SEC 17-A 2015 Annual Report -CHI Pdf

SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A

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

1. For the fiscal year ended December 31, 2015

2. SEC Identification Number 157912 3. BIR Identification No. 000-551-890-000

4. Exact name of the issuer as specified in its charter: CEBU HOLDINGS, INC.

5. Province, Country or other jurisdiction of incorporation or organization: Cebu, Philippines

6. Industry Classification Code: ______(SEC Use Only)

7. Address of principal office: Unit #701, 7/F, Cebu Holdings Center, Cardinal Rosales Avenue, Cebu Business Park, Cebu City Postal code: 6000

8. Issuer’s telephone number: (032) 231-5301

9. Former name, former address, former fiscal year: not applicable

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

Title of each class Number of shares of common stock outstanding Common shares 1,920,073,623 shares P1,920,073,623

Amount of debt outstanding : The Company has no registered debt.

11. Are any or all of these securities listed on a Stock Exchange? Yes [x] No [ ]

Name of Stock Exchange: Philippine Stock Exchange Class of securities listed: Common stocks

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

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

13. Aggregate market value of the voting stock held by non-affiliates: P 9.946 billion (as of end-Dec. 2015)

No. of Shares % Market Value (P5.18/share) Ayala Land, Inc. (Parent Company) 1,082,109,737 56.36% P 5,605,328,437.00 Non-affiliate (Public) 837,963,886 43.64% 4,340,652,929.00 Total 1,920,073,623 100.00% P 9,945,981,366.00

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

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

Not applicable.

DOCUMENTS INCORPORATED BY REFERENCE

15. Briefly describe documents incorporated by reference and identify the part of the SEC Form 17-A into which the document is incorporated:

2015 Audited Consolidated Financial Statements (incorporated as reference for Item 7 of SEC Form 17-A)

TABLE OF CONTENTS

Page No.

PART I - BUSINESS AND GENERAL INFORMATION

Item 1. Business 1 Item 2. Properties 27 Item 3. Legal Proceedings 28 Item 4. Submission of Matters to a Vote of Security Holders 28

PART II – OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Issuer’s Common Equity and Related Stockholder Matters 28 Item 6. Management’s Discussion and Analysis or Plan of Operation 30 Item 7. Financial Statements 42 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 42

PART III – CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Issuer 42 Item 10. Executive Compensation 47 Item 11. Security Ownership of Certain Beneficial Owners and Management 48 Item 12. Certain Relationships and Related Transactions 51 Item 13. Compliance with Leading Practice on Corporate Governance 54

PART IV - EXHIBITS AND SCHEDULES

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

(a) Exhibits 54 (b) Reports on SEC Form 17-C 55 Item 14. Additional Disclosures Data 56

SIGNATURES 57

INDEX TO EXHIBITS

INDEX TO SUPPLEMENTARY SCHEDULES

PART I - BUSINESS AND GENERAL INFORMATION

Item 1. Business (Part I, Paragraph (A) of SRC Rule 12)

(A) Description of the Business (The Company)

(1) Business Development.

Cebu Holdings, Inc. is a publicly listed company engaged in real property ownership, development, marketing, and management. It was registered with the Securities and Exchange Commission on December 9, 1988 with an authorized capitalization of P1 Billion.

It is an affiliate company of ALI (56.36%). Other shareholders include First Metro Investment Corporation, (11.52%), and the Public (32.12%).

The Company's operations consist of seven (7) types of activities: ∑ strategic land management ∑ mixed-use development ∑ real estate business (commercial land sales and residential subdivision/condominium sales) ∑ commercial business operations and management (retail space lease and office space lease) ∑ hotel development and operations ∑ proprietary sports club shares sales

The Company owns and manages the Cebu Business Park, a 50-hectare business and commercial subdivision in Cebu City, and, to date, the single largest operating IT economic zone in Southern Philippines. Cebu Business Park is master-planned to be the central business district in Cebu that integrates business, high-rise residential, shopping, and sports and recreational facilities. Cebu Business Park is complete with world-class utilities and is home to some of the top local and international companies.

Cebu Business Park is strategically located to co-exist with the development plans and directions of Cebu City’s urban growth. Cebu Business Park’s major streets serve as a vital part of Cebu City’s radial road network in the northern district.

Cebu Business Park was officially proclaimed as a PEZA-accredited IT Park pursuant to Presidential Proclamation 2053 (2010). According to the Special Economic Zone Act of 1995 (as amended in R.A. 7916), all investors and locators in PEZA-accredited IT Parks are now entitled to fiscal and non-fiscal incentives. Among the benefits of an IT park are improvement in international competitiveness, increase in direct investments and capital formation, employment of job creation, and an improved of quality of life.

This development allows Cebu to maximize its advantages as a preferred business and tourist destination in the country.

There are currently 38 buildings in Cebu Business Park, with 11 ongoing constructions.

This development is noteworthy not only for its scale but also because of its environment and urban development aspects. Its roadways have become integral to Cebu City’s road network, and therefore contribute to the easy flow of vehicular traffic and to daytime population distribution. The master plan allows for generous open spaces (20 percent of Cebu Business Park is devoted to open green space and greenery), and makes allowances for the growing demands of a modern urban commercial community.

The Cebu Business Park and Cebu I.T. Park—the flagship project of CHI subsidiary, Cebu Property Ventures and Development Corporation (CPVDC)—are unified through an integrated brand identity known as Cebu Park District, which was launched in 2011. Each one is a complete destination comprising a dynamic whole. Their respective strengths will be highlighted as a representation of

- 1 - shared growth. The Cebu Park District’s identity will serve to magnify each park’s best- in-class positioning and unify both park’s value proposition of being the premier district for business, leisure and living. This integrated brand also serves to sustain continuing build up and promote investment in both developments.

Ayala Center Cebu is the shopping and lifestyle destination of the region. Nestled at the heart of the vibrant metropolis, it showcases the most sought-after retail brands as well as promising concepts clustered in specialized zones. It also hosts a collection of popular dining and hangout places for fun, bonding, and nurturing relationship activities.

Since 1994, Ayala Center has continuously offered the most unique and rewarding shopping and dining experiences to both its local and tourist patrons. It is the preferred mall of the AB market, gated villages, and office workers with its wide selection of foreign and local brands. It is a masterpiece of retail innovation.

Strategically located at the center of Cebu Business Park, it is only 20 minutes away from the Mactan Cebu International Airport, and is just a walk away from some of Cebu’s best hotels, including Cebu City Marriott Hotel. It is also just 10 minutes away from the nearest seaports for that quick island getaway.

The Terraces at Ayala Center Cebu aims to strengthen the mall’s ambiance-driven dining component with a cohesive and comprehensive mix of established national brands like Italianni’s, Cyma, Gerry’s Grill, J.Co Donuts, and TGIFriday’s and Cebu dining concepts like Casa Verde , Mooon Café, Hukad and Laguna Garden to name a few. Set at the center of The Terraces is the outdoor activity area surrounded by vibrant greeneries and soothing water features that provides a distinctive in dining and entertainment. The Terraces strengthens Ayala Center Cebu’s position as the landmark of unsurpassed shopping, dining, and entertainment in the region.

In 2011, the company embarked on the expansion project of Ayala Center Cebu to address the market gap and strengthen its landmark as the lifestyle and retail destination in Metro Cebu. Opened to the public last 2013, this expansion adds four levels of retail, dining and entertainment establishments with over 34,000 square meters of gross leasable space in a gross floor area of approximately 50,000 square meters. Rustan’s Supermarket and Rustan’s Department Store moved to an expanded area in this new wing, occupying four storeys to bring in their full line-up in product and brand offerings. This latest expansion of this mall recently garnered Gold in the renovations and expansions design and development category of the 2015 Asia Pacific Shopping Center Awards competition of The International Council of Shopping Centers.

CHI also developed the City Sports Club Cebu , an exclusive urban resort equipped with health and fitness facilities, as well as restaurants and function rooms for members and their guests to use. This project is in partnership with ALI. To enhance its offerings for its members, the club completed a multi-million peso renovation in 2013.

In 2010, CHI partnered with Ayala Land Premier (ALP), the high-end product category of Ayala Land, for the development of a premier residential condominium project within the Cebu Business Park. 1016 Residences provides 109 units of country club living in Cebu’s address of choice. Located beside the City Sports Club Cebu, residents will be entitled to club usage rights.

With the success of 1016 Residences, CHI and ALP unveiled another 38-storey residential tower, the first of its kind in ALP’s residential portfolio in the region. Primed to rise on top of the mall’s newly-completed expansion wing, Park Point Residences is said to mark the beginning of sophisticatedly modern and integrated convenient living in the district since its location will offer private access to future destinations in Ayala Center Cebu.

In March of 2015, CHI and ALP launched another residential tower on top of Ayala Center Cebu, The Alcoves . The Alcoves is a 37-story luxury condominium that boasts of a number of unique amenities and residential concepts fit for a discerning market. A mixed-use tower with a retail podium and high-rise residences, The Alcoves will feature retail and dining establishments on the second and third floors, while a private access to Ayala Center Cebu provides residents with even more options.

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CHI also partnered with Alveo Land for the development of Sedona Parc in 2010. This residential condominium of 114 units will offer upscale lifestyle inspired by style, design, and nature. It is set to rise in a tranquil and highly- accessible parkside location in Cebu Business Park.

The following year, CHI and Alveo Land showcased its residential innovation through Solinea —its first multi- tower Alveo project in Cebu that upholds a city-resort living experience through its overall design while reminiscent of a vacation destination.

The Cebu Business Park is also the site of the Cebu City Marriott Hotel , the first businessman's hotel managed by world- renowned Marriott International in Visayas-Mindanao.

Amara is CHI’s premier residential development in Catarman, Liloan, which carries the ALP label and follows the standards of the brand. ALP is set exclusively for the most well-appointed addresses—the likes of renowned communities such as Ayala Alabang, Forbes Park, and Dasmariñas Village in Luzon.

Amara offers a master-planned community nestled by the sea and undulating hills accentuated by the eternal warmth of a historical lighthouse. It provides a safe haven for families and a luxurious seaside living experience with first-class facilities.

Amara offers a range of facilities for lotowners and residents which include a breathtaking esplanade, the grand clubhouse with infinity pools, jacuzzi, social hall, function room, a beach bar, and view decks with spectacular views of the Mactan channel. This seaside residential community also has its own sports and recreation center, Serenity Park, picnic groves, pocket parks and a wharf for yachts and speed boats in an exclusive enclave at the Catarman headland

To capitalize on the Park’s PEZA Accreditation, CHI launched its first office building in Cebu Business Park. The ACC Corporate Center is a 20 storey office building with 12 office floors, 6 podium parking, and 2 floors for retail. This will add 30,688.05 square meters of additional office space in CBP. The project was launched last January 30, 2013. ACC Corporate Center will be completed on November of this year. It will also serve as the new headquarters of Cebu Holdings, Inc. and all of Ayala Land Inc.’s Special Business Units in Visayas and Mindanao.

CHI subsidiary, Cebu Property Ventures and Development Corporation (CPVDC), is the developer of the 27- hectare Cebu I.T. Park (formerly Asiatown I.T. Park), only 1.5 kilometers away from Cebu Business Park.

Cebu I.T. Park is a well-planned IT economic zone and modern trading hub with global gateway. The integrated, mixed-use, masterplanned development obtained accreditation from the Philippine Economic Zone Authority (PEZA) as an IT Park in 2000. The PEZA accreditation is the first such distinction accorded a property development project in the Visayas and Mindanao.

In September 22, 2011, Asiatown I.T. Park was officially re-named Cebu I.T. Park – strengthening the emphasis the queen city of the South which has today become one of the top BPO destinations globally. In 2016, Cebu retained its ranking at the 7 th top outsourcing destination globally by Tholons Magazine.

Home to over a hundred IT companies and related services, Cebu I.T. Park is host to over 70 percent of Cebu’s business process outsourcing (BPO) industry. It hosts a good mix of software research and development, BPOs, and contact centers, bringing in millions of pesos in investments and employing thousands of people. In fact, by end of 2015, it has provided employment to almost 44,000 – a mixture of engineers, and information and communication technology professionals.

Cebu’s thriving IT and BPO industry is most evident in the bullish build-up within Cebu I.T. Park with nine buildings under construction which will be an addition to the existing 23 buildings at the I.T. Park. eBloc Tower 1 is 12-storey mid-rise office condominium with retail provision at the ground floor. It is a project of Asian I-Office Properties, a joint venture between CPVDC and Ayala Land, Inc. The building has redundant power and water supply, optimum telecommunications facilities, centralized sewage and a secure location within the heart of the city.

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With its first tower fully leased out, AiO launched eBloc Tower 2 , a 16-level office building with a total gross floor area of 34,762 square meters in June 2010. Like its predecessor, eBloc Tower 2 is proud manifestation of sustainable design practices. The building is fully leased out to some of the big players in the BPO/IT industry.

To accommodate the ever increasing demand for office spaces, eBloc Tower 3 and eBloc Tower 4 were launched last February 2012 and October 2013 respectively. These two 12-level office buildings will add a total of 29,805 square meters of leaseable floor area. . eBloc Tower 3 was completed last August 2014 and is already 100 percent committed to three locators. eBloc Tower 4 has been completed and is awaiting fit- out of locators.

Seeing the demand for residential spaces within this bustling IT park, AiO in partnership with Avida Land (Ayala Land’s best value brand offering affordable living at its best) launched Avida Towers Cebu in June of 2010. The first Ayala Land affordable condominium outside Luzon, Avida redefines life with exciting options for future residents to enjoy the benefits of home, office, and play inside the most vibrant address in town for young professionals and families. The first tower of over 500 units was sold in an unprecedented rate, prompting the launch of the second tower after only three months since it was first offered to the market.

The Avida brand further expanded its portfolio in Cebu with the multi-tower Avida Towers Riala . The said development will seamlessly include spaces for retail and dining in its masterplan, furthering the lifestyle options that are already present in its location.

Cebu I.T. Park’s retail center, The Walk, remains to be a strong retail magnet in the ever-busy Cebu IT Park. Heavily frequented by BPO workers, young professionals, tourists, families, and sports enthusiasts, it has emerged from simply being a hangout haven into popular venue for showcasing recreational activities like sports, music, photography, and even luxury vehicle collections.

To maximize land value and increases recurring income, CHI and subsidiary CPVDC broke ground for the Central Bloc at Cebu I.T. Park in March of 2015. The Central Bloc is a two-hectare central superblock which will include a regional mall, a hotel, and office towers. This new project will complement the 24/7 community in this area, as well as enhance the pedestrian experience, connecting the growing number of buildings within the park.

The magnitude and significance of its projects make CHI the leading real estate company in Cebu. Brining the Ayala brand of development to the Visayas and Mindanao, it is the premier multi-lined real estate organization which continues to create landmarks, set standards, and build lasting relationships with its customers. In over 27 years, CHI has definitely changed the physical landscape of Cebu, bringing with it a distinctive lifestyle for a market that aspires “world class”.

SUBSIDIARIES AND ASSOCIATE % Ownership Nature of Projects

CBP Theater Management, Inc. 100% Theater management (Pre-operating) Cebu Leisure Company, Inc. 100% Entertainment facilities management Cebu Property Ventures and Devt. Corp. 76% Mixed-use development Asian I-Office Properties, Inc.* 76% Mixed-use development Taft Punta Engaño Property, Inc. 55% Mixed-use development Cebu Insular Hotel Company, Inc. 37% Hotel development/operations Solinea, Inc. 35% Mixed-use development Amaia Southern Properties, Inc. 35% Mixed-use development Southportal Properties, Inc. 35% Mixed-use development Central Block Developers, Inc. 57% Mixed-use development *wholly owned by CPVDC

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(2) Business of the Issuer (Operations).

(A) Description of Registrant

(i) CHI’s operations consist of seven types of activities:

∑ strategic land management ∑ mixed-use development ∑ real estate business (commercial land sales and residential subdivision/condominium sales) ∑ commercial business operations and management (retail space lease and office space lease) ∑ hotel development and operations via an affiliate Cebu Insular Hotel Co. Inc. ∑ proprietary Sports Club Shares sales

(ii) The following spells out CHI’s operating (real estate) revenues by category of activity for the periods indicated:

For the years ended 31 December 20 15 20 14 20 13 P Mn % P Mn % P Mn %

Commercial land sales 1,087.3 29 - 0 96.5 4 Residential lot (Amara) 27.6 1 34.1 2 102.8 5 Residential Condo(1016, 222.5 6 204.0 9 395.5 18 Sedona Parc, Park Point, Avida Towers Cebu & Avida Riala Tower) City Sport Club shares - 0 -.7 -0 2.8 0 Rental Income Ayala Center Cebu 1,165.4 31 995.4 43 772.8 36 Cebu Leisure Co., Inc. 65.8 2 57.7 3 49.0 2 AITP Retail (The Walk) 26.9 1 26.2 1 23.7 1 e-Office - 0 .3 0 18.4 1 eBloc Towers 384.9 10 302.0 13 216.4 10 Land Leased 10.7 0 - - - - Theater income 143.2 4 135.5 6 102.3 5 Equity in net earnings of 106.3 3 79.7 3 47.0 2 an associate Interest and other income 499.7 13 459.4 20 342.3 16 3,740.3 100 2,293.6 100 2,169.5 10 0

Commercial Land Sales

Cebu Business Park and Cebu IT Park

Cebu Business Park (50 hectares) and Cebu IT Park (27 hectares) are both large-scale, master- planned, mixed-use, integrated economic zones. Each one is a complete destination comprising a dynamic whole, being collectively known as Cebu Park District.

The respective strengths of each development of Cebu Business Park and Cebu IT Park are highlighted as a representation of shared growth. The Cebu Park District’s identity will serve to

- 5 - magnify each park’s best-in-class positioning and value proposition of being the premier district for business, leisure and living.

Cebu Business Park and Cebu I.T. Park are 1.5 kilometers apart and are strategically located relative to the economic drivers of Cebu. Both parks enjoy a critical mass of locators in the spheres of business, banking, finance, IT and tourism services among others.

These developments have been considered as benchmarks of urban developments south of Luzon, having provided the Cebu and the Vismin markets the opportunity to experience the convenience of integrated living concept and standards that Ayala Land has championed in the tradition of developments such as Makati, Bonifacio Global City and Nuvali.

Being high quality urban environments, both developments have vibrant mix of uses: office, residential, retail, recreational, cultural and institutional.

Business. The Cebu Park District is where many of the region’s corporate headquarters are located. Both parks and the adjoining areas enjoy a critical mass of locators in the spheres of business, banking, finance, IT and tourism services, among others. As the preferred business district, these two parks are home to some of the biggest local and international companies. Taken together, all these compose the largest concentration of developments in Southern Philippines.

