SDE Philippines Financial Statements

SDE (Philippines) Corp.
Financial Statements
March 31, 2017 and 2016
SDE (PHILIPPINES) CORP.
STATEMENTS OF FINANCIAL POSITION
(In U.S. Dollars)
March 31
2017 2016
ASSETS
Current Assets
Cash (Notes 6 and 20) $2,285,488 $2,328,943
Accounts receivable (Notes 7, 18 and 20) 1,688,384 1,324,876
Inventories (Notes 8 and 13) 1,275,507 1,045,337
Prepaid expenses and other current assets (Note 9) 59,604 117,641
Total Current Assets 0 0
Noncurrent Assets
Property and equipment (Note 10) 839,489 718,409
Deferred tax assets (Note 17) 11,686 26,548
Other noncurrent assets 53,697 47,534
Total Noncurrent Assets 0 0
0 0
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses
(Notes 11, 18 and 20) $1,778,207 $1,481,717
Income tax payable 46,945 52,095
Total Current Liabilities 0 0
Noncurrent Liability
Retirement benefit liability (Note 16) 186,029 182,795
Total Liabilities 0 0
Equity (Note 12)

Capital stock 841,751 841,751
Retained earnings
Appropriated 2,849,163 2,539,170
Unappropriated 564,089 559,617
Remeasurement loss on retirement benefit liability,
net of tax (Note 16) (52,329) (47,857)
** Expression is ** Expression is
Total Equity faulty ** faulty **
faulty ** faulty **
See accompanying Notes to Financial Statements.

STATEMENTS OF COMPREHENSIVE INCOME
(In U.S. Dollars)
Years Ended March 31

2017 2016
REVENUE (Note 18) $14,303,092 $12,361,411
COST OF SALES (Notes 13 and 18) 11,621,633 10,065,134
GROSS PROFIT 0 0
GENERAL AND ADMINISTRATIVE

EXPENSES (Note 14) 617,441 582,875
OTHER INCOME (CHARGES) - Net

Foreign currency exchange gain - net 73,138 65,354
Interest income (Note 6) 4,076 5,055
Interest expense (2,632) (2,293)
Other income 7,859 19,179
faulty ** faulty **
** Expression is
INCOME BEFORE INCOME TAX 0 faulty **0
PROVISION FOR INCOME TAX (Note 17) 187,041 158,952
NET INCOME 0 0
OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) not to be reclassified to
profit or loss in subsequent periods
Remeasurement gain (loss) on retirement benefit liability,
net of deferred tax (Note 16) (4,472) 3,208
TOTAL COMPREHENSIVE INCOME 0 0

STATEMENTS OF CHANGES IN EQUITY
(In U.S. Dollars)
Remeasurement
Loss on
Retained Earnings (Note 12) Retirement
Capital Stock Benefit Liability
(Note 12) Appropriated Unappropriated (Note 16) Total
For the Year Ended March 31, 2017
Balances as at April 1, 2016 $841,751 faulty ** faulty ** ($47,857) 0
Net income − − 1,959,418 − 0
Other comprehensive income, net of tax − − − (4,472) 0
** Expression is
Total comprehensive income − − faulty ** 0 0
Reversal of appropriations − (1,644,953) 1,644,953 − −
Appropriations − 1,954,946 (1,954,946) − −
** Expression is
Cash dividends (Note 12) − − (1,644,953) − faulty **
** Expression is
Balances as at March 31, 2017 $841,751 faulty ** 0 0 0
For the Year Ended March 31, 2016
** Expression is
Balances as at April 1, 2015 $841,751 $2,550,000 $562,825 ($51,065) faulty **
** Expression is
Net income − − 1,641,745 − faulty **
** Expression is
Other comprehensive loss, net of tax − − − 3,208 faulty **
** Expression is ** Expression is ** Expression is
Total comprehensive income − − faulty ** faulty ** faulty **
STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
Years Ended March 31

2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $2,146,459 $1
Adjustments for:
Depreciation (Notes 10, 13 and 14) 304,426 402
Interest expense 2,632 2
Reversal of allowance for inventory
obsolescence (Note 8) (77,793) (183
Retirement Expense (Note 16) 28,907 29
Net unrealized foreign currency exchange loss (33,863) (52
Interest income (Note 6) (4,076) (5
** Expression is ** Expression
Operating income before working capital changes faulty ** is faulty **
Decrease (increase) in:
Accounts receivable (363,643) 336
Inventories (152,377) (63
Prepaid expenses and other assets 58,037 35
Increase (decrease) in accounts payable and accrued expenses 117,049 (177
Net cash generated from operations faulty ** is faulty **
Interest received 4,076 5
Interest paid (2,632) (2
Income tax paid (174,528) (51
Net cash provided by operating activities faulty ** is faulty **
CASH FLOWS FROM INVESTING ACTIVITY

Acquisitions of property and equipment (Note 10) (246,539) (575
Decrease in noncurrent receivables (4,772) −
Net cash used in investing activities faulty ** is faulty **
CASH FLOWS FRM FINANCING ACTIVITY

Cash dividends paid (Note 12) (1,644,953) (1
EFFECT OF EXCHANGE RATE CHANGES ON CASH 135 52
NET DECREASE IN CASH faulty ** is faulty **
CASH AT BEGINNING OF YEAR 2,328,943 2
CASH AT END OF YEAR (Note 6) 0 0

NOTES TO FINANCIAL STATEMENTS
1. Corporate Information and Authorization for Issuance
Corporate Information
SDE (Philippines) Corp. (the Company) was incorporated in the Philippines and registered with
the Philippine Security and Exchange Commission (SEC) on October 31, 2004. The Company is
engaged to manufacture, export and sell wiring harness assembly boards, circuit check boards,
wiring harness manufacturing equipment and maintenance service of those products.
The Company is a subsidiary of SD Engineering Co., Ltd. (Japan), a large organization in the
engineering services industry founded in 1993 and located in Yokkaichi, Japan. The Company’s
ultimate parent, Sumitomo Electric Industries, Ltd. (SEI), engages in the manufacture and sale of
electrical wires, cables, and other communication wiring products.
The Company was registered with the Philippine Economic Zone Authority (PEZA) under the
Omnibus Investment Code of 1987 and the Republic Act (R.A.) No. 7916, The Special Economic
Zone Act of 1995, on March 31, 2005, and this registration covered certain activities (see Note 21).
Company’s registered office is at Luisita Industrial Park, Special Economic Zone, San Miguel,
Tarlac City.
Authorization for Issuance

The financial statements as of and for the fiscal years ended March 31, 2017 and 2016 were
authorized for issuance by Board of Directors (BOD) on June 30, 2017.
2. Basis of Preparation and Statement of Compliance
Basis of Preparation
The financial statements of the Company have been prepared on a historical cost basis and are
presented in United States (U.S.) Dollars ($), which is also the Company’s functional currency.
All amounts are rounded off to the nearest dollar except as otherwise indicated.
Statement of Compliance
The financial statements of the Company have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS).
On October 13, 2009, the Philippine Securities and Exchange Commission (SEC) adopted the use
of PFRS for Small and Medium-sized Entities (PFRS for SMEs) effective for annual periods
beginning on or after January 1, 2010.
The Philippine SEC defines a Small and Medium Entity (SME) for financial reporting purposes as
an entity:
• With total assets of between P3.00 million and P350.00 million or total liabilities of between
P3.00 million and P250.00 million;
• That is not required to file financial statements under Securities Regulation Code Rule 68.1;
• That is not in process of filing its financial statements for the purposes of issuing any class of
instruments in a public market; and
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• That is not a holder of a secondary license issued by regulatory agency, such as a bank, an
investment house, a financing company, an insurance company, a securities broker, a mutual
fund and a pre-need company.

