1 0 6 8 3 S.E.C. Registration Number

S U N T R U S T H O M E D E V E L O P E R S , I N C . (Company’s Full Name)

6 / F T H E W O R L D C E N T R E 3 3 0 S E N G I L P U Y A T A V E . M A K A T I (Business Address: No. Street City/ Town/ Province)

ROLANDO D. SIATELA 867-8826 to 40 Contact Person Company Telephone Number

1 2 3 1 S E C F O R M 2 0 - I S 10 Last Tues. Month Day FORM TYPE Month Day Fiscal Year Definitive Information Statement 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

S T A M P S

Remarks = pls. use black ink for scanning purposes

SUN SEC Form 20-IS - 2017 1

SECURITIES AND EXCHANGE COMMISSION SEC FORM 20-IS INFORMATION STATEMENT PURSUANT TO SECTION 20 OF THE SECURITIES REGULATION CODE

1. Check the appropriate box:

[ ] Preliminary Information Statement [/ ] Definitive Information Statement

2. Name of Registrant as specified in its charter: SUNTRUST HOME DEVELOPERS, INC.

3. Province, country or other jurisdiction of incorporation or organization: METRO MANILA, PHILIPPINES

4. SEC Identification Number: 10683

5. BIR Tax Identification Code: 000-141-166-000

6. Address of Principal Office: 6th Floor, The World Centre Building, 330 Sen. Gil Puyat Avenue, Makati City, Metro Manila, Philippines

7. Registrant’s telephone number, including area code: (+632) 867-8826 to 40

8. Date, time and place of the meeting of security holders: 10 November 2017, 9:00 AM Belmont Hotel Manila, Newport Boulevard, Newport City, Pasay City

9. Approximate date on which the Information Statement is first to be sent or given to security holders: 13 October 2017

10. Securities registered pursuant to Sections 8 and 12 of the Code or Sections 4 and 8 of the RSA (information on number of shares and amount of debt is applicable only to corporate registrants):

Title of Each Class Number of Shares of Common Stock Outstanding

Common stock 2,250,000,000

11. Are any or all of registrant's securities listed in a Stock Exchange? Yes

Disclose the name of such Stock Exchange: Philippine Stock Exchange

SUN SEC Form 20-IS - 2017 2

6th Floor, The World Centre 330 Sen. Gil Puyat Avenue, Makati City 1200, Philippines Tel: (632) 867-88-26 to 40

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO ALL STOCKHOLDERS:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Suntrust Home Developers, Inc. will be held on 10 November 2017 at 9:00 a.m. at the Belmont Hotel Manila, Newport Boulevard, Newport City, Pasay City, Metro Manila, Philippines, with the following agenda:

1. Call to Order 2. Certification of Notice and Quorum 3. Approval of the Minutes of the Previous Annual Stockholders’ Meeting 4. Report of Management 5. Amendment of Principal Office Address 6. Appointment of Independent Auditors 7. Ratification of Acts of the Board of Directors, Board Committees, and Management 8. Election of Directors 9. Other Matters 10. Adjournment

The Board has fixed the close of business hours of 06 October 2017 as the record date for the determination of the stockholders entitled to notice and vote at the meeting.

Makati City, Metro Manila, Philippines, 05 October 2017.

ROLANDO D. SIATELA Corporate Secretary

SUN SEC Form 20-IS - 2017 3

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT REQUESTED TO SEND US A PROXY

SAMPLE PROXY ONLY

The undersigned shareholder(s) of SUNTRUST HOME DEVELOPERS, INC. (the “Corporation) hereby appoint/s or in his/her absence, the Chairman of the Annual Shareholders’ Meeting, as proxy of the undersigned shareholder(s) at the Annual Meeting of Shareholders scheduled on 10 November 2017 at 9:00 A.M. at the Belmont Hotel Manila, Newport Boulevard, Newport City, Pasay City and/or at any postponement or adjournment thereof, and/or any annual shareholders’ meeting of the Company, which appointment shall not exceed five (5) years from date hereof.

The undersigned shareholder(s) hereby direct/s the said proxy to vote all shares on the agenda items set forth below as expressly indicated by marking the same with [√] or [X]:

ITEM SUBJECT ACTION NO. FOR AGAINST ABSTAIN

3 Approval of the Minutes of the Previous Annual Stockholders Meeting 5 Amendment of the Articles of Incorporation to change the principal office address of the Corporation 6 Appointment of Independent Auditors 7 Ratification of Acts of the Board of Directors, Board Committees, and Management 8 Election of Directors Ferdinand B. Masi Evelyn G. Cacho Giancarlo C. Ng Josephine Marie R. Salazar Neoli Mae L. Kho Alejo L. Villanueva, Jr. - Independent Director Eugenio B. Reducindo - Independent Director

PRINTED NAME OF SHAREHOLDER SIGNATURE OF SHAREHOLDER/ NUMBER OF SHARES DATE AUTHORIZED SIGNATORY TO BE REPRESENTED

This proxy should be received by the Corporate Secretary not later than end of business hours on 08 November 2017.

This proxy when properly executed will be voted in the manner as directed herein by the shareholder. If no direction is made, the proxy will be voted for the election of all nominees and for the approval of all matters stated above and for such other matters as may properly come before the meeting in the manner described in the information statement.

A shareholder giving a proxy has the power to revoke it at any time before the right granted is exercised. A proxy is also considered revoked if the shareholder attends the meeting in person and expressed his intention to vote in person.

This proxy does not need to be notarized. (Partnerships, Corporations and Associations must attach certified resolutions thereof designating Proxy/Representative and Authorized Signatories.)

SUN SEC Form 20-IS - 2017 4

I INFORMATION STATEMENT GENERAL INFORMATION

Date, time and place of annual meeting of security holders.

The annual meeting of the stockholders of the Company will be held on 10 November 2017, 9:00 a.m. at the Belmont Hotel Manila, Newport Boulevard, Newport City, Pasay City, Philippines.

The Company’s complete mailing address is at the 20th Floor Alliance Global Tower, 36th Street cor. 11th Avenue, Uptown Bonifacio, Taguig City.

Copies of this information statement will be sent on or before 13 October 2017 to all stockholders on record as of 06 October 2017.

The Company is not soliciting proxies. We are not asking for a proxy. Neither are you required to send us a proxy.

Dissenter’s Right of Appraisal

There are no matters to be acted upon or proposed corporate action in the agenda for the annual meeting of stockholders that may give rise to possible exercise by a dissenting stockholder of its appraisal rights under Title X of the Corporation Code of the Philippines.

Any stockholder of the Company shall have the right to dissent and demand payment of the fair value of his shares in the following instances: (1) in case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence; (2) in case the Company decides to invest funds in another corporation or business or for any purpose outside of the primary purpose for which it was organized; (3) in case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets, and (4) in case of merger or consolidation.

The appraisal right may be exercised by any stockholder who shall have voted against the proposed corporate action by making a written demand on the Company within thirty (30) days after the date on which the vote was taken for payment of the fair value of his shares. A stockholder must have voted against the proposed corporate action in order to avail himself of the appraisal right. Failure to make the demand within the 30-day period shall be deemed a waiver of the appraisal right. From the time of the demand until either the abandonment of the corporate action in question or the purchase of the dissenting shares by the Company, all rights accruing to the dissenting shares shall be suspended, except the stockholder’s right to receive payment of the fair value thereof. If the proposed corporate action is implemented or effected, the Company shall pay to such stockholder, upon surrender of the stock certificate(s) representing his shares, the fair value thereof as of the day prior to the date on which the vote was taken, excluding any appreciation or depreciation in anticipation of such corporate action.

If the fair value is not determined within sixty (60) days from the date the corporate action was approved by the stockholders, it will be determined by three (3) disinterested persons (one chosen by the Company, another chosen by the dissenting stockholder and the third to be chosen jointly by the Company and the stockholder). The findings of the majority of the appraisers shall be final, and their award shall be paid by the Company within thirty (30) days after such award is made. Upon payment by the Company of the awarded price, the dissenting stockholder shall forthwith transfer his shares to the Company.

No payment shall be made to any dissenting stockholder unless the Company has unrestricted retained earnings.

SUN SEC Form 20-IS - 2017 5

Interest of Certain Persons in or Opposition to Matters to be Acted Upon

No director or officer of the Company or any nominee for election as a director of the Company, or any associate thereof, has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon, other than election to office.

No director of the Company has informed it in writing that he intends to oppose any action to be taken by the Company at the Annual Stockholders’ Meeting (“Meeting”).

CONTROL AND COMPENSATION INFORMATION

Voting Securities and Principal Holders Thereof

Number of Shares Outstanding

As of 31 August 2017, the Company had outstanding shares of 2,250,000,000 common stock. Each common share is entitled to one (1) vote.

Record Date of Meeting

All stockholders on record as of 06 October 2017 will be entitled to notice of, and to vote at, the Meeting.

Cumulative Voting Rights

Each stockholder shall be entitled to one (1) vote with respect to all matters to be taken up during the annual meeting of stockholders, provided that each stockholder shall have cumulative voting rights with respect to the election of the members of the board of directors of the Company. Cumulative voting entitles each stockholder to cumulate his shares and give one nominee as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or distribute them on the same principle among as many nominees 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 the number of directors to be elected.

Security Ownership of Record and Beneficial Owners of more than 5% of the Company’s Voting Stocks as of 31 August 2017:

Title Name and Address of Beneficial Owner & Percent Of Class Record Owner& Relationship Citizenship No. of Shares Owned Relationship w/ Issuer w/Record Owner Common Megaworld Corporation1 Megaworld Corporation Filipino 955,834,992 42.48% 28/F The World Centre, (also the record owner) 330 Sen. Gil Puyat Avenue, Makati City Common BDO Securities BDO Securities Filipino 332,142,263 14.76% Corporation2 Corporation 20th Floor, South Tower, 820th Floor, South BDO Corporate Center, Tower, BDO Corporate 7899 Makati Avenue, Center, 7899 Makati Makati City Avenue, Makati City

1 The Board of Directors appoints the person who has the power to direct the voting and disposition of the shares held by Megaworld Corporation in the Company 2 Beneficiaries are brokers and custodian bank participants of PCD.

SUN SEC Form 20-IS - 2017 6

Common Townsquare Development, Townsquare Filipino 235,000,000 10.44% Inc.3 Development, Inc. 28th Floor The World Centre 330 Sen. Gil Puyat Avenue, Makati City

Common Stanley Ho Hung-Sun Stanley Ho Hung Sun Non- Filipino 116,100,000 5.16% c/o Suntrust Home (also the record Developers, Inc., 6/F owner) World Centre Building 330 Sen. Gil Puyat Avenue Makati City

Other than the persons identified above, there are no other beneficial owners of more than 5% of the Company’s voting stock known to the Company.

Security Ownership of Directors and Management as of 31 August 2017:

Title of Class Name of Beneficial Amount and Nature of Citizenship Percent of Owner Beneficial Ownership Class

Common Ferdinand B. Masi 1 (direct) Filipino 0.00% Common Evelyn G. Cacho 1 (direct) Filipino 0.00% Common Giancarlo C. Ng 1 (direct) Filipino 0.00% Common Felizardo T. Sapno 1 (direct) Filipino 0.00% Common Elmer P. Pineda 1 (direct) Filipino 0.00% Common Alejo L. Villanueva, Jr. 1 (direct) Filipino 0.00% Common Eugenio B. Reducindo 1 (direct) Filipino 0.00% Common Rolando D. Siatela 0 Filipino N/A Common Ma. Cristina D. Gonzales 0 Filipino N/A Common All directors and 7 (direct) 0.00% executive officers

Voting Trust Holders of 5% or More

The Company is not aware of the existence of persons holding more than five percent (5%) of the Company’s common shares under a voting trust or similar agreement.

Change in Control

The Company has no knowledge of any arrangements among stockholders that may result in a change in control of the Company.

3 The Board of Directors appoints the person who has the power to direct the voting and disposition of the shares held by Townsquare Development, Inc. in the Company.

SUN SEC Form 20-IS - 2017 7

Directors Including Independent Directors and Executive Officers

Incumbent

The following are the incumbent directors and executive officers of the Company:

Name Age Citizenship Present Position Ferdinand B. Masi 55 Filipino Chairman of the Board and President and Chief Executive Officer Evelyn G. Cacho 55 Filipino Director and Treasurer Giancarlo C. Ng 40 Filipino Director Felizardo T. Sapno 60 Filipino Director Elmer P. Pineda 59 Filipino Director, Asst. Corporate Secretary and Asst. Corporate Information Officer Alejo L. Villanueva, Jr. 76 Filipino Independent Director Eugenio B. Reducindo 48 Filipino Independent Director Rolando D. Siatela 57 Filipino Corporate Secretary and Corporate Information Officer Maria Cristina D. Gonzales 53 Filipino Compliance Officer

There are seven (7) members of the Company’s Board of Directors, two of whom are independent directors. All incumbent directors were elected during the annual meeting of stockholders held on 25 October 2016.

Background

Ferdinand B. Masi. Mr. Masi, 55 years old, Filipino, is currently the Chairman and the President of the Company. He was appointed as Chairman of the Board on 09 November 2007 and has served as its President since 09 February 2001. Mr. Masi is a Senior Vice President of Progreen Agricorp, Inc. and General Manager of Consolidated Distillers of the Far East, Inc. and has been connected with the latter since 1983. He is concurrently the Chairman and President of South Point Science Park, Inc. and Good Earth Technologies International, Inc., and Corporate Secretary of First Centro, Inc. He is a Certified Public Accountant and member of the Philippine Institute of Certified Public Accountants. He also finished his MBA from Ateneo Graduate School of Business.

Evelyn G. Cacho. Ms. Cacho, 55 years old, Filipino, is currently the Treasurer and a member of the Board of Directors of the Company since 29 August 2005. Ms. Cacho is concurrently a director of Empire East Land Holdings, Inc. (“EELHI”), a position she has occupied since February 2009. She joined EELHI in February 1995 and has served as its Vice President for Finance since February 2001. She also currently serves as director of Empire East Communities, Inc., Laguna Bel Air School, Inc., Sonoma Premier Land, Inc., Valle Verde Properties, Inc. and Sherman Oak Holdings, Inc. She holds the position of Treasurer of Megaworld Central Properties, Inc., and Megaworld Newport Property Holdings, Inc. and Assistant Corporate Secretary of Gilmore Property Marketing Associates, Inc. Prior to joining EELHI, she had extensive experience in the fields of financial/operations audit, treasury, and general accounting from banks, manufacturing and trading companies. Ms. Cacho has a bachelor’s degree in Business Administration major in Accounting, and is a Certified Public Accountant by profession.

Giancarlo C. Ng. Mr. Ng, 40 years old, Filipino, has served in the Company’s Board of Directors since 23 October 2007. He is currently Director and Corporate Secretary of South Point Science Park, Inc. and the Vice President for Sales Operation Support of Progreen Agricorp, Inc. He is a graduate of the University of Asia and the Pacific with a degree in Bachelor of Arts in Liberal Arts and Humanities, graduating Magna Cum Laude and Valedictorian of his batch. He also obtained his Masters of Science in Information Technology from the same university. Mr. Ng was at various times from 2003 to 2006 an account officer, sales manager, and inter-team coordinator of Condis. Mr. Ng has handled Customer Relations Management, Sales and Delivery Logistics, and Information Technology Planning

SUN SEC Form 20-IS - 2017 8 and Tactical Coordination for Condis and has extensive experience in work involving business processes and information technology solutions.

He was the project manager for the email and internet connectivity infrastructure project and inventory system database of Condis. Prior to joining Consolidated Distillers of the Far East, Inc., he was a member of the Systems Technology Support of Meralco MTP-CSPT from 1998-1999, where he participated in the company’s Y2K compliance project. Mr. Ng then joined the Software Services Department of the Orient Overseas Container Line Phils, Inc. as a software programmer from 2000- 2003, where he developed web applications and also served as customer EDI programmer and trainer of new recruits. Mr. Ng has attended trainings and seminars on several software languages, Customer Relations Management, Business Orientation for Marketing and Sales, Business Writing, Information Strategy Planning, and on the New Digital Economy and Emerging Technologies for the Philippines in 2020.

Elmer P. Pineda. Mr. Pineda, 59 years old, Filipino, has served in the Company’s Board since 03 February 2012. He is concurrently the Assistant Corporate Secretary and Assistant Corporate Information Officer of the Company. He was previously connected with First Oceanic Property Management, Inc. where he was responsible for the management of a number of real estate developments. A licensed civil engineer, Mr. Pineda has over a decade of experience in project and construction management with various companies and firms such as Farm System Development Corporation and Megaworld Corporation.

Felizardo T. Sapno. Mr. Sapno, 60 years old, Filipino, has served as Director of the Company since 03 July 2006. He is currently the Plant Manager of the Consolidated Distillers of the Far East, Inc. since August 1990. Mr. Sapno is a licensed Chemical Engineer and a graduate of the Mapua Institute of Technology with a degree in BS Chemical Engineering. He was previously employed with the Philippine Allied Leatherette, Inc. as Production Supervisor from October 1981 to October 1982 and the Central Azucarera de Tarlac as Shift Supervisor from November 1982 to November 1985. He is a member of various professional and socio-civic associations such as the Philippine Institute of Chemical Engineers, Center for Alcohol and Research Development Foundation, Inc., Philippine Association of Alcohol and Fermentation Technologies, Inc., Kiwanis International, Philippine Luzon District and the Knights of Columbus, Council 4668.

Alejo L. Villanueva, Jr. Mr. Villanueva, 76 years old, Filipino was elected as Independent Director on 29 October 2012. He currently serves as Independent Director of Alliance Global Group, Inc., Emperador Inc. and Empire East Land Holdings, Inc. and a Director of First Capital Condominium Corporation, a non-stock non-profit corporation. He is also Chairman of Ruru Courier Systems, Inc. and Vice Chairman of Public Relations Counselors Foundations of the Philippines, Inc. He is a professional consultant who has more than twenty years of experience in the fields of training and development, public relations, community relations, institutional communication, and policy advocacy, among others. He has done consulting work with the Office of the Vice President, the Office of the Senate President, the Commission on Appointments, the Securities and Exchange Commission, the Home Development Mutual Fund, the Home Insurance Guaranty Corporation, Department of Agriculture, Philippine National Railways, International Rice Research Institute, Rustan’s Supermarkets, Louis Berger International (USAID-funded projects on Mindanao growth), World Bank (Subic Conversion Program), Ernst & Young (an agricultural productivity project), Chemonics (an agribusiness project of USAID), Price Waterhouse (BOT program, a USAID project), Andersen Consulting (Mindanao 2000, a USAID project), Renardet S.A. (a project on the Privatization of MWSS, with World Bank funding support), Western Mining Corporation, Phelps Dodge Exploration, and Marubeni Corporation. Mr. Villanueva obtained his bachelor’s degree in Philosophy from San Beda College, summa cum laude. He has a master’s degree in Philosophy from the University of Hawaii under an East-West Center Fellowship. He also took up special studies in the Humanities at Harvard University. He studied Organizational Behavior at INSEAD in Fontainebleau, France. He taught at the Ateneo Graduate School of Business, the UST Graduate School, and the Asian Institute of Journalism.

Eugenio B. Reducindo. Mr. Reducindo, 47 years old, Filipino, was elected as Independent Director on October 2015. He is currently the Managing Director of Choice Gourmet Banquet, Inc., which owns and operates McDonald’s stores and used to operate other restaurants like Shanghai Bistro and SoHo Tea House. He has held the position of Managing Director of Choice Gourmet Banquet, Inc.

SUN SEC Form 20-IS - 2017 9 since 2007. As Managing Director, Mr. Reducindo is responsible for the overall operations and management of 11 McDonald’s outlets located within Metro Manila and other provinces such as Cebu and Iloilo. Prior to being Managing Director, Mr. Reducindo was a branch manager at Choice Gourmet handling the first McDonald’s branch of the company located at Forbestown Center. Mr. Reducindo has considerable experience in the management and operations of quick service and fine dining restaurants, having been involved in the daily operations of a specific branch as well as the overall management and operations of several branches/outlets. He has worked for Golden Arches Development Corporation as branch manager and for McDonald’s Egypt as Operations Consultant and for Makati Shangri-La as Assistant Manager for the coffee shop. Mr. Reducindo graduated in 1989 from the Far Eastern University with a degree in AB Communications.

Rolando D. Siatela. Mr. Siatela, 57 years old, Filipino, has served as Corporate Secretary and Corporate Information Officer of the Company since 23 May 2006. He concurrently serves in PSE- listed companies, Alliance Global Group, Inc., Emperador Inc., Megaworld Corporation, and Global- Estate Resorts, Inc. as Assistant Corporate Secretary. He is also the Assistant Vice President for Controllership of Megaworld Corporation. Prior to joining Megaworld Corporation, he was employed as Administrative and Personnel Officer with Batarasa Consolidated, Inc. He is a member of the board of Asia Finest Cuisine, Inc. and the Corporate Secretary of ERA Real Estate Exchange, Inc., Oceanic Realty Group International, Inc. and Documentation Officer of Megaworld Foundation.

Maria Cristina D. Gonzales. Ms. Gonzales, 53 years old, Filipino, is the Compliance Officer of the Company. She is presently a First Vice President for Management Services of Megaworld Corporation, a position she has held since 2007. Previously, she was a Vice President for Audit of Megaworld from 1993 to 2007, Audit Manager for Shoemart, Inc. from 1988 to 1993 and Auditor with Sycip, Gorres & Velayo from 1984 to 1987. She is a Certified Public Accountant since 1984 and graduated with a Business Administration degree, Major in Accounting (graduated magna cum laude) from the University of the East.

Directors are elected annually by the stockholders to serve until the election and qualification of their successors. Mr. Ferdinand B. Masi, Mr. Giancarlo C. Ng, Mr. Felizardo T. Sapno, Ms. Evelyn G. Cacho, Mr. Elmer Pineda, and Independent Directors Mr. Alejo L. Villanueva, Jr. and Mr. Eugenio B. Reducindo, were elected in the last annual stockholders’ meeting on 25 October 2016.

Procedure for Nomination and Election of Independent Directors

Pursuant to Article II, Section 2 of the Company’s By-Laws (amended as of August 30, 2005 and November 11, 2005) and the Manual on Corporate Governance revised as of May 30, 2017, the nomination and election of independent directors shall be conducted in accordance with SRC Rule 38. SRC Rule 38 provides that the nomination and election of independent directors shall be conducted in accordance with the following rules:

1. Nomination of independent directors shall be conducted by the Nomination Committee prior to a stockholders’ meeting. All recommendations shall be signed by nominating stockholders and shall bear the conformity of the nominees.

2. The Nomination Committee shall pre-screen the nominees and prepare a final list of candidates.

3. The final list of candidates shall contain the business and/or professional experience of the nominees for independent directors, which list shall be made available to the Commission and to all stockholders through the filing and distribution of the Information Statement, in accordance with SRC Rule 20, or in such other reports the Company is required to submit to the Commission. The name of the person or group of persons who recommended the nominees for independent directors shall be identified in such report including any relationship to the nominees.

4. Only nominees whose names appear in the final list of candidates shall be eligible for election as independent directors. No other nominations shall be entertained after the final list of candidates shall have been prepared. No further nominations shall be entertained or allowed on the floor during the actual annual stockholders’ meeting.

SUN SEC Form 20-IS - 2017 10

5. The conduct of the election of independent directors shall be made in accordance with the standard election procedures of the Company in its By-laws, subject to pertinent laws, rules and regulations of the Commission.

6. It shall be the responsibility of the Chairman of the Meeting to inform all stockholders in attendance of the mandatory requirement of electing independent directors. He shall ensure those independent directors are elected during the stockholders’ meeting.

7. In case of failure of election for independent directors, the Chairman of the Meeting shall call a separate election during the same meeting to fill up the vacancy.

The Company is required to have at least two (2) independent directors in its Board of Directors, who are each independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director in the Company. An independent director should have at least one (1) share of the Company’s common stock, a college graduate or has been engaged or exposed to the business for at least five (5) years, and possesses integrity/probity and assiduousness. Pursuant to SEC Memorandum Circular No. 19, Series of 2016, the independent directors shall serve for a maximum cumulative term of nine (9) years. After which, the independent director should be perpetually barred from reelection as such in the Corporation but may continue to qualify for nomination and election as a non-qua. If the Corporation wants to retain an independent director who has served for nine years, the Board should provide meritorious justification/s and seek shareholders’ approval during the annual stockholders’ meeting.

There shall be no limit in the number of covered companies that a persons may be elected as Independent Director, except in business conglomerates where he can be elected to only five (5) companies of the conglomerate, i.e. parent company, subsidiary or affiliate.

Nominees

Directors are elected annually by the stockholders at the annual stockholders’ meeting to serve until the election and qualification of their successors. The Nomination Committee composed of Elmer Pineda as Chairman and members, Giancarlo C. Ng, and Alejo L. Villanueva, Jr., accepts nominees to the Board of Directors, including nominees for independent director. The Committee is responsible for screening and qualifying the list of nominees. The following is the complete list of nominees for members of the Board of Directors:

1. Ferdinand B. Masi 2. Evelyn G. Cacho 3. Giancarlo C. Ng 4. Josephine Marie R. Salazar 5. Neoli Mae L. Kho 6. Alejo L. Villanueva, Jr. – Independent Director 7. Eugenio B. Reducindo – Independent Director

Except for nominees Josephine Marie R. Salazar and Neoli Mae L. Kho, whose profiles are presented below, the profiles of the other nominees for directors are presented above under the current directors of the Company.

Josephine Marie R. Salazar Director

Ms. Josephine Marie Ringler-Salazar, 57 years old, Filipino, joined First Oceanic Property Management Inc. (FOPM) as its President in July 2014. With over 30 years of experience in diverse areas on real estate project development, project management and design, her leadership of FOPM carries new and dynamic initiatives which are strategic in its transformation into a customer-centric and top-of-mind service provider as the property management arm of the Megaworld Group for its residential, office and BPO developments. She is concurrently the President of Elite Communities Property Services, Inc. and also serves as Board member of Megaworld-Daewoo Development

SUN SEC Form 20-IS - 2017 11

Corporation, McKinley Town Center Estates Association Inc., and Newport City Estates Association Inc.

Prior to joining FOPM, Ms. Salazar was a First Vice President of Megaworld Corporation and head of its Operations and Quality Control Management (QCM) group from 1997-2014. She was QCM team lead instrumental to the strong and rapid growth of Megaworld in having completed over 250 buildings, handed over 40,000 residential units, and over 600,000 sqm. of BPO and office floor space. Prior to Megaworld, she also held key management positions at Regatta Properties Inc., an ICCP Group (Investment & Capital Corporation of the Philippines) as its Project Development Manager, with Project Management Consultants, Inc. as Director, and with George Ramos & Associates as Designer/Architect.

Ms. Salazar is a licensed Architect and affiliated with United Architects of the Philippines, the Professional Regulation Commission Board of Architecture, and the Philippine Association of Building Administrators Inc. She is a member of the Executive Development Academy, Philippines and has received certification with Six Sigma Belt Training. She is a graduate of the University of Santo Tomas with a degree in Bachelor of Sciences in Architecture and also received International Training through the Japanese Architectural & Building Technology Scholarship and The ILO Association of Japan in Chiba Prefecture, Japan, which included a Japanese Language Course in the Chiba Prefecture Central Skill Development Center.

