Lexmedia Digital Corporation (AFS 2020)

2nd Floor Multinational Bancorporation Centre
BOA/PRC Reg. No. 0005, 6805 Ayala Avenue, Makati City 1226 Philippines
December 13, 2018, valid until July 20, 2021 www.bdo-roxascruztagle.ph
SEC Accreditation No. 0005-SEC, Tel: + (632) 8844 2016
April 13, 2021, valid until April 12, 2024 Fax: + (632) 8844 2045
INDEPENDENT AUDITOR’S REPORT TO ACCOMPANY INCOME TAX RETURN
The Shareholders and the Board of Directors

Lexmedia Digital Corporation
(A wholly-owned subsidiary of FEP Printing Corporation)
Print Town Complex
Lot 2532-C-1-28 Mamplasan
Biñan City, Laguna
Philippines
We have audited the financial statements of Lexmedia Digital Corporation (the Company), as at and
for the year ended December 31, 2020, on which we have rendered the attached report dated
April 26, 2021.
In compliance with Revenue Regulations No. V-20, we are stating that no partner of our Firm
is related by consanguinity or affinity to the president, manager or principal shareholders of the
Company.
ROXAS CRUZ TAGLE AND CO.
Warren M. Urriza
Partner
CPA Certificate No. 0106419
Tax Identification No. 246-618-368
SEC Accreditation No. 106419-SEC, Group A, issued on March 24, 2020,
effective until March 23, 2023
BIR Accreditation No. 08-001682-017-2019, issued on February 8, 2019,
effective until February 7, 2022
PTR No. 8531368, issued on January 5, 2021, Makati City
April 26, 2021

Makati City
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Roxas Cruz Tagle and Co., a Philippine professional partnership, is a member of BDO International Limited, a UK Company Limited by guarantee.
BDO is the brand name for the BDO network and for each of the BDO member firms.
April 26, 2021
2nd Floor Multinational Bancorporation Centre
BOA/PRC Reg. No. 0005, 6805 Ayala Avenue, Makati City 1226 Philippines
December 13, 2018, valid until July 20, 2021 www.bdo-roxascruztagle.ph
SEC Accreditation No. 0005-SEC, Tel: + (632) 8844 2016
April 13, 2021, valid until April 12, 2024 Fax: + (632) 8844 2045
INDEPENDENT AUDITOR’S REPORT
The Shareholders and the Board of Directors

Lexmedia Digital Corporation
Print Town Complex
Lot 2532-C-1-28 Mamplasan
Biñan City, Laguna
Philippines
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Lexmedia Digital Corporation (“the Company”), which
comprise the statements of financial position as at December 31, 2020 and 2019, and the statements
of income, 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, 2020 and 2019, and its financial performance
and its cash flows for the years then ended in accordance with Philippine Financial Reporting
Standards (PFRS).
Basis for Opinion
We conducted our audits in accordance with Philippine Standards on Auditing (PSA). 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 audits 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 PFRS, 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 are responsible for overseeing the Company’s financial reporting
process.
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-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 PSA 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 users taken
on the basis of these financial statements.
As part of an audit in accordance with PSA, 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 a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, 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 a 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 our 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 and 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.
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-3-
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 audits.
Report on the Supplementary Information Required by the Bureau of Internal Revenue (BIR)
Our audits were conducted for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplementary information as disclosed in Note 23 to the financial statements
is presented for purposes of filing with the BIR and is not a required part of the basic financial
statements. Such information is the responsibility of management. 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.
ROXAS CRUZ TAGLE AND CO.
Warren M. Urriza
Partner
CPA Certificate No. 0106419
Tax Identification No. 246-618-368
SEC Accreditation No. 106419-SEC, Group A, issued on March 24, 2020,
effective until March 23, 2023
BIR Accreditation No. 08-001682-017-2019, issued on February 8, 2019,
effective until February 7, 2022
PTR No. 8531368, issued on January 5, 2021, Makati City
April 26, 2021

Makati City
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LEXMEDIA DIGITAL CORPORATION
STATEMENTS OF FINANCIAL POSITION

DECEMBER 31, 2020 AND 2019
Note 2020 2019

ASSETS
Current Assets
Cash 5 =42,770,911
P P
=50,872,123
Trade and other receivables 6 41,836,005 59,796,717
Inventories 7 60,935,991 64,698,281
Prepayments and other current assets 8 23,309,032 23,395,724
Total Current Assets 168,851,939 198,762,845
Noncurrent Assets
Property and equipment, net 9 201,983,384 222,336,833
Right-of-use asset 19 3,156,330 10,434,415
Retirement asset 16 1,025,650 643,919
Due from related parties 18 139,948 -
Deferred tax assets, net 17 26,109,089 18,035,289
Other noncurrent assets 12,000 12,000
Total Noncurrent Assets 232,426,401 251,462,456
=401,278,340
P P
=450,225,301
LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables 10 =17,696,878
P P
=43,908,998
Lease liability, current portion 19 3,724,620 7,215,229
Total Current Liabilities 21,421,498 51,124,227
Noncurrent Liabilities
Lease liability, noncurrent portion 19 - 3,724,620
Other noncurrent liabilities 1,066,139 -
Total Noncurrent Liabilities 1,066,139 3,724,620
Total Liabilities 22,487,637 54,848,847
Equity
Share capital 11 500,000,000 500,000,000
Deficit (121,209,297) (103,948,174)
Remeasurement loss on retirement benefits 16 - (675,372)
Total Equity 378,790,703 395,376,454
=401,278,340
P P
= 450,225,301
See Notes to the Financial Statements.
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STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
Note 2020 2019

REVENUES 12 =97,450,252
P P
=184,720,026
COST OF SALES AND SERVICES 13 (115,441,014) (183,106,198)
GROSS INCOME (17,990,762) 1,613,828
GENERAL AND ADMINISTRATIVE EXPENSES 14 (13,083,134) (17,498,010)
INTEREST EXPENSE 19 (278,769) (849,839)
INTEREST INCOME 5 195,605 187,377
OTHER INCOME (EXPENSE) – NET 15 8,687,218 (603,099)
LOSS BEFORE INCOME TAX (22,469,842) (17,149,743)
INCOME TAX BENEFIT 17 7,416,887 4,942,584
NET LOSS (P
=15,052,955) (P
=12,207,159)
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STATEMENTS OF COMPREHENSIVE INCOME

Note 2020 2019

NET LOSS (P
=15,052,955) (P
=12,207,159)
OTHER COMPREHENSIVE LOSS
Item that may not be reclassified to profit or loss
Remeasurement loss on retirement benefits 16 (2,189,709) (2,347,569)
Deferred tax benefit expense 656,913 704,271
OTHER COMPREHENSIVE INCOME - NET OF TAX (1,532,796) (1,643,298)
TOTAL COMPREHENSIVE LOSS (P
=16,585,751) (P
=13,850,457)
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STATEMENTS OF CHANGES IN EQUITY

Note 2020 2019

SHARE CAPITAL 11 =500,000,000
P P
=500,000,000
DEFICIT
Balance at beginning of year (103,948,174) (91,741,015)
Net loss (15,052,955) (12,207,159)
Transfer from other comprehensive loss 16 (2,208,168) -
Balance at end of year (121,209,297) (103,948,174)
OTHER COMPREHENSIVE LOSS 16
Balance at beginning of year (675,372) 967,926
Remeasurement loss for the year (1,532,796) (1,643,298)
Transfer to deficit 2,208,168 -
Balance at end of year - (675,372)
=378,790,703
P P
=395,376,454
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STATEMENTS OF CASH FLOWS

Note 2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES
Loss before income tax (P
=22,469,842) (P
=17,149,743)
Adjustments for:
Depreciation and amortization 9 31,250,571 32,510,810
Provision for (reversal of):
Expected credit loss on trade and other
receivables 6 4,725,325 (874,065)
Retirement benefit expense (income) 16 (2,473,260) 654,190
Decline in value of inventories 7 (50,638) 117,070
Gain on remeasurement of lease 15,19 (2,272,412) -
Interest expense 19 278,769 849,839
Interest income 5 (195,605) (187,377)
Unrealized foreign exchange loss (gain) 15 (8,992) 145,018
Operating income before working capital changes 8,783,916 16,065,742
Decrease (increase) in:
Trade and other receivables 13,235,387 13,877,150
Inventories 3,812,928 13,960,036
Other current assets (53,256) (1,892,452)
Increase (decrease) in:
Trade and other payables (26,212,120) (370,655)
Advances from related parties 16 139,948 -
Other noncurrent liabilities 1,066,139 -
Cash generated from operations 772,942 41,639,821
Retirement fund contribution 16 (238,128) (1,430,358)
Interest income received 195,605 187,377
Net cash flows provided by operating activities 730,419 40,396,840
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment 9 (5,486,269) (4,514,304)
Payment of lease liabilities 19 (3,354,354) (7,300,682)
Net cash flows used in investing activities (8,840,623) (11,814,986)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 8,992 (145,018)
NET INCREASE (DECREASE) IN CASH (8,101,212) 28,436,836
CASH AT BEGINNING OF YEAR 5 50,872,123 22,435,287
CASH AT END OF YEAR 5 =42,770,911
P P
=50,872,123
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NOTES TO THE FINANCIAL STATEMENTS

AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
1. General Information
Lexmedia Digital Corporation (the Company) was registered with the Philippine Securities and
Exchange Commission (SEC) on June 15, 2001. The Company is engaged in transmitting, sending
and communicating all kinds of digital information, data, pictures and other advertising materials.
The Company is also engaged in printing and publishing of books, magazines, papers, advertising
materials and literatures in the Company’s primary operations.
The Company is a wholly-owned subsidiary of FEP Printing Corporation (FEP), a Company

registered with the SEC, domiciled in the Philippines and is engaged in printing newspapers. The
ultimate Parent Company is Pinnacle Printers Corporation (PPC), a company registered with the
SEC, domiciled in the Philippines and is a holding company.
On April 20, 2018, the Board of Directors (BOD) and stockholders of the Company approved the
merger of Alliance Media Printing, Inc. (AMPI), Newspaper Paraphernalia, Inc. (NPI) and Print
Town, Inc. (PTI), related entities, with and unto the Alliance Media Printing, Inc. (AMPI), a related
party, to improve efficiency of operations and to use productively the parties’ sales network.
Under the terms of the merger, AMPI will issue 69,048,734 shares of stock with par value of P =10
per share to the respective stockholders of the Company, NPI and LEXD in exchange for the net
assets acquired.
As at April 26, 2021, the parties are awaiting the approval of the merger by the SEC.
On September 28, 2020, the BOD approved of the cessation of the Company’s major operations.
The Company is planning to shift into a leasing business.
The registered office address and principal place of business of the Company is located at Print
Town Complex, Lot 2532 C-1-28, Mamplasan, Biñan City, Laguna, Philippines.
The financial statements were approved and authorized for issue in accordance with a resolution
by the BOD on April 26, 2021.
2. Basis of Preparation
Statement of Compliance
The accompanying financial statements have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS). PFRS are based on International Financial Reporting
Standards issued by the International Accounting Standards Board (IASB). PFRS consist of PFRS,
Philippine Accounting Standards (PAS) and Philippine Interpretations issued by the Philippine
Financial Reporting Standards Council (FRSC) and adopted by the SEC.
Basis of Measurement
The financial statements of the Company have been prepared on the historical cost basis, unless
otherwise indicated.
Functional and Presentation Currency

