FINAL PROSPECTUS STRICTLY CONFIDENTIAL

Cirtek Holdings Philippines Corporation

(incorporated in the Republic of the Philippines)

Primary Offer of 80,000,000 Common Shares at an Offer Price of 20.00 per Offer Share, with an
Oversubscription Option of up to 40,000,000 Common Shares by way of a secondary offering to be listed
and traded on the Main Board of The Philippine Stock Exchange, Inc.

Issue Manager and Bookrunner

First Metro Investment Corporation is a 99.23%-owned subsidiary of Metropolitan Bank & Trust Company
who is the lender of the loan that will be repaid with the proceeds of the Offer.

Joint Lead Underwriters

Participating Underwriter

Philippine Commercial Capital, Inc.

The date of this Prospectus is 26 October 2015

THE PHILIPPINE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE AND SHOULD BE REPORTED
IMMEDIATELY TO THE PHILIPPINES SECURITIES AND EXCHANGE COMMISSION.
CIRTEK HOLDINGS PHILIPPINES CORPORATION
116 East Main Avenue, Phase V-SEZ
Laguna Technopark
Bian, Laguna
Tel Nos. +63 2 729 6206 and +63 49 541 2317
Corporate Website: www.cirtekholdings.com

This Prospectus relates to the offer and sale (the Offer) of eighty million 80,000,000 Common Shares by
way of a primary offering at an Offer Price (as defined below) of 20.00 (the Firm Offer, and such shares,
the Firm Shares), with a par value of 1.00 per common share (the Common Shares), of Cirtek Holdings
Philippines Corporation, a corporation organized under Philippine law (CHPC, Cirtek, the Company or
the Issuer). The Firm Offer Shares will comprise eighty million (80,000,000) new Common Shares to be
issued and offered by the Company by way of a primary offer as further described below. In the event of an
oversubscription to the Offer, the Joint Lead Underwriters (as defined on page ii), with the consent of
Camerton, Inc., the Selling Shareholder, reserves the right to increase the size of the Offer to up to an
additional forty million (40,000,000) Common Shares by way of a secondary offering (the Oversubscription
Option, and such shares, the Option Shares), for an aggregate Offer size of up to one hundred twenty
million (120,000,000) Common Shares (the Offer Shares). The Oversubscription Option, to the extent not
exercised during the Offer Period (as defined below), shall be deemed cancelled.

Pursuant to its articles of incorporation as amended on 23 July 2015, the Company has an authorized capital
stock of 560,000,000.00 divided into 520,000,000 Common Shares with a par value of 1.00 per share and
400,000,000 Preferred Shares with a par value of 0.10 per share. As of 30 June 2015, 339,063,353
Common Shares and 400,000,000 Preferred Shares are outstanding and fully paid. The Offer Shares by way
of a primary offering are Common Shares of the Company which will be from the increase in the authorized
capital stock.

The Offer Shares will be offered at a price of 20.00 per Offer Share (the Offer Price). The determination of
the Offer Price is further discussed on page 52 of this Prospectus. A total of 419,063,353 Common Shares will
be outstanding after the Offer. The Offer Shares will comprise up to 28.64% of the outstanding Common
Shares after the Offer, assuming full exercise of the Oversubscription Option.

The total gross proceeds to be raised by the Company from the sale of the Firm Shares will be 1,600.0
million. The estimated net proceeds to be raised by the Company from the sale of the Firm Shares after
deducting fees and expenses payable by the Company of approximately 56.5 million will be approximately
1,543.5 million. In the event the Oversubscription Option is exercised in full, the total gross proceeds to be
raised by the Selling Shareholder from the sale of the Option Shares will be 800.0 million and the estimated
net proceeds to be raised by the Selling Shareholder from the sale of Option Shares (after deducting fees and
expenses payable by the Selling Shareholder of approximately 26.9 million will be approximately 773.1
million. The Company intends to use the net proceeds it receives from the Firm Offer for strategic
acquisitions, capital expenditures, payment of financial obligations (comprised of a loan from Metropolitan
Bank & Trust Company (Metrobank), parent company of First Metro Investment Corporation, the Issue
Manager and Bookrunner, and Joint Lead Underwriter of the Offer), and working capital requirements of the
Company. For a more detailed discussion on the proceeds from the Firm Offer and the Companys proposed
use of proceeds, please see Use of Proceeds beginning on page 47 of this Prospectus.

i
The Issue Manager and Bookrunner, and the Joint Lead Underwriters (as defined below) will receive an
aggregate transaction fee from the Company equivalent to 2.5% of the gross proceeds from the sale of the
Offer Shares, inclusive of the amounts to be paid to the Selling Agents. For a more detailed discussion on the
fees to be received by the Joint Lead Underwriters, see Plan of Distribution beginning on page 159 of this
Prospectus.

Each holder of the Common Shares will be entitled to such dividends as may be declared by the Companys
Board of Directors (the Board), provided that any stock dividend declaration requires the approval of
shareholders holding at least two-thirds of the Companys total outstanding capital stock. The Corporation
Code of the Philippines, Batas Pambansa Blg. 68 (the Philippine Corporation Code), has defined
outstanding capital stock as the total shares of stock issued, whether paid in full or not, except treasury
shares. Dividends declared by the Company on its shares of stocks are payable in cash or in additional shares
of stock. On 28 April 2011, the Companys Board approved an annual dividend payment ratio of
approximately 30% of its consolidated net income from the preceding fiscal year, subject to the
requirements of the applicable laws and regulations and the absence of circumstances which may restrict
the payment of dividends. Please see Dividends and Dividend Policy beginning on page 50 of this
Prospectus.

64,000,000 of the Firm Shares (or 80% of the Firm Shares) are being offered and sold at the Offer Price to
qualified institutional buyers (QIBs) and the general public in the Philippines. 16,000,000 Firm Shares (or
20% of the Firm Shares) are being offered to all of the trading participants of the PSE (the PSE Trading
Participants). First Metro Investment Corporation (First Metro) will act as the Issue Manager and
Bookrunner (the Issue Manager and Bookrunner), and Joint Lead Underwriter of the Offer; while SB
Capital Investment Corporation (SB Capital) will act as Joint Lead Underwriter. (First Metro and SB Capital
shall be referred to as the Joint Lead Underwriters). Details regarding the fee to be received by the Joint
Lead Underwriters can be found under Plan of Distribution. Prior to the closing of the Offer, any allocation
of Offer Shares not taken up by the PSE Trading Participants shall be distributed by the Joint Lead
Underwriters to their clients or to the general public. Pursuant to their firm underwriting commitments for
the Offer, Offer Shares not taken up by the QIBs, PSE Trading Participants, the clients of the Joint Lead
Underwriters, or the general public shall be purchased by the Joint Lead Underwriters pursuant to the terms
and conditions of the Underwriting Agreement.

All of the Common Shares issued and to be issued or sold pursuant to the Offer have identical rights and
privileges. The Common Shares may be owned by any person or entity regardless of citizenship or
nationality, subject to the nationality limits under Philippine law. The Philippine Constitution and related
statutes set forth restrictions on foreign ownership for companies engaged in certain activities.

No dealer, salesman, or any other person has been authorized to give any information or to make any
representation not contained in this Prospectus. If given or made, any such information or representation
must not be relied upon as having been authorized by the Company or the Joint Lead Underwriters. The
distribution of this Final Prospectus and the offer and sale of the Shares may, in certain jurisdictions, be
restricted by law. The Company and the Joint Lead Underwriters require persons into whose possession this
Final Prospectus comes, to inform themselves of and observe all such restrictions. This Prospectus does not
constitute an offer of any securities, or any offer to sell, or a solicitation of any offer to buy any securities of
the Company in any jurisdiction, to or from any person to whom it is unlawful to make such offer in such
jurisdiction.

The information contained in this Prospectus relating to the Company and its operations has been supplied
by the Company, unless otherwise stated herein. To the best of its knowledge and belief, the Company,
which has taken reasonable care to ensure that such is the case, confirms that the information contained in
this Prospectus relating to it and its operations is correct, and that there is no material misstatement or
omission of fact which would make any statement in this Prospectus misleading in any material respect and

ii
that the Company hereby accepts full and sole responsibility for the accuracy of the information contained in
this Prospectus with respect to the same.

Unless otherwise indicated, all information in this Prospectus is as of the date of this Prospectus. Neither the
delivery of this Prospectus nor any sale made pursuant to this Prospectus shall, under any circumstance,
create any implication that the information contained herein is correct as of any date subsequent to the date
hereof or that there has been no change in the affairs of the Company since such date.

Each person contemplating an investment in the Shares should make his own investigation and analysis of
the creditworthiness of the Company and his own determination of the suitability of any such investment.
Before making an investment decision, investors should carefully consider the risks associated with an
investment in the Common Shares. These risks include:

risks relating to the Companys business,

risks relating to countries where the Company operates (including the Philippines),

risks relating to the Offer and the Offer Shares, and

risks relating to certain statistical information in this Prospectus.

Please refer to the section entitled Risk Factors beginning on page 32 of this Prospectus, which, while not
intended to be an exhaustive enumeration of all risks, must be considered in connection with a purchase of
the Offer Shares.

The Common Shares are (and, upon close of the Offer, the Offer Shares will be) listed on The Philippine Stock
Exchange, Inc. (the PSE) under the trading symbol TECH1 (formerly, CHIPS). On 23 October 2015, the
closing price of the Common Shares on the PSE was 24.90. The Offer Price was determined by the Company
and the Joint Lead Underwriters, through a book building process and discussions between the Company
and the Joint Lead Underwriters and not by reference to the historical trading price of the Common Shares
on the PSE. Investors should not rely on the historical market price of the Common Shares on the PSE as an
indicator of the value of the Common Shares. See Determination of the Offer Price on page 52 of this
Prospectus.

An application for listing of the Offer Shares was approved on 23 September 2015 by the Board of Directors
of the PSE, subject to the fulfillment of certain listing conditions. The PSE assumes no responsibility for the
correctness of any statements made or opinions expressed in this Prospectus. The PSE makes no
representation as to its completeness and expressly disclaims any liability whatsoever for any loss arising
from reliance on the entire or any part of this Prospectus. Such approval for listing is permissive only and
does not constitute a recommendation or endorsement of the Offer Shares by the PSE or the Securities and
Exchange Commission of the Philippines (the SEC).

An application was made to the SEC to register the Offer Shares under the provisions of the Securities
Regulation Code of the Philippines (Republic Act (R.A.) No. 8799) (the SRC). Subsequently, the SEC issued
a pre-effective clearance on 21 September 2015. Any approval for registration of the Offer Shares by the SEC
does not constitute a recommendation or endorsement of the Offer Shares by the SEC.

The Offer Shares are offered subject to receipt and acceptance of any order by the Company and subject to
its right to reject any order in whole or in part. It is expected that the Offer Shares will be delivered in book-

1
The change in stock symbol of Cirtek Holdings Philippines Corporation from "CHIPS" to "TECH" was reflected on the Exchange's trading
system effective on Tuesday, October 6, 2015.

iii
entry form against payment to the Philippine Depository and Trust Corporation (the PDTC) on or about 10
November 2015.

ALL REGISTRATION REQUIREMENTS HAVE BEEN MET AND ALL INFORMATION CONTAINED
HEREIN ARE TRUE AND CURRENT.

By:

(originally signed)
Jerry Liu
Chairman and President

Republic of the Philippines )

City of Makati ) s.s.

Before me, a notary public in and for the city named above, personally appeared with Passport No. 134-207-
402 issued at Republic of China on 1 July 2014, who was identified by me through competent evidence of
identity to be the same person who presented the foregoing instrument and signed the instrument in my
presence, and who took an oath before me as to such instrument.

Witness my hand and seal this ___day of _______ 2015 at Makati City,

Doc No. _________:

Book No. ________:
Page No. ________:
Series of 2015

iv
No representation or warranty, express or implied, is made by the Company and the Joint Lead Underwriters
regarding the legality of an investment in the Offer Shares under any legal, investment, or similar laws or
regulations. No representation or warranty, express or implied, is made by the Joint Lead Underwriters as to
the accuracy or completeness of the information herein and nothing contained in this Prospectus is, or shall
be relied upon as, a promise or representation by the Joint Lead Underwriters. The contents of this
Prospectus are not investment, legal, or tax advice. Prospective investors should consult their own counsel,
accountant, and other advisors as to legal, tax, business, financial, and related aspects of a purchase of the
Offer Shares. In making any investment decision regarding the Offer Shares, prospective investors must rely
on their own examination of the Company and the terms of the Offer, including the merits and risks
involved. Any reproduction or distribution of this Prospectus, in whole or in part, and any disclosure of its
contents or use of any information herein for any purpose other than considering an investment in the Offer
Shares is prohibited.

THE OFFER SHARES ARE BEING OFFERED IN THE PHILIPPINES ON THE BASIS OF THIS PROSPECTUS ONLY.
ANY DECISION TO PURCHASE THE OFFER SHARES IN THE PHILIPPINES MUST BE BASED ONLY ON THE
INFORMATION CONTAINED HEREIN.

No person has been authorized to give any information or to make any representations other than those
contained in this Prospectus and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company and the Joint Lead Underwriters. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to purchase any securities other than the Offer
Shares or an offer to sell or the solicitation of an offer to purchase such securities by any person in any
circumstances in which such offer or solicitation is unlawful. Neither the delivery of this Prospectus nor any
sale of the Offer Shares offered hereby shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof or that the information contained herein
is correct as of any time subsequent to the date hereof.

Market data used throughout this Prospectus has been obtained from market research, reports and studies,
publicly available information and industry publications. Industry publications generally state that the
information that they contain has been obtained from sources believed to be reliable but that the accuracy
and completeness of that information is not guaranteed. Similarly, industry forecasts, market research, and
the underlying economic assumptions relied upon therein, while believed to be reliable, have not been
independently verified, and neither the Company nor the Joint Lead Underwriters make any representation
as to the accuracy of that information.

The operating information used throughout this Prospectus has been calculated by the Company on the
basis of certain assumptions made by it. As a result, this operating information may not be comparable to
similar operating information reported by other companies.

The distribution of this Prospectus and the offer and sale of the Offer Shares in certain jurisdictions may be
restricted by law. The Company and the Joint Lead Underwriters require persons into whose possession this
Prospectus comes to inform themselves about and to observe any such restrictions. This Prospectus does
not constitute an offer of, or an invitation to purchase, any of the Offer Shares in any jurisdiction in which
such offer or invitation would be unlawful. Each prospective purchaser of the Offer Shares must comply with
all applicable laws and regulations in force in any jurisdiction in which it purchases, offers, sells, or resells the
Offer Shares or possesses and distributes this Prospectus and must obtain any consent, approval, or
permission required for the purchase, offer, sale, or resale by it of the Offer Shares under the laws, rules and
regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales,
or resales, and neither the Company nor the Joint Lead Underwriters shall have any responsibility therefor.

The Company reserves the right to withdraw the offer and sale of Offer Shares at any time, and the Joint
Lead Underwriters reserve the right to reject any commitment to subscribe for the Offer Shares in whole or

v
in part and to allot to any prospective purchaser less than the full amount of the Offer Shares sought by such
purchaser. If the Offer is withdrawn or discontinued, the Company shall subsequently notify the SEC and the
PSE. The Joint Lead Underwriters and certain related entities may acquire for their own account a portion of
the Offer Shares.

Each offeree of the Offer Shares, by accepting delivery of this Prospectus, agrees to the foregoing.

Conventions which apply to this Prospectus

In this Prospectus, unless otherwise specified or the context otherwise requires, all references to the
Company or "Cirtek Group" are to Cirtek Holdings Philippines Corporation and its Subsidiaries on a
consolidated basis and all references to the Parent Company are to Cirtek Holdings Philippines
Corporation. All references to the Philippines are references to the Republic of the Philippines. All
references to the Government are to the national government of the Philippines. All references to United
States or U.S. are to the United States of America. All references to Taiwan are to the Republic of China.
All references to China are to the Peoples Republic of China and, for the purpose of this Prospectus only,
excluding Hong Kong, the Macau Special Administrative Region and Taiwan. All references to Philippine
Peso, Pesos and are to the lawful currency of the Philippines, and all references to U.S. dollars and
US$ are to the lawful currency of the United States. The Company publishes its financial statements in U.S.
dollars.

The items expressed in the Glossary of Terms may be defined otherwise by appropriate government
agencies or regulations from time to time, or by conventional or industry usage.

Presentation of Financial Information

The Companys financial statements are reported in U.S. dollars and are prepared based on its accounting
policies, which are in accordance with the Philippine Financial Reporting Standards (PFRS) issued by the
Financial Reporting Standards Council of the Philippines. PFRS include PFRS, Philippine Accounting Standards
and Philippine Interpretations of International Financial Reporting Interpretations Committee.

The financial information of the Company as of 30 June 2015 and for the six months ended 30 June 2015 and
30 June 2014, and as of 31 December 2014 and 2013 and for the years ended 31 December 2014, 2013, and
2012 represent the accounts of the Company on a consolidated basis. Unless otherwise stated, all financial
information relating to the Company contained herein is stated in accordance with PFRS. In this Prospectus,
references to 2014, 2013 and 2012 refer to the years ended 31 December 2014, 31 December 2013
and 31 December 2012.

The Companys fiscal year begins on 1 January and ends on 31 December of each year. SyCip Gorres Velayo
& Co. (SGV & Co.), a member firm of Ernst & Young Global Limited, has audited and rendered an
unqualified audit report on the Companys consolidated financial statements as of 31 December 2014 and
2013 and for the years ended 31 December 2014, 2013, and 2012.

The unaudited interim consolidated financial statements as of 30 June 2015 and for the six months ended 30
June 2015 and 2014 prepared in accordance with PFRS were reviewed by SGV & Co. in accordance with
Philippine Standards on Review Engagements 2410, Review of Interim Financial Information Performed By
Independent Auditor of the Entity (PSRE 2410). A review conducted in accordance with PSRE 2410 is
substantially less than in scope than audit conducted in accordance with Philippine Standards on Auditing
and, as stated in its review report included in this Prospectus, SGV & Co. did not audit and does not express
any opinion on such unaudited interim condensed consolidated financial statements. Accordingly, the
degree of reliance on its review report on such information should be restricted in light of the limited nature
of the review procedures applied.

vi
Figures in this Prospectus have been subject to rounding adjustments. Accordingly, figures shown in the
same item of information may vary, and figures which are totals may not be an arithmetic aggregate of their
components.

vii
 TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS .......................................................................................................... IX

GLOSSARY OF TERMS ............................................................................................................................. 11
SUMMARY ............................................................................................................................................. 16
SUMMARY OF THE OFFER....................................................................................................................... 22
SUMMARY FINANCIAL AND OPERATING INFORMATION ......................................................................... 29
RISK FACTORS ........................................................................................................................................ 32
EXCHANGE RATES .................................................................................................................................. 46
USE OF PROCEEDS .................................................................................................................................. 47
DIVIDENDS AND DIVIDEND POLICY ......................................................................................................... 50
DETERMINATION OF THE OFFER PRICE ................................................................................................... 52
CAPITALIZATION AND INDEBTEDNESS .................................................................................................... 53
DILUTION............................................................................................................................................... 54
SELECTED FINANCIAL AND OPERATING INFORMATION ........................................................................... 55
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 58
BUSINESS ............................................................................................................................................... 76
INDUSTRY ............................................................................................................................................ 100
REGULATORY AND ENVIRONMENTAL MATTERS.................................................................................... 116
BOARD OF DIRECTORS AND SENIOR MANAGEMENT ............................................................................. 121
PRINCIPAL SHAREHOLDERS .................................................................................................................. 126
RELATED PARTY TRANSACTIONS........................................................................................................... 129
DESCRIPTION OF THE OFFER SHARES .................................................................................................... 133
MARKET PRICE OF THE COMPANYS STOCK AND RELATED STOCKHOLDER MATTERS .............................. 141
THE PHILIPPINE STOCK MARKET ........................................................................................................... 144
PHILIPPINE TAXATION .......................................................................................................................... 150
PHILIPPINE FOREIGN EXCHANGE AND FOREIGN OWNERSHIP CONTROLS ............................................... 156
PLAN OF DISTRIBUTION........................................................................................................................ 158
LEGAL MATTERS................................................................................................................................... 161
INDEPENDENT AUDITORS ..................................................................................................................... 162
INDEX TO AUDITED FINANCIAL STATEMENTS ........................................................................................ 163

viii
 FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements that are, by their nature, subject to significant risks and
uncertainties. These forward-looking statements include, without limitation, statements relating to:

known and unknown risks,

uncertainties and other factors that may cause the Companys actual results, performance or
achievements to be materially different from expected future results, and
performance or achievements expressed or implied by forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding the Companys present and
future business strategies and the environment in which the Company will operate in the future. Important
factors that could cause some or all of the assumptions not to occur or cause actual results, performance or
achievements to differ materially from those in the forward-looking statements include, among other things:

the Companys ability to successfully manage its activities,

the Companys ability to successfully implement its current and future strategies,
the Companys ability to successfully manage aggressive growth,
changes in the Philippine electronics manufacturing, assembly and test services market and the
demand for the Companys electronic products and services,
the Companys ability to maintain its reputation for safety-driven and quality products ,
the Companys ability to develop products and provide services without delays due to regulatory or
other causes,
the Companys ability to successfully manage its future business, financial condition, results of
operations, and cash flow,
general political, social, and economic conditions and changes in the countries where the Company
operates,

any future political instability in the countries where the Company operates,
changes in interest rates, inflation rates, and the value of the Peso against the U.S. dollar and other
currencies,

changes in the laws, including tax laws, regulations, policies and licenses applicable to or affecting
the Company,
the Companys subsidiaries continued enjoyment of tax incentives, such as its current income tax
holiday with respect to its operations,

competition in the electronics manufacturing, assembly and test services industry,

legal or regulatory proceedings in which the Company is or may become involved, and

uncontrollable events, such as war, civil unrest or acts of international or domestic terrorism, the
outbreak of contagious diseases, accidents and natural disasters.

ix
Additional factors that could cause the Companys actual results, performance or achievements to differ
materially from forward-looking statements include, but are not limited to, those disclosed under Risk
Factors and elsewhere in this Prospectus. These forward-looking statements speak only as of the date of
this Prospectus. The Company and the Joint Lead Underwriters expressly disclaim any obligation or
undertaking to release, publicly or otherwise, any updates or revisions to any forward-looking statement
contained herein to reflect any change in the Companys expectations with regard thereto or any change in
events, conditions, assumptions, or circumstances on which any statement is based.

This Prospectus includes statements regarding the Companys expectations and projections for future
operating performance and business prospects. The words believe, plan, expect, anticipate,
estimate, project, intend, seek, target, aim, may, might, will, would, could, and similar
words identify forward-looking statements. In addition, all statements other than statements of historical
facts included in this Prospectus are forward-looking statements. Statements in this Prospectus as to the
opinions, beliefs and intentions of the Company accurately reflect in all material respects the opinions,
beliefs and intentions of its management as to such matters as of the date of this Prospectus, although the
Company gives no assurance that such opinions or beliefs will prove to be correct or that such intentions will
not change. This Prospectus discloses, under the section Risk Factors and elsewhere, important factors
that could cause actual results to differ materially from the Companys expectations. All subsequent written
and oral forward-looking statements attributable to the Company or persons acting on behalf of the
Company are expressly qualified in their entirety by the above cautionary statements.

The Company and the Joint Lead Underwriters have exercised due diligence in ascertaining that all material
representations contained in the prospectus and any amendments and supplements are true and correct,
and that no material information was omitted, which was necessary in order to make the statements
contained in said documents not misleading.

x
 GLOSSARY OF TERMS

In this Prospectus, unless the context otherwise requires, the following terms shall have the meanings set
forth below.
AOI Automatic Optical Inspection
Application the documents to purchase or subscribe to the Offer Shares
Articles the Articles of Incorporation of the Company
Banking Day or Business Day a day on which commercial banks are open for business in Makati
City, Metro Manila
BER Bit Error Rate
BIR Bureau of Internal Revenue
Board of Directors or Board the Board of Directors of the Company
BOI Board of Investments, the lead investments promotion agency of the
Philippines
BPSK Binary Phase Shift Keying
BSP Bangko Sentral ng Pilipinas, the central bank of the Philippines
By-Laws the By-Laws of the Company
CAGR compound annual growth rate
Camerton Camerton, Inc., the principal shareholder of the Company
CATS Cirtek Advanced Technologies and Solutions, Inc.
Cayon Cayon Holdings, Inc.
CEC Cirtek Electronics Corporation, a Philippine company
CEIC Cirtek Electronics International Corporation, a British Virgin Islands
company
Charmview Charmview Enterprises, Ltd, ,
CHI Cirtek Holdings, Inc.
CLC Cirtek Land Corporation
Common Shares common shares of the Company with a par value of P1.00 per share
CHPC or Cirtek or Cirtek Group or Cirtek Holdings Philippines Corporation, a corporation incorporated in
Company Issuer or TECH the Philippines; references to the Company include references to its
Subsidiaries, unless the context otherwise requires
COA Commission on Audit
Congress the Congress of the Philippines, which comprises the House of
Representatives and the Senate
CTT code name for RBWIs 2nd generation radio (after MRI)
Debt-to-Equity Ratio the Companys total bank borrowings divided by its total equity

11
 attributable to the equity holders of the Parent Company as
described in the Consolidated Financial Statements included in this
Prospectus
DENR Department of Environment and Natural Resources
DFN Dual flat leadless package
Director(s) the director(s) of the Company
EBITDA earnings before interest, taxes, depreciation and amortization
ECC Environmental Compliance Certificate
EDGE Electronic Disclosure Generation Technology
EIS Environmental Impact Statement
Eligible Investors Applicants who are qualified to subscribe to the Offer Shares
EMB Environmental Management Bureau
EMS Electronics Manufacturing Services
Firm Offer the offer and sale of 80,000,000 Common Shares of the Company
Firm Shares the Common Shares relating to the Firm Offer
Government the national government of the Republic of the Philippines
IC Integrated Circuits
IDM Integrated Device Manufacturer
IPP Investment Priorities Plan, an annual publication by the BOI that
defines the areas of business that it intends to promote
IRFU Indoor Radio Frequency Unit
IRRs Implementing Rules and Regulations of the SRC, as amended
Issue Manager and Bookrunner First Metro Investment Corporation
Joint Lead Underwriters First Metro Investment Corporation and SB Capital Investment
Corporation
LMC Labor Management Council
MIC Monolithic Integrated Circuit
MPO minimum public ownership
MTBF Mean Time Between Failure. It is a way of measuring how good an
equipment is, usually in hours between failure.
NPI New Product Information
ODFN Optical Dual Flat No lead. It is a DFN package that uses clear or
transparent mold compound.
ODM Original Design Manufacturer
ODU Out Door Unit

12
OEMs Original Equipment Manufacturers
Offer the offer and sale of the Offer Shares
Offer Price 20.00 per Offer Share
Offer Shares the Firm Shares and the Option Shares
OIPR Outdoor Internet Protocol Radio
Option Shares the Common Shares relating to the Oversubscription Option, which
comprise up to 40,000,000 existing Common Shares offered by the
Selling Shareholder
OSAT Outsourced Semiconductor Assembly & Test
Oversubscription Option the option granted by the Selling Shareholder to the Joint Lead
Underwriters to increase the Offer by up to an additional 40,000,000
Common Shares by way of a secondary offering by the Selling
Shareholder, to be made available to the general investing public on
the same terms and conditions as the Firm Shares
PCBA Printed Circuit Board Assembly
PDIP Plastic Dual-In-Line Package
PDTC the Philippine Depositary & Trust Corporation
Pesos, Philippine Pesos, and the legal currency of the Republic of the Philippines
Philippine currency
PEZA Philippine Economic Zone Authority
PFRS Philippine Financial Reporting Standards
Philippine Constitution also known as the 1987 Constitution, the supreme law of the
Republic of the Philippines
Philippine Corporation Code Batas Pambansa Blg. 68, also known as the Corporation Code of the
Philippines
Philippine Nationals The term shall mean any of the following: (1) a citizen of the
Philippines; or (2) a domestic partnership or association wholly
owned by citizens of the Philippines; or (3) a corporation organized
under the laws of the Philippines of which at least 60% of the capital
stock outstanding and entitled to vote is owned and held by citizens
of the Philippines; or (4) a corporation organized abroad and
registered as doing business in the Philippines under the Corporation
Code of which 100% of the capital stock outstanding and entitled to
vote is wholly owned by Filipinos or (5) a trustee of funds for pension
or other employee retirement or separation benefits, where the
trustee is a Philippine national and at least 60% of the fund will
accrue to the benefit of the Philippine nationals. Where a
corporation and its non-Filipino stockholders own stocks in an SEC-
registered enterprise, at least 60% of the capital stock outstanding
and entitled to vote of both corporations must be owned and held by
citizens of the Philippines and at least 60% of the members of the
Board of Directors of both corporations must be citizens of the

13
 Philippines, in order that the corporations shall be considered a
Philippine national
PQFN Power Quad Flat No leads
Principal Shareholder Camerton, Inc.
Prospectus This Prospectus together with all its annexes, appendices and
amendments, if any
PSA Philippine Standards on Auditing
PSE The Philippine Stock Exchange, Inc.
PSE Trading Participants the trading participants of the PSE in the Philippines
QFN Quad flat pack leadless package
QIB a qualified institutional buyer, refers to any of the following: mutual
funds, pension or retirement funds, commercial or universal banks,
trust companies, investment houses, insurance companies,
investment companies, finance companies, venture capital firms,
government financial institutions, trust departments of commercial
or universal banks, non-bank quasi banking institutions, Trading
Participants of the PSE for their dealer accounts, non-stock savings
and loan associations, educational assistance funds, other juridical
persons that possess the following qualifications, and registered with
the SEC under Memorandum Circular No. 6, Series of 2007:
a) Has a minimum annual gross income of at least One Hundred
Million Pesos (100,000,000) for at least two years prior to
registration;
b) A total portfolio investment in securities registered with the
SEC of at least Sixty Million Pesos (60,000,000);
c) A net worth of not less than One Hundred Million
(100,000,000)
and other institutions of similar nature determined as such by the
SEC
R.A. Republic Act, which refers to a statute enacted by the Senate or the
House of Representatives
RBWI REMEC Broadband Wireless International, Inc.
Receiving Agent Metropolitan Bank & Trust Company Trust Banking Group, a
corporation duly licensed and authorized to operate in the
Philippines, with address at 17/F GT Tower International, 6813 Ayala
Ave. cor. H.V. Dela Costa St., 1200 Makati City, Philippines
REMEC REMEC Broadband Wireless Holdings, Inc.
RF Radio frequency
SBFZ Subic Bay Freeport Zone
SCCP Securities Clearing Corporation of the Philippines
SEC the Philippine Securities and Exchange Commission
14
Selling Shareholder Camerton, Inc.
Senate the Senate of the Philippines, one of the two branches of the
Congress
Selling Agents PSE Trading Participants
SOIC Small-outline integrated circuit
SRC R.A. No. 8799, also known as the Securities Regulation Code of the
Philippines
SSS the Republic of the Philippines' Social Security System
Subsidiaries Cirtek Electronics Corporation, Cirtek Electronics International
Corporation, and/or Cirtek Advanced Technologies and Solutions, Inc.
TUV TV SUD Philippines Inc.
UHA Ultra High Availability
Underwriting Agreement The agreement entered into by and between the Company and the
Joint Lead Underwriters, indicating the terms and conditions of the
Offer and providing that the Offer shall be fully underwritten by the
Joint Lead Underwriters
Unrestricted Retained Earnings the undistributed earnings of a corporation which have not been
allocated for any managerial, contractual, or legal purpose and which
are free for distribution to the shareholders as dividends, see
Dividends and Dividend Policy Limitations and Requirements on
page 50 of this Prospectus.
VAT Value Added Tax

15
 SUMMARY

The following summary is qualified in its entirety by the more detailed information and consolidated
financial statements and notes thereto appearing elsewhere in this Final Prospectus. Because it is a
summary, it does not contain all of the information that a prospective purchaser should consider
before investing. Prospective investors should read the entire Final Prospectus carefully, including the
section entitled Risk Factors and Other Considerations and the consolidated financial statements
and the related notes to those statements included in this Final Prospectus.

Overview

The Company is the holding company of Cirtek Electronics Corporation (CEC) and Cirtek Electronics
International Corporation (CEIC), (collectively the Cirtek Group). Through its subsidiaries, the
Company is primarily engaged in two major activities: (1) providing full service/turnkey solutions
including wafer probing, wafer back grinding, assembly, and packaging and final testing of
semiconductor devices, and (2) offering complete manufacturing solutions for value-added, highly
integrated radio frequency (RF), microwave and millimeterwave technology products.

CHPC through its subsidiaries harnesses more than 50 years of combined operating track record. The
Companys products cover a wide range of applications and industries, including communications,
consumer electronics, power devices, computing, automotive, and industrial.

Beginning in 1984 with only three customers, the Cirtek Group has significantly grown its customer
base to over 70 major and regular customers across Europe, U.S. and Asia, with the bulk of revenues
contributed by customers located in Europe and the U.S.

The Cirtek Group has earned a strong reputation with its customers for its high-quality products,
production flexibility, competitive costing, and capability to work with customers to develop
application and customer specific packages. The Cirtek Group has been accredited and certified by
several international quality institutions, namely TD SD Management Service GmbH, TV Product
Service Asia Ltd., Taiwan Branch, Defense Supply Center & British Approval Board Telecom, for the
latest quality system standards, which include ISO9001, ISO14001, and QS9000/TS16949.

The Companys principal office is located at 116 East Main Avenue, Phase V-SEZ, Laguna Technopark,
Bian, Laguna.

The Company was registered with the SEC on 10 February 2011, with an initial authorized capital
stock of P400,000,000.00 divided into 400,000,000 common shares with a par value of One Peso
(P1.00) per share. Of the authorized capital stock, 30% equivalent to 120,000,000 shares or
P120,000,000.00 was subscribed and fully paid-up. On 24 March 2015 and 11 May 2015 the Board
and the stockholders, respectively, approved the increase in the authorized capital stock of the
Company. On 23 July 2015, the SEC approved the Companys application to increase its authorized
capital stock by 160,000,000.00 or from 400,000,000.00 divided into 400,000,000 common shares
with a par value of 1.00 per share, to 560,000,000.00 divided into 520,000,000 common shares
with a par value of 1.00 per share and 400,000,000 preferred shares with a par value of 0.10 per
share.

The Company was listed in the PSE on 18 November 2011. Its market capitalization has grown by
approximately eight times from P1.1 billion in 2011 to P8.2 billion as of 23 October 2015.

16
From 2012 to 2014, Cirtek Groups revenues grew from US$40.6 million to US$51.8 million at a CAGR
of 12.9% while net income grew from US$4.4 million to US$6.5 million at a CAGR of 21.8%. For the
six months ended 30 June 2015, the Cirtek Group reported revenues and net income of US$28.3
million and US$3.3 million at a year-on-year growth of 24.2% and 45.1%, respectively. As of 30 June
2015, the Cirtek Group had total assets of US$81.6 million and total liabilities of US$44.1 million.

Competitive Strengths

The Company believes that its principal strengths are the following:

Strong Financial Track Record

Cirtek, through its subsidiaries, has consistently proven its ability to grow the business. Cirtek has
grown its revenues from US$24 million in 2009 to US$52 million in 2014, a 17% CAGR, significantly
outpacing the 6% revenue growth of the broader semiconductor industry. After the acquisition of
RBWI, the Companys revenues grew by almost 18% in 2014.

The Cirtek Groups ability to create shareholder value is seen in the consistent rise in its profits and
EBITDA over the years. As a result, market capitalization has grown by approximately eight times
since its IPO in November 2011 to PhP8.2 billion as of 23 October 2015.

Offers a Complete Range of Turnkey Solutions and Vertically Integrated Services

The Company, through its subsidiaries, provides a full range of turnkey solutions. For the
semiconductor business, these would include package design and development, wafer probing, wafer
back grinding, assembly and packaging, final testing of semiconductor devices, and delivery and
shipment to its customers end users. CATS also offers full turnkey solutions, including product and
process design and development, transition from R&D to full scale manufacturing, integrated
manufacturing processes, and delivery to end customers.

Of particular importance to the Company, however, is its ability to adapt and adjust to the specific
needs and demands of its customers through its technical capabilities. The Companys customers are
given the flexibility to contract for the entire process flow, or just a portion thereof. In addition, the
Company also works with its customers to develop application and customer specific
packages. These have given Cirtek the ability to adapt to its customers needs, which in turn, helps
build a stronger relationship with its customers.

Furthermore, the Companys vertically integrated manufacturing solutions enable it to shorten lead
times. This results in savings for Cirteks customers for non-essential product costs and faster time to
market for their products.

Global and Diversified Customer Footprint

Cirtek Groups products have multiple end-user applications that serve a diverse range of industries
including telecommunications, automotive, consumer electronics, industrial, medical, satellite
communication, and aerospace and defense. The table below illustrates the breakdown of the
Companys revenues by industry for the year ended December 31, 2014:

Industry Revenue Contribution for the

year ended 31 December 2014
(%)
Communication 45%

17
 Computing 20%
Consumer 20%
Electronics
Industrial 10%
Automotive 5%

Since its incorporation, the Cirtek Group has slowly built a global customer base of over 70 customers
based in three major regions in the world, namely, Asia, Europe and the U.S. The table below shows
the revenue contribution of its customers per region for the year ended December 31, 2014:

Region Revenue Contribution for the

year ended 31 December
2014 (%)
U.S. 46%
Europe 33%
Asia 21%

Because of the diversified revenue base of the Cirtek Group, it is not dependent on a single market
and is able to cope with upswings and downswings in demand.

Highly Experienced Management Team

The Companys senior management is composed of highly experienced individuals from various
semiconductor, OSAT, and RF and microwave companies. It has over 200 years of combined
management and engineering expertise. It believes that because of managements extensive
experience in the industry, the Company is highly equipped in dealing with, responding, and adapting
to customer needs, as well as changes in the industry landscape.

Proven Execution Track Record

The Company, through its subsidiaries, harnesses more than 50 years of combined operating track
record. It has a well-established reputation in both the assembly and testing segment of the
semiconductor industry and in providing complete "box build" turnkey manufacturing solutions to RF,
microwave, and millimeterwave products.

CEC is known for its high-quality products, production flexibility, competitive costing, and capability
to work with customers to develop applications. It continues to be the preferred supplier of
customer- and application-specific semiconductor packages. It has been in business with most of its
customers for more than ten years. Moreover, its existing customer base has grown since 1984 from
only three customers to over 60 customers to date.

RBWI, now known as CATS, has over 18 years of experience in producing high quality niche PCBA and
box-build in low/medium/high volume and high-mix products for industrial and consumer
applications, such as RF/microwave, emerging products of OEMs and ODMs for commercial,
industrial, military and telecommunications applications, and providing related repair services. These
unique capabilities and extensive experience in RF and microwave manufacturing and engineering
services offer a versatile competitiveness in this field.

The Company has over the years developed excellence in manufacturing. This is evidenced by latest
quality system standards obtained by the Company, through its subsidiaries, namely ISO9001,
ISO14001, QS9000/TS16949, Defense Supply Center & British Approval Board Telecom. Cirteks

18
manufacturing practices are designed to be compliant with industry requirements and to exceed
customer expectations.

The Companys quality system has evolved from direct dealings with customers, benchmarking and
learning from their experiences, and incorporating their best practices into the Companys own
quality system. All these have enabled the company to garner several recognition awards from its
major customers as presented in Awards and Recognition on page 89.

Key Strategies

Focus on further expanding the semiconductor business

Improve on customer- and application- specific packages

The Company intends to constantly review and make innovations in its production and assembly
techniques and capabilities to improve productivity and efficiency in its use of resources. In addition
to that, it plans to continue to work closely with its current and potential customers to understand
technology and industry trends that may have an impact on customers products. Together with the
customer, the Company will evaluate how its customers product can evolve to meet new
requirements and standards in order to stay competitive.

Furthermore, the Company will continue to aggressively offer dedicated or captive line models for
assembly and test services. This involves dedicating certain capacity to fulfill a customers mature
and stable products with competitive volume break incentives. This arrangement allows customers
to increase capacity quickly and minimize the need for additional capital expenditures.

Introduce new products/packages that meet customers needs

The Company plans to continue to co-develop new technologies with its customers. It will tap into
the expertise and strengths of customers in areas where developing it solely would be costly and
time consuming. The cooperation with customers assures the availability of a ready market and a
faster-to-market introduction of products.

Strengthen presence in high-growth market segments such as wireless communication, consumer

electronics, automotive sectors

The Company plans to actively pursue business opportunities in high-growth market segments such
as wireless communication, consumer electronics and automotive. Demand for smart phones,
tablets and gadgets remain strong. In automotive, demand is being driven by the growing number of
cars, as well as the higher electronic content in vehicles as result of enhancements to, convenience
and safety features, and environmental concerns. The internet of things (the ability to connect
remote and mobile things or machines or assets to the Internet or corporate Intranets through
the use of wireless communications and low-cost sensors/computing/storage) will significantly drive
the consumer electronics market.

Expand sales network in key markets such as Europe, US and Asia

The Company is increasing its international sales force and sales representatives to establish greater
geographic presence and increase its end-customer base.

Aggressive growth for RF/Microwave/Millimeterwave Business

19
The Company expects the demand for its RF/Microwave/Millimeterwave business to grow at a rapid
rate as a result of the explosive growth in wireless data traffic and growing application of
millimeterwave in imaging, telecommunication, consumer markets, defense and security.

Diversify growth drivers through vertical integration

The Company aims to expand its business portfolio vertically from OSAT, to becoming a complex
OEM, to the development of its own products and brands, with a focus on high-growth industry
segments such as wireless communication and mobile devices and applications, and online and
mobile solutions (i.e. e-commerce).

The Company believes that by moving up the value chain, it will be able to accelerate its revenue
trajectory and improve profit margins.

Transform into an innovative technology-enabled company of business, commerce, industry and

finance

In line with the Companys strategy to expand its business and leverage on its accumulated expertise
in technology, particularly in the wireless / broadband transmission business and e-commerce, the
Company plans to actively seek strategic investments, alliances, joint ventures and/or acquisitions in
leading technologies, in order to accelerate the growth of its operating scale.

While majority of the Companys revenues are currently derived from its semiconductor and
RF/microwave/millimeter wave businesses, the Companys manufacturing expertise and long-
standing relationships with other technology companies allow it to continuously engage and
collaborate with important players in the technology industry, to understand key technological
market trends and anticipate the needs of customers.

The Company plans to make meaningful acquisitions designed to gain expertise and access to
proprietary software technologies and content, which will improve its capability in creating and
providing e-commerce platforms and enterprise software solutions that are applicable to various
industries, such as financial services, communications, and retailing.

The Company believes that its ability to become not only a manufacturing-centered business, but
also a technology and software-focused enterprise, will allow it to offer a wider range of products
and services to its clients than its competitors, to continuously improve its existing portfolio, and to
expand its market reach, not only to existing customers but to new consumers as well.

Risks of Investing

Before making an investment decision, investors should carefully consider the risks associated with
an investment in the Offer Shares. These risks include:

risks relating to the Companys business,

risks relating to countries where the Company operates (including the Philippines),
risks relating to the Offer and the Offer Shares, and
risks relating to certain statistical information in this Prospectus.

Please refer to the section entitled Risk Factors on page 32 which, while not intended to be an
exhaustive enumeration of all risks, must be considered in connection with a purchase of the Offer
Shares.

20
Corporate Information

The Company is a Philippine corporation with its registered office located at 116 East Main Avenue,
Phase V-SEZ, Laguna Technopark, Bian, Laguna. The Companys telephone numbers are +63 2 729
6206 and +63 49 541 2317. Its corporate website is www.cirtekholdings.com. The information on the
Companys website is not incorporated by reference into, and does not constitute part of, this
Prospectus.

Investor Relations Office and Compliance Office

The Investor Relations Office is tasked with (a) the creation and implementation of an investor
relations program that reaches out to all shareholders and informs them of corporate activities and
(b) the formulation of a clear policy for accurately, effectively and sufficiently communicating and
relating relevant information to the Companys stakeholders as well as to the broader investor
community.

Anthony Albert S. Buyawe, the Chief Financial Officer, heads the Companys Investor Relations Office
and serves as the Companys designated Investor Relations Officer (IRO). The IRO is also
responsible for ensuring that the Companys shareholders have timely and uniform access to official
announcements, disclosures and market-sensitive information relating to the Company. As the
Companys officially designated spokesperson, the IRO is responsible for receiving and responding to
investor and shareholder queries. In addition, the IRO oversees most aspects of the Companys
shareholder meetings, press conferences, investor briefings, management of the investor relations
portion of the Companys website and the preparation of its annual reports. The IRO is also
responsible for conveying information such as the Companys policy on corporate governance and
corporate social responsibility, as well as other qualitative aspects of the Companys operations and
performance.

Anthony Albert S. Buyawe also currently serves as the Companys Acting Compliance Officer to
ensure that the Company complies with, and files on a timely basis, all required disclosures and
continuing requirements of the SEC and the PSE.

The Companys Investor Relations Office is located at 116 East Main Avenue, Phase V-SEZ, Laguna
Technopark, Bian, Laguna. The Companys Investor Relations Officer, may be contacted at +63 2
729 6205 or +63 49 541 2310.

21
 SUMMARY OF THE OFFER

Issuer Cirtek Holdings Philippines Corporation, a corporation

organized under Philippine law with the trading symbol
TECH.

Issue Manager and Bookrunner First Metro Investment Corporation

First Metro Investment Corporation

Joint Lead Underwriters SB Capital Investment Corporation

Selling Agents PSE Trading Participants

The Offer Offer of 80,000,000 Firm Shares, consisting of new

Common Shares to be issued and offered by the Company,
with an Oversubscription Option of up to an additional
40,000,000 Common Shares to be offered by the Selling
Shareholder by way of a secondary offering that will be
made available to the general investing public on the
same terms and conditions as the Firm Shares.

64,000,000 Firm Shares (or 80% of the Firm Shares) are

being allocated to all QIBs and the general public at the
Offer Price. 16,000,000 Firm Shares (or 20% of the Firm
Shares) are being allocated to all of the PSE Trading
Participants at the Offer Price. Each PSE Trading
Participant shall initially be allocated 121,200 Firm Shares,
subject to reallocation as may be determined by the Joint
Lead Underwriters. Based on the initial allocation for each
trading participant, there will be a total of 1,600 residual
Firm Shares to be allocated as may be determined by the
Joint Lead Underwriters. A PSE representative will be
present during the reallocation process. Offer Shares not
taken up by the PSE Trading Participants shall be
distributed by the Joint Lead Underwriters to their
respective clients or to the general public. Offer Shares
not taken up by the QIBs, the PSE Trading Participants, the
Joint Lead Underwriters clients, or the general public shall
be purchased by the Joint Lead Underwriters pursuant to
the terms and conditions of the Underwriting Agreement.

Offer Shares the Firm Shares and the Option Shares

Offer Price 20.00 per Offer Share

Offer Period The Offer Period shall commence at 9:00 a.m., Manila
time, on 28 October 2015 and end at 12:00 p.m., Manila
time, on 4 November 2015. The Company and the Joint
Lead Underwriters reserve the right to extend or
terminate the Offer Period with the approval of the SEC
and the PSE.

22
 Applications must be received by the Receiving Agent by
12:00 p.m., Manila time on 4 November 2015, whether
filed through a participating Selling Agent or filed directly
with either of the Joint Lead Underwriters. Applications
received thereafter or without the required documents
will be rejected. Applications shall be considered
irrevocable upon submission to a participating Selling
Agent or either of the Joint Lead Underwriters, and shall
be subject to the terms and conditions of the Offer as
stated in this Prospectus and in the application. The actual
purchase of the Offer Shares shall become effective only
upon the actual listing of the Offer Shares on the PSE and
upon the obligations of the Joint Lead Underwriters under
the Underwriting Agreement becoming unconditional and
not being suspended, terminated or cancelled on or
before the Listing Date in accordance with the provisions
of such agreement.

Use of Proceeds The Company intends to use the net proceeds from the
Offer for strategic acquisitions, capital expenditures,
payment of financial obligations, and working capital
requirements of the Company. See Use of Proceeds on
page 47 of this Prospectus for details of how the total net
proceeds are expected to be applied.

Minimum Subscription Each application must be for a minimum of 300 Firm

Shares, and thereafter, in multiples of 100 Firm Shares.
Applications for multiples of any other number of
Common Shares may be rejected or adjusted to conform
to the required multiple, at the Companys discretion.

Eligible Investors The Offer Shares may be purchased by any natural person
of legal age residing in the Philippines, regardless of
nationality, or any corporation, association, partnership,
trust account, fund or entity residing in and organized
under the laws of the Philippines and/or licensed to do
business in the Philippines, regardless of nationality,
subject to the Companys right to reject an application or
reduce the number of Offer Shares applied for
subscription or purchase if the same will cause the
Company to be in breach of the Philippine ownership
requirements under relevant Philippine laws.

Lock-up The Company and the Principal Shareholder have agreed

with the Joint Lead Underwriters that they will not,
without the prior written consent of the Joint Lead
Underwriters issue, offer, pledge, sell, contract to sell, or
otherwise dispose of (or publicly announce any such
issuance, offer, sale, or disposal of) any Common Shares
or securities convertible or exchangeable into or
exercisable for any Common Shares or warrants or other
rights to purchase Common Shares or any security or

23

Listing and Trading
Dividends
Registration and Lodgment of
Shares with PDTC
Registration of Foreign Investments
financial product whose value is determined directly or
indirectly by reference to the price of the underlying
securities, including equity swaps, forward sales and
options for a period of 180 days after the listing of the
Offer Shares. See Principal Shareholders on page 126 of
this Prospectus and Plan of Distribution Lock-Up on
page 160 of this Prospectus.
The Companys application for the listing of the Offer
Shares was approved by the PSE on 23 September 2015.
All of the Offer Shares to be issued are expected to be
listed on the PSE under the symbol and company alias
TECH on or about 10 November 2015. Trading of the
Offer Shares that are not subject to lock up is expected to
commence on the same date. See Description of the
Offer Shares beginning on page 133 of this Prospectus.
Each holder of the Common Shares will be entitled to such
dividends as may be declared by the Board of Directors,
provided that any stock dividend declaration requires the
approval of shareholders holding at least two-thirds of the
Companys total outstanding capital stock. The Philippine
Corporation Code has defined outstanding capital stock
as the total shares of stock issued, whether paid in full or
not, except treasury shares. Dividends declared by the
Company on its shares of stock are payable in cash or in
additional shares of stock. On 28 April 2011, the
Companys Board approved an annual dividend payment
ratio of approximately 30% of its consolidated net income
from the preceding fiscal year, subject to the
requirements of the applicable laws and regulations and
the absence of circumstances which may restrict the
payment of dividends. See Dividends and Dividend
Policy on page 50 of this Prospectus for more discussion.
The Offer Shares are required to be lodged with the PDTC.
The applicant must provide the information required for
the PDTC lodgment of the Offer Shares. The Offer Shares
will be lodged with the PDTC at least two trading days
prior to the Listing Date. The applicant may request to
receive share certificates evidencing such applicants
investment in the Offer Shares through his/her broker
after the Listing Date. Any expense to be incurred for such
issuance of certificates shall be borne by the applicant.
The BSP requires that investments in shares of stock
funded by inward remittance of foreign currency be
registered with the BSP only if the foreign exchange
needed to service capital repatriation or dividend
remittance will be sourced from the Philippine banking
system. The registration with the BSP of all foreign
investments in the Offer Shares shall be the responsibility
of the foreign investor. See Philippine Foreign Exchange
24
 and Foreign Ownership Controls beginning on page 156
of this Prospectus.

Restriction on Issuance and Disposal See Lock-up above.

of Shares
See Philippine Taxation beginning on page 150 of this
Tax Considerations
Prospectus for further information on the Philippine tax
consequences of the purchase, ownership and disposal of
the Offer Shares.

Procedure for Application for the Application forms and signature cards may be obtained
Offer from either of the Joint Lead Underwriters or from any
participating Selling Agent. Applicants shall complete the
application form, indicating all pertinent information such
as the applicants name, address, taxpayers identification
number, citizenship and all other information as may be
required in the application form. Applicants shall
undertake to sign all documents and to do all necessary
acts to enable them to be registered as holders of Offer
Shares. Failure to complete the application form may
result in the rejection of the application.

If the applicant is an individual, the applicant must submit

the following supporting documents:

a properly completed Application to Subscribe;

one (1) copy each of at least two (2) valid

government-issued identification documents (IDs)
as prescribed by the BSP in its Circular Nos. 608
(Series of 2008) and 792 (Series of 2013), and in its
Memorandum No. M-2012-021 (e.g., SSS, GSIS,
drivers license, passport, PRC ID, Senior Citizens
ID or digital TIN ID); and

the duly accomplished signature card.

If the applicant is a corporation, partnership or trust

account, the application must be accompanied by the
following documents:

a certified true copy of the applicants latest

articles of incorporation and by-laws (or articles of
partnership in the case of a partnership) and other
constitutive documents (each as amended to
date) duly certified by its corporate secretary (or
managing partner in the case of a partnership),

a certified true copy of the applicants SEC

certificate of registration or certificate of filing
amended articles of incorporation or by-laws, as

25

Payment Terms for the Offer
Acceptance or Rejection of
Applications for the Offer
the case may be, duly certified by its corporate
secretary (or managing partner in the case of a
partnership), and
a duly notarized corporate secretarys certificate
(or certificate of the managing partner in the case
of a partnership) setting forth the resolution of
the applicants board of directors or equivalent
body authorizing the purchase of the Offer Shares
indicated in the application, identifying the
designated signatories authorized for the purpose,
including his or her specimen signature, and
certifying the percentage of the applicants capital
or capital stock held by Philippine Nationals.
Foreign corporate and institutional applicants who
qualify as Eligible Investors, in addition to the
documents listed above, are required to submit in
quadruplicate, a representation and warranty
stating that their purchase of the Offer Shares to
which their application relates will not violate the
laws of their jurisdictions of incorporation or
organization, and that they are allowed, under
such laws, to acquire, purchase and hold the Offer
Shares.
The purchase price must be paid in full in Pesos upon the
submission of the duly completed and signed application
form and signature card together with the requisite
attachments. Payment for the Offer Shares shall be made
either by: (i) a personal or corporate check drawn against
an account with a BSP authorized bank at any of its
branches located in Metro Manila, or (ii) a managers or
cashiers check issued by an authorized bank. All checks
should be made payable to Cirtek Holdings Philippines
Corporation Public Offer, crossed Payees Account
Only, and dated the same date as the application. The
applications and the related payments will be received at
any of the offices of the Joint Lead Underwriters or the
Selling Agents.
Application forms are subject to confirmation by either of
the Joint Lead Underwriters and the final approval of the
Company. The Company and the Joint Lead Underwriters
reserve the right to accept, reject, or scale down the
number and amount of Offer Shares covered by any
application. The Company and the Joint Lead Underwriters
have the right to reallocate available Offer Shares in the
event that the Offer Shares are insufficient to satisfy the
total applications received. The Offer Shares will be
allotted in such a manner as the Company and the Joint
Lead Underwriters may, in their sole discretion, deem
appropriate, subject to distribution guidelines of the PSE.
Applications with checks dishonored upon first
26
 presentation and Application forms which do not comply
with terms of the Offer will be automatically rejected.
Notwithstanding the acceptance of any Application form,
the actual subscription of the Offer Shares by the
applicant will be effective only upon the listing of the
Offer Shares at the PSE.

Refunds for the Offer In the event that the number of Offer Shares to be
received by an applicant, as confirmed by a Joint Lead
Underwriter, is less than the number covered by its
application, or if an application is rejected by the
Company, then the Joint Lead Underwriters shall refund,
without interest, within five (5) banking days from the end
of the offer period, all or a portion of the payment
corresponding to the number of Offer Shares wholly or
partially rejected. All refunds shall be made through the
Receiving Agent with whom the applicant has filed the
application, at the applicants risk.

Expected Timetable The timetable of the Offer is expected to be as follows:

Bookbuilding 28 September to 23
October 2015

Price-setting date 26 October 2015

Release of listing notice on final 26 October 2015

offer price

Start of offer period for trading 28 October 2015

participants, and the general
investing public

Submission of firm commitments 2 November 2015

by PSE trading participants

End of offer period for trading 4 November 2015

participants, and the general
investing public

Listing Date 10 November 2015

The dates listed above are subject to market and other

conditions and may be changed at the discretion of the
Company and the Joint Lead Underwriters, subject to the
approval of the PSE.

Risks of Investing Before making an investment decision, prospective

investors should carefully consider the risks associated
with an investment in the Offer Shares. Certain of these
risks are discussed in the section entitled Risk Factors on
page 32 and include: risks relating to the Companys
27
business, risks relating to the Philippines, risks relating to
other countries where the Company operates, risks
relating to the Offer and the Offer Shares, and risks
relating to certain statistical information in this
Prospectus.

28
 SUMMARY FINANCIAL AND OPERATING INFORMATION

The following tables set forth the summary consolidated financial information derived from the Companys
unaudited interim consolidated financial statements as of 30 June 2015 and for the six months ended 30
June 2015 and 2014, and the Companys audited consolidated financial statements as of 31 December 2014
and 2013 and for the years ended 31 December 2014, 2013 and 2012, and should be read in conjunction
with the financial statements, including the notes thereto, included elsewhere in this Prospectus, and the
section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations on
page 58 and other financial information included herein. The audited consolidated financial statements
have not been revised to reflect the restatement as of and for the year ended 31 December 2014 due to
finalization of accounting for the acquisition of CATS. The effects due to finalization of accounting for the
acquisition of CATS have been disclosed in Note 4 to the Companys unaudited interim condensed
consolidated financial statements, included elsewhere in this Prospectus.

The Companys audited consolidated financial statements as of 31 December 2014 and 2013 and for the
years ended 31 December 2014, 2013 and 2012, were prepared in accordance with PFRS and were audited
by SGV & Co. in accordance with the Philippine Standards on Auditing (PSA). The Companys unaudited
interim consolidated financial statements as of 30 June 2015 and for the six months ended 30 June 2015 and
2014 were prepared in accordance with PFRS and reviewed by SGV & Co. in accordance with PSRE 2410. The
summary consolidated financial information below is not necessarily indicative of the results of future
operations.

SUMMARIZED CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except where
indicated) For the years ended December 31 For the six months ended June 30

2012 Audited 2013 Audited 2014 Audited 2014 Unaudited 2015 Unaudited
In US $ In 2 In US $ In 2 In US $ In 2 In US $ In 2 In US $ In 2
Net Sales $40,631 1,836,521 $43,984 1,988,077 $51,792 2,340,998 $22,818 1,031,374 $28,312 1,279,702
Cost of Sales (33,791) (1,527,353) (35,476) (1,603,515) (44,251) (2,000,145) (19,168) (866,394) (23,031) (1,041,001)
Gross Profit 6,840 309,168 8,508 384,562 7,541 340,853 3,650 164,980 5,281 238,701
Operating Expenses (2,378) (107,486) (2,433) (109,972) (3,328) (150,426) (1,307) (59,076) (1,826) (82,535)
Financial Income (Expenses)
Interest Income 123 5,560 118 5,334 32 1,446 11 497 216 9,763
Interest Expense (183) (8,272) (403) (18,216) (551) (24,905) (194) (8,769) (577) (26,080)
(60) (2,712) (285) (12,882) (519) (23,459) (183) (8,272) (361) (16,317)
Other Income (Charges) 160 7,232 (894) (40,409) 2,928 132,346 85 3,842 436 19,707
Income Before Income Tax 4,562 206,202 4,896 221,299 6,622 299,314 2,245 101,474 3,530 159,556
Provision (benefit from) for Income Tax
Current 215 9,718 191 8,633 202 9,130 95 4,294 178 8,046
Deferred (60) (2,712) 69 3,119 (123) (5,560) (15) (678) 95 4,294
155 7,006 260 11,752 79 3,571 80 3,616 275 12,430
NET INCOME 4,407 199,196 4,636 209,547 6,543 295,744 2,165 97,858 3,256 147,171
Other comprehensive income
Other comprehensive income (loss) not to be
reclassified to profit or loss in subsequent periods:

Re-measurement gain (loss) on retirement

benefit, net of deferred tax (198) (8,950) 132 5,966 384 17,357 33 1,492 60 2,712
Total Comprehensive Income $4,209 190,247 $4,768 215,514 $6,927 313,100 $2,198 99,350 $3,316 149,883

Earnings per Share Basic and diluted -as

restated 1 $0.018 0.814 $0.014 0.633 $0.020 0.904 $0.006 0.271 $0.010 0.452

Note:
(1) Earnings per Share was calculated using CHPCs weighted average number of common shares outstanding for all periods presented.
(2) Amounts in US Dollars were converted to Philippine pesos using the exchange rate as of 30 June 2015 of P45.20 to US$ 1.00.

29
SUMMARIZED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except where
indicated) As of December 31 As of June 30

2013 Audited 2014 Audited 2015 Unaudited

In US $ In 2 In US $ In 2 In US $ In 2
ASSETS
Current Assets
Cash and cash equivalents $7,024 317,485 $12,602 569,610 $6,644 300,309
Trade and other receivables 4,061 183,557 15,587 704,532 12,245 553,474
Inventories 7,535 340,582 10,769 486,759 12,717 574,808
Financial asset at fair value through profit or
loss 8,055 364,086 702 31,730 9,541 431,253
Amounts owed by related parties 2,222 100,434 5,123 231,560 5,834 263,697
Held-to-maturity investments - - 114 5,153 555 25,086
Other current assets 1,801 81,405 1,871 84,569 2,216 100,163
30,698 1,387,550 46,768 2,113,914 49,751 2,248,745
Non-current assets-held-for-sale - - 11,409 515,687 11,409 515,687
Total Current Assets 30,698 1,387,550 58,177 2,629,600 61,160 2,764,432
Noncurrent Assets
Property, plant and equipment 15,784 713,437 17,015 769,078 18,641 842,573
Held-to-maturity investments - - 1,074 48,545 399 18,035
Deferred tax asset 84 3,797 187 8,452 174 7,865
Other noncurrent assets 688 31,098 963 43,528 922 41,674
Total Noncurrent Assets 16,555 748,286 19,239 869,603 20,136 910,147
TOTAL ASSETS $47,253 2,135,836 $77,415 3,499,158 $81,297 3,674,624

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables $4,384 198,157 $9,434 426,417 $9,762 441,242
Short-term loan 200 9,040 2,100 94,920 6,554 296,241
Current portion of long term debt 965 43,618 3,412 154,222 3,293 148,844
Amounts owed to related parties 447 20,204 470 21,244 483 21,832
Deferred revenues - - 405 18,306 228 10,306
Income tax payable 58 2,622 349 15,775 440 19,888
Provision for warranty - - 149 6,735 14 633
Dividends payable - - - - - -
Derivative Liability 102 4,610 41 1,853 - -
Total Current Libilities 6,156 278,251 16,360 739,472 20,773 938,940
Noncurrent Liabilities
Long-term debt net of current portion 8,685 392,588 23,753 1,073,707 21,700 980,840
Retirement benefit obligation 1,882 85,072 1,646 74,404 1,648 74,490
Deferred tax liability - - - - 102 4,610
Total Noncurrent Liabilities 10,567 477,660 25,399 1,148,111 23,450 1,059,940
Total Liabilities 16,723 755,930 41,759 1,887,632 44,223 1,998,880
Equity
Capital stock 6,559 296,486 7,893 356,787 7,893 356,764
Additional paid-in capital 4,734 213,991 4,734 213,991 4,734 213,977
Equity Reserve 4,138 187,050 4,138 187,050 4,138 187,038
Other comprehensive income (66) (2,983) 318 14,375 377 17,040
Retained earnings 15,166 685,549 18,573 839,555 19,932 900,926
Total Equity 30,530 1,380,048 35,656 1,611,758 37,074 1,675,745
TOTAL LIABILITIES AND EQUITY $47,253 2,135,836 $77,415 3,499,158 $81,297 3,674,624

30
SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands, except where indicated) For the years ended December 31 For the six months ended June 30

2012 Audited 2013 Audited 2014 Audited 2014 Unaudited 2015 Unaudited
In US $ In 2 In US $ In 2 In US $ In 2 In US $ In 2 In US $ In 2
Cash Flows from Operating Activities
Income before income tax $4,562 206,202 $4,897 221,344 $6,621 299,269 $2,246 101,519 $3,530 159,556
Adjustments for:
Depreciation and amortization 3,037 137,272 2,310 104,412 2,901 131,125 1,144 51,709 1,676 75,755
Interest Expense 183 8,272 403 18,216 551 24,905 194 8,769 577 26,080
Change in fair value of financial asset at FVPL - - (33) (1,492) - - - - (345) (15,594)
Interest Income (123) (5,560) (118) (5,334) (32) (1,446) (11) (497) (216) (9,763)
Retirement benefit obligation 216 9,763 262 11,842 (243) (10,984) 121 5,469 79 3,571
Net unrealized foreign exchange losses (gains) 149 6,735 23 1,040 (62) (2,802) 61 2,757 (15) (678)
Excess of the fair value of net assets acquired over
the aggregate consideration transferred
- - - - (2,574) (116,345) - - - -

Mark-to-market loss on forward contracts 9 407 102 4,610 - - - - - -

Operating income before working capital changes 8,033 363,092 7,846 354,639 7,162 323,722 3,755 169,726 5,287 238,972
Decrease (increase) in:
Trade and other receivables (403) (18,216) 1,005 45,426 (6,643) (300,264) (3,403) (153,816) 2,682 121,226
Inventories (2,233) (100,932) 42 1,898 3,415 154,358 810 36,612 (1,948) (88,050)
Other current assets (83) (3,752) (60) (2,712) 108 4,882 107 4,836 (349) (15,775)
Increase (decrease) in:
Trade and other payables (718) (32,454) (100) (4,520) (201) (9,085) (97) (4,384) 345 15,594
Net cash generated from operations 4,596 207,739 8,733 394,732 3,841 173,613 1,171 52,929 6,017 271,968
Interest received 117 5,288 70 3,164 32 1,446 11 497 195 8,814
Income taxes paid (185) (8,362) (198) (8,950) (22) (994) (130) (5,876) (88) (3,978)
Net cash flows from operating activities 4,528 204,666 8,605 388,946 3,851 174,065 1,052 47,550 6,124 276,805

Cash Flows from Investing Activities

Proceeds from (investment in) financial asset at FVPL - - (8,022) (362,594) 7,353 332,356 (84) 3,796 (8,839) (399,523)

Acquisitions of property, plant and equipment (3,367) (152,188) (3,474) (157,025) (1,861) (84,117) (1,258) (56,862) (3,302) (149,250)
Net payment for the acquisition of REMEC entities - - - - (7,174) (324,265) - - - -
Proceeds from maturity of held-to-maturity investments - - - - - - - - 115 5,198
Decrease in Held-to-maturity investments - - - - - - - - 30 1,356
Decrease (increase) in other non-current assets (163) (7,368) - - 39 1,763 52 2,350 35 1,582
Net cash used in investing activities (3,530) (159,556) (11,496) (519,619) (1,642) (74,218) (1,290) (58,308) (11,960) (540,592)

Cash Flows from Financing Activities

Proceeds from availment of:
Short-term loan 1,500 67,800 400 18,080 3,300 149,160 450 20,340 8,393 379,364
Long-term debt 10,000 452,000 - - 10,000 452,000 - - - -
Transaction costs from availment of long-term debt (153) (6,916) - - - - - - - -
Payments of:
Short-term loan (1,500) (67,800) (200) (9,040) (1,100) (49,720) (388) (17,538) (4,100) (185,320)
Long-term debt - - (613) (27,708) (3,495) (157,974) (500) (22,600) (2,011) (90,897)
Cash Dividends (3,608) (163,082) (1,770) (80,004) (1,800) (81,360) (1,200) (54,240) (1,200) (54,240)
Interest (101) (4,565) (318) (14,374) (415) (18,758) (180) (8,136) (506) (22,871)
Net cash settlement on forward contracts - - (482) (21,786) - - - - - -
Net movement in amounts owned by and owed to
43 1,944 (116) (5,243) (3,169) (143,239) 12 542 (698) (31,550)
related parties
Net cash provided by (used in) financing activities 6,181 279,381 3,099 140,075 3,321 150,109 (1,806) (81,631) (122) (5,514)

Net increase (decrease) in cash and cash equivalents 7,181 324,581 (5,990) (270,748) 5,529 249,911 (2,043) (92,344) (5,957) (269,256)

Effect of exchange rate changes on cash and cash

(48) (2,170) (97) (4,384) 49 2,215 (5) (226) (1) (45)
equivalents

Cash and cash equivalents at beginning of period 5,978 270,206 13,111 592,617 7,024 317,485 7,024 317,485 12,602 569,610

Cash and cash equivalents at end of period $13,111 592,617 $7,024 317,485 $12,602 569,610 $4,976 224,915 $6,644 300,309

31
 RISK FACTORS

An investment in the Offer Shares involves a number of risks. The price of securities can and do fluctuate,
and any individual security may experience upward or downward movement, and may even become
valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying
and selling securities. Past performance is not a guide to future performance. There is an extra risk of losing
money when securities are bought from smaller companies. There may be a big difference between the
buying price and the selling price of the securities. An investor deals in a range of investments, each of
which may carry a different level of risk. Investors should carefully consider all the information contained in
this Prospectus, including the risk factors described below, before deciding to invest in the Offer Shares. The
occurrence of any of the following events, or other events not currently anticipated, could have material
adverse effect on the Companys business, financial condition and results of operations and cause the
market price of the Offer Shares to decline. All or part of an investment in the Offer Shares could be lost.

The means by which the Company intends to address the risk factors discussed herein are principally
presented under the captions Business, Managements Discussion and Analysis of Financial Condition
and Results of Operations, Industry, and Board of Directors and Senior ManagementCorporate
Governance of this Prospectus. This risk disclosure does not purport to disclose all of the risks and other
significant aspects of investing in the securities. An investor should undertake his/ her own research and
study on the trading of securities before commencing any trading activities. An investor should seek
professional advice if he/ she is uncertain of, or has not understood any aspect of the securities to invest in
or the nature of risks involved in the trading of securities specially those high risk securities. He/ she may
request information on the securities and issuer thereof from the Commission which are available to the
public.

RISKS RELATING TO THE COMPANYS BUSINESS

The Company is exposed to the cyclical nature of the semiconductor industry

The semiconductor industrys growth is largely driven by end markets in communications, data processing,
consumer electronics, the automotive industry, and the industrial sector for which semiconductors are
critical components. The industry has historically been cyclical, and affected by economic downturns. The
Company currently derives 77% of its sales and operating profits from the assembly and testing services it
provides other semiconductor companies worldwide. During periods of weak demand or excess capacity,
the Cirtek Groups customers may opt not to continue with, or cancel, existing orders. These events would
have a material adverse effect on the Companys business, financial condition and results of operations.

While the industry has experienced cycles, the global semiconductor industry grew by a Compounded
Annual Growth Rate (CAGR) of 9% from 1987 to 2014, according to the World Semiconductor Trade
Statistics ("WSTS"). Global semiconductor bills rose from US$33 billion in 1997 to US$336 billion in 2014. 2
The usual cycle in the semiconductor industry is characterized by short downturns followed by extended
periods of growth.

To mitigate this risk, the Cirtek Group continually monitors its direct costs such as raw materials, spare
parts, and direct and indirect labor and customers provide order forecasts that enable them to properly
plan direct material purchases. They have also implemented an internal reporting system, which allows
senior management to monitor profitability for each of the products on a weekly basis. The Cirtek Group
believes that these measures allow it to respond quickly and make the necessary adjustments, which has
proven crucial in maintaining its competitiveness.

2
WSTS, as reported in PWC's "The Internet of Things: The next growth engine for the semiconductor industry." (2014).

32
In addition, the products have diverse end-user applications in different industries, which allow it to cope
with upswings and downswings in demand. Customers are also geographically diverse among Europe, U.S.
and Asia. Thus, because of this diversity, the Cirtek Group is not dependent on a single market. In 2014,
46% of Cirtek's revenue came from the U.S., 33% from Europe, and 21% from Asia.

Please see Business CEC Customers and Business CEIC Customers on pages 82 and 85-86 of this
Prospectus.

Significant competition in the assembly and testing segment of the semiconductor industry could
adversely affect the Companys business.

The assembly and testing segment of the semiconductor industry is highly competitive. Cirtek competes
with both local and foreign firms to provide these back-end processes to semiconductor manufacturers.
The Companys competitors include Integrated Device Manufacturers (IDM) with their own in-house
assembly and testing capabilities, and similar independent semiconductor assembly and test
subcontractors. In order to remain competitive, the Company has to price its services and products
reasonably, as well as maintain the quality in its manufacturing processes and deliver its products on a
timely basis. Discussion on the Companys competitors is found on page 83 of this Prospectus. A discussion
on the semiconductor industry is found on page 100 of this Prospectus.

The Company has in place, strict procedures to ensure the quality of its products. Through the Quality
Assurance division of its subsidiary CEC, the Company ascertains its processes and products are compliant
with its clients requirements, and conducts regular audits of manufacturing procedures. The Company
believes it has a dedicated and experienced management team that understands the industrys
requirements and technology trends that allows the Company to be highly competitive.

At least 65% of the Companys product portfolio pertains to customer specific applications, which cannot
be easily replicated by competitors. Moreover, accreditation of a qualified supplier normally takes a
minimum of nine months. Hence, once its requirements are met, it is not easy for a customer to transfer to
a competitor.

As a PEZA-registered entity, CEC enjoys certain incentives like preferential 5% gross income tax, duty free
importation of materials, and reduced power rate vis-a-vis non-registered entities which enables it to price
its products competitively. It likewise continually monitors its direct costs such as raw materials, spare
parts, and direct and indirect labor.

The Companys industry is dependent on the continuous growth of outsourcing by OEMs

The Company belongs to an industry that is dependent on the strong and continuous growth of outsourcing
in the computing, communications, consumer automotive, and industrial electronics industries where
customers choose to outsource production of certain components and parts, as well as functions in the
production process. A customers decision to outsource is affected by its ability and capacity for internal
manufacturing and the competitive advantages of outsourcing.

The Companys industry depends on the continuing trend of increased outsourcing by its customers. Future
growth in its revenue depends on new outsourcing opportunities in which it assumes additional
manufacturing and supply chain management responsibilities from its customers. To the extent that these
opportunities do not materialize, either because the customers decide to perform these functions
internally or because they use other providers of these services, the Companys future growth could be
limited.

33
The Company believes that its global footprint, with sales reach in Asia, Europe, the U.S., Africa, and South
America3, its global supply chain systems and capabilities, and its design services will continue to provide
strategic advantages for customers to outsource parts of their product development and manufacturing
processes to the Company.

The RF, Microwave and Millimeterwave segment of the wireless communication industry is competitive
and characterized by rapid technological changes

The Company operates in a highly competitive industry. As a result of the rapid technological changes,
regulation and changing customer needs, there can be no assurance that the Company will be successful in
responding to these industry demands.

The Company offers full turnkey solutions at very competitive price points. The Company also has unique
and strong manufacturing capabilities to build components, modules, up to system level.

CATSs revenues are mostly contributed by a single customer

CATSs major customer is Remec Broadband Wireless Holdings, Inc. (REMEC), based in the British Virgin
Islands, who contributes approximately 95% of its revenues. REMEC holds the relationship with the large
names in the industry, which carry the demand for CATSs products and technology.

Under their manufacturing agreement, REMEC is granted the right to order less than the quarterly
minimum order for various reasons, including a reduction in orders for products from its own customers
that is reasonably related to any change affecting the economy, market, or industry.

In order to reduce the concentration risk of a single major customer, CATS has been actively seeking
business opportunities with new potential customers.

Long-term purchase contracts are not standard practice in the industry

Cirtek Group does not have long-term purchase contracts with any of its customers, since it is not
customary practice in the industry to do so. Customer orders are governed by purchase orders which
provide the technical specification of the products, delivery schedule, and terms of payment, among
others. A significant reduction in demand from its customers may have a material adverse effect on Cirtek
Groups business, financial condition, or results of operation.

Save for specific engagements peculiar to certain products and services required, the Companys customers
do not generally contract for firm and long-term volume purchase. Customers may place lower-than-
expected orders, cancel existing or future orders, or change production quantities.

Some of the Cirtek Groups customers have the contractual right to place orders in quantities less than the
agreed minimum. In addition, the Company makes significant investment decisions, including determining
the levels of business that it will seek and accept capacity expansion, personnel needs, and other resource
requirements. These key decisions are ultimately based on estimates of customer long-term requirements.
The rapid changes in demand for its products reduce its ability to estimate accurately long-term future
customer requirements. Thus, there is the risk that resource investments are not optimized at a certain
period.

In order to manage the effects of these uncertainties, customers are required to place firm orders within
the manufacturing lead time to ensure delivery. The Company does not solely rely on the forecast provided

3
All of Cirtek Groups invoiced customers are based in three main regions, namely, Asia, Europe, and the United States. These customers
deploy Cirteks products to other regions such as Africa and South America.

34
by the clients. By focusing on the longer cycle industry segments, the volatility that comes with rapid model
changes is reduced and the Company is able to have a more accurate production planning and inventory
management process.

While formal supply contracts are not the norm in the industry, CEC has been in business with most of its
customers for almost ten years, and has developed a proven track record allowing it to retain its earliest
customers, such as Semtech, International Rectifier, Maxim, and Protek, among others. Moreover, the
barrier to entry into the business is very difficult because accreditation of a qualified supplier is a lengthy
process, normally taking nine months minimum, and is also a very costly process for a customer. In
addition, CEC performs a number of specialized assembly processes that are not easily replicated by
competitors.

The volatility in the price of raw materials and the availability of supply used by the Company in its
production process could affect its profitability.

A significant increase in the price of or a significant reduction in the supply of raw materials could adversely
affect the cost of sales and other expenses. For certain products, raw materials such as gold and copper
can account for up to 40% of cost of goods sold.

While these risks are uncontrollable, the Company's practice has been to bill its customers for any price
adjustments whenever the cost of direct materials such as gold increases. In order to ascertain access to
raw materials at all times, the Company as a policy, maintains at least three to four suppliers for each of the
raw materials it uses for production. The Company also has clients who provide certain raw materials to
them for exclusive use in these clients products, which serve to reduce the production costs.

Customers are required to submit order forecasts ranging from three to six months, which the Company
uses to project its supply requirements.

The Company may be exposed to risk of inventory obsolescence and working capital tied up in inventories

As an EMS provider, the Company may be exposed to a risk of inventory obsolescence because of rapidly
changing technology and customer requirements. Inventory obsolescence may require it to make
adjustments to write down inventory to the lower of cost or net realizable value, and its operating results
could be adversely affected. The Company is cognizant of these risks and accordingly exercises due
diligence in materials planning. The Company also provisions in its inventory systems and planning a
reasonable amount for obsolescence. It works with key suppliers to establish supplier-managed inventory
arrangements that will mutually reduce the risk. In addition, the Company often negotiates buy back
arrangements with customers where, in the event the customers purchase orders are delayed, canceled,
or enter in the end-of-life phase, the customers assumes the risk and compensates the Company for the
excess inventory.

The Company is exposed to credit risks on its receivables from clients.

Cirtek is exposed to credit risk if its customers are unable to fully settle amounts due for services and
products delivered, and other claims owed to the Company.

Credit risk is managed in accordance with the Companys credit risk policy, which requires the evaluation of
the creditworthiness of each customer. The Company requires new customers to undergo an initial
evaluation period of six months, to pay cash upon delivery of products or services. Existing customers are
given a credit term of between 30 to 45 days which it strictly implements.