The Company qualifies as a SME based on the criteria set by Philippine SEC for mandatory
adoption of PFRS for SMEs. However, the Company, being a subsidiary of a foreign parent
company reporting under full IFRS, has availed of the exemption for mandatory adoption.
3. 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
April 1, 2016. Adoption of these pronouncements did not have any significant impact on the
Company’s financial position or performance unless otherwise indicated.
 Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12, Disclosure of

Interests in Other Entities, and PAS 28, Investments in Associates and Joint Ventures,
Investment Entities: Applying the Consolidation Exception
 Amendments to PFRS 11, Joint Arrangements, Accounting for Acquisitions of Interests in
Joint Operations
 PFRS 14, Regulatory Deferral Accounts
 Amendments to PAS 1, Presentation of Financial Statements, Disclosure Initiative
 Amendments to PAS 16, Property, Plant and Equipment and PAS 38, Intangible Assets,
Clarification of Acceptable Methods of Depreciation and Amortization
 Amendments to PAS 16 and PAS 41, Agriculture: Bearer Plants
 Amendments to PAS 27, Separate Financial Statements, Equity Method in Separate
 Annual Improvements to PFRSs 2012 - 2014 Cycle
• Amendment to PFRS 5, Non-current Assets Held for Sale and Discontinued Operations,
Changes in Methods of Disposal
• Amendment to PFRS 7, Financial Instruments: Disclosures, Servicing Contracts
• Amendment to PFRS 7, Applicability of the Amendments to PFRS 7 to Condensed Interim
• Amendment to PAS 19, Employee Benefits, Discount Rate: Regional Market Issue
• Amendment to PAS 34, Interim Financial Reporting, Disclosure of Information
‘Elsewhere in the Interim Financial Report’
Standards 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 they become effective.
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Effective beginning on or after January 1, 2017 for adoption in fiscal year beginning April 1,
2018
 Amendment to PFRS 12, Clarification of the Scope of the Standard (Part of Annual
Improvements to PFRSs 2014 - 2016 Cycle)
The amendments clarify that the disclosure requirements in PFRS 12, other than those relating
to summarized financial information, apply to an entity’s interest in a subsidiary, a joint
venture or an associate (or a portion of its interest in a joint venture or an associate) that is
classified (or included in a disposal group that is classified) as held for sale.
 Amendments to PAS 7, Statement of Cash Flows, Disclosure Initiative

The amendments to PAS 7 require an entity to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from financing activities,
including both changes arising from cash flows and non-cash changes (such as foreign
exchange gains or losses). On initial application of the amendments, entities are not required
to provide comparative information for preceding periods. Early application of the
amendments is permitted.
Application of amendments will result in additional disclosures in the 2018 financial

statements of the Company.
 Amendments to PAS 12, Income Taxes, Recognition of Deferred Tax Assets for Unrealized
Losses
The amendments clarify that an entity needs to consider whether tax law restricts the sources
of taxable profits against which it may make deductions on the reversal of that deductible
temporary difference. Furthermore, the amendments provide guidance on how an entity
should determine future taxable profits and explain the circumstances in which taxable profit
may include the recovery of some assets for more than their carrying amount.
Entities are required to apply the amendments retrospectively. However, on initial application
of the amendments, the change in the opening equity of the earliest comparative period may
be recognized in opening retained earnings (or in another component of equity, as
appropriate), without allocating the change between opening retained earnings and other
components of equity. Entities applying this relief must disclose that fact. Early application
of the amendments is permitted.
2019
 Amendments to PFRS 2, Share-based Payment, Classification and Measurement of Share-

based Payment Transactions
The amendments to PFRS 2 address three main areas: the effects of vesting conditions on the
measurement of a cash-settled share-based payment transaction; the classification of a share-
based payment transaction with net settlement features for withholding tax obligations; and
the accounting where a modification to the terms and conditions of a share-based payment
transaction changes its classification from cash settled to equity settled.
On adoption, entities are required to apply the amendments without restating prior periods, but
retrospective application is permitted if elected for all three amendments and if other criteria
are met. Early application of the amendments is permitted.
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 Amendments to PFRS 4, Insurance Contracts, Applying PFRS 9, Financial Instruments, with

PFRS 4
The amendments address concerns arising from implementing PFRS 9, the new financial
instruments standard before implementing the forthcoming insurance contracts standard.
They allow entities to choose between the overlay approach and the deferral approach to deal
with the transitional challenges. The overlay approach gives all entities that issue insurance
contracts the option to recognize in other comprehensive income, rather than profit or loss, the
volatility that could arise when PFRS 9 is applied before the new insurance contracts standard
is issued. On the other hand, the deferral approach gives entities whose activities are
predominantly connected with insurance an optional temporary exemption from applying
PFRS 9 until the earlier of application of the forthcoming insurance contracts standard or
January 1, 2021.
The overlay approach and the deferral approach will only be available to an entity if it has not
previously applied PFRS 9.
The amendments are not applicable to the Company since the Company does not have
activities that are predominantly connected with insurance or issue insurance contracts.
 PFRS 15, Revenue from Contracts with Customers
PFRS 15 establishes a new five-step model that will apply to revenue arising from contracts
with customers. Under PFRS 15, revenue is 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. The principles in PFRS 15 provide a more structured approach to
measuring and recognizing revenue.
The new revenue standard is applicable to all entities and will supersede all current revenue
recognition requirements under PFRSs. Either a full or modified retrospective application is
required for annual periods beginning on or after January 1, 2018.
The Company is currently assessing the impacts of PFRS 15 and plans to adopt the new
standard on the required effective date once adopted locally.
 PFRS 9, Financial Instruments
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 providing
comparative information is not compulsory. For hedge accounting, the requirements are
generally applied prospectively, with some limited exceptions.
The adoption of PFRS 9 will have an effect on the classification and measurement of the
Company’s financial assets and impairment methodology for financial assets, but will have no
impact on the classification and measurement of the Company’s financial liabilities. The
adoption will also have an effect on the Company’s application of hedge accounting and on
the amount of its credit losses.
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 Amendments to PAS 28, Measuring an Associate or Joint Venture at Fair Value (Part of
Annual Improvements to PFRSs 2014 - 2016 Cycle)
The amendments clarify that an entity that is a venture capital organization, or other
qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to
measure its investments in associates and joint ventures at fair value through profit or loss.
They also clarify that if an entity that is not itself an investment entity has an interest in an
associate or joint venture that is an investment entity, the entity may, when applying the equity
method, elect to retain the fair value measurement applied by that investment entity associate
or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.
This election is made separately for each investment entity associate or joint venture, at the
later of the date on which (a) the investment entity associate or joint venture is initially
recognized; (b) the associate or joint venture becomes an investment entity; and (c) the
investment entity associate or joint venture first becomes a parent. The amendments should
be applied retrospectively, with earlier application permitted.
 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. The
amendments should be applied prospectively to changes in use that occur on or after the
beginning of the annual reporting period in which the entity first applies the amendments.
Retrospective application is only permitted if this is possible without the use of hindsight.
 Philippine Interpretation IFRIC-22, Foreign Currency Transactions and Advance

Consideration
The interpretation clarifies that in determining the spot exchange rate to use on initial
recognition of the related asset, expense or income (or part of it) on the derecognition of a
non-monetary asset or non-monetary liability relating to advance consideration, the date of the
transaction is the date on which an entity initially recognizes the nonmonetary asset or non-
monetary liability arising from the advance consideration. If there are multiple payments or
receipts in advance, then the entity must determine a date of the transactions for each payment
or receipt of advance consideration. The interpretation may be applied on a fully retrospective
basis. Entities may apply the interpretation prospectively to all assets, expenses and income in
its scope that are initially recognized on or after the beginning of the reporting period in which
the entity first applies the interpretation or the beginning of a prior reporting period presented
as comparative information in the Company financial statements of the reporting period in
which the entity first applies the interpretation.
2020
 PFRS 16, Leases

