GENERAL INFORMATION

ITEM 1.DATE, TIME AND PLACE OF MEETING OF SECURITY HOLDERS

DATE: 3 August 2019

TIME: 10:30 a.m.

PLACE: Spring Garden, Highlands China Palace Tagaytay Highlands Complex, Brgy. Calabuso, Tagaytay City

Mailing address: Tagaytay Highlands Complex, Brgy. Calabuso, Tagaytay City

Approximate date on which the Information Statement is to be sent or given to security holders: 15 July 2019

ITEM 2. DISSENTER’S RIGHT OF APPRAISAL

The matters to be voted upon in the Annual Stockholders’ Meeting on 3 August 2019 are not among the instances enumerated in Sections 42 and 81, Title X of the Corporation Code whereby the right of appraisal, defined to be the right of any stockholder to dissent and demand payment of the fair value of his shares, may be exercised. The instances where the right of appraisal may be exercised are as follows:

1. In case any amendment to the Articles of Incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those outstanding shares of any class, or of extending or shortening the term of corporate existence; 2. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in the Corporation Code; 3. In case the Company decides to invest its funds in another corporation or business outside of its primary purpose; and 4. In case of merger or consolidation.

ITEM 3. INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON

a. No person who has been a director or officer or a nominee for election as director of the Country Club or associate of such persons, have a substantial interest, direct or indirect in any matter to be acted upon.

b. No director of the Country Club has informed the Country Club in writing that he intends to oppose any action to be taken by the Country Club at the meeting.

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CONTROL AND COMPENSATION INFORMATION

ITEM 4. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

a. The Country Club has 5,000 outstanding shares as of 31 March 2019. Each common share shall be entitled to one (1) vote with respect to all matters to be taken up during the annual stockholders’ meeting with the exception of the election of directors as indicated in item (c) below.

b. The record date for determining stockholders entitled to notice of and to vote during the annual stockholders' meeting is on 4 July 2019.

c. In the forthcoming annual stockholders' meeting, stockholders shall be entitled to elect five (5) members to the Board of Directors. Each stockholder may vote such number of shares for as many as five (5) persons he may choose to be elected from the list of nominees, or he may cumulate said shares and give one candidate as many votes as the number of his shares multiplied by five (5) shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit, provided that the total number of votes cast by him shall not exceed the number of shares owned by him multiplied by five (5).

d. Security Ownership of Certain Record and Beneficial Owners

Security Ownership of Certain Record and Beneficial Owners

The following table shows the record and beneficial owners owning more than 5% of the outstanding capital stock of the Country Club as of 30 June 2019:

NAME OF NAME AND ADDRESS OF BENEFICIAL OWNER NO. OF PERCENT TITLE OF CLASS RECORD OWNER AND AND RELATIONSHIP CITIZENSHIP SHARES HELD OF CLASS RELATIONS WITH THE ISSUER WITH RECORD OWNER

Belle Corporation* 5th Flr., Tower A., Two E- Proprietary Com Center, Palm Coast Same as record Filipino 2,319 Share Avenue, Mall of Asia owner shares 46.38% Complex, Pasay City, Metro Manila, Philippines

Proprietary Ivory Holdings** Filipino 267 5.34% Share shares

*Belle Corporation is a publicly-listed corporation. The following are the incumbent members of the Board of Directors of Belle Corporation are: Mr. Emilio S. De Quiros Jr., Mr. Willy N. Ocier, Ms. Elizabeth Anne C. Uychaco, Ms. Aurora Cruz Ignacio, Mr. Jose T. Sio, Mr. Manuel A. Gana, Mr. Gregorio U. Kilayko, Mr. Jacinto C. Ng Jr.,Mr. Amando M. Tetangco Jr., Mr. Cesar E.A. Virata, and Ms. Virginia A. Yap. All the members of the Board of Directors of Belle Corporation are Filipino citizens.

Mr. Willy N. Ocier has been designated by Belle Corporation to vote on its behalf.

**Mr. Joseph Chua or, in his absence, the Chairman of the stockholders’ meeting have been designated by Ivory Holdings Inc. to vote for and on its behalf. The top 20 stockholders of Ivory Holdings, Inc. is not known to the Country Club.

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The top 20 stockholders of Belle Corporation as of 30 June 2019 are as follows:

OUTSTANDING & STOCKHOLDERS TYPE / CLASS ISSUED SHARES

1 Belleshares Holdings, Inc. Common 2,604,740,622 2 PCD Nominee Corporation (Filipino) Common 2,504,738,686 3 PCD Nominee Corporation (Non-Filipino) Common 2,032,206,932 4. Sysmart Corporation Common 1,629,353,802 5 Sybase Equity Investment Corporation. Common 531,320,577 6 Social Security System Common 370,469,139 7 Eastern Securities Development Corp. Common 171,730,866 Ng, Jacinto C. Jr. 135,860,666 8 Common - Jacinto C. Ng, Jr or Anita C. Ng 18,293,333 9 Premium Leisure Corporation (form. Sinophil Corp) Common 99,987,719 10 Ng, Jacinto L. Sr. Common 88,835,833 11 Parallax Resources Inc. Common 86,308,131 12 SLW Development Corporation Common 66,082,333 13 F. Yap Securities, Inc. Common 31,803,732 14 Willy N. Ocier Common 15,090,342 15 Pacita K. Yap / Phillip K. Yap Common 7,000,000 16 Lim Siew Kim Common 6,200,000 17 James Go. Common 4,816,999 18 Estate of Leo Joseph Blanchet Common 4,128,579 19 William T. Gabaldon Common 4,000,000 20 TDG Retirement Fund Common 2,536,800

Security Ownership of Management

The following is a tabular presentation of the shares beneficially owned by all directors and executive officers of the Country Club as of 30 June 2019:

AMOUNT AND NATURE OF TITLE OF CLASS NAME OF BENEFICIAL OWNER CITIZENSHIP PERCENT OF CLASS OWNERSHIP

Proprietary Willy N. Ocier 1 share/Beneficial Filipino 0.02% Share 32 Wilson St., San Juan, Metro Manila

Hans T. Sy Proprietary 1 share/Beneficial Filipino 0.02% No. 11 Harvard Road, Forbes Park, Share Makati City

Jerry C. Tiu Proprietary 1 share/Beneficial Filipino 0.02% 5 Urdaneta St., Urdaneta Village, Makati Share City

Proprietary Ruben C. Tan 0.02% 1 share/Beneficial Filipino Share #769 Harvard St. Wack wack Village Mandaluyong City

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AMOUNT AND NATURE OF TITLE OF CLASS NAME OF BENEFICIAL OWNER CITIZENSHIP PERCENT OF CLASS OWNERSHIP

Joseph T. Chua 0.04% Proprietary 1 share/Beneficial Filipino Macroasia Corporation, 12/F Allied Bank Share Center, 6765 Ayala Avenue, Makati City

A. Bayani K. Tan Proprietary 2 share/Beneficial Filipino 0.02% 57 Athena Loop, Palladium, Share Mandaluyong City Aggregate Security Ownership of Directors and 7 shares 0.26% Officers

Voting Trust Holders of 5% or more

There is no party that holds any voting trust or any similar agreement for 5% or more of the Country Club's voting securities.

Changes in Control

The Country Club is not aware of any arrangement that may result in a change in control of the Country Club.

ITEM 5.DIRECTORS AND EXECUTIVE OFFICERS

a. Directors, Executive Officers, Promoters and Control Persons

The following are the incumbent Directors and Executive Officers of the Club, who are nominated for re-election as members of the Board of Directors for 2019-2020:

NATIO- TERM OF NAME POSITION AGE NALITY OFFICE Willy N. Ocier Filipino Chairman 62 1992 to present Hans T. Sy Filipino Director 63 1992 to present Jerry C. Tiu Filipino President 62 1999 to present Joseph T. Chua Filipino Independent Director 62 1999 to present Ruben C. Tan Filipino Independent Director 63 2018 to Present A. Bayani K. Tan Filipino Corporate Secretary 63 1992 to present Manuel A. Gana Filipino Vice President / Treasurer 61 2000 to present Ma. Clara T. Kramer Filipino General Manager 57 2010 to present

Upon recommendation of the Country Club’s Nomination Committee composed of Mr. Willy N. Ocier (Chairman), Jerry C. Tiu, Hans T. Sy and Joseph T. Chua, as required by the Company’s Manual of Corporate Governance, the following persons are nominated for election to the positions above-stated for the year 2019-2020, to hold office as such for one year or until their successors shall have been duly elected and qualified.

The independent directors, Mr. Joseph T. Chua and Mr. Ruben C. Tan, were nominated by Mr. Willy N. Ocier and Mr. A. Bayani K. Tan, respectively. Except as fellow stockholders of the 6

Country Club, the nominees for independent director are not related to the persons nominating them.

Presented below are brief write-ups on the nominees’ business experience for at least the past five (5) years:

WILLY N. OCIER Chairperson

Mr. Ocier is the Chairman of the Board of the Country Club since 1996. Likewise, he is the Chairman of the Board of The Spa and Lodge at Tagaytay Highlands, Inc. (TSL) since 1996, while he is the Chairman of the Board of Tagaytay Midlands Golf Club, Inc. (TMGCI) and the Vice Chairman of the Board of Tagaytay Highlands International Golf club, Inc. (THIGCI) from 1992 up to present. He is also the Chairman of the Board of APC Group, Inc., Premium Leisure Corp., Premium Leisure and Amusement, Inc., PRC-Magma Energy Resources, Inc., and Aragorn Power and Energy Corporation. Concurrently, he is the Chairman, President and Chief Executive Officer of Philippine Global Communications, Inc. and the Chairman and President of Pacific Online Systems Corporation. Furthermore, he is the Vice Chairman of Belle Corporation and Highlands Prime, Inc. He is a Director of Leisure and Resorts World Corporation, PhilEquity Management, Inc., Vantage Equities, Toyota Corporation – Batangas, and AbaCore Capital Holdings, Inc. He was also the former President and Chief Operating Officer of Eastern Securities Development Corporation. Mr. Ocier received his Bachelor’s Degree in Economics from Ateneo de Manila University.

JERRY C. TIU Director/President

Mr. Tiu, Filipino, 62, is the President of the Country Club since 2000. He is an Independent Director of Pacific Online Systems Corporation since February 21, 2007 and was appointed as the Lead Independent Director last May 31, 2017. He is also an Independent Director of Philippine Global Communications, Inc. since 2009. He is the President and a Director of Tagaytay Highlands International Golf Club, Inc., Tagaytay Midlands Golf Club, Inc., and The Spa & Lodge at Tagaytay Highlands, Inc. He is likewise the President and a Director of Tagaytay Highlands Community Condominium Association, Inc., Tagaytay Midlands Community Homeowners’ Association, Inc., and Greenlands Community Homeowners’ Association, Inc. Moreover, he is the Vice-President and a Board of Trustee of The Highlands Prime Community Condominium Owners’ Association, Inc., The HPI’s Horizon Community Condominium Owners’ Association, Inc. and The Hillside at Tagaytay Highlands Community Homeowners’ Association, Inc. He holds a Bachelor of Science degree in Commerce (Major in Marketing) from University of British Columbia.

HANS T. SY Director

Mr. Sy is a Director of the Country Club since 1996. He is also the Chairman of the Board of THIGCI and a Director of TMGCI from 1992 up to present. Currently, he is the Chairman of the Executive Committee of SM Prime Holdings, Inc. where he has been a Director since 1994, and served as its President until September 2016. He has held key positions in businesses related to banking, real estate development, mall operations, as well as leisure and entertainment. In the SM Group, his other current positions include Adviser to the Board of SM Investments Corporation, Chairman of China Banking Corporation, and Chairman of

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National University. Mr. Sy is a Bachelor of Science in Mechanical Engineering Graduate of De La Salle University.

JOSEPH T. CHUA Independent Director

Mr. Chua is an Independent Director of the Country Club since 2008. He was the Managing Director of Goodwind Development Corporation from 1983 to 2012 before he became its President in 2013. He is also the Chairman of the Board of JF Rubber Philippines since 1993. He is a Director of MacroAsia Corporation since 1997. He became its COO in 2001, then President and CEO from 2003 to December 14, 2015, and currently, the President and COO. Likewise, he is a Director of Lufthansa Technik Philippines Inc. (2000-Present), PAL Holdings, Inc. (October 23, 2014–January 29, 2018), Philippine Airlines, Inc. (August 2003–March 2012, October 23, 2014–January 29, 2018), Air Philippines Corporation (February 11, 2015-January 29, 2018), Eton City, Inc. (May 2013-May 2, 2018), Belton Communities, Inc. (May 2013-May 2, 2018), FirstHomes Inc. (May 2013-May 2, 2018), Bulawan Mining (2009-January 29, 2018), PNB Management & Development Corporation (2009-January 29, 2018), and PNB General Insurers Company, Inc. (August 12, 2014-February 23, 2018). He is the President of Macroasia Airport Services Corporation (2000-Present), MacroAsia Catering Services, Inc. (2003- Present), and MacroAsia SATS Food, Inc. (2015-Present). He was the Chairman of the Board before he became the President of MacroAsia Air Taxi Services (2004-Present), MacroAsia Properties Development Corporation (January 2013-Present), Watergy Business Solutions, Inc. (2014-Present), and MacroAsia Mining Corporation (December 2012-Present). He is currently the Chairman of the Board of Cavite Business Resources, Inc. (2011-Present), Boracay Tubi System Inc. (December 2016-Present), Naic Water Supply Corporation (August 2017-Present), Summa Water Resources, Inc. (October 2018-Present), and First Aviation Academy Inc. (December 2017-Present). He also served as the Director (May 2013- September 2017), OIC (February 28, 2014), and EVP-COO (June 24, 2014-September 2017) of Eton Properties Philippines, Inc. as well as Director (May 27, 2014-May 25, 2015) and Board Advisor (May 25, 2018-February 23, 2018) of Philippine National Bank.

Mr. Chua holds a Master of International Finance degree from the University of Southern California and a double degree of Bachelor of Arts in Economics and Bachelor of Science in Business Management from the De La Salle University.

RUBEN C. TAN Independent Director

Mr. Tan is an Independent Director of the Country Club, as well as TMGCI, THIGCI and TSL. Likewise, he is a Director of Blue Ridge Mineral Corporation and Eagle Crest Mining & Development Corporation from 2012 up to present. He is also the President of Glendale Mining & Development Corporation (1997-Present), Citimex, Inc. (1984-Present), Cedarside Industries, Inc. (1996-Present), and Barrington Carpets, Inc. (1989-Present). Mr. Tan holds a Bachelor of Science degree in Mechanical Engineering from De La Salle University.

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Key Officers

A. BAYANI K. TAN Corporate Secretary

Mr. A. Bayani K. Tan is the Corporate Secretary of the Country Club (since August 1995). He is also a Director, Corporate Secretary or both of the following reporting and/or listed companies: Belle Corporation (since May 1994), Coal Asia Holdings, Inc. (since July 2012), Discovery World Corporation (since March 2013), I-Remit, Inc. (since May 2007), Pacific Online Systems Corporation (since May 2007), Philequity Dividend Yield Fund, Inc. (since January 2013), Philequity Dollar Income Fund, Inc. (since March 1999), Philequity Fund, Inc. (since June 1997), Philequity MSCI Philippines Index Fund, Inc. (since December 2017), Philequity Peso Bond Fund, Inc. (since June 2000), Philequity PSE Index Fund, Inc. (since February 1999), Premium Leisure Corporation (since December 1993), Sterling Bank of Asia Inc (A Savings Bank) (since December 2006), TKC Metals Corporation (since February 2007), Tagaytay Highlands International Golf Club, Inc. (since November 1993), Tagaytay Midlands Golf Club, Inc. (since June 1997), The Spa and Lodge at Tagaytay Highlands, Inc. (since December 1999), and Vantage Equities, Inc. (since January 1993). He is the Managing Partner of the law offices of Tan Venturanza Valdez (since it was established in 1988), Managing Director/President of Shamrock Development Corporation (since May 1988), Director of Destiny LendFund, Inc. (since December 2005), Pascual Laboratories, Inc. (since March 2014), and Pure Energy Holdings Corporation (since October 2016), President of Catarman Chamber Elementary School Foundation, Inc. (since August 2012), Managing Trustee of SCTan Foundation, Inc. (since 1986), Trustee and Treasurer of Rebisco Foundation, Inc. (since April 2013) and Trustee and Corporate Secretary of St. Scholastica's Hospital, Inc. (since February 2011).

Mr. Tan holds a Master of Laws degree from New York University and earned his Bachelor of Laws degree from the University of the Philippines where he was a member of the Order of the Purple Feather (U.P. College of Law Honor Society) and ranked ninth in his class. Mr. Tan passed the bar examinations in 1981 where he placed sixth. He has a Bachelor of Arts major in Political Science degree from the San Beda College from where he graduated Class Valedictorian and was awarded the medal for Academic Excellence.

MANUEL A. GANA Vice President / Treasurer

Mr. Gana is the Vice President and Treasurer of the Country Club (2000-present). He is also the Vice President and the Treasurer of THIGCI, TMGCI and TSL. He was the Executive Vice President (EVP) for Finance and Chief Financial Officer (CFO) of Belle Corporation since 2000 before he became its Chief Executive Officer and President in March 2017. Moreover, he is a Director of APC Group, Inc. and Pacific Online Systems Corporation and was the President and Chief Operating Officer (COO) of Sinophil Corporation from 2010 to 2013. He was a former Director of Investment Banking at Nesbitt Burns Securities Incorporated, and had worked for Bank of Montreal and Merrill Lynch Capital Markets (all in New York) and for Procter & Gamble Philippine Manufacturing Corp.

Mr. Gana holds a double degree in Economics and Accounting from De La Salle University and a Master of Business Administration degree from Wharton School of the University of Pennsylvania. He is a Certified Public Accountant.

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MA. CLARA T. KRAMER General Manager

Ms. Kramer is the General Manager of the Country Club since 2010. She is also the concurrent General Manager of THIGCI, TMGCI, TSL, THCCAI, TMCHAI, GCHAI, THPCCOAI, THHCCOAI, and THTHCHAI. She serves as the Business Unit Head and Senior Vice-President of Tagaytay Highlands Estate (Belle Corporation). She was a consistent Dean’s Lister in Assumption College (San Lorenzo Village, Makati City) where she earned her bachelor’s degree. She started her career in hotel industry back in December of 1983 when she joined the sales department of Manila Hotel as Sales Executive. In July 1990, she was hired by L’Fisher Hotel as Front Office Manager and later on as PR & Promotions Manager until she got promoted in June 2001 and was tasked to manage the Sales and Marketing Department. As member of the management team, she actively took part in the formulation of major policies and procedures of the Hotel. Ms. Kramer is also involved in various civic and social activities as member and resource speaker focusing on family, marriage and parenting.

b. Material Pending Legal Proceedings

As of 30 June 2019, there is no material pending legal proceedings to which the Country Club is a party to. c. Significant Employees

The Country Club has no significant employees. d. Family Relationships

There are no family relationships up to the fourth civil degree either by consanguinity or affinity among the directors, executive officers, or persons nominated by the Country Club to become directors or executive officers of the Country Club. e. Involvement in Certain Legal Proceedings

As a result of the delay in the delivery of the facilities of the Universal Leisure Club, Inc. (ULCI), some of its members initiated a Complaint for Estafa (I.S. No. 08K-19713) against ULCI, the Universal Rightfield Property Holdings, Inc. and the Universal Leisure Corp., as well as their respective officers and directors, including their former Corporate Secretary, Atty. A. Bayani K. Tan, an incumbent Director and the Corporate Secretary of the Corporation. The Complaint was submitted for resolution in 2009 and was acted upon and dismissed by the City Prosecutor of Manila (OCP) only on March 18, 2013. Complainants belatedly filed motion for reconsideration for which reason, among others, the OCP denied motion on June 16, 2014. A Petition for Review dated March 31, 2014 was filed by the Complainant before the Department of Justice (DOJ). On August 7, 2014, Atty. Tan filed his Comment to the said Petition. In a Resolution dated April 17, 2015, the Petition for Review was denied and the DOJ dismissed the complaint for Estafa.

Except as disclosed above, the Country Club is not aware of any of the following events wherein any of its directors, nominees for election as director, executive officers, underwriter or control person were involved during the past five (5) years:

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(a) Any bankruptcy 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 two years prior to that time; (b) Any conviction by final judgment, including the nature of the offense, in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses;

(c) Being subject to 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 his involvement in any type of business, securities, commodities or banking activities; and

(d) Being found by a domestic or foreign court of competent jurisdiction (in a civil action), the Commission 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, and the judgment has not been reversed, suspended, or vacated.

f. Certain Relationships and Related Transactions

The Country Club has not been involved in any transaction during the last three (3) years in which any of its directors, executive officers, nominees or security holders has direct or indirect material interest.

Belle Corporation owns 2,319 shares or 46.38% of the total outstanding shares of the Country Club.

g. Disagreement with Director

None of the directors have resigned or declined to stand for re-election to the Board of Directors since the date of the last annual meeting of security holders because of a disagreement with the Country Club on any matter relating to the Country Club’s operations, policies or practices.

ITEM 6. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Except for the General Manager and President, the Directors do not receive any form of compensation from the Country Club. None of the Directors receive per diem from the Club.

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SUMMARY COMPENSATION TABLE

Annual Compensation (a) (b) (c) (d) (e) Name and Principal Position Year Salary Bonus Others

A Jerry C. Tiu** (President) B (Ma. Clara T. Kramer)** (General Manager) TOTAL 2019* P 2,999,024.00 2018 P 2,999,024.00 2017 P 2,761,424.00 *estimated amounts *They are the only top compensated Executives or Directors of the Company.

The Country Club has no other arrangements, including consulting contracts, pursuant to which any director of the Country Club was compensated, or is to be compensated, directly or indirectly, during the Country Club’s last completed fiscal year, and the ensuing year.

ITEM 7.INDEPENDENT PUBLIC ACCOUNTANTS

SyCip Gorres Velayo & Co. (“SGV”), the Company’s external auditors for 2017-2018, will be recommended for re-appointment as such for the current year. Representatives of SGV are expected to be present at the Annual Stockholders’ Meeting to respond to appropriate questions and will be given the opportunity to make a statement if they so desire.

Over the past five (5) years, there was no event where SGV and the Company had any disagreement with regard to any matter relating to accounting principles or practices, disclosure of financial statements or auditing scope or procedure.

In Compliance with the SEC Memorandum Circular No. 8 Series of 2003, Ms. Julie Christine O. Mateo was assigned in 2017 as SGV’s engagement partner for the Company to replace Mr. Sherwin V. Yason whose assignment ended after the 2016 audit engagement.

The Club paid SGV ₱338,000.00 and ₱280,000.00 for external audit services for 2018 and 2017.

For each of the last two (2) fiscal years, SGV did not render services for tax accounting, planning, compliance, advice, or any other professional services for which it billed TCCATHI the corresponding professional fees.

The Audit Committee, composed of Mr. Ruben C. Tan as Chairman, and Messrs. Willy N. Ocier, Jerry C. Tiu, and Hans T. Sy as Members, recommends to the Board of Directors the appointment of the external auditors. The Board of Directors and the stockholders approve the Audit Committee’s recommendation. The Executive Committee approves the audit fees as recommended by the Audit Committee.

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OTHER MATTERS

ITEM 15. ACTION WITH RESPECT TO REPORTS

The Country Club will seek the approval by the stockholders of the Minutes of the previous Stockholders’ Meeting during which the following were taken up: (1) Call to Order, (2) Certification of Notice & Quorum, (3) Approval of the Minutes of the Last Stockholders’ Meeting, (4) Approval of Audited Financial Statements and Annual Report, (5) Ratification of all Acts of the Board of Directors and Officers, (6) Election of Directors, (7) Appointment of SyCip, Gorres, Velayo & Co. as External Auditors, and (8) Adjournment.

The items covered with respect to the ratification of the acts of the Board of Directors and officers for the past year up to the date of the meeting are those items entered in the ordinary course of business, with those of significance having been covered by appropriate disclosures such as:

1. Resignations and Appointments of Officers; 2. Approval of Payment of Real Property Tax; 3. Registration with National Privacy Commission; 4. Delegation of Authority to the Membership Committee and the President to approve certain membership rules and regulations; 5. Membership in the Board committees; 6. Employee Benefits and Incentives; 7. Declaration of Delinquent Shareholders and Scheduling of Delinquency Sale; 8. Purchase of Motor Vehicles; 9. Setting up of Retirement Plan; and 10. Amendment of By-Laws.

Management reports which summarize the acts of management for the year 2018 are included in the Company’s Annual Report to be sent to the stockholders together with this Information Statement and shall be submitted for approval by the stockholders at the meeting. Accordingly, approval of the Annual Report will constitute approval and ratification of the acts of Management stated in the Annual Report during the period covered thereby.

Management reports will be submitted for approval by the stockholders at the meeting. Approval of the reports will constitute approval and ratification of the acts of management for the past year.

ITEM 19.VOTING PROCEDURES

Each stockholder shall be entitled to one vote, in person or thru proxy for each share with voting right. All elections and all questions, except as otherwise provided by law, shall be decided by the plurality vote of the stockholders present in person or by proxy, a quorum (majority of the issued and outstanding capital stock having powers) being present.

In the election of directors, the five (5) nominees with the greatest number of votes will be elected directors. If the number of nominees for election as directors does not exceed the number of directors to be elected, the Secretary of the Meeting shall be instructed to cast all votes represented at the Meeting equally in favor of all such nominees. However, if the number of nominees for election as directors exceeds the number of directors to be elected, voting shall be

13 done by ballot, and counting of votes shall be done by two (2) election inspectors appointed by the Chairman of the Meeting.

For motion on other corporate matters that will be submitted for approval and for such other matters as may properly come before the Meeting, a vote of the majority of the shares present or represented by proxy at the meeting is necessary for their approval. Voting will be done by secret balloting in accordance with the Country Club’s by-laws. The votes for or against the matter submitted shall be tallied by the Secretary.

Items 8. 9, 10, 11, 12, 13, 14, 16, 17 and 18 are not responded to in this report, the Company having no intention to take any action with respect to the information required therein.

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THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. BUSINESS AND GENERAL INFORMATION

The Business

The Country Club was incorporated in 1995 as an exclusive membership club operating on a non- profit basis. Its primary purpose is to promote social, recreational and athletic activities among its members. It is a self-contained community set on a ridge in Tagaytay City which is located approximately 60 kilometers south of Metro Manila and situated on a 7-hectare land below the 18- hole par-71 international championship golf course of THIGCI.

Sale of membership shares to the public started in November 1995 but the Country Club officially opened for business in March 1996. Majority of members are private individuals (about 87.08%) most of which are Filipino nationals and citizens and the remaining 12.92% are corporate members. Members of the THIGCI were given preference to purchase the first few shares before they were offered to the public. The Country Club derives its revenues and other income from the monthly dues (32%), restaurant patronage (46%), recreational facilities (6%), room sales (5%), and other income (11%). Collection of monthly dues started in March 1996 at P750 per member and was subjected to gradual increases. The following are the monthly dues with the respective periods wherein the increase became effective: ₱1,500 in June 1996, ₱2,000 in January 1998, ₱2,300 in April 2001, ₱2,500 in April 2004, ₱3,100 in January 2006, ₱3,600 in January 2010, ₱4,200 in September 2012, and ₱4,700 in January 2019.