The Company carries out the necessary due diligence customary for the business prior to booking orders
from new customers. The Company also strictly enforces its collection policies to all customers. The
Company has not made any significant write-off of receivables in its operating history.
35
The Cirtek Group's business is highly dependent on an industry that is characterized by rapid
technological changes, such that it must be able to adapt to new technologies and be flexible to customer
needs in order to remain competitive.

The pace of innovation in the semiconductor industry is high. In order to remain competitive, the Cirtek
Group must adapt to new technologies required by their customers. They must have the engineering
capability for product development to meet their clients needs.

The demand for the Companys solutions is derived from the demand of end customers particularly for
end-use applications in the computing, communications, consumer automotive, and industrial electronics
industries. These industries have historically been characterized by rapid technological change, evolving
industry standards, and changing customer needs. There can be no assurance that the Company will be
successful in responding to these industry demands. New services or technologies may also render the
Companys existing services or technologies less competitive. If the Company does not promptly make
measures to respond to technological developments and industry standard changes, the eventual
integration of new technology or industry standards or the eventual upgrading of its facilities and
production capabilities may require substantial time, effort, and capital investment.

Thus, the Cirtek Group is focused on continuous technical innovation and re-engineering. This is done to
provide the process capability and to reduce production cost. They have successfully collaborated with
their customers in a number of projects, co-developing new technologies that are customer specific,
thereby ensuring long-term partnership with customers.

The Cirtek Group develops its own technology and packaging roadmaps. The technology roadmap includes
material development and process improvement to enhance capability, productivity and reduce cost.

The Cirtek Group ensures that it has the skills necessary to meet its customers needs through training and
hiring.

Some of the Cirtek Groups customers have the contractual right to place orders in quantities less than
the agreed minimum. The customers also require that the latter maintain certain key certifications and
meet technical audit standards in order to be an accredited assembly and testing subcontractor.

CEC is required to maintain certain certifications, which include among others, ISO9001, ISO14001,
QS9000/TS16949, Defense Supply Center of Columbus, and British Approval Board Telecom. In addition,
CEC must pass annual audits conducted by its customers, in order to maintain its status as an accredited
assembly and testing subcontractor. The failure by CEC to maintain any of its key accreditations could have
a material adverse effect on the Cirtek Groups financial condition, or results of operation.

CEC has managed to consistently obtain all customary international accreditations certifying to its world-
class standards of process and manufacturing from quality institutions such as TUV, Defense Supply Center
of Columbus, and British Approval Board Telecom. This allows it to meet various industry requirements and
standards. CEC continually monitors industry requirements and standards issued by applicable international
accreditation bodies and implements the changes or adjustments necessary to remain compliant with the
levels of standard imposed on competitive industry members.

CATS is likewise required to maintain certain certifications, including ISO9001:2008 and ISO14001:2004.
CATS must also pass annual audits conducted by its customers.

CEC and CATS are required to maintain governmental approvals

As PEZA-registered entities, the Subsidiaries are required to submit certain periodic reports to PEZA such as
annual reports, quarterly reports, and audited financial statements. They are also required to submit
quarterly, semi-annual, and annual reports to the Department of Energy and Natural Resources as part of
36
its Environmental Compliance Certificate requirements. CECs and CATSs failure to comply with these
reports and with any other requirements or regulations of these government agencies could expose them
to penalties and the revocation of the registrations.

CEC and CATS ensure compliance with these requirements by assigning dedicated personnel to monitor,
prepare the necessary filings, and liaise with the relevant government agencies.

The Cirtek Group may be exposed to liquidity risk from delayed payments of customers.

The Cirtek Group may encounter difficulty with cash inflows due to delayed payments of customers. This,
in turn, may affect their working capital cycle.

The Cirtek Group believes it has been highly efficient in its collection of accounts receivable. It likewise
believes it has a solid financial position which should mitigate liquidity risk that may result from delayed
payment of customers.

The Company is exposed to foreign exchange risk

The Company uses the US$ as its functional currency and is therefore exposed to foreign exchange
movements, primarily in the Philippine Peso currency. Its expenses denominated in Philippine Peso are
local expenses such as labor, utilities, and local content and comprise around 40% of the Companys total
expense.

The Company follows a policy to manage its currency risk by closely monitoring its cash flow position and
by providing forecast on all other exposures in non-US$ currencies. To further manage foreign exchange
risk, the Company from time to time enters into currency swaps and forward contracts.

The Company is exposed to the risk of industrial or labor disputes

The Company has maintained a harmonious relationship between management and staff. Cirtek provides
employee benefits and complies with labor standards. The Company is not unionized; however, to foster
better employee-management relations, there is a labor management council composed of committees
with representatives from both labor and management. Labor management councils are established to
enable the workers to participate in policy and decision-making processes, in so far as said processes will
directly affect their rights, benefits and welfare, except those which are covered by collective bargaining
agreement or are traditional areas of bargaining. The scope of the council/committees functions consists
of information sharing, discussion, consultation, formulation, or establishment of programs or projects
affecting the employees in general or the management.

More than half of the Group's workforce consists of contractual employees. These are the direct employees
of the Group's subcontractors who perform specific services or certain aspects of the manufacturing
process. Such arrangements involve a "trilateral relationship" among: (i) the Group, as the principal who
decides to farm out the job, work or service to a contractor; (ii) the contractor who has the capacity to
independently undertake the performance of the service; and (iii) the contractual workers engaged by the
contractor to accomplish the job, work, or service for the Group.

Under the Labor Code of the Philippines, the Cirtek Group, as principal in the contracting relationship, is
liable as an indirect employer to the contractual employees, in the same manner and extent that it is liable
to its own employees. Such liability is to the extent of the work performed under the contract and arises
when the contractor fails to pay the wages of its employees or violates any provision of the Labor Code.
The principal can then seek reimbursement from the contractor/agency.

To date, there has been no labor-related claim filed by any contractual employee against any member of
the Group.
37
The Cirtek Group nevertheless continues to be exposed to the risk of industrial or labor disputes. The
occurrence of such events could have a material adverse effect on the Companys business, financial
condition, or results of operation. Regardless of the outcome, these disputes may lead to legal or other
proceedings and may result in substantial costs, delays in the subsidiaries' development schedule, and the
diversion of resources and managements attention

Risk on the separation of key employees

The Cirtek Group relies on the continued employment of, and its ability to attract, qualified engineers, key
managers, and technical personnel to ensure its continued success. The competition for such skilled
workforce is strong, as seen in aggressive head hunting of employees.

The Cirtek Group gives attractive compensation packages that combine standard remuneration and
performance incentives. The Cirtek Group provides continuous training and development to managers and
direct employees. These training sessions include technical and managerial courses.

Key employees are also bound by employment contracts which have standard confidentiality, non-compete
and non-solicitation clauses.

RISKS RELATING TO COUNTRIES WHERE THE COMPANY OPERATES (INCLUDING THE PHILIPPINES)

The Company conducts business in various jurisdictions, exposing it to business, political, operational,
financial, and economic risks due to its operations in these jurisdictions

There is no assurance that there will be no occurrence of an economic slowdown in the countries where
the Company operates, including the Philippines. Factors that may adversely affect an economy include but
are not limited to:

decreases in business, industrial, manufacturing, or financial activity in the Philippines or in the

global market,

scarcity of credit or other financing, resulting in lower demand for products and services,

the sovereign credit ratings of the country,

exchange rate fluctuations,

a prolonged period of inflation or increase in interest rates,

changes in the relevant government's taxation policies,

natural disasters, including typhoons, earthquakes, fires, floods, and similar events,

political instability, terrorism, or military conflict, and

other regulatory, political, or economic developments in or affecting the Company

Notwithstanding the foregoing, the global operations, marketing, and distribution of the Companys
products inherently integrate the impact of any economic downturn affecting a single country where the
Company operates, and enables the Company to shift the focus of its operations to other jurisdictions.

Changes in law including unexpected changes in regulatory requirements, affect the Companys business
plans, such as those relating to labor, environmental compliance, and product safety. Delays or difficulties,
burdens, and costs of compliance with a variety of foreign laws, including often conflicting and highly

38
proscriptive regulations also directly affect the Companys business plans and operations, cross-border
arrangements, and the inter-company systems.

Increases in duties and taxation and a potential reversal of current tax or other currently favorable policies
encouraging foreign investment or foreign trade by host countries may lead to the imposition of
government controls, changes in tariffs, or trade restrictions on component or assembled products. This, in
turn, may result to adverse tax consequences, including tax consequences which may arise in connection
with inter-company pricing for transactions between separate legal entities within a group operating in
different tax jurisdictions, as well as increases in cost of duties and taxation.

Actions which may be taken by foreign governments pursuant to any trade restrictions, such as most
favored nation status and trade preferences, as well as potential foreign exchange and repatriation
controls on foreign earnings, exchange rate fluctuations, and currency conversion restrictions may
adversely affect the Companys business and financial condition.

Under existing foreign exchange controls in the Philippines, as a general rule, Philippine residents may
freely dispose of their foreign exchange receipts and foreign exchange may be freely sold and purchased
outside the Philippine banking system. Restrictions exist on the sale and purchase of foreign exchange in
the Philippine banking system. In the past, the Government has instituted restrictions on the ability of
foreign companies to use foreign exchange revenues or to convert Philippine pesos into foreign currencies
to satisfy foreign currency- denominated obligations, and no assurance can be given that the Government
will not institute such or other restrictive exchange policies in the future.

Environmental laws applicable to the Companys projects could have a material adverse effect on its
business, financial condition or results of operations

The Company cannot predict what environmental legislation or regulations will be amended or enacted in
the future, how existing or future laws or regulations will be enforced, administered, or interpreted, or the
amount of future expenditures that may be required to comply with these environmental laws or
regulations or to respond to environmental claims. The introduction or inconsistent application of, or
changes in, laws and regulations applicable to the Companys business could have a material adverse effect
on its business, financial condition and results of operations.

There can be no assurance that current or future environmental laws and regulations applicable to the
Company will not increase the costs of conducting its business above currently projected levels or require
future capital expenditures. In addition, if a violation of any environmental law or regulation occurs or if
environmental hazards on land where the Companys projects are located cause damage or injury to buyers
or any third party, the Company may be required to pay a fine, to incur costs in order to cure the violation
and to compensate its buyers and any affected third parties.

Any political instability in the Philippines and the countries where the Company operates may adversely
affect the business operations, plans, and prospects of the Company

The Philippines has from time to time experienced severe political and social instability. The Philippine
Constitution provides that, in times of national emergency, when the public interest so requires, the
Government may take over and direct the operation of any privately owned public utility or business. In the
last few years, there were instances of political instability, including public and military protests arising
from alleged misconduct by the previous administration.

On 12 December 2011, the House of Representatives initiated impeachment proceedings against Renato
Corona, Chief Justice of the Supreme Court of the Philippines. The impeachment complaint accused Corona
of improperly issuing decisions that favored former President Arroyo, as well as failure to disclose certain
properties, in violation of rules applicable to all public employees and officials. The trial of Chief Justice

39
Corona began in January 2012 and ended in May 2012, with Corona found guilty and impeached with
respect to his failure to disclose certain assets and bank accounts in his statement of assets, liabilities, and
net worth.

In 2013, a massive and widespread scam relating to the diversion and misuse of the Priority Assistance
Development Fund by some members of Congress through pseudo-development organizations headed by
Janet Lim Napoles was discovered. As a result of this expos, a number of investigations, including one in
the Senate, were launched to determine the extent of the diversion of the Priority Assistance Development
Fund and the Government officials and the private individuals responsible for the misappropriation of
public funds. On 16 September 2013, cases of plunder and malversation of public funds were filed with the
Office of the Ombudsman against Janet Lim Napoles, three Senators, a few members of the House of
Representatives, and other Government personnel.

Macro-economic conditions of different countries where the company operates may adversely affect the
Companys business and prospects

Historically, the Philippines sovereign debt has been rated relatively low by international credit rating
agencies. Although the Philippines long-term foreign currency-denominated debt was recently upgraded
by each of Standard & Poors, Fitch Ratings and Moodys to investment-grade, no assurance can be given
that such international credit rating agencies will not subsequently downgrade the credit ratings of the
Government in the future and, therefore, Philippine companies. Any such downgrade could have an
adverse impact on the liquidity in the Philippine financial markets, the ability of the Government and
Philippine companies, including the Parent Company, to raise additional financing and the interest rates
and other commercial terms at which such additional financing is available.

On an as-need basis, the Company seeks the help of consultants and subject matter experts for changes in
laws and regulations that may have a significant impact on the Companys business operations. It also
maintains good relationship with local government, customs, and tax authorities through business
transparency and compliance and/or payment of all government-related assessments in a timely manner.
The Company has been able to overcome major crises brought about by economic and political factors
affecting the countries where it operates. The strong corporate governance structure of the Company and
its prudent management team are the foundations for its continued success. The Company also constantly
monitors its macroeconomic risk exposure, identifies unwanted risk concentration, and modifies its
business policies and activities to navigate such risks. Severe macroeconomic contractions may conceivably
lead the Company to tweak or modify its investment decisions to meet the downturn. As a holding
company, the Company affirms the principles of fiscal prudence and efficiency in the operations to its
subsidiaries operating in various countries.

The Company faces risks of international expansion and operation in multiple jurisdictions

The Company has an international customer base which requires worldwide service and support. The
Company may expand its operations internationally and enter additional markets, which will require
significant management attention. Any such expansion may cause a strain in existing management
resources.

The distances between the Company, the customers, and the suppliers globally, create a number of
logistical and communications challenges, including managing operations across multiple time zones,
directing the manufacture and delivery of products across significant distances, coordinating the
procurement of raw materials and their delivery to multiple locations, and coordinating the activities and
decisions of the Companys management team, the members of which are spread out internationally.

The Company aggressively pursues hiring of experienced international managers and staff globally. This
enables the Company to ensure that it has sufficient manpower complement possessed with the required

40
skills and experience to work with customers, vendors, and other partners in and out of the relevant
country where it operates.

Natural or other catastrophes, including severe weather conditions and epidemics, that may materially
disrupt the Companys operations, affect its ability to complete projects and result in losses not covered
by its insurance

The Philippines has experienced a number of major natural catastrophes over the years, including
typhoons, droughts, volcanic eruptions and earthquakes. In October 2013, a 7.2 magnitude earthquake
affected Cebu and the island of Bohol, and in November, 2013, Super Typhoon Haiyan (called Yolanda in
the Philippines) caused destruction, devastation, and casualties of unprecedented levels in Tacloban,
certain parts of Samar, and certain parts of Cebu, all of which are located in the Visayas, the southern part
of the Philippines.

There can be no assurance that the occurrence of such natural catastrophes will not materially disrupt the
Companys operations. These factors, which are not within the Companys control, could potentially have
significant effects on the Companys manufacturing facilities. As a result, the occurrence of natural or other
catastrophes or severe weather conditions may adversely affect the Companys business, financial
condition and results of operations.

Any escalation in these events or similar future events may disrupt the Companys operations and the
operations of the Companys customers and suppliers, and may affect the availability of materials needed
for the Companys manufacturing services. Such events may also disrupt the transportation of materials to
the Companys manufacturing facilities and finished products to the Companys customers.

There can be no assurance that the Company is fully capable to deal with these situations and that the
insurance coverage it maintains will fully compensate it for all the damages and economic losses resulting
from these catastrophes.

Political instability or threats that may disrupt the Companys operations could result in losses not
covered by the Companys insurance

No assurance can be given that the political environment in the Philippines will remain stable. Any political
instability in the future could reduce consumer demand. It can also result in inconsistent or sudden
changes in regulations and policies that affect the Companys business operations, which could have an
adverse effect on the results of operations and the financial condition of the Company.

Increased political instability threats or occurrence of terrorist attacks, enhanced national security
measures, and conflicts in the Middle East, Africa, and Asia, as well as territorial and other disputes
between China and the Philippines (and a number of Southeast Asian countries), which strain international
relations, may reduce consumer confidence and cause economic weakness, thus, adversely affecting the
Companys business plans and prospects.

The Philippines, China, and several Southeast Asian nations have been engaged in a series of long standing
territorial disputes over certain islands in the West Philippine Sea, also known as the South China Sea.
Despite efforts to reach a compromise, a dispute arose between the Philippines and China over a group of
small islands and reefs known as the Scarborough Shoal. In April and May 2012, the Philippines and China
accused one another of deploying vessels to the shoal in an attempt to take control of the area, and both
sides unilaterally imposed fishing bans at the shoal during the late spring and summer of 2012. These
actions threatened to disrupt trade and other ties between the two countries, including a temporary ban by
China on Philippine banana imports, as well as a temporary suspension of tours to the Philippines by
Chinese travel agencies. Since July 2012, Chinese vessels have reportedly been turning away Philippine
fishing boats attempting to enter the shoal, and the Philippines has continued to protest Chinas presence
there. Chinese vessels have also recently confronted Philippine vessels in the area, and the Chinese
41
government has warned the Philippines against what it calls provocative actions. There has been an
escalation in China's activities in the contested areas, including land reclamation/horizontal development
and vertical infrastructure development. Recent talks between the Government of the Philippines and the
U.S. about increased American military presence in the country, particularly through possible American
forays into and use of Philippine military installations, may further increase tensions.

There is an ongoing arbitration case brought by the Philippines against China before the Permanent Court
of Arbitration in the Hague, the Netherlands. China has challenged the arbitration court's jurisdiction.

In early March 2013, several hundred armed Filipino-Muslim followers of Sultan Jamalul Kiram III, the self-
proclaimed Sultan of Sulu from the south of the Philippines, illegally entered Lahad Datu, Sabah, Malaysia in
a bid to enforce the Sultan of Sulus historical claim on the territory. As a result of the illegal entry, his
followers engaged in a three-week standoff with the Malaysian armed forces, resulting in casualties on
both sides. Clashes between the Malaysian authorities and followers of the Sultan of Sulu have killed at
least 98 Filipino-Muslims and 10 Malaysian policemen army since 1 March 2013. In addition, about 4,000
Filipino-Muslims working in Sabah have reportedly returned to the southern Philippines.

On 9 May 2013, a Philippine Coast Guard ship opened fire on a Taiwanese fishermans vessel in a disputed
exclusive economic zone between Taiwan and the Philippines, killing a 65-year old Taiwanese fisherman.
Although the Philippine government maintained that the loss of life was unintended, Taiwan imposed
economic sanctions on the Philippines in the aftermath of the incident. Taiwan eventually lifted the
sanctions in August 2013 after a formal apology was issued by the Government of the Philippines. However,
the incident has raised tensions between the two countries in recent months.

Should territorial disputes between the Philippines and other countries in the region continue or escalate
further, the Philippines and its economy may be disrupted and the Companys operations could be
adversely affected as a result. In particular, further disputes between the Philippines and other countries
may lead to reciprocal trade restrictions on the others imports or suspension of visa-free access and/or
permits. Any impact from these disputes in countries in which the Company has operations could materially
and adversely affect the Companys business, financial condition and results of operations.

RISKS RELATING TO THE OFFER AND THE OFFER SHARES

There can be no guarantee that the Offer Shares will be registered with the SEC and listed on the PSE, or
that there will be no other regulatory action that could delay or affect the Offer.

Purchasers of Offer Shares will be required to pay for such Offer Shares on the Settlement Date, which is
expected to be on 9 November 2015. Although the PSE has approved the Companys application to list the
Firm Shares, there can be no guarantee that listing will occur on the anticipated Listing Date or at all
because the Listing Date is scheduled to occur after the Settlement Date. Furthermore, there is a risk that
there may be other regulatory action that may be taken to delay or affect the Offer. Delays in the listing of
the Offer Shares for any reason, or any action on the part of the BIR as aforesaid, may adversely affect the
market for the Offer Shares. Delays in the commencement of trading in shares on the PSE have occurred in
the past. If the SEC does not maintain the registration of the Offer Shares and the PSE does not admit the
Offer Shares onto the PSE, the market for the Offer Shares would be illiquid and shareholders may not be
able to trade the Offer Shares. This may materially and adversely affect the value of the Offer Shares.

There may be a limited market for the Common Shares, so there may be no liquidity in the market for the
Offer Shares and the price of the Offer Shares may fall.

The Common Shares are listed on the PSE. Trading volumes on the PSE have historically been significantly
smaller than on major securities markets in more developed countries and have also been highly volatile.
As of the date of this Prospectus, the Principal Shareholder beneficially owns 70.6% of the Companys

42
issued and outstanding Common Shares and, following the Offer, will beneficially own 57.12% of the
Companys issued and outstanding Common Shares assuming no Shares are sold pursuant to the exercise
of the Oversubscription Option. As there may be limited liquidity in the Common Shares, there can be no
assurance that an active market for the Offer Shares will develop following the Offer or, if developed, that
such market will be sustained.

The Offer Price was determined through a book-building process and discussions between the Company
and the Issue Manager and Bookrunner, and not by reference to the historical trading price of the Common
Shares. The price at which the Common Shares will trade on the PSE at any point in time after the Offer
may vary significantly from the Offer Price.

The Offer Shares may not be a suitable investment for all investors

Each prospective investor in the Offer Shares must determine the suitability of that investment in light of its
own circumstances. In particular, each prospective investor should:

have sufficient knowledge and experience to make a meaningful evaluation of the Company and its
businesses, the merits and risks of investing in the Offer Shares and the information contained in
this Prospectus,

have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the Offer Shares and the impact the Offer Shares will
have on its overall investment portfolio,

have sufficient financial resources and liquidity to bear all of the risks of an investment in the Offer
Shares, including where the currency for purchasing and receiving dividends on the Offer Shares is
different from the potential investors currency,

understand and be familiar with the behavior of any relevant financial markets, and

be able to evaluate (either alone or with the help of a financial advisor) possible scenarios for
economic, interest rate, and other factors that may affect its investment and its ability to bear the
applicable risks.

The market price of the Common Shares may be volatile, which could cause the value of investors
investments in the Company to decline

The market price of securities can and does fluctuate, and it is impossible to predict whether the price of
the Common Shares will rise or fall or even lose all of its value. The market price of Common Shares could
be affected by several factors, including:

general market, political, and economic conditions,

changes in earnings estimates and recommendations by financial analysts,

changes in market valuations of listed shares in general and other retail shares in particular,

the market value of the assets of the Company,

changes to Government policy, legislation, or regulations, and

general operational and business risks.

43
In addition, many of the risks described elsewhere in this Prospectus could materially and adversely affect
the market price of the Common Shares.

In part as a result of the global economic downturn, the global equity markets have experienced price and
volume volatility that has affected the share prices of many companies. Share prices for many companies
have experienced wide fluctuations that have often been unrelated to the operating performance of those
companies. Fluctuations such as these may adversely affect the market price of the Common Shares.

Future sales of Common Shares in the public market could adversely affect the prevailing market price of
the Common Shares and shareholders may experience dilution in their holdings

In order to finance the expansion of the Companys business and operations, the Board may consider other
funding options available to the Company at that time, which may include the sale of additional Common
Shares from the treasury or the issuance of new Common Shares. If additional funds are raised through the
sale or issuance of new equity or equity-linked securities by the Company other than on a pro rata basis to
existing shareholders, the percentage ownership of the shareholders may be reduced, shareholders may
experience subsequent dilution and/or such securities may have rights, preferences, and privileges senior
to those of the Offer Shares. Further, the market price of the Common Shares could decline as a result of
future sales of substantial amounts of Common Shares in the public market or the issuance of new
Common Shares, or the perception that such sales, transfers, or issuances may occur. This could also
materially and adversely affect the prevailing market price of the Common Shares or the Companys ability
to raise capital in the future at a time and at a price it deems appropriate.

Shareholders may be subject to limitations on minority shareholders rights

The obligation under Philippine law of majority shareholders and directors with respect to minority
shareholders may be more limited than those in certain other countries such as the United States or United
Kingdom. Consequently, minority shareholders may not be able to protect their interests under current
Philippine law to the same extent as in certain other countries. There can be no assurance that legal rights
or remedies of minority shareholders will be the same, or as extensive, as those available in other
jurisdictions or sufficient to protect the interests of minority shareholders.

The Philippine Corporation Code, however, provides for certain protective rights to minority shareholders
by requiring a vote by the shareholders representing at least two-thirds of the Companys outstanding
capital stock for certain corporate acts.

Investors may incur immediate and substantial dilution as a result of purchasing Offer Shares.

The Offer Price of the Common Shares may be substantially higher than the net tangible book value of net
assets per share of the Companys outstanding Common Shares. Therefore, purchasers of Offer Shares may
experience immediate and substantial dilution and the Companys existing shareholders may experience a
material increase in the net tangible book value of net assets per share of the Common Shares they own.
See Dilution on page 54 of this Prospectus.

Future changes in the value of the Philippine Peso against the U.S. dollar or other currencies will affect
the foreign currency equivalent of the value of the Common Shares and any dividends

The price of the Common Shares is denominated in Philippine Pesos. Fluctuations in the exchange rate
between the Peso and other currencies will affect the foreign currency equivalent of the Peso price of the
Common Shares on the PSE. Such fluctuations will also affect the amount in foreign currency received upon
conversion of cash dividends or other distributions paid in Pesos by the Company on, and the Peso
proceeds received from any sales of, the Offer Shares, as well as the book value of foreign currency assets,
and income and expenses and cash flows in the Companys financial statements.

44
The Company may be unable to pay dividends on the Common Shares

Dividends declared by the Company on its shares of stock are payable in cash or in additional shares of
stock. On 28 April 2011, the Companys Board approved an annual dividend payment ratio of approximately
30% of its consolidated net income from the preceding fiscal year, subject to the requirements of the
applicable laws and regulations and the absence of circumstances which may restrict the payment of
dividends. The payment of dividends in the future will depend upon the Companys: 1) future results of
operations and general financial condition; (2) capital requirements; (3) its ability to receive dividends and
other distributions and payments from its Subsidiaries; (4) foreign exchange rates; (5) legal, regulatory, and
contractual restrictions; (6) loan obligations and loan covenants, including loan obligations and loan
covenants of its Subsidiaries; (7) and other factors plans of the Company.

Declaration of cash dividends by the Company requires the approval of the Board, while the declaration of
stock dividends by the Company requires the approval of its Board and the approval of stockholders
representing at least 2/3 of the outstanding capital stock. There must be unrestricted retained earnings to
support any dividend declaration.

RISKS RELATING TO CERTAIN STATISTICAL INFORMATION IN THIS PROSPECTUS

Certain information contained herein is derived from unofficial publications

Certain information in this Prospectus relating to the Philippines, the industries in which the Company
competes, and the markets in where the Company operates, including statistics relating to market size, are
derived from various Government and private publications. This Prospectus also contains industry
information which was prepared from publicly available third-party sources. Industry publications generally
state that the information they contain has been obtained from sources believed to be reliable but that the
accuracy and completeness of that information is not guaranteed. The information contained in the
Industry section may not be consistent with other information. Similarly, industry forecasts and other
market research data, including those contained or extracted herein, have not been independently verified
by the Company, the Joint Lead Underwriters, nor any of their respective affiliates or advisors, and may not
be accurate, complete, up-to-date, or consistent with other information compiled within or outside the
Philippines. Prospective investors are cautioned accordingly.

Non-verification of Certain Information

The section of this Prospectus entitled Industry was not independently verified by the Company, the Joint
Lead Underwriters, or any of their respective affiliates or advisors.

45
 EXCHANGE RATES

The PDS, a computer network supervised by the BSP, through which the members of the Bankers
Association of the Philippines effect spot and forward currency exchange transactions, was introduced in
1992. The PDS was adopted by the BSP as a means to monitor foreign exchange rates. The BSP Rate is the
closing spot rate for the purchase of U.S. dollars with Pesos, which is quoted on the PDS and published in
the BSPs Reference Exchange Rate Bulletin and major Philippine financial press on the following business
day.

On 29 December 2014, the last business day in 2014 in the Philippines, the closing BSP Rate was 44.617 =
US$1.00. On 30 June 2015, the closing BSP Rate was 45.20 = US$1.00.

The following table sets forth certain information concerning the BSP Rate between the Peso and the U.S.
dollar for the periods and dates indicated, expressed in Pesos per US$1.00:

Peso/U.S. dollar exchange rate

Year Period end Average(1) High(2) Low(3)
2007 .................................................................. 41.401 46.148 49.156 41.142
2008 .................................................................. 47.485 44.475 49.984 40.360
2009 .................................................................. 46.356 47.637 49.056 45.947
2010 .................................................................. 43.885 45.110 46.983 42.516
2011 .................................................................. 43.928 43.313 44.585 41.955
2012 .................................................................. 41.192 42.229 44.246 40.862
2013 .................................................................. 44.414 42.446 44.660 40.569
2014 .................................................................. 44.617 44.395 45.406 43.280
2015 ..................................................................
January ....................................................... 44.132 44.604 45.064 44.082
February ..................................................... 44.087 44.221 44.396 44.053
March ......................................................... 44.796 44.446 44.831 44.082
April. 44.250 44.414 44.725 44.213
May. 44.650 44.611 44.796 44.455
June... 45.200 44.983 44.549 45.261
__________________
(1) Weighted average rate under the Philippine Dealing System (PDS) starting 4 August 1992.
(2) Highest closing exchange rate for the period.
(3) Lowest closing exchange rate for the period.

Source: Reference Exchange Rate Bulletin, Treasury Department of the BSP.

46
 USE OF PROCEEDS

Based on the maximum Offer Price of 20.00 per Offer Share, the Company expects to raise net proceeds
from the Firm Offer (after deducting fees and expenses payable by the Company of 56.5 million) of
approximately 1,543.5 million. In the event that the Oversubscription Option is exercised in full, the
Selling Shareholder expects to raise net proceeds (after deducting fees and expenses payable by the Selling
Shareholder of 26.9 million) from the Offer of approximately 773.1 million.

The following are the estimated expenses to be incurred in relation to the Offer (assuming full exercise of
the Oversubscription Option) (in millions):

Selling
Company Shareholder Total
Total proceeds from the Offer 1,600.0 800.0 2,400.0
Underwriting and selling fees (incl. GRT) 43.0 21.5 64.5
Documentary Stamps Tax 0.4 0.0 0.4
SEC registration, filing, and research fees 0.9 0.4 1.3
PSE listing and processing fees (incl. VAT) 2.2 0.0 2.2
Estimated professional fees (including legal and audit fees) 8.7 4.3 13.0
Others 1.3 0.7 2.0
Total estimated expenses 56.5 26.9 83.4
Estimated net proceeds from the Offer 1,543.5 773.1 2,316.6

The Company expects to use the net proceeds from the Offer, estimated to be P1,543.5 million, after
deducting the above expenses on the following:

Use of Proceeds Budgeted Amount Percentage Estimated Timing

(in million)
Fund strategic acquisitions 524.8 34% 2015
Capital expenditures 630.6 41% 2015-2016
Payment of financial obligations 231.5 15% 2015-2016
Working capital requirements 156.6 10% 2015-2016
Total 1,543.5 100%

In the event that the Offer proceeds are less than the expected amount, the Company intends to allocate
the proceeds in order of priority as follows:

1. Fund strategic acquisitions

2. Capital expenditures
3. Payment of financial obligations
4. Working capital requirements

To the extent that the Offer proceeds are insufficient to finance the above-mentioned purposes, additional
financing from loans and internally-generated cash flows will be utilized as necessary.

Fund Strategic Acquisitions

The Companys acquisition strategy is to focus on leading technologies, which would generate higher
margins and help accelerate the Companys growth. The Companys target acquisitions must have a
strategic fit with its current operations and opportunities for the Company to explore other business
segments and add value to the new businesses using its existing competitive strengths. Some of these

47
target acquisitions may include, but are not limited to: a company that is involved in advanced satellite
technology, a company that provides high quality mobile devices and solutions, and companies that will
give Cirtek the ecosystem and capability to engage in e-commerce and e-finance.

While the Company has identified target companies and are currently in the early stages of evaluation and
due diligence, no definitive agreements have been signed.

Capital Expenditures

The Company will use a portion of the net proceeds to fund the expansion of its manufacturing plant in
Laguna Technopark. Approximately 332 million is going to be allocated for the construction of a three-
storey building with a total floor area of about 8,175 square meters, which will be an extension of the
assembly and test operations of CEC. The new building will also serve as a warehouse for both CEC and
CATS. The land on which the building will be situated is owned by the Liu family.

Another 275 million of the net proceeds shall be allocated for the purchase of manufacturing equipment
for CEC and CATS. The equipment that will be purchased for CEC include backgrinders, wafer saw machines,
die attach machines, wire bond machines, molding systems, DTFS systems, water jet deflash machines,
electroplating machines, and test handlers. For CATS, equipment to be purchased shall include pick & place,
screen printers, reflow ovens, feeders and inline inspection systems for additional SMT lines, auto bonders,
millimeter wave and microwave test stations, among others.

The remaining 23 million of the net proceeds shall be used for other capital expenditure requirements
which include an MRP system upgrade, a DFX Tool software, additional servers, MES licenses, and product
development systems.

Payment of Financial Obligations

The Company intends to use a portion of the net proceeds amounting to 231.5 million as a partial
payment of the outstanding long-term financial obligation, in the form of a fixed rate corporate note with
Metrobank, issued last 27 July 2012. The original issue size of the note was $10,000,000.00, with an interest
rate of 3.600%. The note was issued to fund the Companys general corporate requirements and strategic
acquisitions. As of 28 July 2015, the outstanding balance of the note is $8,432,000.00 or equivalent to
379.40 million.

Metrobank is the parent company of First Metro, the Issue Manager, Bookrunner and Joint Lead
Underwriter of the Offer.

Aside from the foregoing, the Joint Lead Underwriters have no other business relationships with the
Company. Neither First Metro nor SB Capital is represented in the Companys Board of Directors. Neither
is there a provision in the Underwriting Agreement, which would entitle the Joint Lead Underwriters to
representation in the Companys Board of Directors as part of their compensation for underwriting
services.

Such outstanding corporate note with Metrobank, and the intended use of proceeds stated had no effect
on the due diligence conducted by First Metro on the Company.

Working Capital Requirements

The Company anticipates a need for additional working capital to fund its receivables and inventory
requirements as a result of the expected increase in revenues to be generated from new and existing
customers. About 156.6 million will be allocated to fund this.

48
To the extent that the net proceeds from the Primary Offer are not immediately applied to the above
purposes, the Company will invest the net proceeds in short-term demand deposits and/or money market
placements.

The proposed use of proceeds described above represents a best estimate of the use of the net proceeds of
the Offer based on the Companys current plans and expenditures.

No part of the net proceeds from the Offer will be used to reimburse any director, officer, employee, or
shareholder of the Company for services rendered, assets previously transferred, money loaned or
advanced, or otherwise.

The actual amount and timing of disbursement of the net proceeds from the Offer for the use stated above
will depend on various factors. To the extent that the net proceeds from the Offer are not immediately
applied to the above purpose, the Company will invest the net proceeds in interest-bearing short-term
demand deposits and/or money market instruments. Aside from underwriting and selling fees, the Joint
Lead Underwriters will not receive any of the net proceeds from the Offer.

In the event of any material deviation or substantial adjustment in the planned use of proceeds, the
Company shall inform its shareholders, the SEC, and the PSE in writing at least 30 days before such
deviation or adjustment is implemented. Any material or substantial adjustments to the use of proceeds, as
indicated above, will be approved by the Companys Board of Directors and disclosed to the SEC and the
PSE. In addition, the Company shall submit via the PSEs Online Disclosure System, the PSE (EDGE) Portal,
the following disclosures to ensure transparency in the use of proceeds:

(i) any disbursements made in connection with the planned use of proceeds from the Offer,

(ii) Quarterly Progress Report on the application of the proceeds from the Offer on or before the first
15 days of the following fiscal quarter, certified by the Companys Chief Financial Officer or
Treasurer and external auditor,

(iii) annual summary of the application of the proceeds on or before 31 January of the following year,
certified by the Companys Chief Financial Officer or Treasurer and external auditor, and

(iv) approval by the Companys Board of Directors of any reallocation on the planned use of proceeds,
or of any change in the Work Program. The actual disbursement or implementation of such
reallocation must be disclosed by the Company at least 30 days prior to the said actual
disbursement or implementation.

The quarterly and annual reports required in items (ii) and (iii) above must include a detailed explanation
for any material variances between the actual disbursements and the planned use of proceeds in the
Prospectus, if any. The detailed explanation must state the approval of the Board as required in item (iv)
above.

49
 DIVIDENDS AND DIVIDEND POLICY

Limitations and Requirements

Under Philippine law, dividends may be declared out of a corporations Unrestricted Retained Earnings
which shall be payable in cash, in property, or in stock to all stockholders on the basis of outstanding stock
held by them. The amount of retained earnings available for declaration as dividends may be determined
pursuant to regulations issued by the SEC. The approval of the Board of Directors is generally sufficient to
approve the distribution of dividends, except in the case of stock dividends which requires the approval of
stockholders representing not less than two-thirds of the outstanding capital stock at a regular or special
meeting duly called for the purpose. From time to time, the Company may reallocate capital among its
Subsidiaries depending on its business requirements.

The Philippine Corporation Code generally requires a Philippine corporation with retained earnings in
excess of 100% of its paid-in capital to declare and distribute as dividends the amount of such surplus.
Notwithstanding this general requirement, a Philippine corporation may retain all or any portion of such
surplus in the following cases: (1) when justified by definite expansion plans approved by the board of
directors of the corporation; (2) when the required consent of any financing institution or creditor to such
distribution has not been secured; (3) when retention is necessary under special circumstances, such as
when there is a need for special reserves for probably contingencies; or (4) when the non-distribution of
dividends is consistent with the policy or requirement of a Government office.

Record Date

Pursuant to existing SEC rules, cash dividends declared by the Company must have a record date not less
than 10 nor more than 30 days from the date of declaration. In case no record date is specified, the same is
deemed to be fixed at 15 days from such declaration. However, companies that are obliged to pay
dividends may have a single declaration for several cash dividends within a year, subject to the condition
that their record and payment dates are also explicitly provided.

For stock dividends, the record date should not be less than ten nor more than 30 days from the date of the
shareholders approval, provided however, that the set record date is not to be less than ten trading days
from receipt by the PSE of the notice of declaration of stock dividend. In the event that a stock dividend is
declared in connection with an increase in authorized capital stock, the corresponding record date is to be
fixed by the SEC.

Dividend Policy

On 28 April 2011, the Companys Board approved an annual dividend payment ratio of approximately 30%
of its consolidated net income from the preceding fiscal year, subject to the requirements of the applicable
laws and regulations and the absence of circumstances which may restrict the payment of dividends
including, but not limited to, when the Company undertakes major projects and developments requiring
substantial cash expenditures or when it is restricted from paying cash dividends by its loan covenants. The
Companys Board may, at any time, modify such dividend payout ratio depending upon the results of
operations and future projects and plans of the Company.

The subsidiaries have no defined dividend policy; nevertheless the subsidiaries, in declaring and paying
dividends, take into consideration the interests of their shareholders as well as their working capital, capital
expenditures and debt servicing requirements, and tax regimes.

50
Dividend History

Stock Dividends
CLASS DECLARATION DATE PERCENT RECORD DATE PAYMENT DATE
Common 25 May 2012 20% 08 June 2012 29 June2012
Common 7 December 2012 20% 21 December 2012 10 January 2013
Common 9 March 2013 20% 25 March 2013 23 April 2013
Common 11 July 2014 10% 25 July 2014 20 August 2014
Common 11 May 2015 10% 26 May 2015 18 June 2015

Cash Dividend
CLASS DECLARATION RATE/SHARE RECORD DATE PAYMENT DATE
DATE
Common 13 March 2012 US$0.004933 27 March 2012 25 April 2012
Common 16 January 2013 US$0.004796 31 January 2013 15 February 2013
Common 15 July 2013 US$0.00232 29 July 2013 12 August 2013
Common 29 January 2014 US$0.00428 13 February 2014 25 February 2014
Common 30 May 2014 US$0.00214 16 June 2014 07 July 2014
Common 23 February 2015 US$0.003893 10 March 2015 27 March 2015
Common 10 August 2015 US$0.002628 25 August 2015 28 August 2015

51
 DETERMINATION OF THE OFFER PRICE

The Common Shares are listed and traded on the Main Board of the PSE under the symbol TECH. The
Company will apply for the Offer Shares to be listed and traded on the PSE under the same symbol. For a
description of the PSE, see The Philippine Stock Market beginning on page 144.

The Offer Price has been set at 20.00 per Offer Share. The final Offer Price was determined through a
book-building process and discussions between the Company and the Issue Manager and Bookrunner.

The factors considered in determining the Offer Price were, among others, the Companys ability to
generate earnings and cash flow, its short and long term prospects, the level of demand from institutional
investors, overall market conditions at the time of launch of the Offer and the market price of listed
comparable companies, with reference to the relevant countrys stock market index. The Offer Price does
not have any correlation to the book value of the Offer Shares and to the current market price of the
Companys Common Shares on the PSE.

52
 CAPITALIZATION AND INDEBTEDNESS

The following table sets forth the balances of consolidated long-term debt and equity of the Company as of
30 June 2015, and as adjusted to give effect to the issuance of the Offer Shares, after payment of the
estimated offering fees and expenses. This table should be read in conjunction with the Companys
financial statements, including the notes thereto, included elsewhere in this Prospectus.

As of As of 30 June 2015
30 June 2015 As adjusted after giving effect to the Offer
(In thousands)
In US$ In P (1) In US$ In P (1)

Total Debt: 31,547 1,425,925 31,547 1,425,925

Equity:
Capital stock 7,893 356,764 9,663 436,764
Additional paid-in 4,734 213,977 37,112 1,677,477
capital
Equity Reserve 4,138 187,038 4,138 187,038
Other 377 17,040 377 17,040
comprehensive
income
Retained 19,932 900,836 19,932 900,836
earnings

Total 68,621 3,101,580 102,769 4,645,080

Capitalization
Note:
(1) For the readers convenience, amounts in US Dollars were converted to Philippine pesos using the exchange rate as of 30 June 2015 of P45.20 to
US$ 1.00

53
 DILUTION

The net book value attributable to the Companys shareholders, based on the Companys audited financial
statements as at 30 June 2015, was US$37.1 million, while the net book value per Common Share was
US$0.11 or approximately P4.94. The net book value attributable to the Companys Common Shareholders
represents the amount of the Companys total equity attributable to equity holders of the Parent Company.
The Companys net book value per share is computed by dividing the net book value attributable to the
Companys shareholders by the equivalent number of Common Shares outstanding. Without taking into
account any other changes in such net book value after 30 June 2015 other than the sale of up to
120,000,000 Offer Shares at the Offer Price of 20.00 per Offer Share and after deduction of the
underwriting discounts and commissions and estimated offering expenses of the Offer payable by the
Company, the Companys pro forma net book value immediately following the completion of the Offer
would increase to 3,219.15 million, or 7.68 per Common Share. This represents an immediate increase in
net book value of 2.74 per Common Share to existing shareholders, and an immediate dilution of 12.32
per Common Share to purchasers of the Offer Shares at the Offer Price of 20.00 per Offer Share. The
above calculations assume a versus US$ exchange rate as of 30 June 2015 of 45.20.

The following table illustrates dilution on a per share basis based on the Offer Price of 20.00 per Offer
Share:

Maximum Offer Price per Offer Share ...................................................................................................... 20.00

Net book value per Common Share as at 30 June 2015 ........................................................................... 4.94
Increase in net book value per Common Share ........................................................................................ 2.74
Pro forma net book value per Common Share immediately following completion of the Offer ............. 7.68
Dilution to purchasers of the Offer Shares ............................................................................................... 12.32

The following table sets forth the shareholdings and percentage of Common Shares outstanding of existing
and new shareholders of the Company immediately after completion of a Firm Offer of 80,000,000 Offer
Shares:

Common Shares
Number %
Existing shareholders 339,063,353 80.91%
New investors 80,000,000 19.09%
Total 419,063,353 100.0%

The following table sets forth the shareholdings and percentage of Common Shares outstanding of existing
and new shareholders of the Company immediately after completion of the Offer Shares (assuming full
exercise of the Oversubscription Option):
Common Shares
Number %
Existing shareholders 299,063,353 71.36%
New investors 120,000,000 28.64%
Total 419,063,353 100.0%

54
 SELECTED FINANCIAL AND OPERATING INFORMATION

The following tables set forth the summary consolidated financial information derived from the Companys
unaudited interim consolidated financial statements as of 30 June 2015 and for the six months ended 30
June 2015 and 2014, and the Companys audited consolidated financial statements as of 31 December 2014
and 2013 and for the years ended 31 December 2014, 2013, and 2012, and should be read in conjunction
with the financial statements, including the notes thereto, included elsewhere in this Prospectus, and the
section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations on
page 58 and other financial information included herein. The audited consolidated financial statements
have not been revised to reflect the restatement as of and for the year ended December 31, 2014 due to
finalization of the accounting for the acquisition of CATS. . The effects due to finalization of accounting for
the acquisition of CATS have been disclosed in Note 4 to the Companys unaudited interim condensed
consolidated financial statements, included elsewhere in this Prospectus.

The Companys audited consolidated financial statements as of 31 December 2014 and 2013 and for the
years ended 31 December 2014, 2013, and 2012, were prepared in accordance with PFRS and were audited
by SGV & Co. in accordance with the Philippine Standards on Auditing (PSA). The Companys unaudited
interim consolidated financial statements as of 30 June 2015 and for the six months ended 30 June 2015 and
2014 were prepared in accordance with PFRS and reviewed by SGV & Co. in accordance with PSRE 2410. The
summary consolidated financial information below is not necessarily indicative of the results of future
operations.

CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except where
indicated) For the years ended December 31 For the six months ended June 30

2012 Audited 2013 Audited 2014 Audited 2014 Unaudited 2015 Unaudited
In US $ In 2 In US $ In 2 In US $ In 2 In US $ In 2 In US $ In 2
Net Sales $40,631 1,836,521 $43,984 1,988,077 $51,792 2,340,998 $22,818 1,031,374 $28,312 1,279,702
Cost of Sales (33,791) (1,527,353) (35,476) (1,603,515) (44,251) (2,000,145) (19,168) (866,394) (23,031) (1,041,001)
Gross Profit 6,840 309,168 8,508 384,562 7,541 340,853 3,650 164,980 5,281 238,701
Operating Expenses (2,378) (107,486) (2,433) (109,972) (3,328) (150,426) (1,307) (59,076) (1,826) (82,535)
Financial Income (Expenses)
Interest Income 123 5,560 118 5,334 32 1,446 11 497 216 9,763
Interest Expense (183) (8,272) (403) (18,216) (551) (24,905) (194) (8,769) (577) (26,080)
(60) (2,712) (285) (12,882) (519) (23,459) (183) (8,272) (361) (16,317)
Other Income (Charges) 160 7,232 (894) (40,409) 2,928 132,346 85 3,842 436 19,707
Income Before Income Tax 4,562 206,202 4,896 221,299 6,622 299,314 2,245 101,474 3,530 159,556
Provision (benefit from) for Income Tax
Current 215 9,718 191 8,633 202 9,130 95 4,294 178 8,046
Deferred (60) (2,712) 69 3,119 (123) (5,560) (15) (678) 95 4,294
155 7,006 260 11,752 79 3,571 80 3,616 275 12,430
NET INCOME 4,407 199,196 4,636 209,547 6,543 295,744 2,165 97,858 3,256 147,171
Other comprehensive income
Other comprehensive income (loss) not to be
reclassified to profit or loss in subsequent periods:

Re-measurement gain (loss) on retirement

benefit, net of deferred tax (198) (8,950) 132 5,966 384 17,357 33 1,492 60 2,712
Total Comprehensive Income $4,209 190,247 $4,768 215,514 $6,927 313,100 $2,198 99,350 $3,316 149,883

Earnings per Share Basic and diluted -as

restated 1 $0.018 0.814 $0.014 0.633 $0.020 0.904 $0.006 0.271 $0.010 0.452

Note:
(1) Earnings per Share was calculated using CHPCs weighted average number of common shares outstanding for all periods presented.
(2) Amounts in US Dollars were converted to Philippine pesos using the exchange rate as of 30 June 2015 of P45.20 to US$ 1.00.

55
CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except where

indicated) As of December 31 As of June 30

2013 Audited 2014 Audited 2015 Unaudited

In US $ In 2 In US $ In 2 In US $ In 2
ASSETS
Current Assets
Cash and cash equivalents $7,024 317,485 $12,602 569,610 $6,644 300,309
Trade and other receivables 4,061 183,557 15,587 704,532 12,245 553,474
Inventories 7,535 340,582 10,769 486,759 12,717 574,808
Financial asset at fair value through profit or
loss 8,055 364,086 702 31,730 9,541 431,253
Amounts owed by related parties 2,222 100,434 5,123 231,560 5,834 263,697
Held-to-maturity investments - - 114 5,153 555 25,086
Other current assets 1,801 81,405 1,871 84,569 2,216 100,163
30,698 1,387,550 46,768 2,113,914 49,751 2,248,745
Non-current assets-held-for-sale - - 11,409 515,687 11,409 515,687
Total Current Assets 30,698 1,387,550 58,177 2,629,600 61,160 2,764,432
Noncurrent Assets
Property, plant and equipment 15,784 713,437 17,015 769,078 18,641 842,573
Held-to-maturity investments - - 1,074 48,545 399 18,035
Deferred tax asset 84 3,797 187 8,452 174 7,865
Other noncurrent assets 688 31,098 963 43,528 922 41,674
Total Noncurrent Assets 16,555 748,286 19,239 869,603 20,136 910,147
TOTAL ASSETS $47,253 2,135,836 $77,415 3,499,158 $81,297 3,674,624

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables $4,384 198,157 $9,434 426,417 $9,762 441,242
Short-term loan 200 9,040 2,100 94,920 6,554 296,241
Current portion of long term debt 965 43,618 3,412 154,222 3,293 148,844
Amounts owed to related parties 447 20,204 470 21,244 483 21,832
Deferred revenues - - 405 18,306 228 10,306
Income tax payable 58 2,622 349 15,775 440 19,888
Provision for warranty - - 149 6,735 14 633
Dividends payable - - - - - -
Derivative Liability 102 4,610 41 1,853 - -
Total Current Libilities 6,156 278,251 16,360 739,472 20,773 938,940
Noncurrent Liabilities
Long-term debt net of current portion 8,685 392,588 23,753 1,073,707 21,700 980,840
Retirement benefit obligation 1,882 85,072 1,646 74,404 1,648 74,490
Deferred tax liability - - - - 102 4,610
Total Noncurrent Liabilities 10,567 477,660 25,399 1,148,111 23,450 1,059,940
Total Liabilities 16,723 755,930 41,759 1,887,632 44,223 1,998,880
Equity
Capital stock 6,559 296,486 7,893 356,787 7,893 356,764
Additional paid-in capital 4,734 213,991 4,734 213,991 4,734 213,977
Equity Reserve 4,138 187,050 4,138 187,050 4,138 187,038
Other comprehensive income (66) (2,983) 318 14,375 377 17,040
Retained earnings 15,166 685,549 18,573 839,555 19,932 900,926
Total Equity 30,530 1,380,048 35,656 1,611,758 37,074 1,675,745
TOTAL LIABILITIES AND EQUITY $47,253 2,135,836 $77,415 3,499,158 $81,297 3,674,624

56
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands, except where indicated) For the years ended December 31 For the six months ended June 30

2012 Audited 2013 Audited 2014 Audited 2014 Unaudited 2015 Unaudited
In US $ In 2 In US $ In 2 In US $ In 2 In US $ In 2 In US $ In 2
Cash Flows from Operating Activities
Income before income tax $4,562 206,202 $4,897 221,344 $6,621 299,269 $2,246 101,519 $3,530 159,556
Adjustments for:
Depreciation and amortization 3,037 137,272 2,310 104,412 2,901 131,125 1,144 51,709 1,676 75,755
Interest Expense 183 8,272 403 18,216 551 24,905 194 8,769 577 26,080
Change in fair value of financial asset at FVPL - - (33) (1,492) - - - - (345) (15,594)
Interest Income (123) (5,560) (118) (5,334) (32) (1,446) (11) (497) (216) (9,763)
Retirement benefit obligation 216 9,763 262 11,842 (243) (10,984) 121 5,469 79 3,571
Net unrealized foreign exchange losses (gains) 149 6,735 23 1,040 (62) (2,802) 61 2,757 (15) (678)
Excess of the fair value of net assets acquired over the
aggregate consideration transferred
- - - - (2,574) (116,345) - - - -

Mark-to-market loss on forward contracts 9 407 102 4,610 - - - - - -

Operating income before working capital changes 8,033 363,092 7,846 354,639 7,162 323,722 3,755 169,726 5,287 238,972
Decrease (increase) in:
Trade and other receivables (403) (18,216) 1,005 45,426 (6,643) (300,264) (3,403) (153,816) 2,682 121,226
Inventories (2,233) (100,932) 42 1,898 3,415 154,358 810 36,612 (1,948) (88,050)
Other current assets (83) (3,752) (60) (2,712) 108 4,882 107 4,836 (349) (15,775)
Increase (decrease) in:
Trade and other payables (718) (32,454) (100) (4,520) (201) (9,085) (97) (4,384) 345 15,594
Net cash generated from operations 4,596 207,739 8,733 394,732 3,841 173,613 1,171 52,929 6,017 271,968
Interest received 117 5,288 70 3,164 32 1,446 11 497 195 8,814
Income taxes paid (185) (8,362) (198) (8,950) (22) (994) (130) (5,876) (88) (3,978)
Net cash flows from operating activities 4,528 204,666 8,605 388,946 3,851 174,065 1,052 47,550 6,124 276,805

Cash Flows from Investing Activities

Proceeds from (investment in) financial asset at FVPL - - (8,022) (362,594) 7,353 332,356 (84) 3,796 (8,839) (399,523)

Acquisitions of property, plant and equipment (3,367) (152,188) (3,474) (157,025) (1,861) (84,117) (1,258) (56,862) (3,302) (149,250)
Net payment for the acquisition of REMEC entities - - - - (7,174) (324,265) - - - -
Proceeds from maturity of held-to-maturity investments - - - - - - - - 115 5,198
Decrease in Held-to-maturity investments - - - - - - - - 30 1,356
Decrease (increase) in other non-current assets (163) (7,368) - - 39 1,763 52 2,350 35 1,582
Net cash used in investing activities (3,530) (159,556) (11,496) (519,619) (1,642) (74,218) (1,290) (58,308) (11,960) (540,592)

Cash Flows from Financing Activities

Proceeds from availment of:
Short-term loan 1,500 67,800 400 18,080 3,300 149,160 450 20,340 8,393 379,364
Long-term debt 10,000 452,000 - - 10,000 452,000 - - - -
Transaction costs from availment of long-term debt (153) (6,916) - - - - - - - -
Payments of:
Short-term loan (1,500) (67,800) (200) (9,040) (1,100) (49,720) (388) (17,538) (4,100) (185,320)
Long-term debt - - (613) (27,708) (3,495) (157,974) (500) (22,600) (2,011) (90,897)
Cash Dividends (3,608) (163,082) (1,770) (80,004) (1,800) (81,360) (1,200) (54,240) (1,200) (54,240)
Interest (101) (4,565) (318) (14,374) (415) (18,758) (180) (8,136) (506) (22,871)
Net cash settlement on forward contracts - - (482) (21,786) - - - - - -
Net movement in amounts owned by and owed to related
43 1,944 (116) (5,243) (3,169) (143,239) 12 542 (698) (31,550)
parties
Net cash provided by (used in) financing activities 6,181 279,381 3,099 140,075 3,321 150,109 (1,806) (81,631) (122) (5,514)

Net increase (decrease) in cash and cash equivalents 7,181 324,581 (5,990) (270,748) 5,529 249,911 (2,043) (92,344) (5,957) (269,256)

Effect of exchange rate changes on cash and cash

(48) (2,170) (97) (4,384) 49 2,215 (5) (226) (1) (45)
equivalents

Cash and cash equivalents at beginning of period 5,978 270,206 13,111 592,617 7,024 317,485 7,024 317,485 12,602 569,610

Cash and cash equivalents at end of period $13,111 592,617 $7,024 317,485 $12,602 569,610 $4,976 224,915 $6,644 300,309

57
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Companys financial results should be read in conjunction with the
Companys consolidated financial statements and notes thereto contained in this Prospectus and the section
entitled Selected Financial and Operating Information.

This discussion contains forward-looking statements and reflects the current views of the Company with
respect to future events and financial performance. Actual results may differ materially from those
anticipated in these forward-looking statements as a result of certain factors such as those set forth in the
section entitled Risk Factors and elsewhere in this Prospectus.

Overview

The Company is the holding company of Cirtek Electronics Corporation (CEC) and Cirtek Electronics
International Corporation (CEIC). Through its subsidiaries, the Company is primarily engaged in two
major activities: (1) providing full service/turnkey solutions including wafer probing, wafer back grinding,
assembly, and packaging and final testing of semiconductor devices, and (2) offering complete
manufacturing solutions for value-added, highly integrated radio frequency (RF), microwave and
millimeterwave technology products.

CHPC through its subsidiaries, harnesses more than 50 years of combined operating track record. The
Companys products cover a wide range of applications and industries, including communications,
consumer electronics, power devices, computing, automotive, and industrial.

Factors Affecting the Companys Results of Operations and Financial Conditions

1. Cyclical Nature of the Electronics Industry

The worldwide electronics industry has experienced peaks and troughs over the years. From 2011 to 2014,
the market has experienced single-digit growth.

2. Market Conditions for End-User Application of Electronics

Market conditions in the electronics industry, to a large degree, track those for their end-user applications.
Any deterioration in the market conditions for the end-user applications of semiconductors that the
Company assembles and tests may reduce demand for its services and, in turn, materially adversely affect
its financial condition and results of operations.

The Company has a diversified customer base that operates in different industry spaces. Because of this,
the Companys products are likewise used in different industries. This mitigates the effect of downturn in
certain industries to the Companys operating results and financial outcomes. Customers are also
geographically diverse among Europe, U.S., and Asia; thus, the Company is not dependent on a single
geographical market.

3. Competitive Selling Prices of Semiconductor and RF/Microwave Products

The semiconductor industry is characterized by a general decrease in prices for products and services over
time as a result of product and technology life cycles.

The Company constantly reviews and makes innovations in its product and assembly techniques to improve
yield and optimize productivity. The Company also prepares cost-reduction roadmaps that allow it to meet
the price points expected by customers to be market competitive.

58
Critical Account Policies

Critical accounting policies are those that are both (i) relevant to the presentation of the Companys
financial condition and results of operations and (ii) require managements most difficult, subjective, or
complex judgments, often as a result of the need to make estimates about the effect of matters that are
inherently uncertain. As the number of variables and assumptions affecting the possible future solution of
the uncertainties increase, those judgments become even more subjective and complex. To provide an
understanding of how the Companys management forms its judgments about future events, including the
variables and assumptions underlying its estimates, and the sensitivity of those judgments to different
circumstances, the critical accounting policies discussed below have been identified. While the Company
believes that all aspects of its financial statements should be studied and understood in assessing its current
and expected financial condition and results of operations, the Company believes that the following critical
accounting policies warrant particular attention.

The preparation of the consolidated financial statements in conformity with PFRS requires management to
make judgments, estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Uncertainty about these judgments, assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amounts of assets and liabilities
affected in future periods. Significant accounting policies and methods used in the preparation of our
consolidated financial statements are described and disclosed under Significant Accounting Judgments,
Estimates and Assumptions.

DESCRIPTION OF CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME LINE ITEMS

Revenues from Sales of Goods revenues arising from turnkey businesses wherein the Company provides
materials sourcing and management, labor and overhead support, aside from manufacturing processes and
equipment

Revenues from Sales of Services revenues arising from arrangement wherein customers provide
materials and equipment and the Company renders assembly services

Cost of Goods Sold and Services costs attributable to the production of goods sold by the Company which
include costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their
present location and condition.

Operating Expenses expenses incurred in carrying out the Companys day-to-day activities but not
directly associated with production. These expenses are further subdivided into selling expenses and
general & administrative expenses.

Net Finance and Other Income (Expense) these comprise non-operating items such as finance/interest
costs, interest income, foreign exchange gains or losses and other income not arising from activities not
related to the Companys core operations.

Provision for Income Taxes an amount that estimates the Companys income tax liability for a certain
period

Net Income (Loss) Attributable to the Equity Holders of the Parent Company net profit attributable to
controlling interests or share of the Parent Companys stockholders

Net Income Attributable to Non-controlling Interests share in the net profit of minority stockholders

59
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2015 COMPARED TO THE SIX MONTHS
ENDED JUNE 30, 2014

Revenue

The Company recorded consolidated revenues of US$28.3 million for the six months ended June 30, 2015
compared with US$22.8 million for the same period in 2014, an increase of 24%. The growth was
accounted for by the sales contribution of Cirtek ATS and sales growth of CEC's New Product, QFN,
Hermetics and Discrete Divisions. The other divisions in CEC recorded lower sales in the six months ended
June 30, 2015 compared to the same period in 2014.

Sales per division

In US$ 000 For the Six Months ended June 30

2015 2014 % Inc / (Dec)
(Unaudited) (Unaudited)
CEC
Discrete 5,331 5,529 (4)
Multichip 5,190 5,883 (12)
IC 3,781 5,678 (33)
QFN 2,240 2,082 8
New Products 2,730 2,679 2
Hermetics 896 967 (7)
CATS
Cougar 154 - -
ODR 4,337 - -
Indoor Unit 905 - -
Bridgewave 897 - -
IRFU 1,005 - -
Manufacturing 92
Services
Service Income 753
Total 28,311 22,818 24%

Cost of Sales and Gross Margin

The Companys cost of sales (COS) is composed of: raw materials, spare parts, supplies; direct salaries,
wages and employees benefits; depreciation and amortization; utility expenses directly attributable to
production, freight and duties; and changes in finished goods and work in process inventories. The
Companys cost of sales increased by 20% to US$23.0 million in the six months ended June 30, 2015 from
US$19.2 million for the same period in 2014. The increase was mainly due to a rise in raw materials
expenses, salaries and wages and utilities, mainly as a result of higher sales. Other COS items such as
depreciation and freight also increased.

- Raw materials, spare parts, supplies, and other inventories grew by 30% to US$14.0 million for
the six months ended June 30, 2015, from US$10.8 million for the same period in 2014.
- Salaries, wages and employees benefits increased by 28% to US$4.4 million for the six months
ended June 30, 2015, from US$3.5 million for the same period in 2014.
- Depreciation and amortization increased by 46% to US$1.6 million for the six months ended
June 30, 2015, from US$1.1 million for the same period in 2014.

60
 - Utility expenses amounted to US$1.9 million for the six months ended June 30, 2015, from
US$1.6 million for the same period in 2014, an increase 17%.
- Freight and duties increased by 62% to US$450 thousand for six months ended June 30, 2015
from US$278 thousand for the same period in 2014.
- Other cost of sales increased by 107% to US$349 thousand for the six months ended June 30,
2015, from US$169 thousand for the same period in 2014.

The Companys gross margin was 19% for the six months ended June 30, 2015, three percentage points
higher than the gross margin recorded for the same period in 2014

Operating Expenses

The Companys operating expenses for the six months ended June 30, 2015 amounted to US$1.8 million,
40% higher compared to the US$1.3 million recorded during the same period in 2014.

Net Income (Loss) Before Income Tax

For the six months ended June 30, 2015, the Company recorded a net income before income tax of US$3.5
million, an increase of 57% compared with US$2.2 million recorded for the same period in 2014. The
increase can be attributed to higher sales, improvement in contribution and operating profit margins, and
mark to market gain of the Company's fixed rate notes investment.

Provision for Income Tax

Provision for income tax for the six months ended June 30, 2015 amounted to US$274 thousand compared
with US$80 thousand for the same period in 2014, an increase of 242%.

Net Income After Tax

The Companys net income after tax for the six months ended June 30, 2015 amounted to US$3.3 million,
an increase of 50% compared with US$2.2 million for the same period in 2014.

Financial Condition

As of June 30, 2015 compared to December 31, 2014

Assets

The Companys cash and cash equivalent as of June 30, 2015 amounted to US$6.6 million, compared with
US$12.6 million as of December 31, 2014, a decrease of US$6 million or 47%.The Company invested it
excess cash in Unit Trust Funds which is recognized in the balance sheet as financial assets at fair value
through profit or loss.

Trade and other receivables as of June 30, 2015 amounted to US$12.2 million, compared with US$15.6
million as of December 31, 2014, a 21% decrease.

Inventory levels as of June 30, 2015 amounted to US$12.7 million, 18% higher compared with US$10.8
million as of December 31, 2014.

Financial assets at fair value through profit and loss refer to short-term investments of the Company. As of
June 30, 2015, short term investments amounted to US$9.5 million compared with US$702 thousand as of
December 31, 2014, a 1,260% increase.

61
As of June 30, 2015, amounts owed by related parties amounted to US$5.8 million, compared to US$5.1
million as of December 31, 2014.

Other current assets as of June 30, 2015 totaled US$2.2 million, compared with US$1.9 million as of
December 31, 2014, an increase of 18%. The change was mainly due to the increase in advances to
suppliers, loans to employees, and prepaid expenses.

Non-current assets comprised of property, plant and equipment (PPE), held-to-maturity-investments,

deferred tax assets and other noncurrent assets as of June 30, 2015 amounted to US$20.1 million
compared with US$19.2 million as of December 31, 2014.

Liabilities

The Companys current liabilities is comprised of trade and other payables, short-term loan, current portion
of long-term debt, amounts owed to related parties, income tax payable, provision for warranty, dividends
payable and derivative liability. As of June 30, 2015, current liabilities were at US$20.8 million compared
with US$16.4 million as of December 31, 2014, a 27% increase. This can be mainly attributed to increase in
trade and other payables and short-term loans.

As of June 30, 2015, the Companys non-current liabilities, comprised of long-term debt net of current
portion, deferred tax liability, and retirement benefit obligation, amounted to US$23.5 million, a 8%
decrease compared to US$25.4 million as of December 31, 2014.

Equity

The Companys shareholders equity as of June 30, 2015 amounted to US$37.1 million compared with
US$35.7 million as of December 31, 2014, a 4% increase. The increase in equity was due to profits recorded
by the Company in 2015, less cash and stock dividends paid out during the year.

Liquidity and Capital Resources

For the six months ended June 30, 2015, the Companys principal sources of liquidity were cash from sales
of its products, bank credit facilities, and proceeds from its 5-year corporate notes issuance. The Company
expects to meet its working capital, capital expenditure, dividend payment, and investment requirements
for the next 12 months primarily from the proceeds of the Companys proceeds of the Companys
corporate notes issuance, short-term credit facilities, and cash flows from operations. It may also from
time to time seek other sources of funding, which may include debt or equity financings, including dollar
and peso-denominated loans from Philippine banks, depending on its financing needs and market
conditions.

For the next 12 months, the Company plans to increase its production further by increasing volume
deliveries to existing customers, entering into new production agreements, and expanding its customer
base by intensifying its sales and marketing activities.

The following table sets out the Companys cash flows for the six months ended June 30, 2015 and the
same period in 2014:

For the six months ended

In US$ Thousands June 30
2015 2014
Net cash flows provided by/ (used for) operating activities 6,124 1,052

62
 Net cash flows provided by/ (used for) investing activities (11,960) (1,290)
Net cash flows provided by/ (used for) financing activities (122) (1,806)
Net increase (decrease) in cash equivalents (5,957) (2,043)

Net Cash Flows from Operating Activities

Net cash flow provided by operating activities was US$6.1 million for the six months ended June 30, 2015,
compared with US$1.1 million for the same period in 2014.

For the six months ended June 30, 2015, net income before tax was US$3.5 million. After adjustments for
depreciation, unrealized foreign exchange gain/losses, interest income/expense, retirement benefit
obligation, and change in fair value of financial assets at FVPL, operating income before change in working
capital was US$5.3 million. Working capital decreased by US$730 thousand.

Investing Activities

Net cash used in investing activities amounted to US$12.0 million for the six months ended June 30, 2015.
Investing activities mainly involved investment in unit trust funds and purchase of production-related
machinery and equipment. For the same period in 2014, cash used in investing activities totaled US$1.3
million, the bulk of which was spent on production-related machinery and equipment and facility and
production tools.

Financing Activities

Net cash flow used for financing activities for the six months ended June 30, 2015 amounted to US$122
thousand. Major financing activities involved payment of cash dividends, payment of short-term and long-
term debt, interest and proceeds from availment of short-term loan. For the same period in 2014, net cash
flows from financing activities amounted to US$1.8 million and mainly involved payment of cash dividends,
interest payments, short-term loan and long-term debt and proceeds from short-term bank facilities.

Material Changes to the Companys Unaudited Income Statement as of June 30, 2015 compared to the
Unaudited Income Statement as of June 30, 2014 (increase/decrease of 5% or more)

24% increase in net sales

Net sales contribution of CATS

20% increase in cost of sales

Increase in net sales

40% increase in operating expenses

Consolidation of a subsidiarys operating expenses

57% increase in Net Income Before Tax

Increase in net sales, higher gross margin and operating margin,

242% increase in Provision for Income Tax

Higher gross profit

50% increase in Net Income After Tax

Increase in sales, higher gross margin and operating profit, and mark to market gain in investments

63
Material Changes to the Companys Unaudited Balance Sheet as of June 30, 2015 compared to the
Audited Balance Sheet as of December 31, 2014 (increase/decrease of 5% or more)

47% decrease in Cash and Cash Equivalent

Investment by the Company in unit investment trust fund

21% decrease in Trade and Other Receivables Net

Timing of collection of receivables

18% increase in inventories

Consolidation of a subsidiarys inventories

1,260% increase in Financial assets at fair value through profit or loss

Short-term investments made by the Company

18% increase in Other Current Assets

Increase in advances to suppliers, loans to employees, and prepaid expenses.

10% increase in Property, Plant and Equipment

Acquisition of production machinery and equipment, construction in progress, and building
improvements

212% increase in short-term loan

Increase in working capital requirements

8% decrease in Non-current Liabilities

Reduction in long-term debt -- net of current portion

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2014 COMPARED TO THE YEAR ENDED
DECEMBER 31, 2013

Revenue

The Company recorded consolidated revenues of US$51.8 million for the 12 months ended December 31,
2014, an increase of 18% from US$44 million for the same period in 2013. The growth was accounted for
by the growth of the Companys Multichip and Hermetics Divisions and contribution from the CATS
business.

64
 Sales per division

For the 12 months ended

In US$ 000 December 31 % Inc / (Dec)
2014 2013
CEC
Discrete 10,800 11,506 (6)
Multichip 9,629 8,878 8
IC 8,556 9,903 (14)
QFN 3,848 5,097 (25)
New Products 5,221 6,704 (22)
Hermetics 2,008 1,896 6
CATS
Cougar 121 - -
ODR 6,436 - -
EMS 831 - -
Bridgewave 1,233 - -
IRFU 811 - -
Service Income 2,298
Total 51,792 43,984 18%

Cost of Sales and Gross Margin

The Companys cost of sales (COS) is composed of: raw materials, spare parts, supplies; direct salaries,
wages, and employees benefits; depreciation and amortization; utility expenses directly attributable to
production, freight and duties; and changes in finished goods and work-in-process inventories. The
Companys cost of sales increased by 25% to US$44.3 million in the 12 months ended December 31, 2014
from US$35.5 million for the same period in 2013. The increase was mainly due to a rise in raw materials
expenses as a result of higher sales, as well as higher salaries and wages, utilities and depreciation due to
the acquisition of a new operating company.

- Raw materials, spare parts, supplies and other inventories grew by 24% to US$28.4 million for the
12 months ended December 31, 2014 from US$23 million for the same period in 2013.
- Salaries, wages and employees benefits increased by 10% to US$7.8 million for the 12months
ended December 31, 2014, from US$7.1 million for the same period in 2013.
- Depreciation and amortization increased by 26% to US$2.8 million for the 12 months ended
December 31, 2014 from US$2.3 million for the same period in 2013.
- Utility expenses amounted to US$3.6 million for the 12 months ended December 31, 2014, from
US$3.4 million for the same period in 2013, an increase of 4%.
- Freight and duties increased by 4% to US$739 thousand for the 12 months ended December 31,
2014 from US$709 thousand for the same period in 2013. Other cost of sales increased by 35% to
US$513 thousand for the 12 months ended December 31, 2014 from US$378 thousand for the
same period in 2013.

The Companys gross margin was 15% for the 12 months ended December 31, 2014, four percentage points
lower than the gross margin recorded for the same period in 2013.

Operating Expenses

The Companys operating expenses for the 12 months ended December 31, 2014 amounted to US$3.3
million, 37% higher compared to the US$2.4 million recorded during the same period in 2013.

Net Income (Loss) Before Income Tax

65
For the 12 months ended December 31 2014, the Company recorded a net income before income tax of
US$6.6 million, an increase of 35% compared with US$4.9 million recorded for the same period in 2013.
The increase can be attributed to the gain from the excess of the fair market value of net assets over the
acquisition cost (RBW acquisition).

Provision for Income Tax

Provision for income tax for the 12 months ended December 31 2014 amounted to US$79 thousand
compared with US$260 thousand for the same period in 2013, a decrease of 70%. The decrease was due to
the lower taxable income of CEC in 2014.

Net Income After Tax

The Companys net income for the 12 months ended December 31 2014 amounted to US$6.5 million, an
increase of 41% compared with US$4.6 million for the same period in 2013.

Financial Condition

Assets

The Companys cash and cash equivalent as of December 31, 2014 amounted to US$12.6 million, compared
with US$7 million as of December 31, 2013, an increase of US$5.6 million or 79%. The increase was mainly
due to proceeds from the corporate notes issued by the Company in December 2014.

Trade and other receivables as of December 31, 2014 amounted to US$15.6 million, compared with US$4
million as of December 31, 2013, a 284% increase. The increase was mainly due to the effect of
consolidation of a subsidiarys trade and other receivables.

Inventory levels as of December 31, 2014 amounted to US$10.8 million, 43% higher compared with US$7.5
million as of December 31, 2013. This was mainly due to the effect of consolidation of a subsidiarys
inventory.

Financial assets at fair value through profit and loss refer to short-term investments of the Company. As of
December 31, 2014, short term investments amounted to US$702 thousand compared with US$8 million as
of December 31 2013, a 91% decline. The proceeds from the short term investment were used to fund the
Companys recent acquisition.

Other current assets as of December 31, 2014 totaled US$1.9 million, compared with US$1.8 million as of
December 31 2013, an increase of 4%. The change was mainly due to security deposit and prepaid
expenses.

Non-current assets comprised of Property, plant and equipment (PPE), held-to-maturity investments,
deferred tax assets, and other noncurrent assets as of December 31, 2014 amounted to US$19.2 million
compared with US$16.6 million as of December 31, 2013, an increase of 16%. The increase in was due to
consolidation of a subsidiarys noncurrent assets.

Liabilities

The Companys current liabilities are comprised of trade and other payables, current portion of long-term
debt, short-term loan, amounts owed to related parties, income tax payable, deferred revenues, provision
for warranty, and derivative liability. As of December 31, 2014, current liabilities were at US$16.4 million

66
compared with US$6.2 million as of December 31, 2013, a 166% increase. This can be mainly attributed to
increase in trade and other payables, short-term loan and current portion of long-term debt.

As of December 31, 2014, the Companys non-current liabilities, comprised of long-term debt net of
current portion and retirement benefit obligation, amounted to US$25.4 million, a 140% increase
compared to US$10.6 million as of December 31, 2013. The increase was mainly due to increase in long-
term debt.

Equity

The Companys shareholders equity as of December 31, 2014 amounted to US$35.7 million compared with
US$30.5 million as of December 31, 2013, a 17% increase. The increase in equity was due to profits
recorded by the Company in 2014, less cash dividends paid out during the year.

Liquidity and Capital Resources

For the 12 months ended December 31, 2014, the Companys principal sources of liquidity were cash from
sales of its products, initial public offering (IPO) proceeds, bank credit facilities and proceeds from its 5-year
corporate notes issuance. The Company expects to meet its working capital, capital expenditure, dividend
payment and investment requirements for the next 12 months primarily from the proceeds of the
Companys IPO, proceeds of the Companys corporate notes issuance, short-term credit facilities and cash
flows from operations. It may also from time to time seek other sources of funding, which may include
debt or equity financings, including dollar and peso-denominated loans from Philippine banks, depending
on its financing needs and market conditions.

For the next 12 months, the Company plans to increase its production further by increasing volume
deliveries to existing customers, entering into new production agreements, and expanding its customer
base by intensifying its sales and marketing activities.

The following table sets out the Companys cash flows for the years ended December 31, 2014 and 2013:

For the 12 months ended

In US$ Thousands December 31
2014 2013
Net cash flows provided by/ (used for) operating activities 3,851 8,605
Net cash flows provided by/ (used for) investing activities (1,642) (11,496)
Net cash flows provided by/ (used for) financing activities 3,321 (3,099)
Net increase (decrease) in cash equivalents 5,529 (5,990)

Net Cash Flows from Operating Activities

Net cash flow provided by operating activities was US$3.9 million for the 12 months ended December 31,
2014, compared with US$8.6 million for the same period in 2013.

For the 12 months ended December 31, 2014, net income before tax was US$6.6 million. After
adjustments for depreciation and amortization, unrealized foreign exchange gain/losses, interest
income/expense, change in fair value of financial assets at FVPL, mark-to-market loss on forward contracts,
retirement benefit obligation and excess of the fair value of net assets acquired over the aggregate
consideration transferred, operating income before change in working capital was US$7.2 million. Changes
in working capital reduced operating income by US$3.4 million. This was mainly due to increase in trade
and other receivables.

67
Investing Activities

Net cash used in investing activities amounted to US$1.6 million for the 12 months ended December 31,
2014. Investing activities mainly involved payment of consideration for a company acquired, purchase of
production-related machinery and equipment, and proceeds from financial assets at FVPL. For the same
period in 2013, cash used in investing activities totaled US$11.5 million, the bulk of which was spent on
production-related machinery and equipment and facility and production tools.

Financing Activities

Net cash flow used for financing activities for the 12 months ended December 31, 2014 amounted to
US$3.3 million. Major financing activities involved payment of cash dividends, payment of short-term and
long-term loans, interest and proceeds from availment of short-term loan and long term debt. For the same
period in 2013 financing activities amounted to US$3.1 million and mainly involved payment of cash
dividends, interest payments, payments of short term and long term loan and proceeds from short-term
bank facilities.

Material Changes to the Companys Audited Income Statement as of December 31, 2014 compared to the
Audited Income Statement as of December 31, 2013 (increase/decrease of 5% or more)

18% increase in net sales

Growth of Multichip and Hermetics Divisions, and net sales contribution of new subsidiary

25% increase in cost of sales

Increase in net sales

37% increase in operating expenses

Consolidation of a subsidiarys operating expenses

35% increase in Net Income Before Tax

Gain from the excess of the fair market value of net assets over the acquisition cost (RBW acquisition).

70% decrease in Provision for Income Tax

Lower taxable income of CEC

41% increase in Net Income After Tax

Gain from the excess of the fair market value of net assets over the acquisition cost (RBW acquisition)
and other comprehensive income

Material Changes to the Companys Audited Balance Sheet as of December 31, 2014 compared to the
Audited Balance Sheet as of December 31, 2013 (increase/decrease of 5% or more)

79% increase in Cash and Cash Equivalent

Proceeds from corporate notes issued by the Company

284% increase in Trade and Other Receivables Net

Consolidation of a subsidiarys trade and other receivables

43% increase in inventories

Consolidation of a subsidiarys inventories

91% decrease in Financial assets at fair value through profit or loss

68
 Proceeds used to fund acquisition of new company

40% increase in Other Non-current Assets

Consolidation of a subsidiarys noncurrent assets

166% increase in Current Liabilities

Increase in trade and other receivables, short-term loan and current portion of long-term debt

140% increase in Non-current Liabilities

Increase in long-term debt

17% increase in Total Equity

Increase in retained earnings

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2013 COMPARED TO THE YEAR ENDED
DECEMBER 31, 2012

Revenue

The Company posted consolidated revenue of US$44 million for the 12-months ended December 31, 2013,
a growth of 8% from US$40.6 million for the same period in 2012. This growth was mainly due to the
strong performance of the Companys IC, New Product and Discrete Divisions, which grew by 37%, 22%,
and 18%, respectively.