Under the new standard, lessees will no longer classify their leases as either operating or
finance leases in accordance with PAS 17, Leases. Rather, lessees will apply the single-asset
model. Under this model, lessees will recognize the assets and related liabilities for most
leases on their balance sheets, and subsequently, will depreciate the lease assets and recognize
interest on the lease liabilities in their profit or loss. Leases with a term of 12 months or less
or for which the underlying asset is of low value are exempted from these requirements.
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The accounting by lessors is substantially unchanged as the new standard carries forward the
principles of lessor accounting under PAS 17. Lessors, however, will be required to disclose
more information in their financial statements, particularly on the risk exposure to residual
value.
Entities may early adopt PFRS 16 but only if they have also adopted PFRS 15. When
adopting PFRS 16, an entity is permitted to use either a full retrospective or a modified
retrospective approach, with options to use certain transition reliefs.
The Company is currently assessing the impact of adopting PFRS 16.
Deferred effectivity
 Amendments to PFRS 10 and PAS 28, Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture
The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of
control of a subsidiary that is sold or contributed to an associate or joint venture. The
amendments clarify that a full gain or loss is recognized when a transfer to an associate or
joint venture involves a business as defined in PFRS 3, Business Combinations. Any gain or
loss resulting from the sale or contribution of assets that does not constitute a business,
however, is recognized only to the extent of unrelated investors’ interests in the associate or
joint venture.
On January 13, 2016, the Financial Reporting Standards Council postponed the original
effective date of January 1, 2016 of the said amendments until the International Accounting
Standards Board has completed its broader review of the research project on equity accounting
that may result in the simplification of accounting for such transactions and of other aspects of
accounting for associates and joint ventures.
4. Summary of Significant Accounting Policies
The significant accounting policies that have been used in the preparation of the financial
statements are summarized below. These policies have been consistently applied to all years
presented, unless otherwise stated.
Current versus Non-current Classification

The Company presents assets and liabilities in the statement of financial position based on
current/non-current classification. An asset as current when it is:
 expected to be realized or intended to be sold or consumed in normal operating cycle;

 held primarily for the purpose of trading;
 expected to be realized within twelve months after the reporting period; or
 cash or cash equivalent unless restricted form being exchanged or used to settle as liability for
at least twelve months after the reporting period.
All other assets are classified as noncurrent.

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A liability is current when:
 It is expected to be settled in normal operating cycle;

 It is held primarily for the purpose of trading;
 It is due to be settled within twelve months after the reporting period; or
 There is no unconditional right to defer the settlement of the liability for at least twelve
months after the reporting period.
The Company classifies all other liabilities as non-current.
Financial Instruments
The Company recognizes a financial instrument in the statement of financial position when it
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 on the settlement date.
Initial recognition
All financial instruments are recognized initially at fair value. Transaction costs are included in
the initial measurement of all financial assets and financial liabilities, except for financial
instruments measured at fair value through profit or loss (FVPL).
Financial assets in the scope of PAS 39 are classified as either financial assets at FVPL, loans and
receivables, held-to-maturity (HTM) investments, or AFS financial assets, as appropriate.
Financial liabilities are classified as either financial liabilities at FVPL or other financial liabilities.
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual agreement. Interest, dividends, gains and losses relating to a financial instrument or a
component that is a financial liability are reported as expense or income. Distributions to holders
of financial instruments classified as equity are charged directly to equity net of any related
income tax benefits.
As of March 31, 2017 and 2016, the Company’s financial assets and financial liabilities are in the
nature of loans and receivables and other financial liabilities.
Subsequent Measurement
The subsequent measurement of financial assets and financial liabilities depends on their
classification.
Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments and fixed
maturities that are not quoted in an active market. These are not entered into with the intention of
immediate or short-term resale and are not designated as AFS financial assets or financial assets at
FVPL. These are included in current assets if maturity is within 12 months from the statement of
financial position date, otherwise, these are classified as noncurrent assets.
After initial measurement, the loans and receivables are subsequently measured at amortized cost
using the effective interest rate (EIR) method, less allowance for impairment. Amortized cost is
calculated by taking into account any discount or premium on acquisition and fees that are an
integral part of the EIR and transaction costs. Amortization and losses from impairment are
recognized in profit or loss.
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The Company’s loans and receivables include cash and accounts receivable.
Other financial liabilities

Other financial liabilities pertain to issued financial instruments that are not classified or
designated as financial liabilities at FVPL and contain contractual obligations to deliver cash or
other financial assets to the holder or to settle the obligation other than the exchange of a fixed
amount of cash or another financial asset for a fixed number of own equity shares.
The Company’s other financial liabilities include accounts payable and accrued expenses
excluding statutory payable.
Fair Value
Financial assets
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 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.
Nonfinancial assets
A fair value measurement of a nonfinancial 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.
Fair value hierarchy

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 unobservable inputs.
The Company uses the following hierarchy for determining and disclosing the fair value of
financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: Valuation techniques for which all inputs which have a significant effect on the recorded
fair value are directly or indirectly observable
Level 3: Valuation techniques which use inputs which have a significant effect on the recorded
fair value that are not based on observable market data
For assets and liabilities that are recognized in the financial statements 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.
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For the purpose of fair value disclosures, the Company has determined classes of assets and
liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level
of the fair value hierarchy as explained above.
Derecognition of Financial Assets and Liabilities

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 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
 the Company has transferred its rights to receive cash flows from the asset and either: (i)
has transferred substantially all the risks and rewards of the asset, or (ii) has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of
the asset.
When the Company has transferred its rights 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 Company’s continuing involvement in the
asset. Continuing involvement that takes the form of a guarantee over the transferred asset is
measured at the lower of the carrying amount of the asset and the maximum amount of
consideration that the Company could be required to repay.
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 is recognized in profit or loss.
Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial
position if there is an enforceable legal right and an 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.
‘Day 1’ Difference
For transactions other than those related to customers’ guaranty and other deposits, where the
transaction price in a non-active market is different to the fair value from other observable current
market transactions in the same instrument or based on a valuation technique whose variables
include only data from observable market, the Company recognizes the difference between the
transaction price and fair value (a ‘Day 1’ difference) in profit or loss unless it qualifies for
recognition as some other type of asset.
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In cases where the valuation technique used is made of data which is not observable, the
difference between the transaction price and model value is only recognized in profit or loss when
the inputs become observable or when the instrument is derecognized. For each transaction, the
Company determines the appropriate method of recognizing the ‘Day 1’ difference amount.
Impairment of Financial Assets

The Company assesses at each reporting 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.
Loans and receivables

For loans and receivables carried at amortized cost, the Company first assesses whether objective
evidence of impairment exists individually for financial assets that are individually significant, or
collectively for financial assets that are not individually significant. If the Company determines
that no objective evidence of impairment exists for individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assessed for impairment. Those characteristics are relevant to the
estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability
to pay all amounts due according to the contractual terms of the assets being evaluated. Assets
that are individually assessed for impairment and for which an impairment loss is, or continues to
be, recognized are not included in a collective assessment for impairment.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis
of such credit risk characteristics as industry, customer type, customer location, past-due status
and term. Future cash flows in a group of financial assets that are collectively evaluated for
impairment are estimated on the basis of historical loss experience for assets with credit risk
characteristics similar to those in the group. Historical loss experience is adjusted on the basis of
current observable data to reflect the effects of current conditions that did not affect the period on
which the historical loss experience is based and to remove the effects of conditions in the
historical period that do not exist currently. The methodology and assumptions used for
estimating future cash flows are reviewed regularly by the Company to reduce any differences
between loss estimates and actual loss experience.
In relation to trade receivables, a provision for impairment is made when there is objective
evidence (such as the probability of insolvency or significant financial difficulties of the debtor)
that the Company will not be able to collect all of the amounts due under the original terms of the
invoice.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of the
estimated future cash flows (excluding future credit losses that have not been incurred) discounted
at the financial assets’ original EIR (i.e., the EIR computed at initial recognition). If a loan has a
variable interest rate, the discount rate for measuring any impairment loss is the current EIR.
- 12 -
The carrying amount of the asset is reduced through use of an allowance account and the amount
of loss is charged to the profit or loss during the period in which it arises. Interest income
continues to be recognized based on the original EIR of the asset. Receivables, together with the
associated allowance accounts, are written off when there is no realistic prospect of future
recovery has been realized and all collateral has been realized or has been transferred to the
Company.
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
reversed. Any subsequent reversal of an impairment loss is recognized in profit or loss, to the
extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.
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 estimated costs of completion and the
estimated costs necessary to make the sale.
Costs incurred in bringing each product to its present location and condition is accounted for as
follows:
Finished goods - cost includes direct materials and labor and the
applicable allocation of fixed and variable
overhead costs.
Raw materials and goods in process - purchase cost on a weighted average method.
At each reporting date, inventories are assessed for impairment. If inventory is impaired, the
carrying amount is reduced to its selling prices less cost to complete and sell, the impairment loss
is recognized immediately in profit or loss.
Prepaid expenses and other current assets