Leisure. The district offers opportunities for better and healthier lifestyle through the retail developments such as Ayala Center Cebu and the Walk and Cebu’s urban resort, the City Sport Club Cebu. The development and urban design will highlight the district’s distinctive character -- its natural environment, the green and open spaces. To sustain the dynamism and vibrancy in the district, all these shared spaces are enhanced and expanded for people to come together in events, particularly entertainment, leisure, health and wellness activities.

Living. Both parks have a growing residential component, allowing people to live near their workplaces in a vibrant and diverse urban environment. Ayala Land introduced its three residential brands to bring a wide range of options for Cebuanos. Ayala Land Premier ushers in an exclusive and distinct living experience with 1016 Residences and Park Point Residences. Alveo Land brings innovative projects attuned to the needs of a dynamic, urban lifestyle with Sedona Parc and Solinea. While affordable homes with the Ayala brand of development is made available with Avida Land’s first foray outside of Luzon with Avida Towers Cebu and Avida Riala. A new addition to the residential developments is Amaia Steps located in Mandaue.

Cebu Business Park . It is strategically located to co-exist with the development plans and directions of Cebu City’s urban growth. Cebu Business Park’s major streets serve as a vital part of Cebu City’s radial road network in the northern district. Situated at the center of Cebu City, the CBP is bounded by Archbishop Reyes Avenue in the west, Juan Luna Avenue to the north, M.J. Cuenco Avenue to the east and Gorordo Avenue to the South. The Park is located approximately three (3) kilometers from residential subdivisions in the north, and fifteen (15) kilometers from the Mactan International Airport.

Lot owners at CBP include various prestigious companies such as A. Soriano Corporation, Asian Bank Corporation, Phinma Properties & Holding Co., Philippine National Bank, Insular Life Insurance Co., China Bank, Metropolitan Bank & Trust Co., Bank of the Philippine Islands, Bigfoot Properties Phils., Inc., Adelaida Ghassemi, Alveo Land, Corp., Repro Optima Center for Reproductive Health, Inc., Ms. Lina Danaque Ong, Ahava Realty & Development Corporation, Contempo Property Holdings, Inc. and Harry John Viloria.

A number of vertical construction project started since the Company initiated the construction of Cebu Holdings Center in 1992. Other CHI-owned projects include Ayala Center Cebu, Park Tower One and Park Tower Two, Ayala Life FGU Center (jointly with Ayala Life Assurance, Inc. and FGU Insurance Corp.), Cebu City Marriott Hotel (the 303-room businessman’s hotel jointly with Ayala Hotels, Inc.), Ayala Center Phase 2b, 1016 Residences, Park Point Residences, ACC Corporate Center & The Alcoves (jointly with Ayala Land Premier), Sedona Parc, Solinea Towers & BPI Corporate Center (jointly with Alveo Corp.) and CBP Tech

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Tower (BPO 400). Other lot owners who count among the early builders are Keppel Center, First Abacus Financial Tower (owned by the Prosperity Properties and Management Corporation) and the HDMF / WTI Tower owned by Pag-ibig Fund and WTI, Metro Bank, Union Bank and Taft Financial Center, Security Bank, Pioneer House, 8990 Housing and Development Building, Cebu IT Tower, Lexmark Building 1, 2&3, China Bank, Insular Building, Pagoda Realty Corp., Avalon Residences, AppleOne Property, Creativo 2 building, China Bank expansion building and Calyx Residences. In 2015, 2-Quad, MSY Holdings Corp. Center, FLB Corporate Center, Skyrise Beta, Loreta Tower 2, RCBC, Skyrise Alpha and Zenith Central building was completed. The Philam Life Tower, Mandaue Foam building and Builtcom Center, were still under construction during the period. Others are expected to begin construction within the next five years, thus hastening the pace of full development in the area.

Apart from the office/residential condominium projects and the City Sports Club Cebu, CBP also has a luxury hotel. This is in accordance with the plan of making CBP a world class mixed-use commercial property designed to meet the demands of the 21 st century.

A CHI subsidiary, Cebu Property Ventures and Development Corporation, has also developed a 24-hectare property not far from the CBP. This project is called Cebu I.T. Park (formerly Asiatown I.T. Park).

Cebu I.T. Park is a well-planned IT economic zone and modern trading hub with global gateway. The 24- hectare integrated mixed-use I.T. Park obtained accreditation from the Philippine Economic Zone Authority (PEZA) as an IT Park in 2000. The PEZA accreditation is the first such distinction accorded a property development project in the Visayas and Mindanao.

Residential Lot Sales

Amara Amara is an exclusive seaside residential community located in Catarman, Liloan, Cebu. The property is envisioned to be a community of seaside neighborhoods within a master-planned residential haven. It will offer superior values in product features, amenities and value appreciation with the Ayala trademark.

It has launched its newest phase dubbed The Parks at Amara. This phase is surrounded by seamlessly connected landscaped parks with a central park as the gem. The Parks boasts of amenities that allow its future residents to have an active lifestyle, joyful outdoor celebrations and a quiet respite.

Chapel at Amara To provide a holistic living experience at the premier seaside residential subdivision, Amara, we broke ground for its chapel in August of 2013. The chapel's design is made by budding and award- winning architect, Jason Buensalido. The design purposely maximizes natural light and ventilation sources, drawing inspiration from clean geometric lines, visually illustrating a rising bridge, and linking nature, man and God.

Amara Phase 1 has an esplanade and the grand clubhouse with infinity pools, jacuzzi, social hall, function room, a beach bar, and view decks with spectacular views of the Mactan channel. Amenities in Phase 2 include a Serenity Park with floating gazebos and a Sports and Recreation Center with covered basketball and badminton courts and a fitness gym that overlooks the sea. Picnic Groves will be located in Phase 3 of the sprawling Amara development.

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City Sports Club Shares The Company also developed the City Sports Club Cebu (CSCC) , an exclusive urban resort equipped with state-of-the-art health and fitness equipment. This project is in partnership with ALI. In 2004, CSCC signed reciprocity agreements with American Club in Singapore and United Services Recreation Club in Hongkong.

Cebu's only world-class urban resort for recreation and sports, City Sports Club Cebu has a wide range of facilities and amenities for leisure, dining, health and fitness for the whole family, located at the heart of Cebu Business Park. To enhance its offering for its members, the City Sports Club Cebu completed a multi-million peso renovation in 2013.

Residential Condominium Sales (Cebu Business Park)

1016 Residences 1016 Residences is a high-end residential condominium project co-developed by Ayala Land Premier and Cebu Holdings, Inc. Carrying the Ayala Land Premier brand, the development delivers an exclusive and distinct living experience.

Located centrally at Cebu Business Park, it is a short walk from the city’s premier retail and entertainment hub, Ayala Center Cebu, and is directly connected to the exclusive City Sports Club Cebu. This 27-storey building holds 109 prime corner units.

Park Point Residences Park Point Residences is an intimate community of only 255 residences, aloft at the heart of Cebu Park District's urban renaissance. It is seamlessly connected to city's premier dining, shopping, and entertainment destination, Ayala Center Cebu.

The 38-storey residential tower is the first of its kind in ALP’s residential portfolio in the region, as it is the first living space that will rise on top of the mall’s new wing.

Sedona Parc A joint project between Cebu Holdings, Inc. and Alveo Land, Sedona Parc is located within the Cebu Business Park, providing future residents amenities that are designed to complement their existing lifestyle while maintaining the convenience of being at the heart of a progressive district.

Sedona Parc is a 24-storey residential condominium with 114 units that will offer upscale lifestyle inspired by style, design and nature.

Solinea Solinea is the first multi-tower development in Cebu City under the Alveo brand. It is envisioned to offer City Resort Living – a balanced lifestyle merging the vibrant pace of the city and the relaxing ambience of a resort inspired environment.

Solinea is strategically located right across Ayala Center Cebu, and is in close proximity to numerous recreational, dining and leisure options.

The Alcoves In March of 2015, CHI and ALP launched another residential tower on top of Ayala Center Cebu, The Alcoves. The Alcoves is a 37-story luxury condominium that boasts of a number of unique amenities and residential concepts fit for a discerning market. A mixed-use tower with a retail podium and high-rise residences, The Alcoves will feature retail and dining establishments on the second and third floors, while a private access to Ayala Center Cebu provides residents with even more options.

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Rental of Retail Space

Ayala Center Cebu Since its inception in 1994, Ayala Center Cebu has become the preferred lifestyle destination in Cebu for its growing market. It is an agora for new products, a venue for community interaction and the trendsetter for new attitudes and lifestyle.

Strategically located at the center of Cebu’s vibrant business district, it is only 20 minutes away from the Mactan Cebu International Airport and is just a walk away from some of Cebu’s best hotels including Cebu City Marriott Hotel among others. It is also just 10 minutes away from the nearest seaports for that quick island getaway.

Ayala Center Cebu Expansion Ayala Center Cebu opened its biggest ever expansion on December 11, 2013. This new section of the mall provides space for over 200 store options for mall patrons. The four levels of the expansion is seamlessly connected to the existing building and completes the full-circle retail master plan of Ayala Center Cebu while adding 36,500 square meters of gross leasable area. The expansion of Ayala Center Cebu brings in a merchandise mix of premium foreign brands, mid-priced to high-end fashion boutiques, specialty stores for IT, home and kids selections. Its top level is a destination of its own, with carefully selected outlets, a new high-fidelity audio-visual cinema and a chapel.

The Walk The Walk, the retail component of subsidiary Cebu Property Ventures and Development Corporation’s Cebu I.T. Park, positions itself as one of the best convergence hub where friends and families connect with their loves ones and live out their passions. This retail facility combines with a strong mix of affordable dining options and convenient services, making it the favorite hangout at Cebu I.T. Park. Since it opened, The Walk retained its freshness and attraction to its market with a total gross leasable area of 2,100sqm. In 2014, it ended the year with Ninety Seven percent (97%) lease occupancy. Highlights were the opening of Tsim Sha Tsui.

Cebu I.T. Park’s retail center, The Walk , remains to be a strong retail magnet in the ever-busy Cebu IT Park. Heavily frequented by BPO workers, young professionals, tourists, families, and sports enthusiasts, it has emerged from simply being a hangout haven into popular venue for showcasing recreational activities like sports, music, photography, and even luxury vehicle collections.

Rental of Office Space

ACC Corporate Center To capitalize on the Park’s PEZA Accreditation, CHI launched its first office building in Cebu Business Park. The project is a 20 storey office building with 12 office floors, 6 podium parking, and 2 floors for retail. This will add 30,688.05 square meters of additional office space in CBP. The project was launched last January 30, 2013. ACC Corporate Center will be completed on November of this year. It will also serve as the new headquarters of Cebu Holdings, Inc. and all of Ayala Land Inc.’s Special Business Units in Visayas and Mindanao. eOffice One e-Office One , a one-storey modular building (11,370 square meter).

- 9 - eBloc Towers 1 and 2 Retail The eBloc Towers retail outlets at the ground floor of the buildings provide more choices for dining at the Cebu I.T. Park. The current mix of outlets add to the dynamic 24/7 environment at the park. These include coffee shops, popular food outlets and restaurants and convenience stores which complement the lifestyle of the park's growing population. eBloc Towers eBloc Tower 1 and eBloc Tower 2

The eBlocs are state-of-the-art mid-rise office buildings with retail spaces at its ground level.

The first among many projects to be pushed for Cebu’s twin-win industries - Information and Communication Technology (ICT) and tourism - the eBloc Towers are part of the project of Asian i- Office Properties Inc. (AiO).

They currently house few of the top companies; NCR Cebu Development Corp, JP Morgan Chase & Co., NEC Telecom, and Accenture. eBloc Tower 3 and eBloc Tower 4 eBloc Tower 3 and eBloc Tower 4 are designed to have support retail provision with landscaped storefront at the ground floor to cater the needs of the BPO worker 24/7. An open air podium, which will accommodate ample parking slots, will provide for both retail and office needs.

The buildings are a proud manifestation of environmentally sustainable design practices through energy-efficient electrical, air-conditioning and its water-efficient plumbing systems. Lights, pumps and motors will be energy-rated and will save electricity. The plumbing system will use a dual-pipe system to collect grey water and will facilitate rainwater collection. It will also employ waterless urinals and other water-saving toilet fixtures.

Stepping-up to cater to the needs of the growing IT/BPO industry in Cebu, CPVDC’s subsidiary, Asian i-Office Properties topped off eBloc Tower 3 and broke ground for eBloc Tower 4 in October 2013.

Residential Condominium Sales (Cebu I.T. Park)

Avida Towers Cebu Avida Towers Cebu is a joint venture project of Avida Land and Asian i-Office (AiO). AiO is an associate of Cebu Property Ventures and Development Corporation.

When it was first launched in June 2010, Avida Towers Cebu sold over 90 percent units Tower 1 in less than four months. This fast-tracked the launch of the second tower, which also sold in record breaking speed.

Avida Towers Cebu redefines city living with exciting options for its future residents to enjoy the benefits of home, work and play inside the most vibrant address in town for young professionals and families.

Avida Towers Riala Avida Towers Riala is our second residential condominium project in partnership with Ayala Land’s affordable brand, Avida Land, in Cebu. Due to the continued fast take-up of this market segment, the second building of this multi-tower development was launched in 2013 to offer more units.

Avida Towers Riala is a five-tower project with additional shopping and dining outlets built into the property to provide convenient access for the needs of its residents. Located in the Cebu I.T. Park, this pocket mixed-used development is within the primest district in the city, home to over 70 percent of Cebu’s BPO industry.

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Central Bloc To maximize land value and increases recurring income, CHI and subsidiary CPVDC broke ground for the Central Bloc project at Cebu I.T. Park in March of 2015. The Central Bloc is a two-hectare central superblock which will include a regional mall, a hotel, and office towers. This new project will complement the 24/7 community in this area, as well as enhance the pedestrian experience, connecting the growing number of buildings within the park.

The company and its subsidiaries had no material reclassification, merger, consolidation or purchase of a significant amount of assets during the last three years.

The company and its subsidiaries have not filed any bankruptcy, receivership or similar proceedings during the last three years.

Business Development of CHI’s subsidiaries/affiliate:

Cebu Property Ventures & Development Corp. (76% owned subsidiary)

The Company was registered with the Securities and Exchange Commission (SEC) on August 2, 1990. It started commercial operation on September 1, 1996 as a joint venture corporation between the Province of Cebu and Ayala Land, Inc. CPVDC is now 76 percent owned by Cebu Holdings, Inc. (CHI) after a successful tender offering undertaken in 1995.

CPVDC is a publicly-listed company engaged in real property ownership, marketing, management and development. The Company's operations consist of various types of activities:

• Strategic land bank management (acquisition and estate development) • Real estate business (commercial land sales residential condominium sales) • Commercial business operations and management (retail space lease and office space lease)

CPVDC is the developer of the 27-hectare called Cebu I.T. Park (formerly Asiatown I.T. Park), only 1.5 kilometers away from CHI’s Cebu Business Park.

In September 22, 2011, Asiatown I.T. Park was officially re-named Cebu I.T. Park – strengthening the emphasis the queen city of the South which has today become one of the top BPO destinations globally. In 2014, Cebu retained its ranking at the 8 th top outsourcing destination globally by Tholons Magazine.

Competition:

The Company has no known competitor in the area of commercial land sales. With respect to residential subdivision sales CPVDC competes for purchasers primarily on the basis of reputation, price, availability of attractive in-house financing terms, reliability, and the quality and location of the community in which the relevant site is located.

CPVDC’s THREE YEAR RESULTS OF OPERATIONS

2015 vs. 2014 Results of Operations

Cebu Property Ventures and Development Corporation’s consolidated net income reached P=497.2 million, an all time high NIAT.

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The company generated total revenue of P=1.26 billion, 129% higher versus last year’s level of P=.55 billion mainly due to sale of commercial lot at Cebu IT Park and higher leasing income from eBloc Towers. Revenues for the period were derived from the sale of commercial lot, rental in eBloc Towers & The Walk, sale of condominium units (Avida Towers Cebu) and interest and other income.

Earnings before Interest and Taxes (EBIT) showed a significant increase from P=49.7 million in 2014 to P= 606.1 million in 2015.

Stock price for CPVa increased from a closing of P=5.41 per share in 2014 to P=6.00 per share in 2015. While, CPVB stock price decreased from a closing of P=6.30 per share in 2014 to P=6.10 per share in 2015.

As of December 2015, CPVDC declared cash dividend from the unappropriated retained earnings of the company as of December 31, 2014, of P=0.12 per share to all shareholders as of record date December 16, 2015 and paid on December 23, 2015.

Revenues amounted to P=1.26 billion, 129% higher than last year’s P=.55 billion.

• Revenue from commercial lot stood at P=633.6 million derived from the sale of commercial lot at Cebu IT Park.

• eBloc Towers contributed P=384.8 million in revenues, 27% higher than last year’s level of P=302.0 million. As of December 2015 average lease occupancy for eBloc 1 was at 97.8%, eBloc 2 was at 99.7% and eBloc 3 was at 61.6 percent.

• The Walk registered total rental revenue of P=26.8 million, 2% increase compared to last year’s level of P=26.2 million mainly on account of higher lease occupancy which was at 95.8 percent.

• CITP Land Lease contributed P=10.7 million in revenues during the period.

• Avida Towers Cebu’s total revenue reached P=1.9 million from current year sale of condo units from Tower 2. Compared to the previous year’s P=9.4 million, it posted a decline. As of end of 2015, both towers were already 100% completed.

• Well placed interest and other income (note 19) reached P=205.9 million, 8% higher than last year’s level of P=191.5 million. The increase was mainly due to accretion of receivables.

Cost and Expenses reached P=597.4 million, 56% higher versus the previous year’s P=381.9 million due to costs related to the sale of commercial lot and leasing of office space which resulted to the increase in revenues and AiO’s interest expense. Cost and expenses for the period comprised primarily of cost of commercial lot, depreciation of leasing assets, real property tax, repairs and maintenance, ad and promo, management fee, security and janitorial expenses, dues and fees, and interest expense.

Net Income reached P=497.2 million, 231% higher than the previous year’s P=150.2 million due to higher revenues.

Financial Condition The company’s Balance Sheet remains strong with total assets amounting to P=5.132 billion as of December 31, 2015, P=71.8 million of which is cash. It has a current ratio of 0.54: 1 compared to 0.60: 1 in December 2014. Total liabilities as of the period stood at P=3.450 billion, P=1.981 billion of which is current. Debt-to-equity ratio stood at 2.05: 1 compared to the December 2014 level of 2.23: 1. Bank Debt to equity ratio registered at 0.76: 1 compared to the December 2014 level of 1.36: 1.