The financial statements are presented in Philippine peso, which is the functional and
presentation currency of the Company. All values are rounded off to the nearest Peso (P
=), unless
otherwise indicated.
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3. Significant Accounting Policies
Adoption of New and Amended PFRS

The accounting policies adopted are consistent with those of the previous financial year, except
for the adoption of the following new and amended PFRS which the Company adopted effective
for annual periods beginning on or after January 1, 2020:
 Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies,

Changes in Accounting Estimates and Errors, Definition of Material. The amendments address
the definition of material if omitting, misstating or obscuring it could reasonably be expected
to influence decisions that the primary users of general purpose financial statements make
on the basis of those financial statements, which provide financial information about a
specific reporting entity.
These amendments had no impact on the financial statements of the Company.
 Amendments to PFRS 3, Business Combinations, Definition of Business. The amendments to

PFRS 3 clarifies that to be considered a business, an acquired set of activities and assets must
include, at a minimum, an input and a substantive process that together significantly
contribute to the ability to create outputs. The clarification stated that a business can exist
without including all of the inputs and processes needed to create outputs.
These amendments had no impact on the financial statements of the Company.
 Conceptual Framework for Financial Reporting (Revised). The IASB issued the revised
Conceptual Framework for Financial Reporting (Conceptual Framework), a comprehensive set
of concepts for financial reporting, in March 2018.
It sets out:
o the objective of financial reporting
o the qualitative characteristics of useful financial information
o a description of the reporting entity and its boundary
o definitions of an asset, a liability, equity, income and expenses
o criteria for including assets and liabilities in financial statements (recognition) and
guidance on when to remove them (derecognition)
o measurement bases and guidance on when to use them
o concepts and guidance on presentation and disclosure
The purpose of the Conceptual Framework is to assist the IASB to develop financial reporting
standards (Standards) based on consistent concepts, resulting in financial information that is
useful to investors, lenders and other creditors. It also assists preparers to develop consistent
accounting policies for transactions or other events when no Standard applies, or a Standard
allows a choice of accounting policies. The Conceptual Framework is not a Standard and does
not override any Standard or any requirement in a Standard.
 Amendments to PFRS 7, Financial Instruments: Disclosures and PFRS 9, Financial Instruments,

Interest Rate Benchmark Reform. The amendments to PFRS 9 and PAS 39 Financial
Instruments: Recognition and Measurement and PAS 7 Financial Instruments: Disclosures
include a number of reliefs, which apply to all hedging relationships that are directly affected
by the interest rate benchmark reform. A hedging relationship is affected if the reform gives
rise to uncertainties about the timing and/or amount of benchmark-based cash flows of the
hedged item or the hedging instrument.
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The mandatory reliefs provided in the Standard are as follows:
 The assessment of whether a forecast transaction (or component thereof) is highly

probable.
 Assessing when to reclassify the amount in the cash flow hedge reserve to profit and loss.
 The assessment of the economic relationship between the hedged item and the hedging
instrument.
 For a benchmark component of interest rate risk that is affected by IBOR reform, the
requirement that the risk component is separately identifiable need be met only at the
inception of the hedging relationship.
These amendments had no impact on the financial statements of the Company as it does not
have any interest rate hedge relationships.
 Amendment to PFRS 16, COVID-19 Related Rent Concession. The amendment to PFRS 16 will
provide relief to lessees for accounting for rent concessions from lessors specifically arising
from covid-19 pandemic. The amendment provides an options to lessees not to account as
lease modification covid-19-related lease concessions that meet all of the following criteria:
 The rent concession is a direct consequence of Covid-19;

 The change in lease payments results in a revised lease consideration that is substantially
the same as, or less than, the lease consideration immediately preceding the change;
 Any reduction in lease payments affects only payments originally due on or before June
30, 2021; and
 There is no substantive change to other terms and conditions of the lease.
This amendment had no impact on the financial statements of the Company.
New and Amended PFRS Issued But Not Yet Effective

Relevant new and amended PFRS which are not yet effective for the year ended
December 31, 2020 and have not been applied in preparing the financial statements are
summarized below.
Effective for annual periods beginning on or after January 1, 2021:
 Annual Improvements to IFRS: 2018-2020 Cycle
o IFRS 1, First-time Adoption of IFRS - Subsidiary as a first-time adopter. The amendment

permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative
translation differences using the amounts reported by its parent, based on the parent’s
date of transition to IFRSs.
o IFRS 9, Financial Instruments - Fees in the ‘10 percent’ test for derecognition of financial
liabilities. The amendment clarifies which fees an entity includes when it applies the ‘10
percent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial
liability. An entity includes only fees paid or received between the entity (the borrower)
and the lender, including fees paid or received by either the entity or the lender on the
other’s behalf.
*RCTMNLFS0564*
o IFRS 16, Leases – Lease incentives. The amendment to Illustrative Example 13
accompanying IFRS 16 removes from the example the illustration of the reimbursement
of leasehold improvements by the lessor in order to resolve any potential confusion
regarding the treatment of lease incentives that might arise because of how lease
incentives are illustrated in that example.
o IAS 41, Agriculture – Taxation in fair value measurements. The amendment removes the
requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when
measuring the fair value of a biological asset using a present value technique. This will
ensure consistency with the requirements in IFRS 13.
 Amendments to PFRS 3, Business Combinations – Reference to the Conceptual Framework –

The amendments add an exception to the recognition principle of PFRS 3 to avoid the issue
of potential “day 2” gains or losses arising from liabilities and contingent liabilities that would
be within the scope of PAS 37, Provisions, Contingent Liabilities and Contingent Assets or
IFRIC 21, Levies, if incurred separately. It also clarifies that contingent assets do not qualify
recognition at the acquisition date. The amendments are effective for annual periods
beginning on or after January 1, 2022.
 Amendments to PAS 37, Provisions, Contingent Liabilities and Contingent Assets: Onerous
Contracts – Costs of Fulfilling a Contract – The amendments specify the costs a Company
includes when assessing whether a contract will be loss-making and is therefore recognized
as an onerous contract. The amendments apply a “directly related approach”. The costs that
relate directly to a contract to provide goods or services include both incremental costs and
an allocation of costs directly related to contract activities.
 Amendments to PAS 16, Property, Plant and Equipment: Proceeds before Intended Use – The
amendments prohibit the entities from deducting from the cost of an item of property, plant
and equipment, any proceeds of the sale items produced while bringing that asset to the
location and condition necessary for it to be capable of operating in the manner intended by
the Management. Instead, the entity recognizes such sales proceeds and any related costs in
the profit or loss.
 PFRS 17, Insurance Contracts – This standard will replace PFRS 4, Insurance Contracts. It
requires insurance liabilities to be measured at current fulfillment value and provides a more
uniform measurement and presentation approach to achieve consistent, principle-based
accounting for all insurance contracts. It also requires similar principles to be applied to
reinsurance contracts held and investment contracts with discretionary participation features
issued. In June 2020, the IASB issued amendments to the standard, including a deferral of its
effective date to 1 January 2023.
 Amendments to PAS 1, Presentation of Financial Statements - The amendments to PAS 1

specify the requirements for classifying current and noncurrent liabilities. The amendments
will clarify that a right to defer must exist at the end of reporting period and the classification
is unaffected by the likelihood that an entity will exercise its deferral right. The issuance of
amendments was deferred until January 1, 2023 as a result of COVID-19 pandemic.
*RCTMNLFS0564*
Deferred effectivity -
 Amendments to PFRS 10, Consolidated Financial Statements and PAS 28, Investments in
Associates and Joint Ventures - Sale or Contribution of Assets Between an Investor and its
Associate or Joint Venture – The amendments address a current conflict between the two
standards and clarify that a gain or loss should be recognized fully when the transaction
involves a business, and partially if it involves assets that do not constitute a business. The
effective date of the amendments, initially set for annual periods beginning on or after
January 1, 2016, was deferred indefinitely in December 2015 but earlier application is still
permitted.
Under prevailing circumstances, the adoption of the foregoing new and amended PFRS is not
expected to have any material effect on the financial statements of the Company.
Current Versus Noncurrent Classification

The Company presents assets and liabilities in the statements of financial position based on
current and noncurrent classification. An asset is current when it is: (a) expected to be realized
or intended to be sold or consumed in the normal operating cycle; (b) held primarily for the
purpose of trading; (c) expected to be realized within 12 months after the reporting period; or
(d) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period.
A liability is current when it is: (a) expected to be settled in the normal operating cycle;
(b) held primarily for trading; (c) due to be settled within 12 months after the reporting period;
or (d) there is no unconditional right to defer the settlement of the liability for at least 12 months
after the reporting period.
The Company classifies all other assets and liabilities as noncurrent. Deferred tax assets and
liabilities are classified as noncurrent.
Financial Assets and Financial Liabilities
Date of Recognition. The Company recognizes a financial asset or a financial liability in the
statements of financial position when it becomes a party to the contractual provisions of a
financial instrument. In the case of a regular way purchase or sale of financial assets, recognition
and derecognition, as applicable, is done using settlement date accounting.
Initial Recognition and Measurement. Financial instruments are recognized initially at fair value,
which is the fair value of the consideration given (in case of an asset) or received
(in case of a liability). The initial measurement of financial instruments, except for those
designated at fair value through profit and loss (FVPL), includes transaction cost.
“Day 1” Difference. Where the transaction in a non-active market is different from the fair value
of 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. In cases where there is no observable data on inception, the Company deems the transaction
price as the best estimate of fair value and recognizes “Day 1” difference 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.
Classification. The Company classifies its financial assets at initial recognition under the following
categories: (a) financial assets at FVPL, (b) financial assets at amortized cost and
(c) financial assets at fair value through other comprehensive income (FVOCI). Financial liabilities,
on the other hand, are classified as either financial liabilities at FVPL or financial liabilities at
amortized cost. The classification of a financial instrument largely depends on the Company’s
business model and its contractual cash flow characteristics.
*RCTMNLFS0564*
Financial Assets and Liabilities at FVPL. Financial assets and liabilities at FVPL are either classified
as held for trading or designated at FVPL. A financial instrument is classified as held for trading
if it meets either of the following conditions:
 it is acquired or incurred principally for the purpose of selling or repurchasing it in the near
term;
• on initial recognition, it is part of a portfolio of identified financial instruments that are

managed together and for which there is evidence of a recent actual pattern of short-term
profit-taking; or
 it is a derivative (except for a derivative that is a financial guarantee contract or a designated