Sales per division

In US$ 000 For the 12 months ended December 31

2013 2012 % Inc /
(Dec)

Discrete 11,506 9,757 18%

Multichip 8,878 9,081 (2%)
IC 9,903 7,223 37%
QFN 5,097 6,950 (27%)
New Products 6,704 5,476 22%
Hermetics 1,896 2,144 (12%)
Total 43,984 40,631 8%

Cost of Sales and Gross Margin

The Companys cost of sales is composed of: raw materials, spare parts supplies; direct salaries, wages and
employees benefits; depreciation and amortization; utility expenses directly attributable to production,
freight and duties; and changes in finished goods and work-in-process inventories. The Companys cost of
sales increased by 5% to US$35.5 million in the 12 months ended 31 December 2013 from US$33.8 million
for the same period in 2012. The increase was primarily due to a rise in the majority of cost of sales items,
mainly as a result of higher sales.

- Raw materials, spare parts, supplies and other inventories increased by 11% to US$23 million
for the 12-month period ended 31 December 2013 from US$20.7 million for the same period in
2012.

69
 - Salaries, wages and employees benefits rose to US$7.1 million for the 12-month period ended
31 December 2013, from US$7 million for the same period in 2012, a change of 2%.
- Depreciation and amortization decreased by 24% for the 12-month period ended 31 December
2013 to US$2.3 million from US$3 million for the same period in 2012, as a result of the
Companys review of EUL of its fixed assets.
- Utility expenses rose to US$3.4 million for the 12-month period ended 31
December 2013, from US$3.1 million for the same period in 2012, a change of 9%.
- Freight and duties for the 12-month period ended 31 December 2013 amounted to US$709
Thousand, a decrease of 14% from US$820 Thousand in the same period in 2012.
- Change in finished goods and work-in-process inventories increased by 25% for the 12-month
period ended 31 December 2013, to (US$1.4 million) from (US$1.1 million) for the same period
in 2012.
- Other cost of sales increased by 18% to US$378 Thousand for the 12-month period ended 31
December 2013 from US$322 Thousand for the same period in 2012.

The Companys gross margin was 19% for the 12-month period ended 31 December 2013, two percentage
point higher compared with the 17% gross margin recorded for the same period in 2012.

Operating Expenses

The Companys operating expenses for the 12-month period ended 31 December 2013 amounted to
US$2.4 million compared to US$2.38 million for the same period in 2012, a slight increase of 2%. The
increase was mainly due to business development expenses in the Asian region.

Financial Income / (Expenses)

Net financial expenses for the 12-month period ended 31 December 2013, amounted to US$285 Thousand,
compared to US$60 Thousand for the same period in 2012, a change of 376%. Financial expenses
constitute interest payments made to the banks for working capital lines and the corporate notes facility.

Other Income / (Charges)

For the 12-month period ended 31 December 2013, the Company recorded other charges amounting
US$894 thousand, compared to income of US$160 thousand for the same period in 2012. The charges
were due to temporary difference pertaining to unrealized foreign exchange loss and unrealized mark-to-
market loss.

Net Income (Loss) Before Income Tax

For the 12-month period ended 31 December2013, the Company recorded a 7% increase in net income
before income tax to US$4.9 million from US$4.6 million recorded in the same period 2012. The increase
can be attributed to higher sales, improved gross margins and minimal increase in operating expenses.

Provision for Income Tax

Provision for income tax for the 12-month period ended 31 December 2013 amounted to US$260
Thousand. Provision for income tax for 2012 totaled US$155 Thousand.

Net Income After Tax

The Companys net income for the 12-month period ended 31 December 2013 amounted to US$4.6 million,
an increase of 5% compared with US$ 4.4 million for the same period in 2012.

70
Liquidity and Capital Resources

For the 12-month period ended 31 December 2013, the Companys principal source of liquidity was cash
from sales of its products, short-term bank loans, and proceeds of its corporate notes issuance, which are
primarily earmarked for acquisitions and joint ventures. The Company expects to meet its working capital,
capital expenditure, dividend payment, and investment requirements for the next 12 months primarily
from the internally generated cash and, from time to time, short-terms bank loans. It may also consider
other sources of funding, which may include debt or equity financings, including dollar and peso-
denominated loans from Philippine banks, depending on its financing needs and market conditions.

For the next 12 months, the Company plans to increase its production further by increasing volume
deliveries to existing customers, entering into new production agreements, and expanding its customer
base by intensifying its sales and marketing activities. The Company may also consider acquisitions and
other forms of business cooperation provided these would result in synergies such as gaining new
customers, adding new products and packages, acquiring new technologies, and expanding geographic
presence.

The following table sets out the Companys cash flows for the years ended 31 December 2013 and2012:

For the 12 months ended

In US$ Thousands December 31
2013 2012
Net cash flows provided by/ (used for) operating activities 8,605 4,529
Net cash flows provided by/ (used for) investing activities (11,496) (3,530)
Net cash flows provided by/ (used for) financing activities (3,099) 6,181
Net increase (decrease) in cash equivalents (5,990) 7,181

Net Cash Flows from Operating Activities

Net cash provided by operating activities was US$8.6 million for the 12-month period ended 31 December
2013, while net cash flow provided by operating activities totaled US$4.5 million for the same period in
2012.

For the 12-month period ended 31 December 2013, net income before tax was US$4.9 million. After
adjustments for depreciation and amortization, unrealized foreign exchange gain/losses, interest income,
interest expense, change in fair value of financial assets at FVPL, mark-to-market loss on forward contracts
and retirement benefit obligation, operating income before change in working capital was US$ 7.8 million.
Working capital decreased by US$0.9 million. Trade and other receivables, inventories and prepayments
and other current assets decreased. Trade and other payables decreased.. Interest received and income
taxes paid amounted to US$70 Thousand and US$198 Thousand, respectively.

For the 12-month period ended 31 December 2012, net income before tax stood at US$4.6million. After
adjustments for depreciation and amortization, net unrealized foreign exchange gain/losses, interest
income, interest expense and mark-to-market loss on forward contracts and retirement benefit obligation,
operating income before change in working capital was US$8.0 million. Working capital increased by
US$3.4 million. Interests received amounted to US$117 Thousand. Cash flow from operations amounted
to US$4.6 million.

71
Investing Activities

Net cash used in investing activities amounted to US$11.5 million for the 12-month period ended 31
December 2013. Majority of investing activities involved acquisition of production machinery, tools and
equipment. For the same period in 2012, cash used in investing activities totaled US$3.5million, the bulk of
which was accounted for by capital expenditure.

Financing Activities

Net cash flow used in financing activities for the 12-month period ended 31 December 2013 amounted to
US$3.1 million. Financing activities involved payment of cash dividends, short-term loans and interest.

Net cash flow provided by financing activities for the 12-month period ended 31 December 2012 amounted
to US$6.2 million. This amount was mainly accounted for by proceeds from corporate notes issuance
(US$10 million), transaction costs related to the notes issuance short-term loans (US$153 Thousand),
payment of cash dividends (US$3.6 million), interest paid (US$101 Thousand).

Material Changes to the Companys Audited Income Statement as of December 31, 2013 compared to the
Audited Income Statement as of December 31, 2012 (increase/decrease of 5% or more)

8% increase in Net Sales

Strong performance of the Companys IC, New Products and Discrete Divisions

5% increase in Cost of Sales

Increase in cost of sales items, as a result of higher sales

376% increase in Net Financial Expenses

Increase in interest payments due to availment of short-term loans and issuance of corporate notes

7% increase in Income Before Income Tax

Better gross margins and lower operating expenses as a percent of sales

68% increase in Provision for Income Tax

Income tax holiday enjoyed by certain products and packages

5% increase in Net Income

Higher sales and better gross margins

KEY PERFORMANCE INDICATORS

The Companys top key performance indicators are listed below:

Amounts in 2012 2013 2014 June 30,

thousands US$, 2015
except ratios, and
where indicated
Profitability EBITDA 8,033 7,878 9,737 5,286
EBITDA margin 20% 18% 19% 19%
Revenue growth 9% 8% 18% 24%*
Earnings per share 0.018 0.014 0.020 0.010
(US$)

72
 Return on equity 17.1% 16.0% 19.8% 23%**
Return on assets 11.1% 10% 10.5% 11.6%**
Liquidity Current ratio 5.0x 5.0x 3.6x 2.9x
Solvency Debt-to-equity 0.36x 0.32x 0.82x 0.85x
ratio
Note:
*Compared with same period in 2014
**Based on last twelve months ended June 30, 2015

1. EBITDA and EBITDA Margin

Earnings before interest, tax, depreciation and amortization ("EBITDA) provides an indication of the
rate of earnings growth achieved.

The EBITDA margin shows earnings before interest, tax, depreciation and amortization as a percentage
of revenue. It is a measure of how efficiently revenue is converted into EBITDA.

EBITDA and EBITDA Margin are not measures of performance under PFRS, and investors should not
consider EBITDA and EBITDA Margin in isolation or as alternatives to net income as an indicator of our
Companys operating performance or to cash flow from operating, investing and financing activities as
a measure of liquidity, or any other measures of performance under PFRS. Because there are various
EBITDA and EBITDA Margin calculation methods, the Companys presentation of these measures may
not be comparable to similarly titled measures used by other companies.

The following table sets out the Companys EBITDA after consolidation entries.
For the six
months ended
For the years ended December 31 June 30
In US$ 000 2012 2013 2014 2014 2015
Net income 4,407 4,636 6,543 2,165 3,256
Add back:
Interest expense/income-net 60 285 519 183 361
Provision for income tax 155 260 79 80 274
Depreciation and amortization 3,037 2,310 2,901 1,144 1,676
Unrealized foreign exchange loss/(gain) 149 23 (62) 62 (15)
Unrealized mark to market loss/(gain) 9 102 - - (345)
Retirement benefit obligation 216 262 (243) 121 79
EBITDA 8,033 7,878 9,737 3,755 5,286

The table sets forth a reconciliation of the Companys consolidated EBITDA to consolidated net income.

For the six months

For the years ended December 31 ended June 30
In US$ 000 2012 2013 2014 2014 2015
EBITDA 8,033 7,878 9,737 3,755 5,286
Deduct:
Interest income/(expense) (60) (285) (519) (183) (361)
Provision for income tax (155) (260) (79) (80) (274)
Depreciation and amortization (3,037) (2,310) (2,901) (1,144) (1,676)
Unrealized foreign exchange (62) 15
gain/)(osses) (149) (23) 62
Unrealized mark to market gain (10) (102) - - (345)
Retirement Benefit Obligation (216) (262) 243 (121) (79)

73
 Net Income 4,407 4,636 6,543 2,165 3,256

2. Revenue growth

Revenue growth is a key indicator of the Companys ability to grow the business. It was calculated as
the amount of change in revenue divided by the previous periods recorded revenue.

3. Earnings per share

Earnings per share shows the Companys attributable profit earned per share. At constant outstanding
number of shares, as the Company's earnings increase, the earnings per share correspondingly
increase.

Earnings per share was calculated using CHPCs weighted average number of outstanding common
shares for each of the periods presented.

4. Return on equity

Return on equity measures the Companys profitability as a percentage of shareholders equity. It is

calculated as net income divided by the average shareholders equity for the period (beginning plus
ending shareholders equity divided by two).

5. Return on assets

Return on assets measures how efficient the Company is at using its assets to generate earnings. It is
calculated as net income divided by the average total assets for the period (beginning plus ending total
assets divided by two).

6. Current ratio

Current ratio measures the Companys short-term liquidity, i.e. its ability to pay its debts that are due
within the next 12 months. It is expressed as the ratio between current assets and current liabilities.

7. Debt-to-equity ratio

Debt-to-equity ratio measures the Companys financial leverage and is calculated by dividing total
interest-bearing debt by shareholders equity.

FINANCIAL RISK DISCLOSURE

The Company is not aware of any known trends, demands, commitments, events, or uncertainties that will
have a material impact on the Companys liquidity.

The Company is not aware of any event that will trigger direct or contingent financial obligation that is
material to the Company, including default or acceleration of any obligation.

The Company does not have any off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships with unconsolidated entities or other persons created
during the reporting period.

The Company has allocated up to US$3 million for capital expenditure for full year 2015, from the proceeds
of the Companys Follow-On Offering and cash flows from operations. It may also from time to time seek

74
other sources of funding, which may include debt or equity financings, including dollar and peso-
denominated loans from Philippine banks, depending on its financing needs and market conditions.
The Company is not aware of any trends, events, or uncertainties that have had or that are reasonably
expected to have a material favorable or unfavorable impact on net sales/revenues/income from
continuing operations.

The Company does not have any significant elements of income or loss that did not arise from its
continuing operations.

The Company does not have any seasonal aspects that had a material effect on the financial conditions or
results of operations.

75
 BUSINESS

OVERVIEW

Beginning in 1984 with only three customers, the Cirtek Group has significantly grown its customer base to
over 70 major and regular customers across Europe, U.S. and Asia, with the bulk of revenues contributed by
customers located in Europe and the U.S.

The Cirtek Group has earned a strong reputation with its customers for its high-quality products,
production flexibility, competitive costing, and capability to work with customers to develop application
and customer specific packages. The Cirtek Group has been accredited and certified by several
international quality institutions, namely TD SD Management Service GmbH, TV Product Service Asia
Ltd., Taiwan Branch, Defense Supply Center & British Approval Board Telecom, for the latest quality system
standards, which include ISO9001, ISO14001, and QS9000/TS16949.

The Companys principal office is located at 116 East Main Avenue, Phase V-SEZ, Laguna Technopark, Binan,
Laguna.

The Company was registered with the SEC on 10 February 2011, with an initial authorized capital stock of
P400,000,000.00 divided into 400,000,000 common shares with a par value of One Peso (P1.00) per share.
Of the authorized capital stock, 30% equivalent to 120,000,000 shares or P120,000,000.00 was subscribed
and fully paid-up. On 24 March 2015 and 11 May 2015 the Board and the stockholders, respectively,
approved the increase in the authorized capital stock of the Company. On 23 July 2015, the SEC approved
the Companys application to increase its authorized capital stock by 160,000,000.00 or from
400,000,000.00 divided into 400,000,000 common shares with a par value of 1.00 per share, to
560,000,000.00 divided into 520,000,000 common shares with a par value of 1.00 per share and
400,000,000 preferred shares with a par value of 0.10 per share.

The Company was listed in the PSE on 18 November 2011. Its market capitalization has grown by
approximately eight times from P1.1 billion in 2011 to P8.2 billion as of 23 October 2015.

From 2012 to 2014, Cirtek Groups revenues grew from US$40.6 million to US$51.8 million at a CAGR of
12.9% while net income grew from US$4.4 million to US$6.5 million at a CAGR of 21.8%. For the six months
ended 30 June 2015, the Cirtek Group reported revenues and net income of US$28.3 million and US$3.3
million at a year-on-year growth of 24.2% and 45.1%, respectively. As of 30 June 2015, the Cirtek Group
had total assets of US$81.3 million and total liabilities of US$44.2 million.

HISTORY

CHPC was duly organized as a corporation under the laws of the Philippines and registered with the SEC on
10 February 2011. It is the holding company of two wholly-owned subsidiaries, CEC and CEIC, both of
which are engaged in various services related to the assembly and testing of semiconductor devices.

Corporate Name Date of Incorporation

Cirtek Electronics Corporation 31 May 1984
Cirtek Electronics International Corporation 4 April 1995

76
Corporate Structure

Liu Family (100%) Liu Family (100%)

Carmetheus Holdings, Inc. Charmview Enterprises,

(60%) Ltd. (40%)

Camerton Inc. (70.60%) Public Shareholders (29.40%)

Cirtek Holdings Philippines

Corporation

100% 100%
Cirtek Electronics Cirtek Electronics
Corporation International Corporation

Cirtek Advanced Technology

and Solutions, Inc. (BVI)

Cirtek Advanced Technology

and Solutions, Inc.
(Philippine branch)

RBW Realty and Properties,

Inc.

Notably, substantial transactions of CEC, CEIC, and CATS involving at least 10% of each companys overall
business requires the prior consent, through a Board resolution, of the Corporation. While not stipulated in
any written agreement, such prior consent requirement is a long-established corporate practice of the
Cirtek group to ensure that the operations of the various corporate entities remain consistent with the
overall business strategy of the Corporation.

SUBSIDIARIES

Cirtek Electronics Corporation

CEC was incorporated with the SEC on 31 May 1984, primarily to engage as an independent subcontractor
for semiconductor assembly, test and packaging services.

Prior to the Companys acquisition of CEC in 2011, CEC was majority-owned by Charmview Enterprises, Ltd.
(Charmview), a holding company incorporated in the British Virgin Islands on 1 November 1994 and is
owned by the Liu family, wherein the US$50,000 authorized capital stock is divided equally among Jerry Liu,
Nelia Liu, Michael Liu, Justin Liu, and Brian Gregory Liu.

77
In 24 March 2008, Charmview and CHI entered into a Share Swap Agreement whereby Charmview
transferred all of its interest in CEC, constituting 155,511,959 common shares, to CHI in exchange for
50,000 common shares of stock of CHI. As a result of the share swap, CEC became a subsidiary of CHI.

On 1 March 2011, CHI and the Company executed the Deed of Absolute Sale of Shares wherein CHI
transferred all of its 155,511,959 shares in CEC in favor of the Company for and in consideration of
P130,000,000.00, making CEC a wholly-owned subsidiary of the Company.

CEC owns the manufacturing plants in Technopark as well as machinery such as bonder, auto test handler,
optical inspection system, wafer back grinder, mold set, and other machinery necessary for the
manufacture, assembly, and testing of semiconductors.

CEC was previously registered with the Board of Investments (BOI) under Presidential Decree No. 1789,
as amended by Batas Pambansa Blg. 391, as a preferred pioneer enterprise for the manufacture and export
of integrated circuits. As a registered enterprise, CEC was entitled to certain tax and nontax incentives
provided for in PD 1789.

On 24 March 1998, the Philippine Economic Zone Authority (PEZA) approved CECs registration as an
ecozone export enterprise at the Laguna Technopark for the manufacture of standard integrated circuits,
discrete, hybrid, and potential new packages. Beginning 30 October 2002, the manufacture and export of
integrated circuits, discrete and hybrid transferred to PEZA from BOI. Since its income tax holiday incentive
expired in 2003, CEC is subject to tax at the preferential rate of 5% of its gross income in accordance with
Republic Act No. 7916, the law creating the PEZA. In order to maximize the incentives granted under
Republic Act No. 7916, CEC applied for the registration of its new products and was granted income tax
holiday therefor from 2003 to 2005.

On 27 April 2011, PEZA approved CECs application for the registration of a new project involving the
manufacture of devices which will be used as components for smart phones, automotive sensor
applications, battery chargers, and industrial applications.

CEC Products

CEC offers a broad range of products that go into various applications. The end application covers a diverse
range of industries from consumer products to high reliability industrial and military products.

The following are CEC's product lines:

1. Protection products

These products are designed to protect electronic devices from damaging voltage or current spikes. These
are in multi-chip Small-outline Integrated Circuit (SOIC) packages, with up to 32 diodes in a single unit.

78
2. Light sensors

These optical devices sense the intensity of light and trigger the automatic switching on and off of
headlights and the automatic adjustment of air conditioning settings in cars. The package is a transparent
custom-body Quad Flat Pack Leadless Package (QFN).

3. Real time clock

These are precision time keeping devices which contain features like calendars, time of day, trickle charger
and memory functions. These devices come with tuning fork cylindrical crystals and are packaged in 16/20L
SOIC 300mil body version.

4. Voltage control oscillators (VCO)

79
This is an electronic oscillator that is designed to be controlled in oscillation frequency by a DC voltage
input. Signals may also be fed into the VCO to cause frequency modulation or phase modulation.

5. Electronic Relays

These are opto relays that are used in controlling high voltage and high power equipment. The control is
achieved through the physical isolation of high voltage output and the low voltage input side of the device
protecting the circuit components and the users. These are packaged in Plastic Dual-in-line Package
(PDIP) with an LED and a driver IC coupled together, without electrical connection between them.

6. Power management devices

These devices are used in a wide range of power management applications from telecommunications,
industrial equipment, portable devices, computers, and networks. These are packaged in SOIC with the die
pad exposed.

80
CEC Manufacturing Process Flow

The Company, through its subsidiary CEC, assembles and tests semiconductor devices at its manufacturing
complex located on a 12,740 square meter property in Bian, Laguna. CEC currently leases the property
from Cirtek Land Corporation and Cayon Holdings, Inc., both of which are majority owned by one of the
Companys directors, Nelia T. Liu. CECs manufacturing facility is composed of two buildings, with a total
floor area of 152,000 square feet.

Process Flow

The figure below illustrates the typical manufacturing process for the back-end production of
semiconductor products:

PACKAGE
DESIGN
AND Leadrames and Assembly Process Bill of Material
Package Outline Flow Definition
DEVELOPMENT Selection
Drawing Design

WAFER Wafer Wafer Probe Wafer Saw

SAWING Backgrind

Mold Wirebond Die Attach

ASSEMBLY
AND
Laser Mark Electroplate Deflash / Trim /
TESTING Form / Singulate

Test Final Visual

Inspection

WAREHOUSING Shipping
AND SHIPPING

The back end semiconductor operation starts with package design and development. The design phase
pertains to a) the determination of the type of package to be used that conforms to industry standards, b)
the substrates that will match the intended package, and c) the material set that will be used to meet
customer specifications. This is followed by tooling selection and ordering.

The development process follows a systematic approach which takes into account the standards required
by the end user product. Advanced quality planning is made part of the process to ensure that the critical
quality characteristics are fully understood, characterized and tested. Customers are involved as they have
to approve the design and any changes that will happen later in the development stage.

The development is only deemed complete once critical processes are proven capable and qualification
units and lots are produced and tested for reliability internally and or by the customers.

81
The fundamental package assembly process starts after the Company receives the wafer silicon from
customers. Pre-assembly, the wafers are back grinded to the desired thickness, probed for electrical
performance and then sawn to dice the wafers to its individual chip size following customer requirements.
The individually sawn dies are then mounted on a copper substrate typically using epoxy adhesives. Other
packages made by the Company however, may require other mounting adhesives for enhanced functional
performance. Examples of these include, E0201 dual flat leadless package (DFN) (used in smart phones)
which requires a gold eutectic process or the Power Quad Flat No leads (PQFN) (used in charges) which
requires solder paste.

The interconnection between die to leads is normally done using gold fine wire. Power packages however
use copper clips for higher electrical conductivity. The parts are then encapsulated by an epoxy moulding
compound, which are usually opaque.

The parts are then electroplated for protection of the metal leads, trimmed and formed into its final shape
or sawn into its final dimensions in the case of 0201 DFN, Optical Dual Flat No lead (ODFN) and PQFN.
These assembled units are electrically tested for functional screening. The good parts are then packed per
customer specifications and shipped to its intended destination.

Customers may opt to contract for the entire process flow or for portions thereof, as well require changes,
subject to mutual consent to suit the customers product needs.

CEC Customers

Beginning in 1984 with 3 customers, the Cirtek Group has significantly grown its customer base to over 60
regular customers as of 30 June 2015. Cirtek, through CEC, aims to broaden its existing customer base, as
well as its geographic coverage to mitigate the volatility in the semiconductor industry.

The table below lists the CECs major customers:

The figure below illustrates the geographic distribution of customers by revenue contribution, over the past
3 years.

Revenue Contribution Per Region (%)

2012 2013 2014
Asia 19% 23% 25%
Europe 46% 40% 43%

82
 U.S. 35% 37% 32%

The Company is not dependent upon a single customer or a few customers or industry, the loss of any of
which would have a material adverse effect on the Company. The Company has no single customer
contributing more than 20% of the Companys total revenues in the last three years of operation. The top
customer accounts for only 12% of total revenue while the top 10 customers collectively account for less
than 70% of total revenue. Neither is the Company reliant on any specific industry since its products have
varied applications in different industries.

Most of the Cirtek Groups customers have been clients of the company for more than 10 years. For most
of these clients, no formal supply or manufacturing contract is executed, and the orders are governed by
purchase orders which provide the specification of the products to be sold, delivery schedule and terms of
payment, among others. Customers are required to submit order forecasts ranging from 3-6 months, which
the Company uses to project its supply requirements. Depending on the relationship with the particular
customers, payment terms can be on a cash-on-delivery basis or credit term of between 30 to 45 days.

CEC Competition

The assembly and testing segment of the semiconductor industry is highly competitive. The Companys
competitors in the semiconductor space include IDMs with their own in-house assembly and testing
capabilities, and similar independent semiconductor assembly and test subcontractors, located in the
Philippines and in the Asia-Pacific region. Among the Companys competitors are Amkor Technology in
Korea and in the Philippines; Advanced Semiconductor Engineering, Inc. or ASE, a Taiwanese company and
one of the largest OSAT companies in the world, with branches in Korea and China; Orient Semiconductor
Electronics, Ltd. and Siliconware Precision Industries Co. Ltd. in Taiwan; Unisem and Carsem Semiconductor
in Malaysia; Hana Microelectronics in Thailand; STATS Chip Pac Ltd. in Singapore, and other Chinese
subcontractors such as Diodes, Inc. and Chiang Jiang Electronic Technology or JCET.

Aside from Cirtek Group, there are two other companies in the semiconductor industry that are listed in
the PSE. These are Integrated Micro-Electronics, Inc. (IMI) and Phoenix Semiconductors Philippines
Corporation (PSPC). The table below presents a side by side comparison between and among Cirtek,
PSPC and IMI of each ones relative size and financial performance.

in PHP millions TECH PSPC IMI

Market Capitalization as of 23 Oct 2015 8,154.47 4,308.40 11,067.12
As of and for the year ended 31 Dec 2014:
Revenue 2,340.99 10,369.34 37,491.40
EBITDA 440.11 1,931.36 2,338.80
Net Income 295.74 772.24 1,292.70
Total Assets 3,499.16 8,827.98 24,728.10
Total Liabilities 1,887.63 4,486.83 13,799.70
Total Stockholders' Equity 1,611.76 4,341.15 10,928.40

The principal areas of competition are pricing and product quality. The Company believes however, that it
has an advantage over its competitors not only in the above-mentioned areas but also because of the
following reasons: advanced packaging technology in multiple component products; retooling and
configuration capabilities that focus on jointly developed application-specific packages; dedicated line
services; and quick turnaround time on customer requirements.

83
Risks related to CEC

For a more detailed discussion of the major risks pertaining to CEC, please refer to the section on Risk
Factors.

Cirtek Electronics International Corporation

CEIC was incorporated under the International Business Companies Act of the British Virgin Islands on 4
April 1995. CEIC was incorporated with the primary purpose of selling integrated circuits principally in the
U.S. CEIC subcontracts the production of the same to CEC.

Beginning 8 June 1995, CEIC, after securing the sales from its customers abroad, would subcontract the
assembly, testing, and/or packaging of the devices to CEC, pursuant to a Master Subcontractor Agreement.
Under said agreement, CEIC issues purchase orders to CEC stating therein the type of product it will
require, the quantity, delivery date, and destination, together with such other instructions the former may
have. In consideration for its services, CEC is paid a service fee depending on the services contracted for a
particular purchase order.

Prior to the Companys acquisition of CEIC in 2011, CEIC was majority-owned by Charmview. In 24 March
2008, Charmview and CHI entered into a Share Swap Agreement whereby Charmview transferred all of its
interest in CEIC, constituting 50,000 common shares, to CHI in exchange for 50,000 common shares of stock
of CHI. As a result of the share swap, CEIC became a subsidiary of CHI.

On 1 March 2011, CHI and the Company executed the Deed of Absolute Sale of Shares wherein CHI
transferred all of its 50,000,000 shares in CEIC in favor of the Company for and in consideration of
P130,000,000.00, making CEIC a wholly-owned subsidiary of the Company.

CEICs Acquisition of Remec Broadband Wireless International, Inc.

On 30 July 2014, CEIC entered into a sale and purchase agreement with REMEC Broadband Wireless
Holdings (REMEC), for the purchase of 100% of the shares of REMECs manufacturing division, REMEC
Broadband Wireless International, Inc. (RBWI), a Philippine-based manufacturer of value added, highly
integrated technology products. Based on the terms of the sale: (i) REMEC and its remaining subsidiaries
will continue to design and market its top-of-class telecommunications products globally under its REMEC
brand; and (ii) REMEC will enter into a manufacturing agreement with Cirtek to manufacture REMECs
products under a long term contract manufacturing relationship. CEIC acquired RBWI for a consideration of
$7.5 million. CHPC funded the acquisition through a combination of available cash on hand and proceeds
from a corporate notes issuance.

At the time of the acquisition, RBWI had over 18 years of experience in producing high quality niche PCBA
and box-build in low/medium/high volume and high mix products for industrial and consumer applications,
such as RF/microwave, emerging products of OEMs and ODMs for commercial, industrial, military, and
telecommunications applications, and providing related repair services. These unique capabilities and
extensive experience in RF and microwave manufacturing and engineering services offer a versatile
competitiveness in this field.

RBWIs contract manufacturing capabilities range from component level (transceivers, synthesizers,
oscillators, mixers, filters switches, microwave devices), sub-system and module level (power amps,
transceivers, filters, diplexers, mixers, mixed signal, PCBA), system level (spread spectrum radios, power
amplifiers, repeaters, modem, Outdoor RF Radios (ODU, IP Radio), 6GHz to 42GHz, broadband radios -
60GHz to 80GHz , and Indoor RF Radios (IRFU, IDU).

84
RBWI has shipped more than 1,000,000 finished products (ODUs, IP radios, transceivers and amplifiers)
with field-proven MTBF of over 100 years, to over 30 customers globally. RBWI is also PEZA-registered as
Pioneer Status, and owns a world-class manufacturing facility (ISO 9001 and 14001 certified) located in
Carmelray Industrial Park 1, Laguna. RBWI has received numerous awards from top global microwave
OEMs, and recorded sales revenues worth $43 million for fiscal year 2013.

CEICs acquisition of RBWI allows the Cirtek Group to expand its existing manufacturing capacity and
capability into the high-growth wireless segment via a proven player with a strong customer base. It also
allows Cirtek Group to provide customers with vertically integrated solutions that offer the Company higher
margins and the customer more flexibility.

Through RBWI, the Cirtek Group will be able to cater to the strong demand for electronic products and
applications, such as smartphones and media streaming in the telecommunications industry, wireless
health monitors in the medical industry, and connectivity applications in the automotive industry, among
others.

RBWI was renamed to Cirtek Advanced Technology Solutions, Inc. (CATS) on 21 November 2014 in the
British Virgin Islands. On 18 February 2015, the Philippine SEC approved the change in corporate name.

CATS Products

CATS offers a broad range of microwave products that go into various applications. The end application
covers microwave/wireless solutions for carrier and private data networks catering mobile backhaul,
service provider, education, enterprise, government/municipalities and healthcare.

The following are CATS' microwave products:

1. CTT Out Door Unit (ODU)

The CTTH ODU is available in 6L, 6U, 7GHz, 8GHz, 11GHz, 13GHz, 15GHz, 18GHz, 23GHz, 26GHz, 28GHz,
32GHz and 38GHz. The CTT ODU supports QPSK to 256QAM modulation and 7MHz to 56MHz channel
bandwidth.

2. Indoor Radio Frequency Unit (IRFU)

The IRFU is available in L6, U6, 7GHz, 8GHz, and 11GHz frequency bands. The channel spacing supported
for North American ANSI rates is between 3.75 MHz and 60 MHz. The channel spacing supported for ETSI
rates is between 7 MHz and 56 MHz.

3. Outdoor Internet Protocol Radio (OIPR)

The OIPR is available in 6L, 6U, 7GHz, 8GHz, 11GHz, 13GHz, 15GHz, 18GHz, 23GHz, 26GHz, 28GHz, 32GHz
and 38GHz. The supported modulation is QPSK to 256QAM. The channel spacings supported for North
American ANSI rates is between 10MHz and 50 MHz. The channel spacings supported for ETSI rates are
7MHz, 14MHz, 28-30MHz, 40MHz and 56MHz.

4. FLEX4G-Ultra High Availability (UHA)

Flex4G-UHA-UHA operates in the 71-76/81-86 GHz frequency range in compliance with ECC/REC 05/07
Recommendations and is subject to use based on each EU member countrys individual regulations for

85
operation in this band. The FLEX4G-UHA uses Binary Phase Shift Keying (BPSK) modulation and supports
a maximum data rate of 1,000 Mbps in a 1,250 MHz channel.

86
CATS Manufacturing Process Flow

CATS assembles and tests microwave products at its manufacturing complex located on a 12,740 square
meters property in Bian, Laguna. It currently leases the property from Cirtek Land Corporation and Cayon
Holdings, Inc., both of which are majority owned by one of the Companys directors, Nelia T. Liu. The
manufacturing facility is composed of two buildings, with a total floor area of 152,000 square feet.

Process Flow

The figure below illustrates the typical manufacturing process for the production of microwave products:

87
The manufacturing process starts with business and product development. The business development
pertains to a) Request for Quote (RFQ) from customer; and b) customer approval. Once the customer
approves the quote, product development proceeds. The product development pertains to a) New Product
Introduction (NPI) and b) bill of materials selection. During NPI, the factory will qualify the product and
the process (to manufacture the product). The NPI process is considered completed once critical processes
are proven capable and qualification units are produced and tested for reliability internally and or by the
customers. If NPI is successful, the bill of materials is finalized. This includes the product BOM, fixtures and
packaging. Mass production follows.

The fundamental assembly process starts with a Printed Circuit Board Assembly (PCBA). Solder paste is
applied to the Printed Circuit Board (PCB), followed by placement of components during SMT pick and
place. The populated board is then loaded to the reflow oven for solder paste curing. After the oven
reflow, the board undergoes Automatic Optical Inspection (AOI). All boards with reject (assembly rejects,
i.e. missing components, wrong part mounted, tombstone, insufficient solder, mis-oriented, tilted, etc.)
during AOI are reworked. All boards without rejects proceed to 2nd operation or manual soldering (if
required).

Some modules/sub-assembly boards from PCBA undergo Microwave Integrated Circuit process (MIC).
During this process, a component (MMIC) is attached or mounted to the board with epoxy, either manually
or automated. The board is then cured to the required temperature depending on the type of epoxy used.
Wirebond/gapweld is performed depending on the required assembly drawing. Inspection follows to
ensure conformance to the assembly drawing.

The modules/sub-assembly boards will then undergo test and tune (if required). All passing modules are
then integrated to form the ODU (final product) during Top level assembly. System level testing follows
(Calibration and Parametric test, Bit Error Rate (BER) Test, etc.). The ODUs should conform to the
specifications set by the customer.

Finished products are then packed per customer specifications and shipped to the intended destination.

CATS Customers

The figure below illustrates the geographic distribution of customers by revenue contribution, over the past
3 years.

Revenue Contribution Per Region (%)

Aug-Dec 2014
Asia 4%
Europe 1%
U.S. 95%

CATSs major customer is REMEC, who contributes approximately 95% of its revenues. REMEC holds the
relationship with the large names in the industry, which carry the demand for CATSs products and
technology. In order to reduce the concentration risk of a single major customer, CATS has been actively
seeking business opportunities with new potential customers.

Most of the Cirtek Groups customers have been clients of the company for more than 10 years. For most
of these clients, no formal supply or manufacturing contract is executed, and the orders are governed by
purchase orders which provide the specification of the products to be sold, delivery schedule and terms of
payment, among others. Customers are required to submit order forecasts ranging from 3-6 months, which

88
the Company uses to project its supply requirements. Depending on the relationship with the particular
customers, payment terms can be on a cash-on-delivery basis or credit term of between 30 to 45 days.

CATS Competition

CATS has had no direct competitors in the Philippines since it started operations. The Company's
competitors in the RF/wireless broadband EMS space include large ODMs such as Ericsson, Huawei, and
NEC, the smaller ODMs such as DragonWave, Bridgewave, E-band, Siklu, Vubiq, and ZTE, and large OEMs
for microwave products such as Ionics, Benchmark Electronics, Jabil Circuit, and Flextronics.

The Company believes its competitive strength lies in its ability to provide complete turnkey solutions for
complex, box build electronic and microwave products. The Company also believes it has unique
RF/microwave expertise to deliver vertically integrated products from components to modules and system
levels.

Risks related to CEIC and CATS

For a more detailed discussion of the major risks pertaining to CEIC and CATS, please refer to the section on
Risk Factors.

AWARDS AND RECOGNITION

The Cirtek Group has been presented with several awards by its customers. The table below lists some of
the awards and certifications garnered by the Cirtek Group in recent years.

Awards/Recognition Received by Cirtek Electronics Corporation

Award Awarding Body Year

Cambridge Semiconductor
Best New Product Introduction (Camsemi) 2013
Plaque of Appreciation
Success on New Product Introduction Camsemi 2012
Technology Partner Award Camsemi 2010
Most Improved Subcontractor Award Supertex, Inc. 2009
Top Ranking Subcontractor Triquit Semiconductor 2008
Excellent Partner Award Sunpower Corp. 2008
Excellence in Delivery and
Service Award WJ Communications 2008
Delivery and Service Award International Rectifier 2006

Awards/Recognition Received by CATS

Award Awarding Body Year

Silver Core Partner Award Huawei Technologies Co. Ltd 2011
Gold Core Partner Award Huawei Technologies Co. Ltd 2010
Silver Core Partner Award Huawei Technologies Co. Ltd 2009

89
COMPETITIVE STRENGTHS

The Company believes that its principal strengths are the following:

Strong Financial Track Record

Cirtek, through its subsidiaries, has consistently proven its ability to grow the business. Cirtek has grown its
revenues from US$24 million in 2009 to US$52 million in 2014, a 17% CAGR, significantly outpacing the 6%
revenue growth of the broader semiconductor industry. After the acquisition of RBWI, the Companys
revenues grew by almost 18% in 2014.

The Cirtek Groups ability to create shareholder value is seen in the consistent rise in its profits and EBITDA
over the years. As a result, market capitalization has grown by approximately eight times since its IPO in
November 2011 to PhP8.2 billion as of 23 October 2015.

Offers a Complete Range of Turnkey Solutions and Vertically Integrated Services

The Company, through its subsidiaries, provides a full range of turnkey solutions. For the semiconductor
business, these would include package design and development, wafer probing, wafer back grinding,
assembly and packaging, final testing of semiconductor devices, and delivery and shipment to its
customers end users. CATS also offers full turnkey solutions, including product and process design and
development, transition from R&D to full scale manufacturing, integrated manufacturing processes, and
delivery to end customers.

Of particular importance to the Company, however, is its ability to adapt and adjust to the specific needs
and demands of its customers through its technical capabilities. The Companys customers are given the
flexibility to contract for the entire process flow, or just a portion thereof. In addition, the Company also
works with its customers to develop application and customer specific packages. These have given Cirtek
the ability to adapt to its customers needs, which in turn, helps build a stronger relationship with its
customers.

Furthermore, the Companys vertically integrated manufacturing solutions enable it to shorten lead times.
This results in savings for Cirteks customers for non-essential product costs and providing them with faster
time to market.

Global and Diversified Customer Footprint

Cirtek Groups products have multiple end-user applications that serve a diverse range of industries
including telecommunications, automotive, consumer electronics, industrial, medical, satellite
communication, and aerospace and defense. The table below illustrates the breakdown of the Companys
revenues by industry for the year ended 31 December 2014:

Industry Revenue Contribution for the

year ended 31 December 2014
(%)
Communication 45%
Computing 20%
Consumer Electronics 20%
Industrial 10%
Automotive 5%

90
Since its incorporation, the Cirtek Group has slowly built a global customer base of over 70 customers
based in three major regions in the world, namely, Asia, Europe and the U.S. The table below shows the
revenue contribution of its customers per region for the year ended 31 December 2014:

Region Revenue Contribution for the

year ended 31 December
2014 (%)
U.S. 46%
Europe 33%
Asia 21%

Because of the diversified revenue base of the Cirtek Group, it is not dependent on a single market and is
able to cope with upswings and downswings in demand.

Highly Experienced Management Team

The Companys senior management is composed of highly experienced individuals from various
semiconductor, OSAT, and RF and microwave companies. It has over 200 years of combined management
and engineering expertise. It believes that because of managements extensive experience in the industry,
the Company is highly equipped in dealing with, responding and adapting to customer needs, as well as
changes in the industry landscape.

Proven Execution Track Record

The Company, through its subsidiaries, harnesses more than 50 years of combined operating track record.
It has a well-established reputation in both the assembly and testing segment of the semiconductor
industry and in providing complete "box build" turnkey manufacturing solutions to RF, microwave, and
millimeterwave products.

CEC is known for its high-quality products, production flexibility, competitive costing, and capability to work
with customers to develop applications. It continues to be the preferred supplier of customer- and
application-specific semiconductor packages. It has been in business with most of its customers for more
than ten years. Moreover, its existing customer base has grown since 1984 from only three customers to
over 60 customers to date.

RBWI, now known as CATS, has over 18 years of experience in producing high quality niche PCBA and box-
build in low/medium/high volume and high-mix products for industrial and consumer applications, such as
RF/microwave, emerging products of OEMs and ODMs for commercial, industrial, military and
telecommunications applications, and providing related repair services. These unique capabilities and
extensive experience in RF and microwave manufacturing and engineering services offer a versatile
competitiveness in this field.

The Company has over the years developed excellence in manufacturing. This is evidenced by latest quality
system standards obtained by the Company, through its subsidiaries, namely ISO9001, ISO14001,
QS9000/TS16949, Defense Supply Center & British Approval Board Telecom. Cirteks manufacturing
practices are designed to be compliant with industry requirements and to exceed customer expectations.

The Companys quality system has evolved from direct dealings with customers, benchmarking and learning
from their experiences, and incorporating their best practices into the Companys own quality system. All

91
these have enabled the company to garner several recognition awards from its major customers as
presented in Awards and Recognition on page 89.

KEY STRATEGIES

Focus on further expanding the semiconductor business

Improve on customer- and application- specific packages

The Company intends to constantly review and make innovations in its production and assembly
techniques and capabilities to improve productivity and efficiency in its use of resources. In addition to
that, it plans to continue to work closely with its current and potential customers to understand technology
and industry trends that may have an impact on customers products. Together with the customer, the
Company will evaluate how its customers product can evolve to meet new requirements and standards in
order to stay competitive.

Furthermore, the Company will continue to aggressively offer dedicated or captive line models for
assembly and test services. This involves dedicating certain capacity to fulfill a customers mature and
stable products with competitive volume break incentives. This arrangement allows customers to increase
capacity quickly and minimize the need for additional capital expenditures.

Introduce new products/packages that meet customers needs

The Company plans to continue to co-develop new technologies with its customers. It will tap into the
expertise and strengths of customers in areas where developing it solely would be costly and time
consuming. The cooperation with customers assures the availability of a ready market and a faster-to-
market introduction of products.

Strengthen presence in high-growth market segments such as wireless communication, consumer

electronics, automotive

The Company plans to actively pursue business opportunities in high-growth market segments such as
wireless communication, consumer electronics and automotive. Demand for smart phones, tablets and
gadgets remain strong. In automotive, demand is being driven by the growing number of cars, as well as
the higher electronic content in vehicles as a result of enhanced convenience and safety features, and
environmental concerns. The internet of things (the ability to connect remote and mobile things or
machines or assets to the Internet or corporate Intranets through the use of wireless communications
and low-cost sensors/computing/storage) will significantly drive the consumer electronics market.

Expand sales network in key markets such as Europe, US and Asia

The Company is increasing its international sales force and sales representatives to establish greater
geographic presence and increase its end-customer base.

Aggressive growth for RF/Microwave/Millimeterwave Business

The Company expects the demand for its RF/Microwave/Millimeterwave business to grow at a rapid rate
due as a result of the explosive growth in wireless data traffic and growing application of millimeterwave in
imaging, telecommunication, consumer markets, defense and security.

92
Diversify growth drivers through vertical integration

The Company aims to expand its business portfolio vertically from OSAT, to becoming a complex OEM, to
the development of its own products and brands, with a focus on high-growth industry segments such as
wireless communication and mobile devices and applications, and online and mobile solutions (i.e. e-
commerce).

The Company believes that by moving up the value chain, it will be able to accelerate its revenue trajectory
and improve profit margins.

Transform into an innovative technology-enabled company of business, commerce, industry and finance

In line with the Companys strategy to expand its business and leverage on its accumulated expertise in
technology, particularly in the wireless/broadband transmission business and e-commerce, the Company
plans to actively seek strategic investments, alliances, joint ventures and/or acquisitions in leading
technologies, in order to accelerate the growth of its operating scale.

While majority of the Companys revenues are currently derived from its semiconductor and
RF/microwave/millimeter wave businesses, the Companys manufacturing expertise and long-standing
relationships with other technology companies allow it to continuously engage and collaborate with
important players in the technology industry, to understand key technological market trends and
anticipate the needs of customers.

The Company plans to make meaningful acquisitions designed to gain expertise and access to proprietary
software technologies and content, which will improve its capability in creating and providing e-commerce
platforms and enterprise software solutions that are applicable to various industries, such as financial
services, communications, and retailing.

The Company believes that its ability to become not only a manufacturing-centered business, but also a
technology and software-focused enterprise, will allow it to offer a wider range of products and services to
its clients than its competitors, to continuously improve its existing portfolio, and to expand its market
reach, not only to existing customers but to new consumers as well.

MARKETING

The Company has its own sales force complemented by non-exclusive sales agents around the globe to
promote its products and services. These agents help promote and maintain strong relationships by
working closely with customers to address and resolve quality issues and communicate timely responses to
specific requirements and delivery issues. The Company through its subsidiaries currently maintains sales
agents in the USA, Europe and Asia.

Cirtek also performs marketing research for technology development by working closely with its customers
through collaboration, conducting surveys, and gathering market trends to keep the Company abreast of
new packaging techniques and product introductions.

SUPPLIERS

Direct materials used by the Company in the manufacturing process are sourced abroad, mainly from
Hongkong, Singapore, Malaysia, and Korea. In order to mitigate the risk of shortage of these direct
materials, the Company has at least 3-4 suppliers for each material. There is no single supplier that
accounts for 20% of any particular raw material.

93
The table below lists the Companys major suppliers for each direct material:

Direct Material Major Suppliers

Leadframes -Rokko Leadframes Pte Ltd
-ASM Technology Singapore Pte Ltd., Singapore
-Poongsan Microtec Philippines.
-PSMC Co. Ltd. , Korea
-Dai Nippon Printing Co. Ltd
-Dongguan Possehl SEG Elec. Co. Ltd.,China
-QPL Limited, Hongkong.
Moulding Compound -Sumitomo Bakelite Singapore Pte.Ltd, Singapore.
- Panasonic Electric Works Electronic Materials
- Shinetsu
-Hitachi Chemical Asia Pacific Pte. Ltd, Singapore
Epoxy -Ablestik ( Shanghai) Ltd, China
-Henkel Corporation, USA
-Sumitomo, Japan

Wires -Hereaus Oriental Hitec Co. Ltd, Korea.

-Heraeus Materials Malaysia Sdn Bhd

EMPLOYEES

As of 30 June 2015, the Cirtek Groups manpower complement numbered at 1,535.

Position Total
Managers and Executives 30
Engineers 34
Administration 39
Other Support Groups 439
Rank and File 297
Agency/Contractual 696

Total 1,535

Contractual employees of the Company are primarily involved in mechanical functions in the production
lines. Employees holding critical or highly technical functions such as management and oversight of the
production process, which include engineers and key managers, are regular employees of the Company.

The Company does not expect to significantly increase its manpower requirements in the next twelve
months.

Management-Employee Relations

The Cirtek Group is not unionized. However, to foster better employee-management relations, the Cirtek
Group has a Labor Management Council (LMC) composed of committees with representatives from both
labor and management. These committees include the committee on employee welfare and benefit,

94
employee cooperative committee, employee discipline committee and sports and recreation committee,
among others.

LMCs are established to enable the workers to participate in policy and decision-making processes in
establishment, in so far as said processes will directly affect their rights, benefits, and welfare, except those
which are covered by collective bargaining agreement or are traditional areas of bargaining. The scope of
the council/committees functions consists of information sharing, discussion, consultation, formulation, or
establishment of programs or projects affecting the employees in general or the management.

There is an existing agreement between CEC and the United Cirtek Employees Association, entitled
"Collective Bargaining Agreement", pertaining to minimum salary, benefits, emoluments, security of
tenure, and other terms and conditions of employment. CATS does not have a similar agreement with its
employees.

Contractual Employees

Approximately 45% of the Cirtek Group's workforce consists of contractual employees (direct employees of
the Group's contractors).

The 696 contractual employees (as of 30 June 2015) are entitled to all the statutory employment rights and
privileges vis--vis their direct employer, the contractor/agency.

PROPERTIES

The Company, through its subsidiary, owns the manufacturing plants in the Laguna Technopark as well as
machinery such as bonder, auto test handler, optical inspection system, wafer back grinder, mold set, SMT
equipment, MIC epoxy dispense, die attach, high-speed wire bonders, automated test stations, and other
machinery necessary for the manufacture, assembly and testing of semiconductors and broadband wireless
products. All of these properties are free and clear of liens, encumbrances, and other charges, and are not
subject of any mortgage or other security arrangement.

CHPC does not own land. Thus, it entered into a lease arrangement with CLC and Cayon to lease the land
where the manufacturing facility is located. The manufacturing facility is composed of two buildings, with a
total floor area of 152,000 square feet and is shared by CEC and CATS.

The leases with CLC and Cayon will expire on 2021 but are renewable upon mutual agreement of the
parties. The Company does not anticipate any issues with the lease renewals.

The Company does not expect to acquire new properties or enter into new leases in the next twelve
months.

Please refer to the related discussion on the leases under Related Party Transactions - Transactions with
CLC and Cayon on page 132 of the Prospectus.

INTELLECTUAL PROPERTY

The Company does not believe that its operations are dependent on any patent, trademark, copyright,
license, franchise, concession, or royalty agreement. The Cirtek Group is not a party to any intellectual
property, license, franchise, concession, or royalty agreement.

95
RESEARCH AND DEVELOPMENT

Research and development work is performed by a team of over 57 experienced engineers with skills
developed internally and learned from previous work experiences. Skills are brought in through hiring when
necessary while training is a continuing concern to hone the skills of the technical staff.

The Company, through CEC and CATS, has successfully cooperated with customers on many projects, co-
developing with them new technology that are customer specific that will ensure continuing engagement
by the customers. This approach ties up customer with the Company over a long period of time generating
revenues from a captive market.

The Companys technology roadmap covers material development and process improvement to improve on
cost and to help maintain the margins. The latest materials are identified to meet ever increasing demand
for higher quality and lower cost. These are product-application specific that are jointly co-developed with
the customers bringing benefits to both parties.

Although the Company engages in research and development activities, the expenses incurred by the
Company incurred in connection with these activities are not material. The table below shows the amount
spent on R&D activities and its percentage to revenues during each of the last three fiscal years:

Year Amount Spent % to Revenues

2012 US$284,303 0.65%
2013 US$226,276 0.40%
2014 US$213,861 0.41%

GOVERNMENT APPROVAL AND PERMITS

All government approvals and permits issued by the appropriate government agencies or bodies which are
material and necessary to conduct the business and operations of the Company, were obtained by the
Company and are in full force and effect.

As a holding company, the Company is only required to obtain a mayors permit, which was issued to the
Company on 4 March 2012 by the City of Bian, Laguna. Such mayors permit is required to be renewed
within the first twenty (20) days from the beginning of January of the following year, with the most recent
renewal on 20 January 2015. The list of the permits and licenses of the Company and its subsidiaries are
set out below:

Cirtek Holdings Philippines Corporation ("CHPC")

Date of Validity/
Issuing Agency Title of Permit /License Status/Remarks
Issuance Expiration Date
Securities and
Exchange Certificate of 10 February Valid for the
Commission (SEC) Incorporation 2011 entire corporate Valid and subsisting.
term
Local 31 December
Government Unit 20 January 2015
(LGU) of Binan, Business Permit 2015 Valid and subsisting.
Laguna

96
Bureau of Internal Certificate of None stated
Revenue (BIR) Registration 11 March 2011 Valid and subsisting.

Cirtek Electronics Corporation (CEC)

Date of Validity/
Issuing Agency Title of Permit /License Status/Remarks
Issuance Expiration Date

Valid for the

SEC Certificate of 31 May 1984
entire corporate Valid and subsisting.
Incorporation
term
None stated
BIR Certificate of 23 October
Valid and subsisting.
Registration 2002
Philippine None stated
Certificate of
Economic Zone 24 March 1998 Valid and subsisting.
Registration
Authority (PEZA)
31 December This lists down
10 February 2015 CECs incentives under
PEZA Certification
2015 PEZA. Valid and
subsisting.
LGU of Binan, 20 January 31 December
Business Permit 2015 Valid and subsisting.
Laguna 2015
Department of None stated
Labor and Approved Application 04 February
Valid and subsisting.
Employment for Registration 2003
(DOLE)
Social Security Certificate of 20 January None stated
Valid and subsisting.
System (SSS) Membership 1999
Philippine Health None sated
Insurance Certificate of
11 March 2011 Valid and subsisting.
Corporation Registration
(PhilHealth)
Home None stated
Development
Certificate 24 March 2011 Valid and subsisting.
Mutual Fund
(HDMF)
Department of None stated
Natural Resources,
Environmental
Environmental 28 February
Management Valid and subsisting.
Compliance Certificate 2011
Bureau (DENR-
EMB) Regional
Office IV
Laguna Lake Clearance for None stated
Development Development Plan/ 01 February
Valid and subsisting.
Authority Program/Project in the 2012
(LLDA) Laguna de Bay Region

97
 20 January 2016
LLDA Discharge Permit July 2015 Valid and subsisting.

Cirtek Advanced Technologies and Solutions, Inc. (CATS)

Date of Validity/
Issuing Agency Title of Permit /License Status/Remarks
Issuance Expiration Date
None stated.
18 February
SEC Amended License Valid and subsisting.
2015
Certificate of Filing of None stated.
18 February
SEC Substitution of Resident Valid and subsisting.
2015
Agent
Certificate of None stated
BIR 11 May 2015 Valid and subsisting.
Registration
Certificate of None stated
PEZA 16 March 1998 Valid and subsisting.
Registration
Certifications (Nos. 31 December
PEZA 2015-1928, 2015-0898, 26 May 2015 2015 Valid and subsisting.
2015-1629)
Barangay Loma, 09 September None stated
Barangay Clearance Valid and subsisting.
Binan, Laguna 2015
DOLE Regional Registry of None stated
22 May 2015 Valid and subsisting.
Office IV-A Establishment
None stated Valid and subsisting

Examined
Certificate on
Registration No. 04-
Certificate of 12 September 0988479-1, vis--vis
SSS
Registration 2005 Employer Data
Change Request to
change name from
Remec Broadband
Wireless International
to CATS
Certificate of None stated
PhilHealth 30 April 2015 Valid and subsisting.
Registration
None stated
HDMF Certification 13 March 2015 Valid and subsisting.

Clearance for None stated

Development Plan/
LLDA 13 June 2012 Valid and subsisting.
Program/Project in the
Laguna de Bay Region
Permit to Operate Air 30 October 2015
26 January
DENR-EMB Pollution Source and Valid and subsisting.
2015
Control Installations

98
PEZA Memorandum Circular No. MC No. 2004-24 provides that all PEZA-registered ECOZONE locator
enterprises which are entitled to any or all three (3) fiscal incentives are exempted from having to secure all
LGU permits. Relying on this, CATS no longer obtained LGU permits in the past. Nonetheless, as part of the
practice of the Cirtek Group, CATS will be obtaining its LGU permits moving forward.

CATS applied for the renewal of the following PEZA-issued permits, namely: (a) Permit to Operate
Mechanical Equipment/Machinery. (b) Permit to Operate Electrical Equipment, (c) Fire Safety Inspection
Certificate, and (d) Certificate of Annual Inspection. However, PEZA have not conducted its inspection in
2015 and thus have not issued the aforementioned renewal permits. CATS does not anticipate that the
same will pose any material disruption to its operations and expects that the renewal permits will be issued
in due course.

Some of the permits of CATS are still under the name of Remec Broadband Wireless International, Inc.
These may be changed during renewal or by giving due notice to the appropriate authority. The Company
does not expect this to have any material adverse effect on the operations of CATS.

REGULATORY FRAMEWORK

Being PEZA-registered, CEC and CATS are required to submit periodic financial and other reports. CEC and
CATS are also required to submit quarterly, semi-annual, and annual reports to the DENR as part of their
ECC requirements. The failure to comply with these reports and with any other requirements or regulations
of these government agencies could expose CEC and CATS to penalties and the revocation of the
registrations.

CEC and CATS ensure compliance with these requirements by assigning dedicated personnel to monitor,
prepare the necessary filings, and liaise with the relevant government agencies.

LEGAL PROCEEDINGS

There are no pending legal cases against the Company, its subsidiaries, and their respective management
that will have immediate material effect on the financial position and operating results of the Company.

99
 INDUSTRY

The information in this section has been derived from various government and private publications, and
unless otherwise indicated, has not been prepared or independently verified by the Company, the Joint Lead
Underwriters, or any of their respective affiliates or advisors. The data presented hereunder are the latest
figures available from the relevant sources.

SEMICONDUCTOR MANUFACTURING INDUSTRY

Market Structure

The semiconductor industry is comprised of a number of different sectors. Its market structure can be
illustrated by a value chain, which is made of the semiconductor manufacturers and the external
environment.

There are several business models in the semiconductor industry value chain, which companies use. The
business models are segmented by specific processes of manufacturing or development. Main segments
are IDM (Integrated Device Manufacturer), fabless, licensing, foundry and assembly and testing. Each
sector makes up portions of the industrys value chain.

The semiconductor industrys value chain can be illustrated as follows:

IDMs. IDMs are the companies, which take up all stages of the semiconductor manufacturing value
chain. They operate, design, develop, introduce and market new products based on market trends and
demand. IDMs are the key drivers of technology behind the semiconductor industry through research
and development and innovation. Many IDMs have begun to transition to a fab-light strategy by
partnering with other companies in order to make room for production of newly developed
semiconductors, which require more advanced manufacturing processes.

Fabless. Fabless companies deal with the selling process and the research and development of
semiconductors. These companies are not directly involved in production or manufacturing, but
concentrate instead on product development. Fabless companies are a low cost segment of the
industry since no fixed costs are incurred due to the absence of production facilities.

100
 Licensing. Licensing companies in the semiconductor industry focus on design and development of
specific modules which are then patented and finally licensed to their customers. Licensing companies
do not take part in the sales of the products that are comprised of their licensed technology.

Semiconductor Outsourcing Market

The semiconductor outsourcing market can be divided into two major service segments:

Wafer Foundries. Wafer Foundries manufacture wafers based on designs from certain industry
participants such as IDMs and fabless companies.

Assembly and Testing. Outsourced Semiconductor Assembly and Test companies (OSAT) provide
packaging, assembly and test services. OSATs perform the specific task of putting parts together,
testing for utilization and packing semiconductor devices before these are released to customers who
will in turn provide these products to end applications. Although large IDM companies maintain their
internal foundry and assembly equipment, a vast population of the medium and small scale IDMs relies
on OSATs for lower cost off-shore services and added production capacity to support the growing
demand of our technology-enabled society.

Semiconductor Industry Performance

The supply and demand of semiconductors correlates with the economic cycles as well as seasonality. In
growth years, strong demand for semiconductors is followed by built up production capacities by
semiconductor companies. The high cost in building up production capacities, may put forth pressure on
prices, and affect profitability and growth.

In 2014, the global semiconductor industry posted another record sales totaling US$336 billion, a 9.9%
growth over 2013s record sales of US$306 billion. Sales continued to be robust across the board, with
almost all regions and products categories posting increases.

The following graph illustrates worldwide semiconductor sales for the past 28 years.

Global Semiconductor Historical Sales

1989-2014 in US$Bn

101
 Global Semiconductor Sales by Application
2013-2014
In billion US$
2013 2014
Data Processing 118 134
Communications 91 101
Consumer Electronics 39 38
Automotive 28 29
Industrial 29 33

With US$134 billion in sales in 2014, data processing was the largest market by sales. This is a 12.8%
increase from its US$118 billion sales in 2013. Communications, automotive, and industrial markets have
also show particular strengths posting US$101 billion, US$29 billion, and US$33 billion, respectively.

Global Semiconductor Sales by Component

2013-2014
In billion US$
2013 2014
Memories 67 79
MPUs and MCUs* 59 63
Logic 86 90
Analog ICs 40 45
Discrete semiconductor 18 21
Optical semiconductors 28 30
Sensors and actuators 8 9

*MPU Microprocessor Units. MCU Microcontroller Units

In terms of installed semiconductor components, logic integrated circuits (ICs) was the largest category by
sales posting US$90 billion in 2014, a 6% year-on-year increase compared to its estimated 2013 sales of
US$86 billion. The memory category with US$79.2 billion in sales, an 18.2% year-on-year increase, was the
fastest growing segment. Other remarkably fast-growing segments in terms of sales for 2014 are the
sensors which grew 8.2% year-on-year with US$9 billion, power transistors which grew 16.1% year-on-year
with US$11.9 billion, discretes which grew 10.8% year-on-year with US$20 billion, and analogs with
US$44.4 billion grew annually by 10.6%. (Raman Chitkara, May 2015)

102
 2014 Global Semiconductor Consumption by Region

In 2014, all four regional markets posted an increase in sales for the first time since 2010. The U.S. market
showed particular strength, posting double-digit growth to lead all regions, with sales increasing by 12.7%
in 2014. Sales were also up in Asia Pacific (11.4%), Europe (7.4%), and Japan (0.1%), marking the first time
annual sales in Japan increased since 2010. (Rosso, 2015).

China accounted for more than half of the worldwide semiconductor consumption revenues with 56.5%,
followed by the Rest of the World with 15.8%, Americas with 11.7%, Europe with 9.6%, and Japan with
6.4%.

Prospects
Semiconductor Billings Forecast
(In US$ Bn)

2014-2019
CAGR: 5.2%

The semiconductor industry serves as a driver, enabler and indicator of technological progress.
Developments in the industry determine the way people work, transport themselves, communicate,
entertain and respond to their environment. Rapid technological innovation is driving the growth in the
semiconductor industry. The outlook for the semiconductor industry remains positive given the end
markets driving the current strength in the industry, the extreme sophistication in applications, the
emergence of more cutting edge devices, the revival of corporate spending driven by new products and
hardware upgrades because of power efficiencies and cost savings afforded by newer technologies, and
increased demand in virtualization and the data center segment. The advance of digitization and the

103
Internet of Things (IoT) will further increase demand for semiconductor products. Taken together, these
factors will drive solid growth for the global semiconductor market over the next several years.4

Product Innovation

The semiconductor industrys pace of innovation is high. Gordon Moore, co-founder of Intel, authored
Moores law, which postulates that the number of transistors being integrated into a standard processor
will grow exponentially, doubling every 18 to 24 months. In addition, enhanced functionalities on chips,
and innovative designs with several applications have also been crucial to maintaining competitiveness for
companies. Due to the significant investment in research and technology in the industry, many IDMs have
opted for a fab-light business model, wherein certain manufacturing processes are outsourced. Increased
specialization in the manufacturing process has led to the emergence of OSATs. These companies are
based mostly in Southeast Asia, particularly in Taiwan, Malaysia and Singapore, due to low labor costs.

Energy Efficient / Green Technology

As environmental issues have become more of a concern, semiconductor devices are being made to
address environmental concerns by reducing power consumption, reducing heat dissipation, capturing
solar energy, and creating more efficient lighting solutions, among others. Semiconductor devices are
being created for specific use in green technology and energy efficiency. IMS Research estimates that
semiconductors used in power generation applications will grow annually by 18% in the coming years.
Semiconductors used in automotive applications are expected to grow by 8% due to the increased demand
for hybrid cars, whose drives have higher semiconductor content than regular cars, the requirement for low
consumption and emission in cars, and the demand for safer vehicles.

Communications and Data Processing

In the period from 2015 to 2019, the largest overall application segments will be data processing and
communications to make up 38% and 29% of the revenue pie, respectively. More people throughout the
world are seeking the ability to communicate, whether using the telephone, email or the internet at high
transmission speeds. Semiconductor components are required in the backbone and for processing data in
networks. The increase in demand for smartphones and tablet PCs is also expected to increase demand for
semiconductor devices.

Consumer Electronics

Different semiconductor products are utilized in various consumer electronics products. The improvement
in speed and quality of gaming consoles for instance, is attributed to components such as graphic chips,
memory modules and semiconductor analogues. Digital televisions also use semiconductor products.
Other consumer electronics which use semiconductors as components include MP3 players, DVD players,
recorders, photo, digital and video cameras.

THE PHILIPPINE SEMICONDUCTOR INDUSTRY

The Philippine semiconductor industry is the largest sub-sector of the Philippine electronics industry, which
began in the mid-seventies when industrialized countries relocated production facilities to third world

4
The Internet of Things: The next growth engine for the semiconductor industry, Published by PricewaterhouseCoopers AG
Wirtschaftsprfungsgesellschaft By Raman Chitkara, Werner Ballhaus, Olaf Acker, Dr. Bin Song, Anand Sundaram and Maria Popova

104
countries in order to counter rising production costs. The Philippines was considered an ideal location due
to its cost competitive and English speaking labor force.

The semiconductor industry consists of companies manufacturing integrated circuits, diodes, resistors,
capacitors, coils, transformers, printed circuit board and other components. The major players in the
industry include Integrated Micro-Electronics Inc., Phoenix Semiconductors Philippines Corp., Texas
Instruments, Philips, Amkor and Fairchild Semiconductor. Other components of the Philippine electronics
industry include electronic data processing, telecommunications, consumer electronics, communications
and radar, office equipment, automotive electronics, control and instrumentation, medication and
industrial, and solar / photovoltaics.

The Philippine electronics industry is a major contributor to the Philippine economy and the largest
contributor to the countrys exports for 2014 with 43.1% of the total exports. This grew by 11.9% from
$23.931 billion in 2013 to $26.790 billion. For the 6 months ended June 2015, it remained as the countrys
top export with total receipts of $13.35 billion, accounting for 46.2% of the total exports revenue. It
increased by 7% from $12.5 billion registered in the first half of 2014.

1H 2014- 1H 2015 YOY Top Exports

In US$ millions

Electronic Products 13,353

12,548

Other Manufactures 1,923

2,763

Machinery and Transport Equipment 1,877

1,860

Woodcrafts and Furniture 1,314

1,700

0 5,000 10,000 15,000

2015 2014

Source: psa.gov.ph

Characteristics of the Industry

Dominated by Multinational Companies. The Philippine electronics industry is dominated by

multinational companies, which include among others, Intel, Texas Instruments, Continental Temic,
NXP, Sony, Toshiba, Hitachi, Fujitsu, Samsung, Acer and OSE.

Export-oriented. Most of the electronics industrys output is exported, and not much is sold
domestically. Majority of the output from these companies are sold to their parent companies.

Engaged in assembly and test manufacturing services. The Philippine electronics industrys
expertise lies with the back-end of semiconductor manufacturing, i.e. assembly and test.

High quality and productivity. Strong emphasis is placed on high quality products and services.
Most Philippine electronics firms are ISO certified, and operates with clean rooms and fully
integrated manufacturing facilities.

105
 Increase in components suppliers. There is an increasing number of components suppliers in the
Philippines, thus lessening the need for electronics companies located in the country to seek parts
elsewhere.

MILLIMETER WAVE INDUSTRY

Millimeter Wave Technology: What is Millimeter Wave?

Millimeter waves are a portion of the radio frequency (RF) or microwave spectrum, the range generally
designated as 20 GHz to 300 GHz, the upper end of the microwave range. These frequencies correspond
roughly to wavelengths from one to fifteen millimeters, hence the name.

Millimeter waves offer important advantages over the lower end of the spectrum. More highly directional
beams with higher gain, due to the shorter wavelengths involved, allow systems using these bands to
operate in close proximity without interference, and therefore a potentially greater density of users with
more efficient spectrum use, and less chance of interception. The shorter wavelengths enable radar
systems with higher resolution than is normally available. Higher frequencies are recognized to have larger
bandwidth, enable higher data rates, provide better security and privacy, and require reduced hardware
size due to the smaller antennas. Such technology is also known to be quicker to roll out and cheaper to
deploy compared to optical fiber systems.

Despite its many advantages, millimeter wave applications have remained somewhat underpenetrated and
undeveloped versus lower frequency microwaves. The higher frequencies, in particular, present several
challenges in engineering and design. For instance, millimeter waves are known to have high signal
attenuation in the atmosphere because they are prone to absorption by oxygen and rain. These waves also
have difficulty reflecting and penetrating solid materials (i.e. concrete walls). Essentially, all millimeter
wave communication systems require a direct line of sight connection. Hence, a major concern is that a
millimeter-wave-based mobile broadband network, for example, would not be able to provide coverage
everywhere; particularly in cluttered outdoor environments such as cities because they cant always
guarantee a line-of-sight connection from a base station to a handset.

The good news is that further research is being pursued to overcome these technical issues. There is in fact
on-going research for the design and development of steerable antennas (also called smart antennas),
which would have the ability to continually sweep their beams in any direction to search for the strongest
connection, getting around obstructions by taking advantage of reflections. Communication system
prototypes for a commercial cellular network using an array of such antennas as the backbone are very well
in progress. This could potentially support future 5G technologies.

106
The table below sets forth the key differences in capabilities between current cellular technology and
future millimeter-wave technology.

Current Cellular Technology Future Millimeter-wave

Technology
Frequency range 300 MHz - 3 GHz 10 GHz - 300 GHz
Total available spectrum 700 MHz 100 GHz
Maximum data channel bandwidth 100 MHz
Average user data rate 30 Mbps 1 Gbps
Single antenna length in free space At 700 MHz: 21.3 cm At 28 GHz: 0.5 cm
Maximum urban-transmission range At 700 MHz: 3 kms At 28 GHz: 300 m
Signal attenuation At 700 MHz At 28 GHz
Air: .005 decibels per km Air: .1 dB/km
Heavy rain: .02 dB/km Heavy rain: 10 dB/km
Sources: Zhouyue Pi and Farooq Khan, An introduction to Millimeter-Wave Mobile Broadband Systems, IEEE Communications, June 2011;
Recommendation ITU-R P.676; Electronic Warfare and Radar Systems Engineering Handbook, April 1999

While more and more studies are focusing on its application in mobile telecommunications, millimeter
wave technology has already made a significant impact in the development of a number of emerging
applications in the sphere of telecommunications, imaging, defense, and consumer & automotive.

Applications

I. Telecommunications

As telecommunications moves towards the wireless model, millimeter wave technology is becoming a very
important part of the industrys development.

Most of the growing telecom applications for millimeter waves involve the E-band, frequencies within 60 to
95 GHz but particularly the bands 71-76 GHz and 81-86 GHz. These frequencies are suitable for a broad
range of innovative products and services, including high-speed, point-to-point wireless local area
networks, and wireless broadband Internet access. These systems will allow very high rate data transfer
and point- to-point connectivity over distances between 1 and 2 km.

Prime applications are those where optical fiber connections are unavailable or too costly to install, which
will include in many cases urban office buildings.

Telecommunications applications are generally divided among the following categories:

Point-to-Multipoint communications
Point-to-Point communications
High definition video streaming
File transfer
Wireless gigabit Ethernet
Desktop point-to-multipoint applications
Wireless docking stations
Wireless ad hoc networks
Campus and enterprise communications
HDTV video relay
Wireless backhaul for 3G and 4G mobile communications

107
Beginning in late 2009, mobile operators and other telecom carriers needed a way to address rapidly
growing bottleneck issues, with cell phone calls being dropped, insufficient bandwidth available for
consumers to open browsers on their mobile phones, and similar problems.

According to reports from Cisco and Ericsson, mobile traffic worldwide is about doubling each year, and
that exponential growth will likely continue for the foreseeable future. To be specific, global mobile data
traffic is seen to grow at a 57% CAGR between 2014-2019. By 2019, video will represent 72% of total
mobile data traffic compared to 55% in 2014 (see Figure 1.1). The average traffic per mobile-connected
end user device is expected to reach 2.8 GB per month by 2019 (see Figure 1.2).

Figure 1.1 - Mobile Data Traffic by Application Type Figure 1.2 - Mobile Traffic per End-user Device (MB per Month)

3,000 2.8 GB

2,500

2,000

1,500

1,000
359 MB
500

-
2014 2019
Source: Cisco VNI Global Mobile Data Traffic Forecast, 2014-2019

If present trends continue, overall demand for larger bandwidths available in millimeter wave technology in
telecommunications could grow to be quite significant.

Equipment makers for cellular networks are likewise beginning to take advantage of the ultrawide bands
available in millimeter-wave spectrum. Several suppliers, including Ericsson, Huawei, Nokia, and the start-
up Bridgewave, are now using millimeter waves to provide high-speed line-of-sight connections between
base stations and backbone networks, eliminating the need for costly fiber links.

Figures 1.3 and 1.4 below show a growth in millimeter wave systems, which reflect a pattern previously
observed in the lower frequency bands. The market size of traditional microwave systems, at 6 to 38 GHz, is
about $7 billion, 90% of which is in telecom mobile backhaul and 10% in enterprise networks. For
millimeter wave systems, we see a shift from enterprise systems to mobile backhaul from 2009 to 2012,
driven primarily from the broader market shift to 4G networks.

Figure 1.3 - Millimeter Wave Systems Markets, 60 to 80 GHz, Figure 1.4 Distribution of Millimeter Wave Systems
by Application Markets, from 2009-2012

Year Enterprise Mobile

Backhaul
2009 70% 30%
2010 30% 70%
2011 15% 85%
2012 10% 90%

Source: Thintri, Inc., Millimeter Waves: Emerging Markets, 2012 edition

108
The next five years, then, will bring about a shift in the distribution of applications away from enterprise
and campus deployments toward a heavy emphasis in mobile backhaul.

Competition of millimeter waves in backhaul includes optical fiber, and conventional, or common carrier,
microwave technology at lower frequencies (6 to 38 GHz). However, the attraction for 60 GHz and E-band
technology remains due to higher capacity and also the fact that the spectrum is so lightly used and most of
it is still available.

Figure 1.5 depicts the growing share of millimeter wave in the telecommunications backhaul segment,
which expects it to reach over 30% by 2020.
Figure 1.5 Telecommunications Backhaul: Shares by Technology

Source: Thintri, Inc., Millimeter Waves: Emerging Markets, 2012 edition

The range 20 to 38 GHz, while technically millimeter wave, is more mature and well-established than the
higher frequencies like E-band. It has more in common, technically, with the lower sub-millimeter wave
frequencies and thus does not share the more promising growth prospects of the 60 GHz and E-band
ranges, which are seen to grow at a 45% CAGR to a market size of US$11.0 billion by 2020.

Figures 1.6 to 1.9 below set forth present and future market growth for each of the 20 to 38 GHz and the 60
to 80 GHz millimeter wave bands.

Figure 1.6 - Markets, Millimeter Wave Telecom- Figure 1.7 - Markets, 20 to 38 GHz, By Component
munications Links, 20 to 38 GHz

109
 Figure 1.8 - Millimeter Wave Systems Markets, Figure 1.9 - Telecom Systems Markets by
Telecom, 60 to 80 GHz Component, 60 to 80 GHz

Source: Thintri, Inc., Millimeter Waves: Emerging Markets, 2012 edition

II. Imaging

One of the most promising applications for millimeter waves, and one of the most rapidly growing, is in
imaging. The most popular imaging applications today include checkpoint security, inventory control,
through-wall imaging, and consumer retail.

The table below sets forth some applications of millimeter wave technology in the arena of imaging and the
corresponding market outlook up to the year 2020.

APPLICATION DESCRIPTION OUTLOOK

Checkpoint security Screening of passengers on airlines, The graph below displays the outlook of the checkpoint security
ferries, court houses, etc. market for both active and passive systems (passive systems show
An alternative to metal detectors, x- indication of presence or motion of an individual while active
ray backscatter, etc. systems show clearly the persons outline or body surface).

Figure 2.1 - Millimeter Wave Imaging Systems in Checkpoint

Security, Market Volume

110
Inventory control Used to prevent inventory theft in
and loss prevention factories, warehouses, or
manufacturing facilities, for example.
An alternative to metal detectors for
theft prevention.
Many products such as cell phones
have dramatically reduced metal
content, and so more sophisticated
methods are needed such as
millimeter wave-based scanners.
The graph below displays the outlook of imaging system sales for
inventory control applications. It is expected to exceed US$4.0
billion in volume by 2020, becoming the largest market among the
four imaging applications.
Figure 2.2 Imaging System Sales, Loss Prevention, Market
Volume

Through-wall Has ability to conduct surveillance The market for through-wall imaging systems is expected to grow
imaging through walls, to detect people, to almost US$200 million by 2020 (see graph below).
weapons, baggage, drugs,
contraband or other items of Figure 2.3 - Millimeter Wave Through-Wall Imaging, Market
interest. Volume
Enables penetration and imaging
through walls and other non-
conducting materials such as
clothing.
Currently being used in urban
warfare applications. Law
enforcement applications are
emerging while hostage rescue
situations are one of the next target
applications.
Consumer retail Used in retail commerce, particularly The market for imaging systems in consumer retail is expected to
that of clothing. grow to US$450 million by 2020 (see graph below).
For example, millimeter wave
systems can provide a convenient, Figure 2.4 Imaging Systems in Consumer Retail, Market Volume
safe and inexpensive way to take a
customers measurements for fitting
clothing and shoes.
A related application could be fitness
monitoring, by measuring, for
example, reduction of a customers
waistline during training, or buildup
of muscle from a training routine.

Source: Thintri, Inc., Millimeter Waves: Emerging Markets, 2012 edition

III. Defense

Defense is making increasing use of millimeter waves. Of particular importance is the ability to incorporate
small antennas, and therefore reduced weight, which is important to portable applications, such as
perimeter radar systems carried by soldiers.

Most defense applications involve frequencies from 26.5 GHz to 100 GHz, with some higher frequencies
used occasionally.

111
The table below sets forth some applications of millimeter wave technology in defense and the
corresponding market outlook up to the year 2020.
APPLICATION DESCRIPTION
Surveillance / Peri- Involve protection of facilities (majority
meter Radar of applications are for government).
Markets Two kinds: outdoor perimeter security
(short-distance) and outdoor
surveillance (wider area).
Primary applications include
monitoring of oil refineries, gas storage
facilities, VIP security, border security
and others.
Generally uses 26.5-40 GHz or 75-110
GHz.
Has higher resolution and directionality
compared to lower frequencies.
Munitions Some applications include:
Applications Radar fusing, to ensure the bombs
exploded at the correct altitude
Fire-and-forget weapons guidance
Trajectory Correction Munition (TCM)
which is the ability to correct the
trajectory of an artillery shell with
high precision, after firing using
remote control
Marine Radar Used in Port Security to monitor ships
in port, or approaching port, and
detect marine traffic that may not be
legitimate
112
OUTLOOK
Deployed radar installations are growing most rapidly in South
America, Africa and Asia.
Outdoor surveillance market, nearly doubling every year, has
been growing faster than the perimeter security market.
Figure 3.1 - Millimeter Wave Surveillance / Perimeter Radar
Markets
In light of economic conditions in the western part of the world,
many are advocating a drastic reduction in defense spending,
which would impact high technology weapons systems
significantly. In any case, a conservative approach still projects
markets for munitions applications to grow to approximately
US$280 Mn by 2020.
Figure 3.2 - Millimeter Wave Munitions Radar Markets
Opportunities for this application are still very limited with the
market expected to be about US$47 Mn by 2020, much smaller
compared to other defense applications. Marine radar markets
will continue to face competition from lower frequency, and
optical markets.
Figure 3.3 Marine Radar Millimeter Wave Markets
 APPLICATION DESCRIPTION OUTLOOK
Defense and More mature than many other Overall sales growth in these markets may be less rapid but are
Intelligence millimeter wave applications. foreseen to be healthy overall with target volume of
Communications Makes use of 60 GHz range because it approximately US$370 Mn by 2020.
provides highly secure
communications. Figure 3.4 Defense and Intelligence Millimeter Wave
60 GHz is used in inter-satellite Communications Markets
communications.

