Notes to Financial Statements

1. Reporting Entity

PPG Cars Corporation (hereinafter, "the Company") is a company domiciled in the Philippines.
The company buys manufactured cars directly from manufacturers and sells them to customers.

2. Basis of Presentation

(1) Conformance of consolidated financial statements with IFRS

The financial statements of the Company have been prepared in accordance with International
Financial Reporting Standards (IFRS) as permitted by the provisions of Article 93 of the
Ordinance.

The financial statements have been approved by Ami Lee, president of the Company, on August
15, 2024.

(2) Basis of measurement

As detailed in "3. Significant Accounting Policies", PPG Cars Corporation’s financial statements
have been prepared on a historical cost basis, except for specific financial instruments and others
measured at fair value.

(3) Functional currency and presentation currency

The financial statements of PPG Cars Corporation are measured using the currency of the
primary economic environment in which the entity operates ("functional currency"). These
financial statements are presented in Philippine peso, which is the Company's functional
currency, rounded down to the nearest Philippine peso.
(4) Use of estimates and judgments

In the preparation of the IFRS-compliant consolidated financial statements, management of the

Company is required to make several judgments, estimates and assumptions that could have an
impact on the application of accounting
policies, reporting revenues and expenses as well as assets and liabilities.

Actual results, however, could differ from

those estimates. Estimates and assumptions are continually reviewed. The effect of a change in
accounting estimates is recognized in the reporting period in which the change was made and in
future reporting periods.

The information regarding judgments used in applying accounting policies that could have a
material effect on the Company's c financial statements is included in "3. Significant Accounting
Policies".

The information regarding uncertainties arising from assumptions and estimates that could result
in material adjustments in the subsequent financial statements is as follows.

10. Goodwill and Intangible Assets (impairment losses)

(5) Accounting standards and interpretations not yet adopted by the Company

Of the new accounting standards and the new interpretations that have been newly issued or
amended by the date of approval of the consolidated financial statements, there are no items that
are not early adopted by the Company and that has a material impact on the consolidated
financial statements.

3. Significant Accounting Policies

(1) Cash and Cash Equivalents

Cash and cash equivalents are cash on hand, readily available for deposits and short-term highly
liquid and low risk investments with maturities not exceeding three months at the time of
purchase.

(2) Inventories

Inventories are stated at the lower cost or net realizable value. The cost of inventories includes
purchase costs, processing costs and all other costs incurred in bringing them to their existing
location and condition and is calculated primarily using the moving average method.
Net realizable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and the estimated costs necessary to sell.

(3) Property, Plant and Equipment

Property, plant and equipment are measured using the cost model and stated at cost less
accumulated depreciation and accumulated impairment losses.

Estimated useful lives and the method of depreciation are reviewed at the fiscal year-end.
Changes in estimated useful lives or depreciation methods are accounted for on a prospective
basis as a change in accounting estimate.

Property, plant and equipment, excluding land and construction in progress, are depreciated on a
straight-line basis over their estimated useful lives. Right-of-use assets are depreciated on a
systematic basis from the commencement date to the earlier of the end of the economic life of
the underlying asset or the end of the lease term.

The estimated useful lives for major classes of assets are as follows.
・ Buildings and structures: 5 to 60 years

An item of property, plant and equipment is derecognized on disposal or when it is withdrawn

from use and no future economic benefits are expected from its disposal. Any gain or loss arising
from derecognition of an item of property, plant and equipment is included in profit or loss when
it is derecognized. For the policy on impairment of property, plant and equipment, see "(15)
Impairment Losses (ii) Non-financial assets".
(6) Intangible Assets

Intangible assets are measured using the cost model and stated at cost less accumulated
depreciation and accumulated impairment losses.

(i) Intangible assets acquired separately

Intangible assets acquired separately with finite useful lives are carried at cost less accumulated
amortization and accumulated impairment losses.