Neoli Mae L. Kho Director

Ms. Neoli Mae L. Kho, 33 years old, Filipino, is a Senior Assistant Vice President and the Finance and Administration Head of First Oceanic Property Management, Inc. (FOPM), which handles the property management of various residential and BPO office developments of the Megaworld Group, a position she has held since August 2010. As Finance and Administration Head, Ms. Kho is responsible for the management of operations of 3 different business units in FOPM, including Finance (composed of Budget, Payroll, and Cost Analytics and Performance Analysis), Information Technology, and General Administration and Supply Chain Management. While in FOPM, Ms. Kho has gained over 7 years’ experience and has been extensively involved in Strategic, Tax and Organizational Planning, Budgeting & Cost Management, Strategic Alliances and Contract Negotiation, Risk Management (including negotiation and enhancement of Insurance Policies), Profitability and Cost Analysis, Systems and Technology Utilization, and Team Building and Performance Improvement. She is responsible for developing and implementing the Finance and Administration Corporate Manual currently being used by FOPM which helped standardize and define the different processes in the company.

Prior to joining FOPM, Ms. Kho was a Manager in the Management Analyst Group of Megaworld Corporation reporting directly to the Finance Director, where she was responsible for auditing and analyzing various transactions of Megaworld and its group of companies and projects ranging from construction, marketing, land acquisitions, and administration. She is concurrently President of 8 Forbestown Road Association Inc., a Director of One World Center Building Administration, Inc., Treasurer of Eastwood City Estates Association, Inc., and a trustee and officer of several condominium and building associations of Megaworld projects.

Ms. Kho has a degree in Bachelor of Science Major in Industrial Economics, Minor in AB Humanities and a Master of Science in Industrial Economics from the University of Asia and the Pacific, where she was a member of several business, language and sports organizations. She has also taken courses for qualification as a Certified Financial Consultant.

Independent Directors

This year’s nominees for directors include two persons who qualify as independent directors. The President, Mr. Ferdinand B. Masi, nominated the incumbent Independent Director Mr. Eugenio B. Reducindo, while Mr. Giancarlo C. Ng nominated the incumbent Independent Director, Mr. Alejo L. Villanueva, Jr., for another term. Messrs. Masi and Reducindo and Messrs. Ng and Villanueva are not related by consanguinity or affinity up to the fourth civil degree. Neither are Messrs. Reducindo and Villanueva acting as representatives of the persons who nominated them. The Nomination Committee

SUN SEC Form 20-IS - 2017 12 reviewed the qualifications of Messrs. Villanueva and Reducindo under the criteria defined by SEC in its Circular No. 16, series of 2002, and they do not possess any of the disqualifications enumerated under the law and in the Code of Corporate Governance (Their respective profiles are presented on the preceding pages). Having found them duly qualified, the Nomination Committee endorsed the nomination of Mr. Alejo L. Villanueva, Jr. and Mr. Eugenio B. Reducindo as candidates for Independent Directors for the ensuing year.

Disagreements with the Company

No director has resigned or declined to stand for re-election to the Board of Directors since the date of the last annual stockholders’ meeting because of a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Significant Employees

The Company does not have significant employees, i.e., persons who are not executive officers but expected to make significant contribution to the business.

Family Relationships

No director or executive officer is related to each other up to the fourth civil degree whether by consanguinity or affinity.

Involvement in Legal Proceedings

The Company has no knowledge of any of the following events that occurred during the past five (5) years up the date of this report that are material to an evaluation of the ability or integrity of any director, nominee for election as director, or executive officer:

1. Any bankruptcy petition filed by or against any business of a director, nominee for election as director, or executive officer who was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2. Any conviction by final judgment in a criminal proceeding, domestic or foreign, or being subject in his personal capacity to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses;

3. 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

4. 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.

Certain Relationships and Related Transactions

Except for the material related party transactions described in the notes to the consolidated financial statements of the Company for the years 2016, 2015 and 2014 (please see elsewhere in here), there has been no material transaction during the last two years, nor is there any material transaction currently proposed, to which the Company was or is to be a party, in which any director or executive officer, any nominee for election as director, stockholder of more than ten percent (10%) of the Company’s voting shares, and any member of the immediate family (including spouse, parents, children, siblings, and in-laws) of any such director or officer or stockholder of more than ten percent (10%) of the Company’s voting shares had or is to have a direct or indirect material interest.

SUN SEC Form 20-IS - 2017 13

Compensation of Directors and Executive Officers

The principal executive officers of the Company are:

Name Position

Ferdinand B. Masi Chairman & President and Chief Executive Officer Evelyn G. Cacho Treasurer Rolando D. Siatela Corporate Secretary and Corporate Information Officer Elmer P. Pineda Asst. Corporate Secretary and Asst. Corporate Information Officer Maria Cristina D. Gonzales Compliance Officer

Compensation of Directors and Executive Officer

No compensation was received by the above-named principal executive officers from the Company and neither will there be any compensation for the ensuing year. There are no arrangements in force pursuant to which the above-named officers or directors of the Company are compensated, or are to be compensated, directly or indirectly, for any services provided as such officer.

There are no standard arrangements pursuant to which directors or officers of the Company are compensated, or are to be compensated, directly or indirectly, for any services provided as a director, including any additional amounts payable for committee participation or special assignments, for the years 2014, 2015 and 2016 and for the ensuing year. There are no per diems granted to directors for attendance at meetings.

There are no other arrangements, including consulting contracts, pursuant to which any director of the Company was compensated, or is to be compensated, directly or indirectly, for the years 2014, 2015 and 2016, and for the ensuing year, for any service provided as a director.

Employment Contracts and Termination of Employment and Change-in-Control Arrangement

No employment contracts, termination of employment, or change in control arrangements, were effected for the applicable fiscal year.

Warrants and Options Outstanding

No warrants or stock options are held by the Company’s CEO, its named executive officers or directors for years 2014, 2015 and 2016 nor are there plans for extending warrants or options for the ensuing year.

Independent Public Accountants

The Board of Directors of the Company, in consultation with the Audit Committee composed of Alejo L. Villanueva, Jr., as Chairman and Evelyn G. Cacho and Eugenio B. Reducindo as members, will recommend to the stockholders the engagement of Punongbayan & Araullo as external auditors of the Company for 2017.

The selection of external auditors is made on the basis of credibility, professional reputation, accreditation with the Securities and Exchange Commission, and affiliation with a reputable foreign partner. The professional fees of the external auditors are approved by the Company after approval by the stockholders of the engagement and prior to the commencement of each audit season.

In compliance with SEC Memorandum Circular No. 8, Series of 2003, which was subsequently incorporated in SRC Rule 68, paragraph 3(b)(iv), and the Company’s Manual of Corporate Governance, which require that the Company’s external auditor be rotated or the handling partner changed every five (5) years or earlier, Mr. Renan A. Piamonte of Punongbayan and Araullo was designated as handling partner for the audit of the financial statements of the Company for the year ending 31 December 2016. Punongbayan & Araullo was also the auditor of the Company for 2015 and 2014.

SUN SEC Form 20-IS - 2017 14

There are no disagreements with auditors on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to their satisfaction, would have caused the auditors to make reference thereto in their reports on the financial statements of the Company and its subsidiary.

Representatives of Punongbayan & Araullo are expected to be present at the Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

External audit fees and services

The fees billed by P&A for each of the last three financial years totaled Php775,000 in 2016, Php 760,000 in 2015, and Php750,000 in 2014, in fees for professional services rendered for the audit of the Company’s annual financial statements and services that are normally provided by the external auditor in connection with statutory and regulatory filings or engagements for 2016, 2015, and 2014.

There were no separate tax fees billed and no other products and services provided by P&A for the last two fiscal years.

All the above services have been approved by the Company, upon recommendation of the Audit Committee of the Board of Directors composed of Alejo L. Villanueva, Jr. as Chairman and Evelyn G. Cacho and Eugenio B. Reducindo as members.

Changes in and disagreements with accountants on accounting and financial disclosure

P&A, as principal auditors, issued an unqualified opinion on the consolidated financial statements. As such, there had been no disagreements with them on any accounting principles or practices, financial disclosures, and auditing scope or procedure.

Financial Information

Financial Statements of the Company as of 31 December 2016, 2015, and 2014, the Interim Financial Statements of the Company as of 30 June 2017, and the Management’s Discussion and Analysis of Results of Operations and Financial Condition for the corresponding periods are contained in the Company’s Annual Report to Stockholders and are incorporated herein by reference.

OTHER MATTERS

Action with Respect to Reports

The Minutes of the Annual Meeting of Stockholders held on 25 October 2016 will be submitted to the stockholders for approval. The Minutes will refer to the adoption of stockholder’s resolutions pertaining to the following: approval of minutes of the previous annual meeting, appointment of external auditors, ratification of acts and resolutions of the Board of Directors, Board Committees and Management and election of Directors.

The approval or disapproval of the Minutes will constitute merely an approval or disapproval of the correctness of the minutes but will not constitute an approval or disapproval of the matters referred to in the Minutes.

Amendment of Charter, Bylaws, or other Documents

In a special meeting of the Board of Directors held on 22 September 2017, the Board approved to amend Article Third of its Amended Articles of Incorporation (“AOI”) to change the principal office address of the Company FROM 6th Floor, The World Centre, 330 Sen. Gil Puyat Avenue, Makati City, Metro Manila, Philippines TO 26th Floor Alliance Global Tower, 36th Street corner 11th Avenue, Uptown Bonifacio, Taguig City, Metro Manila, Philippines. The amendment is being made in connection with the transfer of the Company to its new office address, as indicated.

SUN SEC Form 20-IS - 2017 15

As amended, Article Third of the Company’s AOI shall read as follows:

“THIRD: That the place where the principal office of the Corporation is to be established or located is at the 26th Floor Alliance Global Tower, 36th Street corner 11th Avenue, Uptown Bonifacio, Taguig City, Metro Manila, Philippines.”

The resolution of the Board on the amendment of Article Third of the AOI will be submitted to the stockholders for approval at the Meeting. In connection with such amendment, approval will also be sought to authorize any one of the officers of the Corporation to finalize, execute, and deliver the necessary certificates and other documents with the Securities and Exchange Commission and other government agencies and perform all actions as may be necessary to fully implement the foregoing resolution and the change in principal office address.

Other Proposed Action

The stockholders will be asked to ratify all resolutions of the Board of Directors and Board Committees, and acts of Management adopted during the period up to the date of this Meeting. These include, among others, approval of financial statements, notices of annual stockholders’ meetings, and organization of board committees and election of Board of Directors, designation of authorized contract signatories and representatives, opening and maintenance of bank accounts and other bank transactions, and other similar activities of the Company.

Voting Procedures

Vote Required

In the election of directors, the seven (7) nominees garnering the highest number of votes will be elected as members of the board of directors, provided that there shall always be elected at least two (2) independent directors in the Company’s board of directors.

For the proposed amendment to the AOI, 2/3 of the outstanding capital stock will be required for approval while for all other matters proposed to be acted upon, the vote of a majority of the outstanding capital stock will be required for approval.

Method of Counting of Votes

Each holder of common share will be entitled to one (1) vote with respect to all matters to be taken up during the Meeting; provided, that in the election of directors , each stockholder may vote such number of shares for as many persons as there are directors to be elected or may cumulate said shares and give one nominee as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or he may distribute them on the same principle among as many nominees as he shall see fit; provided further, that the total number of votes cast by him shall not exceed the number of shares owned by him multiplied by the number of directors to be elected .

There will be seven (7) persons to be elected to the Company's board of directors, including at least two (2) independent directors. In the event that the number of nominees to the board of directors exceeds the number of board seats, voting shall be done by ballot. However, if the number of nominees to the board of directors does not exceed the number of board seats, voting will be done by a show of hands. Election inspectors duly appointed during the meeting shall be responsible for counting the number of votes, subject to validation by representatives of Punongbayan & Araullo, the Company's external auditors.

The Company shall provide, without charge, to each stockholder a copy of its annual report on SEC Form 17-A, upon written request addressed to Suntrust Home Developers, Inc., Attention: Mr. Rolando D. Siatela, Corporateh Secretary, 24th Floor Alliance Global Tower, 36th Street cor. 11th Avenue, Uptown Bonifacio, Taguig City.

SUN SEC Form 20-IS - 2017 17

MANAGEMENT REPORT AS REQUIRED BY SRC RULE 20 INCLUDING FINANCIAL INFORMATION FOR FIRST HALF OF 2017

OVERVIEW

Suntrust Home Developers, Inc. (the “Company”) was incorporated under Philippine laws and registered with the SEC on 18 January 1956 under the name Ramie Textiles, Inc. It was originally authorized to engage in the manufacture and sale of all types of ramie products. The Company’s corporate life was extended for another 50 years starting January 18, 2006. The Company has since amended its Articles of Incorporation as it sought to identify investment opportunities that will yield attractive returns. It is presently engaged in the business of a holding company with investments in stocks and other property. The Company owns 100% of the outstanding shares of stock of First Oceanic Property Management, Inc. (“FOPM”), which is engaged in the management of real estate properties consisting of residential and office condominiums and private estates. Some of the properties managed by FOPM include Cambridge Village in Cainta, Eastwood One Central Park and Grand Eastwood Palazzo in Eastwood City, Salcedo Park and The World Centre in Makati, Two World Square and Three World Square in Taguig City. FOPM also holds 100% of the outstanding shares of stock of CityLink Coach Services, Inc. (CityLink), a domestic company engaged in overland transport, carriage, moving or haulage of passengers, fares, customers and commuters as well as freight, cargo, articles, items, parcels, commodities, goods or merchandise by means of coaches, buses, coasters, jeeps, cars and other similar means of transport. It plies routes from Eastwood City, in Libis, Quezon City to Newport City, in Villamor Air Base, Pasay via C-5 Road, making it the first bus service to traverse along the said road. It also offers shuttle for hire services to Megaworld Corporation and some of its affiliates and related companies.

Megaworld Corporation, also a publicly listed company in the Philippines, is a substantial shareholder of the Company with 42.48% ownership interest. In 1999, PhP1,200,000,000.00 worth of shares out of the increase in authorized capital stock of the Company were issued to Megaworld in exchange for a parcel of land with improvements with a total area of 7,255.30 square meters located at M.H. del Pilar corner Pedro Gil St., Malate, Manila and with a fair market value of One Billion Two Hundred Million Pesos (PhP1,200,000,000.00). In 2002, Megaworld subscribed to PhP250,000,000 worth of shares out of a PhP1 Billion increase in authorized capital stock of the Company, out of which PhP62,500,000 has been actually paid-up in cash. However, from the years 2000 up to 2003, Megaworld disposed its shares in a series of transactions resulting in its present ownership of 42.48%.

The registered office of the Company, which is also its principal place of business, is located at the 6th Floor, The World Centre, 330 Sen. Gil Puyat Avenue, Makati City.

HISTORY

On 18 January 1956, the Company, then known as Ramie Textiles, Inc. was incorporated to engage in the business of manufacture and sale of all types of ramie products. On 11 February 1959 the Company was listed in The Philippine Stock Exchange, Inc.

On 10 June 1994, the SEC approved the Amendment to the Articles of Incorporation of the Company changing the name from Ramie Textiles Inc. to Gaming Interest and Franchise Technologies, Inc. and its secondary purpose, and including a provision denying pre-emptive rights to existing stockholders for any future issue of shares. Upon its conversion to a holding company, the Company sought to identify investment opportunities which will yield attractive returns.

On 10 April 1995, the Company’s name was changed from Gaming Interest and Franchise Technologies, Inc. to Greater Asia Resources Corporation. Subsequently, the Company acquired two (2) parcels of land situated in Tagaytay City with an approximate total area of 510,479 square meters in exchange for 250,000 shares out of its unissued capital stock.

On 11 August 1998, the SEC approved the Amended AOI of the Company changing the name from Greater Asia Resources Corporation to BW Resource Corporation (BWRC). The primary purpose of BWRC is to acquire interests in tourism or leisure-related enterprises, projects, or ventures.

SUN SEC Form 20-IS - 2017 18

On 17 August 1999, the SEC approved an increase in authorized capital stock of the Company from PhP450,000,000.00 divided into 450,000,000 shares to PhP2,000,000,000.00 divided into 2,000,000,000 shares with a par value of One Peso (1.00) per share. Out of the increase in authorized capital stock, One Billion Two Hundred Million Pesos (PhP1,200,000,000.00) worth of shares were issued to Megaworld Corporation (Megaworld) in exchange for a parcel of land with improvements with a total area of 7,255.30 square meters located at M.H. del Pilar corner Pedro Gil St., Malate Manila and with a fair market value of One Billion Two Hundred Million Pesos (PhP1,200,000,000.00). With the entry of Megaworld, the SEC, on October 3, 2000, approved the change in name from BWRC to Fairmont Holdings, Inc.

On 29 June 2002, the Board of Directors of the Company approved the change of the Company’s name from Fairmont Holdings, Inc. to Suntrust Home Developers, Inc. The change of the Company’s name was ratified by the stockholders on November 11, 2005 and was approved by the SEC on 10 May 2006. The change in name came hand in hand with a change in the Company’s primary purpose or nature of business, from a holding company to a real estate company authorized to engage in real estate development, mass community housing, townhouses and rowhouses development, residential subdivision and other massive horizontal land development. The change in the nature of business of the Company was prompted by the perception that being a holding company no longer appeared to be viable, at least in the next few years. On the same date, the Board likewise approved a PhP1 Billion increase in the Company’s authorized capital stock from PhP2,000,000,000 to PhP3,000,000,000 for the purpose of enabling the Company to finance any acquisitions or projects that it may undertake in the future in line with its new corporate purpose. Out of the PhP1 Billion increase, PhP250,000,000 has been actually subscribed while PhP62,500,000 has been actually paid-up in cash by Megaworld Corporation, an existing stockholder of the Company.

Sometime in July 2002, the Company acquired from an affiliate, Empire East Land Holdings, Inc. (EELHI), all of the latter’s shareholdings in Empire East Properties, Inc. (“EEPI”). As a result, consolidated financial statements were presented in the third quarter of 2002 and onwards. Prior to such acquisition, EEPI was a wholly-owned subsidiary of EELHI engaged in the development of socialized or low-cost housing projects. In March 2004, the Company’s percentage of ownership in EEPI was reduced from 100% to 60% upon the subscription by EELHI to additional shares of stock of EEPI. On 8 July 2008, EEPI changed its name to Suntrust Properties, Inc. (“SPI”) and increased its authorized capital stock, with EELHI subscribing to such increase. As a result, the Company’s ownership interest in SPI decreased from 60% to 20% and the Company’s control over SPI ceased and, as such, SPI was no longer a subsidiary but was considered an associate of the Company. In June 2013, the Company has sold all its remaining shares in SPI.

On 30 August 2005, the Board of Directors of the Company approved the decrease in the number of members of the Board of Directors from eleven to seven directors and the extension of its corporate term for another fifty (50) years from 18 January 2006. These changes to the Articles of Incorporation were ratified by the stockholders of the Company on 11 November 2005 and were approved by the SEC on 10 May 2006.

In September 2011, the Company acquired 100% of the outstanding shares of stock of FOPMI. Consequently, FOPM became the Company’s wholly-owned subsidiary and its financial statements were consolidated with the Company’s financial statements starting 2011.

FOPM was incorporated and registered with the Philippine Securities and Exchange Commission on January 31, 1990 and is engaged primarily in the management of real estate properties consisting of residential and office condominiums and private estates. FOPM’s services are covered by management contracts covering the different properties it manages and these contracts assure it of relatively fixed monthly revenues in the form of administrative/management fees. The acquisition of FOPM was intended to create a new revenue stream for the Company which would complement its existing investments in real estate. FOPM also holds 100% of the outstanding shares of stock of CityLink Coach Services, Inc. (CityLink), which was incorporated and registered with the Philippine Securities and Exchange Commission on November 7, 2006. CityLink is a domestic company engaged in overland transport, carriage, moving or haulage of passengers, fares, customers and commuters as well as freight, cargo, articles, items, parcels, commodities, goods or merchandise by means of coaches, buses, coasters, jeeps, cars and other similar means of transport.

SUN SEC Form 20-IS - 2017 19

BUSINESS

The Company currently does not have any business operations and is not offering any product or service. However, its subsidiary FOPM is engaged in property management of residential and office buildings and private estates.

FOPM is engaged in property management and provides vital real estate management services for several residential and office condominium buildings and private estates in Metro Manila. These include basic administrative, housekeeping and security services, and special services such as facilities and equipment management, audit and technical support services, finance and account management, and procurement services. FOPM’s revenue is primarily generated from management fees it charges in connection with its property management services.

FOPM is very competitive and is determined to perform as the best by assigning dedicated teams to manage over property/building. On-site Property Administrator, Property Engineer and Administrative Assistant/s are assigned to look after each individual property. A pool of experienced professionals – architects, engineers, accountants and other personnel with varying expertise – provides back-up support and services for its individual clients and customer.

CityLink is engaged in overland transport, carriage, moving or haulage of passengers, fares, customers and commuters as well as freight, cargo, articles, items, parcels, commodities, goods or merchandise by means of coaches, buses, coasters, jeeps, cars and other similar means of transport.

The Company or FOPM is not dependent upon a single or a few customers. No single customer accounts for 20% or more of FOPMI’s sales.

In normal course of business, the Company entered into transactions with related parties, consisting mainly of advances from related parties for working capital purposes and for the settlement of certain liabilities. For more information, please see Note 17 to the Audited Financial Statements.

The Company does not hold any patent, trademark, copyright, license, franchise, concession or royalty agreement upon which their operations are dependent.

SUN SEC Form 20-IS - 2017 20

Management Discussion and Analysis of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

Review of June 30, 2017 versus June 30, 2016

The Group's total revenues exhibited an increase of Php32.54 million or 15.81% from Php205.90 million in 2016 to Php238.44 million in 2017 of the same period. Total revenues mostly came from management fees, service income and rental income.

Costs and expenses exhibited an increase of Php26.35 million or 14.24% from Php185.02 million in 2016 to Php211.38 million in 2017. Increase in costs and expenses were mainly due to cost of services and operating expenses.

The Group’s net profit showed an increase of Php6.19 million or 29.66% from Php20.88 million in 2016 to Php27.07 million in 2017.

Review of June 30, 2016 versus June 30, 2015

The Group's total revenues exhibited an increase of Php35.48 million or 20.82% from Php170.42 million in 2015 to Php205.90 million in 2016 of the same period. Total revenues mostly came from management fees, service income and rental income.

Costs and expenses exhibited an increase of Php27.53 million or 17.48% from Php157.50 million in 2015 to Php185.02 million in 2016. Increase in costs and expenses were mainly due to cost of services and operating expenses.

The Group’s net profit showed an increase of Php7.96 million or 61.57% from Php12.92 million in 2015 to Php20.88 million in 2016.

Review of June 30, 2015 versus June 30, 2014

The Group's total revenues exhibited an increase of Php26.52 million or 18.43% from Php143.90 million in 2014 to Php170.42 million in 2015 of the same period. Total revenues mostly came from management fees, service income and rental income.

Costs and expenses exhibited an increase of Php19.63 million or 14.24% from Php137.87 million in 2014 to Php157.50 million in 2015. Increase in costs and expenses were mainly due to cost of services, operating and tax expenses.

The Group’s net profit showed an increase of Php6.89 million or 114.30% from Php6.03 million in 2014 to Php12.92 million in 2015.

FINANCIAL CONDITION

As of June 30, 2017 and December 31, 2016

The Group’s total resources amounted to Php704.39million in 2017 from Php684.38 million in 2016. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business.

Current assets decreased by Php3.87 million or 0.69% from Php563.02 million in 2016 to Php559.16 million in 2017. Cash and cash equivalents increased by Php10.27 million or 2.86% from Php359.66 million in 2016 to Php369.93 million in 2017. Due from related parties - net decreased by Php0.28 million or 0.45% from Php60.93 million in 2016 to Php60.66 million in 2017.

Non-current assets increased by Php23.88 million or 19.68% from Php121.35 million in 2016 to Php145.24 million in 2017. Investment property - net decreased by Php0.62 million from Php27.27

SUN SEC Form 20-IS - 2017 21 million in 2016 to Php26.65 million in 2017. Property and equipment - net increased by Php19.16 million or 43.72% from Php43.81 million in 2016 to Php62.97 million in 2017.

Trade and other receivables decreased by Php14.02 million or 10.37% from Php135.24 million in 2016 to Php121.22 million in 2017. Other assets increased by Php5.16 million or 24.21% from Php21.31 million in 2016 to Php26.47 million in 2017.

Current liabilities decreased by Php19.05 million or 6.65% from Php286.55 million in 2016 to Php267.50 million in 2017. Trade and other payables exhibited a decrease of Php14.05 million or 8.23% from Php170.65 million in 2016 to Php156.61 million in 2017. Due to related parties increased by Php0.68 million or 0.62% from Php109.56 million in 2016 to

Php110.24 million in 2017. Income tax payable decreased by Php5.69 million or 89.73% from Php6.34 million in 2016 to Php0.65 million in 2017.

Retirement benefit obligation increased by Php12.00 million or 10.35% from Php115.99 million in 2016 to Php127.99 million in 2017.

As of June 30, 2016 and December 31, 2015

The Group’s total resources amounted to Php641.48 million in 2016 from Php563.07 million in 2015. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business.

Current assets increased by Php69.87 million or 14.86% from Php470.31 million in 2015 to Php540.17 million in 2016. Cash and cash equivalents increased by Php54.75 million or 18.26% from Php299.90 million in 2015 to Php354.64 million in 2016. Due from related parties increased by Php4.86 million or 9.03% from Php53.86 million in 2015 to Php58.72 million in 2016.

Non-current assets increased by Php8.55 million or 9.22% from Php92.76 million in 2015 to Php101.31 million in 2016. Investment property decreased by Php0.62 million from Php28.51 million in 2015 to Php27.89 million in 2016. Property and equipment increased by Php8.50 million or 40.74% from Php20.86 million in 2015 to Php29.36 million in 2016.

Trade and other receivables increased by Php10.63 million or 9.48% from Php112.17 million in 2015 to Php122.80 million in 2016. Other Assets increased by Php0.29 million or 2.55% from Php11.43 million in 2015 to Php11.72 million in 2016.

Current liabilities increased by Php45.54 million or 20.27% from Php224.60 million in 2015 to Php270.14 million in 2016. Trade and other payables exhibited an increase of Php51.73 million or 41.56% from Php124.48 million in 2015 to Php176.21 million in 2016. Due to related parties slightly increased by Php1.95 million or 2.14% from Php91.08 million in 2015 to Php93.03 million in 2016. Income tax payable decreased by Php8.14 million or 90.01% from Php9.05 million in 2015 to Php0.90 million in 2016.

Retirement benefit obligation increased by Php12.00 million or 10.29% from Php116.58 million in 2015 to Php128.58 million in 2016.

As of June 30, 2015 and December 31, 2014

The Group’s total resources amounted to Php536.33 million in 2015 from Php491.41 million in 2014. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business.

