EPLI - FS1218 Ebara Philippines Landholdings

Ebara Philippines Landholdings,
Inc.
Financial Statements
December 31, 2018 and 2017
and
Independent Auditor’s Report

COVER SHEET
for
AUDITED FINANCIAL STATEMENTS
SEC Registration Number
1 8 8 0 7 0
COMPANY NAME
E B A R A P H I L I P P I N E S L A N D H O L D I N G S
, I N C .
PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province )
C A N L U B A N G I N D U S T R I A L E S T A T E , B
O . P I T T L A N D , C A B U Y A O , L A G U N A
Form Type Department requiring the report Secondary License Type, If Applicable
A A F S C R M N / A
COMPANY INFORMATION
Company’s Email Address Company’s Telephone Number Mobile Number
mjmagampon@ebaraphilippi 049-5491914 0922-8905769
nes.com
No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day)
7 March 18 December 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
Marietta J Magampon mjmagampon@ebaraphilippines.com 049-5491914 0922-8905769
CONTACT PERSON’s ADDRESS
Canlubang Industrial Estate, Bo. Pittland, Cabuyao City, Laguna
NOTE 1 : 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.
2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with
the Commission and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its
deficiencies.
*SGVFS032574*
INDEPENDENT AUDITOR’S REPORT
The Board of Directors and Stockholders

Ebara Philippines Landholdings, Inc.
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Ebara Philippines Landholdings, Inc. (the Company), which
comprise the statements of financial position as at December 31, 2018 and 2017, and the statements of
comprehensive income, statements of changes in equity and statements of cash flows for the years then
ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2018 and 2017, and its financial performance and its cash
flows for the years then ended in accordance with Philippine Financial Reporting Standards (PFRSs).
Basis for Opinion
We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Company in accordance
with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the
ethical requirements that are relevant to our audit of the financial statements in the Philippines, and we
have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with PFRSs, 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.
In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance is responsible for overseeing the Company’s financial reporting process.
*SGVFS032574*
-2-
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the PSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of the users taken on
the basis of these financial statements.
As part of an audit in accordance with the PSAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentation, or the override of internal control.
 Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.
 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the
auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
 Evaluate the overall presentation, structure, content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
*SGVFS032574*
-3-
Report on the Supplementary Information Required Under Revenue Regulations No. 15-2010
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken
as a whole. The supplementary information required under Revenue Regulations No. 15-2010 in Note 13
to the financial statements 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 Ebara Philippines Landholdings, Inc. The information has been subjected to the auditing
procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly
stated, in all material respects, in relation to the basic financial statements taken as a whole.
SYCIP GORRES VELAYO & CO.
Alicia O. Lu
Partner
CPA Certificate No. 0062493
SEC Accreditation No. 0661-AR-3 (Group A),
February 9, 2017, valid until February 9, 2020
Tax Identification No. 102-090-613
BIR Accreditation No. 08-001998-66-2018,
PTR No. 7332566, January 3, 2019, Makati City
April 5, 2019
*SGVFS032574*
A member firm of Ernst & Young Global Limited
The Stockholders and the Board of Directors

Canlubang Industrial Estate
Bo. Pittland, Cabuyao, Laguna
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Ebara Philippines Landholdings, Inc. (the Company), which
comprise the statements of financial position as at December 31, 2018 and 2017, and the statements of
comprehensive income, statements of changes in equity and statements of cash flows for the years then
ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2018 and 2017, and its financial performance and its cash
flows for the years then ended in accordance with Philippine Financial Reporting Standards (PFRSs).
Basis for Opinion
We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Company in accordance
with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the
ethical requirements that are relevant to our audit of the financial statements in the Philippines, and we
have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with PFRSs, 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.
In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
*SGVFS032574*
going concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance is responsible for overseeing the Company’s financial reporting process.
*SGVFS032574*
-2-
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the PSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of the users taken on
the basis of these financial statements.
As part of an audit in accordance with the PSAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentation, or the override of internal control.
 Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.
 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the
auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
 Evaluate the overall presentation, structure, content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
*SGVFS032574*
*SGVFS032574*
-3-
Report on the Supplementary Information Required Under Revenue Regulations No. 15-2010
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken
as a whole. The supplementary information required under Revenue Regulations No. 15-2010 in Note 13
to the financial statements 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 Ebara Philippines Landholdings, Inc. The information has been subjected to the auditing
procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly
stated, in all material respects, in relation to the basic financial statements taken as a whole.
Alicia O. Lu
Partner
April 5, 2019
*SGVFS032574*

We have examined the financial statements of Ebara Philippines Landholdings, Inc. for the year ended
December 31, 2018, on which we have rendered the attached report dated April 5, 2019.
In compliance with Securities Regulation Code Rule 68, we are stating that the said Company has a total
number of two (2) stockholders owning one hundred (100) or more shares each.
Alicia O. Lu
Partner
April 5, 2019
*SGVFS032574*

ON SUPPLEMENTARY SCHEDULES

We have audited in accordance with Philippine Standards on Auditing, the financial statements of Ebara
Philippines Landholdings, Inc. as at and for the years ended December 31, 2018 and 2017, and have
issued our report thereon dated April 5, 2019. Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The accompanying schedule of retained
earnings available for dividend declaration as at December 31, 2018 is the responsibility of the
Company’s management. This schedule is presented for purposes of complying with Securities
Regulation Code Rule 68, As Amended (2011) and are 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 state, in all material respects, the information required to be set forth
therein in relation to the basic financial statements taken as a whole.
Alicia O. Lu
Partner
April 5, 2019
*SGVFS032574*
EBARA PHILIPPINES LANDHOLDINGS, INC.
STATEMENTS OF FINANCIAL POSITION
December 31
2018 2017
ASSETS
Current Assets
Cash with bank (Note 4) P248,015 P328,051
Other current assets (Note 5) 110,927 114,031
Total Current Assets 0 0
Noncurrent Asset
Investment properties (Note 6) 205,137,000 187,727,000
TOTAL ASSETS P00 P0

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and others (Note 7) P2,640,396 P2,923,275
Loan payable (Note 8a) 3,600,000 3,600,000
** Expression is
Total Current Liabilities 0 faulty **
Noncurrent Liabilities
Rental deposit (Note 8c) 14,392,300 14,392,300
Deferred income tax liability (Note 10) 49,477,115 44,254,115
** Expression is
Total Noncurrent Liabilities 0 faulty **
** Expression is
Total Liabilities faulty ** 65,169,690
Equity
Capital stock (Note 9)
Class A - P10,000 par value
Authorized - 2,400 shares
Issued and outstanding- 600 shares 6,000,000 6,000,000
Class B - P10,000 par value
Authorized - 1,600 shares
Issued and outstanding - 400 shares 4,000,000 4,000,000
Revaluation increment in investment property (Note 6) 90,531,130 90,531,130
Retained earnings 34,855,001 22,468,262
** Expression is ** Expression is
Total Equity faulty ** faulty **
P** Expression is
TOTAL LIABILITIES AND EQUITY P0 faulty **
*SGVFS032574*
See accompanying Notes to Financial Statements.
*SGVFS032574*
STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31