and effective hedging instrument).
This category includes equity instruments which the Company had not irrevocably elected to
classify at FVOCI at initial recognition. This category includes debt instruments whose cash flows
are not “solely for payment of principal and interest” assessed at initial recognition of the assets,
or which are not held within a business model whose objective is either to collect contractual
cash flows, or to both collect contractual cash flows and sell.
The Company may, at initial recognition, designate a financial asset or financial liability meeting
the criteria to be classified at amortized cost or at FVOCI, as a financial asset or financial liability
at FVPL, if doing so eliminates or significantly reduces accounting mismatch that would arise from
measuring these assets or liabilities.
After initial recognition, financial assets at FVPL and held for trading financial liabilities are
subsequently measured at fair value. Unrealized gains or losses arising from the fair valuation of
financial assets at FVPL and held for trading financial liabilities are recognized in profit or loss.
For financial liabilities designated at FVPL under the fair value option, the amount of change in
fair value that is attributable to changes in the credit risk of that liability is recognized in other
comprehensive income (rather than in profit or loss), unless this creates an accounting mismatch.
Amounts presented in other comprehensive income are not subsequently transferred to profit or
loss.
As at December 31, 2020 and 2019, the Company does not have financial assets and liabilities at
FVPL.
Financial Assets at Amortized Cost. Financial assets shall be measured at amortized cost if both
of the following conditions are met:
 the financial asset is held within a business model whose objective is 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.
After initial recognition, financial assets at amortized cost are subsequently measured at
amortized cost using the effective interest method, less allowance for impairment, if any.
Amortized cost is calculated by taking into account any discount or premium on acquisition and
fees that are an integral part of the effective interest rate. Gains and losses are recognized in
profit or loss when the financial assets are derecognized and through amortization process.
Financial assets at amortized cost are included under current assets if realizability or
collectability is within 12 months after the reporting period. Otherwise, these are classified as
noncurrent assets.
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As at December 31, 2020 and 2019, the Company’s cash, trade and other receivables and due
from related parties are included under this category (see Notes 6, 7 and 18).
Financial Assets at FVOCI. For debt instruments that meet the contractual cash flow characteristic
and are not designated at FVPL under the fair value option, the financial assets shall be measured
at FVOCI if both of the following conditions are met:
 the financial asset is held within a business model whose objective is to hold financial assets
in order to collect contractual cash flows and selling the financial assets; 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.
For equity instruments, the Company may irrevocably designate the financial asset to be
measured at FVOCI in case the above conditions are not met.
Financial assets at FVOCI are initially measured at fair value plus transaction costs. After initial
recognition, interest income (calculated using the effective interest rate method), foreign
currency gains or losses and impairment losses of debt instruments measured at FVOCI are
recognized directly in profit or loss. When the financial asset is derecognized, the cumulative
gains or losses previously recognized in OCI are reclassified from equity to profit or loss as a
reclassification adjustment.
Dividends from equity instruments held at FVOCI are recognized in profit or loss when the right
to receive payment is established, unless the dividend clearly represents a recovery of part of the
cost of the investment. Foreign currency gains or losses and unrealized gains or losses from equity
instruments are recognized in OCI and presented in the equity section of the statements of
financial position. These fair value changes are recognized in equity and are not reclassified to
profit or loss in subsequent periods.
As at December 31, 2020 and 2019, the Company has no financial assets that are designated at
FVOCI.
Financial liabilities at amortized cost. Financial liabilities are categorized as financial liabilities
at amortized cost when 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 settle
the obligation other than by the exchange of a fixed amount of cash or another financial asset for
a fixed number of its own equity instruments.
These financial liabilities are initially recognized at fair value less any directly attributable
transaction costs. After initial recognition, these financial liabilities are subsequently measured
at amortized cost using the effective interest method. Amortized cost is calculated by taking into
account any discount or premium on the issue and fees that are an integral part of the effective
interest rate. Gains and losses are recognized in profit or loss when the liabilities are derecognized
or through the amortization process.
As at December 31, 2020 and 2019, the Company’s liabilities arising from its trade and other
payables (excluding statutory liabilities), lease liabilities and other noncurrent liabilities are
included under this category (see Note 10 and 19).
Other noncurrent liabilities only consist of payables pertaining to employee health benefits that
are not expected to be settled within 12 months.
Reclassification
The Company reclassifies its financial assets when, and only when, it changes its business model
for managing those financial assets. The reclassification is applied prospectively from the first
day of the first reporting period following the change in the business model (reclassification date).
*RCTMNLFS0564*
For a financial asset reclassified out of the financial assets at amortized cost category to financial
assets at FVPL, any gain or loss arising from the difference between the previous amortized cost
of the financial asset and fair value is recognized in profit or loss.
For a financial asset reclassified out of the financial assets at amortized cost category to financial
assets at FVOCI, any gain or loss arising from a difference between the previous amortized cost
of the financial asset and fair value is recognized in OCI.
For a financial asset reclassified out of the financial assets at FVPL category to financial assets at
amortized cost, its fair value at the reclassification date becomes its new gross carrying amount.
For a financial asset reclassified out of the financial assets at FVOCI category to financial assets
at amortized cost, any gain or loss previously recognized in OCI, and any difference between the
new amortized cost and maturity amount, are amortized to profit or loss over the remaining life
of the investment using the effective interest method. If the financial asset is subsequently
impaired, any gain or loss that has been recognized in OCI is reclassified from equity to profit or
loss.
In the case of a financial asset that does not have a fixed maturity, the gain or loss shall be
recognized in profit or loss when the financial asset is sold or disposed. If the financial asset is
subsequently impaired, any previous gain or loss that has been recognized in OCI is reclassified
from equity to profit or loss.
For a financial asset reclassified out of the financial assets at FVPL category to financial assets at
FVOCI, its fair value at the reclassification date becomes its new gross carrying amount.
Meanwhile, for a financial asset reclassified out of the financial assets at FVOCI category to
financial assets at FVPL, the cumulative gain or loss previously recognized in other comprehensive
income is reclassified from equity to profit or loss as a reclassification adjustment at the
reclassification date.
Impairment of Financial Assets at Amortized Cost and FVOCI

The Company records an allowance for “expected credit loss” (ECL). ECL is 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. The difference is then discounted at an
approximation to the asset’s original effective interest rate.
For receivables, the Company has applied the simplified approach and has calculated ECLs based
on the lifetime expected credit losses. The Company has established a provision matrix that is
based on its historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
For debt instruments measured at amortized cost and FVOCI, the ECL is based on the 12-month
ECL, which pertains to the portion of lifetime ECLs that result from default events on a financial
instrument that are possible within 12 months after the reporting date. However, when there
has been a significant increase in credit risk since initial recognition, the allowance will be based
on the lifetime ECL. When determining whether the credit risk of a financial asset has increased
significantly since initial recognition, the Company compares the risk of a default occurring on
the financial instrument as at the reporting date with the risk of a default occurring on the
financial instrument as at the date of initial recognition and consider reasonable and supportable
information, that is available without undue cost or effort, that is indicative of significant
increases in credit risk since initial recognition.
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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 right to receive cash flows from the asset has expired;
 the Company retains the right to receive cash flows from the financial 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 right to receive cash flows from the financial asset 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.
When the Company has transferred its right to receive cash flows from a financial asset or has
entered into a pass-through arrangement and has neither transferred nor retained substantially
all the risks and rewards of ownership of the financial asset nor transferred control of the financial
asset, the financial asset is recognized to the extent of the Company’s continuing involvement in
the financial asset. Continuing involvement that takes the form of a guarantee over the
transferred financial asset is measured at the lower of the original carrying amount of the
financial 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, cancelled or has expired. When an existing financial liability is replaced by another
from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognized in the statements of comprehensive income.
A modification is considered substantial if the present value of the cash flows under the new
terms, including net fees paid or received and discounted using the original effective interest
rate, is different by at least 10% from the discounted present value of remaining cash flows of
the original liability.
The fair value of the modified financial liability is determined based on its expected cash flows,
discounted using the interest rate at which the Company could raise debt with similar terms and
conditions in the market. The difference between the carrying value of the original liability and
fair value of the new liability is recognized in the statements of comprehensive income.
On the other hand, if the difference does not meet the 10% threshold, the original debt is not
extinguished but merely modified. In such case, the carrying amount is adjusted by the costs or
fees paid or received in the restructuring.
Offsetting of Financial Assets and Liabilities

Financial assets and financial liabilities are offset and the net amount reported in the statements
of financial position if, and only if, there is a currently enforceable legal right to offset the
recognized amounts and there is intention to settle on a net basis, or to realize the asset and
settle the liability simultaneously. This is not generally the case with master netting agreements,
and the related assets and liabilities are presented gross in the statements of financial position.
*RCTMNLFS0564*
Classification of Financial Instrument Between Liability and Equity
A financial instrument is classified as liability if it provides for a contractual obligation to:
 Deliver cash or another financial asset to another entity;
 Exchange financial assets or financial liabilities with another entity under conditions that are
potentially unfavorable to the Company; or
 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.
If the Company does not have an unconditional right to avoid delivering cash or another financial
asset to settle its contractual obligation, the obligation meets the definition of a financial
liability.
Inventories
Inventories are valued at lower of cost and net realizable value.
Costs incurred in bringing its product to its present location and condition are accounted for as
follows:
 Finished goods – determined on a moving average basis; cost include direct materials and
labor and a portion of manufacturing overhead costs based on normal operating capacity;
 Raw materials and supplies (including tools and spare parts) – purchase cost on a moving
average basis; and
 Inventories in transit – invoice price plus other charges.
Net realizable value, except for raw materials and supplies, is the estimated selling price in the
ordinary course of business, less estimated costs of completion, marketing and distribution. Net
realizable value for the raw materials and supplies is the current replacement cost.
Prepayments and Other Current Assets