Sale of food and beverage through the Country Club’s restaurants is a major source of income contributing to about 36.43% of total revenues in 2018. The different specialty restaurants offer a wide array of cuisines (Filipino, Chinese, Italian, Japanese, Korean, and Western) which are sure to satisfy everyone’s palate.

Part of the Country Club’s commitment to members was also to provide sports and recreational facilities. Prior to the Country Club’s opening in March 1996, the outdoor facilities like the tennis courts, fishing pier, mini-golf course, horseback bridle path and the children’s playground were already available to members. In July 1996, the two-level Sports Center was officially opened. This houses a 14-lane bowling facility, indoor lap pool, basketball court, badminton court, game room, spas, gym, and a Kidsports - children’s play area. In December 1996 major portions of the camping ground called Camp Highlands were also completed and ready to accept members who wish to stay overnight or simply to cool off in the swimming pools. In addition to the aforesaid developments the Animal Farm and Highlands Cinema were opened in 1997. However, as of end of fiscal year 2010 the Highlands Cinema is no longer operational.

The wide array of facilities and the continuing developments in the Country Club are important considerations for members to retain membership with the Country Club and for some to speculate increase in market value of their shares. In 2002, the Country Club’s operations include accommodation facilities at the Cottage Grove and Cowboy Cabins available to members and their guests. New sports facilities were also introduced such as the Sporting Arrow, All-terrain vehicle trail, Archery and Aerial Walk. There is an on-going renovation and rehabilitation of the Club’s facilities such as Sports Center, Highlander Steakhouse, Highlands China Palace, Country Club Veranda, Akasaka, Camp Highlands, Gourmet Avenue, Peak Bar, Country Clubhouse, Holy Family Chapel, Genghis Khan, and Trellis.

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Bankruptcy, Receivership or Similar Proceedings

The Country Club has not been involved in any bankruptcy, receivership or similar proceedings for the past three (3) years.

Material Reclassification, Merger, Consolidation or Purchase or Sale of a Significant Amount of Assets (not ordinary)

The Country Club has not engaged in any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets (not ordinary) for the past three (3) years.

Competition

There is no formal or organized secondary market for the purchase and sale of golf and country club shares in the Philippines. As such, holders of shares in the Country Club who may wish to sell or dispose of their shares in the Country Club may not readily find a counter-party for the transaction at the desired asking price. At present, there is a growing number of golf and country clubs being established in various parts of the country. This may affect appreciation in the value of investment in the Country Club.

Investments in leisure-oriented developments such as golf and country clubs are influenced by the economic and political conditions in the country. Any adverse economic and political developments in the country may affect the demand for such leisure facilities, and any anticipated appreciation in the prices of golf and country club shares.

Although there are other clubs engaged in the same line of business, the Country Club competes in terms of service and facilities. The Country Club is highly competitive because of its wide array of facilities which includes world-class sports and recreational facilities, specialty restaurants and bars offering different cuisines (Filipino, Chinese, Italian, Japanese, Korean, and Western) and accommodation facilities.

Sources and availability of raw materials

The Country Club’s principal suppliers include Werdenberg International Corporation, ESV International Corp., RGL33 Fruits and Vegetable Dealer, JC Seafoods Supply, Delos Reyes Trading, and Sanford Marketing Corporation. There is no existing major supply contracts entered into by the Country Club.

Transactions with and/or dependence on related parties

In the ordinary course of business, the Country Club has transactions with related parties which consist mainly of charges for affiliate’s usage of Country Club’s facilities and services. This is also comprised of reimbursement of certain operating expenses such as utilities, contract services and repairs and maintenance from related parties.

Government Regulations

The Country Club has complied with licensing and regulatory requirements necessary for its development and operations.

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Compliance with Environmental Laws

The Country Club has complied with pertinent environmental laws and regulations and has received the Environmental Certificate Clearance issued by the Department of Energy and Natural Resources.

The Country Club has constructed a Sewerage Treatment Plant for treatment of waste products and reuse in its animal farm and golf course. The Country Club has also adopted the process of decomposing biodegradable waste products which are converted as fertilizers for the garden.

Employees

The Country Club is run by a team of regular and casual employees as follows:

Regular Employees (based on head count as of 30 June 2019) GM & Department Heads 35 Supervisors 58 Rank and File 109 Total 202

All regular rank and file employees are subject to the Collective Bargaining Agreement which expires in June 2020. Some of the regular employees are also seconded to Tagaytay Highlands International Golf Club, Inc. and Tagaytay Midlands Golf Club, Inc. (*based on head count as of 30 June 2019)

There has been no strike brought about by the Country Club’s employees in the past Nineteen (19) years.

Major Business Risks

The Country Club has been sustaining its operational requirements through the collection of monthly dues from each member and the operation of restaurants and sports & recreation facilities. The Country Club has no foreign currency exposures or obligations that will have a material impact on its short-term or long-term liquidity due to the depreciation of the peso. Despite the current economic condition, however, Country Club memberships have not been adversely affected as new members have been registered during the fiscal year. The Club does not foresee any negative effects on members’ patronage in view of the present economic condition.

Directors and Executive Officers

Please refer to discussion on Directors and Executive Officers.

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Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters

Market Information

The Country Club has authorized and subscribed 5,000 proprietary shares, of which 46.38% is owned by Belle Corporation and the remaining shares are owned by other Country Club members. There are 2,353 holders of the Country Club’s proprietary shares.

Top 20 shareholders are as follows:

NAME OF STOCKHOLDER NO. OF SHARES %

Belle Corporation 2,319 46.38% Ivory Holdings, Inc. 267 5.34% Highlands Prime Inc. 73 1.46% Jollibee Foods Corporation 14 0.28% Camara, Feliciana G. 6 0.12% APC Group Inc. 6 0.12% First Gas Holdings Corp. 4 0.08% Pilipino Star Printing Co., Inc. 3 0.06% S. P. Properties, Inc. 3 0.06% OTHERS 2,305 46.10% Total 5,000 100.00%

Below are the high and low bid prices for the past three (3) years based on newspapers publications:

HIGH LOW Quarter ended March 2016 200,000 200,000 Quarter ended June 2016 180,000 180,000 Quarter ended September 2016 180,000 180,000 Quarter ended December 2016 120,000 120,000 Quarter ended March 2017 150,000 120,000 Quarter ended June 2017 220,000 150,000 Quarter ended September 2017 180,000 120,000 Quarter ended December 2017 120,000 120,000 Quarter ended March 2018 200,000 150,000 Quarter ended June 2018 160,000 135,000 Quarter ended September 2018 160,000 130,000 Quarter ended December 2018 150,000 130,000 Quarter ended March 2019 120,000 120,000 Quarter ended June 2019 200,000 120,000

The Country Club’s securities are not traded in the Philippine Stock Exchange. 19

Dividends

The Country Club does not declare dividends to its shareholders. In accordance with the Country Club’s Articles of Incorporation and By-Laws, no profit shall inure to the exclusive benefit of any of its shareholders, hence, no dividends shall be declared in their favor. Shareholders shall be entitled only to a pro-rata share of the asset of the Club at the time of the dissolution or liquidation of the Country Club.

Recent Sales of Unregistered or Exempt Securities

All the Club's securities are registered under the Securities Regulation Code. There were no sale of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities for the past three (3) years.

Management’s Discussion and Analysis

The Country Club derived its revenues from membership dues, food and beverage sales, and income from recreational facilities.

Financial Highlights (In Million Pesos) Jun 30 Dec 31 Dec 31 Dec 31 2019 2018 2017 2016 Balance Sheet Total Assets 687.40 674.51 672.20 693.40 Total Liabilities 152.73 142.76 147.06 172.22 Total Members' Equity 534.67 531.76 525.14 521.18

Jun 30 Dec 31 Dec 31 Dec 31 2019 2018 2017 2016 Income Statement Total Revenues 162.86 315.41 305.57 299.99 Total Cost and Operating Expense 135.09 262.62 225.13 245.30 Depreciation and amortization 22.67 46.25 46.72 53.90 Net Income/Loss 2.91 3.23 3.79 0.78

RESULTS OF OPERATIONS

Six-month period ending June 30, 2019 compared to June 30, 2018

REVENUE For the six-month period ended June 30, 2019, the Club’s performance showed an increase in total revenue amounting to ₱7.73 million (4.98%), from ₱155.13 million in 2018 to ₱162.86 million in 2019. This is caused by higher revenues from members’ dues of ₱7.82 million (15.55%) due to increase in membership dues; food, beverage and sundries of ₱2.11 million (2.83%); and transfer fees and

20 interest of ₱0.23 million (10.26%). This is offset by decreases in income from recreational facilities of ₱0.71 million (7.14%), room sales of ₱0.40 million (4.90%) resulting from lower room occupancy, miscellaneous and assignment fees of ₱0.94 million or 10.54%, and commission income from concessionaires of ₱0.38 million (31.08%).

COST AND OPERATING EXPENSES Cost and operating expenses increased by ₱2.00 million (1.29%), from ₱155.74 million for the six- month period ended June 30, 2018 to ₱157.74 million for the same period in 2019. This is the result of higher food, beverages and sundry costs of ₱1.15 million (4.84%) in relation to the increase in its corresponding revenue, repairs and maintenance of ₱1.02 million (10.55%), rental expense of ₱0.75 million (33.59%), supplies of ₱0.43 million (8.20%), taxes and licenses of ₱0.41 million (21.27%), commission expense of ₱0.41 million (5.16%), banquet expense of ₱0.33 million (6.80%), service charge expense of ₱0.34 million (8.16%), and communication, light and water of ₱0.08 million (0.69%).

NET INCOME / (LOSS) As a result, the Club registered a net income of ₱2.91 million for the six-month period ended June 30, 2019 in comparison to the net loss of ₱1.81 million for the same period in 2018.

December 31, 2018 compared to December 31, 2017

Revenue The Country Club generated total revenue and other income amounting to P315.41 million for the year ended December 31, 2018 as compared to P305.40 million for the year ended December 31, 2017 or an improvement of 3.28%. Major contributors to the Club’s revenues were derived from increase in food & beverage revenue of P5.89 million or 4.23%, from P139.12 million in 2017 to P145 million in 2018, pertaining to the increase in patronage as a result of introduction of new food offerings and rewards program. Likewise, membership dues are higher by P3.93 million or 3.99%, from P98.46 million in 2017 to P102.39 million in 2018.

Cost and Operating Expense Cost and operating expenses for the twelve months period ended December 31, 2018 amounted to P308.87 million, an increase of P7.28 million or 2.41% compared to P301.59 million in the same period in 2017. This is mainly attributed to increases in commission expense of P3.79 million or 30.04%, food, beverages and sundry costs of P3.79 million or 8.78% and banquet expense of P1.23 million or 14.63% corresponding to increase in its related revenue derived from the events being held at the club, fuel and oil of P0.72 million or 21.79%, taxes and licenses of P0.52 million or 16.42%, and repairs and maintenance of P1.26 million or 6.90%. On the other hand, depreciation expense decreased by P0.47 million or 1% from P46.72 million in 2017 to P46.25 million in 2018 which pertains to the fully depreciated asset of building, facilities and equipment for the year.

Net Income For the twelve months period ended December 31, 2018, the Country Club posted total Comprehensive Income of P6.62 million. The OCI amounting to P3.39 million is from the remeasurement gain on defined benefit pension plan.

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December 31, 2017 compared to December 31, 2016

Revenue The Country Club generated total revenue and other income amounting to P305.40 million for the year ended December 31, 2017 as compared to P299.85 million for the year ended December 31, 2016 or an improvement of 1.85%. Major contributors to the Club’s revenues were derived from the increase in income from food & beverage revenue, of P6.37 million or 4.80%, from P132.74 million in 2016 to P139.12 million in 2017 pertaining to the increase in patronage as a result of introduction of new food offerings and rewards program. Likewise, sports & recreational facilities revenue increased by P1.75 million or 9.93% from P17.62 million in 2016 to P19.37 million in 2017; this was due to additional sports activities like archery, trail buggy, aerial walk and team building for corporate function.

Cost and Operating Expense Cost and operating expenses for the twelve months period ended December 31, 2017 amounted to P301.59 million, an increase of P3.33 million or 1.12% compared to P298.26 million in the same period in 2016. This was mainly attributed to the decrease of contract services - outside services by P15.92 million or 89.89% and professional fees by P1.37 million or 21.02%, which resulted to the increase in personnel cost by P12.59 million or 23.09%; Absorption of employees resulted this movement. Banquet expense increased by P1.82 million or 27.59%, from P6.58 million relative to increase in food & beverage sales that derived from the events being held at the club. Advertising and promotion increased by P1.28 million or 33.09% due to the implementation of Clubs reward promo of P500.00 worth of gift certificate for members who spent P5,000 in Club operated restaurant. Meanwhile, depreciation expense decreased by P7.18 million or 13.3% from P53.90 million in 2016 to P46.72 million in 2017. This pertains to the fully depreciated asset of building, facilities and equipment for the year.

Net Income For the twelve months period ended December 31, 2017, the Country Club posted total Comprehensive Income of P3.96 million.

Financial Condition and Changes in Financial Condition

Six-month period ending June 30, 2019 compared to June 30, 2018

ASSETS The Club has total assets of P=687.40 million as of June 30, 2019 compared to P=664.56 million as of June 30, 2018. The Club has current assets of P=0.86 for each peso of current liabilities as of June 30, 2019 compared to P=1.25 as of June 30, 2018. The decrease in current ratio is due to the reduction in cash and cash equivalents and increase in accounts payable and other current liabilities.

Cash and Cash Equivalents Cash and cash equivalents decreased by P=26.51 million (56.17%) from P=47.20 million as of June 30, 2018 to P=20.68 million as of June 30, 2019. This is mainly the result of ₱43.79-million increase in construction in progress due to renovations of the Club’s facilities. Advances to contractors and suppliers is also higher by ₱10.40 million. This was offset by the ₱31.32-million net cash provided by operating activities.

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Receivables Receivables decreased by P=6.08 million (9.64%) from P=63.10 million as of June 30, 2018 to ₱57.02 million as of June 30, 2019. This is mainly due to the decrease in receivables from related parties of ₱28.79 million or 96.14%. This was offset by the increases in receivables from members of ₱16.89 million attributed to higher membership dues and from functions of ₱6.19 million. Allowance for impairment is also higher by 97.85%.

Inventories Inventories increased by ₱3.00 million or 25.73% from ₱11.66 million as of June 30, 2018 to ₱14.66 million in June 30, 2019 due to consumption during the period.

Other Current Assets Prepaid expenses and other current assets decreased by P=1.13 million (4.74%) from P=23.89 million as of June 30, 2018 to P=22.76 million as of June 30, 2019. This is mainly due to the decreases in prepaid expenses of ₱0.67 million (24.22%), creditable withholding tax of ₱0.19 million (0.98%), and current portion of deferred input VAT of ₱0.28 million (13.15%).

Noncurrent Assets Noncurrent assets increased by ₱53.57 million or 10.33% from ₱518.71 million as of June 30, 2018 to ₱572.28 million as of June 30, 2019 as a result of additions to property and equipment of ₱22.66 million and construction in progress of ₱54.67 million due to renovations of the Club’s facilities. Advances to contractors and suppliers also increased significantly by ₱20.40 million, as well as intangible assets by ₱0.23 million. On the other hand, there is a ₱1.59-million (32.17%) decrease in deferred input VAT, while depreciation expense increased by ₱41.84 million.

LIABILITIES Accounts payable and other current liabilities posted an increase of ₱19.32 million or 16.91%, from ₱114.23 million in June 30, 2018 to ₱133.54 million in 2019. This pertains to higher trade accounts payable of ₱6.85 million (33.49%), payables to related party of ₱8.10 million (117.44%), refundable deposit of ₱1.95 (25.83%), membership dues collected in advance of ₱13.63 million (70.43%), retention payable of ₱2.94 million (218.51%), and unclaimed gift certificate of ₱1.66 million (36.97%). Conversely, there are decreases in accrued expenses of ₱1.31 million (10.59%), statutory payables of ₱11.73 million (90.67%), deposit for functions of ₱0.44 million (2.15%), and payables to concessionaires of ₱0.15 million (20.46%).

In addition, non-current liabilities decreased by ₱6.34 million or 25.37% from ₱25.00 million in June 30, 2018 to ₱18.66 million in June 30, 2019. This lower amount is caused by the retirement provision.

EQUITY Members’ equity increased by P=11.35 million (2.17%) from P=523.32 million as of June 30, 2018 to ₱534.67 million as of June 30, 2019 mainly because of the net income during the six-month period.

December 31, 2018 compared to December 31, 2017

ASSETS The Country Club has total assets of P674.51 million as of December 31, 2018 as compared to the December 31, 2017 P672.2 million, an increase of P2.31 million or 0.34%. The Country club has a current ratio of P1.14 for each peso of current liabilities as of December 31, 2018 as compared to P1.19 as of December 31, 2017.

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Cash and Cash Equivalents Cash and cash equivalents increased by P3.22 million or 6.36%, from P50.67 million in December 31, 2017 to P53.90 million in December 31, 2018. This is the result of the net cash inflows provided by operating activities which amounted to P53.98 million, net cash flows used in investing activities of P49.17 million, and net cash used in financing activities of P1.62 million.

Receivables Receivables amounted to P49.27 million and P57.46 million as of December 31, 2018 and 2017, respectively. The decrease of P8.19 million or 14.26% was attributed to the decrease in receivables from related parties (net) of P10.79 million or 72.30% and higher allowance for impairment by P0.39 million or 97.85%.

Inventories Inventories increased by P2.06 million or 14.52% from P14.20 million in December 31, 2017 to P16.26 million in December 31, 2018.

Other Current Assets Other current assets has a balance amounting to P23.87 million and P21.57 million as of December 31, 2018 and 2017, respectively. This is mainly due to increase of P1.69 million or 197% in prepaid expenses and P0.79 million or 4.46% in creditable withholding taxes.

Non-current Assets Non-current assets increased by 0.55% or P2.92 million, from P528.30 million in December 31, 2017 to P531.22 million in December 31, 2018 due mainly to increases in advances to contractors and suppliers by P9.22 million or 210.78%, intangible assets by P0.57 million or 49.95%, and additions to property and equipment of P25.66 million.

LIABILITIES Accounts payable and other current liabilities posted an increase of P5.77 million or 4.84%, from P119.19 million in December 31, 2017 to P124.96 million in 2018. This pertains to the increases in unclaimed gift certificate of P2.99 million or 84.19%, membership dues collected in advance P3.74 million or 22.09%, refundable deposit by P4.51 million or 15.50% mainly from deposits for function, and payables to nonrelated parties of P6.94 million or 24.75%. On the other hand, there are decreases in statutory payables of P7.85 million or 59.78%, accrued expenses of P1.41 million or 13.70%, related parties of P0.34 million or 4.99%, retention payable of P0.28 million or 19.02%, and auctioned members liability of P0.08 million or 91.90% due to closing of long outstanding accounts.

In addition, non-current liabilities decreased by P9.93 million or 37.53% from P26.45 million in December 31, 2017 to P16.52 million in December 31, 2018. This lower amount is caused by the retirement provision for the year.

EQUITY Members’ equity increased by P6.62 million or 1.26% from P525.14 million in December 31, 2017 to P531.76 million in December 31, 2018, attributed to the total comprehensive income of P6.62 million during the current year. OCI amounting to P3.39 million is from the remeasurement gain on defined benefit pension plan.

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December 31, 2017 compared to December 31, 2016

ASSETS The Country Club has total assets of P672.2 million as of December 31, 2017 as compared to December 31, 2016 P693.40 million or a decrease of P21.20 million or 3.06%. The Country club has a current ratio of P1.23 for each peso of current liabilities as of December 31, 2017 as compared to P1.06 as of December 31, 2016.

Cash and Cash Equivalents Cash and cash equivalents increased by P7.62 million or 17.69% from P43.06 million in December 31, 2016 to P50.67 million in December 31, 2017. This resulted from the net cash inflows provided by operating activities which amounted to P42.71 million, net cash flows used in investing activities of P36.43 million, and net cash used in financing activities of P7.61 million.

Receivables Receivables amounted to P57.46 million and P83.86 million as of December 31, 2017 and 2016, respectively. The movement of P26.40 million or 31.48% was attributed to the decrease in receivables from related parties (net) of P23.64 million or 61.32% and decreased of receivable from functions by P1.60 million or 15.39%.

Inventories Inventories have increased by P2.81 million or 24.72% from P11.39 million in December 31, 2016 to P14.20 million in December 31, 2017. Other Current Assets Other current assets has a balance amounting to P21.57 million and P18.03 million as of December 31, 2017 and 2016, respectively due mainly to the increase in creditable withholding tax by P8.38 million or 67.98%.

Non-current Assets Non-current assets decreased by 1.62% or P8.72 million in 2017, from P537.02 million in December 31, 2016 to P528.30 million in December 31, 2017 due to depreciation expense recognized which amounted to P46.72 million during the year 2017 which was offset by the additions to property and equipment amounting to P26.73 million for the year 2016 and P35.77 million for the year 2017.

LIABILITIES Accounts payable and other current liabilities posted a decrease of P29.94 million or 20.07%, from P149.13 million in December 31, 2016 to P119.19 million in 2017. The decrease pertains to the following: decrease in related parties by P44.30 million or 86.79%, statutory payable by P6.88 million or 34.39%, decrease in retention payable of P0.21 million or 12.45%. Meanwhile, nonrelated parties increased by P0.33 million or 1.18%, membership dues collected in advance increased by P1.99 million or 13.33%, accrued expense increased by P1.25 million or 13.76% and refundable deposits increased by P10.45 million or 56.06% mainly from deposits for function.

In addition, non-current liabilities posted an increase of P3.89 million or 17.26% from P22.56 million in December 31, 2016 to a P26.45 million in December 31, 2017. The increase was brought by the retirement provision for the year.

EQUITY Members’ equity increased by P3.96 million or 0.76% from P521.18 million in December 31, 2016 to P525.14 million in December 31, 2017, attributed to the total comprehensive income of P3.96 million during the current year December 31, 2017.

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Below are the comparative key performance indicators of the Country Club: 30 June-19 31-Dec-18 31-Dec-17 Performance Formula for Calculation (Unaudited) (Audited) (Audited) Indicators Current assets over current Current ratio 0.86 : 1.00 1.14 : 1.00 1.19 : 1.00 liabilities Total liabilities to Total liabilities over total 0.29 : 1.00 0.27 : 1.00 0.28 : 1.00 equity ratio members’ equity Total assets over total Asset to equity ratio 1.29 : 1.00 1.27 : 1.00 1.28 : 1.00 members’ equity Fixed assets Sales over net fixed assets 0.28 times 0.59 times 0.59 times turnover Profitability ratio Net income over total revenue 0.02 : 1.00 0.01 : 1.00 0.01 : 1.00 Excess of Revenue Over Expenses before Interest, Tax, EBITDA * per share Depreciation and Amortization ₱ 5,564.10 ₱ 10,603.18 ₱ 10,138.66 over weighted average number of shares

* Excess of Revenue Over Expenses before Interest, Tax, Depreciation and Amortization (EBITDA)

During the six months period ending June 30, 2019, except for what has been noted in the preceding, there were no material events or uncertainties known to management that had a material impact on past performance, or that would have a material impact on future operations, in respect of the following:

i. Known trends, demands, commitments, events or uncertainties that would have a material impact on the Country Club ; ii. Events that will trigger direct or contingent financial obligation that is material to the Country Club, including any default or acceleration of an obligation; iii. Material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Country Club with unconsolidated entities or other persons created during the reporting period; iv. Material commitments for capital expenditures that are reasonably expected to have a material impact on the Country Club’s short-term or long-term liquidity; v. Known 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; vi. Significant elements of income or loss that did not arise from the Country Club’s continuing operations; vii. Seasonal aspects that had a material impact on the Country Club’s results of operations; and viii. Material changes in the financial statements of the Country Club from the year ended December 31, 2018, except as reported in the MD&A.

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Disagreements with Accountants on Accounting and Financial Disclosure

No principal accountant or independent accountant of the Country Club has resigned, was dismissed or has ceased to perform services during the calendar year covered by this report.

There were no disagreements with the accountants on any matter of accounting principles or practices, financial statement disclosures, or auditing scope procedure.

Mergers, Consolidations, Acquisitions and Similar Matters

There is no action to be taken with respect to any transaction involving the following:

1. The merger or consolidation of the registrant into or with any other person or of any other person into or with the registrant; 2. The acquisition by the registrant or any of its security holders of securities of another person; 3. The acquisition by the registrant or any other going business or of the assets thereof; 4. The sale or other transfer of all or any substantial part of the assets of the registrar; or 5. The liquidation or dissolution of the registrant.

ACQUISITION OR DISPOSITION OF PROPERTY

There is no action to be taken with respect to the acquisition or disposition of any property.

RESTATEMENT OF ACCOUNTS

There is no action to be taken with respect to the restatement of any asset, capital, or surplus account of the Country Club.

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DISCUSSION ON CORPORATE GOVERNANCE

The Country Club remains focused on insuring the adoption of systems and practices of good corporate governance in enhancing value for its shareholders.

In compliance with the initiative of the Securities and Exchange Commission (“SEC”), The Country Club submitted its Corporate Governance Manual (the “Manual”) to the SEC. This manual institutionalizes the principles of good corporate governance in the entire Company. The Country Club believes that corporate governance, the framework of rules, systems and processes governing the performance of the Board of Directors and Management of their respective duties and responsibilities, and from which the organization’s values and ethics emerge, is of utmost importance to the Company’s shareholders and other stakeholders, which include, among others, clients, employees, suppliers, financiers, government and community in which it operates. The Company undertakes every effort possible to create awareness throughout the entire organization.

The Country Club has been monitoring compliance with SEC Memorandum Circular No.2, Series of 2002, as well as other relevant SEC circular and rules on good corporate governance. The Country Club also appointed members of various Board level committees. These committees consist of the Membership Committee, the Nomination committee (for selection and evaluation of qualifications of directors and officers), the Compensation Committee (tasked to consider an appropriate remuneration system), and the Audit Committee (tasked to review financial and accounting matters). A Compliance Officer was also appointed. Members of various committees are elected annually and to serve for a term of one (1) year.

As proof of compliance with leading practices and principles of Good Governance the Country Club has formally adopted a manual on Corporate Governance and regularly submits to SEC its Corporate Governance Self–Rating Form.

The Board establishes the major goals, policies and objectives of the Country Club, as well as the means to monitor and evaluate the performance of Management. The Board also ensures that adequate internal control mechanisms are implemented and properly complied in all levels.

The Country Club is not aware of any non-compliance with its Manual on Corporate Governance, by any of its officers or employees.

