Equity
Debt Equity Ratio

58,507,289
44,879,933

44,247,691
38,115,211

1.30

1.16

101,408,670

118,552,235

98,116,183
1.03

70,634,705
1.68

199,524,853
98,116,183

189,186,940
70,634,705

2.03

2.68

17,453,811

13,593,415

3. Asset to Equity Ratio (Total Assets/SHE)

Total Assets
Stockholder's Equity
Asset to Equity Ratio
4. Interest Rate Coverage Ratio (EBITDA/Interest Expense)
Net Income After Tax

*SGVFS010994*

Finance Cost
Provision for income tax
Depreciation
Amortization of Intangibles
EBITDA
Interest Expense*
Interest Rate Coverage Ratio
*interest expense includes guarantee fee
5. Profitability ratios
a. Net Income Margin (Net Income/Revenue)
Net Income
Revenue
Net Income Margin
b. Return on Assets (Net Income/Total Assets)
Net Income
Total Assets, beg
Total Assets, end
Average Total Assets
Return on Assets
c. Return on Equity (Net Income/Ave Shareholder's Equity)
Net Income
Shareholders Equity, CY
Shareholders Equity, PY
Avarage Shareholder's Equity
Return on Equity

5,145,737
1,505,293
18,701,023
120,960
42,926,824
4,900,981

7,940,614
1,875,627
18,375,283
121,492
41,906,431
6,168,586

8.76

6.79

17,453,811
234,361,810
7.45%

13,593,415
209,675,061
6.48%

17,453,811
189,186,940
199,524,853
194,355,897

13,593,415
192,410,125
189,186,940
190,798,533

8.98%

7.12%

17,453,811
98,116,183
70,634,705

13,593,415
70,634,705
57,041,290

84,375,444
20.69%

63,837,998
21.29%

*SGVFS010994*