Prepaid expenses and other current assets pertains to resources controlled by the Company as a
result of past events and from which future economic benefits are expected to flow to the
Company.
These are initially recorded as assets and measured at the amount of cash paid. Subsequently,
these are charged to profit or loss as the benefits are consumed in operations or expired with the
passage of time.
As of March 31, 2017 and 2016, the Company’s prepaid expenses and other current assets include
advances to suppliers, prepayments for car, accident and hospitalization insurance and others.
Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and any accumulated
impairment losses.
The initial cost of property and equipment comprises its purchase price and any directly
attributable costs of bringing the asset to its working condition and location for its intended use.
Expenditures incurred after the assets have been put into operations, such as repairs and
maintenance and overhaul cost, are normally charged to profit or loss in the period in which the
costs are incurred. In situations where it can be clearly demonstrated that the expenditures have
resulted in an increase in the future economic benefits expected to be obtained from the use of an
- 13 -
item of property and equipment beyond its originally assessed standard of performance, the
expenditures are capitalized as additional cost of property and equipment.
Depreciation of property and equipment commences once the assets are put into operational use
and is calculated on a straight-line method over the estimated useful life as follows:
Category Number of Years

Leasehold improvements 5 or lease term,
whichever is shorter
Machinery, tools and equipment 5
Computer equipment and software 3
Furniture and fixtures 3
Transportation equipment 5
The assets’ residual values, useful lives and depreciation method are reviewed periodically, and
adjusted, if appropriate, to ensure that the residual values, useful lives and method are consistent
with the expected pattern of economic benefits from items of property and equipment.
An item of property and equipment is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is included in profit or loss in the period the asset is derecognized.
Impairment of Nonfinancial Assets

The Company assesses at each reporting date whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the
Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher
of an asset’s or cash-generating unit’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
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 or other available fair value indicators. Impairment losses, if any, are recognized in
profit or loss.
An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication
exists, the Company estimates the asset’s recoverable amount. A previously recognized
impairment loss is reversed only if there has been a change in the assumptions used to determine
the asset’s recoverable amount since the last impairment loss was recognized. The reversal is
limited so that the carrying amount of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognized for the asset in prior periods. Such reversal is recognized in
profit or loss.
After such reversal, the depreciation charge is adjusted in future periods to allocate the asset’s
revised carrying amount, less any residual value, on a systematic basis over its remaining useful
life.
- 14 -
Equity
Capital stock
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 retained earnings.
Retained earnings
Retained earnings represent accumulated earnings of the Company less dividends declared.
Dividends on common stocks are recognized as a liability and deducted from equity (retained
earnings) when they declared. Dividends for the year that are approved after the reporting date are
dealt with as an event after the reporting date. Retained earnings may also include effect of
changes in accounting policy as may be required by the standard’s transitional provisions.
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 measured reliably. Regardless of when the payment is being
made, revenue is measured at the fair value of the consideration received or receivable, taking into
account contractually defined terms of payment and excluding taxes and duties. The Company
assesses its revenue recognition arrangements against specific criteria in order to determine if it is
acting as principal or agent. The Company is acting as principal in all arrangements. The
following specific recognition criteria must also be met before revenue is recognized:
Sale of goods
Revenue from sale of goods is recognized when the significant risks and rewards of ownership
have passed to the buyer.
Interest income
Interest income is recognized as it accrues using the EIR method.
Expenses Recognition
Expenses are decrease in economic benefit during the accounting period in the form of outflows or
decrease of assets or incurrence of liabilities that result in decrease in equity, other than those
relating to distributions to equity participants. Expenses are generally recognized when services
are used or the expenses arise. The following specific recognition criteria must also be met before
costs and expenses are recognized:
Cost of sales
Cost that includes all expenses associated with the specific sale of goods. Cost of sales includes
all materials and supplies used, direct labor, depreciation of production equipment, production
supervision, light and water, repairs and maintenance, freight and handling, royalty 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 in profit or loss as incurred.
- 15 -
Retirement Benefit Liability

The retirement benefit liability 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, adjusted for
any effect of limiting a net retirement 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.
Retirement benefit expense on the Company’s defined benefit retirement plan is actuarially
computed using the projected unit credit (PUC) valuation method. Under this method, the current
service cost is the present value of retirement benefits liability in the future with respect to the
services rendered in the current period.
Retirement benefit expense comprises the following:

a) service cost;
b) net interest on the net retirement benefit liability or asset; and
c) remeasurements of net retirement 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.
Net interest on the net retirement liability or asset is the change during the period in the net
retirement liability or asset that arises from the passage of time which is determined by applying
the discount rate based on high quality corporate bonds to the net retirement liability or asset. Net
interest on the net retirement 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 OCI in the period in which they arise. Remeasurements are not reclassified to
profit or loss in subsequent periods.
Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance
policies. Plan assets are not available to the creditors of the Company, nor can they be paid
directly to the Company. Fair value of plan assets is based on market price information. When no
market price is available, the fair value of plan assets is estimated by discounting expected future
cash flows using a discount rate that reflects both the risk associated with the plan assets and the
maturity or expected disposal date of those assets (or, if they have no maturity, the expected
period until the settlement of the related obligations).
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of
the arrangement at the inception date whether the fulfillment of the arrangement is dependent on
the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that
right is not explicitly specified in an arrangement.
A reassessment is made after inception of the lease only if one of the following applies:
(a) There is a change in contractual terms, other than a renewal or extension of the arrangement;
(b) A renewal option is exercised or extension 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
- 16 -
(d) There is a substantial change to the asset.
Where 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 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 expense in profit or
loss on a straight line basis over the lease term.
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 substantially 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 certain exception.
Deferred tax assets are recognized for all deductible temporary differences, carryforward benefit
of unused tax credits from excess minimum corporate income tax (MCIT) over the regular
corporate income tax (RCIT) and net operating loss carryover (NOLCO), to the extent that it is
probable that taxable income will be available against which the deductible temporary differences
and carryforward benefits of unused tax credits from MCIT and NOLCO can be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantially enacted at the reporting date.
Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority.
Foreign Currency-denominated Transactions and Translation

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing
at the date of the transaction using the exchange rate based on the Philippine Dealing System and
Bangko Sentral ng Pilipinas rates. 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 the profit or loss. 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.
- 17 -
Provisions
Provisions are recognized when the Company has: (a) a present obligation (legal or constructive)
as a result of a past event; (b) it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; (c) and a reliable estimate can be made of the
amount of the obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pretax rate that reflects current
market assessment of the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is
recognized as an interest expense. Provisions are reviewed at each reporting date and adjusted to
reflect the current best estimates.
Contingencies
Contingent liabilities are not recognized in the financial statements. They are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets
are not recognized in the financial statements but disclosed when an inflow of economic benefits
is probable.
Events after Reporting Date