Current assets increased by Php48.92 million or 12.88% from Php379.80 million in 2014 to Php428.72 million in 2015. Cash and cash equivalents increased by Php26.15 million or 11.34% from Php230.66 million in 2014 to Php256.81 million in 2015. Due from related parties increased by Php0.82 million or 1.78% from Php46.27 million in 2014 to Php47.09 million in 2015.

SUN SEC Form 20-IS - 2017 22

Non-current assets decreased by Php4.00 million or 3.58% from Php111.61 million in 2014 to Php107.61 million in 2015. Investment property decreased by Php0.62 million from Php29.75 million in 2014 to Php29.13 million in 2015. Property and equipment decreased by Php2.64 million or 11.43% from Php23.09 million in 2014 to Php20.45 million in 2015.

Trade and other receivables increased by Php18.22 million or 18.83% from Php96.74 million in 2014 to Php114.96 million in 2015. Other Assets increased by Php2.99 million or 22.83% from Php13.08 million in 2014 to Php16.07 million in 2015.

Current liabilities increased by Php20.00 million or 10.68% from Php187.16 million in 2014 to Php207.16 million in 2015. Trade and other payables exhibited an increase of Php27.28 million or 31.26% from Php87.25 million in 2014 to Php114.53 million in 2015. Due to related parties slightly decreased by Php0.17 million or 0.19% from Php90.70 million in 2014 to Php90.53 million in 2015. Income tax payable decreased by Php7.11 million or 77.20% from Php9.21 million in 2014 to Php2.10 million in 2015.

Retirement benefit obligation increased by Php12.00 million or 7.61% from Php157.69 million in 2014 to Php169.69 million in 2015.

Material Changes in Year 2017 Financial Statements Increase/Decrease of 5% or more versus December 31, 2016

Statements of Financial Position

10.37% decrease in trade and other receivables – current and non-current Due to collection of receivables as of current period

43.72% increase in property and equipment - net Due to additional leasehold improvement during the period

24.21% increase in other assets - net – current and non-current Due to increase in prepayments and deposits as of the current period

8.23% decrease trade and other payables Due to settlement of liabilities of a subsidiary

89.73% decrease in income tax payable Due to payment of prior year income tax due

10.35% increase in retirement benefit obligation Due to additional accrual of employee retirement benefits for the current period

Increase/Decrease of 5% or more versus June 30, 2016

Statements of Income

14.42% increase in management fees Due to additional properties managed by a subsidiary as well as the increase in management fee rate

104.17% increase in rental income Due to higher rental income generated by a subsidiary

14.47% increase in cost of services Due to higher service cost for the current period

16.66% increase in operating expenses Due to higher administrative and overhead expenses for the current period

10.41% increase in tax expense - Due to higher taxable income for the current period

SUN SEC Form 20-IS - 2017 23

Material Changes in Year 2016 Financial Statements Increase/Decrease of 5% or more versus December 31, 2015

Statements of Financial Position

18.26% increase in cash and cash equivalents Due to timely collection of receivables as of current period

9.48% increase in trade and other receivables Due to additional revenues from management fees and rental income as of the current period

9.03% increase in due from related parties Due to additional advances to related parties

40.74% increase in property and equipment Mainly due to additional bus units purchased

41.56% increase in trade and other payables Due to increase in trade payable and accrued expenses as of the current period

90.01% decrease in income tax payable Due to payment of income tax payable for the previous period.

10.29% increase in retirement benefit obligation Due to additional accrual of employee retirement benefits for the current period

Increase/Decrease of 5% or more versus June 30, 2015

Statements of Income

15.09% increase in management fees Due to additional properties managed by the subsidiary

144.78% increase in service income Due to higher service income generated by the subsidiary

20.19% increase in rental income Due to higher rental income generated by the subsidiary

108.02% increase in finance income Due to higher interest income generated by the subsidiary

13.75% increase in cost of services Due to additional properties managed by the subsidiary

20.73% increase in operating expenses Due to higher administrative and overhead expenses for the current period

37.18% increase in finance costs Due to higher interest expense on retirement benefits obligation

46.25% increase in tax expense Due to higher taxable income for the current period

SUN SEC Form 20-IS - 2017 24

Material Changes in Year 2015 Financial Statements Increase/Decrease of 5% or more versus December 31, 2014

Statements of Financial Position

11.34% increase cash and cash equivalents Due to timely collection of receivables as of current period

18.83% increase in trade and other receivables Due to additional revenues from management fees as of the current period

22.83% increase in other assets Due to increase in prepayments as of the current period

11.43% decrease in property and equipment – net Mainly due to depreciation for the current period

31.26% increase trade and other payables Due to increase in trade payable and accrued expenses as of the current period

77.20% decrease in income tax payable Due to payment of income tax payable for the previous period

7.61% increase in retirement benefit obligation Due to additional accrual of employee retirement benefits for the current period

Increase/Decrease of 5% or more versus June 30, 2014

Statements of Income

21.45% increase in management fees Due to additional properties managed by the subsidiary as well as the increase in management fee rate

30.66% decrease in service income Due to lower service income generated by the subsidiary

23.06% increase in rental income Due to higher rental income generated by the subsidiary

11.02% increase in cost of services Higher cost of services due to increase in properties managed by the subsidiary

9.90% increase in operating expenses Due to higher administrative and overhead expenses for the current period

22.29% increase in finance costs Due to higher interest expense on retirement benefit obligation

157.67% increase in tax expense Due to higher taxable income for the current period

SUN SEC Form 20-IS - 2017 25

KEY PERFORMANCE INDICATORS

Presented below are the top five (5) key performance indicators of the Group:

June 30, 2017 December 31, 2016 Current Ratio *1 2.09 : 1.00 1.96 : 1.00 Quick Ratio *2 1.38 : 1.00 1.26 : 1.00 Debt to Equity Ratio *3 1.28 : 1.00 1.43 : 1.00

June 30, 2016 Return on Assets *4 3.90% 3.47% Return on Equity *5 9.16% 8.99%

*1 – Current Assets / Current Liabilities

*2 – Cash and Cash Equivalents / Current Liabilities

*3 – Total Liabilities / Equity *4 – Net Profit / Average Total Assets

*5 – Net Profit / Average Equity

There are no other significant changes in the Group's financial position (5% or more) and condition that will warrant a more detailed discussion. Further, there are no material events and uncertainties known to management that would impact or change reported financial information and condition on the Group.

There are no known trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in increasing or decreasing the Group's liquidity in any material way.

There are no other known events that will trigger direct or contingent financial obligation that is currently considered material to the Group, including any default or acceleration of an obligation.

The Group does not anticipate having any cash flow or liquidity problems. The Group is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments. The Group has no material commitments for capital expenditures.

There are no material off-balance sheet transactions, arrangements, obligations, and other relationships of the Group with unconsolidated entities or other persons created during the reporting period.

The Group has no unusual nature of transactions or events that affects assets, liabilities, equity, net income or cash flows.

There are no other material issuances, repurchases or repayments of debt and equity securities.

There are no seasonal aspects that had a material effect on the financial condition or results of operations of the Group.

There are no material events subsequent to the end of the period that have not been reflected in the financial statements for the period.

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

SUN SEC Form 20-IS - 2017 26

2016 vs. 2015

RESULTS OF OPERATIONS

Twelve months ended December 31, 2016 compared to Twelve months ended December 31, 2015

The Group's total revenues exhibited an increase of Php52.28 million or 14.32% from Php365.07 million in 2015 to Php417.35 million in 2016 of the same period. Total revenues mostly came from management fees, service income and rental income.

Costs and expenses exhibited an increase of Php41.41 million or 12.60% from Php328.49 million in 2015 to Php369.90 million in 2016. Increase in costs and expenses were mainly due to cost of services and operating expenses.

The Group’s net profit showed an increase of Php10.88 million or 29.74% from Php36.58 million in 2015 to Php47.45 million in 2016.

FINANCIAL CONDITION

As of December 31, 2016 and December 31, 2015

The Group’s total resources amounted to Php684.38 million in 2016 from Php563.07 million in 2015. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business.

Current assets increased by Php92.72 million or 19.71% from Php470.31 million in 2015 to Php563.02 million in 2016. Cash and cash equivalents increased by Php59.76 million or 19.93% from Php299.90 million in 2015 to Php359.66 million in 2016. Due from related parties increased by Php7.07 million or 13.13% from Php53.86 million in 2015 to Php60.93 million in 2016.

Non-current assets increased by Php28.60 million or 30.83% from Php92.76 million in 2015 to Php121.35 million in 2016. Investment property decreased by Php1.24 million from Php28.51 million in 2015 to Php27.27 million in 2016. Property and equipment increased by Php22.95 million or 109.99% from Php20.86 million in 2015 to Php43.81 million in 2016.

Trade and other receivables increased by Php23.07 million or 20.57% from Php112.17 million in 2015 to Php135.24 million in 2016. Other assets increased by Php9.90 million or 86.48% from Php11.43 million in 2015 to Php21.31 million in 2016.

Current liabilities increased by Php61.95 million or 27.58% from Php224.60 million in 2015 to Php286.55 million in 2016. Trade and other payables exhibited an increase of Php46.18 million or 37.09% from Php124.48 million in 2015 to Php170.65 million in 2016. Due to related parties increased by Php18.49 million or 20.30% from Php91.08 million in 2015 to Php109.56 million in 2016. Income tax payable decreased by Php2.71 million or 29.97% from Php9.05 million in 2015 to Php6.34 million in 2016.

Retirement benefit obligation decreased by Php0.60 million or 0.51% from Php116.58 million in 2015 to Php115.99 million in 2016.

SUN SEC Form 20-IS - 2017 27

Material Changes in the Financial Statements Items: Increase/Decrease of 5% or more versus December 31, 2015

Statements of Financial Position

Cash and Cash Equivalents 19.93% Increase was due to timely collection of receivables

Trade and other receivables 20.57% Increase was due to additional revenues from management fees

Due from related parties 13.13% Increase was due to additional advances to related parties

Property and Equipment 109.99% Increase was mainly due to additional bus units acquired

Other Assets 86.48% Increase was due to additional intangible assets

Trade and other payables 37.09% Increase was due to trade payable and accrued expenses

Due to related parties 20.30% Increase was due to additional advances obtained by a subsidiary

Income tax payable (29.97%) Decrease was due to payment of prior year income tax due

Increase/Decrease of 5% or more versus December 31, 2015

Statements of Income

Management Fees 8.97% Increase was due to additional properties managed by a subsidiary as well as the increase in management fee rate

Service Income 84.32% Increase was due to higher service income generated by a subsidiary

Rental Income 67.36% Increase was due to higher rental income generated by a subsidiary

Finance and Other Income 73.93% Increase was due to higher miscellaneous income generated by a subsidiary

Cost of Services 26.67% Increase was due to higher service costs for the period

Operating Expenses 18.35% Increase was due to higher administrative and overhead expenses for the period

Tax Expense (11.84%) Decrease was due to lower taxable income for the period

SUN SEC Form 20-IS - 2017 28

KEY PERFORMANCE INDICATORS

Presented below are the top five (5) key performance indicators of the Group:

o Revenue Growth – The Group generated its revenue mostly from management fees, service income and rental income. The Group’s revenues showed an increase of Php52.28 million or 14.32% from Php365.07 million in 2015 to Php417.35 million in 2016.

o Net Profit Growth – measures the percentage change in net profit over a designated period of time. The Group’s net profit increased by Php10.88 million or 29.74% from Php36.58 million in 2015 to Php47.45 million in 2016.

o Increase in Cash and cash equivalents – Primarily attributable to collection of receivables and discreet control of finances observably enhanced the cash position. The Group’s cash and cash equivalents increased by Php59.76 million.

o Increase in Trade and Other receivables – Total trade and other receivables increased by Php23.07 million or 20.57% from Php112.17 million in 2015 to Php135.24 million in 2016. Increase is due to continuous flows of revenues in the form of administrative fees and rental income.

o Increase in Total Assets – Total assets increased by Php121.31 million or 21.54% from Php563.07 million in 2015 to Php684.38 million in 2016.

There are no other significant changes in the Group's financial position (5% or more) and condition that will warrant a more detailed discussion. Further, there are no material events and uncertainties known to management that would impact or change reported financial information and condition on the Group.

There are no known trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in increasing or decreasing the Group's liquidity in any material way. There are no other known events that will trigger direct or contingent financial obligation that is currently considered material to the Group, including any default or acceleration of an obligation.

The Group does not anticipate having any cash flow or liquidity problems. The Group is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments. The Group has no material commitments for capital expenditures.

There are no material off-balance sheet transactions, arrangements, obligations, and other relationships of the Group with unconsolidated entities or other persons created during the reporting period.

The Group has no unusual nature of transactions or events that affects assets, liabilities, equity, net income or cash flows.

There are no other material issuances, repurchases or repayments of debt and equity securities. There are no seasonal aspects that had a material effect on the financial condition or results of operations of the Group.

There are no material events subsequent to the end of the period that have not been reflected in the financial statements for the year 2016.

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

SUN SEC Form 20-IS - 2017 29

2015 vs. 2014

RESULTS OF OPERATIONS

Twelve months ended December 31, 2015 compared to Twelve months ended December 31, 2014

The Group's total revenues exhibited an increase of Php57.80 million or 18.81% from Php307.26 million in 2014 to Php365.07 million in 2015 of the same period. Total revenues mostly came from management fees, service income and rental income.

Costs and expenses exhibited an increase of Php50.05 million or 17.97% from Php278.44 million in 2014 to Php328.49 million in 2015. Increase in costs and expenses were mainly due to operating expenses, finance costs and tax expenses.

The Group’s net profit showed an increase of Php7.76 million or 26.92% from Php28.82 million in 2014 to Php36.58 million in 2015.

FINANCIAL CONDITION

As of December 31, 2015 and December 31, 2014

The Group’s total resources amounted to Php563.07 million in 2015 from Php491.41 million in 2014. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business.

Current assets increased by Php90.51 million or 23.83% from Php379.80 million in 2014 to Php470.31 million in 2015. Cash and cash equivalents increased by Php69.23 million or 30.02% from Php230.66 million in 2014 to Php299.90 million in 2015. Due from related parties increased by Php7.59 million or 16.41% from Php46.27 million in 2014 to Php53.86 million in 2015.

Non-current assets decreased by Php18.85 million or 16.89% from Php111.61 million in 2014 to Php92.76 million in 2015. Investment property decreased by Php1.24 million from Php29.75 million in 2014 to Php28.51 million in 2015. Property and equipment decreased by Php2.23 million or 9.65% from Php23.09 million in 2014 to Php20.86 million in 2015.

Trade and other receivables increased by Php15.43 million or 15.94% from Php96.74 million in 2014 to Php112.17 million in 2015. Other assets decreased by Php1.65 million or 12.63% from Php13.08 million in 2014 to Php11.43 million in 2015.

Current liabilities increased by Php37.44 million or 20.00% from Php187.16 million in 2014 to Php224.60 million in 2015. Trade and other payables exhibited an increase of Php37.22 million or 42.66% from Php87.25 million in 2014 to Php124.48 million in 2015. Due to related parties slightly increased by Php0.37 million or 0.41% from Php90.70 million in 2014 to Php91.08 million in 2015. Income tax payable decreased by Php0.16 million or 1.73% from Php9.21 million in 2014 to Php9.05 million in 2015.

Retirement benefit obligation decreased by Php41.10 million or 26.07% from Php157.69 million in 2014 to Php116.58 million in 2015.

SUN SEC Form 20-IS - 2017 30

Material Changes in the Financial Statements Items: Increase/Decrease of 5% or more versus December 31, 2014

Statements of Financial Position

Cash and Cash Equivalents 30.02% Increase was due to timely collection of receivables as of current period.

Trade and other receivables 15.94% Increase was due to additional revenues from management fees as of the current period.

Due from related parties 16.41% Increase was due to additional advances to related parties.

Property and Equipment (9.65%) Decrease was mainly due to depreciation for the current period.

Deferred Tax Assets (29.87%) Decrease was mainly due to effects of taxable and deductible temporary differences.

Other Assets (12.63%) Decrease was due to lower prepayments.

Trade and other payables 42.66% Increase was due to trade payable and accrued expenses as of the current period.

Retirement benefit obligation (26.07%) Decrease was mainly due to lower recognized liabilities on employee benefits.

Increase/Decrease of 5% or more versus December 31, 2014

Statements of Income

Management Fees 20.36% Increase was due to additional properties managed by the subsidiary as well as the increase in management fee rate.

Rental Income 8.60% Increase was due to higher rental income generated by the subsidiary.

Finance Income 19.41% Increase was due to higher interest income generated by the company.

Operating Expenses 28.13% Increase was due to higher administrative and overhead expenses for the current period.

Finance Cost 124.39% Increase was due to impairment loss on receivables recognized by the subsidiary.

Tax Expense 62.35% Increase was due to higher taxable income for the current period.

KEY PERFORMANCE INDICATORS

Presented below are the top five (5) key performance indicators of the Group:

o Revenue Growth – The Group generated its revenue mostly from management fees, service income and rental income. The Group’s revenues showed an increase of Php57.80 million or 18.81% from Php307.26 million in 2014 to Php365.07 million in 2015.

SUN SEC Form 20-IS - 2017 31

o Net Profit Growth – measures the percentage change in net profit over a designated period of time. The Group’s net profit increased by Php7.76 million or 26.92% from Php28.82 million in 2014 to Php36.58 million in 2015.

o Increase in Cash and cash equivalents – Primarily attributable to collection of receivables and discreet control of finances observably enhanced the cash position. The Group’s cash and cash equivalents increased by Php69.23 million.

o Increase in Trade and Other receivables – Total trade and other receivables increased by Php15.43 million or 15.94% from Php96.74 million in 2014 to Php112.17 million in 2015. Increase is due to continuous flows of revenues in the form of administrative fees and rental income.

o Increase in Total Assets – Total assets increased by Php71.66 million or 14.58% from Php491.41 million in 2014 to Php563.07 million in 2015.

There are no other significant changes in the Group's financial position (5% or more) and condition that will warrant a more detailed discussion. Further, there are no material events and uncertainties known to management that would impact or change reported financial information and condition on the Group.

There are no known trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in increasing or decreasing the Group's liquidity in any material way. There are no other known events that will trigger direct or contingent financial obligation that is currently considered material to the Group, including any default or acceleration of an obligation.

The Group does not anticipate having any cash flow or liquidity problems. The Group is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments. The Group has no material commitments for capital expenditures.

There are no material off-balance sheet transactions, arrangements, obligations, and other relationships of the Group with unconsolidated entities or other persons created during the reporting period.

The Group has no unusual nature of transactions or events that affects assets, liabilities, equity, net income or cash flows.

There are no other material issuances, repurchases or repayments of debt and equity securities. There are no seasonal aspects that had a material effect on the financial condition or results of operations of the Group.

There are no material events subsequent to the end of the period that have not been reflected in the financial statements for the year 2015.

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

2014 vs. 2013

RESULTS OF OPERATIONS

Twelve months ended December 31, 2014 compared to Twelve months ended December 31, 2013

The Group's total revenues exhibited an increase of 24.38 million or 8.62% from 282.89 million in 2013 to 307.26 million in 2014 of the same period. Total revenues mostly came from management fees, service income and rental income.

SUN SEC Form 20-IS - 2017 32

Costs and expenses exhibited an increase of 15.13 million or 5.75% from 263.31 million in 2013 to 278.44 million in 2014. Increase in costs and expenses were mainly due to operating expenses and tax expense.

The Group’s net profit showed an increase of 9.24 million or 47.22% from 19.58 million in 2013 to 28.82 million in 2014.

FINANCIAL CONDITION

As of December 31, 2014 and December 31, 2013

The Group’s total resources amounted to 491.41 million in 2014 from 400.88 million in 2013. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business.

Current assets increased by 81.06 million or 27.13% from 298.74 million in 2013 to 379.80 million in 2014. Cash and cash equivalents increased by 58.44 million or 33.93% from 172.23 million in 2013 to 230.66 million in 2014. Due from related parties increased by 9.62 million or 26.25% from 36.65 million in 2013 to 46.27 million in 2014.

Non-current assets increased by 9.46 million or 9.27% from 102.14 million in 2013 to 111.61 million in 2014. Investment property decreased by 1.24 million from 30.99 million in 2013 to 29.75 million in 2014. Property and equipment increased by 3.35 million or 16.98% from 19.74 million in 2013 to 23.09 million in 2014.

Trade and other receivables increased by 7.82 million or 8.79% from 88.92 million in 2013 to 96.74 million in 2014. Other Assets increased by 0.35 million or 2.79% from 12.72 million in 2013 to 13.08 million in 2014.

Current liabilities increased by 37.87 million or 25.37% from 149.29 million in 2013 to 187.16 million in 2014. Trade and other payables exhibited an increase of 15.43 million or 21.48% from 71.82 million in 2013 to 87.25 million in 2014. Due to related parties also increased by 13.39 million or 17.33% from 77.31 million in 2013 to 90.70 million in 2014. Income tax payable increased by 9.05 million or 5,640.81% from 0.16 million in 2013 to 9.21 million in 2014.

Retirement benefit obligation increased by 33.65 million or 27.13% from 124.04 million in 2013 to 157.69 million in 2014.

Material Changes in the Financial Statements Items: Increase/(Decrease) of 5% or more versus 2013

Statements of Financial Position

Cash and Cash Equivalents 33.93% Increase was due to timely collection of receivables as of the current period.

Due from Related Parties 26.25% Increase was due to additional advances to related parties of a subsidiary.

Trade and Other Receivables 8.79% Increase was due to additional revenues from management fees for the current period.

Property and Equipment 16.98% Increase was mainly due to additional acquisition of equipment by the subsidiaries.

Deferred Tax Asset 30.74% Increase was mainly due to effects of taxable and deductible temporary differences.

Trade and Other Payables 21.48% Increase was due to increase in accrued expenses as of the current period.

SUN SEC Form 20-IS - 2017 33

Due to Related Parties 17.33% Increase was due to additional advances incurred by the subsidiaries.

Income Tax Payable 5,640.81% Increase was due to higher taxable income tax for the current period.

Retirement Benefit Obligation 27.13% Increase was due to additional accrual of retirement benefits for the current period.

Statements of Income

Management Fees 20.45% Increase was due to additional properties managed by the subsidiary.

Service Income (5.89%) Decrease was due to lower service income generated by the subsidiary.

Rental Income (6.86%) Decrease was due to lower rental income generated by the subsidiary.

Finance Income 46.47% Increase was due to higher interest income generated for the current period.

Gain on Sale of AFS (100.00%) Decrease was due to non-recurring gain on sale of the parent company’s investment in available-for- sale financial asset.

Operating Expenses 21.44% Increase was due to higher administrative and overhead expenses for the current period.

Finance Cost 95.22% Increase was due to higher interest expense incurred by the subsidiary.

Tax Expense 209.86% Increase was due to higher taxable income for the current period.

KEY PERFORMANCE INDICATORS Presented below are the top five (5) key performance indicators of the Group:

o Revenue Growth – The Group generated its revenue mostly from management fees, rental income and service income. The group’s revenues showed an increase of 24.38 million or 8.62% from 282.89 million to 307.26 million year-on-year.

o Net Profit Growth – measures the percentage change in net profit over a designated period of time. The group’s net profit increase by 9.24 million or 47.22% from 19.58 million in 2013 to 28.82 million in 2014.

o Increase in Cash and Cash Equivalents – Cash and cash equivalents increased by 58.44 million or 33.93% from 172.23 million in 2013 to 230.66 million in 2014.

o Increase in Trade Receivables – Total trade receivables increased by 7.82 million from 88.92 million in 2013 to 96.74 million in 2014. Increase is due continuous flows of revenues in the form of administrative fees.

o Increase in Total Assets – Total assets increased by 90.53 million or 22.58% from 400.88 million in 2013 to 491.41 million in 2014.

SUN SEC Form 20-IS - 2017 34

There are no other significant changes in the Group's financial position (5% or more) and condition that will warrant a more detailed discussion. Further, there are no material events and uncertainties known to management that would impact or change reported financial information and condition on the Group.

There are no known trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in increasing or decreasing the Group's liquidity in any material way.

There are no other known events that will trigger direct or contingent financial obligation that is currently considered material to the Group, including any default or acceleration of an obligation.

The Group does not anticipate having any cash flow or liquidity problems. The Group is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments. The Group has no material commitments for capital expenditures.

There are no material off-balance sheet transactions, arrangements, obligations, and other relationships of the Group with unconsolidated entities or other persons created during the reporting period.

The Group has no unusual nature of transactions or events that affects assets, liabilities, equity, net income or cash flows.

There are no other material issuances, repurchases or repayments of debt and equity securities.

There are no seasonal aspects that had a material effect on the financial condition or results of operations of the group.

There are no material events subsequent to the end of the period that have not been reflected in the financial statements for the year 2014.

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

Market Price of and Dividends on the Company’s Common Shares

Market Information

The Company’s common shares are traded on the Philippine Stock Exchange. The closing price of the said shares as of 27 September 2017 was Php0.87. The trading prices of the said shares for each quarter within the last two years and subsequent interim period are set forth below:

Year First Quarter Second Quarter Third Quarter Fourth Quarter 2015 High 1.27 1.10 0.86 1.75 Low 1.00 0.81 0.65 0.66 2016 High 1.28 1.38 1.18 1.03 Low 0.70 0.95 0.97 0.80 2017 High 1.04 0.95 Low 0.84 0.86

SUN SEC Form 20-IS - 2017 35

Shareholders

There are 1,600 holders of the Company’s 2,250,000,000 outstanding shares of common stock. Below is a list of the top twenty holders of the Company’s shares of common stock as of 31 August 2017.

Rank Name No. Of Shares Percentage Of Ownership 1. Megaworld Corporation 955,834,992 42.48% 2. PCD Nominee Corp. (Filipino) 694,614,503 30.87% 3. Townsquare Development, Inc. 235,000,000 10.44% 4. Stanley Ho Hung Sun 116,100,000 5.16% 5. First Centro. Inc. 102,987,000 4.58% 6. The Andresons Group, Inc. 89,460,000 3.98% 7. EBC PCI TA NO. 203-53106-5 17,000,000 0.76% 8. PCD Nominee Corp. (Non-Filipino) 13,761465,465 0.61% 9. Lucio L. Co 4,082,563 0.18% 10. Genevieve Go 1,300,000 0.06% 11. PCCI Securities Brokers Corp. 1,000,000 0.04% 12. Romulo P. Ney 555,000 0.02% 13. Larcy Marichi Y. So &/Or Hanson G. So 601125 513,700 0.02% 14. Yap Sik Kieong 500,000 0.02% 15. Luciano H. Tan 450,000 0.02% 16. Pablo M. Silva 437,499 0.02% 17. Hanson G. So 400,000 0.02% 18. Jaime Dy &/Or Juliet Dy 399,000 0.02% 19. Francis L. Dy &/Or Ingred S. 385,500 0.02% 20. Peter Ty 357,000 0.02%

Dividends

The deficit of the Company and its cash position did not merit any declaration of dividends for the last two fiscal years.

The payment of dividends in the future will depend upon the Company's earnings, cash flow and financial condition, among other factors. The Company may declare dividends only out of its unrestricted retained earnings. These represent the net accumulated earnings of the Company, with its capital unimpaired, which are not appropriated for any other purpose.