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UNDERTAKING TO PROVIDE COPIES OF THE ANNUAL REPORT

UPON WRITTEN REQUEST OF ANY SHAREHOLDER OF RECORD ENTITLED TO NOTICE OF AND VOTE AT THE MEETING, THE COMPANY SHALL FURNISH SUCH SHAREHOLDER WITH A COPY OF THE COMPANY’S INFORMATION STATEMENT AND ANNUAL REPORT (SEC FORM 17-A) WITHOUT CHARGE. ANY SUCH WRITTEN REQUEST SHALL BE ADDRESSED TO:

THE CORPORATE SECRETARY THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. BO. CALABUSO, TAGAYTAY CITY PHILIPPINES

f:\data\clients\383\corp\asm\2018\2018 definitive 20-is - tccath (final).docx 383-263

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The Country Club at Tagaytay Highlands, Inc. (A Nonprofit Corporation)

Financial Statements December 31, 2018 and 2017 and Years Ended December 31, 2018, 2017 and 2016 and

Independent Auditor’s Report

THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. (A Nonprofit Corporation) STATEMENTS OF CHANGES IN MEMBERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016

Remeasurement Gain on Defined Proprietary Additional Benefit Pension Certificates Paid-in Plan, (Notes 13 Capital Deficit Net of tax Net Members’ and 22) (Note 22) (Note 22) (Note 19) Equity

Balances at January 1, 2016 P=500,000,000 P=1,048,932,564 (P=1,030,409,226) P=630,457 P=519,153,795 Net income ‒ ‒ 784,458 ‒ 784,458 Other comprehensive income, net of tax ‒ ‒ ‒ 1,239,467 1,239,467 Total comprehensive income ‒ ‒ 784,458 1,239,467 2,023,925 Balances at December 31, 2016 P=500,000,000 P=1,048,932,564 (P=1,029,624,768) P=1,869,924 P=521,177,720

Balances at January 1, 2017 P=500,000,000 P=1,048,932,564 (P=1,029,624,768) P=1,869,924 P=521,177,720 Net income ‒ ‒ 3,790,430 ‒ 3,790,430 Other comprehensive income, net of tax ‒ ‒ ‒ 168,683 168,683 Total comprehensive income ‒ ‒ 3,790,430 168,683 3,959,113 Balances at December 31, 2017 P=500,000,000 P=1,048,932,564 (P=1,025,834,338) P=2,038,607 P=525,136,833

Balances at January 1, 2018 P=500,000,000 P=1,048,932,564 (P=1,025,834,338) P=2,038,607 P=525,136,833 Net income ‒ ‒ 3,233,766 ‒ 3,233,766 Other comprehensive income, net of tax ‒ ‒ ‒ 3,387,736 3,387,736 Total comprehensive income ‒ ‒ 3,233,766 3,387,736 6,621,502 Balances at December 31, 2018 P=500,000,000 P=1,048,932,564 (P=1,022,600,572) P=5,426,343 P=531,758,335 See accompanying Notes to Financial Statements.

THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. (A Nonprofit Corporation) STATEMENTS OF CASH FLOWS

Years Ended December 31 2018 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES Net income before income tax P=6,573,111 P=3,753,105 P=1,596,434 Adjustments for: Depreciation (Notes 9, 14 and 15) 46,249,989 46,719,139 53,896,904 Pension costs (Notes 16 and 19) 4,278,023 3,944,736 6,213,164 Interest income (Note 5) (226,165) (163,685) (139,104) Interest expense (Note 12) 192,790 221,069 125,930 Unrealized foreign exchange gain (31,332) (6,175) (25,845) Gain on disposal of property and equipment (Notes 9 and 17) – (39,864) – Income before working capital changes 57,036,416 54,428,325 61,667,483 Decrease (increase) in: Receivables 8,190,834 26,399,652 (15,859,906) Other current assets (7,044,603) (62,490) (808,744) Inventories (2,062,181) (2,814,263) (586,351) Increase (decrease) in accounts payable and other current liabilities 5,770,878 (29,940,656) (2,491,070) Cash generated from operations 61,891,344 48,010,568 41,921,412 Contribution to plan assets (Note 19) (7,000,000) – – Benefits paid (Note 19) (1,092,063) (468,415) (25,800) Interest received 226,165 163,685 139,104 Income taxes paid, including creditable withholding taxes (Note 20) (42,451) (5,404,505) (10,606,716) Net cash provided by operating activities 53,982,995 42,301,333 31,428,000 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (Note 9) (40,944,080) (35,770,588) (26,732,973) Decrease (increase) in other noncurrent assets (8,228,757) (291,703) 961,613 Proceeds from disposal of property and equipment (Note 9) – 44,145 – Net cash used in investing activities (49,172,837) (36,018,146) (25,771,360) CASH FLOWS FROM FINANCING ACTIVITIES Payment of loans (Notes 12 and 24) (1,418,553) (1,070,677) (2,296,268) Interest paid (Note 24) (198,626) (215,922) (118,985) Availment of loans (Notes 12 and 24) – 2,615,200 1,692,600 Net cash provided by (used in) financing activities (1,617,179) 1,328,601 (722,653) NET INCREASE IN CASH AND CASH EQUIVALENTS 3,192,979 7,611,788 4,933,987 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 31,332 6,175 25,845 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 5) 50,673,890 43,055,927 38,096,095 CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 5) P=53,898,201 P=50,673,890 P=43,055,927

See accompanying Notes to Financial Statements.

THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. (A Nonprofit Corporation) NOTES TO FINANCIAL STATEMENTS

1. Corporate Information and Authorization for the Issuance of Financial Statements

Corporate Information The Country Club at Tagaytay Highlands, Inc. (the Country Club), a nonprofit corporation, was incorporated and registered with the Philippine Securities and Exchange Commission (SEC) on August 18, 1995. The Country Club’s primary purpose is to promote social, recreational and athletic activities among its members on a non-profit basis, the nucleus of which will be the construction, development, and maintenance of a club house, swimming pools, horse back-riding field, botanical gardens, and other sports, health and recreational facilities.

The registered office address of the Country Club is Tagaytay Highlands Complex, Barangay Calabuso, Tagaytay City 4120, Cavite, Philippines.

Belle Corporation (Belle), a publicly-listed Country Club in the Philippines, owns 46.26% and 46.24% of the Country Club’s proprietary certificates as at December 31, 2018 and 2017, respectively.

Authorization for Issuance of Financial Statements The financial statements were approved and authorized for issuance by the Board of Directors (BOD) on April 11, 2019.

2. Basis of Preparation and Changes in Accounting Policies

Basis of Preparation The financial statements of the Country Club have been prepared on a historical cost basis and are presented in Philippine peso (Peso), which is the Country Club’s functional and presentation currency. All values are rounded to the nearest Peso, unless otherwise stated.

Statement of Compliance The accompanying financial statements have been prepared in compliance with Philippine Financial Reporting Standards (PFRSs).

Changes in Accounting Policies and Disclosures The accounting policies adopted are consistent with those of the previous financial year, except that the Country Club has adopted the following new accounting pronouncements starting January 1, 2018. Adoption of these pronouncements did not have a significant impact on the Country Club’s financial position or performance unless otherwise indicated.

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

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

▪ PFRS 9, Financial Instruments

PFRS 9 replaces Philippine Accounting Standards (PAS) 39, Financial Instruments: Recognition and Measurement for annual reporting periods beginning on or after January 1, 2018, bringing

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together all three aspects of the accounting for financial instruments: classification and measurement, impairment, and hedge accounting.

The Country Club applied PFRS 9 using the modified retrospective approach, with an initial application date of January 1, 2018. The Country Club has not restated the comparative information, which continues to be reported under PAS 39.

The nature and effect of the adoption of PFRS 9 is described below: a) Classification and Measurement

Under PFRS 9, debt instruments are subsequently measured at fair value through profit or loss (FVPL), amortized cost, or fair value through other comprehensive income (FVOCI). The classification is based on two criteria, the Country Club’s business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding.

The assessment of the Country Club’s business model was made as of the date of the initial application, January 1, 2018. The assessment of whether contractual cash flows on debt instruments are solely comprised of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.

The classification and measurement requirements of PFRS 9 did not have a significant impact on the financial statements.

The Country Club’s cash in banks, short-term deposits, receivables and refundable deposits classified as Loans and receivables are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. These are now classified and measured as Debt instruments at amortized cost beginning January 1, 2018.

There are no changes in classification and measurement for the Country Club’s financial liabilities.

The impact of adopting PFRS 9 as at January 1, 2018 is as follows:

PAS 39 PFRS 9 measurement measurement category category Loans and receivables Amortized cost Cash and cash equivalents* P=49,870,035 P=49,870,035 Receivables 57,455,948 57,455,948 Refundable deposits** 29,852 29,852 P=107,355,835 P=107,355,835 *Excluding cash on hand amounting to P=803,855. **Presented under “Other noncurrent assets” account in the statement of financial position. b) Impairment

The adoption of PFRS 9 has fundamentally changed the Country Club’s accounting for impairment losses for financial assets by replacing PAS 39’s incurred loss approach with a forward-looking expected credit loss (ECL) approach. PFRS 9 requires the Country Club to recognize an allowance for ECLs for all debt instruments not held at FVPL and contract assets.

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The adoption of ECL approach did not have any significant impact on the Country Club’s provision for impairment on its financial assets as at January 1, 2019.

▪ PFRS 15, Revenue from Contracts with Customers

PFRS 15 supersedes PAS 11, Construction Contracts, PAS 18, Revenue, and related interpretations. It applies, with limited exceptions, to all revenue arising from contracts with its customers. PFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. Under PFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles set in PFRS 15 provide a more structured approach to measuring and recognizing revenue.

PFRS 15 requires the exercise of judgment when applying each step of the model to contracts with customers, taking into consideration all of the relevant facts and circumstances. The standard also specifies the accounting for incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

The Country Club applied PFRS 15 using the modified retrospective approach, with an initial application as at January 1, 2018.

The adoption of PFRS 15 did not have a material impact on the Country Club’s statements of financial position, statements of comprehensive income and statements of cash flows since the Country Club’s primary performance obligation to its customers is the sale of food and beverage and sundries wherein revenue is recognized at a point in time when control of the asset is transferred to the customer, generally at point of sale and sales of services wherein the Country Club satisfies it performance obligation by transferring of the promised services to customers on an agreed contract price.

▪ Amendments to PAS 28, Investments in Associates and Joint Ventures, Measuring an Associate or Joint Venture at Fair Value (Part of Annual Improvements to PFRSs 2014 - 2016 Cycle)

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

▪ Philippine Interpretation International Financial Reporting Interpretations Committee (IFRIC) 22, Foreign Currency Transactions and Advance Consideration

Future Changes in Accounting Policies The following are the new standards, amendments, interpretation and improvements to PFRSs that were issued but are not yet effective as at December 31, 2018. Unless otherwise indicated, the Country Club does not expect the future adoption of the said new standards, amendments, interpretation and improvements to have a significant impact on the financial statements. The Country Club intends to adopt the applicable standards, amendments, interpretation and improvements when these become effective.

Effective beginning on or after January 1, 2019

▪ Amendments to PFRS 9, Prepayment Features with Negative Compensation

Under PFRS 9, a debt instrument can be measured at amortized cost or at FVOCI, provided that the contractual cash flows are ‘solely payments of principal and interest on the principal amount outstanding’ (the SPPI criterion) and the instrument is held within the appropriate business model

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for that classification. The amendments to PFRS 9 clarify that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract. The amendments should be applied retrospectively and are effective from January 1, 2019, with earlier application permitted.

The amendments are not applicable since the Country Club does not have debt instruments with negative compensation prepayment features.

▪ PFRS 16, Leases

PFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under PAS 17, Leases. The standard includes two recognition exemptions for lessees – leases of ‘low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under PFRS 16 is substantially unchanged from today’s accounting under PAS 17. Lessors will continue to classify all leases using the same classification principle as in PAS 17 and distinguish between two types of leases: operating and finance leases.

PFRS 16 also requires lessees and lessors to make more extensive disclosures than under PAS 17.

Early application is permitted, but not before an entity applies PFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.

The Country Club is currently assessing the impact of adopting PFRS 16.

▪ Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement

The amendments to PAS 19 address the accounting when a plan amendment, curtailment or settlement occurs during a reporting period. The amendments specify that when a plan amendment, curtailment or settlement occurs during the annual reporting period, an entity is required to determine the:

• Current service cost for the remainder of the period after the plan amendment, curtailment or settlement, using the actuarial assumptions used to remeasure the net defined benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after that event; and

• Net interest for the remainder of the period after the plan amendment, curtailment or settlement using: the net defined benefit liability (asset) reflecting the benefits offered

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under the plan and the plan assets after that event; and the discount rate used to remeasure that net defined benefit liability (asset).

The amendments also clarify that an entity first determines any past service cost, or a gain or loss on settlement, without considering the effect of the asset ceiling. This amount is recognized in profit or loss. An entity then determines the effect of the asset ceiling after the plan amendment, curtailment or settlement. Any change in that effect, excluding amounts included in the net interest, is recognized in other comprehensive income.

The amendments apply to plan amendments, curtailments, or settlements occurring on or after the beginning of the first annual reporting period that begins on or after January 1, 2019, with early application permitted.

The Country Club is currently assessing the impact of adopting the amendments to PAS 19.

▪ Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures

The amendments clarify that an entity applies PFRS 9 to long-term interests in an associate or joint venture to which the equity method is not applied but that, in substance, form part of the net investment in the associate or joint venture (long-term interests). This clarification is relevant because it implies that the ECL model in PFRS 9 applies to such long-term interests.

The amendments also clarified that, in applying PFRS 9, an entity does not take account of any losses of the associate or joint venture, or any impairment losses on the net investment, recognized as adjustments to the net investment in the associate or joint venture that arise from applying PAS 28, Investments in Associates and Joint Ventures.

The amendments should be applied retrospectively and are effective from January 1, 2019, with early application permitted.

These amendments are not applicable since the Country Club does not have any investments in associates and joint ventures.

▪ Philippine Interpretation IFRIC 23, Uncertainty over Income Tax Treatments

The interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of PAS 12, Income Taxes, and does not apply to taxes or levies outside the scope of PAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.

The interpretation specifically addresses the following:

• Whether an entity considers uncertain tax treatments separately • The assumptions an entity makes about the examination of tax treatments by taxation authorities • How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates • How an entity considers changes in facts and circumstances

An entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed.

The Country Club is currently assessing the impact of adopting this interpretation.

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Annual Improvements to PFRSs (2015 - 2017 cycle) The Annual Improvements to PFRSs (2015 - 2017 cycle) are effective for annual periods beginning on or after January 1, 2019.

▪ Amendments to PFRS 3, Business Combinations, and PFRS 11, Joint Arrangements, Previously Held Interest in a Joint Operation

The amendments clarify that, when an entity obtains control of a business that is a joint operation, it applies the requirements for a business combination achieved in stages, including remeasuring previously held interests in the assets and liabilities of the joint operation at fair value. In doing so, the acquirer remeasures its entire previously held interest in the joint operation.

A party that participates in, but does not have joint control of, a joint operation might obtain joint control of the joint operation in which the activity of the joint operation constitutes a business as defined in PFRS 3. The amendments clarify that the previously held interests in that joint operation are not remeasured.

An entity applies those amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2019 and to transactions in which it obtains joint control on or after the beginning of the first annual reporting period beginning on or after January 1, 2019, with early application permitted.

The standard is not applicable since the Country Club does not enter into business combination transactions.

▪ Amendments to PAS 12, Income Tax Consequences of Payments on Financial Instruments Classified as Equity

The amendments clarify that the income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity recognizes the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events.

An entity applies those amendments for annual reporting periods beginning on or after January 1, 2019, with early application is permitted.

The amendments are not applicable since the Country Club does not declare dividends to its members.

▪ Amendments to PAS 23, Borrowing Costs, Borrowing Costs Eligible for Capitalization

The amendments clarify that an entity treats as part of general borrowings any borrowing originally made to develop a qualifying asset when substantially all of the activities necessary to prepare that asset for its intended use or sale are complete.

An entity applies those amendments to borrowing costs incurred on or after the beginning of the annual reporting period in which the entity first applies those amendments. An entity applies those amendments for annual reporting periods beginning on or after January 1, 2019, with early application permitted.

The Country Club is currently assessing the impact of adopting the amendments to PAS 23.

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Effective beginning on or after January 1, 2020

▪ Amendments to PFRS 3, Definition of a Business

The amendments to PFRS 3 clarify the minimum requirements to be a business, remove the assessment of a market participant’s ability to replace missing elements, and narrow the definition of outputs. The amendments also add guidance to assess whether an acquired process is substantive and add illustrative examples. An optional fair value concentration test is introduced which permits a simplified assessment of whether an acquired set of activities and assets is not a business.

An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier application permitted.

The amendments have no impact to the Country Club since the Country Club does enter into business combinations transactions.

▪ Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, Definition of Material

The amendments refine the definition of material in PAS 1 and align the definitions used across PFRSs and other pronouncements. They are intended to improve the understanding of the existing requirements rather than to significantly impact an entity’s materiality judgements. An entity applies those amendments prospectively for annual reporting periods beginning on or after January 1, 2020, with earlier application permitted.

The Country Club is currently assessing the impact of adopting the amendments to PAS 1.

Effective beginning on or after January 1, 2021

▪ PFRS 17, Insurance Contracts

PFRS 17 is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, PFRS 17 will replace PFRS 4, Insurance Contracts. This new standard on insurance contracts applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply.

The overall objective of PFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which are largely based on grandfathering previous local accounting policies, PFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects.

PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, with comparative figures required. Early application is permitted.

The amendments are not applicable to the Country Club since it has no activities that are predominantly connected with insurance or insurance contracts.

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Deferred effectivity

▪ Amendments to PFRS 10, Consolidated Financial Statements and PAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that a full gain or loss is recognized when a transfer to an associate or joint venture involves a business as defined in PFRS 3, Business Combinations. Any gain or loss resulting from the sale or contribution of assets that does not constitute a business, however, is recognized only to the extent of unrelated investors’ interests in the associate or joint venture.

On January 13, 2016, the Financial Reporting Standards Council deferred the original effective date of January 1, 2016 of the said amendments until the International Accounting Standards Board completes its broader review of the research project on equity accounting that may result in the simplification of accounting for such transactions and of other aspects of accounting for associates and joint ventures.

3. Summary of Significant Accounting and Financial Reporting Policies

The significant accounting policies that have been used in the presentation of the financial statements are summarized below. These policies have been consistently applied to all years presented, unless otherwise stated.

Current and Noncurrent Classification The Country Club presents assets and liabilities in the statement of financial position based on current or noncurrent classification.

An asset is current when it is:

• Expected to be realized or intended to be sold or consumed in normal operating cycle; • Held primarily for the purpose of trading; • Expected to be realized within 12 months after the reporting period; or • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

All other assets are classified as noncurrent.

A liability is current when it is:

• Expected to be settled in normal operating cycle; • Held primarily for the purpose of trading; • Expected to be settled within 12 months after the reporting period; or • There is no unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

All other liabilities are classified as noncurrent.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities, respectively.

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Cash and Cash Equivalents Cash includes cash on hand and in banks. Cash in banks earn interest at the prevailing 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 date of acquisition and are subject to an insignificant risk of change in value.

Accounting Policies - Beginning January 1, 2018

Financial Instruments - Initial Recognition, Subsequent Measurement and Derecognition A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial Assets

Initial Recognition and Measurement Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, FVOCI, and FVPL.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Country Club’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Country Club has applied the practical expedient, the Country Club initially measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs. Trade receivables that do not contain a significant financing component or for which the Country Club has applied the practical expedient are measured at the transaction price determined under PFRS 15.

In order for a financial asset to be classified and measured at amortized cost or FVOCI, it needs to give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at instrument level.

The Country Club’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place are recognized on the trade date, i.e., the date that the Country Club commits to purchase or sell the asset.

Subsequent Measurement For purposes of subsequent measurement, financial assets are classified in four categories:

▪ financial assets at amortized cost (debt instruments) ▪ financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments) ▪ financial assets designated at FVOCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) ▪ financial assets at FVPL

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Financial Assets at Amortized Cost (Debt Instruments) The Country Club measures financial assets at amortized cost if both of the following conditions are met:

▪ The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

▪ The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.

The Country Club’s financial assets at amortized cost include cash and cash equivalents (excluding cash on hand), receivables and refundable deposits presented in the statement of financial position as at December 31, 2018.

Financial Assets at FVPL Financial assets at FVPL include financial assets held for trading, financial assets designated upon initial recognition at FVPL and financial assets mandatorily required to be measured at fair value.

Financial assets are classified as held for trading if these are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not SPPI are classified and measured at FVPL, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at FVOCI, debt instruments may be designated at FVPL on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at FVPL are measured at fair value. Changes in fair values are recognized in profit or loss.

As at December 31, 2018, the Country Club does not have financial assets measured at FVPL.

Financial Assets at FVOCI (Debt Instruments) The Country Club measures debt instruments at FVOCI if both of the following conditions are met:

▪ the financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and

▪ the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.

For debt instruments at FVOCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the statement of comprehensive income and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in other comprehensive income. Upon derecognition, the cumulative fair value change recognized in other comprehensive income is recycled to profit or loss.

As at December 31, 2018, the Country Club does not have debt instruments measured at FVOCI.

Financial Assets Designated at FVOCI (Equity Instruments) Upon initial recognition, the Country Club can elect to irrevocable classify its equity investments as equity instruments designated at FVOCI when these meet the definition of equity under PAS 32, Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

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Gains and losses on these financial assets are never recycled to profit or loss. Equity instruments designated at FVOCI are not subject to impairment assessment.

As at December 31, 2018, the Country Club does not have equity instruments designated at FVOCI.

Impairment of Financial Assets The Country Club recognizes an allowance for ECLs for all debt instruments not held at FVPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Country Club expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures with no significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures with significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables, the Country Club applies a simplified approach in calculating ECLs. The Country Club does not track changes in credit risk, instead, recognizes a loss allowance based on lifetime ECLs at each reporting date. The Country Club uses specific identification approach in determining provision for ECL, through determining the Loss Given Default (LGD) (recoverable amount/outstanding balance).

The Country Club considers a financial asset in default generally when contractual payments are past due. However, in certain cases, the Country Club may also consider a financial asset to be in default when internal or external information indicates that the Country Club is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Country Club.

Financial Liabilities

Initial Recognition and Measurement Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Country Club’s financial liabilities include accounts payable and other current liabilities (excluding membership dues collected in advance and statutory payables) and loans payable.

Subsequent Measurement The measurement of financial liabilities depends on their classification, as described below: a. Financial Liabilities at FVPL Financial liabilities at FVPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Country Club that are not designated as hedging instruments in hedge relationships as defined by PFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

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Gains or losses on liabilities held for trading are recognized in the statement of comprehensive income.

Financial liabilities designated upon initial recognition at FVPL are designated at the initial date of recognition, and only if the criteria in PFRS 9 are satisfied. The Country Club has not designated any financial liability as at FVPL as at December 31, 2018. b. Loans and Borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in the statement of comprehensive income.

This category includes the accounts payable and other current liabilities (excluding membership dues collected in advance and statutory payables) and loans payable.

Accounting Policies - Prior to January 1, 2018

Financial Instruments - Initial Recognition and Subsequent Measurement A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Date of Recognition The Country Club recognizes a financial asset or a financial liability in the statement of financial position when it becomes a party to the contractual provisions of the instrument. In the case of regular purchase or sale of financial assets, recognition or derecognition, as applicable, is done using settlement date accounting. Regular way purchases that require delivery or assets within the time frame established by regulation or convention in the market place are recognized on the trade date.

Initial Recognition of Financial Instruments Financial instruments are recognized initially at fair value, which is the fair value of the consideration given (in case of an asset) or received (in case of a liability). The fair value of the consideration given or received is determined by reference to the transaction price or other market prices. The initial measurement of financial instruments, except for financial instruments at FVPL includes transaction cost. If the fair value differs from the transaction price, the Country Club will account for the financial instrument as follows: a) if that fair value is evidenced by a quoted price in an active market for an identical asset or liability or based on a valuation technique that uses only data from observable markets, the Country Club shall recognize the difference between the fair value at initial recognition and the transaction price as a gain or loss. b) in all other cases, adjusted to defer the difference between the fair value at initial recognition and the transaction price. After initial recognition, the Country Club shall recognize that deferred difference as a gain or loss only to the extent that it arises from a change in a factor (including time) that market participants would take into account when pricing the asset or liability.

The Country Club has no financial assets and liabilities carried at FVPL, held-to-maturity (HTM) investments and available-for-sale (AFS) investments as at December 31, 2017.

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The classification depends on the purpose for which the instruments were acquired or liabilities were incurred and whether they are quoted in an active market. Management determines the classification of its instruments at initial recognition and, where allowed and appropriate, reevaluates such classification at each financial reporting date.

The Country Club’s financial instruments pertain only to loans and receivables and other financial liabilities as at December 31, 2017.

Subsequent Measurement Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are subsequently carried at amortized cost using the EIR method, less any allowance for impairment, if any. Gains and losses are recognized in the statement of comprehensive income when the loans and receivables are derecognized or impaired, as well as through the amortization process. Loans and receivables are included in current assets if maturity is within 12 months from the reporting date. Otherwise, these are classified as noncurrent assets.

As at December 31, 2017, the Country Club’s loans and receivables include cash and cash equivalents (excluding cash on hand), receivables and refundable deposits.

Impairment of Financial Assets The Country Club assesses at the end of each reporting period whether a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired, if and only if, there is objective evidence of impairment as a result of one or more events that 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 a group of financial assets that can be reliably estimated. Objective evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For financial assets carried at amortized cost, the Country Club first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Country Club determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognized in the statement of comprehensive income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Country Club. If, in a subsequent year, the amount of the estimated

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impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in the statement of comprehensive income.

Accounting Policies Applicable to Both Periods Presented

Other Financial Liabilities This category pertains to financial liabilities that are neither held for trading nor designated as at FVPL upon the inception of the liability. These include liabilities of the Country Club arising from its operations.

Other financial liabilities are initially recorded at fair value, less directly attributable transaction costs. Other financial liabilities are included in current liabilities if maturity is within 12 months from the reporting date. Otherwise, these are classified as noncurrent liabilities.

As at December 31, 2017, the Country Club’s other financial liabilities include accounts payable and other current liabilities (excluding statutory payables and membership dues collected in advance) and loans payable.

Derecognition of Financial Assets and Financial Liabilities A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Country Club’s statement of financial position) when:

▪ the right to receive cash flows from the asset has expired; or ▪ the Country Club 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 Country Club has transferred substantially all the risks and rewards of the asset, or, (b) the Country Club has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.

When the Country Club has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Country Club continues to recognize the transferred asset to the extent of its continuing involvement. In that case, the Country Club also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Country Club has retained.

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 Country Club could be required to repay.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of comprehensive income.

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Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position 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 asset and settle the liability simultaneously. The Country Club assesses that it has a currently enforceable right to offset if the right is not contingent on a future event, and is legally enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the Country Club and all of the counterparties.

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 of liability.

The principal or the most advantageous market must be accessible to the Country Club. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Country Club 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.