Post year-end events up to the date of the auditors’ report that provide additional information
about the Company’s position at the reporting date (adjusting event) are reflected in the financial
statements. Post year-end events that are not adjusting events are disclosed in the financial
statements when material.
5. Significant Accounting Judgments, Estimates and Assumptions
The preparation of the financial statements in accordance with PFRS requires the Company to
make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities,
income and expenses and disclosure of contingent assets and contingent liabilities. However,
future events may occur which will cause the assumptions used in arriving at the estimates to
change. The effects of any change in estimates are reflected in the financial statements as they
become reasonably determinable. Actual results could differ from such estimates.
Judgments, estimates and assumptions are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances.
Judgments
In the process of applying the Company’s accounting policies, management has made the
following judgments, which have the most significant effect on the amounts recognized in the
financial statements:
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 its revenue and expenses are substantially denominated in U.S. Dollar.
Operating lease commitments - Company as a lessee

The Company has entered into commercial property leases on its plant facility, warehouse and
administrative office locations. 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.
- 18 -
Estimates and Assumptions

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:
Evaluating impairment of accounts receivables

The Company reviews its receivables at each reporting date to assess whether an impairment loss
should be recorded in profit or loss. In particular, judgment by management is required in the
estimation of the amount and timing of future cash flows when determining the level of allowance
required. Such estimates are based on assumptions a number of factors and actual results may
differ, resulting in future changes to the allowance.
The level of this allowance is evaluated by management on the basis of factors that affect the
collectability of the accounts. These factors include, but are not limited to financial status of
counterparties, payment behavior and known market factors. The Company reviews the age and
status of receivables, and identifies accounts that are to be provided with allowance on a regular
basis.
The amount of 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 net income. The Company has no
allowance for doubtful accounts amounting to nil as of March 31, 2017 and 2016. The carrying
values of receivables amounted to $1.69 million and $1.32 million as of March 31, 2017 and 2016,
respectively (see Note 7), and due to related parties amounted to $1.60 million and $1.22 million
as of March 31, 2017 and 2016, respectively (see Note 18).
Evaluating impairment of inventories

The Company reviews its perpetual inventory levels to assess impairment at least on a
semi-annual basis. The amount and timing of recorded expenses for any period would differ if
different judgments were made or different estimates were utilized.
The Company recognized reversal of allowance for inventory obsolescence amounting to $77,793
and $183,706 in 2017 and 2016, respectively. Inventories, net of allowance for inventory
obsolescence, as of March 31, 2017 and 2016 amounted to $1,275,507 and $1,045,337,
respectively (see Note 8).
Estimating useful life of property and equipment

The Company estimates the useful life of its property and equipment based on the period over
which these assets are expected to be available for use. The estimated useful life of property and
equipment are reviewed at least annually and are updated if expectations differ from previous
estimates due to physical wear and tear and technical or commercial obsolescence on the use of
these assets. It is possible that future results of operations could be materially affected by changes
in estimates brought about by changes in the factors mentioned. Estimated useful life of property
and equipment are disclosed in Note 4 to the financial statements.
Evaluating impairment of nonfinancial assets

The Company assesses impairment on property and equipment, prepaid expenses and other assets
whenever events or changes in circumstances indicate that the carrying amount of a nonfinancial
asset may not be recoverable.
- 19 -
The factors that the Company considers important which could trigger an impairment review
include the following:
 Significant underperformance relative to expected historical or projected future operating

results;
 Significant changes in the manner of use of the acquired assets or the strategy for overall
business; and
 Significant negative industry or economic trends.
The carrying value of property and equipment, prepaid expenses and other assets as of
March 31, 2017 and 2016 are as follows:
2017 2016
Property and equipment (Note 10) $839,489 $718,409
Prepaid expenses and other current assets (Note 9) 59,604 117,641
Other noncurrent assets 53,697 47,534
faulty ** faulty **
The Company assesses impairment on property and equipment and considers the following
important indicators:
 Significant changes in asset usage;
 Significant decline in assets’ market value;
 Obsolescence or physical damage of an asset;
 Significant underperformance relative to expected historical or projected future operating
results;
 Significant changes in the manner of usage of the acquired assets or the strategy for the
Company’s overall business; and
 Significant negative industry or economic trends.
Estimating retirement benefit liability

The cost of benefit as well as the present value of the retirement benefit liability is determined
using actuarial valuations. The actuarial valuation involves making assumptions about discount
rates, expected rates of return of assets, future salary increases, mortality rates and future
retirement benefit increases. All the assumptions are reviewed at each reporting date. In
accordance with PFRS, actual results that differ from the Company’s assumptions are accumulated
and amortized over future periods and therefore, generally affect the recognized expense. While
the Company believes that the assumptions are reasonable and appropriate, significant differences
in the actual experience or significant changes in the assumptions may materially affect the
retirement benefit and other retirement obligations.
Retirement benefit liability amounted to $186,029 and $182,795 as of March 31, 2017 and 2016,
respectively (see Note 16).
Realizability of deferred tax assets

The Company reviews the carrying amounts of deferred tax assets at each reporting date and
reduces it to the extent that it is no longer probable that sufficient future income will be available
to allow all or part of the deferred tax assets to be utilized. The Company believes that it will
generate sufficient taxable profit to allow all or part of the deferred tax assets to be utilized.
- 20 -
Deferred tax assets recognized in the statements of financial position as of March 31, 2017 and
2016 amounted to $11,686 and $26,548, respectively (see Note 17).
- 21 -
Estimating fair value of financial instruments