The Company may pay dividends in cash, by the distribution of property, or by the issue of shares of stock. Dividends paid in cash are subject to the approval by the Board of Directors. Dividends paid in the form of additional shares are subject to approval by both the Board of Directors and at least two- thirds (2/3) of the outstanding capital stock of the shareholders at a shareholders' meeting called for such purpose.

The Corporation Code prohibits stock corporations from retaining surplus profits in excess of one hundred per cent (100%) of their paid-in capital stock, except when justified by definite corporate expansion projects or programs approved by the Board of Directors, or when the corporation is prohibited under any loan agreement with any financial institution or creditor from declaring dividends without its consent, and such consent has not yet been secured, or when it can be clearly shown that such retention is necessary under special circumstances obtaining in the corporation.

SUN SEC Form 20-IS - 2017 36

Recent Sales of Unregistered Securities

In the past three (3) years, the Company has not undertaken any sale of unregistered or exempt securities, or issued securities constituting an exempt transaction.

Compliance with Leading Practices on Corporate Governance

In 2002, the Company adopted a Manual on Corporate Governance in order to institutionalize the rules and principles of good corporate governance in the entire organization in accordance with the Code of Corporate Governance promulgated by SEC. A revised Manual was adopted by the Company on 2014 pursuant to SEC Memorandum Circular No. 6, Series of 2009 and as amended by SEC Memorandum Circular No. 9, Series of 2014. The Manual was further revised and adopted by the Company on May 30, 2017 pursuant to SEC Memorandum Circular No. 19, Series of 2016.

Corporate Governance Committee

The Company’s Corporate Governance Committee is responsible for assisting the Board in the performance of its corporate governance responsibilities, as well as establishing formal and transparent procedure to develop a policy for determining the remuneration of directors and officers, and determining the nomination and election process for the Corporation’s directors and the general profile of board members that the Corporation may need to ensure that appropriate knowledge, competencies and expertise that complement the existing skills of the Board. This Committee shall be composed of three (3) members, two of whom are independent directors, including the Chairman.

Board Risk Oversight Committee

The Company’s Board Risk Oversight Committee is responsible for the oversight of the Corporation’s Enterprise Risk Management system to ensure its functionality and effectiveness. This Committee shall be composed of three (3) members of the Board, the majority of whom are independent directors, including the Chairman.

Audit Committee

The Company’s Audit Committee is responsible for ensuring that all financial reports comply with internal financial management and accounting standards, performing oversight financial management functions, pre-approving all audit plans, scope and frequency and performing direct interface functions with internal and external auditors. This Committee has three members, two of whom are independent directors. An independent director serves as the head of the committee.

Related Party Transaction Committee

The Company’s Related Party Transaction Committee is responsible for reviewing all material related party transactions of the Corporation, including evaluating on an ongoing basis existing relations between and among business and counterparties to ensure that all related parties are continuously identified, RPTs are monitored, and subsequent changes in relationships with counterparties (from non-related to related and vice versa) are captured. This Committee shall be composed of three directors, two of whom are independent directors, including the Chairman.

In 2016. the Directors and officers of the Company were required to take a Corporate Governance Orientation course and are encouraged to undergo further training in corporate governance.

The Company likewise complies with its Manual on Corporate Governance requirement that it rotate its external auditor or change the handling partner every five (5) years or earlier.

Evaluation System

The Company has designated a Compliance Officer who is tasked with monitoring compliance with the provisions of its Manual of Corporate Governance. The Compliance Officer, who is directly reporting to the Chairman of the Board, has established an evaluation system to measure or

SUN SEC Form 20-IS - 2017 37 determine the level of compliance by the Company with its Manual. A Self-Rating System on Corporate Governance was implemented and submitted to SEC and PSE in July 2003.

Deviations from Manual and Sanctions Imposed

In 2016, the Company substantially complied with its Manual of Corporate Governance and did not materially deviate from its provisions. No sanctions have been imposed on any director, officer or employee on account of non-compliance.

Plan to Improve Corporate Governance

Pursuant to SEC Memorandum Circular No. 6, Series of 2009 and as amended by SEC Memorandum Circular No, 9, Series of 2014, the Company has revised its Manual of Corporate Governance to make its provision complaint with the Revised Code of Corporate Governance. The Manual was further revised and adopted by the Company on May 30, 2017 pursuant to the SEC Memorandum Circular No. 19, Series of 2016.

Among the measures undertaken by the Company in order to fully comply with the provisions of the leading practices on good corporate governance adopted in its Manual on Corporate Governance are monitoring and evaluation of the internal control system for corporate governance. The Company likewise maintains an active website where its Annual Reports, Quarterly Reports, Financial Statements and other disclosures are uploaded for easy access and reference by the investing public. The Company is committed to good corporate governance and continues to improve and enhance the evaluation system for purposes of determining the level of compliance by the Company with its Manual on Corporate Governance.

UNDERTAKING

The Company undertakes to provide without charge to a stockholder a copy of the Annual Report on SEC Form 17-A upon written request address to ROLANDO D. SIATELA, Corporate Secretary and Information Officer, Suntrust Home Developers, Inc., 24th Floor, Alliance Global Tower, 36th Street cor. 11th Avenue, Uptown Bonifacio, Taguig City 1634.

SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2016 AND 2015 (Amounts in Philippine Pesos)

Notes 2016 2015

A S S E T S

CURRENT ASSETS Cash and cash equivalents 5 P 359,656,256 P 299,896,867 Trade and other receivables 6 131,749,470 107,934,741 Due from related parties - net 14 60,930,517 53,859,925 Other current assets - net 7 10,687,537 8,616,419

Total Current Assets 563,023,780 470,307,952

NON-CURRENT ASSETS Trade and other receivables 6 3,489,257 4,234,183 Investment property - net 9 27,266,842 28,506,244 Property and equipment - net 8 43,814,174 20,864,983 Deferred tax assets 13 36,163,019 36,341,694 Other non-current assets - net 7 10,620,923 2,810,522

Total Non-current Assets 121,354,215 92,757,626

TOTAL ASSETS P 684,377,995 P 563,065,578

LIABILITIES AND EQUITY

CURRENT LIABILITIES Trade and other payables 10 P 170,653,926 P 124,478,738 Due to related parties 14 109,563,646 91,076,837 Income tax payable 6,335,970 9,048,094

Total Current Liabilities 286,553,542 224,603,669

NON-CURRENT LIABILITY Retirement benefit obligation 12 115,988,616 116,584,200

Total Liabilities 402,542,158 341,187,869

EQUITY 16 281,835,837 221,877,709

TOTAL LIABILITIES AND EQUITY P 684,377,995 P 563,065,578

See Notes to Consolidated Financial Statements. SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014 (Amounts in Philippine Pesos)

Notes 2016 2015 2014

REVENUES Management fees 4 P 366,587,074 P 336,409,706 P 279,504,341 Service income 4 27,333,182 14,829,452 14,640,357 Rental income 9, 17 15,853,676 9,472,933 8,722,669 Finance and other income 5, 6 7,577,354 4,356,674 4,396,722

417,351,286 365,068,765 307,264,089

COSTS AND EXPENSES Cost of services 11 239,938,927 189,415,811 183,800,839 Operating expenses 11 100,491,182 84,906,821 66,263,979 Finance costs 6, 12 7,527,127 29,281,077 13,049,374 Tax expense 13 21,941,357 24,888,917 15,330,731

369,898,593 328,492,626 278,444,923

NET PROFIT P 47,452,693 P 36,576,139 P 28,819,166

Earnings Per Share – Basic and Diluted 15 P 0.021 P 0.016 P 0.013

See Notes to Consolidated Financial Statements. SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014 (Amounts in Philippine Pesos)

Notes 2016 2015 2014

NET PROFIT P 47,452,693 P 36,576,139 P 28,819,166

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss Remeasurements of retirement benefit obligation 12 17,864,907 55,348,777 ( 14,025,098 ) Tax income (expense) 13 ( 5,359,472 ) ( 16,604,633 ) 4,207,530

12,505,435 38,744,144 ( 9,817,568 )

TOTAL COMPREHENSIVE INCOME P 59,958,128 P 75,320,283 P 19,001,598

See Notes to Consolidated Financial Statements. SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014 (Amounts in Philippine Pesos)

Revaluation Capital Stock Reserves Total (See Note 16) (See Note 12) Deficit Equity

Balance at January 1, 2016 P 2,062,500,000 P 12,844,540 ( P 1,853,466,831 ) P 221,877,709 Total comprehensive income for the year - 12,505,435 47,452,693 59,958,128

Balance at December 31, 2016 P 2,062,500,000 P 25,349,975 ( P 1,806,014,138 ) P 281,835,837

Balance at January 1, 2015 P 2,062,500,000 ( P 25,899,604 ) ( P 1,890,042,970 ) P 146,557,426 Total comprehensive income for the year - 38,744,144 36,576,139 75,320,283

Balance at December 31, 2015 P 2,062,500,000 P 12,844,540 ( P 1,853,466,831 ) P 221,877,709

Balance at January 1, 2014 P 2,062,500,000 ( P 16,082,036 ) ( P 1,918,862,136 ) P 127,555,828 Total comprehensive income for the year - ( 9,817,568 ) 28,819,166 19,001,598

Balance at December 31, 2014 P 2,062,500,000 ( P 25,899,604 ) ( P 1,890,042,970 ) P 146,557,426

See Notes to Consolidated Financial Statements. SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014 (Amounts in Philippine Pesos)

Notes 2016 2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax P 69,394,050 P 61,465,056 P 44,149,897 Adjustments for: Interest expense 6,857,927 7,397,850 6,091,911 Depreciation and amortization 7, 8, 9 6,581,574 9,157,741 12,966,563 Interest income 5, 6 ( 3,916,012 ) ( 4,042,604 ) ( 3,385,507 ) Impairment loss on trade and other receivables 6 656,250 21,883,227 6,957,463 Loss on retirement of property and equipment 25,189 - - Operating profit before working capital changes 79,598,978 95,861,270 66,780,327 Increase in trade and other receivables ( 23,707,237 ) ( 37,280,443 ) ( 14,776,630 ) Increase in due from related parties - net 14 ( 7,070,592 ) ( 7,591,101 ) ( 9,619,110 ) Decrease (increase) in other current assets ( 2,071,118 ) 1,082,345 ( 2,232,860 ) Increase in trade and other payables 45,612,808 37,222,208 15,431,113 Increase in retirement benefit obligation 10,973,776 6,848,667 13,533,797 Cash generated from operations 103,336,615 96,142,946 69,116,637 Interest received 5 3,897,196 4,014,593 3,385,507 Cash paid for taxes ( 29,834,278 ) ( 26,177,389 ) ( 14,258,583 )

Net Cash From Operating Activities 77,399,533 73,980,150 58,243,561

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment 8 ( 27,697,956 ) ( 4,526,963 ) ( 15,909,143 ) Decrease (increase) in other non-current assets ( 8,428,997 ) ( 670,000 ) 406,680 Proceeds from disposal of property and equipment - 75,893 2,301,197

Net Cash Used in Investing Activities ( 36,126,953 ) ( 5,121,070 ) ( 13,201,266 )

CASH FLOWS FROM A FINANCING ACTIVITY Advances obtained 14 18,486,809 374,814 13,394,521

NET INCREASE IN CASH AND CASH EQUIVALENTS 59,759,389 69,233,894 58,436,816

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 299,896,867 230,662,973 172,226,157

CASH AND CASH EQUIVALENTS AT END OF YEAR P 359,656,256 P 299,896,867 P 230,662,973

See Notes to Consolidated Financial Statements.

SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2016, 2015 AND 2014 (Amounts in Philippine Pesos)

1. CORPORATE INFORMATION

1.1 Company Background

Suntrust Home Developers, Inc. (the Company or Parent Company) was incorporated in the Philippines on January 18, 1956 (extended for another 50 years starting January 18, 2006) to primarily engage in real estate development. The Parent Company is presently engaged in leasing activity and is a publicly listed entity in the Philippines.

Megaworld Corporation (Megaworld), also a publicly listed company in the Philippines, is the major stockholder with 42.48% ownership interest in the Parent Company.

The registered office of the Parent Company, which is also its principal place of business, is located at the 6 th Floor, The World Centre Building, 330 Sen. Gil Puyat Avenue, Makati City.

The Parent Company’s administrative functions are being handled by Megaworld at no cost to the Company.

1.2 Subsidiaries and their Operations

The Parent Company holds 100% ownership interest in First Oceanic Property Management, Inc. (FOPMI). FOPMI, which is incorporated in the Philippines, is engaged primarily in the management of real estate properties.

On the other hand, FOPMI holds 100% ownership interest in the shares of stock of Citylink Coach Services, Inc. (Citylink), a domestic company engaged in overland transport, carriage, moving or haulage of passengers, fares, customers and commuters as well as freight, cargo, articles, items, parcels, commodities, goods or merchandise by means of coaches, buses, coasters, jeeps, cars and other similar means of transport.

The registered and principal place of business of FOPMI is located at No. 102 L.P. Leviste St., Salcedo Village, Barangay Bel-Air, Makati City. The registered and principal place of business of Citylink is located at G/F McKinley Parking Building, Service Road 2, McKinley Town Center, Fort Bonifacio, Taguig City.

1.3 Approval of the Consolidated Financial Statements

The consolidated financial statements of Suntrust Home Developers, Inc. and Subsidiaries (the Group) as at and for the year ended December 31, 2016 (including the comparative consolidated financial statements as at December 31, 2015 and for the years ended December 31, 2015 and 2014) were authorized for issue by the Company’s Board of Directors (BOD) on March 29, 2017.

- 2 -

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarized below and in the succeeding pages. The policies have been consistently applied to all years presented, unless otherwise stated.

2.1 Basis of Preparation of Consolidated Financial Statements

(a) Statement of Compliance with Philippine Financial Reporting Standards

The consolidated financial statements of the Group have been prepared in accordance with Philippine Financial Reporting Standards (PFRS). PFRS are adopted by the Financial Reporting Standards Council (FRSC), from the pronouncements issued by the International Accounting Standards Board, and approved by the Philippine Board of Accountancy.

The consolidated financial statements have been prepared using the measurement bases specified by PFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies that follow.

(b) Presentation of Consolidated Financial Statements

The consolidated financial statements are presented in accordance with Philippine Accounting Standard (PAS) 1, Presentation of Financial Statements . The Group presents consolidated statements of comprehensive income separate from the consolidated statements of income.

The Group presents a third consolidated statement of financial position as at the beginning of the preceding period when it applies an accounting policy retrospectively, or makes a retrospective restatement or reclassification of items that has a material effect on the information in the consolidated statement of financial position at the beginning of the preceding period. The related notes to the third consolidated statement of financial position are not required to be disclosed.

(c) Functional and Presentation Currency

These consolidated financial statements are presented in Philippine pesos, the functional and presentation currency of the Group, and all values represent absolute amounts except when otherwise indicated.

Items included in the consolidated financial statements of the Group are measured using its functional currency, the currency of the primary economic environment in which the Group operates.

- 3 -

2.2 Adoption of New and Amended PFRS

(a) Effective in 2016 that are Relevant to the Group

The Group adopted for the first time the following amendments and annual improvements to PFRS, which are mandatorily effective for consolidated financial statements beginning on or after January 1, 2016:

PAS 1 (Amendments) : Presentation of Financial Statements – Disclosure Initiative PAS 16 and PAS 38 (Amendments) : Property, Plant and Equipment and Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortization PAS 16 and PAS 41 (Amendments) : Property, Plant and Equipment and Agriculture – Bearer Plants PAS 28, PFRS 10 and PFRS 12 (Amendments) : Consolidated Financial Statements, Disclosure of Interests in Other Entities, and Investments in Associates and Joint Ventures – Investment Entities – Applying the Consolidation Exception PFRS 11 (Amendments) : Joint Arrangements – Accounting for Acquisition of Interest in Joint Operations Annual Improvements : Annual Improvements to PFRS (2012-2014 Cycle)

Discussed below and in the succeeding pages are the relevant information about these amendments and improvements.

(i) PAS 1 (Amendments), Presentation of Financial Statements – Disclosure Initiative . The amendments encourage entities to apply professional judgment in presenting and disclosing information in the financial statements. Accordingly, the amendments clarify that materiality applies to the whole financial statements and an entity shall not reduce the understandability of the financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. The amendments clarify that, in determining the order of presenting the notes and disclosures, an entity shall consider the understandability and comparability of the financial statements.

- 4 -

(ii) PAS 16 (Amendments), Property, Plant and Equipment, and PAS 38 (Amendments), Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortization . The amendments in PAS 16 clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate for property, plant and equipment. In addition, amendments to PAS 38 introduce a rebuttable presumption that an amortization method that is based on the revenue generated by an activity that includes the use of an intangible asset is not appropriate, which can only be overcome in limited circumstances where the intangible asset is expressed as a measure of revenue, or when it can be demonstrated that revenue and the consumption of the economic benefits of an intangible asset are highly correlated. The amendments also provide guidance that the expected future reductions in the selling price of an item that was produced using the asset could indicate an expectation of technological or commercial obsolescence of an asset, which may reflect a reduction of the future economic benefits embodied in the asset.

(iii) PAS 16 (Amendments), Property, Plant and Equipment and PAS 41 (Amendment) Agriculture – Bearer Plants . The amendments define a bearer plant as a living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period and has a remote likelihood of being sold as agricultural produce. On this basis, bearer plant is now included within the scope of PAS 16 rather than PAS 41, allowing such assets to be accounted for as property, plant and equipment and to be measured after initial recognition at cost or revaluation basis in accordance with PAS 16. The amendments further clarify that produce growing on bearer plants remains within the scope of PAS 41.

(iv) PFRS 10 (Amendments), Consolidated Financial Statements , PFRS 12, Disclosure of Interests in Other Entities , and PAS 28 (Amendment), Investments in Associates and Joint Ventures – Investment Entities – Applying the Consolidation Exception . These amendments address the concerns that have arisen in the context of applying the consolidation exception for investment entities. It clarifies which subsidiaries of an investment entity are consolidated in accordance with paragraph 32 of PFRS 10 and clarifies whether the exemption to present consolidated financial statements, set out in paragraph 4 of PFRS 10, is available to a parent entity that is a subsidiary of an investment entity. These amendments also permit a non-investment entity investor, when applying the equity method of accounting for an associate or joint venture that is an investment entity, to retain the fair value measurement applied by that investment entity associate or joint venture to its interests in subsidiaries.

(v) PFRS 11 (Amendments), Joint Arrangements – Accounting for Acquisition of Interest in Joint Operations. These amendments require the acquirer of an interest in a joint operation in which the activity constitutes a business as defined in PFRS 3, Business Combinations to apply all accounting principles and disclosure requirements on business combinations under PFRS 3 and other PFRSs, except for those principles that conflict with the guidance in PFRS 11.

- 5 -

(vi) Annual Improvements to PFRS (2012-2014 Cycle). Among the improvements, the amendments below are relevant to the Group but management does not expect these to have material impact on the Group’s consolidated financial statements.

• PFRS 7 (Amendments), Financial Instruments – Disclosures . The amendments provide additional guidance to help entities identify the circumstances under which a contract to “service” financial assets is considered to be a continuing involvement in those assets for the purposes of applying the disclosure requirements of PFRS 7. Such circumstances commonly arise when, for example, the servicing is dependent on the amount or timing of cash flows collected from the transferred asset or when a fixed fee is not paid in full due to non-performance of that asset.

• PAS 19 (Amendments), Employee Benefits . The amendments clarify that the currency and term of the high quality corporate bonds which were used to determine the discount rate for post-employment benefit obligations shall be made consistent with the currency and estimated term of the post-employment benefit obligations.

(b) Effective in 2016 that are not Relevant to the Group

The following new PFRS, amendments and annual improvements to existing standards are mandatorily effective for annual periods beginning on or after January 1, 2016 but are not relevant to the Group’s consolidated financial statements:

PAS 27 (Amendments) : Separate Financial Statements – Equity Method in Separate Financial Statements PFRS 14 : Regulatory Deferral Accounts Annual Improvements to PFRS (2012-2014 Cycle) PAS 34 (Amendments) : Interim Financial Reporting – Disclosure of Information “Elsewhere in the Interim Financial Report” PFRS 5 (Amendments) : Non-current Assets Held for Sale and Discontinued Operations – Changes in Methods of Disposal PFRS 7 (Amendments) : Financial Instruments: Disclosures – Applicability of the Amendments to PFRS 7 to Condensed Interim Financial Statements

(c) Effective Subsequent to 2016 but not Adopted Early

There are new PFRS and amendments to existing standards effective for annual periods subsequent to 2016, which are adopted by the FRSC. Management will adopt the following relevant pronouncements in the succeeding pages in accordance with their transitional provisions; and, unless otherwise stated, none of these are expected to have significant impact on the Group’s consolidated financial statements.

- 6 -

(i) PAS 7 (Amendments), Statement of Cash Flows – Disclosure Initiative (effective from January 1, 2017). The amendments are designed to improve the quality of information provided to users of financial statements about changes in an entity’s debt and related cash flows (and non-cash changes). They require an entity to provide disclosures that enable users to evaluate changes in liabilities arising from financing activities. An entity applies its judgment when determining the exact form and content of the disclosures needed to satisfy this requirement. Moreover, they suggest a number of specific disclosures that may be necessary in order to satisfy the above requirement, including: (a) changes in liabilities arising from financing activities caused by changes in financing cash flows, foreign exchange rates or fair values, or obtaining or losing control of subsidiaries or other businesses; and, (b) a reconciliation of the opening and closing balances of liabilities arising from financing activities in the statement of financial position including those changes identified immediately above.

(ii) PAS 12 (Amendments), Income Taxes – Recognition of Deferred Tax Assets for Unrealized Losses (effective from January 1, 2017). The focus of the amendments is to clarify how to account for deferred tax assets related to debt instruments measured at fair value, particularly where changes in the market interest rate decrease the fair value of a debt instrument below cost. The amendments provide guidance in the following areas where diversity in practice previously existed: (a) existence of a deductible temporary difference; (b) recovering an asset for more than its carrying amount; (c) probable future taxable profit against which deductible temporary differences are assessed for utilization; and, (d) combined versus separate assessment of deferred tax asset recognition for each deductible temporary difference.

(iii) PFRS 9 (2014), Financial Instruments (effective from January 1, 2018). This new standard on financial instruments will eventually replace PAS 39, Financial Instruments: Recognition and Measurement and PFRS 9 (2009, 2010 and 2013 versions). This standard contains, among others, the following:

• three principal classification categories for financial assets based on the business model on how an entity is managing its financial instruments;

• an expected loss model in determining impairment of all financial assets that are not measured at fair value through profit or loss (FVTPL), which generally depends on whether there has been a significant increase in credit risk since initial recognition of a financial asset; and,

• a new model on hedge accounting that provides significant improvements principally by aligning hedge accounting more closely with the risk management activities undertaken by entities when hedging their financial and non-financial risk exposures.

- 7 -

In accordance with the financial asset classification principle of PFRS 9 (2014), a financial asset is classified and measured at amortized cost if the asset is held within a business model whose objective is to hold financial assets in order to collect the contractual cash flows that represent solely payments of principal and interest (SPPI) on the principal outstanding. Moreover, a financial asset is classified and subsequently measured at fair value through other comprehensive income if it meets the SPPI criterion and is held in a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets. All other financial assets are measured at FVTPL.

In addition, PFRS 9 (2014) allows entities to make an irrevocable election to present subsequent changes in the fair value of an equity instrument that is not held for trading in other comprehensive income.

The accounting for embedded derivatives in host contracts that are financial assets is simplified by removing the requirement to consider whether or not they are closely related, and, in most arrangements, does not require separation from the host contract.

For liabilities, the standard retains most of the PAS 39 requirements which include amortized cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The amendment also requires changes in the fair value of an entity’s own debt instruments caused by changes in its own credit quality to be recognized in other comprehensive income rather than in profit or loss.

Management is currently assessing the impact of PFRS 9 (2014) on the consolidated financial statements of the Group and it will conduct a comprehensive study of the potential impact of this standard prior to its mandatory adoption date to assess the impact of all changes.

(iv) PFRS 15, Revenue from Contract with Customers (effective from January 1, 2018) – This standard will replace PAS 18, Revenue , and PAS 11, Construction Contracts , the related Interpretations on revenue recognition: International Financial Reporting Interpretations Committee (IFRIC) 13, Customer Loyalty Programmes , IFRIC 15, Agreement for the Construction of Real Estate , IFRIC 18, Transfers of Assets from Customers and Standing Interpretations Committee 31, Revenue – Barter Transactions Involving Advertising Services . This new standard establishes a comprehensive framework for determining when to recognize revenue and how much revenue to recognize. The core principle in the said framework is for an entity to recognize revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Management is currently assessing the impact of this standard on the Group’s consolidated financial statements.

- 8 -

(v) PFRS 16, Leases (effective from January 1, 2019). The new standard will eventually replace PAS 17, Leases .

For lessees, it requires to account for leases “on-balance sheet” by recognizing a “right of use” asset and a lease liability. The lease liability is initially measured as the present value of future lease payments. For this purpose, lease payments include fixed, non-cancellable payments for lease elements, amounts due under residual value guarantees, certain types of contingent payments and amounts due during optional periods to the extent that extension is reasonably certain. In subsequent periods, the “right-of-use” asset is accounted for similarly to a purchased asset and depreciated or amortized. The lease liability is accounted for similar to a financial liability using the effective interest method. However, the new standard provides important reliefs or exemptions for short-term leases and leases of low value assets. If these exemptions are used, the accounting is similar to operating lease accounting under PAS 17 where lease payments are recognized as expenses on a straight-line basis over the lease term or another systematic basis (if more representative of the pattern of the lessee’s benefit).

For lessors, lease accounting is similar to PAS 17’s. In particular, the distinction between finance and operating leases is retained. The definitions of each type of lease, and the supporting indicators of a finance lease, are substantially the same as PAS 17’s. The basic accounting mechanics are also similar, but with some different or more explicit guidance in few areas. These include variable payments, sub-leases, lease modifications, the treatment of initial direct costs and lessor disclosures.

Management is currently assessing the impact of this new standard on the Group’s consolidated financial statements.

(vii) PFRS 10 (Amendments), Consolidated Financial Statements, and PAS 28 (Amendments), Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associates or Joint Venture (effective date deferred indefinitely). The amendments to PFRS 10 require full recognition in the investor’s financial statements of gains or losses arising on the sale or contribution of assets that constitute a business as defined in PFRS 3, Business Combinations , between an investor and its associate or joint venture. Accordingly, the partial recognition of gains or losses (i.e., to the extent of the unrelated investor’s interests in an associate or joint venture) only applies to those sale of contribution of assets that do not constitute a business. Corresponding amendments have been made to PAS 28 to reflect these changes. In addition, PAS 28 has been amended to clarify that when determining whether assets that are sold or contributed constitute a business, an entity shall consider whether the sale or contribution of those assets is part of multiple arrangements that should be accounted for as a single transaction.