2018 2017
RENTAL INCOME (Note 8c) P1,450,000 P1,450,000
ADMINISTRATIVE EXPENSES
Taxes and licenses 517,169 516,078
Outside services 300,000 300,000
Professional fees 44,702 141,445
Others 14,787 8,405
** Expression is
0 faulty **
OTHER (INCOME) CHARGES

Gain on revaluation of investment property (Note 6) (18,462,000) (8,547,000)
Provision for impairment of investment property (Note 6) 1,052,000 –
Interest expense (Note 8a) 288,000 288,000
faulty ** faulty **
INCOME BEFORE INCOME TAX 0 0
PROVISION FOR INCOME TAX (Note 10)

Current 85,603 59,122
Deferred 5,223,000 2,564,100
** Expression is
faulty **0 0
NET INCOME 0 0
OTHER COMPREHENSIVE INCOME, NET – –
P** Expression is
TOTAL COMPREHENSIVE INCOME P12,386,739
faulty **
*SGVFS032574*
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
Revaluation
increment
Capital Stock (Note 9) in Investment Retained
Class A Class B Property (Note 6) Earnings Total
Balances at December 31, 2016 P6,000,000 P4,000,000 P90,531,130 P16,348,412 P116,879,542
Net income for the year – – – 6,119,850 6,119,850
Other comprehensive income, net – – – – –
Total comprehensive income – – – 6,119,850 0
Balances at December 31, 2017 6,000,000 4,000,000 90,531,130 22,468,262 0
Net income for the year – – – 12,386,739 12,386,739
Other comprehensive income, net – – – – –
Total comprehensive income – – – 12,386,739 0
Balances at December 31, 2018 P6,000,000 P4,000,000 P90,531,130 P34,855,001 P0
*SGVFS032574*
STATEMENTS OF CASH FLOWS
Years Ended December 31

2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax P17,695,342 P 8,743,072
Adjustments for:
Gain on revaluation of investment property (Note 6) (18,462,000) (8,547,000)
Provision for impairment of investment property (Note 6) 1,052,000 –
Interest expense (Note 8a) 288,000 288,000
Operating income before changes in working capital faulty ** faulty **
Increase (decrease) in accounts payable and others (197,276) 364,608
Decrease (increase) in other current assets (82,499) 36,409
Net cash flows generated from operations faulty ** faulty **
Income taxes paid (85,603) (59,122)
Net cash flows provided by operating activities faulty ** faulty **
CASH FLOWS USED IN FINANCING ACTIVITY

Interest paid (288,000) (576,000)
** Expression is
NET INCREASE (DECREASE) IN CASH WITH BANK (80,036)

faulty **
CASH WITH BANK AT BEGINNING OF YEAR 328,051 78,084
CASH WITH BANK AT END OF YEAR P248,015 P0

*SGVFS032574*
NOTES TO FINANCIAL STATEMENTS
1. Corporate Information
Ebara Philippines Landholdings, Inc. (the “Company”) was incorporated and registered with the
Philippine Securities and Exchange Commission (SEC) on March 12, 1991 primarily to engage in
leasing real estate. The Company does not employ any personnel. Rather, the accounting and
administrative functions are undertaken by Ebara Pumps Philippines, Inc. (EPPI), a related party
under a common control. The registered office address of the Company is Canlubang Industrial
Estate, Bo. Pittland, Cabuyao, Laguna.
The Company is owned by the Retirement Fund of EPPI (60%) and by Ebara Corporation of Japan
(40%).
The financial statements of the Company were authorized for issuance by the Company’s Board of
Directors (BOD) on April 5, 2019.
2. Basis of Preparation, Statement of Compliance and Summary of Significant Accounting and

Financial Reporting Policies
Basis of Preparation
The Company’s financial statements have been prepared under the historical cost except for the
Company’s investment property which is measured at fair value basis and are presented in Philippine
peso, which is the Company’s functional and presentation currency under the Philippine Financial
Reporting Standards (PFRSs). All values are rounded to the nearest peso, except as otherwise
indicated.
Statement of Compliance
The Company’s financial statements have been prepared in accordance with the PFRSs. The
Company has been exempted from the mandatory adoption of PFRS for Small and Medium-sized
Entities since it is part of a group as an associate that is reporting full PFRSs.
Changes in Accounting Policies and Disclosures

The accounting policies adopted are consistent with those of the previous financial year, except that
the Company has adopted the following new accounting pronouncements starting
January 1, 2018. Adoption of these pronouncements did not have any significant impact on the
Company’s financial position or performance, unless otherwise indicated.
 Amendments to PFRS 2, Share-based Payment - Classification and Measurement of Share-based

payment Transactions
 Amendments to PFRS 4, Applying PFRS 9 Financial Instruments with PFRS 4 Insurance
Contracts
 PFRS 9, Financial Instruments
PFRS 9, Financial Instruments replaces Philippine Accounting Standards (PAS) 39, Financial
Instruments: Recognition and Measurement for annual periods beginning on or after January 1,
2018, bringing together all three aspects of the accounting for financial instruments: classification
and measurement; impairment; and hedge accounting.
*SGVFS032574*
19
The Company applied PFRS 9 retrospectively, with an initial application dated January 1, 2018.
The Company has not restated the comparative information, which continues to be reported under
PAS 39. There are no adjustments arising from the adoption of PFRS 9 to be recognized directly
in retained earnings.
Classification and Measurement