Key Performance Indicators

The table below sets forth the comparative key performance indicators of the Company: - 12 -

Indicators 2015 2014 Current Ratio 1 0.54: 1 0.60: 1 Total Debt to Equity Ratio 2 2.05: 1 2.23: 1 Bank Debt to Equity Ratio 3 0:76: 1 1:36: 1 Net Debt /(Cash) to Equity Ratio 4 0.71: 1 1.26: 1 Return on Assets (ROA) 5 10.66% 3.75% Return on Equity (ROE) 6 33.37% 11.74% 1Current Asserts / Current Liabilities 2Total Liabilities / Stockholders’ Equity 3Total Bank Debt / Stockholders’ Equity 4Total Bank Debt less Cash & Cash Equivalents / Stockholders’ Equity 5Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divide by two) 6Net Income / Average Stockholders’ Equity (Stockholders’ Equity beginning of the year plus Stockholders’ Equity end of the year divide by two)

Causes for Material Changes from Period to Period of Financial Statements

Cash and Cash Equivalents totaled P=33.3 million, 58% lower than the P=79.8 million in December 2014. The decrease was mainly due to payment of contractors & suppliers and settlement of intercompany advances for the period.

Short-term Cash Investments registered at P=10.4 million.

Financial Assets at Fair Value through Profit or Loss amounted to P=28.1 million, 46% lower than the December 2014’s level of P=52.4 million on account of reclassification of Financial Assets at Fair Value through Profit or Loss to Cash and Cash Equivalents.

Accounts Receivable registered P=529.3 million, 60% higher than the P=331.3 million of December 2014. The increase was mainly due from affiliate (Avida Land Corporation) for the purchase of commercial lot at Cebu IT Park during the period.

Inventories (Subdivided Land for Sale and Condominium Units for Sale) stood at P=278.8 million, 7% lower than the P=299.4 million in December 2014 mainly due to the close out of all Avida Riala Tower 1 units.

Other Current Assets stood at P=196.4 million, 64% higher than the previous year’s level of P=119.5 million due to the additional VAT input, prepaid taxes, and other various charges for the period.

Investment in an Associate and a Joint Venture amounted to P=236.5 million, 59% higher versus the P= 149.2 million as of December 2014. The increase was primarily due to investment in Central Bloc Developers, Inc.

Investments Properties was 10% higher compared to December 2014’s P=3.08 billion due to the ongoing construction of eBloc Tower 4.

Property & Equipment-net decreased by 22% vis-à-vis the P=565 thousand as of December 2014 due to depreciation of equipment during the period.

Deferred Tax Assets posted a decrease of P=15.7 million compared to the previous year’s level mainly on account of AiO’s deferred tax asset knocked off against CPVDC-parent deferred tax liability.

Non-current Accounts Receivable was P=375.4 million higher compared to December 2014’s P=34.3 million due to sale of commercial lot to Avida Land Corp. on installment basis during the period.

Other Non-current Assets registered P=10.2 million, 66% lower than the year-end level of P=29.7 million. The decrease was mainly due to settlement of advances to contractors and various suspense accounts.

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Accounts & Other Payables totaled P=1.79 billion, 97% higher vis-à-vis the P=.91 billion reported in December 2014. The increase was primarily due to advances and intercompany loan, payable to various contractors & suppliers, taxes payable and accrued operating expenses during the period.

Deposits & Other Current Liabilities posted an increase of 13% or P=6.7 million due to various rental deposits from eBloc Tower 3 locators.

Income Tax Payable reached P=27.9 million, 212% higher vis-à-vis the December 2014 level of P=8.9 million due to provision for income tax for the period.

Current Portion of Long-term Debt amounted to P=107.9 million, 78% lower versus the December 2014 level of P=492.6 million due to partial payment of AiO’s bank loan during the period.

Deferred Tax Liabilities increased by 100% or P=98.3 million due to additional provision of deferred tax from the sale of commercial lot on installment basis to Avida Land Corp.

Deposits & Other Non-current Liabilities increased by 24% or P=39.8 million, this is mainly on account of various rental deposits from eBloc Tower 3 locators.

Long-term Debt-net of current portion registered P=1.2 billion, 8% lower than the year-end level of P=1.3 billion. The decrease was mainly due to reclassification of long-term debt to current portion of long term debt. CPVDC-parent has zero bank debt during the period.

Retained Earnings showed 105% or P=384.4 million increase as a result of the 2015 Net Income net of cash dividend paid in December 23, 2015 amounted to P=112.8 million.

• Due to the Company’s sound financial condition, there is no foreseeable trend or event which may have material impact on its short-term or long-term liquidity.

• Funding will be sourced from internally-generated funds.

• There is no material commitment for capital expenditures other than those performed in the ordinary course of trade or business.

• There is no known trend, event or uncertainty that have had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations.

• There is no significant element of income arising from continuing operations.

• There is no material change from period to period in one or more line items of the financial statements.

• There have not been any seasonal aspects that had a material effect on the financial condition or results of the Company’s operations.

• There were no known events and uncertainties that will trigger direct or contingent financial obligation that is material to the company, including any default or acceleration of an obligation.

• There were no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationship of the company with unconsolidated entities or other persons created during the reporting period.

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2014 vs. 2013 Results of Operations

Cebu Property Ventures and Development Corporation (CPVDC) registered consolidated revenues of P= 550.7 million, 20% higher than the same period last year amounting to P= 460.8 million. The improvement was mainly on account of higher leasing income and interest & other income. Revenues during the period were derived from rental in eBloc Towers, eOffice and The Walk, sale of condominium units and interest and other income.

Earnings before Interest and Taxes (EBIT) showed a 7% decrease from P= 53.4 million in 2013 to P= 49.7 million in 2014.

Stock price for CPV increased from a closing of P= 5.41 per share in 2014 to P= 5.00 per share in 2013. CPVB stock price increased from a closing of P= 5.20 per share in 2013 to P= 6.30 per share in 2014. As of end of 2014, the total shareholder return (TSR) was of 9.81 percent.

As of December 2014, CPVDC declared cash dividend from the unappropriated retained earnings of the Company as of December 31, 2013, of P= 0.12 per share to all shareholders as of record date November 25, 2014 and paid on December 09, 2014.

Revenues amounted to P= 550.7 million, 20% higher than last year’s P= 460.8 million.

• The Walk registered a total rental revenue of P= 26.2 million, showing a 10% increase compared to last year’s level of P= 23.7 million mainly on account of higher lease occupancy which was at 96.6 percent.

• eBloc Towers put in P= 302.0 million revenues, 40% higher than last year’s level of P= 216.4 million. As of December 2014, average lease occupancy was 97.3%, 100% and 14.0% for eBloc Tower 1 to 3, respectively.

• Revenues generated from e-Office reached P= 294 thousand, 98% lower than last year due to the dwindling down of operations to give way to redevelopment of the area to maximize its land usage.

• Avida Riala Tower registered total revenues of P= 22.1 million from previous year’s sale and current year sale of nine (9) units from Tower 1. Compared to the same period last year, it posted a 48% growth. For the period, percentage of completion for Avida Riala Tower 1 was already at 74.13% while Tower 2 was at 69.02% and Tower 3 was at 32.41 percent.

• Avida Towers Cebu’s total revenue reached P= 9.4 million from previous year’s sale and current year sale of six (6) condo units from Tower 2. Compared to the previous year’s P= 29.4 million, it posted a decline. As of end of 2014, both towers were already 100% completed.

• Well placed short-term investments and other income reached P= 191.5 million, 40% higher than previous year’s P= 137.2 million. The increase was mainly due to service income fees and override from Avida.

• The Company posted a net loss of P= 799 thousand in its equity in net earnings from Cebu District Property Enterprise, Inc. (CDPEI), which is a 5% owned and newly acquired associate. The figure is 106% lower than last year’s P= 14.2 million. The decrease was due to full consolidation of Asian I- Office Properties, Inc. (AiO) being a wholly owned subsidiary in 2013 and negative income from CDPEI during the period.

Cost and Expenses totaled P= 381.1 million, 29% higher than the previous year’s P= 294.5 million due to costs related to the sale of condominium units and leasing of office space which resulted to the increase in revenues and AiO’s interest expense. Cost and expenses for the period comprised primarily of development cost of condominium units, depreciation, real property tax, repairs and maintenance, ad and promo, management fee, security and janitorial expenses, dues and fees, and interest expense.

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Net Income registered at P= 150.2 million, 10% higher than last year’s level of P= 136.8 million.

Financial Condition The Company’s Balance Sheet remains strong with total assets amounting to P= 4.195 billion as of December 31, 2014, P= 132.2 million of which is cash. It has a current ratio of 0.60: 1 compared to 1.34: 1 in December 2013. Total liabilities as of the period stood at P= 2.897 billion, P= 1.459 billion of which is current. Debt-to- equity ratio stood at 2.23: 1 compared to the December 2013 level of 2.03: 1. Bank debt-to-equity ratio registered at 1.36: 1 compared to the December 2013 level of 1.46: 1.

Key Performance Indicators

The table below sets forth the comparative key performance indicators of the Company:

Indicators 2014 2013 Current Ratio 1 0.60: 1 1.34: 1 Total Debt to Equity Ratio 2 2.23: 1 2.03: 1 Bank Debt to Equity Ratio 3 1:36: 1 1:46: 1 Net Debt /(Cash) to Equity Ratio 4 1.26: 1 1.18: 1 Return on Assets (ROA) 5 3.75% 5.08% Return on Equity (ROE) 6 11.74% 10.37% 1Current Asserts / Current Liabilities 2Total Liabilities / Stockholders’ Equity 3Total Bank Debt / Stockholders’ Equity 4Total Bank Debt less Cash & Cash Equivalents / Stockholders’ Equity 5Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divide by two) 6Net Income / Average Stockholders’ Equity (Stockholders’ Equity beginning of the year plus Stockholders’ Equity end of the year divide by two)

Causes for Material Changes from Period to Period of Financial Statements

Cash and Cash Equivalents reached P= 79.8 million, 72% lower than the P= 282.0 million in December 2013. The decrease was mainly due to payments to AiO, Makati Development Corp. (MDC) and various contractors and suppliers for the period.

Financial Assets at Fair Value through Profit or Loss amounted to P= 52.4 million, 13% lower than the P= 60.5 million in December 2013 on account of reclassification of Cash and Cash Equivalents to Financial Assets at Fair Value through Profit or Loss.

Accounts Receivable registered P= 331.3 million, 79% higher than the P= 185.5 million in December 2013 mainly due to advances to contractors and due from affiliates during the period.

Other Current Assets stood at P= 119.5 million, 83% higher than the year-end level of P= 65.4 million. The increase was mainly due to the additional VAT input, prepaid taxes, and other various charges.

Investment in an Associate and a Joint Venture registered at 149.2 million representing investment in CDPEI.

Investments Properties was 10% (P= 287.8 million) higher compared to the P= 2.796 billion on the account of construction in progress at eBloc Tower 3 as of December 2013.

Property & Equipment-net decreased by 63% (P= 962k) vis-à-vis the P= 1.5 million as of December 2013. The decrease was due to depreciation of equipment during the period.

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Deferred Tax Assets reached P= 15.7 million, 20% higher than the 2013 year-end level of P= 13.1 million mainly on account of interest accretion and unrealized foreign exchange loss for the period.

Non-current Accounts Receivable was 69% (P= 75.0 million) lower compared to the P= 109.3 million as of December 2013 due to reclassification of non-current to current accounts.

Other Non-current Assets registered at P= 29.7 million, 887% higher than the year-end level of P= 3.0 million. The increase was mainly due to suspense account for CITP Superblock project during the period.

Accounts & Other Payables amounted to P= 907.8 million, 72% higher versus the P= 528.6 million as of December 2013. The increase was primarily due to payable to various contractors/suppliers, dividends payable, construction bond, accrued operating expenses and due to parent and affiliate (booking of system cost and management fee, advances and intercompany loan) during the period.

Deposits & Other Current Liabilities posted an increase of 7% or P= 3.3 million mainly due to various deposits from eBloc Towers locators.

Income Tax Payable reached P= 8.9 million, 39% lower vis-à-vis the December 2013 level of P= 14.7 million due to payment of income taxes in 2014.

Current Portion of Long-term Debt amounted to P= 492.6 million, 524% higher versus the December 2013 level of P= 78.9 million due to reclassification from long-term debt to current portion of long-term debt during the period.

Deposits & Other Non-current Liabilities increased by 23% or P31.3 million mainly on account of various deposits from eBloc Towers locators.

Long-term Debt-net of current portion reached P= 1.273 billion, posting a 28% decrease versus the December 2013 level of P= 1.757 billion due to reclassification from Long-term debt to current portion of Long-term debt. CPVDC-parent has zero bank debt during the period.

Retained Earnings showed 11% or P= 37.4 million increase as a result of the 2014 Net Income net of cash dividend paid in December 09, 2014 amounted to P= 112.8 million.

• Due to the Company’s sound financial condition, there is no foreseeable trend or event which may have material impact on its short-term or long-term liquidity.

• Funding will be sourced from internally-generated funds.

• There is no material commitment for capital expenditures other than those performed in the ordinary course of trade or business.

• There is no known trend, event or uncertainty that have had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations.

• There is no significant element of income arising from continuing operations.

• There is no material change from period to period in one or more line items of the financial statements.

• There have not been any seasonal aspects that had a material effect on the financial condition or results of the Company’s operations.

• There were no known events and uncertainties that will trigger direct or contingent financial obligation that is material to the company, including any default or acceleration of an obligation.

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2013 vs. 2012 Results of Operations

Cebu Property Ventures and Development Corporation (CPVDC) posted consolidated revenues of P= 460.8 million, 90% higher versus the previous year of P= 242.2 million due to higher residential sales and higher leasing income. The increase is brought about by the purchase of the Ayala Land Inc.’s (ALI) 60% stake in Asian I-Office Properties, Inc. (AiO). AiO is now a wholly owned subsidiary of the company. This year’s revenues were derived from rental income from eBloc Towers, eOffice and The Walk, sale of condominium units and interest and other income.

Earnings before Interest and Taxes (EBIT) showed a 224% increase from P16.5 million in 2012 to P53.4 million in 2013.

Stock price for CPVA closed at P= 5.00 per share in 2013, same as 2012. While, CPVB stock price increased from a closing of P= 5.10 per share in 2012 to P= 5.20 per share in 2013.

As of December 2013, CPVDC declared cash dividend from the unappropriated retained earnings of the company as of December 31, 2012, of P= 0.12 per share to all shareholders as of record date November 05, 2013 and paid on November 29, 2013.

Revenues amounted to P= 460.8 million, 90% higher than last year’s P= 242.2 million.

• Cebu I.T. Park‘s revenues registered a decline versus last year due the company’s move not to sell commercial lots despite high demand. Instead CPVDC opted to develop office and residential projects on the remaining parcels at the I.T. Park. Revenues recognized during the period were deferred income from the sale of one lot to AiO in 2009.

• Revenues from Avida Towers Cebu stood at P= 29.4 million from the sale of four (4) units and prior period sales computed based on percentage of completion. As of December 2013, Tower 1 is already 99.78% completed while Tower 2 is 99.12% completed.

• Avida Riala Tower contributed total revenues of P= 14.9 million, higher than last year’s P3.9 million. These were derived from previous year’s sale and current year’s sale of fifteen (15) units. For the period, Tower 1 was already 57.79% completed.

• Revenues generated from e-Office reached P= 18.4 million, 38% lower than last year due to the dwindling down of operations to give way to redevelopment of the area to maximize its land usage which will increase the Company’s office and retail leasing income in the coming years.

• eBloc Towers brought in a total revenue of P= 216.4 million.

• The Walk registered total rental revenue of P= 23.7 million, 11% increase compared to last year’s level of P= 21.5 million mainly on account of higher sales and rental per square meter. As of December 2013, average lease occupancy reached 85.0%.

• Well placed short-term investments and other income reached P= 137.2 million, 15% higher than last year’s level of P= 119.5 million.

• Equity in net earnings of an associate- 40% owned Asian I-Office Properties, Inc. (AiO) amounted to P= 14.2 million, 58% lower than last year’s P= 33.7 million. The decrease was due to full consolidation of AiO being a wholly owned subsidiary.

Cost and Expenses reached P= 294.5 million, 299% higher versus the previous year’s P= 73.8 million brought about costs related to the sale of condominium units and leasing of office space which resulted to the

- 18 - increase in revenues. Cost and expenses for the period comprised primarily development cost of condominium units, depreciation, real property tax, dues & fees, repairs & maintenance, ad & promo, management fee and security & janitorial expenses.

Net Income for the period amounted to P= 136.8million, 4% higher than the previous year’s P= 132.1 million.

Financial Condition The company’s Balance Sheet remains strong with total assets amounting to P= 3.821 billion as of December 31, 2013, P= 342.5 million of which is cash. It has a current ratio of 1.34: 1 compared to 5.25: 1 in December 2012. Total liabilities as of the period stood at P= 2.560 billion, P= 668.7 million of which is current. Debt-to- equity ratio stood at 2.03: 1 compared to the December 2012 level of 0.14: 1. Bank Debt to equity ratio registered at 1.46: 1. The increase in the company’s assets and liabilities is due to the acquisition of Asian I- Office Properties, Inc.

Key Performance Indicators

The table below sets forth the comparative key performance indicators of the Company:

Indica tors 2013 2012 Current Ratio 1 1.34: 1 5.25: 1 Total Debt to Equity Ratio 2 2.03: 1 0.14: 1 Bank Debt to Equity Ratio 3 1:46: 1 - Net Debt /(Cash) to Equity Ratio 4 1.18: 1 - Return on Assets (ROA) 5 5.08% 8.65% Return on Equity (ROE) 6 10.37% 9.65% 1Current Asserts / Current Liabilities 2Total Liabilities / Stockholders’ Equity 3Total Bank Debt / Stockholders’ Equity 4Total Bank Debt less Cash & Cash Equivalents / Stockholders’ Equity 5Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divide by two) 6Net Income / Average Stockholders’ Equity (Stockholders’ Equity beginning of the year plus Stockholders’ Equity end of the year divide by two)

Causes for Material Changes from Period to Period of Financial Statements

Cash and Cash Equivalents totaled P= 282.0 million, 34% lower than the P= 430.0 million in December 2012 mainly due to the purchase of the ALI’s 60% stake in Asian I-Office Properties, Inc. (AiO) and payment to various suppliers & contractors during the period.