Other current assets are recognized when the Company expects to receive future economic
benefit from the asset and the amount can be measured reliably.
Other current assets include prepayments, tools and spare parts, creditable withholding tax
(CWT), input value-added tax (VAT) and deferred input VAT.
Prepayments. Prepayments represent expenses not yet incurred but already paid in cash.
Prepayments are initially recorded as assets and measured at the amount of cash paid.
Subsequently, these are charged to profit or loss as they are consumed in operations or expire
with the passage of time.
Prepayments are classified in the statements of financial position as current assets when the cost
of goods or services or expenses related to the prepayments are expected to be incurred within
one year or the Company’s normal operating cycle, whichever is longer. Otherwise, prepayments
are classified as non-current.
CWT. CWT represents the amount withheld by the Company’s customers in relation to its income.
CWT 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 Philippines income
taxation.
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Input VAT. Input VAT is the indirect tax paid by the Company on the local purchase of goods or
services from a VAT-registered person. Input VAT is deducted from the output VAT in arriving at
the VAT due and payable. Claims for input VAT are stated at face value less provision for
impairment, if any. Allowance for unrecoverable input VAT, if any, is maintained by the Company
at a level considered adequate to provide for potential uncollectible portion of the claims. The
Company, on a continuing basis, makes a review of the status of the claims designed to identify
those that may require provision for impairment losses.
Deferred input VAT. Deferred input VAT represents unamortized amount of input VAT on capital
goods. Deferred input VAT that are expected to be claimed against output VAT for no more than
12 months after the reporting date are classified as current assets otherwise, these are classified
as noncurrent.
Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization and
any accumulated impairment in value. Such cost includes the cost of replacing part of the
property and equipment at the time the cost is incurred, if the recognition criteria are met, and
excludes the costs of day-to-day servicing.
The initial cost of property and equipment comprises its construction cost or purchase price,
including import duties, taxes and any directly attributable costs in bringing the asset to its
working condition and location for its intended use. Cost also includes any related asset
retirement obligation (ARO). Expenditures incurred after the asset has been put into operation,
such as repairs, maintenance and overhaul costs, are normally recognized as expense in the period
the costs are incurred. Major repairs are capitalized as part of property and equipment only when
it is probable that future economic benefits associated with the items will flow to the Company
and the cost of the items can be measured reliably.
Depreciation and amortization, which commences when the assets are available for their intended
use, is computed using the straight-line method over the following estimated useful lives of the
assets:
Number of Years
Building 20
Building improvements 3-10
Machinery and equipment 5-10
Leasehold improvements 10 or lease term, whichever is shorter
Transportation equipment 5
Office equipment, furniture and fixtures 3
The remaining useful lives, residual values and depreciation and amortization method are
reviewed and adjusted periodically, if appropriate, to ensure that such periods and method of
depreciation are consistent with the expected pattern of economic benefits from the items of
property and equipment.
The carrying amounts of property and equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying amounts may not be recoverable.
Fully depreciated assets are retained in the accounts until they are no longer in use.
An item of property and equipment is derecognized when either it has been disposed of or when
it is permanently withdrawn from use and no future economic benefits are expected from its use
or disposal. Any gain or loss arising from the retirement and disposal of an item of property and
equipment (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is recognized in the statements of comprehensive income in the period of
retirement and disposal.
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*RCTMNLFS0564*
Impairment of Non-financial Assets
The carrying amounts of property and equipment and right-of-use assets are reviewed for
impairment when events or changes in circumstances indicate that the carrying amount may not
be recoverable. If any such indication exists, and if the carrying amount exceeds the estimated
recoverable amount, the assets or cash-generating units are written down to their recoverable
amounts. The recoverable amount of the asset is the greater of fair value less costs to sell and
value in use. The fair value less costs to sell is the amount obtainable from the sale of an asset in
an arm’s length transaction between knowledgeable, willing parties, less costs of disposal. Value
in use is the present value of estimated future cash flows expected to arise from the continuing
use of an asset and from its disposal at the end of its useful life.
In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-generating unit to which the asset
belongs. Impairment losses are recognized in the statements of comprehensive income in those
expense categories consistent with the function of the impaired asset.
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 recoverable amount is estimated. A previously recognized impairment loss is reversed only if
there has been a change in the estimates used to determine the asset’s recoverable amount since
the last impairment loss was recognized. If that is the case, the carrying amount of the asset is
increased to its recoverable amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognized
for the asset in prior years. Such reversal is recognized in the statements of comprehensive
income. After such a 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.
Equity
Share capital is measured at par value for all shares issued. Incremental costs incurred directly
attributable of the issuance of new shares are shown as a deduction from equity, net of any tax.
Proceeds from issuance of shares and/or fair value of consideration received in excess of par
value are recognized as additional paid-in capital.
Retained earnings (deficit) represent the accumulated net income or losses, net of any dividend
distributions and other capital adjustments. Appropriated retained earnings represent that
portion which is restricted and therefore not available for any dividend declaration.
Other comprehensive income (loss) comprises items of income and expense, including items
previously presented under the statements of changes in equity, that are not recognized in profit
or loss for the year. Other comprehensive income (loss) of the Company pertains to
remeasurement gain (loss) on retirement liability.
Revenue Recognition
Revenue from contract with customers is recognized when the performance obligation in the
contract has been satisfied, either at a point in time or over time. Revenue is recognized over time
if one of the following criteria is met: (a) the customer simultaneously receives and consumes the
benefits as the Company perform its obligations; (b) the Company’s performance creates or
enhances an asset that the customer controls as the asset is created or enhanced; or
(c) the Company’s performance does not create an asset with an alternative use to the Company
and the Company has an enforceable right to payment for performance completed to date.
Otherwise, revenue is recognized at a point in time. The following specific recognition criteria must
also be met before revenue is recognized:
Interest income. Interest income earned from bank deposits is recognized as it accrues usually on a
time proportion basis taking into account the effective yield on the asset or EIR, and is presented
net of applicable final tax withheld by banks.
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The Company considers whether there are other promises in the contract that are separate
performance obligations to which a portion of the transaction price needs to be allocated. In
determining the transaction price, the Company considers the effects of variable consideration
and consideration payable to the customer (if any).
Cost and Expense Recognition

Costs and 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 recognized when
incurred.
Retirement Benefits
The retirement benefits cost is determined using the projected unit credit method which reflects
services rendered by employees to the date of valuation and incorporates assumptions concerning
employees’ projected salaries.
The Company recognizes service costs, comprising of current service costs, past service costs,
gains and losses on curtailments and non-routine settlements; and net interest expense or income
in profit or loss. Net interest is calculated by applying the discount rate to the net retirement
liability or asset.
Past service costs are recognized in profit or loss on the earlier of the date of the plan amendment
or curtailment; and the date that the Company recognizes restructuring-related costs.
Remeasurements comprising actuarial gains and losses, return on plan assets and any change in
the effect of the asset ceiling (excluding net interest on retirement liability or asset) are
recognized immediately in other comprehensive income (OCI) in the period in which they arise.
Remeasurements are not reclassified to profit or loss in subsequent periods.
The net retirement liability or asset is the aggregate of the present value of the retirement
liability and the fair value of plan assets on which the obligations are to be settled directly. The
present value of the retirement liability is determined by discounting the estimated future cash
outflows using interest rate on government bonds that have terms to maturity approximating the
terms of the related retirement liability.
Actuarial valuations are made with sufficient regularity so that the amounts recognized in the
financial statements do not differ materially from the amounts that would be determined at the
reporting date.
Leases
At the inception of a contract, the Company assesses whether a contract is, or contains, a lease.
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset, the Company assesses whether:
• the contract involves an identified asset – this may be specified explicitly or implicitly, and
should be physically distinct or represent substantially all of the capacity of a physically
distinct asset. If the supplier has a substantive substitution right, then the asset is not
identified;
• the Company has the right to obtain substantially all of the economic benefits from use of
the asset throughout the period of use; and
• the Company has the right to direct the use of the asset. The Company when it has the
decision-making rights that are most relevant to changing how and for what purpose the asset
is used. The Company has the right to direct the use of the asset of either:
- the Company has the right to operate the asset; or
- the Company designed the asset in a way that predetermines how and for what purpose
it will be used.
This policy is applied to contracts entered into, or changed, on or after January 1, 2019.
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At the inception or on reassessment of a contract that contains a lease component, the Company
allocates the consideration in the contract to each lease component on the basis of their relative
stand-alone prices.
For contracts entered into before January 1, 2019, the Company determines whether an
arrangement is or contains a lease based on whether of:
• fulfillment of the arrangement was dependent on the use of a specific asset or assets;
• the arrangement had conveyed a right to use the asset. An arrangement conveyed the right
to use the asset if one of the following was met;
• the purchaser had the ability or right to operate the asset while obtaining or controlling more
than an insignificant amount of output;
• the purchaser had the ability or right to control physical access to the asset while obtaining
or controlling more than an insignificant amount of the output; or
• facts and circumstances indicated that it was remote that other parties would take more than
an insignificant amount of output.
Company as a lessee. The Company recognizes a right-of-use asset and lease liability at the date
of initial application for leases previously classified as an operating lease under PAS 17.
Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted by the
amount of any prepaid or accrued lease payments, and are amortized using straight-line method
over the shorter of estimated useful life of the assets or the remaining lease term.
Estimated useful life of the leased machineries is between 5 to 10 years.
In addition, the right-of-use is periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not
paid at the commencement date, discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally,
the Company uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise of the following:
• fixed payments, including in-substance fixed payments;

• variable lease payments that depend on an index rate, initially measured using the index or
rate as at the commencement date;
• amounts expected to be payable under residual value guarantee; and
• the exercise price under a purchase option that the Company is reasonably certain to
exercise, lease payments option renewal period if the Company is reasonably to exercise an
extension option, and penalties for early termination of a lease unless the Company is
reasonably certain not to terminate early.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a

constant rate on the balance outstanding and are reduced for lease payments made. It is
remeasured when there is a change in future lease payments or rate, if there is a change in the
Company’s estimate of the amount expected to be payable under a residual value guarantee, or
if the Company changes its assessment of whether it will exercise a purchase, extension or
termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the
carrying amount of the right-of-use asset or is recognized in profit or loss if the carrying amount
of the right-of-use asset has been reduced to zero.
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*RCTMNLFS0564*
Company as a lessor. Leases where the Company does not transfer substantially all the risks and
rewards of ownership of the assets are classified as operating leases. Rent income from operating
leases is recognized as income on a straight-line basis over the lease term.
Taxes
Current tax. Current tax is the expected tax payable or receivable on the taxable income or loss
for the year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
Current tax relating to items recognized directly in equity is recognized in equity and not in the
statements of comprehensive income. The Company periodically evaluates positions taken in the
tax returns with respect to situations in which applicable tax regulations are subject to
interpretations and establishes provisions where appropriate.
Deferred tax. Deferred tax is recognized using the liability method in respect of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes.
Deferred tax liabilities are recognized using the liability method for all taxable temporary
differences, except:
 where the deferred 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 profit nor taxable profit or loss; and
 with respect to taxable temporary differences associated with investments in shares of

stock of subsidiaries, 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.
Deferred tax assets are recognized for all deductible temporary differences to the extent that it
is probable that taxable profit will be available against which the deductible temporary
differences can be utilized, except:
 where the deferred 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 profit nor
taxable profit or loss; and
 with respect to deductible temporary differences associated with investments in shares

of stock of subsidiaries, deferred tax assets are recognized only to the extent that it is
probable that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at each financial reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are
reassessed at each financial reporting date and are recognized to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
The measurement of deferred tax reflects the tax consequences that would follow the manner in
which the Company expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
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Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date.
Current tax and deferred tax are recognized in the statements of comprehensive income, except
to the extent that it relates to a business combination, or items recognized directly in equity or
in other comprehensive income.
Deferred tax assets and deferred tax 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 Translations