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 Country Club determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Country Club determines the policies and procedures for both recurring and non-recurring fair value measurements. For the purpose of fair value disclosures, the Country Club 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.

“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 Country Club recognizes the difference between the

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transaction price and fair value (a “Day 1” difference) in the statement of comprehensive income unless it qualifies for recognition as some other type of asset. In cases where unobservable data is used, the difference between the transaction price and model value is only recognized in the statement of comprehensive income when the inputs become observable or when the instrument is derecognized. For each transaction, the Country Club determines the appropriate method of recognizing the “Day 1” difference amount.

Inventories Inventories include food, beverage and supplies. Inventories are carried at lower of cost or net realizable value (NRV). The Country Club’s current practice of reporting its ending inventory is based on the moving average method for storeroom items, while weighted average method for direct issuance to outlets. NRV for food and beverage is the estimated selling price in the ordinary course of business, less estimated costs of marketing and distribution. NRV for supplies is the current replacement cost. In determining the NRV, the Country Club considers any adjustments necessary for obsolescence.

Prepaid Expenses Prepaid expenses, which are included under “Other current assets”, are carried at cost, less amortized portion. These include prepayments for insurance and other expenses.

Advances to Contractors Advances to contractors represents advance payment for construction of an item of property and equipment which will be recouped upon every progress billing payments depending on the percentage of accomplishment.

The Country Club classified the advances as current if it will be applied as payment for assets to be classified as current and as noncurrent if it will be applied as payment for assets to be classified as property and equipment or investments properties.

Property and Equipment Property and equipment, except for land, are measured at cost, including transaction costs, less accumulated depreciation and any accumulated impairment in value. Such cost includes the cost of replacing part of the property and equipment when that cost is incurred, if the recognition criteria are met. Land is measured at cost, including transaction costs less any accumulated impairment in value.

The initial cost of property and equipment consists of its purchase price, including import duties, taxes and any directly attributable costs in bringing the asset to its working condition and location for its intended use. Expenditures incurred after the item has been put into operations, such as repairs, maintenance and overhaul costs, are normally recognized as expense in the period such costs are incurred. In situations where it can be clearly demonstrated that the expenditures have improved the condition of the asset beyond the originally assessed standard of performance, the expenditures are capitalized as additional cost of property and equipment.

Depreciation of property and equipment commences once the property and equipment are available for use and is computed using the straight-line method over the following estimated useful lives of the assets:

Number of years Buildings and improvements 20 Facilities and equipment 2 to 10 Office furniture, fixtures and equipment 5 Transportation equipment 5

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The residual values, useful lives and method of depreciation of the assets are reviewed and adjusted, if appropriate, at each financial year-end.

Fully depreciated assets are retained in the accounts until they are no longer in use and no further depreciation is credited or charged to current operation.

When each major inspection is performed, the cost is recognized in the carrying amount of property and equipment as a replacement, if the recognition criteria are met.

Construction in progress represents structures under construction and is stated at cost less any impairment in value. This includes the cost of construction and other direct costs. Cost also includes interest on borrowed funds incurred during the construction period. Construction in progress is not depreciated until such time that the relevant assets are completed and are ready for use.

Property and equipment is derecognized when either it has been disposed of or when it is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of property and equipment are recognized in the statement of comprehensive income in the year of retirement or disposal.

Investment Property Investment property, which consists of land held for capital appreciation, is measured initially at cost, including transaction costs. After initial recognition, the Country Club recognizes investment property at its cost less any accumulated impairment losses.

Investment properties are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the statement of comprehensive income in the period of derecognition.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Country Club accounts for such property in accordance with the policy stated under property and equipment up to the date of change in use.

Computer Software Computer software is capitalized on the basis of the cost incurred to acquire and install the specific software. Computer software is included in the “Other noncurrent assets” in the statement of financial position. Costs associated with maintaining computer software are expensed as incurred. Capitalized costs are amortized on a straight-line basis over its estimated useful life.

The estimated useful life of software are reviewed, and adjusted if appropriate, at each financial reporting date to ensure that these are consistent with the expected pattern of economic benefits from items of software.

Impairment of Nonfinancial Assets The carrying values of property and equipment, investment property and computer software are reviewed for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. If any such indication exists, and if the carrying value exceeds the estimated recoverable amount, the assets or CGUs are written down to their recoverable amounts. The recoverable amount is the greater of fair value less costs to sell or value in use. The fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s-length transaction less costs to sell.

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In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the CGUS to which the asset belongs. Impairment losses are recognized in the statement of comprehensive income in those expense categories consistent with the function of the impaired asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of comprehensive income. After such a reversal, the depreciation charges are adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

Members’ Equity Proprietary certificates are measured at par value for all shares issued. Incremental costs directly attributable to the issuance of new shares are recognized as a deduction from proceeds, net of any tax effects. Proceeds and/or fair value of consideration received in excess of par value are recognized as additional paid-in capital (APIC).

Deficit represents cumulative excess of expenses over revenues.

Accounting Policies Starting January 1, 2018

Revenue Recognition Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Country Club expects to be entitled in exchange for those goods and services. The Country Club has generally concluded that it is the principal in all of its revenue arrangements.

Sale of Food, Beverage and Sundries Revenue from sale of food, beverage and sundries is recognized when the transfer of control has been passed to the buyer at the time when the performance obligation has been satisfied. The performance obligation is generally satisfied when the customer purchases the goods. Payment of the transaction price is due immediately at the point when the customer purchases the goods. Sales returns and discounts are deducted from gross sales to arrive at net sales as presented under “Food, beverage and sundries” in the statement of comprehensive income.

Room Sales and Income from Recreational Activities Revenue from room sales and income from recreational activities are recognized upon satisfaction of performance obligation transferring of the promised services to the customers.

Accounting Policies Prior to January 1, 2018

Revenue and income are recognized to the extent that it is probable that the economic benefits associated with the transaction will flow to the Country Club and the amount of the revenue can be reliably measured. Revenue and income are measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding value-added tax (VAT).

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The Country Club assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. It is acting as a principal when it has the primary responsibility for providing the goods or services. The Country Club also acts as a principal when it has the discretion in establishing the prices and bears inventory and credit risk. The Country Club has concluded that it is acting as a principal in all of its revenue arrangements.

Food, Beverage and Sundries Revenue is recognized upon delivery and billing to customers.

Room Sales and Income from Recreational Activities Revenue is recognized when services are rendered.

Accounting Policies Applicable to Both Periods Presented

Membership Dues Membership dues are recognized in the applicable membership period. Advance collection of membership dues are recognized in the “Membership dues collected in advance” presented under “Accounts payable and other current liabilities” account in the statement of financial position. Membership Transfer and Assignment Fees Revenue is recognized upon transfer and assignment of member shares.

Commission Income Revenue is recognized when the related services are rendered. Commission is computed as a certain percentage of the rental income of units owned by related party.

Interest Income Interest income from bank deposits is recognized as interest accrues (using the effective interest method that is 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).

Other Income Revenue is recognized when there is an incremental economic benefit, other than the usual business operations, that will flow to the Country Club and the amount of the revenue can be measured reliably.

Costs and Expenses Costs and expenses are decreases in economic benefits during the accounting period in the form of outflows or decrease of assets or incurrence of liabilities that result in decrease in equity, other than those relating to distributions to equity participants. Costs and expenses are recognized in the statement of comprehensive income on the basis of systematic and rational allocation procedures when economic benefits are expected to arise over several accounting periods and the association with income can only be broadly or indirectly determined; or immediately when expenditure produces no future economic benefits or when, and to the extent that, future economic benefits do not qualify, cease to qualify, for recognition in the statement of financial position as an asset.

Other Comprehensive Income (OCI) OCI comprises items of income and expenses that are not recognized on profit or loss as required or permitted by other PFRS. The Country Clubs’ OCI actuarial gains or losses from pension benefits are recognized in full in the period in which they occur.

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Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A reassessment is made after inception of the lease if one of the following applies: a. There is a change in contractual terms, other than a renewal or extension of the agreement; b. A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term; c. There is a change in the determination of whether the fulfillment is dependent on a specified asset; or d. There is substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) and the date of renewal or extension period for scenario (b).

Country Club as Lessee Leases where the lessor retains substantially all the risks and benefits of ownership of the assets are classified as operating leases. Operating lease payments are recognized as expense in the statement of comprehensive income on a straight-line basis over the lease term.

Pension Benefits The Country Club has a noncontributory defined benefit pension plan administered by a trustee, covering its regular and permanent employees. The cost of providing benefits under the defined benefit plan is actuarially determined using the projected unit credit method. This method reflects service rendered by employees to the date of valuation and incorporates assumptions concerning employees’ projected salaries.

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.

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. These amounts are calculated periodically by independent qualified actuaries.

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 government 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 profit or loss.

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Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately in OCI in the period in which they arise. Remeasurements are not reclassified to profit or loss in subsequent periods.

Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Plan assets are not available to the creditors of the Country Club, nor can they be paid directly to the Country Club. Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date of those assets (or, if they have no maturity, the expected period until the settlement of the related obligations). If the fair value of the plan assets is higher than the present value of the defined benefit obligation, the measurement of the resulting defined benefit asset is limited to the present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

The Country Club’s right to be reimbursed of some or all of the expenditure required to settle a defined benefit obligation is recognized as a separate asset at fair value when and only when reimbursement is virtually certain.

Taxes

Current Income Tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Deferred Tax Deferred tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, including asset revaluations. Deferred tax assets are recognized for all deductible temporary differences, carryforward benefits of unused tax credits from the excess of minimum corporate income tax (MCIT) over the regular corporate income tax, and unused net operating loss carryover (NOLCO), to the extent that it is probable that sufficient future taxable income will be available against which the deductible temporary differences and carryforward benefits of unused tax credits from excess MCIT and unused NOLCO can be utilized.

Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that sufficient future taxable profits will be available against which the deductible temporary difference can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

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Income tax relating to items recognized directly in equity is recognized in the statement of changes in members’ equity and not in the statement of comprehensive income. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to offset current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

VAT Revenues, expenses and assets are recognized net of the amount of VAT, if applicable.

When VAT from sales of goods and/or services (output VAT) exceeds VAT passed on from purchases of goods or services (input VAT), the excess is recognized as payable in the statement of financial position. When VAT passed on from purchases of goods or services (input VAT) exceeds VAT from sales of goods and/or services (output VAT), the excess is recognized as an asset in the statement of financial position to the extent of the recoverable amount.

Net Income (Loss) Per Share Net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares issued and outstanding during the year.

Provisions Provisions are recognized when the Country Club has a present obligation (legal or constructive) as a result of a past event, if it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a 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 interest expense. Where the Country Club expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the receipt of the reimbursement is virtually certain.

Contingencies Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed when an inflow of economic benefits is probable.

Events After the End of the Reporting Period Post year-end events that provide additional information on the Country Club’s financial position at the reporting period (adjusting events), if any, are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes to financial statements when material.

4. Significant Accounting Judgments and Estimates

The preparation of the Country Club’s financial statements requires management to make judgments and estimates that affect certain reported amounts and disclosures. However, uncertainty about these judgments and estimates could result in outcomes that could require a material adjustment to the carrying value of the asset or liability affected in the future.

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Estimates and Assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the financial reporting date, that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities within the next financial period are as follows:

Provision for ECLs (PFRS 9) For receivable from members, the Country Club uses specific identification approach in determining the balance of receivables from each members to be potentially uncollectible, when it meets the following criteria: (a) the member is more than 120 days past due on its contractual payments, i.e, principal and interest including penalties; and (b) the current market value of the shares of each member is below its outstanding receivables. The current market value of the shares act as collateral in case of non-payment of members, as the Country Club has the current rights to rescind the shares and put it in an auction. The Country Club determine the loss given default (recoverable amount/outstanding receivables) in computing the provision for ECL.

For receivable from related parties, the Country Club uses judgment, based on the best available facts and circumstances, including but not limited to, assessment of the related parties’ operating activities (active or dormant), business viability and overall capacity to pay, in providing provision for ECL. The provision for ECL are re-evaluated and adjusted as additional information is received.

For cash and cash equivalents, the Country Club applies the low credit risk simplification. The probability of default and loss given defaults are publicly available and are considered to be low credit risk investments. It is the Country Club’s policy to measure ECLs on such instruments on a 12-month basis.

Following the adoption of PFRS 9, the Country Club recognized additional allowance for ECL amounting to P=386,692 in 2018. As at December 31, 2018 the total allowance for ECL amounted to P=781,880. The carrying value of receivables amounted to P=49,265,114 as at December 31, 2018 (see Notes 6, 18 and 21).

Determination of Impairment of Receivables (PAS 39) The Country Club reviews its receivables at each financial reporting date to assess whether a provision for impairment should be recorded in the statement of comprehensive income. Allowance for impairment of receivables is maintained at a level considered adequate to provide for potentially uncollectible receivables. The level of this allowance is evaluated by the management on the basis of factors that affect that collectability of the accounts. These factors include, but not limited to, the age and status of receivable, the length of relationship with the members and related parties, the member’s payment behavior and other known market factors. The Country Club reviews the allowance on a continuous basis. Accounts that are specifically identified to be potentially uncollectible are provided with adequate allowance through charges to income in the form of provision for impairment of receivables. Accounts are written off when management believes that the receivables cannot be collected or realized after exhausting all efforts and courses of action. The amount and timing of recorded provision for impairment of receivables for any period would differ if the Country Club made different judgments or utilized different estimates. An increase in the Country Club’s allowance for impairment of receivables would increase the recorded operating expenses and decrease its current assets.

Provision for impairment of receivables amounted to P=54,004 in 2017. The carrying amounts of receivables, net of allowance for impairment, amounted to P=57,455,948 as at December 31, 2017 (see Notes 6, 18 and 21).

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Evaluation of Operating Lease - Country Club as Lessee The Country Club has entered into various lease contracts covering the land, buildings and equipment for its facilities and employee’s housing. The Country Club has determined that it has not acquired the significant risks and rewards of ownership of the leased properties because of the following factors: (a) the Country Club will not acquire ownership of the leased properties upon termination of the leases; and b) the Country Club was not given an option to purchase the leased properties at a price that is sufficiently lower than the fair value at the date of the option. Thus, the leases are accounted as operating leases.

The lease contracts entered by the Country Club has an average lease period of one to three years. The terms of the lease require the Country Club to pay rental deposits to be refunded at the end of the lease term. Rent expense amounted to P=4,038,175, P=4,846,873, and P=4,641,943 in 2018, 2017 and 2016, respectively (see Notes 14, 15 and 25).

Determination of NRV of Inventories The Country Club writes down the carrying value of inventories whenever NRV of inventories becomes lower than cost due to damage, physical deterioration, obsolescence, changes in prices level or other causes. The carrying value of inventories is reviewed at each reporting date. Inventory items identified to be obsolete and unusable are also written off and charged as expense in the statement of comprehensive income.

There was no allowance for inventory write-down in 2018, 2017 and 2016. The carrying values of inventories amounted to P=16,262,654 and P=14,200,473 as at December 31, 2018 and 2017, respectively (see Note 7).

Estimation of Useful Lives of Property and Equipment The useful life of each Country Club’s property and equipment is estimated based on the period over which the property and equipment are expected to be available for use. Such estimations are based on the collective assessment of industry practice, internal technical evaluation and experience with similar assets. The estimated useful lives of property and equipment are reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the property and equipment. It is possible; however, that future financial performance could be materially affected by changes and timing of recorded expenses brought about by changes in the factors mentioned above. A reduction in the estimated useful life of any property and equipment would increase the recorded depreciation expense and decrease the carrying value of property and equipment.

There were no changes in the estimated useful lives of property and equipment in 2018, 2017 and 2016.

Determination of Impairment of Nonfinancial Assets The Country Club assesses whether there are any indicators of impairment for all nonfinancial assets at each financial reporting date. Property and equipment, investment property and computer software are reviewed for impairment when there are indicators that the carrying value may not be recoverable. Determining the VIU of these nonfinancial assets, which requires the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such assets, requires the Country Club to make estimates and assumptions that can materially affect the financial statements. Future events could cause the Country Club to conclude that such nonfinancial assets are impaired.

While it is believed that the assumptions used in the estimation of fair values reflected in the financial statements are appropriate and reasonable, significant changes in these assumptions may materially affect the assessment of recoverable values and any resulting impairment loss could have a material adverse impact on the financial performance.

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There were no impairment losses recognized in 2018, 2017 and 2016. The carrying values of nonfinancial assets subjected to impairment review as at December 31 are as follows:

2018 2017 Property and equipment (Note 9) P=477,774,255 P=483,080,164 Investment property (Note 9) 34,581,711 34,581,711 Computer software (Note 10) 1,711,386 1,141,282

Determination and Computation of Pension Costs The present value of the pension liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost for pensions include the discount rates and rate of future salary increases. In accordance with PFRS, actual results that differ from the Country Club’s assumptions are accumulated and amortized over future periods and therefore, generally affect the recognized expense and recorded liability in such future periods.

The Country Club determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension liability. In determining the appropriate discount rate, the Country Club considers the interest rates on government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Other key assumptions for pension liability are based in part on current market conditions.

While it is believed that the Country Club’s assumptions are reasonable and appropriate, significant differences in actual experience or significant changes in assumptions may materially affect the Country Club’s pension liability.

Pension cost recognized in profit or loss amounted to P=4,278,023, P=3,944,736, and P=6,213,164, in 2018, 2017 and 2016, respectively (see Notes 16 and 19). Remeasurement gain recognized in OCI amounted to P=4,839,623, P=240,976 and P= 1,770,667 in 2018, 2017 and 2016 (see Note 19). Pension liability amounted to P=16,199,834 and P=24,853,497 as at December 31, 2018 and 2017, respectively (see Note 19).

Recognition of Deferred Income Tax Assets The carrying amount of deferred tax assets is reviewed at each reporting period. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. The forecasted availability of taxable profit is based on past and future expectations on revenue and expenses. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

The Country Club recognized deferred tax assets to the extent of deferred tax liabilities amounting to P=4,438,356 and P=2,978,921 as at December 31, 2018 and 2017, respectively (see Note 20).

The Country Club did not recognize deferred income tax assets on certain temporary differences in 2018 and 2017 to the extent that sufficient future taxable income in the near future will not be generated (see Note 20). The Country Club did not recognize deferred income tax assets amounting to P=18,823,066 and P=17,590,930 as at December 31, 2018 and 2017, respectively (see Note 20).

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5. Cash and Cash Equivalents

2018 2017 Cash on hand and in banks P=53,668,452 P=46,353,034 Short-term deposits 229,749 4,320,856 P=53,898,201 P=50,673,890

Interest income on cash in banks and short-term deposits amounted to P=226,165, P=163,685, and P=139,104 in 2018, 2017 and 2016, respectively.

6. Receivables

2018 2017 Trade: Members P=33,836,894 P=31,437,544 Related parties (Note 18) 4,131,540 14,917,363 Receivables from functions 9,591,208 8,779,273 Receivables from credit card 1,901,272 2,053,474 Others 586,080 663,482 50,046,994 57,851,136 Less allowance for impairment of receivables 781,880 395,188 P=49,265,114 P=57,455,948

Members’ account pertains to uncollected charges for membership dues, guest fees, sale of food and beverage and services rendered and is normally on a 30 to 60 days’ term. Unsettled members’ account for 60 days are considered past due. The Country Club has the option to put members’ proprietary shares into auction in case of nonpayment of members’ accounts.

Receivables from related parties consist of charges for the affiliates’ use of the Country Club’s facilities. These receivables are noninterest-bearing and are due and demandable.

Receivable from functions consists of receivables from individual and corporate customers for the use of the Executive Conference Center (ECC) and is normally collected within one year.

Receivable from credit card companies are nontrade receivables. These are noninterest-bearing and are normally collected within 30 days.

Movements in the allowance for impairment of receivables are as follows:

2018 Members Others Total Balance at January 1, 2018 P=395,188 P=– P=395,188 Provision for impairment (Notes 14 and 15) 386,692 – 386,692 Balance at December 31, 2018 P=781,880 P=– P=781,880 2017 Members Others Total Balance at January 1, 2017 P=341,184 P=– P=341,184 Provision for impairment (Notes 14 and 15) 54,004 – 54,004 Balance at December 31, 2017 P=395,188 P=– P=395,188

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2016 Members Others Total Balance at January 1, 2016 P=1,069,581 P=89,325 P=1,158,906 Write-off of allowance for impairment (728,397) (89,325) (817,722) Balance at December 31, 2016 P=341,184 P=– P=341,184

7. Inventories

2018 2017 At cost: Food and beverage P=10,247,394 P=9,294,867 Supplies 6,015,260 4,905,606 P=16,262,654 P=14,200,473

Supplies pertain to fuel, oil and lubricants, and other various supplies which are expected to be utilized within a year.

The cost of inventories charged to “Cost of sales and services” account in the statements of comprehensive income amounted to P=60,026,945, P=52,513,939 and P=54,956,388 in 2018, 2017 and 2016, respectively (see Note 14).

The cost of inventories charged to “Supplies” and “Fuel and oil” under “General and administrative expenses” account in the statements of comprehensive income amounted to P=1,656,353, P=4,253,520 and P=2,412,708 in 2018, 2017 and 2016, respectively (see Note 15).

8. Other Current Assets

2018 2017 Creditable withholding tax P=18,491,968 P=17,702,839 Current portion of deferred input VAT 2,833,778 3,014,682 Prepaid expenses 2,544,102 856,505 P=23,869,848 P=21,574,026

Creditable withholding tax withheld from income payments made to the Country Club is deductible against the income tax due of the Country Club for the future taxable quarters.

Prepaid expenses mainly pertain to the unexpired portion of insurance and real property taxes. These are expected to be utilized and consumed within one year.

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9. Property and Equipment and Investment Property

Property and Equipment

2018 Office Furniture Buildings and Facilities and Fixtures and TransportationConstruction in Land Improvements Equipment Equipment Equipment Progress Total Cost: Beginning balance P=328,019,641 P=970,790,678 P=497,606,019 P=82,782,469 P=21,925,855 P=3,790,486 P=1,904,915,148 Additions – 9,292,295 15,799,096 3,409,337 92,304 12,351,048 40,944,080 Disposals – – (22,667) – – – (22,667) Ending balances 328,019,641 980,082,973 513,382,448 86,191,806 22,018,159 16,141,534 1,945,836,561 Accumulated depreciation: Beginning balance – 884,968,654 447,292,132 74,018,093 15,556,105 – 1,421,834,984 Depreciation (Notes 14 and 15) – 22,548,084 16,962,049 3,991,389 2,748,467 – 46,249,989 Disposals – – (22,667) – – – (22,667) Ending balances – 907,516,738 464,231,514 78,009,482 18,304,572 – 1,468,062,306 Net book value P=328,019,641 P=72,566,235 P=49,150,934 P=8,182,324 P=3,713,587 P=16,141,534 P=477,774,255

2017 Office Furniture Buildings and Facilities and Fixtures and Transportation Construction in Land Improvements Equipment Equipment Equipment Progress Total Cost: Beginning balance P=328,019,641 P=964,749,709 P=481,971,756 P=76,180,413 P=18,496,917 P=311,116 P=1,869,729,552 Additions – 6,040,969 16,013,154 6,808,157 3,428,938 3,479,370 35,770,588 Disposals – – (378,891) (206,101) – – (584,992) Ending balances 328,019,641 970,790,678 497,606,019 82,782,469 21,925,855 3,790,486 1,904,915,148 Accumulated Depreciation: Beginning balance – 861,396,314 434,588,358 67,152,582 12,559,302 – 1,375,696,556 Depreciation (Notes 14 and 15) – 23,572,340 13,082,665 7,067,331 2,996,803 – 46,719,139 Disposals – – (378,891) (201,820) – – (580,711) Ending balances – 884,968,654 447,292,132 74,018,093 15,556,105 – 1,421,834,984 Net book value P=328,019,641 P=85,822,024 P=50,313,887 P=8,764,376 P=6,369,750 P=3,790,486 P=483,080,164

In 2018 and 2017, the Country Club disposed certain items of property and equipment with book values of nil and P=4,281, respectively. Gain on sale of property, plant and equipment amounted to nil, P=39,864 and nil in 2018, 2017 and 2016, respectively (see Note 17).

Certain transportation equipment were acquired and held as chattel mortgage on loans payable amounting to P=1,597,758 and P=3,016,311 as at December 31, 2018 and 2017, respectively (see Note 12).

The cost of fully depreciated property and equipment which are still being used amounted to P=1,270,850,981 and P=1,197,231,032 as at December 31, 2018 and 2017, respectively.

Investment Property As at December 31, 2018 and 2017, the carrying value of the investment property amounted to P=34,581,711. The fair value amounted to P=34,590,000 as determined by an independent firm of appraiser who holds a recognized and relevant professional qualification on March 31, 2014. The valuation of investment property was based on market values using sales comparison approach. This approach considers the sale of similar or substitute properties and related market data and establishes a value estimate by process involving comparison. The fair value represents the amount at which the assets can be exchanged between a knowledgeable, willing seller and a knowledgeable, willing buyer in an arm’s length transaction at the date of valuation, in accordance with International Valuation Standards.

The significant input to valuation includes market value per share amounting to P=5,000 per square meter.

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The fair value measurement for investment property is categorized under Level 3 fair value measurement.

While fair value of the investment property was not determined as at December 31, 2018 and 2017, the Country Club’s management believes that there were no conditions present in 2018 and 2017 that would significantly reduce the fair value of investment property from that determined on March 31, 2014.

The Country Club has no restrictions on the realizability of its investment property and no obligation to either purchase, construct or develop or for repairs, maintenance and enhancements.

10. Other Noncurrent Assets

2018 2017 Advances to contractors P=13,606,757 P=4,378,290 Deferred input VAT - net of current portion 3,224,500 4,805,252 Computer software 1,711,386 1,141,282 Others 320,333 309,395 P=18,862,976 P=10,634,219

Advances to contractors pertain to advance payments made to contractors and suppliers for various projects and services, which are noninterest-bearing and are expected to be applied against future billings.

In 2018, the Country Club reclassified to noncurrent assets the advances to contractors previously classified as “Other current assets” in 2017 statement of financial position. The Country Club assessed that the advances to contractors are determined to be noncurrent since it will be applied as payment for assets to be classified as property and equipment. The change in the presentation does not have an impact in the Country Club’s statements of comprehensive income, cash flows and equity.

Computer software pertains to the cost of the Country Club’s accounting and information system. No amortization was recognized in 2018 and 2017 since the software is still under the testing phase.

Deferred input VAT pertains to the input VAT relating to capital expenditures which are amortized over 60 months or the life of the asset, whichever is shorter.

Others pertains to refundable deposits on containers for beverages and utilities.