- 9 -

2.3 Basis of Consolidation

The Parent Company obtains and exercises control through voting rights. The Group’s consolidated financial statements comprise the accounts of the Parent Company and its subsidiaries as mentioned in Note 1, after the elimination of material intercompany transactions. All intercompany assets and liabilities, equity, income, expenses and cash flows relating to transaction between entities under the Group, are eliminated in full on consolidation. Unrealized profits and losses from intercompany transactions that are recognized in assets are also eliminated in full. Intercompany losses that indicate impairment are recognized in the consolidated financial statements.

The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent accounting principles. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when: it has the power over the entity; it is exposed, or has rights to, variable returns from its involvement with the entity; and, has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date the Company obtains control.

The Company reassesess whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of controls indicated above. Accordingly, entities are deconsolidated from the date that control ceases.

The acquisition method is applied to account for acquired subsidiaries. This requires recognizing and measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Company, if any. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred and subsequent change in the fair value of contingent consideration is recognized directly in profit or loss.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any existing equity interest in the acquiree over the acquisition-date fair value of the identifiable net assets acquired is recognized as goodwill. If the consideration transferred is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly as gain in profit or loss (see Note 2.11).

2.4 Financial Assets

Financial assets are recognized when the Group becomes a party to the contractual terms of the financial instrument.

- 10 -

For purposes of classifying financial assets, an instrument is considered as an equity instrument if it is non-derivative and meets the definition of equity for the issuer in accordance with the criteria of PAS 32, Financial Instruments: Presentation . All other non-derivative financial instruments are treated as debt instruments.

Financial assets other than those designated and effective as hedging instruments are classified into the following categories: financial assets at FVTPL, held-to-maturity investments, loans and receivables and available-for-sale financial assets. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the investments were acquired.

Regular purchases and sales of financial assets are recognized on their trade date. All financial assets that are not classified as FVTPL are initially recognized at fair value plus any directly attributable transaction costs.

The Group’s financial assets are classified as loans and receivables.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money or services directly to a debtor with no intention of trading the receivables. They are included in current assets, except for maturities greater than 12 months after the end of each reporting period, which are classified as non-current assets.

The Group’s financial assets categorized as loans and receivables are presented as Cash and Cash Equivalents, Trade and Other Receivables (except Advances to employees) and Due from Related Parties in the consolidated statement of financial position. Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments with original maturities of three months or less, readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

Loans and receivables are subsequently measured at amortized cost using the effective interest method, less impairment loss, if any.

Impairment loss is provided when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the impairment loss is determined as the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset’s original effective interest rate or current effective interest rate determined under the contract if the loan has a variable interest rate.

The carrying amount of the asset shall be reduced either directly or through the use of an allowance account. The amount of the loss shall be recognized in profit or loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in the profit or loss.

All income and expenses, including impairment losses, relating to financial assets that are recognized in profit or loss are presented as part of Finance and Other Income or Finance Costs accounts in the consolidated statement of income. - 11 -

Non-compounding interest and other cash flows resulting from holding financial assets are recognized in profit or loss when earned, regardless of how the related carrying amount of financial assets is measured.

The financial assets (or where applicable, a part of a financial asset or a part of a group of financial assets) are derecognized when the contractual rights to receive cash flows from the financial instruments expire, or when the financial assets and all substantial risks and rewards of ownership have been transferred to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

2.5 Other Assets

Other current assets pertain to other resources controlled by the Group as a result of past events. They are recognized in the consolidated financial statements when it is probable that the future economic benefits will flow to the Group and the asset has a cost or value that can be measured reliably.

Other recognized assets of similar nature, where future economic benefits are expected to flow to the Group beyond one year after the end of the reporting period are classified as non-current assets.

2.6 Investment Property

Investment property pertains to condominium units held for rent and for capital appreciation. Condominium units are stated at cost, less accumulated depreciation and accumulated impairment losses, if any.

The cost of investment property comprise the acquisition cost or construction cost and other directly attributable costs for bringing the asset to working condition for its intended use. Expenditures for additions and major improvements are capitalized while expenditures for repairs and maintenance are charged to expense when incurred.

Depreciation of condominium units is computed on a straight-line basis over its estimated useful life of 30 years [see Note 3.2(a)].

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see Note 2.16).

Any gain or loss on the retirement or disposal of an investment property is recognized in profit or loss in the year of retirement disposal.

Investment properties are derecognized upon disposal or when permanently withdrawn from use and no future economic benefit is expected from their disposal.

2.7 Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization and any impairment in value.

- 12 -

The cost of an asset comprises its purchase price and directly attributable costs of bringing the asset to working condition for its intended use. Expenditures for additions, major improvements and renewals are capitalized while expenditures for repairs and maintenance are charged to expense as incurred.

Depreciation is computed on the straight-line basis over the estimated useful lives of the assets as follows:

Transportation equipment 5-15 years Office and communication equipment 3-5 years Furniture and fixtures 3-5 years

Leasehold improvements are amortized over their estimated useful life of five years or the term of the lease, whichever is shorter.

Fully depreciated and amortized assets are retained in the accounts until they are no longer in use and no further change for depreciation and amortization is made in respect of these assets.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see Note 2.16).

The residual values, estimated useful lives and method of depreciation of property and equipment are reviewed and adjusted, if appropriate, at the end of each reporting period.

An item of property and equipment, including the related accumulated depreciation and any impairment losses, is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the year the item is derecognized.

2.8 Intangible Assets

Intangible assets, presented as part of Other Non-current Assets account in the consolidated statement of financial position, pertain to acquired computer software applications used in operation and administration which are accounted for under the cost model. The cost of the asset is the amount of cash or cash equivalents paid or the fair value of the other considerations given to acquire an asset at the time of its acquisition. Capitalized costs are amortized on a straight-line basis over an estimated useful life of five years as these intangible assets are considered finite. In addition, intangible assets are subject to impairment testing as described in Note 2.16.

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and install the specific software for its intended use. Costs associated with maintaining computer software are expensed as incurred.

When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset and is recognized in profit or loss.

- 13 -

2.9 Financial Liabilities

The financial liabilities of the Group include Trade and Other Payables (excluding customers’ deposits and tax-related payables) and Due to Related Parties. Financial liabilities are recognized when the Group becomes a party to the contractual terms of the instrument. All interest-related charges are recognized as an expense under the caption Finance Costs in the consolidated statement of income.

Trade and other payables and amounts due to related parties are recognized initially at their fair value and subsequently measured at amortized cost, using the effective interest method for maturities beyond one year, less settlement payments.

Financial liabilities are classified as current liabilities if payment is due to be settled within one year or less after the reporting period (or in the normal operating cycle of the business, if longer), or the Group does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Otherwise, these are presented as non-current liabilities.

Financial liabilities are derecognized from the consolidated statement of financial position only when the obligations are extinguished either through discharge, cancellation or expiration. The difference between the carrying amount of the financial liability derecognized and the consideration paid or payable is recognized in profit or loss.

2.10 Offsetting Financial Instruments

Financial assets and financial liabilities are offset and the resulting net amount, considered as a single financial asset or financial liability, is reported in the consolidated statement of financial position when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. The right of set-off must be available at the end of the reporting period, that is, it is not contingent on future event. It must also be enforceable in the normal course of business, in the event of default, and in the event of insolvency or bankruptcy; and, must be legally enforceable for both entity and all counterparties to the financial instruments.

2.11 Business Combinations

Business acquisitions are accounted for using the acquisition method of accounting.

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.

Negative goodwill, if any, which is the excess of the Group’s interest in the net fair value of acquired identifiable assets, liabilities, and contingent liabilities over cost, is charged directly to income.

For the purpose of impairment testing, goodwill is allocated to cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The cash-generating units or groups of cash-generating units are identified according to operating segment. Gains and losses on the disposal of an interest in a subsidiary include the carrying amount of goodwill relating to it. - 14 -

If the business combination is achieved in stages, the acquirer is required to remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in the profit or loss or other comprehensive income, as appropriate.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with PAS 37, Provisions, Contingent Liabilities and Contingent Assets, either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

2.12 Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s strategic steering committee; its chief operating decision-maker. The strategic steering committee is responsible for allocating resources and assessing performance of the operating segments.

In identifying its operating segments, management generally follows the Group’s service lines as disclosed in Note 4, which represent the main services provided by the Group.

Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources as well as marketing approaches. All inter-segment transfers are carried out at arm’s length prices.

The measurement policies the Group uses for segment reporting under PFRS 8, Operating Segments , are the same as those used in its consolidated financial statements. In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment.

There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.

2.13 Provisions and Contingencies

Provisions are recognized when present obligations will probably lead to an outflow of economic resources and they can be estimated reliably even if the timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the end of the reporting period, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. When time value of money is material, long- term provisions are discounted to their present values using a pretax rate that reflects market assessments and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. - 15 -

In those cases where the possible outflow of economic resource as a result of present obligations is considered improbable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognized in the consolidated financial statements. Similarly, possible inflows of economic benefits to the Group that do not yet meet the recognition criteria of an asset are considered contingent assets, hence, are not recognized in the consolidated financial statements. On the other hand, any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset not exceeding the amount of the related provision.

2.14 Revenue and Expense Recognition

Revenue comprises of income from rental and the rendering of services measured by reference to the fair value of consideration received or receivable by the Group for services rendered excluding value-added tax (VAT).

Revenue is recognized to the extent that the revenue can be reliably measured; it is probable that the economic benefits will flow to the Group; and the costs incurred or to be incurred can be measured reliably. In addition, the following specific recognition criteria must also be met before revenue is recognized:

(a) Management fees – Revenue is recognized when the performance of contractually agreed tasks have been substantially rendered.

(b) Rental income – Revenue is recognized on a straight-line basis over the duration of the lease term. For tax purposes, rental income is recognized based on the contractual terms of the lease.

(c) Service income – Revenue is recognized when the services related to technical projects, telephone services and transport of passengers have been substantially rendered.

(d) Interest Income – Revenue is recognized as the interest accrues taking into account the effective yield on the asset.

Costs and expenses are recognized in profit or loss upon utilization of goods or services or at the date they are incurred. Finance costs are reported in profit or loss on accrual basis.

2.15 Leases

The Group accounts for its leases as follows:

(a) Group as Lessee

Leases which do not transfer to the Group substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments (net of any incentive received from the lessor) are recognized as expense in the consolidated statements of income on a straight-line basis over the lease term. Associated costs, such as repairs and maintenance and insurance, are expensed as incurred.

(b) Group as Lessor

Leases which do not transfer to the lessee substantially all the risks and benefits of ownership of the asset are classified as operating leases. Lease income from operating leases is recognized in profit or loss on a straight-line basis over the lease term. - 16 -

The Group determines whether an arrangement is, or contains, a lease based on the substance of the arrangement. It makes 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.

2.16 Impairment of Non-financial Assets

The Group’s property and equipment, investment property, intangible assets (presented under Other Non-current Assets account) and other non-financial assets are subject to impairment testing whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable.

For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, assets are tested for impairment either individually or at the cash-generating unit level.

Impairment loss is recognized for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amounts which is the higher of its fair value less costs to sell and its value in use. In determining value in use, management estimates the expected future cash flows from each cash-generating unit and determines the suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risk factors.

All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment loss is reversed if the asset’s or cash generating unit’s recoverable amount exceeds its carrying amount.

2.17 Employee Benefits

The Group’s post-employment benefits to employees through a defined benefit plan and defined contribution plans, and other employee benefits are recognized as follows:

(a) Post-employment Defined Benefit Plan

A defined benefit plan is a post-employment plan that defines an amount of post-employment benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and salary. The legal obligation for any benefits from this kind of post-employment benefit plan remains with the Group. The Group’s post-employment defined benefit plan covers all regular full-time employees.

The liability recognized in the consolidated statement of financial position for defined benefit plans is the present value of the defined benefit obligation (DBO) at the end of the reporting period. The DBO is calculated annually by independent actuaries using the projected unit credit method. The present value of the DBO is determined by discounting the estimated future cash outflows using a discount rate derived from the interest rates of zero coupon government bonds as published by the Philippine Dealing & Exchange Corporation, that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related post-employment liability.

- 17 -

Remeasurements, comprising of actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are reflected immediately in the consolidated statement of financial position with a charge or credit recognized in other comprehensive income in the period in which they arise. Net interest is calculated by applying the discount rate at the beginning of the period, taking account of any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments. Net interest is reported as part of Finance Costs or Finance and Other Income accounts in the consolidated statement of income.

Past-service costs are recognized immediately in profit or loss in the period of a plan amendment and curtailment.

(b) Post-employment Defined Contribution Plans

A defined contribution plan is a post-employment plan under which the Group pays fixed contributions into an independent entity (such as Social Security System). The Group has no legal or constructive obligations to pay further contributions after payment of the fixed contribution. The contributions recognized in respect of defined contribution plans are expensed as they fall due. Liabilities and assets may be recognized if underpayment or prepayment has occurred and are included in current liabilities or current assets as they are normally of a short-term nature.

(c) Compensated Absences

Compensated absences are recognized for the number of paid leave days (including holiday entitlement) remaining at the end of the reporting period. They are included in Trade and Other Payables account in the consolidated statement of financial position at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.

2.18 Income Taxes

Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity, if any.

Current tax assets or liabilities comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting period, that are uncollected or unpaid at the end of reporting period. They are calculated using the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognized as a component of tax expense in profit or loss.

Deferred tax is accounted for using the liability method on temporary differences at the end of each reporting period between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Under the liability method, with certain exceptions, deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences and the carryforward of unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that future taxable profit will be available to allow such deferred tax assets to be recovered.

- 18 -

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, provided such tax rates have been enacted or substantially enacted at the end of the reporting period.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would flow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Most changes in deferred tax assets or liabilities are recognized as a component of tax expense in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Deferred tax assets and deferred tax liabilities are offset if the Group has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same entity and the same taxation authority.

2.19 Related Party Relationship and Transactions

Related party transactions are transfers of resources, services or obligations between the Group and its related parties, regardless whether a price is charged.

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. These parties include: (a) individuals owning, directly or indirectly through one or more intermediaries, control or are controlled by, or under common control with the Group; (b) associates; and, (c) individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them significant influence over the Group and close members of the family of any such individual.

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

2.20 Equity

Capital stock represents the nominal value of shares that have been issued.

Subscription receivable represents the unpaid portion of the subscribed capital stock due from stockholders.

Revaluation reserves comprise accumulated actuarial gains and losses arising from remeasurement of post-employment defined benefit plan, net of tax.

Deficit includes all current and prior period results of operations as disclosed in the consolidated statement of income.

- 19 -

2.21 Earnings Per Share

Basic earnings per share is computed by dividing net profit by the weighted average number of common shares subscribed and issued during the year adjusted retroactively for any stock dividend, stock split or reverse stock split declared in the current year, if any.

Diluted earnings per share is computed by adjusting the weighted average number of ordinary shares outstanding to assume conversion of dilutive potential shares. Currently, the Group does not have dilutive potential shares outstanding; thus, diluted earnings per share is the same to the basic earnings per share.

2.22 Events After the End of the Reporting Period

Any post-year-end event that provides additional information about the Group’s consolidated financial position at the end of the reporting period (adjusting event) is reflected in the consolidated financial statements. Post-year-end events that are not adjusting events, if any, are disclosed when material to the consolidated financial statements.

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the Group’s consolidated financial statements in accordance with PFRS requires management to make judgments and estimates that affect amounts reported in the consolidated financial statements and related notes. Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may ultimately differ from these estimates.

3.1 Critical Management Judgments in Applying Accounting Policies

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimation, which have the most significant effect on the amounts recognized in the consolidated financial statements:

(a) Distinction Between Investment Properties and Owner-managed Properties

The Group determines whether a property qualifies as investment property. In making its judgment, the entity considers whether the property generates cash flows largely independently of the other assets held by an entity. Owner-managed properties generate cash flows that are attributable not only to property but also to other assets used in the production or supply process.

(b) Distinction Between Operating and Finance Leases

The Group has entered into various lease agreements either as a lessor or as lessee. Critical judgment was exercised by management to distinguish each lease agreement as either an operating or finance lease by looking at the transfer or retention of significant risk and rewards of ownership of the properties covered by the agreements. Failure to make the right judgment will result in either overstatement or understatement of assets and liabilities.

Management has determined that the Group’s current lease agreements are operating leases. - 20 -

(c) Recognition of Provisions and Contingencies

Judgment is exercised by management to distinguish between provisions and contingencies. Policies on recognition of provisions and contingencies are discussed in Note 2.13 and disclosures on relevant provisions and contingencies are presented in Note 17.

3.2 Key Sources of Estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period:

(a) Estimating Useful Lives of Condominium Units (presented as Investment Property), Property and Equipment and Computer Software

The Group estimates the useful lives of condominium units, property and equipment and computer software based on the period over which the assets are expected to be available for use. The estimated useful lives of these assets are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the assets.

The carrying amounts of computer software (under other non-current asset), property and equipment and investment property are analyzed in Notes 7, 8 and 9, respectively. Based on management’s assessment as at December 31, 2016 and 2015, there are no changes in the estimated useful lives of those assets during those years. Actual results, however, may vary due to changes in estimates brought about by changes in factors mentioned above.

(b) Impairment of Trade and Other Receivables and Due from Related Parties

Adequate allowance is provided for specific and groups of accounts, where an objective evidence of impairment exists. The Group evaluates these accounts based on available facts and circumstances, including, but not limited to, the length of the Group’s relationship with the customers, customers’ credit status, average age of accounts, collection experience and historical loss experience. The methodology and assumptions used in estimating future cash flows are reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience.

The carrying value of trade and other receivables and due from related parties are shown in Notes 6 and 14, respectively.

- 21 -

(c) Determining Realizable Amount of Deferred Tax Assets

The Group reviews its deferred tax assets at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. Based on management’s assessment, the Group has assessed that the deferred tax assets recognized as at December 31, 2016 and 2015 will be fully utilized in the coming years. The carrying amount of deferred tax assets as of those dates is disclosed in Note 13.

(d) Impairment of Non-financial Assets

In assessing impairment, management estimates the recoverable amount of each asset or a cash-generating unit based on expected future cash flows and uses an interest rate to calculate the present value of those cash flows. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate (see Note 2.16). Though management believes that the assumptions used in the estimation of fair values reflected in the consolidated 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 effect on the results of operations.

No impairment losses were recognized on the Group’s non-financial assets in 2016, 2015 and 2014.

(e) Fair Value Measurement of Investment Property

The Group’s condominium units, classified as Investment Property, are carried at cost at the end of the reporting period. The fair value disclosed in Note 9 is determined by the Group using the discounted cash flows valuation technique since the information on current or recent prices of investment property is not available. The Group uses assumptions that are mainly based on market conditions existing at each reporting period, such as: the receipt of contractual rentals; expected future market rentals; void periods; maintenance requirements; and appropriate discount rates. These valuations are regularly compared to actual market yield data and actual transactions by the Group and those reported by the market. The expected future market rentals are determined on the basis of current market rentals for similar properties in the same location and condition.

(f) Valuation of Post-employment Defined Benefit Obligation

The determination of the Group’s obligation and cost of post-employment defined benefit is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include, among others, discount rates and salary increase rate. A significant change in any of these actuarial assumptions may generally affect the recognized expense, other comprehensive income or loss and the carrying amount of the post-employment benefit obligation in the next reporting period.

The amounts of retirement benefit obligation and expense analysis of the movements in the estimated present value of post-employment benefit obligation are presented in Note 12.2.

- 22 -

(g) Business Combination

On initial recognition, the assets and liabilities of the acquired business and the consideration paid for them are included in the consolidated financial statements at their fair values. In measuring fair value, management uses estimates of future cash flows and discount rates. Any subsequent change in these estimates would affect the amount of goodwill, if any, if the change qualifies as a measurement period adjustment. Any other change would be recognized in profit or loss in the subsequent period.

4. SEGMENT REPORTING

4.1 Business Segments

The Group’s operating businesses are organized and managed separately according to the services provided, with each segment represent unit that offers different services and serves different markets. For management purposes, the Group is organized into two major business segments, namely property management and rental and other activities. These are also the basis of the Group in reporting to its strategic steering committee for its strategic decision-making activities.

(a) Property Management – is the operation, control of (usually on behalf of an owner), and oversight of commercial, industrial or residential real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its usable life and condition.

(b) Rental and Others – consists of rental from leasing activity of the Parent Company and transportation services of Citylink.

4.2 Segment Assets and Liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash and cash equivalents, receivables, net of allowances and due from related parties. Segment liabilities include all operating liabilities and consist principally of trade and other payables, due to related parties and retirement benefit obligation.

The business segment information of the Group as of and for the years ended December 31, 2016, 2015 and 2014 follows:

Property Rental and Management Others Total

2016 Revenues: Management fees P 366,587,074 P - P 366,587,074 Service income - 27,333,182 27,333,182 Rental income - 15,853,676 15,853,676 Finance and other income 5,912,714 1,664,640 7,577,354 Gross revenues 372,499,788 44,851,498 417,351,286 Expenses 293,156,940 47,273,169 340,430,109 Finance costs 6,951,797 575,330 7,527,127 Profit (loss) before tax 72,391,051 ( 2,997,001) 69,394,050 Tax expense 21,555,896 385,461 21,941,357

Net profit (loss) P 50,835,155 ( P 3,382,462) P 47,452,693

Segment assets P 517,804,728 P 166,573,267 P 684,377,995

Segment liabilities P 334,305,111 P 68,237,047 P 402,542,158 - 23 -

Property Rental and Management Others Total

2015 Revenues: Management fees P 336,409,706 P - P 336,409,706 Service income - 14,829,452 14,829,452 Rental income - 9,472,933 9,472,933 Finance and other income 2,148,007 2,208,667 4,356,674 Gross revenues 338,557,713 26,511,052 365,068,765 Expenses 241,586,133 32,736,499 274,322,632 Finance costs 29,278,827 2,250 29,281,077 Profit (loss) before tax 67,692,753 ( 6,227,697 ) 61,465,056 Tax expense (income) 25,359,528 ( 470,611 ) 24,888,917

Net profit (loss) P 42,333,225 (P 5,757,086 ) P 36,576,139

Segment assets P 395,656,575 P 167,409,003 P 563,065,578

Segment liabilities P 275,497,549 P 65,690,320 P 341,187,869

2014 Revenues: Management fees P 279,504,341 P - P 279,504,341 Service income - 14,640,357 14,640,357 Rental income - 8,722,669 8,722,669 Finance and other income 2,812,828 1,583,894 4,396,722 Gross revenues 282,317,169 24,946,920 307,264,089 Expenses 219,932,265 30,132,553 250,064,818 Finance costs 13,047,724 1,650 13,049,374 Profit (loss) before tax 49,337,180 ( 5,187,283 ) 44,149,897 Tax expense 14,979,257 351,474 15,330,731

Net profit (loss) P 34,357,923 ( P 5,538,757 ) P 28,819,166

Segment assets P 320,646,174 P 170,763,750 P 491,409,924

Segment liabilities P 281,564,517 P 63,287,981 P 344,852,498

5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include the following components as of December 31:

2016 2015

Cash on hand and in banks P 187,524,455 P 130,157,543 Short-term placements 172,131,801 169,739,324

P 359,656,256 P 299,896,867

Cash in banks generally earn interest based on daily bank deposit rates. Short-term placements are made for varying periods from 15 to 90 days and earn effective interest ranging from 1.25% to 2.50% in 2016 and 1.63% to 2.75% in 2015. Interest earned is presented as part of Finance and Other Income account in the consolidated statements of income.

- 24 -

6. TRADE AND OTHER RECEIVABLES

The details of this account as of December 31 are as follows:

2016 2015

Current: Trade receivables P 122,984,024 P 102,879,454 Car and housing loans receivables 3,445,360 3,378,865 Advances to employees 2,377,634 410,098 Others 2,942,452 1,266,324 131,749,470 107,934,741

Non-current – Car and housing loans receivables 3,489,257 4,234,183

P 135,238,727 P 112,168,924

Trade receivables are usually due within 30 to 60 days and do not bear any interest. All trade receivables are subject to credit risk exposure. However, the Group does not identify specific concentrations of credit risk with regard to trade and other receivables, as the amounts recognized resemble a large number of receivables from various customers.

Car and housing loans receivables pertain to interest-bearing loans granted to employees with interest rate comparable to market rates and are payable through salary deduction for a period of 10 years from the date of grant. Related interest income from such transactions is shown as part of Finance and Other Income account in the consolidated statements of income.

Advances to employees pertain to unliquidated advances to employees for business-related expenditures subject to liquidation.

All of the Group’s trade and other receivables have been reviewed for indicators of impairment. The Group has written-off certain receivables as management deemed that they are no longer collectible. Impairment loss on trade and other receivables amounted to P0.7 million, P21.9 million and P7.0 million in 2016, 2015 and 2014, respectively. Impairment loss is presented as part of Finance Costs in the consolidated statements of income.

7. OTHER ASSETS

The composition of this account is shown below.

2016 2015

Current: Input VAT - net P 4,871,812 P 5,317,232 Prepaid expenses 3,006,691 1,018,815 Advances to contractors 1,775,567 1,573,092 Deferred input VAT 566,286 296,527 Tax credits 408,824 250,872 Others 58,357 159,881

Balance carried forward P 10,687,537 P 8,616,419 - 25 -

2016 2015

Balance carried forward P 10,687,537 P 8,616,419

Non-current: Computer software - net 8,208,798 508,394 Security deposits 1,841,883 1,751,386 Rental deposits 457,352 437,852 Others 112,890 112,890

10,620,923 2,810,522

P 21,308,460 P 11,426,941

Advances to contractors include down payments made by FOPMI to the contractors for the completion of the contracted projects on properties being managed by FOPMI.

Deferred input VAT represents the unamortized portion of input VAT on capital goods subject to amortization.

In 2015, computer software with carrying amount of P0.2 million was reclassified to property and equipment (see Note 8), while certain computer software with carrying amount of P0.3 million was written off. There were no similar transactions in 2016. Amortization of computer software amounted to P0.6 million in 2016, P1.1 million in 2015 and P1.4 million in 2014 is presented as part of Depreciation and amortization under the Operating Expenses account in the statements of income (see Note 11). Meanwhile accumulated amortization amounted to P0.9 million and P0.3 million as of December 31, 2016 and 2015, respectively.

Intangible assets are subject to impairment testing whenever there is an indication of impairment. Based on management’s evaluation, no impairment loss on intangible assets needs to be recognized in 2016, 2015 and 2014.

8. PROPERTY AND EQUIPMENT

The gross carrying amounts and accumulated depreciation and amortization of property and equipment at the beginning and end of 2016 and 2015 are shown below.

Office and Transportation Communication Furniture Leasehold Equipment Equipment and Fixtures Improvements Total

December 31, 2016 Cost P 77,299,783 P 25,850,397 P 3,505,354 P 8,613,671 P 115,269,205 Accumulated depreciation and amortization ( 41,148,268 ) ( 19,148,419 ) ( 2,546,222 ) ( 8,612,122 ) ( 71,455,031 )

Net carrying amount P 36,151,515 P 6,701,978 P 959,132 P 1,549 P 43,814,174

December 31, 2015 Cost P 57,127,783 P 18,604,000 P 3,206,787 P 8,657,867 P 87,596,437 Accumulated depreciation and amortization ( 39,217,391 ) ( 17,047,042 ) ( 1,813,195 ) ( 8,653,826 ) ( 66,731,454 )

Net carrying amount P 17,910,392 P 1,556,958 P 1,393,592 P 4,041 P 20,864,983

January 1, 2015 Cost P 57,326,445 P 16,305,646 P 1,375,804 P 8,682,421 P 83,690,316 Accumulated depreciation and amortization ( 37,545,635 ) ( 15,058,481 ) ( 1,244,031 ) ( 6,749,679 ) ( 60,597,826 )

Net carrying amount P 19,780,810 P 1,247,165 P 131,773 P 1,932,742 P 23,092,490

- 26 -

A reconciliation of the carrying amounts of property and equipment at the beginning and end of 2016 and 2015 is shown below.