Financial Assets at Fair Value through Profit or Loss amounted to P= 60.5 million, 100% higher than the December 2012’s level on account of reclassification of Cash and Cash Equivalents to Financial Assets at Fair Value through Profit or Loss.

Accounts Receivable registered P= 185.5 million, 32% lower than the P= 271.3 million of December 2012 mainly on account the full consolidation of intercompany advances from AiO.

Inventories (Condominium Units for Sale and Subdivided Land for Sale) reached P= 304.9 million, 6% higher compared to the P286.3 million of December 2012. The increase was mainly due to the booking of inventory of condominium units (Avida Riala Tower & Avida Tower Cebu) as percentage of completion during the period increases.

Other Current Assets amounted to P= 65.4 million, higher than year-end level of P= 1.0 million due to the additional VAT input, prepaid taxes, and other various charges.

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Investments Properties posted a 748% or P= 2.466 billion increase versus the December 2012 level of P= 329.7 million primarily due to consolidation of AiO’s eBloc Towers, investments in land and construction in progress at eBloc Tower 3.

Investment in an Associate posted a decline compared to last year’s level of P= 238.0 million. The decrease was primarily due to full consolidation of Asian I-Office Properties, Inc.

Property & Equipment-net increased by 4% vis-à-vis the P= 1.5 million as of December 2012. The increase was mainly brought about by the consolidation of AiO’s office equipment during the period.

Deferred Tax Assets totaled P= 13.1 million, 68% higher than last year’s P= 7.8 million mainly due to interest accretion and unrealized forex loss for the period.

Non-current Accounts Receivable reached P= 109.3 million, higher compared to December 2012’s P= 840 thousand mainly due to full consolidation of AiO.

Other Non-current Assets registered P= 3.0 million, 1,087% higher than the year-end level of P= 254 thousand. The increase was mainly due to advances to contractors for the period.

Accounts & Other Payables totaled P= 528.6 million, 277% higher versus the P= 140.2 million as of December 2012. The increase was primarily due to payable to various contractors, retention payable, taxes payable, various accrued operating expenses, and due to parent & affiliate (booking of system cost & management fee, advance payment to Avida Land Corporation & Makati Development Corp.).

Deposits and Other Current Liabilities posted an increase of 26% or P= 9.7 million mainly due to various deposits from eBloc Towers locators.

Income Tax Payable registered P= 14.7 million, 32% higher vis-à-vis the December 2012 level of P= 11.2 million due to provision for income tax during the period.

Current Portion of Long-term Debt amounted to P= 78.9 million, 100% increase versus the December 2012’s level due to consolidation of AiO.

Deposits and Other Non-current Liabilities increased by 100% or P= 134.2 million. This is mainly on account of various deposits from eBloc Tower locators.

Long-term Debt-net of Current Portion reached P= 1.757 billion, an increase versus the December 2012’s level due to consolidation of AiO. CPVDC-parent has zero bank debt during the period.

Retained Earnings showed a 25% or P= 108.3 million decrease as a result of the 2013 Net Income net of cash dividend paid in November 2013 amounted to P= 112.8 million and effect of pooling of interests registered to P= 132.3 million.

• Due to the Company’s sound financial condition, there is no foreseeable trend or event which may have material impact on its short-term or long-term liquidity.

• Funding will be sourced from internally-generated funds.

• There is no material commitment for capital expenditures other than those performed in the ordinary course of trade or business.

• There is no known trend, event or uncertainty that have had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations.

• There is no significant element of income arising from continuing operations.

• There is no material change from period to period in one or more line items of the financial statements.

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• There have not been any seasonal aspects that had a material effect on the financial condition or results of the Company’s operations.

• There were no known events and uncertainties that will trigger direct or contingent financial obligation that is material to the company, including any default or acceleration of an obligation.

Cebu Insular Hotel Company, Inc. (37% owned affiliate)

Cebu City Marriott Hotel Cebu City Marriott Hotel is the premier business lifestyle hotel is conveniently located in upscale financial and leisure district Cebu Business Park, offering its guests the best address when staying in Cebu. The first truly international business hotel to set foot in Cebu.

A project of Cebu Insular Hotels, Inc., a joint venture project of Cebu Holdings, Inc. (37%) and AyalaLand Hotels and Resorts Corp. (formerly Ayala Hotels, Inc.) (63%), Land area: 6,234 square meters 301 rooms with modern convention facilities Executive floors with exclusive dining and access to work station formally opened in February 1998.

The company was incorporated in April 6, 1995 with the primary purpose of hotel development and management. It is situated within the superblock of CBP and a walking distance from Ayala Center Cebu and the nearby business establishments.

In January 1997, CHI and AHRC announced the appointment of Marriott International as manager and operator of the hotel. Marriott International is one of the world’s largest hotel chains with over 2,900 establishments in its portfolio including properties in the United States and in 67 other countries. Even in its infancy, the hotel acquired a market niche with its own distinctive brand of service. It is fast becoming a preferred destination of transient businessmen and the favorite venue for conferences, parties and banquets. After a year of operation, the Cebu City Marriott Hotel ranked first in guest satisfaction surveys among Marriott hotels in Asia Pacific, and second worldwide. In 1999, Cebu City Marriott Hotel was cited as number one in market share among city hotels in Cebu and highest in revenue per available room, twice as much compared to its nearest competitors.

The company generated total revenue of P484.3 million, P466.0 million and P410.2 million, for the years 2015, 2014 and 2013, respectively. Furthermore, during the same periods, the company posted a net income of P53.3 million, P50.0 million and P32.9 million, respectively.

Cebu Leisure Company, Inc.

Cebu Leisure Company, Inc. was formed in 1994, engaged in business of ownership, management and leasing entertainment facilities. It was a joint venture company between Fun Corporation and Cebu Holdings Incorporated. The first venture was Glico’s Imaginature. It was registered with the Securities and Exchange Commission on January 31, 1994, with an authorized capital of P100 Million and a subscribed & paid up capital of P70 Million.

In its first year of operations as “Glicos Imaginature”, the business was not doing well. Fun Corporation sold its shares to Cebu Holdings Incorporated thus the latter gaining control over the company. Cebu Leisure Company, Inc. is a wholly owned subsidiary of Cebu Holdings Incorporated.

Cebu Leisure Company, Inc changed the concept of Glico’s Imaginature into an Entertainment Center. The first mall to have an entertainment (including cinema) and food center within its premises. The new Ayala Food & Entertainment Center was launched in August 18, 2001. It has definitely captured the market being

- 21 - the top destination for entertainment in Cebu. It redefined the lifestyle of the Cebuanos and made Ayala Center Cebu as the trail blazer not only in shopping but also in dining & entertainment.

Active Zone continues to post positive sales/sqm performance which was higher by 11% versus last year while Food Choices decreased by 13%. Ayala Cinemas occupancy rate performance of 21.5% is 2%pts higher compared to the same period of last year.

Total revenue of P209.0 million was 8% higher than last year. Net operating income increased also by 24% due to the favorable financial performance of Active Zone, Food Choices and Cinemas.

CBP Theater Management, Inc ., founded on February 1, 1994 is still in the pre-operating stage.

Taft Punta Engaño Property, Inc. (TPEPI) (55% owned subsidiary) Mactan project, as we expand our business to new geographies, we entered into a joint venture with Taft Punta Engaño Property, Inc. to develop a 12-hectare property in Mactan, Cebu. Currently in its design and conceptualization stage, the project is envisioned to become an integrated, mixed-use development with retail, residential and hotel/condotel components.

(iii) Distribution Method;

The Marketing and Sales Department Ayala Land Sales, Inc. (ALSI), and its accredited real estate brokers handle the selling/distribution of the Company’s product under CHI-ALSI partnership.

(iv) Status of Any Publicly-Announced Product;

The company has no new products other than the above mentioned Cebu Business Park (CBP) and Cebu I.T. Park office lots, Sports Club Shares, Amara residential lots, 1016 Residences, Sedona Parc, Park Point Residences, Solinea Towers (Residential Condo), ACC Corporate Center (BPO Office Building), BPI Corporate Center (Office Building), Taft Punta Engaño Property, Inc. (Mactan Project-mixed-used development), Amaia Steps (Mandaue Project- Residential Condo), CITP Retail (The Walk), e-office, eBloc Towers (BPO Office Building), Avida Towers Cebu & Avida Riala Towers (Residential Condo), Central Bloc (mixed-used development), The Alcoves (Residential Condo) and CBP Tech Tower (BPO Office Building).

(v) Competitive Business Condition;

CHI’s Position in Cebu Real Estate Market 2015

Market Assessment

The Region 7 economy remained bullish in 2015, with a growth rate of +8.8%, as of the latest NEDA estimate. This was driven mainly by the strong performance in the industry and service sectors.

The Cebu office sector had a particularly strong year, growing at 24% versus the previous year and adding an additional 170,000 sq.m. of new office space to the market. Office demand also remained healthy with vacancy rates remaining below 10% across Metro Cebu, particularly in centralized areas such as Cebu Business Park and Cebu IT Park.

Cebu also remained to be a key tourist destination for the country, growing at +4.0% as per the latest DOT partial reading (Jan-Oct) with 3.5 Million arrivals.

CEBU RESIDENTIAL MARKET The market for residential condominiums is estimated at P 16.1 B. The market softened in 2015, with a 20% decline in number of units launched (from 5,638 in 2014 to 4,505 units in 2015). Volume take-up for condos also declined by -4% or from 5,072 units in 2014 to 4,891 units in 2015.

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Despite the softening market, ALI-CHI was able to gain market share from 23% in 2014 to 25% in 2015, ending the year as market leader vis-a-vis competition. ALI-CHI’s strong performance is attributed to its strong product portfolio which is well-priced and in desirable locations.

Principal Compeitors, Estimated Size and Financial Strength The top competitors in the vertical market are estimated to have the following take up sales values in 2015: • FLI P 1.27 B • Taft P 1.08 B • RLC P 1.05 B • Land Traders P 966 M • Cebu Landmasters P 869 M • Tytans P 773 M • Grand Land P 741 M • MEG P 596 M • VLL P 546 M

CEBU COMMERCIAL (BPO/IT) Office stock in Metro Cebu increased by approximately 170,000 sq.m. in 2015, with the completion of FLB Corporate Center, Skyrise Beta, Cebu IT Tower, Union Bank Tower, MST Tower, E-bloc 4, Park Centrale, City SOHO, Norkis One, Robinsons Galleria Cebu BPO and GT Time Square.

The Business Process Outsourcing (BPO) continues to fuel the Cebu office market and now accounts for 70% of the total available office stock in the market. The BPO industry is seen to expand in the next few years as Tholons, a global outsourcing research and advisory firm, identified Cebu City as the seventh (7 th ) most favorable location in the world for outsourcing which will spur further interest of international locators to operate in Cebu.

ALI-CHI is a sizeable player in the office market occupying the leadership position of 16% market share. Following behind are local players, Skyrise and Primary, at 12% share.

CEBU MALL LEASING Cebu’s retail sector is feeling the rush from the continuing growth of the Central Visayan economy, which is still expanding faster than the national average. Growth in 2014 in Central Visayas stood at 8.8%, which is expected to accelerate to 9% in 2015. The region’s retail trade industry continued to enjoy steady growth amid improving purchasing power of consumers, boosted by money coming in from the business process outsourcing sector (BPO) and overseas Filipinos. Very minimal inflation in Central Visayas has also encouraged more spending by local buyers.

Ayala Center Cebu | 2015 Performance Continuing to complement Cebu’s vibrant community, Ayala Center Cebu is now 93.5% leased out. The mall continues to bring in premium foreign brands further increasing the options of merchandise mix for the discerning Cebuano market and reinforcing Ayala Center Cebu as the icon of shopping and lifestyle.

Ayala Center Cebu opened the biggest H&M in the Asia Pacific in December 2015. The other major brands that opened in 2015 are: Pull & Bear, Bershka, Dune and K-Pub.

Ayala Center Cebu won Gold in the International Council of Shopping Centers (ICSC) 2015 Asia Pacific Shopping Center Awards. ICSC has named Ayala Center Cebu as a Gold winner in the renovations and expansions design and development category for the new expansion wing, which houses an extensive combination of local Cebuano retailers and international offerings within a modern and graceful façade that personifies the cosmopolitan city.

Ayala Center Cebu was also named as the Best Lifestyle Mall for 2 years in a row by SunStar Cebu’s Best of Cebu Awards. .

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The retail market remains strong and growing especially within the primary trade area of Ayala Center Cebu. Across the ABC market, the mall continued to enjoy its no. 1 position in terms of market leadership outperforming its closest competitors among mall goers from Office Workers and AB / Gated Villages. This manifestation in terms of growth from office workers with higher incidence of mall visits can be attributed to the opening of more office buildings around Cebu Business Park and Cebu IT Park.

Aggressive Retail Expansion in Cebu Retailers are investing more on their business and international brands like fashion powerhouse H&M and the convenience store chain Family Mart are expanding their operations in the region. Giant mall players like SM and Robinsons opened new shopping malls in Cebu, their biggest spaces to date in the Visayas and Mindanao. International brands like Uniqlo, H&M, Tony Moly, Pull& Bear, Sfera, and Bershka penetrated the Cebu market for the first time.

While national mall players and international brands took opportunities to reach Cebuano buyers, homegrown players tried a different path. Go’s Prince Hypermart and the Gaisanos are going instead to the neighboring provinces as they see an underserved market there.

Convenience stores, on the other hand, remain strong despite competition. Our Philippine version, the sari- sari stores, are also growing despite threats of extinction as convenience stores, the more modern format, mushroomed.

(vi) Sources and Availability of Raw Materials and the Names of Principal Suppliers;

The Company engaged the services of the following contractors for the development of its on-going projects. * Makati Development Corp. - Amara The Parks, 1016 Residences, Sedona Parc, Park Point Residences, Solinea Towers, ACC Corporate Center, BPI Corporate Center, The Alcoves, CBP Tech Tower & Cebu IT Park (eBloc Towers, Avida Towers Cebu, Avida Riala Towers & Central Bloc) and Amaia Steps.

(vii) Dependence on One or Few Major Customers and Identify Any Such Major Customers;

The Company is not dependent on one particular segment or group of customers in the real estate market.

(viii) Dependence on One or Few Materials and the Names of Principal Suppliers;

The Company is not dependent on one or few suppliers/contractors. There are a number of eligible and reliable contractors in the country today which can serve the Company’s requirements.

(ix) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty, Agreements, or Labor Contracts;

The Company has engaged the services of various contractors or agencies for the maintenance of its projects. Among these are the security and janitorial services, with terms of one year for each contractor or agency.

(x) Need for Any Government Approval of Principal Products or Services.

The Company secures various government approvals such as the ECC, development permits, license to sell, etc. as part of the normal course of its business. CHI/MDC has obtained the following government approvals for the development of its projects:

1. Provisional Approval and Locational Clearance (PALC) - Office of the Mayor 2. Development Permit - Office of the Mayor 3. Environmental Compliance Certificate - DENR 4. License to Sell - HLURB

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(xi) Effects of Existing or Probable Government regulations on the Business;

The Company operates a material part of its business in a highly regulated environment. The introduction of inconsistent or unpredictable application of, or changes in, regulations may from time to time materially affect the Company’s operations.

(xii) Research and Development;

The Company has not allocated any amount for research and development for the last three (3) fiscal years.

(xiii) Cost and Effect of Compliance with Environmental Laws

The Company’s projects (CBP/Cebu I.T. Park) are designed to be environment-friendly commercial communities with amenities such as the Sewage Treatment Plant (STP), tree-lined avenues and parks. It is a standard operating procedure of any CHI project to comply with environmental laws, the cost of which is already incorporated in the total development cost of the project.

(xiv) Number of Employees;

The company has a total of eighty-four (84) employees as of year-end, four (4) of which are Ayala Land, Inc. employees seconded to Cebu Holdings, Inc. • Senior Personnel-(ALI seconded to CHI) 4 • Senior Personnel-CHI 23 • Supervisors 31 • Non Senior Personnel – Technical 24 • Non Senior Personnel – Clerical 2

There is no union nor CBA in the Company and its subsidiaries. Employees receive above industry compensation and benefits (ie. hospitalization, medical allowance, clothing, commodities check, 13 th and 14 th month and other government mandated benefits) plus performance bonus. Annual salary increases are also given. There have been no strike in the past three years nor threat to strike as there are no dispute between management and employees.

Enterprise-Wide Risk Management (ERM)

Risk Management

We continue to implement our Enterprise-wide Risk Management Program to manage key risks and safeguard shareholder value in the face of our growing business and evolving environment.

ERM Framework

The ERM framework continues to achieve its objective of systematic approach in risk management throughout the Company. The framework embodies the policy, scope, process methodology, and organizational structure of the risk management program. We utilize an all-encompassing risk framework covering oversight, management and internal control. This framework systemically guides us through monitoring, identifying, analyzing and treating risks in a timely proactive manner at both corporate and business-group levels.

A Pro-Active Process Across the Organization

- 25 - the individual business-group levels. This allows CHI to manage its key risks to an acceptable level both holistically and individually and to address issues in a timely manner.

The board of directors, in 2015, opted to split the Audit and Risk committee into two, creating a separate board level Risk Committee dedicated solely to managing the Company’s risks. The Risk Committee of the Board is governed by its board-approved charter that documents its mandate, composition and working procedures.

Periodic reviews are done at all levels of the Organization, including the ERM Team lead by the Risk Committee and the Chief Risk Officer, to ensure that risks are effectively managed and the Company is addressing relevant key risks.

Results of monitoring of the ERM process are also presented to the Board of Directors by the Risk Committee, at least quarterly, or more and frequently if necessary, to update them of the status of the company’s key risks to serve as inputs in executive decision-making.

A Driver of Key Strategic Actions

The Company continued to direct the following key strategic actions in 2015:

1. Protecting the Balance Sheet through Financial Risk Management

We continue to take advantage of the current low but slowly increasing-interest-rate business environment by increasing its leverage and converting its short-term to long-term debt, at favorable rates to fund the construction of our leasing projects. This allows us to better balance our debt capacity and debt maturity with a steady recurring income.

2. Monitoring of Leading Market Indicators

We rely on close monitoring of leading market indicators for guidance in current and future project investments. Forecasts, industry and sales reports are regularly monitored and reported to the operating project teams and senior management from where direct inputs in decision-making are derived for strategic and on-the-ground issues.

3. Close Monitoring of Ongoing Projects

Early identification and management of delivery risk allows us to keep our projects on-track, meet our customers’ requirements and achieve our sales and turnover targets.

4. Expanded Partnerships Beyond Parent Company

Strong synergies diversify risk and create the opportunity for us to increase our reach and depth in the Cebu market.