Source: Thintri, Inc., Millimeter Waves: Emerging Markets, 2012 edition

IV. Consumer & Automotive

The entry of millimeterwave technology into the consumer markets will offer the potential for enormous
growth and will likely be the source of bulk of millimeter-wave-related revenue, once the relevant markets
mature. The key to such growth would be keeping prices low. Fortunately, recent silicon-based
technologies have enabled dramatic reductions in costs, increasing the commercial viability of millimeter
wave technology in the consumer sector. Many high-end smartphones, televisions, and gaming laptops, for
example, now include these cheap silicon wireless chips sets.

APPLICATION DESCRIPTION OUTLOOK

Consumer Multi- Several short-distance wireless Much of the development in consumer multimedia technology
media Products technologies in the 5 to 60 GHz relates to wireless transfer of high definition video within the
frequency bands are under home.
development to provide HD video Exponential growth is forecasted for the consumer multimedia
interconnectivity in the home products markets with the commercial viability seen in the use
environment to link together HDTV and of silicon technology which would significantly bring down
other multi-media sources without costs of products and will make more sense to consumers.
cables.
Figure 4.1 60 GHz Consumer Multimedia Products, Markets

113
 APPLICATION DESCRIPTION OUTLOOK
Automotive Radar Automotive radar was the earliest As millimeter wave radar technology matures and becomes less
large-scale commercialization of expensive, the number of automotive applications will continue
millimeter wave technology. to grow.
Automotive radars rely on either 24
GHz or 77 GHz technology Figure 4.2 Markets for Automotive Radar, 24 GHz and 77 GHz
Some applications include:
Automatic distance control
Autonomous intelligent cruise control
systems (AICC)
Adaptive cruise control (ACC)
Intelligent cruise control (ICC)
Blind spot warning
Lane change assist
Side pre-crash sensing
Collision warning systems
Collision avoidance/ mitigation
systems
Backup and parking assist functions
Automatic positioning / parking

Source: Thintri, Inc., Millimeter Waves: Emerging Markets, 2012 edition

Internet of Things

Millimeter wave technology will be the next generation technology that can provide up to multi-gigabytes
per second (Gbps) wireless connectivity to support the advancement into an era of interconnected
devices called the Internet of Things.

According to Gartner, the Internet of Things (IoT) is defined as the network of physical objects that
contain embedded technology such as electronics, software, sensors, and connectivity, which allow these
things to communicate and sense or interact with their internal states or the external environment. The
Internet of Things allows objects to be sensed and controlled remotely across existing network
infrastructure, creating opportunities for more direct integration between the physical world and
computer-based systems, and resulting in improved efficiency, accuracy and economic benefit. Each thing
is uniquely identifiable through its embedded computing system but is able to interoperate within the
existing Internet infrastructure.

The Internet of Things has a variety of applications, most notably in the consumer electronics sector such as
smart watches, fitness bands and trackers, and smart glasses to name just a few. The IoT is manifesting
itself in technologies beyond consumer electronics in other markets and applications, too. The rapid
advances being demonstrated through self-driving cars and drones are just the beginning of the endless
possibilities that a network of smart connected devices can bring to improving human productivity, safety,
and overall quality of life. Ericsson predicts the number of all connected devices to reach 50 bn by 2020,
with the IoT expected to drive this growth across multiple industries.

114
 In millions In US$ bn
5,000 2,225
6,000
5,500 1,780
3,300
1,335
1,150 890
30,000 850 890
3,200 520 890
4,100
5,400 472 890

2014 2020 2014 2020

Consumer Electronics Automotive
Internet of Things TV Healthcare & Life Sciences Energy & Utilities
Tablets Smartphones Retail Construction/ Infrastructure
PCs Industrial/ Manufacturing

Source: 2020 forecast from IDC, PwC analysis, May 2015, Ericsson

Since the key capability required in IoT applications is connectivity, the development of millimeter wave
technology is critical to satisfy future exponential data demand.

115
 REGULATORY AND ENVIRONMENTAL MATTERS

PHILIPPINE ECONOMIC ZONE AUTHORITY

The PEZA is an attached agency to the Department of Trade and Industry and is tasked to promote
investments, extend assistance, register, grant incentives to, and facilitate the business operations of
investors in export-oriented manufacturing and service facilities located inside selected areas throughout
the country proclaimed by the President of the Philippines as PEZA Special Economic Zones. It oversees and
administers incentives to developers/operators and locators in Special Economic Zones.

Entities registered with the PEZA are entitled to fiscal and non-fiscal incentives. Fiscal Incentives include
income tax holiday; tax and duty free importation of raw materials, capital equipment, machineries and
spare parts; VAT zero rating; exemption from payment of local government imposts, fees, licenses, and
taxes; and exemption from expanded withholding tax. Non-fiscal incentives include simplified import-
export procedures; and special non-immigrant visa with multiple entry privileges for certain officers and
employees. PEZA also extends visa facilitation assistance to foreign nationals and their spouses and
dependents.

PEZA registered entities are required to maintain distinct and separate books for its operations inside the
Special Economic Zones and are mandated to submit financial and other reports/documents to PEZA.
Below are some of the periodic reports/documents required to be submitted to PEZA and their respective
due dates:

Types of Report Due Date

Quarterly Reports 45 days after the end of the quarter

Annual Report (For Developer/Operator 90 days after the end of the accounting
Enterprises) period
Audited Financial Statements (For 30 days after filing with BIR
Developer/Operator Enterprises)
Quarterly Income Tax Returns(For 15 days after filing with BIR
Developer/Operator Enterprises)
Annual Income Tax Returns (ITR) (For 30 days after filing with BIR
Developer/Operator Enterprises)
Breakdown/Schedule of Sales per Activity Together with AFS & Annual ITR
Breakdown/Schedule of Other Income Together with AFS & Annual ITR
Data on Revenues and Taxes Paid Together with AFS & Annual ITR
Commission on Audit (COA) Annual Audit After the end of the year
Report Audit Certificate (For
Developer/Operator owned by the
Government)
Change of Corporate Name & Equity 30 days after the said change
Ownership

As PEZA-registered entities, CEC and CATS are required to submit the periodic reports described above to
PEZA. They are also required to submit quarterly, semi-annual and annual reports to the DENR as part of
their ECC requirements. The failure to comply with these reports and with any other requirements or
regulations of these government agencies could expose CEC and CATS to penalties and the revocation of
their respective registrations.

116
CEC and CATS ensure compliance with these requirements by assigning dedicated personnel to monitor,
prepare the necessary filings and liaise with the relevant government agencies.

ENVIRONMENTAL LAWS

Presidential Decree No. 1586 established the Environmental Impact Statement (EIS) System which is
concerned primarily with assessing the direct and indirect impacts of a project or undertaking to the quality
of the environment and ensures that these impacts are addressed by appropriate environmental protection
and enhancement measures. The EIS system successfully culminates in the issuance of an Environmental
Compliance Certificate (ECC).

The ECC serves as a government certification based on the representations of the proponent that: (i) the
proposed project or undertaking will not cause a significant negative environmental impact; (ii) that the
proponent has complied with all the requirements of the EIS system and; (iii) that the proponent is
committed to implement its approved environmental management plan in the EIS or, Initial Environmental
Examination (IEE). The ECC also contains specific measures and conditions that a project proponent must
undertake before, during, and in some cases, at the abandonment of a project.

Development projects that are classified by law as environmentally critical or projects within statutorily
defined environmentally critical areas are required to obtain an ECC prior to commencement. The DENR,
through its regional offices or through the Environmental Management Bureau (the EMB), determines
whether a project is environmentally critical or located in an environmentally critical area. As a pre-
requisite for the issuance of an ECC, an environmentally critical project must submit an EIS to the EMB
while a project in an environmentally critical area is generally required to submit an IEE to the proper DENR
regional office. In the case of an environmentally critical project within an environmentally critical area, an
EIS is required. The construction of major roads and bridges are considered environmentally critical
projects for which EIS and ECC are mandatory.

The EIS refers to both the document and the study of a projects environmental impact, including a
discussion of the direct and indirect consequences to human welfare and the ecological as well as
environmental integrity. The Initial Environmental Examination refers to the document and the study
describing the environmental impact, including mitigation and enhancement measures, for projects in
environmentally critical areas.

While the terms and conditions of an EIS or an IEE may vary from project to project, as a minimum it
contains all relevant information regarding the projects environmental effects. The entire process of
organization, administration, and assessment of the effects of any project on the quality of the physical,
biological, and socio-economic environment as well as the design of appropriate preventive, mitigating, and
enhancement measures is known as the EIS System. The EIS System successfully culminates in the issuance
of an ECC. The issuance of an ECC is a Government certification that the proposed project or undertaking
will not cause a significant negative environmental impact; that the proponent has complied with all the
requirements of the EIS System; and that the proponent is committed to implementing its approved
Environmental Management Plan in the EIS or, if an IEE was required, that it shall comply with the
mitigation measures provided therein.

Project proponents that prepare an EIS are required to establish an Environmental Guarantee Fund when
the ECC is issued for projects determined by the DENR to pose a significant public risk to life, health,
property, and the environment or where the project requires rehabilitation or restoration. The
Environmental Guarantee Fund is intended to meet any damage caused by such a project as well as any
rehabilitation and restoration measures. Project proponents that prepare an EIS are required to include a
commitment to establish an Environmental Monitoring Fund when an ECC is eventually issued. In any case,

117
the establishment of an Environmental Monitoring Fund must not occur later than the initial construction
phase of the project. The Environmental Monitoring Fund must be used to support the activities of a multi-
partite monitoring team, which will be organized to monitor compliance with the ECC and applicable laws,
rules and regulations.

CEC and CATS incur expenses for the purposes of complying with environmental laws that consist primarily
of payments for Government regulatory fees. Such fees are standard in the industry and are minimal.

CEC is required to obtain the following environmental certifications and permits from the Department of
Environment and Natural Resources Environmental Management Bureau for its operations:

Permit Issuance Expiration

Environmental Clearance Sept. 9, 20085 N/A(1)
Certificate (ECC)
Permit to Operate (Air Jan. 20, 2015 Oct. 30, 2015
Pollution Source & Control
Installations)
Notes:
(1) An Environmental Clearance Certificate (ECC) expressly states that it is a planning tool and not a permit. It remains in
effect provided the company complies with conditions stipulated under the ECC, and therefor has no expiration date. The
DENR/EMB monitors the company/project periodically to ensure compliance with stipulations in the ECC.

CATS is required to obtain the following environmental permits for its operations:

Permit Issuance Expiration

Environmental Clearance Oct. 11, 2011 N/A(1)
Certificate (ECC)
Permit to Operate (Air Jan. 26, 2015 Oct. 30, 2016
Pollution Source & Control
Installations)

Notes:
(1) An Environmental Clearance Certificate (ECC) expressly states that it is a planning tool and not a permit. It remains in
effect provided the company complies with conditions stipulated under the ECC, and therefor has no expiration date.
The DENR/EMB monitors the company/project periodically to ensure compliance with stipulations in the ECC.

All development projects, installations, and activities that discharge liquid waste into and pose a threat to
the environment of the Laguna de Bay region are also required to obtain a discharge permit from the
Laguna Lake Development Authority (LLDA). CEC's current discharge permit will be valid until July 20, 2016.

NATIONALITY RESTRICTIONS

The Philippine Constitution limits ownership of land in the Philippines to Filipino citizens or to corporations
the outstanding capital stock of which is at least 60% owned by Philippine Nationals. While the Philippine
Constitution prescribes nationality restrictions on land ownership, there is generally no prohibition against
foreigners owning buildings and other permanent structures. However, with respect to condominium
developments, the foreign ownership of units in such developments is limited to 40%.

Republic Act No. 7042, as amended, otherwise known as the Foreign Investments Act of 1991, and the
Tenth Regular Foreign Investment Negative List, provide that certain activities are nationalized or partly-

5
Superseded by ECC-R4A-1101-0063 issued on 28 February 2011.

118
nationalized, such that the operation and/or ownership thereof are wholly or partially reserved for
Filipinos. Under these regulations, and in accordance with the Philippine Constitution, ownership of private
lands is partly-nationalized and thus, landholding companies may only have a maximum of 40% foreign
equity.

The Company does not currently own real estate. However, if the Company acquires real estate in the
future, it would be subject to nationality restrictions found under the Philippine Constitution and other
laws limiting land ownership to Philippine Nationals. The term Philippine National as defined under the
R.A. No. 7042, as amended, shall mean a citizen of the Philippines, a domestic partnership or association
wholly-owned by citizens of the Philippines or a corporation organized under the laws of the Philippines of
which at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the
Philippines, or a corporation organized abroad and registered to do business in the Philippines under the
Philippine Corporation Code of which 60% of the capital stock outstanding and entitled to vote is wholly-
owned by Filipinos or a trustee of funds for pension or other employee retirement or separation benefits,
where the trustee is a Philippine National and at least 60% of the fund will accrue to the benefit of
Philippine Nationals.

LABOR CODE

The Labor Code recognizes subcontracting arrangements, whereby a principal (i.e. CEC or CATS, as the case
may be) puts out or farms out with a contractor the performance or completion of a specific job, work or
service within a definite or predetermined period, regardless of whether such job, work or service is to be
performed or completed within or outside the premises of the principal. Such arrangements involve a
"trilateral relationship" among: (i) the principal who decides to farm out a job, work or service to a
contractor; (ii) the contractor who has the capacity to independently undertake the performance of the job,
work, or service; and (iii) the contractual workers engaged by the contractor to accomplish the job, work, or
service.

The principal is liable as an indirect employer to the contractual employees, in the same manner and extent
that it is liable to its own employees, to the extent of the work performed under the contract, when the
contractor fails to pay the wages of its employees or violates any provision of the Labor Code. The principal
can then seek reimbursement from the contractor/agency.

The Philippine Labor Code and other statutory enactments provide the minimum benefits that employers
must grant to their employees, which include certain social security benefits, such as benefits mandated by
the Social Security Act of 1997 (R.A. No. 8282), the National Health Insurance Act of 1995 (R.A. No. 7875),
as amended, and the Home Development Fund Law of 2009 (R.A. No. 9679).

Under the Social Security Act of 1997, social security coverage is compulsory for all employees under 60
years of age. An employer is obligated to deduct and withhold from each employee's monthly salary, wage,
compensation or earnings, the employee's contribution, and the employer, for its part, makes a
counterpart contribution for the employee, and remits both amounts to the Social Security System (SSS).
This enables the employees to claim their pension, death benefits, permanent disability benefits, funeral
benefits, sickness benefits, and maternity-leave benefits. The Social Security Act of 1997 imposes penal
sanctions if an employer fails to remit the contributions to the SSS. For corporate employers, the penalty is
imposed on its president and members of the board of directors.

The National Health Insurance Act created the National Health Insurance Program (NHIP) to provide
health insurance coverage and ensure affordable and accessible health care services to all Filipino citizens.
Under the law, all members of the SSS are automatically members of the NHIP. The Philippine Health
Insurance Corporation (PhilHealth) administers the NHIP, and an employer is required to deduct and

119
withhold the contributions from the employees salary, wage, or earnings, make a counterpart contribution
for the employee, and remit both amounts to PhilHealth. The NHIP will then subsidize personal health
services required by the employee subject to certain terms and conditions under the law. The National
Health Insurance Act likewise imposes penal sanctions if an employer does not remit the contributions to
PhilHealth. For corporate employers, the penalty is imposed on its president and members of the board of
directors.

The Home Development Fund Law (R.A. No. 9679) or the Pag-IBIG Fund Law, created the Home
Development Mutual Fund (HDMF), a national savings program as well as a fund to provide for affordable
shelter financing to Filipino workers. Coverage under the HDMF is compulsory for all SSS members and
their employers. Under the law, an employer must deduct and withhold 2% of the employee's monthly
compensation, up to a maximum of 5,000.00, and likewise make a counterpart contribution of 2% of the
employee's monthly compensation, and remit the contributions to the HDMF. The Pag-IBIG Fund Law also
imposes penal sanctions if the employer does not remit the contributions to the HDMF.

120
 BOARD OF DIRECTORS AND SENIOR MANAGEMENT

All of the Directors and Officers named herein have served in their respective positions since 31 May 2013.
The Directors of the Corporation were elected at the annual meeting of the stockholders of the Corporation
to hold office until the next succeeding annual meeting of the stockholders and until the respective
successors have been elected and qualified.

The following is a brief profile of the Corporations Directors and Officers for the year 2015-2016.

Jerry Liu, Chinese, 67 years old, was first elected as the Companys Chairman and President on 17 February
2011. He is concurrently President/CEO of CEC, Director of CLC and Cayon Holdings, Inc. and Chairman of
Silicon Link, Inc., Mr, Liu holds a Bachelor of Science degree in Physics from Chung Yuan University of
Taiwan and an MBA from the University of the East.

Nicanor Lizares, Filipino, 52 years old, was first elected as a director of the Company on 17 February 2011.
He is also a director of Abraaj Phil Advisers, Inc. and F Coffee. Mr. Lizares holds a Master in Science degree
in Industrial Economics from the Center for Research and Communications.

Anthony Albert S. Buyawe, Filipino, 48 years old, was first elected as the Companys Director, Treasurer,
and Chief Financial Officer (CFO) on 17 February, 2011. He is concurrently the CFO of CEC, CEIC, and the
Figaro Coffee Company. Prior to joining the Company, Mr. Buyawe was CFO of ITP Technologies (2003
2005) and SMEDC (2008-2009) and was a Senior Director of Ernst and Young (2005-2008). Mr. Buyawe
obtained his Bachelor of Arts degree from the University of the Philippines and his MBA from the Asian
Institute of Management.

Jorge Aguilar, Filipino, 58 years old, has been a director of the Company since 17 February, 2011. He joined
CEC in 1985 and is currently the EVP/General Manager of CEC, a position he has held since 2004. Mr.
Aguilar has a Bachelor of Science degree in Mechanical Engineering from the Manuel L. Quezon University
and an MBA from the Collegio de San Juan de Letran.

Rafael G. Estrada, Filipino, 63 years old, has been a director of the Company since 30 May 2013. He is
currently the Chairman and President of First National Holdings Corporation, Chairman of Ecovet Group
International, Inc., and Water for Calasiao, Inc. Previously, Mr. Estrada served as Vice Chairman of the
Social Security System, and served as director for Land Bank of the Philippines, Union Bank of the
Philippines, Manila Doctors Hospital, and Medical Center Manila. He obtained his Bachelor of Science
degree in Management from the University of Sto. Tomas and is an MBA candidate in the University of
Virginia.

Martin Ignacio P. Lorenzo, Filipino, 50 years old, was first elected as an Independent Director of the
Company on 17 February 2011. Mr. Lorenzo is the Chairman and CEO of First Lucky Holdings Corp., L.
Aldava Cojuangco Development Corp., PHI Culinary Arts, and Food Services Institute, Inc., Hospitality School
Management Group, Inc., CAT Resource & Asset Holdings Inc., Central Azucarera de Tarlac, Luisita Realty
Corp. and First Lucky Agro-Industrial Corp. He is also Chairman and President of First Lucky Property Corp.,
Macondray Philippines Co., Inc., Macondray Finance Corp, Macondray Insurance Brokers Corp., Marlor
Investment Corp, Blue Mountains Corp., Hospitality School Management Group, Inc., Cocosorbetero
Holdings, Inc., and International School for Culinary Arts & Hospitality Management QC. Mr. Lorenzo
graduated from the Ateneo de Manila University with a Bachelor of Science in Management Engineering
and earned his MBA from the Wharton Graduate School, University of Pennsylvania in 1990.

Ernest Fritz Server, Filipino, 72 years old, was first elected as an Independent Director of the Company on
17 February 2011. Mr. Server currently serves as the President of Superior Las Pias, Inc., President of 818
Aqua Farms, Inc., Chairman of Westview Properties, Inc., Chairman of Arrakis Holdings, Inc., Vice Chairman
121
of RFM Corporation, Vice Chairman of Philtown Properties, Inc., and a director of Philippine Township, Inc.
Previously, Mr. Server served as President of Philam Fund, Chairman of Filcredit Finance & Capital De.
Corporation, Vice Chairman of the Commercial Bank of Manila, Consumer Bank, and Cosmos Bottling
Company and President of Philippine Home Cable Holdings, Inc. and Philam Fund. Mr. Server graduated
from the Ateneo de Manila University in 1963 with a Bachelor of Arts degree Economics and holds an MBA
Major in Banking and Finance from the University of Pennsylvania, Wharton Graduate School.

Michael Stephen Liu, Filipino, 31 years old, is currently the General Manager of Cirtek Advanced
Technology and Solutions (CATSI) a newly acquired entity of the Company catering to the telecom and
wireless broadband space. He was first elected as Director on 11 May 2015. Michael was previously a
product engineer responsible for new products development, sales and customer support in Silicon Link,
Inc. from 2008 to 2011, and special projects development lead responsible for the evaluation and
implementation of new technologies and processes for the continuous product and package roadmap of
CEC from 2011 to 2014. Mr. Liu obtained his degree in Electronics and Communications Engineering from
De La Salle University in 2007 and is a licensed Electrical Engineer.

Brian Gregory T. Liu, Filipino, 29 years old, has been the Assistant Corporate Secretary of the Company
since March 2011. He was elected as Director on 11 May 2015. He is concurrently a stockholder in Cirtek
Electronics Corporation, Cirtek Land Corporation, and Turborg Trading. Mr. Liu trained as an Operations
Trainee in Dominos Pizza from 2001 to 2002, then as an Analyst in Evergreen Stockbrokerage & Securities
Inc. from 2003 to 2005. He obtained his degree in Management in Financial Institutions from De La Salle
University in 2009.

OFFICERS

Tadeo Hilado, Filipino, 63 years old, was elected as the Companys Corporate Secretary on 17 February
2011. Atty. Tadeo is a senior partner at the Angara Abello Concepcion Regala & Cruz law offices. He also
serves as director and corporate secretary of several companies including Cocoa Specialties, Inc., Nissan
Motor Philippines, Inc., Nissan Autoparts Manufacturing Corporation, Sumisetsu Philippines, Inc., and
Samsonite Philippines, Inc., among others. Atty. Tadeo holds a Bachelor of Arts degree from the De La Salle
University, Bachelor of Laws degree from the University of the Philippines and a Master of Laws degree
from the University of Michigan.

SIGNIFICANT EMPLOYEES

The Cirtek Group relies on the continued employment of, and its ability to attract, qualified engineers, key
managers, and technical personnel to ensure its continued success. To ensure that these persons will
remain with the Company, Cirtek Group relies on good relationship and provides attractive compensation
packages that combine standard remuneration and performance incentives. Furthermore, the Company
provides continuous training and development to managers and direct employees. These training sessions
include technical and managerial courses.

To ensure that these significant employees will not compete with the Company upon termination, they are
bound by employment contracts which have standard confidentiality, non-compete and non-solicitation
clauses.

FAMILY RELATIONSHIPS

As of the date of this Prospectus, family relationships (by consanguinity or affinity within the fourth civil
degree) between Directors and members of the Companys officers are as follows:

122
Jerry Liu, President, Chief Executive Officer, and Chairman of the Board of Directors, is the father of Michael
Stephen T. Liu, Director, and Brian Gregory T. Liu, Director and Assistant Corporate Secretary of the
Company.

Apart from the foregoing, there are no other family relationships up to the fourth civil degree either by
consanguinity or affinity among the directors or officers of the Company.

COMMITTEES OF THE BOARD

The Board created and appointed Board members to each of the committees set forth below. Each
member of the respective committees named below holds office as of the date of this Prospectus and will
serve until his successor is elected and qualified.

Nominations Committee
Martin Lorenzo - Chairman
Jerry Liu - Member
Nicanor P. Lizares - Member

Audit Committee
Ernest Fritz Server - Chairman
Anthony Albert S. Buyawe - Member
Jerry Liu - Member

Compensation Committee
Martin Lorenzo - Chairman
Anthony Albert S. Buyawe - Member
Jerry Liu - Member

EXECUTIVE COMPENSATION

The following are the Companys President and four most highly compensated officers for the period ended
30 June 2015:

Name & Position Year Salary Bonus

Jerry Liu (President) 2014 P 14.0 million P 2.0 million
Anthony Buyawe (CFO)
Jorge Aguilar (General Manager)
Antonio Callueng (Sales Director)
Raul Santiano (Vice President)
Aggregate compensation paid to all officers 2014 P 15.0 million P 3.0 million
and directors as a Cirtek Group unnamed

Name & Position Year Estimated Salary Estimated Bonus

Jerry Liu (President) 2015 P 25.0 million P 4.0 million
Anthony Buyawe (CFO)
Domingo Bonifacio (President CATS)
Rolando Enriquez (Vice President CATS)
Jorge Aguilar (President CEC)

Aggregate compensation paid to all officers 2015 P 30.0 million P 6.0 million
and directors as a Cirtek Group unnamed

123
COMPENSATION OF DIRECTORS

Under the By-Laws of the Company, by resolution of the Board, each director shall receive a reasonable per
diem allowance for his attendance at each meeting of the Board. As compensation, the Board shall receive
and allocate an amount of not more than ten percent (10%) of the net income before income tax of the
corporation during the preceding year. Such compensation shall be determined and apportioned among
directors in such manner as the Board may deem proper, subject to the approval of stockholders
representing at least majority of the outstanding capital stock at a regular or special meeting of the
stockholders.

STANDARD ARRANGEMENTS AND OTHER ARRANGEMENTS

There are no other arrangements for compensation either by way of payments for committee participation
or special assignments.

There are no other arrangements for compensation either by way of payments for committee participation
or special assignments other than reasonable per diem. There are also no outstanding warrants or options
held by the Companys Chief Executive Officer, other officers, and/or directors.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS

The Cirtek Group has executed employment contracts with some of its key officers. Such contracts provide
the customary provisions on job description, benefits, confidentiality, non-compete, and non-solicitation
clauses. There are no special retirement plans for executives. There is also no existing arrangement for
compensation to be received by any executive officer from the Company in the event of change in control
of the Company.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS OF DIRECTORS AND EXECUTIVE OFFICERS

None of the Companys directors, nominees for election as director, or executive officers have, in the five-
year period prior to the date of this Prospectus: (1) had any petition filed by or against any business of
which such person was a general partner or executive officer either at the time of the bankruptcy or within
a two-year period of that time, (2) have been convicted by final judgment in a criminal proceeding,
domestic or foreign, or have been subjected to a pending judicial proceeding of a criminal nature, domestic
or foreign, excluding traffic violations and other minor offenses, (3) have been the subject of any order,
judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending, or otherwise
limiting their involvement in any type of business, securities, commodities or banking activities, or (4) have
been found by a domestic or foreign court of competent jurisdiction (in a civil action), the SEC or
comparable foreign body, or a domestic or foreign exchange or other organized trading market or self-
regulatory organization, to have violated a securities or commodities law or regulation, such judgment
having not been reversed, suspended, or vacated.

CORPORATE GOVERNANCE

The Corporation is committed to the ideals of good corporate governance. In compliance with the SEC
requirement, the Corporation is studying best practices in good corporate governance to further improve
the current corporate governance practices of the Corporation and to develop an efficient and effective
evaluation system to measure or determine the level of compliance of the Board of Directors and top level
management with its Manual of Corporate Governance.

124
Corporate governance rules/principles were established to ensure that the interest of stakeholders are
always taken into account; that directors, officers, and employees are conducting business in a safe and
sound manner; and that transactions entered into between the Corporation and related interests are
conducted at arms length basis and in the regular course of business. There are no incidences of deviation
from the Corporations Manual of Corporate Governance.

The Corporation has sufficient number of independent directors that gives the assurance of independent
views and perspective.

125
 PRINCIPAL SHAREHOLDERS

The following table sets for the Stockholders of Record as of 15 September 2015:

Number of Common
Shares Subscribed
Names Nationality (P 1.00/share)
Camerton, Inc. Filipino 203,860,7816
PCD Nominee Filipino Filipino 134,434,043
PCD Nominee Non-Filipino Non-Filipino 679,924
Ambrosio J. Makalintal Jr. &/or Maripi A. Makalintal Filipino 94,089
Stephen G. Soliven Filipino 266
Julius Victor Emmanuel D. Sanvictores Filipino 145
Jesus San Luis Valencia Filipino 62
Owen Nathaniel S. Au ITF Li Marcus Au Filipino 33
Jorge Aguilar Filipino 1
Anthony Albert S. Buyawe Filipino 1
Brian Gregory Liu Filipino 1
Jerry Liu Chinese 1
Justin T. Liu Filipino 1
Michael Stephen Liu Filipino 1
Rafael Estrada Filipino 1
Nicanor P. Lizares Filipino 1
Martin Lorenzo Filipino 1
Ernest Fritz Server Filipino 1
TOTAL 339,063,353

Under PCD account, the following participants hold shares representing more than 5% of the companys
outstanding shares

Number of
Common
Shares Percentage to
Names Subscribed Total
Camerton, Inc. 203,860,7816 60.12%7
PCD Nominee Filipino 134,434,043 39.65%

Except as stated above, the corporation has no knowledge of any person or any Cirtek Group member who,
directly or indirectly, is the beneficial owner of more than 5% of the corporations outstanding shares or
who has a voting power, voting trust, or any similar agreement with respect to shares comprising more
than 5% of the corporations outstanding common stock.

6
Please note that this is exclusive of the additional 35,517,946 common shares owned by Camerton Inc. that are registered under PCD
Nominee Filipino Accounts.
7
The total percentage of common shares held by Camerton Inc. in CHPC, taking into account both those registered in the books of the
Corporation under its name and those registered under PCD Nominee Filipino Accounts is 70.6%.

126
Assuming the full exercise of the oversubscription option, the Option Shares will be drawn from the Selling
Shareholder, Camerton, Inc. Camerton, Inc. is the principal shareholder of the Company. The table below
sets forth, for the Selling Shareholder, the number of shares held by it before the Offer, the number of
shares to be sold by it in the Offer, and the number of shares to be owned by it immediately after the Offer.

No exercise of Full exercise of

Oversubscription Option Oversubscription Option
Common
% of
Common Share to be
Common Common
Shares to sold Common Common
Selling Shares held Shares
be sold in pursuant to Shares held % Shares held %
Shareholder before the outstanding
the Firm the Over- after the Offer after the Offer
Offer before the
Offer subscription
Offer
Option
8 9 8 10 8 11
Camerton, Inc. 203,860,781 60.125% - 40,000,000 203,860,781 48.65% 163,860,781 39.10%

Security Ownership of Certain Beneficial Owners and Management

The number of common shares beneficially owned by directors and executive officers as of 30 June 2015 is
as follows:

Name of Beneficial
Owner and No. of
Name, Address of Record Owner and Relationship with Shares
Title of Class Relationship with Issuer Record Owner Citizenship Held Percent
Common Jerry Liu Jerry Liu Chinese 1 0.0000
24 Buchanan St., North Greenhills, San N/A
Juan, Metro Manila
Chairman/President
Common Rafael G. Estrada Rafael G. Estrada Filipino 1 0.0000
39 Ifugao St., La Vista Subdivision, N/A
Quezon City
Director
Common Nicanor Lizares Nicanor Lizares Filipino 1 0.0000
6 Bahamas St., Loyola Grand Villas, N/A
Quezon City
Director/Vice President
Common Anthony Buyawe Anthony Buyawe Filipino 1 0.0000
561 Apricot St., La Marea Hills, San N/A
Pedro, Laguna
Director/Treasurer/CFO
Common Jorge Aguilar Jorge Aguilar Filipino 1 0.0000
Lot 10 Rosal St., Blk. 2 Ph. 2, Gainta N/A
Greenland Subdivision, Cainta Rizal
Director
Common Martin Lorenzo Martin Lorenzo Filipino 1 0.0000
2259 Pasong Tamo Extension, Makati N/A

8
Please note that this is exclusive of the additional 35,517,946 common shares owned by Camerton Inc. that are registered under PCD
Nominee Filipino Accounts.
9
The total percentage of common shares held by Camerton Inc. in CHPC, taking into account both those registered in the books of the
Corporation under its name and those registered under PCD Nominee Filipino Accounts is 70.6%.
10
The total percentage of common shares held by Camerton Inc. in CHPC, taking into account both those registered in the books of the
Corporation under its name and those registered under PCD Nominee Filipino Accounts is 57.12%.
11
The total percentage of common shares held by Camerton Inc. in CHPC, taking into account both those registered in the books of the
Corporation under its name and those registered under PCD Nominee Filipino Accounts is 47.58%

127
 City
Independent Director
Common Ernest Fritz Server Ernest Fritz Server Filipino 1 0.0000
319 Chico Drive, Ayala Alabang Village, N/A
Muntinlupa City
Independent Director
Common Michael Stephen Liu Michael Stephen Liu Filipino 1 0.0000
24 Buchanan St., North Greenhills, San N/A
Juan, Metro Manila
Director
Common Brian Gregory Liu Brian Gregory Liu Filipino 1 0.0000
24 Buchanan St., North Greenhills, San N/A
Juan, Metro Manila
Director/Assistant Corporate Secretary

Voting Trust Holder of 5% or More

The Company is not aware of any person holding more than 5% of the common shares of the corporation
under a voting trust or similar agreement as there has been no voting trust agreement which has been filed
with the corporation and the Securities and Exchange Commission.

Description of any arrangement which may result in a change in control of the corporation

No change in control of the corporation has occurred since the beginning of the last fiscal year.

Issuance of Preferred Shares by the Corporation

On 23 July 2015, the Philippine SEC approved the increase in the authorized capital stock of the Corporation
and the amendment to its Articles of Incorporation, which included the creation of four hundred million
(400,000,000) preferred shares with a par value of Ten Centavos (P 0.10) per share. Four hundred million
(400,000,000) preferred shares were issued to Camerton, Inc. The preferred shares have full voting rights
and are entitled to non-cumulative cash dividends at the rate of one per cent (1%) of their par value per
year, with no participation in further cash dividends, which may be declared and paid to the common
shares. They are also entitled to same stock dividends, which may be declared and paid to the common
shares.

128
 RELATED PARTY TRANSACTIONS

The Liu family, primarily through Camerton, is the largest shareholder in the Corporation, and as of 30 June
2015 owns 203,860,781 common shares registered in the books of the Corporation under its name and
additional 35,517,946 common shares registered under PCD Nominee Filipino accounts, or approximately
70.6% of the Corporations issued and outstanding common shares.

On 24 March 2015 and 11 May 2015, the Board and the stockholders, respectively, approved the increase
in the authorized capital stock of the Company. On 23 July 2015, the SEC approved the Companys
application to increase its authorized capital stock by 160,000,000.00 or from 400,000,000.00 divided
into 400,000,000 common shares with a par value of 1.00 per share, to 560,000,000.00 divided into
520,000,000 common shares with a par value of 1.00 per share and 400,000,000 preferred shares with a
par value of 0.10 per share.

The 400,000,000 preferred shares were issued to Camerton, a principal shareholder of the Corporation
which presently beneficially owns 70.6% of the Companys total issued and outstanding shares. The
issuance of 100,000,000 Preferred Shares to Camerton was approved by the Board of Directors of the
Company on 24 March 2015 and the issuance of an additional 300,000,000 Preferred Shares on 15 June
2015 during its special meetings.

As a result of the issuance of 400,000,000 preferred shares to Camerton, Camerton now holds 70.6% of the
total issued and outstanding common shares of the Company and 100% of the total issued and outstanding
preferred shares of the Company. In the aggregate, Camerton presently owns 86.5% of the total issued and
outstanding shares of the Company.

Parties are considered to be related if one party has the ability to control, directly or indirectly, 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. Related parties may be
individuals or corporate entities.

In the normal course of business, the Group has entered into transactions with affiliates. The significant
transactions consist of the following:

a. Advances for operating requirements of CHI, former parent of CEC and CEIC;
b. Rental of land and lease deposit with CLC, an affiliate, where the manufacturing building 1 and
administrative building are situated;
c. Payments and /or reimbursements of expenses made in behalf of the affiliates;
d. Rental of land from Cayon Holdings, Inc. (Cayon), an affiliate, where building 2 of the Company is
situated.

The consolidated balance sheets and consolidated statements of income include the following significant
account balances resulting from the above transactions with related parties:

129
 a. Amounts owed to related parties

Amount as of the six months Amounts owed to related

ended June 30 parties
Balances as
Balances as
Amounts as of Amounts as at
Nature of at June 30,
2015 of 2014 December Terms Conditions
Transactions 2015
(Unaudited) (Unaudited) 31, 2014
(Unaudited)
(Audited)
Other related parties
CLC Rental $6,965 ($6,841) $427,644 $420,679 Due and Unsecured
demandable;
non-interest
bearing

Cayon Rental $6,073 $6,215 $55,541 $49,468 Due and Unsecured

demandable;
non-interest
bearing
$13,038 $13,056 $483,185 $470,147

b. Amounts owed by related parties

Volume Outstanding Balances

Nature of Balances as at Transactions Balances as at Balances as Terms Conditions
Transactions 2015 as of June 30, June 30, 2015 at December
(Unaudited) 2014 (Unaudited) 31, 2014
(Audited)
Other related parties
CHI Advances for $ $ $1,809,256 $1,809,256 Due and Unsecured; no
working capital demandable; impairment
non-interest
bearing

Cayon Reimbursement 206,284 206,284 Due and Unsecured; no

of expenses demandable; impairment
non-interest
bearing

Camerton, Reimbursement 33,161 33,161 Due and Unsecured; no

Inc. of expenses demandable; impairment
non-interest
bearing

Jerry Liu Reimbursement $710,866 662 $3,785,243 $3,074,377 Due and Unsecured; no
of expenses demandable; impairment
non-interest
bearing
$710,866 $662 $5,833,944 $5,123,078

130
c. Rental deposit

Outstanding Balances
Amount (see Note 9)
Amounts as at six Amounts as at Balances as
months ended June six months at June 30, Balances as at
30, 2015 ended June 30, 2014 December 31,
(Unaudited) 2014 (Unaudited) 2014 (Audited) Terms Conditions
Other related party
Due and
demandable; Unsecured;
non-interest no
CLC $ $ $1,131,399 $1,131,399 bearing impairment

The above related parties are under common ultimate ownership with the Group.

In 2011, the Group entered into the following assignments and set-off agreements with the related parties
as part of its corporate restructuring:

Transactions with CHI, Charmview Enterprises Ltd. (CEL), and officer

The amount owed by an officer amounting to $7.7 million as of 31 December 2010 was transferred in 2011
to CEL, the former ultimate parent of CEC and CEIC. CEL now owns 40% interest in Camerton, the parent of
the Parent Company.

The amounts owed by and to CHI as of 31 December 2010 represent advances for working capital lines in
the normal course of business when CEC and CEIC were then still subsidiaries of CHI.

For purposes of settling outstanding balances with the Group and as part of corporate restructuring in
preparation for the planned IPO of the Parent Company, on 17 March 2011:

CHI, CEL and the officer, with the consent of the Group, entered into assignment agreements
whereby CHI absorbed the amounts owed by CEL and by the officer as of 17 March 2011
amounting to $7.7 million and $0.8 million, respectively.

The Group, with the consent of the related parties, entered into assignment agreements whereby
the Parent Company absorbed the amount owed by CEIC to CHI totalling
$3.6 million representing unpaid advances of $2.3 million and dividends of $1.3 million
as of 17 March 2011.

Thereafter, on 18 March 2011, the Parent Company and CHI, in view of being creditors and debtors to each
other as a result of the assignment agreements above, entered into a set-off agreement for the value of the
Groups liability aggregating $6.8 million. The amount represents the above mentioned total liability of
$3.6 million and the balance outstanding from the Parent Companys purchase of CEC and CEIC amounting
to $3.2 million, as revalued from the effect of foreign exchange rate.

The amount owed by CHI as of 30 June 2015 and 31 December 2014 pertains to the remaining balance of
receivable as a result of the assignments and set-off agreements as discussed above.

Transactions with Camerton

131
Camerton is the majority shareholder of the Parent Company holding 70.6% interest. Amounts owed by
Camerton as of 30 June 2015, and December 31, 2014 pertain mainly to advances for incorporation
expenses of Camerton.

Transactions with CLC and Cayon

CLC is an entity under common ownership with the ultimate parent. CEC had a lease agreement on the
land where its manufacturing plant (Building 1) is located with CLC for a period of 50 years starting 1
January 1999. The lease was renewable for another 25 years at the option of CEC. The lease agreement
provided for an annual rental of $151,682, subject to periodic adjustments upon mutual agreement of both
parties.

On 1 January 2005, CEC terminated the lease agreement with CLC but has continued to occupy the said
land for no consideration with CLCs consent. With the termination of the lease agreement, the Group has
classified the rental deposit amounting to $1.1 million as current asset as the deposit has become due and
demandable anytime from CLC.

On 1 January 2011, CEC entered into an agreement with CLC to lease the land where CECs Building 1 is
located. The agreement calls for a P
=640,704 rent per annum for a period of ten (10) years, renewable
thereafter by mutual agreement of the parties subject to such new terms and conditions as they may then
be mutually agreed-upon. Total rent expense charged to operations amounted to $7,191 and $7,200 for
the six months ended 30 June 2015 and 2014, respectively.

CEC also entered into an agreement with Cayon starting 1 January 2011 to lease the land where CECs
Building 2 is located. The agreement calls for an annual rental of P
=582,144 for a period of ten (10) years and
renewable thereafter. Total rent expense charged to operations amounted to $6,534 and $6,543 for the six
months ended 30 June 2015 and 2014, respectively.

Please refer to the notes to the financial statements of CEC, CEIC, and CATS for a similar discussion on
related party transactions.

The compensation of key management personnel of the Group are as follows:

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Salaries and wages $622,161 $379,848
Employee benefits 133,020 214,779
$755,181 $594,627

132
 DESCRIPTION OF THE OFFER SHARES

The shares to be offered shall be Common Shares of the Company.

Pursuant to its articles of incorporation as amended on 23 July 2015, the Company has an authorized
capital stock of 560,000,000.00 divided into 520,000,000 Common Shares with a par value of 1.00 per
share and 400,000,000 Preferred Shares with a par value of 0.10 per share. As of 30 June 2015,
339,063,353 Common Shares and 400,000,000 Preferred Shares are issued and outstanding. The Offer
Shares by way of a primary offering are Common Shares of the Company which will be from the increase in
the authorized capital stock.

The Offer Shares shall be offered at a price of 20.00 per Offer Share. The determination of the Offer Price
is further discussed on page 52 of this Prospectus. A total of 419,063,353 Common Shares will be
outstanding after the Offer. The Offer Shares will comprise up to 28.64% of the outstanding Common
Shares after the Offer, assuming full exercise of the Oversubscription Option.

Share Capital

A Philippine corporation may issue common or preferred shares, or such other classes of shares with such
rights, privileges, or restrictions as may be provided for in the articles of incorporation and by-laws of the
corporation. Subject to the approval by the Philippine SEC, it may increase or decrease its authorized
capital stock by amending its articles of incorporation, provided that the change is approved by a majority
of the board of directors and by shareholders representing at least two-thirds of the outstanding capital
stock of the corporation voting at a shareholders meeting duly called for the purpose.

Under Philippine law, the shares of a corporation may either be with or without a par value. The Common
Shares currently issued have a par value of 1.00 per share, while the Preferred Shares will have a par value
of P0.10 per share. In the case of par value shares, where a corporation issues shares at a price above par,
whether for cash or otherwise, the amount by which the subscription price exceeds the par value is
credited to an account designated as additional paid-in capital or paid-in surplus.

A corporation is empowered to acquire its own shares for a legitimate corporate purpose, provided that
the corporation has unrestricted retained earnings or surplus profits sufficient to pay for the shares to be
acquired. Examples of instances in which the corporation is empowered to purchase its own shares are:
when the elimination of fractional shares arising out of share dividends is necessary or desirable, the
purchase of shares of dissenting shareholders exercising their appraisal right (as discussed below), and the
collection or compromise of an indebtedness arising out of an unpaid subscription. When a corporation
repurchases its own shares, the shares become treasury shares, which may be resold at a price fixed by the
board of directors of such corporation.

The Board is authorized to issue shares from treasury from time to time. Treasury shares may be issued to
any person, corporation, or association, whether or not a shareholder of the Company, including its officers
or employees for such consideration in money as the Board may determine.

Voting Rights

The Companys Common Shares and Preferred Shares have full voting rights. However, the Philippine
Corporation Code provides that voting rights cannot be exercised with respect to shares declared by the
board of directors as delinquent, treasury shares, or if the shareholder has elected to exercise his right of
appraisal referred to below.

133
Dividend Rights

Under the Philippine Corporation Code, dividends may be paid out of the Unrestricted Retained Earnings of
the Company, as and when the Board of Directors may elect, subject to legal requirements. The
Unrestricted Retained Earnings represent the undistributed earnings of the Company which have not been
allocated for any managerial, contractual, or legal purposes and which are free for distribution to the
shareholders as dividends. Dividends are payable to all shareholders on the basis of outstanding shares of
the Company held by them, each share being entitled to the same unit of dividend as any other share.
Dividends are payable to shareholders whose name are recorded in the stock and transfer book as of the
record date fixed by the Board of Directors. The PSE has an established mechanism for distribution of
dividends to beneficial owners of shares which are traded through the PSE which are lodged with the PCD
Nominee as required for scripless trading.

See Dividends and Dividend Policy beginning on page 50 of this Prospectus.

Pre-Emptive Rights

The Philippine Corporation Code confers pre-emptive rights on the existing shareholders of a Philippine
corporation which entitle such shareholders to subscribe to all issues or other dispositions of shares of any
class by the corporation in proportion to their respective shareholdings, regardless of whether the shares
proposed to be issued or otherwise disposed of are identical to the shares held. A Philippine corporation
may, however, provide for the denial of these pre-emptive rights in its articles of incorporation. Likewise,
shareholders who are entitled to such pre-emptive rights may waive the same through a written
instrument to that effect.

The Companys Articles of Incorporation have denied pre-emptive rights on all classes of shares issued by
the Company and therefore further issues of shares (including treasury shares) can be made without
offering such shares on a pre-emptive basis to the existing shareholders.

Derivative Rights

Philippine law recognizes the right of a shareholder to institute proceedings on behalf of the corporation in
a derivative action in circumstances where the corporation itself is unable or unwilling to institute the
necessary proceedings to redress wrongs committed against the corporation or to vindicate corporate
rights as, for example, where the directors of the corporation themselves are the malefactors.

Appraisal Rights

The Philippine Corporation Code grants a shareholder a right of appraisal and demand payment of the fair
value of his shares in certain circumstances where he has dissented and voted against a proposed
corporate action, including:
an amendment of the articles of incorporation which has the effect of adversely affecting the rights
attached to his shares or of authorizing preferences in any respect superior to those of outstanding
shares of any class,
the extension of the term of corporate existence,
the sale, lease, exchange, transfer, mortgage, pledge, or other disposal of all or substantially all the
assets of the corporation,
a merger or consolidation, and

134
 investment by the corporation of funds in any other corporation or business or for any purpose
other than the primary purpose for which it was organized.

In any of these circumstances, the dissenting shareholder may require the corporation to purchase its
shares at a fair value, which, in default of agreement, is determined by three disinterested persons, one of
whom shall be named by the shareholder, one by the corporation, and the third by the two thus chosen.
Regional Trial Courts will, in the event of a dispute, determine any question about whether a dissenting
shareholder is entitled to this right of appraisal. From the time the shareholder makes a demand for
payment until the corporation purchases such shares, all rights accruing on the shares, including voting and
dividend rights, shall be suspended, except the right of the shareholder to receive the fair value of such
shares. No payment shall be made to any dissenting shareholder unless the corporation has Unrestricted
Retained Earnings sufficient to support the purchase of the shares of the dissenting shareholders.

Right of Inspection

A shareholder has the right to inspect the records of all business transactions of the corporation and the
minutes of any meeting of the board of directors and shareholders at reasonable hours on business days
and may demand a copy of excerpts from such records or minutes at his or her expense. However, the
corporation may refuse such inspection if the shareholder demanding to examine or copy the corporations
records has improperly used any information secured through any prior examination, or was not acting in
good faith or for a legitimate purpose in making his demand.

Right to Financial Statements

A shareholder has a right to be furnished with the most recent financial statement of a Philippine
corporation, which shall include a balance sheet as of the end of the last taxable year and a profit or loss
statement for said taxable year, showing in reasonable detail its assets and liabilities and the results of its
operations. At the meeting of shareholders, the board of directors is required to present to the
shareholders a financial report of the operations of the corporation for the preceding year, which shall
include financial statements duly signed and certificate by an independent certified public accountant.

Board of Directors

Unless otherwise provided by law or in the articles of incorporation, the corporate powers of the Company
are exercised, its business conducted, and its property controlled by the Board. Pursuant to its articles of
incorporation, as amended, the Company shall have nine Directors, two of whom are independent
Directors within the meaning set forth in Section 38 of the SRC. The Board shall be elected during each
regular meeting of shareholders, at which shareholders representing at least a majority of the issued and
outstanding capital shares of the Company are present, either in person or by proxy.

Under Philippine law, representation of foreign ownership on the Board is limited to the proportion of the
foreign shareholding. Directors may only act collectively, and individual directors have no power to bind the
Company unless specially authorized by the Board. Five directors, which is a majority of the Board,
constitute a quorum for the transaction of corporate business. Except for certain corporate actions such as
the election of officers, which shall require the vote of a majority of all the members of the Board, every
decision of a majority of the quorum duly assembled as a board is valid as a corporate act.

Any vacancy created by the death, resignation, or removal of a director prior to expiration of such directors
term shall be filled by a vote of at least a majority of the remaining members of the Board, if still
constituting a quorum Otherwise, the vacancy must be filled by the shareholders at a meeting duly called
for the purpose. Any director elected in this manner by the Board shall serve only for the unexpired term of
the director whom such director replaces and until his successor is duly elected and qualified.

135
Shareholders Meetings

Annual or Regular Shareholders Meetings

The Philippine Corporation Code requires all Philippine corporations to hold an annual meeting of
shareholders for corporate purposes including the election of directors. The By-laws of the Company, as
amended on 19 April 2013, provide for annual meetings on the last Friday of May of each year to be held at
the principal office of the Company and at such hour as specified in the notice.

Special Shareholders Meeting

Special meetings of shareholders, for any purpose or purposes, may at any time be called by either a
majority of the Board of Directors or at the request of shareholders representing one-third of the
subscribed capital

Notice of Shareholders Meeting

Whenever shareholders are required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date, and time of the meeting, and the purpose or
purposes for which the meeting is called. The Companys By-laws provide that notices of the time and place
of the annual and special meetings of the shareholders shall be given either by mailing the same, addressed
to each shareholder of record at the address left by such shareholder with the Secretary of the Company,
by delivering the same to him in person, or by sending electronically or by e-mail to each shareholder who
have consented to receive notices, information, or documents in such form at least 15 days before the date
set for such meeting. Notice to any special meeting must state, among others, the matters to be taken up
in the said meeting, and no other business shall be transacted at such meeting except by consent of all the
shareholders present, entitled to vote. No notice of meeting need be published in any newspaper, except
when necessary to comply with the special requirements of the Philippine Corporation Code. Shareholders
entitled to vote may, by written consent, waive notice of the time, place, and purpose of any meeting of
shareholders and any action taken at such meeting pursuant to such waiver shall be valid and binding.
When the meeting of the shareholders is adjourned to another time or place, notice of the adjourned
meeting need not be provided so long as the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken. At the reconvened meeting, any business
may be transacted that might have been transacted on the original date of the meeting.

Quorum

Unless otherwise provided by an existing shareholders agreement or by law, in all regular or special
meeting of shareholders, a majority of the outstanding capital shares must be present or represented in
order to constitute a quorum, except in those cases where the Philippine Corporation Code provides a
greater percentage vis--vis the total outstanding capital shares. If no quorum is constituted, the meeting
shall be adjourned until the requisite amount of shares shall be presented.

Pursuant to the Companys By-laws, the chairman of the board, or in case of his absence or disability, the
vice chairman of the board, may then call to order any meeting of the shareholders, and proceed to the
transaction of business, provided a majority of the shares issued and outstanding is present, either in
person or by proxy. If there be no quorum present at any meeting, the meeting may be adjourned by the
shareholders present from time to time until the quorum shall be obtained. If neither the chairman nor the
vice chairman of the board is present, then the meeting is to be conducted by the president, and in case
the latter is also absent, by the senior director or by the oldest director, if several became directors on the
same date.

136
Voting

At all meetings of shareholders, a holder of Common Shares and Preferred Shares, may vote in person or by
proxy, for each share held by such shareholder.

Fixing Record Dates

Under existing Philippine SEC rules, cash dividends declared by corporations whose shares are listed on the
PSE shall have a record date which shall not be less than 10 or more than 30 days from the date of
declaration. With respect to stock dividends, the record date shall not be less than 10 or more than 30 days
from the date of shareholder approval, provided, however, that the record date set shall not be less than
10 trading days from receipt by the PSE of the notice of declaration of share dividends. In the event that
share dividends are declared in connection with an increase in the authorized capital shares, the
corresponding record date shall be fixed by the Philippine SEC.

Matters Pertaining to Proxies

Shareholders may vote at all meetings the number of shares registered in their respective names, either in
person or by proxy duly given in writing and duly presented to the Corporate Secretary before or during the
meeting. Unless otherwise provided in the proxy, it shall be valid only for the meeting at which it has been
presented to the Corporate Secretary.

Proxies should comply with the relevant provisions of the Philippine Corporation Code, the SRC, the IRRs,
and Philippine SEC Memorandum Circular No. 5 (series of 1996) issued by the Philippine SEC.

Dividends

The Common Shares of the Company have full dividend rights. Dividends on the Companys Common
Shares, if any, are paid in accordance with Philippine law. Dividends are payable to all Common
shareholders on the basis of outstanding Common Shares held by them, each Common Share being entitled
to the same unit of dividend as any other Common Share.

Preferred Shares are entitled to preferred non-cumulative cash dividends at the rate of one per cent (1%) of
their value per year, and no more, with no participation in further cash dividends which may be declared
and paid to the Common Shares or any other class or series of shares. However, Preferred Shares are
entitled to the same stock dividends which may be declared and paid to the Common Shares or any other
class or series of shares.

Dividends are payable to shareholders whose names are recorded in the stock and transfer book as of the
record date fixed by the Companys Board of Directors. The PSE has an established mechanism for
distribution of dividends to beneficial owners of Common Shares which are traded through the PSE which
are lodged with the PCD Nominee as required for scripless trading.

Transfer of Shares and Share Register

All transfers of shares on the PSE shall be effected by means of a book-entry system. Under the book-entry
system of trading and settlement, a registered shareholder shall transfer legal title over the shares to a
nominee, but retains beneficial ownership over the shares. The transfer of legal title is done by
surrendering the stock certificate representing the shares to participants of the PDTC System (i.e., brokers
and custodian banks) that, in turn, lodge the same with the PCD Nominee Corporation, a corporation
wholly-owned by the PDTC (the PCD Nominee). A shareholder may request upliftment of the shares from
the PDTC, in which case a stock certificate will be issued to the shareholder and the shares registered in the

137
shareholders name in the books of the Company. See The Philippine Stock Market beginning on page
144 of this Prospectus.

Philippine law does not require transfers of the Common Shares to be effected on the PSE, but any off-
exchange transfers will subject the transferor to a capital gains tax that may be significantly greater than
the share transfer tax applicable to transfers effected on the PSE. See Philippine Taxation beginning on
page 150 of this Prospectus. All transfers of shares on the PSE must be effected through a licensed
stockbroker in the Philippines.

There are no existing provisions in the Companys amended articles of incorporation or the amended by-
laws which will delay, defer, or in any manner prevent a change in control of the Company.

Issues of Shares

Subject to otherwise applicable limitations, the Company may issue additional Common or Preferred Shares
to any person for consideration deemed fair by the Board, provided that such consideration shall not be
less than the par value of the issued Common or Preferred Shares. No share certificates shall be issued to a
subscriber until the full amount of the subscription together with interest and expenses (in case of
delinquent shares) has been paid and proof of payment of the applicable taxes shall have been submitted
to the Companys Corporate Secretary. Under the PSE Rules, only fully-paid shares may be listed on the
PSE.

Share Certificates

Share certificates will be issued in such denominations as shareholders may request, except that
certificates will not be issued for fractional shares. Shareholders wishing to split their certificates may do so
upon application to the Companys share transfer agent, BDO Unibank, Inc. Trust Banking Group, which
will maintain the share register. Common Shares may also be lodged and maintained under the book-entry
system of the PDTC. See The Philippine Stock Market beginning on page 144 of this Prospectus.

Mandatory Tender Offers

In general, under the SRC and the IRRs, any person or group of persons acting in concert and intending to
acquire at least (1) 35% of any class of any equity security of a public or listed corporation in a single
transaction, or (2) 35% of such equity over a period of 12 months, or (3) even if less than 35% of such
equity, if such acquisition would result in ownership by the acquiring party of over 51% of the total
outstanding equity, is required to make a tender offer to all the shareholders of the target corporation on
the same terms. Generally, in the event that the securities tendered pursuant to such an offer exceed that
which the acquiring person or group of persons is willing to take up, the securities shall be purchased from
each tendering shareholder on a pro rata basis, disregarding fractions, according to the number of
securities tendered by each security holder. Where a mandatory tender offer is required, the acquirer is
compelled to offer the highest price paid by him for such shares during the past six months. Where the
offer involves payment by transfer or allotment of securities, such securities must be valued on an
equitable basis. However, if any acquisition of even less than 35% would result in ownership of over 51% of
the total outstanding equity, the acquirer shall be required to make a tender offer for all the outstanding
equity securities to all remaining shareholders of the said corporation at a price supported by a fairness
opinion provided by an independent financial adviser or equivalent third party. The acquirer in such a
tender offer shall be required to accept any and all securities thus tendered.

No Mandatory Tender Offer is required in: (i) purchases of shares from unissued capital shares unless it will
result to a 50% or more ownership of shares by the purchaser, (ii) purchases from an increase in the
authorized capital shares of the target company, (iii) purchases in connection with a foreclosure
proceedings involving a pledge or security where the acquisition is made by the debtor or creditor, (iv)

138
purchases in connection with privatization undertaken by the government of the Philippines, (v) purchases
in connection with corporate rehabilitation under court supervision, (vi) purchases through an open market
at the prevailing market price, or (vii) purchases resulting from a merger or consolidation.

Fundamental Matters

The Philippine Corporation Code provides that certain significant acts may only be implemented with
shareholders approval. The following require the approval of shareholders representing at least two-thirds
of the issued and outstanding capital shares of the corporation in a meeting duly called for the purpose:

amendment of the articles of incorporation,

removal of directors,

sale, lease, exchange, mortgage, pledge or other disposition of all or a substantial part of the assets
of the corporation,

investment of corporate funds in any other corporation or business or for any purpose other than
the primary purpose for which the corporation was organized,

declaration or issuance of share dividends,

delegation to the board of directors of the power to amend or repeal by-laws or adopt new by-
laws,

merger or consolidation,

dissolution,

an increase or decrease in capital shares,

ratification of a contract of a directors or officer with the corporation,

extension or shortening of the corporate term,

creation or increase of bonded indebtedness, and

management contracts with related parties,

The approval of shareholders holding a majority of the outstanding capital shares of a Philippine
corporation, including non-voting preferred shares, is required for the adoption or amendment of the by-
laws of such corporation.

Accounting and Auditing Requirements

Philippine stock corporations are required to file copies of their annual financial statements with the
Philippine SEC. In addition, public corporations are required to file quarterly financial statements (for the
first three quarters) with the Philippine SEC. Those corporations whose shares are listed on the PSE are
additionally required to file said quarterly and annual financial statements with the PSE. Shareholders are
entitled to request copies of the most recent financial statements of the corporation which should include a
statement of financial position as of the end of the most recent tax year and a profit and loss statement for

139
that year. Shareholders are also entitled to inspect and examine the books and records that the corporation
is required by law to maintain.

The Board is required to present to shareholders at every annual meeting a financial report of the
operations of the Company for the preceding year. This report is required to include audited financial
statements.

140
 MARKET PRICE OF THE COMPANYS STOCK AND RELATED STOCKHOLDER MATTERS

Market Information

The Companys Common Shares are traded on the PSE under the symbol TECH.

The following table sets out, for the periods indicated, the high and low sales prices for the Companys
Common Shares, as reported on the PSE:

High (in ) Low (in )

2012
First quarter 8.26 7.61
Second quarter 9.70 8.05
Third quarter 11.94 8.70
Fourth quarter 26.00 11.76
2013
First quarter 28.50 17.80
Second quarter 18.50 14.00
Third quarter 16.20 13.80
Fourth quarter 14.90 9.82
2014
First quarter 14.40 12.12
Second quarter 14.50 14.10
Third quarter 15.80 10.08
Fourth quarter 19.00 12.00
2015
First quarter 31.00 18.00
Second quarter 32.09 24.50
Third quarter 27.60 25.75

On 23 October 2015, the closing price of TECH Common Shares on the PSE was 24.90 per Common Share.

On 23 September 2015, the PSE approved the listing of the Offer Shares on the PSE subject to the
fulfillment of certain conditions.

141
Holders

As of 15 September 2015, the total number of subscribed shares of stock of the Company is three hundred
thirty nine million sixty three thousand three hundred fifty three (339,063,353) common shares with a par
value of one peso (P1.00) per share. The table below sets forth the effect of the follow-on offering on the
number and percentage of common shares held by the Companys local and foreign shareholders:

Number of
Common
Number of Number of Shares Held
Common Common after exercise of
Shares Shares Held the
Subscribed Percentage after the Firm Percentage Oversubscriptio Percentage
Names Nationality (P 1.00/share) to Total Offer to Total n Option to Total
12 13 12 14 12 15
Camerton, Inc. Filipino 203,860,781 60.125% 203,860,781 48.65% 163,860,781 39.10%
PCD Nominee Filipino Filipino 134,434,043 39.649% 214,434,043 51.17% 254,434,043 60.71%
PCD Nominee Non- Non-Filipino 673,924 0.199% 673,924 0.16% 673,924 0.16%
Filipino
Ambrosio J. Filipino 94,089 0.028% 94,089 0.022% 94,089 0.022%
Makalintal Jr. &/or
Maripi A. Makalintal
Stephen G. Soliven Filipino 266 0 266 0 266 0
Julius Victor Filipino 145 0 145 0 145 0
Emmanuel D.
Sanvictores
Jesus San Luis Filipino 62 0 62 0 62 0
Valencia
Owen Nathaniel S. Au Filipino 33 0 33 0 33 0
ITF Li Marcus Au
Jorge Aguilar Filipino 1 0 1 0 1 0
Anthony S. Buyawe Filipino 1 0 1 0 1 0
Brian Gregory Liu Filipino 1 0 1 0 1 0
Jerry Liu Chinese 1 0 1 0 1 0
Justin T. Liu Filipino 1 0 1 0 1 0
Michael Stephen Liu Filipino 1 0 1 0 1 0
Rafael Estrada Filipino 1 0 1 0 1 0
Nicanor P. Lizares Filipino 1 0 1 0 1 0
Martin Lorenzo Filipino 1 0 1 0 1 0
Ernest Fritz Server Filipino 1 0 1 0 1 0
TOTAL 339,063,353 100% 419,063,353 100% 419,063,353 100%

The issuance of additional shares resulting from the follow-on offering will affect the percentage of the
Companys shares beneficially owned by foreigners in the following manner:

Common Common Shares Nationality

Shares Nationality Nationality Subscribed after Composition after
Subscribed Composition Common Shares Composition Exercise of the Exercise of the
before the before the Subscribed after after the Firm Oversubscription Oversubscription
Nationality Offer Offer the Firm Offer Offer Option Option
Filipino 338,389,428 99.80% 418,389,428 99.84% 418,389,428 99.84%
Foreign 673,925 0.20% 673,925 0.16% 673,925 0.16%

12
Please note that this is exclusive of the additional 35,517,946 common shares owned by Camerton Inc. that are registered under PCD
Nominee Filipino Accounts.
13
The total percentage of common shares held by Camerton Inc. in CHPC, taking into account both those registered in the books of the
Corporation under its name and those registered under PCD Nominee Filipino Accounts is 70.6%.
14
The total percentage of common shares held by Camerton Inc. in CHPC, taking into account both those registered in the books of the
Corporation under its name and those registered under PCD Nominee Filipino Accounts is 57.12%.
15
The total percentage of common shares held by Camerton Inc. in CHPC, taking into account both those registered in the books of the
Corporation under its name and those registered under PCD Nominee Filipino Accounts is 47.58%.

142
 TOTAL 339,063,353 100.00% 419,063,353 100.00% 419,063,353 100.00%

In the last three (3) years, the Company filed Notice of Exempt Transaction with the SEC under SRC Rule
10.1, seeking for exemptive relief from SEC registration under SRC 10.1 (d) for its stock dividend
declaration. Below is the table summarizing the filing of Notice of Exempt Transaction made in relation to
the Companys stock dividend declarations.

Stock Dividends
No. of DECLARATION DATE DATE OF FILING RECORD DATE PAYMENT DATE
Shares NOTICE OF EXEMPT
for Stock TRANSACTION
Dividend
32,432,600 25 May 2012 21 June 2012 08 June 2012 29 June2012
38,919,119 7 December 2012 21 December 2012 21 December 2012 10 January 2013
46,702,943 9 March 2013 25 March 2013 25 March 2013 23 April 2013
28,021,765 11 July 2014 15 July 2014 25 July 2014 20 August 2014
30,823,937 11 May 2015 21 May 2015 26 May 2015 18 June 2015

143
 THE PHILIPPINE STOCK MARKET

The information presented in this section has been extracted from publicly available documents which have
not been prepared or independently verified by the Company and the Joint Lead Underwriters, or any of its
respective subsidiaries, affiliates or advisors in connection with the offer and sale of the Offer Shares.

Brief History

The Philippines initially had two stock exchanges, the Manila Stock Exchange, which was organized in 1927,
and the Makati Stock Exchange, which began operations in 1963. Each exchange was self-regulating,
governed by its respective Board of Governors elected annually by its members.

Several steps initiated by the Philippine government have resulted in the unification of the two bourses into
the PSE. The PSE was incorporated in 1992 by officers of both the Makati and the Manila Stock Exchanges.
In March 1994, the licenses of the two exchanges were revoked. While the PSE maintains two trading
floors, one in Makati City and the other in Pasig City, these floors are linked by an automated trading
system, which integrates all bids, and ask quotations from the bourses.

In June 1998, the SEC granted the Self-Regulatory Organization (SRO) status to the PSE, allowing it to
impose rules as well as implement penalties on erring trading participants and listed companies. On 8
August 2001, the PSE completed its demutualization, converting from a non-stock member-governed
institution into a stock corporation in compliance with the requirements of the SRC.

The PSE has an authorized capital stock of 120,000,000 million shares, of which 73,480,409 shares were
issued and 73,480,397 million shares are outstanding as of the date of this Prospectus. Each of the 184
member-brokers was granted 50,000 common shares of the new PSE at a par value of 1.00 per share. In
addition, a trading right evidenced by a Trading Participant Certificate was immediately conferred on
each member-broker allowing the use of the PSEs trading facilities. As a result of the demutualization, the
composition of the PSE Board of Governors was changed, requiring the inclusion of seven brokers and eight
non-brokers, one of whom is the President.

On December 15, 2003, the PSE listed its shares by way of introduction at its own bourse as part of a series
of reforms aimed at strengthening the Philippine securities industry. As of the date of this Prospectus,
73,480,409 million PSE shares are listed.

Classified into financial, industrial, holding firms, property, services, and mining and oil sectors, companies
are listed either on the PSEs Main Board or the Small, Medium and Emerging Board. Recently, the PSE
issued Rules on Exchange Traded Funds (ETF) which provides for the listing of ETFs on an ETF Board
separate from the PSEs existing boards. Previously, the PSE allowed listing on the First Board, Second
Board or the Small, Medium and Enterprises Board. With the issuance by the PSE of Memorandum No. CN-
No. 2013-0023 dated 6 June 2013, revisions to the PSE Listing Rules were made, among which changes are
the removal of the Second Board listing and the requirement that lock-up rules be embodied in the articles
of the incorporation of the issuer. Each index represents the numerical average of the prices of component
shares. The PSE has an index, referred to as the PHISIX, which as at the date thereof reflects the price
movements of selected shares listed on the PSE, based on traded prices of shares from the various sectors.
The PSE shifted from full market capitalization to free float market capitalization effective 3 April 2006,
simultaneous with the migration to the free float index and the renaming of the PHISIX to PSEi. The PSEi is
composed of shares of 30 selected companies listed on the PSE.

In December 2013, the PSE replaced its online disclosure system (OdiSy) with a new disclosure system,
the PSE EDGE. EDGE was acquired from the Korea Exchange and is a fully automated system equipped with
a variety of features to further standardize the disclosure reporting process of listed companies on the PSE,
improve investors disclosure searching and viewing experience, and enhance overall issuer transparency in

144
the market. The PSE also launched its Corporate Governance Guidebook in November 2010 as another
initiative of the PSE to promote good governance among listed companies. It is composed of ten guidelines
embodying principles of good business practice and based on internationally recognized corporate
governance codes and best practices.

The table below sets out movements in the composite index as of the last business day of each calendar
year from 1995 to 2014 and shows the number of listed companies, market capitalization, and value of
shares traded for the same period:

Composite Number of Aggregate Combined

Index at Listed Market Value of
Year
Closing Companies Capitalization Turnover
(in billions) (in billions)

1995 .....................................................................
2,594.2 205 1,545.7 379.0
1996 .....................................................................
3,170.6 216 2,121.1 668.8
1997 .....................................................................
1,869.2 221 1,251.3 586.2
1998 .....................................................................
1,968.8 222 1,373.7 408.7
1999 .....................................................................
2,142.9 225 1,936.5 781.0
2000 .....................................................................
1,494.5 229 2,576.5 357.7
2001 .....................................................................
1,168.1 231 2,141.4 159.6
2002 .....................................................................
1,018.4 234 2,083.2 159.7
2003 .....................................................................
1,442.4 236 2,973.8 145.4
2004 .....................................................................
1,822.8 235 4,766.3 206.6
2005 .....................................................................
2,096.0 237 5,948.4 383.5
2006 .....................................................................
2,982.5 239 7,173.2 572.6
2007 .....................................................................
3,621.6 244 7,977.6 1,338.3
2008 .....................................................................
1,872.9 246 4,069.2 763.9
2009 .....................................................................
3,052.7 248 6,029.1 994.2
2010 .....................................................................
4,201.1 253 8,866.1 1,207.4
2011 .....................................................................
4,372.0 245 8,697.0 1,422.6
2012 .....................................................................
5,812.7 254 10,952.7 1,771.7
2013 .....................................................................
5,889.8 257 11,931.3 2,546.2
2014 .....................................................................
7,230.6 263 14,251.7 2,160.1

Source: PSE

Trading

The PSE is a double auction market. Buyers and sellers are each represented by stockbrokers. To trade, bid
or ask prices are posted on the PSEs electronic trading system. A buy (or sell) order that matches the
lowest asked (or highest bid) price is automatically executed. Buy and sell orders received by one broker at
the same price are crossed at the PSE at the indicated price. Payment of purchases of listed securities must
be made by the buyer on or before the third trading day (the settlement date) after the trade.

Trading on the PSE commences at 9:30 a.m. with a trading recess beginning at 12:00 p.m. In the afternoon,
trading resumes at 1:30 p.m. and ends at 3:30 p.m., including a 10-minute extension during which
transactions may be conducted, provided that they are executed at the last traded price and are only for
the purpose of completing unfinished orders. Trading days are Monday to Friday, except legal holidays and
days when the BSP clearing house is closed.

145
Minimum trading lots range from 5 to 1,000,000 shares depending on the price range and nature of the
security traded. The minimum trading lot for the Companys shares is 100 shares. Odd-sized lots are traded
by brokers on a board specifically designed for odd-lot trading.

To maintain stability in the stock market, daily price swings are monitored and regulated. Under current
PSE regulations, when the price of a listed security moves up by 50% or down by 50% in one day (based on
the previous closing price or last posted bid price, whichever is higher), the price of that security is
automatically frozen by the PSE, unless there is an official statement from the company or a government
agency justifying such price fluctuation, in which case the affected security can still be traded but only at
the frozen price. If the issuer fails to submit such explanation, a trading halt is imposed by the PSE on the
listed security the following day. Resumption of trading shall be allowed only when the disclosure of the
company is disseminated, subject again to the trading ban.

Non-Resident Transactions

When the purchase/sale of Philippine shares involves a non-resident, whether the transaction is effected in
the domestic or foreign market, it will be the responsibility of the securities dealer/broker to register the
transaction with the BSP. The local securities dealer/broker shall file with the BSP, within three business
days from the transaction date, an application in the prescribed registration form. After compliance with
other required undertakings, the BSP shall issue a Certificate of Registration. Under BSP rules, all registered
foreign investments in Philippine securities including profits and dividends, net of taxes and charges, may
be repatriated.

Settlement

The Securities Clearing Corporation of the Philippines (SCCP) is a wholly-owned subsidiary of the PSE, and
was organized primarily as a clearance and settlement agency for SCCP-eligible trades executed through
the facilities of the PSE. SCCP received its permanent license to operate on 17 January 2002. It is
responsible for:

synchronizing the settlement of funds and the transfer of securities through Delivery versus
Payment clearing and settlement of transactions of Clearing Members, who are also Trading
Participants of the PSE,
guaranteeing the settlement of trades in the event of a Trading Participants default through the
implementation of its Fails Management System and administration of the Clearing and Trade
Guaranty Fund, and
performance of Risk Management and Monitoring to ensure final and irrevocable settlement.

SCCP settles PSE trades on a three-day rolling settlement environment, which means that settlement of
trades takes place three trading days after transaction date (T+3). The deadline for settlement of trades is
12:00 noon of T+3. Securities sold should be in scripless form and lodged under the book-entry system of
the PDTC. Each trading participant maintains a Cash Settlement Account with one of the seven existing
Settlement Banks of SCCP, which are Banco de Oro Unibank, Inc., Rizal Commercial Banking Corporation,
Metropolitan Bank and Trust Company, Deutsche Bank, HSBC Philippines, Union Bank of the Philippines,
and Maybank Philippines Incorporated. Payment for securities bought should be in good, cleared funds and
should be final and irrevocable. Settlement is presently on a broker level.

SCCP implemented its Central Clearing and Central Settlement system on 29 May 2006. CCCS employs
multilateral netting, whereby the system automatically offsets buy and sell transactions on a per issue
and a per flag basis to arrive at a net receipt or a net delivery security position for each Clearing Member.
All cash debits and credits are also netted into a single net cash position for each Clearing Member.

146
Novation of the original PSE trade contracts occurs, and SCCP stands between the original trading parties
and becomes the Central Counterparty to each PSE-eligible trade cleared through it.

Scripless Trading

In 1995, the PDTC (formerly the Philippine Central Depository, Inc.), was organized to establish a central
depository in the Philippines and introduce scripless or book-entry trading in the Philippines. On December
16, 1996, the PDTC was granted a provisional license by the SEC to act as a central securities depository.

All listed securities at the PSE have been converted into book-entry settlement in the PDTC. The depository
service of the PDTC provides the infrastructure for lodgment (deposit) and upliftment (withdrawal) of
securities, pledge of securities, securities lending and borrowing and corporate actions including
shareholders meetings, dividend declarations and rights offerings. The PDTC also provides depository and
settlement services for non-PSE trades of listed equity securities. For transactions on the PSE, the security
element of the trade will be settled through the book-entry system, while the cash element will be settled
through the current settlement banks, Banco de Oro Unibank, Inc., Rizal Commercial Banking Corporation,
Metropolitan Bank and Trust Company, Deutsche Bank, HSBC Philippines, Union Bank of the Philippines,
and Maybank Philippines Incorporated.

In order to benefit from the book-entry system, securities must be immobilized into the PDTC system
through a process called lodgment. Lodgment is the process by which shareholders transfer legal title (but
not beneficial title) over their shares in favor of the PCD Nominee Corporation (PCD Nominee), a
corporation wholly-owned by the PDTC, whose sole purpose is to act as nominee and legal title holder of all
shares lodged in the PDTC. Immobilization is the process by which the warrant or share certificates of
lodging holders are cancelled by the transfer agent and the corresponding transfer of beneficial ownership
of the immobilized shares in the account of the PCD Nominee through the PDTC participant will be
recorded in the issuing corporations registry. This trust arrangement between the participants and PDTC
through the PCD Nominee is established by and explained in the PDTC Rules and Operating Procedures
approved by the SEC. No consideration is paid for the transfer of legal title to the PCD Nominee. Once
lodged, transfers of beneficial title of the securities are accomplished via book-entry settlement.

Under the current PDTC system, only participants (e.g. brokers and custodians) will be recognized by the
PDTC as the beneficial owners of the lodged equity securities. Thus, each beneficial owner of shares,
through his participant, will be the beneficial owner to the extent of the number of shares held by such
participant in the records of the PCD Nominee. All lodgments, trades and uplifts on these shares will have
to be coursed through a participant. Ownership and transfers of beneficial interests in the shares will be
reflected, with respect to the participants aggregate holdings, in the PDTC system, and with respect to
each beneficial owners holdings, in the records of the participants. Beneficial owners are thus advised that
in order to exercise their rights as beneficial owners of the lodged shares, they must rely on their
participant-brokers and/or participant-custodians.

Any beneficial owner of shares who wishes to trade his interests in the shares must course the trade
through a participant. The participant can execute PSE trades and non-PSE trades of lodged equity
securities through the PDTC system. All matched transactions in the PSE trading system will be fed through
the SCCP, and into the PDTC system. Once it is determined on the settlement date (T+3) that there are
adequate securities in the securities settlement account of the participant-seller and adequate cleared
funds in the settlement bank account of the participant-buyer, the PSE trades are automatically settled in
the SCCP Central Clearing and Central Settlement system, in accordance with the SCCP and PDTC Rules and
Operating Procedures. Once settled, the beneficial ownership of the securities is transferred from the
participant-seller to the participant-buyer without the physical transfer of stock certificates covering the
traded securities.

147
If a shareholder wishes to withdraw his shareholdings from the PDTC system, the PDTC has a procedure of
upliftment under which PCD Nominee will transfer back to the shareholder the legal title to the shares
lodged. The uplifting shareholder shall follow the Rules and Operating Procedures of the PDTC for the
upliftment of the shares lodged under the name of the PCD Nominee. The transfer agent shall prepare and
send a Registry Confirmation Advice to the PDTC covering the new number of shares lodged under the PCD
Nominee. The expenses for upliftment are for the account of the uplifting shareholder.

The difference between the depository and the registry would be on the recording of ownership of the
shares in the issuing corporations books. In the depository set-up, shares are simply immobilized, wherein
customers certificates are cancelled and a confirmation advice is issued in the name of PCD Nominee to
confirm new balances of the shares lodged with the PDTC. Transfers among/between broker and/or
custodian accounts, as the case may be, will only be made within the book-entry system of the PDTC.
However, as far as the issuing corporation is concerned, the underlying certificates are in the PCD
Nominees name. In the registry set-up, settlement and recording of ownership of traded securities will
already be directly made in the corresponding issuing companys transfer agents books or system.
Likewise, recording will already be at the beneficiary level (whether it be a client or a registered custodian
holding securities for its clients), thereby removing from the broker its current de facto custodianship
role.