Transactions entered into by the Company in currencies other than the currency of the primary
economic environment in which it operates (“the functional currency”) are recorded at the rates
prevailing when the transactions occur. Foreign currency monetary assets and monetary liabilities
are translated at the rates prevailing at the financial reporting date. Exchange differences arising
on the settlement of monetary items, and on the translation of monetary items, are recognized
in profit or loss in the period in which they arise. Non-monetary items that are measured in terms
of historical cost in a foreign currency are not translated. Exchange differences arising on the
translation of unsettled monetary assets and monetary liabilities are similarly recognized
immediately in profit or loss.
Related Parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control
the other party or exercise significant influence over the other party in making financial and
operating decisions. Parties are also considered to be related if they are subject to common
control and significant influence. Related parties may be individuals or corporate entities. Key
management personnel of the Company are also considered as related party.
In considering each possible related party relationship, attention is directed to the substance of
the relationship, and not merely legal form. Transactions between related parties are accounted
for at arm’s-length prices or terms similar to those offered to non-related entities in an
economically comparable market.
Provisions
Provisions are recognized when: (a) the Company has a present obligation (legal or constructive)
as a result of past events; (b) it is probable (i.e., more likely than not) that an outflow of resources
embodying economic benefits will be required to settle the obligation; and (c) a reliable estimate
of the amount of the obligation can be made. Where some or all of the expenditure required to
settle a provision is expected to be reimbursed by another party, the reimbursement is recognized
as a separate asset only when it is virtually certain that reimbursement will be received. The
amount recognized for the reimbursement shall not exceed the amount of the provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
If the effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessment of the time
value of money and the risks specific to the liability. Where discounting is used, the increase in
the provision due to the passage of time is recognized as interest expense.
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Contingencies
Contingent liabilities are not recognized in the financial statements. They are disclosed in the
notes to the 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 are disclosed in the notes to the financial statements when an inflow of economic benefits is
probable.
Events After the Reporting Date

The Company identifies events after the end of the financial reporting period as events that
occurred after the financial reporting date but before the date the financial statements were
authorized for issuance. Any subsequent events that provide additional information about the
Company’s financial position at the reporting date are reflected in the financial statements.
Non-adjusting subsequent events are disclosed in the notes to the financial statements when
material.
4. Use of Judgements, Estimates and Assumptions
The preparation of the financial statements in accordance with PFRS requires management to
make judgments, estimates and assumptions that affect the application of accounting policies
and the amounts of assets, liabilities, income and expenses reported in the separate financial
statements at the reporting date. However, uncertainty about these judgments, estimates and
assumptions could result in an outcome that could require a material adjustment to the carrying
amount of the affected asset or liability in the future.
Judgments and estimates are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under
the circumstances. Revisions are recognized in the period in which the judgments and estimates
are revised and in any future period affected.
Judgments
In the process of applying the accounting policies, the Company has made the following
judgments, apart from those involving estimations, which have an effect on the amounts
recognized in the financial statements:
Determination Whether an Arrangement Contains a Lease. The Company assesses whether an

arrangement contains a lease based on PFRS 16, as disclosed in Note 3. On adoption of PFRS 16,
the Company elected to apply the practical expedient to grandfather the assessment of which
transactions are leases. It applied PFRS 16 only to contracts that were previously identified as
leases. Contracts that were not identified as leases under PAS 17 and IFRC 4 were not reassessed
for whether there is a lease. Therefore, the definition of lease under PFRS 16 was applied only to
contracts entered into or changed on or after January 1, 2019.
The details of these lease agreements are disclosed in Note 19.
Company as lessee. The Company has entered into lease agreements as a lessee. Depreciation of
right-of-use of asset and interest expense on lease liability recognized in profit or loss are
disclosed in Note 19, respectively.
Determining the Lease Term of Contracts with Renewal and Termination Options – Company as
lessee. The Company determines the lease term as the non-cancellable term of the lease,
together with any periods covered by an option to extend the lease if it is reasonably certain to
be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain
not to be exercised.
17
*RCTMNLFS0564*
The Company has lease contracts that include extension and termination options. The Company
applies judgement in evaluating whether it is reasonably certain whether or not to exercise the
option to renew or terminate the lease. That is, it considers all relevant factors that create an
economic incentive for it to exercise either the renewal or termination. After the commencement
date, the Company reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise or not to exercise the
option to renew or to terminate (e.g., construction of significant leasehold improvements or
significant customization to the leased asset).
Classifying Financial Instruments. The Company exercises judgments in classifying a financial

instrument, or its component parts, on initial recognition as a financial asset, a financial liability,
or an equity instrument in accordance with the substance of the contractual arrangement and the
definitions of a financial asset or liability. The substance of a financial instrument, rather than
its legal form, governs its classification in the statements of financial position.
Assessing Going Concern Assumption. The Company’s management has made an assessment on
the Company’s ability to continue as a going concern and is satisfied that the Company has the
resources to continue their business for the foreseeable future. Furthermore, management is not
aware of any material uncertainties that may cast significant doubt upon the Company’s ability
to continue as a going concern.
Estimates and Assumptions

The key estimates and assumptions used in the financial statements are based upon the
Company’s evaluation of relevant facts and circumstances as at the date of the financial
statements. Actual results could differ from such estimates.
Leases - Estimating the Incremental Borrowing Rate - The Company cannot readily determine the
interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to
measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to
borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of
a similar value to the right-of-use asset in a similar economic environment. The IBR therefore
reflects what the Company ‘would have to pay’, which requires estimation when no observable
rates are available or when they need to be adjusted to reflect the terms and conditions of the
lease. The Company estimates the IBR using observable inputs (such as market interest rates)
when available and is required to make certain entity-specific estimates (such as the Company’s
stand-alone credit rating).
Estimating Allowance for Expected Credit Losses on Receivables. The Company uses a provision
matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for
groupings of various customer that have similar loss patterns.
The provision matrix is initially based on the Company’s historical observed default rates. The
Company will calibrate the matrix to adjust the historical credit loss experience with
forward-looking information. At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed.
The Company evaluates the impairment on the basis of factors that affect the collectability of
the accounts. These factors include, but are not limited to, the length of the Company’s
relationship with the counterparties, the current credit status based on third party credit reports
and known market forces, average age of accounts, collection experience and historical loss
experience. The amount and timing of the recorded expenses for any period would differ if the
Company made different judgments or utilized different methodologies.
The provision for (reversal of) expected credit losses (ECL) on receivables amounted to
P
=4.7 million and (P
=0.9 million) in 2020 and 2019, respectively. The allowance for expected credit
losses on receivables amounted to = P45.5 million and P
=40.8 million as at December 31, 2020 and
2019, respectively (See Note 6).
18
*RCTMNLFS0564*
The carrying amounts of trade and other receivables amounted to P
=41.8 million and =
P59.8 million
as at December 31, 2020 and 2019, respectively (See Note 6).
Assessing Net Realizable Value of Inventories. The Company recognizes impairment losses on
inventories whenever its net realizable values becomes lower than cost due to damage, physical
deterioration, obsolescence, changes in price levels or other causes.
Estimates of selling price less cost to complete and sell are based on the most reliable evidence
available at the time the estimates are made of the amount the inventories are expected to be
realized. These estimates take into consideration fluctuations of price or cost directly relating
to events occurring after reporting date to the extent that such events confirm conditions existing
at reporting date. The allowance account is reviewed periodically to reflect the accurate
valuation in the financial records.
The provision for (reversal of) inventory write down and losses amounted to (P=50,638) and =P0.1
million in 2020 and 2019, respectively. Allowance for inventory write down and losses amounted
to P
=0.3 million and =
P0.4 million as at December 31, 2020 and 2019, respectively (see Note 7).
The carrying value of inventories amounted to = P60.9 million and P

=64.7 million as at
December 31, 2020 and 2019, respectively (see Note 7).
Estimating Useful Lives of Property and Equipment. The Company estimates the useful lives of
property and equipment based on the period over which the assets are expected to be available
for use. The estimated useful lives of property and equipment are reviewed periodically and are
updated if expectations differ from previous estimates due to physical wear and tear, technical
or commercial obsolescence and legal or other limits on the use of the assets.
In addition, estimation of the useful lives of property and equipment is based on collective
assessment of industry practice, internal technical evaluation and experience with similar assets.
It is possible, however, that future financial performance could be materially affected by changes
in estimates brought about by changes in factors mentioned above. The amounts and timing of
recorded expenses for any period would be affected by changes in these factors and
circumstances. A reduction in the estimated useful lives of property and equipment and
investment property would increase the recorded costs and expenses and decrease noncurrent
assets.
There were no changes in the estimated useful lives of property and equipment as at
December 31, 2020 and 2019.
The carrying value of depreciable property and equipment amounted to P =202.0 million and
P
=222.3 million as at December 31, 2020 and 2019, respectively (see Note 9).
Assessing Impairment of Non-Financial Assets. PFRS requires that an impairment review be

performed on property and equipment when events or changes in circumstances indicate that the
carrying amount may not be recoverable. Determining the recoverable amounts of these assets
requires the estimation of cash flows expected to be generated from the continued use and
ultimate disposition of such assets. While it is believed that the assumptions used in the
estimation of fair values reflected in the financial statements are appropriate and reasonable,
significant changes in these assumptions may materially affect the assessment of recoverable
amounts and any resulting impairment loss could have a material adverse impact on the financial
performance.
The Company assessed that its property and equipment with the carrying amounts of
P
=202.0 million and P
=222.3 million at December 31, 2020 and 2019, respectively, are not impaired
(see Note 9).
19
*RCTMNLFS0564*
Assessing Realizability of Deferred Tax Assets. The Company reviews its deferred tax assets at
each reporting date and reduces the carrying amount to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be
utilized. The Company’s assessment on the recognition of deferred tax assets on deductible
temporary differences and carryforward benefits of MCIT and NOLCO is based on the projected
taxable income in the following periods. Unrecognized deferred tax assets are reassessed at each
reporting date and are recognized to the extent that it has become probable that future taxable
profit will allow the deferred tax assets to be recovered.
The deferred tax assets amounted to P

=26.4 million and P
=18.2 million as at December 31, 2020 and
2019, respectively (see Note 17).
Estimating Retirement Liability. The determination of the obligation and cost of retirement
benefits is dependent on the assumptions determined by management and used by the actuary in
calculating such amounts. These assumptions are described in Note 16 to financial statements
and include, among others, discount rate and salary increase rate. Actual results that differ from
the Company’s assumptions are accumulated and recognized in other comprehensive income,
therefore, generally affect the recognized expense and recorded obligation in such future years.
Net retirement assets amounted to P

=1.0 million and =
P0.6 million as at December 31, 2020 and
2019, respectively (see Note 16).
5. Cash
This account consists of:
2020 2019
Cash on hand =-
P P
=20,000
Cash in banks 42,770,911 50,852,123
=42,770,911
P P
=50,872,123
Cash in banks earn interest at bank deposit rates. Interest income from cash in banks amounted
to P
=195,605 and =
P187,377 in 2020 and 2019, respectively.
6. Trade and Other Receivables
Note 2020 2019