Under PFRS 9, debt instruments are subsequently measured at fair value through profit or loss
(FVPL), amortized cost, or fair value through other comprehensive income (OCI). The
classification is based on two criteria: the Company’s business model for managing the assets;
and whether the instruments’ contractual cash flows represent ‘solely payments of principal and
interest’ (SPPI) on the principal amount outstanding.
The assessment of the Company’s business model was made as of the date of initial application,
January 1, 2018. The assessment of whether contractual cash flows on debt instruments are
solely comprised of principal and interest was made based on the facts and circumstances as at
the initial recognition of the assets.
The measurement category and the carrying amount of financial assets in accordance with
PAS 39 and PFRS 9 as of January 1, 2018 are compared as follows:
PAS 39 PFRS 9
Classification Amount Classification Amount
Loans and
Cash with bank Receivables P328,051
Amortized Cost P328,051
The classification and measurement requirements of PFRS 9 did not have a significant impact to
the Company. The changes in the classification of the Company’s financial assets pertains to
cash with bank as at December 31, 2017 which are held to collect contractual cash flows and give
rise to cash flows representing solely payments of principal and interest. These are classified and
measured as financial assets at amortized cost beginning January 1, 2018.
The Company has not designated any financial liabilities at fair value through profit or loss
(FVPL). There are no changes in classification and measurement for the Company’s financial
liabilities.
Impairment
The adoption of PFRS 9 has changed the Company’s accounting for impairment losses for
financial assets by replacing PAS 39’s incurred loss approach with a forward-looking expected
credit loss (ECL) approach. PFRS 9 requires the Company to recognize an allowance for ECLs
for all debt instruments not held at FVPL and contract assets in the scope of PFRS 15.
There is no significant impact on the impairment of the Company’s financial assets.
Hedge accounting
Under PFRS 9, the new hedge accounting model aims to simplify hedge accounting, align the
accounting for hedge relationships more closely with an entity’s risk management activities and
permit hedge accounting to be applied to a greater variety of hedging instruments and risks
eligible for hedge accounting.
*SGVFS032574*
20
Adoption of the new hedge accounting requirements did not have an impact on the Company’s
financial statements as it does not apply hedge accounting.
 PFRS 15, Revenue from Contracts with Customers
PFRS 15 supersedes PAS 11, Construction Contracts, PAS 18, Revenue and related
Interpretations and it applies, with limited exceptions, to all revenue arising from contracts with
customers. PFRS 15 establishes a five-step model to account for revenue arising from contracts
with customers and requires that revenue be recognized at an amount that reflects the
consideration to which an entity expects to be entitled in exchange for transferring goods or
services to a customer.
PFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts
and circumstances when applying each step of the model to contracts with their customers. The
standard also specifies the accounting for the incremental costs of obtaining a contract and the
costs directly related to fulfilling a contract. In addition, the standard requires extensive
disclosures.
The Company’s revenue stream falls under a leasing contract which is scoped out with the new
standard. PFRS 15 specifically excludes from its scope those revenues generated from lease
contract within the scope of PAS 17, Leases. This new standard is not applicable to the Company
since its revenue arises from lease contract from its tenants.
 Amendments to PAS 28, Investments in Associates and Joint Ventures - Measuring an Associate
or Joint Venture at Fair Value (Part of Annual Improvements to PFRSs 2014-2016 Cycle)
 Amendments to PAS 40, Investment Property - Transfers of Investment Property
The amendments clarify when an entity should transfer property, including property under
construction or development into, or out of investment property. The amendments state that a
change in use occurs when the property meets, or ceases to meet, the definition of investment
property and there is evidence of the change in use. A mere change in management’s intentions
for the use of a property does not provide evidence of a change in use. Retrospective application
of the amendments is not required and is only permitted if this is possible without the use of
hindsight.
These amendments have no significant impact on the Company since the Company’s policy is in
line with the clarification.
 Philippine Interpretation International Financial Reporting Interpretations Committee

(IFRIC)-22, Foreign Currency Transactions and Advance Consideration
Standards and Interpretation Issued but not yet Effective

Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the
Company does not expect that the future adoption of the said pronouncements to have a significant
impact on its financial statements. The Company intends to adopt the following pronouncements
when these become effective.
 Amendments to PFRS 9, Prepayment Features with Negative Compensation
*SGVFS032574*
21
Effective January 1, 2019
 Amendments to PFRS 9, Prepayment Features with Negative Compensation

 PFRS 16, Leases
PFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of
leases and requires lessees to account for all leases under a single on-balance sheet model similar
to the accounting for finance leases under PAS 17, Leases. The standard includes two
recognition exemptions for lessees - leases of ’low-value’ assets (e.g., personal computers) and
short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date
of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and
an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-
use asset). Lessees will be required to separately recognize the interest expense on the lease
liability and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events
(e.g., a change in the lease term, a change in future lease payments resulting from a change in an
index or rate used to determine those payments). The lessee will generally recognize the amount
of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under PFRS 16 is substantially unchanged from today’s accounting under
PAS 17. Lessors will continue to classify all leases using the same classification principle as in
PAS 17 and distinguish between two types of leases: operating and finance leases.
PFRS 16 also requires lessees and lessors to make more extensive disclosures than under PAS 17.
A lessee can choose to apply the standard using either a full retrospective or a modified
retrospective approach. The standard’s transition provisions permit certain reliefs. The Company
is currently assessing the impact of adopting PFRS 16.
Application of the new standards will result in additional disclosure in the 2019 financial
statements of the Company as the Company is a lessor.
 Amendments to PAS 19, Employee Benefits - Plan Amendment, Curtailment or Settlement

 Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures
 Philippine Interpretation IFRIC-23, Uncertainty over Income Tax Treatments
 Annual Improvements to PFRSs 2015-2017 Cycle
 Amendments to PFRS 3, Business Combinations, and PFRS 11, Joint Arrangements - Previously
Held Interest in a Joint Operation
 Amendments to PAS 12, Income Taxes - Income Tax Consequences of Payments on Financial
Instruments Classified as Equity
 Amendments to PAS 23, Borrowing Costs - Borrowing Costs Eligible for Capitalization
Effective beginning on or after January 1, 2020
 Amendments to PFRS 3, Definition of a Business

 Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies,
Changes in Accounting Estimates and Errors - Definition of Material
*SGVFS032574*
22
Effective beginning on or after January 1, 2021
 PFRS 17, Insurance Contracts
Deferred effectivity
 Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28, Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture
Summary of Significant Accounting and Financial Reporting Policies
Presentation of Financial Statements

The Company has elected to present all items of recognized income and expense in one single
statement of comprehensive income.
Cash with bank

Cash with bank earns interest at a prevailing bank interest rates.
Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of the entity and a financial
liability or equity instrument of another entity.
Financial instruments prior to January 1, 2018
Initial Recognition and Measurement

Financial instruments are recognized in the statements of financial position when the Company
becomes a party to the contractual provisions of the instrument. The Company determines the
classification of its financial instruments on initial recognition and, where allowed and appropriate,
re-evaluates this designation at each reporting date.
Financial assets are classified, at initial recognition, as either financial assets at FVPL, loans and
receivables, held-to-maturity (HTM) investments, AFS financial assets, or derivatives designated as
hedging instruments in an effective hedge, as appropriate. All financial assets are recognized initially
at fair value plus, in the case of financial assets not recorded at FVPL, transaction costs that are
attributable to the acquisition of the financial asset.
As at December 31, 2017, the financial assets are in the nature of loans and receivables. The
Company has no financial assets classified as financial assets at FVPL, AFS financial assets, HTM
investments and derivatives designated as hedging instruments in an effective hedge.
Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, other financial
liabilities, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of interest bearing loans
and borrowings and payables, net of directly attributable transaction costs.
As at December 31, 2017, the financial liabilities are in the nature of other financial liabilities. The
Company has no financial liabilities classified as financial liabilities at FVPL and derivatives
designated as hedging instruments in an effective hedge.
*SGVFS032574*
23
Subsequent Measurement
The subsequent measurement of financial instruments depends on their classification as follows:
Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. After initial measurement, loans and receivables are subsequently
carried at cost or amortized cost using the effective interest rate (EIR) method less any allowance for
impairment losses. Amortized cost is calculated by taking into account any discount or premium on
acquisition and fees and costs that are integral part of the EIR. The EIR amortization, if any, is
included in “Interest Income” in the Company’s statement of comprehensive income. The losses
arising from impairment of receivables are recognized in the Company’s statement of comprehensive
income. The level of allowance for impairment losses is evaluated by management on the bases of
factors that affect the collectability of accounts.
Loans and receivables are included as current assets when they are expected to be realized within 12
months from the reporting date or within the normal operating cycle, whichever is longer. Otherwise,
these are classified as noncurrent assets.
The Company’s loans and receivables include cash with bank (see Note 4).
Other Financial Liabilities