Amended Rule on Lodgment of Securities

On 24 June 2009, the PSE apprised all listed companies and market participants through Memorandum No.
2009-0320 that commencing on 1 July 2009, as a condition for the listing and trading of the securities of an
applicant company, the applicant company shall electronically lodge its registered securities with the PDTC
or any other entity duly authorized by the SEC, without any jumbo or mother certificate in compliance with
the requirements of Section 43 of the SRC. In compliance with the foregoing requirement, actual listing and
trading of securities on the scheduled listing date shall take effect only after submission by the applicant
company of the documentary requirements stated in the amended rule on Lodgment of Securities of the
PSE.

Pursuant to the said amendment, the PDTC issued an implementing procedure in support thereof to wit:

For a new company to be listed at the PSE as of 1 July 2009, the usual procedure will be observed
but the transfer agent of the company shall no longer issue a certificate to PCD Nominee but shall
issue a Registry Confirmation Advice, which shall be the basis for the PDTC to credit the holdings of
the depository participants on the listing date.

On the other hand, for an existing listed company, the PDTC shall wait for the advice of the transfer
agent that it is ready to accept surrender of PCD Nominee jumbo certificates and upon such advice
the PDTC shall surrender all PCD Nominee jumbo certificates to the transfer agent for cancellation.
The transfer agent shall issue a Registry Confirmation Advice to PDTC evidencing the total number
of shares registered in the name of PCD Nominee in the listed companys registry as of
confirmation date.

Further, the PSE apprised all listed companies and market participants on 21 May 2010 through
Memorandum No. 2010-0246 that the Amended Rule on Lodgement of Securities under Section 16 of
Article III, Part A of the Revised Listing Rules of the PSE shall apply to all securities that are lodged with the
PDTC or any other entity duly authorized by the PSE.

For listing applications, the amended rule on lodgment of securities is applicable to:

The offer shares/securities of the applicant company in the case of an initial public offering,

148
 The shares/securities that are lodged with the PDTC, or any other entity duly authorized by the PSE
in the case of a listing by way of introduction,
New securities to be offered and applied for listing by an existing listed company, and
Additional listing of securities of an existing listed company.

Issuance of Stock Certificates for Certificated Shares

On or after the listing of the shares on the PSE, any beneficial owner of the shares may apply with PDTC
through his broker or custodian-participant for a withdrawal from the book-entry system and return to the
conventional paper-based settlement. If a shareholder wishes to withdraw his shareholdings from the PDTC
system, the PDTC has a procedure of upliftment under which PCD Nominee will transfer back to the
shareholder the legal title to the shares lodged. The uplifting shareholder shall follow the Rules and
Operating Procedures of the PDTC for the uplifting of the shares lodged under the name of the PCD
Nominee. The transfer agent shall prepare and send a Registry Confirmation Advice to the PDTC covering
the new number of shares lodged under PCD Nominee. The expenses for upliftment are on the account of
the uplifting shareholder.

Upon the issuance of stock certificates for the shares in the name of the person applying for upliftment,
such shares shall be deemed to be withdrawn from the PDTC book-entry settlement system, and trading on
such shares will follow the normal process for settlement of certificated securities. The expenses for
upliftment of the shares into certificated securities will be charged to the person applying for upliftment.
Pending completion of the upliftment process, the beneficial interest in the shares covered by the
application for upliftment is frozen and no trading and book-entry settlement will be permitted until the
relevant stock certificates in the name of the person applying for upliftment shall have been issued by the
relevant companys transfer agent.

149
 PHILIPPINE TAXATION

The following is a discussion of the material Philippine tax consequences of the acquisition, ownership, and
disposition of the Common Shares. This general description does not purport to be a comprehensive
description of the Philippine tax aspects of the Common Shares and no information is provided regarding
the tax aspects of acquiring, owning, holding, or disposing of the Common Shares under the tax laws of
other applicable jurisdictions and the specific Philippine tax consequence in light of particular situations of
acquiring, owning, holding, and disposing of the Common Shares in such other jurisdictions. This discussion
is based upon laws, regulations, rulings, and income tax conventions or treaties in effect at the date of this
Prospectus. The tax treatment applicable to a holder of the Common Shares may vary depending upon such
holders particular situation, and certain holders may be subject to special rules not discussed below. This
summary does not purport to address all tax aspects that may be important to a holder of the Common
Shares. Prospective investors of the Common Shares are urged to consult their own tax advisors as to the
particular tax consequences of the ownership and disposition of the Common Shares, including the
applicability and effect of any local or foreign tax laws.

As used in this section: (1) the term resident alien refers to an individual whose residence is within the
Philippines and who is not a citizen of the Philippines; and (2) a non-resident alien is an individual whose
residence is not within the Philippines and who is not a citizen of the Philippines. A non-resident alien who
is actually within the Philippines for an aggregate period of more than 180 days during any calendar year is
considered a non-resident alien doing business in the Philippines. A non-resident alien who is actually
within the Philippines for an aggregate period of 180 days or less during any calendar year is considered a
non-resident alien not doing business in the Philippines. A resident foreign corporation is a non-
Philippine corporation engaged in trade or business within the Philippines, and a non-resident foreign
corporation is a non-Philippine corporation not engaged in trade or business within the Philippines. The
term dividends under this section refers to cash or property dividends. Tax Code means the Philippine
National Internal Revenue of 1997, as amended.

Taxes on Dividends on the Shares

Individual Philippine citizens and resident aliens are subject to a final tax on dividends derived from the
Common Shares at the rate of 10%, which tax shall be withheld by the Company.

Non-resident alien individuals engaged in trade or business in the Philippines are subject to a final
withholding tax on dividends derived from the Common Shares at the rate of 20% on the gross amount
thereof, subject to applicable preferential tax rates under tax treaties in force between the Philippines and
the country of domicile or residence of such non-resident alien individual. A non-resident alien individual
not engaged in trade or business in the Philippines is subject to a final withholding tax on dividends derived
from the Common Shares at the rate of 25% of the gross amount, subject to applicable preferential tax
rates under tax treaties in force between the Philippines and the country of domicile or residence of such
non-resident alien individual.

The term non-resident holder means a holder of the Common Shares:

who is an individual who is neither a citizen nor a resident of the Philippines or an entity which is a
foreign corporation not engaged in trade or business in the Philippines, and
should a tax treaty be applicable, whose ownership of the Common Shares is not effectively
connected with a fixed base or a permanent establishment in the Philippines.

Dividends derived by domestic corporations (i.e. corporations created or organized in the Philippines or
under its laws) and resident foreign corporations from the Common Shares shall not be subject to tax.

150
Dividends received from a domestic corporation by a non-resident foreign corporation are generally subject
to final withholding tax at the rate of 30%, subject to applicable preferential tax rates under tax treaties in
force between the Philippines and the country of domicile of such non-resident foreign corporation. The
30% rate for dividends paid to non-resident foreign corporations with countries of domicile having no tax
treaty with the Philippines may be reduced to a special 15% rate if:

the country in which the non-resident foreign corporation is domiciled imposes no taxes on foreign
sourced dividends, or
the country in which the non-resident foreign corporation is domiciled allows a credit against the
tax due from the non-resident foreign corporation for taxes deemed to have been paid in the
Philippines equivalent to 15%.

The BIR has prescribed, through an administrative issuance, procedures for the availment of tax treaty
relief. The application for tax treaty relief has to be filed with the BIR by the non-resident holder of the
Common Shares (or its duly authorized representative) prior to the first taxable event, or prior to the first
and only time the income tax payor is required to withhold the tax thereon or should have withheld taxes
thereon had the transaction been subject to tax. The first taxable event has been construed by the BIR as
payment of the dividend. Failure to file the application for tax treaty relief with the BIR prior to the first
taxable event may disqualify the said application. A corporation may withhold taxes at a reduced rate on
dividends paid to a non-resident holder of the Common Shares if such non-resident holder submits to the
domestic corporation proof of the filing of the tax treaty relief application with the BIR prior to the
payment of dividends. However, on 9 August 2013, the Philippine Supreme Court in Deutsche Bank AG
Manila Branch v. CIR, G.R. No. 188550, ruled that the period of application for the availment of tax treaty
relief should not operate to divest entitlement to the relief as it would constitute a violation of the duty
required by good faith in complying with a tax treaty. At most, the application for a tax treaty relief to be
filed with the BIR should merely operate to confirm the entitlement of the taxpayer to such relief.

The requirements for a tax treaty relief application in respect of dividends are set out in the applicable tax
treaty and BIR Form No. 0901-D. These include proof of tax residence in the country that is a party to the
tax treaty. Proof of residence consists of a consularized certification from the tax authority of the country of
residence of the non-resident holder of Common Shares which states that the non-resident holder is a tax
resident of such country under the applicable tax treaty. If the non-resident holder of Common Shares is a
juridical entity, authenticated certified true copies of its articles of incorporation or association issued by
the proper government authority should also be submitted to the BIR in addition to the certification of its
residence from the tax authority of its country of residence.

If tax at the regular rate is withheld by the Company instead of the reduced rates applicable under a treaty,
the non-resident holder of the Common Shares may file a claim for refund from the BIR. However, because
the refund process in the Philippines requires the filing of an administrative claim and the submission of
supporting information, and may also involve the filing of a judicial appeal, it may be impractical to pursue
obtaining such a refund. Moreover, in view of the requirement of the BIR that an application for tax treaty
relief be filed prior to the first taxable event as previously stated, the non-resident holder of Common
Shares may not be able to successfully pursue a claim for refund if such an application is not filed before
such deadline.

Stock dividends distributed pro rata to any holder of shares are not subject to Philippine income tax.
However, the sale, exchange, or disposition of shares received as share dividends by the holder is subject to
either capital gains tax and documentary stamp tax or stock transaction tax.

Tax Treaties

The following table lists some of the countries with which the Philippines has tax treaties and the tax rates
currently applicable to non-resident holders who are residents of those countries:
151
 Capital Gains Tax Due
on Disposition of
Country Dividends
Common Shares
Outside the PSE
(%) (%)
Canada ........................................................................................... 25(1) Exempt(8)
France ............................................................................................ 15(2) Exempt(8)
Germany ........................................................................................ 15(3) 5/10(9)
Japan .............................................................................................. 15(4) Exempt(8)
Singapore ....................................................................................... 25(5) Exempt(8)
United Kingdom ............................................................................. 25(6) Exempt(10)
United States ................................................................................. 25(7) Exempt(8)
____________
Notes:

(1) 15% if the recipient company controls at least 10% of the voting power of the company paying the dividends.
(2) 10% if the recipient company (excluding a partnership) holds directly at least 10% of the voting shares of the company paying the
dividends.
(3) 10% if the recipient company (excluding a partnership) owns directly at least 25% of the capital of the company paying the dividends.
(4) 10% if the recipient company holds directly at least 10% of either the voting shares of the company paying the dividends or of the total
shares issued by that company during the period of six months immediately preceding the date of payment of the dividends.
(5) 15% if during the part of the paying companys taxable year which precedes the date of payment of dividends and during the whole of its
prior taxable year at least 15% of the outstanding shares of the voting shares of the paying company were owned by the recipient
company.
(6) 15% if the recipient company is a company which controls directly or indirectly at least 10% of the voting power of the company paying
the dividends.
(7) 20% if during the part of the paying corporations taxable year which precedes the date of payment of dividends and during the whole of
its prior taxable year, at least 10% of the outstanding shares of the voting shares of the paying corporation were owned by the recipient
corporation. Notwithstanding the rates provided under the Republic of the Philippines-United States Treaty, residents of the United States
may avail of the 15% withholding tax rate under the tax-sparing clause of the Tax Code provided certain conditions are met.
(8 Capital gains are taxable only in the country where the seller is a resident, provided the shares are not those of a corporation, the assets
of which consist principally of real property situated in the Philippines, in which case the sale is subject to Philippine taxes.
(9) Under the tax treaty between the Philippines and Germany, capital gains from the alienation of shares of a Philippine corporation may be
taxed in the Philippines irrespective of the nature of the assets of the Philippine corporation. Tax rates are 5% on the net capital gains
realized during the taxable year not in excess of 100,000 and 10% on the net capital gains realized during the taxable year in excess of
100,000.
(10) Under the tax treaty between the Philippines and the United Kingdom, capital gains on the sale of the shares of Philippine corporations
are subject to tax only in the country where the seller is a resident, irrespective of the nature of the assets of the Philippine corporation.

In order for an exemption under a tax treaty to be recognized, an application for tax treaty relief on capital
gains tax on the sale of shares must be filed by the income recipient before the deadline for the filing of the
documentary stamp tax return, which is the fifth day from the end of the month when the document
transferring ownership was executed.

The requirements for a tax treaty relief application in respect of capital gains tax on the sale of shares are
set out in the applicable tax treaty and BIR Form No. 0901-C. These include proof of residence in the
country that is a party to the tax treaty. Proof of residence consists of a consularized certification from the
tax authority of the country of residence of the seller of shares which provides that the seller is a resident
of such country under the applicable tax treaty. If the seller is a juridical entity, authenticated certified true
copies of its articles of incorporation or association issued by the proper government authority should also
be submitted to the BIR in addition to the certification of its residence from the tax authority of its country
of residence.

152
Sale, Exchange or Disposition of Shares

Capital gains tax, if sale was made outside the PSE

Net capital gains realized by a resident or non-resident other than a dealer in securities during each taxable
year from the sale, exchange or disposition of shares outside the facilities of the PSE, unless an applicable
treaty exempts such gains from tax or provides for preferential rates, are subject to tax as follows: 5% on
gains not exceeding 100,000.00 and 10% on gains over 100,000.00. An application for tax treaty relief
must be filed (and approved) by the Philippine tax authorities to obtain an exemption under a tax treaty.

The transfer of shares shall not be recorded in the books of the Company unless the BIR certifies that the
capital gains and documentary stamp taxes relating to the sale or transfer have been paid or, where
applicable, tax treaty relief has been confirmed by the International Tax Affairs Division of the BIR in
respect of the capital gains tax or other conditions have been met.

Taxes on transfer of shares listed and traded at the PSE

A sale or other disposition of shares through the facilities of the PSE by a resident or a non-resident holder,
other than a dealer in securities, is subject to a stock transaction tax at the rate of 0.5% of the gross selling
price or gross value in money of the shares sold or otherwise disposed, unless an applicable treaty exempts
such sale from said tax. This tax is required to be collected by and paid to the Government by the selling
stockbroker on behalf of his client. The stock transaction tax is classified as a percentage tax in lieu of a
capital gains tax. Under certain tax treaties, the exemptions from capital gains tax discussed herein may not
be applicable to stock transaction tax. In addition, value added tax of 12% is imposed on the commission
earned by the PSE-registered broker, and is generally passed on to the client.

On 7 November 2012, the BIR issued Revenue Regulations No. 16-2012 which provides that the sale, barter,
transfer, and/or assignment of shares of listed companies that fail to meet the minimum public ownership
(MPO) requirement after 31 December 2012 will be subject to capital gains tax and documentary stamp
tax. It also requires publicly listed companies to submit public ownership reports to the BIR within 15 days
after the end of each quarter.

On 31 December 2012, the PSE imposed a trading suspension for a period of not more than six months, on
shares of a listed company which had not complied with the Rule on MPO. The MPO requires listed
companies to maintain a minimum percentage of listed securities held by the public at ten percent of the
listed companies' issued and outstanding shares at all times. Companies which do not comply with the MPO
after the lapse of the trading suspension shall be automatically delisted.

The sale of such listed company's shares during the trading suspension may be effected only outside the
trading system of the PSE and shall be subject to capital gains tax and documentary stamp tax.
Furthermore, if the fair market value of the shares of stock sold is greater than the consideration or the
selling price, the amount by which the fair market value of the shares exceeds the selling price shall be
deemed a gift that is subject to donor's tax under Section 100 of the Tax Code.

Documentary Stamp Taxes on Shares

The original issue of shares is subject to documentary stamp tax of 1.00 on each 200.00 par value, or
fraction thereof, of the shares issued. On the other hand, the transfer of shares is subject to a documentary
stamp tax at a rate of 0.75 on each 200.00, or fractional part thereof, of the par value of the Common
Shares. The documentary stamp tax is imposed on the person making, signing, issuing, accepting or
transferring the document and is thus payable either by the vendor or the purchaser of the Common
Shares. However, the sale, barter or exchange of Common Shares listed and traded through the PSE are
exempt from documentary stamp tax.

153
Estate and Gift Taxes

The transfer of the Common Shares upon the death of a registered holder to his heirs by way of succession,
whether such an individual was a citizen of the Philippines or an alien, regardless of residence, will be
subject to Philippine estate tax at progressive rates ranging from 5% to 20% if the net estate is over
200,000.00.

The transfer of shares by gift or donation to a stranger (i.e. a person who is not a brother, sister, spouse,
ancestor, lineal descendant or relative by consanguinity within the fourth degree of relationship) will be
subject to a donors tax at a flat rate of 30%. Gifts or donations to non-strangers, however, will be subject
to progressive rates ranging from 2% to 15%, if the net gifts during the calendar year exceed 100,000.00;
otherwise, such transfer will not be subject to donors tax. Corporate registered holders are also liable for
Philippine donors tax on such transfers, but the rate of tax with respect to net gifts made by corporate
registered holders is always at a flat rate of 30%.

Estate and gift taxes will not be collected in respect of intangible personal property, such as shares, (1) if
the deceased at the time of death, or the donor at the time of donation, was a citizen and resident of a
foreign country which at the time of his death or donation did not impose a transfer tax of any character in
respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or
(2) if the laws of the foreign country of which the deceased or the donor was a citizen and resident at the
time of his death or donation allow a similar exemption from transfer or death taxes of every character or
description in respect of intangible personal property owned by citizens of the Philippines not residing in
that foreign country.

Corporate Income Tax

As a general rule, a domestic corporation is subject to corporate income tax of 30% on its taxable income16
from all sources within or without the Philippines. The exception, among others, would be (i) gross interest
income from Philippine currency bank deposits and yields from deposit substitutes, trust funds and similar
arrangements, and royalties, which are subject to a final withholding tax rate of 20% of the gross amount of
such income, (ii) interest income from a depository bank under the expanded foreign currency deposit
system which is subject to a final 7.5% tax on the gross amount of such income.

Further, in computing the corporate income tax, effective 6 July 2008, companies are given a choice to
claim itemized deductions or the optional standard deduction (OSD), with the former being presumed
unless specific election of OSD is signified in the tax return. The OSD election is irrevocable for the taxable
year for which the tax return is made. The OSD is equivalent to an amount not exceeding 40% of the
companys gross income. For this purpose, "Gross Income" means all income derived from whatever
source, including, but not limited to, compensation for service, gross income derived from the conduct of
trade or business or exercise of profession, gains derived from dealings in property, interests, rent,
royalties, dividends, annuities, prizes and winnings.

A minimum corporate income tax (MCIT) of 2% of gross income would likewise be applicable to the
Issuer, beginning on the fourth taxable year from commencement of business operations, whenever the
MCIT is greater that the ordinary corporate income tax. For this purpose, "Gross Income" means gross sales
less sales returns, discounts and allowances and cost of goods sold. Passive income, such as interest on
bank deposits and royalties subject to final withholding tax, shall not form part of gross income for
purposes of MCIT.

16
Taxable income refers to the pertinent items of gross income specified in the National Internal Revenue Code of 1997, as amended
(the "Tax Code") less the deductions and/or personal and additional exemptions, if any, authorized for such types of income by the
Tax Code or other special laws.

154
Nevertheless, any excess of the MCIT over the ordinary corporate income tax may be carried forward and
credited against the latter for the three immediately succeeding taxable years. Further, subject to certain
conditions, the MCIT may be suspended with respect to a corporation which suffers losses on account of a
prolonged labor dispute, or because of force majeure, or because of legitimate business reverses.

155
 PHILIPPINE FOREIGN EXCHANGE AND FOREIGN OWNERSHIP CONTROLS

Registration of Foreign Investments and Exchange Controls

Under current BSP regulations, an investment in listed Philippine securities (such as the Common Shares)
must be registered with the BSP if the foreign exchange needed to service the repatriation of capital and
the remittance of dividends, profits and earnings derived from such shares is to be sourced from the
Philippine banking system. If the foreign exchange required to service capital repatriation or dividend
remittance is sourced outside the Philippine banking system, registration is not required. BSP Circular No.
471 (Series of 2005), as amended, however subjects foreign exchange dealers, money changers and
remittance agents to R.A. No. 9160 (the Anti-Money Laundering Act of 2001, as amended) and requires
these non-bank sources of foreign exchange to require foreign exchange buyers to submit, among others,
the original BSP registration document in connection with their application to purchase foreign exchange
exceeding US$10,000.00 for purposes of capital repatriation and remittance of dividends.

Registration of Philippine securities listed on the PSE may be done directly with a custodian bank duly
designated by the foreign investor. A custodian bank may be a universal or commercial bank or an offshore
banking unit registered with the BSP to act as such and appointed by the investor to register the
investment, hold shares for the investor, and represent the investor in all necessary actions in connection
with his investments in the Philippines. Applications for registration must be accompanied by: (i) purchase
invoice, subscription agreement and proof of listing on the PSE (either or both), (ii) credit advice or bank
certificate showing the amount of foreign currency inwardly remitted and converted into Pesos, and (iii)
transfer instructions from the stockbroker or dealer, as the case may be.

Upon registration of the investment, proceeds of divestments, or dividends of registered investments are
repatriable or remittable immediately and in full through the Philippine banking system, net of applicable
tax, without need of BSP approval. Capital repatriation of investments in listed securities is permitted upon
presentation of the BSP registration document and the brokers sales invoice, at the exchange rate
prevailing at the time of purchase of the foreign exchange from the banking system. Remittance of
dividends is permitted upon presentation of: (1) the BSP registration document, (2) the cash dividends
notice from the PSE and the Philippine Central Depository printout of cash dividend payment or
computation of interest earned, (3) copy of secretarys sworn statement on the board resolution covering
the dividend declaration and (4) detailed computation of the amount applied for in the format prescribed
by the BSP. Pending reinvestment or repatriation, divestment proceeds, as well as dividends of registered
investments, may be lodged temporarily in interest-bearing deposit accounts. Interest earned thereon, net
of taxes may also be remitted in full. Remittance of divestment proceeds or dividends of registered
investments may be reinvested in the Philippines if the investments are registered with the BSP or the
investors custodian bank.

The foregoing is subject to the power of the BSP, through the Monetary Board, with the approval of the
president of the Philippines, to suspend temporarily or restrict the availability of foreign exchange, require
licensing of foreign exchange transactions or require delivery of foreign exchange to the BSP or its designee
during an exchange crisis, when an exchange crisis is imminent, or in times of national emergency.

The registration with the BSP of all foreign investments in any Common Shares received in exchange for
Offer Shares shall be the responsibility of the foreign investor.

Foreign Ownership Controls

The Philippine Constitution and related statutes set forth restrictions on foreign ownership of companies
engaged in certain activities, among them the ownership of private land.

156
In connection with the ownership of private land, Article XII, Section 7 of the Philippine Constitution, in
relation to Article XII, Section 2 of the Philippine Constitution and Chapter 4 of Commonwealth Act No. 141,
states that no private land shall be transferred or conveyed except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines at least 60% of whose capital is
owned by such citizens.

RA 7042, as amended, otherwise known as the Foreign Investments Act of 1991 and the Negative List
issued pursuant thereto, reserves to Philippine Nationals all areas of investment in which foreign ownership
is limited by mandate of the Constitution and specific laws. Section 3(a) of RA 7042 defines a Philippine
National as:

a citizen of the Philippines,

a domestic partnership or association wholly-owned by citizens of the Philippines,
a trustee of funds for pension or other employee retirement or separation benefits where the
trustee is a Philippine National and at least 60% of the fund will accrue to the benefit of the
Philippine Nationals,
a corporation organized under the laws of the Philippines of which at least 60% of the capital stock
outstanding and entitled to vote is owned and held by citizens of the Philippines, and
a corporation organized abroad and registered as doing business in the Philippines under the
Philippine Corporation Code of which 100% of the capital stock outstanding and entitled to vote is
wholly-owned by Filipinos.

However, the Foreign Investments Act of 1991 states that where a corporation (and its non-Filipino
shareholders) own stock in a SEC-registered enterprise, at least 60% of the capital stock outstanding and
entitled to vote of both the investing corporation and the investee corporation must be owned and held by
citizens of the Philippines. Further, at least 60% of the members of the board of directors of both the
investing corporation and the investee corporation must be Philippine citizens in order for the investee
corporation to be considered a Philippine National.

The Company does not currently own real estate. However, if the Company acquires real estate in the
future, it would be subject to nationality restrictions found under the Philippine Constitution and other
laws limiting land ownership to Philippine Nationals.

As of the date of this Prospectus, approximately 99.80% of the total outstanding capital stock of the
Company is held by Philippine Nationals. Immediately after the completion of the Offer, foreign equity shall
not exceed 40% of the Companys total outstanding capital stock.

157
 PLAN OF DISTRIBUTION

64,000,000 of the Offer Shares or 80% of the Firm Shares are being offered for subscription to qualified
institutional buyers in the Philippines (the QIBs) and the general public by the Joint Lead Underwriters,
and 16,000,000 Offer Shares, or 20% of the Firm Shares, are being offered by the Joint Lead Underwriters at
the Offer Price to all of the PSE Trading Participants. The Joint Lead Underwriters will underwrite the Firm
Shares on a firm commitment basis. There is no arrangement for the Joint Lead Underwriters to return any
of the Firm Shares to the Company.

In the event of an oversubscription to the Offer, during the Offer period, the Joint Lead Underwriters (as
defined below), with the consent of the Selling Shareholder, reserves the right to increase the size of the
Offer up to an additional 40,000,000 Common Shares by way of a secondary offering. To the extent the
Oversubscription Option is exercised, the relevant Option Shares shall be offered and sold to the general
investing public on the same terms and conditions as the Firm Shares, through the Joint Lead Underwriters
(please see discussion on Procedure for Application for the Offer on page 25).

Allocation to the PSE Trading Participants

The PSE shall allocate approximately 16,000,000 Offer Shares, or 20% of the Firm Shares, among the PSE
Trading Participants. Each PSE Trading Participant shall initially be allocated approximately 121,200 Offer
Shares (computed by dividing the Trading Participants and Retail Offer Shares allocated to the PSE Trading
Participants between 132 PSE Trading Participants) and subject to reallocation as may be determined by
the Joint Lead Underwriters. A PSE representative will be present during the reallocation process. Any
allocation of Offer Shares not taken up by the PSE Trading Participants shall be distributed by the Joint Lead
Underwriters to their clients or the general public in the Philippines. Offer Shares not taken up by the QIBs,
the PSE Trading Participants, the clients of the Joint Lead Underwriters, or the general public shall be
purchased by the Joint Lead Underwriters pursuant to the terms and conditions of the Underwriting
Agreement.

Underwriting Commitments

To facilitate the Offer, the Company has appointed First Metro Investment Corporation to act as the Issue
Manager, Bookrunner, and Joint Lead Underwriter; and SB Capital Investment Corporation to act as Joint
Lead Underwriter (collectively, the Joint Lead Underwriters). The Company and the Joint Lead
Underwriters shall enter into an Underwriting Agreement to be dated on or about 26 October 2015 (the
Underwriting Agreement), whereby the Joint Lead Underwriters agree to underwrite all of the Firm
Shares on a firm commitment basis.

In accordance with the Underwriting Agreement, the Joint Lead Underwriters have agreed to underwrite
80,000,000 Offer Shares on a firm basis, and to distribute and sell the Offer Shares in the Offer, subject to
the satisfaction of certain conditions, in consideration for certain fees and expenses. The amount of
underwriting commitment allocated to each Joint Lead Underwriter is as follows:

Amount
Joint Lead Underwriter %
(in millions )
First Metro 1,000.00 62.5%
SB Capital 600.00 37.5%
Total 1,600.00 100.0%

158
The Joint Lead Underwriters

First Metro is a 99.23%-owned subsidiary and the investment banking arm of the Metropolitan Bank and
Trust Company. It obtained its license to operate as an investment house in 2003 and its license by the SEC
to engage in underwriting and distribution of securities to the public. It is a leading investment bank in the
Philippines with over 50 years of service in the development of the countrys capital markets. Together with
its subsidiaries, First Metro Securities Brokerage Corporation and First Metro Asset Management, Inc., First
Metro offers a wide range of services, from debt and equity underwriting, loan syndication, project finance,
financial advisory, securitization, investment advisory, trust, government securities and corporate debt
trading, equity brokering, asset management, online trading, fund management, and research. As of
December 31, 2014, First Metros total assets amounted to 69.9 billion and capital funds stood at 18.31
billion. It reported consolidated net income of 2.34 billion for the year ended 31 December 2014. First
Metro has received numerous awards and recognition from multiple award-giving bodies. In 2014, 2013,
2011, and 2009, First Metro was awarded the Best Bond House in the Philippines by Finance Asia. In the
last five years, First Metro was also awarded the Best Bond House by The Asset Magazine of Hong Kong. In
2013, it was awarded as one of the Top 10 Best Managed Companies and Top 10 Best Investor Relations by
Finance Asia. It was also recognized by Finance Asia as the Best Equity House in the Philippines in 2012.

SB Capital Investment Corporation (SB Capital) is a Philippine corporation organized in October 1995 as a
wholly-owned subsidiary of Security Bank Corporation. It obtained its license to operate as an investment
house in 1996 and is licensed by the SEC to engage in underwriting and distribution of securities to the
public. SB Capital provides a wide range of investment banking services including financial advisory,
underwriting of equity and debt securities, project finance, privatizations, mergers and acquisitions, loan
syndications, and corporate advisory services. SB Capital is also involved in equity trading through its
wholly-owned stock brokerage subsidiary, SB Equities, Inc. Its senior executives have extensive experience
in the capital markets and were involved in a lead role in a substantial number of major equity and debt
issues, both locally and internationally.

Underwriters Compensation

The Issue Manager and Bookrunner and the Joint Lead Underwriters (as defined below) will receive an
aggregate transaction fee from the Company equivalent to 2.5% of the gross proceeds from the sale of the
Offer Shares, inclusive of the amounts to be paid to the Selling Agents. The fees shall be withheld by the
Joint Lead Underwriters from the proceeds of the Offer. PSE Trading Participants who take up Offer Shares
shall be entitled to a selling fee of 1% of the Offer Shares taken up and purchased by the relevant PSE
Trading Participant. The selling fee, less a withholding tax of 10%, will be paid by the Joint Lead
Underwriters to the PSE Trading Participants within ten banking days from the Listing Date.

None of the Joint Lead Underwriters have any other business relationships with the Company. Neither First
Metro nor SB Capital is represented in the Companys Board of Directors. Neither is there a provision in the
Underwriting Agreement, which would entitle the Joint Lead Underwriters to representation in the
Companys Board of Directors as part of their compensation for underwriting services.

However, the Company has an outstanding long-term financial obligation in the form of a fixed rate
corporate note with Metrobank, which is the parent company of First Metro. Furthermore, a portion of
the proceeds from the Offer will be used to partially settle the obligation. Such outstanding corporate note
with Metrobank, and the intended use of proceeds stated had no effect on the due diligence conducted by
First Metro on the Company.

Subscription Procedures

On or before 2 November 2015, the PSE Trading Participants shall submit to the designated representative
any of the Joint Lead Underwriters their respective firm orders and commitments to purchase Offer Shares.

159
Offer Shares not taken up by the PSE Trading Participants will be distributed by the Joint Lead Underwriters
directly to their clients and the general public and whatever remains will be purchased by the Joint Lead
Underwriters.

Lodgement of Shares

All of the Offer Shares shall be lodged with the PDTC and shall be issued in scripless form. Shareholders may
maintain the Offer Shares in scripless form or opt to have the stock certificates issued to them by
requesting an upliftment of the relevant Offer Shares from the PDTCs electronic system after the Listing
Date.

Lock-up

The Company and the Principal Shareholder have agreed with the Joint Lead Underwriters that they will
not, without the prior written consent of the Joint Lead Underwriters, issue, offer, pledge, sell, contract to
sell, or otherwise dispose of (or publicly announce any such issuance, offer, sale, or disposal of) any Shares
or securities convertible or exchangeable into or exercisable for any Shares or warrants or other rights to
purchase Shares or any security or financial product whose value is determined directly or indirectly by
reference to the price of the underlying securities, including equity swaps, forward sales, and options for a
period of 180 days after the listing of the Offer Shares.

Selling Restrictions

No securities, except of a class exempt under Section 9 of the SRC or unless sold in any transaction exempt
under Section 10 thereof, shall be sold or distributed by any person within the Philippines, unless such
securities shall have been registered with the SEC on Form 12-1 and the registration statement has been
declared effective by the SEC.

160
 LEGAL MATTERS

Certain legal matters as to Philippine law relating to the Offer will be passed upon by Angara Abello
Concepcion Regala & Cruz, legal counsel to the Company, and Romulo Mabanta Buenaventura Sayoc & de
los Angeles, legal counsel to the Issue Manager, Bookrunner, and Lead Underwriter.

Each of the foregoing legal counsel has neither shareholdings in the Company nor any right, whether legally
enforceable or not, to nominate persons or to subscribe for securities in the Company. None of the legal
counsel will receive any direct or indirect interest in the Company or in any securities thereof (including
options, warrants, or rights thereto) pursuant to or in connection with the Offer. Other than the
appointment as the Companys Corporate Secretary of Atty. Tadeo Hilado of Angara Abello Concepcion
Regala & Cruz Law Offices, none of the aforementioned counsels has acted or will act as promoter,
underwriter, voting trustee, officer, or employee of the Company.

161
 INDEPENDENT AUDITORS

The financial information for the Company as of 30 June 2015 and for the six months ended 30 June 2015
and 2014, and as of 31 December 2014 and 2013 and for the years ended 31 December 2014, 2013, and
2012 represent the accounts of the Company on a consolidated basis. Unless otherwise stated, all financial
information relating to the Company contained herein is stated in accordance with PFRS.

The Companys fiscal year begins on 1 January and ends on 31 December of each year.

SGV & Co., independent auditors, audited the consolidated financial statements of the Company as of 31
December 2014 and 2013 and for the years ended 31 December 2014, 2013 and 2012 without qualification,
and reviewed the unaudited interim consolidated financial statements of the Company as of 30 June 2015
and for the six months ended 30 June 2015 and 2014, all included in this Prospectus.

SGV & Co. has acted as the Companys independent auditors since inception. Ladislao Z. Avila, Jr. is the
current audit partner and has served the Company since 2011. The Company has not had any material
disagreements on accounting and financial disclosures with its current independent auditors for the same
periods or any subsequent interim period. SGV & Co. has neither shareholdings in the Company nor any
right, whether legally enforceable or not, to nominate persons or to subscribe for the securities of the
Company. SGV & Co. will not receive any direct or indirect interest in the Company or its securities
(including options, warrants or rights thereto) pursuant to or in connection with the Offer. The foregoing is
in accordance with the Code of Ethics for Professional Accountants in the Philippines set by the Board of
Accountancy and approved by the Professional Regulation Commission.

The following table sets out the aggregate fees billed for each of the last two years for professional services
rendered by SGV & Co., excluding fees directly related to the Offer.

In Millions 2014 2013 2012

Audit and Audit-Related Feesa 1.6 0.9 0.9
All Other Feesb 1.4 0.3 0.0
Total 3.0 1.2 0.9

a Audit and Audit-Related Fees. This category includes the audit of annual financial statements and services that are normally
provided by the independent auditor in connection with statutory and regulatory filings or engagements for those calendar years.
This is exclusive of out-of-pocket expenses incidental to the independent auditors work.

b All Other Fees. This category includes other services rendered by SGV & Co. such as agreed upon procedures and tax compliance
services.

In relation to the audit of the Companys annual financial statements, the Companys Corporate
Governance Manual, which was approved by the Board of Directors on 15 December 2010 (revised on 31
July 2014), provides that the audit committee shall, among other activities, (i) evaluate significant issues
reported by the independent auditors in relation to the adequacy, efficiency, and effectiveness of policies,
controls, processes, and activities of the Company, (ii) ensure that other non-audit work provided by the
independent auditors are not in conflict with their functions as independent auditors, and (iii) ensure the
compliance of the Company with acceptable auditing and accounting standards and regulations.

162
 INDEX TO AUDITED FINANCIAL STATEMENTS

The following pages set forth the Companys financial information as of 31 December 2014 and 2013 and
for the years ended 31 December 2014, 2013, and 2012 (audited), and as of 30 June 2015 and for the six
months ended 30 June 2015 and 2014 (unaudited).

163
Cirtek Holdings Philippines Corporation
and Subsidiaries

Consolidated Financial Statements

December 31, 2014 and 2013
and Years Ended December 31, 2014, 2013 and 2012

and

Independent Auditors Report

 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 December 28, 2012, valid until December 31, 2015
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-3 (Group A),
Philippines November 15, 2012, valid until November 16, 2015

INDEPENDENT AUDITORS REPORT

The Stockholders and the Board of Directors

Cirtek Holdings Philippines Corporation

We have audited the accompanying consolidated financial statements of Cirtek Holdings Philippines
Corporation and Subsidiaries, which comprise the consolidated balance sheets as at
December 31, 2014 and 2013, and the consolidated statements of comprehensive income, statements
of changes in equity and statements of cash flows for each of the three years in the period ended
December 31, 20144, and a summary of significant accounting policies and other explanatory
information.

Managements Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Philippine Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the auditors judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entitys preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.

*SGVFS012872*
A member firm of Ernst & Young Global Limited
 -2-

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of Cirtek Holdings Philippines Corporation and Subsidiaries as at
December 31, 2014 and 2013, and their financial performance and their cash flows for each of the
three years in the period ended December 31, 2014 in accordance with Philippine Financial Reporting
Standards.

SYCIP GORRES VELAYO & CO.

Ladislao Z. Avila, Jr.

Partner
CPA Certificate No. 69099
SEC Accreditation No. 0111-AR-3 (Group A),
January 18, 2013, valid until January 17, 2016
Tax Identification No. 109-247-891
BIR Accreditation No. 08-001998-43-2015,
February 27, 2015, valid until February 26, 2018
PTR No. 4751254, January 5, 2015, Makati City

April 10, 2015

*SGVFS012872*
A member firm of Ernst & Young Global Limited
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

December 31
2014 2013
ASSETS
Current Assets
Cash and cash equivalents (Note 5) $12,602,322 $7,023,747
Trade and other receivables (Note 6) 15,586,934 4,060,866
Inventories (Note 7) 10,768,681 7,534,619
Financial asset at fair value through profit or loss (Note 8) 701,747 8,055,039
Amounts owed by related parties (Note 6) 5,123,078 2,222,415
Held-to-maturity investments (Note 10) 114,341
Other current assets (Note 9) 1,871,111 1,801,286
46,768,214 30,697,972
Noncurrent assets-held-for-sale (Note 11) 11,408,611
Total Current Assets 58,176,825 30,697,972
Noncurrent Assets
Property, plant and equipment (Note 11) 17,015,168 15,783,581
Held-to-maturity investments (Note 10) 1,073,789
Deferred income tax asset (Note 22) 186,579 83,754
Other noncurrent assets (Note 12) 962,504 687,748
Total Noncurrent Assets 19,238,040 16,555,083
TOTAL ASSETS $77,414,865 $47,253,055

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables (Note 13) $9,434,272 $4,383,654
Short-term loan (Note 14) 2,100,000 200,000
Long-term debt - current portion and net of deferred
financing costs (Note 15) 3,412,079 964,977
Amounts owed to related parties (Note 16) 470,147 447,420
Deferred revenues 405,144
Income tax payable 349,237 58,210
Provision for warranty 148,954
Derivative liability (Note 25) 40,836 102,090
Total Current Liabilities 16,360,669 6,156,351
Noncurrent Liabilities
Long-term debt - net of current portion and deferred
financing costs (Note 15) 23,752,534 8,684,679
Retirement benefit obligation (Note 20) 1,645,787 1,881,835
Total Noncurrent Liabilities 25,398,321 10,566,514
Total Liabilities 41,758,990 16,722,865
Equity
Capital stock (Note 27) 7,893,134 6,559,066
Additional paid-in capital 4,733,511 4,733,511
Equity reserve 4,138,375 4,138,375
Other comprehensive income 317,579 (66,414)
Retained earnings (Note 27) 18,573,276 15,165,652
Total Equity 35,655,875 30,530,190
TOTAL LIABILITIES AND EQUITY $77,414,865 $47,253,055

See accompanying Notes to Consolidated Financial Statements.

*SGVFS012872*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31

2014 2013 2012

NET SALES $51,792,081 $43,984,426 $40,631,136

COST OF SALES (Note 17) (44,251,335) (35,476,436) (33,790,977)

GROSS PROFIT 7,540,746 8,507,990 6,840,159

OPERATING EXPENSES (Note 18) (3,328,456) (2,432,700) (2,378,331)

FINANCIAL INCOME (EXPENSES)

Interest income 31,704 118,370 123,117
Interest expense (551,334) (403,450) (182,980)
(519,630) (285,080) (59,863)

OTHER INCOME (CHARGES) (Note 21) 2,928,008 (893,555) 160,008

INCOME BEFORE INCOME TAX 6,620,668 4,896,655 4,561,973

PROVISION FOR (BENEFIT FROM)

INCOME TAX (Note 22)
Current 202,011 190,813 215,287
Deferred (123,035) 69,006 (60,479)
78,976 259,819 154,808

NET INCOME 6,541,692 4,636,836 4,407,165

OTHER COMPREHENSIVE INCOME

Other comprehensive income (loss) not to be
reclassified to profit or loss in subsequent
periods:
Re-measurement gain (loss) on retirement
benefit, net of deferred tax 383,993 131,779 (98,193)

TOTAL COMPREHENSIVE INCOME $6,925,685 $4,768,615 $4,208,972

Earnings Per Share
Basic and diluted - as restated (Note 23) $0.020 $0.014 $0.018
See accompanying Notes to Consolidated Financial Statements.

*SGVFS012872*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012

Capital Stock
Undistributed Other Retained
Stock Dividends Additional Comprehensive Earnings
Issued (Note 7) Paid-in Capital Equity Reserve Income (Note 7) Total
Balances at January 1, 2011 $3,720,358 $ $4,733,511 $4,138,375 $ $11,530,296 $24,122,540
Net income for the year 4,407,165 4,407,165
Other comprehensive loss (198,193) (198,193)
Total comprehensive income (loss) (198,193) 4,407,165 4,208,972
Cash dividends declared at $0.004933 per share (Note 7) (800,000) (800,000)
Stock dividends (Note 7) 740,538 950,847 (1,691,385)
Balances at December 31, 2012 $4,460,896 $950,847 $4,733,511 $4,138,375 ($198,193) $13,446,076 $27,531,512

Balances at January 1, 2013 $4,460,896 $950,847 $4,733,511 $4,138,375 ($198,193) $13,446,076 $27,531,512
Net income for the year 4,636,836 4,636,836
Other comprehensive income 131,779 131,779
Total comprehensive income 131,779 4,636,836 4,768,615
Issuance of undistributed stock dividends 950,847 (950,847)
Cash dividends declared at $0.004796 per share (Note 7) (1,119,937) (1,119,937)
Stock dividends during the year (Note 7) 1,147,323 (1,147,323)
Cash dividends declared at $0.00232 per share (Note 7) (650,000) (650,000)
Balances at December 31, 2013 $6,559,066 $ $4,733,511 $4,138,375 ($66,414) $15,165,652 $30,530,190

Balances at January 1, 2014 $6,559,066 $ $4,733,511 $4,138,375 ($66,414) $15,165,652 $30,530,190

Net income for the year 6,541,692 6,541,692
Other comprehensive income 383,993 383,993
Total comprehensive income 383,993 6,541,692 6,925,685
Cash dividends declared at $ 0.004282 per share (Note 7) (1,200,000) (1,200,000)
Stock dividends during the year (Note 7) 644,803 689,265 (1,334,068)
Cash dividends declared at $ 0.002141 per share (Note 7) (600,000) (600,000)
Balances at December 31, 2014 $7,203,869 $689,265 $4,733,511 $4,138,375 $317,579 $18,573,276 $35,655,875

See accompanying Notes to Consolidated Financial Statements.

*SGVFS012872*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31

2014 2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax $6,620,668 $4,896,655 $4,561,973
Adjustments for:
Depreciation and amortization (Note 11) 2,900,520 2,309,774 3,037,385
Interest expense (Notes 14 and 15) 551,334 403,450 182,980
Excess of the fair value of net assets acquired over the
aggregate consideration transferred (Note 4) (2,573,837)
Net unrealized foreign exchange losses (gains) (61,768) 22,879 149,221
Interest income (Note 5) (31,704) (118,370) (123,117)
Change in fair value of financial asset at FVPL (Note 8) (33,472)
Mark-to-market loss on forward contracts 102,090 9,480
Operating income before working capital changes 7,405,213 7,583,006 7,817,922
Decrease (increase) in:
Inventories 3,414,890 41,504 (2,232,592)
Trade and other receivables (6,642,564) 1,004,963 (403,415)
Other current assets 107,565 (59,910) (82,560)
Increase (decrease) in:
Trade and other payables (201,197) (100,125) (718,351)
Retirement benefit obligation (Note 20) (242,529) 262,301 215,925
Net cash generated from operations 3,841,378 8,731,739 4,596,929
Interest received 31,704 70,446 117,436
Income taxes paid (22,004) (197,685) (185,346)
Net cash flows from operating activities 3,851,078 8,604,500 4,529,019
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from (investment in) financial asset at FVPL 7,353,292 (8,021,567)
Acquisitions of property, plant and equipment (Note 11) (1,860,794) (3,474,172) (3,366,817)
Net payment for the acquisition of REMEC entities (7,173,926)
Decrease (increase) in other noncurrent assets 39,231 (163,006)
Net cash flows used in investing activities (1,642,197) (11,495,739) (3,529,823)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from availment of:
Short-term loan (Note 14) 3,300,000 400,000 1,500,000
Long-term debt (Note 15) 10,000,000 10,000,000
Transaction costs from availment of long-term debt (Note 15) (152,650)
Payments of:
Cash dividends (1,800,000) (1,769,937) (3,608,003)
Interest (Note 13) (415,198) (317,774) (100,504)
Long-term loan (3,495,131) (613,200)
Short-term loan (Note 4) (1,100,000) (200,000) (1,500,000)
Net cash settlement on forward contracts (482,073)
Net movement in amounts owed by and owed to related parties (3,169,115) (115,742) 42,637
Net cash flows from (used in) financing activities 3,320,556 (3,098,726) 6,181,480
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 5,529,437 (5,989,965) 7,180,676
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 49,138 (97,250) (47,963)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 7,023,747 13,110,962 5,978,249
CASH AND CASH EQUIVALENTS AT
END OF YEAR (Note 5) $12,602,322 $7,023,747 $13,110,962

See accompanying Notes to Consolidated Financial Statements.

*SGVFS007196*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Information

Cirtek Holdings Philippines Corporation (CHPC or the Parent Company) was incorporated under
the laws of the Republic of the Philippines on February 10, 2011 to invest in, purchase or acquire
personal property of every kind, including shares of stocks, bonds, debentures, notes, evidences of
indebtedness, and other securities.

On March 1, 2011, the Parent Company acquired from Cirtek Holdings, Inc. (CHI) 155,511,952
common shares of Cirtek Electronics Corporation (CEC), and 50,000 shares of Cirtek Electronics
International Corporation (CEIC), representing 100% of the outstanding capital stock of both
companies.

The above transaction was treated as a business combination of entities under common control and
was accounted for similar to pooling-of-interests method. Accordingly, all financial information
for the periods prior to the effectivity of the combination were restated as if the Parent Company,
CEC and CEIC (collectively referred to as the Group) had always been combined but depending
on whether these entities were under common control for the periods presented.

The Group is primarily engaged in the manufacture and sale of semiconductor packages as an
independent subcontractor for outsourced semiconductor assembly, test and packaging services.
CEC manufactures standard integrated circuits, discrete, hybrid and potential new packages and
provides complete turnkey solutions that include wafer probing, wafer back grinding, assembly
and packaging and final testing of semiconductor devices with majority of its client base located in
United States of America (USA). CEIC sells integrated circuits principally in the USA and
assigns the production of the same to CEC.

The Parent Company was listed with the Philippine Stock Exchange on November 18, 2011.

The Parent Companys registered address is 116 East Main Avenue Phase V-SEZ, Laguna
Technopark, Bian, Laguna, Philippines.

Business Acquisition
On July 23, 2014, CEIC (the Buyer) entered into a Share Purchase Agreement (SPA) with Remec
Broadband Wireless Holdings, Inc (RBWHI; the Seller) and Remec Broadband Wireless
International, Inc. (the Philippine Branch) wherein RBWHI agreed to sell all of its issued and
outstanding ordinary share (5,000 ordinary shares at US$ 1.00 each at par value) to CEIC.

The closing date of the transactions is effective July 30, 2014 (see Note 4).

Issuance of financial statements

The consolidated financial statements of the Group as at December 31, 2014 and 2013 and for
each of the three years in the period ended December 31, 2014 were approved and authorized for
issue by the Board of Directors (BOD) on April 10, 2015.

*SGVFS012872*
 -2-

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

Policies

Basis of Preparation
The consolidated financial statements of the Group are prepared on a historical cost basis except
for derivative liability and financial asset at fair value through profit or loss (FVPL) which are
carried at fair value. The consolidated financial statements are presented in United States (US)
dollars ($), which is the Groups functional and presentation currency. All amounts are rounded
off to the nearest US dollar except when otherwise indicated.

Statement of Compliance
The consolidated financial statements of the Group have been prepared in accordance with
Philippine Financial Reporting Standards (PFRS). PFRS includes statements named PFRS and
Philippine Accounting Standards (PAS), including Philippine Interpretations from the
International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the
Philippine Financial Reporting Standards Council (FRSC).

Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company
and its subsidiaries as at December 31, 2014 and 2013 (see Notes 1 and 4):

Country of Incorporation Percentage of Ownership

2014 2013
Direct Indirect Direct Indirect
CEC Philippines 100 100
British Virgin Islands 100
CEIC (BVI) 100
RBWHI British Virgin Islands 100
RBWII - Philippine
Branch Philippines 100
RBWRP Philippines 100

Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if and only if the Group has:

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:

The contractual arrangement with the other vote holders of the investee
Rights arising from other contractual arrangements
The Groups voting rights and potential voting rights

*SGVFS012872*
 -3-

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group
loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or
disposed of during the year are included in the statements of comprehensive income from the date
the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the
equity holders of the Parent Company and to the non-controlling interests, even if this results in
the non-controlling interests having a deficit balance. When necessary, adjustments are made to
the financial statements of subsidiaries to bring their accounting policies into line with the Groups
accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it:

Derecognises the assets (including goodwill) and liabilities of the subsidiary

Derecognises the carrying amount of any non-controlling interests
Derecognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investment retained
Recognises any surplus or deficit in profit or loss
Reclassifies the parents share of components previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be required if the Group had directly disposed of
the related assets or liabilities

Common control business combinations

Where there are group reorganizations and business combinations in which all the combining
entities within the Group are ultimately controlled by the same ultimate parent (i.e., controlling
shareholders) before and after the business combination and the control is not transitory (business
combinations under common control), the Group accounts for such group reorganizations and
business combinations similar to a pooling-of-interests method. The assets and liabilities of the
acquired entities and that of the Company are reflected at their carrying values at the stand-alone
financial statements of the investee companies. The difference in the amount recognized and the
fair value of the consideration given is accounted for as an equity transaction, i.e., as either a
contribution or distribution of equity. Further, when a subsidiary is disposed in a common control
transaction without loss of control, the difference in the amount recognized and the fair value of
consideration received, is also accounted for as an equity transaction.

The Group records the difference as equity reserve and is presented as a separate component of
equity in the consolidated balance sheet. Comparatives shall be restated to include balances and
transactions as if the entities have been acquired at the beginning of the earliest period presented
in the consolidated financial statements, regardless of the actual date of the combination.

Subsidiaries are entities over which the Company has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Company controls another entity.

*SGVFS012872*
 -4-

Changes in Accounting Policies and Disclosures

The Group applied for the first time certain standards and amendments, which are effective for
annual periods beginning on or after January 1, 2014.

The nature and impact of each new standard and amendment is described below:

New and Amended Standards and Interpretations and Improved PFRS Adopted in Calendar Year
2014
The accounting policies adopted are consistent with those of the previous financial year, except for
the adoption of the following new and amended standards and Philippine Interpretations from
IFRIC and improved PFRS which the Group has adopted starting January 1, 2014. Unless
otherwise indicated, the adoption did not have any significant impact on the consolidated financial
statements of the Group.

Investment Entities (Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12,
Disclosure of Interests in Other Entities, and PAS 27, Separate Financial Statements)
These amendments provide an exception to the consolidation requirement for entities that
meet the definition of an investment entity under PFRS 10. The exception to consolidation
requires investment entities to account for subsidiaries at fair value through profit or loss. The
amendments must be applied retrospectively, subject to certain transition relief.

PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities (Amendments)
These amendments clarify the meaning of currently has a legally enforceable right to set-off
and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for
offsetting and are applied retrospectively.

PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and
Continuation of Hedge Accounting (Amendments)
These amendments provide relief from discontinuing hedge accounting when novation of a
derivative designated as a hedging instrument meets certain criteria and retrospective
application is required.

PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets
(Amendments)
These amendments remove the unintended consequences of PFRS 13, Fair Value
Measurement, on the disclosures required under PAS 36. In addition, these amendments
require disclosure of the recoverable amounts for assets or cash-generating units (CGUs) for
which impairment loss has been recognized or reversed during the period.

Philippine Interpretation IFRIC 21, Levies (IFRIC 21)

IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers
payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon
reaching a minimum threshold, the interpretation clarifies that no liability should be
anticipated before the specified minimum threshold is reached. Retrospective application is
required for IFRIC 21.

Annual Improvements to PFRSs (2010-2012 cycle)

In the 2010 - 2012 annual improvements cycle, seven amendments to six standards were
issued, which included an amendment to PFRS 13, Fair Value Measurement. The amendment
to PFRS 13 is effective immediately and it clarifies that short-term receivables and payables

*SGVFS012872*
 -5-

with no stated interest rates can be measured at invoice amounts when the effect of
discounting is immaterial.

Annual Improvements to PFRSs (2011-2013 cycle)

In the 2011 - 2013 annual improvements cycle, four amendments to four standards were
issued, which included an amendment to PFRS 1, First-time Adoption of Philippine Financial
Reporting Standards-First-time Adoption of PFRS. The amendment to PFRS 1 is effective
immediately. It clarifies that an entity may choose to apply either a current standard or a new
standard that is not yet mandatory, but permits early application, provided either standard is
applied consistently throughout the periods presented in the entitys first PFRS financial
statements.

New Accounting Standards, Interpretations and Amendments to Existing Standards Effective

Subsequent to December 31, 2014
The Group will adopt the following standards and interpretations when these become effective.
Except as otherwise indicated, the Group does not expect the adoption of these new standards and
interpretations to have any significant impact on the consolidated financial statements.

PFRS 9, Financial Instruments - Classification and Measurement (2010 version)

PFRS 9 (2010 version) reflects the first phase on the replacement of PAS 39 and applies to the
classification and measurement of financial assets and liabilities as defined in PAS 39,
Financial Instruments: Recognition and Measurement. PFRS 9 requires all financial assets to
be measured at fair value at initial recognition. A debt financial asset may, if the fair value
option (FVO) is not invoked, be subsequently measured at amortized cost if it is held within a
business model that has the objective to hold the assets to collect the contractual cash flows
and its contractual terms give rise, on specified dates, to cash flows that are solely payments of
principal and interest on the principal outstanding. All other debt instruments are
subsequently measured at fair value through profit or loss. All equity financial assets are
measured at fair value either through other comprehensive income (OCI) or profit or loss.
Equity financial assets held for trading must be measured at fair value through profit or loss.
For FVO liabilities, the amount of change in the fair value of a liability that is attributable to
changes in credit risk must be presented in OCI. The remainder of the change in fair value is
presented in profit or loss, unless presentation of the fair value change in respect of the
liabilitys credit risk in OCI would create or enlarge an accounting mismatch in profit or loss.
All other PAS 39 classification and measurement requirements for financial liabilities have
been carried forward into PFRS 9, including the embedded derivative separation rules and the
criteria for using the FVO. The adoption of the first phase of PFRS 9 will have an effect on
the classification and measurement of the Groups financial assets, but will potentially have no
impact on the classification and measurement of financial liabilities.

PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1, 2015.
This mandatory adoption date was moved to January 1, 2018 when the final version of PFRS
9 was adopted by the FRSC. Such adoption, however, is still for approval by the Board of
Accountancy (BOA).

Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate
This interpretation covers accounting for revenue and associated expenses by entities that
undertake the construction of real estate directly or through subcontractors. The SEC and the
FRSC have deferred the effectivity of this interpretation until the final Revenue standard is
issued by the IASB and an evaluation of the requirements of the final Revenue standard
against the practices of the Philippine real estate industry is completed. Adoption of the

*SGVFS012872*
 -6-

interpretation when it becomes effective will not have any impact on the consolidated
financial statements of the Group.

Effective January 1, 2015

PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions (Amendments)
PAS 19 requires an entity to consider contributions from employees or third parties when
accounting for defined benefit plans. Where the contributions are linked to service, they
should be attributed to periods of service as a negative benefit. These amendments clarify that,
if the amount of the contributions is independent of the number of years of service, an entity is
permitted to recognize such contributions as a reduction in the service cost in the period in
which the service is rendered, instead of allocating the contributions to the periods of service.
This amendment is effective for annual periods beginning on or after January 1, 2015. It is
not expected that this amendment would be relevant to the Group, since none of the entities
within the Group has defined benefit plans with contributions from employees or third parties.

Annual Improvements to PFRSs (2010-2012 cycle)

The Annual Improvements to PFRSs (2010-2012 cycle) are effective for annual periods
beginning on or after January 1, 2015 and are not expected to have a material impact on the
Group. They include:

PFRS 2, Share-based Payment - Definition of Vesting Condition

This improvement is applied prospectively and clarifies various issues relating to the
definitions of performance and service conditions which are vesting conditions, including:
o A performance condition must contain a service condition
o A performance target must be met while the counterparty is rendering service
o A performance target may relate to the operations or activities of an entity, or to those
of another entity in the same group
o A performance condition may be a market or non-market condition
o If the counterparty, regardless of the reason, ceases to provide service during the
vesting period, the service condition is not satisfied.

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

Combination
The amendment is applied prospectively for business combinations for which the
acquisition date is on or after July 1, 2014. It clarifies that a contingent consideration that
is not classified as equity is subsequently measured at fair value through profit or loss
whether or not it falls within the scope of PAS 39, Financial Instruments: Recognition
and Measurement (or PFRS 9, Financial Instruments, if early adopted). The Group shall
consider this amendment for future business combinations.

PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of

the Total of the Reportable Segments Assets to the Entitys Assets
The amendments are applied retrospectively and clarify that:
o An entity must disclose the judgments made by management in applying the
aggregation criteria in the standard, including a brief description of operating
segments that have been aggregated and the economic characteristics (e.g., sales and
gross margins) used to assess whether the segments are similar.
o The reconciliation of segment assets to total assets is only required to be disclosed if
the reconciliation is reported to the chief operating decision maker, similar to the
required disclosure for segment liabilities.

*SGVFS012872*
 -7-

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Revaluation
Method - Proportionate Restatement of Accumulated Depreciation and Amortization
The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the
asset may be revalued by reference to the observable data on either the gross or the net
carrying amount. In addition, the accumulated depreciation or amortization is the
difference between the gross and carrying amounts of the asset.

PAS 24, Related Party Disclosures - Key Management Personnel

The amendment is applied retrospectively and clarifies that a management entity, which is
an entity that provides key management personnel services, is a related party subject to the
related party disclosures. In addition, an entity that uses a management entity is required
to disclose the expenses incurred for management services.

Annual Improvements to PFRSs (2011-2013 cycle)

The Annual Improvements to PFRSs (2011-2013 cycle) are effective for annual periods
beginning on or after January 1, 2015 and are not expected to have a material impact on the
Group. They include:

PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements

The amendment is applied prospectively and clarifies the following regarding the scope
exceptions within PFRS 3:
o Joint arrangements, not just joint ventures, are outside the scope of PFRS 3.
o This scope exception applies only to the accounting in the financial statements of the
joint arrangement itself.

PFRS 13, Fair Value Measurement - Portfolio Exception

The amendment is applied prospectively and clarifies that the portfolio exception in PFRS
13 can be applied not only to financial assets and financial liabilities, but also to other
contracts within the scope of PAS 39.

PAS 40, Investment Property

The amendment is applied prospectively and clarifies that PFRS 3, and not the description
of ancillary services in PAS 40, is used to determine if the transaction is the purchase of
an asset or business combination. The description of ancillary services in PAS 40 only
differentiates between investment property and owner-occupied property (i.e., property,
plant and equipment).

Effective January 1, 2016

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of
Acceptable Methods of Depreciation and Amortization (Amendments)
The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of
economic benefits that are generated from operating a business (of which the asset is part)
rather than the economic benefits that are consumed through use of the asset. As a result, a
revenue-based method cannot be used to depreciate property, plant and equipment and may
only be used in very limited circumstances to amortize intangible assets. The amendments are
effective prospectively for annual periods beginning on or after January 1, 2016, with early
adoption permitted. These amendments are not expected to have any impact to the Group
given that the Group has not used a revenue-based method to depreciate its non-current assets.

*SGVFS012872*
 -8-

PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants
(Amendments)
The amendments change the accounting requirements for biological assets that meet the
definition of bearer plants. Under the amendments, biological assets that meet the definition
of bearer plants will no longer be within the scope of PAS 41. Instead, PAS 16 will apply.
After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost
(before maturity) and using either the cost model or revaluation model (after maturity). The
amendments also require that produce that grows on bearer plants will remain in the scope of
PAS 41 measured at fair value less costs to sell. For government grants related to bearer
plants, PAS 20, Accounting for Government Grants and Disclosure of Government Assistance,
will apply. The amendments are retrospectively effective for annual periods beginning on or
after January 1, 2016, with early adoption permitted. These amendments are not expected to
have any impact to the Group as the Group does not have any bearer plants.

PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements
(Amendments)
The amendments will allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. Entities
already applying PFRS and electing to change to the equity method in its separate financial
statements will have to apply that change retrospectively. For first-time adopters of PFRS
electing to use the equity method in its separate financial statements, they will be required to
apply this method from the date of transition to PFRS. The amendments are effective for
annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments will not have any impact on the Groups consolidated financial statements.

PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint
Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
These amendments address an acknowledged inconsistency between the requirements in
PFRS 10 and those in PAS 28 (2011) in dealing with the sale or contribution of assets between
an investor and its associate or joint venture. The amendments require that a full gain or loss
is recognized when a transaction involves a business (whether it is housed in a subsidiary or
not). A partial gain or loss is recognized when a transaction involves assets that do not
constitute a business, even if these assets are housed in a subsidiary. These amendments are
effective from annual periods beginning on or after January 1, 2016.

PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations
(Amendments)
The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an
interest in a joint operation, in which the activity of the joint operation constitutes a business
must apply the relevant PFRS 3 principles for business combinations accounting. The
amendments also clarify that a previously held interest in a joint operation is not remeasured
on the acquisition of an additional interest in the same joint operation while joint control is
retained. In addition, a scope exclusion has been added to PFRS 11 to specify that the
amendments do not apply when the parties sharing joint control, including the reporting entity,
are under common control of the same ultimate controlling party.

The amendments apply to both the acquisition of the initial interest in a joint operation and the
acquisition of any additional interests in the same joint operation and are prospectively
effective for annual periods beginning on or after January 1, 2016, with early adoption
permitted. These amendments are not expected to have any impact to the Group.

*SGVFS012872*
 -9-

PFRS 14, Regulatory Deferral Accounts

PFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-
regulation, to continue applying most of its existing accounting policies for regulatory deferral
account balances upon its first-time adoption of PFRS. Entities that adopt PFRS 14 must
present the regulatory deferral accounts as separate line items on the statement of financial
position and present movements in these account balances as separate line items in the
statement of profit or loss and other comprehensive income. The standard requires disclosures
on the nature of, and risks associated with, the entitys rate-regulation and the effects of that
rate-regulation on its financial statements. PFRS 14 is effective for annual periods beginning
on or after January 1, 2016. Since the Group is an existing PFRS preparer, this standard
would not apply.

Annual Improvements to PFRSs (2012-2014 cycle)

The Annual Improvements to PFRSs (2012-2014 cycle) are effective for annual periods
beginning on or after January 1, 2016 and are not expected to have a material impact on the
Group. They include:

PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in
Methods of Disposal
The amendment is applied prospectively and clarifies that changing from a disposal
through sale to a disposal through distribution to owners and vice-versa should not be
considered to be a new plan of disposal, rather it is a continuation of the original plan.
There is, therefore, no interruption of the application of the requirements in PFRS 5. The
amendment also clarifies that changing the disposal method does not change the date of
classification.

PFRS 7, Financial Instruments: Disclosures - Servicing Contracts

PFRS 7 requires an entity to provide disclosures for any continuing involvement in a
transferred asset that is derecognized in its entirety. The amendment clarifies that a
servicing contract that includes a fee can constitute continuing involvement in a financial
asset. An entity must assess the nature of the fee and arrangement against the guidance in
PFRS 7 in order to assess whether the disclosures are required. The amendment is to be
applied such that the assessment of which servicing contracts constitute continuing
involvement will need to be done retrospectively. However, comparative disclosures are
not required to be provided for any period beginning before the annual period in which the
entity first applies the amendments.

PFRS 7 - Applicability of the Amendments to PFRS 7 to Condensed Interim Financial

Statements
This amendment is applied retrospectively and clarifies that the disclosures on offsetting
of financial assets and financial liabilities are not required in the condensed interim
financial report unless they provide a significant update to the information reported in the
most recent annual report.

PAS 19, Employee Benefits - regional market issue regarding discount rate
This amendment is applied prospectively and clarifies that market depth of high quality
corporate bonds is assessed based on the currency in which the obligation is denominated,
rather than the country where the obligation is located. When there is no deep market for
high quality corporate bonds in that currency, government bond rates must be used.

*SGVFS012872*
 - 10 -

PAS 34, Interim Financial Reporting - disclosure of information elsewhere in the interim
financial report
The amendment is applied retrospectively and clarifies that the required interim
disclosures must either be in the interim financial statements or incorporated by cross-
reference between the interim financial statements and wherever they are included within
the greater interim financial report (e.g., in the management commentary or risk report).

Effective January 1, 2018

PFRS 9, Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and
PAS 39 (2013 version)
PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which
pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge
accounting model of PAS 39 with a more principles-based approach. Changes include
replacing the rules-based hedge effectiveness test with an objectives-based test that focuses on
the economic relationship between the hedged item and the hedging instrument, and the effect
of credit risk on that economic relationship; allowing risk components to be designated as the
hedged item, not only for financial items but also for non-financial items, provided that the
risk component is separately identifiable and reliably measurable; and allowing the time value
of an option, the forward element of a forward contract and any foreign currency basis spread
to be excluded from the designation of a derivative instrument as the hedging instrument and
accounted for as costs of hedging. PFRS 9 also requires more extensive disclosures for hedge
accounting.

PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of
January 1, 2018 was eventually set when the final version of PFRS 9 was adopted by the
FRSC. The adoption of the final version of PFRS 9, however, is still for approval by BOA.

The adoption of PFRS 9 is not expected to have any significant impact on the Groups
consolidated financial statements.

PFRS 9, Financial Instruments (2014 or final version)

In July 2014, the final version of PFRS 9, Financial Instruments, was issued. PFRS 9 reflects
all phases of the financial instruments project and replaces PAS 39, Financial Instruments:
Recognition and Measurement, and all previous versions of PFRS 9. The standard introduces
new requirements for classification and measurement, impairment, and hedge accounting.
PFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early
application permitted. Retrospective application is required, but comparative information is
not compulsory. Early application of previous versions of PFRS 9 is permitted if the date of
initial application is before February 1, 2015.

The adoption of PFRS 9 is not expected to have any significant impact on the Groups
consolidated financial statements.

The following new standard issued by the IASB has not yet been adopted by the FRSC

IFRS 15, Revenue from Contracts with Customers

IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to
revenue arising from contracts with customers. Under IFRS 15 revenue is recognized at an
amount that reflects the consideration to which an entity expects to be entitled in exchange for
transferring goods or services to a customer. The principles in IFRS 15 provide a more
structured approach to measuring and recognizing revenue. The new revenue standard is

*SGVFS012872*
 - 11 -

applicable to all entities and will supersede all current revenue recognition requirements under
IFRS. Either a full or modified retrospective application is required for annual periods
beginning on or after January 1, 2017 with early adoption permitted. The Group is currently
assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective
date once adopted locally.

Summary of Significant Accounting Policies

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:

In the principal market for the asset or liability, or

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

The principal or the most advantageous market must be accessible to by the Group. The fair value
of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best
interest.

A fair value measurement of a nonfinancial asset takes into account a market participant's ability
to generate economic benefits by using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements
are categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recurring basis, the
Group determines whether transfers have occurred between Levels in the hierarchy by re-
assessing categorization (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities
on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair
value hierarchy as explained above.

*SGVFS012872*
 - 12 -

Cash and Cash Equivalents

Cash includes cash on hand and in banks. Cash in banks earn interest at the respective bank
deposit rates. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three months or less from dates
of acquisition and that are subject to an insignificant risk of change in value.

Financial Instruments
Financial assets
Initial recognition
Financial assets within the scope of PAS 39 are classified as either financial assets at FVPL, loans
and receivables, held-to-maturity (HTM) investments, and available-for-sale (AFS) financial
assets, as appropriate. The Group determines the classification of its financial assets at initial
recognition.

Financial assets are recognized initially at fair value plus, in the case of investments not at FVPL,
directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time frame established
by regulation or convention in the marketplace (regular way purchases) are recognized on the
trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at FVPL

Financial assets at FVPL include financial assets held for trading and financial assets designated
upon initial recognition as at FVPL. Financial assets are classified as held for trading if they are
acquired for the purpose of selling in the near term. This category includes derivative financial
instruments entered into by the Group that do not meet the hedge accounting criteria as defined by
PAS 39. Derivatives, including separated embedded derivatives are also classified as held for
trading unless they are designated as effective hedging instruments. Financial assets at FVPL are
carried in the balance sheets at fair value with gains or losses recognized in the statement of
comprehensive income.

Derivatives embedded in host contracts are accounted for as separate derivatives when their risks
and characteristics are not closely related to those of the host contracts and the host contracts are
not carried at fair value. These embedded derivatives are measured at fair value with gains or
losses arising from changes in fair value recognized in the statements of comprehensive income.
Reassessment only occurs if there is a change in the terms of the contract that significantly
modifies the cash flows that would otherwise be required.

As at December 31, 2014 and 2013, the Group carries a financial asset at FVPL.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Such financial assets are carried at amortized cost using the
effective interest rate method. Gains and losses are recognized in the statements of comprehensive
income when the loans and receivables are derecognized or impaired, as well as through the
amortization process.

As of December 31, 2014 and 2013, the Group has designated as loans and receivables its cash
and cash equivalents, trade and other receivables, amounts owed by related parties, and refundable
deposits (reported as part of Other noncurrent assets in the consolidated balance sheet).

*SGVFS012872*
 - 13 -

HTM investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities are
classified as HTM when the Group has the positive intention and ability to hold it to maturity.
After initial measurement HTM investments are measured at amortized cost using the effective
interest rate method. This method uses an effective interest rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of
the financial asset. Gains and losses are recognized in the statements of comprehensive income
when the investments are derecognized or impaired, as well as through the amortization process.

As of December 31, 2014, the Group has HTM investments but none in 2013.

AFS financial assets

AFS financial assets are non-derivative financial assets that are designated as AFS or are not
classified in any of the three preceding categories. After initial measurement, AFS financial assets
are measured at fair value with unrealized gains or losses recognized directly in equity until the
investment is derecognized, at which time the cumulative gain or loss recorded in equity is
recognized in the statements of comprehensive income, or determined to be impaired, at which
time the cumulative loss recorded in equity is recognized in the statements of comprehensive
income.

As of December 31, 2014 and 2013, the Group has no AFS financial assets.

Financial Liabilities
Initial recognition
Financial liabilities within the scope of PAS 39 are classified as financial liabilities at FVPL, other
financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate. The Group determines the classification of its financial liabilities at initial
recognition and, where allowed and appropriate, re-evaluates such designation at every financial
reporting date.

Financial liabilities are recognized initially at fair value plus, in the case of investments not at
FVPL, directly attributable transaction costs.

The Groups financial liabilities include trade and other payables, short-term loan, long-term debt,
amount owed to related parties and derivative liability.

Financial liabilities are classified in this category if these are not held for trading or not designated
as at FVPL upon the inception of the liability. These include liabilities arising from operations or
borrowings.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:

Financial liabilities at FVPL

Financial liabilities as at FVPL include financial liabilities held for trading and financial liabilities
designated upon initial recognition at FVPL.

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling
in the near term. This category includes derivative financial instruments entered into by the Group
that do not meet the hedge accounting criteria as defined by PAS 39.

Gains and losses on liabilities held for trading are recognized in the statements of comprehensive
income.

*SGVFS012872*
 - 14 -

As at December 31, 2014 and 2013, the Groups derivative liability is classified as a financial
liability at FVPL. The Group does not have a financial liability held for trading and has not
designated any financial liabilities as at FVPL.

Other financial liabilities

Other financial liabilities are initially recognized at fair value of the consideration received, less
directly attributable transaction costs. After initial recognition, other financial liabilities are
subsequently measured at amortized cost using the effective interest method. Amortized cost is
calculated by taking into account any related issue costs, discount or premium. Gains and losses
are recognized in the statements of comprehensive income when the liabilities are derecognized,
as well as through the amortization process.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance
sheets if, and only if, there is a currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities
simultaneously. This is not generally the case with master netting agreements, and the related
assets and liabilities are presented gross in the balance sheet.

Fair value of financial instruments

The fair value of financial instruments that are actively traded in organized financial markets is
determined by reference to quoted market bid prices at the close of business on the balance sheet
date. For financial instruments where there is no active market, fair value is determined using
valuation techniques. Such techniques may include using recent arms-length market transactions;
reference to the current fair value of another instrument that is substantially the same; discounted
cash flow analysis or other valuation models.

Day 1 difference
Where the transaction price 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 Group recognizes the difference
between the transaction price and fair value (a Day 1 difference) in the statements of
comprehensive income unless it qualifies for recognition as some other type of asset. In cases
where use is made of data which is not observable, the difference between the transaction price
and model value is only recognized in the statements of comprehensive income when the inputs
become observable or when the instrument is derecognized. For each transaction, the Group
determines the appropriate method of recognizing the Day 1 difference amount.

Amortized cost of financial instruments

Amortized cost is computed using the effective interest rate method less any allowance for
impairment and principal repayment or reduction. The calculation takes into account any
premium or discount on acquisition and includes transaction costs and fees that are an integral part
of the effective interest rate.

Classification of financial instruments between debt and equity

A financial instrument is classified as debt if it provides for a contractual obligation to:

deliver cash or another financial asset to another entity; or

exchange financial assets or financial liabilities with another entity under conditions that are
potentially unfavorable to the Group; 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.

*SGVFS012872*
 - 15 -

If the Group 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.
The components of issued financial instruments that contain both liability and equity elements are
accounted for separately, with the equity component being assigned the residual amount after
deducting from the instrument as a whole the amount separately determined as the fair value of the
liability component on the date of issue.

Impairment of Financial Assets

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

Financial assets carried at amortized cost

The Group first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, the asset
is included in a group of financial assets with similar credit risk characteristics and that group of
financial assets is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognized are not included in
a collective assessment of impairment.

If there is objective evidence that an impairment loss on loans and receivables carried at amortized
cost has been incurred, the amount of the loss is measured as the difference between the assets
carrying amount and the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial assets original effective interest
rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the
asset shall be reduced either directly or through the use of an allowance account. The amount of
the loss shall be recognized in the consolidated statement of comprehensive income. If, in a
subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the
statement of comprehensive income, to the extent that the carrying value of the asset does not
exceed its amortized cost at the reversal date.

Financial assets carried at cost

If there is objective evidence that an impairment loss on an unquoted equity instrument that is not
carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that
is linked to and must be settled by delivery of such an unquoted equity instrument has been
incurred, the amount of the loss is measured as the difference between the assets carrying amount
and the present value of estimated future cash flows discounted at the current market rate of return
for a similar financial asset.

*SGVFS012872*
 - 16 -

AFS financial assets

For AFS financial assets, the Group assesses at each balance sheet date whether there is objective
evidence that an investment or a group of investments is impaired. In the case of equity
investments classified as AFS, objective evidence would include a significant or prolonged decline
in the fair value of the investment below its cost. Where there is evidence of impairment, the
cumulative loss is removed from equity and recognized in the statements of comprehensive
income. Impairment losses on equity investments are not reversed through the statements of
comprehensive income; increases in their fair value after impairment are recognized directly in
equity.

In the case of debt instruments classified as AFS, impairment is assessed based on the same
criteria as financial assets carried at amortized cost. Future interest income is based on the
reduced carrying amount and is accrued based on the rate of interest used to discount future cash
flows for the purpose of measuring impairment loss. Such accrual is recorded as part of interest
income in the statements of comprehensive income. If, in subsequent year, the fair value of a
debt instrument increases and the increase can be objectively related to an event occurring after
the impairment loss was recognized in the consolidated statements of comprehensive income, the
impairment loss is reversed through the statements of comprehensive income.

Derecognition of Financial Instruments

Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar
financial assets) is derecognized where:

the rights to receive cash flows from the asset have expired;
the Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
pass-through arrangement; and
either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b)
the Group has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.

Where the Group has transferred its rights to receive cash flows from an asset or has entered into
pass through arrangement and has neither transferred nor retained substantially all the risks and
rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the
Groups continuing involvement in the asset.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured
at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
When continuing involvement takes the form of a written and/or purchased option (including a
cash settled option or similar provision) on the transferred asset, the extent of the Groups
continuing involvement is the amount of the transferred asset that the Group may repurchase,
except that in the case of a written put option (including a cash settled option or similar provision)
on an asset measured at fair value, the extent of the Groups continuing involvement is limited to
the lower of the fair value of the transferred asset and the option exercise price.

*SGVFS012872*
 - 17 -

Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or 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
consolidated comprehensive income.

Inventories
Inventories are valued at the lower of cost and net realizable value (NRV). Costs incurred in
bringing each inventory to its present location and condition is accounted for as follows:

Raw materials, spare parts, - purchase cost on a first-in, first-out basis (FIFO);
supplies and others

Finished goods and work-in- - cost includes raw materials, direct labor and a portion
process of manufacturing overhead costs. Costs are determined
on a standard cost basis. Standard costs take into account
normal levels of materials and supplies, labor, efficiency,
and capacity utilization. They are regularly reviewed and,
if necessary, revised in light of current conditions.

NRV of finished goods, work-in-process and raw materials is the estimated selling price in the
ordinary course of business, less estimated costs of completion and the estimated costs necessary
to make the sale. NRV of supplies and spare parts is the current replacement costs.

Property, Plant and Equipment

Property, plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less
accumulated depreciation and any accumulated impairment in value. Such cost includes the cost
of replacing part of such property, plant and equipment when that cost is incurred and if the
recognition criteria are met. Repairs and maintenance are recognized in the consolidated
statement of comprehensive income as incurred.