Trade receivables 18 =85,739,823
P P
=97,325,476
Advances to suppliers 129,604 1,356,449
Others 1,514,730 1,937,619
87,384,157 100,619,544
Allowance for ECL (45,548,152) (40,822,827)
=41,836,005
P P
=59,796,717
Trade receivables with related parties and third parties are unsecured, non-interest bearing and
has normal credit terms of 30 to 60 days.
Advances to suppliers pertain to down payments for contractual services or purchasing of

materials. This will be applied against subsequent billings.
20
*RCTMNLFS0564*
Other receivables consist of emergency loans, communication advances, and advances to officers
and employees which are subject to liquidation.
As at December 31, 2020 and 2019, the aging of receivables follows:
2020 2019
Amounts Amounts
Owed by Owed by
Related Other Related Other
Parties Receivables Total Parties Receivables Total
Current =3,748,247
P =4,127,035
P =7,875,282
P P
=29,528,143 P
=22,613,881 P
=52,142,024
Past due
1 to 30 days 503,569 4,572,724 5,076,293 51,682 4,345,709 4,397,391
31 to 60 days - 1,962,017 1,962,017 - 2,313,918 2,313,918
61 to 90 days - 1,234,602 1,234,602 - 600,601 600,601
Over 90 days 25,148,867 46,087,096 71,235,963 384,542 40,781,068 41,165,610
=29,400,683
P =57,983,474
P =87,384,157
P P
=29,964,367 P
=70,655,177 P
=100,619,544
Certain receivables pertain to related party accounts that were not impaired, and are collectible
based on historical payment behavior and analyses of the underlying counterparty credit ratings.
There are no significant changes in the credit quality of the counterparties.
Movements of allowance for ECL on trade and other receivables follows:
Note 2020 2019

Beginning balance =40,822,827
P P
=41,914,996
Provision for ECL, net of reversals 14 4,725,325 (874,065)
Write-off - (218,104)
Ending balance =45,548,152
P P
=40,822,827
7. Inventories
2020 2019
Raw materials – at NRV =60,775,720
P P
=63,537,748
Work in process – at Cost 501,793 1,552,693
61,277,513 65,090,441
Allowance for decline in value (341,522) (392,160)
=60,935,991
P P
=64,698,281
The cost of inventories used amounted to =

P41.5 million and P
=84.6 million in 2020 and 2019,
respectively (see Note 13).
There was neither restriction on title, contractual commitments nor inventories pledged as
security for liabilities as at December 31, 2020 and 2019.
Movements of allowance for decline in value of inventories follow:
Note 2020 2019

Beginning balance =392,160
P P
=275,090
Impairment 13 - 117,070
Reversal 13 (50,638) -
Ending balance =341,522
P P
=392,160
21
*RCTMNLFS0564*
8. Prepayments and Other Current Assets
2020 2019
CWT =11,252,571
P P
=9,102,419
Tools and spare parts 10,556,711 10,263,087
Input VAT 439,275 3,053,566
Deferred input VAT 249,048 271,768
Others 811,427 704,884
=23,309,032
P P
=23,395,724
Tools and spare parts are composed of belts, blade, bearings, ink inductor motors and boards
which are to be used in maintenance of the machinery and equipment.
Others include prepaid insurance for fire, auto and truck, life and accident, office and janitorial
supplies.
9. Property and Equipment, Net
Composition and movement of this account follow:
Office
equipment
Machinery and
Building and Leasehold furniture and Transportation Construction in
Building improvements equipment improvements fixtures equipment Progress Total
Cost
At December 31,
2018 P
=77,997,739 P
=10,282,793 P
=641,407,320 P
=970,165 P
=21,909,294 P
=2,050,522 P
=- P
=754,617,833
Additions - - 4,264,304 - 250,000 - - 4,514,304
At December 31,
2019 77,997,739 10,282,793 645,671,624 970,165 22,159,294 2,050,522 - 759,132,137
Additions - - 4,851,019 - 293,250 - 342,000 5,486,269
At December 31,
2020 77,997,739 10,282,793 650,522,643 970,165 22,452,544 2,050,522 342,000 764,618,406
Accumulated depreciation and amortization
At December 31,
2018 56,715,067 8,834,321 421,316,633 755,098 21,836,229 1,783,423 - 511,240,771
Additions 3,876,917 322,310 21,135,994 31,473 43,839 144,000 - 25,554,533
At December 31,
2019 60,591,984 9,156,631 442,452,627 786,571 21,880,068 1,927,423 - 536,795,304
Additions 3,876,917 322,310 21,352,458 31,473 112,560 144,000 - 25,839,718
At December 31,
2020 64,468,901 9,478,941 463,805,085 818,044 21,992,628 2,071,423 - 562,635,022
Carrying value
At December 31,
2019 P
=17,405,755 P
=1,126,162 P
= 203,218,997 P
=183,594 P
= 279,226 P
=123,099 - P
=222,336,833
At December 31,
2020 =13,528,838
P =803,852
P =186,717,558
P =152,121
P =459,916
P =20,901
P =342,000
P =201,983,384
P
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*RCTMNLFS0564*
Depreciation and amortization is composed of the following:
Note 2020 2019

Property and equipment =25,839,718
P P
=25,554,533
Right of use asset 19 5,410,853 6,956,277
13 =31,250,571
P P
=32,510,810
The costs of fully depreciated property and equipment still in use amounted to P
=40.6 million and
P
=35.8 million as at December 31, 2020 and 2019, respectively.
There was neither restriction on title, contractual commitments nor property and equipment
pledged as security for liabilities. The Company has no contractual commitments for the
acquisition of asset.
10. Trade and Other Payables
Note 2020 2019

Trade payables 18 =8,376,131
P P
=31,291,237
Advances from customers 237,450 833,604
Statutory liabilities
Deferred output VAT 7,780,025 9,268,633
Output VAT 701,912 1,560,906
Withholding taxes 40,208 379,744
SSS, Philhealth and HDMF - 278,363
Others 561,152 296,511
18 =17,696,878
P P
=43,908,998
Trade payables represent purchases from local and related party suppliers and various
importations of goods for printing materials. These are non-interest bearing and has normal credit
terms of 30 to 120 days.
Advances from customers pertain to down payments for various contractual services or purchasing
of materials. These will be applied against subsequent billings.
23
*RCTMNLFS0564*
11. Share Capital
Details of capital stock follows as at December 31, 2020 and 2019 follows:
Shares Amount
Authorized, issued and outstanding - P
=100 par value 5,000,000 =500,000,000
P
12. Revenue
2020 2019
Printing services =94,396,983
P P
=178,488,604
Others 3,053,269 6,231,422
=97,450,252
P P
=184,720,026
13. Costs of Sales and Services
Note 2020 2019

Inventories used 7 =41,522,978
P P
=84,611,952
Direct labor 13,782,910 17,831,579
Factory overhead
Depreciation and amortization 9 31,250,571 32,510,810
Repairs and maintenance 8,125,889 8,716,216
Printing and other supplies 7,686,029 10,849,743
Utilities 7,601,517 13,288,520
Taxes and licenses 2,763,696 202,686
Retirement expense (benefit) 16 (2,240,423) 592,822
Outsourced services 1,636,918 12,187,557
Insurance expense 1,606,390 1,298,981
Indirect labor 232,541 186,350
Provision for (reversal of) decline in value of
inventories 7 (50,638) 117,070
Others 1,522,636 711,912
=115,441,014
P P
=183,106,198
24
*RCTMNLFS0564*
14. General and Administrative Expenses
Note 2020 2019

Provision for (reversal of) allowance for ECL 6 =4,725,325
P (P
=874,065)
Salaries and allowances 1,989,931 2,279,292
Outside services 1,809,848 4,658,220
Utilities 1,784,867 3,030,440
Taxes and licenses 1,473,088 2,089,324
Commission 449,225 643,972
Professional fees 272,260 283,063
Retirement benefits expense (income) 16 (232,837) 61,368
Transportation and travel 182,075 2,255,725
Insurance 170,297 602,774
Repairs and maintenance 119,000 783,479
Communication 114,983 470,267
SSS, Philhealth and HDMF contributions 98,305 116,662
Meetings and conferences 7,534 28,671
Fines and penalties - 161,849
Others 119,233 906,969
=13,083,134
P P
=17,498,010
15. Other Income (Expense), Net
Note 2020 2019

Scrap sales =4,562,786
P P
=-
Gain on remeasurement of lease 19 2,272,412 -
Packaging services 1,033,577 -
Unrealized foreign exchange gain (loss) 8,992 (145,018)
Others 809,451 (458,081)
=8,687,218
P (P
=603,099)
16. Retirement Benefits
The Company is a participant in a trusted, funded, non-contributory retirement plan providing for
retirement, death, disability and separation benefits to all regular and full-time employees of the
participating affiliated companies. The latest actuarial valuation report of the Company is as at
December 31, 2020.
In 2020, all employees of the Company have either retired or transferred to certain related
parties. Accordingly, the Company has no more retirement benefits obligation as at
December 31, 2020.
Retirement benefits expense (income) follow:
2020 2019
Current service cost =880,774
P P
=806,805
Interest expense 453,839 537,728
Interest income (571,005) (705,243)
Settlement gain (3,236,868) -
Transferred liability - 14,900
(P
=2,473,260) P
=654,190
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*RCTMNLFS0564*
Retirement benefits expense (income) are charged as follows:
Note 2020 2019

Cost of sales and services 13 (P
=2,240,423) P
=592,822
General and administrative expenses 14 (232,837) 61,368
(P
=2,473,260) P
=654,190
Movements in the retirement asset (liability) follow:
Present value Fair value of

of obligation plan assets Total
At December 31, 2018 (P
=7,064,187) P
=9,279,507 P
=2,215,320
Movements during the year:
Current service cost (806,805) - (806,805)
Interest (expense) income (537,728) 705,243 167,515
Remeasurement gain (loss) (2,451,804) 104,235 (2,347,569)
Transferred liability (14,900) - (14,900)
Contributions to the fund - 1,430,358 1,430,358
Benefits paid 538,472 (538,472) -
(3,272,765) 1,701,364 (1,571,401)
=10,336,952) P
=10,980,871 P
=643,919
Present value Fair value of

of obligation plan assets Total
=10,336,952) P
=10,980,871 P
=643,919
Movements during the year:
Current service cost (880,774) - (880,774)
Interest (expense) income (453,839) 571,005 117,166
Settlement 13,943,889 (10,707,021) 3,236,868
Remeasurement gain (loss) (2,167,500) (22,209) (2,189,709)
Transferred liability (139,948) - (139,948)
Contributions to the fund - 238,128 238,128
Benefits paid 35,124 (35,124) -
10,336,952 (9,955,221) 381,731
At December 31, 2020 =-
P =1,025,650
P =1,025,650
P
Net retirement benefits asset is broken down as follows:
2020 2019
Present value of the obligation =-
P (P
=10,336,952)
Fair value of plan assets 1,025,650 10,980,871
Retirement benefits asset =1,025,650
P P
=643,919
Cumulative remeasurement gains (losses) recognized in other comprehensive income follow:
Cumulative Deferred Tax

Remeasurement Asset (Liability)
Gain (Loss) (see Note 17) Net
At December 31, 2018 P
=1,382,751 (P
=414,825) P
=967,926
Remeasurement loss (2,347,569) 704,271 (1,643,298)
At December 31, 2019 (964,818) 289,446 (675,372)
Remeasurement loss (2,189,709) 656,913 (1,532,796)
Transferred to deficit 3,154,527 946,359 2,208,168
At December 31, 2020 =-
P =-
P =-
P
26
*RCTMNLFS0564*
Categories of the plan assets as follow:
2020 2019
Cash on hand and in banks =467,310
P P
=2,856,062
Other fixed income securities 565,374 -
Trust fees payables (6,735) (12,993)
Unit investment trust fund (UITF)/Mutual funds - 1,314,596
Debt Securities - 111,100
Government securities - 6,712,106
Other payables (299) -
=1,025,650
P P
=10,980,871
The significant actuarial assumptions were as follows:
2020 2019
Discount rate - 5.20%
Salary increase rate - 5.00%
The sensitivity analysis below has been determined based on a reasonably possible change of each
significant assumption on the defined benefit obligation as at the December 31, with all other
variables held constant:
Rate 2020 2019