(ii) Internally generated intangible assets

Expenditure on research is recognized as an expense in the consolidated statement of profit or

loss in the fiscal year in which it is incurred. An intangible asset arising from development (or
from the development phase of an internal project) is recognized if,
and only if, all of the following can be demonstrated:

a) the technical feasibility of completing the intangible asset so that it will be available
for use or sale
b) its intention to complete the intangible asset and use or sell it
c) its ability to use or sell the intangible asset
d) how the intangible asset will generate probable future economic benefits
e) the availability of adequate technical, financial and other resources to complete
development and to use or sell the intangible asset
f) its ability to measure reliably the expenditure attributable to the intangible asset during
its development

The cost of an internally generated intangible asset is the sum of expenditure incurred from the
date when the intangible asset first meets the recognition criteria above to the completion of its
development. If an internally generated asset is not recognized, a development cost is recognized
as an expense in the consolidated statement of profit or loss in the fiscal year in which it is
incurred.

After initial recognition, an internally generated intangible assets are carried at cost less
accumulated amortization and accumulated impairment losses.

(iii) Intangible assets acquired in business combinations

The cost of intangible assets acquired in a business combination is measured at fair value at the
acquisition date. After initial recognition, intangible assets acquired in a business combination
are carried at cost less accumulated amortization and accumulated impairment losses.
Intangible assets acquired in business combinations with indefinite useful lives are carried at cost
less accumulated impairment losses, without being amortized but tested for impairment, in the
same way as goodwill.

(iv) Amortization of intangible assets

Intangible assets with finite useful lives are amortized on a straight-line basis over their
estimated useful lives. The estimated useful lives of major classes of assets are as follows:

・ Software: 3 to 5 years
・ Copyright: 2 to 10 years

Estimated useful lives and amortization methods are reviewed at each reporting date, and any
revisions are applied as revisions to accounting estimates prospectively.

(v) Derecognition of intangible assets

An item of intangible assets is derecognized on disposal or when it is withdrawn from use and no
future economic benefits are expected from its disposal. Any gain or loss arising from
derecognition of an item of intangible assets is included in profit or loss when it is derecognized.

(4) Leases

(i) Leases as lessee

Lease liabilities are measured at the discounted present value of outstanding lease payments at
the commencement date of the lease. After the commencement date of the lease, lease liabilities
are measured by increasing the carrying amount to reflect interest on the lease liabilities and
reducing the carrying amount to reflect the lease payments made.

The interest rate implicit in the lease (if that rate can be readily determined) or lessee's
incremental borrowing rate is used for the discount rate.
Right-of-use assets are measured at cost that is the initial measurement amount of lease liability
at the commencement date of the lease adjusted by the amount of any initial direct costs, prepaid
lease payments and other expenses. After the commencement date of the lease, right-of-use
assets are measured at cost less any accumulated depreciation and accumulated impairment
losses as determined using the cost model

Right-of-use assets are depreciated on a systematic basis from the commencement date to the
earlier of the end of the economic life of the underlying asset or the end of the lease term.

Right-of-use assets are included in "Property, plant and equipment" or "Goodwill and intangible
assets". Lease liabilities are included in "Other financial liabilities (Current liabilities)" or "Other
financial liabilities (Non-current liabilities)".

Lease payments for short-term leases and leases of low value assets are recognized as expense
using the straight-line method over the lease term. For contracts that include a lease component
and a non-lease component, the Company accounts for the lease component and the non-lease
component as a single lease component without separating the non-lease component.

In reference to whether a contract is a lease or whether a contract contains a lease, Toyota

Industries makes judgments based on the substance of the contract even though it is not legally
considered as a lease.

(ii) Leases as lessor

Contracts containing leases are classified as finance leases whenever substantially all risks and
economic values incidental to the ownership of assets are transferred to the lessee, and other
leases are classified as operating leases.