This category pertains to financial liabilities that are not held for trading or not designated as FVPL
upon the inception of the liability. These include liabilities arising from operations (e.g., accrued
expenses and loan payable).
The other financial liabilities are recognized initially at fair value and are subsequently carried at
amortized cost, taking into account the impact of applying the effective interest rate method of
amortization (or accretion) for any related premium, discount and any directly attributable transaction
cost.
Other financial liabilities are included in current liabilities if maturity is within twelve months from
the financial reporting date. Otherwise, these are classified as noncurrent liabilities.
The Company’s other financial liabilities include accounts payable and loans payable (see Notes 7
and 8b).
Derecognition of Financial Instruments

Financial Assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognized when:
 The rights to receive cash flows from the asset have expired;
 The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
“pass-through” arrangement and either: (a) has transferred substantially all the risks and rewards
of the asset; or (b) has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
*SGVFS032574*
24
Where the Company has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transfer control of the asset, the Company continues to recognize the transferred
asset to the extent of the Company’s continuing involvement. In that case, the Company also
recognizes an associated liability. The transferred asset and the associated liability are measured on
the basis that reflects the rights and obligation that the Company has retained.
Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or has expired.
When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts of a financial liability extinguished or
transferred to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognized in the statement of comprehensive income.
Impairment of Financial Assets

The Company assesses at each statement of financial position date whether there is objective
evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of
financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as
a result of one or more events that has occurred after the initial recognition of the asset (an incurred
‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the
financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment
may include indications that the borrower or a group of borrowers is experiencing significant
financial difficulty, default or delinquency in interest or principal payments, the probability that they
will enter bankruptcy or other financial reorganization and where observable data indicate that there
is measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.
Financial Assets Carried at Amortized Cost

For financial assets carried at amortized cost, the Company first assesses whether impairment exists
individually for financial assets that are individually significant or collectively for financial assets that
are not individually significant. If the Company determines that no objective evidence of impairment
exists for an 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 them 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 of impairment.
The amount of any impairment loss identified is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future expected
credit losses that have not yet been incurred). The present value of the estimated future cash flows is
discounted at the financial asset’s original EIR.
The carrying amount of the asset is reduced through the use of an allowance account, and the loss is
recognized in the statements of comprehensive income. Interest income continues to be accrued on
the reduced carrying amount and is accrued using the rate of interest used to discount the future cash
flows for the purpose of measuring the impairment loss. Loans together with the associated
allowance are written off when there is no realistic prospect of future recovery and all collateral has
been realized or has been transferred to the Company. If, in a subsequent year, the amount of the
*SGVFS032574*
25
estimated impairment loss increases or decreases because of an event occurring after the impairment
was recognized, the previously recognized impairment loss is increased or reduced by adjusting the
allowance account. Any subsequent reversal of an impairment loss is recognized in the statements of
comprehensive income, to the extent that the carrying value of the asset does not exceed its amortized
cost at the reversal date.
Financial Instruments beginning January 1, 2018
Initial Recognition and Measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost,
FVOCI, and FVPL.
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the business model of the Company for managing the assets. The
Company initially measures a financial asset at its fair value plus, in the case of a financial asset not
at FVPL, transaction costs.
In order for a financial asset to be classified and measured at amortized cost or FVOCI, it needs to
give rise to cash flows that are SPPI on the principal amount outstanding. This assessment is referred
to as the SPPI test and is performed at an instrument level.
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date,
i.e., the date that the Company commits to purchase or sell the asset.
Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.
As at December 31, 2018, the financial assets of the Company are in the nature of financial assets at
amortized cost. The Company has no financial assets classified as FVPL and FVOCI.
As at December 31, 2018, the financial liabilities of the Company are in the nature of payables and
loans and borrowings. The Company has no financial liabilities classified as financial liabilities at
FVPL and as derivatives designated as hedging instruments in an effective hedge, as appropriate.
Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
 Financial assets at amortised cost (debt instruments)

 Financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments)
 Financial assets designated at FVOCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
 Financial assets at FVPL
*SGVFS032574*
26
Financial Assets at Amortized Cost (Debt Instruments)

The Company measures financial assets at amortized cost if both of the following conditions are met:
 The financial asset is held within a business model with the objective to hold financial assets in
order to collect contractual cash flows; and,
 The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortized cost are subsequently measured using the EIR method and are subject to
impairment. Gains and losses are recognized in statements of comprehensive income when the asset
is derecognized, modified or impaired.
As at December 31, 2018, financial assets at amortized cost of the Company pertain to cash with bank
(see Note 4).
Payables
This category pertains to financial liabilities that are not held for trading or not designated as at FVPL
upon the inception of the liability. These include liabilities arising from operations (e.g., accrued
liabilities). Payables are recognized initially at fair value and are subsequently carried at amortized
cost, taking into account the impact of applying the EIR method of amortization (or accretion) for any
related premium, discount and any directly attributable transaction costs. Gains and lossess are
recognized in the statements of comprehensive income when the liabilities are derecognized, as well
as through the EIR amortization process.
Payables are classified as current when these are expected to be settled within 12 months from the
end of the reporting period or within the normal operating cycle of the Company, whichever is longer.
Otherwise these are classified as noncurrent.
This accounting policy applies to the accounts payable and others (excluding accrued expenses) as at
December 31, 2018 (see Note 7).
Loans and Borrowings

This category pertains to financial liabilities that are not held for trading, not derivatives nor
designated as at FVPL upon the inception of the liability, 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. These include financial liabilities
arising from operations (e.g., payables and accruals) or borrowings. These financial liabilities are
recognized initially at fair value and are subsequently carried at amortized cost, taking into account
the impact of applying the EIR method of amortization or accretion for any related premium, discount
and any directly attributable transaction cost.
Included under this category is loans payable (see Note 8a).
*SGVFS032574*
27
Derecognition of Financial Instruments

Financial Assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial
assets) is derecognized when:
 The rights to receive cash flows from the asset have expired; and,
 The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When the Company retains the contractual rights to receive the cash flows of a financial asset but
assumes a contractual obligation to pay those cash flows to one or more entities, the Company treats
the transaction as a transfer of a financial asset if the Company:
 has no obligation to pay amounts to the eventual recipients unless it collects equivalent amounts
from the original asset;
 is prohibited by the terms of the transfer contract from selling or pledging the original asset other
than as security to the eventual recipients for the obligation to pay them cash flows; and
 has an obligation to remit any cash flows it collects on behalf of the eventual recipients without
material delay.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the Company continues to recognize the transferred
asset to the extent of the continuing involvement of the Company. In that case, the Company also
recognizes an associated liability. The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Company has retained.
Financial Liability
A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or has expired.
When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognized in the statements of
comprehensive income.
Impairment of Financial Assets

The Company recognizes an allowance for ECLs for all debt instruments not held at FVPL. ECLs are
based on the difference between the contractual cash flows due in accordance with the contract and
all the cash flows that the Company expects to receive, discounted at an approximation of the original
effective interest rate. The expected cash flows will include cash flows from the sale of collateral
held or other credit enhancements that are integral to the contractual terms.
ECLs are recognized in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
*SGVFS032574*
28
The Company considers a financial asset in default when contractual payments are 30 days past due.
However, in certain cases, the Company may also consider a financial asset to be in default when
internal or external information indicates that the Company is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the Company.
A financial asset is written off when there is no reasonable expectation of recovering the contractual
cash flows.
Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statements of
financial position if there is a currently enforceable legal right to set off the recognized amounts and
there is intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.
The Company assesses that it has a currently enforceable right of offset if the right is not contingent
on a future event, and is legally enforceable in the normal course of business, event of default, and
event of insolvency or bankruptcy of the Company and all of the counterparties.
Fair Value Measurements