In 2015, we continue to partner with strong local developers for the development of new estates in Cebu specifically Taft Punta Engano Property, Inc. (TPEPI) with the Gaisano group in Mactan and Cebu District Property Enterprise, Inc. (CDPEI) with both the Ayala Land, Inc and AboitizLand in Mandaue. These strong strategic partnerships allow us to expand our product portfolio through strong synergies, advanced master planning, stronger combined branding, and deeper market knowledge.

As of 2Q 2015, SM Prime Holdings, Inc. (SM), with Ayala Land, Inc. (ALI), and its affiliate, Cebu Holdings, Inc. (CHI), formed a consortium which won the bid for the 26-hectare Lot No. 8-B-1 at SRP. Dubbed as the SM-ALI Group consortium. The consortium benefits from the combined financial muscle, technical expertise and the real estate experience of SM and the ALI Group. The SM-ALI Group will co-develop the property pursuant to a joint master plan.

5. Diversification of Product Lines

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We continue to build on our expertise and extend our market reach. Since 2013, we continue to diversify our portfolio with the introduction of the Amaia brand, for affordable housing, and office condominiums for sale through our affiliate Solinea, Inc.

6. Proactive Management of Environmental Risks

We continue to adapt measures to reinforce our fully-functional Business Continuity Plan (BCP). Our Crisis Management Team (CMT) ensures continuous operations or minimal disruption during calamities and unforeseen events. Improvements on our services and facilities have also been implemented to ensure safety of our stakeholders and enhance our readiness capacity in times of emergencies and calamities. These allow us to protect our assets, including our employees, customers and locators in our facilities.

Item 2. Properties (Part I, Paragraph (B) of SRC Rule 12)

a. Cebu Business Park , a 50-hectare property strategically located at the center of Cebu City. The CBP is bounded by Archbishop Reyes Avenue in the west, Juan Luna Avenue to the north, M. J. Cuenco Avenue to the east and Gorordo Avenue to the south. The business park is located approximately three (3) kilometers from residential subdivisions in the north, fifteen (15) kilometers from the Mactan International Airport, a kilometer from Fuente Osmeña, and is two (2) kilometers from the downtown commercial area. Because of its strategic location, Cebu Business Park’s major streets now serve as a vital part of City’s road network. The property is free from any lien and encumbrances. CBP was officially proclaimed as a PEZA-accredited IT Park pursuant to Presidential Proclamation 2053 (2010). According to the Special Economic Zone Act of 1995 (as amended in R.A. 7916), all investors and locators in PEZA-accredited IT Parks are now entitled to fiscal and non-fiscal incentives. Among the benefits of an IT Park are improvement in international competitiveness, increase in direct investments and capital formation, employment of job creation and an improved of quality of life.

b. Ayala Center Cebu (ACC) a shopping complex built on a nine-hectare property located at the heart of CBP and serves as the centerpiece of one of the largest and fully integrated business and commercial areas in Cebu City. This property sits on a lot with total area of 88,412 square meters which is subject to mortgage trust indenture. The carrying value (lodged under “Land and Improvements” and Investments in Real Properties” accounts in the consolidated balance sheets) amounted to P4.030 billion in 2015 and P4.108 billion in 2014.

c. The Company also developed the City Sports Club Cebu (CSCC), an exclusive urban resort equipped with state-of-the-art health and fitness equipment. This project is in partnership with ALI. In 2004, CSCC signed reciprocity agreements with American Club in Singapore and United Services Recreation Club in Hongkong.

d. Cebu I.T. Park - a 24-hectare mixed-use community that will host office and residential buildings, a hotel, as well as retail and recreational facilities. The property was proclaimed as a special economic zone by virtue of Proclamation No. 12 singed on 27 February 2001 by the President of the Republic. The property is situated at Salinas Drive, Lahug, Cebu City. Phase 1 covering 18 hectares was completed in 1999. Horizontal development on the remaining phase is ongoing. The property is free from any lien and encumbrances. The property is owned by Cebu Property Ventures Development Corporation (CPVDC), a 76% owned subsidiary of Cebu Holdings, Incorporated.

e. eOffice One , a one-storey modular building (11,370 sqm), now hosts BPOs, I.T. firms, conveyor design and software research multinational companies.

f. The Walk . The Walk steadily remains to be a strong retail magnet in the ever-busy Cebu IT Park. Heavily frequented by BPO workers, young professionals, tourists, families, and sports enthusiasts, it has emerged from simply being a hangout haven into popular venue for showcasing recreational activities like sports, music, photography, and even luxury vehicle collections.

- 27 -

CHI is a leasee of one Condominium Unit:

Condominium Unit at Cebu Holdings Center: CHI leased one (1) office unit (Unit #704) at Cebu Holdings Center located at Cardinal Rosales Avenue, Cebu Business Park, Cebu City.

• Unit 704 has a total area of 93.13 sqm. with monthly rental of P56,678.74 (inclusive of VAT). The term of the lease is one (1) year, commencing on 1 January 2015 and expiring 31 December 2015. The lease maybe renewed under the same terms and condition except for the rental rate which is subject to re-negotiation and mutual agreement of both parties.

The company has no plan to acquire or plan to lease any property in the next 12 months.

Item 3. Legal Proceedings (Part I, Paragraph (C) of SRC Rule 12)

As of end-2015, CPVDC, a subsidiary of Cebu Holdings, Inc., is currently involved in a legal case related to property restriction violation. The outcome of this legal proceeding is not presently determinable.

In the opinion of management and its legal counsel, the eventual liability under this case, if any, will not have a material or adverse effect on the Group’s financial position and results of operations. Accordingly, no provision for any liability has been made in the consolidated financial statements. Further, disclosure of additional details beyond the present disclosures may affect the Group’s position and strategy. Thus, as allowed by PAS 37, Provisions, Contingent Liabilities and Contingent Assets , only general descriptions were provided.

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

Except for the matters taken up during the Annual Meeting of Stockholders, there was no other matter submitted to a vote of security holders during the period covered by this report.

PART II - OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters (Part II, Paragraph (A)(1) through (4) of SRC Rule 12)

(1) Market Information

Price Information of CHI Shares

The issued and outstanding shares of stock of the Company have been listed on the Makati Stock Exchange and the Manila Stock Exchange, predecessors of the Philippine Stock Exchange.

The following table shows the closing prices (in PHP) of Cebu Holdings, Inc.’s shares in the Philippine Stock Exchange for the year 2015 and 2014:

2015 High Low Close 1st Quarter 5.20 5.15 5.15 2nd Quarter 5.16 5.05 5.16 3rd Quarter 5.10 4.99 5.00 4th Quarter 5.20 5.00 5.18

2014 High Low Close 1st Quarter 5.03 5.00 5.00 2nd Quarter 5.15 5.15 5.15 3rd Quarter 5.24 5.20 5.24 4th Quarter 5.16 5.00 5.16

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The market capitalization of the Company as of end-2015 based on the closing price of P5.18/share was approximately P9.94 billion.

The price information as of the close of the latest practicable trading date, March 11, 2016 is P5.16 per share.

(2) Holders

There are approximately 4,151 registered holders of common equity security of the Company as of January 31, 2016. The following are the top 20 registered holders of the common equity securities of the Company:

Stockholder Name No. of Shares Percentage 1. Ayal a Land, Inc. 1,082,109,737 56.36% 2. PCD Nominee Corp. (Non-Filipino) 360,855,611 18.79% 3. PCD Nominee Corp. (Filipino) 228,362,697 11.89% 4. First Metro Investment Corporation 186,695,363 9.72% 5. Makati Supermarket Corporation 3,013,265 0.16% 6. BP I Capital Corporation 2,000,000 0.10% 7. Laguna Properties Holdings, Inc. 1,875,000 0.10% 8. Alfonso Lao 1,750,000 0.09% 9. Jose C. Lee 1,000,000 0.05% 10. Aurora E. Panlilio 937,500 0.05% 11. Vicente Jayme, Jr. 767,500 0.04% 12. Fermin P. Angcao 670 ,000 0.03% 13. Victor G. Sy 625,000 0.03% 14. Jose E. Suarez 618,750 0.03% 15. Maximo S. Uy 470,000 0.02% 16. Alejandra R. Malaya 385,000 0.02% 17. Alberto Mendoza &/or Jeanie C. Mendoza 376,250 0.02% 18. Mercedes A. Tuason 375,000 0.02% 18. Salvador Mariposa 375,000 0.02% 18. Vincent Y. Tan 375,000 0.02% 18. Carolyn Chua 375,000 0.02% 19. Robert Tan 358,750 0.02% 20. Edan Corporation 347,500 0.02%

(3) Dividend

(A) Dividend History Stock Dividend (per share) Percent Record Date Payment Date 50% August 5, 1994 August 31, 1994 25% October 2, 1997 November 12, 1997

Cash Dividend (per share) Peso Amount Declaration Date Record Date Payment Date P0.05 20 September 2006 13 October 2006 27 October 2006 0.05 19 November 2007 04 December 2007 18 December 2007 0.07 08 October 2008 06 November 2008 28 November 2008 0.07 16 November 2009 01 December 2009 22 December 2009 0.07 27 October 2010 25 November 2010 17 December 2010 0.07 20 October 2011 18 November 2011 14 December 2011 0.10 22 Novemb er 2012 07 December 2012 21 December 2012 - 29 -

0.11 09 October 2013 05 November 2013 29 November 2013 0.12 November 11, 2014 November 25, 2014 December 9, 2014 0.12 December 01, 2015 December 16, 2015 December 23, 2015

(B) Dividend Restrictions/Policy

There are no restrictions that limit the ability to pay dividends except those provided under Section 43 of the Corporation Code and other existing laws. To the extent feasible, it is the policy of the Company to declare periodically a portion of its unrestricted retained earnings as dividends to shareholders, either in the form of stock or cash, or both. The payment of dividends in the future will depend on the Company’s earnings, cash flow, investment program, and other factors. Management aims to declare dividends at a minimum of 40% of prior year’s net income subject to board approval every dividend declaration.

(4) Recent Sales of Unregistered Securities

The company has no unregistered securities nor has engaged in any sale of unregistered securities for the period covered in this report.

Item 6. Management’s Discussion and Analysis or Plan of Operation. (Part III, Paragraph (A) of SRC Rule 12)

2015 vs. 2014 Results of Operations

Cebu Holdings, Inc. ended the year with an all time high consolidated revenues and net income of P3.7 billion and P827.2 million, respectively.

The company’s consolidated revenues were derived from sale of commercial lots, lease income from Ayala Center Cebu and eBloc Towers and sale of residential lots and condominium units. The company also derived income from interest earnings from short-term investments, interest & other income and equity in net earnings of affiliates.

Earnings before Interest and Taxes (EBIT) posted a significant increase from P0.397 billion in 2014 to P1.117 billion in 2015.

CHI declared cash dividend of P0.12 per share to all shareholders as of record date on December 16, 2015 and paid on December 23, 2015.

Stock price increased from a closing of P5.16 per share in 2014 to P5.18 per share in 2015.

Rental Income

Commercial Business

For the period ended December 31, 2015, overall gross sales performance of the mall ended at 8% higher versus same period of last year. New expansion’s food and non-food category provided a significant contribution to the overall growth. Land Lease tenant increased also by 6% compared to same period of last year.

Leasing group introduced new concepts and international brands to expand the offerings of the mall and provide what the market needs. New merchants include H&M, Bershka, Pull & Bear, New Balance, Brique. Marks & Spencer also reopened. During this period, the marketing group initiated mallwide events and promos to bring in further foot traffic to augment the sales of merchants like Pink October Sale, Amore Mallwide Sale, Christmas Sale, Pay It Forward Ayala Cebu Digital Promo, Symphony of Lights and Meet & Greet Santa Claus.

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In terms of revenue, the mall registered a favorable performance of P1.16 billion versus last year. This is 17% higher than same period of last year while net operating income posted a 25% increase versus 2014.

Cebu Leisure Company, Inc. (CLCI-a wholly owned subsidiary)

Total revenue of P209.0 million was 8% higher than last year. Net operating income increased also by 24% due to the favorable financial performance of Active Zone, Food Choices and Cinemas.

The Walk registered total rental revenue of P26.8 million, posting a 2% increase compared to last year’s level of P26.2 million mainly on account of higher lease occupancy which was at 95.8 percent. eBloc Towers contributed P384.8 million in revenues, 27% higher than last year’s level of P302.0 million. As of December 2015 average lease occupancy for eBloc 1 was at 97.8%, eBloc 2 was at 99.7% and eBloc 3 was at 61.6%.

CITP Land Lease contributed P10.7 million in revenues during the period.

Real Estate Income

Revenue from commercial lot stood at P1.087 billion. This includes a one time sale of commercial to Avida Land Corp and Cebu District Property Enterprise, Inc with total revenue of P759.3 million.

Amara revenue reached P27.6 million derived from prior and current year’s sales computed based on percentage of completion. Compared to the previous year’s level of P34.1 million, it declined by 19%. The Parks at Amara if fully completed as of end of 2015.

Park Point Residences registered total revenue of P250.9 million from current year’s sale units and the prior year’s sale computed based on percentage of completion. Compared to the previous year’s level of P113.8 million, it posted an increase of 121 percent. As of December 2015 percentage of completion was at 82.93 percent.

Avida Towers Cebu’s total revenue reached P= 1.9 million. Compared to the previous year’s P9.4 million, it posted a decline. As of end of 2015, both towers were already 100% completed.

The company also generated interest and other income primarily from the well placed short-term investments and other income from fees & recovery charges amounting to P499.7 million. This is 9% higher versus last year’s level of P459.4 million.

Equity in net earnings of affiliates (Cebu Insular Hotel Co., Inc., Solinea, Inc., Amaia Southern Properties, Inc., Cebu District Property Enterprise, Inc., Southportal Properties, Inc. and Central Bloc Developers, Inc.) reached P106.3 million, 33% higher compared to the previous year’s level of P79.7 million mainly due to higher income from Solinea, Inc.

Net Income reached P827.2 million, 56% higher versus the P530.9 million of the previous year due to higher revenues from sale of commercial lots and leasing income.

Financial Condition

CHI’s Balance Sheet remains strong with total assets amounting to P19.733 billion as of December 31, 2015, P.234 billion of which is cash. It has a current ratio of 0.95: 1 compared to 1.63: 1 in December 2014. Total liabilities as of the period stood at P12.821 billion, P5.518 billion of which is current. Debt-to-equity ratio

- 31 - stood at 2.11: 1 compared to the December 2014 level of 1.86: 1. Bank Debt to equity ratio registered at 1.03: 1 compared to 1.23: 1 in December 2014.

Key Performance Indicators

The table below shows the comparative key performance indicators of the Company:

Indicators 2015 2014 Current Ratio 1 0.95: 1 1.63: 1 Total Debt to Equity Ratio 2 2.11: 1 1.86: 1 Bank Debt to Equity Ratio 3 1.03: 1 1.23: 1 Net Debt /(Cash) to Equity Ratio 4 0.99: 1 0.66: 1 Return on Assets (ROA) 5 4.58% 3.62% Return on Equity (ROE) 6 14.35% 9.98% 1Current Asserts / Current Liabilities 2Total Liabilities / Stockholders’ Equity 3Total Bank Debt / Stockholders’ Equity 4Total Bank Debt less Cash & Cash Equivalents / Stockholders’ Equity 5Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divide by two) 6Net Income / Average Stockholders’ Equity (Stockholders’ Equity beginning of the year plus Stockholders’ Equity end of the year divide by two)

Cause for Material Changes from Period to Period of the Financial Statements

Cash and Cash Equivalents registered at P.115 billion, 96% lower versus the P2.9 billion as of December 2014. The decrease was primarily brought about by land acquisition, investment in affiliates and payment to contractors and suppliers.

Financial Assets at Fair Value through Profit or Loss amounted to P= 73.6 million, 64% lower than the December 2014’s level of P204.1 million on account of reclassification from Financial Assets at Fair Value through Profit or Loss to Cash and Cash Equivalents.

Short-term Cash Investments registered at P45.3 million higher compared to the previous year’s level.

Accounts Receivable totaled P3.1 billion, 140% higher than the P1.3 billion as of December 2014. The increase was mainly on account of due from affiliates relative to the sale of commercial lot to Avida and collectibles from the sale of condominium units on installment during the period.

Inventories (Subdivided Land for Sale, Condominium Units for Sale and Sports Club Shares) stood at P1.4 billion, 17% higher than the P1.2 billion in December 2014. The increase was mainly due to additional cost estimate for the development of Cebu Business Park and booking of inventory of Park Point Residences & 1016 Residences units as percentage of completion increased for the period.

Other Current Assets reached P561.6 million, 101% higher than December 2014’s level of P278.9 million due to booking of various taxes (VAT Input, Prepaid Taxes and others).

Land and Improvements is stood at P2.2 billion. This pertains to the newly acquired lot at South Road Properties (SRP).

Investments in Associates and a Joint Venture was 29% higher than December 2014’s level of P1.1 billion as it reached P1.4 billion. The increase was primarily due to investment in Southportal Properties, Inc. and Central Bloc Developers, Inc.

Investments Properties registered a 12% (P1.1b) increase versus the December 2014 level of P9.2 billion primarily due to construction of ACC Corporate Center, BPO 400 Building & eBloc Tower 4 and purchase of land.

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Noncurrent Accounts Receivable showed an increase of 301% (P319.4m) versus the December 2014’s level of P106.0 million mainly due to sale of CITP commercial lot to Avida Land Corp. on installment basis during the period. Other Noncurrent Assets was 48% lower than December 2014’s level of P83.6 million as it reached P43.4 million. The decrease was primarily due to settlement of suspense accounts.

Deferred Tax Assets posted a decrease of 96% (P15.6m) versus the P16.2 million as of December 2014 mainly due to AiO’s deferred tax asset knocked off against CPVDC-parent deferred tax liability.

Accounts & Other Payables totaled P4.7 billion, 98% higher vis-à-vis the P2.4 billion reported in December 2014. The increase was primarily due to payables to various contractors & suppliers and Cebu City government for the purchase of SRP lot, accrued operating expenses and due to affiliates (booking of management fees & systems cost and AiO’s intercompany).

Income Tax Payable reached P61.2 million, 65% higher versus the December 2014 level of P37.1 million due to provision for income tax during the period.

Current Portion of Long-term Debt showed a decrease of 78% (P384.7m) versus the December 2014’s level of P492.6 million mainly due to partial payment of AiO’s bank loan for the period.

Deposits and Other Non-current Liabilities increased by 322% or P727.5 million mainly on account of financial liability for the purchase of SRP lot and various rental deposits from Ayala Center Cebu merchants & eBloc Tower 3 locators.