Depreciation is calculated on a straight-line method over the estimated useful lives of the property,
plant and equipment as follows:

Category Number of Years

Machinery and equipment 6-12
Buildings and improvements 5-25
Facility and production tools 3-5
Furniture, fixtures and equipment 2-5
Transportation equipment 5-7

The property, plant and equipments residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each financial year-end.

When each major inspection is performed, its cost is recognized in the carrying amount of the
property, plant and equipment as a replacement if the recognition criteria are satisfied.

*SGVFS012872*
 - 18 -

Construction-in-progress represents property under construction and is stated at cost. This

includes costs of construction and other direct costs. Construction-in-progress is not depreciated
until such time that the relevant assets are completed and put into operational use.

Fully depreciated assets are retained in the accounts until these are no longer in use. When assets
are retired or otherwise disposed of, both the cost and related accumulated depreciation and
amortization and any allowance for impairment losses are removed from the accounts and any
resulting gain or loss is credited or charged to current operations.

An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and carrying amount of
the asset) is included in the consolidated statement of comprehensive income in the year the asset
is derecognized.

Noncurrent Asset Held for Sale

Property, plant and equipment are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction expected to be completed within one year from
the date of classification, rather than through continuing use. Property, plant and equipment held
for sale are stated at the lower of carrying amount and fair value less costs to sell.

Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in
the period in which they occur. Borrowing costs consist of interest and other costs that the Group
incurs in connection with the borrowing of funds.

Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less any accumulated amortization and any
accumulated impairment losses. Internally generated intangible assets, excluding capitalized
development costs, are not capitalized and expenditure is charged against income in the year in
which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The
amortization period and the amortization method for an intangible asset with a finite useful life are
reviewed at each financial year-end. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset is accounted for by changing the
amortization period or method, as appropriate, and treated as changes in accounting estimates.
The amortization expense on intangible assets with finite lives is recognized in the consolidated
statement of comprehensive income.

Intangible assets with indefinite useful lives are tested for impairment annually either individually
or at the cash-generating unit level. Such intangibles are not amortized. The useful life of an
intangible asset with an indefinite life is reviewed annually to determine whether the assessment
can be supported. If not, the change in the useful life assessment from indefinite to finite is made
on a prospective basis.

*SGVFS012872*
 - 19 -

Research and Development Costs

Research costs are expensed as incurred. Development expenditures on an individual project are
recognized as an intangible asset when the Group can demonstrate:

the technical feasibility of completing the intangible asset so that the asset will be available for
use or sale
its intention to complete and its ability to use or sell the asset
how the asset will generate future economic benefits
the availability of resources to complete the asset
the ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at
cost less any accumulated amortization and accumulated impairment losses. Amortization of the
asset begins when development is complete and the asset is available for use. It is amortized over
the period of expected future benefit. Amortization is recorded in cost of sales. During the period
of development, the asset is tested for impairment annually.

Impairment of Nonfinancial Assets

The Group assesses at each reporting date whether there is an indication that a nonfinancial asset
may be impaired. The Group has designated as nonfinancial assets its prepaid expenses and other
current assets, property and equipment and other noncurrent assets. If any such indication exists,
or when annual impairment testing for a nonfinancial asset is required, the Group makes an
estimate of the nonfinancial assets recoverable amount. A nonfinancial assets estimated
recoverable amount is the higher of a nonfinancial assets or cash-generating units fair value less
costs to sell and its value in use (VIU) and is determined for an individual asset, unless the
nonfinancial asset does not generate cash inflows that are largely independent of those from other
nonfinancial assets or groups of nonfinancial assets. Where the carrying amount of a nonfinancial
asset exceeds its estimated recoverable amount, the nonfinancial asset is considered impaired and
is written down to its estimated recoverable amount. In assessing VIU, 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 nonfinancial asset. In
determining fair value less costs to sell, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share prices for publicly traded
subsidiaries or other available fair value indicators.

For nonfinancial assets excluding goodwill, 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 Group makes an estimate of recoverable
amount. A previously recognized impairment loss is reversed only if there has been a change in
the estimates used to determine the nonfinancial assets recoverable amount since the last
impairment loss was recognized. If that is the case the carrying amount of the nonfinancial 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 nonfinancial asset in prior years. Such reversal is recognized in the consolidated statements of
comprehensive income.

Capital Stock
Capital stock is measured at par value for all shares issued. Subscriptions receivable are
accounted for as a deduction from equity.

*SGVFS012872*
 - 20 -

Retained Earnings
The amount included in retained earnings includes profit or loss attributable to the Groups equity
holders and reduced by dividends on capital stock. Retained earnings may also include effect of
changes in accounting policies as may be required by the standards transitional provisions.

Cash dividends
Cash dividends on capital stock are recognized as a liability and deducted from equity when they
are approved by the BOD. Dividends for the year that are approved after the financial reporting
date are dealt with as an event after the financial reporting date.

Stock dividends
Stock dividends are recognized as a liability and deducted from equity when they are approved by
the shareholders representing not less than two-thirds (2/3) of the outstanding capital stock of the
Parent Company. A stock dividend of at least 20% of the outstanding capital stock is considered
as large stock dividend and is measured at par value. A stock dividend of less than 20% is
considered small stock dividend and is measured at fair value.

Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received or receivable, taking into
account contractually defined terms of payment and excluding discounts, returns, rebates and
other sales taxes or duties. The Group assesses its revenue arrangement against specific criteria in
order to determine if it is acting as principal or agent. The Group has concluded that it is acting as
a principal in all of its revenue arrangements.

The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership
of the goods have passed to the buyer, usually on delivery of the goods.

Interest income
Interest income is recognized as it accrues using the effective interest rate method. (i.e., the rate
that exactly discounts estimated future cash receipts through the expected life of the financial
instrument to the net carrying amount of the financial asset).

Operating expenses
Operating 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. Operating expenses are recognized when
incurred.

Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of
the arrangement at the inception date and requires an assessment of whether the fulfillment of the
arrangements is dependent on the use of a specific asset or assets or the arrangement conveys a
right to use the asset. A reassessment is made after the inception of the lease only if one of the
following applies:

a. There is a change in contractual terms, other than a renewal or extension of the arrangement;
b. A renewal option is exercised and extension granted, unless the term of the renewal or
extension was initially included in the lease term;

*SGVFS012872*
 - 21 -

c. There is a change in the determination of whether fulfillment is dependent on a specified

asset; or
d. There is a substantial change to the asset.

When a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances give rise to the reassessment for scenarios (a), (c) or (d) and at the date of
renewal or extension period for scenario (b).

Group as a lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease payments are recognized as expense in the
consolidated statement of comprehensive income on a straight-line basis over the lease term.

Retirement Benefit Costs

The Group is covered by a noncontributory defined benefit retirement plan. The net defined
benefit liability or asset is the aggregate of the present value of the defined benefit obligation at the
end of the reporting period reduced by the fair value of plan assets, adjusted for any effect of
limiting a net defined benefit asset to the asset ceiling. The asset ceiling is the present value of
any economic benefits available in the form of refunds from the plan or reductions in future
contributions to the plan.

The cost of providing benefits under the defined benefit plans is actuarially determined using the
projected unit credit method.

Defined benefit costs comprise the following:

Service cost
Net interest on the net defined benefit liability or asset
Remeasurements of net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses on non-
routine settlements are recognized as expense in profit or loss. Past service costs are recognized
when plan amendment or curtailment occurs.

Net interest on the net defined benefit liability or asset is the change during the period in the net
defined benefit liability or asset that arises from the passage of time which is determined by
applying the discount rate based on high quality corporate bonds to the net defined benefit liability
or asset. Net interest on the net defined benefit liability or asset is recognized as expense or
income in the consolidated statement of comprehensive income.

Remeasurements comprising actuarial gains and losses, return on plan assets and any change in
the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized
immediately in other comprehensive income in the period in which they arise. Remeasurements
are not reclassified to profit or loss in subsequent periods. These are retained in other
comprehensive income until full settlement of the obligation.

The past service cost is recognized as an expense on a straight-line basis over the average period
until the benefits become vested. If the benefits are already vested immediately following the
introduction of, or changes to, a pension plan, past service cost is recognized immediately.

*SGVFS012872*
 - 22 -

Foreign Currency Transactions

The consolidated financial statements are presented in US dollars, which is the functional and
presentation currency of all companies in the Group. Transactions in foreign currencies are
initially recorded at the functional currency spot rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency rate of exchange ruling at the balance sheet date.

All differences are taken to the consolidated statement of comprehensive income. Nonmonetary
items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as at the dates of the initial transactions.

Taxes
Current income tax
Current income tax liabilities for the current and prior periods are measured at the amount
expected to be paid to the taxation authority. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by the financial reporting date.

Deferred income tax

Deferred income tax is provided using the balance sheet liability method on temporary differences
at the financial reporting date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, except:

where the deferred income tax liability arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries and
interests in joint ventures, where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.

Deferred income tax assets are recognized for all deductible temporary differences, carry-forward
of unused tax credits from excess minimum corporate income tax (MCIT) and unused net
operating loss carryover (NOLCO) to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carryforward of unused tax
credits from MCIT and unused NOLCO can be utilized, except:

where the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and in respect of deductible temporary differences associated with
investments in subsidiaries and interests in joint ventures, deferred income tax assets are
recognized only to the extent that it is probable that the temporary differences will reverse in
the foreseeable future and taxable profit will be available against which the temporary
differences can be utilized.

The carrying amount of deferred income tax assets is reviewed at each balance sheet 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 income tax asset to be utilized. Unrecognized deferred income tax
assets are reassessed at each balance sheet 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.

*SGVFS012872*
 - 23 -

Income tax relating to items recognized directly in equity is recognized in the statement of
changes in equity and not in the consolidated statement of comprehensive income.

Earnings Per Share (EPS)

Basic EPS is calculated by dividing the net income for the year by the weighted average number
of common shares outstanding during the year, with retroactive adjustments for any stock
dividends and stock split.

For the purpose of calculating diluted earnings per share, the net income and the weighted average
number of shares outstanding are adjusted for the effects of all dilutive potential common shares.

Segment Reporting
For management purposes, the Group has determined that it is operating as one operating segment.
Sales are reported internally per division, however, profit or loss, assets and liabilities are reported
on an entity-wide basis. These information are measured using the same accounting policies and
estimates as the Groups consolidated financial statements (see Note 23).

Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a
result of a past event and it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Where the Group expects some or all of a provision to be reimbursed, for example,
under an insurance contract, the reimbursement is recognized as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the
statements of comprehensive income, net of any reimbursement. 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 assessments of the time value of money and, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the
provision due to the passage of time is recognized as an interest expense.

Contingencies
Contingent liabilities are not recognized but are disclosed in the notes to consolidated financial
statements unless the possibility of an outflow of resources embodying economic benefit is
remote. Contingent assets are not recognized but are disclosed in the notes to consolidated
financial statements when an inflow of economic benefit is probable.

Events After the Reporting Date

Post year-end events that provide additional information about the Groups position at the
financial reporting date (adjusting events) are reflected in the financial statements. Post year-end
events that are not adjusting events are disclosed in the notes to consolidated financial statements
when material.

3. Significant Accounting Judgments and Estimates

The preparation of the Groups consolidated financial statements in accordance with PFRS
requires management to make judgments, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at
the reporting date. However, uncertainty about these assumptions and estimates could result in
outcomes that could require a material adjustment to the carrying amount of the asset or liability
affected in the future.

*SGVFS012872*
 - 24 -

Judgments
In the process of applying the Groups accounting policies, management has made the following
judgments, apart from those involving estimations, which has the most significant effect on the
amounts recognized in the consolidated financial statements:

Determining functional currency

Based on the economic substance of the underlying circumstances relevant to the companies in the
Group, the functional currency of all companies in the Group has been determined to be the US
dollar. The US dollar is the currency of the primary economic environment in which the
companies in the Group operate and it is the currency that mainly influences the operating
activities of all companies in the Group.

Deferred tax liability on a subsidiarys undistributed profits

CEIC has an undistributed profit as of December 31, 2014 and 2013 that becomes taxable when
distributed to the Parent Company. PAS 12, Income Taxes, requires the recognition of deferred
tax liability on taxable temporary difference associated with investments in subsidiaries and
interests in joint ventures, unless the Group has the ability to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable
future. The Group has made a judgment that it is probable that the temporary difference will not
reverse in the foreseeable future based on managements plan that the Group will not be declaring
dividends from CEIC in the foreseeable future. Accordingly, no deferred tax liability has been
recognized on the undistributed profits of CEIC.

Operating lease commitments - Group as lessee

The Group has entered into leases of its office and commercial spaces. The Group has determined
that it does not acquire all the significant risks and rewards of ownership of these properties which
are leased as operating leases (see Note 9).

Estimation Uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the
balance sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below.

Estimating useful lives of property, plant and equipment

The Group estimates the useful lives of its property, plant and equipment based on the period over
which the assets are expected to be available for use. The Group reviews annually the estimated
useful lives of property and equipment based on factors that include asset utilization, internal
technical evaluation, technological changes, environmental and anticipated use of the assets
tempered by related industry benchmark information. It is possible that future results of operation
could be materially affected by changes in these estimates brought about by changes in factors
mentioned. A reduction in the estimated useful lives of property and equipment would increase
depreciation expense and decrease noncurrent assets.

Depreciation charged in the consolidated statement of comprehensive income amounted to

$2,900,520, $2,309,774, and $3,037,385 in 2014, 2013 and 2012, respectively. As of
December 31, 2014 and 2013, the Groups property, plant and equipment have a net book value of
$17,015,168 and $15,783,581, respectively (see Note 11).

*SGVFS012872*
 - 25 -

Assessing impairment of nonfinancial assets

The Group assesses impairment on assets whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The factors that the Group considers
important which could trigger an impairment review include the following:

Significant underperformance relative to expected historical or projected future operating

results;
Significant changes in the manner of use of the acquired assets or the strategy for overall
business; and
Significant negative industry or economic trends.

An impairment loss is recognized whenever the carrying amount of an asset exceeds its estimated
recoverable amount which is the higher of an assets fair value less costs to sell and value in use.
For purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows.

Assets that are subject to impairment testing when impairment indicators are present (such as
obsolescence, physical damage, significant changes to the manner in which the asset is used,
worse than expected economic performance, a drop in revenues or other external indicators) are as
follows:

2014 2013
Advances to suppliers, prepaid expense and others
under other current assets (see Note 9) $462,683 $598,944
Property, plant and equipment (see Note 11) 17,015,168 15,783,581
Product development cost, advances to suppliers
included under other noncurrent assets
(see Note 12) 789,426 513,405

No impairment loss was recognized as of December 31, 2014, 2013 and 2012.

Estimating allowance for inventory obsolescence

The Group recognizes allowance for inventory obsolescence when the inventory items are no
longer marketable and diminishes in value. Obsolescence is based on the physical and internal
condition of inventory items. The Group reviews on a monthly basis the condition of its stocks.
The assessment of the condition of the inventory goods either increase or decrease the expenses or
total inventory.

The estimated allowance for inventory obsolescence is $641,583 and $96,885 for 2014 and 2013,
respectively. The carrying amounts of inventories, net of allowance for inventory obsolescence,
amounted to $10,768,681 and $7,534,619 as of December 31, 2014 and 2013, respectively
(see Note 7).

Estimating impairment of loans and receivables

The Group maintains allowance for impairment at a level considered adequate to provide for
potential uncollectible receivables. The level of this impairment allowance is evaluated by the
management on the basis of factors that affect the collectibility of the accounts. These factors
include, but are not limited to, the length of the Groups relationship with debtors, their payment
behavior and known market factors. The Group reviews the age and status of receivable, and
identifies accounts that are to be provided with allowance on a continuous basis either individually
or collectively. The amount and timing of recorded expenses for any period would differ if the
Group made different judgment or utilized different estimates. An increase in the Groups

*SGVFS012872*
 - 26 -

allowance for impairment would increase the Groups recorded expenses and decrease current
assets.

The Group determines allowance for each significant receivable on an individual basis. Among
the items that the Group considers in assessing the impairment is the inability to collect from the
counterparty based on the contractual terms of the receivables.

For collective assessment, allowances are assessed for receivables that are not individually
significant and for individually significant receivables where there is not yet objective evidence of
individual impairment. Impairment losses are estimated by taking into consideration the age of
the receivables, past collection experience and other factors that may affect collectability.

In 2014 and 2013, the Group has not provided any impairment allowance since receivables were
assessed to be fully collectible. The carrying amount of trade and other receivables, loans to
employees and amounts owed by related parties amounted to $20,804,123 and $6,417,353 as of
December 31, 2014 and 2013, respectively (see Notes 6 and 16).

Estimating retirement benefit cost

The determination of the obligation for retirement benefits is dependent on the selection by
management of certain assumptions used by actuaries in calculating such amounts. Those
assumptions are described in Note 19 and include among others, discount rate and salary increase
rate. Actual results that differ from the Groups assumptions are accumulated and amortized over
future periods and therefore, generally affect the recognized expense and recorded obligation in
such future periods. While management believes that the Groups assumptions are reasonable and
appropriate, significant differences in actual experience or significant changes in assumptions may
materially affect the Groups retirement obligation.

The Groups retirement benefit cost amounted to $242,529, $262,301 and $215,925 in 2014, 2013
and 2012, respectively. As of December 31, 2014 and 2013, the Groups retirement benefit
obligation amounted to $1,645,354 and $1,881,835, respectively (see Note 20).

Estimating useful life of software costs and capitalized product development cost
The estimated useful lives of amortizing software costs and capitalized product development cost
were determined on the basis of managements assessment of the period within which the benefits
of these costs are expected to be realized by the Group.

As of December 31, 2014 and 2013, the software costs have been fully amortized (see Note 2).
The carrying of capitalized development cost amounted $560,932 and $469,965 as of
December 31, 2014 and 2013.

Recoverability of deferred income tax assets

The Group reviews the carrying amounts of deferred income tax assets at each balance sheet date
and reduces deferred income tax assets to the extent that it is no longer probable that sufficient
income will be available to allow all or part of the deferred income tax assets to be utilized. The
Group has unrecognized net deferred income tax assets amounting to $389,743 and $439,219 as of
December 31, 2014 and 2013, respectively (see Note 22).

Determining provision for warranty

The Group estimates the total warranty reserve to be recognized on the total internal and external
sales for the period using a predetermined percentage rate. Assumptions made by the Group such
as percentage used is based on their cumulative and industry experience on approximate inventory
returns made by the customers.

*SGVFS012872*
 - 27 -

The provision for warranty amounted to $0.5 million as of December 31, 2014.

Legal contingencies
The estimate of probable costs for the resolution of possible claims has been developed in
consultation with outside counsels handling the Groups defense in these matters and is based
upon analysis of potential claims.

Management, in consultation with these counsels, believes that the likely outcome of these legal
proceedings will not have a material adverse effect on the Groups financial position and operating
results. However, it is possible that the future results of operations could be materially affected on
changes in estimates or in the effectiveness of the strategies relating to these litigations and claims.
No provision for probable losses arising from legal contingencies was recognized in 2014 and
2013 (see Note 28).

4. Business Combination

As discussed in Note 1, the Company acquired the ordinary shares of RBWHI on July 23, 2014.
The authorized capital stock of RBWHI consists of 50,000 shares with a par value of US$1.00 per
share, of which 5,000 shares of such Common Shares are issued and outstanding. The CEIC
bought all of the 5,000 ordinary shares issued representing 100% ownership in the acquired entity.
The amount of consideration transferred for the acquisition was $7,465,105.

The provisional fair values of the identifiable assets and liabilities acquired as at the date of the
acquisition are:

July 30,
Balance Sheet 2014
Assets
Current Assets
Cash and cash equivalent $291,179
Trade and other receivables 4,883,504
Inventories - net 6,648,952
Prepayments and other current assets 177,390
Noncurrent assets held for sale 13,695,428
Noncurrent Assets
Held-to-maturity investment 1,188,130
Other noncurrent assets 311,951
Retirement benefit asset 2,036
Total Assets $27,198,570
Liabilities
Current Liabilities
Trade and other payables $5,251,815
Current portion of interest - bearing loans 4,512,142
Income tax payable 110,930
Deferred revenues 404,741
Noncurrent Liabilities
Interest-bearing loans - net of current portion 6,500,000
Provision for warranty 380,000
Total Liabilities 117,159,628
Fair value of identifiable Net asset $10,038,942

*SGVFS012872*
 - 28 -

As provided for under PFRS 3, the Group has applied provisional accounting for the purchase
price allocation, subject to finalization during the measurement period not exceeding one year
from the acquisition date.

For the period

August 01, 2014
to December 31,
Results of Operation 2014
Net sales $11,729,914
Cost of sales (9,824,009)
Gross income 1,905,905
Operating expenses (690,228)
Financial income - net 133,749
Income before income tax 1,349,426
Provision for income tax 53,829
Net income 1,295,597
Fair value of asset acquired $10,038,942
Cash consideration transferred 7,465,105
Excess of the fair value of net assets acquired over the aggregate
consideration transferred $2,573,837

The negative goodwill represents the contemplated discount granted by the seller as part of the
terms of the SPA.

5. Cash and Cash Equivalents

2014 2013
Cash on hand and in banks $12,598,873 $7,020,304
Short-term deposits 3,449 3,443
$12,602,322 $7,023,747

Cash in banks earns interest at prevailing bank deposit rates. Short-term deposits are made for
varying periods of between one (1) day and three (3) months depending on the immediate cash
requirements of the Group, and earn interest at the respective short-term deposit rates.

Interest income earned from cash in banks and short-term deposits amounted to $23,524, $118,370
and $123,117 in 2014, 2013 and 2012, respectively.

6. Trade and Other Receivables

2014 2013
Trade $10,365,745 $4,054,523
Others (see Notes 9 and 10) 5,221,189 6,343
$15,586,934 $4,060,866

Trade receivables are non-interest bearing and are generally on 30-60 days terms.

*SGVFS012872*
 - 29 -

Others include accrued interest receivable from short-term deposits and nontrade receivable from
suppliers which are expected to be collected within one year.

7. Inventories

2014 2013
At Cost:
Raw materials $4,820,159 $2,241,400
Finished goods 889,141 1,182,590
Work in process 4,082,702 3,115,904
Spare parts 510,748 670,508
10,302,750 7,210,402
At NRV:
Supplies and others 465,931 324,217
Total inventories at lower of cost and NRV $10,768,681 $7,534,619

Certain inventories have been provided with allowance to reflect valuation for non-movement and
obsolescence.

The cost of supplies and other inventories amounted to $419,974 and $421,102, respectively.

The movements in the allowance for inventory obsolescence are as follows:

2014 2013
Balances at beginning of year $96,885 $96,885
Addition (see Note 17) 544,698
Balances at end of year $641,583 $96,885

The cost of inventories recognized as cost of sales amounted to $28,352,936, $22,954,231 and
$20,668,115 in 2014, 2013 and 2012, respectively (see Note 17).

8. Financial Asset at Fair Value through Profit or Loss

This account primarily consists of investment in Unit Investment Trust Fund, which is designated
as at FVPL on initial recognition, acquired by the Company in 2013. The reconciliation of the
carrying amounts of financial assets at FVPL as of December 31, 2014 and 2013 is as follows:

2014 2013
Balances at beginning of year $8,055,039 $
Initial investment 8,021,567
Disposal during the year (7,538,277)
Fair value gains (see Note 20) 184,985 33,472
Balance at end of year $701,747 $8,055,039

All amounts have been determined directly by reference to published prices quoted in an active
market.

*SGVFS012872*
 - 30 -

9. Other Current Assets

2014 2013
Rental deposit (see Note 16) $1,133,929 $1,131,399
Advances to suppliers 235,742 235,709
Security deposit 180,387
Prepaid expenses 104,532
Loans to employees 94,111 134,072
Others 122,410 300,106
$1,871,111 $1,801,286

Advances to suppliers pertain mainly to down payments for production materials that are still to be
delivered.

10. Held-to-Maturity Investments

As of December 31, 2014, the details of HTM investments as a result of business combination are
as follows:

Current portion $114,341

Noncurrent portion 1,073,789
$1,188,130

In compliance with the Corporation Code of the Philippines which requires foreign corporations
doing business in the Philippines to deposit with SEC, securities worth of at least $2,300
(P
=0.1 million) and additional securities with market values equivalent to a certain percentage of
the amount by which the Branchs gross income exceeds $0.1 million (P =5.0 million).

The Groups HTM investments pertain to government bonds which were purchased by the
Philippine Branch of RBWII in compliance with above regulation. The maturity date of the bonds
ranges from 2015-2016 and bear an average effective interest rate of 3.19% to 4.42% per annum.
Interest income is presented as part of Financial income (charges) account in the statement of
comprehensive income.

The SEC shall also require a deposit of additional securities if the actual market values of the
securities in deposit decreases by at least 10% of their actual market values at the time they were
deposited.

*SGVFS012872*
 - 31 -

11. Property, Plant and Equipment

December 31, 2014

Machinery Buildings Facility and Furniture,

and and Production Fixtures and Transportation
Land Equipment Improvement Tools Equipment Equipment Total
Cost:
Beginning balances $ $36,453,977 $5,649,376 $5,489,442 $826,271 $86,204 $48,505,270
Additions 25,765 1,227,497 542,676 64,856 1,860,794
Additions due to
business combination 3,698,601 1,905,546 8,330,384 168,899 18,161 14,121,591
Reclassication to
Noncurrent-Held-
for-Sale (3,698,601) (8,136,173) (11,834,774)
Disposals (38,049) (1,049) (39,098)
Ending balances 38,385,288 7,071,084 5,994,069 1,058,977 104,365 52,613,783
Accumulated
Depreciation:
Beginning balances 24,886,622 3,717,818 3,314,529 734,613 68,107 32,721,689
Depreciation 1,701,006 437,086 666,903 84,829 10,696 2,900,520
Disposals (23,014) (580) (23,594)
Ending balances 26,587,628 4,154,904 3,981,432 818,862 78,803 35,598,615
Net Book Values $ $11,797,660 $2,916,180 $2,035,651 $240,115 $25,562 $17,015,168

December 31, 2013

Machinery Buildings Facility and Furniture,

and and Production Fixtures and Transportation
Land Equipment Improvement Tools Equipment Equipment Total
Cost:
Beginning balances $ $33,987,777 $5,649,376 $4,538,972 $768,769 $86,204 $45,031,098
Additions 2,466,200 950,470 57,502 3,474,172
Disposals
Ending balances 36,453,977 5,649,376 5,489,442 826,271 86,204 48,505,270
Accumulated
Depreciation:
Beginning balances 23,617,503 3,475,650 2,591,241 664,349 63,172 30,411,915
Depreciation 1,269,119 242,168 723,288 70,264 4,935 2,309,774
Disposals
Ending balances 24,886,622 3,717,818 3,314,529 734,613 68,107 32,721,689
Net Book Values $ $11,567,355 $1,931,558 $2,174,913 $91,658 $18,097 $15,783,581

There are no restrictions on title and no property, plant and equipment are pledged as security for
liabilities.

On December 9, 2014, the Parent Companys BOD approved the plan to sell the land and building
of RBWII - Philippine Branch and RBWRP to interested buyers as a result of its efficiency
measures in the Groups operations. The related property and equipment as of December 31, 2014
were measured at fair value and a provision for impairment loss on property and equipment
amounting to $426,163 was recognized. An independent valuation was obtained to determine the
fair values of property and equipment which were based on recent transactions for similar assets
within the same industry. The impairment loss has resulted to a reduction in Excess of the fair
value of net assets acquired over the aggregate consideration transferred value account in the
consolidated statement of income. Property and equipment with carrying value of $11,834,774,
net of allowance for impairment loss of $426,163, was classified as assets held for sale in
consolidated statements of financial position. The Parent Companys management expects that
sale will be completed within one year from the date of classification.

*SGVFS012872*
 - 32 -

12. Other Noncurrent Assets

2014 2013
Product development costs $560,932 $469,965
Miscellaneous deposits 167,551 168,776
Advances to suppliers 101,940 43,440
Note receivable 87,373
Others 44,708 5,567
$962,504 $687,748

Miscellaneous deposits pertain to refundable deposits with MERALCO for the installation of
CECs electrical meters and bill deposit equivalent to one month energy consumption.

As of December 31, 2014 and 2013, CEC has software costs with gross carrying amount of
$39,278 that are fully amortized but are still in active use.

Product development costs pertain to the capitalized cost of developing certain packages or
products for specific customers. The development costs met the requirements of PAS 38,
Intangible Assets, for capitalization. As of December 31, 2014 and 2013, amortization of product
development cost was charged to the consolidated statements of comprehensive income for the
development costs incurred in 2013 and 2012, respectively, as these are substantially available for
use.

13. Trade and Other Payables

2014 2013
Trade $5,263,140 $3,487,478
Accruals:
Payroll 878,519 56,554
Utilities 381,567 416,540
Interest 206,336 70,200
Others 99,485 42,072
Advances from customers 1,835,464 153,544
Others 769761 157,266
$9,434,272 $4,383,654

Trade payables are non-interest bearing and are generally on 60-90 days terms.

Accruals comprise mainly of accruals for electricity, water, communication, security, shuttle
services and professional services.

Advances from customers pertain mainly to downpayments for sales orders.

Other payables pertain to statutory liabilities and are generally payable within 12 months from
balance sheet date.

*SGVFS012872*
 - 33 -

14. Short-term loan

On September 5, 2014, CEC obtained additional loans of $3,300,00 from Security bank with a
2.10% interest per annum. As of December 31, 2014, the outstanding balance of short-term loan
amounted to $2,100,000.

In 2013, CEC obtained a 180-day loan from Chinatrust (Phils.) Commercial Bank Corporation
amounting to $200,000 with a 2.28% interest per annum. The amount was fully paid in 2014.

15. Long-term debt

2014 2013
5-year corporate note-secured $8,750,000 $9,750,000
Additions:
Additional availment during the year 10,000,000
Due to business combination 8,479,933
Less deferred financing costs 65,320 100,344
27,164,613 9,649,656
Less current portion - net of deferred financing costs 3,412,079 964,977
$23,752,534 $8,684,679

CHPC
On July 25, 2012, the Parent Company entered into a $10.0 million Notes Facility Agreement
(NFA) with Metropolitan Bank & Trust Company (Initial Noteholder), Metropolitan Bank & Trust
Company - Trust Banking Group (Facility and Paying Agent) and First Metro Investment
Corporation (Arranger). The Notes Facility Agreement provided for the issuance of 5-year fixed
rate corporate note which bears interest of 3.6% per annum payable quarterly. On July 27, 2012
(issue date), the Parent Company drew $10.0 million from the facility. The net proceeds of the
issuance of the Notes shall be used to finance the Groups strategic acquisitions and for general
corporate purposes.

Under the NFA, the Parent Company shall pay 30% of the loan outstanding on issue date in 12
equal consecutive quarterly installments in the amount equivalent to 2.5% of loan outstanding on
issue date commencing on the end of the 5th quarter until end of the 16th quarter from the issue
date. The remaining 70% of the loan outstanding on issue date is payable in 4 equal consecutive
quarterly installments in the amount equivalent to 17.5% of the loan outstanding on issue date
commencing on the 17th quarter from the issue date until the maturity date.

Prior to the maturity date, the Parent Company may redeem in whole but not in part, the relevant
outstanding notes beginning on and after the third anniversary of the issue date, by paying the
amount that is equivalent to 102% of the unpaid principal amount together with any and all
accrued interest up to the date of prepayment.

In accordance with the NFA, the following ratios based on consolidated financial statements of the
Group are required to be maintained:

debt to equity ratio shall not at any time exceed 2:1

debt service coverage ratio shall not exceed 1:5

*SGVFS012872*
 - 34 -

current ratio shall not at any time be less than 1:1, provided however, this ratio shall not apply
after the fourth anniversary of the issue date.

The Group is in compliance with the debt covenants as of December 31, 2014 and 2013.

Total interest expense charged to the consolidated statements of comprehensive income amounted
to $551,334, $403,450 and $182,980 in 2014, 2013 and 2012, respectively.

Unamortized deferred financing cost reduced the carrying amount of long-term debt by $65,320
and $100,344 as of December 31, 2014 and 2013, respectively.

RBWII Philippine Branch

Prior to acquisition, the Philippine Branch obtained a secured interest bearing loan from local
commercial bank amounting to $13.0 million. The principal is payable in 28 quarterly payments
of $464,286 until 2018 and bears annual interest rate of 3.0% plus three month London inter-bank
offer rate (LIBOR). This bank loan was specifically borrowed for working capital purposes.
RBWRP agreed to be the third party mortgagor for the loan obtained by the Branch. The land and
building owned by RBWRP with a net book value of $9.7 million as at December 31, 2012 was
used as the collateral for the secured interest-bearing loan.

Interest expense charged to operations for the period August 1, 2014 to December 31, 2014
amounted to $154,856.

16. Related Party Disclosures

Parties are considered to be related if one party has the ability to control, directly or indirectly, 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. Related
parties may be individuals or corporate entities.

In the normal course of business, the Group has entered into transactions with affiliates. The
significant transactions consist of the following:

a. Advances for operating requirements of Cirtek Holdings, Inc. (CHI), former parent of CEC
and CEIC
b. Rental of land and lease deposit with Cirtek Land Corporation (CLC), an affiliate, where the
manufacturing building 1 and administrative building is situated.
c. Payments and /or reimbursements of expenses made or in behalf of the affiliates.
d. Rental of land with Cayon Holdings, Inc. (Cayon), an affiliate, where the building 2 of the
Group is situated.

*SGVFS012872*
 - 35 -

The consolidated balance sheets and consolidated statements of income include the following
significant account balances resulting from the above transactions with related parties:

a. Amounts owed to related parties

Amount Outstanding Balances

Nature of 2014 2013 2014 2013 Terms Conditions
Transactions
Other related parties
CLC Rental $10,630 ($18,586) $420,679 $410,049 Due and Unsecured
demandable;
non-interest
bearing

Cayon Rental 12,097 10,427 49,468 37,371 Due and Unsecured

demandable;
non-interest
bearing
$22,727 ($8,159) $470,147 $447,420

b. Amounts owed by related parties

Volume Outstanding Balances

Nature of 2014 2013 2014 2013 Terms Conditions
Transactions
Other related parties
CHI Advances for $ $ $1,809,256 $1,809,256 Due and Unsecured; no
working capital demandable; impairment
non-interest
bearing

Cayon Reimbursement 6,363 206,284 206,284 Due and Unsecured; no

of expenses demandable; impairment
non-interest
bearing

Camerton, Inc. Reimbursement (353) 33,161 33,161 Due and Unsecured; no

of expenses demandable; impairment
non-interest
bearing

Jerry Liu Reimbursement 2,900,663 173,714 3,074,377 173,714 Due and Unsecured; no
of expenses demandable; impairment
non-interest
bearing
$2,900,663 $179,724 $5,123,078 $2,222,415

c. Rental deposit

Outstanding Balances
Amount (see Note 9)
2014 2013 2014 2013 Terms Conditions
Other related party
Due and
demandable; non- Unsecured; no
CLC $ $ $1,131,399 $1,131,399 interest bearing impairment

The above related parties are under common ultimate ownership with the Group.

In 2011, the Group entered into the following assignments and set-off agreements with the related
parties as part of its corporate restructuring:

*SGVFS012872*
 - 36 -

Transactions with CHI, Charmview Enterprises Ltd (CEL) and officer

The amount owed by an officer amounting to $7.7 million as of December 31, 2010 was
transferred in 2011 to CEL, the former ultimate parent of CEC and CEIC. CEL now owns 40%
interest in Camerton, the parent of the Parent Company.

The amounts owed by and to CHI as of December 31, 2010 represent advances for working capital
lines in the normal course of business when CEC and CEIC were then still subsidiaries of CHI.

For purposes of settling outstanding balances with the Group and as part of corporate restructuring
in preparation for the planned Initial Public Offering (IPO) of the Parent Company, on March 17,
2011:

CHI, CEL and the officer, with the consent of the Group, entered into assignment agreements
whereby CHI absorbed the amounts owed by CEL and by the officer as of March 17, 2011
amounting to $7.7 million and $0.8 million, respectively.

The Group, with the consent of the related parties, entered into assignment agreements
whereby the Parent Company absorbed the amount owed by CEIC to CHI totaling
$3.6 million representing unpaid advances of $2.3 million and dividends of $1.3 million
(see Note 26) as of March 17, 2011.

Thereafter, on March 18, 2011, the Parent Company and CHI, in view of being creditors and
debtors to each other as a result of the assignment agreements above, entered into a set-off
agreement for the value of the Groups liability aggregating $6.8 million. The amount represents
the above mentioned total liability of $3.6 million and the balance outstanding from the Parent
Companys purchase of CEC and CEIC amounting to $3.2 million (see Note 4), as revalued from
the effect of foreign exchange rate.

The amount owed by CHI as of December 31, 2014 and 2013 pertains to the remaining balance of
receivable as a result of the assignments and set-off agreements as discussed above.

Transactions with Camerton

Camerton is the majority shareholder of the Parent Company holding 60% interest. Amounts
owed by Camerton as of December 31, 2014 and 2013 pertain mainly to advances for
incorporation expenses of Camerton.

Transactions with CLC and Cayon

CLC is an entity under common ownership with the ultimate parent. CEC had a lease agreement
on the land where its manufacturing plant (Building 1) is located with CLC for a period of 50
years starting January 1, 1999. The lease was renewable for another 25 years at the option of
CEC. The lease agreement provided for an annual rental of $151,682, subject to periodic
adjustments upon mutual agreement of both parties.

On January 1, 2005, CEC terminated the lease agreement with CLC but has continued to occupy
the said land for no consideration with CLCs consent. With the termination of the lease
agreement, the Group has classified the rental deposit amounting to $1.1 million as current asset as
the deposit has become due and demandable anytime from CLC (see Note 9).

On January 1, 2011, CEC entered into an agreement with CLC to lease the land where CECs
Building 1 is located. The agreement calls for a =
P640,704 rent per annum for a period of ten (10)
years and renewable thereafter by mutual agreement of the parties subject to such new terms and
conditions as they may then be mutually agreed-upon. Total rent expense charged to operations
amounted to $14,434, $16,314 and $41,162 in 2014, 2013 and 2012, respectively.

*SGVFS012872*
 - 37 -

CEC also entered into an agreement with Cayon starting January 1, 2011 to lease the land where
CECs Building 2 is located. The agreement calls for an annual rental of =
P582,144 for a period of
ten (10) years and renewable thereafter. Total rent expense charged to operations amounted to
$13,114, $14,823 and $14,329 in 2014, 2013 and 2012, respectively.

Future minimum rental payables under these operating leases are as follows:

2014 2013
Within one year $28,821 $28,821
After one year but not more than five years 144,103 144,103
More than five years 28,821
$172,924 $201,745

The short-term compensation of key management personnel of the Group are as follows:

2014 2013 2012

Salaries and wages $953,896 $538,662 $499,977
Employee benefits 194,985 157,984 160,046
$1,148,881 $696,646 $660,023

17. Cost of Sales

2014 2013 2012

Raw materials, spare parts, supplies and
other inventories used (see Note 7) $28,352,936 $22,954,231 $20,668,115
Salaries, wages and employees benefits
(see Notes 16 and 20) 7,821,742 7,125,555 6,959,222
Utilities 3,556,257 3,409,564 3,120,341
Depreciation and amortization
(see Note 11) 2,838,858 2,260,022 2,985,708
Inward freight and duties 738,501 708,910 819,971
Change in finished goods and work in
process inventories (see Note 7) 430,359 (1,359,760) (1,084,142)
Others 512,682 378,443 321,762
$44,251,335 $35,476,436 $33,790,977

*SGVFS012872*
 - 38 -

18. Operating expense

2014 2013 2012

Salaries, wages and employees benefits
(see Notes 16 and 20) $1,594,075 $1,036,979 $1,032,961
Utilities 290,845 286,836 287,189
Transportation and travel 284,608 259,143 248,340
Professional fees 132,542 206,825 239,732
Entertainment, amusement and recreation 168,981 248,958 182,575
Commissions 159,935 155,117 158,463
Depreciation (see Note 11) 61,662 49,753 51,677
Taxes and licenses 47,792 43,783 33,490
Office supplies 27,815 17,372 24,428
Insurance premiums 31,191 2,711 3,440
Provision for inventory obsolescence
(see Note 7) 65,421
Others 529,010 125,223 50,615
$3,328,456 $2,432,700 $2,378,331

19. Salaries, Wages and Employees Benefits

2014 2013 2012

Salaries and wages $7,771,711 $6,331,838 $6,211,521
Other employees benefits 1,401,577 1,568,395 1,564,737
Retirement costs (see Note 20) 242,529 262,301 215,925
$9,415,817 $8,162,534 $7,992,183

20. Retirement Benefit Obligation

The Group has a funded, noncontributory defined benefit retirement plan which covers all of its
regular employees. The benefits are based on years of service and compensation on the last year
of employment.

Retirement costs recognized in the consolidated statements of comprehensive income are as

follows:

2012
2014 2013 (As restated)
Current service cost $140,308 $147,287 $114,309
Interest cost 102,221 115,014 101,616
Expense recognized during plan year $242,529 $262,301 $215,925

*SGVFS012872*
 - 39 -

The amounts recognized in the consolidated balance sheets as retirement benefit obligation are as
follows:

2014 2013
Present value of the obligation $1,780,923 $1,951,134
Fair value of plan assets (135,136) (69,299)
Retirement benefit obligation $1,645,787 $1,881,835

Changes in the present value of the obligations are as follows:

2014 2013
Opening defined benefit obligation $1,951,134 $2,006,592
Current service cost 2,045,396 147,287
Interest cost 106,005 115,014
Translation difference (13,000) (155,146)
Actuarial gain on obligation (403,924) (162,613)
Benefits paid (1,905,088)
Closing present value of defined obligation $1,780,923 $1,951,134

2014 2013
Opening fair value of plan assets $69,299 $
Effect of business combination 1,878,867
Interest income included in net interest costs 3,784 478
Contributions paid 62,764 96,292
Actual return on plan assets excluding interest 279 (24,262)
Translation difference 25,231 (3,209)
Benefits paid (1,905,088)
Closing fair value of plan assets $135,136 $69,299

The principal actuarial assumptions used to determine retirement obligations for the Groups
retirement plan are as follows:

2014 2013 2012

Discount rate 4.64% 5.46% 6.90%
Salary increase rate 2.00% 4.00% 4.00%

The sensitivity analysis below has been determined based on reasonably possible changes of each
significant assumption on the pension obligations as of December 31, 2014, assuming all other
assumptions were held constant:

Increase/(Decrease) Effect on Present Value of

(In percentage point) Defined Benefit Obligation
Discount rate +1% ($198,263)
-1% 238,321

Future salary increase rate +1% $231,782

-1% (196,346)

*SGVFS012872*
 - 40 -

The Company has contributed $62,764 and $96,292 to the plan assets in 2014 and in 2013. The
average duration of the defined benefit obligation at the end of the reporting date is 16 years.
Shown below is the maturity analysis of the undiscounted benefit payments as of December 31,
2014:

1 year or less $55,447

More than 1 year to 5 years 545,277
More than 5 years 7,575,156

21. Other Income (Charges)

2014 2013 2012

Excess of the fair value of net assets
acquired over the aggregate
consideration transferred (see Note 4) $2,573,837 $ $
Sale of scrap 259,819 111,660 244,045
Foreign exchange losses - net 151,402 (390,651) (4,940)
Mark-to-market loss (584,163) (81,770)
Others - net (57,050) (30,401) 2,673
$2,928,008 ($893,555) $160,008

22. Income Taxes

CEC
On March 24, 1998, the Philippine Economic Zone Authority (PEZA) approved CECs
registration as an ecozone export enterprise at the Laguna Technopark for the manufacture of
standard integrated circuits, discrete, hybrid and potential new packages.

Beginning October 30, 2002, the manufacture and export of integrated circuits, discrete and hybrid
transferred to PEZA from Board of Investments (where originally registered) and became subject
to the 5% gross income tax incentive, as defined under Republic Act (R.A.) No. 7916, the law
creating the PEZA.

RBWII Philippine Branch

The Philippine Branch was registered with PEZA as an Ecozone Export Enterprise to engage in
the manufacture, fabrication and design of millimeterwave components and subsystems in a
special economic zone to be known as the Carmelray Industrial Park I Special Economic Zone
(CIP I-SEZ) in accordance with the project study, representations, commitments and proposals set
forth in its application forming integral parts, subject to the terms and conditions provided in its
registration.

As a PEZA-registered activity, the Philippine Branch is entitled to tax incentives equivalent to 5%

of the gross income earned on its registered activities after the income tax holiday (ITH) of four
years.

*SGVFS012872*
 - 41 -

Details of provision for (benefit from) income tax are as follows:

Years Ended December 31

2014 2013 2012
Current $202,011 $190,813 $215,287
Deferred (123,035) 69,006 (60,479)
$78,976 $259,819 $154,808

The provision for current income tax for the year ended December 31, 2014, 2013 and 2012
pertains to the special rate of 5% on taxable gross income of CEC, RBWII Philippine Branch
and RBWRP.

Based on the National Internal Revenue Code Sec. 27, Minimum Corporate Income Tax (MCIT)
of two percent (2%) of the gross income as of the end of taxable year is imposed on corporation
beginning on the fourth taxable year immediately following the year in which such corporation
started its commercial operation when the MCIT is greater than the regular corporate income
computed for the taxable year. The Parent Company is subject to MCIT beginning 2015.

A reconciliation of provision for income tax computed at the statutory income tax rate to provision
for income tax shown in the consolidated statements of comprehensive income follows:

Years Ended December 31

2014 2013 2012
Income tax at applicable statutory rate $304,717 $244,832 $221,341
Additions to (reduction in) income tax:
Nontaxable income (128,692)
Change in unrecognized deferred
income tax assets (60,008) 104,722 58,853
Taxable income subject to Income
Tax Holiday (53,519) (71,835) (67,578)
Nondeductible entertainment and
representation expense 136 11,825 2,908
Non-deductible expenses 12,935 3,438 7,355
Translation difference and others 3,690 (14,659) (50,174)
Interest income subject to final tax (283) (18,504) (17,897)
$78,976 $259,819 $154,808

In 2014, 2013 and 2012, the CEC has availed an income tax holiday of certain product lines.
Total gross income for the registered activities of CEC amounted to $1,070,379, $1,481,216 and
$1,351,556 in 2014, 2013 and 2012, respectively.

Scrap sales amounted to $257,647, $139,701 and $244,045 in 2014, 2013 and 2012, respectively,
is also subjected to 5% tax as these pertain to scrap materials that undergone production process of
CEC.

*SGVFS012872*
 - 42 -

CEC has recognized deferred income tax on temporary differences arising from accrued
retirement obligations and the difference between the accounting and tax bases of property, plant
and equipment as follows:

2014 2013
Deferred tax assets
Accrued retirement $85,643 $86,075
Allowance for impairment loss 127,849

Deferred tax liability

Effect of foreign exchange differences between
tax base and financial reporting base (10,015) (5,633)
203,477 80,442
Deferred income tax asset (liability) related to
retirement benefit obligation recognized under
other comprehensive income (16,898) 3,312
$186,579 $83,754

On the other hand, the Parent Company has temporary difference pertaining to unrealized foreign
exchange loss, unrealized mark-to-market loss and NOLCO with an aggregate amount of
$1,264,037 and $1,464,063 in 2014 and 2013, respectively. The deferred income tax asset was not
recognized in the Parent Companys balance sheet since the management expects that it will not
generate sufficient taxable income in the future that will be available to allow part of the deferred
income tax assets to be utilized. The components of the unrecognized deferred income tax assets
are as follows:

2014 2013
NOLCO $375,377 $239,426
Unrealized mark-to-market loss 18,376
Unrealized foreign exchange loss 3,834 181,417
$379,211 $439,219

As of December 31, 2014 and 2013, the Parent Company incurred NOLCO that can be claimed as
deduction from future taxable income as follows:

Period of Availment
recognition Period Amount Applied Expired Balance
2011 2012-2014 $35,106 $ $35,106 $
2012 2013-2015 248,001 248,001
2013 2014-2016 585,191 585,191
2014 2015-2017 418,065 418,065
$1,286,363 $ $35,106 $1,251,257

CEIC is exempt from income tax under the tax privileged status as a BVI business company under
the BVI Business Companies Act.

*SGVFS012872*
 - 43 -

23. Earnings Per Share (EPS)

The following table presents information necessary to calculate EPS on net income.

2014 2013 2012

Net income $6,541,692 $4,636,836 $4,407,165
Weighted average number of common
shares outstanding 336,261,197 336,261,197 240,368,810
Basic and diluted EPS $0.020 $0.014 $0.018

As of December 31, 2014, 2013 and 2012, the Parent Company has no dilutive potential common
shares.

The weighted average number of common shares outstanding used in the calculation of the EPS is
based on the outstanding shares of the Parent Company. The additional shares from stock
dividends during the year, including the unissued stock dividends and stock dividends declared
after the reporting period but before the approval of the financial statements, were reflected in the
calculation of the EPS as if these shares have been issued in all earlier period presented. Thus,
EPS for the years 2013 and 2012 were restated.

24. Operating Segment

The Group has determined that it is operating as one operating segment. Based on managements
assessment, no part or component of the business of the Group meets the qualifications of an
operating segment as defined by PFRS 8. More specifically:

There is no significant or obvious distinction among the products assembled by the Group.
All products are semiconductor packages that go into electronic products and applications.
The assembly process is likewise similar;
The Groups production facility and head office is located in the Philippines;
Although production of goods is divided into six divisions, the commercial, technical,
operating, marketing and selling matters are made at the executive committee level and not at
the division levels. The role of the respective division managers is to ensure that production is
on track in meeting its volume forecasts, and that quality standards are consistently met.

Sales are reported internally per division, but profit or loss, assets and liabilities are reported on an
entity-wide basis. These information are measured using the same accounting policies and
estimates as the Groups consolidated financial statements.

*SGVFS012872*
 - 44 -

Sales from external customers per division as reported internally are as follows (amounts in
thousands):

2014 2013 2012

Discrete $10,800 $11,506 $9,757
Multichip 9,629 8,878 9,081
Integrated Circuits (IC) 8,556 9,903 7,223
Odr 8,003
New Products 5,221 6,704 5,476
Quad-Flat No-Leads (QFN) 3,848 5,097 6,950
Hermetics 2,008 1,896 2,144
Bri 1,534
Ems 1,034
Irfu 1,009
Cou 150
$51,792 $43,984 $40,631

Below are customers contributing to at least 10% of the Groups total sales of each year. Sales to
these customers are as follows (amounts in thousands):

2014 2013 2012

Major Customer A (Semtech) $10,778 $ $
Major Customer B (Maxim) 10,495 9,543 5,142
Major Customer C (Bourns) 4,809 5,486 4,351

The Groups customers are located in various countries, with the bulk of revenues contributed by
customers located in Europe and the USA. Following shows the revenue distribution of customers
by revenue contribution (amounts in thousands):

2014 2013 2012

Asia $23,880 $11,158 $7,687
Europe 17,238 18,478 18,608
USA 10,674 14,348 14,336
$51,792 $43,984 $40,631

There are no sales made to entities under common control with the Group.

25. Financial Risk Management Objectives and Policies

The Groups principal financial instruments comprise of cash and cash equivalents, short term
loans and long-term debt. The main purpose of these financial instruments is to support the
Groups operation. The Group has various other financial instruments such as trade and other
receivables, amounts owed by related parties, rental deposits and loans to employees (presented as
part of other current assets, miscellaneous deposits (presented under other noncurrent assets), trade
and other payables, amounts owed to related parties and derivative liability which generally arise
directly from its operations.

Risk Management Structure

The BOD is mainly responsible for the overall risk management approach and for the approval of
risk strategies and principles of the Group.

*SGVFS012872*
 - 45 -

The main risks arising from the financial instruments of the Group are credit risk, liquidity risk
and foreign currency risk. The Groups management reviews and approves policies for managing
each of these risks and they are summarized below.

Credit risk
Credit risk is the risk that the Group will incur a loss because its customers or counterparties failed
to discharge their contractual obligations.

The Group trades only with recognized, creditworthy third parties. It is the Groups policy that all
customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis with the result that the Groups
exposure to bad debts is not significant.

The table below shows the maximum exposure to credit risk of the Groups financial assets. The
maximum exposure is shown net of impairment losses, if any:

2014 2013
Cash and cash equivalents* $12,601,553 $7,023,647
Trade and other receivables 15,586,934 4,060,866
Financial assets at FVPL 701,747 8,055,039
Amounts owed by related parties 5,123,078 2,222,415
Other current assets
Rental deposit 1,133,929 1,131,399
Loans to employees 94,111 134,072
Held-to-maturity (HTM) investments 1,181,130
Other noncurrent assets
Miscellaneous deposits 167,551 168,776
Total credit risk exposure $35,590,033 $22,796,214
*Excluding cash on hand

The aging analyses per class of financial assets that are past due but not yet impaired are as
follows:

December 31, 2014

Neither Past Due but not Impaired

Past Due Impaired
nor 60 - 90 Financial
Impaired < 30 days 30 - 60 days days > 90 days Assets Total
Cash and cash equivalents* $12,601,553 $ $ $ $ $ $12,601,553
Trade and other receivables 14,075,613 823,572 654,895 4,546 28,308 15,586,934
Financial assets at FVPL 701,747 701,747
Amounts owed by related
parties 5,123,078 5,123,078
Other current assets
Rental deposit 1,133,929 1,133,929
Loans to employees 94,111 94,111
HTM investments 1,181,130 1,181,130
Other noncurrent assets
Miscellaneous deposits 167,551 167,551
$28,727,594 $823,572 $654,895 $4,546 $6,379,426 $ $36,590,033
*Excluding cash on hand

*SGVFS012872*
 - 46 -

December 31, 2013

Neither Past Due but not Impaired

Past Due Impaired
nor 60 - 90 Financial
Impaired < 30 days 30 - 60 days days > 90 days Assets Total
Cash and cash equivalents* $7,023,647 $ $ $ $ $ $7,023,647
Trade and other receivables 3,168,356 775,341 87,894 2,500 26,775 4,060,866
Financial assets at FVPL 8,055,039 8,055,039
Amounts owed by related
parties 2,222,416 2,222,416
Other current assets
Rental deposit 1,131,399 1,131,399
Loans to employees 134,072 134,072
Other noncurrent assets
Miscellaneous deposits 168,776 168,776
$18,415,818 $775,341 $87,894 $2,500 $3,514,662 $ $22,796,215
*Excluding cash on hand

The tables below summarize the credit quality per class of the Groups financial assets that are
neither past due nor impaired:

December 31, 2014

Neither Past Due nor Impaired

High Medium
Grade Grade Low Grade Total
Cash and cash equivalents * $12,601,553 $ $ $12,601,553
Trade and other receivables 14,042,759 32,854 14,075,613
Financial assets at FVPL 701,747 701,747
HTM investments 1,181,130 1,181,130
Other noncurrent assets
Miscellaneous deposits 167,551 167,551
$27,513,610 $32,854 $ $27,546,464
* excluding cash on hand

December 31, 2013

Neither Past Due nor Impaired

High Medium
Grade Grade Low Grade Total
Cash and cash equivalents
(excluding
cash on hand) $7,023,647 $ $ $7,023,747
Trade and other receivables 3,139,082 29,274 3,168,357
Financial assets at FVPL 8,055,039 8,055,039
Other noncurrent assets
Miscellaneous deposits 168,776 168,776
$18,386,544 $29,274 $ $18,415,818

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).

*SGVFS012872*
 - 47 -

Medium grade - These are receivables where collections are probable due to the reputation and the
financial ability of the counterparty to pay and that have history of sliding beyond the credit terms
but pay within 60 days.

Low grade - These are receivables where the counterpartys capability of honoring its financial
obligation is doubtful.

Liquidity risk
Liquidity risk is the risk that the Group may encounter difficulties in raising funds to meet
commitments from financial instruments. Liquidity risk may result from a counterpartys failure
on repayment of a contractual obligation or inability to generate cash inflows as anticipated.

The Group maintains sufficient cash to finance its operations and major capital expenditures and
satisfy its maturing obligations. It may also from time to time seek other sources of funding,
which may include debt or equity financings, including dollar and peso-denominated loans from
Philippine banks, depending on its financing needs and market conditions.

The tables below summarize the maturity analysis of the Groups financial assets used for
liquidity management and financial liabilities based on contractual undiscounted payments:

December 31, 2014

Less than
On demand 1 year 1 to 2 years 3 to 5 years Total
Financial Assets
Cash and cash equivalents $12,602,322 $ $ $ $12,602,322
Trade and other receivables 15,586,934 15,586,934
Amounts owed by related parties 5,123,078 5,123,078
$17,725,400 $15,586,934 $ $ $33,312,334
Financial Liabilities
Trade and other payables
Trade payables $5,263,140 $ $ $ $5,263,140
Accrued expenses 1,565,907 1,565,907
Amounts owed to related parties 470,146 470,147
Long-term debt 1,686,010 17,247,742 8,418,943 27,352,695
Derivative liability 40,836 40,836
$5,733,286 $3,292,753 $17,247,742 $8,418,943 $34,692,724

December 31, 2013

Less than
On demand 1 year 1 to 2 years 3 to 5 years Total
Financial Assets
Cash and cash equivalents $7,023,747 $ $ $ $7,023,747
Trade and other receivables 4,060,866 4,060,866
Amounts owed by related parties 2,222,415 2,222,415
$9,246,162 $4,060,866 $ $ $13,307,028
Financial Liabilities
Trade and other payables
Trade payables $3,487,478 $ $ $ $3,487,478
Accrued expenses 567,374 567,374
Amounts owed to related parties 447,420 447,420
Long-term debt 1,334,675 4,045,825 5,298,300 10,678,800
Derivative liability 102,090 102,090
$3,934,898 $2,004,139 $4,045,825 $5,298,300 $15,283,162

*SGVFS012872*
 - 48 -

Foreign currency risk

The Group uses the US dollar as its functional currency and is therefore exposed to foreign
exchange movements, primarily in Philippine Peso currency. The Group follows a policy to
manage its currency risk by closely monitoring its cash flow position and by providing forecast on
all other exposures in non-US dollar currencies.

The following table demonstrates the sensitivity to a reasonably possible change in the foreign
exchange rate, with all other variables held constant, of the Groups income before income tax as
of December 31:

2014
Original Total Dollar
Currency in Php1 Equivalent
Financial assets
Cash and cash equivalents 35,143,622 $785,860
Trade and other receivables 281,617 6,343
Financial asset at FVPL 31,382,139 701,747
Amounts owed by related parties 18,371,609 413,822
Other current assets 144,774,223 3,176,289
Other non-current assets 15,560,561 353,455
Total financial assets 245,513,771 5,437,516
Financial liabilities
Trade and other payables 76,880,509 1,725,970
Amounts owed to related parties 21,024,919 470,146
Total financial liabilities 97,905,428 2,196,116
Net financial assets 147,608,343 $3,241,400
1
1 = $.0223

2013
Original Total Dollar
Currency in Php1 Equivalent
Financial assets
Cash and cash equivalents 10,909,363 $245,735
Trade and other receivables 281,617 6,343
Financial asset at FVPL 357,603,488 8,055,039
Amounts owed by related parties 18,371,609 413,822
Other current assets 66,231,987 1,270,472
Other non-current assets 7,739,588 174,335
Total financial assets 461,137,652 10,165,746
Financial liabilities
Trade and other payables 24,589,954 553,890
Amounts owed to related parties 19,863,213 447,420
Total financial liabilities 44,453,167 1,001,310
Net financial assets 416,684,485 $9,164,436
1
1 = $.0225

*SGVFS012872*
 - 49 -

Foreign
Currency Effect on Foreign Effect on
appreciates Income Currency Income
2014 by Before Tax depreciates by Before tax
Peso denominated assets +5% ($518,780) -5% $621,825
Peso denominated liabilities +5% 84,334 -5% (84,334)
($537,491) $537,491

Foreign
Currency Effect on Foreign Effect on
appreciates Income Currency Income
2013 by Before Tax depreciates by Before tax
Peso denominated assets +5% ($518,780) -5% $518,780
Peso denominated liabilities +5% 50,010 -5% (50,010)
($468,770) $468,770

The change in currency rate is based on the Groups best estimate of its expected change
considering the historical trends and experiences. There is no other effect on the Groups equity
other than those already affecting income before tax.

Capital Management
The primary objective of the Groups capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to support its business and maximize shareholder
value.

The Group manages its capital structure, which pertains to its noncurrent liabilities and equity as
shown in the consolidated balance sheet and makes adjustments to it, in light of changes in
economic conditions. To maintain or adjust the capital structure, the Group may adjust the
dividend payment to shareholders, return capital to shareholders or issue new shares. As of
December 31, 2014, 2013 and 2012, the Group is subject to externally imposed capital
requirements (see Note 4).

26. Financial Instruments

The following table sets out the categories and class of the Groups financial instruments:

2014
Carrying
Amount Fair Value
Financial assets
Loans and receivables
Cash and cash equivalents $12,602,322 $12,602,322
Trade and other receivables 15,586,934 15,586,934
Financial assets at FVPL 701,747 701,747
Amounts owed by related parties 5,123,078 5,123,078
HTM investments 1,181,130

(Forward)

*SGVFS012872*
 - 50 -

2014
Carrying
Amount Fair Value
Other current assets
Rental deposit $1,133,929 $1,133,929
Loans to employees 94,111 94,111
Other noncurrent assets
Miscellaneous deposits 167,551 $167,551
$36,590,812 $35,408,903
Financial liabilities
Other financial liabilities
Trade and other payables
Trade payables $5,263,140 $5,263,140
Accrued expenses 1,565,907 1,565,907
Advances from customers 1,835,464 1,835,464
Derivative liability 40,836 40,836
Amounts owed to related parties 470,147 470,147
Long-term debt 27,164,613 27,164,613
$36,340,106 $36,340,106

2013
Carrying
Amount Fair Value
Financial assets
Loans and receivables
Cash and cash equivalents $7,023,647 $7,023,647
Trade and other receivables 4,060,866 4,060,866
Financial assets at FVPL 8,055,039 8,055,039
Amounts owed by related parties 2,222,415 2,222,415
Other current assets
Rental deposit 1,131,399 1,131,399
Loans to employees 134,072 134,072
Other noncurrent assets
Miscellaneous deposits 168,776 168,776
$22,796,214 $22,796,214
Financial liabilities
Other financial liabilities
Trade and other payables
Trade payables $3,487,478 $3,487,478
Accrued expenses 651,767 651,767
Advances from customers 153,544 153,544
Derivative liability 102,090 102,090
Amounts owed to related parties 447,420 447,420
Dividends payable
Long-term debt 9,649,656 9,649,656
$14,491,955 $14,491,955

*SGVFS012872*
 - 51 -

Fair Values of Financial Instruments

Fair value is defined as the amount at which the financial instrument could be exchanged in a
current transaction between knowledgeable willing parties in an arms length transaction, other
than in a forced liquidation or sale.

Cash and cash equivalents, trade and other receivables, loans to employees, trade and other
payables
The carrying amounts approximate fair value since these are mostly short-term in nature.

Amounts owed by and owed to related parties and rental deposits

The carrying amounts approximate the fair value since these are due and demandable.

Financial assets at FVPL

Financial assets at FVPL are stated at their fair values based on quoted prices. The fair value is
determined using the Level 1 of the fair value hierarchy.

HTM Investments
The fair value of HTM investments that are actively traded in organized financial markets is
determined by reference to quoted market bid prices, at the close of business on the reporting date
or last trading day as applicable. The fair value is determined using the Level 1 of the fair value
hierarchy.

Miscellaneous deposits
The miscellaneous deposits are carried at cost since the timing and related amounts of future cash
flows cannot be reasonably and reliably estimated for purposes of establishing its fair value using
an alternative valuation technique.

Long-term debt
The fair value of long-term debt is based on the discounted value of future cash flows using the
applicable rates for similar types of loans. Discounts rates used range from 3.63% to 3.70% in
2012.

Derivative liability
The fair value is calculated by reference to prevailing interest rate differential and spot exchange
rate as of valuation date, taking into account its remaining term to maturity.

Freestanding derivatives
As of December 31, 2013, the Group has outstanding foreign currency swap contracts with
counterparty bank with an aggregate notional amount of $1.2 million and remaining maturities of
less than 2 months. The forward rates related to the forward contracts ranged from and from
P
=40.70 to P=40.71 per US$ 1 as at December 31, 2013. The Group recognized derivative liability
relating to these contracts amounting to $40,436 and $102,090 as of December 31, 2014 and 2013,
respectively.

*SGVFS012872*
 - 52 -

The movements in fair value changes of all derivative instruments for the years ended
December 31, 2014 and 2013 are as follows:

2014 2013
At beginning of year ($102,090) $9,480
Net changes in fair value of derivatives not
designated as accounting hedges 102,090
Fair value of settled instruments 61,654 (9,480)
At end of year ($40,436) ($102,090)

The loss from the net fair value changes relating to the foreign currency swap contracts amounting
$584,163 in 2013 are included under Other income (charges) - net in the consolidated
statements of comprehensive income (see Note 21).

Fair Value Hierarchy

The Group uses the following hierarchy for determining the fair value of financial instruments by
valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair
value are observable, either directly or indirectly

Level 3: techniques which use inputs which have a significant effect on the recorded fair value
that are not based on observable market data

Only the derivative instruments, which is classified under level 2 is measured and carried at fair
value. There were no transfers made in the fair value measurements in 2014 and 2013.

27. Equity

a. Capital stock

The roll-forward of the capital stock of the Parent Company follows:

2014 2013
Authorized - common shares (P =1 par value) 400,000,000 400,000,000
Issued shares
Beginning 280,217,656 194,595,600
Upon incorporation
Upon initial public offering
Stock dividend- issued and distributed
(see Note 27) 28,021,763 85,622,056
Ending 308,239,419 280,217,656

Issued - 308,239,419 shares $7,203,869 $6,559,066

Undistributed shares (see Note 26) -
30,823,942 shares 689,265
$7,893,134 $6,559,066

*SGVFS012872*
 - 53 -

On November 18, 2011, the Parent Company listed with the PSE its common stock, wherein it
offered 42,163,000 shares to the public at issue price of =
P7 per share. The total proceeds with
issuance of new shares amounted to = P295.1 million ($6.8 million). The Parent Company
incurred transaction costs incidental to the IPO amounting to P=47.3 million ($1.1 million),
which is charged against Additional paid-in capital in the consolidated balance sheet.

As of December 31, 2014 and 2013, the Parent Company has a total 18 and 80 number of
stockholders, respectively.

b. Retained earnings

The Board of Directors of Cirtek Holdings Philippines Corporation (the Corporation) in its
meeting held today, February 23, 2015, approved the declaration of cash dividend of US
Dollar 0.003893 (US$ 0.003893) per share, payable on March 27, 2015 to stockholders of
record as of March 10, 2015. The cash dividend shall be paid in Philippine Peso at BSP
exchange rate one day before payment date. The total dividend payment will amount to US
Dollar One Million Two Hundred Thousand (US$ 1,200,000) based on the total 308,239,416
outstanding shares of stock of the Corporation.

On January 29, 2014, the BOD of the Parent Company declared cash dividend of $1,200,000
or $0.00428 per share to stockholders of record as of February 13, 2014. Also, on May 30,
2014, the BOD of the Parent Company declared cash dividends amounting to $600,000 or
$0.00214 per share to stockholders of record as of June 16, 2014.

In addition to the cash dividends, the BOD also declared a ten (10%) stock dividend. During
the special stockholders meeting dated July 11, 2014, the shareholders approved and ratified
the declaration of 10% stock dividend payable to stockholders of record as of July 25, 2014
and payment date of August 20, 2014.

On January 16, 2013, the BOD of the Parent Company declared cash dividends amounting to
$1,119,937 ($0.004796 per share) to stockholders of record as of January 31, 2013 payable on
February 15, 2013.

In addition to the cash dividend, the BOD also declared a Twenty Percent (20%) stock
dividend. During a regular meeting held on January 16, 2013, the stockholders approved the
20% stock dividends payable to stockholders of record as of March 15, 2013 and payment
date of April 5, 2013.

During the regular meeting of the BOD of the Parent Company dated September 14, 2012, the
BOD approved the declaration of Twenty Percent (20%) stock dividend to stockholders of
record as of December 21, 2012, distributed on January 10, 2013. In a special meeting of
stockholders dated December 7, 2012, the stockholders approved the Twenty Percent (20%)
stock dividend.

As discussed in Note 15, on March 17, 2011, the Parent Company absorbed the amount owed
by CEIC to CHI, including dividends payable amounting to $1,300,000. Subsequently, on
March 18, 2011, the Parent Company settled the dividends payable through set-off with
existing receivables with CHI.

*SGVFS012872*
 - 54 -

28. Notes to Statement of Cash Flows

The Group has noncash operating, investing and financing activities representing the transfer
of ownership over the assets and liabilities assumed related to the acquisition of REMEC
entities, as discussed in Note 4 to the consolidated financial statements. This transaction has
resulted to an increase in certain assets and liabilities as enumerated in Note 4.

29. Other Matter

CEC is a defendant in certain legal cases which are currently pending before the courts and
other government bodies. In the opinion of management and CECs legal counsel, any
adverse decision on these cases would not materially affect the consolidated financial position
as at December 31, 2014 and 2013 and results of operations for each of the three years in the
period ended December 31, 2014.

*SGVFS012872*
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 December 28, 2012, valid until December 31, 2015
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-3 (Group A),
Philippines November 15, 2012, valid until November 16, 2015

INDEPENDENT AUDITORS REPORT

ON SUPPLEMENTARY SCHEDULES

The Stockholders and the Board of Directors

Cirtek Holdings Philippines Corporation
116 East Main Avenue
Phase V-SEZ
Laguna Technopark
Bian, Laguna

We have audited the accompanying Consolidated Financial Statements of Cirtek Holdings Philippines
Corporation and Subsidiaries (the Group) as at and for the year ended December 31, 2014 in
accordance with Philippine Standards on Auditing and have issued our report thereon dated
April 10, 2015. Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules I to IV and A to H listed in the Index to the Consolidated
Financial Statements and Supplementary Schedules are the responsibility of the Groups management.
These schedules are presented for the purpose of complying with the Securities Regulation Code Rule
68, As Amended (2011) and are not part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state, in all material respects, the information required to be set
forth therein in relation to the basic financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Ladislao Z. Avila, Jr.

Partner
CPA Certificate No. 69099
SEC Accreditation No. 0111-AR-3 (Group A),
January 18, 2013, valid until January 17, 2016
Tax Identification No. 109-247-891
BIR Accreditation No. 08-001998-43-2015,
February 27, 2015, valid until February 26, 2018
PTR No. 4751254, January 5, 2015, Makati City

April 10, 2015

*SGVFS012872*
A member firm of Ernst & Young Global Limited
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTARY SCHEDULES
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2014

Schedule Contents
Index to the Consolidated Financial Statements
I Map Showing the Relationships Between and Among the Companies in the
Group, its Ultimate Parent Company and Co-subsidiaries
II Schedule of All Effective Standards and Interpretations Under Philippine
Financial Reporting Standards
III Reconciliation of Retained Earnings Available for Dividend Declaration
IV Financial Soundness Indicators

Supplementary Schedules
A Financial Assets

Amounts Receivable from Directors, Officers, Employees, Related

B
Parties, and Principal Stockholders (Other than Related parties)

Amounts Receivable from Related Parties and Amounts Payable to Related

C Parties which are Eliminated during the Consolidation of Financial
Statements

D Intangible Assets - Other Assets

E Long-Term Debt

F Indebtedness to Related Parties

G Guarantees of Securities of Other Issuers

H Capital Stock

*SGVFS012872*
 -2-

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

MAP SHOWING THE RELATIONSHIPS BETWEEN AND AMONG THE
COMPANIES IN THE GROUP, ITS ULTIMATE PARENT COMPANY AND CO-
SUBSIDIARIES
DECEMBER 31, 2014

*SGVFS012872*
 SCHEDULE OF ALL EFFECTIVE STANDARDS AND INTERPRETATIONS

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE REQUIRED
UNDER SRC RULE 68, AS AMENDED (2011)

PHILIPPINE FINANCIAL REPORTING STANDARDS

Not Not
AND INTERPRETATIONS Adopted
Adopted Applicable
Effective as of December 31, 2014
Framework for the Preparation and Presentation of Financial
Statements

Conceptual Framework Phase A: Objectives and qualitative
characteristics
PFRSs Practice Statement Management Commentary
Philippine Financial Reporting Standards
PFRS 1 First-time Adoption of Philippine Financial Reporting

(Revised) Standards
Amendments to PFRS 1 and PAS 27: Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or
Associate
Amendments to PFRS 1: Additional Exemptions for

First-time Adopters
Amendment to PFRS 1: Limited Exemption from
Comparative PFRS 7 Disclosures for First-time
Adopters
Amendments to PFRS 1: Severe Hyperinflation and

Removal of Fixed Date for First-time Adopters
Amendments to PFRS 1: Government Loans
PFRS 2 Share-based Payment
Amendments to PFRS 2: Vesting Conditions and

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

based Payment Transactions
PFRS 3 Business Combinations

(Revised)
PFRS 4 Insurance Contracts
Amendments to PAS 39 and PFRS 4: Financial

Guarantee Contracts
PFRS 5 Non-current Assets Held for Sale and Discontinued

Operations
PFRS 6 Exploration for and Evaluation of Mineral Resources
PFRS 7 Financial Instruments: Disclosures
Amendments to PAS 39 and PFRS 7: Reclassification

of Financial Assets
*Standards and interpretations which will become effective subsequent to December 31, 2014.

*SGVFS012872*
 -2-

PHILIPPINE FINANCIAL REPORTING STANDARDS

Not Not
AND INTERPRETATIONS Adopted
Adopted Applicable
Effective as of December 31, 2014
PFRS 7 Amendments to PAS 39 and PFRS 7: Reclassification

of Financial Assets - Effective Date and Transition
Amendments to PFRS 7: Improving Disclosures about

Financial Instruments
Amendments to PFRS 7: Disclosures - Transfers of

Financial Assets
Amendments to PFRS 7: Disclosures - Offsetting

Financial Assets and Financial Liabilities
Amendments to PFRS 7: Mandatory Effective Date of

PFRS 9 and Transition Disclosures
PFRS 8 Operating Segments
PFRS 9 Financial Instruments * See footnote.*
Amendments to PFRS 9: Mandatory Effective Date of
See footnote.*
PFRS 9 and Transition Disclosures*
PFRS 10 Consolidated Financial Statements
Amendments to PFRS 10, PFRS 12 and PAS 27:

Investment Entities
Amendments to PFRS 10, PFRS 12 and PAS 28:
Investment Entities - Applying the Consolidation See footnote.*
Exception*
Amendments to PFRS 10 and PAS 28: Sale or
Contribution of Assets between an Investor and its See footnote.*
Associate or Joint Venture*
PFRS 11 Joint Arrangements
Amendments to PFRS 11: Accounting for Acquisitions
See footnote.*
of Interests in Joint Operations*
PFRS 12 Disclosure of Interests in Other Entities
Amendments to PFRS 10, PFRS 12 and PAS 27:

Investment Entities
Amendments to PFRS 10, PFRS 12 and PAS 28:
Investment Entities - Applying the Consolidation See footnote.*
Exception*
PFRS 13 Fair Value Measurement
PFRS 14 Regulatory Deferral Accounts* See footnote.*
Philippine Accounting Standards
PAS 1 Presentation of Financial Statements
(Revised)
Amendment to PAS 1: Capital Disclosures
Amendments to PAS 32 and PAS 1: Puttable Financial

Instruments and Obligations Arising on Liquidation
*Standards and interpretations which will become effective subsequent to December 31, 2014.

*SGVFS012872*
 -3-

PHILIPPINE FINANCIAL REPORTING STANDARDS

Not Not
AND INTERPRETATIONS Adopted
Adopted Applicable
Effective as of December 31, 2014
PAS 1 Amendments to PAS 1: Presentation of Items of Other

(Revised) Comprehensive Income
Amendments to PAS 1: Disclosure Initiatives* See footnote.*
PAS 2 Inventories
PAS 7 Statement of Cash Flows
PAS 8 Accounting Policies, Changes in Accounting Estimates

and Errors
PAS 10 Events after the Reporting Period
PAS 11 Construction Contracts
PAS 12 Income Taxes
Amendment to PAS 12 - Deferred Tax: Recovery of

Underlying Assets
PAS 16 Property, Plant and Equipment
Amendments to PAS 16 and PAS 38: Clarification of
See footnote.*
Acceptable Methods of Depreciation and Amortization*
Amendments to PAS 16 and PAS 41: Bearer Plants* See footnote.*
PAS 17 Leases
PAS 18 Revenue
PAS 19 Employee Benefits
(Amended)
Amendments to PAS 19: Defined Benefit Plans -
See footnote.*
Employee Contributions*
PAS 20 Accounting for Government Grants and Disclosure of

Government Assistance
PAS 21 The Effects of Changes in Foreign Exchange Rates
Amendment to PAS 21: Net Investment in a Foreign

Operation
PAS 23 Borrowing Costs

(Revised)
PAS 24 Related Party Disclosures

(Revised)
PAS 26 Accounting and Reporting by Retirement Benefit Plans
PAS 27 Separate Financial Statements
(Amended)
Amendments to PFRS 10, PFRS 12 and PAS 27:

Investment Entities
Amendments to PAS 27: Equity Method in Separate
See footnote.*
Financial Statements*
*Standards and interpretations which will become effective subsequent to December 31, 2014.

*SGVFS012872*
 -4-

PHILIPPINE FINANCIAL REPORTING STANDARDS

Not Not
AND INTERPRETATIONS Adopted
Adopted Applicable
Effective as of December 31, 2014
PAS 28 Investments in Associates and Joint Ventures
(Amended)
Amendments to PFRS 10, PFRS 12 and PAS 28:
Investment Entities - Applying the Consolidation See footnote.*
Exception*
Amendments to PFRS 10 and PAS 28: Sale or
Contribution of Assets between an Investor and its See footnote.*
Associate or Joint Venture*
PAS 29 Financial Reporting in Hyperinflationary Economies
PAS 32 Financial Instruments: Disclosure and Presentation
Amendments to PAS 32 and PAS 1: Puttable Financial

Instruments and Obligations Arising on Liquidation
Amendment to PAS 32: Classification of Rights Issues
Amendments to PAS 32: Offsetting Financial Assets

and Financial Liabilities
PAS 33 Earnings per Share
PAS 34 Interim Financial Reporting
PAS 36 Impairment of Assets
Amendments to PAS 36: Recoverable Amount

Disclosures for Non-Financial Assets
PAS 37 Provisions, Contingent Liabilities and Contingent

Assets
PAS 38 Intangible Assets
Amendments to PAS 16 and PAS 38: Clarification of

Acceptable Methods of Depreciation and Amortization*
PAS 39 Financial Instruments: Recognition and Measurement
Amendments to PAS 39: Transition and Initial
Recognition of Financial Assets and Financial
Liabilities
Amendments to PAS 39: Cash Flow Hedge Accounting

of Forecast Intragroup Transactions
Amendments to PAS 39: The Fair Value Option
Amendments to PAS 39 and PFRS 4: Financial

Guarantee Contracts
Amendments to PAS 39 and PFRS 7: Reclassification

of Financial Assets
Amendments to PAS 39 and PFRS 7: Reclassification

of Financial Assets - Effective Date and Transition
*Standards and interpretations which will become effective subsequent to December 31, 2014.