PFRS requires certain financial assets and liabilities to be carried at fair value or have the fair
values disclosed in the notes, which requires use of extensive accounting estimates and judgments.
While significant components of fair value measurement were determined using verifiable
objective evidence (i.e., foreign exchange rates and interest rates), the amount of changes in fair
value would differ if the Company utilized different valuation methodology. Any changes in fair
value of these financial assets and liabilities would affect directly the profit or loss and statement
of changes in equity. Certain financial assets and liabilities of the Company were initially
recorded at its fair value by using the discounted cash flow methodology. See Note 19 for the
related balances.
6. Cash
This account consists of:
2017 2016
Cash on hand $2,014 $2,515
Cash in banks 2,283,474 2,326,428
faulty ** faulty **
Cash in banks earns interest at the respective bank deposit rates ranging from 0.20% to 0.25%.
Interest income earned amounted to $4,076 and $5,055 in 2017 and 2016, respectively.
7. Accounts Receivable
2017 2016
Trade:
Related parties (Note 18) $1,600,588 $1,217,318
Others 5,130 3,460
Nontrade 82,666 104,098
0 0
Trade receivables are noninterest-bearing and are generally settled on 30 and 45-day terms for
domestic and export sales, respectively. Nontrade receivables represent emergency loans, cash
advances, car loans and SSS maternity/sickness.
No allowance for impairment loss was recognized by the Company in 2017 and 2016.
For the terms and condition on related party transactions, see Note 18.
- 22 -
8. Inventories
2017 2016
At cost:
Raw materials $1,035,894 $923,886
Goods-in-process 156,385 55,300
Finished goods 225,320 286,036
** Expression is
0 faulty **
Less: Allowance for inventory obsolescence (142,092) (219,885)
** Expression is
0 faulty **
The rollforward of the allowance for inventory obsolescence is as follows:
2017 2016
Balance at beginning of year $219,885 $403,591
Reversal of allowance for inventory obsolescence (77,793) (183,706)
0** Expression is 0** Expression is
Balance at end of year faulty ** faulty **0
The Company has no inventories which were used as security to its obligations as of
March 31, 2017 and 2016.
The total costs of inventories recognized as “Cost of Sales” include the following:
2017 2016
Raw materials used (Note 13) $8,296,686 $6,747,370
Factory tools and supplies (Note 13) 1,096,421 988,884
Goods in process
Balance at beginning of year 55,300 116,955
Balance at end of year (156,385) (55,300)
Finished goods
Balance at beginning of year 286,036 237,785
Balance at end of year (225,320) (286,036)
faulty ** faulty **
9. Prepaid Expenses and Other Current Assets
2017 2016
Deposits on purchases $46,468 $78,516
Prepaid expenses 13,136 39,125
faulty ** faulty **
- 23 -
Deposits on purchases are composed of advances made to suppliers.
Prepaid expenses include prepayments for car, accident and hospitalization insurance and others.
10. Property and Equipment
The rollforward analysis of this account follows:
2017
Machinery, Computer
Leasehold Tools and Equipment Furniture Transportation
Improvements Equipment and Software and Fixtures Equipment Total
Cost:
Balances at beginning of year $186,970 $2,282,451 $452,244 $192,690 $180,399 0
Acquisitions − 331,409 44,591 4,581 44,925 0
Disposals − (2,026) − − − 0
0** Expression ** Expression** Expression ** Expression ** Expression is
Balances at end of year is faulty **0 is faulty ** is faulty ** is faulty ** faulty ** 0
Accumulated depreciation:
Balances at beginning of year 176,008 1,817,540 384,204 142,195 56,398 0
Depreciation (Note 13) 4,872 188,605 43,547 29,505 37,897 0
Disposals − (2,026) − − − 0
** Expression ** Expression** Expression ** Expression ** Expression is
Balances at end of year is faulty ** is faulty ** is faulty ** is faulty ** faulty ** 0
Net book values 0 0 0 0 0 0
2016
Machinery Computer
Leasehold Tools and Equipment Furniture Transportation
Improvements Equipment and Software and Fixtures Equipment Total
Cost:
Balances at beginning of year $128,411 $1,929,309 $409,762 $173,791 $104,681 0
Acquisitions 58,559 353,142 42,482 18,899 100,324 0
Disposals − − − − (24,606) (24,606)
Balances at end of year 0 0 0 0 0 0
Accumulated depreciation:
Balances at beginning of year 112,576 1,585,684 341,950 107,878 50,783 0
Depreciation (Note 13) 63,432 231,856 42,254 34,317 30,221 0
** Expression
Disposals − − − − (24,606)
is faulty **
0** Expression ** Expression ** Expression ** Expression ** Expression is
Balances at end of year is faulty ** is faulty ** is faulty ** is faulty ** faulty ** 0
Net book values 0 0 0 $0 0 0
Outstanding liabilities from acquisitions of property and equipment amounted $178,967 and
$6,286 as of March 31, 2017 and 2016, respectively.
Depreciation is allocated as follows:
2017 2016
Cost of Sales (Note 13) $268,555 $378,603
Operating expenses (Note 14) 35,871 23,477
faulty ** faulty **
Fully depreciated property and equipment that are still in use by the Company as of March 31,
2017 and 2016 amounted to $1,749,201 and $1,532,348, respectively.
- 24 -
The Company has no property and equipment which were used as security to its obligations as of
March 31, 2017 and 2016.
- 25 -
11. Accounts Payable and Accrued Expenses
2017 2016
Accounts payable:
Trade $627 $492,631
Nontrade 398 259,463
Accrued expenses
Salaries and employee benefits 534 230,815
Accrual on purchases 170 205,094
Utilities and supplies 35 203,258
Others 11 90,456
faulty ** faulty **
Trade payables consists of amounts payable to vendors and suppliers and are generally settled
within 30 to 60 days.
Nontrade payables consists generally of employee and payroll related transactions.
Accrued expenses include salaries and employee benefits, freight and handling, rentals, utilities,
janitorial services, management fee, gas and oil and others. Accrual on purchases include those
transactions with goods already received but are not yet billed by the supplier as of year-end.
For the terms and condition on related party transactions, see Note 18.
12. Equity
Capital Stock
On December 20, 2004, the Company was incorporated with authorized capital stock amounting
to P40,000,000 and is divided into four million shares (4,000,000) with a par value of P10.00 per
share (or $0.21 per share).
The details of the Company’s capital stock as of March 31, 2017 and 2016 follow:
No. of Shares Amount

2017 2016 Par value US $ equivalent
Capital stock - $0.21 par value per share
Authorized, issued and outstanding 4,000,000 4,000,000 P40,000,000 $841,751
Retained Earnings
a. On March 28, 2017, the Company’s Board of Directors (BOD) appropriated retained earnings
for cash dividend amounting to $1,954,946 ($0.49 per share) to its stockholders. Dividends
are expected to be paid on September 2017.
b. On March 22, 2016, the Company’s BOD appropriated retained earnings for cash dividend
amounting to $1,644,953 ($0.41 per share) to its stockholders. The dividend was paid on
September 2016.
- 26 -
- 27 -
c. On March 17, 2015, the Company’s BOD approved the appropriation for future cash dividend
declaration and for the Company’s planned expansion amounting $2,550,000. Dividends are
expected to be paid on September 2015. On the same date, the Company’s BOD approved the
reversal of the appropriated retained earnings amounting $602,267 to unappropriated retained
earnings due to completion of its purpose.
Capital Management
Capital includes equity attributable to the equity holders of the Company. The primary objective
of the Company’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximize shareholder value.
The Company manages its capital structure and makes adjustments to it, in light of changes in
economic conditions. To maintain or adjust the capital structure, the Company may adjust the
dividend payment to shareholders or issue new shares.
The following table shows the component of the Company’s capital as of March 31, 2017 and
2016:
2017 2016
Capital stock $841,751 $841,751
Retained earnings
Appropriated 2,849,163 2,539,170
Unappropriated 564,089 559,617
faulty ** faulty **
There were no changes made in the objectives, policies or processes in 2017 and 2016.
The Company is not subjected to externally imposed capital requirements.
13. Cost of Sales
2017 2016
Raw materials used $8,296,686 $6,747,370
Direct labor (Note 15) 348,886 414,825
Manufacturing expenses
Factory tools and supplies 1,096,421 988,884
Indirect labor (Note 15) 583,604 486,800
Royalty and technical assistance (Note 18) 458,764 360,837
Depreciation (Note 10) 268,555 378,603
Subcontractor services 221,483 216,286
Utilities and communication 143,166 141,747
Freight and handling 64,881 26,772
Transportation and travel 47,502 22,142
Repairs and maintenance 39,938 161,071
Rental 27,040 26,762
Training 14,933 18,920
(Forward)
- 28 -
2017 2016
Gasoline and oil $10,752 $22,734
Entertainment, amusement and recreation 3,225 1,817
Others 36,166 36,160
faulty ** faulty **
Total manufacturing costs ** Expression is 0
faulty **
Goods in process inventory (Note 8)
Beginning of year 55,300 116,955
End of year (156,385) (55,300)
Cost of goods manufactured ** Expression is ** Expression is
faulty ** faulty **
Finished goods inventory (Note 8)
Beginning of year 286,036 237,785
End of year (225,320) (286,036)
faulty ** faulty **
14. General and Administrative Expenses
2017 2016
Salaries and employee benefits (Note 15) $401,483 $372,293
Subcontractor services 38,569 21,235
Depreciation (Note 10) 35,871 23,477
Rental 24,982 30,596
Supplies 24,733 21,268
Professional fees 18,170 15,218
Utilities and communication 14,624 15,557
Security and janitorial services 10,568 9,941
Repairs and maintenance 7,760 27,303
Management fees 6,834 7,902
Entertainment, amusement and recreation 4,232 7,005
Others 29,615 31,080
faulty ** faulty **
15. Personnel Expenses
2017 2016
Cost of sales (Note 13)
Salaries, wages and bonuses $790,344 $760,966
Employees’ benefits and welfare 142,146 140,659
faulty ** faulty **
General and administrative expense (Note 14)
Salaries, wages and bonuses 342,125 315,063
- 29 -
Employees’ benefits and welfare 59,358 57,230