Deferred Tax Liabilities posted an increase of 117% (P91.3m) versus the December 2014’s level of P77.8 million. The increase was primarily brought about by additional provision of deferred tax from the sale of CITP commercial lot to Avida Land Corp. during the period.

Retained Earnings showed a growth of P596.8 million as a result of the 2015 Net Income net of P230.4 million cash dividend in December 23, 2015.

• Due to the Company’s sound financial condition, there is no foreseeable trend or event which may have material impact on its short-term or long-term liquidity.

• Funding will be sourced from internally-generated funds and bank loans.

• There is no material commitment for capital expenditures other than those performed in the ordinary course of trade or business.

• There is no known trend, event or uncertainty that have had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations.

• There is no significant element of income arising from continuing operations.

• There have not been any seasonal aspects that had a material effect on the financial condition or results of the Company’s operations.

• There were no known events and uncertainties that will trigger direct or contingent financial obligation that is material to the company, including any default or acceleration of an obligation.

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2014 vs. 2013 Results of Operations

Cebu Holdings, Inc.’s net income reached P= 530.9 million, 6% higher compared to the same period last year of P= 501.1 million. The 2014 NIAT is the highest in the history of the company. The Company posted consolidated revenues of P= 2.294 billion for the period ended December 31, 2014, 6% higher versus last year’s level of P= 2.169 billion. The improvement in consolidated revenues was mainly on account of higher leasing income from Ayala Center Cebu & eBloc Towers and sale of condominium units.

Consolidated Revenues were derived from lease income from commercial center, sale of Amara residential lots, condominium units from 1016 Residences, Park Point Residences and Sedona Parc. Other revenue contributors were rental from eBloc Towers, e-office & The Walk and sale of Avida Tower Cebu and Avida Riala Towers condominium units, projects of subsidiaries Cebu Property Ventures & Development Corporation (CPVDC) and Asian I-Office Properties, Inc. (AiO). The Company also derived income from interest earnings from CPVDC short-term investments, interest & other income and equity in net earnings of affiliates.

As of December 2014, CHI declared cash dividend from the unappropriated retained earnings of the Company as of December 31, 2013, of P= 0.12 per share to all shareholders as of record date November 25, 2014 and paid on December 09, 2014.

Rental Income

Commercial Business

For the period ended 31 December 2014, overall gross sales performance of the mall ended at 15% higher versus same period of last year. New expansions on food and non-food category provided a significant contribution for the overall growth. Land Lease tenant increase as well by 2% compared to same period of last year.

Leasing group introduced new concepts, international and popular brands to expand the offerings of the mall and provide what the market needs. Some of the stores that have recently opened are Burger King, Dorothy Perkins, Wrangler, Planet Grapes and Mothercare. Rustans Department Store and Supermarket also opened in their new location at the new expansion area. During this period, the marketing group also initiated mall wide events to bring in further foot traffic to augment the sales of merchants like Anniversary Sale and Kasalang Filipino.

In terms of revenue, the mall registered a favorable performance than last year which was at P= 995.4 million. This is 29% higher than same period of last year while net operating income was 19% better.

Cebu Leisure Company, Inc. (CLCI-a wholly owned subsidiary)

Active Zone continues to post positive sales/square meter performance which was higher by 9% versus last year while Food Choices increased by 36%. Ayala Cinema’s occupancy rate performance of 19.3% is at par with same period of last year.

Total revenue of P= 193.2 million was 28% higher than last year. Net operating income increased also by 66% due to the favorable financial performance of Active Zone, Food Choices and Cinemas.

The Walk registered a total rental revenue of P= 26.2 million, showing a 10% increase compared to last year’s level of P= 23.7 million mainly on account of higher lease occupancy which was at 96.6%. eBloc Towers put in P= 302.0 million revenues, 40% higher than last year’s level of P= 216.4 million. As of December 2014 average lease occupancy was 97.3%, 100% and 14.0% for eBloc Tower 1 to 3, respectively.

Revenues generated from e-Office reached P= 294 thousand, 98% lower than last year due to the dwindling down of operations to give way to redevelopment of the area to maximize its land usage.

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Real Estate Income

Amara revenue stood at P= 34.1 million derived from current year’s sale and the previous year’s sale computed based on percentage of completion. Compared to last year’s figure of P= 102.9 million, it registered a decrease due to fewer lots sold. Percentage of completion as of December 2014 stood at 95.60% for The Parks at Amara.

1016 Residences registered total revenue of P= 30.0 million from current year’s sale and the prior year’s sale computed based on percentage of completion. Compared to the previous year’s level of P= 98.8 million, it posted a decline. Percentage of completion as of December 2014 stood at 99.25%.

From the sale of two (2) units and prior year’s sale computed based on percentage of completion, Sedona Parc posted total revenues of P= 28.7 million, lower than last year’s P= 55.8 million by 49%. As of end of 2014, percentage of completion was at 99.55%.

Park Point Residences registered total revenue of P= 113.8 million from current year’s sale of eleven (11) units and the prior year’s sale computed based on percentage of completion. Compared to the previous year’s level of P= 196.6 million, it posted a decrease of 42%. As of December 2014, percentage of completion was at 49.50%.

Avida Riala Tower registered total revenues of P= 22.1 million from previous year’s sale and current year sale of nine (9) units from Tower 1. Compared to the same period last year, it posted a 48% growth. For the period, percentage of completion for Avida Riala Tower 1 was already at 74.13% while Tower 2 was at 69.02% and Tower 3 was at 32.41%.

Avida Towers Cebu’s total revenue reached P= 9.4 million from previous year’s sale and current year sale of six (6) condo units from Tower 2. Compared to the previous year’s P= 29.4 million, it posted a decline. As of end of 2014, both towers were already 100% completed.

In 2013, Revenue from commercial lot stood at P= 96.5 million derived from the sale of one (1) lot from Cebu Business Park. There was no lot sold during in 2014.

The Company also generated interest and other income primarily from the well placed short-term investments and water & utility charges amounting to P= 459.4 million. This is 34% higher versus last year’s level of P= 342.3 million.

Equity in net earnings of affiliates (Cebu Insular Hotel Co., Inc. (CIHCI), Solinea, Inc., Amaia Southern Properties, Inc. and Cebu District Property Enterprise, Inc.) reached P= 79.7 million, 69% higher compared to the previous year’s level of P= 47.0 million mainly due to higher income from Solinea, Inc,.

Net Income amounted to P= 530.9 million, 6% higher compared to the same period last year of P= 501.1 million.

Financial Condition

CHI’s Balance Sheet remains strong with total assets amounting to P= 16.385 billion as of December 31, 2014, P= 3.099 billion of which is cash. It has a current ratio of 1.63: 1 compared to 1.21: 1 in December 2013. Total liabilities as of the period stood at P= 10.163 billion, P= 3.577 billion of which is current. Debt-to- equity ratio stood at 1.86: 1 compared to the December 2013 level of 1.36: 1. Bank debt-to-equity ratio registered at 1.23: 1 compared to 0.85: 1 in December 2013. The increase in the Company’s debt was mainly due to the issuance of P= 5 billion bonds in June 2014.

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Key Performance Indicators

The table below shows the comparative key performance indicators of the Company:

Indicators 2014 2013 Current Ratio 1 1.63: 1 1.21: 1 Total Debt to Equity Ratio 2 1.86: 1 1.36: 1 Bank Debt to Equity Ratio 3 1.23: 1 0.85: 1 Net Debt /(Cash) to Equity Ratio 4 0.66: 1 0.62: 1 Return on Assets (ROA) 5 3.62% 4.42% Return on Equity (ROE) 6 9.98% 9.91% 1Current Asserts / Current Liabilities 2Total Liabilities / Stockholders’ Equity 3Total Bank Debt / Stockholders’ Equity 4Total Bank Debt less Cash & Cash Equivalents / Stockholders’ Equity 5Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divide by two) 6Net Income / Average Stockholders’ Equity (Stockholders’ Equity beginning of the year plus Stockholders’ Equity end of the year divide by two)

Cause for Material Changes from Period to Period of the Financial Statements

Cash and Cash Equivalents posted a 278% (P= 2.130 billion) increase compared to the P= 765.1 million as of December 2013. The increase was primarily brought about by the proceeds of Bonds issuance coupled with collection of receivables, and sales and rental income during the period.

Financial Assets at Fair Value through Profit or Loss stood at P= 204.1 million, 52% lower than the P= 426.6 million as of December 2013 on account of reclassification to Cash and Cash Equivalents from Financial Assets at Fair Value through Profit or Loss.

Accounts Receivable reached P= 1.282 billion, 23% higher than the P= 1.045 billion as of December 2013. The increase was mainly due to collectibles from various Ayala Center Cebu (ACC) merchants, sale of Amara lots and sale of condominium units on installment, due from affiliates and advances to contractors for the period.

Inventories (Subdivided Land for Sale, Condominium Units for Sale and Sports Club Shares) stood at P= 1.178 billion, 6% lower than the P= 1.247 billion in December 2013 mainly due to the sale of Amara The Parks lots during the period.

Other Current Assets reached P= 278.9 million, 43% higher than the P= 194.9 million in December 2013 due to booking of prepaid management fee, dividends receivable and other expenses.

Investments in Associates and a Joint Venture was 147% higher than the P= 428.1 million in December 2013 as it reached P1.058 billion. The increase was primarily due to investment in newly acquired Cebu District Property Enterprise, Inc. and Southportal Properties, Inc. and higher income from various affiliate companies for the period.

Investments Properties registered a 12% (P= 980.2 million) increase versus the P= 8.231 billion in December 2013 primarily due to building and improvements of Ayala Center Cebu, construction of eBloc Tower 3 and purchase of land.

Noncurrent Accounts Receivable was lower by 78% versus the P= 473.8 million in December 2013 due to reclassification of noncurrent receivable accounts to current account during the period.

Other Noncurrent Assets registered a 53% (P= 28.8 million) increase primarily due to suspense accounts and sundry receivables and deposits.

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Deferred Tax Assets posted an increase of 16% (P= 2.3 million) versus the P= 14.0 million as of December 2013. This was brought about mainly by interest accretion for the period.

Accounts & Other Payables reached P= 2.377 billion, a 30% increase compared to the P= 1.831 billion reported in December 2013. The increase was primarily due to payables to various contractors & suppliers, taxes payable, dividends payable, accrued operating expenses and due to affiliates (booking of management fees & systems cost, advances and intercompany loan) during the period.

Deposits and Other Current Liabilities increased by 37% vis-à-vis the P= 488.1 million in December 2013. The increase was due to various deposits made by new merchants of Ayala Center Cebu and eBloc Tower locators.

Income Tax Payable totaled P= 37.1 million, 25% lower versus the P= 49.6 million in December 2013 due to the payment of income taxes in 2014.

Current Portion of Long-term Debt showed a decrease of 26% (P= 176.7 million) versus the P= 669.2 million in December 2013 mainly due to payment of CHI-parent bank loan for the period.

Deposits and Other Non-current Liabilities increased by 24% or P= 43.2 million. This is mainly on account of various deposits made by new merchants of ACC and eBloc Tower locators.

Deferred Tax Liabilities reached P= 77.8 million, 31% higher than the P59.3 million in December 2013. The increase was primarily brought about by additional provision of deferred tax during the period.

Long-term Debt-net of current portion amounted to P= 6.227 billion, 68% higher versus the P= 3.709 billion in December 2013 mainly due to issuance of bonds in June 2014.

Retained Earnings showed a growth of P293.9 million as a result of the 2014 Net Income net of P230.4 million cash dividend in December 09, 2014.

• Due to the Company’s sound financial condition, there is no foreseeable trend or event which may have material impact on its short-term or long-term liquidity.

• Funding will be sourced from internally-generated funds and bank loans.

• There is no material commitment for capital expenditures other than those performed in the ordinary course of trade or business.

• There is no known trend, event or uncertainty that have had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations.

• There is no significant element of income arising from continuing operations.

• There have not been any seasonal aspects that had a material effect on the financial condition or results of the Company’s operations.

• There were no known events and uncertainties that will trigger direct or contingent financial obligation that is material to the company, including any default or acceleration of an obligation.

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2013 vs. 2012 Results of Operations

CHI’s consolidated net income reached P= 501.1 million.

Consolidated revenues registered at P= 2.169 billion, 33% higher than the P= 1.633 billion last year due to higher leasing income and residential sales. Leasing income is boasted by the purchase of Ayala Land Inc.’s (ALI) 60% stake in Asian I-Office Properties, Inc. (AiO) and improved rental income from Ayala Center Cebu. Sale of residential condominium units and sale of Amara residential lots also contributed to the increase in consolidated revenues.

Consolidated Revenues were derived from commercial land sales, lease income from commercial center, sale of Amara residential lots, condominium units from 1016 Residences, Park Point Residences and Sedona Parc and sports club shares. Other revenue contributors were rental from eBloc Towers, e-office & The Walk and sale of condominium units (Avida Riala Tower & Avida Tower Cebu), projects of subsidiaries, Cebu Property Ventures & Development Corporation and Asian I-Office Properties, Inc. The company also derived from Interest earnings from short-term investments and interest and other income.

Earnings before Interest and Taxes (EBIT) posted a 28% increase from P= 314.7 million in 2012 to P403.7 million in 2013.

Stock price increased from a closing of P4.00 per share in 2012 to P= 5.73 per share in 2013 resulting in a total shareholder return (TSR) of 44.99%.

As of December 2013, CHI declared cash dividend from the unappropriated retained earnings of the company as of December 31, 2012, of P= 0.11 per share to all shareholders as of record date November 5, 2013 and paid on November 29, 2013.

Rental Income

Commercial Business

Within the year ending in December 2013, the mall maintained the same level of gross sales, despite the disruption caused by the final stages of construction of the new wing. Compared to the previous year, merchants under food category posted a positive growth of two percent while the non-food merchants performed unfavourably by also two percent.

In 2013, Ayala Center Cebu introduced new brands such as Italiannis, Tonkatsu, Ulli’s, Seafood Island, Chika-an that cater to different types of dining market segments. Several marketing events and promotions were also done throughout the year significantly increased foot traffic and sales. Its newest expansion, opened in December 11, also brings in an additional 36,500 square meters of leasable space for luxury and top brands.

Active Zone’s gross sales performance was at par with that of the previous year’s. In 2013, we began the renovation of the Food Choices to complement and seamlessly connect to the mall’s expansion. The occupancy rate at Ayala Cinemas in 2013 was slightly higher at 18.9 percent compared to 18.4 percent in 2012.

Despite reported higher inflation rates in the last quarter of 2013 brought about by the twin calamities, consumer spending and retail expansion was not deterred.With revenues of P924.0 million, the mall registered a favorable growth versus last year at P900.0 million. This is three percent higher than the same period in 2012, while net operating income is at par against last year’s.

The Walk registered total rental revenue of P= 23.7 million, 11% increase compared to last year’s level of P= 21.5 million mainly on account of higher sales and rental per square meter. As of December 2013, average lease occupancy reached 85.0%. eBloc Towers brought in total revenue of P= 216.4 million.

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Revenues generated from e-Office reached P= 18.4 million, 38% lower than last year due to the dwindling down of operations to give way to redevelopment of the area to maximize its land usage which will increase the Company’s office and retail leasing income in the coming years.

Real Estate Income

Revenue from Commercial lot stood at P= 96.5 million derived from the sale of one (1) lot from Cebu Business Park, 20% lower versus last year’s level of P= 120.2 million. In 2012, there were two (2) CBP lots sold.

Amara revenue reached P= 102.9 million derived from current year’s sale and the previous year’s sale computed based on percentage of completion. Compared to the previous year’s level of P= 19.2 million, it is higher by 436% mainly on account of more lots sold & higher percentage of completion. Percentage of completion as of December 2013 stood at 92.80% for The Parks at Amara.

1016 Residences contributed total revenues of P= 98.8 million from the prior year’s sale computed based on percentage of completion. Compared to the previous year’s figure of P= 94.8 million, it registered an increase of 4%. Percentage of completion as of December 2013 stood at 89.28%.

Sedona Parc posted total revenues of P= 55.8 million from the sale of seven (7) units and three (3) parking slots and prior year’s sale computed based on percentage of completion. Compared to last year’s level of P= 56.3 million, it posted a slight decrease. As of 2013, percentage of completion was at 89.80%.

From the sale of thirty seven (37) units and prior year’s sale computed based on percentage of completion, Park Point Residences generated total revenues of P= 196.6 million, 1,247% higher than last year’s P= 14.6 million. End 2013 percentage of completion was at 39.00%.

Sale of Sports Club Shares contributed P= 2.8 million in revenues , 321% higher than the P= 660 thousand of the same period last year. For the period, there were four CSCC shares sold.

Revenues from Avida Towers Cebu stood at P= 29.4 million from the sale of four (4) units and prior period sales computed based on percentage of completion. As of December 2013, Tower 1 was already 99.78% completed while Tower 2 was 99.12% completed.

Avida Riala Tower contributed total revenues of P= 14.9 million, higher than last year’s P= 3.9 million. These were derived from previous year’s sale and current year’s sale of fifteen (15) units. For the period, Tower 1 was already 57.79% completed.

The company also generated interest and other income primarily from the well placed short-term investments, water & utility charges amounting to P= 342.3 million, 15% higher than last year’s level of P= 298.5 million.

Equity in net earnings of affiliates (Cebu Insular Hotel Co., Inc. and Solinea, Inc.) amounted to P= 47.0 million, 36% lower versus last year’s level of P= 73.9 million. The decrease was primarily due to eliminated accounts brought about by full consolidation of Asian I-Office Properties, Inc. (AiO) and lower income from Solinea.

Net Income reached P= 501.1 million, 13% higher versus the P= 443.6 million of the previous year.

Financial Condition

CHI’s Balance Sheet remains strong with its total assets amounting to P= 12.950 billion as of December 31, 2013, P= 1.192 billion of which is cash. It has a current ratio of 1.21: 1 compared to 1.43: 1 in December 2012. Total liabilities as of the period stood at P= 7.028 billion, P= 3.038 billion of which is current. Debt-to- equity ratio stood at 1.36: 1 compared to the December 2012 level of 0.91: 1. Bank Debt to equity ratio registered at 0.85: 1 compared to 0.37: 1 in December 2012. The increase in the company’s assets and liabilities is due to the acquisition of Asian I-Office Properties, Inc.