For financial leases, an amount equal to the net investment in the lease by discounting the total
amount of lease payments and unguaranteed residual value with the interest rate implicit in the
lease is recorded as lease investment assets.

If PPG Cars Corporation is a manufacturer or distributor lessor in a lease, selling profit or loss in
a financial lease is recognized in accordance with the accounting policy it follows for sales of
goods (see "(12) Revenues").
Financial income is allocated to each period over the lease term so that the interest rate will be
proportional to an amount equal to the net investment in the lease.

If PPG CARS Corporation is not a manufacturer or distributor lessor in a lease, financial income
is allocated to each period over the lease term so that the interest rate will be proportional to an
amount equal to the net investment in the lease.

Income from operating leases is recognized on a straight-line basis over the lease term, unless
another systematic basis is more representative of the time pattern in which use benefit derived
from the leased asset is diminished.

(5) Provisions

The Company recognizes provisions if it has a present legal or constructive obligation as a result
of past events, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and the amount of obligation can be reliably estimated.
In case the time value of money is material, the amount of a provision is measured at the present
value of the amount of expenditures expected to be required to settle the obligation.

(6) Financial Instruments

A financial instrument is a contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. The Group recognizes a financial asset or a
financial liability when it becomes a party to the contract of a financial instrument. A purchase or
sale of financial assets is recognized or derecognized at the trade date.

(i) Non-derivative financial assets

PPG Cars Corporation categorizes non-derivative assets into financial assets measured at
amortized cost, financial assets measured at fair value through other comprehensive income
(FVTOCI) and financial assets measured at fair value through profit or loss (FVTPL).

(Financial assets measured at amortized cost)

PPG Cars Corporation categorizes financial assets as financial assets measured at amortized cost
if financial assets are held with the objective of collecting contractual cash flows and their
contractual terms provide cash flows on specified dates that are solely payments of principal and
interest on the principal amount outstanding.

Financial assets measured at amortized cost are initially measured at fair value. The carrying
amount of financial assets measured at amortized cost is subsequently measured using the
effective interest method.

(Financial assets measured at fair value)

Toyota Industries categorizes financial assets other than financial assets measured at amortized
cost as financial assets measured at fair value. Financial assets measured at fair value are further
divided into the following classifications according to holding purpose.

(Equity instruments measured at fair value through other comprehensive income (FVTOCI))

Shares and other financial assets held mainly for the purpose of maintaining or enhancing
business relationships with investees are designated at initial recognition as financial assets at
FVTOCI.

Equity instruments at FVTOCI are measured at fair value at initial recognition and changes in
fair value thereafter are recognized in other comprehensive income. However, dividends arising
from financial assets at FVTOCI are recognized in profit or loss.

If an equity instrument at FVTOCI is derecognized, the cumulative amount of other

comprehensive income recognized in other components of equity on the consolidated statement
of financial position is directly transferred to retained earnings.

(Financial assets measured at fair value through profit or loss (FVTPL))

Financial assets not designated as financial assets at FVTOCI of financial assets measured by
Toyota Industries are classified as financial assets at FVTPL. Financial assets at FVTPL are
measured at fair value at initial recognition and changes in fair value thereafter are
recognized in profit or loss.
(ii) Non-derivative financial liabilities

Non-derivative financial liabilities are measured at fair value at initial recognition and thereafter
at amortization cost using the effective interest method.

A financial liability is derecognized when its contractual obligations are discharged or canceled,
or expire.

(iii) Derivatives

PPG Cars Corporation holds derivative financial instruments to hedge foreign currency and
interest rate fluctuation risks, including foreign currency forward contracts, currency options,
currency swaps, interest rate swaps, interest rate and currency swaps, and interest rate options.

For all of these derivatives, PPG Cars Corporation recognizes financial assets or financial
liabilities when it becomes the party to these derivatives contracts. Some of derivatives PPG Cars
Corporation holds for hedging purposes do not meet hedge accounting requirements.