11. Accounts Payable and Other Current Liabilities

2018 2017 Trade: Related parties (Note 18) P=6,408,916 P=6,745,443 Nonrelated parties 34,980,000 28,040,723 Refundable deposits 33,591,619 29,083,778 Membership dues collected in advance 20,672,574 16,932,698 Statutory payables 5,280,562 13,127,709

(Forward)

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2018 2017 Accrued expenses: Contracted services P=5,897,544 P=3,772,966 Laundry 857,030 1,088,285 Utilities 828,144 2,510,181 Personnel 546,336 583,734 Rent 3,153 272,752 Others 779,976 2,099,101 Unclaimed gift certificate 6,543,984 3,552,922 Retention payable 1,211,448 1,496,033 Auctioned membership liability 7,206 88,946 Others 7,350,340 9,798,519 P=124,958,832 P=119,193,790

Trade payables to related parties arise from the use by the Country Club’s members of the facilities of the related parties and reimbursement of operating expenses. These payables are due and demandable.

Trade payables to nonrelated parties, including suppliers and concessionaires, are noninterest-bearing and are normally on a 15 to 30 days term.

Statutory payables mostly pertain to deferred output VAT, net output VAT, withholding taxes and other government taxes. These are normally settled within 30 days.

Refundable deposits pertain to cash receipts from members upon assignment of shares. The amount paid is refundable upon completion of terms and conditions.

Membership dues collected in advance pertain to membership dues that are already collected but are not yet earned as at the end of the year. The Country Club uses this account to monitor such liability.

Accrued expenses are noninterest-bearing with term of 30 to 180 days.

Retention payable pertains to amount withheld to contractors of the Country Club until the completion of specified conditions based on the agreement.

Auctioned membership liability refers to the unclaimed net proceeds or the excess of the bid price over the amount of receivables from delinquent members sold at auction. These are normally claimed within 30 to 180 days.

Others include payables to nontrade suppliers which are noninterest-bearing and are normally settled within a year.

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12. Loans Payables

2018 2017 Peso currency-denominated loan payable in 36 monthly installments or until July 10, 2019 starting August 10, 2016 at 0.70% interest, collateralized by a chattel mortgage on certain transportation equipment P=180,285 P=469,655 Peso currency-denominated loan payable in 36 monthly installments or until July 10, 2019 starting August 10, 2016 at 0.70% interest, collateralized by a chattel mortgage on certain transportation equipment 180,285 469,655 Peso currency-denominated loan payable in 36 monthly installments or until March 5, 2020 starting April 5, 2017 at 0.70% interest, collateralized by a chattel mortgage on certain transportation equipment 379,304 655,518 Peso currency-denominated loan payable in 36 monthly installments or until March 5, 2020 starting April 5, 2017 at 0.70% interest, collateralized by a chattel mortgage on certain transportation equipment 379,304 655,518 Peso currency-denominated loan payable in 36 monthly installments or until June 30,2020 starting July 30, 2017 at 0.70% interest, collateralized by a chattel mortgage on certain transportation equipment 478,580 765,965 1,597,758 3,016,311 Less current portion 1,273,345 1,418,553 Noncurrent portion P=324,413 P=1,597,758

Certain transportation equipment are held as security for the three-year loans (see Note 9).

Interest expense on loans payable amounted to P=192,790, P=221,069 and P=125,930 in 2018, 2017 and 2016, respectively.

13. Members’ Equity

The following summarizes the information on the Country Club’s registration of securities under the Securities Regulation Code:

Authorized Number of Date of SEC Approval Shares Shares Issued Issue/Offer Price September 29, 1995 5,000 5,000 P=400,000 to P=600,000

The authorized capital stock of the Country Club amounted to P=500,000,000 divided into 5,000 shares with par value of P=100,000 per share. The Country Club is an exclusive club and is organized on a non-profit basis for the sole benefit of its members.

The ownership of all shares of stock of the Country Club is subject to the following restrictive conditions:

a. No issuance or transfer of shares of stock of the Country Club which would reduce the stock ownership of Philippine citizens or nationals to less than the minimum percentage of the outstanding capital stock required by any applicable provisions of the Constitution, law, or regulation to be owned by Philippine citizens or nationals, shall be made or effected by, or shall be recorded in the books of the Country Club.

b. No holder, of any class of shares of the Country Club shall have, as such holder any preemptive right to acquire, purchase, or subscribe for any share of the capital stock of any class of the Country Club which it may issue or sell, whether out of the number of shares authorized by the

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Articles of Incorporation as originally filed, or by any amendment thereof, or out of shares of the capital stock of any class of the Country Club acquired by it after the issue thereof; nor shall any holder of any class of shares of the Country Club have, as such holder, have any preemptive right to acquire, purchase, or subscribe for any obligation which the Country Club may issue or sell that shall be convertible into or exchangeable for any shares of the capital stock of any class of the Country Club or to which shall be attached or appertain any warrant or any instrument that shall confer upon the owner of such obligation, warrant, or instrument the right to subscribe for, or to acquire or purchase from the Country Club, any share of its capital stock of any class. c. No profit shall inure to the exclusive benefit of any of its shareholders, hence, no dividends shall be declared in their favor. Shareholders shall be entitled only to a pro-rata share of the asset of the Country Club at the time of the dissolution or liquidation of the Country Club. d. The members of the Country Club shall be subject to the payment of monthly dues amounting to P=4,200 and other dues and assessments in such amounts and subject to such rules and conditions as may be prescribed in the By-Laws or by the BOD to meet the expenses for the general operations of the Country Club, and the maintenance and improvement of its premises and facilities, in addition to such fees as may be charged for the actual use of the facilities. In the case of a shareholder who is a corporate shareholder, the designated representative shall be initially billed for such dues. In case of nonpayment by the representative, the corporate shareholder shall be ultimately liable for the payment of such dues. Such dues together with all other obligations of the shareholders to the Country Club, shall constitute a first lien on the shares, second only to any lien in favor of the national or local government, and in the event of delinquency such shares may be ordered sold by the BOD in the manner provided in the By-Laws to satisfy said dues or other obligations of the shareholders. e. Any shareholder selling or disposing of his/its share(s) in the Country Club shall pay a transfer fee in such amount as may be determined by the BOD from time to time. Said transfer fee shall be levied and collected at the time of transfer in the Country Club’s Stock and Transfer Book. Any transfer of shares, except transfer by hereditary succession, made in violations of these conditions shall be null and void and shall not be recorded in the books of the Country Club. f. Except in the case of legally married spouses, shares of stock of the Country Club may be registered only in the name of a single person, firm, entity, association or corporation. In the case of legally married spouses, one of the spouses may be entitled to apply for membership in the Country Club. Juridical entities may also designate only one individual playing representative for each share of stock owned by them. g. A holder of a share of stock of the Country Club is not an ipso facto member of the Country Club, and he must file an application for Country Club membership, which shall be subject to the approval of the BOD. If an application for membership of a shareholder is disapproved by the BOD, the shareholder shall dispose of his share within a period of 60 days from notice of such disapproval. In the event of his failure to affect such transfer, his share shall be offered for sale at auction in the manner prescribed in the By-Laws or by the BOD. h. In case any shareholder or member shall violate the provisions of the Articles of Incorporation or the By-Laws or the rules and regulations of the Country Club, or the resolutions duly promulgated by the BOD or the shareholders, or commit any other act or conduct which the BOD may deem injurious to the interest or hostile to the objects of the Country Club, such shareholder or member may be expelled by the BOD in the manner provided in the By-Laws upon proper notice and hearing. A shareholder/member who is so expelled shall then cease to be a shareholder/member and shall have no right with respect to his share except the right to demand payment therefore in

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accordance with these By-Laws. The Country Club shall have a period of 30 days from the expulsion of the shareholder to make payment of his share/s, and upon such payment the shareholder shall forthwith transfer and assign the share/s held by him as directed by the Country Club.

i. All certificates of stock of the Country Club shall contain an appropriate reference to the foregoing limitations and restrictions, and stock may be issued or transferred in the books of the Country Club only in accordance with the terms and provisions of such limitations and restrictions.

14. Costs of Sales and Services Cost of Sales (Note 7)

2018 2017 2016 Food cost P=41,336,123 P=37,924,391 P=37,390,883 Sundry inventory cost 3,387,737 3,329,616 1,982,570 Beverage cost 2,187,252 1,870,679 2,758,443 Food and beverage spoilage 855,859 307,726 325,772 P=47,766,971 P=43,432,412 P=42,457,668

Cost of Services

2018 2017 2016 Personnel costs (Note 16) P=58,577,673 P=47,773,442 P=46,177,000 Depreciation (Note 9) 39,924,997 39,580,465 46,811,704 Communication, light and water 20,721,144 17,382,037 15,197,529 Commission 16,415,016 11,214,117 13,566,173 Repairs and maintenance 15,807,391 11,764,707 9,519,126 Outside services 14,342,022 12,930,557 28,816,168 Banquet 9,063,242 6,819,170 6,402,345 Supplies (Note 7) 8,884,955 6,881,397 9,544,934 Service charge 7,677,012 6,605,648 5,752,679 Rent (Note 25) 3,689,419 3,647,916 4,051,657 Fuel and oil (Note 7) 3,375,019 2,200,130 2,953,786 Laundry 2,593,070 1,993,871 3,262,934 Club events 2,002,138 2,005,958 2,345,923 Taxes and licenses 1,864,025 1,603,339 1,482,932 Transportation and travel 1,473,374 1,672,531 900,401 Animal farm 731,361 543,372 623,430 Advertising 727,486 3,615,987 2,410,007 Insurance 712,681 639,804 576,246 Waste disposal 533,109 496,894 453,291 Entertainment, amusement and recreation 374,884 428,826 663,352 Dues and subscriptions 313,210 349,940 132,862 Provision for impairment of receivables (Note 6) 193,346 – – Decorations 55,212 66,147 173,020 Others 15,031,385 8,996,210 10,421,825 P=225,083,171 P=189,212,465 P=212,239,324

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15. General and Administrative Expenses

2018 2017 2016 Personnel costs (Note 16) P=8,214,363 P=19,328,888 P=8,336,666 Depreciation (Note 9) 6,324,992 7,138,674 7,085,200 Outside services 5,432,612 7,344,873 6,814,749 Repairs and maintenance 3,699,882 6,483,873 3,384,359 Communication, light and water 2,642,236 6,980,876 8,188,537 Taxes and licenses 1,836,930 1,575,666 1,383,783 Supplies (Note 7) 989,092 3,134,667 1,664,676 Fuel and oil (Note 7) 667,261 1,118,853 748,032 Insurance 581,345 565,974 441,935 Banquet 558,009 1,574,419 176,014 Entertainment, amusement and recreation 412,111 662,651 226,615 Rent 348,756 1,198,957 590,286 Advertising 301,819 1,527,367 1,454,605 Transportation and travel 298,918 448,302 223,534 Club events 252,764 624,574 170,515 Waste disposal 243,306 496,895 299,094 Provision for impairment of receivables (Note 6) 193,346 54,004 – Dues and subscriptions 81,536 101,781 84,767 Decorations 53,988 65,388 52,025 Laundry 28,354 899,049 – Commission – 1,408,658 33,829 Others 2,861,241 6,213,741 2,206,914 P=36,022,861 P=68,948,130 P=43,566,135

16. Personnel Costs

2018 2017 2016 Salaries and wages P=41,831,356 P=41,829,100 P=28,014,803 Employee benefits and others 20,682,657 21,328,494 20,285,699 Retirement benefit cost - net (Note 19) 4,278,023 3,944,736 6,213,164 P=66,792,036 P=67,102,330 P=54,513,666

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17. Other Income

2018 2017 2016 Service charge revenue P=10,539,056 P=10,171,812 P=9,671,471 Reversal of accruals 7,861,861 4,010,797 6,233,759 Membership transfer fees 4,664,464 4,640,944 5,526,786 Income from members’ fund assessment 2,699,018 2,615,982 2,595,536 Commission income 2,189,329 5,097,874 4,895,363 Assignment fees 1,319,965 1,519,558 1,251,405 Ticket sales 1,040,150 1,107,929 2,297,250 Members’ penalties and charges 613,959 744,621 498,481 Gain on disposal of property and equipment – 39,864 – Others 3,409,276 1,237,860 1,634,677 P=34,337,078 P=31,187,241 P=34,604,728

Service charge revenue pertains to a percentage of food and beverage sales charged against guests and non-members.

Income from members’ fund assessment pertains to the monthly fund assessment charged by the Country Club to each member.

Others pertain to income derived from various transactions of the Country Club which includes income from penalties of members and sundry income from concessionaire consumptions.

18. Related Party Disclosures

Related parties are entities and individuals that have the ability to directly or indirectly through one or more intermediaries, control or are controlled by, or under common control with the Country Club, including holding companies, subsidiaries and fellow subsidiaries. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Country Club that gives them significant influence over the entity, key management personnel, including directors and officers of the Country Club and close members of the family of these individuals and companies associated with these individuals also constitute related entities.

In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.

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The following table provides the summary of outstanding balances with related parties as at December 31:

Classification Terms Conditions 2018 2017 Shareholder

Belle Trade payables (Note 11) Due and demandable, Unsecured (P=3,068,011) (P=1,636,611) noninterest- bearing Related parties with common set of directors

Tagaytay Midlands Golf Club, Inc. (TMGCI) Trade receivables (Note 6) Due and demandable, Unsecured, 2,886,503 11,520,154 noninterest- no impairment bearing

The Spa and Lodge at Tagaytay Highlands, Inc. (TSLTHI) Trade payables (Note 11) Due and demandable, Unsecured (1,632,600) (3,908,375) noninterest- bearing

Tagaytay Highlands International Golf Club, Inc. (THIGCI) Trade receivables (Note 6) Due and demandable, Unsecured, 1,245,037 2,991,893 noninterest- no impairment bearing

Tagaytay Highlands Community Condominium Association, Inc. (THCCAI) Trade payables (Note 11) Due and demandable, Unsecured (1,646,281) (1,123,732) noninterest- bearing

Highlands Prime, Inc. (HPI) Trade receivables (Note 6) Due and demandable, Unsecured, – 390,199 noninterest- no impairment bearing Trade payables (Note 11) Due and demandable, Unsecured (36,708) – noninterest- bearing

Greenlands Community Homeowners Association, Inc. (GCHAI) Trade payables (Note 11) Due and demandable, Unsecured – (76,725) noninterest- bearing

The Highlands Prime Community Condominium Owners Association, Inc. (THPCCOAI) Trade receivables (Note 6) Due and demandable, Unsecured, – 15,117 noninterest- no impairment bearing Trade payables (Note 11) Due and demandable, Unsecured (25,316) – noninterest- bearing Receivables (Note 6) P=4,131,540 P=14,917,363 Payables (Note 11) (6,408,916) (6,745,443)

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The following table provides the summary of transactions with related parties for the years ended December 31, 2018, 2017 and 2016:

Classification 2018 2017 2016 Shareholder

Belle Revenue: Club events and other functions P=22,300 P=156,069 P=954,168 Room and spa charges – – 10,400 Others 102,263 43,405 1,860 Expense: Utilities 1,748,122 1,796,717 612,460 Maintenance 245,143 245,143 22,723 Insurance – – 148,564 Rental – – 10,292 Others – 321,886 1,197,982

Related parties with common set of directors

TMGCI Revenue: Sales 45,223,635 52,114,235 35,287,216 Expense: Share on common expenses 11,059,855 3,567,999 7,743,657 Supplies consumption 3,278,499 2,309,362 2,300,777 Club events 1,328,129 14,206 80,316 Payroll 440,989 922 – Food and beverage issuances 342,332 1,517,803 1,440,127 Shuttle service 303,488 333,669 465,104 Utilities 45,453 609,855 598,669 Repairs and maintenance 17,600 84,015 21,508 Employee benefits – 141,601 271,321 Rental – 132,034 31,379 Purchases – 15,131 – Interclub payments 50,000,000 66,000,000 98,774 Others – 447,248 –

TSLTHI Expense: Room and spa charges 10,138,286 8,651,377 7,212,167 Food and beverage issuances 1,861,402 1,751,348 237,654 Massage fees 701,551 – 382,536 Supplies consumption 526,419 490,428 3,145,497 Medicine charges 4,341 4,571 3,125 Employee benefits – – 2,809 Insurance – – 850 Others – 10,994 194,261

THIGCI Revenue: Sales 182,748,666 63,374,535 8,503,535 Expense: Share on common expenses 10,857,820 19,393,328 18,549,943 Purchases 3,060,749 301,245 1,198,882 Supplies consumption 2,212,250 3,417,614 2,534,308 Shuttle service 1,492,817 1,137,444 913,608 Payroll 1,363,292 1,145,202 822,203 Food and beverage issuances 1,047,088 141,090 930,837 Utilities 704,160 14,405,925 15,420,449

(Forward)

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Classification 2018 2017 2016 Repairs and maintenance P=70,190 P=733,792 P=55,474 Medicine charges – 224,873 5,366 Employee benefits – – 3,879,806 Interclub payments 37,248,549 – 7,697,907 Others 1,374,134 32,500,000 335,789

THCCAI Revenue: Room revenue share 264,296 680,718 46,717 Expense: Utilities 675,638 672,012 276,127 Cleaning services 320,510 274,659 240,312 Maintenance services 196,700 11,985 80,865 Billeting charges 57,835 74,697 95,165 Others – 224,265 –

HPI Expense: Bid Price 930,000 1,352,000 – Rental 2,823,654 2,863,312 2,553,297 Club events 35,059 26,688 542,167 Others 11,911 8,360 –

GCHAI Revenue: Room revenue share – 72,829 76,796

THPCCOAI Revenue: Banquet – 26,688 – Expense: Utilities 165,447 66,939 –

Terms and Conditions of Transactions with Related Parties Outstanding balances of related party receivables and payables at year-end are settled in cash. There have been no guarantees provided or received for any related party receivables or payables. The Country Club did not make any provision for impairment on receivables from related parties. An assessment is undertaken each financial year through examination of the financial position of the related party and the market in which the related party operates. Transaction with Belle The Country Club has an agreement with Belle wherein Belle will provide water distribution and repairs and maintenance works on the Country Club’s facilities. Other transactions with Belle consist of cost charges and Belle’s use of the Country Club’s amenities and facilities and availment of services.

Transactions with HPI Commission Income. The Country Club, HPI and THIGCI share 25-50-25, respectively, of the ECC revenue. THIGCI is also majority owned by Belle while HPI and Belle have the same shareholders. HPI owns condominium units in the ECC, which are made available for lease to entities that wish to hold conferences and seminars.

Transactions with THIGCI and TMGCI Reciprocity Agreement. On October 6, 1999, the Country Club entered into a Reciprocity Agreement with THIGCI and TMGCI (both are also majority owned by Belle), whereby members of THIGCI and TMGCI will be allowed to enjoy the use of each other’s facilities, subject to rules and regulations. This agreement shall remain in effect until mutually terminated by the parties.

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Reimbursement of Operating Expenses. The three clubs also have transactions for reimbursement of operating expenses such as contract services, repairs and maintenance and utilities, among others.

Total compensation paid to key management personnel representing short-term employee benefits amounted to P=9,223,579, P=9,832,427 and P=8,013,738 in 2018, 2017 and 2016, respectively.

19. Pension Costs

The Country Club is a participant to the Tagaytay Highlands, Multiemployer Retirement Plan which is non-contributory and of the final salary defined benefit type. The plan provides a retirement benefit equal to one hundred percent (100%) of Plan Salary for every year of credited service or in accordance with the collective bargaining agreement. Benefits are paid in a lump sum upon retirement or separation in accordance with the terms of the plan.

In accordance with the provisions of the Bureau of Internal Revenue (BIR) Revenue Regulations No. 1-68, it is required that a formal retirement plan be trusteed; that there must be no discrimination in benefits; that forfeitures shall be retained in the retirement fund and be used as soon as possible to reduce the future contributions; and that no part of the corpus or income of the retirement fund shall be used for, or diverted to, any purpose other than for the exclusive benefit of the plan members. The latest actuarial valuation of the plan Country Club’s retirement plan is as at December 31, 2018.

The following tables summarize the components of retirement benefits cost recognized in the statements of comprehensive income and the funded status and amounts recognized in the statement of financial position.

2018 2017 Current service cost P=3,024,496 P=2,840,048 Net interest expense 1,253,527 1,104,688 Retirement benefits cost - net (Note 16) P=4,278,023 P=3,944,736

Changes in net pension liability as at December 31 are as follows:

2018 2017 Pension liability, beginning P=24,853,497 P=21,618,152 Current service cost 3,024,496 2,840,048 Net interest expense 1,253,527 1,104,688 4,278,023 3,944,736 Actuarial changes arising from: Changes in financial assumptions (5,084,095) (1,442,361) Experience adjustments 66,170 1,201,385 Return on plan assets 178,302 – (4,839,623) (240,976) Contributions to plan assets (7,000,000) – Benefits paid to employees (1,092,063) (468,415) P=16,199,834 P=24,853,497

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Changes in the present value of the pension liability as at December 31 are as follow: 2018 2017 Beginning balance P=24,853,497 P=21,618,152 Current service cost 3,024,496 2,840,048 Interest expense 1,441,503 1,104,688 Remeasurement in other comprehensive income: Actuarial gain - changes in financial assumptions (5,084,095) (1,442,361) Actuarial (gain) loss - experience adjustments 66,170 1,201,385 Benefits paid to employees (1,092,063) (468,415) P=23,209,508 P=24,853,497

In 2018 and 2017, benefits paid to employees amounting to P=1,092,063 and P=468,415, respectively, were paid using the Country Club’s own fund.

Changes in the fair value of plan asset as at December 31, 2018 are follows:

2018 2017 Beginning balance P=– P=– Contribution to the retirement fund 7,000,000 – Interest income 187,976 – Remeasurement loss on plan asset (178,302) – P=7,009,674 P=–

Reconciliation of net pension liability as at December 31 are follows:

2018 2017 Present value of pension liability P=23,209,508 P=24,853,497 Less fair value of plan assets 7,009,674 – P=16,199,834 P=24,853,497

The retirement benefits cost and present value of the pension liability are determined using actuarial valuations. The actuarial valuation includes making various assumptions. The principal assumptions used in determining the pension liability as at December 31 are shown below:

2018 2017 Discount rate 8.55% 5.80% Salary increase rate 4.00% 4.00% Mortality rate 2001 CSO Table 2001 CSO Table Disability rate 1952 Disability Study 1952 Disability Study

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in the Philippines.

The weighted average duration of the defined benefit obligation is 6.7 years and 7.1 years as at December 31, 2018 and 2017, respectively.

The sensitivity analysis in the next page has been determined based on reasonably possible changes of each significant assumption on the defined benefit pension plan as at December 31, assuming all other assumptions were held constant:

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Impact on Pension Liability Increase (Decrease) 2018 2017 Discount rate +1% (P=1,470,095) (P=1,878,679) -1% 1,653,819 2,133,576 Salary increase rate 1% 1,507,763 (1,867,097) -1% (1,366,715) 2,172,083

The Country Club’s plan assets mainly consist of cash and cash equivalents. The carrying values of the Country Club’s plan assets approximates its fair values since these are short-term in nature. As at December 31, 2018 the fair value of plan assets amounted to P=7,009,674 (nil as at December 31, 2017).

Shown below is the maturity analysis of the undiscounted benefit payments as at December 31, 2018:

Financial year 2018 2017 Less than one year P=3,342,655 P=3,790,940 More than one year to five years 10,439,356 10,633,479 More than five years to ten years 11,772,578 13,466,244

Actual return on plan assets amounted to P=9,674 in 2018 (nil in 2017).

The Country Club expects to contribute P=6,481,931 in the defined benefit plan in 2019.

20. Income Taxes

a. The components of the current provision for income tax are as follows:

2018 2017 2016 RCIT P=4,748,781 P=1,778,289 P=– Final tax on interest income 42,451 31,219 27,805 MCIT – – 1,315,371 P=4,791,232 P=1,809,508 P=1,343,176

b. The components of deferred tax assets (liabilities) as at December 31 are as follows:

2018 2017 Deferred tax assets: Pension liability P=4,428,956 P=2,978,921 Deposit for function 8,454 – Accrued rent expense 946 – 4,438,356 2,978,921 Deferred tax liabilities: Receivable arising from transferred pension liability (2,103,380) (2,103,380) Remeasurement gains on defined benefit pension plan (2,325,576) (873,689) Unrealized foreign exchange gain (9,400) (1,852) (4,438,356) (2,978,921) Deferred tax assets - net P=– P=–

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Deferred tax assets on the following deductible temporary differences were not recognized since management believes that it is not probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilized:

2018 2017 Deposit for function P=24,644,332 P=22,788,738 Pension liability 16,188,567 17,836,057 Membership dues collected in advance 20,672,574 16,932,698 Other dues collected in advance 456,200 411,000 Allowance for impairment of receivables 781,880 395,188 Accrued rent expense – 272,752

Unrecognized deferred tax assets amounted to P=18,823,066 and P=17,590,930 as at December 31, 2018 and 2017, respectively.

a. A reconciliation between the provision for income tax computed at the statutory income tax rate and the provision for (benefit from) income tax as shown on the statements of comprehensive income follows:

2018 2017 2016 Provision for income tax at statutory tax rate of 30% P=1,971,933 P=1,125,932 P=478,930 Income tax effects of: Changes in unrecognized deferred tax assets 1,232,136 (1,177,175) (1,071,523) Nondeductible expenses 160,675 31,805 27,140 Interest income subjected to final tax at a lower rate (67,850) (49,106) (41,731) Final tax on interest income 42,451 31,219 27,805 Expired NOLCO – – 1,227,693 Expired MCIT – – 163,662 P=3,339,345 (P=37,325) P=811,976

21. Net Income Per Share

2018 2017 2016 Net income P=3,233,766 P=3,790,430 P=784,458 Divided by weighted average number of shares issued and outstanding 5,000 5,000 5,000 Net income per share P=647 P=758 P=157

22. Financial Risk Management Objectives and Policies

The Country Club’s principal financial assets comprise of cash and cash equivalents and receivables. The main purpose of these financial assets is to raise finances for the Country Club’s operations. The Country Club has various other financial assets and financial liabilities such as refundable deposits (included as part of “Other noncurrent assets” in the statement of financial position), accounts payable and other current liabilities (excluding membership dues collected in advance and statutory payables) and loans payable, which arise directly from its operations.

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The main risks arising from the Country Club’s financial instruments are liquidity risk and credit risk. The Country Club’s BOD and management reviews and agrees on policies for managing each of these risks as summarized below:

Liquidity Risk Liquidity risk is defined as the risk that the Country Club will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The Country Club monitors its risk to a shortage of funds through monitoring of financial assets and projected cash flows from operations. The Country Club’s objectives to manage its liquidity profile are: a) to ensure that adequate funding is available at all times; b) to meet commitments as they arise without incurring unnecessary costs; and c) to be able to access funding when needed at the least possible cost.

The analysis of financial assets into maturity groupings is based on the remaining period from the reporting date to the contractual maturity date or if earlier, the expected date on which the assets will be realized.

For financial liabilities, the maturity grouping is based on the remaining period from the reporting date to the contractual maturity date. When a counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Country Club can be required to pay.

The table below summarizes the maturity profile of the Country Club’s financial liabilities as at December 31, 2018 and 2017 based on contractual undiscounted payments. The table also analyzes the maturity profile of the Country Club’s financial assets to provide a complete view of the Country Club’s contractual commitments and liquidity.