The Company measures financial instruments at each end of the reporting period. Also, fair values of
financial instruments measured at amortized cost are disclosed in Note 12.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. 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.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable inputs
and minimizing the use of non-observable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level input that
is significant to the fair value measurement as a whole:
 Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
 Level 2 - Valuation techniques for which the lowest level of input that is significant to the fair
value measurement is directly or indirectly observable
 Level 3 - Valuation techniques for which the lowest level of input that is significant to the fair
value measurement is unobservable.
*SGVFS032574*
29
For assets and liabilities that are recognized in the financial statements at fair value on a recurring
basis, the Company determines whether transfers have occurred between levels in 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.
The fair value of financial instruments that are actively traded in organized financial markets is
determined by reference to quoted market close prices at the close of business on the end of the
reporting period.
For financial instruments where there is no active market, fair value is determined using valuation
techniques. Such techniques include comparison to similar investments for which market observable
prices exist and discounted cash flow analysis or other valuation models.
For the purpose of fair value disclosures, the Company has determined classes and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy.
Other Current Assets

The Company’s other current assets comprises of input value-added tax (VAT) and creditable
withholding taxes (CWTs) which the Company expects to realize or consume the assets within twelve
(12) months after each reporting period and carried at cost.
Input VAT
Input VAT represents VAT imposed on the Company’s purchases of goods and services required
under Philippine taxation laws and regulations
Input VAT representing claims for refund from the taxation authorities after twelve (12) months from
the reporting period is recognized as a noncurrent asset. Input VAT is stated at cost less allowance
for impairment losses, if any.
Revenues, expenses and assets are recognized, net of the amount of VAT, except:
 When the VAT incurred on the purchase of assets or services is not recoverable from the
taxation authority, in which case the VAT is recognized as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
 When receivables and payables that are stated with the amount of VAT are included.
The net amount of sales tax receivable from, or payable to, the taxation authority is included as part
of other current assets or accounts payable and others in the Company statement of financial position.
CWTs
CWTs are amounts withheld from income subject to expanded withholding taxes. CWTs can be
utilized as payment for income taxes, provided that these are properly supported by certificates of
creditable tax withheld at source subject to the rules on Philippine income taxation. CWTs are stated
at their net realizable value.
Investment Properties
The Company’s investment property consists of parcels of land that are held to earn rentals and for
capital appreciation. Investment property is measured initially at cost, including transaction costs.
The carrying amount includes the cost of replacing part of an existing investment property at the time
that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing
of an investment property. Subsequent to initial recognition, investment properties is stated at fair
value, which reflects market conditions at the financial reporting period.
*SGVFS032574*
30
*SGVFS032574*
31
Gains or losses arising from changes in the fair values of investment properties are included in the
statement of comprehensive income in the period on which they arise, including the corresponding
tax effect. Fair values are determined based on annual evaluation performed by an accredited external
independent appraiser applying revaluation model recommended by the International Valuations
Standard Committee.
Transfers are made to investment properties when, and only when, there is a change in use, evidenced
by ending of owner-occupation, commencement of an operating lease to another party or ending of
construction or development. Transfers are made from investment properties when, and only when,
there is a change in use, evidenced by commencement of owner-occupation or commencement of
development with a view to sale.
For a transfer from investment properties to owner-occupation, commencement of operating lease to

another party or ending of construction or development, the deemed cost of property for subsequent
accounting is its fair value at the date of change in use. If the owner occupied becomes investment
properties, the Company accounts for such property in accordance with the policy stated under
property and equipment up to the date of change in use.
Impairment of Nonfinancial Assets
Other current assets

The Company provides allowance for impairment losses on nonfinancial other current assets when
they can no longer be realized. The amounts and timing of recorded expenses for any period would
differ if the Company made different judgments or utilized different estimates. An increase in
allowance for impairment losses would increase recorded expenses and decrease other current assets.
Recovery of impairment losses recognized in prior years is recorded when there is an indication that
the impairment losses recognized for the asset no longer exist or have decreased. The recovery is
recorded in the statements of comprehensive income. However, the increased carrying amount of an
asset due to a recovery of an impairment loss is recognized to the extent it does not exceed the
carrying amount that would have been determined had no impairment loss been recognized for that
asset in prior years.
Investment Properties
Investment properties are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If any such indication exists
and where the carrying amount of an asset exceeds its recoverable amount, the asset or cash
generating unit (CGU) is written down to its recoverable amount. An asset’s recoverable amount is
the higher of an asset’s or CGU’s fair value less costs to sell and its value in use and is determined for
an individual asset, unless the asset does not generate cash inflows that are largely independent of
those from other assets or groups of assets. Where the carrying amount of an asset or CGU 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. In determining fair value less costs to sell, an appropriate
valuation model is used. These calculations are corroborated by valuation multiples, quoted share
prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses are
recognized in the statement of comprehensive income.
Recovery of impairment losses recognized in prior years is recorded when there is an indication that
the impairment losses recognized for the asset no longer exist or have decreased. The recovery is
recorded in the statement of comprehensive income. However, the increased carrying amount of an
asset due to a recovery of an impairment loss is recognized to the extent it does not exceed the
carrying amount that would have been determined (net of depreciation and amortization) had no
*SGVFS032574*
32
impairment loss been recognized for that asset in prior years.
Investment property is derecognized when either it has been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its
disposal. The difference between the net proceeds and the carrying amount of the asset would result
in either gains or losses at the retirement or disposal of investment property. Any gains or losses on
the retirement or disposal of an investment property are recognized in the statements of
comprehensive income in the year of retirement or disposal.
Capital Stock
Common shares are classified as equity. Incremental costs directly attributable to the issuance of new
shares or options are shown in equity as a deduction, net of tax, from proceeds. The excess of
proceeds from issuance of shares over the par value of shares is credited to the additional paid-in
capital.
Retained Earnings
Retained earnings represent the cumulative balance of periodic net income or loss, dividend
contributions, prior period adjustments, effect of changes in accounting policy and other capital
adjustments. When the retained earnings account has a debit balance, it is called “Deficit”. A deficit
is not an asset but a deduction from equity.
Other Comprehensive Income

Other comprehensive income comprises items of income and expense (including items previously
presented under the statement of changes in equity) that are not recognized in the statement of income
for the year in accordance with PFRSs.
Revenue Recognition prior to January 1, 2018
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. Revenue is measured at fair value of the
consideration received or receivable, taking into account contractually deferred terms of payment and
excluding taxes or duty. The Company has concluded that it is the principal in all of its revenue
arrangements since it is the primary obligor in all the revenue arrangements and is also exposed to
credit risk.
Revenue Recognition beginning January 1, 2018
Revenue from Contracts with Customer