Office and Transportation Communication Furniture Leasehold Equipment Equipment and Fixtures Improvements Total

Balance at January 1, 2016, net of accumulated depreciation and amortization P 17,910,392 P 1,556,958 P 1,393,592 P 4,041 P 20,864,983 Additions 20,172,000 7,265,156 260,800 27,697,956 Disposals - net - ( 25,189 ) - - ( 25,189 ) Reclassifications - 6,430 ( 6,430 ) - - Depreciation and amortization charges for the year ( 1,930,877 ) ( 2,101,377 ) ( 688,830 ) ( 2,492 ) ( 4,723,576 )

Balance at December 31, 2016, net of accumulated depreciation and amortization P 36,151,515 P 6,701,978 P 959,132 P 1,549 P 43,814,174

Balance at January 1, 2015, net of accumulated depreciation and amortization P 19,780,810 P 1,247,165 P 131,773 P 1,932,742 P 23,092,490 Additions 1,162,945 1,557,589 1,806,429 - 4,526,963 Disposals - net ( 75,893 ) - - - ( 75,893 ) Reclassifications - 160,715 24,554 ( 24,554 ) 160,715 Depreciation and amortization charges for the year ( 2,957,470 ) ( 1,408,511 ) ( 569,164 ) ( 1,904,147 ) ( 6,839,292 )

Balance at December 31, 2015, net of accumulated depreciation and amortization P 17,910,392 P 1,556,958 P 1,393,592 P 4,041 P 20,864,983

In 2015, certain intangible asset with carrying amount of P0.2 million was reclassified to property and equipment (see Note 7). There was no similar transaction in 2016.

The amount of depreciation and amortization is presented as part of Operating Expenses account in the statements of comprehensive income (see Note 11).

Certain fully depreciated leasehold improvements costing P44,196 were retired in the Group’s books in 2016.

The cost of the Group’s fully depreciated property and equipment that are still being used in operations amounted to P37.9 million and P34.0 million as of December 31, 2016 and 2015, respectively.

9. INVESTMENT PROPERTY

The gross carrying amounts and accumulated depreciation of investment property at the beginning and end of 2016 and 2015 are shown below.

December 31, December 31, January 1, 2016 2015 2015

Cost P 1,456,194,860 P 1,456,194,860 P 1,456,194,860 Accumulated depreciation ( 1,428,928,018 ) ( 1,427,688,616 ) ( 1,426,449,214 )

Net carrying amount P 27,266,842 P 28,506,244 P 29,745,646

- 27 -

A reconciliation of the carrying amounts of investment property at the beginning and end of 2016 and 2015 is shown below.

2016 2015

Balance at January 1, net of accumulated depreciation P 28,506,244 P 29,745,646 Depreciation charge for the year ( 1,239,402 ) ( 1,239,402 )

Balance at December 31, net of accumulated depreciation P 27,266,842 P 28,506,244

Rental income from condominium units under operating lease agreements not exceeding one year, amounted to P0.9 million, P1.2 million and P1.3 million in 2016, 2015 and 2014, respectively, and is presented as part of Rental Income account in the consolidated statements of income. There was no contingent rent recognized as of those dates. The operating lease commitments of the Group as a lessor are fully disclosed in Note 17.2.

The carrying amount of the investment properties that do not generate rental income amounted to P9.1 million and P9.5 million as of December 31, 2016 and 2015, respectively.

There are no direct operating expenses incurred with respect to investment properties except for depreciation charges and real property tax presented as part of Cost of Services in the consolidated statements of income (see Note 11).

The fair market values of these properties are P28.8 million and P29.2 million as of December 31, 2016, and 2015, respectively. These are determined by calculating the present value of the cash inflows anticipated until the end of the life of the investment properties using a discount rate of 10% both in 2016 and 2015.

Other information about the fair value measurement and disclosures related to the investment properties are presented in Note 20.3.

10. TRADE AND OTHER PAYABLES

The details of this account are as follows:

Note 2016 2015

Trade payables P 94,138,637 P 48,458,106 Accrued expenses 63,895,877 38,558,778 Withholding taxes payable 3,906,084 3,060,618 Customers’ deposits 2,395,796 2,395,796 Output VAT payable 2,185,511 1,755,853 Non-trade payable - 25,503,746 Others 14.4 4,132,021 4,745,841

P 170,653,926 P 124,478,738

Accrued expenses include accruals for employee benefits, utilities, professional fees, and others.

Non-trade payable pertains to a liability payable on demand to a third party which was initially payable to Empire East Land Holdings, Inc., a related party under common ownership. In 2016, the Group fully settled this liability.

Other payables include advances from customers and unpaid rentals. - 28 -

11. OPERATING EXPENSES BY NATURE

The details of operating expenses by nature are shown below.

Notes 2016 2015 2014

Salaries and employee benefits 12 P 240,541,586 P 191,814,660 P 186,187,958 Service costs 22,921,641 12,659,512 13,205,789 Rentals 14.4, 17.1 17,109,251 7,922,229 3,169,382 Outside services 16,048,725 13,345,039 15,077,636 Depreciation and amortization 7, 8, 9 6,581,574 9,157,741 12,966,563 Utilities and supplies 6,431,185 7,621,455 4,753,154 Repairs and maintenance 5,209,274 3,751,294 4,008,970 Taxes and licenses 3,711,731 8,761,746 3,045,688 Representation and entertainment 2,821,255 3,329,267 1,368,081 Professional fees 2,039,131 3,258,931 2,448,010 Others 17,014,756 12,700,758 3,833,587

P 340,430,109 P 274,322,632 P 250,064,818

Others include office supplies, dues and charges, insurance, trainings and seminars and printing and photocopying.

These expenses are classified in the consolidated statements of income as follows:

2016 2015 2014

Cost of services P 239,938,927 P 189,415,811 P 183,800,839 Operating expenses 100,491,182 84,906,821 66,263,979

P 340,430,109 P 274,322,632 P 250,064,818

12. EMPLOYEE BENEFITS

12.1 Salaries and Employee Benefits

Expenses recognized as salaries and employee benefits are presented below.

Notes 2016 2015 2014

Short-term benefits P 229,567,810 P 181,837,987 P 172,652,511 Post-employment benefits 12.2 10,973,776 9,976,673 13,535,447

11 P 240,541,586 P 191,814,660 P 186,187,958

12.2 Post-employment Benefit Obligation

The Parent Company has not yet established a formal post-employment benefit plan and does not accrue post-employment benefits for its employee due to insignificance of the amount. However, FOPMI, maintains an unfunded non-contributory post-employment benefit plan covering all its regular full-time employees.

- 29 -

(a) Explanation of Amounts Presented in the Consolidated Financial Statements

Actuarial valuations are made annually to update the retirement benefit costs. All amounts presented below are based on the actuarial valuation report obtained from an independent actuary in 2016 and 2015.

The movements in present value of the retirement benefit obligation recognized are as follows:

2016 2015

Balance at beginning of year P 116,584,200 P 157,688,710 Current service costs 10,973,776 9,976,673 Interest costs 6,295,547 7,395,600 Remeasurements – Actuarial gains arising from : Experience adjustments ( 16,087,064 ) ( 37,479,593 ) Change in financial assumptions ( 1,777,843 ) ( 17,869,184 ) Benefits paid - ( 3,128,006 )

Balance at end of year P 115,988,616 P 116,584,200

The components of amounts recognized in consolidated statements of income and consolidated statements of comprehensive income in respect of the defined benefit post-employment plan are as follows:

2016 2015 2014

Reported in consolidated statements of income: Current service costs P 10,973,776 P 9,976,673 P 13,535,447 Interest costs 6,295,547 7,395,600 6,090,261

P 17,269,323 P 17,372,273 P 19,625,708

Reported in consolidated statements of comprehensive income – Actuarial gains (losses) arising from: Experience adjustments P 16,087,064 P 37,479,593 ( P 7,147,443 ) Change in financial assumption 1,777,843 17,869,184 ( 6,877,655 )

P 17,864,907 P 55,348,777 ( P 14,025,098 )

The amounts of post-employment benefit expense are allocated as follows:

Note 2016 2015 2014

Cost of services P 8,555,825 P 8,000,524 P 11,099,067 Operating expenses 2,417,951 1,976,149 2,436,380

12.1 P 10,973,776 P 9,976,673 P 13,535,447

The interest costs is included in Finance Costs under Cost and Expenses section in the consolidated statements of income.

Amounts recognized in other comprehensive income were included within items that will not be reclassified subsequently to consolidated profit or loss. - 30 -

In determining the amounts of the defined benefit post-employment obligation, the following significant actuarial assumptions were used:

2016 2015

Discount rates 5.48% 5.40% Expected rate of salary increases 10.00% 10.00%

Assumptions regarding future mortality are based on published statistics and mortality tables. The average expected remaining working life of employees retiring at 60 is 20 years for both male and female. These assumptions were developed by management with the assistance of an independent actuary. Discount factors are determined close to the end of each reporting period by reference to the interest rates of a zero coupon government bonds with terms to maturity approximating to the terms of the post-employment obligation. Other assumptions are based on current actuarial benchmarks and management’s historical experience.

(b) Risks Associated with the Retirement Plan

The plan exposes the Group to actuarial risks such as interest rate risk, longevity risk and salary risk.

(i) Interest Rate Risks

The present value of the defined benefit obligation is calculated using a discount rate determined by reference to market yields of government bonds. Generally, a decrease in the interest rate of a reference government bonds will increase the plan obligation.

(ii) Longevity and Salary Risks

The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of the plan participants both during and after their employment, and to their future salaries. Consequently, increases in the life expectancy and salary of the plan participants will result in an increase in the plan obligation.

(c) Other Information

The information on the sensitivity analysis for certain significant actuarial assumptions are described below and in the succeeding page.

(i) Sensitivity Analysis

The following table summarizes the effects of changes in the significant actuarial assumptions used in the determination of the defined benefit obligation:

Impact on Post-employment Benefit Obligation Change in Increase in Decrease in Assumption Assumption Assumption

December 31, 2016

Discount rate +/- 0.5% (P 10,419,514 ) P 11,655,410 Salary growth rat e +/- 1.0% 22,768,277 ( 18,756,682 )

- 31 -

Impact on Post-employment Benefit Obligation Change in Increase in Decrease in Assumption Assumption Assumption

December 31, 2015

Discount rate +/-0.5 % (P 10,938,754 ) P 12,273,691 Salary growth rate +/-1.0 % 23,968,974 ( 19,641,475 )

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. This analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation recognized in the consolidated statements of financial position.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.

(ii) Funding Arrangements and Expected Contributions

The Group has no formal retirement benefit plan as of December 31, 2016; hence, it does not expect to make any contributions in 2017. As of December 31, 2016 and 2015, the funding requirement is equivalent to the carrying amount of Retirement Benefit Obligation in the consolidated statement of financial position. While there are no minimum funding requirements in the country, the size of the underfunding may pose a cash flow risk in about ten years’ time when a significant number of employees is expected to retire.

The maturity profile of undiscounted expected benefit payments for the next 10 years as of December 31 are as follows:

2016 2015

More than one year to five years P 13,306,694 P 13,309,294 More than five years to ten years 25,700,409 14,440,224

P 39,007,103 P 27,749,518

The weighted average duration of the defined benefit obligation at the end of the reporting period is 20 years.

- 32 -

13. TAXES

The components of tax expense relating to profit or loss and other comprehensive income follow:

2016 2015 2014

Reported in consolidated statements of income: Current tax expense: Regular corporate income tax (RCIT) at 30% P 26,413,855 P 25,335,402 P 22,837,172 Final tax 648,147 646,002 429,894 Minimum corporate income tax (MCIT) at 2% 60,152 36,594 38,616 27,122,154 26,017,998 23,305,682 Deferred tax income relating to origination and reversal of temporary differences ( 5,180,797 ) ( 1,129,081 ) ( 7,974,951 )

P 21,941,357 P 24,888,917 P 15,330,731

Reported in consolidated statements of comprehensive income – Deferred tax income (expense) relating to origination and reversal of temporary differences ( P 5,359,472 ) (P 16,604,633 ) P 4,207,530

A reconciliation of tax on pretax profit computed at the applicable statutory rates to tax expense reported in the consolidated statements of income is as follows:

2016 2015 2014

Tax on pretax profit at 30% P 20,818,215 P 18,439,517 P 13,244,969 Adjustment for income subjected to lower income tax rates ( 324,074 ) ( 323,001 ) ( 214,947 ) Tax effects of: Deferred tax assets related to valuation allowance 1,054,503 2,568,137 788,316 Non-deductible expenses 392,713 4,204,264 1,512,393

P 21,941,357 24,888,917 P 15,330,731

The Parent Company and Citylink did not recognize deferred tax assets on the following valuation allowance based on management’s evaluation that such deferred tax assets may not be recovered in future years:

2016 2015 Amount Tax Effect Amount Tax Effect

Net operating loss carryover (NOLCO) P 16,691,837 P 5,007,551 P14,425,065 P 4,327,520 MCIT 135,362 135,362 76,542 76,542

P 16,827,199 P 5,142,913 P14,501,607 P 4,404,062

- 33 -

The details of NOLCO, which can be claimed as deduction by the Parent Company and Citylink from future taxable income within three years from the year such loss was incurred, are shown below.

Year Original Expired Remaining Valid Incurred Amount Amount Balance Until

2016 P 4,623,059 P - P 4,623,059 2019 2015 9,560,770 - 9,560,770 2018 2014 2,508,008 - 2,508,008 2017 2013 2,356,287 ( 2,356,287) - 2016

P 19,048,124 (P 2,356,287) P 16,691,837

The breakdown of MCIT which can be claimed as a credit against the Parent Company’s and Citylink’s RCIT is as follows:

Year Original Expired Remaining Valid Incurred Amount Amount Balance Until

2016 P 60,152 P P 60,152 2019 2015 36,594 - 36,594 2018 2014 38,616 - 38,616 2017 2013 1,332 ( 1,332 ) - 2016

P 136,694 (P 1,332 ) P 135,362

The Group is subject to MCIT which is computed at 2% of gross income, as defined under the tax regulations or RCIT, whichever is higher. The Parent Company reported MCIT in 2014 while no MCIT or RCIT was reported in 2016 and 2015 as the Parent Company is in a gross loss position. Citylink reported MCIT in 2016, 2015 and 2014 since they are in a taxable loss position in those years. FOPMI, on the other hand, did not report any MCIT in 2016, 2015 and 2014 as the RCIT is higher than MCIT in such years.

The deferred tax assets recognized by FOPMI and Citylink as of December 31, 2016 and 2015 relate to the following:

2016 2015

Retirement benefit obligation P 34,796,585 P 34,975,260 Allowance for impairment 419,695 419,695 NOLCO 946,739 946,739

P 36,163,019 P 36,341,694

Consolidated Consolidated Profit or Loss Other Comprehensive Income 2016 2015 2014 2016 2015 2014

Retirement benefit obligation P 5,180,797 P 4,273,280 P 5,887,712 (P 5,359,472) (P16,604,633) P 4,207,530 Allowance for impairment - ( 4,090,938 ) 2,087,239 - - - NOLCO - 946,739 - - - -

Deferred tax income (expense) P 5,180,797 P 1,129,081 P 7,974,951 (P 5,359,472) (P 16,604,633) P 4,207,530

In 2016, 2015 and 2014, the Group opted to continue claiming itemized deductions in computing for its income tax due. - 34 -

14. RELATED PARTY TRANSACTIONS

The Group’s transactions with related parties, which include a stockholder, related parties by common ownership and the Group’s key management, are described below.

Outstanding Amount of Transaction Receivable (Payable) Related Party Category Notes 2016 2015 2014 2016 2015

Stockholder: Advances obtained 14.3 P 17,922,809 P - P - ( P 50,875,821) (P 32,953,012 ) Subscription receivable 14.1 - - - 187,500,000 187,500,000

Related Parties Under Common Ownership: Advances granted 14.2 7,070,592 7,591,101 9,619,110 60,930,517 53,859,925 Lease of properties 14.4 4,765,565 2,944,464 1,342,092 2,970,000 883,929 Advances obtained 14.3 564,000 374,814 13,994,521 ( 58,687,825 ) ( 58,123,825 )

Key Management Personnel – Compensation 14.5 14,147,822 13,075,231 9,371,065 - -

14.1 Subscription Receivable

In prior years, one of the Group’s investors subscribed to additional shares of the Group amounting to P250.0 million, of which P62.5 million was paid to the Group representing 25% of the subscription. The subscription receivable, which is unsecured, noninterest-bearing and payable in cash remains outstanding as of December 31, 2016 and 2015. Subscription receivable is presented as deduction from Subscribed Capital in the consolidated statements of changes in equity (see Note 16).

14.2 Due from Related Parties

The Group grants unsecured and noninterest-bearing cash advances to its related parties for working capital requirements. These advances have no repayment terms and are payable in cash on demand. The details of due from related parties as of December 31, 2016 and 2015 are as follows:

2016 2015

Due from related parties P 61,050,126 P 53,979,534 Allowance for impairment ( 119,609) ( 119,609)

P 60,930,517 P 53,859,925

The movement in due from related parties is as follows:

2016 2015

Balance at beginning of year P 53,859,925 P 46,268,824 Additions 7,070,592 7,591,101

Balance at end of year P 60,930,517 P 53,859,925

Based on management’s assessment, no impairment loss is necessary to be recognized in 2016 and 2015 on these advances.

- 35 -

14.3 Due to Related Parties

The Group obtains unsecured, and noninterest-bearing advances from Megaworld and related parties under common ownership for working capital purposes. These advances have no repayment terms and payable in cash on demand.

2016 2015

Stockholder P 50,875,821 P 32,953,012 Other related parties 58,687,825 58,123,825

P 109,563,646 P 91,076,837

The movements in due to related parties are as follows:

2016 2015

Balance at beginning of year P 91,076,837 P 90,702,023 Additions 18,486,809 374,814

Balance at end of year P 109,563,646 P 91,076,837

14.4 Lease of Properties

FOPMI has existing agreements with related parties under common ownership for the lease of its office facilities for a period of 12 months renewable annually at the FOPMI’s option. Rental charges arising from these transactions are presented as part of Rentals under Operating Expenses account in the consolidated statements of income (see Note 11). The unpaid rentals are shown as part of Other payables under Trade and Other Payables account in the consolidated statements of financial position (see Note 10).

14.5 Key Management Personnel Compensation

The compensation of Group’s key management personnel in 2016 and 2015 are broken down as follows:

2016 2015

Salaries and short-term benefits P 12,532,722 P 11,907,869 Retirement benefit 1,615,100 1,167,362

P 14,147,822 P 13,075,231

The Parent Company’s administrative functions are being handled by Megaworld, a significant stockholder, with no cost to the Parent Company.

- 36 -

15. EARNINGS PER SHARE

The basic and diluted EPS is computed as follows:

2016 2015 2014

Net profit P 47,452,693 P 36,576,139 P 28,819,166 Divided by the weighted average number of outstanding shares 2,250,000,000 2,250,000,000 2,250,000,000

Basic and diluted EPS P 0.021 P 0.016 P 0.013

The Group has no potentially dilutive shares as of the end of each reporting period.

16. EQUITY

The details of this account as of December 31 are as follows:

2016 2015 2014

Capital stock P 2,062,500,000 P 2,062,500,000 P 2,062,500,000 Revaluation reserves 25,349,975 12,844,540 ( 25,899,604 ) Deficit ( 1,806,014,138 ) ( 1,853,466,831 ) ( 1,890,042,970 )

P 281,835,837 P 221,877,709 P 146,557,426

The details of the Company’s capital stock as of December 31, 2016 and 2015 are as follows:

Note Shares Amount

Common stock – P1 par value, Authorized 3.0 billion shares, Issued and outstanding 2,000,000,000 P 2,000,000,000

Subscribed capital stock 250,000,000 250,000,000 Subscription receivable 14.7 ( 187,500,000 ) 62,500,000

Capital Stock P2,062,500,000

On June 9, 2006, the SEC approved the listing of the Company’s shares totaling 2,000,000,000. The shares were initially issued at an offer price of P1.00 per share. There was no additional listing of shares subsequent to initial listing. As of December 31, 2016 and 2015, there are 1,602 and 1,605 holders of the listed shares, respectively, which closed at P0.86 and P0.84 per share, respectively.

- 37 -

On August 14, 2013, the BOD approved a pre-emptive rights offer to holders of its common shares which will entitle them to subscribe to 2.5 new shares for every common share held as of record date, to be set by the Company after approval by the Philippine Stock Exchange (PSE) of the listing of the rights shares.

The rights shares will be offered at the price of one peso per share, equivalent to the par value of the Company’s common shares. Upon submission of the application for subscription, 25% of the subscription price shall be paid and the balance of 75% shall be payable upon call by the BOD to be made not later than three years from the approval by the stockholders of the increase in capital stock. Subscribers shall have the option of paying 100% of the subscription price upon application for subscription.

Proceeds of the rights offer will be used to fund various investment opportunities. As of December 31, 2016, the said issuance of stock rights has not yet been approved by the PSE.

In September 2014 and November 2014, the BOD and the stockholders, respectively, approved an increase in authorized capital stock from 3.0 billion common shares with par value of P1 per share to 23.0 billion common shares with par value of P1 per share. As of December 31, 2016, the application for the increase in authorized capital stock has not been filed with the SEC.

17. COMMITMENTS AND CONTINGENCIES

17.1 Operating Lease Commitment – Group as a Lessee

FOPMI is a lessee under several operating leases covering its office facilities. The lease agreements have terms of five years and renewable upon the terms and conditions as may be agreed by the parties. In 2015, the long-term leases were pre-terminated.

In 2015, FOPMI entered into another contract of lease with a related party under common control for the lease of office and parking space. The lease has a term of one year, with renewal options. The future minimum rentals payable under this operating lease as of December 31, 2016, 2015 and 2014 amounted to P4.36 million, P4.22 million and P2.7 million, respectively.

Further, Citylink is a lessee covering its bus units. The lease agreements have a one year term and may be renewed or extended by mutual agreement of the parties which shall be executed in writing.

Total rental expense in 2016, 2015 and 2014 from these operating leases shown as Rentals under Operating Expenses account in the consolidated statements of income (see Note 11).

- 38 -

17.2 Operating Lease Commitment – Group as a Lessor

The Parent Company is a lessor under several operating leases covering real estate properties for commercial use. The leases have a term of one to three years, with renewal options, and include annual escalation rates of 5% to 10%. Future minimum lease payments receivable under these agreements amounted to P1.0 million, P1.1 million and P0.4 million as of December 31, 2016, 2015 and 2014, respectively. Total rental income in from these operating leases shown as part of Rental Income account in the consolidated statements of income amounted to P0.9 million, P1.2 million, and P1.3 million in 2016, 2015 and 2014, respectively.

Also, the Citylink is a lessor under various service transport lease agreements covering its transportation equipment. The lease agreements are short-term in nature but can be renewed upon mutual agreements by the parties and; accordingly, no future minimum rental receivables are disclosed. Total rental from these lease agreements amounted to P14.9 million, P8.3 million and P7.4 million in 2016, 2015 and 2014, respectively, and is presented as part of Rental Income account in the consolidated statements of income.

17.3 Others

The Group has other commitments and contingencies that may arise in the normal course of the Group’s operations which have not been reflected in the consolidated financial statements. Management is of the opinion that losses, if any, from these other commitments will not have material effects on the Group’s consolidated financial statements.

18. RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group is exposed to a variety of financial risks in relation to financial instruments. The Group’s risk management is coordinated with the BOD and focuses on actively securing the Group’s short- to medium-term cash flows by minimizing the exposure to financial markets.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The relevant financial risks to which the Group is exposed to are described below and in the succeeding pages.

18.1 Interest Rate Risk

As at December 31, 2016 and 2015, the Group is exposed to changes in market interest rates through its cash and cash equivalents which are subject to variable interest rates (see Note 5).

The following describes the sensitivity of the profit before tax in 2016 and 2015 to a reasonably possible change in interest rates of +/- 0.61% and +/- 0.29%, respectively, with effect from the beginning of the year. This percentage has been determined based on the average market volatility in interest rate in the previous 12 months, estimated at 95% level of confidence.

The sensitivity analysis is based on the Group’s financial instruments held at December 31, 2016 and 2015 with effect estimated from the beginning of the year. All other variables held constant, if interest rate increased by 0.61% and 0.29% in 2016 and 2015, the profit before tax in 2016 and 2015 would have increased by P2.2 million and P0.9 million, respectively. Conversely, if the interest rate decreased by same percentage, profit before tax in 2016 and 2015 would have been lowered by the same amount.

- 39 -

18.2 Credit Risk

Credit risk is the risk that a counterparty may fail to discharge an obligation to the Group. The maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the consolidated statements of financial position or in the detailed analysis provided in the notes to consolidated financial statements. As of December 31, 2016 and 2015, the Group has the following financial assets:

Notes 2016 2015

Cash and cash equivalents 5 P 359,656,256 P 299,896,867 Trade and other receivables 6 125,926,477 104,145,778 Due from related parties - net 14.2 60,930,517 53,859,925

P 546,513,250 P 457,902,570

None of the Group’s financial assets are secured by collateral or other credit enhancements except for cash and cash equivalents as described below.

(a) Cash and Cash Equivalents

The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. Cash in banks, which are insured by the Philippine Deposit Insurance Corporation up to a maximum coverage of P0.5 million per depositor per banking unit as provided for under Republic Act 9302, Charter of Philippine Deposit Insurance Corporation, are still subject to credit risk.

(b) Trade and Other Receivables

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Based on historical default rates, the balance of receivables, which are not impaired relates to reputable companies that have a good track record with the Group.

Some of the unimpaired trade receivables are past due as at the end of the reporting period. No other financial assets are past due at the end of the reporting period. Trade receivables that are past due but not impaired as of December 31, 2016 and 2015 are shown below.

2016 2015

Not more than 3 months P 30,616,705 P 37,559,532 More than 3 months but not more than 6 months 10,355,830 16,534,946 More than 6 months but not more than one year 16,535,314 16,058,737 More than one year 23,608,706 17,950,472

P 81,116,555 P 88,103,687

- 40 -

(c) Due from Related Parties

In respect of due from related parties, the Group is not exposed to any significant credit risk exposure because management considers the credit quality of receivables from related parties to be good.

18.3 Liquidity Risk

The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash outflows due in a day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a six months and one year period are identified monthly.

The Group maintains cash to meet its liquidity requirements for up to 60-day periods. Excess cash are invested in time deposits. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities.

As at December 31, 2016, the Group’s consolidated financial liabilities have contractual maturities which are presented below.