*SGVFS012872*
 -5-

PHILIPPINE FINANCIAL REPORTING STANDARDS

Not Not
AND INTERPRETATIONS Adopted
Adopted Applicable
Effective as of December 31, 2014
PAS 39 Amendments to Philippine Interpretation IFRIC-9 and

PAS 39: Embedded Derivatives
Amendment to PAS 39: Eligible Hedged Items
Amendments to PAS 39: Novation of Derivatives and

Continuation of Hedge Accounting
Amendments to PAS 39: Mandatory Effective Date of
See footnote. *
PFRS 9 and Transition Disclosures*
PAS 40 Investment Property
PAS 41 Agriculture
Amendments to PAS 16 and PAS 41: Bearer Plants*
Philippine Interpretations
IFRIC 1 Changes in Existing Decommissioning, Restoration and

Similar Liabilities
IFRIC 2 Members Share in Co-operative Entities and Similar

Instruments
IFRIC 4 Determining Whether an Arrangement Contains a

Lease
IFRIC 5 Rights to Interests arising from Decommissioning,

Restoration and Environmental Rehabilitation Funds
IFRIC 6 Liabilities arising from Participating in a Specific

Market - Waste Electrical and Electronic Equipment
IFRIC 7 Applying the Restatement Approach under PAS 29

Financial Reporting in Hyperinflationary Economies
IFRIC 8 Scope of PFRS 2
IFRIC 9 Reassessment of Embedded Derivatives
Amendments to Philippine Interpretation IFRIC-9 and

PAS 39: Embedded Derivatives
IFRIC 10 Interim Financial Reporting and Impairment
IFRIC 11 PFRS 2Group and Treasury Share Transactions
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 14 PAS 19The Limit on a Defined Benefit Asset,

Minimum Funding Requirements and their Interaction
Amendments to Philippine Interpretations IFRIC-14,

Prepayments of a Minimum Funding Requirement
IFRIC 15 Agreements for the Construction of Real Estate* See footnote. *
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 17 Distributions of Non-cash Assets to Owners
*Standards and interpretations which will become effective subsequent to December 31, 2014.

*SGVFS012872*
 -6-

PHILIPPINE FINANCIAL REPORTING STANDARDS

Not Not
AND INTERPRETATIONS Adopted
Adopted Applicable
Effective as of December 31, 2014
IFRIC 18 Transfers of Assets from Customers
IFRIC 19 Extinguishing Financial Liabilities with Equity

Instruments
IFRIC 20 Stripping Costs in the Production Phase of a Surface
Mine

IFRIC 21 Levies
SIC-7 Introduction of the Euro
SIC-10 Government Assistance - No Specific Relation to

Operating Activities
SIC-15 Operating Leases Incentives
SIC-25 Income Taxes - Changes in the Tax Status of an Entity

or its Shareholders
SIC-27 Evaluating the Substance of Transactions Involving the

Legal Form of a Lease
SIC-29 Service Concession Arrangements: Disclosures
SIC-31 Revenue - Barter Transactions Involving Advertising

Services
SIC-32 Intangible Assets - Web Site Costs
*Standards and interpretations which will become effective subsequent to December 31, 2014.

*SGVFS012872*
CIRTEK HOLDINGS PHILIPPINES CORPORATION
RECONCILIATION OF RETAINED EARNINGS AVAILABLE FOR
DIVIDEND DECLARATION
DECEMBER 31, 2014

Unappropriated Retained Earnings, beginning $35,762

Adjustments in previous years Reconciliation:
Less: Non-actual/unrealized income net of tax
Unappropriated Retained Earnings, as adjusted, beginning 35,762
Net Income based on the face of AFS $3,169,977
Add: Non-actual losses
Less: Non-actual/unrealized income net of tax
Net Income Actual/Realized 3,169,977
Transfer from Appropriated to Unappropriated Retained
Earnings
Unappropriated Retained Earnings, as adjusted, ending
Less: Dividends declared in 2014
Cash dividends declared (1,800,000)
Stock dividends declared (1,334,068) (3,134,068)
Retained earnings available for dividend declaration $71,671

*SGVFS012872*
CIRTEK HOLDINGS PHILIPPINES CORPORATION
FINANCIAL SOUNDNESS INDICATORS
DECEMBER 31, 2014

31-Dec-
Ratios Formula 31-Dec-13
14
(i) Current Ratio Current Assets/Current Liabilities 3.56 4.99
(ii) Debt/Equity Ratio Bank Debts/ Total Equity 0.76 0.32
(iii) Net Debt/Equity Bank Debts-Cash & Equivalents/Total
0.41 0.09
Ratio Equity
(iii) Asset to Equity
Total Assets/Total Equity 2.17 1.55
Ratio
(iv) Interest Cover Ratio EBITDA/Interest Expense
(13.43) (18.80)
(v) Profitability Ratios
GP Margin Gross Profit/Revenues 0.15 0.19
Net Profit Margin Net Income/Revenues 0.13 0.11
EBITDA Margin EBITDA/Revenues 0.14 0.17
Return on Assets Net Income/Total Assets 0.08 0.10
Return on Equity Net Income/Total Equity 0.18 0.15
*EBITDA = Operating income before working capital changes

*SGVFS012872*
 SCHEDULE A

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF FINANCIAL ASSETS
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2014

Valued based
Name of on market
Issuing entity quotations at
and Amount end of Income
association of shown in the reporting received or
each issue balance sheet period accrued
Cash and cash equivalents N/A $12,602,322 $12,602,322
Trade and other receivables N/A 15,586,934 15,586,934
Financial asset at fair value through profit
or loss N/A 701,747 701,747
Amounts owed by related parties N/A 5,123,078 5,123,078
Other current assets
Rental deposit N/A 1,133,929 1,133,929
Loan to employees N/A 94,111 94,111
Held-to-maturity investments N/A 1,188,130 1,188,130
Other noncurrent assets
Miscellaneous deposits N/A 167,551 167,551
$36,597,802 $36,597,802 $

*SGVFS012872*
 SCHEDULE B

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM
DIRECTORS, OFFICERS, EMPLOYEES, RELATED PARTIES, AND
PRINCIPAL STOCKHOLDERS (OTHER THAN RELATED PARTIES)
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2014

Amounts Receivable from Officers, Employees and Related Parties under Trade and other receivables

Balance at Balance at
beginning Amounts the end of
Name and Designation of debtor of period Additions collected Current Not Current the period

Advances to officers and employees $134,072 $139,122 ($179,083) $94,111 $ $94,111

$134,072 $139,122 ($179,083) $94,111 $ $94,111

Amounts owed by Related Parties

Balance at Balance at
beginning Amounts the end of
Name and Designation of debtor of period Additions collected Current Not Current the period

Cirtek Holding, Inc. $1,809,256 $ $ $1,809,256 $ $1,809,256

Carmerton, Inc. 33,161 33,161 33,161
Cayon Holdings, Inc. 206,284 206,284 206,284
Jerry Liu 173,714 2,900,663 3,074,377 3,074,377

$2,222,415 $2,900,663 $ $5,123,078 $ $5,123,078

*SGVFS012872*
 SCHEDULE C

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM
RELATED PARTIES WHICH ARE ELIMINATED DURING THE
CONSOLIDATION OF FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2014

Receivables from related parties which are eliminated during the consolidation

(under Trade and other receivables)

Balance

Balance at at end of
beginning of Amount Amount
Name and designation of debtor period Additions collected written off Current Noncurrent period

Cirtek Electronics Corporation $37,663,571 $5,459,191 $ $ $43,122,762 $ $43,122,762

Cirtek Electronics International

Corporation 9,000,000 9,000,000 9,000,000

Cirtek Advanced Technology

Solution Inc. 1,499,468 1,499,468 1,499,468

Cirtek Holdings Philippines

Corporation 12,366,567 11,376,956 23,743,523 23,743,523

$50,030,138 $27,335,615 $ $ $77,365,753 $ $77,365,753

Amounts owed by related parties which are eliminated during the consolidation

Balance at Balance at
beginning of Amount Amount end of
Name and designation of debtor period Additions collected written off Current Not current period

Cirtek Electronics Corporation $37,663,571 $5,459,191 $ $ $43,122,762 $ $43,122,762

Cirtek Electronics International

Corporation 9,000,000 9,000,000 9,000,000

Cirtek Advanced Technology

Solution Inc. 1,499,468 1,499,468 1,499,468

Cirtek Holdings Philippines

Corporation 12,366,567 11,376,956 23,743,523 23,743,523

$50,030,138 $27,335,615 $ $ $77,365,753 $ $77,365,753

*SGVFS012872*
 SCHEDULE D

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF INTANGIBLE ASSETS - OTHER
ASSETS
AS AT DECEMBER 31, 2014

Intangible Assets - Other Assets

Other
Charged to Charged to changes
Beginning Additions cost and other additions Ending
Description Balance at cost expenses accounts (deductions) Balance
Advances to supplier $43,440 $58,500 $ $ $ $101,940
Development Cost 469,965 163,907 (72,940) 560,932
Notes Receivable 87,373 87,373
Miscellaneous Deposit 168,776 (1,266) 167,510
$682,181 $222,407 ($72,940) $ $86,107 $917,755

*SGVFS012872*
 SCHEDULE E

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF LONG-TERM DEBT
AS AT DECEMBER 31, 2014

Long-term Debt

Amount shown under

caption "current portion of Amount shown under
Title of Issue and type of Amount authorized by long-term in related caption long-term debt in
obligation indenture balance sheet related balance sheet

Notes Payable $18,684,680 $967,861 $17,716,819

Interest-bearing loan 8,479,933 2,444,218 6,035,715
$1,820,353,996 $328,514,924 $1,491,839,072

*SGVFS012872*
 SCHEDULE F

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF INDEBTEDNESS TO RELATED
PARTIES (LONG-TERM LOANS FROM RELATED COMPANIES)
AS AT DECEMBER 31, 2014

Indebtedness to related parties (Long-term loans from related companies)

Name of related party Balance at beginning of period Balance at end of period

Not Applicable

*SGVFS012872*
 SCHEDULE G

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF GUARANTEES OF SECURITIES OF
OTHER ISSUERS
AS AT DECEMBER 31, 2014

Guarantees of Securities of Other Issuers

Name of issuing entity of Title of issue of
securities guaranteed by the each class of Total amount Amount owned by
company for which this securities guaranteed and person for which
statement is filed guaranteed outstanding statement is file Nature of guarantee

Not Applicable

*SGVFS012872*
 SCHEDULE H

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF CAPITAL STOCK
AS AT DECEMBER 31, 2014

Capital Stock
Number of Number of
shares issued and shares reserved Number of
outstanding as for options Number of shares held by
Number of shown under warrants, shares held directors,
shares related balance conversion and by related officers and
Title of Issue authorized sheet caption other rights parties employees Others

Capital Stock 400,000,000 308,239,419

*SGVFS012872*
Cirtek Holdings Philippines Corporation and Subsidiaries

Interim Consolidated Financial Statements

As at June 30, 2015 and December 31, 2014
And for the six months ended June 30, 2015 and 2014

and

Independent Review Report

A member firm of Ernst & Young Global Limited

 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 December 28, 2012, valid until December 31, 2015
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-3 (Group A),
Philippines November 15, 2012, valid until November 16, 2015

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

The Stockholders and the Board of Directors

Cirtek Holdings Philippines Corporation and Subsidiaries
116 East Main Avenue
Phase V-SEZ, Laguna Technopark
Bian, Laguna

We have reviewed the accompanying interim consolidated financial statements of Cirtek Holdings
Philippines Corporation and Subsidiaries (the Group), which comprise the interim consolidated
balance sheet as at June 30, 2015, and the related interim consolidated statements of comprehensive
income, consolidated statements of changes in equity and consolidated statements of cash flows for
the six months ended June 30, 2015 and 2014, and a summary of significant accounting policies and
other explanatory information (the Interim Consolidated Financial Statements).

Managements Responsibility for the Interim Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these interim consolidated
financial statements in accordance with Philippine Financial Reporting Standards, and for such
internal control as management determines is necessary to enable the preparation of interim
consolidated financial statements that are free from material misstatement, whether due to fraud or
error.

Auditors Responsibility

Our responsibility is to express a conclusion on the Interim Consolidated Financial Statements based
on our review.

We conducted our review of the Interim Consolidated Financial Statements in accordance with
Philippine Standard on Review Engagements 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity. A review of the interim consolidated financial
statements consists principally of making inquiries of management and applying analytical procedures.
A review is substantially less in scope than an audit conducted in accordance with Philippine
Standards on Auditing and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not express an
audit opinion on the Interim Consolidated Financial Statements.

*SGVFS014132*
A member firm of Ernst & Young Global Limited
 -2-

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the
accompanying Interim Consolidated Financial Statements do not present fairly, in all material
respects, the financial position of Cirtek Holdings Philippines Corporation and Subsidiaries as at
June 30, 2015 and their financial performance and their cash flows for the six months ended
June 30, 2015 and 2014 in accordance with Philippine Financial Reporting Standards.

SYCIP GORRES VELAYO & CO.

Ladislao Z. Avila, Jr.

Partner
CPA Certificate No. 69099
SEC Accreditation No. 0111-AR-3 (Group A),
January 18, 2013, valid until January 17, 2016
Tax Identification No. 109-247-891
BIR Accreditation No. 08-001998-43-2015,
February 27, 2015, valid until February 26, 2018
PTR No. 4751254, January 5, 2015, Makati City

September 22, 2015

*SGVFS014132*
A member firm of Ernst & Young Global Limited
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEET
(With Comparative Figures as at December 31, 2014)

December 31,
June 30, 2014
2015 (As Restated,
(Unaudited) Note 4)
ASSETS
Current Assets
Cash and cash equivalents (Note 5) $6,643,663 $12,602,322
Trade and other receivables (Note 6) 12,245,375 14,927,504
Inventories (Note 7) 12,716,634 10,768,681
Financial asset at fair value through profit or loss (FVPL) (Note 8) 9,540,690 701,747
Amounts owed by related parties (Note 16) 5,833,944 5,123,078
Held-to-maturity investments (Note 10) 554,696 113,880
Other current assets (Note 9) 2,215,975 1,871,111
49,750,977 46,108,323
Noncurrent assets held for sale (Note 11) 11,408,611 11,408,611
Total Current Assets 61,159,588 57,516,934
Noncurrent Assets
Property, plant and equipment (Note 11) 18,640,625 17,015,168
Held-to-maturity investments (Note 10) 398,582 985,362
Deferred tax asset (Note 22) 176,198 172,487
Other noncurrent assets (Note 12) 922,234 962,504
Total Noncurrent Assets 20,137,639 19,135,521
TOTAL ASSETS $81,297,227 $76,652,455

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables (Note 13) $9,762,139 $9,434,272
Short-term loan (Note 14) 6,554,080 2,100,000
Current portion of long-term debt (Note 15) 3,293,192 3,399,432
Amounts owed to related parties (Note 16) 483,185 470,147
Deferred revenues 227,573 405,144
Income tax payable (Note 22) 439,577 349,237
Provision for warranty 13,538 148,954
Derivative liability 40,836
Total Current Liabilities 20,773,284 16,348,022
Noncurrent Liabilities
Long-term debt - net of current portion (Note 15) 21,699,533 23,700,379
Retirement benefit obligation (Note 20) 1,648,058 1,645,787
Deferred tax liability (Note 22) 102,000
Total Noncurrent Liabilities 23,449,591 25,346,166
Total Liabilities 44,222,875 41,694,188
Equity
Capital stock (Note 27) 7,893,134 7,893,134
Additional paid-in capital (Note 27) 4,733,511 4,733,511
Equity reserve 4,138,375 4,138,375
Other comprehensive income 377,416 317,579
Retained earnings (Note 27) 19,931,916 17,875,668
Total Equity 37,074,352 34,958,267
TOTAL LIABILITIES AND EQUITY $81,297,227 $76,652,455

See accompanying Notes to Interim Consolidated Financial Statements.

*SGVFS014132*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)

NET SALES (Note 24) $28,311,837 $22,818,276

COST OF SALES (Note 17) (23,030,586) (19,167,579)

GROSS PROFIT 5,281,251 3,650,697

OPERATING EXPENSES (Note 18) (1,826,109) (1,307,211)

FINANCIAL INCOME (EXPENSES)

Interest income 215,876 11,052
Interest expense (576,820) (193,519)
(360,944) (182,467)

OTHER INCOME (Note 21) 435,846 84,546

INCOME BEFORE INCOME TAX 3,530,044 2,245,565

PROVISION FOR (BENEFIT FROM) INCOME TAX

(Note 22)
Current 178,491 94,873
Deferred 95,305 (14,843)
273,796 80,030

NET INCOME 3,256,248 2,165,535

OTHER COMPREHENSIVE INCOME

Other comprehensive income not to be reclassified to profit or loss
in subsequent periods:
Re-measurement gain on retirement benefit, net of deferred tax of
$2,984 and $1,645 in 2015 and 2014, respectively (Note 20) 59,837 32,979

TOTAL COMPREHENSIVE INCOME $3,316,085 $2,198,514

Earnings Per Share (Note 23)

Basic and diluted $0.010 $0.006

See accompanying Notes to Interim Consolidated Financial Statements.

*SGVFS014132*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Six Months Ended June 30, 2015 (Unaudited)

Capital Stock
Undistributed Additional Other
Stock Paid-in Equity Comprehensive Retained
Issued Dividends Capital Reserve Income Earnings Total
Balances at January 1, 2015 $7,203,869 $689,265 $4,733,511 $4,138,375 $317,579 $17,875,668 $34,958,267
Net income for the period 3,256,248 3,256,248
Other comprehensive income 59,837 59,837
Total comprehensive income 59,837 3,256,248 3,316,085
Issuance of undistributed stock dividends (Note 27) 689,265 (689,265)
Cash dividends declared and paid at $0.003893 per share
(Note 27) (1,200,000) (1,200,000)
Balances at June 30, 2015 $7,893,134 $ $4,733,511 $4,138,375 $377,416 $19,931,916 $37,074,352

For the Six Months Ended June 30, 2014 (Unaudited)

Capital Stock
Undistributed Additional Other
Stock Paid-in Equity Comprehensive Retained
Issued Dividends Capital Reserve Income Earnings Total
Balances at January 1, 2014 $6,559,066 $ $4,733,511 $4,138,375 ($66,414) $15,165,652 $30,530,190
Net income for the period 2,165,535 2,165,535
Other comprehensive income 32,979 32,979
Total comprehensive income 32,979 2,165,535 2,198,514
Cash dividends declared and paid at $0.00428 per share
(Note 27) (1,200,000) (1,200,000)
Cash dividends declared at $0.00214 per share (Note 27) (600,000) (600,000)
Balances at June 30, 2014 $6,559,066 $ $4,733,511 $4,138,375 ($33,435) $15,531,187 $30,928,704

*SGVFS014132*
 For the Six Months Ended December 31, 2014 (As restated)
Capital Stock
Undistributed Additional Other
Stock Paid-in Equity Comprehensive Retained
Issued Dividends Capital Reserve Income Earnings Total
Balances at July 1, 2014 $6,559,066 $ $4,733,511 $4,138,375 ($33,435) $15,531,187 $30,928,704
Net income for the period before the effect of
restatement 4,376,157 4,376,157
Restatement due to finalization of purchase price
allocation (Note 4) (697,608) (697,608)
Net income for the period, as restated 3,678,549 3,678,549
Other comprehensive income 351,014 351,014
Total comprehensive income 351,014 3,678,549 4,029,563
Stock dividends during the period (Note 27) 644,803 689,265 (1,334,068)
Balances at December 31, 2014 $7,203,869 $689,265 $4,733,511 $4,138,375 $317,579 $17,875,668 $34,958,267

See accompanying Notes to Interim Consolidated Financial Statements.

*SGVFS014132*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $3,530,044 $2,245,565
Adjustments for:
Depreciation and amortization (Notes 17 and 18) 1,676,475 1,144,230
Interest expense (Notes 14 and 15) 576,820 193,519
Change in fair value of financial asset at FVPL (Note 21) (344,710)
Interest income (Notes 5, 8 and 10) (215,876) (11,052)
Retirement benefit obligation (Note 20) 79,153 120,995
Net unrealized foreign exchange losses (gains) (14,648) 61,400
Operating income before working capital changes 5,287,258 3,754,657
Decrease (increase) in:
Trade and other receivables 2,682,129 (3,402,954)
Inventories (1,947,953) 809,543
Other current assets (349,454) 106,919
Increase (decrease) in trade and other payables 345,448 (97,031)
Net cash generated from operations 6,017,428 1,171,134
Interest received 194,968 11,052
Income taxes paid (88,151) (129,795)
Net cash flows from operating activities 6,124,245 1,052,391

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in financial asset at FVPL (Note 8) (8,838,943) (84,119)
Acquisitions of property, plant and equipment (Note 11) (3,301,932) (1,258,040)
Proceeds from maturity of held-to-maturity investments (Note 10) 115,478
Decrease in:
Held-to-maturity investments (Note 10) 30,486
Other noncurrent assets (Note 12) 34,991 52,134
Net cash flows used in investing activities (11,959,920) (1,290,025)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from availment of short-term loan (Note 14) 8,392,670 450,000
Payments of:
Short-term loan (4,099,749) (387,500)
Long-term debt (2,010,989) (500,000)
Cash dividends (Note 27) (1,200,000) (1,200,000)
Interest (505,728) (180,420)
Net movements in amounts owed by and owed to related parties (Note 16) (697,828) 12,394
Net cash flows used in financing activities (121,624) (1,805,526)

NET DECREASE IN CASH AND CASH EQUIVALENTS (5,957,299) (2,043,160)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH

EQUIVALENTS (1,360) (4,722)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,602,322 7,023,747
CASH AND CASH EQUIVALENTS AT END OF PERIOD $6,643,663 $4,975,865

See accompanying Notes to Interim Consolidated Financial Statements.

*SGVFS014132*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Information

Cirtek Holdings Philippines Corporation (CHPC or the Parent Company) was incorporated under
the laws of the Republic of the Philippines on February 10, 2011 to invest in, purchase or acquire
personal property of every kind, including shares of stocks, bonds, debentures, notes, evidences of
indebtedness, and other securities.

The Parent Company was listed in the Philippine Stock Exchange on November 18, 2011.

Prior to the listing, the Parent Company had undergone a corporate re-organization on
March 1, 2011 which includes an acquisition from Cirtek Holdings, Inc. (CHI) 155,511,952
common shares of Cirtek Electronics Corporation (CEC), and 50,000 shares of Cirtek Electronics
International Corporation (CEIC), representing 100% of the outstanding capital stock of both
companies. The above transaction was treated as a business combination of entities under
common control and was accounted for similar to pooling-of-interests method.

Camerton Inc. is the immediate parent of CHPC, while Carmetheus Holdings, Inc. is the ultimate
parent company of the Group.

The Group is primarily engaged in the manufacture and sale of semiconductor packages as an
independent subcontractor for outsourced semiconductor assembly, test and packaging services.
CEC manufactures standard integrated circuits, discrete, hybrid and potential new packages and
provides complete turnkey solutions that include wafer probing, wafer back grinding, assembly
and packaging and final testing of semiconductor devices with majority of its client base located in
United States of America (USA). CEIC sells integrated circuits principally in the USA and
assigns the production of the same to CEC. The Parent Companys registered address is 116 East
Main Avenue Phase V-SEZ, Laguna Technopark, Bian, Laguna, Philippines.

Business Acquisition
On July 30, 2014, CEIC entered into a sale and purchase agreement with REMEC Broadband
Wireless Holdings (REMEC), for the purchase of 100% shares of REMECs manufacturing
division, REMEC Broadband Wireless International, Inc. (RBWI), a Philippine-based
manufacturer of value added, highly integrated technology products. Based on the terms of the
sale, REMEC and its remaining subsidiaries will continue to design and market its top-of-class
telecommunications products globally under its REMEC brand, and, REMEC will enter into a
manufacturing agreement with RBWI to manufacture REMECs products under a long term
contract manufacturing relationship. CEIC acquired RBWI for a consideration of $7.5 million.
CHPC funded the acquisition through a combination of available cash on hand and proceeds from
a corporate notes issuance.

The closing date of the transaction is effective July 30, 2014 (see Note 4).

RBWI is primarily engaged in the manufacture, fabrication and design of microwave components
and subsystems primarily for export. RBWI was renamed to Cirtek Advanced Technology
Solutions, Inc. (CATS) on November 21, 2014 at the British Virgin Islands and on
February 18, 2015 at the Philippine Securities and Exchange Commission (SEC).
Issuance of financial statements
The interim consolidated financial statements of the Group as at June 30, 2015 and for the six
months period ended June 30, 2015 and 2014 were approved and authorized for issue by the Board
of Directors (BOD) on September 22, 2015.

*SGVFS014132*
 -2-

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

Policies

Basis of Preparation
The consolidated financial statements of the Group are prepared on a historical cost basis except
for financial assets at fair value through profit or loss (FVPL) and derivative liability which are
carried at fair value. The consolidated financial statements are presented in United States (US)
dollars ($), which is the Groups functional and presentation currency. All amounts are rounded
off to the nearest US dollar except when otherwise indicated.

Statement of Compliance
The consolidated financial statements of the Group have been prepared in accordance with
Philippine Financial Reporting Standards (PFRS).

Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company
and its subsidiaries as of June 30, 2015 and December 31, 2014 (see Notes 1 and 4):

Percentage of Ownership
June 30, December 31,
Country of 2015 2014
Incorporation Direct Indirect Direct Indirect
CEC Philippines 100 100
CEIC British Virgin
Islands (BVI) 100 100
CATS (formerly known
as RBWI) BVI 100 100
CATS - Philippine Branch Philippines 100 100
Remec Broadband Wireless
Real Property
(RBWRP) Philippines 100 100

Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if and only if the Group has:

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:

The contractual arrangement with the other vote holders of the investee
Rights arising from other contractual arrangements
The Groups voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group

*SGVFS014132*
 -3-

loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or
disposed of during the year are included in the statements of comprehensive income from the date
the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the
equity holders of the Parent Company and to the non-controlling interests, even if this results in
the non-controlling interests having a deficit balance. When necessary, adjustments are made to
the financial statements of subsidiaries to bring their accounting policies into line with the Groups
accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it:

Derecognizes the assets (including goodwill) and liabilities of the subsidiary

Derecognizes the carrying amount of any non-controlling interests
Derecognizes the cumulative translation differences recorded in equity
Recognizes the fair value of the consideration received
Recognizes the fair value of any investment retained
Recognizes any surplus or deficit in profit or loss
Reclassifies the parents share of components previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be required if the Group had directly disposed of
the related assets or liabilities

Common control business combinations

Where there are group reorganizations and business combinations in which all the combining
entities within the Group are ultimately controlled by the same ultimate parent (i.e., controlling
shareholders) before and after the business combination and the control is not transitory (business
combinations under common control), the Group accounts for such group reorganizations and
business combinations similar to a pooling-of-interests method. The assets and liabilities of the
acquired entities and that of the Company are reflected at their carrying values at the stand-alone
financial statements of the investee companies. The difference in the amount recognized and the
fair value of the consideration given is accounted for as an equity transaction, i.e., as either a
contribution or distribution of equity. Further, when a subsidiary is disposed in a common control
transaction without loss of control, the difference in the amount recognized and the fair value of
consideration received, is also accounted for as an equity transaction.

The Group records the difference as equity reserve and is presented as a separate component of
equity in the consolidated balance sheet. Comparatives shall be restated to include balances and
transactions as if the entities have been acquired at the beginning of the earliest period presented in
the consolidated financial statements, regardless of the actual date of the combination.

Changes in Accounting Policies and Disclosures

The Group applied for the first time certain standards and amendments, which are effective for
annual periods beginning on or after January 1, 2015.

*SGVFS014132*
 -4-

The nature and impact of each new standard and amendment is described below:

New and Amended Standards and Interpretations and Improved PFRS Adopted in Calendar Year
2015
The accounting policies adopted in the preparation of the interim consolidated financial statements
are consistent with those followed in the preparation of the Groups annual consolidated financial
statements of the previous financial year, except for the adoption of the following new and
amended standards and Philippine Interpretations from IFRIC and improved PFRS which the
Group has adopted starting January 1, 2015. Unless otherwise indicated, the adoption did not
have any significant impact on the interim consolidated financial statements of the Group.

Philippine Accounting Standard (PAS) 19, Employee Benefits - Defined Benefit Plans:
Employee Contributions (Amendments)
PAS 19 requires an entity to consider contributions from employees or third parties when
accounting for defined benefit plans. Where the contributions are linked to service, they
should be attributed to periods of service as a negative benefit. These amendments clarify
that, if the amount of the contributions is independent of the number of years of service, an
entity is permitted to recognize such contributions as a reduction in the service cost in the
period in which the service is rendered, instead of allocating the contributions to the periods of
service. This amendment is effective for annual periods beginning on or after January 1,
2015. It is not expected that this amendment would be relevant to the Group, since none of
the entities within the Group has defined benefit plans with contributions from employees or
third parties.

Improvements to PFRSs
The Group has applied these Improvements to PFRSs for the first time in these interim
financial statements. They include:

2010-2012 Cycle
PFRS 2, Share-based Payment Definition of Vesting Condition
This improvement is applied prospectively and clarifies various issues relating to the
definitions of performance and service conditions which are vesting conditions, including:
o A performance condition must contain a service condition
o A performance target must be met while the counterparty is rendering service
o A performance target may relate to the operations or activities of an entity, or to those
of another entity in the same group
o A performance condition may be a market or non-market condition
o If the counterparty, regardless of the reason, ceases to provide service during the
vesting period, the service condition is not satisfied.

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

Combination
The amendment is applied prospectively for business combinations for which the
acquisition date is on or after July 1, 2014. It clarifies that a contingent consideration that
is not classified as equity is subsequently measured at fair value through profit or loss
whether or not it falls within the scope of PAS 39, Financial Instruments: Recognition
and Measurement (or PFRS 9, Financial Instruments, if early adopted). The Group shall
consider this amendment for future business combinations.

*SGVFS014132*
 -5-

PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of

the Total of the Reportable Segments Assets to the Entitys Assets
The amendments are applied retrospectively and clarify that:
o An entity must disclose the judgments made by management in applying the
aggregation criteria in the standard, including a brief description of operating
segments that have been aggregated and the economic characteristics (e.g., sales and
gross margins) used to assess whether the segments are similar.
o The reconciliation of segment assets to total assets is only required to be disclosed if
the reconciliation is reported to the chief operating decision maker, similar to the
required disclosure for segment liabilities.

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Revaluation
Method - Proportionate Restatement of Accumulated Depreciation and Amortization
The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the
asset may be revalued by reference to the observable data on either the gross or the net
carrying amount. In addition, the accumulated depreciation or amortization is the
difference between the gross and carrying amounts of the asset.

PAS 24, Related Party Disclosures - Key Management Personnel

The amendment is applied retrospectively and clarifies that a management entity, which is
an entity that provides key management personnel services, is a related party subject to the
related party disclosures. In addition, an entity that uses a management entity is required
to disclose the expenses incurred for management services.

2011-2013 cycle
PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements
The amendment is applied prospectively and clarifies the following regarding the scope
exceptions within PFRS 3:
o Joint arrangements, not just joint ventures, are outside the scope of PFRS 3.
o This scope exception applies only to the accounting in the financial statements of the
joint arrangement itself.

PFRS 13, Fair Value Measurement - Portfolio Exception

The amendment is applied prospectively and clarifies that the portfolio exception in PFRS
13 can be applied not only to financial assets and financial liabilities, but also to other
contracts within the scope of PAS 39.

PAS 40, Investment Property

The amendment is applied prospectively and clarifies that PFRS 3, and not the description
of ancillary services in PAS 40, is used to determine if the transaction is the purchase of
an asset or business combination. The description of ancillary services in PAS 40 only
differentiates between investment property and owner-occupied property (i.e., property,
plant and equipment).

*SGVFS014132*
 -6-

New Accounting Standards, Interpretations and Amendments Effective Subsequent to

June 30, 2015

Effective January 1, 2016

PFRS 9, Financial Instruments - Classification and Measurement (2010 version)

PFRS 9 (2010 version) reflects the first phase on the replacement of PAS 39 and applies to the
classification and measurement of financial assets and liabilities as defined in PAS 39,
Financial Instruments: Recognition and Measurement. PFRS 9 requires all financial assets to
be measured at fair value at initial recognition. A debt financial asset may, if the fair value
option (FVO) is not invoked, be subsequently measured at amortized cost if it is held within a
business model that has the objective to hold the assets to collect the contractual cash flows
and its contractual terms give rise, on specified dates, to cash flows that are solely payments of
principal and interest on the principal outstanding. All other debt instruments are
subsequently measured at fair value through profit or loss. All equity financial assets are
measured at fair value either through other comprehensive income (OCI) or profit or loss.
Equity financial assets held for trading must be measured at fair value through profit or loss.
For FVO liabilities, the amount of change in the fair value of a liability that is attributable to
changes in credit risk must be presented in OCI. The remainder of the change in fair value is
presented in profit or loss, unless presentation of the fair value change in respect of the
liabilitys credit risk in OCI would create or enlarge an accounting mismatch in profit or loss.
All other PAS 39 classification and measurement requirements for financial liabilities have
been carried forward into PFRS 9, including the embedded derivative separation rules and the
criteria for using the FVO. The adoption of the first phase of PFRS 9 will have an effect on
the classification and measurement of the Groups financial assets, but will potentially have no
impact on the classification and measurement of financial liabilities.

PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1, 2015.
This mandatory adoption date was moved to January 1, 2018 when the final version of PFRS
9 was adopted by the FRSC. Such adoption, however, is still for approval by the Board of
Accountancy (BOA).

Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate
This interpretation covers accounting for revenue and associated expenses by entities that
undertake the construction of real estate directly or through subcontractors. The SEC and the
FRSC have deferred the effectivity of this interpretation until the final Revenue standard is
issued by the IASB and an evaluation of the requirements of the final Revenue standard
against the practices of the Philippine real estate industry is completed. Adoption of the
interpretation when it becomes effective will not have any impact on the consolidated
financial statements of the Group.

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of
Acceptable Methods of Depreciation and Amortization (Amendments)
The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of
economic benefits that are generated from operating a business (of which the asset is part)
rather than the economic benefits that are consumed through use of the asset. As a result, a
revenue-based method cannot be used to depreciate property, plant and equipment and may
only be used in very limited circumstances to amortize intangible assets. The amendments are
effective prospectively for annual periods beginning on or after January 1, 2016, with early
adoption permitted. These amendments are not expected to have any impact to the Group
given that the Group has not used a revenue-based method to depreciate its non-current assets.

*SGVFS014132*
 -7-

PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants
(Amendments)
The amendments change the accounting requirements for biological assets that meet the
definition of bearer plants. Under the amendments, biological assets that meet the definition
of bearer plants will no longer be within the scope of PAS 41. Instead, PAS 16 will apply.
After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost
(before maturity) and using either the cost model or revaluation model (after maturity). The
amendments also require that produce that grows on bearer plants will remain in the scope of
PAS 41 measured at fair value less costs to sell. For government grants related to bearer
plants, PAS 20, Accounting for Government Grants and Disclosure of Government Assistance,
will apply. The amendments are retrospectively effective for annual periods beginning on or
after January 1, 2016, with early adoption permitted. These amendments are not expected to
have any impact to the Group as the Group does not have any bearer plants.

PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements
(Amendments)
The amendments will allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. Entities
already applying PFRS and electing to change to the equity method in its separate financial
statements will have to apply that change retrospectively. For first-time adopters of PFRS
electing to use the equity method in its separate financial statements, they will be required to
apply this method from the date of transition to PFRS. The amendments are effective for
annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments will not have any impact on the Groups interim consolidated financial
statements.

PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and
Joint Ventures- Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
These amendments address an acknowledged inconsistency between the requirements in
PFRS 10 and those in PAS 28 (2011) in dealing with the sale or contribution of assets between
an investor and its associate or joint venture. The amendments require that a full gain or loss
is recognized when a transaction involves a business (whether it is housed in a subsidiary or
not). A partial gain or loss is recognized when a transaction involves assets that do not
constitute a business, even if these assets are housed in a subsidiary. These amendments are
effective from annual periods beginning on or after January 1, 2016.

PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations
(Amendments)
The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an
interest in a joint operation, in which the activity of the joint operation constitutes a business
must apply the relevant PFRS 3 principles for business combinations accounting. The
amendments also clarify that a previously held interest in a joint operation is not remeasured
on the acquisition of an additional interest in the same joint operation while joint control is
retained. In addition, scope exclusion has been added to PFRS 11 to specify that the
amendments do not apply when the parties sharing joint control, including the reporting entity,
are under common control of the same ultimate controlling party.

The amendments apply to both the acquisition of the initial interest in a joint operation and the
acquisition of any additional interests in the same joint operation and are prospectively
effective for annual periods beginning on or after January 1, 2016, with early adoption
permitted. These amendments are not expected to have any impact to the Group.

*SGVFS014132*
 -8-

PFRS 14, Regulatory Deferral Accounts

PFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-
regulation, to continue applying most of its existing accounting policies for regulatory deferral
account balances upon its first-time adoption of PFRS. Entities that adopt PFRS 14 must
present the regulatory deferral accounts as separate line items on the statement of financial
position and present movements in these account balances as separate line items in the
statement of profit or loss and other comprehensive income. The standard requires disclosures
on the nature of, and risks associated with, the entitys rate-regulation and the effects of that
rate-regulation on its financial statements. PFRS 14 is effective for annual periods beginning
on or after January 1, 2016. Since the Group is an existing PFRS preparer, this standard
would not apply.

Annual Improvements to PFRSs (2012-2014 cycle)

The Annual Improvements to PFRSs (2012-2014 cycle) are effective for annual periods beginning
on or after January 1, 2016 and are not expected to have a material impact on the Group. They
include:

PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in
Methods of Disposal
The amendment is applied prospectively and clarifies that changing from a disposal
through sale to a disposal through distribution to owners and vice-versa should not be
considered to be a new plan of disposal, rather it is a continuation of the original plan.
There is, therefore, no interruption of the application of the requirements in PFRS 5. The
amendment also clarifies that changing the disposal method does not change the date of
classification.

PFRS 7, Financial Instruments: Disclosures - Servicing Contracts

PFRS 7 requires an entity to provide disclosures for any continuing involvement in a
transferred asset that is derecognized in its entirety. The amendment clarifies that a
servicing contract that includes a fee can constitute continuing involvement in a financial
asset. An entity must assess the nature of the fee and arrangement against the guidance in
PFRS 7 in order to assess whether the disclosures are required. The amendment is to be
applied such that the assessment of which servicing contracts constitute continuing
involvement will need to be done retrospectively. However, comparative disclosures are
not required to be provided for any period beginning before the annual period in which the
entity first applies the amendments.

PFRS 7 - Applicability of the Amendments to PFRS 7 to Condensed Interim Financial

Statements
This amendment is applied retrospectively and clarifies that the disclosures on offsetting
of financial assets and financial liabilities are not required in the condensed interim
financial report unless they provide a significant update to the information reported in the
most recent annual report.

PAS 19, Employee Benefits - regional market issue regarding discount rate
This amendment is applied prospectively and clarifies that market depth of high quality
corporate bonds is assessed based on the currency in which the obligation is denominated,
rather than the country where the obligation is located. When there is no deep market for
high quality corporate bonds in that currency, government bond rates must be used.

*SGVFS014132*
 -9-

PAS 34, Interim Financial Reporting - disclosure of information elsewhere in the interim
financial report
The amendment is applied retrospectively and clarifies that the required interim
disclosures must either be in the interim financial statements or incorporated by cross-
reference between the interim financial statements and wherever they are included within
the greater interim financial report (e.g., in the management commentary or risk report).

Effective January 1, 2018

PFRS 9, Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and
PAS 39 (2013 version)
PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which
pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge
accounting model of PAS 39 with a more principles-based approach. Changes include
replacing the rules-based hedge effectiveness test with an objectives-based test that focuses on
the economic relationship between the hedged item and the hedging instrument, and the effect
of credit risk on that economic relationship; allowing risk components to be designated as the
hedged item, not only for financial items but also for non-financial items, provided that the
risk component is separately identifiable and reliably measurable; and allowing the time value
of an option, the forward element of a forward contract and any foreign currency basis spread
to be excluded from the designation of a derivative instrument as the hedging instrument and
accounted for as costs of hedging. PFRS 9 also requires more extensive disclosures for hedge
accounting.

PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1, 2015.
This mandatory adoption date was moved to January 1, 2018 when the final version of
PFRS 9 was adopted by the FRSC. Such adoption, however, is still for approval by the Board
of Accountancy (BOA).

PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of
January 1, 2018 was eventually set when the final version of PFRS 9 was adopted by the
FRSC. The adoption of the final version of PFRS 9, however, is still for approval by BOA.

The adoption of PFRS 9 is not expected to have any significant impact on the Groups interim
consolidated financial statements.

PFRS 9, Financial Instruments (2014 or final version)

In July 2014, the final version of PFRS 9, Financial Instruments, was issued. PFRS 9 reflects
all phases of the financial instruments project and replaces PAS 39, Financial Instruments:
Recognition and Measurement, and all previous versions of PFRS 9. The standard introduces
new requirements for classification and measurement, impairment, and hedge accounting.
PFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early
application permitted. Retrospective application is required, but comparative information is
not compulsory. Early application of previous versions of PFRS 9 is permitted if the date of
initial application is before February 1, 2015.

The adoption of PFRS 9 is not expected to have any significant impact on the Groups interim
consolidated financial statements.

*SGVFS014132*
 - 10 -

The following new standard by IASB has not yet been adopted by the FRSC:

IFRS 15, Revenue from Contracts with Customers

IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to
revenue arising from contracts with customers. Under IFRS 15 revenue is recognized at an
amount that reflects the consideration to which an entity expects to be entitled in exchange for
transferring goods or services to a customer. The principles in IFRS 15 provide a more
structured approach to measuring and recognizing revenue. The new revenue standard is
applicable to all entities and will supersede all current revenue recognition requirements under
IFRS. Either a full or modified retrospective application is required for annual periods
beginning on or after January 1, 2018 with early adoption permitted. The Group is currently
assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective
date once adopted locally.

Summary of Significant Accounting Policies

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:

In the principal market for the asset or liability, or

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

The principal or the most advantageous market must be accessible to by the Group. The fair value
of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best
interest.

A fair value measurement of a nonfinancial asset takes into account a market participant's ability
to generate economic benefits by using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements
are categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recurring basis, the
Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing
categorization (based on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each reporting period.

*SGVFS014132*
 - 11 -

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities
on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair
value hierarchy as explained above.

Cash and Cash Equivalents

Cash includes cash on hand and in banks. Cash in banks earn interest at the respective bank
deposit rates. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three months or less from dates
of acquisition and that are subject to an insignificant risk of change in value.

Financial Instruments

Financial assets
Initial recognition
Financial assets within the scope of PAS 39 are classified as either financial assets at FVPL, loans
and receivables, held-to-maturity (HTM) investments, or available-for-sale (AFS) financial assets,
as appropriate. The Group determines the classification of its financial assets at initial recognition.

Financial assets are recognized initially at fair value plus, in the case of investments not at FVPL,
directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time frame established
by regulation or convention in the marketplace (regular way purchases) are recognized on the
trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at FVPL

Financial assets at FVPL include financial assets held for trading and financial assets designated
upon initial recognition as FVPL. Financial assets are classified as held for trading if they are
acquired for the purpose of selling in the near term.

This category includes held for trading, designated at FVPL and derivative financial instruments
entered into by the Group that do not meet the hedge accounting criteria as defined by PAS 39.
Derivatives, including separated embedded derivatives are also classified as held for trading unless
they are designated as effective hedging instruments. Financial assets at FVPL are carried in the
interim consolidated balance sheets at fair value with gains or losses recognized in the interim
consolidated statement of comprehensive income.

Derivatives embedded in host contracts are accounted for as separate derivatives when their risks
and characteristics are not closely related to those of the host contracts and the host contracts are
not carried at fair value. These embedded derivatives are measured at fair value with gains or
losses arising from changes in fair value recognized in the interim consolidated statement of
comprehensive income. Reassessment only occurs if there is a change in the terms of the contract
that significantly modifies the cash flows that would otherwise be required.

*SGVFS014132*
 - 12 -

Financial assets designated as FVPL are designated by management on initial recognition when
any of the following criteria are met:

The designation eliminates or significantly reduces the inconsistent treatment that would
otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them
on a different basis; or
The assets and liabilities are part of a group of financial assets, financial liabilities or both
which are managed and their performance evaluated on a fair value basis, in accordance with
a documented risk management or investment strategy; or
The financial instrument contains an embedded derivative, unless the embedded derivative
does not significantly modify the cash flows or it is clear, with little or no analysis, that it
would not be separately recorded.

As of June 30, 2015 and December 31, 2014, the Group designated its investments in Unit
Investment Trust Fund (UITF) and RCBC Senior Notes as financial assets at FVPL.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Such financial assets are carried at amortized cost using the
effective interest rate method. Gains and losses are recognized in the interim consolidated
statement of comprehensive income when the loans and receivables are derecognized or impaired,
as well as through the amortization process.

As of June 30, 2015 and December 31, 2014, the Group has designated as loans and receivables its
cash and cash equivalents, trade and other receivables, amounts owed by related parties, and
refundable deposits (reported as part of Other noncurrent assets in the interim consolidated
balance sheet).

HTM investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities are
classified as HTM when the Group has the positive intention and ability to hold it to maturity.
After initial measurement HTM investments are measured at amortized cost using the effective
interest rate method. This method uses an effective interest rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of
the financial asset. Gains and losses are recognized in the interim consolidated statement of
comprehensive income when the investments are derecognized or impaired, as well as through the
amortization process.

As of June 30, 2015 and December 31, 2014, the Group has HTM investments in Philippine
government securities.

AFS financial assets

AFS financial assets are non-derivative financial assets that are designated as AFS or are not
classified in any of the three preceding categories. After initial measurement, AFS financial assets
are measured at fair value with unrealized gains or losses recognized directly in equity until the
investment is derecognized, at which time the cumulative gain or loss recorded in equity is
recognized in the interim consolidated statement of comprehensive income, or determined to be
impaired, at which time the cumulative loss recorded in equity is recognized in the consolidated
statement of comprehensive income.

As of June 30, 2015 and December 31, 2014, the Group has no available-for-sale security
investments.

*SGVFS014132*
 - 13 -

Financial Liabilities
Initial recognition
Financial liabilities within the scope of PAS 39 are classified as financial liabilities at FVPL, other
financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate. The Group determines the classification of its financial liabilities at initial
recognition and, where allowed and appropriate, re-evaluates such designation at every financial
reporting date.

Financial liabilities are recognized initially at fair value plus, in the case of investments not at
FVPL, directly attributable transaction costs.

The Groups financial liabilities include trade and other payables, short-term loan, long-term debt,
amounts owed to related parties and derivative liability.

Financial liabilities are classified in this category if these are not held for trading or not designated
at FVPL upon the inception of the liability. These include liabilities arising from operations or
borrowings.

Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:

Financial liabilities at FVPL

Financial liabilities at FVPL include financial liabilities held for trading and financial liabilities
designated upon initial recognition at FVPL.

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling
in the near term. This category includes derivative financial instruments entered into by the Group
that do not meet the hedge accounting criteria as defined by PAS 39.

Gains and losses on liabilities held for trading are recognized in the interim consolidated statement
of comprehensive income.

As of December 31, 2014, the Groups derivative liability is classified as a financial liability a
FVPL. The Group does not have a financial liability at FVPL as of June 30, 2015.

Other financial liabilities

Other financial liabilities are initially recognized at fair value of the consideration received, less
directly attributable transaction costs. After initial recognition, other financial liabilities are
subsequently measured at amortized cost using the effective interest method. Amortized cost is
calculated by taking into account any related issue costs, discount or premium. Gains and losses
are recognized in the interim consolidated statement of comprehensive income when the liabilities
are derecognized, as well as through the amortization process.

As of June 30, 2015 and December 31, 2014, the Group has no other financial liabilities.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the interim
consolidated balance sheet if, and only if, there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on a net basis, or to realize the assets and
settle the liabilities simultaneously.

*SGVFS014132*
 - 14 -

Fair value of financial instruments

The fair value of financial instruments that are actively traded in organized financial markets is
determined by reference to quoted market bid prices at the close of business on the balance sheet
date. For financial instruments where there is no active market, fair value is determined using
valuation techniques. Such techniques may include using recent arms-length market transactions;
reference to the current fair value of another instrument that is substantially the same; discounted
cash flow analysis or other valuation models.

Day 1 difference
Where the transaction price 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 Group recognizes the difference
between the transaction price and fair value (a Day 1 difference) in the interim consolidated
statement of comprehensive income unless it qualifies for recognition as some other type of asset.
In cases where use is made of data which is not observable, the difference between the transaction
price and model value is only recognized in the interim consolidated statement of comprehensive
income when the inputs become observable or when the instrument is derecognized. For each
transaction, the Group determines the appropriate method of recognizing the Day 1 difference
amount.

Amortized cost of financial instruments

Amortized cost is computed using the effective interest rate method less any allowance for
impairment and principal repayment or reduction. The calculation takes into account any
premium or discount on acquisition and includes transaction costs and fees that are an integral part
of the effective interest rate.

Classification of financial instruments between debt and equity

A financial instrument is classified as debt if it provides for a contractual obligation to:

deliver cash or another financial asset to another entity; or

exchange financial assets or financial liabilities with another entity under conditions that are
potentially unfavorable to the Group; 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 Group 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.
The components of issued financial instruments that contain both liability and equity elements are
accounted for separately, with the equity component being assigned the residual amount after
deducting from the instrument as a whole the amount separately determined as the fair value of the
liability component on the date of issue.

Impairment of Financial Assets

The Group assesses at each balance sheet date whether there is any objective evidence that a
financial asset or a group of financial assets is impaired. A financial asset or a group of financial
assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a
result of one or more events that has occurred after the initial recognition of the asset (an incurred
loss event) and that loss event has an impact on the estimated future cash flows of the financial
asset or the group of financial assets that can be reliably estimated. Evidence of impairment may
include indications that the debtors or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will
enter bankruptcy or other financial reorganization and where observable data indicate that there is

*SGVFS014132*
 - 15 -

a measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.

Financial assets carried at amortized cost

The Group first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, the asset
is included in a group of financial assets with similar credit risk characteristics and that group of
financial assets is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognized are not included in
a collective assessment of impairment.

If there is objective evidence that an impairment loss on loans and receivables carried at amortized
cost has been incurred, the amount of the loss is measured as the difference between the assets
carrying amount and the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial assets original effective interest rate
(i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset
shall be reduced either directly or through the use of an allowance account. The amount of the
loss shall be recognized in the interim consolidated statement of comprehensive income. If, in a
subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the
interim consolidated statement of comprehensive income, to the extent that the carrying value of
the asset does not exceed its amortized cost at the reversal date.

Financial assets carried at cost

If there is objective evidence that an impairment loss on an unquoted equity instrument that is not
carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that
is linked to and must be settled by delivery of such an unquoted equity instrument has been
incurred, the amount of the loss is measured as the difference between the assets carrying amount
and the present value of estimated future cash flows discounted at the current market rate of return
for a similar financial asset.

AFS financial assets

For AFS financial assets, the Group assesses at each balance sheet date whether there is objective
evidence that an investment or a group of investments is impaired. In the case of equity
investments classified as AFS, objective evidence would include a significant or prolonged decline
in the fair value of the investment below its cost. Where there is evidence of impairment, the
cumulative loss is removed from equity and recognized in the interim consolidated statements of
comprehensive income. Impairment losses on equity investments are not reversed through the
interim consolidated statement of comprehensive income; increases in their fair value after
impairment are recognized directly in equity.

In the case of debt instruments classified as AFS, impairment is assessed based on the same
criteria as financial assets carried at amortized cost. Future interest income is based on the
reduced carrying amount and is accrued based on the rate of interest used to discount future cash
flows for the purpose of measuring impairment loss. Such accrual is recorded as part of interest
income in the interim consolidated statement of comprehensive income. If, in subsequent year,
the fair value of a debt instrument increases and the increase can be objectively related to an event
occurring after the impairment loss was recognized in the interim consolidated statement of

*SGVFS014132*
 - 16 -

comprehensive income, the impairment loss is reversed through the interim consolidated statement
of comprehensive income.

Derecognition of Financial Instruments

Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar
financial assets) is derecognized where:

the rights to receive cash flows from the asset have expired;
the Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
pass-through arrangement; and
either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b)
the Group has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.

Where the Group has transferred its rights to receive cash flows from an asset or has entered into
pass through arrangement and has neither transferred nor retained substantially all the risks and
rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the
Groups continuing involvement in the asset.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured
at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
When continuing involvement takes the form of a written and/or purchased option (including a
cash settled option or similar provision) on the transferred asset, the extent of the Groups
continuing involvement is the amount of the transferred asset that the Group may repurchase,
except that in the case of a written put option (including a cash settled option or similar provision)
on an asset measured at fair value, the extent of the Groups continuing involvement is limited to
the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or 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 interim
consolidated statement of consolidated comprehensive income.

Inventories
Inventories are valued at the lower of cost and net realizable value (NRV). Costs incurred in
bringing each inventory to its present location and condition are accounted for as follows:

Raw materials, spare parts, - purchase cost on a first-in, first-out basis (FIFO);
supplies and others

Finished goods and work-in- - cost of direct materials and labor and a proportion of
process inventories manufacturing overhead costs based on the normal
operating capacity, but excluding borrowing costs.

*SGVFS014132*
 - 17 -

NRV of finished goods, work-in-process inventories and raw materials is the estimated selling
price in the ordinary course of business, less estimated costs of completion and the estimated costs
necessary to make the sale. NRV of supplies and spare parts is the current replacement costs.

Property, Plant and Equipment

Property, plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less
accumulated depreciation and any accumulated impairment in value. Such cost includes the cost
of replacing part of such property, plant and equipment when that cost is incurred and if the
recognition criteria are met. Repairs and maintenance are recognized in the interim consolidated
statement of comprehensive income as incurred.

Depreciation is calculated on a straight-line method over the estimated useful lives of the property,
plant and equipment as follows:

Category Number of Years

Machinery and equipment 6-12
Buildings and improvements 5-25
Facility and production tools 3-5
Furniture, fixtures and equipment 2-5
Transportation equipment 5-7

The property, plant and equipments residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each financial year-end.

When each major inspection is performed, its cost is recognized in the carrying amount of the
property, plant and equipment as a replacement if the recognition criteria are satisfied.

Construction-in-progress represents property under construction and is stated at cost. This

includes costs of construction and other direct costs. Construction-in-progress is not depreciated
until such time that the relevant assets are completed and put into operational use.

Fully depreciated assets are retained in the accounts until these are no longer in use. When assets
are retired or otherwise disposed of, both the cost and related accumulated depreciation and
amortization and any allowance for impairment losses are removed from the accounts and any
resulting gain or loss is credited or charged to current operations.

An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and carrying amount of
the asset) is included in the interim consolidated statement of comprehensive income in the year
the asset is derecognized.

Noncurrent Asset Held for Sale

Property, plant and equipment are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction expected to be completed within one year from the
date of classification, rather than through continuing use. Property, plant and equipment held for
sale are stated at the lower of carrying amount and fair value less costs to sell.

The criteria for held for sale classification is regarded as met only when the sale or distribution is
highly probable and the asset or disposal group is available for immediate sale in its present
condition. Actions required to complete the sale should indicate that it is unlikely that significant

*SGVFS014132*
 - 18 -

changes to the sale will be made or that the sale will be withdrawn. Management must be
committed to the sale expected within one year from the date of the classification.

Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in
the period in which they occur. Borrowing costs consist of interest and other costs that the Group
incurs in connection with the borrowing of funds. Foreign currency exchange differences are
included in the determination of borrowing costs to be capitalised, but only to the extent that they
are an adjustment to the interest cost on the borrowing. No further guidance is given within the
standard itself about how this is determined.

Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less any accumulated amortization and any
accumulated impairment losses. Internally generated intangible assets, excluding capitalized
development costs, are not capitalized and expenditure is charged against income in the period in
which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortized over seven years, useful economic life, and
assessed for impairment whenever there is an indication that the intangible asset may be impaired.
The amortization period and the amortization method for an intangible asset with a finite useful
life are reviewed at each financial year-end. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset is accounted for by
changing the amortization period or method, as appropriate, and treated as changes in accounting
estimates. The amortization expense on intangible assets with finite lives is recognized in the
interim consolidated statement of comprehensive income.

Intangible assets with indefinite useful lives are tested for impairment annually either individually
or at the cash-generating unit level. Such intangibles are not amortized. The useful life of an
intangible asset with an indefinite life is reviewed annually to determine whether the assessment
can be supported. If not, the change in the useful life assessment from indefinite to finite is made
on a prospective basis.

Business Combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration transferred measured at acquisition date fair
value and the amount of any non-controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquiree at
fair value or at the proportionate share of the acquirees identifiable net assets. Acquisition-related
costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as of the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.

*SGVFS014132*
 - 19 -

If the business combination is achieved in stages, any previously held equity interest is remeasured
at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at
the acquisition date. Contingent consideration classified as an asset or liability that is a financial
instrument and within the scope of PAS 39 Financial Instruments: Recognition and Measurement,
is measured at fair value with changes in fair value recognised either in either profit or loss or as a
change to OCI. If the contingent consideration is not within the scope of PAS 39, it is measured in
accordance with the appropriate IFRS. Contingent consideration that is classified as equity is not
remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests, and any previous interest held,
over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it
has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition date. If the
reassessment still results in an excess of the fair value of net assets acquired over the aggregate
consideration transferred, then the gain is recognised in profit or loss as excess of the fair value of
net assets over the aggregate consideration transferred.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Groups cash-generating units that are expected to benefit
from the combination, irrespective of whether other assets or liabilities of the acquiree are
assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that
unit is disposed of, the goodwill associated with the disposed operation is included in the carrying
amount of the operation when determining the gain or loss on disposal. Goodwill disposed in
these circumstances is measured based on the relative values of the disposed operation and the
portion of the cash-generating unit retained.

Research and Development Costs

Research costs are expensed as incurred. Development expenditures on an individual project are
recognized as an intangible asset when the Group can demonstrate:

the technical feasibility of completing the intangible asset so that the asset will be available for
use or sale
its intention to complete and its ability to use or sell the asset
how the asset will generate future economic benefits
the availability of resources to complete the asset
the ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at
cost less any accumulated amortization and accumulated impairment losses. Amortization of the
asset begins when development is complete and the asset is available for use. It is amortized over
the period of expected future benefit, which is estimated to be seven (7) years. Amortization is
recorded in cost of sales. During the period of development, the asset is tested for impairment
annually.

*SGVFS014132*
 - 20 -

Impairment of Nonfinancial Assets

The Group assesses at each reporting date whether there is an indication that a nonfinancial asset
may be impaired. The Group has designated as nonfinancial assets its prepaid expenses and other
current assets, property and equipment and other noncurrent assets. If any such indication exists,
or when annual impairment testing for a nonfinancial asset is required, the Group makes an
estimate of the nonfinancial assets recoverable amount. A nonfinancial assets estimated
recoverable amount is the higher of a nonfinancial assets or cash-generating units fair value less
costs to sell and its value in use (VIU) and is determined for an individual asset, unless the
nonfinancial asset does not generate cash inflows that are largely independent of those from other
nonfinancial assets or groups of nonfinancial assets. Where the carrying amount of a nonfinancial
asset exceeds its estimated recoverable amount, the nonfinancial asset is considered impaired and
is written down to its estimated recoverable amount. In assessing VIU, 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 nonfinancial asset. In
determining fair value less costs to sell, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share prices for publicly traded
subsidiaries or other available fair value indicators.

For nonfinancial assets excluding goodwill, 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 Group makes an estimate of recoverable
amount. A previously recognized impairment loss is reversed only if there has been a change in
the estimates used to determine the nonfinancial assets recoverable amount since the last
impairment loss was recognized. If that is the case the carrying amount of the nonfinancial 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 nonfinancial asset in prior years. Such reversal is recognized in the interim consolidated
statement of comprehensive income.

Capital Stock
Capital stock is measured at par value for all shares issued. Subscriptions receivable are
accounted for as a deduction from equity. Proceeds and/or fair value of consideration received in
excess of par value, if any, are recognized as additional paid-in capital (APIC).

Retained Earnings
The amount included in retained earnings includes profit or loss attributable to the Groups equity
holders and reduced by dividends on capital stock. Retained earnings may also include effect of
changes in accounting policies as may be required by the standards transitional provisions.

Cash dividends
Cash dividends on capital stock are recognized as a liability and deducted from equity when they
are approved by the BOD. Dividends for the year that are approved after the financial reporting
date are dealt with as an event after the financial reporting date.

Stock dividends
Stock dividends are recognized as a liability and deducted from equity when they are approved by
the shareholders representing not less than two-thirds (2/3) of the outstanding capital stock of the
Parent Company. A stock dividend of at least 20% of the outstanding capital stock is considered
as large stock dividend and is measured at par value. A stock dividend of less than 20% is
considered small stock dividend and is measured at fair value.

*SGVFS014132*
 - 21 -

Equity Reserve
Equity Reserve represents the effect of the application of the pooling-of-interests method.

Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received or receivable, taking into
account contractually defined terms of payment and excluding discounts, returns, rebates and other
sales taxes or duties. The Group assesses its revenue arrangement against specific criteria in order
to determine if it is acting as principal or agent. The Group has concluded that it is acting as a
principal in all of its revenue arrangements.

The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership
of the goods have passed to the buyer, usually on delivery of the goods.

Interest income
Interest income is recognized as it accrues using the effective interest rate method. (i.e., the rate
that exactly discounts estimated future cash receipts through the expected life of the financial
instrument to the net carrying amount of the financial asset).

Deferred Revenues
Deferred revenues pertain to the unearned income arising from the sale of goods wherein no actual
shipment or transfer of risks and rewards to customers has occurred yet. No amortization is done
to recognize the earned revenue since the Branch will make subsequent reversals upon shipment of
the goods to customers.

Operating expenses
Operating 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. Operating expenses are recognized when
incurred.

Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of
the arrangement at the inception date and requires an assessment of whether the fulfillment of the
arrangements is dependent on the use of a specific asset or assets or the arrangement conveys a
right to use the asset. A reassessment is made after the inception of the lease only if one of the
following applies:

a. There is a change in contractual terms, other than a renewal or extension of the arrangement;
b. A renewal option is exercised and extension granted, unless the term of the renewal or
extension was initially included in the lease term;
c. There is a change in the determination of whether fulfillment is dependent on a specified asset;
or
d. There is a substantial change to the asset.

When a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances give rise to the reassessment for scenarios (a), (c) or (d) and at the date of
renewal or extension period for scenario (b).

*SGVFS014132*
 - 22 -

Group as a lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease payments are recognized as expense in the
consolidated statement of comprehensive income on a straight-line basis over the lease term.

Retirement Benefit Costs

The Group is covered by a noncontributory defined benefit retirement plan. The net defined
benefit liability or asset is the aggregate of the present value of the defined benefit obligation at the
end of the reporting period reduced by the fair value of plan assets, adjusted for any effect of
limiting a net defined benefit asset to the asset ceiling. The asset ceiling is the present value of
any economic benefits available in the form of refunds from the plan or reductions in future
contributions to the plan.

The cost of providing benefits under the defined benefit plans is actuarially determined using the
projected unit credit method.

Defined benefit costs comprise the following:

Service cost
Net interest on the net defined benefit liability or asset
Remeasurements of net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses on non-
routine settlements are recognized as expense in profit or loss. Past service costs are recognized
when plan amendment or curtailment occurs.

Net interest on the net defined benefit liability or asset is the change during the period in the net
defined benefit liability or asset that arises from the passage of time which is determined by
applying the discount rate based on high quality corporate bonds to the net defined benefit liability
or asset. Net interest on the net defined benefit liability or asset is recognized as expense or
income in the consolidated statement of comprehensive income.

Remeasurements comprising actuarial gains and losses, return on plan assets and any change in
the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized
immediately in other comprehensive income in the period in which they arise. Remeasurements
are not reclassified to profit or loss in subsequent periods. These are retained in other
comprehensive income until full settlement of the obligation.

Foreign Currency Denominated Transactions

The consolidated financial statements are presented in US dollars, which is the functional and
presentation currency of all companies in the Group. Transactions in foreign currencies are
initially recorded at the functional currency spot rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency rate of exchange ruling at the balance sheet date.

All differences are taken to the consolidated statement of comprehensive income. Nonmonetary
items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as of the dates of the initial transactions.

*SGVFS014132*
 - 23 -

Taxes

Current tax
Current tax liabilities for the current and prior periods are measured at the amount expected to be
paid to the taxation authority. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the financial reporting date.

Deferred tax
Deferred tax is provided using the balance sheet liability method on temporary differences at the
financial reporting date between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, 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
in respect of taxable temporary differences associated with investments in subsidiaries and
interests in joint ventures, where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.

Deferred tax assets are recognized for all deductible temporary differences, carry-forward of
unused tax credits from excess minimum corporate income tax (MCIT) and unused net operating
loss carryover (NOLCO) to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carryforward of unused tax credits
from MCIT and unused NOLCO 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 in respect of deductible temporary differences associated with investments in
subsidiaries and interests in joint ventures, 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 balance sheet 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 balance sheet 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.

Income tax relating to items recognized directly in equity is recognized in the statement of
changes in equity and not in the consolidated statement of comprehensive income.

Earnings Per Share (EPS)

Basic EPS is calculated by dividing the net income for the year by the weighted average number
of common shares outstanding during the year, with retroactive adjustments for any stock
dividends and stock split.

For the purpose of calculating diluted earnings per share, the net income and the weighted average
number of shares outstanding are adjusted for the effects of all dilutive potential common shares.

*SGVFS014132*
 - 24 -

Segment Reporting
For management purposes, the Group has determined that it is operating as one operating segment.
Sales are reported internally per division, however, profit or loss, assets and liabilities are reported
on an entity-wide basis. These information are measured using the same accounting policies and
estimates as the Groups interim consolidated financial statements (see Note 24).

Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a
result of a past event and it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Where the Group expects some or all of a provision to be reimbursed, for example,
under an insurance contract, the reimbursement is recognized as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the
statement of comprehensive income, net of any reimbursement. 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 assessments of the time value of money and, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the
provision due to the passage of time is recognized as an interest expense.

Contingencies
Contingent liabilities are not recognized but are disclosed in the notes to interim consolidated
financial statements unless the possibility of an outflow of resources embodying economic benefit
is remote. Contingent assets are not recognized but are disclosed in the notes to consolidated
financial statements when an inflow of economic benefit is probable.

Events After the Reporting Date

Post year-end events that provide additional information about the Groups position at the
financial reporting date (adjusting events) are reflected in the interim financial statements. Post
year-end events that are not adjusting events are disclosed in the notes to interim consolidated
financial statements when material.

3. Significant Accounting Judgments and Estimates

The preparation of the Groups interim consolidated financial statements in accordance with PFRS
requires management to make judgments, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at
the reporting date. However, uncertainty about these assumptions and estimates could result in
outcomes that could require a material adjustment to the carrying amount of the asset or liability
affected in the future.

Judgments
In the process of applying the Groups accounting policies, management has made the following
judgments, apart from those involving estimations, which has the most significant effect on the
amounts recognized in the interim consolidated financial statements:

Classifying Non-current assets held for sale

When CEIC acquired CATS and RBWRP, the manufacturing activities of CATS had been
transferred to CEC facility for operational efficiency measures. As a result, the land and building
improvements owned by CATS and RBWRP became idle; thus, on December 9, 2014, the BOD
approved the plan to sell and dispose the said aforementioned assets to interested buyers. PFRS 5,
Non-current Assets Held for Sale and Discontinued Operations, requires entities to classify a non-

*SGVFS014132*
 - 25 -

current asset held for sale if its carrying amount will be recovered mainly through selling rather
than through usage. The Group has made a judgment that the non-current assets are held for sale
since the management are committed to selling the assets and are active in looking for interested
buyers. Furthermore, the assets are available for immediate sale in their present condition and that
the sale is expected to be completed within a year from the date of the classification.

Capitalization of Product Development Cost

Initial capitalization of costs is based on managements judgment that technological and economic
feasibility is confirmed, usually when a product development project has reached a defined
milestone according to an established project management model. In determining the amounts to
be capitalized, management makes assumptions regarding the expected future cash generation of
the project, discount rates to be applied and the expected period of benefits.

Deferred tax liability on a subsidiarys undistributed profits

CEIC has an undistributed profit as of June 30, 2015 and December 31, 2014 that becomes taxable
when distributed to the Parent Company. PAS 12, Income Taxes, requires the recognition of
deferred tax liability on taxable temporary difference associated with investments in subsidiaries
and interests in joint ventures, unless the Group has the ability to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. The Group has made a judgment that it is probable that the temporary
difference will not reverse in the foreseeable future based on managements plan that the Group
will not be declaring dividends from CEIC in the foreseeable future. Accordingly, no deferred tax
liability has been recognized on the undistributed profits of CEIC.

Operating lease commitments - Group as lessee

The Group has entered into leases of its office and commercial spaces. The Group has determined
that it does not acquire all the significant risks and rewards of ownership of these properties which
are leased as operating leases (see Note 9).

Determining functional currency

The functional currencies of the entities under the Group are the currencies of the primary
economic environment in which the entity operates. It is the currency that mainly influences the
sales prices of goods and cost of goods sold. Based on the economic substance of the underlying
circumstances, the functional currency of the Company and its subsidiaries is the US dollar.

Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the
balance sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below.

Estimation of Fair Value of Identifiable Net Assets of an Acquiree in a Business Combination

In accounting for business combinations, the purchase consideration is allocated to the identifiable
assets, liabilities and contingent liabilities (identifiable net assets) on the basis of fair value at the
date of acquisition. The determination of fair values requires estimates of economic conditions
and other factors. The fair values of identifiable net assets are in Note 4 to the interim
consolidated financial statements.

Estimation of Fair Value of Noncurrent Assets Held for Sale

The determination of the fair value of noncurrent assets held for sale is made with reference to the
selling price of the asset in the market. Other factors such as the local market conditions and the
asking price of the potential buyers are considered in the determination of the fair value of the
assets. As of June 30, 2015 and December 31, 2014, the Group carries its noncurrent assets held

*SGVFS014132*
 - 26 -

for sale at lower of carrying amount and fair value less cost to sell amounting to $11,408,611
(see Note 11).

Fair Values of Financial Instruments

The fair values of financial instruments that are not quoted in active markets are determined using
valuation techniques. Where valuation techniques are used to determine fair values, fair values are
validated and periodically reviewed by qualified independent personnel. All models are reviewed
before they are used, and models are calibrated to ensure that outputs reflect actual data and
comparative market prices. To the extent practicable, models use only observable data; however,
areas such as credit risk (both own and counterparty), volatilities and correlations require
management to make estimates. Changes in assumptions about these factors could affect reported
fair value of financial instruments. The fair values of the financial instruments of the Group are
disclosed in Note 26 to the interim consolidated financial statements.

Estimating useful lives of property, plant and equipment

The Group estimates the useful lives of its property, plant and equipment based on the period over
which the assets are expected to be available for use. The Group reviews annually the estimated
useful lives of property and equipment based on factors that include asset utilization, internal
technical evaluation, technological changes, environmental and anticipated use of the assets
tempered by related industry benchmark information. It is possible that future results of operation
could be materially affected by changes in these estimates brought about by changes in factors
mentioned. A reduction in the estimated useful lives of property and equipment would increase
depreciation expense and decrease noncurrent assets.

Depreciation charged in the interim consolidated statements of comprehensive income amounted

to $1,676,475 and $1,144,230 for the six months ended June 30, 2015 and 2014, respectively. As
of June 30, 2015 and December 31, 2014, the Groups property, plant and equipment have a net
book value of $18,640,625 and $17,015,168, respectively (see Note 11).

Assessing impairment of nonfinancial assets

The Group assesses impairment on assets whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The factors that the Group considers
important which could trigger an impairment review include the following:

Significant underperformance relative to expected historical or projected future operating

results;
Significant changes in the manner of use of the acquired assets or the strategy for overall
business; and
Significant negative industry or economic trends.

An impairment loss is recognized whenever the carrying amount of an asset exceeds its estimated
recoverable amount which is the higher of an assets fair value less costs to sell and value in use.
For purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows.

*SGVFS014132*
 - 27 -

Assets that are subject to impairment testing when impairment indicators are present (such as
obsolescence, physical damage, significant changes to the manner in which the asset is used,
worse than expected economic performance, a drop in revenues or other external indicators) are as
follows:

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Advances to suppliers, prepaid expense and others
under other current assets (see Note 9) $771,877 $462,684
Property, plant and equipment (see Note 11) 18,640,625 17,015,168
Product development costs and advances to
suppliers included under other noncurrent assets
(see Note 12) 648,577 662,872

No impairment loss was recognized for the six months ended June 30, 2015 and 2014.

Estimating allowance for inventory obsolescence

The Group recognizes allowance for inventory obsolescence when the inventory items are no
longer marketable and diminishes in value. Obsolescence is based on the physical and internal
condition of inventory items. The Group reviews on a monthly basis the condition of its stocks.
The assessment of the condition of the inventory goods either increase or decrease the expenses or
total inventory.

The estimated allowance for inventory obsolescence amounted $96,884 as of June 30, 2015 and
December 31, 2014. The carrying amounts of inventories, net of allowance for inventory
obsolescence, amounted to $12,716,634 and $10,768,681 as of June 30, 2015 and December 31,
2014, respectively (see Note 7).

Estimating impairment of loans and receivables

The Group maintains allowance for impairment at a level considered adequate to provide for
potential uncollectible receivables. The level of this impairment allowance is evaluated by
management on the basis of factors that affect the collectibility of the accounts. These factors
include, but are not limited to, the length of the Groups relationship with debtors, their payment
behavior and known market factors. The Group reviews the age and status of receivable, and
identifies accounts that are to be provided with allowance on a continuous basis either individually
or collectively. The amount and timing of recorded expenses for any period would differ if the
Group made different judgment or utilized different estimates. An increase in the Groups
allowance for impairment would increase the Groups recorded expenses and decrease current
assets.

The Group determines allowance for each significant receivable on an individual basis. Among
the items that the Group considers in assessing the impairment is the inability to collect from the
counterparty based on the contractual terms of the receivables.

For collective assessment, allowances are assessed for receivables that are not individually
significant and for individually significant receivables where there is not yet objective evidence of
individual impairment. Impairment losses are estimated by taking into consideration the age of
the receivables, past collection experience and other factors that may affect collectability.
As of June 30, 2015 and December 31, 2014, the Group has not provided any impairment
allowance since receivables were assessed to be fully collectible. The carrying amount of trade
and other receivables, loans to employees and amounts owed by related parties amounted to

*SGVFS014132*
 - 28 -

$18,209,101 and $20,144,693 as of June 30, 2015 and December 31, 2014, respectively
(see Notes 6, 9 and 16).

Estimating retirement benefit cost

The determination of the obligation for retirement benefits is dependent on the selection by
management of certain assumptions used by actuaries in calculating such amounts. Those
assumptions are described in Note 20 and include among others, discount rate and salary increase
rate. Actual results that differ from the Groups assumptions are accumulated and amortized over
future periods and therefore, generally affect the recognized expense and recorded obligation in
such future periods. While management believes that the Groups assumptions are reasonable and
appropriate, significant differences in actual experience or significant changes in assumptions may
materially affect the Groups retirement obligation.

The Groups retirement benefit cost amounted to $124,070 and $120,995 for the six months ended
June 30, 2015 and 2014, respectively. As of June 30, 2015 and December 31, 2014, the Groups
retirement benefit obligation amounted to $1,648,058 and $1,645,787, respectively (see Note 20).

Estimating useful life of software costs and capitalized product development cost
The estimated useful lives of amortizing software costs and capitalized product development cost
were determined on the basis of managements assessment of the period within which the benefits
of these costs are expected to be realized by the Group.

As of June 30, 2015 and December 31, 2014, the software costs gross carrying amount of $39,278
has been fully amortized (see Note 12). The carrying amount of capitalized development cost
amounted to $571,742 and $560,932 as of June 30, 2015 and December 31, 2014, respectively.
The amortization of capitalized development cost amounted to $48,178 and $36,470 for the six
months ended June 30, 2015 and 2014, respectively.

Recoverability of deferred tax assets

The Group reviews the carrying amounts of deferred tax assets at each balance sheet date and
reduces deferred tax assets to the extent that it is no longer probable that sufficient income will be
available to allow all or part of the deferred tax assets to be utilized. The Group has recognized
net deferred tax assets amounting to $176,198 and $172,487 as of June 30, 2015 and
December 31, 2014, respectively (see Note 22).

Determining provision for warranty

The Group estimates the total warranty reserve to be recognized on the total internal and external
sales for the period using a predetermined percentage rate. Assumptions made by the Group such
as percentage used is based on their cumulative and industry experience on approximate inventory
returns made by the customers.

The provision for warranty amounted to $13,538 and $148,954 as of June 30, 2015 and
December 31, 2014, respectively.

Legal contingencies
The estimate of probable costs for the resolution of possible claims has been developed in
consultation with outside counsels handling the Groups defense in these matters and is based
upon analysis of potential claims.

Management, in consultation with these counsels, believes that the likely outcome of these legal
proceedings will not have a material adverse effect on the Groups financial position and operating
results. However, it is possible that the future results of operations could be materially affected on

*SGVFS014132*
 - 29 -

changes in estimates or in the effectiveness of the strategies relating to these litigations and claims.
No provision for probable losses arising from legal contingencies was recognized for the six
months ended June 30, 2015 and 2014.

4. Business Combination

As discussed in Note 1, the Company acquired the ordinary shares of RBWHIs manufacturing
division, CATS (formerly known as RBWI) on July 23, 2014. The authorized capital stock of
CATS consists of 50,000 shares with a par value of US$1.00 per share, of which 5,000 shares of
such shares are issued and outstanding. The CEIC bought all of the 5,000 ordinary shares issued
representing 100% ownership in the acquired entity.

The acquisition of CATS allows the Group to expand its manufacturing capacity and capability
into the high-growth wireless segment via a proven player with a strong customer base.

The amount of consideration transferred for the acquisition was $7,465,105.

The fair values of the identifiable assets and liabilities of CATS as of the date of acquisition were:

Final fair value

Provisional recognized on
Balance Sheet fair value acquisition date
Assets
Current Assets
Cash and cash equivalent $291,179 $291,179
Trade and other receivables 4,883,504 4,883,504
Inventories - net 6,648,952 6,648,952
Held-to-maturity investment 114,341 119,751
Prepayments and other current assets 177,390 177,390

Noncurrent Assets
Property, plant and equipment 13,695,428 13,695,428
Held-to-maturity investment 1,073,789 1,036,971
Deferred tax assets 113,593
Other noncurrent assets 311,951 311,951
Total Assets 27,196,534 27,278,719

Liabilities
Current Liabilities
Trade and other payables $5,251,815 $5,251,815
Current portion of long-term debt 4,512,142 4,512,142
Income tax payable 110,930 110,930
Deferred revenues 404,741 404,741

Noncurrent Liabilities
Long-term debt - net of current portion 6,500,000 6,421,072
Retirement benefit obligation (asset) (2,036) 691,855
Provision for warranty 380,000 380,000
Total Liabilities 17,157,592 17,772,555
Fair value of identifiable net asset $10,038,942 $9,506,164

*SGVFS014132*
 - 30 -

Final fair value

Provisional recognized on
fair value acquisition date
Fair value of net assets acquired $10,038,942 $9,506,164
Cash consideration transferred 7,465,105 7,465,105
Excess of the fair value of net assets acquired over the
aggregate consideration transferred $2,573,837 $2,041,059

The net assets recognized in the consolidated financial statements as of December 31, 2014 were
based on a provisional assessment of their fair value while the Group is in the process of finalizing
the fair value of net assets acquired.

As of June 30, 2015, the Group valuation was completed and the acquisition date fair value of the
held-to-maturity investments, long-term debt, retirement benefit obligation and the related
deferred tax assets amounted to $1,156,722, $10,933,214, $691,855, and $113,593, respectively, a
net decrease of $532,778 over the provisional fair value of net assets. The 2014 comparative
information was restated to reflect the adjustment to the provisional amounts. As a result, there
was a corresponding reduction in the retained earnings amounting to $697,608 as of December 31,
2014 due to the decrease in the excess of the fair value of net assets acquired over the aggregate
consideration transferred.