2018 Due and More than demandable Within 1 year 1 year Total Financial Assets At amortized cost: Cash and cash equivalents P=53,898,201 P=– P=– P=53,898,201 Receivables: Trade: Related parties 4,131,540 – – 4,131,540 Members 16,040,148 17,014,866 – 33,055,014 Receivables from functions – 9,591,208 – 9,591,208 Receivables from credit card – 1,901,272 – 1,901,272 Others – 586,080 – 586,080 Refundable deposits* – – 40,789 40,789 74,069,889 29,093,426 40,789 103,204,104 Financial Liabilities Other financial liabilities: Trade: Related parties 6,408,916 − – 6,408,916 Nonrelated parties − 34,980,000 – 34,980,000 Refundable deposits** – 8,919,107 – 8,919,107 Accrued expenses – 8,912,183 – 8,912,183 Retention payable – 1,211,448 – 1,211,448 Unclaimed gift certificate 6,543,984 – – 6,543,984 Auctioned membership liability – 7,206 – 7,206 Other payables*** – 6,894,140 – 6,894,140 Loans payable**** – 1,352,420 330,582 1,683,002 12,952,900 62,276,504 330,582 75,559,986 Liquidity position (gap) P=61,116,989 (P=33,183,078) (P=289,793) P=27,644,118 *Included as part of “Other noncurrent assets” account in the statements of financial position. **Excludes deposit for function amounting to P=24,672,512. ***Excludes other dues collected in advance amounting to P=456,200. ****Includes future interest payments amounting to P=85,244.

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2017 Due and More than demandable Within 1 year 1 year Total Financial Assets Loans and receivables: Cash and cash equivalents P=50,673,890 P=– P=– P=50,673,890 Receivables: Trade: Related parties 14,917,363 – – 14,917,363 Members 9,073,764 21,968,592 – 31,042,356 Receivables from functions – 8,779,273 – 8,779,273 Receivables from credit card – 2,053,474 – 2,053,474 Others – 663,482 – 663,482 Refundable deposits* – – 29,852 29,852 74,665,017 33,464,821 29,852 108,159,690 Other financial liabilities: Trade: Related parties 6,745,443 − – 6,745,443 Nonrelated parties − 28,040,723 – 28,040,723 Refundable deposits** – 6,295,040 – 6,295,040 Accrued expenses – 10,327,019 – 10,327,019 Retention payable – 1,496,033 – 1,496,033 Unclaimed gift certificate 3,552,922 – – 3,552,922 Auctioned membership liability – 88,946 – 88,946 Other payables*** – 9,387,519 – 9,387,519 Loans payable**** – 1,617,180 1,683,002 3,300,182 10,298,365 57,252,460 1,683,002 69,233,827 Liquidity position (gap) P=64,366,652 (P=23,787,639) (P=1,653,150) P=38,925,863 *Included as part of “Other noncurrent assets” account in the statement of financial position. **Excludes deposit for function amounting to P=22,788,738. ***Excludes other dues collected in advance amounting to P=411,000. ****Includes future interest payments amounting to P=283,871.

Credit Risk Credit risk is most likely limited to the risk arising from the inability of a debtor to make payments when due. The Country Club trades only with recognized, creditworthy third parties. It is the Club’s practice that all members are subject to credit verification procedures.

The Country Club’s exposure to credit risk related primarily to the collection of members’ monthly dues and receivables from related party. The Country Club’s policy is to monitor the receivable balances on an ongoing basis, which causes the exposure to bad debts to be insignificant. The Country Club has also the option to put into auction members’ proprietary shares in case of non- payment of members account.

The table below shows the maximum exposure to credit risk for the Country Club’s financial assets as at December 31, 2018 and 2017, without taking account of any collateral and other credit enhancements:

Gross Maximum Exposure(1) Net Maximum Exposure(2) 2018 2017 2018 2017 Cash and cash equivalents* P=53,568,201 P=49,870,035 P=52,058,201 P=48,360,035 Receivables: Trade: Related parties 4,131,540 14,917,363 4,131,540 14,917,363 Members 33,055,014 31,042,356 – – Receivables from functions 9,591,208 8,779,273 9,591,208 8,779,273

(Forward)

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Gross Maximum Exposure(1) Net Maximum Exposure(2) 2018 2017 2018 2017 Receivables from credit card P=1,901,272 P=2,053,474 P=1,901,272 P=2,053,474 Others 586,080 663,482 586,080 663,482 Refundable deposits** 40,789 29,852 40,789 29,852 P=102,874,104 P=107,355,835 P=68,309,090 P=74,803,479 (1) Gross financial asset before taking into account any collateral held or other credit enhancements or offsetting arrangements or insurance in case of bank deposits or fair market value of shares for receivables from members. (2) Gross financial assets after taking into account any collateral held or other credit enhancements or offsetting arrangements or insurance in case of bank deposits or fair market value of shares for receivables from members. *Excluding cash on hand amounting to P=330,000 and P=803,855 as at December 31, 2018 and 2017, respectively. **Included as part of “Other noncurrent assets” account in the statement of financial position.

The table below shows the aging analysis of the Country Club’s financial assets as at December 31:

2018 Past Due but not Impaired Over Provision for Total net Current 1–30 Days 31–60 Days 60 Days Subtotal ECL of ECL Cash and cash equivalents* P=53,568,201 P=– P=– P=– P=– P=– P=53,568,201 Receivables: Trade: Members 17,014,866 6,902,971 3,607,631 5,529,546 16,040,148 781,880 33,836,894 Related parties – – – 4,131,540 4,131,540 – 4,131,540 Receivables from functions 9,591,208 – – – – – 9,591,208 Receivables from credit card 1,901,272 – – – – – 1,901,272 Others 586,080 – – – – – 586,080 Refundable deposits** 40,789 – – – – – 40,789 P=82,702,416 P=6,902,971 P=3,607,631 P=9,661,086 P=20,171,688 P=781,880 P=103,655,984 **Excluding cash on hand amounting to P=330,000. **Presented under “Other noncurrent assets” account in the statement of financial position

2017 Neither Past Due but not Impaired Past Due Over nor Impaired 1–30 Days 31–60 Days 60 Days Subtotal Impaired Total Cash and cash equivalents* P=49,870,035 P=– P=– P=– P=– P=– P=49,870,035 Receivables: Trade: Members 21,968,592 5,453,556 2,189,776 1,430,432 9,073,764 395,188 31,437,544 Related parties – – – 14,917,363 14,917,363 – 14,917,363 Receivables from functions 8,779,273 – – – – – 8,779,273 Receivables from credit card 2,053,474 – – – – – 2,053,474 Receivables from concessionaires – – – – – – – Others 663,482 – – – – – 663,482 Refundable deposits** 29,852 – – – – – 29,852 P=83,364,708 P=5,453,556 P=2,189,776 P=16,347,795 P=23,991,127 P=395,188 P=107,751,023 **Excluding cash on hand amounting to P=803,855. **Presented under “Other noncurrent assets” account in the statement of financial position.

Past due receivables include those that are past due but are still collectible based on the assessment of the debtor’s ability to pay and collection agreement.

Credit Quality - Applicable as at December 31, 2018 The financial assets of the Country Club are grouped according to stage whose description is explained as follows:

Stage 1 - Those that are considered current and up to 60 days past due and based on change in rating delinquencies and payment history, do not demonstrate significant increase in credit risk.

Stage 2 - Those that, based on change in rating, delinquencies and payment history, demonstrate significant increase in credit risk, and/or are considered more than 60 days past due but does not demonstrate objective evidence of impairment as of reporting date.

Stage 3 - Those that are considered in default or demonstrate objective evidence of impairment as of reporting date.

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The table below shows determination of ECL stage of the Country Club’s financial assets

2018 Stage 1 Stage 2 Stage 3 Total 12-month ECL Lifetime ECL Lifetime ECL Financial assets at amortized cost: Cash and cash equivalents* P=53,568,201 P=– P=– P=53,568,201 Receivables: Trade- Members 27,525,468 5,529,546 781,880 33,836,894 Receivables from functions 9,591,208 – – 9,591,208 Receivables from credit card 1,901,272 – – 1,901,272 Others 586,080 – – 586,080 Refundable deposits** 40,789 – – 40,789 P=93,213,018 P=5,529,546 P=781,880 P=99,524,444 **Excluding cash on hand amounting to P=330,000 on as at December 31, 2018. **Included as part of “Other noncurrent assets” account in the statement of financial position.

Credit Quality - Applicable as at December 31, 2017 The credit quality of financial assets is managed by the Country Club using high grade and standard grade as internal credit ratings. High Grade. Pertains to counterparty who is not expected by the Country Club to default in settling its obligations, thus credit risk exposure is minimal. This normally includes large prime financial institutions, companies, government agencies and individual buyers. Credit quality was determined based on the credit standing of the counterparty.

Standard Grade. Other financial assets not belonging to high grade financial assets are included in this category. The table below shows the credit quality of the Country Club’s financial assets that are neither past due nor impaired as at December 31 based on historical experience with the corresponding third parties:

2017 High Grade Standard Grade Total Cash and cash equivalents* P=49,870,035 P=– P=49,870,035 Receivables: Trade- Members 21,968,592 – 21,968,592 Receivables from functions – 8,779,273 8,779,273 Receivables from credit card – 2,053,474 2,053,474 Others – 663,482 663,482 Refundable deposits** 29,852 – 29,852 P=71,868,479 P=11,496,229 P=83,364,708 *Excluding cash on hand amounting to P=803,855 on as at December 31, 2017. **Included as part of “Other noncurrent assets” account in the statement of financial position.

Cash in banks and short-term placements are deposited with the top ten banks in the Philippines; hence, considered as high grade.

Capital Management The primary objective of the Country Club’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize member value.

The Country Club manages the capital structure and makes adjustments to it in the light of changes in economic conditions. To maintain or adjust the capital structure, the Country Club may increase monthly membership dues. Starting January 1, 2019, as proposed by the management and approved

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by the BOD, monthly membership dues will increase by P=150. There were no changes made in the objectives or policies for the year ended December 31, 2018 and 2017.

The Country Club monitors capital on the basis of the debt-to-equity ratio. This ratio is calculated as total liabilities divided by members’ equity.

The Country Club considers the following as capital:

2018 2017 Proprietary certificates (Note 13) P=500,000,000 P=500,000,000 APIC 1,048,932,564 1,048,932,564 Deficit (1,022,600,572) (1,025,834,338) P=526,331,992 P=523,098,226

The Country Club’s strategy was to maintain the debt-to-equity ratio at a manageable level. The debt-to-equity ratio as at December 31 is as follows:

2018 2017 Total liabilities (a) P=142,756,424 P=147,063,598 Net members’ equity (b) 531,758,335 525,136,833 Debt-to-equity ratio (a/b) 0.27:1 0.28:1

23. Fair Value of Financial Assets and Liabilities

The carrying values of cash and cash equivalents, receivables, accounts payable and other current liabilities (excluding membership dues collected in advance and statutory payables) approximate their fair values due to the short-term nature and maturities of the transactions.

For refundable deposits (included as part of “Other noncurrent assets” account in the statement of financial position), these are carried at cost less allowance for any impairment loss due to the unpredictable nature of future cash flows and lack of suitable methods for arriving at reliable fair value.

The carrying amount the Country Club’s interest-bearing loans payable approximates its fair value since the interest rates are within the markets rates.

As at December 31, 2018 and 2017, the Country Club has no financial assets and liabilities carried at fair value that which is based on the three levels of fair value hierarchy.

24. Changes in Liabilities Arising from Financing Activities

Cash Flows January 1, 2018 Additions Used December 31, 2018 Loans payable P=3,016,311 P=− (P=1,418,553) P=1,597,758 Interest payable 12,093 192,790 (198,626) 6,257 Total liabilities from financing activities P=3,028,404 P=192,790 (P=1,617,179) P=1,604,015

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Cash Flows January 1, 2017 Additions Used December 31, 2017 Loans payable P=1,471,788 P=2,615,200 (P=1,070,677) P=3,016,311 Interest payable 6,946 221,069 (215,922) 12,093 Total liabilities from financing activities P=1,478,734 P=2,836,269 (P=1,286,599) P=3,028,404

25. Significant Agreements

Contract Services The Country Club entered into a Service Agreement (SA) with KARES Int’l Commoditites & Manpower Services Corp. (KARES) wherein KARES shall provide manpower for various projects, hotels and related services required by the Clubs. The term of the SA is effective for one year and is subject to renewal. The SA has expired on November 30, 2018. On December 1, 2018, the Country Club renewed its contract with KARES effective until November 30, 2019.

The Country Club, THIGCI and TMGCI (collectively referred to as the “Clubs”) entered into an SA with Golforce Incorporated (Golforce) wherein Golforce shall provide manpower and maintenance services (specifically cleaning, gardening and landscaping services) to the Clubs. The term of the SA is effective for four years beginning October 1, 2016 to September 30, 2020.

The Clubs entered into an SA with Help U Clean Systems Inc. (Help U Clean) wherein Help U Clean shall provide manpower and maintenance services (specifically housekeeping services) to the Clubs. The SA has expired on November 30, 2018. On December 1, 2018 the Country Club renewed its contract with Help U Clean effective until November 30, 2019.

The Clubs entered into an SA with Bio-tech Environmental Services Philippines, Inc. (Bio-Tech) wherein Bio-Tech shall provide equipment, tools, and experienced personnel to implement pest management for the Club. The term of the SA is effective for two years beginning October 1, 2017 to September 30, 2019.

The Clubs entered into an SA with Creative Proverbs Enterprises (Creative Proverbs) wherein Creative Proverbs shall provide materials and skilled labor (specifically for renovation, restoration, repairs and maintenance of Clubs facilities) to the Clubs. The SA has expired on November 15, 2018. On November 16, 2018 the Country Club renewed its contract with Creative Proverbs effective until November 15, 2019.

The Clubs entered into a Memorandum of Agreement (MOA) with Lifeline Ambulance Rescue, Inc. (Lifeline) wherein Lifeline will provide a dedicated ambulance standby to respond to any medical emergencies within the Clubs. The term of the MOA is effective from August 16, 2017 to August 15, 2020.

Professional Services The Clubs entered into a contract with Dr. Eva Marie Ronquillo, D.M.D. wherein the Doctor of Dental Medicine shall provide necessary dental services to the employees of the Clubs. The contract has expired on May 15, 2018 and was not renewed.

The Clubs entered into a contract with Dr. Kevin Poblete Tapawan, D.M.D. wherein the Doctor of Dental Medicine shall provide necessary dental services to the employees of the Clubs. The contract shall be valid for a period of one year commencing on October 1, 2018 to September 30, 2019.

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Security Services The Clubs entered into an SA with Saint Anthony Security and Investigation Agency (SASIA) wherein SASIA will provide security and safety services to the Club. The term of the SA is effective for three years beginning August 1, 2017 to July 31, 2020.

The Clubs entered into an SA with Eagle Corinthians Integrated Security, Inc. (EAGLECOR) wherein EAGLECOR will provide security and safety services to the Club. The term of the SA is effective for three years beginning August 1, 2017 to July 31, 2020.

Lease The Country Club executed a Lease Agreement (LA) with HPI whereby the former shall lease the land of HPI where certain facilities of the Country Club are located. The term of the LA is three years effective January 1, 2017 until December 31, 2019, and renewable upon such terms and conditions mutually agreeable to the parties.

The Country Club executed a Lease Agreement (LA) with Easybuys Car Trading whereby the former shall lease the latter’s storage space with security privileges. The term of the LA is one year effective May 9, 2018 to April 9, 2019.

Commission The Clubs executed a Service Contract (SC) with Asmara Inc. (Asmara) wherein Asmara will provide spa and massage services to the members and guests of the Clubs. The duration of the SC is from January 31, 2018 to January 30, 2020, unless earlier terminated by a written notice at least thirty (30) days prior to termination.

The Clubs executed an SC with Yellow Brick Food Services, Inc. (Yellow Brick) wherein Yellow Brick will provide food and beverages and render related services during special occasions at the food outlets located at the selected restaurants of the Clubs. The contract has expired on December 31, 2017. On January 1, 2018, the Country Club renewed its contract effective until December 31, 2019 renewable annually upon mutual agreement of both parties.

26. Supplementary Information Required Under Revenue Regulations No. (RR) 15-2010

The Bureau of Internal Revenue has issued RR No. 15-2010 which requires certain tax information to be disclosed in the notes to financial statements. The Country Club presented the required supplementary tax information as a separate schedule attached to its annual income tax return.

THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. SUPPLEMENTARY INFORMATION REQUIRED UNDER REVENUE REGULATIONS (RR) NO. 15-2010 FOR THE YEAR ENDED DECEMBER 31, 2018

1. Supplementary Information Required Under RR No. 15-2010

On December 28, 2010, RR No. 15-2010 became effective and amended certain provisions of RR No. 21-2002 prescribing the manner of compliance with any documentary and/or procedural requirements in connection with the preparation and submission of financial statements and income tax returns. This information is presented for purposes of filing with the Bureau of Internal Revenue (BIR) and is not a required part of the basic financial statements.

The Company reported and/or paid the following types of taxes in 2018: Value-Added Tax (VAT) The Company’s sales are subject to output VAT while its purchases from other VAT-registered individuals or corporations are subject to input VAT. The VAT rate is 12%. a) Net sales and output VAT declared in the Company’s VAT returns for 2018

Net Sales/Receipts Output VAT Taxable sales: Sale of services P=345,896,708 P=41,507,605 Sale of goods 1,162,484 139,498 Sales to government – – Exempt sales 15,695,652 – Zero-rated sales – – Total P=362,754,844 P=41,647,103

Total VAT credits and payments made during the year amounted to P=17,364,945.

As at December 31, 2018, the Country Club has outstanding VAT payable amounting to P=3,466,008 presented as part of Statutory payables under the “Accounts payable and other current liabilities” account in the statement of financial position.

The Country Club’s sale of service is based on actual collections during the year, hence, may not be the same with the amounts recorded in the statement of comprehensive income. b) VAT for the year

The following table shows the sources of input VAT claimed:

Input VAT Balance at January 1 P=– Domestic purchases of: Goods for resale/manufacture or further processing – Services lodged under cost of goods sold 20,816,150 Capital goods subject to amortization – Capital goods not subject to amortization – Total input VAT 20,816,150 Input VAT allocated to exempt sales – Total available input VAT 20,816,150 Applied against output VAT 20,816,150 Balance at December 31 P=–

Other Taxes and Licenses All other local and national taxes, presented under “Cost of services” and “General and administrative expenses” account in the statement of comprehensive income for the year 2018 are as follows:

Real property taxes P=1,912,128 Business tax permit 1,703,903 Community tax certificate 10,500 Others 74,424 P=3,700,955

Withholding Taxes The following are the categories of the Company’s withholding taxes:

Expanded withholding taxes P=7,034,870 Withholding taxes on compensation and benefits 2,800,544 Final withholding taxes 42,451 P=9,877,865

Tax Assessments and Cases The Country Club has no tax assessments and cases pending before the BIR as at December 31, 2018. Likewise, the Country Club has no other pending tax cases outside the administration of the BIR.

THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. Index to the Financial Statements and Supplementary Schedules December 31, 2018

Schedule I: Supplementary schedule of all effective standards and interpretations as at December 31, 2018

Schedule II: Financial soundness indicators

Schedule III: Supplementary schedules required by Annex 68-E

Scss THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. (A Nonprofit Corporation) SUPPLEMENTARY SCHEDULE OF ALL THE EFFECTIVE STANDARDS AND INTERPRETATIONS

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Not Not Effective as at December 31, 2018 Adopted Adopted Applicable Philippine Financial Reporting Standards PFRS 1 First-time Adoption of Philippine Financial  Reporting Standards PFRS 2 Share-based Payment  Amendments to PFRS 2, Classification and  Measurement of Share-based Payment Transactions PFRS 3 Business Combinations  PFRS 4 Insurance Contracts  Amendments to PFRS 4, Applying PFRS 9  Financial Instruments with PFRS 4 Insurance 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  PFRS 8 Operating Segments  PFRS 9 Financial Instruments  PFRS 10 Consolidated Financial Statements  PFRS 11 Joint Arrangements  PFRS 12 Disclosure of Interests in Other Entities  PFRS 13 Fair Value Measurement  PFRS 14 Regulatory Deferral Accounts  PFRS 15 Revenue from Contracts with Customers  Philippine Accounting Standards PAS 1 Presentation of Financial Statements  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 

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PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Not Not Effective as at December 31, 2018 Adopted Adopted Applicable PAS 12 Income Taxes  PAS 16 Property, Plant and Equipment  PAS 17 Leases  PAS 19 Employee Benefits  PAS 20 Accounting for Government Grants and  Disclosure of Government Assistance PAS 21 The Effects of Changes in Foreign Exchange  Rates PAS 23 Borrowing Costs  PAS 24 Related Party Disclosures  PAS 26 Accounting and Reporting by Retirement Benefit  Plans PAS 27 Separate Financial Statements  PAS 28 Investments in Associates and Joint Ventures  Amendments to PAS 28, Measuring an Associate  or Joint Venture at Fair Value (Part of Annual Improvements to PFRSs 2014 - 2016 Cycle) PAS 29 Financial Reporting in Hyperinflationary  Economies PAS 32 Financial Instruments: Presentation  PAS 33 Earnings per Share  PAS 34 Interim Financial Reporting  PAS 36 Impairment of Assets  PAS 37 Provisions, Contingent Liabilities and Contingent  Assets PAS 38 Intangible Assets  PAS 39 Financial Instruments: Recognition and  Measurement PAS 40 Investment Property  Amendments to PAS 40, Transfers of Investment  Property PAS 41 Agriculture  Philippine Interpretations Philippine Changes in Existing Decommissioning,  Interpretation Restoration and Similar Liabilities IFRIC-1

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PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Not Not Effective as at December 31, 2018 Adopted Adopted Applicable Philippine Members’ Shares in Co-operative Entities and  Interpretation Similar Instruments IFRIC-2 Philippine Determining whether an Arrangement contains a  Interpretation Lease IFRIC-4 Philippine Rights to Interests arising from Decommissioning,  Interpretation Restoration and Environmental Rehabilitation IFRIC-5 Funds Philippine Liabilities arising from Participating in a Specific  Interpretation Market—Waste Electrical and Electronic IFRIC-6 Equipment Philippine Applying the Restatement Approach under PAS  Interpretation 29 Financial Reporting in Hyperinflationary IFRIC-7 Economies Philippine Interim Financial Reporting and Impairment  Interpretation IFRIC-10 Philippine Service Concession Arrangements  Interpretation IFRIC-12 Philippine PAS 19—The Limit on a Defined Benefit Asset,  Interpretation Minimum Funding Requirements and their IFRIC-14 Interaction Philippine Hedges of a Net Investment in a Foreign  Interpretation Operation IFRIC-16 Philippine Distributions of Non-cash Assets to Owners  Interpretation IFRIC-17 Philippine Extinguishing Financial Liabilities with Equity  Interpretation Instruments IFRIC-19 Philippine Stripping Costs in the Production Phase of a  Interpretation Surface Mine IFRIC-20 Philippine Levies  Interpretation IFRIC-21 Philippine Foreign Currency Transactions and Advance  Interpretation Consideration IFRIC-22

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PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Not Not Effective as at December 31, 2018 Adopted Adopted Applicable Philippine Introduction of the Euro  Interpretation SIC-7 Philippine Government Assistance—No Specific Relation to  Interpretation Operating Activities SIC-10 Philippine Operating Leases—Incentives  Interpretation SIC-15 Philippine Income Taxes—Changes in the Tax Status of an  Interpretation Entity or its Shareholders SIC-25 Philippine Evaluating the Substance of Transactions  Interpretation Involving the Legal Form of a Lease SIC-27 Philippine Service Concession Arrangements: Disclosures  Interpretation SIC-29 Philippine Intangible Assets—Web Site Costs  Interpretation SIC-32 Note: Standards and interpretations tagged as “Not Applicable” are those standards and interpretations which were adopted but the entity has no significant covered transaction as at and for the year ended December 31, 2018.

A S 0 9 5 0 0 7 8 2 7 S.E.C. Registration Number

T H E C O U N T R Y C L U B A T T A G A Y T A Y

H I G H L A N D S , I N C .

(Company’s Full Name)

T A G A Y T A Y H I G H L A N D S C O M P L E X , B A

R A N G A Y C A L A B U S O , T A G A Y T A Y C I T Y (Business Address: No. Street City / Town / Province)

Mr. A. Bayani K. Tan 632-0905 Contact Person Company Telephone Number

1 2 - 3 1 A M E N D E D 1 7 - A 0 8 - 0 3 Month Day FORM TYPE Month Day Calendar Year Annual Meeting

Secondary License Type, If Applicable

Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of Borrowings

Total No. of Stockholders Domestic Foreign

To be Accomplished by SEC Personnel concerned

File Number LCU

Document I.D. Cashier

STAMPS

Remarks = pls. use black ink for scanning purposes

THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. (A Nonprofit Corporation) Supplementary Schedules Required By the Securities and Exchange Commission As of and for the Calendar Year Ended December 31, 2018

T A B L E O F C O N T E N T S

Page No.

PART I BUSINESS AND GENERAL INFORMATION

Item 1 Business 2 Item 2 Properties 5 Item 3 Legal Proceedings 5 Item 4 Submission of Matters to a Vote of Security Holders 5

PART II OPERATIONAL AND FINANCIAL INFORMATION

Item 5 Market for Issuer’s Common Equity and Related 6 Stockholder Matters Item 6 Management’s Discussion and Analysis 7 Item 7 Financial Statements 12 Item 8 Changes in and Disagreement With Accountants on Accounting and Financial Disclosure 13

PART III CONTROL AND COMPENSATION INFORMATION

Item 9 Directors and Executive Officers 14 Item 10 Executive Compensation 18 Item 11 Security Ownership of Certain Beneficial Owners and 18 Management Item 12 Certain Relationships and Related Transactions 20

PART IV CORPORATE GOVERNANCE

Item 13 Corporate Governance 21

PART V EXHIBITS AND SCHEDULES

Item 14 Exhibits and Reports on SEC Form 17-C 22

SIGNATURES 23

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES 25

INDEX TO EXHIBITS 31

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-A, AS AMENDED

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF CORPORATION CODE OF THE PHILIPPINES

1. For the fiscal year ended DECEMBER 31, 2018

2. SEC Identification Number : 007827 3. BIR Tax Identification No. : 004-734-253-000

4. Exact name of issuer as specified in its charter: The Country Club at Tagaytay Highlands, Inc.

5. Makati, Metro Manila, Philippines 6. (SEC Use Only) Province, Country or other jurisdiction of Industry Classification Code: incorporation or organization

7. Tagaytay Highlands Complex, Barangay Calabuso, Tagaytay City, Philippines 4120 Address of principal office Postal Code

8. (046) 483-0830 Issuer's telephone number, including area code

9. Not Applicable Former name, former address, and former fiscal year, if changed since last report.

10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA

Title of Each Class Number of Shares of Common Stock Outstanding

Proprietary Shares 5,000 11. Are any or all of these securities listed on a Stock Exchange.