Within Within 6 months 6 - 12 months

Trade and other payables P 96,140,620 P 64,093,746 Due to related parties - 109,563,646

P 96,140,620 P 173,657,392

As at December 31, 2015, the Group’s consolidated financial liabilities have contractual maturities which are presented below.

Within Within 6 months 6 - 12 months

Trade and other payables P 84,368,274 P 32,898,197 Due to related parties - 91,076,837

P 84,368,274 P 123,975,034

The Group does not have non-current financial liabilities as of December 31, 2016 and 2015.

The above contractual maturities reflect the gross cash flows, which may differ from the carrying values of the liabilities at the end of each reporting periods.

- 41 -

19. CATEGORIES AND OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

19.1 Carrying Amounts and Fair Values by Category

The carrying amounts and fair values of the categories of financial assets and financial liabilities presented in the consolidated statements of financial position are shown below.

2016 2015 Notes Carrying Values Fair Values Carrying Values Fair Values Financial Assets Loan and receivables: Cash and cash equivalents 5 P 359,656,256 P 359,656,256 P 299,896,867 P 299,896,867 Trade and other receivables 6 125,926,477 125,926,477 104,145,778 104,145,778 Due from related parties 14.2 60,930,517 60,930,517 53,859,925 53,859,925

P 546,513,250 P 546,513,250 P 457,902,570 P 457,902,570

Financial liabilities Financial liabilities at amortized cost: Trade and other payables 10 P 160,234,366 P 160,234,366 P 117,266,471 P 117,266,471 Due to related parties 14.3 109,563,646 109,563,646 91,076,837 91,076,837

P 269,798,012 P 269,798,012 P 208,343,308 P 208,343,308

See Notes 2.4 and 2.9 for the description of the accounting policies for each category of financial instruments. A description of the Group’s risk management objectives and policies for financial instruments is provided in Note 18.

19.2 Offsetting of Financial Assets and Financial Liabilities

The Group does not have relevant offsetting arrangements. Currently, all other financial assets and financial liabilities are settled on a gross basis; however, each party to the financial instrument (particularly related parties) will have the option to settle all such amounts on a net basis in the event of default of the other party through approval by both parties’ BOD and shareholders. As such, the Group’s outstanding receivables from and payables to the same related parties can be potentially offset to the extent of their corresponding outstanding balances.

20. FAIR VALUE MEASUREMENT AND DISCLOSURES

20.1 Fair Value Hierarchy

In accordance with PFRS 13, Fair Value Measurement , the fair value of financial assets and liabilities and non-financial assets which are measured at fair value on a recurring or non- recurring basis and those assets and liabilities not measured at fair value but for which fair value is disclosed in accordance with other relevant PFRS, are categorized into three levels based on the significance of inputs used to measure the fair value. The fair value hierarchy has the following levels:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that an entity can access at the measurement date;

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and,

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). - 42 -

The level within which the asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

For purposes of determining the market value at Level 1, a market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

20.2 Financial Instruments Measured at Amortized Cost for which Fair Value is Disclosed

The Group’s financial assets which are not measured at fair value in the consolidated statements of financial position but for which fair value is disclosed include cash and cash equivalents, which are categorized as Level 1, and trade and other receivables and due from related parties, which are categorized as Level 3. Financial liabilities which are not measured at fair value but for which fair value is disclosed pertain to trade and other payables and due to related parties which are categorized under Level 3.

For financial assets with fair values included in Level 1, management considers that the carrying amounts of these financial instruments approximate their fair values due to their short-term duration.

The fair values of the financial assets and financial liabilities included in Level 3, which are not traded in an active market, are determined based on the expected cash flows of the underlying net asset or liability based on the instrument where the significant inputs required to determine the fair value of such instruments are not based on observable market data.

20.3 Fair Value Measurement for Investment Property

Investment property comprising condominium units has fair value amounted to P28.8 million and P29.2 million as of December 31, 2016 and 2015, respectively (see Note 9). The fair value of investment property is determined by calculating the present value of the cash inflows anticipated until the end of the life of the investment property using a discount rate of 10% both in 2016 and 2015.

21. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Group’s capital management objectives are to ensure the Group’s ability to continue as a going concern and to provide an adequate return to shareholders in the future.

The Group also monitors capital on the basis of the carrying amount of equity as presented on the consolidated statements of financial position. It sets the amount of capital in proportion to its overall financing structure, i.e., equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES December 31, 2016

Report of Independent Auditors on Supplementary Schedules Filed Separately from the Basic Financial Statements

Schedule Contents Page No.

Schedules Required under Annex 68-E of the Securities Regulation Code Rule 68

A Financial Assets Financial Assets at Fair Value Through Profit or Loss N/A Held-to-maturity Investments N/A Available-for-sale Financial Assets N/A

B Amounts Receivables/Accounts Payables from/to Directors, Officers, Employees, Related Parties, and Principal Stockholders (Other than Related Parties) 1

C Amounts Receivable from Related Parties which are Eliminated during Consolidation of Financial Statements N/A

D Intangible Assets - Other Assets 2

E Long-term Debt N/A

F Indebtedness to Related Parties 3

G Guarantees of Securities of Other Issuers N/A

H Capital Stock 4

Other Required Information

I Reconciliation of Retained Earnings Available for Dividend Declaration 5

J Schedule of Philippine Financial Reporting Standards and Interpretations 6 Adopted by the Securities and Exchange Commission and the Financial Reporting Standards Council as of December 31, 2016

K Map Showing the Relationship Between the Company and its Related Entities 7

L Summary of Application of Initial Public Offering Proceeds N/A

M Schedule of Financial Soundness Indicator 8 SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES SCHEDULE B - Amounts Receivables/Accounts Payable from/to Directors, Officers, Employees, Related Parties, and Principal Stockholders (Other than Related Parties) December 31, 2016

Deductions Ending Balance Name and designation of Balance at Amounts Amounts Balance at the Additions Current Not Current debtor beginning of period Collected written off end of period

Officers and Employees P 8,023,146 P 1,434,514 ( P 678,431 ) - P 5,289,972 P 3,489,257 P 8,779,229

- 1 - SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES Schedule D - Intangible Assets - Other Assets December 31, 2016

Deduction Other Additions at Charged to cost Charged to Description Beginning balance charges Ending balance cost and expenses other accounts additions (deductions)

Computer software - net P 508,394 P 8,319,000 ( P 618,596 ) - - P 8,208,798

- 2 - SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES Schedule F - Indebtedness to Related Parties December 31, 2016

Balance at the Balance at the end of Name of related party beginning of year year

Megaworld Corporation P 32,953,012 P 50,875,821 Empire East Landholdings, Inc. 34,449,016 34,449,016 Golden Hands Multipurpose Corporation 12,627,064 14,527,064 Eastwood Cyber One Corporation 3,904,593 2,568,593 Megaworld Land, Inc. 4,000,000 4,000,000 Others 3,143,152 3,143,152

Total P 91,076,837 P 109,563,646

- 3 - SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES Schedule H - Capital Stock December 31, 2016

Number of shares held by Number of shares issued Number of shares Number of Directors, and outstanding as reserved for options, Title of Issue shares Related parties officers and Others shown under related warrants, conversion authorized employees balance sheet caption and other rights Common 3,000,000,000 2,250,000,000 - 1,148,281,992 7 1,101,718,001

- 4 - SUNTRUST HOME DEVELOPERS, INC. 6th Floor, The World Centre Building 330 Sen. Gil Puyat Avenue, Makati City

Schedule I - Reconciliation of Retained Earnings Available for Dividend Declaration For the Year Ended December 31, 2016

Deficit, at beginning of year ( P 1,946,920,509 )

Net Loss Realized during the Year Net loss per audited financial statements ( 2,253,011 )

Deficit, at end of year ( P 1,949,173,520 )

- 5 - Suntrust Home Developers, Inc. and Subsidiaries Schedule of Philippine Financial Reporting Standards and Interpretations Adopted by the Securities and Exchange Commission and the Financial Reporting Standards Council as of December 31, 2016

Not Not PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Adopted Adopted Applicable

Framework for the Preparation and Presentation of Financial Statements a Conceptual Framework Phase A: Objectives and Qualitative Characteristics a Practice Statement Management Commentary a

Philippine Financial Reporting Standards (PFRS)

First-time Adoption of Philippine Financial Reporting Standards a Amendments to PFRS 1: Additional Exemptions for First-time Adopters a Amendments to PFRS 1: Limited Exemption from Comparative PFRS 7 Disclosures for PFRS 1 a (Revised) First-time Adopters Amendments to PFRS 1: Severe Hyperinflation and Removal of Fixed Date for a First-time Adopters Amendments to PFRS 1: Government Loans a Share-based Payment a Amendments to PFRS 2: Vesting Conditions and Cancellations a PFRS 2 Amendments to PFRS 2: Group Cash-settled Share-based Payment Transactions a Amendments to PFRS 2: Classification and Measurement of Share-based Payment a Transactions* (effective January 1, 2018) PFRS 3 Business Combinations a (Revised) Insurance Contracts a

PFRS 4 Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts a Amendments to PFRS 4: Applying PFRS 9, Financial Instruments , with PFRS 4, Insurance a Contracts * (effective January 1, 2018) PFRS 5 Non-current Assets Held for Sale and Discontinued Operations a PFRS 6 Exploration for and Evaluation of Mineral Resources a Financial Instruments: Disclosures a Amendments to PFRS 7: Transition** a Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets** a Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets - Effective Date and a Transition** PFRS 7 Amendments to PFRS 7: Improving Disclosures about Financial Instruments a Amendments to PFRS 7: Disclosures – Transfers of Financial Assets** a

Amendments to PFRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities** a

Amendments to PFRS 7: Mandatory Effective Date of PFRS 9 and Transition Disclosures* a (effective when PFRS 9 is first applied) PFRS 8 Operating Segments a PFRS 9 Financial Instruments (2014)* (effective January 1, 2018) a Consolidated Financial Statements a Amendments to PFRS 10: Transition Guidance a

PFRS 10 Amendments to PFRS 10: Investment Entities a Amendments to PFRS 10: Sale or Contribution of Assets between an Investor and its Associate a or Joint Venture* (effective date deferred indefinitely) Amendments to PFRS 10: Investment Entities – Applying the Consolidation Exception** a - 6 - Not Not PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Adopted Adopted Applicable

Joint Arrangements a PFRS 11 Amendments to PFRS 11: Transition Guidance a Amendments to PFRS 11: Accounting for Acquisitions of Interests in Joint Operations** a Disclosure of Interests in Other Entities a Amendments to PFRS 12: Transition Guidance a PFRS 12 Amendments to PFRS 12: Investment Entities a Amendments to PFRS 10: Investment Entities – Applying the Consolidation Exception a PFRS 13 Fair Value Measurement a PFRS 14 Regulatory Deferral Accounts a PFRS 15 Revenue from Contracts with Customers* (effective January 1, 2018) a PFRS 16 Leases* (effective January 1, 2019) a

Philippine Accounting Standards (PAS)

Presentation of Financial Statements a Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on a PAS 1 Liquidation (Revised) Amendments to PAS 1: Presentation of Items of Other Comprehensive Income a Amendments to PAS 1: Disclosure Initiative a PAS 2 Inventories a Statement of Cash Flows a PAS 7 Amendments to PAS 7: Disclosure Initiative* (effective January 1, 2017) a PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors a PAS 10 Events After the Reporting Period a PAS 11 Construction Contracts a Income Taxes a

PAS 12 Amendments to PAS 12 - Deferred Tax: Recovery of Underlying Assets** a Amendments to PAS 12 - Recognition of Deferred Tax Assets for Unrealized Losses* (effective a January 1, 2017) Property, Plant and Equipment a

PAS 16 Amendments to PAS 16: Bearer Plants** a Amendments to PAS 16: Clarification of Acceptable Methods of Depreciation and a Amortization PAS 17 Leases a PAS 18 Revenue a PAS 19 Employee Benefits a (Revised) Amendments to PAS 19: Defined Benefit Plans - Employee Contributions a PAS 20 Accounting for Government Grants and Disclosure of Government Assistance a The Effects of Changes in Foreign Exchange Rates a PAS 21 Amendments: Net Investment in a Foreign Operation a PAS 23 Borrowing Costs** a (Revised) PAS 24 Related Party Disclosures a (Revised) PAS 26 Accounting and Reporting by Retirement Benefit Plans a

- 6 - Not Not PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Adopted Adopted Applicable

Separate Financial Statements a a PAS 27 Amendments to PAS 27: Investment Entities a a (Revised) Amendments to PAS 27: Equity Method in Separate Financial Statements** a a Investments in Associates and Joint Ventures a PAS 28 Amendments to PFRS 10: Sale or Contribution of Assets between an Investor and its Associate a (Revised) or Joint Venture* (effective date deferred indefinitely) Amendments to PAS 28: Investment Entities - Applying the Consolidation Exception a PAS 29 Financial Reporting in Hyperinflationary Economies a Financial Instruments: Presentation a Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on a PAS 32 Liquidation** Amendments to PAS 32: Classification of Rights Issues** a Amendments to PAS 32: Offsetting Financial Assets and Financial Liabilities** a PAS 33 Earnings Per Share a PAS 34 Interim Financial Reporting a Impairment of Assets a PAS 36 Amendment to PAS 36: Recoverable Amount Disclosures for Non-financial Assets a PAS 37 Provisions, Contingent Liabilities and Contingent Assets a Intangible Assets a PAS 38 Amendments to PAS 38: Clarification of Acceptable Methods of Depreciation and a Amortization Financial Instruments: Recognition and Measurement a Amendments to PAS 39: Transition and Initial Recognition of Financial Assets and Financial a Liabilities

Amendments to PAS 39: Cash Flow Hedge Accounting of Forecast Intragroup Transactions** a

Amendments to PAS 39: The Fair Value Option** a Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts** a PAS 39 Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets** a Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets – Effective Date and a Transition** Amendments to Philippine Interpretation IFRIC 9 and PAS 39: Embedded Derivatives** a Amendments to PAS 39: Eligible Hedged Items** a

Amendments to PAS 39: Novation of Derivatives and Continuation of Hedge Accounting** a

PAS 40 Investment Property a Agriculture a PAS 41 Amendments to PAS 41: Bearer Plants a

Philippine Interpretations - International Financial Reporting Interpretations Committee (IFRIC)

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities** a IFRIC 2 Members' Share in Co-operative Entities and Similar Instruments a IFRIC 4 Determining Whether an Arrangement Contains a Lease a

- 6 - Not Not PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Adopted Adopted Applicable

Rights to Interests Arising from Decommissioning, Restoration and Environmental IFRIC 5 a Rehabilitation Funds** Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic IFRIC 6 a Equipment Applying the Restatement Approach under PAS 29, Financial Reporting in Hyperinflationary IFRIC 7 a Economies Reassessment of Embedded Derivatives** a IFRIC 9 Amendments to Philippine Interpretation IFRIC–9 and PAS 39: Embedded Derivatives** a IFRIC 10 Interim Financial Reporting and Impairment a IFRIC 12 Service Concession Arrangements a IFRIC 13 Customer Loyalty Programmes a PAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their a Interaction** IFRIC 14 Amendments to Philippine Interpretations IFRIC - 14, Prepayments of a Minimum Funding a Requirement and their Interaction** IFRIC 16 Hedges of a Net Investment in a Foreign Operation a IFRIC 17 Distributions of Non-cash Assets to Owners** a IFRIC 18 Transfers of Assets from Customers** a IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments** a IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine a IFRIC 21 Levies a

Philippine Interpretations - Standing Interpretations Committee (SIC)

SIC-7 Introduction of the Euro a SIC-10 Government Assistance - No Specific Relation to Operating Activities a SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers a SIC-15 Operating Leases - Incentives a SIC-25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders** a SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease a SIC-29 Service Concession Arrangements: Disclosures a SIC-31 Revenue - Barter Transactions Involving Advertising Services** a SIC-32 Intangible Assets - Web Site Costs a

* These standards will be effective for periods subsequent to 2016 and are not early adopted by the Company.

** These standards have been adopted in the preparation of financial statements but the Company has no significant transactions covered in both years presented.

- 6 - ALLIANCE GLOBAL GROUP, INC. Schedule K – Map Showing the Relationship Between and Among the Company and Its Related Parties December 31, 2016

Alliance Global Group, Inc. (Parent Company)

A M Greenspring Investment Holdings Emperador, Inc. and C Megaworld Corporation and Travellers International Hotel Golden Arches Development, Inc. Adams Properties, Inc. Properties, Ltd. Travellers Group, Ltd. Subsidiaries**** Subsidiaries* B Group, Inc. and Subsidiaries** and Subsidiaries*** (1) (1) (1) (1) (1) (1) (1) N D C ****see schedule L-5 *see schedule L-1 **see schedule L-2 ***see schedule L-3

A

Alliance Global Group Cayman B First Centro, Inc. Alliance Global Brands, Inc. Megaworld Resort Estates, Inc. Westside City Resorts World, Inc. Venezia Universal, Ltd. Islands A (1) (1) (1) (1) (1) (1) C

E

Oceanic Realty Group Int'l, Inc. Townsquare Development, Inc. Shiok Success International, Ltd. Q (1) (1) Newtown Land Partners, Inc. (1) Purple Flamingos Amusement (1) and Leisure Corporation (1)

ERA Real Estate Exchange, Inc. Golden Panda-ATI Realty Dew Dreams International, Ltd. (1) A Corporation Red Falcon Amusement and (1) (1) Leisure Corporation (1)

A Great American Foods, Inc. R McKester Pik-Nik International, (1) Ltd. E (1)

G McKester America, Inc. (1)

P

Legend

(1) Subsidiary A Megaworld, Corp. F Manila Bayshore Property Holdings, Inc. K Megaworld Global Estates, Inc. P Sonoma Premier Land, Inc. (2) Associate B Adams Properties, Inc. G Westside City Resorts World, Inc. L Megaworld Central Properties, Inc. Q Gilmore Property Marketing Associates, Inc. (3) Jointly Controlled Entity C First Centro, Inc. H Townsquare Development, Inc. M Shiok Success International, Ltd. R Emperador Inc. D Newtown Land Partners, Inc. I Megaworld Resort Estates, Inc. N Dew Dreams International, Ltd. E Travellers International Hotel Group, Inc. J Twin Lakes, Corp. O File-Estate Properties, Inc.

- 7 - ALLIANCE GLOBAL GROUP, INC. Schedule K-1 – Map Showing the Relationship Between and Among the Company and Megaworld Corporation Group December 31, 2016

Alliance Global Group, Inc. (Parent Company)

Megaworld Corporation (1)

Megaword Bacolod Properties, Mactan Oceanview Properties Arcovia Properties, Inc. Global One Hotel Group, Inc. Oceantown Properties, Inc. Inc. and Holdings, Inc. (1) (1) (1) (1) (1)

Palm Tree Holdings Eastwood Cyber One Megaworld Newport Property Megaworld Cayman Islands, Inc. Megaworld Cebu Properties, Inc. Development Corp. Corporation Holdings, Inc. (1) (1) (2) (1) (1)

Megaworld Globus Asia, Inc. Piedmont Property Ventures, Inc. Stonehaven Land, Inc. Streamwood Property, Inc. Megaworld Daewoo Corporation (1) (1) (1) (1) (1)

Integrated Town Management Richmonde Hotel Group E G I J K L Suntrust Home Developers, Inc. Suntrust Properties, Inc. Corporation International Ltd. (2) (1) (1) (1)

First Oceanic Property Suntrust Ecotown Developers, Governor's Hills Science School, Sunrays Property Management, Citylink Coach Services, Inc. Management, Inc. Inc. Inc. Inc. (2) (2) (1) (1) (1)

San Vicente Coast, Inc. Luxury Global Hotels and Landmark Seaside Properties, Suntrust One Shanata, Inc. Suntrust Two Shanata, Inc. (1) Leisures, Inc. Inc. (1) (1) (1) (1)

Soho Cafe Restaurant Group, Global One Integrated Business Empire East Land Holdings, Inc. La Fuerza, Inc. Maple Grove Land, Inc. Services Inc. (1) (1) (1) Inc. (1) (1)

Gilmore Property Marketing Valle Verde Properties, Inc. Empire East Communities, Inc. Sonoma Premier Land, Inc. C H Associates, Inc. (1) (1) (1) (1)

Laguna BelAir Science School, Eastwood Property Holdings, Sherman Oak Holdings, Inc. Inc. Inc. Megaworld Central Properties, (1) (1) (1) A Inc. (1)

Bonifacio West Development 20th Century Nylon Shirt, Inc. Corporation Pacific Coast Mega City, Inc. (1) (2) (3)

Belmont Newport Luxury Manila Bayshore Property Luxury Global Malls, Inc. Megaworld Land, Inc. Prestige Hotels and Resorts, Inc. Hotels, Inc. Holdings, Inc. (1) E (1) (1) (1) (1)

Davao Park District Holdings, Forebestown Commercial Center Citywalk Building Adminstration, Paseo Center Building Uptown Commercial Center Inc. Administration, Inc. Inc. Administration, Inc. Administration, Inc. (1) (1) (1) (1) (1)

J

Global-Estate Resorts, Inc. and Valley Peaks Property Iloilo Center Mall Newtown Commercial Center Subsidiaries K Management, Inc. Administration, Inc. Administration, Inc. (1) (1) (1) (1) O

Legend

(1) Subsidiary (2) Associate (3) Jointly Controlled Entity

A Megaworld Corporation J Twin Lakes Corporation B Adams Properties, Inc. K Megaworld Global Estates, Inc. C First Centro, Inc. L Megaworld Central Properties, Inc. D Newtown Land Partners, Inc. M Shiok Success International, Ltd. E Travellers International Hotel Group, Inc. N Dew Dreams International, Ltd. F Manila Bayshore Property Holdings, Inc. O File-Estate Properties, Inc. G Westside City Resorts World, Inc. P Sonoma Premier Land, Inc. H Townsquare Development, Inc. Q Gilmore Property Marketing Associates, Inc. I Megaworld Resort Estates, Inc. R Emperador Inc. ALLIANCE GLOBAL GROUP, INC. Schedule K-2 – Map Showing the Relationship Between and Among the Company and Travellers Group December 31, 2016

Alliance Global Group, Inc. (Parent Company)

Travellers International Hotel Group, Inc. (1)

Entertainment City Integrated GrandVenture Management Netdeals, Inc. APEC Assets Limited Bright Leisure Management, Inc. Resorts and Leisure, Inc. Services, Inc. (1) (1) (1) (1) (1)

Front Row Theatre Management Grand Integrated Hotels and Majestic Sunrise Leisure and GrandServices, Inc. Newport Star Lifestyle, Inc. Inc. Recreation, Inc. Recreation, Inc. (1) (1) (3) (1) (1)

Royal Bayshore Hotels and Lucky Star Hotels and FHTC Entertainment and Bright Pelican Leisure and Golden Peak Leisure and Amusement, Inc. Recreation, Inc. Production, Inc. Recreation, Inc. Recreation, Inc. (1) (1) (1) (1) (1)

Deluxe Hotels and Recreation, Agile Fox Amusement and Aquamarine Delphinium Leisure Brilliant Apex Hotels and Leisure Inc. Leisure Corporation and Recreation Corporation Corporation (1) (1) (1) (1)

Coral Primrose Leisure and Lucky Panther Amusement and Luminescent Vertex Hotels and Sapphire Carnation Leisure and Magenta Centaurus Amusement Recreation Corporation Recreation Corporation Leisure Corporation Leisure Corporation and Leisure Corporation (1) (1) (1) (1) (1)

Valiant Leopard Amusement and Vermillion Triangulum Scarlet Milky Way Amusement Sparkling Summit Hotels and Westside Theater, Inc. Leisure Corporation Amusement and Leisure and Leisure Corporation Leisure Corporation (1) (1) (1) (1) Corporation (1)

F

A B C

Westside City Resorts World, Inc. (1)

Purple Flamingos Amusement Red Falcon Amusement and and Leisure Corporation Leisure Corporation (1) (1)

Legend

(1) Subsidiary (2) Associate (3) Jointly Controlled Entity

A Megaworld Corporation J Twin Lakes Corporation B Adams Properties, Inc. K Megaworld Global Estates, Inc. C First Centro, Inc. L Megaworld Central Properties, Inc. D Newtown Land Partners, Inc. M Shiok Success International, Ltd. E Travellers International Hotel Group, Inc. N Dew Dreams International, Ltd. F Manila Bayshore Property Holdings, Inc. O File-Estate Properties, Inc. G Westside City Resorts World, Inc. P Sonoma Premier Land, Inc. H Townsquare Development, Inc. Q Gilmore Property Marketing Associates, Inc. I Megaworld Resort Estates, Inc. R Emperador Inc. ALLIANCE GLOBAL GROUP, INC. Schedule K-4 – Map Showing the Relationship Between and Among Megaworld and Global Estate Resorts Inc. Group December 31, 2016

Megaworld Corporation

Global Estate Resorts, Inc. (1)

Fil-Estate Urban Development, Fil-Estate Realty and Sales Novo Sierra Holdings, Corp. Megaworld Global Estates, Inc. Inc. Associates, Inc. Oceanfront Properties, Inc. A (1) (1) (1) (2) (1)

Fil-Estate Network, Inc. File-Estate Sales, Inc. Fil-Estate Realty Corp. Nasugbu Properties, Inc. Twin Lakes Corporation A (2) (2) (2) (2) (1)

Fil-Estate Golf and Global Homes and Southwoods Mall, Inc. Development, Inc. Communities, Inc. (1) (1) (1)

Golforce Inc. Southwoods Ecocentrum Corp. (1) (1)

Philippine Acquatic Leisure Corp. (1)

Fil-Estate Properties, Inc. (1)

Fil-Estate Subic Development Pioneer L-5 Realty Corp. Blu Sky Airways, Inc.. Aklan Holdings, Inc. Prime Airways, Inc. Corp. (1) (1) (1) (1) (1)

Sto. Domingo Place Fil-Power Concrete Blocks Corp. Golden Sun Airways, Inc. Fil-Power Construction Fil-Estate Industrial Park. Development Corp. (1) (1) Equipment Leasing Corp. (1) (1) (1)

Sherwood Hills Development, La Compaña De Sta. Barbara, MCX Corp. Boracay Newcoast Hotel Group, J Inc. Inc. (1) Inc. (1) (1) (2)

Legend

(1) Subsidiary (2) Associate (3) Jointly Controlled Entity

A Megaworld Corporation J Twin Lakes Corporation B Adams Properties, Inc. K Megaworld Global Estates, Inc. C First Centro, Inc. L Megaworld Central Properties, Inc. D Newtown Land Partners, Inc. M Shiok Success International, Ltd. E Travellers International Hotel Group, Inc. N Dew Dreams International, Ltd. F Manila Bayshore Property Holdings, Inc. O File-Estate Properties, Inc. G Westside City Resorts World, Inc. P Sonoma Premier Land, Inc. H Townsquare Development, Inc. Q Gilmore Property Marketing Associates, Inc. I Megaworld Resort Estates, Inc. R Emperador Inc. ALLIANCE GLOBAL GROUP, INC. Schedule K-3 – Map Showing the Relationship Between and Among the Company and Golden Arches Development Corporation Group December 31, 2016

Alliance Global Group, Inc. (Parent Company)

Golden Arches Development Corp. (1)