Revenue from contracts with customers is recognized when control of the goods or services are
transferred to the customer at an amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods or services.
Rental Income
Rental income is recognized on a straight-line basis over the lease term.
Expenses
Expenses are decreases in economic benefits during the accounting period in the form of outflows or
decrease of assets or incurrence of liabilities that result in decreases in equity, other than those
relating to distributions to equity participants. Expenses are generally recognized when they are
incurred.
*SGVFS032574*
33
Administrative Expenses
General and administrative consist of expenses incurred in the direction and general administration of
day-to-day operation of the Company. These are generally recognized when these expenses arise.
Leases
Determination of Whether an Arrangement Contains a Lease
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent
on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A
reassessment is made after inception of the lease only if any of the following applies:
(a) there is a change in contractual term, other than a renewal or extension of the arrangement;
(b) a renewal option is exercised or an extension is granted, unless the term of the renewal or
extension was initially included in the lease term;
(c) there is a change in the determination of whether fulfillment is dependent on a specified
asset; or
(d) there is a substantial change to the asset.
When a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) and at the date of
renewal or extension period for scenario (b).
Operating Lease - Company as a Lessor

Leases where the Company does not transfer substantially all the risks and benefits of ownership of
the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating
lease are added to the carrying amount of the leased asset and recognized over the lease term on the
same basis as rental operations. Contingent rents are recognized as revenue in the period in which
they are earned.
Income Taxes
Current Income Tax
Current income 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 end of the financial
reporting period.
Deferred Income Tax

Deferred income tax is provided, using the balance sheet liability method, on all temporary
differences at the end of the reporting period between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences, except:
 when the deferred income tax liability arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting income nor taxable income or loss; and
 in respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse in
the foreseeable future.
*SGVFS032574*
34
Deferred income tax assets are recognized for all deductible temporary differences to the extent that it
is probable that sufficient future taxable profits will be available against which the deductible
temporary differences, and the carry-forward of unused tax credits and unused tax losses can be
utilized except:
 when the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting income nor taxable
income or loss; and
 in respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred income tax assets are recognized only to the
extent that it is probable that the temporary differences will reverse in the foreseeable future and
sufficient future taxable income will be available against which the temporary differences can be
utilized.
The carrying amount of deferred income tax assets is reviewed at each end of the financial reporting
period and reduced to the extent that it is no longer probable that sufficient future taxable profits will
be available to allow all or part of the deferred income tax assets to be utilized. Unrecognized
deferred income tax assets are reassessed at each end of the financial reporting period and are
recognized to the extent that it has become probable that sufficient future taxable profits will allow
the deferred income tax assets to be recovered. Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply to the period when the asset is realized or the
liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at
the end of the financial reporting period.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss.
Deferred tax items are recognized in correlation to the underlying transaction either in the parent
company statement of comprehensive income or directly in equity.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a
result of a past event; it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.
Contingencies
Contingent liabilities are not recognized in the financial statements. They are disclosed in the notes
to financial statements unless the possibility of an outflow of resources embodying economic benefits
is remote. Contingent assets are not recognized in the financial statements but disclosed in the notes
to financial statements when an inflow of economic benefits is probable.
Events after the Reporting Period

Post year-end events that provide additional information about the Company’s position at the end of
the reporting period (adjusting events) are reflected in the financial statements. Post year-end events
that are not adjusting events are disclosed in the notes to financial statements when material.
*SGVFS032574*
35
3. Summary of Significant Accounting Judgments, Estimates and Assumptions
The preparation of the financial statements in conformity with PFRS requires management to exercise
judgment, make accounting estimates and use assumptions that affect the amounts of assets,
liabilities, income and expenses and disclosures of contingent assets and contingent liabilities. Future
events may occur which will cause the assumptions used in arriving the estimates to change. The
effects of the changes in estimates are reflected in the financial statements as they become reasonably
determinable.
Judgments, estimates and assumptions are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. However, actual outcome can differ from these estimates.
Judgments
In the process of applying the Company’s accounting policies, management has not made the
following judgments which have the most significant effect on the amounts recognized in the
financial statements:
Assessing Whether a Lease Agreement is a Finance or Operating lease

The Company has entered into a lease on its investment properties. The Company has determined,
based on an evaluation of the terms and conditions of the arrangements, that it retains all significant
risks and rewards of ownership of these properties which are leased out under operating lease
arrangements.
Operating Leases - Company as Lessor

The Company has entered into property leases where it has determined that the risks and rewards
related to those properties are retained by the lessor. As such, the lease agreements are accounted for
as operating leases. Rental income from the Company’s related party amounted to P1,450,000 in
both years (see Note 8c).
Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation at the financial
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below.
The Company based its assumptions and estimates on parameters available when the financial
statements were prepared. Existing circumstances and assumptions about future developments
however may change due to market changes or circumstances arising beyond the control of the
Company. Such changes are reflected in the assumptions when they occur.
Estimating Allowance for Impairment Losses on Other Current Assets

The Company provides allowance for impairment losses on other current assets when they can no
longer be realized. The amounts and timing of recorded expenses for any period would differ if the
Company made different judgments or utilized different estimates. An increase in allowance for
impairment losses would increase recorded expenses and decrease the other current assets.
The carrying values of other current assets amounted to P110,927 and P114,031 as at
December 31, 2018 and 2017, respectively.
*SGVFS032574*
36
Estimating Impairment Losses on Investment Properties

PFRSs requires an impairment review be performed when certain impairment indicators are present.
Determining the value of investment properties which requires the determination of future cash flows
expected to be generated from the continued use and ultimate disposition of such assets requires the
Company to make estimates and assumptions that can materially affect its financial statements.
Future events could cause the Company to conclude that this asset may not be recoverable. Any
resulting impairment loss could have a material adverse impact on financial condition and results of
operations of the Company.
Impairment losses on investment properties amounting to P1,052,000 and nil was recognized in 2018
and 2017, respectively (see Note 6).
The fair value of investment properties amounted to P205,137,000 and P187,727,000 as at

December 31, 2018 and 2017, respectively (see Note 6).
4. Cash with Bank
Cash with bank amounted to P248,015 and P328,051 as at December 31, 2018 and 2017,
respectively.
5. Other Current Assets
2018 2017
CWTs P100,927 P114,031
Prepaid advertising 10,000 –
P110,927 P114,031
Prepaid advertising pertains to the amount paid in advance for the advertisement in selling the
investment properties located in Sherwood Hills Residential Estate and Golf and Country Club in
Trece Martires City, Cavite.
6. Investment Properties
This account consists of the following properties:
Carried at fair value:

2018 2017
Canlubang lot P203,085,000 P184,623,000
Sherwood Hills lots 2,052,000 3,104,000
Total investment properties P-2018 P-2017
Carried at cost:
2018 2017
Canlubang lot P36,900,168 P36,900,168
Sherwood Hills lots 3,313,115 3,313,115
Total investment properties P-2018 P-2018
*SGVFS032574*
37
The details of the Company’s investment properties as at December 31, 2018 and 2017 are as
follows:
a. A land with an area of 47,998 square meters with a cost of P36,900,168. This is located within
the premises of Canlubang Industrial Estate, Barrio Pittland, Cabuyao, Laguna. The appraised
value of the land amounted to P203,085,000 and P184,623,000 as at December 31, 2018 and
2017, respectively. The latest valuation of the parcel of land performed by an independent
appraiser was at December 3, 2018. The gain on revaluation of the land amounted to
P18,462,000 and P8,547,000 in 2018 and 2017, respectively. Gain on revaluation of the land
from transfer from owner-occupied property to investment property amounted to P90,531,130 in
2018 and 2017, respectively.
b. Parcels of land with a total area of 1,140 square meters with a total cost of P3,313,115. These are
located in Sherwood Hills Residential Estate and Golf and Country Club in Trece Martires City,
Cavite. The appraised value of the land amounted to P2,052,000 and P3,104,000 as at
December 31, 2018 and 2017, respectively. The latest valuation of the parcels of land performed
by an independent appraiser is at December 5, 2018.
In 2018, the investment property continuously experienced a decline in its market value as
indicated in the appraised values and other factors. Management believes the trend is an
indication of impairment in the value of the investment property, which is most likely permanent,
in the absence of foreseeable significant improvements that could increase the market value.
Accordingly, the Company recorded a provision for impairment in investment property in 2018
amounting to P1,052,000.
The appraiser firm used the sales comparison approach in determining the appraised value of the
investment properties. This comparative approach considers sales of similar or substitute properties
and related market data and establishes a value estimated by processes involving comparison.
The highest and best use of the Canlubang property is an industrial land facility and for the Sherwood
property is a residential utility. Highest and best is the most probable use of a property which is
physically possible appropriately justified, legally permissible and financially feasible.
Management believes that the fair values of the investment properties as determined by the
independent appraisers approximate the assets’ market values as at December 31, 2018 and 2017.
7. Accounts Payable and Others
2018 2017
Due to EPPI (Note 8b) P2,627,170 P2,800,257
Accrued expenses 13,226 123,018
P** Expression is
faulty ** P2,923,275
Due to EPPI and accrued expenses are noninterest-bearing and are payable upon demand.
*SGVFS032574*
38
8. Related Party Disclosures
Related party relationship exists when one party has the ability to control, directly, or indirectly
through one or more intermediaries, the other party or exercise significant influence over the other
party in making financial and operating decisions. Such relationship also exists between and/or
among entities, which are under common control with the reporting enterprises and its key
management personnel, directors, or its shareholders. In considering each related party relationship,
attention is directed to the substance of the relationship, and not merely the legal form.
Transactions with EPPI, a related party under common control, are as follow:
Outstanding
Related Party Year Amount Balance Terms Conditions
Affiliate:
EPPI
(a) Loan 2018 P0 P3,600,000Payable annually;
8% interest-bearing; to Unsecured,
2017 P0 P3,600,000be settled in cash unguaranteed
(b) Due to EPPI (Note 7) 2018 336,000 2,627,170

Payable on demand; Unsecured,
non-interest bearing; to unguaranteed
2017 337,127 2,800,257be settled in cash
(c) Rental Income 2018 1,450,000 0 To be settled in cash Unsecured,

One (1) year, no impairment,
2017 1,450,000 0 non-interest bearing Unguaranteed
a. The Company has a clean short-term loan payable to EPPI amounting to P3.6 million as at
December 31, 2018 and 2017, which bears interest of 8% per annum.
In December 2018, EPPI granted a one-year extension maturing December 31, 2019.
Total interest expense incurred on the loan amounted to P288,000 in 2018 and 2017. As at
December 31, 2018 and 2017 there were no outstanding interest payable to EPPI.
b. The Company is being charged by EPPI for its share in certain general and administrative
expenses. As at December 31, 2018 and 2017, the Company has outstanding payable to EPPI
amounting to P2,627,170 and P2,800,257, respectively (see Note 7).
c. Rental income
The Company (lessor) has a lease agreement with EPPI (lessee) for the lease of land located in
Cabuyao, Laguna. The lease agreement is for a period of twenty-five (25) years from April 2002,
and shall be automatically renewed for another period of twenty-five (25) years, unless
terminated by the lessee through a six (6)-month advance notice in writing to the Company.
Rental income earned amounted to P1,450,000 in 2018 and 2017.
In addition, a rental deposit amounting to P14,392,300 was paid by the lessee and will be applied
to the last nine (9) years of the lease term.
*SGVFS032574*
39
As at December 31, 2018 and 2017, the future minimum lease receivables for this lease are as
follows:
2018 2017
Within one (1) year P1,450,000 P1,450,000
After one (1) year but not more than five (5) years 5,800,000 5,800,000
More than five (5) years 4,712,500 6,162,500
P** Expression is
faulty ** P0
d. Key management is undertaken by EPPI, a related party under a common control undertaking the
accounting and administrative functions for the Company.
9. Capital Stock
The two classes of common stock of the Company are identical in all respects, except that the
ownership of Class “A” shares are restricted to Philippine nationals. The total number of subscribed
or outstanding shares of Class “B” common stock shall in no case exceeds 40% of the total number of
outstanding common shares.
10. Income Taxes
a. The provision for current income tax in 2018 and 2017 represents regular corporate income tax
(RCIT).
b. The Company’s deferred income tax asset amounting to P378,335 as at December 31, 2018
pertains to the tax effect on the cumulative impairment losses in investment property amounting
to P1,261,115 as at December 31, 2018.x
c. The Company’s deferred income tax liability amounting to P49,855,450 and P44,254,115 as at
December 31, 2018 and 2017, respectively, pertains to the tax effect of the cumulative
revaluation increment in investment property amounting to P166,184,832 and P147,513,717 as at
December 31, 2018 and 2017, respectively.
d. The Company did not avail of the optional standard deduction in 2018 and 2017.
11. Financial Risk Management and Capital Management Objectives and Policies
Financial Risk Management Objectives and Policies

The Company’s principal financial instrument consists of loan payable. The main purpose of this
financial instrument is to finance the Company’s operations. The Company has other financial assets
and financial liabilities such as cash with bank and accounts payable and others, which arise directly
from its operations.
*SGVFS032574*
40
The main risks arising from the Company’s financial instruments are credit risk, liquidity risk and
interest rate risk. The BOD reviews and agrees policies for managing each of these risks and they are
summarized below:
Credit Risk
Credit risk refers to the potential loss arising from any failure by counterparties to fulfill their
obligations, as and when they fall due. The Company trades only with recognized, creditworthy third
parties. Receivable balances are monitored on an ongoing basis with the result that the Company’s
exposure to bad debts is not significant.
With respect to credit risk arising from cash with bank, the Company’s exposure to credit risk arises
from the default of the counterparty, with a maximum exposure equal to the carrying amounts of
these instruments.
Cash with bank amounted to P248,015 and P328,051 as at December 31, 2018 and 2017,
respectively. It shows the maximum exposure to credit risk for the Company’s financial asset, without
taking account for any collateral and other credit enhancements. Accordingly, the Company has
assessed the credit quality of cash with bank as high grade since it is deposited with a reputable bank
duly approved by the BOD.
Liquidity Risk
The Company manages its liquidity based on business needs, tax, capital or regulatory considerations,
if applicable, through numerous sources of finance in order to maintain flexibility.
In the management of liquidity risk, the Company monitors and maintains a level of cash deemed
adequate by the management to finance the Company’s operations and mitigate the effects of
fluctuations in cash flows.
The following table summarizes the maturity profile of the Company’s financial liabilities as at
December 31, 2018 and 2017, based on contractual undiscounted cash flows. The table also analyses
the maturity profile of the Company’s financial assets in order to provide a complete view of the
Company’s contractual commitments. The analysis into relevant maturity groupings is based on the
remaining term at the end of the reporting period to the contractual maturity dates.
Less than
December 31, 2018: On Demand 1 year Total
Financial liabilities:
Accounts payable and
others P2,640,396 P– P2,640,396
Loan payable – 3,600,000 3,600,000
P2,640,396 P3,600,000 P0
Financial asset:
Cash with bank P248,105 P− P248,105
Less than
December 31, 2017: On Demand 1 year Total
Financial liabilities:
Accounts payable and others P2,923,275 P– P2,923,275
Loan payable – 3,600,000 3,600,000
P2,923,275 P0 P0
Financial asset:
Cash with bank P328,051 P− P328,051
*SGVFS032574*
41
Capital Management Objectives and Policies