Yes [ ] No [ x ]

12. Check whether the issuer:

(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); Yes [ x ] No [ ]

(b) has been subject to such filing requirements for the past 90 days. Yes [ ] No [ x ]

13. Aggregate market value of the voting stock held by non-affiliates: P 402,150,000

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

APPLICABLE ONLY TO ISSUERS INVOLVED IN INSOLVENCY/SUSPENSION OF PAYMENTS PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

14. Check whether the issuer has filed all documents and reports required to be filed by Section 17 of the SRC subsequent to the distribution of securities under a plan confirmed by a court or the SEC.

Yes [ ] No [ ] NOT APPLICABLE

PART I - BUSINESS AND GENERAL INFORMATION

Item 1. Business

The Country Club at Tagaytay Highlands, Inc. (Country Club) was incorporated in 1995 as an exclusive membership club operating on a non-profit basis. Its primary purpose is to promote social, recreational and athletic activities among its members. It is a self-contained community set on a ridge in Tagaytay City which is located approximately 60 kilometers south of Metro Manila and situated on a 7-hectare land below the 18-hole par-71 international championship golf course of Tagaytay Highlands International Golf Club Inc. (THIGCI).

Sale of membership shares to the public started in November 1995 but the Country Club officially opened for business in March 1996. Majority of members are private individuals (about 86.91%) most of which are Filipino nationals and citizens and the remaining 13.09% are corporate members. Members of the THIGCI were given preference to purchase the first few shares before they were offered to the public. The Country Club derives its revenues and other income from the monthly dues (32%), restaurant patronage (46%), recreational facilities (6%), room sales (5%), and other income (11%). Collection of monthly dues started in March 1996 at P750 per member and was subjected to gradual increases. The following are the monthly dues with the respective periods wherein the increase became effective: P1,500 in June 1996, P2,000 in January 1998, P2,300 in April 2001, P2,500 in April 2004, P3,100 in January 2006, P3,600 in January 2010, P4,200 in September 2012, and P4,700 in January 2019.

Sale of food and beverage through the Country Club’s restaurants is a major source of income contributing to about 36.43% of total revenues in 2018. The different specialty restaurants offer a wide array of cuisines (Filipino, Chinese, Italian, Japanese, Korean and Western) which are sure to satisfy everyone’s palate.

Part of the Country Club’s commitment to members was also to provide sports and recreational facilities. Prior to the Country Club’s opening in March 1996, the outdoor facilities like the tennis courts, fishing pier, mini-golf course, horseback bridle path and the children’s playground were already available to members. In July 1996, the two-level Sports Center was officially opened. This houses a 14-lane bowling facility, indoor lap pool, basketball court, badminton court, game room, spas, gym, and a Kidsports - children’s play area. In December 1996, major portions of the camping ground called Camp Highlands were also completed and ready to accept members who wish to stay overnight or simply to cool off in the swimming pools. In addition to the aforesaid developments, the Animal Farm and Highlands Cinema were opened in 1997. However, as of the end of fiscal year 2010, the Highlands Cinema is no longer operational.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

The wide array of facilities and the continuing developments in the Country Club are important considerations for members to retain membership with the Country Club and for some to speculate increase in market value of their shares. In 2002, the Country Club’s operations include accommodation facilities at the Cottage Grove and Cowboy Cabins available to members and their guests. New sports facilities were also introduced such as the Sporting Arrow, All-terrain vehicle trail, Archery and Aerial Walk. There is an on-going renovation and rehabilitation of the Club’s facilities such as Sports Center, Highlander Steakhouse, Highlands China Palace, Country Club Veranda, Akasaka, Camp Highlands, Gourmet Avenue, Peak Bar, Country Clubhouse, Holy Family Chapel, Genghis Khan, and Trellis.

Bankruptcy, Receivership or Similar Proceedings

The Country Club does not been involved in any bankruptcy, receivership or similar proceedings for the past three (3) years.

Material Reclassification, Merger, Consolidation or Purchase or Sale of a Significant Amount of Assets (not ordinary)

The Country Club does not engaged in any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets (not ordinary) for the past three (3) years.

Competition

There is no formal or organized secondary market for the purchase and sale of golf and country club shares in the Philippines. As such, holders of shares in the Country Club who may wish to sell or dispose of their shares may not readily find a counter-party for the transaction at the desired asking price. At present, there is a growing number of golf and country clubs being established in various parts of the country. This may affect appreciation in the value of investment in the Country Club.

Investments in leisure-oriented developments such as golf and country clubs are influenced by the economic and political conditions in the country. Any adverse economic and political developments in the country may affect the demand for such leisure facilities, and any anticipated appreciation in the prices of golf and country club shares.

Although there are other clubs engaged in the same line of business, the Country Club competes in terms of service and facilities. The Country Club is highly competitive because of its wide array of facilities which includes world-class sports and recreational facilities, specialty restaurants and bars offering different cuisines (Filipino, Chinese, Italian, Japanese, Korean, and Western) and accommodation facilities.

Sources and availability of raw materials

The Country Club’s principal suppliers include Werdenberg International Corporation, ESV International Corp., RGL33 Fruits and Vegetable Dealer, JC Seafoods Supply, Delos Reyes Trading, and Sanford Marketing Corporation. There is no existing major supply contracts entered into by the Country Club.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Transactions with and/or dependence on related parties

In the ordinary course of business, the Country Club has transactions with related parties which consist mainly of charges for affiliate’s usage of Country Club’s facilities and services. This is also comprised of reimbursement of certain operating expenses such as utilities, contract services and repairs and maintenance from related parties.

Government Regulations

The Country Club has complied with licensing and regulatory requirements necessary for its development and operations.

Compliance with Environmental Laws

The Country Club has complied with pertinent environmental laws and regulations and has received the Environmental Certificate Clearance issued by the Department of Energy and Natural Resources.

The Country Club has constructed the Sewerage Treatment Plant so that waste products are reused in its animal farm.

Employees

The Country Club is run by a team of regular employees as follows: Regular Employees* GM & Department Heads 31 Supervisors 59 Rank and File 102 Project 1 Total 193

All regular rank and file employees are subject to the Collective Bargaining Agreement which expires in June 2019. Some of the regular employees are also seconded to Tagaytay Highlands International Golf Club, Inc. and Tagaytay Midlands Golf Club, Inc. (* based on head count as of December 31, 2018)

There has been no strike brought about by the Country Club’s employees in the past nineteen (19) years.

Major Business Risk

The Country Club has been sustaining its operational requirements through the collection of monthly dues from each member and the operation of restaurants and sports & recreation facilities. The Country Club has no foreign currency exposures or obligations that will have a material impact on its short-term or long-term liquidity due to the depreciation of peso. Despite the current economic condition, Country Club memberships have not been adversely affected as new members have been registered during the fiscal year. The Club does not foresee any negative effects on members’ patronage in view of the present economic condition.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Item 2. Properties

The Country Club is located in Tagaytay Highlands Complex, Barangay Calabuso, Tagaytay City. The Country Club has complete ownership over the property. In addition, the property is free from all liens, encumbrances or mortgage. There are no limitations as to the ownership brought about by the terms and conditions of any encumbrances.

The principal properties include the Country Clubhouse, the Sports Center which includes a 14- lane bowling facility, indoor lap pool, basketball court, badminton court, squash court, video arcade, table tennis, room spas, gym and a Kidsports – children’s play area. Other properties include the Animal farm, a camping ground, and newly introduced facilities such as Archery, Combat Archery, Trail Buggy and Aerial Walk.

Item 3. Legal Proceedings

As of the calendar year ended December 31, 2018, there are no pending material legal proceedings which the Country Club is a party to.

Item 4. Submission of Matters to a Vote of Security Holders

Also during the year, there were no matters submitted to a vote of the shareholders.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

PART II - OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Issuer's Common Equity and Related Stockholder Matters

Proprietary Shares

The Country Club has issued and outstanding 5,000 proprietary shares as at December 31, 2018, of which 46.38% is owned by Belle Corporation and the remaining shares are owned by other club members. There are 2,330 holders of the Club’s proprietary shares.

The top 20 shareholders as of 31 December 2018 are as follows:

NO. OF NAME OF STOCKHOLDER % SHARES

Belle Corporation 2,319 46.38% Ivory Holdings, Inc. 267 5.34% Highlands Prime Inc. 73 1.46% Jollibee Foods Corporation 14 0.28% Camara, Feliciana G. 6 0.12% APC Group Inc. 6 0.12% First Gas Holdings Corp. 4 0.08% Pilipino Star Printing Co., Inc. 3 0.06% S. P. Properties, Inc. 3 0.06% OTHERS 2,305 46.10% Total 5,000 100.00%

Market Value of Security

Below are the high and low bid prices for the past three (3) years based on newspaper publications:

HIGH LOW Quarter ended March 2016 200,000 200,000 Quarter ended June 2016 180,000 180,000 Quarter ended September 2016 180,000 180,000 Quarter ended December 2016 120,000 120,000 Quarter ended March 2017 150,000 120,000 Quarter ended June 2017 220,000 150,000 Quarter ended September 2017 180,000 120,000 Quarter ended December 2017 120,000 120,000 Quarter ended March 2018 200,000 150,000 Quarter ended June 2018 160,000 135,000 Quarter ended September 2018 160,000 130,000 Quarter ended December 2018 150,000 130,000

The Country Club’s securities are not traded in any of the stock exchanges.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Dividends

The Country Club Is a non-profit corporation and as such, does not declare dividends to its shareholders. In accordance with the Country Club’s Articles of Incorporation and By-Laws, no profit shall inure to the exclusive benefit of any of its shareholders, hence, no dividends shall be declared in their favor. Shareholders shall be entitled only to a pro-rata share of the asset of the Club at the time of the dissolution or liquidation of the Country Club.

Recent Sales of Unregistered or Exempt Securities

All the Club's securities are registered under the Securities Regulation Code. There were no sale of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities for the past three (3) years.

Item 6. Management's Discussion and Analysis (MD&A)

The Country Club derived its revenues from the membership dues, food and beverage sales and income from recreational facilities.

Results of Operations

December 31, 2018 compared to December 31, 2017

REVENUE The Country Club generated total revenue and other income amounting to P315.41 million for the year ended December 31, 2018 as compared to P305.40 million for the year ended December 31, 2017 or an improvement of 3.28%. Major contributors to the Club’s revenues were derived from increase in food & beverage revenue of P5.89 million or 4.23%, from P139.12 million in 2017 to P145 million in 2018, pertaining to the increase in patronage as a result of introduction of new food offerings and rewards program. Likewise, membership dues are higher by P3.93 million or 3.99%, from P98.46 million in 2017 to P102.39 million in 2018.

COST AND OPERATING EXPENSE Cost and operating expenses for the twelve months period ended December 31, 2018 amounted to P308.87 million, an increase of P7.28 million or 2.41% compared to P301.59 million in the same period in 2017. This is mainly attributed to increases in commission expense of P3.79 million or 30.04%, food, beverages and sundry costs of P3.79 million or 8.78% and banquet expense of P1.23 million or 14.63% corresponding to increase in its related revenue derived from the events being held at the club, fuel and oil of P0.72 million or 21.79%, taxes and licenses of P0.52 million or 16.42%, and repairs and maintenance of P1.26 million or 6.90%. On the other hand, depreciation expense decreased by P0.47 million or 1% from P46.72 million in 2017 to P46.25 million in 2018 which pertains to the fully depreciated asset of building, facilities and equipment for the year.

NET INCOME For the twelve months period ended December 31, 2018, the Country Club posted total Comprehensive Income of P6.62 million. The OCI amounting to P3.39 million is from the remeasurement gain on defined benefit pension plan.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

December 31, 2017 compared to December 31, 2016

REVENUE The Country Club generated total revenue and other income amounting to P305.40 million for the year ended December 31, 2017 as compared to P299.85 million for the year ended December 31, 2016 or an improvement of 1.85%. Major contributors to the Club’s revenues were derived from the increase in income from food & beverage revenue, of P6.37 million or 4.80%, from P132.74 million in 2016 to P139.12 million in 2017 pertaining to the increase in patronage as a result of introduction of new food offerings and rewards program. Likewise, sports & recreational facilities revenue increased by P1.75 million or 9.93% from P17.62 million in 2016 to P19.37 million in 2017; this was due to additional sports activities like archery, trail buggy, aerial walk and team building for corporate function.

COST AND OPERATING EXPENSE Cost and operating expenses for the twelve months period ended December 31, 2017 amounted to P301.59 million, an increase of P3.33 million or 1.12% compared to P298.26 million in the same period in 2016. This was mainly attributed to the decrease of contract services - outside services by P15.92 million or 89.89% and professional fees by P1.37 million or 21.02%, which resulted to the increase in personnel cost by P12.59 million or 23.09%; Absorption of employees resulted this movement. Banquet expense increased by P1.82 million or 27.59%, from P6.58 million relative to increase in food & beverage sales that derived from the events being held at the club. Advertising and promotion increased by P1.28 million or 33.09% due to the implementation of Clubs reward promo of P500.00 worth of gift certificate for members who spent P5,000 in Club operated restaurant. Meanwhile, depreciation expense decreased by P7.18 million or 13.3% from P53.90 million in 2016 to P46.72 million in 2017. This pertains to the fully depreciated asset of building, facilities and equipment for the year.

NET INCOME For the twelve months period ended December 31, 2017, the Country Club posted total Comprehensive Income of P3.96 million.

Financial Condition and Changes in Financial Condition

December 31, 2018 compared to December 31, 2017

ASSETS The Country Club has total assets of P674.51 million as of December 31, 2018 as compared to the December 31, 2017 P672.2 million, an increase of P2.31 million or 0.34%. The Country club has a current ratio of P1.14 for each peso of current liabilities as of December 31, 2018 as compared to P1.19 as of December 31, 2017.

Cash and Cash Equivalents Cash and cash equivalents increased by P3.22 million or 6.36%, from P50.67 million in December 31, 2017 to P53.90 million in December 31, 2018. This is the result of the net cash inflows provided by operating activities which amounted to P53.98 million, net cash flows used in investing activities of P49.17 million, and net cash used in financing activities of P1.62 million.

Receivables Receivables amounted to P49.27 million and P57.46 million as of December 31, 2018 and 2017, respectively. The decrease of P8.19 million or 14.26% was attributed to the decrease in receivables from related parties (net) of P10.79 million or 72.30% and higher allowance for impairment by P0.39 million or 97.85%.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Inventories Inventories increased by P2.06 million or 14.52% from P14.20 million in December 31, 2017 to P16.26 million in December 31, 2018.

Other Current Assets Other current assets has a balance amounting to P23.87 million and P21.57 million as of December 31, 2018 and 2017, respectively. This is mainly due to increase of P1.69 million or 197% in prepaid expenses and P0.79 million or 4.46% in creditable withholding taxes.

Non-current Assets Non-current assets increased by 0.55% or P2.92 million, from P528.30 million in December 31, 2017 to P531.22 million in December 31, 2018 due mainly to increases in advances to contractors and suppliers by P9.22 million or 210.78%, intangible assets by P0.57 million or 49.95%, and additions to property and equipment of P25.66 million.

LIABILITIES Accounts payable and other current liabilities posted an increase of P5.77 million or 4.84%, from P119.19 million in December 31, 2017 to P124.96 million in 2018. This pertains to the increases in unclaimed gift certificate of P2.99 million or 84.19%, membership dues collected in advance P3.74 million or 22.09%, refundable deposit by P4.51 million or 15.50% mainly from deposits for function, and payables to nonrelated parties of P6.94 million or 24.75%. On the other hand, there are decreases in statutory payables of P7.85 million or 59.78%, accrued expenses of P1.41 million or 13.70%, related parties of P0.34 million or 4.99%, retention payable of P0.28 million or 19.02%, and auctioned members liability of P0.08 million or 91.90% due to closing of long outstanding accounts.

In addition, non-current liabilities decreased by P9.93 million or 37.53% from P26.45 million in December 31, 2017 to P16.52 million in December 31, 2018. This lower amount is caused by the retirement provision for the year.

EQUITY Members’ equity increased by P6.62 million or 1.26% from P525.14 million in December 31, 2017 to P531.76 million in December 31, 2018, attributed to the total comprehensive income of P6.62 million during the current year. OCI amounting to P3.39 million is from the remeasurement gain on defined benefit pension plan.

December 31, 2017 compared to December 31, 2016

ASSETS The Country Club has total assets of P672.2 million as of December 31, 2017 as compared to December 31, 2016 P693.40 million or a decrease of P21.20 million or 3.06%. The Country club has a current ratio of P1.23 for each peso of current liabilities as of December 31, 2017 as compared to P1.06 as of December 31, 2016.

Cash and Cash Equivalents Cash and cash equivalents increased by P7.62 million or 17.69% from P43.06 million in December 31, 2016 to P50.67 million in December 31, 2017. This resulted from the net cash inflows provided by operating activities which amounted to P42.71 million, net cash flows used in investing activities of P36.43 million, and net cash used in financing activities of P7.61 million.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Receivables Receivables amounted to P57.46 million and P83.86 million as of December 31, 2017 and 2016, respectively. The movement of P26.40 million or 31.48% was attributed to the decrease in receivables from related parties (net) of P23.64 million or 61.32% and decreased of receivable from functions by P1.60 million or 15.39%.

Inventories Inventories have increased by P2.81 million or 24.72% from P11.39 million in December 31, 2016 to P14.20 million in December 31, 2017.

Other Current Assets Other current assets has a balance amounting to P21.57 million and P18.03 million as of December 31, 2017 and 2016, respectively due mainly to the increase in creditable withholding tax by P8.38 million or 67.98%.

Non-current Assets Non-current assets decreased by 1.62% or P8.72 million in 2017, from P537.02 million in December 31, 2016 to P528.30 million in December 31, 2017 due to depreciation expense recognized which amounted to P46.72 million during the year 2017 which was offset by the additions to property and equipment amounting to P26.73 million for the year 2016 and P35.77 million for the year 2017.

LIABILITIES Accounts payable and other current liabilities posted a decrease of P29.94 million or 20.07%, from P149.13 million in December 31, 2016 to P119.19 million in 2017. The decrease pertains to the following: decrease in related parties by P44.30 million or 86.79%, statutory payable by P6.88 million or 34.39%, decrease in retention payable of P0.21 million or 12.45%. Meanwhile, nonrelated parties increased by P0.33 million or 1.18%, membership dues collected in advance increased by P1.99 million or 13.33%, accrued expense increased by P1.25 million or 13.76% and refundable deposits increased by P10.45 million or 56.06% mainly from deposits for function.

In addition, non-current liabilities posted an increase of P3.89 million or 17.26% from P22.56 million in December 31, 2016 to a P26.45 million in December 31, 2017. The increase was brought by the retirement provision for the year.

EQUITY Members’ equity increased by P3.96 million or 0.76% from P521.18 million in December 31, 2016 to P525.14 million in December 31, 2017, attributed to the total comprehensive income of P3.96 million during the current year December 31, 2017.

Below are the comparative key performance indicators of the Club:

31-Dec-18 31-Dec-17 Performance Formula for (Audited) (Audited) Indicators Calculation Current assets over Current ratio 1.14 : 1.00 1.19 : 1.00 current liabilities Total liabilities over Total liabilities to total members’ 0.27 : 1.00 0.28 : 1.00 equity ratio equity

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Fixed assets Sales over net fixed 0.59 times 0.57 times turnover assets Excess of Revenue Over Expenses before Interest, Tax, EBITDA * per share Depreciation and P10,603.18 P10,153.59 Amortization over weighted average number of shares

* Excess of Revenue Over Expenses before Interest, Tax, Depreciation and Amortization (EBITDA)

During the year ended December 31, 2018, except for what has been noted in the preceding, there were no material events or uncertainties known to management that had a material impact on past performance, or that would have a material impact on future operations, in respect of the following:

i. Known trends, demands, commitments, events or uncertainties that would have a material impact on the Country Club; ii. Events that will trigger direct or contingent financial obligation that is material to the Country Club, including any default or acceleration of an obligation; iii. Material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Country Club with unconsolidated entities or other persons created during the reporting period; iv. Material commitments for capital expenditures that are reasonably expected to have a material impact on the Country Club’s short-term or long-term liquidity; v. Known 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; vi. Significant elements of income or loss that did not arise from the Country Club’s continuing operations; vii. Seasonal aspects that had a material impact on the Country Club’s results of operations; and viii. Material changes in the financial statements of the Country Club from the year ended December 31, 2017, except as reported in the MD&A.

Other Required Disclosures

1. The Club’s annual financial report is in compliance with generally accepted accounting principles. The accounting policies and methods of computation followed in the annual financial statements as of December 31, 2018 are the same as compared with the annual financial statements as of December 31, 2017.

2. There are no material events or uncertainties known to management that had a material impact on the seasonal aspects of the Club’s results of operations.

3. There are no items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidents.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

4. There are no material changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years.

5. There are no material events subsequent to the end of the fiscal period that have not been reflected in the financial statements for the period December 31, 2018.

6. There are no material changes in the composition of the club during the fiscal period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructurings, and discontinuing operations.

7. The Club has no contingent liabilities or contingent assets.

8. There are no material contingencies existing as of the fiscal period that can have a material effect in the decision making of the financial statement users.

9. The Club did not purchase any interest in another entity that is to be considered as business combination under PFRS 3.

10. The Club did not make an early adoption of PFRS 9 (Financial Instruments: Recognition and Measurement) which is effective for annual periods beginning on or after January 1, 2015. The adoption of the first phase of PFRS 9 will have no impact on the classification and measurement of the Club’s financial assets and financial liabilities.

11. The application of the amendment on PAS 27 (Separate Financial Statements) will have no significant impact on the Club’s financial position or financial performance.

12. The application of the amendment on PAS 28 (Investments in Associates and Joint Ventures) will have no significant impact on the Club’s financial position or financial performance.

13. The amendment on PFRS 1 (Government Loans) does not apply to the Club.

14. The amendment of PFRS 7 (Financial Instruments: Disclosures – Offsetting of Financial Assets and Financial Liabilities) only affect disclosures to financial statement and have no impact on the Club’s financial position or performance.

15. There will be no impact on the Club’s financial position and performance for the application of PFRS 10 (Consolidated Financial Statements)

16. The application of PFRS 11 (Joint Arrangements) will have no impact on the Club’s financial position and performance.

17. The application of PFRS 12 (Disclosure of Interests in Other Entities) will have no impact on the Club’s financial position or performance.

18. The Club does not anticipate that the adoption of PFRS 13 (Fair Value Measurement) will have a significant impact on the financial position or performance.

Item 7. Financial Statements

The audited statement of financial position as of December 31, 2018 and 2017, and the statements of comprehensive income, statement of changes in members’ equity and statements of cash flows for the years ended December 31, 2018, 2017 and 2016 are attached herewith as part of this

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Form 17-A. Also accompanying the financial statements is a statement of management’s responsibility over them.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

No principal accountant or independent accountant of The Country Club has resigned, was dismissed or has ceased to perform services during the fiscal year covered by this report.

There was no disagreement with the accountants on any matter of accounting principles or practices, financial statement disclosures, or auditing scope procedure.

Independent Public Accountants, External Audit Fees and Services

SyCip Gorres Velayo & Co. (“SGV”), the Company’s external auditors for 2017-2018, will be recommended for re-appointment as such for the current year. Representatives of SGV are expected to be present at the Annual Stockholders’ Meeting to respond to appropriate questions and will be given the opportunity to make a statement if they so desire.

Over the past five (5) years, there was no event where SGV and the Company had any disagreement with regard to any matter relating to accounting principles or practices, disclosure of financial statements or auditing scope or procedure.

In Compliance with the SEC Memorandum Circular No. 8 Series of 2003, Ms. Julie Christine O. Mateo was assigned in 2017 as SGV’s engagement partner for the Company to replace Mr. Sherwin V. Yason whose assignment ended after the 2016 audit engagement.

The Club paid SGV ₱338,000.00 and ₱280,000.00 for external audit services for 2018 and 2017.

For each of the last two (2) fiscal years, SGV did not render services for tax accounting, planning, compliance, advice, or any other professional services for which it billed TCCATHI the corresponding professional fees.

The Audit Committee, composed of Mr. Ruben C. Tan as Chairman, and Messrs. Willy N. Ocier, Jerry C. Tiu, and Hans T. Sy as Members, recommends to the Board of Directors the appointment of the external auditors. The Board of Directors and the stockholders approve the Audit Committee’s recommendation. The Executive Committee approves the audit fees as recommended by the Audit Committee.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

PART III - CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Issuer

The following are the incumbent Directors and Principal Officers of the Country Club:

Name Nationality Position Age Term of Office Willy N. Ocier Filipino Chairman 62 1996 to present Jerry C. Tiu Filipino Director / President 61 2000 to present Hans T. Sy Filipino Director 63 1996 to present Joseph T. Chua Filipino Independent Director 62 2008 to present Ruben C. Tan Filipino Independent Director 63 2017 to present A. Bayani K. Tan Filipino Corporate Secretary 63 1996 to present Manuel A. Gana Filipino Vice President/Treasurer 61 2000 to present Ma. Clara T. Kramer Filipino General Manager 57 2010 to present

A brief write-up on the incumbent directors and principal are as follows:

Willy N. Ocier

Mr. Ocier is the Chairman of the Board of the Country Club since 1996. Likewise, he is the Chairman of the Board of The Spa and Lodge at Tagaytay Highlands, Inc. (TSL) since 1996, while he is the Chairman of the Board of Tagaytay Midlands Golf Club, Inc. (TMGCI) and the Vice Chairman of the Board of Tagaytay Highlands International Golf club, Inc. (THIGCI) from 1992 up to present. He is also the Chairman of the Board of APC Group, Inc., Premium Leisure Corp., Premium Leisure and Amusement, Inc., PRC-Magma Energy Resources, Inc., and Aragorn Power and Energy Corporation. Concurrently, he is the Chairman, President and Chief Executive Officer of Philippine Global Communications, Inc. and the Chairman and President of Pacific Online Systems Corporation. Furthermore, he is the Vice Chairman of Belle Corporation and Highlands Prime, Inc. He is a Director of Leisure and Resorts World Corporation, PhilEquity Management, Inc., Vantage Equities, Toyota Corporation – Batangas, and AbaCore Capital Holdings, Inc. He was also the former President and Chief Operating Officer of Eastern Securities Development Corporation. Mr. Ocier received his Bachelor’s Degree in Economics from Ateneo de Manila University.

Jerry C. Tiu

Mr. Tiu, Filipino, 62, is the President of the Country Club since 2000. He is an Independent Director of Pacific Online Systems Corporation since February 21, 2007 and was appointed as the Lead Independent Director last May 31, 2017. He is also an Independent Director of Philippine Global Communications, Inc. since 2009. He is the President and a Director of Tagaytay Highlands International Golf Club, Inc., Tagaytay Midlands Golf Club, Inc., and The Spa & Lodge at Tagaytay Highlands, Inc. He is likewise the President and a Director of Tagaytay Highlands Community Condominium Association, Inc., Tagaytay Midlands Community Homeowners’ Association, Inc., and Greenlands Community Homeowners’ Association, Inc. Moreover, he is the Vice-President and a Board of Trustee of The Highlands Prime Community Condominium Owners’ Association, Inc., The HPI’s Horizon Community Condominium Owners’ Association, Inc. and The Hillside at

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Tagaytay Highlands Community Homeowners’ Association, Inc. He holds a Bachelor of Science degree in Commerce (Major in Marketing) from University of British Columbia.