Clark Mac Enterprises, Inc. First Golden Laoag Ventures Golden Laoag Foods Corp. Retiro Golden Foods, Inc. Davao City Food Industries, Inc. (1) (1) (1) (1) (1)

Golden City Food Industries, McDonald's Bonifacio Global Advance Food Concepts McDonald's Puregold Taguig Golden Arches Realty, Corp. Inc. City Manufacturing, Inc. (1) (1) (1) (1) (1)

Red Asian Food Solutions. McDonald's Anonas City Center Molino First Golden Foods, Inc. GY Alliance Concepts, Inc. (1) (1) (1) (1)

Legend

(1) Subsidiary (2) Associate (3) Jointly Controlled Entity

A Megaworld Corporation J Twin Lakes Corporation B Adams Properties, Inc. K Megaworld Global Estates, Inc. C First Centro, Inc. L Megaworld Central Properties, Inc. D Newtown Land Partners, Inc. M Shiok Success International, Ltd. E Travellers International Hotel Group, Inc. N Dew Dreams International, Ltd. F Manila Bayshore Property Holdings, Inc. O File-Estate Properties, Inc. G Westside City Resorts World, Inc. P Sonoma Premier Land, Inc. H Townsquare Development, Inc. Q Gilmore Property Marketing Associates, Inc. I Megaworld Resort Estates, Inc. R Emperador Inc. ALLIANCE GLOBAL GROUP, INC. Schedule K-5 – Map Showing the Relationship Between and Among the Company and Emperador Inc. December 31, 2016

Alliance Global Group, Inc. (Parent Company)

Emperador Inc. (1)

Emperador Distillers, Inc. (1)

Cocos Vodka Distillers Alcazar de Bana Holdings Anglo Watsons Glass, Inc. The Bar Beverage, Inc. Tradewind Estates, Inc. Philippines, Inc. Company, Inc. (1) (1) (1) (1) (1)

Emperador International Ltd. (1)

ProGreen AgriCorp., Inc. (1)

Emperador Asia Pte Ltd. Emperador Europe SARL Emperador Holdings Limited (1) (1) (1) South Point Science Park, Inc. (1)

Grupo Emperador Spain, SA. (1) Emperador UK Limited (1)

Complejo Bodeguero San Patricio S.L. Bodegas Fundador S.L.U. Bodega Las Copas S.L. Bodega San Bruno SL. Whyte and Mackay Group Limited (1) (1) (3) (1) (1)

Whyte and Mackay Limited Emperador Gestion S.L. Alcoholera de la Mancha Vinicola Vinedos del Rio Tajo SL. (1) (1) SL. (3) (3)

Whyte and Mackay Warehousing Limited (1)

Whyte and Mackay Property Limited (1)

KI Trustees Limited (1)

Legend

(1) Subsidiary (2) Associate (3) Jointly Controlled Entity

A Megaworld Corporation J Twin Lakes Corporation B Adams Properties, Inc. K Megaworld Global Estates, Inc. C First Centro, Inc. L Megaworld Central Properties, Inc. D Newtown Land Partners, Inc. M Shiok Success International, Ltd. E Travellers International Hotel Group, Inc. N Dew Dreams International, Ltd. F Manila Bayshore Property Holdings, Inc. O File-Estate Properties, Inc. G Westside City Resorts World, Inc. P Sonoma Premier Land, Inc. H Townsquare Development, Inc. Q Gilmore Property Marketing Associates, Inc. I Megaworld Resort Estates, Inc. R Emperador Inc. SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES SCHEDULE M - FINANCIAL SOUNDNESS INDICATORS DECEMBER 31, 2016 AND 2015

DECEMBER 31, 2016 DECEMBER 31, 2015 Current ratio 1.96 : 1.00 2.09 : 1.00 Quick ratio 1.26 : 1.00 1.34 : 1.00 Debt-to-equity ratio 1.43 : 1.00 1.54 : 1.00 Asset-to-equity ratio 2.43 : 1.00 2.54 : 1.00 Return on assets 7.61% 6.94% Return on equity/investment 18.84% 19.85%

LIQUIDITY RATIOS measure the business' ability to pay short-term debt. Current ratio - computed as current assets divided by current liabilities Quick ratio - computed as cash and cash equivalents divided by current liabilities

SOLVENCY RATIOS measure the business' ability to pay all debts, particularly long-term debt. Debt to equity ratio- computed as total liabilities divided by stockholders' equity.

ASSET-TO-EQUITY RATIOS measure financial leverage and long-term solvency. It shows how much of the assets are owned by the Company. It is computed as total assets divided by stockholders' equity.

PROFITABILITY RATIOS Return on assets - net profit divided by average total assets Return on investment - net profit divided by average stockholders' equity

- 8 -

1 0 6 8 3 S.E.C. Registration Number

S U N T R U S T H O M E D E V E L O P E R S , I N C . (Company’s Full Name)

6 T H F L R . T H E W O R L D C E N T R E 3 3 0 S E N. G I L J P U Y A T M A K A T I (Business Address: No. Street City/ Town/ Province)

ROLANDO D. SIATELA 867-8826 to 40 Contact Person Company Telephone Number

1 2 3 1 S E C F O R M 1 7 - Q 10 Last Tues. Month Day FORM TYPE Month Day Fiscal Year Quarterly Report for the period ended 30 June 2017 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

S T A M P S

Remarks = pls. use black ink for scanning purposes

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-Q

QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17.2 (b) THEREUNDER

1. For the quarterly period ended 30 June 2017

2. SEC Identification Number: 10683 3. BIR Tax Identification Number: 000-141-166

4. SUNTRUST HOME DEVELOPERS, INC. Exact name of issuer as specified in its charter

5. Metro Manila, Philippines Province, Country, or other jurisdiction of incorporation or organization

6. (SEC Use Only)

Industry Classification Code:

7. 6th Floor The World Centre, 330 Sen. Gil Puyat Avenue, Makati City 1227 Address of issuer’s principal office

8. (632) 867-8826 to 40 Issuer’s Telephone Number, including area code

9. Securities registered pursuant to Sections 8 and 12 of the Code, or Section 4 and 8 of the RSA

TITLE OF EACH CLASS NUMBER OF SHARES OF COMMON STOCK OUTSTANDING

Common 2,250,000,000

10. Are any or all of the securities listed on the Philippine Stock Exchange?

Yes [X] No [ ]

Philippine Stock Exchange Common Shares

11. Indicate by check mark whether the registrant:

(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 twelve (12) months.

Yes [X] No [ ]

(b) has been subject to such filing requirements for the past ninety (90) days.

Yes [X] No [ ]

EXHIBIT 1 SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION JUNE 30, 2017 AND DECEMBER 31, 2016 (Amounts in Philippine Pesos)

Unaudited Audited June 30, 2017 December 31, 2016 A S S E T S

CURRENT ASSETS Cash and cash equivalents P 369,930,889 P 359,656,256 Trade and other receivables 117,731,696 131,749,470 Due from related parties - net 60,655,337 60,930,517 Other current assets - net 10,838,171 10,687,537

Total Current Assets 559,156,093 563,023,780

NON-CURRENT ASSETS Trade and other receivables 3,489,257 3,489,257 Investment property - net 26,647,142 27,266,842 Property and equipment - net 62,971,908 43,814,174 Deferred tax assets 36,499,945 36,163,019 Other non-current assets - net 15,628,401 10,620,923

Total Non-current Assets 145,236,653 121,354,215

TOTAL ASSETS P 704,392,746 P 684,377,995

LIABILITIES AND EQUITY

CURRENT LIABILITIES Trade and other payables P 156,606,510 P 170,653,926 Due to related parties 110,241,445 109,563,646 Income tax payable 650,856 6,335,970

Total Current Liabilities 267,498,811 286,553,542

NON-CURRENT LIABILITY Retirement benefit obligation 127,988,616 115,988,616

TOTAL LIABILITIES 395,487,427 402,542,158

EQUITY 308,905,319 281,835,837

TOTAL LIABILITIES AND EQUITY P 704,392,746 P 684,377,995 EXHIBIT 2 SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIOD ENDED JUNE 30, 2017 AND 2016 (Amounts in Philippine Pesos)

2017 Unaudited 2017 Unaudited 2016 Unaudited 2016 Unaudited Apr 1 - Jun 30 Jan 1 - Jun 30 Apr 1 - Jun 30 Jan 1 - Jun 30 REVENUES Management fees P 112,010,172 P 207,990,479 P 95,741,174 P 181,778,296 Service income 6,892,685 13,864,839 7,170,671 13,537,485 Rental income 6,291,733 12,050,283 3,371,222 5,902,080 Finance and other income 3,017,521 4,539,039 3,117,990 4,682,098

128,212,111 238,444,640 109,401,057 205,899,959

COST AND EXPENSES Cost of services 76,918,760 142,670,736 66,705,140 124,632,103 Operating expenses 28,298,994 51,742,339 23,772,996 44,351,857 Finance costs 2,446,866 4,893,731 2,554,277 5,108,554 Tax expense 6,444,740 12,068,352 5,923,436 10,930,680

114,109,360 211,375,158 98,955,849 185,023,194

NET PROFIT P 14,102,751 P 27,069,482 P 10,445,208 P 20,876,765

Earnings per share Basic and Diluted P 0.0062 P 0.0120 P 0.0047 P 0.0093 EXHIBIT 3 SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE PERIOD ENDED JUNE 30, 2017 AND 2016 (Amounts in Philippine Pesos)

Unaudited Unaudited June 30, 2017 June 30, 2016

CAPITAL STOCK - P1 par value Authorized - 3 billion shares P 2,062,500,000 P 2,062,500,000

REVALUATION RESERVES 25,349,975 12,844,540

DEFICIT Balance at beginning of year ( 1,806,014,138 ) ( 1,853,466,831 )

Net profit for the period 27,069,482 20,876,765

Balance at end of the period ( 1,778,944,656 ) ( 1,832,590,066 )

TOTAL EQUITY P 308,905,319 P 242,754,474 EXHIBIT 4 SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIOD ENDED JUNE 30, 2017 AND 2016 (Amounts in Philippine Pesos)

Unaudited Unaudited June 30, 2017 June 30, 2016

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax P 39,137,834 P 31,807,445 Adjustments for: Depreciation and amortization 14 6,846,473 4,015,060 Finance income ( 1,496,076 ) ( 3,817,396 ) Finance costs 12 4,893,731 5,108,554 Operating profit before working capital changes 49,381,962 37,113,663 Decrease (increase) in trade and other receivables 13,995,245 ( 10,540,750 ) Decrease (increase) in due from related parties 275,180 ( 4,862,788 ) Increase in other current assets ( 150,634 ) ( 320,142 ) Increase (decrease) in trade and other payables ( 14,047,416 ) 51,731,539 Increase in retirement benefit obligation 7,625,389 6,891,446 Cash generated from operations 57,079,726 80,012,968 Interest received 1,518,605 3,725,729 Cash paid for taxes ( 17,753,466 ) ( 19,074,430 )

Net Cash From Operating Activities 40,844,865 64,664,267

CASH FLOWS USED IN INVESTING ACTIVITIES ( 30,728,911 ) ( 11,866,693 )

CASH FLOWS FROM FINANCING ACTIVITIES 158,679 1,950,118

NET INCREASE IN CASH AND CASH EQUIVALENTS 10,274,633 54,747,692

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 359,656,256 299,896,867

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD P 369,930,889 P 354,644,559 EXHIBIT 5

SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (UNAUDITED) (Amounts in Philippine Pesos)

1. CORPORATE INFORMATION

1.1 Company Background

Suntrust Home Developers, Inc. (the Company or Parent Company) was incorporated in the Philippines on January 18, 1956 (extended for another 50 years starting January 18, 2006) to primarily engage in real estate development. The Parent Company is presently engaged in leasing activity and is a publicly listed entity in the Philippines.

Megaworld Corporation (Megaworld), also a publicly listed company in the Philippines, is the major stockholder with 45.68% ownership interest in the Parent Company.

The registered office of the Parent Company, which is also its principal place of business, is located at the 6th Floor, The World Centre Building, 330 Sen. Gil Puyat Avenue, Makati City.

The Parent Company’s administrative functions are being handled by Megaworld at no cost to the Company.

1.2 Subsidiaries and their Operations

The Parent Company holds 100% ownership interest in First Oceanic Property Management, Inc. (FOPMI). FOPMI, which is incorporated in the Philippines, is engaged primarily in the management of real estate properties.

On the other hand, FOPMI holds 100% ownership interest in the shares of stock of Citylink Coach Services, Inc. (Citylink), a domestic company engaged in overland transport, carriage, moving or haulage of passengers, fares, customers and commuters as well as freight, cargo, articles, items, parcels, commodities, goods or merchandise by means of coaches, buses, coasters, jeeps, cars and other similar means of transport.

The registered and principal place of business of FOPMI is located at No. 102 L.P. Leviste St., Salcedo Village, Barangay Bel-Air, Makati City. The registered and principal place of business of Citylink is located at G/F McKinley Parking Building, Service Road 2, McKinley Town Center, Fort Bonifacio, Taguig City.

- 2 -

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarized in the succeeding pages. The policies have been consistently applied to all years presented, unless otherwise stated.

2.1 Basis of Preparation of Interim Condensed Consolidated Financial Statements

These interim condensed consolidated financial statements for the six months ended June 30, 2017 and 2016 have been prepared in accordance with Philippine Accounting Standards (PAS) 34, Interim Financial Reporting. They do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the audited consolidated financial statements of the Group as at and for the year ended December 31, 2016.

The preparation of interim condensed consolidated financial statements in accordance with Philippine Financial Reporting Standards (PFRS) requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates.

These interim condensed consolidated financial statements are presented in Philippine peso, the functional and presentation currency of the Group and all values represent absolute amounts except when otherwise indicated.

2.2 Adoption of New and Amended PFRS

A number of new or amended standards became applicable for the current reporting period. However, the Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

In preparing the interim condensed consolidated financial statements, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results. The judgments, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group’s last annual financial statements as of and for the year ended December 31, 2016.

- 3 -

4. SEGMENT REPORTING

4.1 Business Segments

The Group’s operating businesses are organized and managed separately according to the services provided, with each segment represent unit that offers different services and serves different markets. For management purposes, the Group is organized into two major business segments, namely property management and rental and other activities. These are also the basis of the Group in reporting to its strategic steering committee for its strategic decision-making activities.

(a) Property Management – is the operation, control of (usually on behalf of an owner) and oversight of commercial, industrial or residential real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its usable life and condition.

(b) Rental and Others – consists of rental from leasing activity of Parent Company and transportation services of Citylink.

4.2 Segment Assets and Liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, receivables, net of allowances and due from related parties - net. Segment liabilities include all operating liabilities and consist principally of trade and other payables, due to related parties and retirement benefit obligation.

The following tables present revenue and profit information regarding industry segments for the six months ended June 30, 2017 and 2016 and certain asset and liability information regarding segments as at June 30, 2017 and 2016.

June 30, 2017 Property Rental and Total Management . Others . Total .

Revenues: Management fees P 207,990,479 P - P 207,990,479 Service income - 13,864,839 13,864,839 Rental income - 12,050,283 12,050,283 Finance and other income 3,826,920 712,119 4,539,039 Gross revenues 211,817,399 26,627,241 238,444,640 Expenses 167,670,578 26,742,497 194,413,075 Finance costs 4,374,611 519,120 4,893,731 Profit (loss) before tax 39,772,210 ( 634,376) 39,137,834 Tax expense 11,874,518 193,834 12,068,352

Net profit (loss) P 27,879,692 (P 828,210) P 27,069,482

Segment assets P 536,572,957 P 167,819,789 P 704,392,746

Segment liabilities P 325,175,649 P 70,311,778 P 395,487,427

- 4 -

June 30, 2016 Property Rental and Total Management . Others . Total .

Revenues: Management fees P 181,778,296 P - P 181,778,296 Service income - 13,537,485 13,537,485 Rental income - 5,902,080 5,902,080 Finance and other income 3,543,151 1,138,947 4,682,098 Gross revenues 185,321,447 20,578,512 205,899,959 Expenses 146,100,048 22,883,912 168,983,960 Finance costs 5,108,554 - . 5,108,554 Profit (loss) before tax 34,112,845 ( 2,305,400) 31,807,445 Tax expense 10,557,314 373,366 10,930,680

Net profit (loss) P 23,555,531 (P 2,678,766) P 20,876,765

Segment assets P 471,922,465 P 169,557,785 P 641,480,250

Segment liabilities P 328,207,906 P 70,517,870 P 398,725,776

5. EARNINGS PER SHARE

Earnings per share (EPS) amounts were computed as follows:

June 30, 2017 . June 30, 2016 .

Net profit P 27,069,482 P 20,876,765 Divided by the weighted average number of outstanding shares 2,250,000,000 2,250,000,000

Basic and diluted EPS P 0.0120 P 0.0093

The Group has no potentially dilutive shares as of the end of each reporting period.

6. EQUITY

The details of this account for the six months ended June 30, 2017 and 2016 are as follows:

June 30, 2017 . June 30, 2016 .

Capital stock P 2,062,500,000 P 2,062,500,000 Revaluation reserves 25,349,975 12,844,540 Deficit ( 1,778,994,656) ( 1,832,590,066)

P 308,905,319 P 242,754,474

- 5 -

7. COMMITMENTS AND CONTINGENCIES

The Group has other commitments and contingencies that may arise in the normal course of the Group’s operations which have not been reflected in the consolidated financial statements. Management is of the opinion that losses, if any, from these other commitments will not have material effects on the Group’s consolidated financial statements.

8. RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group is exposed to a variety of financial risks in relation to financial instruments. The Group’s risk management is coordinated with the BOD and focuses on actively securing the Group’s short-to medium-term cash flows by minimizing the exposure to financial markets.

Exposure to interest rate, credit and liquidity risk arise in the ordinary course of the Group’s business activities. The main objective of the Group’s risk management is to identify, monitor, and minimize those risks and to provide cost with a degree of certainty.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The financial risks to which the Group is exposed to are described below.

8.1 Interest Rate Risk

As at June 30, 2017 and December 31, 2016, the Group is exposed to changes in market interest rates through its cash and cash equivalents which are subject to variable interest rates.

8.2 Credit Risk

Credit risk is the risk that a counterpart may fail to discharge an obligation to the Group. The maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the consolidated statements of financial position under cash and cash equivalents, trade and other receivables (excluding advances to employees) and due from related parties - net.

None of the Group’s financial assets are secured by collateral or other credit enhancements except for the cash and cash equivalents as described below.

The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

8.3 Liquidity Risk

The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash outflows due in a day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a six months and one year period are identified monthly.

- 6 -

The Group maintains cash to meet its liquidity requirements for up to 60-day periods. Excess cash are invested in time deposits. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities.

9. CATEGORIES AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

9.1 Carrying Amounts and Fair Values by Category

The carrying amounts and fair values of the categories of financial assets and financial liabilities presented in the consolidated statements of financial position are shown below.

June 30, 2017 (Unaudited) . December 31, 2016 (Audited) Carrying Values Fair Values . Carrying Values Fair Values .

Financial Assets Loans and receivables: Cash and cash equivalents P 369,930,889 P 369,930,889 P 359,656,256 P 359,656,256 Trade and other receivables 111,635,370 111,635,370 125,926,477 125,926,477 Due from related parties - net 60,655,337 60,655,337 60,930,517 60,930,517

P 542,221,596 P 542,221,596 P 546,513,250 P 546,513,250

Financial Liabilities Financial liabilities at amortized cost: Trade and other payables P 142,268,142 P 142,268,142 P 160,234,366 P 160,234,366 Due to related parties 110,241,445 110,241,445 109,563,646 109,563,646

P 252,509,587 P 252,509,587 P 269,798,012 P 269,798,012

9.2 Fair Value Hierarchy

The Group uses the following hierarchy level in determining the fair values that will be disclosed for its financial instruments.

a.) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that an entity can access at the measurement date;

b.) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and,

c.) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

The Group’s financial assets which are not measured at fair value in the consolidated statement of financial position but for which fair value is disclosed include cash and cash equivalents, which are categorized as Level 1, and trade and other receivables and due from related parties, which are categorized as Level 3. Financial liabilities which are not measured at fair value but for which fair value is disclosed pertain to trade and other payables and due to related parties which are categorized under Level 3.

- 7 -

10. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Group’s capital management objectives are to ensure the Group’s ability to continue as a going concern and to provide an adequate return to shareholders in the future.

The Group also monitors capital on the basis of the carrying amount of equity as presented on the consolidated statements of financial position. It sets the amount of capital in proportion to its overall financing structure, i.e., equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. EXHIBIT 6

MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS

Review of June 30, 2017 versus June 30, 2016

The Group's total revenues exhibited an increase of Php32.54 million or 15.81% from Php205.90 million in 2016 to Php238.44 million in 2017 of the same period. Total revenues mostly came from management fees, service income and rental income.

Costs and expenses exhibited an increase of Php26.35 million or 14.24% from Php185.02 million in 2016 to Php211.38 million in 2017. Increase in costs and expenses were mainly due to cost of services and operating expenses.

The Group’s net profit showed an increase of Php6.19 million or 29.66% from Php20.88 million in 2016 to Php27.07 million in 2017.

FINANCIAL CONDITION

As of June 30, 2017 and December 31, 2016

The Group’s total resources amounted to Php704.39million in 2017 from Php684.38 million in 2016. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business.

Current assets decreased by Php3.87 million or 0.69% from Php563.02 million in 2016 to Php559.16 million in 2017. Cash and cash equivalents increased by Php10.27 million or 2.86% from Php359.66 million in 2016 to Php369.93 million in 2017. Due from related parties - net decreased by Php0.28 million or 0.45% from Php60.93 million in 2016 to Php60.66 million in 2017.

Non-current assets increased by Php23.88 million or 19.68% from Php121.35 million in 2016 to Php145.24 million in 2017. Investment property - net decreased by Php0.62 million from Php27.27 million in 2016 to Php26.65 million in 2017. Property and equipment - net increased by Php19.16 million or 43.72% from Php43.81 million in 2016 to Php62.97 million in 2017.

Trade and other receivables decreased by Php14.02 million or 10.37% from Php135.24 million in 2016 to Php121.22 million in 2017. Other assets increased by Php5.16 million or 24.21% from Php21.31 million in 2016 to Php26.47 million in 2017.

Current liabilities decreased by Php19.05 million or 6.65% from Php286.55 million in 2016 to Php267.50 million in 2017. Trade and other payables exhibited a decrease of Php14.05 million or 8.23% from Php170.65 million in 2016 to Php156.61 million in 2017. Due to related parties increased by Php0.68 million or 0.62% from Php109.56 million in 2016 to Php110.24 million in 2017. Income tax payable decreased by Php5.69 million or 89.73% from Php6.34 million in 2016 to Php0.65 million in 2017.

Retirement benefit obligation increased by Php12.00 million or 10.35% from Php115.99 million in 2016 to Php127.99 million in 2017.

Material Changes in Year 2017 Financial Statements Increase/Decrease of 5% or more versus December 31, 2016

Statements of Financial Position

10.37% decrease in trade and other receivables – current and non-current Due to collection of receivables as of current period

43.72% increase in property and equipment - net Due to additional leasehold improvement during the period

24.21% increase in other assets - net – current and non-current Due to increase in prepayments and deposits as of the current period

8.23% decrease trade and other payables Due to settlement of liabilities of a subsidiary

89.73% decrease in income tax payable Due to payment of prior year income tax due

10.35% increase in retirement benefit obligation Due to additional accrual of employee retirement benefits for the current period

Increase/Decrease of 5% or more versus June 30, 2016

Statements of Income

14.42% increase in management fees Due to additional properties managed by a subsidiary as well as the increase in management fee rate

104.17% increase in rental income Due to higher rental income generated by a subsidiary

14.47% increase in cost of services Due to higher service cost for the current period

16.66% increase in operating expenses Due to higher administrative and overhead expenses for the current period

10.41% increase in tax expense Due to higher taxable income for the current period

KEY PERFORMANCE INDICATORS

Presented below are the top five (5) key performance indicators of the Group:

June 30, 2017 December 31, 2016 Current Ratio *1 2.09 : 1.00 1.96 : 1.00 Quick Ratio *2 1.38 : 1.00 1.26 : 1.00 Debt to Equity Ratio *3 1.28 : 1.00 1.43 : 1.00

June 30, 2016 Return on Assets *4 3.90% 3.47% Return on Equity *5 9.16% 8.99%

*1 – Current Assets / Current Liabilities *2 – Cash and Cash Equivalents / Current Liabilities *3 – Total Liabilities / Equity *4 – Net Profit / Average Total Assets *5 – Net Profit / Average Equity

There are no other significant changes in the Group's financial position (5% or more) and condition that will warrant a more detailed discussion. Further, there are no material events and uncertainties known to management that would impact or change reported financial information and condition on the Group.

There are no known trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in increasing or decreasing the Group's liquidity in any material way.

There are no other known events that will trigger direct or contingent financial obligation that is currently considered material to the Group, including any default or acceleration of an obligation.

The Group does not anticipate having any cash flow or liquidity problems. The Group is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments. The Group has no material commitments for capital expenditures.

There are no material off-balance sheet transactions, arrangements, obligations, and other relationships of the Group with unconsolidated entities or other persons created during the reporting period.

The Group has no unusual nature of transactions or events that affects assets, liabilities, equity, net income or cash flows.

There are no other material issuances, repurchases or repayments of debt and equity securities.

There are no seasonal aspects that had a material effect on the financial condition or results of operations of the group.

There are no material events subsequent to the end of the period that have not been reflected in the financial statements for the period.

There are no changes in estimates of amount reported in periods of the current financial year or changes in estimates of amounts reported in prior financial years. SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES EXHIBIT 7 Aging of Accounts Receivable June 30, 2017

Past Due Accounts Current/ 7 Months to and Items in Type of Receivables Total Not Yet Due 1-3 Months 4-6 Months 1 Year 1-2 Years Litigation

Trade and Other Receivables 121,220,953 50,985,664 26,363,905 11,742,386 12,814,726 19,314,272 EXHIBIT 8 SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS JUNE 30, 2017 AND DECEMBER 31, 2016

JUNE 30, 2017 DECEMBER 31, 2016 Current ratio 2.09 :1.00 1.96 :1.00 Quick ratio 1.38 :1.00 1.26 :1.00 Debt-to-equity ratio 1.28 :1.00 1.43 :1.00 Asset-to-equity ratio 2.28 :1.00 2.43 :1.00

JUNE 30, 2016 Return on assets 3.90% 3.47% Return on equity 9.16% 8.99%

LIQUIDITY RATIOS measure the business’ ability to pay short-term debt. Current ratio – computed as current assets divided by current liabilities Quick ratio – computed as cash and cash equivalents divided by current liabilities

SOLVENCY RATIOS measure the business’ ability to pay all debts, particularly long-term debt. Debt-to-equity ratio – computed as total debt divided by total stockholders’ equity.

ASSET-TO-EQUITY RATIOS measure financial leverage and long-term solvency. It shows how much of the assets are owned by the company. It is computed as total assets divided by total stockholders’ equity.

PROFITABILITY RATIOS Return on assets – net profit divided by average total assets. Return on equity – net profit divided by average total stockholders' equity.