faulty ** faulty **
** Expression is
00 faulty **
16. Retirement Benefit Liability
The Company has an unfunded, noncontributory and defined benefit and actuarially computed
retirement plan covering all its regular and permanent employees. The benefit is 100% of the
latest monthly salary per year of service.
Based on the actuarial valuation as of March 31, 2017 and 2016 computed using the PUC method,
the Company’s retirement liability and expenses are summarized as follows:
2017 2016
Retirement benefit liability $186,029 $182,795
Retirement expense 28,907 28,397
Components of retirement expense are as follows:
2017 2016
Current service cost $20,569 $21,237
Interest cost 8,338 7,160
Retirement expense faulty ** faulty **
The movements in the retirement benefit liability follow:
2017 2016
Current service cost 20,569 21,237
Interest cost 8,338 7,160
Amount to be recognized in OCI (9,178) (1,774)
Effect of changes in foreign currency rates (16,495) (4,708)
Balance at end of year faulty ** faulty **
The Company has no plan to contribute to its plan asset in fiscal year 2017.
Remeasurement losses (gains) recognized in OCI follow:
2017 2016
Actuarial losses (gains) on defined benefit obligation
Changes in financial assumptions $9,476 ($3,883)
Changes in experiences (298) 2,109
faulty ** faulty **
- 30 -
Movements of cumulative remeasurement effect recognized in OCI follow:
2017 2016
Actuarial losses (gains) on defined benefit obligation
Changes in financial assumptions 9,476 (3,883)
Changes in experiences (298) 2,109
Balance at end of year faulty ** faulty **
The principal actuarial assumptions used in determining retirement benefit liability for the
Company’s plan are shown below:
2017 2016
Discount rate
Beginning 4.77% 4.60%
Ending 5.10% 4.77%
Salary increase rate
Beginning 5.00% 5.00%
Ending 5.00% 5.00%
The sensitivity analysis that follows has been determined based on reasonably possible changes of
each significant assumption on the retirement benefit obligation as of the end of reporting period,
assuming all other assumptions were held constant.
2017 2016
Discount rate +100bps ($24,532) ($20,903)
-100bps 29,338 24,515
Salary rate +100bps 27,639 22,296
-100bps (23,662) (19,257)
Shown below is the maturity analysis of the undiscounted benefit payments as of March 31, 2017
and 2016:
2017 2016
Less than one year $− $−
More than one year to five years 20,055 37,374
More than five years to ten years 92,726 116,051
The weighted average duration of the defined benefit obligation as of March 31, 2017 and 2016 is
13 years and 15 years, respectively.
17. Income Taxes
The provision for income tax for PEZA registered companies is computed by applying 5% on the
Company’s gross profit, net of allowable deductions, in accordance with Republic Act (RA)
No. 7916.
The Company applied the corporate tax rate of 30% on other income that is not subject to gross
- 31 -
income tax.
The provisions for income tax in 2017 and 2016 consist of:
2017 2016
Current $171,944 $154,712
Deferred 15,097 4,240
faulty ** faulty **
- 32 -
The reconciliation of provision for income tax computed at statutory tax rate to provision for
income tax as shown in profit or loss are as follows:
2017 2016
Income tax at statutory rate of 5% $111,311 $91,105
Add (deduct):
Unallowable deductions under PEZA 73,403 62,179
Other income subject to 30% 2,774 6,498
Interest income subjected to final tax (1,231) (1,520)
Nondeductible interest expense 784 690
faulty ** faulty **
The components of the Company’s deferred tax asset are as follows:
2017 2016
Deferred tax asset arising from:
Allowance for inventory obsolescence $6,343 $10,226
Retirement benefit liability 4,822 3,595
Accrual of sick leave, vacation leave and bonus 521 12,727
faulty ** faulty **
18. Related Party Transactions
The Company, in the regular conduct of business, has entered in transactions with related parties.
Parties are considered to be related if, among others, one party has the ability, directly or
indirectly, to control the other party in making financial and operating decisions, the parties are
subject to common control or the party is an associate or a joint venture. Except as otherwise
indicated, the outstanding accounts with related parties shall be settled in cash. The transactions
are made at terms and prices agreed upon by the parties. The significant transactions with related
parties are as follows:
a. The Company entered into a management agreement with International Wiring Systems
(Phils.) Corporation (IWSPC), an affiliate, wherein the Company pays monthly management
fee of P30,300 for financial and administrative services in the form of general advice and
assistance.
b. The Company has a technical assistance agreement with Sumitomo Wiring System (SWS), an
affiliate. Under this agreement, SWS shall provide technical know-how and grant industrial
property rights. The Company shall pay royalties amounting to 3% of selling price of the
products sold and charges for the use of drwawing tools owned by the affiliate on a monthly
basis.
c. The Company leases its administrative office and manufacturing facilities from IWSPC. The
lease is for a period of one year, renewable automatically every year, unless the lessee
signifies in writing its intention to terminate the lease. For the use and occupancy of the
leased premises, the Company shall pay $2,080 monthly.
Additionally, the Company leases two units of executive houses from IWSPC for P86,000 per
- 33 -
month. The lease is for a period of one year, renewable automatically every year, unless the
lessee signifies in writing its intention to terminate lease within ninety (90) days prior.
The following table provides the total amount of transactions and outstanding balances that have
been entered into with related parties as of and for the years ended March 31, 2017 and 2016:
Outstanding
Amount of Transactions Balances
Relationshi Condition
Company Category Terms
p 2017 2016 2017 2016 s
SD Engineering
Noninterest-
Co., Ltd Parent Dividend $986,848 $993,470 $− $− Unsecured
bearing
(Japan).
Sumitomo Sales/Trade Noninterest-
Shareholder 230,395 197,442 20,117 23,363 Unsecured
Wiring receivable bearing
System, Ltd.
Purchases/Trade Noninterest-
(Japan) 1,207,366 1,618,050 144,443 125,808 Unsecured
Payable bearing
Royalties/Royalty Noninterest-
409,713 360,837 55,821 36,581 Unsecured
Payable bearing
Noninterest-
Dividend 657,899 662,313 − − Unsecured
bearing
International Sales/Trade Noninterest-
Wiring Affiliate 2,345,942 3,669,275 322,217 127,166 Unsecured
receivable bearing
System
(Phils.) Management
Corporation Noninterest-
Fee/Nontrade 6,834 7,902 − 646 Unsecured
bearing
Payable
Rentals/Nontrade Noninterest-
46,517 47,388 − 3,913 Unsecured
Payable bearing
Sumi-Hanel
Wiring Sales/Trade Noninterest-
Affiliate 915,419 235,484 15,962 24,278 Unsecured
Systems Co., receivable bearing
Ltd.
Sumitomo
Electric
Sales/Trade Noninterest-
Wiring Affiliate 810,874 1,447,000 101,199 189,938 Unsecured
receivable bearing
Systems –
America
Pilipinas Sales/Trade
Noninterest-
Kyohritsu Affiliate receivable 773,531 507,041 24,901 44,579 Unsecured
bearing
Inc.
J.K. Wire
Harness Sdn. Sales/Trade Noninterest-
Affiliate 600,611 761,179 31,713 60,681 Unsecured
Bhd. - receivable bearing
Malaysia
Sumi Indo
Wiring Affiliate 596,632 481,759 69,328 34,304 Unsecured
receivable bearing
System
Sumi
Philippines Sales/Trade Noninterest-
Affiliate 581,849 2,569,151 581,849 295,810 Unsecured
System
Sumidenso
Paraguay Affiliate 529,321 217,039 17,576 134,718 Unsecured
receivable bearing
S.R.L
(Forward)
Sumi Vietnam Sales/Trade Noninterest-