Hans T. Sy

Mr. Sy is a Director of the Country Club since 1996. He is also the Chairman of the Board of THIGCI and a Director of TMGCI from 1992 up to present. Currently, he is the Chairman of the Executive Committee of SM Prime Holdings, Inc. where he has been a Director since 1994, and served as its President until September 2016. He has held key positions in businesses related to banking, real estate development, mall operations, as well as leisure and entertainment. In the SM Group, his other current positions include Adviser to the Board of SM Investments Corporation, Chairman of China Banking Corporation, and Chairman of National University. Mr. Sy is a Bachelor of Science in Mechanical Engineering Graduate of De La Salle University.

Joseph T. Chua

Mr. Chua is an Independent Director of the Country Club since 2008. He was the Managing Director of Goodwind Development Corporation from 1983 to 2012 before he became its President in 2013. He is also the Chairman of the Board of JF Rubber Philippines since 1993. He is a Director of MacroAsia Corporation since 1997. He became its COO in 2001, then President and CEO from 2003 to December 14, 2015, and currently, the President and COO. Likewise, he is a Director of Lufthansa Technik Philippines Inc. (2000-Present), PAL Holdings, Inc. (October 23, 2014– January 29, 2018), Philippine Airlines, Inc. (August 2003–March 2012, October 23, 2014–January 29, 2018), Air Philippines Corporation (February 11, 2015-January 29, 2018), Eton City, Inc. (May 2013- May 2, 2018), Belton Communities, Inc. (May 2013-May 2, 2018), FirstHomes Inc. (May 2013-May 2, 2018), Bulawan Mining (2009-January 29, 2018), PNB Management & Development Corporation (2009-January 29, 2018), and PNB General Insurers Company, Inc. (August 12, 2014-February 23, 2018). He is the President of Macroasia Airport Services Corporation (2000-Present), MacroAsia Catering Services, Inc. (2003-Present), and MacroAsia SATS Food, Inc. (2015-Present). He was the Chairman of the Board before he became the President of MacroAsia Air Taxi Services (2004- Present), MacroAsia Properties Development Corporation (January 2013-Present), Watergy Business Solutions, Inc. (2014-Present), and MacroAsia Mining Corporation (December 2012- Present). He is currently the Chairman of the Board of Cavite Business Resources, Inc. (2011- Present), Boracay Tubi System Inc. (December 2016-Present), Naic Water Supply Corporation (August 2017-Present), Summa Water Resources, Inc. (October 2018-Present), and First Aviation Academy Inc. (December 2017-Present). He also served as the Director (May 2013-September 2017), OIC (February 28, 2014), and EVP-COO (June 24, 2014-September 2017) of Eton Properties Philippines, Inc. as well as Director (May 27, 2014-May 25, 2015) and Board Advisor (May 25, 2018- February 23, 2018) of Philippine National Bank. Mr. Chua holds a Master of International Finance degree from the University of Southern California and a double degree of Bachelor of Arts in Economics and Bachelor of Science in Business Management from the De La Salle University.

Ruben C. Tan

Mr. Tan is an Independent Director of the Country Club, as well as TMGCI, THIGCI and TSL. Likewise, he is a Director of Blue Ridge Mineral Corporation and Eagle Crest Mining & Development Corporation from 2012 up to present. He is also the President of Glendale Mining & Development Corporation (1997-Present), Citimex, Inc. (1984-Present), Cedarside Industries, Inc. (1996-Present), and Barrington Carpets, Inc. (1989-Present). Mr. Tan holds a Bachelor of Science degree in Mechanical Engineering from De La Salle University.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Principal Officers

A. Bayani K. Tan

Mr. A. Bayani K. Tan is the Corporate Secretary of the Country Club (since August 1995). He is also a Director, Corporate Secretary or both of the following reporting and/or listed companies: Belle Corporation (since May 1994), Coal Asia Holdings, Inc. (since July 2012), Discovery World Corporation (since March 2013), I-Remit, Inc. (since May 2007), Pacific Online Systems Corporation (since May 2007), Philequity Dividend Yield Fund, Inc. (since January 2013), Philequity Dollar Income Fund, Inc. (since March 1999), Philequity Fund, Inc. (since June 1997), Philequity MSCI Philippines Index Fund, Inc. (since December 2017), Philequity Peso Bond Fund, Inc. (since June 2000), Philequity PSE Index Fund, Inc. (since February 1999), Premium Leisure Corporation (since December 1993), Sterling Bank of Asia Inc (A Savings Bank) (since December 2006), TKC Metals Corporation (since February 2007), Tagaytay Highlands International Golf Club, Inc. (since November 1993), Tagaytay Midlands Golf Club, Inc. (since June 1997), The Spa and Lodge at Tagaytay Highlands, Inc. (since December 1999), and Vantage Equities, Inc. (since January 1993). He is the Managing Partner of the law offices of Tan Venturanza Valdez (since it was established in 1988), Managing Director/President of Shamrock Development Corporation (since May 1988), Director of Destiny LendFund, Inc. (since December 2005), Pascual Laboratories, Inc. (since March 2014), and Pure Energy Holdings Corporation (since October 2016), President of Catarman Chamber Elementary School Foundation, Inc. (since August 2012), Managing Trustee of SCTan Foundation, Inc. (since 1986), Trustee and Treasurer of Rebisco Foundation, Inc. (since April 2013) and Trustee and Corporate Secretary of St. Scholastica's Hospital, Inc. (since February 2011).

Mr. Tan holds a Master of Laws degree from New York University and earned his Bachelor of Laws degree from the University of the Philippines where he was a member of the Order of the Purple Feather (U.P. College of Law Honor Society) and ranked ninth in his class. Mr. Tan passed the bar examinations in 1981 where he placed sixth. He has a Bachelor of Arts major in Political Science degree from the San Beda College from where he graduated Class Valedictorian and was awarded the medal for Academic Excellence.

Manuel A. Gana

Mr. Gana is the Vice President and Treasurer of the Country Club (2000-present). He is also the Vice President and the Treasurer of THIGCI, TMGCI and TSL. He was the Executive Vice President (EVP) for Finance and Chief Financial Officer (CFO) of Belle Corporation since 2000 before he became its Chief Executive Officer and President in March 2017. Moreover, he is a Director of APC Group, Inc. and Pacific Online Systems Corporation and was the President and Chief Operating Officer (COO) of Sinophil Corporation from 2010 to 2013. He was a former Director of Investment Banking at Nesbitt Burns Securities Incorporated, and had worked for Bank of Montreal and Merrill Lynch Capital Markets (all in New York) and for Procter & Gamble Philippine Manufacturing Corp.

Mr. Gana holds a double degree in Economics and Accounting from De La Salle University and a Master of Business Administration degree from Wharton School of the University of Pennsylvania. He is a Certified Public Accountant.

Ma. Clara T. Kramer

Ms. Kramer is the General Manager of the Country Club since 2010. She is also the concurrent General Manager of THIGCI, TMGCI, TSL, THCCAI, TMCHAI, GCHAI, THPCCOAI, THHCCOAI, and THTHCHAI. She serves as the Business Unit Head and Senior Vice-President of Tagaytay Highlands Estate (Belle Corporation). She was a consistent Dean’s Lister in Assumption College (San Lorenzo

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Village, Makati City) where she earned her bachelor’s degree. She started her career in hotel industry back in December of 1983 when she joined the sales department of Manila Hotel as Sales Executive. In July 1990, she was hired by L’Fisher Hotel as Front Office Manager and later on as PR & Promotions Manager until she got promoted in June 2001 and was tasked to manage the Sales and Marketing Department. As member of the management team, she actively took part in the formulation of major policies and procedures of the Hotel. Ms. Kramer is also involved in various civic and social activities as member and resource speaker focusing on family, marriage and parenting.

Significant Employee

The Country Club has no significant employees.

Family Relationships

There are no family relationships up to the fourth civil degree either by consanguinity or affinity among directors, executive officers, or persons nominated or chosen by the Club to become directors or executive officers.

Involvement in Certain Legal Proceedings

As a result of the delay in the delivery of the facilities of the Universal Leisure Club, Inc., some of its members initiated a Complaint for Estafa (I.S. No. 08K-89713) against ULC, the Universal Rightfield Property Holdings, Inc. and the Universal Leisure Corp., as well as their respective officers and directors, including their former Corporate Secretary, Atty. A. Bayani K. Tan, an incumbent Director and the Corporate Secretary of the Corporation. The Complaint was submitted for resolution in 2009 and was acted upon and dismissed by the City Prosecutor of Manila (OCP) only on March 18, 2013. Complainants belatedly filed a motion for reconsideration for which reason, among others, the OCP denied the motion on June 16, 2014. A Petition for Review dated March 31, 2014 was filed by the Complainant before the Department of Justice (DOJ). On August 7, 2014, Atty. Tan filed his Comment to the said Petition. In a Resolution dated April 17, 2015, the Petition for Review was denied and the DOJ dismissed the complaint for estafa.

Except as provided above, the Country Club is not aware of any of the following events wherein any of its directors, nominees for election as director, executive officers, underwriter or control persons were involved during the past five (5) years up to the latest date: (a) Any bankruptcy 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 two years prior to that time; (b) Any conviction by final judgment, including the nature of the offense, in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses; (c) Being subject to 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 his involvement in any type of business, securities, commodities or banking activities; and (d) Being found by a domestic or foreign court of competent jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic or foreign Exchange or other organized trading market or self-regulatory organization, to have violated a

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

securities or commodities law or regulation, and the judgment has not been reversed, suspended, or vacated.

Item 10. Executive Compensation

Except for the General Manager and President, the Directors and Executive Officers do not receive any compensation from the Country Club.

Annual Compensation

Named Group:

Name and Principal Position Year Salary Bonus Other Annual Compensation Claire T. Kramer 2017-2018 ( General Manager ) Jerry C. Tiu 2017-2018 ( President ) TOTAL SALARIES 2017 P2,761,424 2018 P2,999,024 2019 P2,999,024 (estimate)

Item 11. Security Ownership of Certain Beneficial Owners and Management

(1) Security Ownership of Certain Record and Beneficial Owners

The following table shows the record and beneficial owners owning more than 5% of the outstanding capital stock of the Country Club as of December 31, 2018:

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF TITLE OF CLASS RECORD/BENEFICIAL OWNER RECORD/BENEFICIAL CLASS OWNERSHIP

Belle Corporation * Proprietary 5TH Floor Tower A, Two E-com share Center, Palm Coast Avenue, Mall 2,319 shares 46.38% of Asia Complex, CBP 1-A, Pasay City 1300, Philippines

Proprietary Ivory Holdings 267 shares 5.34% share

*Belle Corporation is a publicly-listed corporation. Its Board of Directors is composed of Messrs. Emilio S. De Quiros Jr., Willy N. Ocier, Elizabeth Anne C. Uychaco, Manuel A. Gana, Jose T. Sio, Virginia A. Yap, Arthur L. Amansec, Aurora Cruz Ignacio, Jacinto C. Ng Jr., Gregorio U. Kilayko, Cesar E. A. Virata, and Amando M. Tetangco, Jr. Belle Corporation, having 46.38% shareholdings, is an associate of the Club. The top 20 stockholders of Belle Corporation as of 31 December 2018 are as follows:

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

TYPE/ OUTSTANDING & STOCKHOLDERS CLASS ISSUED SHARES

1 Belleshares Holdings, Inc. Common 2,604,740,622 2 PCD NOMINEE CORPORATION (FILIPINO) Common 2,549,349,317 3 PCD NOMINEE CORPORATION (NON-FILIPINO) Common 2,074,101,699 4 Sysmart Corporation Common 1,629,353,802 5 SYBASE EQUITY INVESTMENTS CORPORATION Common 531,320,577 6 Social Security System Common 370,469,139 7 Eastern Securities Development Corp. Common 171,730,866 8 Jacinto C. Ng Jr. Common 154,153,999 9 Premium Leisure Corporation (formerly Sinophil Corp) Common 99,987,719 10 Jacinto L. Ng Sr. Common 88,835,833 11 Parallax Resources Inc. Common 86,308,131 12 SLW Development Corporation Common 66,082,333 13 Willy N. Ocier Common 48,541,702 14 F. Yap Securities. Inc. Common 21,803,732 15 Pacita K. Yap/ Philip K. Yap Common 7,000,000 16 Lim Siew Kim Common 6,200,000 17 James Go Common 4,816,999 18 Estate of Leo Joseph Blanchet Common 4,128,579 19 William T. Gabaldon Common 4,000,000 20 WASHINGTON Z. SYCIP Common 3,008,334

(2) Security Ownership of Management

The following is a tabular presentation of the shares beneficially owned by all directors and executive officers of the Company as of December 31, 2018:

AMOUNT AND PERCENT OF TITLE OF CLASS NAME OF BENEFICIAL OWNER NATURE OF CITIZENSHIP CLASS OWNERSHIP

Proprietary Willy N. Ocier 1 share/Beneficial Filipino 0.02% Share 32 Wilson St., San Juan, Metro Manila

Proprietary Hans T. Sy 1 share/Beneficial Filipino 0.02% Share No. 11 Harvard Road, Forbes Park, Makati City

Proprietary Jerry C. Tiu 1 share/Beneficial Filipino 0.02% Share 5 Urdaneta St., Urdaneta Village, Makati City

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Proprietary Ruben C. Tan 1 share/Beneficial Filipino 0.02% Share #769 Harvard St. Wack wack Village, Mandaluyong City

Proprietary Joseph T. Chua 1 share/Beneficial Filipino 0.02% Share Macroasia Corporation, 12/F Allied Bank Center, 6765 Ayala Avenue, Makati City

Proprietary A. Bayani K. Tan 2 shares/Beneficial Filipino 0.04% Share No. 57 Athena Loop, Palladium Subdivision, Mandaluyong City 141414 Aggregate Security Ownership of Directors and 7 shares 0.14% Officers

(3) Voting Trust Holders of 5% or more

There is no party that holds any voting trust or any similar agreement for 5% or more of the Country Club voting securities.

(4) Changes in Control

The Country Club is not aware of any arrangement that may result in a change in control of the Country Club.

Item 12. Certain Relationships and Related Transactions

The Country Club has not been involved in any transaction during the last four (4) years in which any of its directors, executive officers, nominees or security holders has direct or indirect material interest.

Belle Corporation is the parent company of the Country Club owning 2,319 shares or 46.38% of the total outstanding shares of the Country Club.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

PART IV – CORPORATE GOVERNANCE

Item 13. Corporate Governance

The Country Club remains focused on insuring the adoption of systems and practices of good corporate governance in enhancing value for its shareholders.

The Company has been monitoring compliance with SEC Memorandum Circular No. 2, Series of 2002, as well as other relevant SEC circulars and rules on good corporate governance. The Country Club filed with the SEC its Revised Manual on Corporate Governance in 2014, pursuant to SEC Memorandum circular No. 9, series of 2014. The Country Club also appointed members of various Board level committees. These committees were comprised of a Membership Committee, a Nomination committee for selection and evaluation of qualifications of directors and officers, a Compensation Committee to look into an appropriate remuneration system, and an Audit Committee to review financial and accounting matters. A Compliance Officer was also appointed. Members of various committees are expected to serve for a term of one (1) year. As a proof of compliance with leading practices and principles of Good Governance, the Country Club has formally adopted a manual on Corporate Governance and submitted to SEC its Corporate Governance Self–Rating Form.

The Country Club is not aware of any non-compliance with its Manual on Corporate Governance by any of its officers or employees.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

PART V - EXHIBITS AND SCHEDULES

Item 14. Exhibits and Reports on SEC Form 17-C

(a) Exhibits

Financial Statements (meeting the requirements of RSA Rule 48-1) Exhibit “E” Property and Equipment Exhibit “F” Accumulated Depreciation Exhibit “I” Indebtedness to Affiliated and Related Parties Exhibit “K” Proprietary Certificates

(b) Reports on SEC Form 17-C

The following SEC Form 17-C was filed pursuant to the provision of the Security Regulation Code:

Date of Report Information

April 12, 2018 Notice of Annual Stockholders’ Meeting

Election of Mr. Ruben C. Tan as May 26, 2018 Independent Director

May 31, 2018 Results of Annual Stockholders’ Meeting and the Organizational Meeting of the Board of Directors.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. (A Nonprofit Corporation)

INDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

FORM 17-A, Item 7

Page No. Financial Statements

Statement of Management’s Responsibility for Financial Statements Report of Independent Public Accountants Statements of Financial Position as at December 31, 2018 and 2017 Statements of Comprehensive Income For the years ended December 31, 2018 and December 31, 2017 and December 31, 2016 Statements of Changes in Members’ Equity For the years ended December 31, 2018 and December 31, 2017 and December 31, 2016 Statements of Cash Flows For the years ended December 31, 2018 and December 31, 2017 and December 31, 2016 Notes to Financial Statements

Supplementary Schedules Required by Annex 68-E

A. Financial Assets Attached

B. Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties) Attached

C. Amounts Receivable from Related Parties which are Eliminated during the Consolidation of Financial Statements NA

D. Intangible Assets and Other Assets NA

E. Long-term Debt NA

F. Indebtedness to Related Parties (Long-term Loans from Related NA Companies)

G. Guarantees of Securities of Other Issuers NA

H. Capital Stock Attached

Additional Components i.) List of Philippine Financial Reporting Standards effective as at Attached December 31, 2018

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. SUPPLEMENTARY SCHEDULES REQUIRED BY ANNEX 68-E DECEMBER 31, 2018

Schedule A. Financial Assets Income Amount Shown in Received Name of Issuing Entity and Association of the Statement of and Each Issue Financial Position Accrued Cash and cash equivalents Cash on hand P=21,083,092.92 P=– Cash in banks: BDO - Savings Account 19,526,126.87 62,833.20 Union Bank - Peso 3,288,520.92 7,187.94 MBTC - Savings Account 5,169,462.66 19,123.68 Union Bank - Dollar 374,268.17 377.58 MBTC - Current Account 10,000.00 – China Bank – Savings Account 500 – China Bank – Current Account 10,549.10 48.58 49,462,520.64 89,570.98 Short-term deposits: BDO P=4,216,980.63 P=133,002.92 UB 218,709.22 3,591.50 P=4,435,689.85 P=136,594.42 53,898,210.49 226,165.40

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Schedule B - Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties) As at December 31, 2018

Deductions Balance as at Balance as at Name and Amount Amount January 1, Non December 31, Designation Additions Collected Written Off Current 2018 Current 2018

Not Applicable: The Country Club has no amounts receivable from directors, officers, employees, related parties and principal stockholders as at December 31, 2018.

Schedule C - Amounts Receivable from and Payable to Related Parties which are Eliminated during the Consolidation of Financial Statements As at December 31, 2018

Due from subsidiaries

Deductions Balance as Amount Balance as at at Amount Non- Name and Designation Additions Written Current December 31, January 1, Collected Current Off 2018 2018

Not Applicable: The Country Club has no amounts receivable from and payable to related parties which are eliminated during consolidation of financial statements as at December 31, 2018.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Schedule D - Intangible Assets - Other Assets As at December 31, 2018

Other Charged to changes: Beginning Additions cost and additions Ending Description balance at cost expenses (disposals) balance Accounting Software 1,141,282 570,104 - - 1,711,386

Not Applicable: The Country Club has no intangible assets as at December 31, 2018.

Schedule E - Long Term Debt As at December 31, 2018

Amount Amount shown under Amount shown under Authorized caption “Current portion of caption “Long term Title of Issue and Type by long term debt” in related debt” in related of Obligation Indenture balance sheet balance sheet Loans Payable - 1,273,345 324,413

Schedule F - Indebtedness to Related Parties As at December 31, 2018

Balance, Balance, Name January 1, 2018 December 31, 2018 BELLE CORPORATION 1,636,611 3,068,011 THE SPA AND LODGE AT TAGAYTAY HIGHLANDS, INC. 3,908,375 1,632,600 HIGHLANDS PRIME INC. - 36,708 GREENLANDS COMMUNITY HOMEOWNERS ASSOC. INC. 76,725 - TAGAYTAY HIGHLANDS COMMUNITY CONDOMINIUM ASSOC INC. 1,123,732 1,646,281 TAGAYTAY HIGHLANDS PRIME COMMUNITY CONDOMINIUM OWNERS ASSOC. INC. - 25,316

6,745,443 6,408,916

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Schedule G - Guarantees of Securities of Other Issuers As at December 31, 2018

Name of Issuing Entity of Amount Owned Title of Issue of Total Amount Securities Guaranteed by Person for Each Class of Guaranteed Nature of by the Company for which the Securities and Guarantee which this statement is Statement is Guaranteed Outstanding filed Filed

Not Applicable: The Country Club has no guarantees of securities of other issuers as at December 31, 2018.

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A)

Schedule H - Capital Stock December 31, 2018

Number of Shares Held By Number of Number of Shares Issued Number of Shares Reserved for Directors, Shares and Options, Warrants, Conversions, Officers and Title of Issue Authorized Outstanding and Other Rights Related parties Employees Others

Common 5,000 5,000 − 2,319 7 2,326

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THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. (A Nonprofit Corporation)

INDEX TO EXHIBITS

FORM 17-A

Page No. Financial Statements

(3) Plan of Acquisition, Reorganization, Arrangements, Liquidation, or Succession NA

(5) Instruments Defining the Rights of Security Holders, Including Indentures NA

(8) Voting Trust Agreement NA

(9) Material Contracts NA

(10) Annual Report to Security Holders, Form 11-Q or Quarterly Report to Security Holders NA

(13) Letter re: Change in Certifying Accountants NA

(16) Report Furnished to Security Holders NA

(18) Subsidiaries of the Registrant NA

(19) Published Report Regarding Matters Submitted to Vote of Security Holders NA

(20) Consent of Experts and Independent Counsel NA

(21) Power of Attorney NA

(29) Additional Exhibits NA

NA Not Applicable -

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The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A) THE COUNTRY CLUB AT TAGAYTAY HIGHLANDS, INC. (A Nonprofit Corporation) SCHEDULE OF PHILIPPINE FINANCIAL REPORTING STANDARDS EFFECTIVE AS AT DECEMBER 31, 2018

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Not Not Effective as at December 31, 2018 Adopted Adopted Applicable Philippine Financial Reporting Standards

PFRS 1 First-time Adoption of Philippine Financial Reporting Standards 

PFRS 2 Share-based Payment 

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

PFRS 3 Business Combinations 

PFRS 4 Insurance Contracts 

Amendments to PFRS 4, Applying PFRS 9 Financial Instruments with PFRS 4 Insurance  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 

PFRS 8 Operating Segments 

PFRS 9 Financial Instruments 

PFRS 10 Consolidated Financial Statements 

PFRS 11 Joint Arrangements 

PFRS 12 Disclosure of Interests in Other Entities 

PFRS 13 Fair Value Measurement 

PFRS 14 Regulatory Deferral Accounts 

PFRS 15 Revenue from Contracts with Customers 

Philippine Accounting Standards

PAS 1 Presentation of Financial Statements 

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 

32 The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A) PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Not Not Effective as at December 31, 2018 Adopted Adopted Applicable PAS 12 Income Taxes 

PAS 16 Property, Plant and Equipment 

PAS 17 Leases 

PAS 19 Employee Benefits 

PAS 20 Accounting for Government Grants and  Disclosure of Government Assistance

PAS 21 The Effects of Changes in Foreign Exchange  Rates

PAS 23 Borrowing Costs 

PAS 24 Related Party Disclosures 

PAS 26 Accounting and Reporting by Retirement Benefit  Plans

PAS 27 Separate Financial Statements 

PAS 28 Investments in Associates and Joint Ventures 

Amendments to PAS 28, Measuring an Associate or Joint Venture at Fair Value (Part of Annual  Improvements to PFRSs 2014 - 2016 Cycle)

PAS 29 Financial Reporting in Hyperinflationary  Economies

PAS 32 Financial Instruments: Presentation 

PAS 33 Earnings per Share 

PAS 34 Interim Financial Reporting 

PAS 36 Impairment of Assets 

PAS 37 Provisions, Contingent Liabilities and Contingent  Assets

PAS 38 Intangible Assets 

PAS 39 Financial Instruments: Recognition and  Measurement

PAS 40 Investment Property 

Amendments to PAS 40, Transfers of Investment Property 

PAS 41 Agriculture 

Philippine Interpretations

Philippine Changes in Existing Decommissioning, Interpretation Restoration and Similar Liabilities  IFRIC-1

33 The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A) PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Not Not Effective as at December 31, 2018 Adopted Adopted Applicable Philippine Members’ Shares in Co-operative Entities and Interpretation Similar Instruments  IFRIC-2

Philippine Determining whether an Arrangement contains a Interpretation Lease  IFRIC-4

Philippine Rights to Interests arising from Decommissioning, Interpretation Restoration and Environmental Rehabilitation  IFRIC-5 Funds

Philippine Liabilities arising from Participating in a Specific Interpretation Market—Waste Electrical and Electronic  IFRIC-6 Equipment

Philippine Applying the Restatement Approach under PAS Interpretation 29 Financial Reporting in Hyperinflationary  IFRIC-7 Economies

Philippine Interim Financial Reporting and Impairment Interpretation  IFRIC-10

Philippine Service Concession Arrangements Interpretation  IFRIC-12

Philippine PAS 19—The Limit on a Defined Benefit Asset, Interpretation Minimum Funding Requirements and their  IFRIC-14 Interaction

Philippine Hedges of a Net Investment in a Foreign Interpretation Operation  IFRIC-16

Philippine Distributions of Non-cash Assets to Owners Interpretation  IFRIC-17

Philippine Extinguishing Financial Liabilities with Equity  Interpretation Instruments IFRIC-19

Philippine Stripping Costs in the Production Phase of a Interpretation Surface Mine  IFRIC-20

Philippine Levies Interpretation  IFRIC-21

Philippine Foreign Currency Transactions and Advance Interpretation Consideration  IFRIC-22

34 The Country Club at Tagaytay Highlands, Inc. 2018 Annual Report (SEC Form 17-A) PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Not Not Effective as at December 31, 2018 Adopted Adopted Applicable Philippine Introduction of the Euro Interpretation  SIC-7

Philippine Government Assistance—No Specific Relation to Interpretation Operating Activities  SIC-10

Philippine Operating Leases—Incentives Interpretation  SIC-15

Philippine Income Taxes—Changes in the Tax Status of an Interpretation Entity or its Shareholders  SIC-25

Philippine Evaluating the Substance of Transactions Interpretation Involving the Legal Form of a Lease  SIC-27

Philippine Service Concession Arrangements: Disclosures  Interpretation SIC-29

Philippine Intangible Assets—Web Site Costs Interpretation  SIC-32

Note: Standards and interpretations tagged as “Not Applicable” are those standards and interpretations which were adopted but the entity has no significant covered transaction as at and for the year ended December 31, 2018.

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