The primary objective of the Company’s capital management is to safeguard the Company’s ability to
continue as a going concern, so that it can continue to provide returns for shareholders and benefits
for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Company manages its capital structure and makes adjustments to it, in light of changes in
economic conditions. To maintain or adjust the capital structure, the Company may adjust the
dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital as at
December 31, 2018 and 2017.
The Company considers the following as capital:
2018 2017
Capital stock:
Class A P6,000,000 P6,000,000
Class B 4,000,000 4,000,000
Retained earnings 34,855,001 22,468,262
P** Expression is
faulty ** P0
The Company is not subject to externally imposed capital requirements.
12. Financial Instruments
Determining Fair Value of Financial Instruments

PFRSs require that certain financial assets and liabilities be carried at fair value, which requires the
use of accounting judgment and estimates. While significant components of fair value measurement
are determined using verifiable objective evidence (e.g. foreign exchange rates, interest rates,
volatility rates), the timing and amount of changes in fair value would differ with the valuation
methodology used. Any change in the fair value of these financial assets and liabilities would
directly affect the statement of comprehensive income. The fair values of financial assets as at
December 31, 2018 and 2017 amounted to P248,015 and P328,051, respectively. The fair values of
financial liabilities as at December 31, 2018 and 2017 amounted to P6,240,396 and P6,811,275,
respectively (see Note 11).
Cash with Bank, Accounts Payable and Others and Loan payable
The carrying values of cash with bank, accounts payable and others and loan payable reasonably
approximate their fair values due to the short-term nature of these financial instruments.
13. Supplementary Information Required Under Revenue Regulations No. 15-2010
On November 25, 2010, the BIR issued RR No. 15-2010 prescribing the manner of compliance in
connection with the preparation and submission of financial statements accompanying the tax returns.
It includes provisions for additional disclosure requirements in the notes to the financial statements,
particularly on taxes and licenses paid or accrued during the year.
*SGVFS032574*
SCHEDULE I
Reconciliation of Retained Earnings Available
for Dividend Declaration
PURSUANT TO SRC RULE 68, AS AMENDED AND
SEC MEMORANDUM CIRCULAR NO. 11
DECEMBER 31, 2018
Unappropriated Retained earnings as of December 31, 2017, as reflected in

audited financial statements P22,468,262
Less: Fair value adjustment (M2M gains) (12,728,472)
Unappropriated Retained Earnings, as adjusted to available for dividend P** Expression is
distribution, beginning faulty **9,739,790
Add: Net income actually earned/realized during the period

Net income during the period closed to Retained Earnings P12,386,739
Less: Non-actual/unrealized income net of tax
Fair value adjustment (M2M gains) (12,923,400)
Net income actually earned during the period (536,661)

TOTAL RETAINED EARNINGS, END
AVAILABLE FOR DIVIDEND DECLARATION P9,203,129

EPLI - FS1218 Ebara Philippines Landholdings

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

EPLI - FS1218 Ebara Philippines Landholdings

Uploaded by

Copyright:

Available Formats

Ebara Philippines Landholdings,

Independent Auditor’s Report

SEC Registration Number

PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province )

CONTACT PERSON INFORMATION

Marietta J Magampon mjmagampon@ebaraphilippines.com 049-5491914 0922-8905769

CONTACT PERSON’s ADDRESS

Canlubang Industrial Estate, Bo. Pittland, Cabuyao City, Laguna

The Board of Directors and Stockholders

Report on the Audit of the Financial Statements

Basis for Opinion

Auditor’s Responsibilities for the Audit of the Financial Statements

SYCIP GORRES VELAYO & CO.

INDEPENDENT AUDITOR’S REPORT

The Stockholders and the Board of Directors

Report on the Audit of the Financial Statements

Basis for Opinion

Auditor’s Responsibilities for the Audit of the Financial Statements

SYCIP GORRES VELAYO & CO.

INDEPENDENT AUDITOR’S REPORT

The Stockholders and the Board of Directors

SYCIP GORRES VELAYO & CO.

INDEPENDENT AUDITOR’S REPORT

The Stockholders and the Board of Directors

SYCIP GORRES VELAYO & CO.

TOTAL ASSETS P00 P0

LIABILITIES AND EQUITY

Years Ended December 31

RENTAL INCOME (Note 8c) P1,450,000 P1,450,000

OTHER (INCOME) CHARGES

INCOME BEFORE INCOME TAX 0 0

PROVISION FOR INCOME TAX (Note 10)

OTHER COMPREHENSIVE INCOME, NET – –

See accompanying Notes to Financial Statements.

Balances at December 31, 2016 P6,000,000 P4,000,000 P90,531,130 P16,348,412 P116,879,542

Net income for the year – – – 6,119,850 6,119,850

Other comprehensive income, net – – – – –

Total comprehensive income – – – 6,119,850 0

Balances at December 31, 2017 6,000,000 4,000,000 90,531,130 22,468,262 0

Net income for the year – – – 12,386,739 12,386,739

Other comprehensive income, net – – – – –

Total comprehensive income – – – 12,386,739 0

Balances at December 31, 2018 P6,000,000 P4,000,000 P90,531,130 P34,855,001 P0

See accompanying Notes to Financial Statements.

Years Ended December 31

CASH FLOWS FROM OPERATING ACTIVITIES

CASH FLOWS USED IN FINANCING ACTIVITY

NET INCREASE (DECREASE) IN CASH WITH BANK (80,036)

CASH WITH BANK AT BEGINNING OF YEAR 328,051 78,084

CASH WITH BANK AT END OF YEAR P248,015 P0

2. Basis of Preparation, Statement of Compliance and Summary of Significant Accounting and

Changes in Accounting Policies and Disclosures

 Amendments to PFRS 2, Share-based Payment - Classification and Measurement of Share-based

Classification and Measurement

There is no significant impact on the impairment of the Company’s financial assets.

 PFRS 15, Revenue from Contracts with Customers

 Amendments to PAS 40, Investment Property - Transfers of Investment Property

 Philippine Interpretation International Financial Reporting Interpretations Committee

Standards and Interpretation Issued but not yet Effective

 Amendments to PFRS 9, Prepayment Features with Negative Compensation

Effective January 1, 2019

 Amendments to PFRS 9, Prepayment Features with Negative Compensation