Changes in fair value of these derivatives are immediately recognized in profit or loss.
Toyota Industries adopts cash flow hedges and fair value hedges as a hedge accounting method.

(7) Revenues

Toyota Industries recognizes revenue based on the following five-step model.

Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

4. Cash and Cash Equivalents

Cash and cash equivalents consist of the following.

CY2023 CY2024
Cash on Hand 1,000,000 500,000
Cash Deposits 12,000,000 14,500,000
The balance of cash and cash equivalents on the statement of financial position as of the end of
the calendar years ended December 31, 2023 and 2024 are consistent with the balances of cash
and cash equivalents on the statement of cash flows.

5. Trade and Other Receivables

Trade receivables and other receivables consist of the following.

CY2023 CY2024
Trade Notes and Accounts 17,000,000 20,078,400
Receivable
Accounts Receivables - 2,000,700 1,000,000
Others

6. Property, Plant and Equipment

Property, plant and equipment consist of the following.

CY2023 CY2024

Land 7,000,000 8,000,000

Building 8,756,300 10,000,800

Accumulated Depreciation (2,000,000) (3,000,200)

Depreciation and impairment losses of property, plant and equipment is included in mainly "Cost
of sales" and "Selling, general and administrative expenses" in the statement of profit or loss.
7. Goodwill and Intangible Assets
Goodwill and intangible assets consist of the following.

CY2023 CY2024
Goodwill 300,000 300,000
Copyright 200,000 200,000
Software 300,000 400,000
Intangible assets are amortized on straight-line basis.

8. Other Financial Assets

Other financial assets consist of the following

CY2023 CY2024
Loan 200,000 250,000
Stock 198,000 250,000

Loans are categorized as financial assets measured at amortized cost, stock is mainly categorized
as financial assets measured at fair value through other comprehensive income and derivative
assets are categorized as financial assets measured at fair value through profit or loss (excluding
items for which hedge accounting is applied). With respect to equity instruments measured at fair
value through profit or loss included in stock or others, there is no monetary significance.

9. Warranty Liability
Warranty liability consists of the following.

CY2023 CY2024
Sales made in 2023 300,000 800,050
Sales made in 2024 408,000

The warranty provision is recorded by recognizing the amount of expected expense payments
required for future repairs. It is expected in many cases that a repair or a payment is made within
a year, while repairs or payments for some items are made over a longer period of time because
customers take longer to physically return defective products.

10. Provision
Provisions consist of the following.

CY2023 CY2024
Litigation - 591, 000
Asset Retirement Obligation 235,900 1,000,500

The warranty provision is recorded by recognizing the amount of expected expense payments
required for future repairs. It is expected in many cases that a repair or a payment is made within
a year, while repairs or payments for some items are made over a longer period of time because
customers take longer to physically return defective products.
Asset retirement obligations are accounted for by recognizing provision for asset
demolition/disposal expenses, expenses for restoring an asset to its original condition and
payments arising as a result of using assets as well as by adding to the acquisition cost of the
respective assets (property, plant and equipment, such as buildings). The respective assets are
depreciated over the number of years of depreciation as indicated "3. Significant Accounting
Policies".
"Others" mainly includes provision for litigation.

11. Corporate Bonds and Loans

Corporate bonds and loans consist of the following.

CY2023 CY2024
Short term loans 9,500,000 10,300,000
Commercial paper 4,256,300 4,700,000

Corporate bonds and loans are financial liabilities measured at amortized cost.

12. Other Financial Liabilities

Other financial liabilities consist of the following.

CY2023 CY2024
Lease liabilities 2,792,500 3,520,000
Deposits payable 2,300,500 2,520,400

Deposits payable is categorized as financial liabilities measured at amortized cost, and derivative
liabilities are categorized as financial liabilities measured at fair value through profit or loss
(excluding items for which hedge accounting is applied).