Affiliate $503,277 $300,316 $213,539 $23,424 Unsecured
- 34 -
Outstanding
Amount of Transactions Balances
Relationshi Condition
Company Category Terms
p 2017 2016 2017 2016 s
Systems Co.,
Ltd.
Noninterest-
Other Income 11,899 − − − Unsecured
bearing
Pt. Sumitomo
Wiring
Systems Affiliate 437,955 779,297 77,934 142,849 Unsecured
receivable bearing
(Batam
Indonesia)
Sistemas de
Arneses K&S Affiliate 673,131 − 61,887 − Unsecured
receivable bearing
Mexicana
Sumitomo
Electric
Sales/Trade
Wiring Affiliate 326,149 376,132 27,268 56,953 Noninterest- Unsecured
receivable
Systems, Ltd. bearing
(Thailand)
Sumidenso
Vietnam Co. Affiliate 297,111 273,176 23,790 15,098 Unsecured
receivable bearing
Ltd.
Sumidenso Do
Brasil
Industrias Affiliate 149,023 355,961 1,561 35,177 Unsecured
receivable bearing
Electricas
Ltda.
SD Engineeing Sales/Trade
Noninterest-
Hui Zhou, Affiliate receivable 78,745 20,161 7,279 − Unsecured
bearing
Ltd.
318,801 − 6,083 − Unsecured
Payable bearing
Sumi
(Cambodia)
Wiring Affiliate 18,657 9,067 − 3,124 Unsecured
receivable bearing
Systems
Co.,Ltd
Sumidenso da
Amazonia
Sales/Trade
Industrias Affiliate 11,622 − 2,468 −
receivable
Electricas
Ltda.
Others Affiliate − 132,132 − 5,856 Unsecured
receivable bearing
Affiliate 21,542 − 290 − Unsecured
Payable bearing
Noninterest-
Affiliate Nontrade Payable − − 2,653 − Unsecured
bearing
- 35 -
The statements of financial position as of March 31, 2017 and 2016 include the following amounts
resulting from transactions with related parties:
2017 2016
Trade receivables $1,600,588 $1,217,318
Trade payables 150,816 125,808
Royalty payable 55,821 36,581
Nontrade payables 2,653 4,559
The Company’s key management personnel include president, vice presidents and assistant vice
presidents. Compensation of the Company’s key management personnel consists of:
2017 2016
Short-term employee benefits $338,052 $336,420
Post-employment benefits 3,939 3,582
faulty ** faulty **
Terms and conditions of transactions with related parties

Outstanding balances are unsecured and settlement occurs in cash. There have been no guarantees
provided or received for any related party receivables and payables. In 2017 and 2016, the
Company has not recorded any impairment of receivables relating to amounts owed by related
parties. This assessment is undertaken each period through examining the financial position of the
related party and the market in which the related party operates.
19. Fair Value Measurement
The fair value of the financial assets and liabilities are included at the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than in a forced or
liquidation sale.
Cash, accounts receivables and accounts payable and accrued expenses, excluding statutory payables,
approximate their carrying amounts largely due to the short-term maturities of these instruments.
During 2017 and 2016, there were no transfers between Level 1 and Level 2 of the fair value
hierarch. Also, there were no financial assets or liabilities included within the Level 3 of the
hierarchy.
20. Financial Risk Management Objectives and Policies
The Company’s financial assets and liabilities are composed of cash, accounts receivable and
accounts payable and accrued expenses, excluding statutory payables, which arise directly from its
operations.
The main risks arising from the Company’s financial instruments are foreign currency risk, credit risk
and liquidity risk.
The Company’s management oversees the management of these risks, and reviews and agrees policies
for managing each of these risks, which are summarized below.
- 36 -
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.
The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the
Company’s operating activities (when revenue or costs and expenses are denominated in a
different currency from the Company’s functional currency, which is U.S. Dollar). Foreign
currency risk is monitored and analyzed systematically and is managed by the Company.
The Company’s foreign currency-denominated financial assets and liabilities are as follows:
2017 2016
Original U.S. Dollar Original U.S. Dollar
Currency Equivalent Currency Equivalent
In Philippine Peso
Cash in banks P6,852,510 $136,613 P9,939,989$215,758
Accounts receivable − − − −
P** Expression is ** Expression is P** Expression is ** Expression
faulty ** faulty ** faulty ** is faulty **
Accounts payable and accrued
expenses P45,453,021 $906,161 P41,589,580$902,748
In Japanese Yen
Cash in banks ¥1,401,390 $12,525 ¥ 3,846,553 $34,216
Accounts payable and accrued
expenses ¥14,144,165 $126,411 ¥10,134,609 $90,150
In translating the foreign currency-denominated monetary assets and liabilities into U.S. Dollar
amounts, the following exchange rates were used:
2017 2016
Philippine Peso P50.16 P46.07
Japanese Yen ¥111.89 ¥112.42
The following table demonstrates the sensitivity to a reasonably possible change in the foreign
currencies exchange rate, with all other variables held constant, of the Company’s income before
income tax (due to changes in the fair value of monetary assets and liabilities):
% Increase Decrease
2017
Philippine Peso ±0.56% (4,296) 4,296
Japanese Yen ±4.56% (5,418) 5,418
2016
Philippine Peso ±0.15% (1,044) 1,044
Japanese Yen ±0.60% (338) 338
There is no other impact on the Company’s equity other than those already affecting the income before
income tax.
Credit Risk
Credit risk refers to the risk that a counterparty will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss. The Company is exposed to credit

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SDE Philippines Financial Statements

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SDE (Philippines) Corp.

LIABILITIES AND EQUITY

Equity (Note 12)

See accompanying Notes to Financial Statements.

Years Ended March 31

REVENUE (Note 18) $14,303,092 $12,361,411

COST OF SALES (Notes 13 and 18) 11,621,633 10,065,134

GENERAL AND ADMINISTRATIVE

OTHER INCOME (CHARGES) - Net

PROVISION FOR INCOME TAX (Note 17) 187,041 158,952

OTHER COMPREHENSIVE INCOME (LOSS)

TOTAL COMPREHENSIVE INCOME 0 0

See accompanying Notes to Financial Statements.

Years Ended March 31

CASH FLOWS FROM OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITY

CASH FLOWS FRM FINANCING ACTIVITY

EFFECT OF EXCHANGE RATE CHANGES ON CASH 135 52

CASH AT BEGINNING OF YEAR 2,328,943 2

CASH AT END OF YEAR (Note 6) 0 0

See accompanying Notes to Financial Statements.

1. Corporate Information and Authorization for Issuance

Authorization for Issuance

2. Basis of Preparation and Statement of Compliance

3. Changes in Accounting Policies and Disclosures

 Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12, Disclosure of

Standards Issued but not yet Effective

 Amendments to PAS 7, Statement of Cash Flows, Disclosure Initiative

Application of amendments will result in additional disclosures in the 2018 financial

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

 Amendments to PFRS 4, Insurance Contracts, Applying PFRS 9, Financial Instruments, with

 PFRS 15, Revenue from Contracts with Customers

 PFRS 9, Financial Instruments

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

 Philippine Interpretation IFRIC-22, Foreign Currency Transactions and Advance

 PFRS 16, Leases

The Company is currently assessing the impact of adopting PFRS 16.

4. Summary of Significant Accounting Policies

Current versus Non-current Classification

 expected to be realized or intended to be sold or consumed in normal operating cycle;

All other assets are classified as noncurrent.

A liability is current when:

 It is expected to be settled in normal operating cycle;

The Company classifies all other liabilities as non-current.

Loans and receivables

Other financial liabilities

• In the principal market for the asset or liability, or

Fair value hierarchy

Derecognition of Financial Assets and Liabilities

Offsetting of financial instruments

Impairment of Financial Assets

Loans and receivables

Prepaid expenses and other current assets

Property and Equipment

Category Number of Years

Impairment of Nonfinancial Assets

General and administrative expenses

Retirement Benefit Liability

Retirement benefit expense comprises the following:

(d) There is a substantial change to the asset.

Operating lease - Company as a lessee

Foreign Currency-denominated Transactions and Translation

Events after Reporting Date