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Key Performance Indicators

The table below shows the comparative key performance indicators of the Company:

Indicators 2013 Restated 2012 Current Ratio 1 1.21: 1 1.43: 1 Total Debt to Equity Ratio 2 1.36: 1 0.91: 1 Bank Debt to Equity Ratio 3 0.85: 1 0.37: 1 Net Debt /(Cash) to Equity Ratio 4 0.62: 1 -0.004: 1 Return on Assets (ROA) 5 4.42% 5.26% Return on Equity (ROE) 6 9.91% 9.20% 1Current Asserts / Current Liabilities 2Total Liabilities / Stockholders’ Equity 3Total Bank Debt / Stockholders’ Equity 4Total Bank Debt less Cash & Cash Equivalents / Stockholders’ Equity 5Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divide by two) 6Net Income / Average Stockholders’ Equity (Stockholders’ Equity beginning of the year plus Stockholders’ Equity end of the year divide by two)

Cause for Material Changes from Period to Period of the Financial Statements

Increase in consolidated revenues (real estate & rental income) by 41% or P519.5 million: • Sale of 1 CBP lot with a total area of 1,173 square meter to a local developer. • Increase in revenue from residential condo (Park Point Res, 1016 Res, Avida Riala Tower & Avida Tower Cebu) • Increase in revenue from residential lot (Amara) • Increase in revenue from Sports Club Share • Increase in rental income from ACC • Increase in rental and theater revenues from Cebu Leisure Company, Inc. • Increase in rental income from The Walk • Increase in rental income from eBloc Towers

Increase in interest and other income by 15% or P43.8 million: • Primarily due to well placed short-term investments, water & utility charges.

Decrease in equity in net earnings of associates by 36% or P26.8 million • Due full consolidation of Asian I-Office Properties, Inc. (AiO) and lower income from Cebu Insular Hotel Co., Inc. (Marriott Hotel), & Solinea, Inc.

Increase in real estate cost and expenses by 45% or P444.4 million • Due to the cost from commercial lot & condo units sold during the year. • Rising maintenance costs, higher consumption of light, aircon, power • Higher interest expense due to availment of additional bank loans.

Decrease in cash and cash equivalents by 59% or P1.099 billion • Due to the purchase of the ALI’s 60% stake in Asian I-Office Properties, Inc. (AiO). • Investments / Landbanking • Payment to contractors for various projects • Payment of Cash Dividends.

Increase in Financial Assets at Fair Value through Profit or Loss by 100% or P426.6 million • Primarily on account of reclassification of Cash and Cash Equivalents to Financial Assets at Fair Value through Profit or Loss.

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Increase in accounts receivable by 48% or P337.1 million • Due to sale of Commercial and Amara lots. • Due to sale of Residential Condo units. • Due to receivables from Ayala Center Cebu merchants and eBloc locators. • Due to advances from various contractors.

Decrease in Inventories (Subdivided Land for Sale, Condominium Units for Sale and Sports Club Shares) by 1% or P10.5 million • Primarily due to sale of one commercial lot at CBP and Amara The Parks lots.

Increase in other current assets by 147% or P116.1 million • Due to booking of various taxes (VAT Input, Prepaid Tax and others) and prepaid broker’s commission.

Increase in property and equipment by P9.8 million or 25% • The increase was primarily due to purchase of new office equipments.

Decrease in investment in associates by 29% or P178.3 million • The decrease was primarily due to full consolidation of Asian I-Office Properties, Inc.

Increase in investment properties by P3.595 billion or 78% • Primarily due to investments in building & improvements at Ayala Center Cebu expansion project, consolidation of AiO’s eBloc Towers, construction in progress at eBloc Tower 3 and investment in land at Punta Engano Property.

Increase in deferred tax assets of 62% or P5.3 million • This was brought about mainly by unrealized forex loss and interest accretion during the period.

Increase in other non-current assets by 7% or P3.4 million • Mainly on account from affiliate-Cebu Insular Hotel Company (CIHC) dividends receivable and various suspense accounts.

Decrease in accounts and other payables by P214.8 million or 10% • Primarily due to accrued operating expenses and payments to contractors & suppliers for the period.

Increase in current portion of long term debt by P505.9 million or 310% • Due to consolidation of AiO and reclassification from noncurrent to current account during period.

Increase in income tax payable by 151% or P29.8 million • Due to provision for income tax during the period.

Increase in long term debt-net of current portion by P2.027 billion or 121% • Mainly on account of additional availment of loan during the period. • Due to consolidation of AiO.

Increase in pension liabilities by 41% or P11.4 million • Due to booking of retirement plan during the period.

Increase in deferred tax liabilities by 100% or P29.7 million • The increase was primarily brought about by additional provision deferred tax during the period.

Increase in other non-current liabilities by 2,318% or P175.1 million • Mainly on account of rental deposits from the new merchants of Ayala Center Cebu & eBloc Towers locator.

Retained Earnings showed a growth of P248.9 million as a result of the 2013 Net Income net of P211.2 million cash dividend and effect of pooling of interests due to acquisition of AiO (P= 41.0 million).

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• Due to the Company’s sound financial condition, there is no foreseeable trend or event which may have material impact on its short-term or long-term liquidity.

• Funding will be sourced from internally-generated funds and bank loans.

• There is no material commitment for capital expenditures other than those performed in the ordinary course of trade or business.

• There is no known trend, event or uncertainty that have had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations.

• There is no significant element of income arising from continuing operations.

• There have not been any seasonal aspects that had a material effect on the financial condition or results of the Company’s operations.

• There were no known events and uncertainties that will trigger direct or contingent financial obligation that is material to the company, including any default or acceleration of an obligation.

Item 7. Financial Statements (see annex audited financial statements and supplementary schedules)

The consolidated financial statements and schedules listed in the accompanying Index to Financial Statements and Supplementary Schedules are filed as part of this Form 17-A.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure (Part III, Paragraph (B) of SRC Rule 12)

There are no changes in and disagreements with accountants on accounting and financial disclosures.

PART III - CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Corporate Officers of the Registrant (Part IV, Paragraph (A) of SRC Rule 12)

(1) (A-E) Directors and Corporate Officers

Board of Directors BERNARD VINCENT O. DY MARIA THERESA M. JAVIER ANICETO V. BISNAR JR. FR. RODERICK C. SALAZAR JR.* ANTONIO S. ABACAN JR. EMILIO LOLITO J. TUMBOCON PAMPIO A. ABARINTOS* JAIME E. YSMAEL ENRIQUE L. BENEDICTO* *Independent Directors

BOARD OF DIRECTORS The members of the Board of Directors are elected at the general meeting of stockholders, who shall hold office for the term of one (1) year or until their successors shall have been elected and qualified. The following are the directors’ and officers’ brief description of their business experiences during the past five years.

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Bernard Vincent O. Dy , Filipino, 52, has been the Chairman of the Board of Directors of CHI since August 2014. He also holds the following positions in other publicly listed Companies: President & Chief Executive Officer of Ayala Land, Inc. and Chairman of the Board of Directors of Cebu Property Ventures and Development Corporation. Prior to this post, he was the Head of the Residential Business, Commercial Business and Corporate Marketing and Sales of ALI. His other significant positions include: Chairman of Ayala Property Management Corporation, Ayala Land International Sales, Inc., Amicassa Process Solutions, Inc., Amaia Land Corporation, Avida Land Corp., Alveo Land Corp., Alviera Country Club, Inc., Ayalaland Commercial Reit, Inc., Lagdigan Land Corporation, Bellavita Land Corporation, Avencosouth Corp., Ayagold Retailers, Inc., Station Square East Commercial Corporation, Aviana Development Corp., Cagayan De Oro Gateway Corp., BGSouth Properties, Inc., BGNorth Properties, Inc., BGWest Properties, Inc., Portico Land Corp., and ALI Capital Corp.; Vice Chairman of Ayala Greenfield Development Corporation; Chairman and President of Serendra, Inc. and; Director and President of Bonifacio Land Corporation, Emerging City Holdings, Inc., Columbus Holdings, Inc. Berkshires Holdings, Inc., Fort Bonifacio Development Corporation, Aurora Properties Incorporated, Vesta Property Holdings, Inc., Ceci Realty Inc., Alabang Commercial Corporation, Accendo Commercial Corp., Hero Foundation Incorporated, and Bonifacio Art Foundation,; Director of Ayala Land Sales, Inc., North Triangle Depot Commercial Corporation, Ayala Greenfield Golf & Leisure Club, Makati Development Corporation, Nuevocentro, Inc., Whiteknight Holdings, Inc., Ayalaland Medical Facilities Leasing, Inc., Alveo-Federal Land Communities, Inc., and Philippine Integrated Energy Solutions, Inc.; Trustee of Ayala Foundation, Inc.; Member of Ayala Group Club, Inc.; and Treasurer of SIAL Specialty Retailers, Inc. and SIAL CVS Retailers, Inc. He earned a degree of B.B.A Accountancy from the University of Notre Dame in 1985 and took his Master’s Degree in Business Administration and International Relations at the University of Chicago in 1997 and 1989, respectively.

Aniceto V. Bisnar Jr., Filipino, 51, has been the Director and President of Cebu Holdings, Inc. since January 1, 2015. He is also the president of Cebu Property Ventures & Development Corporation, a publicly listed company. Concurrently, he is also the Vice President and Chief Operating Officer of the Visayas- Mindanao Group of Ayala Land, Inc. His other significant positions are: Chairman and President of Taft Punta Engano Property, Inc., North Point Estate Association, Inc., Adauge Commercial Corp., Cebu Leisure Company, Inc., and Asian I-Office Properties, Inc., Vice Chairman of South Portal Properties, Inc. and Avenco South Corporation. He is the President of CBP Theatre Management Company, Inc., and Lagdigan Land Corporation. He is also the Vice President of Solinea, Inc. He holds the directorship of: Accendo Commercial Corporation, Westview Commercial Ventures Corp., Cagayan de Oro Gateway Corp., Bonifacio Estates Services Corp., Aurora Properties Inc., Ceci Realty, Inc., Vesta Property Holdings, Inc., East Binan Properties, Inc. and Board of Trustee of the Hero Foundation, Inc. He completed his Master’s in Business Management (MBM) degree in 1989 from the Asian Institute of Management (AIM) in Makati City and graduated in the top 5% of his class at the Philippine Military Academy in Baguio City in 1985. He also took up Master Planning and Mixed-Use Development at Harvard University School of Urban Design.

Jaime E. Ysmael, Filipino, 54 , has served as director of CHI since April 2008 and Treasurer of the Company since August 2014. He concurrently holds the following positions in other publicly listed companies: Senior Vice President, Chief Finance Officer, Compliance Officer, and member of the Management Committee of Ayala Land, Inc., Managing Director of Ayala Corporation, Treasurer of Cebu Property Ventures and Development Corporation and Director of Concrete Aggregates Corporation. He was elected as Chairman, President & Chief Executive Officer of Ortigas Company Limited Partnership, OCLP Holdings, Inc. (An Ortigas Company) and Concrete Aggregates Corporation. His other significant positions include: Chairman of the Board of Directors of Aprisa Business Process Solutions, Inc. and Anvaya Cove Beach and Nature Club, Inc.; Director and Vice Chairman of CMPI Holdings, Inc.; Chairman and President of Tower One & Exchange Plaza Condominium Corporation; Director and Treasurer of Ayala Land International Sales, Inc., Ayala Land Sales, Inc., Alveo Land Corp., Laguna Technopark, Inc., Serendra, Inc., Ayala Hotels, Inc., Ayala Land Hotels and Resorts Corporation, and Philippine Integrated Energy Solutions, Inc,; Director, Treasurer and Compliance Officer of Anvaya Cove Golf and Sports Club, Inc.; Director of Alabang Commercial Corp., Amaia Land Corp., Avida Land Corp., North Triangle Depot Commercial Corp., Station Square East Commercial Corp., Ceci Realty, Inc., Aurora Properties, Inc. and Vesta Properties Holdings, Inc. He is also the Chairman of the FINEX Research and Development Foundation, Inc. and is a member of the Board of Directors of the Financial Executives Institute of the Philippines, Inc., CIBI Foundation, Inc. and Asia Pacific Real Estate Association Ltd. Philippine Chapter. He is also the Director & Treasurer of the Integrity Initiative, Inc. Mr. Ysmael holds a degree in Business Administration, Major in Accounting (Summa

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Cum Laude) at the University of the East, Manila, Philippines and is a Certified Public Accountant. He earned an MBA, Major in Finance, at The Wharton School and an MA in International Studies at The School of Arts and Sciences of the University of Pennsylvania in Philadelphia, USA, as a fellow of The Joseph H. Lauder Institute of Management and International Studies.

Emilio Lolito J. Tumbocon , Filipino, 59, has served as director of CHI since April 29, 2008. He held the following significant positions in other publicly listed company: Group Head of Human Resources & Public Affairs Group and member of the Management Committee of Ayala Land, Inc.; Director of the following companies: Cebu Insular Hotel Co., Inc., Cebu District Property Enterprise, Inc., Accendo Commercial Corporation, Cagayan de Oro Gateway Corporation, Taft Punta Engaño Property, Inc., Alveo Land Corporation, Amaia Land Corporation, Makati Development Corporation, MDC Buildplus, Inc., MDC Equipment Solutions, Inc., MDC Subic, Inc., Ecozone Power Management, Laguna Technopark, Inc., Anvaya Cove Golf & Sports Club, Inc., Northgate Hotel Ventures, Inc., ALI Makati Hotel Property, Inc., ALI Makati Hotel and Residences, Inc., Aviana Development Corporation, Ayala Land Hotels and Resorts Corporation, Cebu Leisure Company, Inc., Lagdigan Land Corporation, Southcrest Hotel Ventures, Inc., Westview Commercial Ventures Corporation, Avencosouth Corporation, Whiteknight Holdings, Inc., and Adauge Commercial Corporation. He was the past Senior Vice President of Ayala Land, Inc. He graduated at the University of the Philippines with a degree of B.S. in Civil Engineering in 1979 and finished his Master’s in Business Administration (MBA) in the same university in 1985. He also took the Construction Executive Program (CEPS ’87) at Stanford University, California, U.S.A., the Senior Business Executive Program (SBEP’91) at the University of Asia & the Pacific, and The Executive Program (TEP’97) at the Darden Graduate School of Business Administration, University of Virginia, U.S.A. He is a Commissioner of the Construction Industry Arbitration Commission of the Construction Industry Authority of the Philippines, Department of Trade & Industry and is a certified Project Management Professional (PMP) of the Project Management Institute since 2006 and he is also a director for Public Relations, Project Management Institute, Philippine Chapter & Philippine Constructor’s Association Foundation, Inc. He is the President of UP Alumni Engineers, Inc. He has 36 years of extensive work experience in the construction and real estate industry.

Antonio S. Abacan Jr. , Filipino, 72, has served as director of Cebu Holdings Inc. since November 1993. Concurrently, he is the Group Vice Chairman of Metrobank Group of Companies. He chairs companies within the group such as Toyota Financial Services (Phils) Inc., Sumisho Motor Finance, Manila Medical Services Inc. (Manila Doctors Hospital), Circa 2000 Homes Inc., Manila- GT Medical Center and Manila Tytana Colleges. He holds other significant positions such as Senior Adviser of Metropolitan Bank and Trust Company, which is a publicly listed company, Vice Chairman and Executive Director of Global Business Power Corporation and Vice Chairman and Director of Panay Energy Development Corporation. He serves as director in other companies such as Cebu Energy Development Corporation, Panay Power Corporation, Panay Power Holdings, ARB Power Ventures, Inc., GBH Power Resources, Inc., Global Formosa Power Holdings, Inc., Global Energy Supply Corporation and Vivant Corporation. He is a member of the Advisory Board of GT Capital Holdings Inc., which is a publicly listed company, Metrobank Foundation, Toyota Manila Bay Corporation and Toyota Cubao, Inc., He is the Director for Banking, Finance and Taxation of the Philippine Chamber of Commerce and Industry. He is the Corporate Secretary and Treasurer of LGU Guarantee Corporation and a member of the Board of Governors of Makati Commercial Estate Association (MACEA). He also served as a member of the Board of Trustees of Manila Tytana Colleges. He graduated from the Mapua Institute of Technology with a Bachelor of Science degree in Business Administration Major in Banking and Finance in year 1962 at Mapua Institute of Technology and Major in Accounting at Far Eastern University in 1963. He also attended, the Executive Program of the Graduate school of Business at Stanford, California U.S.A. in year 1991 and finished his Doctorate Degree of Business Administration at the Philippine Women’s University (Honoris Causa) in year 2010. For his personal accomplishments, he was awarded The Outstanding Filipino Award (TOFIL) for Banking by the Philippine Jaycee Senate in 2008, and Huwarang Anak ng Bulacan/Outstanding Bulakeño Achievers by Club Bulakeño, Inc. in 2011. He was also a recipient of the 1978 Outstanding Alumnus of Mapua Institute of Technology, the Communications and Leadership Award by Toastmaster International in 1999, the CEO Excel Award given by the International Association of Business Communicators (IABC) in 2006 and in 2007, and the Outstanding Alumnus Award of the Far Eastern University.

Maria Theresa M. Javier , Filipino, 45, has served as a director of Cebu Holdings, Inc. since July 16, 2012. She is a director of Cebu Property Ventures and Development Corporation, a publicly listed company. She is

- 44 - the Head of the Corporate Banking Division of Bank of the Philippine Islands. She is also a member of the Board of Senior Advisers of the Fund Managers Association and Financial Executives Institute of the Philippines. She served as past President of the Fund Managers Association and Trust Officers Association of the Philippines. She served as Economic Development Specialist of the National Economic and Development Authority (NEDA). She is a graduate of the Advanced Management Program at Harvard Business School, Boston, Massachusetts (2010). She completed the CFA Institute Investment Management Workshop also at Harvard Business School (2006). She has a Master’s Degree in Economics from the University of the Philippines School of Economics, Diliman (1995) and graduated cum laude with B.S. Economics Degree from the University of the Philippines, Los Baños (1990) where she received the Most Outstanding Alumnus award.

Pampio A. Abarintos , Filipino, 72, has served as an independent director of Cebu Holdings Inc. (CHI) since April 8, 2014. He retired as Executive Justice of the Court of Appeals, Visayas Station. He was appointed as CA Justice in 2004 and served until December 2013. Awarded with the Presidential Award for speedy case disposal by the Court of Appeals, Manila in 2005. He retired with ZERO backlog of cases in 2013. After practicing as a Lawyer for 17 years, he was appointed as Regional Trial Court Judge in Negros Oriental and in Cebu City from 1987 to 2013. He was an awardee for the Judicial Excellence as the Most Outstanding Judge of the Philippines in 2003. He was former Officer of the Integrated Bar of the Philippines, Cebu City Chapter and President of the Rotary Club of Cebu University District. Presently he is a member of the Regional Advisory Council of the Philippines National Police (PNP) Region 7; Member of the Management Committee (MANCOM) and Chairman of the Committee on Discipline and Arbitrator of Alta Vista Golf and Country Club, Cebu City and he also served as a Director of South Hills Residents’ Association (SHRA), Cebu City. He graduated as cum laude in Bachelor of Arts from the University of San Jose Recoletos, Cebu City in 1965. In 1969, he also graduated Bachelor of Laws from the University of the Visayas, Cebu City. He has a Master’s Degree in Business Administration (MBA) from the Southwestern University, Cebu City in 1981.