Discount rate +100 bps - P
=9,100,535
-100 bps - 11,814,224
Salary increase rate +100 bps - 11,802,038
-100 bps - 9,087,487
Shown below is the maturity analysis of the undiscounted benefit payments
2020 2019
Less than 1 year =-
P P
=564,583
Between 2 to 5 years - 1,987,286
Between 6 to 10 years - 4,027,930
More than 10 years - 55,111,992
17. Income Taxes
The components of income tax expense (benefit) are shown below:
2020 2019
Current =-
P P
=23,576
Deferred (7,416,887) (4,966,160)
(P
=7,416,887) (P
=4,942,584)
In 2019, the current provision for corporate income tax represents MCIT. This will expire in 2022.
27
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The reconciliation between the statutory income tax rate on income before income tax and the
Company’s effective income tax rate follows:
2020 2019
Benefit from tax computed at 30% statutory tax rate (P
=6,740,953) (P
=5,144,923)
Tax effects of:
Remeasurement gain based on PFRS 16 (681,724) -
Nondeductible expenses 106,456 258,639
Interest income subjected to final tax (58,682) (56,213)
Transferred liability (41,984) -
Others - (87)
Effective income tax (P
=7,416,887) (P
=4,942,584)
The Company’s deferred tax asset and liabilities as at December 31 arise from the following:
2020 2019
Deferred tax assets:
Allowance for estimated credit losses =13,664,446
P P
=12,246,848
NOLCO 11,414,531 5,228,358
Unamortized past service costs 362,262 416,899
Impact of PFRS 16 852,210 151,630
Allowance for decline in value of inventories 102,457 117,648
MCIT 23,576 23,576
Unrealized foreign exchange loss - 43,505
26,419,482 18,228,464
Deferred tax liabilities:
Retirement asset (307,695) (193,175)
Unrealized foreign exchange gain (2,698) -
(310,393) (193,175)
(P
=26,109,089) P
=18,035,289
Deferred tax asset is reported as follows:
Note 2020 2019

Through profit or loss =25,162,730
P P
=17,745,843
Through other comprehensive income 16 946,359 289,446
=26,109,089
P P
=18,035,289
Details of the Company’s NOLCO follow:
Year incurred Incurred Used/Expired Balance Expiry Year

2020 P
=20,620,575 P
=- P
=20,620,575 2025
2019 17,427,859 - 17,427,859 2022
Total P
=38,048,434 P
=- P
=38,048,434
28
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18. Related Party Disclosures
The following are the transactions with related parties and the outstanding balances as at
December 31:
Trade and
Transactions Trade other Lease
Nature of during the Receivables Due from Payables Liabilities
Related Party Transactions Year Year (Note 6) related party (Note 10) (Note 19)
Intermediate Sale of services 2020 =45,340,201
P =23,954,967
P =-
P =-
P =-
P
Parent Company 2019 P
=20,334,042 P
=13,913,853 P
=- P
=- P
=-
Purchase of goods
2020 3,483,838 - - 234,773 -
and services
2019 443,063 - - 1,699,328 -
Lease of
2020 3,354,354 - - - 3,724,620
machineries
2019 7,300,682 - - - 10,939,849
Entities under Sale of goods 2020 9,195,793 5,445,716 - - -

Common Control 2019 97,397 4,978 - - -
and other Affiliates Purchases of
goods and 2020 58,253 - - 252,295 -
services 2019 548,915 - - 2,769,095 -
Advances 2020 - - 139,948 - -

2019 - - - - -
2020 =61,432,439
P =29,400,683
P =139,948
P =487,068
P =3,724,620
P
2019 P
=28,724,099 P
=13,918,831 - P
=4,468,423 P
=10,939,849
Transactions with related parties include:
a. Purchase and sale of goods and services with the Intermediate Parent Company and entities
under common control.
b. Lease agreements with the Intermediate Parent Company and entities under common control
for the use of office and warehouse for a period of five to seven and half years (Note 18).
Outstanding balance of due from Intermediate Parent Company is unsecured, noninterest-bearing

and settlements are made in cash.
Outstanding balance of trade receivables and payables, rent and nontrade payables are generally
settled in varying periods, normally within 30 to 90 days depending on arrangement with related
parties.
Details of compensation of key management are as follows:
2020 2019
Short term =977,040
P P
=1,280,885
19. Leases
Company as a Lessee
The Company has lease agreement with its Parent Company for the lease of machineries. The
leases are for a period of seven and half years and are renewable based on the mutual agreement
by the parties.
29
*RCTMNLFS0564*
Maturity analysis - contractual undiscounted cash flows (see Note 20):
2020 2019
Within one year =3,788,702
P P
=7,665,716
After one year but not more than five years - 3,788,702
=3,788,702
P P
=11,454,418
Set out below are the carrying amounts of lease liabilities and the movements during year:
Note 2020 2019

As at January 1, 2019 =10,939,849
P =17,390,692
P
Remeasurement gain 15 (4,139,644) -
Accretion of interest 278,769 849,839
Payments (3,354,354) (7,300,682)
As at December 31, 2019 =3,724,620
P =10,939,849
P
2020 2019
Current =3,724,620
P P
=7,215,229
Non-current - 3,724,620
=3,724,620
P P
=10,939,849
Right-of-use assets
Note 2020 2019

Balance at January 1 =10,434,415
P P
=17,390,692
Remeasurement loss 15 (1,867,232) -
Depreciation and amortization 9 (5,410,853) (6,956,277)
Balance at December 31 =3,156,330

P P
=10,434,415
20. Financial Risk and Capital Management Objectives and Policies
Objectives and Policies

The Company has significant exposure to the following financial risks primarily from its use of
financial instruments:
 Liquidity Risk
 Credit Risk
This note presents information about the exposure to each of the foregoing risks,
the objectives, policies and processes for measuring and managing these risks, and for
management of capital.
The principal non-trade related financial instruments of the Company include cash. This financial
instruments are used mainly for working capital management purposes. The trade-related
financial assets and financial liabilities of the Company such as trade and other receivables and
trade and other payables, excluding statutory liabilities, arise directly from and are used to
facilitate its daily operations.
30
*RCTMNLFS0564*
The BOD has the overall responsibility for the establishment and oversight of the risk management
framework of the Company.
The risk management policies of the Company are established to identify and analyze the risks
faced by the Company, to set appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and activities. The Company, through its training and management
standards and procedures, aims to develop a disciplined and constructive control environment in
which all employees understand their roles and obligations.
Liquidity Risk
Liquidity risk pertains to the risk that the Company will encounter difficulty to meet payment
obligations when they fall due under normal and stress circumstances.
The Company’s objectives to manage its liquidity risk are as follows: (a) to ensure that adequate
funding is available at all times; (b) to meet commitments as they arise without incurring
unnecessary costs; (c) to be able to access funding when needed at the least possible cost; and
(d) to maintain an adequate time spread of refinancing maturities.
The Company constantly monitors and manages its liquidity position, liquidity gaps and surplus on
a daily basis. A committed stand-by credit facility from several local banks is also available to
ensure availability of funds when necessary.
The table below summarizes the maturity profile of the Company’s financial assets and financial
liabilities based on contractual undiscounted receipts and payments used for liquidity
management.
Carrying Contractual Less than Over

2020 Amount Cash Flow 1 Year 5 Years
Financial Assets
Cash =42,770,911
P =42,770,911
P =42,770,911
P =-
P
Trade and other
receivables - net 41,836,005 41,836,005 41,836,005 -
Financial Liabilities
Trade and other
payables (excluding
statutory liabilities) =9,174,733
P =9,174,733
P =9,174,733
P =-
P
Lease liabilities
(excluding interest) 3,724,620 3,788,702 3,788,702 -
Carrying Contractual Less than Over

2019 Amount Cash Flow 1 Year 5 Years
Financial Assets
Cash P
=50,872,123 P
=50,872,123 P
=50,872,123 P
=-
Trade and other
receivables - net 59,796,717 59,796,717 59,796,717 -
Trade and other payables
(excluding statutory
liabilities) P
=32,421,352 P
=32,421,352 P
=32,421,352 P
=-
Lease liabilities
(excluding interest) 10,939,849 11,454,418 7,665,716 P
=3,788,702
31
*RCTMNLFS0564*
Credit Risk
Credit risk is the risk of financial loss to the Company when a customer or counterparty to a
financial instrument fails to meet its contractual obligations, and arises principally from
receivables. The Company manages its credit risk mainly through the application of transaction
limits and close risk monitoring. It is the Company’s policy to enter into transactions with a wide
diversity of creditworthy counterparties to mitigate any significant concentration of credit risk.
The Company has regular internal control reviews to monitor the granting of credit and
management of credit exposures.
Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of
each customer. However, management also considers the factors that may influence the credit
risk of its customer base, including the default of the industry in which the customer operates.
Outstanding customer receivables are regularly monitored and an impairment analysis is

performed at each reporting date on individual basis for major clients. Minor receivables are
grouped into homogeneous groups and assessed for impairment collectively.
Cash in banks
Credit risk from balances with banks and financial institutions is managed in accordance with the
Company’s policy. The Company manages the risk by ensuring that the Company’s arrangements
are with reputable and financially sound counterparties.
The following table provides information regarding the maximum credit risk exposure of the
Company arising from its principal financial assets as at December 31, 2020 and 2019 at gross
amounts:
2020 2019
Financial assets at amortized cost
Cash in banks =42,770,911
P P
=50,852,123
Trade and other receivables 85,739,823 97,325,476
=128,510,734
P P
=148,177,599
The Company does not have major concentration of credit risk.
The following table provides information regarding the credit risk exposure of the Company by
classifying assets according to the Company’s credit ratings of debtors:
At December 31, 2020

Trade and other
Cash in banks receivables* Total
Neither past due nor impaired =42,770,911
P =5,849,655
P =48,620,566
P
Past due but not Impaired
1-30 days - 5,076,293 5,076,293
31-60 days - 1,962,017 1,962,017
61-90 days - 1,234,602 1,234,602
Over 91 days - 26,069,104 26,069,104
Impaired - 45,548,152 45,548,152
=42,770,911
P =85,739,823
P =128,510,734
P
32
*RCTMNLFS0564*
Trade and other
Neither past due nor impaired P
=50,852,123 P
=48,847,956 P
=99,700,079
Past due but not Impaired
1-30 days - 4,397,391 4,397,391
31-60 days - 2,313,918 2,313,918
61-90 days - 600,601 600,601
Over 91 days - 342,783 342,783
Impaired - 40,822,827 40,822,827
P
=50,852,123 P
=97,325,476 P
=148,177,599
*Exclusive of advances to suppliers and other receivables subject to liquidation.
The Company does not hold any collateral as security or other credit enhancements attached to
its financial assets.
Credit quality per class of financial assets
The Company’s bases in grading its financial assets are as follows:
High grade - These are receivables which have a high probability of collection (the counterparty
has the apparent ability to satisfy its obligation and the security on the receivables are readily
enforceable).
Standard grade - These are receivables where collections are probable due to the reputation and
the financial ability of the counterparty to pay but have been outstanding for a certain period of
time.
Substandard grade - These are receivables that can be collected provided the Company makes
persistent effort to collect them.
The table below shows the credit quality by class of financial assets (gross of allowance for credit
losses) of the Company that are neither past due nor impaired based on their historical experience
with the counterparties:

Trade and other
Neither past due nor impaired
High grade =42,770,911
P =85,739,823
P =128,510,734
P
Standard - - -
=42,770,911
P =85,739,823
P =128,510,734
P

Trade and other
Neither past due nor impaired
High grade P
=50,852,123 P
=97,325,476 P
=148,177,599
Standard - - -
P
=50,852,123 P
=97,325,476 P
=148,177,599
*Exclusive of advances to suppliers and other receivables subject to liquidation
Trade receivables that were past due but not impaired relate to customers without recent history
of default. The Company does not hold any collateral in relation to these receivables.
33
*RCTMNLFS0564*
The credit quality of the Company’s financial assets is evaluated using internal credit rating.
Financial assets are considered as high grade if the counterparties are not expected to default in
settling their obligations, thus credit risk exposure is minimal. These counterparties include
banks, customers and related parties who are capable of settling their obligations to the
Company.
The Company has no financial assets whose terms have been renegotiated.
Capital Management
The Company maintains a sound capital base to ensure its ability to continue as a going concern,
thereby continue to provide returns to stockholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce cost of capital.
The Company manages its capital structure and makes adjustments, in the light of changes in
economic conditions. To maintain or adjust the capital structure, the Company may adjust the
dividend payment to shareholders, pay-off existing debt, return capital to shareholders or issue
new shares.
The Company defines capital as paid-in capital stock, additional paid-in capital and retained
earnings. Other components of equity such as treasury stock and equity reserves are excluded
from capital for purposes of capital management.
The BOD has overall responsibility for monitoring capital in proportion to risk. Profiles for capital
ratios are set in the light of changes in the external environment and the risks underlying the
Company’s business, operation and industry.
The Company monitors capital on the basis of debt-to-equity ratio, which is calculated as total
debt divided by total equity. Total debt is defined as total current liabilities and total noncurrent
liabilities, while equity is total equity as shown in the separate statements of financial position.
The Company is not subject to externally-imposed capital requirements.
21. Financial Assets and Financial Liabilities
The table below presents a comparison by category of carrying amounts and fair values of the
Company’s financial instruments as at December 31, 2020 and 2019:
2020 2019
Carrying Amount Fair Value Carrying Amount Fair Value
Financial Assets
Cash P42,770,911
= P42,770,911
= P
=50,872,123 P
=50,872,123
Trade and other receivables - net 41,836,005 41,836,005 59,796,717 59,796,717
Trade and other payables (excluding
statutory liabilities) =9,174,733
P =9,174,733
P P
=32,421,352 P
=32,421,352
Lease liabilities (excluding interest) 3,724,620 3,724,620 10,939,849 10,939,849
The following methods and assumptions are used to estimate the fair value of each class of
financial instruments:
Cash and Receivables. The carrying amounts of cash and cash equivalents, and receivables
approximate fair values primarily due to the relatively short-term maturities of these financial
instruments.
Trade and Other Payables. The carrying amount of accounts payable and other current liabilities
approximates fair value due to the relatively short-term maturity of these financial instruments.
34
*RCTMNLFS0564*
Finance Lease Liabilities. The carrying amount of finance lease liabilities was determined based
on the Company’s incremental borrowing rate. This is categorized as Level 2.
22. Events After the Reporting Date
Continuing Effects of COVID-19 Pandemic

On March 11, 2020, the World Health Organization assessed that the novel coronavirus of 2019
(COVID-19) has become a pandemic. In an effort to contain the spread of COVID-19 in the
Philippines, the Government issued Presidential Proclamation No. 929 on March 16, 2020. The
Proclamation declared a State of Calamity throughout the Philippines for a period of six months
and imposed enhanced community quarantine (ECQ), among others. Subsequently, as measure to
limit the spread of COVID-19 in the Philippines, community quarantines of varying strictness were
imposed in numerous parts of the country.
In March 2021, following spike in the number of new COVID-19 cases, the Philippine Government
placed the Metro Manila and other risk areas back to ECQ from March 29 to April 4, 2021 which
was later extended to April 11, 2021. In April 12, 2021, the Philippine Government has announced
and shifted Metro Manila and other risk areas from ECQ to MECQ starting April 12 to April 30,
2021.
These measures did not affect the economic activities and business operations of the Company.
The scale and duration of these developments remain uncertain as of the report date. Considering
the evolving nature of the pandemic, the Company will continue to monitor the situation.
Corporate Recovery and Tax Incentives for Enterprises or “CREATE” Act

On February 1, 2021, the Bicameral Conference Committee, under the 18th Congress of the
Philippines, ratified the Corporate Recovery and Tax Incentives for Enterprises (the CREATE bill).
The CREATE bill seeks to reform corporate income taxes and rationalize fiscal incentives in the
country by implementing certain changes to the current tax regulations. Under the bill, some
changes will be implemented for periods beginning July 1, 2020.
On February 24, 2021, the final version of the CREATE bill was transmitted to the Office of the
President for signing or approval into law. On April 26, 2021, the Office of the President approved
the bill, now called Republic Act No. 11534 or CREATE Act. The CREATE Act will become effective
15 days after complete publication in the Official Gazette or any newspaper of general circulation
in the Philippines.
The CREATE Act resulted to the reduction of the Company’s tax rate from 30% to 25% effective
July 1, 2020. The impact is presented as follows:
Previous Rate CREATE Rate Difference

Deferred tax assets P
=26,419,482 P
=24,217,859 P
=2,201,623
Deferred tax liabilities (310,393) (284,527) (25,866)
35
*RCTMNLFS0564*
23. Supplementary Information Required under Revenue Regulations (RR) No. 15-2010
The Bureau of Internal Revenue (BIR) has issued RR No. 15-2010 which requires certain tax
information to be disclosed in the notes to the financial statements in addition to the disclosures
mandated under PFRS. Presented below is the supplementary information required under
RR 15-2010:
(a) Value added tax (VAT)
Output VAT
Output VAT declared in 2020 and the revenue upon which the same was based consist of:
Gross amount Output VAT

Taxable sales P
=113,477,613 P
=13,617,314
Zero-rated 1,313,099 -
Exempt sales 5,883,488 -
P
=120,674,200 P
=13,617,314
Input VAT
As of December 31, 2020, the details of the input VAT are as follows:
Beginning balance P
=3,053,566
Current purchases and payments for: -
Goods for resale/manufacture or further processing Capital goods
subject to amortization 3,126,469
Capital goods not subject to amortization -
Capital goods subject to amortization 153,234
Domestic purchase of goods other than capital goods -
Services lodged under cost of goods sold 1,731,051
Claims for tax credit/refund and other adjustments (7,625,045)
P
=439,275
(b) The landed costs of imports and the amount of custom duties and tariff fees paid or accrued
thereon.
The landed cost of the Company’s information amounted to =

P61,498,700 for the year, with
paid/accrued amount of P=3,006,140 as tariff fees.
(c) Withholding taxes
Details of withholding taxes paid in 2020 are as follows:
Tax on compensation and benefits P

=297,279
Creditable withholding taxes 694,795
P
=992,074
36
*RCTMNLFS0564*
(d) Other taxes and licenses
a. Local
Business Tax P
=1,326,543
Real Property Tax 2,755,157
Mayor's Permit 77,040
Other Taxes 77,544
b. National
BIR annual registration 500
P
=4,236,784
(e) Tax assessments and cases
The Company received a letter of assessment (LOA) for the 2019 taxable year with LOA
number 057-2020-00000158. The Company was assessed on VAT and miscellaneous charges
amounted to P =279,852 and P =75,000, respectively. These were filed and paid on
November 27, 2020 resulting to the closure of the case.
37
*RCTMNLFS0564*

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2nd Floor Multinational Bancorporation Centre

INDEPENDENT AUDITOR’S REPORT TO ACCOMPANY INCOME TAX RETURN

The Shareholders and the Board of Directors

ROXAS CRUZ TAGLE AND CO.

April 26, 2021

INDEPENDENT AUDITOR’S REPORT

The Shareholders 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

 Evaluate the appropriateness of accounting policies used and the reasonableness of

 Conclude on the appropriateness of management’s use of the going concern basis of

ROXAS CRUZ TAGLE AND CO.

April 26, 2021

STATEMENTS OF FINANCIAL POSITION

Note 2020 2019

LIABILITIES AND EQUITY

See Notes to the Financial Statements.

Note 2020 2019

See Notes to the Financial Statements.

STATEMENTS OF COMPREHENSIVE INCOME

Note 2020 2019

See Notes to the Financial Statements.

STATEMENTS OF CHANGES IN EQUITY

Note 2020 2019

See Notes to the Financial Statements.

STATEMENTS OF CASH FLOWS

Note 2020 2019

See Notes to the Financial Statements.

NOTES TO THE FINANCIAL STATEMENTS

The Company is a wholly-owned subsidiary of FEP Printing Corporation (FEP), a Company

Functional and Presentation Currency

Adoption of New and Amended PFRS

 Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies,

These amendments had no impact on the financial statements of the Company.

 Amendments to PFRS 3, Business Combinations, Definition of Business. The amendments to

These amendments had no impact on the financial statements of the Company.

 Amendments to PFRS 7, Financial Instruments: Disclosures and PFRS 9, Financial Instruments,

 The assessment of whether a forecast transaction (or component thereof) is highly

 The rent concession is a direct consequence of Covid-19;

This amendment had no impact on the financial statements of the Company.

New and Amended PFRS Issued But Not Yet Effective

Effective for annual periods beginning on or after January 1, 2021:

 Annual Improvements to IFRS: 2018-2020 Cycle

o IFRS 1, First-time Adoption of IFRS - Subsidiary as a first-time adopter. The amendment

 Amendments to PFRS 3, Business Combinations – Reference to the Conceptual Framework –

 Amendments to PAS 1, Presentation of Financial Statements - The amendments to PAS 1

Current Versus Noncurrent Classification

Financial Assets and Financial Liabilities

• on initial recognition, it is part of a portfolio of identified financial instruments that are

 it is a derivative (except for a derivative that is a financial guarantee contract or a designated

Impairment of Financial Assets at Amortized Cost and FVOCI

Offsetting of Financial Assets and Liabilities

 Deliver cash or another financial asset to another entity;

 Inventories in transit – invoice price plus other charges.

Prepayments and Other Current Assets

Property and Equipment

Cost and Expense Recognition

Estimated useful life of the leased machineries is between 5 to 10 years.

• fixed payments, including in-substance fixed payments;