From the date of acquisition, CATS contributed $11,729,914 of revenue and $1,349,426 to profit
before tax from continuing operations of the Group for the year ended December 31, 2014. If the
combination had taken place at the beginning of 2014, the Groups revenue from continuing
operations would have been $67,890,213 and the profit before tax from continuing operations
would have been $9,715,181.

Analysis of cash flows on acquisition:

Cash consideration transferred $7,465,105
Transaction costs of the acquisition 30,253
Net cash acquired with the subsidiary (291,179)
Net cash flow on acquisition $7,204,179

Transaction costs of $30,253 were expensed and are included in administrative expenses.

5. Cash and Cash Equivalents

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Cash on hand and in banks $6,640,242 $12,598,873
Short-term deposits 3,421 3,449
$6,643,663 $12,602,322

Cash in banks earns interest at prevailing bank deposit rates. Short-term deposits are made for
varying periods of between one (1) day and three (3) months depending on the immediate cash
requirements of the Group, and earn interest at the respective short-term deposit rates.

Interest income from cash in banks and short-term deposits amounted to $15,472 and $11,052 for
the six months ended June 30, 2015 and 2014, respectively.

*SGVFS014132*
 - 31 -

6. Trade and Other Receivables

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Trade $12,198,241 $12,709,964
Others 47,134 2,217,540
$12,245,375 $14,927,504

Trade receivables are non-interest bearing and are generally on 30-60 days terms.

Others include accrued interest receivable from short-term deposits and nontrade receivable from
suppliers which are expected to be collected within one year. As of December 31, 2014, other
receivables include a receivable from previous owner of CATS amounting to $2,281,406
representing the excess payment by CHPC when it acquired CATS.

7. Inventories

June 30, December 31,

2015 2014
(Unaudited) (Audited)
At cost:
Raw materials $6,927,068 $4,820,159
Work in process 3,599,621 4,082,702
Finished goods 864,034 889,141
Spare parts 576,493 510,748
11,967,216 10,302,750
At NRV:
Supplies and others 749,418 465,931
Total inventories at lower of cost and NRV $12,716,634 $10,768,681

Certain inventories have been provided with allowance to reflect valuation for non-movement and
obsolescence.

The allowance for inventory obsolescence of supplies and other inventories as of June 30, 2015
and December 31, 2014 amounted to $96,884.

The cost of inventories recognized as cost of sales amounted to $14,266,169 and $12,507,768 for
the six months ended June 30, 2015 and 2014, respectively (see Note 17).

8. Financial Asset at Fair Value through Profit or Loss

Unit Investment Trust Fund

This account primarily consists of investment in Unit Investment Trust Fund, acquired by the
Company in 2013. The reconciliation of the carrying amounts of financial assets at FVPL as of
June 30, 2015 and December 31, 2014 as follows:

*SGVFS014132*
 - 32 -

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Balances at beginning of period $701,747 $8,055,039
Disposal during the period (7,538,277)
Fair value gains (losses) (see Note 21) (1,057) 184,985
Balances at end of period $700,690 $701,747

The fair values for the Unit Investment Trust Fund are determined through the Net Asset
Valuation of each investee as of June 30, 2015 and December 31, 2014.

Investment in RCBC Senior Notes

On January 21, 2015, the Parent Company acquired $8.5 million of the USD Senior Unsecured
Fixed Rate Notes offered by the Rizal Banking Commercial Corporation (RCBC) via a drawdown
off its $1 billion Medium Term Note Programme maturing in January 22, 2020. The senior note
earns 4.25 % fixed rate per annum, payable semi-annually commencing July 21, 2015. The senior
note is listed and actively traded in Singapore Exchange Securities Trading Limited. The fixed
rate notes are designated as financial asset at FVPL as of June 30, 2015.

As of June 30, 2015, the Group recognized fair value gains amounting to $340,000 in profit or
loss. The balance of the investment in RCBC Senior Notes amounts to $8,840,000 as of
June 30, 2015.

The fair values for the investment in RCBC Senior Notes have been determined directly by
reference to published prices quoted in an active market. The RCBC Senior Notes are traded in
the Singapore Exchange (SGX).

Interest income earned on these notes amounted to $158,549 for the six months ended
June 30, 2015.

9. Other Current Assets

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Rental deposit (see Note 16) $1,133,929 $1,133,929
Advances to suppliers 681,993 235,742
Security deposit 180,387 180,387
Loans to employees 129,782 94,111
Prepaid expenses 74,488 104,532
Others 15,396 122,410
$2,215,975 $1,871,111

Advances to suppliers pertain mainly to down payments for production materials that are still to be
delivered.

*SGVFS014132*
 - 33 -

10. Held-to-Maturity Investments

As of June 30, 2015 and December 31, 2014, the details of HTM investments are as follows (see
Note 4):

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Current portion $554,696 $113,880
Noncurrent portion 398,582 985,362
$953,278 $1,099,242

In compliance with the Corporation Code of the Philippines which requires foreign corporations
doing business in the Philippines to deposit with SEC, securities worth of at least $2,300
(P
=0.1 million) and additional securities with market values equivalent to a certain percentage of
the amount by which the Branchs gross income exceeds $0.1 million (P =5.0 million).

In May 2015, one of the HTM bonds with a face value of $111,632 (P
=5.0 million) matured and as
a result, the Branch received cash amounting to $115,478.

The Groups HTM investments pertain to government bonds which were purchased by the
Philippine Branch of CATS in compliance with above regulation. The bonds have maturity dates
which range from 2015-2017 and bear an average effective interest rate of 1.97% to 4.63% per
annum. Interest income for the six months ended June 30, 2015 and 2014 amounting to
$41,855 and nil, respectively, are presented as part of Financial income (charges) account in the
interim consolidated statement of comprehensive income.

The SEC shall also require a deposit of additional securities if the actual market values of the
securities in deposit decreases by at least 10% of their actual market values at the time they were
deposited.

11. Property, Plant and Equipment

Six months ended June 30, 2015 (Unaudited)
Machinery Facility and Furniture,
Construction and Buildings and Production Fixtures and Transportation
in Progress Equipment Improvements Tools Equipment Equipment Total
Cost:
Beginning balances $ $38,385,288 $7,071,084 $5,994,069 $1,058,977 $104,365 $52,613,783
Additions 704,655 1,475,984 873,204 217,248 30,841 3,301,932
Disposal (193,085) (193,085)
Ending balances 704,655 39,668,187 7,944,288 6,211,317 1,089,818 104,365 55,722,630
Accumulated depreciation:
Beginning balances 26,587,628 4,154,904 3,958,418 818,862 78,803 35,598,615
Depreciation 1,105,199 129,721 372,163 61,620 7,772 1,676,475
Disposal (193,085) (193,085)
Ending balances 27,499,742 4,284,625 4,330,581 880,482 86,575 37,082,005
Net book values $704,655 $12,168,445 $3,659,663 $1,880,736 $209,336 $17,790 $18,640,625

*SGVFS014132*
 - 34 -

Six months ended June 30, 2014 (Unaudited)

Machinery Facility and Furniture,
Construction and Buildings and Production Fixtures and Transportation
in Progress Equipment Improvements Tools Equipment Equipment Total
Cost:
Beginning balances $ $36,453,977 $5,649,376 $5,489,442 $826,271 $86,204 $48,505,270
Additions 948,500 301,465 8,075 1,258,040
Ending balances 37,402,477 5,649,376 5,790,907 834,346 86,204 49,763,310
Accumulated depreciation:
Beginning balances 24,886,622 3,717,818 3,314,529 734,613 68,107 32,721,689
Depreciation 673,888 117,131 316,310 34,433 2,468 1,144,230
Ending balances 25,560,510 3,834,949 3,630,839 769,046 70,575 33,865,919
Net book values $ $11,841,967 $1,814,427 $2,160,068 $65,300 $15,629 $15,897,391

Year ended December 31, 2014 (Audited)

Machinery Buildings Facility and Furniture,
and and Production Fixtures and Transportation
Land Equipment Improvement Tools Equipment Equipment Total
Cost:
Beginning balances $ $36,453,977 $5,649,376 $5,489,442 $826,271 $86,204 $48,505,270
Additions 25,765 1,227,497 542,676 64,856 1,860,794
Additions due to
business
combination 3,698,601 1,905,546 7,904,221 168,899 18,161 13,695,428
Reclassication to:
Noncurrent
Held-for-Sale (3,698,601) (7,710,010) (11,408,611)
Disposals (38,049) (1,049) (39,098)
Ending balances 38,385,288 7,071,084 5,994,069 1,058,977 104,365 52,613,783
Accumulated depreciation:
Beginning balances 24,886,622 3,717,818 3,314,529 734,613 68,107 32,721,689
Depreciation 1,701,006 437,086 666,903 84,829 10,696 2,900,520
Disposals (23,014) (580) (23,594)
Ending balances 26,587,628 4,154,904 3,958,418 818,862 78,803 35,598,615
Net Book Values $ $11,797,660 $2,916,180 $2,035,651 $240,115 $25,562 $17,015,168

The land and building owned by RBWRP with a net book value of $9.7 million as of
December 31, 2012 was used as the collateral for the secured interest-bearing loan (see Note 15).
On December 9, 2014, the Parent Companys BOD approved the plan to sell and dispose certain
assets such as land, building and other improvements, and building plant and machinery of CATS
and RBWRP to any interested buyers as these are excess assets from the acquisition and are no
longer needed in the Groups operations. The related property and equipment were measured at
fair value at the date of acquisition (see Note 4). An independent valuation was obtained to
determine the fair values of property and equipment which were based on recent transactions for
similar assets within the same industry. Property and equipment with carrying value of
$11,408,611 was classified as noncurrent assets held for sale in the consolidated balance sheets.
The Parent Companys management expects that sale will be completed within one year from the
date of classification.

*SGVFS014132*
 - 35 -

12. Other Noncurrent Assets

June 30, December 31,
2015 2014
(Unaudited) (Audited)
Product development costs $571,742 $560,932
Miscellaneous deposits 141,961 167,551
Note receivable 87,373 87,373
Advances to suppliers 76,835 101,940
Others 44,323 44,708
$922,234 $962,504

Product development costs pertain to the capitalized cost of developing certain packages or
products for specific customers. The development costs met the requirements of PAS 38,
Intangible Assets, for capitalization. The product development costs that were capitalized for the
six months ended June 30, 2015 and 2014 amounted to $58,988 and nil, respectively.
Amortization of product development cost charged to the interim consolidated statements of
comprehensive income amounted to $48,178 and $36,470, for the six months ended June 30, 2015
and 2014, respectively as these are substantially available for use.

Miscellaneous deposits pertain to refundable deposits with MERALCO for the installation of
CECs electrical meters and bill deposit equivalent to one month energy consumption.

As of June 30, 2015 and December 31, 2014, CEC has software costs with gross carrying amount
of $39,278 that are fully amortized but are still in active use.

13. Trade and Other Payables

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Trade $4,408,802 $5,263,140
Accruals:
Payroll 844,642 878,519
Utilities 347,897 381,567
Interest 222,481 206,336
Others 935,151 99,485
Advances from customers 2,439,767 1,835,464
Others 563,399 769,761
$9,762,139 $9,434,272

Trade payables are non-interest bearing and are generally on 60-90 days terms.

Accruals comprise mainly of accruals for electricity, water, communication, security, shuttle
services and professional services.
Advances from customers pertain mainly to downpayments for sales orders.
Other payables pertain to statutory liabilities and are generally payable within 12 months from
balance sheet date.

*SGVFS014132*
 - 36 -

14. Short-term Loan

The Group has the following loan facilities:

June 30, December 31,
2015 2014
(Unaudited) (Audited)
Banks:
Security Bank Corporation (SBC) (a) $2,775,000 $2,100,000
Bank of the Philippine Island (BPI) (b) 2,268,088
Rizal Commercial Banking Corporation
(RCBC) (c) 1,510,992
$6,554,080 $2,100,000

a. Revolving loan facilities with the SBC which have payment terms ranging from 90 to 180
days. The facility is unsecured and charged interest of 1.95% to 2.10% per annum in 2015
and 2014.

b. Revolving loan facilities with the BPI which have payment terms of 180 days. The facility is
unsecured and charged interest of 1.80% per annum in 2015 and 2014.

c. Revolving loan facilities with the RCBC which have payment terms ranging from 60 to 167
days. The facility is unsecured and charged interest of 2.25% per annum in 2015 and 2014.

Interest expense incurred from these short-term loan facilities amounted to $43,205 and $5,217 for
the six months ended June 30, 2015 and 2014, respectively.

15. Long-term Debt

June 30, December 31,

2015 2014
(Unaudited) (Audited)
5-year corporate note-secured $25,218,943 $8,750,000
Additions:
Availment during the period - 10,000,000
Due to business combination - 8,479,933
Less deferred financing costs 226,218 130,122
24,992,725 27,099,811
Less current portion - net of deferred financing costs 3,293,192 3,399,432
$21,699,533 $23,700,379

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Balance at beginning of period $130,122 $100,344
Transaction costs recognized during
the period 161,159 78,928
Less amortization 65,063 49,150
Balance at end of period $226,218 130,122

*SGVFS014132*
 - 37 -

CHPC
On July 25, 2012, the Parent Company entered into a $10.0 million Notes Facility Agreement
(NFA) with Metropolitan Bank & Trust Company (Initial Noteholder), Metropolitan Bank & Trust
Company - Trust Banking Group (Facility and Paying Agent) and First Metro Investment
Corporation (Arranger). The NFA provided for the issuance of 5-year fixed rate corporate note
which bears interest of 3.6% per annum payable quarterly. On July 27, 2012 (issue date), the
Parent Company drew $10.0 million from the facility. The net proceeds of the issuance of the
Notes shall be used to finance the Groups strategic acquisitions and for general corporate
purposes.

Under the NFA, the Parent Company shall pay 30% of the loan outstanding on issue date in 12
equal consecutive quarterly installments in the amount equivalent to 2.5% of loan outstanding on
issue date commencing on the end of the 5th quarter until end of the 16th quarter from the issue
date. The remaining 70% of the loan outstanding on issue date is payable in 4 equal consecutive
quarterly installments in the amount equivalent to 17.5% of the loan outstanding on issue date
commencing on the 17th quarter from the issue date until the maturity date.

Prior to the maturity date, the Parent Company may redeem in whole but not in part, the relevant
outstanding notes beginning on and after the third anniversary of the issue date, by paying the
amount that is equivalent to 102% of the unpaid principal amount together with any and all
accrued interest up to the date of prepayment.

In accordance with the NFA, the following ratios based on consolidated financial statements of the
Group are required to be maintained:

debt to equity ratio shall not at any time exceed 2:1

debt service coverage ratio shall not exceed 1:5
current ratio shall not at any time be less than 1:1, provided however, this ratio shall not apply
after the fourth anniversary of the issue date.

On December 18, 2014, the Parent Company entered into another $10.0 million Notes Facility
Agreement with Metropolitan Bank & Trust Company (Initial Noteholder), Metropolitan Bank &
Trust Company - Trust Banking Group (Facility and Paying Agent) and First Metro Investment
Corporation (Arranger). The Notes Facility bears interest of 3.14% per annum payable quarterly.
The net proceeds of the issuance of the Notes shall be used to finance the Groups strategic
acquisitions and for general corporate purposes.

Under the NFA, the Parent Company shall pay 30% of the loan outstanding on issue date in 12
equal consecutive quarterly installments in the amount equivalent to 2.5% of loan outstanding on
issue date commencing on the end of the 5th quarter until end of the 16th quarter from the Issue
date. The remaining 70% of the loan outstanding on issue date in 4 equal consecutive quarterly
installments in the amount equivalent to 17.5% of the loan outstanding on Issue Date commencing
on the 17th quarter from the issue date until the maturity date, provided that each such date shall
coincide with an Interest Payment Date, and that the last installment shall be in an amount
sufficient to fully pay the Loan.

Prior to the maturity date, the Parent Company may redeem in whole but not in part, the relevant
outstanding notes beginning on the third anniversary of the issue date, by paying the amount that
is equivalent to 102% of the unpaid principal amount together with any and all accrued interest up
to the date of redemption at the applicable rate.

*SGVFS014132*
 - 38 -

Under this agreement, the Group has to maintain the following financial ratios:
debt to equity ratio shall not at any time exceed 2:1
debt service coverage ratio shall not exceed 1.5
current ratio shall not at any time be less than 1:1, provided however, this ratio shall not apply
after the fourth anniversary of the issue date.

The Group is in compliance with the debt covenants as of June 30, 2015 and December 31, 2014.

Total interest expense charged to the interim consolidated statements of comprehensive income
amounted to $385,137 and $188,302 for the six months ended June 30, 2015 and 2014,
respectively.

CATS
Prior to acquisition, the CATS obtained a secured interest bearing loan from local commercial
bank amounting to $13.0 million. The principal is payable in 28 quarterly payments of $464,286
until 2018 and bears annual interest rate of 3.0% plus three month London inter-bank offer rate
(LIBOR). This bank loan was specifically borrowed to refinance the parcel of land with
improvements located along the Innovation Drive, Carmelray Industrial Park 1, Brgy. Canlubang,
Calamba City, Laguna and registered in the name of RBWRP. The land and building owned by
RBWRP - Philippine Branch with a net book value of $9.7 million as of December 31, 2012 was
used as the collateral for the secured interest-bearing loan. After the acquisition, the BOD
approved the plan to sell the said assets to interested buyers on December 9, 2014, resulting to the
reclassification of the land and building to noncurrent assets held for sale (see Note 11).

Interest expense charged to operations for the six months ended June 30, 2015 and 2014 amounted
to $148,478 and nil, respectively.

16. Related Party Disclosures

Parties are considered to be related if one party has the ability to control, directly or indirectly, 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. Related
parties may be individuals or corporate entities.

In the normal course of business, the Group has entered into transactions with affiliates. The
significant transactions consist of the following:

a. Advances for operating requirements of Cirtek Holdings, Inc. (CHI), former parent of CEC
and CEIC.
b. Rental of land and lease deposit with Cirtek Land Corporation (CLC), an affiliate, where the
manufacturing building 1 and administrative building is situated.
c. Payments and /or reimbursements of expenses made or in behalf of the affiliates.
d. Rental of land with Cayon Holdings, Inc. (Cayon), an affiliate, where the building 2 of the
Group is situated.

The interim consolidated balance sheets and interim consolidated statements of comprehensive
income include the following significant account balances resulting from the above transactions
with related parties:

*SGVFS014132*
 - 39 -

a. Amounts owed to related parties

Transactions Balances as of
Six months ended June 30 June 30 December 31,
2015 2014 2015 2014
(Unaudited) (Unaudited) (Unaudited) (Audited) Terms Conditions
Other related parties
CLC Rental $6,965 6,841 $427,644 $420,679 Due and Unsecured
demandable; non-
interest bearing
Cayon Rental 6,073 6,215 55,541 49,468 Due and Unsecured
demandable; non-
interest bearing
$13,038 $13,056 $483,185 $470,147

b. Amounts owed by related parties

Transactions Balances as of
Six months ended June 30 June 30 December 31,
2015 2014 2015 2014
(Unaudited) (Unaudited) (Unaudited) (Audited) Terms Conditions
Other related parties
CHI Advances for $ $ $1,809,256 $1,809,256 Due and Unsecured; no
working capital demandable; non- impairment
interest bearing
Cayon Reimbursement 206,284 206,284 Due and Unsecured; no
of expenses demandable; non- impairment
interest bearing
Camerton, Inc. Reimbursement 33,161 33,161 Due and Unsecured; no
of expenses demandable; non- impairment
interest bearing
Jerry Liu Reimbursement 710,866 662 3,785,243 3,074,377 Due and Unsecured; no
of expenses demandable; non- impairment
interest bearing
$710,866 $662 $5,833,944 $5,123,078

c. Rental deposit

Transactions Balances as of
Six months ended June 30 June 30 December 31,
2015 2014 2015 2014
(Unaudited) (Unaudited) (Unaudited) (Audited) Terms Conditions
Other related parties
CLC $ $ $1,131,399 $1,131,399 Due and
Unsecured; no
demandable; non-
impairment
interest bearing

The above related parties are under common ultimate ownership with the Group.
In 2011, the Group entered into the following assignments and set-off agreements with the related
parties as part of its corporate restructuring:

Transactions with CHI, Charmview Enterprises Ltd (CEL) and officer

The amount owed by an officer amounting to $7.7 million as of December 31, 2010 was
transferred in 2011 to CEL, the former ultimate parent of CEC and CEIC. CEL now owns 40%
interest in Camerton, Inc. the parent of CHPC.

The amounts owed by and to CHI as of December 31, 2010 represent advances for working capital
lines in the normal course of business when CEC and CEIC were then still subsidiaries of CHI.

*SGVFS014132*
 - 40 -

For purposes of settling outstanding balances with the Group and as part of corporate restructuring
in preparation for the planned Initial Public Offering (IPO) of the Parent Company, on March 17,
2011:
CHI, CEL and the officer, with the consent of the Group, entered into assignment agreements
whereby CHI absorbed the amounts owed by CEL and by the officer as of March 17, 2011
amounting to $7.7 million and $0.8 million, respectively.

The Group, with the consent of the related parties, entered into assignment agreements whereby
the Parent Company absorbed the amount owed by CEIC to CHI totaling $3.6 million representing
unpaid advances of $2.3 million and dividends of $1.3 million (see Note 27) as of March 17, 2011.

Thereafter, on March 18, 2011, the Parent Company and CHI, in view of being creditors and
debtors to each other as a result of the assignment agreements above, entered into a set-off
agreement for the value of the Groups liability aggregating $6.8 million. The amount represents
the above mentioned total liability of $3.6 million and the balance outstanding from the Parent
Companys purchase of CEC and CEIC amounting to $3.2 million, as revalued from the effect of
foreign exchange rate.

The amount owed by CHI as of June 30, 2015 and December 31, 2014 pertains to the remaining
balance of receivable as a result of the assignments and set-off agreements as discussed above.

Transactions with Camerton

Camerton is the majority shareholder of the Parent Company holding 70.6% interest. Amounts
owed by Camerton as of June 30, 2015 and December 31, 2014 pertain mainly to advances for
incorporation expenses of Camerton.

Transactions with CLC and Cayon

CLC is an entity under common ownership with the ultimate parent. CEC had a lease agreement
on the land where its manufacturing plant (Building 1) is located with CLC for a period of 50
years starting January 1, 1999. The lease was renewable for another 25 years at the option of
CEC. The lease agreement provided for an annual rental of $151,682, subject to periodic
adjustments upon mutual agreement of both parties.

On January 1, 2005, CEC terminated the lease agreement with CLC but has continued to occupy
the said land for no consideration with CLCs consent. With the termination of the lease
agreement, the Group has classified the rental deposit amounting to $1.1 million as current asset as
the deposit has become due and demandable anytime from CLC (see Note 9). On January 1,
2011, CEC entered into an agreement with CLC to lease the land where CECs Building 1 is
located. The agreement calls for a =P640,704 rent per annum for a period of ten (10) years and
renewable thereafter by mutual agreement of the parties subject to such new terms and conditions
as they may then be mutually agreed-upon. Total rent expense charged to operations amounted to
$7,191 and $7,200 for the six months ended June 30, 2015 and 2014, respectively.

CEC also entered into an agreement with Cayon starting January 1, 2011 to lease the land where
CECs Building 2 is located. The agreement calls for an annual rental of =
P582,144 for a period of
ten (10) years and renewable thereafter. Total rent expense charged to operations amounted to
$6,534 and $6,543 for the six months ended June 30, 2015 and 2014, respectively.

*SGVFS014132*
 - 41 -

The compensation of key management personnel of the Group are as follows:

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Salaries and wages $622,161 $379,848
Employee benefits 133,020 214,779
$755,181 $594,627

17. Cost of Sales

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Raw materials, spare parts, supplies and
other inventories used $14,011,324 $10,777,768
Salaries, wages and employees benefits
(see Notes 19 and 20) 4,432,932 3,470,342
Utilities 1,893,670 1,623,146
Depreciation and amortization (see Note 11) 1,638,760 1,119,860
Inward freight and duties 449,835 277,564
Change in finished goods and work in process
inventories 254,845 1,730,000
Others 349,220 168,899
$23,030,586 $19,167,579

18. Operating Expenses

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Salaries, wages and employees benefits
(see Note 19 and 20) $1,043,832 $730,048
Utilities 216,134 149,956
Transportation and travel 187,378 115,332
Entertainment, amusement and recreation 101,288 72,444
Taxes and licenses 66,706 17,753
Depreciation (see Note 11) 37,715 24,370
Professional fees 33,598 23,856
Commissions 27,994 98,598
Office supplies 11,620 7,493
Insurance premiums 8,711 1,150
Others 91,133 66,211
$1,826,109 $1,307,211

*SGVFS014132*
 - 42 -

19. Salaries, Wages and Employees Benefits

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Salaries and wages $4,776,945 $3,527,179
Other employees benefits 575,749 552,216
Retirement costs (see Note 20) 124,070 120,995
$5,476,764 $4,200,390

20. Retirement Benefit Obligation

The Group has a funded, noncontributory defined benefit retirement plan which covers all of its
regular employees. The benefits are based on years of service and compensation on the last year
of employment.

Retirement costs recognized in the interim consolidated statements of comprehensive income are
as follows:

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Current service cost $85,756 $69,998
Net interest cost 38,314 50,997
Expense recognized during plan year $124,070 $120,995

The amounts recognized in the consolidated balance sheets as retirement benefit obligation are as
follows:

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Present value of obligations $1,810,540 $1,780,923
Fair value of plan assets (162,482) (135,136)
Retirement benefit obligation $1,648,058 $1,645,787

Changes in the present value of the defined benefit obligations are as follows:

Year Ended
Six Months Ended June 30 December 31
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
Opening defined benefit obligation $1,780,923 $1,951,134 $1,951,134
Current service cost 85,756 69,998 166,529
Interest cost 41,461 52,885 106,005
Actuarial gains on obligation (82,015) (33,617) (403,524)
Translation difference (15,585) 35,026 (13,000)
Effect of business combination 1,878,867
Benefits paid (1,905,088)
Closing present value of defined
obligation $1,810,540 $2,075,426 $1,780,923

*SGVFS014132*
 - 43 -

Changes in the fair value of plan assets are as follows:

Year Ended
Six Months Ended June 30 December 31
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
Opening fair value of plan assets $135,136 $69,299 $69,299
Contributions paid 44,844 62,764
Interest income included in net interest
costs 3,147 1,888 3,784
Return on plan assets, excluding amount
included in interest cost (19,194) 1,007 279
Translation difference (1,451) 1,238 25,231
Effect of business combination 1,878,867
Benefits paid (1,905,088)
Closing fair value of plan assets $162,482 $73, 432 $135,136

As a result of the business combination, the Group recognized an additional present value of the
defined benefit obligations of $1,878,867 for the year ended December 31, 2014.

The principal actuarial assumptions used to determine retirement obligations for the Groups
retirement plan are as follows:

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Discount rate 4.7% - 4.77% 5.34%
Salary increase rate 2.00% 4.00%

The sensitivity analysis below has been determined based on reasonably possible changes of each
significant assumption on the pension obligations as of June 30, 2015 and December 31, 2014,
assuming all other assumptions were held constant:

Effect on Present Value

of Defined Benefit Obligation
June 30, December 31,
Increase/(Decrease 2015 2014
(In percentage point) (Unaudited) (Audited)
Discount rate +1% ($197,318) ($198,263)
-1% 236,882 238,321

Future salary increase rate +1% 230,577 231,782

-1% (195,478) 196,346

*SGVFS014132*
 - 44 -

The Group has contributed $44,844 and nil to the plan assets for the six months ended
June 30, 2015 and 2014, respectively. The average duration of the defined benefit obligation at
the end of the reporting date ranges from 19 to 22 years. Shown below is the maturity analysis of
the undiscounted benefit payments:

June 30, December 31,

2015 2014
1 year or less $108,641 $55,477
More than 1 year to 5 years 614,966 545,277
More than 5 years 7,320,254 7,575,156

21. Other Income (Charges)

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Mark-to-market gain (see Note 8) $344,710 $
Sale of scrap 77,276 176,438
Foreign exchange (losses) - net 47,293 (61,400)
Others - net (33,433) (30,492)
$435,846 $84,546

22. Income Taxes

CEC
On March 24, 1998, the Philippine Economic Zone Authority (PEZA) approved CECs
registration as an ecozone export enterprise at the Laguna Technopark for the manufacture of
standard integrated circuits, discrete, hybrid and potential new packages.

Beginning October 30, 2002, the manufacture and export of integrated circuits, discrete and hybrid
transferred to PEZA from Board of Investments (where originally registered) and became subject
to the 5% gross income tax incentive, as defined under Republic Act (R.A.) No. 7916, the law
creating the PEZA.

CATS - Philippine Branch

CATS was registered with PEZA as an Ecozone Export Enterprise to engage in the manufacture,
fabrication and design of millimeterwave components and subsystems in a special economic zone
to be known as the Carmelray Industrial Park I - Special Economic Zone (CIP I-SEZ) and Laguna
Technopark in accordance with the project study, representations, commitments and proposals set
forth in its application forming integral parts, subject to the terms and conditions provided in its
registration.

As a PEZA-registered activity, CATS is entitled to tax incentives equivalent to 5% of the gross

income earned on its registered activities after the income tax holiday (ITH) of four years.

*SGVFS014132*
 - 45 -

Details of provision for (benefit from) income tax are as follows:

Six Months Ended June 30
2015 2014
(Unaudited) (Unaudited)
Current $178,491 $94,873
Deferred 95,305 (14,843)
$273,796 $80,030

The provision for current income tax for the six months ended June 30, 2015 and 2014 pertains to
the special rate of 5% on taxable gross income of CEC, CATS - Philippine Branch and RBWRP.

Based on the National Internal Revenue Code Sec. 27, Minimum Corporate Income Tax (MCIT)
of two percent (2%) of the gross income as of the end of taxable year is imposed on corporation
beginning on the fourth taxable year immediately following the year in which such corporation
started its commercial operation when the MCIT is greater than the regular corporate income
computed for the taxable year. The Parent Company is subject to MCIT beginning 2015.

A reconciliation of provision for income tax computed at the statutory income tax rate to provision
for income tax shown in the interim consolidated statements of comprehensive income follows:
Six Months Ended June 30
2015 2014
(Unaudited) (Unaudited)
Income tax at applicable statutory rate $835,309 $557,666
Additions to (reduction in) income tax:
Change in unrecognized deferred tax assets 103,520 90,010
Non-deductible expenses 19,751 5,328
Nontaxable income (683,974) (540,000)
Taxable income subject to Income Tax Holiday (29,260) (27,947)
Translation difference and others (6,760) (13,832)
Interest income subject to final tax (237) (17)
Other income subject to higher tax rate 35,447 8,822
$273,796 $80,030

For the six months ended June 30, 2015, CATS and CEC have availed an income tax holiday for
certain product lines, the latter also availed the same for the six months ended June 30, 2014.
Total gross income for the registered activities of CEC amounted to $567,446, and $534,631 for
the six months ended June 30, 2015 and 2014, respectively. Total gross income for the registered
activities of CATS for the six months ended June 30, 2015, amounted to $4,762,237.

The Components of the net deferred tax assets of the Group are as follows:

June 30, December 31,

2015 2014
Deferred tax assets:
Property, plant and equipment $127,849 $127,849
Accrued retirement 98,164 85,643
HTM investments 2,842 5,349
Unrealized forex loss 722
Financial asset at FVPL 317

(Forward)

*SGVFS014132*
 - 46 -

June 30, December 31,

2015 2014
Deferred tax liabilities:
Effect of foreign exchange differences
between tax base and financial reporting
base ($16,107) ($10,015)
Long-term debt (15,002) (19,441)
Unrealized foreign exchange gain (2,705)
196,080 189,385
Deferred tax liabilities related to retirement
benefit obligation recognized under
other comprehensive income (19,882) (16,898)
Net deferred tax assets $176,198 $172,487

The deferred tax liability arising from change in fair value of FVPL amounted to $102,000 and nil
as of June 30, 2015 and December 31, 2014, respectively.

On the other hand, the Parent Company has temporary difference pertaining to unrealized foreign
exchange loss, unrealized mark-to-market loss and NOLCO with an aggregate amount of
$697,314 and $417,450 for the six months ended June 30, 2015 and 2014, respectively. The
deferred tax asset was not recognized in the Parent Companys balance sheet since the
management expects that it will not generate sufficient taxable income in the future that will be
available to allow part of the deferred tax assets to be utilized. The components of the
unrecognized deferred tax assets are as follows:

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
NOLCO $693,941 $398,564
MCIT 3,171
Unrealized foreign exchange loss 201 18,885
$697,313 $ 417,449

As of June 30, 2015 and December 31, 2014 and 2013, the Parent Company incurred NOLCO that
can be claimed as deduction from future taxable income as follows:

Period of Availment
recognition Period Amount Applied Expired Balance
2012 2013-2015 $248,001 $ $ $248,001
2013 2014-2016 782,210 782,210
2014 2015-2017 952,273 952,273
2015 2016-2018 330,653 330,653
$2,313,137 $ $ $2,313,137

CEIC and CATS are exempt from income tax under the tax privileged status as a BVI business
company under the BVI Business Companies Act.

*SGVFS014132*
 - 47 -

23. Earnings Per Share (EPS)

The following table presents information necessary to calculate EPS on net income.

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Net income $3,256,248 $2,165,535
Weighted average number of common shares
outstanding 339,063,353 339,063,353
Basic and diluted EPS $0.010 $0.006

As of June 30, 2015 and 2014, the Parent Company has no potential dilutive common shares.

The weighted average number of common shares outstanding used in the calculation of the EPS is
based on the outstanding shares of the Parent Company. The additional shares from stock
dividends during the period, including the unissued stock dividends and stock dividends declared
after the reporting period but before the approval of the financial statements, were reflected in the
calculation of the EPS as if these shares have been issued in all earlier periods presented.

24. Operating Segment

The Group has determined that it is operating as one operating segment. Based on managements
assessment, no part or component of the business of the Group meets the qualifications of an
operating segment as defined by PFRS 8. More specifically:

There is no significant or obvious distinction among the products assembled by the Group.
All products are semiconductor packages that go into electronic products and applications.
The assembly process is likewise similar;
The Groups production facility and head office is located in the Philippines;
Although production of goods is divided into twelve divisions, the commercial, technical,
operating, marketing and selling matters are made at the executive committee level and not at
the division levels. The role of the respective division managers is to ensure that production is
on track in meeting its volume forecasts, and that quality standards are consistently met.

Sales are reported internally per division, but profit or loss, assets and liabilities are reported on an
entity-wide basis. These information are measured using the same accounting policies and
estimates as the Groups interim consolidated financial statements.

*SGVFS014132*
 - 48 -

Sales from external customers per division as reported internally are as follows (amounts in
thousands):

Six Months Ended June 30

2015 2014
(Unaudited) (Unaudited)
Discrete $5,331 $5,529
Multichip 5,190 5,883
Integrated Circuits 3,781 5,678
New Products 2,730 2,679
Quad-Flat No-Leads 2,240 2,082
Hermetics 896 967
Outdoor Unit 4,337
Indoor Radio Frequency Unit 1,005
Indoor Unit 905
Bridgewave 897
Cougar 154
Remec Manufacturing Services 92
$27,558 $22,818

CATS service income amounted to $0.753 million is primarily related to gross margin support,
whereby, RBWHI, a major customer of CATS agreed to subsidize any shortfall of revenue
forecast.

Below are customers contributing to at least 10% of the Groups total sales of each year. Sales to
these customers are as follows (amounts in thousands):

Six months ended June 30

2015 2014
(Unaudited) (Unaudited)
Major Customer A $4,598 $8,044
Major Customer B* 2,021 2,308
Major Customer C** 7,011
* The customers contribution to the Companys total revenues has decreased to 7%
** After the acquisition of CATS, the Companys revenues grew from a single major customer

The Groups customers are located in various countries, with the bulk of revenues contributed by
customers located in Europe and the USA. Following shows the revenue distribution of customers
by revenue contribution (amounts in thousands):

Six months ended June 30

2015 2014
(Unaudited) (Unaudited)
USA $12,995 $6,769
Europe 7,733 11,552
Asia 7,584 4,497
$28,312 $22,818

There are no sales made to entities under common control with the Group.

*SGVFS014132*
 - 49 -

25. Financial Risk Management Objectives and Policies

The Groups principal financial instruments comprise of cash and cash equivalents, short term
loans and long-term debt. The main purpose of these financial instruments is to support the
Groups operation. The Group has various other financial instruments such as trade and other
receivables, amounts owed by related parties, rental deposits and loans to employees (presented as
part of other current assets, miscellaneous deposits (presented under other noncurrent assets), trade
and other payables, amounts owed to related parties and derivative liability which generally arise
directly from its operations.

Risk Management Structure

The BOD is mainly responsible for the overall risk management approach and for the approval of
risk strategies and principles of the Group.

The main risks arising from the financial instruments of the Group are credit risk, liquidity risk
and foreign currency risk. The Groups management reviews and approves policies for managing
each of these risks and they are summarized below.

Credit risk
Credit risk is the risk that the Group will incur a loss because its customers or counterparties failed
to discharge their contractual obligations.

The Group trades only with recognized, creditworthy third parties. It is the Groups policy that all
customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis with the result that the Groups
exposure to bad debts is not significant.

The table below shows the maximum exposure to credit risk of the Groups financial assets. The
maximum exposure is shown net of impairment losses, if any:

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Cash and cash equivalents* $6,643,219 $12,601,553
Trade and other receivables 12,245,375 14,927,504
Financial assets at FVPL 9,540,690 701,747
Amounts owed by related parties 5,833,944 5,123,078
Other current assets
Rental deposit 1,133,929 1,133,929
Loans to employees 129,782 94,111
Held-to-maturity (HTM) investments 953,278 1,099,242
Other noncurrent assets
Miscellaneous deposits 141,961 167,551
Total credit risk exposure $36,622,178 $35,848,715
*Excluding cash on hand

*SGVFS014132*
 - 50 -

The aging analyses per class of financial assets that are past due but not yet impaired are as
follows:

Neither June 30, 2015 (Unaudited)

Past Due Impaired
nor Past Due but not Impaired Financial
Impaired < 30 days 30 - 60 days 60 - 90 days > 90 days Assets Total
Cash and cash
equivalents* $6,643,219 $ $ $ $ $ $6,643,219
Trade and other
receivables 11,233,641 781,569 134,741 65,083 30,341 12,245,375
Financial assets at FVPL 9,540,690 9,540,690
Amounts owed by related
parties 5,833,944 5,833,944
Other current assets
Rental deposit 1,133,929 1,133,929
Loans to employees 129,782 129,782
HTM investments 953,278 953,278
Other noncurrent assets
Miscellaneous deposits 141,961 141,961
$35,610,444 $781,569 $134,741 $65,083 $30,341 $ $36,622,178
*Excluding cash on hand

December 31, 2014 (Audited)

Neither
Past Due Impaired
Past Due but not Impaired
nor Financial
Impaired < 30 days 30 - 60 days 60 - 90 days > 90 days Assets Total
Cash and cash
equivalents* $12,601,553 $ $ $ $ $ $12,601,553
Trade and other
receivables 13,416,183 823,572 654,895 4,546 28,308 14,927,504
Financial assets at FVPL 701,747 701,747
Amounts owed by related
parties 5,123,078 5,123,078
Other current assets
Rental deposit 1,133,929 1,133,929
Loans to employees 94,111 94,111
HTM investments 1,099,242 1,099,242
Other noncurrent assets
Miscellaneous deposits 167,551 167,551
$34,337,394 $823,572 $654,895 $4,546 $28,308 $ $35,848,715
*Excluding cash on hand

The tables below summarize the credit quality per class of the Groups financial assets that are
neither past due nor impaired:

June 30, 2015 (Unaudited)

Neither Past Due nor Impaired
High Grade Medium Grade Low Grade Total
Cash and cash equivalents * $6,643,219 $ $ $6,643,219
Trade and other receivables 11,138,217 95,424 11,233,641
Financial assets at FVPL 9,540,690 9,540,690
Amounts owed by related parties 5,833,944 5,833,944
Other current assets
Rental deposit 1,133,929 1,133,929
Loans to employees 129,782 129,782
Held-to-maturity (HTM) investments 953,278 953,278
Other noncurrent assets
Miscellaneous deposits 141,961 141,961
$35,515,020 $95,424 $ $35,610,444
* Excluding cash on hand

*SGVFS014132*
 - 51 -

December 31, 2014 (Audited)

Neither Past Due nor Impaired
High Grade Medium Grade Low Grade Total
Cash and cash equivalents* $12,601,553 $ $ $12,601,553
Trade and other receivables 13,383,329 32,854 13,416,183
Financial assets at FVPL 701,747 701,747
Amounts owed by related parties 5,123,078 5,123,078
Other current assets
Rental deposit 1,133,929 1,133,929
Loan to employees 94,111 94,111
HTM investments 1,099,242 1,099,242
Other noncurrent assets
Miscellaneous deposits 167,551 167,551
$34,304,540 $32,854 $ $34,337,394
*Excluding cash on hand

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).

Medium grade - These are receivables where collections are probable due to the reputation and the
financial ability of the counterparty to pay and that have history of sliding beyond the credit terms
but pay within 60 days.

Low grade - These are receivables where the counterpartys capability of honoring its financial
obligation is doubtful.

Liquidity risk
Liquidity risk is the risk that the Group may encounter difficulties in raising funds to meet
commitments from financial instruments. Liquidity risk may result from a counterpartys failure
on repayment of a contractual obligation or inability to generate cash inflows as anticipated.

The Group maintains sufficient cash to finance its operations and major capital expenditures and
satisfy its maturing obligations. It may also from time to time seek other sources of funding,
which may include debt or equity financings, including dollar and peso-denominated loans from
Philippine banks, depending on its financing needs and market conditions.
The tables below summarize the maturity analysis of the Groups financial assets used for
liquidity management and financial liabilities based on contractual undiscounted payments:
June 30, 2015 (Unaudited)
Less than
On demand 1 year 1 to 2 years 3 to 5 years Total
Financial Assets
Cash and cash equivalents $6,643,663 $ $ $ $6,643,663
Trade and other receivables 879,604 11,365,771 12,245,375
Amounts owed by related parties 5,833,944 5,833,944
$13,357,211 $11,365,771 $ $ $24,722,982
Financial Liabilities
Trade and other payables
Trade payables $4,408,802 $ $ $ $4,408,802
Accrued expenses* 2,268,034 2,268,034
Short-term loans 6,554,080 6,554,080
Amounts owed to related parties 483,185 483,185
Long-term debt 3,293,192 10,949,533 10,750,000 24,992,725
$4,891,987 $12,115,306 $10,949,533 $10,750,000 $38,706,826
*Excluding statutory liabilities

*SGVFS014132*
 - 52 -

December 31, 2014 (Audited)

Less than
On demand 1 year 1 to 2 years 3 to 5 years Total
Financial Assets
Cash and cash equivalents $12,602,322 $ $ $ $12,602,322
Trade and other receivables 690,810 14,236,694 14,927,504
Amounts owed by related parties 5,123,078 5,123,078
$18,416,210 $14,236,694 $ $ $32,652,904
Financial Liabilities
Trade and other payables
Trade payables $5,263,140 $ $ $ $5,263,140
Accrued expenses* 1,565,907 1,565,907
Short-term loans 2,100,000 2,100,000
Amounts owed to related parties 470,147 470,147
Long-term debt 3,399,432 15,281,436 8,418,943 27,099,811
Derivative liability 40,836 40,836
$5,733,287 $7,106,175 $15,281,436 $8,418,943 $36,539,841
*Excluding statutory liabilities

Interest Rate Risk

The Groups exposure to market risk for changes in interest rates relates primarily to its short-term
debt, long-term debt, mortgage payables and obligations under finance lease. The Groups short-
term debt, long-term debt, mortgage payables and obligations under finance lease consists
principally of fixed interest rate (see Notes 13, 14 and 15). The Groups short-term debt, long-
term debts, mortgage payables and obligations under finance lease with fixed rates expose the
Group to fair value interest rate risk. The changes in market interest rates will not have an impact
in the Groups profit or loss.

The sources of interest expense are as follows:

June 30, December 31,

2015 2014
Interest-bearing loans $6,914,279 $7,828,054

CATS, acquired on July 30, 2014, has long-term interest bearing loan that has a fixed rate at 3.0%
plus certain spread based on the 3-months USD LIBOR. This loan exposes the Group to fair value
interest rate risk. The following table demonstrates the sensitivity to a reasonably possible change
in interest rate, with all other variables held constant, of the Companys income before tax:

Increase/decrease
in interest rate Effect
(in basis on income
points) before tax
Interest-bearing loans +100% $1,485
-100% (1,485)

Foreign currency risk

The Group uses the US dollar as its functional currency and is therefore exposed to foreign
exchange movements, primarily in Philippine Peso currency. The Group follows a policy to
manage its currency risk by closely monitoring its cash flow position and by providing forecast on
all other exposures in non-US dollar currencies.

*SGVFS014132*
 - 53 -

The following table demonstrates the sensitivity to a reasonably possible change in the foreign
exchange rate, with all other variables held constant, of the Groups income before income tax as
of June 30, 2015 and December 31, 2014:
June 30, 2015 (Unaudited)
Original
Currency in Total Dollar
Php1 Equivalent
Financial assets
Cash and cash equivalents 23,413,137 $519,772
Trade and other receivables 1,104,910 24,529
Financial asset at FVPL 31,594,120 701,389
Held-to-maturity (HTM) investments 47,854,384 1,062,367
Amounts owed by related parties 177,922,226 3,949,873
Other current assets 11,713,260 260,034
Other non-current assets 1,117,150 24,801
Total financial assets 294,719,187 6,542,765
Financial liabilities
Trade and other payables 80,642,902 1,790,272
Amounts owed to related parties 21,605,772 479,648
Total financial liabilities 102,248,674 2,269,920
Net financial assets 192,470,513 $4,272,845
1
1 = $.0222

December 31, 2014 (Audited)

Original
Currency in Total Dollar
Php1 Equivalent
Financial assets
Cash and cash equivalents 35,143,622 $787,217
Trade and other receivables 281,617 6,308
Financial asset at FVPL 31,382,139 702,960
Amounts owed by related parties 18,371,609 411,524
Other current assets 144,774,223 3,242,943
Other noncurrent assets 15,560,561 348,557
Total financial assets 245,513,771 5,499,509
Financial liabilities
Trade and other payables 76,880,509 1,722,123
Amounts owed to related parties 21,024,919 470,958
Total financial liabilities 97,905,428 2,193,081
Net financial assets 147,608,343 $3,306,428
1
1 = $.0224

June 30, 2015 (Unaudited)

Foreign Foreign
Currency Effect on Currency Effect on
appreciates Income depreciates Income
by Before Tax by Before tax
Peso denominated assets +5% ($333,033) -5% $333,033
Peso denominated liabilities +5% 115,541 -5% (115,541)
($217,492) $217,492

*SGVFS014132*
 - 54 -

December 31, 2014 (Audited)

Foreign Foreign
Currency Effect on Currency Effect on
appreciates Income depreciates Income
by Before Tax by Before tax
Peso denominated assets +5% ($271,878) -5% $271,878
Peso denominated liabilities +5% 109,806 -5% (109,806)
($162,072) $162,072

The change in currency rate is based on the Groups best estimate of its expected change
considering the historical trends and experiences. There is no other effect on the Groups equity
other than those already affecting income before tax.

Capital Management
The primary objective of the Groups capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to support its business and maximize shareholder
value.

The Group manages its capital structure, which pertains to its noncurrent liabilities and equity as
shown in the consolidated balance sheet and makes adjustments to it, in light of changes in
economic conditions. To maintain or adjust the capital structure, the Group may adjust the
dividend payment to shareholders, return capital to shareholders or issue new shares. As of
June 30, 2015 and December 31, 2014, the Group is subject to externally imposed capital
requirements (see Note 4).

26. Fair Value Measurement

As of June 30, 2015 and December 31, 2014, the carrying values of the Groups financial assets
and liabilities approximate their respective fair values, except for the following financial
instruments:

June 30, 2015 (Unaudited) December 31, 2014 (Audited)

Carrying Carrying
Amount Fair Value Amount Fair Value
Financial assets
Held-to-maturity (HTM)
investments $953,278 $942,521 $1,099,242 $1,104,929
Financial liabilities
Other financial liabilities
Long-term debt $24,992,725 $25,460,131 $27,099,811 $27,426,498

Fair value is defined as the amount at which the financial instrument could be exchanged in a
current transaction between knowledgeable willing parties in an arms length transaction, other
than in a forced liquidation or sale.

Cash and cash equivalents, trade and other receivables, loans to employees, trade and other
payables, amounts owed by and owed to related parties and rental deposits
The carrying amounts approximate fair value since these are mostly short-term in nature or a due
and demandable.

*SGVFS014132*
 - 55 -

Financial assets at FVPL - Unit Investment Trust Fund

The Unit Investment Trust Fund classified as financial assets at FVPL are stated at their fair
values based on lowest level input. The fair value is determined using the Level 2 of the fair value
hierarchy.

Financial assets at FVPL - RCBC Senior Notes

The Investment in RCBC Senior Notes classified as financial assets at FVPL are stated at their fair
values based on the quoted prices in an active market. The fair value is determined using the
Level 1 of the fair value hierarchy.

HTM Investments
The fair value of HTM investments that are actively traded in organized financial markets is
determined by reference to quoted market bid prices, at the close of business on the reporting date
or last trading day as applicable. The fair value is determined using the Level 1 of the fair value
hierarchy.

Miscellaneous deposits
The miscellaneous deposits are carried at cost since the timing and related amounts of future cash
flows cannot be reasonably and reliably estimated for purposes of establishing its fair value using
an alternative valuation technique.

Long-term debt
The fair value of long-term debt is based on the discounted value of future cash flows using the
applicable rates for similar types of loans. Discounts rates used range from 3.63% to 3.70% in
2012.

Fair Value Hierarchy

The Group uses the following hierarchy in determining and disclosing the fair value of financial
instruments by valuation technique:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable;
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable.

The Group held the following financial assets and liabilities measured at fair value or at cost, but
for which fair values are disclosed and their corresponding level in fair value hierarchy:

June 30, 2015 (Unaudited)

Total Level 1 Level 2 Level 3
Financial asset measured at
fair value
Financial assets at fair value
through profit or loss $9,540,690 $8,840,000 $700,690 $
Financial asset and liabilities
measured at amortized cost
but for which fair values are
disclosed
HTM investments 942,521 942,521
Long-term debt 25,460,131 25,460,131

*SGVFS014132*
 - 56 -

December 31, 2014 (As restated)

Total Level 1 Level 2 Level 3
Financial assets measured at
fair value
Financial assets at fair value
through profit or loss $701,747 $ $701,747 $
Financial assets and liabilities
measured at amortized cost
but for which fair values
are disclosed
HTM investments 1,104,929 1,104,929
Long-term debt 27,426,498 27,426,498

27. Equity

a. Capital stock

The rollforward of the capital stock of the Parent Company follows:

June 30, December 31,

2015 2014
(Unaudited) (Audited)
Authorized - common shares (1 par value) 400,000,000 400,000,000
Issued shares
Beginning 308,239,419 280,217,656
Stock dividend- issued and distributed 30,823,934 28,021,763
Ending 339,063,353 308,239,419
Issued - 339,063,353 shares $7,893,134 $7,203,869
Undistributed shares 689,265
$7,893,134 $7,893,134

On November 18, 2011, the Parent Company listed with the PSE its common stock, wherein it
offered 42,163,000 shares to the public at issue price of =
P7 per share. The total proceeds with
issuance of new shares amounted to = P295.1 million ($6.8 million). The Parent Company
incurred transaction costs incidental to the IPO amounting to P=47.3 million ($1.1 million),
which was charged against Additional paid-in capital in the consolidated balance sheet.

On March 24, 2015 and May 11, 2015, the Board and the stockholders, respectively, approved
the increase in the authorized capital stock of the Company.

The 400,000,000 preferred shares were issued to Camerton, a principal shareholder of the
Corporation which presently beneficially owns 70.6% of the Companys total issued and
outstanding shares. The issuance of 100,000,000 Preferred Shares to Camerton was approved
by the Board of Directors of the Company on March 24, 2015 and the issuance of an
additional 300,000,000 Preferred Shares on June 15, 2015 during its special meetings.

As of June 30, 2015 and December 31, 2014, the Parent Company has a total number of 18
stockholders.

*SGVFS014132*
 - 57 -

b. Retained earnings

The Board of Directors of Cirtek Holdings Philippines Corporation (the Corporation) in its
meeting held today, February 23, 2015, approved the declaration of cash dividend of US
Dollar 0.003893 (US$ 0.003893) per share, payable on March 27, 2015 to stockholders of
record as of March 10, 2015. The cash dividend shall be paid in Philippine Peso at BSP
exchange rate one day before payment date. The total dividend payment will amount to US
Dollar One Million Two Hundred Thousand (US$ 1,200,000) based on the total 308,239,416
outstanding shares of stock of the Corporation.

In addition to the cash dividend, the BOD also declared a ten percent (10%) stock dividend in
December 2014. During the special stockholders meeting dated May 11, 2015, the
shareholders approved and ratified the declaration of 10% stock dividend payable to
stockholders of record as of May 26, 2015 and payment date of June 18, 2015.
On January 29, 2014, the BOD of the Parent Company declared cash dividend of $1,200,000
or $0.00428 per share to stockholders of record as of February 13, 2014. Also, on May 30,
2014, the BOD of the Parent Company declared cash dividends amounting to $600,000 or
$0.00214 per share to stockholders of record as of June 16, 2014.

In addition to the cash dividends, the BOD also declared a ten (10%) stock dividend. During
the special stockholders meeting dated July 11, 2014, the shareholders approved and ratified
the declaration of 10% stock dividend payable to stockholders of record as of July 25, 2014
and payment date of August 20, 2014.

28. Notes to Statement of Cashflows

The Group has noncash operating, investing and financing activities representing the transfer
of ownership over the assets and liabilities assumed related to the acquisition of CATS
entities, as discussed in Note 4 to the interim consolidated financial statements. This
transaction has resulted to an increase in certain assets and liabilities as enumerated in Note 4.

29. Other Matters

CEC is a defendant in certain legal cases which are currently pending before the courts and
other government bodies. In the opinion of management and CECs legal counsel, any
adverse decision on these cases would not materially affect the consolidated financial position
as of June 30, 2015 and 2014 and results of operations for the six months ended June 30, 2015
and 2014.
Reclassification of prior period balances
Certain prior year amounts have been reclassified for consistency with the current period
presentation. These reclassifications had no effect on the reported results of operations.
During the December 31, 2014 audit, CATS recognized other receivables for the sale of aged
inventory amounting to $3.003 million. Accordingly, such transaction was recognized as part
of accounts receivables under trade receivables. This change in classification does not
materially affect previously consolidated balance sheet.
Cash dividends declaration
On August 10, 2015, the BOD of Parent Company declared cash dividends of $0.002628 per
common share and $0.000022 per preferred share to stockholders of record as of
August 25, 2015 and payable on August 28, 2015.

*SGVFS014132*
 - 58 -

Increase in authorized capital stock

On July 22, 2015, the SEC approved the Companys application to increase its authorized
capital stock by 160,000,000.00 or from 400,000,000.00 divided into 400,000,000 common
shares with a par value of 1.00 per share, to 560,000,000.00 divided into 520,000,000
common shares with a par value of 1.00 per share and 400,000,000 preferred shares with a
par value of 0.10 per share.

Planned Restructuring of CATS Loans payable with principal amount of $13 million
On July 3, 2015, outstanding loans payable of CATS amounting to $6.964 million has been
approved for restructuring by way of an amendment to the loan agreement and will further be
assumed by CEC. The amended agreement provided for a change in the determination of the
applicable interest rates and extended the maturity date of the loan for five years inclusive of
one year grace period reckoned from initial drawdown date. CEC has the option to select its
new applicable interest rate between a fixed rate of 4.5% p.a or a floating interest with a
minimum net spread of 3% over 3-month LIBOR repriced quarterly minimum floor rate of
3.5% p.a whichever is higher. Principal repayment will be 16 equal quarterly amortizations
starting at the end of the fifth quarter reckoned from initial drawdown. The implementation
date of the restructuring will still be determined by the Company.

Seasonality of operations
The Company does not have any seasonal aspects that had a material effect on the financial
conditions or results of operations.

*SGVFS014132*
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 December 28, 2012, valid until December 31, 2015
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-3 (Group A),
Philippines November 15, 2012, valid until November 16, 2015

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

ON SUPPLEMENTARY SCHEDULES

The Stockholders and the Board of Directors

Cirtek Holdings Philippines Corporation and Subsidiaries
116 East Main Avenue
Phase V-SEZ, Laguna Technopark
Bian, Laguna

We have reviewed the Interim Consolidated Financial Statements of Cirtek Holdings Philippines
Corporation and Subsidiaries (the Group) as at June 30, 2015 and for the six months ended
June 30, 2015 and 2014 in accordance with Philippine Standard on Review Engagements 2410,
Review of Interim Financial Information Performed by the Independent Auditor of the Entity, and have
issued our report thereon dated September 22, 2015. Our review is substantially less in scope than an
audit conducted in accordance with Philippine Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion on the Interim Consolidated
Financial Statements. Indexes I to IV and schedules A to H listed in the Index to the Interim
Consolidated Financial Statements and Supplementary Schedules are the responsibility of the Groups
management. These schedules are presented for the purpose of complying with the Securities
Regulation Code Rule 68, As Amended (2011) and are not part of the basic consolidated financial
statements. These schedules have been subjected to the review procedures applied in the review of the
basic consolidated financial statements and, based on our review, nothing has come to our attention
that causes us to believe that the information required to be set forth therein are not presented fairly, in
all material respects, in relation to the basic consolidated financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Ladislao Z. Avila, Jr.

Partner
CPA Certificate No. 69099
SEC Accreditation No. 0111-AR-3 (Group A),
January 18, 2013, valid until January 17, 2016
Tax Identification No. 109-247-891
BIR Accreditation No. 08-001998-43-2015,
February 27, 2015, valid until February 26, 2018
PTR No. 4751254, January 5, 2015, Makati City

September 22, 2015

*SGVFS014132*
A member firm of Ernst & Young Global Limited
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
INDEX TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY SCHEDULES
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2015

Schedule Contents
Index to the interim Consolidated Financial Statements
I Map Showing the Relationships Between and Among the Companies in the
Group, its Ultimate Parent Company and Co-subsidiaries
II Schedule of All Effective Standards and Interpretations Under Philippine
Financial Reporting Standards
III Reconciliation of Retained Earnings Available for Dividend Declaration
IV Financial Soundness Indicators

Supplementary Schedules
A Financial Assets

Amounts Receivable from Directors, Officers, Employees, Related

B
Parties, and Principal Stockholders (Other than Related parties)

Amounts Receivable from Related Parties and Amounts Payable to Related

C Parties which are Eliminated during the Consolidation of Financial
Statements

D Intangible Assets - Other Assets

E Long-Term Debt

F Indebtedness to Related Parties

G Guarantees of Securities of Other Issuers

H Capital Stock

*SGVFS014132*
CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES
MAP SHOWING THE RELATIONSHIPS BETWEEN AND AMONG THE
COMPANIES IN THE GROUP, ITS ULTIMATE PARENT COMPANY AND CO-
SUBSIDIARIES
JUNE 30, 2015

Carmetheus Holdings, Inc.

60%

Camerton Inc.

70.6%

CHPC

100% 100%

CEC CEIC

100%
CATS

CATS- Phil. Branch

100%

RBWRP

*SGVFS014132*
CIRTEK HOLDINGS PHILIPPINES CORP. AND SUBSIDIARIES
SCHEDULE OF EFFECTIVE STANDARDS AND INTERPRETATIONS
JUNE 30, 2015

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

Not Not
INTERPRETATIONS Adopted
Adopted Applicable
Effective as of June 30, 2015
Framework for the Preparation and Presentation of Financial
Statements

Conceptual Framework Phase A: Objectives and qualitative
characteristics
PFRSs Practice Statement Management Commentary
Philippine Financial Reporting Standards
PFRS 1 First-time Adoption of Philippine Financial Reporting

(Revised) Standards
Amendments to PFRS 1 and PAS 27: Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or
Associate
Amendments to PFRS 1: Additional Exemptions for

First-time Adopters
Amendment to PFRS 1: Limited Exemption from

Comparative PFRS 7 Disclosures for First-time Adopters
Amendments to PFRS 1: Severe Hyperinflation and

Removal of Fixed Date for First-time Adopters
Amendments to PFRS 1: Government Loans
Amendments to PFRS 1: Borrowing costs
Amendments to PFRS 1: Meaning of Effective PFRSs
PFRS 2 Share-based Payment
Amendments to PFRS 2: Vesting Conditions and

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

based Payment Transactions
Amendments to PFRS 2: Definition of Vesting Condition
PFRS 3 Business Combinations
(Revised)
Amendments to PFRS 3: Accounting for Contingent

Consideration in a Business Combination
Amendments to PFRS 3: Scope Exceptions for Joint

Arrangements
PFRS 4 Insurance Contracts
Amendments to PAS 39 and PFRS 4: Financial

Guarantee Contracts
 -2-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

Not Not
INTERPRETATIONS Adopted
Adopted Applicable
Effective as of June 30, 2015
PFRS 5 Non-current Assets Held for Sale and Discontinued

Operations
Amendments to PFRS 5: Changes in Methods of
See footnote. *
Disposal
PFRS 6 Exploration for and Evaluation of Mineral Resources
PFRS 7 Financial Instruments: Disclosures
Amendments to PAS 39 and PFRS 7: Reclassification of

Financial Assets
Amendments to PAS 39 and PFRS 7: Reclassification of

Financial Assets - Effective Date and Transition
Amendments to PFRS 7: Improving Disclosures about

Financial Instruments
Amendments to PFRS 7: Disclosures - Transfers of

Financial Assets
Amendments to PFRS 7: Disclosures - Offsetting

Financial Assets and Financial Liabilities
Amendments to PFRS 7: Mandatory Effective Date of

PFRS 9 and Transition Disclosures
Amendments to PFRS 7: Disclosures - Servicing
See footnote. *
Contracts
Amendments to PFRS 7: Applicability of the
Amendments to PFRS 7 to Condensed Interim Financial See footnote. *
Statements
PFRS 8 Operating Segments
Amendments to PFRS 8: Aggregation of Operating
Segments and Reconciliation of the Total of the
Reportable Segments Assets to the Entitys Assets
PFRS 9 Financial Instruments (2010 version) See footnote. *
Financial Instruments - Hedge Accounting and
amendments to PFRS 9, PFRS 7 and PAS 39 (2013 See footnote. *
version)
Financial Instruments (2014 or final version) See footnote. *
Amendments to PFRS 9: Mandatory Effective Date of
See footnote. *
PFRS 9 and Transition Disclosures
PFRS 10 Consolidated Financial Statements
Amendments to PFRS 10, PFRS 12 and PAS 27:

Investment Entities
Amendment to PFRS 10: Sale or Contribution of Assets
See footnote. *
between an Investor and its Associate or Joint Venture
PFRS 11 Joint Arrangements
Amendment to PFRS 11: Accounting for Acquisitions of
See footnote. *
Interests in Joint Operations
 -3-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

Not Not
INTERPRETATIONS Adopted
Adopted Applicable
Effective as of June 30, 2015
PFRS 12 Disclosure of Interests in Other Entities
Amendments to PFRS 10, PFRS 12 and PAS 27:

Investment Entities
PFRS 13 Fair Value Measurement
Amendments to PFRS 13: Short-term receivable and

payables
Amendments to PFRS 13: Portfolio Exception
PFRS 14 Regulatory Deferral Accounts See footnote. *

PFRS 15 Revenue from Contracts with Customers See footnote. *

Philippine Accounting Standards

PAS 1 Presentation of Financial Statements
(Revised)
Amendment to PAS 1: Capital Disclosures
Amendments to PAS 32 and PAS 1: Puttable Financial

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

for comparative information
PAS 2 Inventories
PAS 7 Statement of Cash Flows
PAS 8 Accounting Policies, Changes in Accounting Estimates

and Errors
PAS 10 Events after the Balance Sheet Date
PAS 11 Construction Contracts
PAS 12 Income Taxes
Amendment to PAS 12 - Deferred Tax: Recovery of

Underlying Assets
PAS 16 Property, Plant and Equipment
Amendment to PAS 16: Classification of servicing

equipment
Amendment to PAS 16: Revaluation Method -

Proportionate Restatement of Accumulated Depreciation
Amendment to PAS 16 and PAS 38: Clarification of
See footnote. *
Acceptable Methods of Depreciation and Amortization
Amendments to PAS 16: Bearer Plants See footnote. *
PAS 17 Leases
PAS 18 Revenue
 -4-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

Not Not
INTERPRETATIONS Adopted
Adopted Applicable
Effective as of June 30, 2015
PAS 19 Employee Benefits
Amendments to PAS 19: Actuarial Gains and Losses,
See footnote. *
Group Plans and Disclosures
PAS 19 Employee Benefits
(Amended)
Amendments to PAS 19: Defined Benefit Plans -

Employee Contributions
Amendments to PAS 19: Regional Market Issue
See footnote. *
regarding Discount Rate
PAS 20 Accounting for Government Grants and Disclosure of

Government Assistance
PAS 21 The Effects of Changes in Foreign Exchange Rates
Amendment: Net Investment in a Foreign Operation
PAS 23 Borrowing Costs

(Revised)
PAS 24 Related Party Disclosures
(Revised)
Amendments to PAS 24: Key Management Personnel
PAS 26 Accounting and Reporting by Retirement Benefit Plans
PAS 27 Separate Financial Statements
(Amended)
Amendments to PFRS 10, PFRS 12 and PAS 27:

Investment Entities
Amendment to PAS 27: Equity Method in Separate
See footnote. *
Financial Statements
PAS 28 Investments in Associates and Joint Ventures
(Amended)
Amendment to PAS 28: Sale or Contribution of Assets
See footnote. *
between an Investor and its Associate or Joint Venture
PAS 29 Financial Reporting in Hyperinflationary Economies
PAS 31 Interests in Joint Ventures
PAS 32 Financial Instruments: Disclosure and Presentation
Amendments to PAS 32 and PAS 1: Puttable Financial

Instruments and Obligations Arising on Liquidation
Amendment to PAS 32: Classification of Rights Issues
Amendment to PAS 32: Presentation - Tax effect of

distribution to holders of equity instrument
Amendments to PAS 32: Offsetting Financial Assets and

Financial Liabilities
PAS 33 Earnings per Share
 -5-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

Not Not
INTERPRETATIONS Adopted
Adopted Applicable
Effective as of June 30, 2015
PAS 34 Interim Financial Reporting
Amendments to PAS 34: Interim financial reporting and
See footnote. *
segment information for total assets and liabilities
Amendments to PAS 34: Disclosure of Information
See footnote. *
elsewhere in the interim financial report
PAS 36 Impairment of Assets
Amendments to PAS 36: Recoverable Amount

Disclosures for Non-Financial Assets
PAS 37 Provisions, Contingent Liabilities and Contingent Assets
PAS 38 Intangible Assets
Amendments to PAS 38: Revaluation Method -

Proportionate Restatement of Accumulated Amortization
Amendments to PAS 16 and PAS 38: Clarification of
See footnote. *
Acceptable Methods of Depreciation and Amortization
PAS 39 Financial Instruments: Recognition and Measurement
Amendments to PAS 39: Transition and Initial

Recognition of Financial Assets and Financial Liabilities
Amendments to PAS 39: Cash Flow Hedge Accounting

of Forecast Intragroup Transactions
Amendments to PAS 39: The Fair Value Option
Amendments to PAS 39 and PFRS 4: Financial

Guarantee Contracts
Amendments to PAS 39 and PFRS 7: Reclassification of

Financial Assets
Amendments to PAS 39 and PFRS 7: Reclassification of

Financial Assets - Effective Date and Transition
Amendments to Philippine Interpretation IFRIC-9 and

PAS 39: Embedded Derivatives
Amendment to PAS 39: Eligible Hedged Items
Amendment to PAS 39: Novation of Derivatives and

Continuation of Hedge Accounting
PAS 40 Investment Property
Amendment to PAS 40: Interrelationship between

PFRS 3 and PAS 40
PAS 41 Agriculture
Amendment to PAS 41: Bearer Plants See footnote. *
 -6-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

Not Not
INTERPRETATIONS Adopted
Adopted Applicable
Effective as of June 30, 2015
Philippine Interpretations
IFRIC 1 Changes in Existing Decommissioning, Restoration and

Similar Liabilities
IFRIC 2 Members' Share in Co-operative Entities and Similar

Instruments
IFRIC 4 Determining Whether an Arrangement Contains a Lease
IFRIC 5 Rights to Interests arising from Decommissioning,

Restoration and Environmental Rehabilitation Funds
IFRIC 6 Liabilities arising from Participating in a Specific Market

- Waste Electrical and Electronic Equipment
IFRIC 7 Applying the Restatement Approach under PAS 29

Financial Reporting in Hyperinflationary Economies
IFRIC 8 Scope of PFRS 2
IFRIC 9 Reassessment of Embedded Derivatives
Amendments to Philippine Interpretation IFRIC-9 and

PAS 39: Embedded Derivatives
IFRIC 10 Interim Financial Reporting and Impairment
IFRIC 11 PFRS 2- Group and Treasury Share Transactions
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding

Requirements and their Interaction
Amendments to Philippine Interpretations IFRIC-14,

Prepayments of a Minimum Funding Requirement
IFRIC 15 Agreements for the Construction of Real Estate See footnote. *
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 17 Distributions of Non-cash Assets to Owners
IFRIC 18 Transfers of Assets from Customers
IFRIC 19 Extinguishing Financial Liabilities with Equity

Instruments
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
IFRIC 21 Levies
SIC-7 Introduction of the Euro
SIC-10 Government Assistance - No Specific Relation to

Operating Activities
SIC-12 Consolidation - Special Purpose Entities
Amendment to SIC - 12: Scope of SIC 12
SIC-13 Jointly Controlled Entities - Non-Monetary Contributions

by Venturers
 -7-

PHILIPPINE FINANCIAL REPORTING STANDARDS AND

Not Not
INTERPRETATIONS Adopted
Adopted Applicable
Effective as of June 30, 2015
SIC-15 Operating Leases - Incentives
SIC-21 Income Taxes - Recovery of Revalued Non-Depreciable

Assets
SIC-25 Income Taxes - Changes in the Tax Status of an Entity or

its Shareholders
SIC-27 Evaluating the Substance of Transactions Involving the

Legal Form of a Lease
SIC-29 Service Concession Arrangements: Disclosures
SIC-31 Revenue - Barter Transactions Involving Advertising

Services
SIC-32 Intangible Assets - Web Site Costs
*These standards, interpretations and amendments to existing standards will become effective subsequent to June 30, 2015.
The Group did not early adopt these standards, interpretations and amendments.
CIRTEK HOLDINGS PHILIPPINES CORPORATION
RECONCILIATION OF RETAINED EARNINGS AVAILABLE FOR
DIVIDEND DECLARATION
JUNE 30, 2015

Unappropriated Retained Earnings, beginning $71,671

Adjustments in previous years Reconciliation:

Less: Non-actual/unrealized income net of tax

Unappropriated Retained Earnings, as adjusted, beginning 71,671

Net Income based on the face of AFS $2,159,185

Add: Non-actual losses
Less: Change in fair value of FVPL 340,000

Net Income Actual/Realized 1,819,185

Transfer from Appropriated to Unappropriated Retained

Earnings

Unappropriated Retained Earnings, as adjusted, ending

Less: Dividends declared in 2015

Cash dividends declared (1,200,000)

Retained earnings available for dividend declaration $690,856

CIRTEK HOLDINGS PHILIPPINES CORPORATION
FINANCIAL SOUNDNESS INDICATORS
JUNE 30, 2015

June 30, December 31,

2015 2014
Ratios Formula (Unaudited) (Audited)
Current Assets/Current
(i) Current Ratio Liabilities 2.94 3.56
(ii) Debt/Equity Ratio Bank Debts/ Total Equity 0.85 0.82
(iii) Net Debt/Equity
Ratio Bank Debts-Cash & 0.67 0.41
Equivalents/Total Equity
(iii) Asset to Equity
Ratio Total Assets/Total Equity 2.19 2.17
(iv) Interest Cover
Ratio EBITDA/Interest Expense 9.17 13.43
(v) Profitability
Ratios
GP Margin Gross Profit/Revenues 0.19 0.15
Net Profit Margin Net Income/Revenues 0.11 0.13
EBITDA Margin EBITDA/Revenues 0.19 0.14
Return on Assets Net Income/Total Assets 0.04 0.08
Return on Equity Net Income/Total Equity 0.09 0.06
*EBITDA = Operating income before working capital changes
 SCHEDULE A

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF FINANCIAL ASSETS
AS OF AND FOR THE PERIOD ENDED JUNE 30, 2015

Name of Valued based

Issuing on market
entity and Amount quotations at
association Income
of each shown in the end of reporting received or
issue balance sheet period accrued
Cash and cash equivalents N/A $6,643,663 $6,643,663 $
Trade and other receivables N/A 12,245,375 12,245,375
Financial asset at fair value
through profit or loss N/A 9,540,690 9,540,690
Amounts owed by related
parties N/A 5,833,944 5,833,944
Other current assets
Rental deposit N/A 1,133,929 1,133,929
Loan to employees N/A 129,782 129,782
Held-to-maturity investments N/A 953,278 953,278
Other noncurrent assets
Miscellaneous deposits N/A 141,961 141,961
$36,622,622 $36,622,622 $
 SCHEDULE B

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM
DIRECTORS, OFFICERS, EMPLOYEES, RELATED PARTIES, AND
PRINCIPAL STOCKHOLDERS (OTHER THAN RELATED PARTIES)
AS OF AND FOR THE PERIOD ENDED JUNE 30, 2015

Amounts Receivable from Officers, Employees and Related Parties under Trade and other receivables

Balance at Balance at the

beginning of Amounts end of the
Name and Designation of debtor period Additions collected Current Not Current period
Advances to officers and
employees $94,111 $68,163 ($40,212) $122,062 $ $122,062

$94,111 $68,163 ($40,212) $122,062 $ $122,062

Amounts owed by Related Parties

Balance at Balance at the
beginning of Amounts end of the
Name and Designation of debtor period Additions collected Current Not Current period

Cirtek Holding, Inc. $1,809,256 $ $ $1,809,256 $ $1,809,256

Carmerton, Inc. 33,161 33,161 33,161
Cayon Holdings, Inc. 206,284 206,284 206,284

Jerry Liu 3,074,377 710,866 3,785,243 3,785,243

$5,123,078 $710,866 $ $5,833,944 $ $5,833,944

 SCHEDULE C

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM
RELATED PARTIES WHICH ARE ELIMINATED DURING THE
CONSOLIDATION OF FINANCIAL STATEMENTS
AS OF AND FOR THE PERIOD ENDED JUNE 30, 2015

Receivables from related parties which are eliminated during the consolidation
(under Trade and other receivables)

Balance
Balance at Amount
beginning of Amount written at end of
Name and designation of debtor period Additions collected off Current Noncurrent period
Cirtek Electronics Corporation $22,838,393 $3,760,652 $ $ $26,599,045 $ $26,599,045
Cirtek Electronics International
Corporation 17,154,885 2,742,317 19,897,202 19,897,202
Cirtek Holdings Philippines
Corporation 37,372,476 3,250,000 40,622,476 40,622,476

$77,365,754 $9,752,969 $ $ $87,118,723 $ $87,118,723

Amounts owed by related parties which are eliminated during the consolidation

Balance at Amount
beginning of Amount written Not Balance at end
Name and designation of debtor period Additions collected off Current current of period

Cirtek Electronics Corporation $43,122,763 $5,604,762 $ $ $48,727,525 $ $48,727,525

Cirtek Electronics International
Corporation 9,000,000 9,000,000 9,000,000
Cirtek Advanced Technology
Solution Inc. 1,499,468 2,096,479 3,595,947 3,595,947
Cirtek Holdings Philippines
Corporation 23,743,523 2,051,728 25,795,251 25,795,251

$77,365,754 $9,752,969 $ $ $87,118,723 $ $87,118,723

 SCHEDULE D

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF INTANGIBLE ASSETS - OTHER
ASSETS
AS OF JUNE 30, 2015

Intangible Assets - Other Assets

Other
Charged to Charged to changes
Beginning Additions cost and other additions Ending
Description Balance at cost expenses accounts (deductions) Balance

Product
development
costs $560,932 $58,988 ($48,178) $ $ $571,742
 SCHEDULE E

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF LONG-TERM DEBT
AS OF JUNE 30, 2015

Long-term Debt
Amount shown
under caption Amount shown
"current portion under caption
of long-term in long-term debt in
Amount authorized related balance related balance
Title of issue and type of obligation by indenture sheet sheet

Notes payable $18,059,661 $1,436,807 $16,622,854

Interest-bearing loan 6,933,064 1,856,385 5,076,679
$24,992,725 $3,293,192 $21,699,533
 SCHEDULE F

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF INDEBTEDNESS TO RELATED
PARTIES (LONG-TERM LOANS FROM RELATED COMPANIES)
AS OF JUNE 30, 2015

Indebtedness to related parties (Long-term loans from related companies)

Name of related party Balance at beginning of period Balance at end of period

Not Applicable
 SCHEDULE G

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF GUARANTEES OF SECURITIES OF
OTHER ISSUERS
AS OF JUNE 30, 2015

Guarantees of Securities of Other Issuers

Name of issuing entity of Title of issue of
securities guaranteed by the each class of Total amount Amount owned by
company for which this securities guaranteed and person for which
statement is filed guaranteed outstanding statement is file Nature of guarantee

Not Applicable
 SCHEDULE H

CIRTEK HOLDINGS PHILIPPINES CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY SCHEDULE OF CAPITAL STOCK
AS OF JUNE 30, 2015

Capital Stock
Number of Number of
shares issued and shares reserved Number of
outstanding as for options Number of shares held by
Number of shown under warrants, shares held directors,
shares related balance conversion and by related officers and
Title of Issue authorized sheet caption other rights parties employees Others

Capital Stock 400,000,000 339,063,353

 Cirtek Holdings Philippines Corporation
116 East Main Avenue, Phase V-SEZ
Laguna Technopark
Bian, Laguna
Philippines

ISSUE MANAGER, BOOKRUNNER AND JOINT LEAD UNDERWRITER

First Metro Investment Corporation

45/F GT Tower International,
6813 Ayala Ave. cor. H.V. Dela Costa St.,
Makati City, 1227
Metro Manila
Philippines

JOINT LEAD UNDERWRITER

SB Capital Investment Corporation

th
18 Floor Security Bank Centre,
6776 Ayala Avenue, Makati City 0719
Philippines

LEGAL COUNSEL TO CIRTEK HOLDINGS PHILIPPINES CORPORATION

Angara Abello Concepcion Regala & Cruz

22/F ACCRA Law Tower,
nd th
2 Ave. cor. 30 Str., Crescent Park West,
Bonifacio Global City, Taguig, 0399
Metro Manila
Philippines

LEGAL COUNSEL TO THE UNDERWRITER

Romulo Mabanta Buenaventura Sayoc & Delos Angeles

21/F Philamlife Tower,
8767 Paseo de Roxas
Makati City, 1226
Metro Manila
Philippines

INDEPENDENT AUDITOR

SyCip Gorres Velayo & Co.

(a member firm of Ernst & Young Global Limited)
6760 Ayala Avenue
Makati City 1226
Philippines