Enrique L. Benedicto , Filipino, 74, has served as an independent director of CHI since April 25, 2003. He is currently the honorary consul of Belgium. His other current regular directorships include: Chairman of Mabuhay Filcement, Inc., and Vice-Chairman of Bernardo Benedicto Foundation, Inc., and he also a director of Enrison Land, Inc., Enrison Holdings, Inc., Berbenwood Industries, Inc., and Benedict Ventures, Inc. He also serves as an Independent Director of SPC Power Corp., a publicly listed company. He received the following awards: ‘Officer in the Order of Leopold II’ by his Majesty Baudowin King of the Belgians, ‘Officer in the Order of Leopold ll’ by His Majesty King Albert II of the Kingdom of Belgium, the highest award that can be given to civilians, Belgian or non-Belgian, Garbo sa Sugbu Awardee given by the Province of Cebu for his outstanding achievement in International Relations as Honorary Consul of Belgium, Most Outstanding Cebuano Citizen per Cebu City Council Resolution dated February 18, 1991, Great Cebuano Award conferred by the Province of Cebu, Sugbuanong Kumintaristang Nagpakabana (SUKNA), Kapisanan ng mga Brodkaster ng Pilipinas (KBP) and Mandaue Chamber of Commerce and Industry, Inc., Entrepreneur of the Year Award conferred by the Cebu Chamber of Commerce & Industry in celebration of its Centennial +10 Anniversary, ‘Most Outstanding Alumnus’ award given by the University of San Jose-Recoletos. He earned his degree in Commerce at the University of San Jose Recoletos in 1964.

Fr. Roderick C. Salazar Jr. SVD , Filipino, 68, has served as an independent director of Cebu Holdings Inc. since April 29, 2005. For more than 15 years, until June 2014, he was Chairman of the Board of Trustees of St. Jude Catholic School in Manila. He is currently the Chair of the Board of Trustees of St. Scholastica’s College, Westgrove; and St. Agnes Academy in Legazpi City. He is a member of the Board of Trustees of St. Paul University in Dumaguete City and Center for Educational Measurement (CEM). He is the Regional Secretary for Asia, and the President of the Office Internationale de l’Enseignement Catholique (OIEC), while concurrently serving as the Executive Secretary of the Office of Education and Faith Formation of the Federation of Asian Bishops Conferences (FABC-OEFF). He worked in various academic and administrative positions at the University of San Carlos for 34 years (1975-2009) since his ordination to the priesthood on June 21, 1974. He was USC president for twelve years (four 3-year terms: 1987-1990; 1990-1993; 2002- 2005; 2005-2008). From 1992 to 2008, he was also President of the Catholic Educational Association of the Philippines (CEAP). Before being elected OIEC president in October 2011, he was Vice President for Asia of the same organization. Outside USC, he was member of various groups like FILIPINO, Inc. (Filipino Institute for the Promotion of Integrity and Nobility); San Carlos Community Development Foundation, Divine Word Educational Association (DWEA); Philippine Accrediting Association of Schools, Colleges, and Universities

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(PAASCU); Private Educational Advisory Council (PEAC); Word Broadcasting Corporation. As past CEAP president, he served three terms as past Chair of the Coordinating Council of Private Educational Associations (COCPEA). He had also been past Chair of the Board of Trustees of St. Scholastica’s Academy in Tabunok, Talisay City, Cebu; Divine Word University (now Liceo del Verbo Divino) in Tacloban City; and Divine Word College of Tagbilaran (now Holy Name University). He was a member of the Board of Trustees of St. Paul University in Tuguegarao, and, at different times, of the St Paul Colleges in Pasig, Iloilo, and Surigao, as well as of the Visayas Cluster of the Daughters of Charity (DC) schools. He was a Board Director of People’s Television Network (PTV4), and of First Metro Asset Management, Inc. (FAMI). He has two Master’s Degree, one in Philosophy from Divine Word Seminary, Tagaytay City in 1976, and another in Mass Communications from the University of Leicester, England (October 1982 to September 1983), degree conferred on July 1984. He has two honorary Doctorates in the Humanities, the first given in March 2010 by St Paul University, Tuguegarao City; the second, awarded by Aquinas University, Legazpi City on April 8, 2011. On August 14, 2010, in the Archdiocese of Cebu, he received the Papal Award Croce Pro Ecclesia et Pontifice for his years of service in Catholic Education. In June 2014 his congregation appointed him Director of SVD Mission Philippines.

Nominees to the Board of Directors for election at the stockholders’ meeting

All above incumbent directors.

Corporate Officers

Bernard Vincent O. Dy* Chairman of the Board Aniceto V. Bisnar Jr.* President Jaime E. Ysmael* Treasurer Enrique B. Manuel Jr. Vice President, Chief Finance Officer/Compliance Officer June Vee D. Monteclaro -Navarro Corporate Secretary Nimfa Ambrosia P. Paras Assistant Corporate Secretary * Members of the Board of Directors

Enrique B. Manuel Jr. , Filipino, 42, is the Vice President, Chief Finance Officer and Chief Compliance Officer of Cebu Holdings, Inc. (CHI) and Cebu Property Ventures & Development Corporation (CPVDC). He is the Assistant Vice President and Group Chief Finance Officer of Ayala Land Inc.-Visayas and Mindanao Group. His other significant positions include: Director of Cagayan De Oro Gateway Corp., Treasurer of Accendo Commercial Corp. and Solinea, Inc. Prior to joining Ayala Land in 2007, he was a Senior Manager in the Risk Management Group of Ernst & Young LLP, based in New York City, U.S.A. He was appointed as member of the Management Committee of CHI and CPVDC in March 2011. He graduated from the University of Philippines with a Bachelor of Science Degree in Business Administration in 1994. He took his Master’s in Business Administration from the Boston University Graduate School of Business with a Double Major in Operations and Finance in 2000.

June Vee D. Monteclaro-Navarro, Filipino, 44, is the Corporate Secretary of CHI since February 2014. She is the Assistant Corporate Secretary of Ayala Land, Inc. (“ALI”) since April 2014 and General Counsel of ALI since April 2015. She was a Deputy General Counsel of ALI from April 2014 to April 2015. She is a Director and Corporate Secretary of AG Counselors Corporation. Currently, she also holds the position of Director of AyalaLand Commercial Reit, Inc.; and Corporate Secretary of Cebu Property Ventures and Development Corporation, Alveo Land Corp., Asterion Technopod Incorporated, Avida Land Corp., Avida Sales Corp., and Ayala Land Sales, Inc. ; She earned a Bachelor of Laws degree from the University of the Philippines in 1997.

Nimfa Ambrosia P. Paras, Filipino, 50, has served as the Assistant Corporate Secretary of CHI since February 2014. She is a Senior Counsel of Ayala Group Legal. She is the Assistant Corporate Secretary of listed companies namely: Ayala Land, Inc. and Cebu Property Ventures and Development Corporation. She handles various corporate secretarial functions for affiliates of CHI and for a number of companies within the Ayala Group. She was the Assistant Corporate Secretary of Integrated Micro-Electronics, Inc. from April 2014 to April 2015. Prior to joining Ayala Group Legal in February 2014, she was a State Counsel at the

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Department of Justice. She also worked at the Regional Trial Courts of Makati and Quezon City. In the private sector, she worked as Legal Counsel for Coca-Cola Bottlers Philippines, Inc., RFM Corporation, and Roasters Philippines, Inc. She graduated with a Bachelors of Law degree from Manuel L. Quezon School of Law in 1990.

(2) Significant Employees

The Corporation considers its entire work force as significant employees. Everyone is expected to work together as a team to achieve the Corporation’s goals and objectives.

(3) Family Relationship

None of the Directors or Executive Officers is related to another by affinity or consanguinity.

(4) Legal Proceedings

None of the Directors or Executive Officers is involved in any material pending legal proceeding in any court or administrative agency of the Government in the last five years.

Item 10. Executive Compensation (of Directors & Officers) (Part V, Paragraph (b) of RSA 3-3)

Directors. Article IV Section 10 of the Company’s Amended By-Laws provides:

“Section 10 - The Chairman and members of the Board shall receive such remuneration as may be fixed by the Board of Directors each year.”

Officers Annual Compensation

The total annual compensation paid to the top four (4) Officers of the Corporation, including the President for the year 2015 amounted to P 22.3 million. During the previous year, the total compensation paid of the Corporation amounted to P 23.7 million. For the current year, it is projected that the total annual compensation will total P23.5 million.

Name and Principal Position Year Salary Other Variable Pay Aniceto V. Bisnar Jr. President Enrique B. Manuel Jr. Vice President and Chief Finance Officer/Compliance Officer Ma. Clavel G. Tongco Vice President and Head, Commercial Business Group Nerissa N. Josef-Mediano Vice President and Head, Business Development and Office Leasing Group Ma. Cecilia Crispina T. Urbina Assistant Vice President and Head, Corporate Services Group and Human Resources and Administration

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All above-named Officers as a Actual 2014 P21.8 M P1.9 M group (Restated) Actual 2015 P21.3 M P1.0 M Projected 2016 P22.4 M P1.1 M All other officers* as a group Actual 2014 P19.1 M P1.2 M unnamed Actual 2015 P19.1 M P1.4 M Projected 2016 P20.0 M P1.5 M * Senior Personnel with pay class of SP-C.

The total annual compensation was all paid in cash. The total annual compensation included the basic salary and other variable pay (performance bonus).

The executive officers are composed of regular employees of the Company and four (4) are seconded personnel from ALI.

The Company has no other arrangement with regard to the remuneration of its existing directors and officers aside from the compensation received as herein stated.

Compensation of Directors

The members of the Board of Directors are entitled to receive a reasonable per diem for attendance at each meeting of the Board of Directors. Other than such per diem, there is no other arrangement pursuant to which any amount or compensation is due to the directors for services rendered as such.

Employment Contracts, Termination of Employment and Change-in-Control Arrangements

An employment contract between the Registrant and a named executive officer will normally include a compensation package, duties and responsibilities and term of employment. The Registrant has not entered into any compensatory plan or arrangement with any named executive officer which would entitle such named executive officer to receive any amount under such plan or arrangement as a result of, or which will result from, the resignation, retirement or any other termination of such executive officer’s employment with the Registrant and its subsidiaries or from a change in control of the Registrant or a change in the executive officer’s responsibilities following a change in control of the Registrant.

Warrants and Options Outstanding

Other than options to purchase shares of the authorized capital stock of the Registrant in their capacity as stockholders of the Registrant pursuant to their pre-emptive right granted by the Articles of Incorporation, there are no outstanding warrants or options held by the chief executive officer, named executive officers and other officers or directors of the Registrant.

Item 11. Security Ownership of Certain Beneficial Owners and Management (Part IV, Paragraph (C) of SRC Rule 12)

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1. Security Ownership of Certain Record and Beneficial Owners (of more than 5%) of Common Shares as of January 31, 2016.

Title of Name, address of Name of Beneficial Citizenship No. of Shares Percent Class Record Owner and Owner and Held Relationship with Relationship with Issuer Record Ow ner Common Ayala Land, Inc. 1 Ayala Land, Inc. 2 Filipino 1,082,109,737 56.36% 31/F Tower One & Exchange Plaza Ayala Triangle, Ayala Ave. Makati City Common PCD Nominee Corp. Aberdeen Asset Singaporean 331,912,700 17.29% (Non-Filipino) 3 Management Asia G/F MSE Bldg. Limited 4 Ayala Ave., Makati City Common First Metro Investment First Metro Investment Filipino 186,695,363 9.72% Corporation 5 Corporation 6 45/F G.T. Tower International, Ayala Ave. cor. H.V. Dela Costa St. Makati City Common PCD Nominee Corp. First Metro Investment Filipino 34,505,001 1.80% (Filipino) 4 Corporation 7 G/F MSE Bldg. Ayala Ave., Makati City Common PCD Nominee Corp. Aberdeen International Hong Kong 196,895,200 10.25% (Non-Filipino) 4 Fund Managers G/F MSE Bldg. Limited 5 Ayala Ave., Makati City

1 Ayala Land, Inc. (ALI) is a major shareholder of CHI. 2 Pursuant to the By-Laws of ALI and the Corporation Code, the Board of Directors of ALI has the power to decide how ALI shares in CHI are to be voted. Mr. Bernard Vincent O. Dy has been named and appointed to exercise the voting power. 3 The PCD is not related to the Company. 4 As stated in the Statements of Changes in Beneficial Ownership of Securities (SEC Form 23-B) filed in September 2015, Aberdeen Asset Management Asia Limited and Aberdeen International Fund Managers Limited (“Aberdeen Companies”) are clients of a PCD participant. The Company has no record relating to the power to decide how the shares held by PCD and beneficially owned by Aberdeen are to be voted. 5 First Metro Investment Corp. (First Metro) is not related to the Company. 6 The Board of Directors of First Metro has the power to decide how First Metro’s shares in CHI are to be voted. Mr. Antonio S. Abacan Jr. is usually appointed to exercise the voting power. - 49 -

Common PCD Nominee Corp. Government Service Filipino 97,278,800 5.07% (Filipino) 4 Insurance System 7 G/F MSE Bldg. Ayala Ave., Makati City

2. Security Ownership of Directors and Management (Corporate Officers) as of January 31, 2016.

Title of Name of Beneficial Owner Amount and Nature Citizenship Percent of Class of Beneficial Class Ownership Directors Common Bernard Vincent O. Dy 1 (direct) Filipino 0.0000% Common Aniceto V. Bisnar Jr. 1 (dire ct) Filipino 0.0000% Common Antonio S. Abacan Jr. 18,751 (direct) Filipino 0.0010% Common Maria Theresa M. Javier 1 (direct) Filipino 0.0000% Common Emilio Lolito J. Tumbocon 112,500 (direct) Filipino 0.0059% Common Enrique L. Benedicto 1 (direct) Filipino 0.0000% Common Fr. Roderick C. Salazar Jr. 1 (direct) Filipino 0.0000% Common Pampio A. Abarintos 1,000 (direct) Filipino 0.0001% Common Jaime E. Ysmael 16,875 (direct & Filipino 0.0009% indirect) President and Highly Compensated Officers Common Aniceto V. Bisnar, Jr. 1 (direct) Filipino 0.0000% Common Enrique B. Manuel Jr. 0 Filipino n/a Common Ma. Clavel G. Tongco 6,250 (direct) Filipino 0.0003% Common Nerissa N. Josef-Mediano 1,875 (direct) Filipino 0.0001% Common Ma. Cecilia Crispina T. 0 Filipino n/a Urbina Other Corporate Officers Common June Vee D. Monteclaro- 0 Filipino n/a Navarro Common Nimfa Ambrosia P. Paras 0 Filipino n/a All Directors and Officers as a group 157,256 0.0082%

None of the members of the Company’s directors and management owns 2.0% or more of the outstanding capital stock of the Company.

No change of control in the Corporation has occurred since the beginning of its last fiscal year.

(3) Voting Trust Holders of 2% or More

No Director, Executive Officer, or stockholder holds more than 2% of a class under a voting trust or similar agreement.

(4) Changes in Control

As of the date hereof, there is no agreement or arrangement which may result in a change in control of the Company.

7 The Company has no record on how the Government Service Insurance System exercise the power to decide how its shares in the Company are to be voted.

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Item 12. Certain Relationships and Related Transactions (Part IV, Paragraph (D) of SRC Rule 12)

CHI and its subsidiaries (the “Group”) in the regular conduct of business have entered into transactions with related parties. Parties are considered to be related if, among others, one party has the ability, directly or indirectly, to control the other party in making financial and operating decisions, the parties are subject to common control or the party is an associate or a joint venture. Except as otherwise indicated, the outstanding accounts with related parties shall be settled in cash. The transactions are made at terms and prices agreed upon by the parties. There have been no guarantees provided or received for any related party receivables or payables and are generally unsecured. Furthermore, these accounts are non-interest bearing except for intercompany loans.

The Group does not provide any allowance relating to receivable from related parties. This assessment is undertaken each financial year through examining the financial position of the related parties and the markets in which the related parties operate.

The following tables provide the total amount of transactions that have been entered into with related parties for the relevant financial year:

Amounts owed by related parties 2015 2014 (In Thousands) Associates Southportal Properties, Inc. (SPI) P=445,116 P=224,657 Solinea 251,234 − Cebu District Property Enterprise, Inc. (CDPEI) 125,807 − Central Block Developers, Inc. (CBDI) 65,104 − Parent Company ALI 13,806 9,303 Subsidiaries of ALI Avida Land Corp. (ALC) 822,621 77,153 Amaia Land Corp. 348,515 − Accendo Commercial Corp. 225,118 55 Alveo Land Corp. (Alveo) 164,861 29,665 Ayala Land Metro North 126,222 − Northbeacon Commercial Corp. 27,027 − Southgateway Development Corp. 20,004 − Soltea Commercial 14,300 − Summerhill 13,000 − Avencosouth Corp. 6,205 − Makati Development Corp. (MDC) 5,932 3,015 Ayala Land Sales, Inc. (ALSI) 723 611 North Triangle Depot 565 − Amicassa Process Solutions, Inc. (APSI) 428 147 ALI Commercial Center 320 − Leisure and Allied Industries, Phils. (LAIP) 121 84 Others 1, 804 546 Total P=2,678,833 P=345,236

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Amounts owed to related parties 2015 2014 (In Thousands) Parent Company ALI P=495,060 P=334,173 Subsidiaries of ALI MDC 1,001,667 150,055 ALI CII 133,686 − Serendra, Inc. 100,000 100,000 ALC 61,020 73,097 PhilEnergy 24,601 68,085 Cagayan De Oro Gateway Corporation 35,000 − Subic Bay Town Center, Inc. 22,500 − Lagoon Development Corporation 20,000 − Alveo 18,131 18,131 Ayala Medical Facilities Leasing Inc. 10,000 − Ceci Realty, Inc. 10,000 − Westview Commercial Ventures Corp. 10,000 − Ayala Property Management Corporation 7,239 − ALI Commercial Center 741 − APSI 127 − ACC 40 − North Triangle Depot 25 − DirectPower Services, Inc. (DPSI) − 150,000 Alabang Commercial Corp. − 10 Others 1,074 60 Total P=1,950,911 P=893,611

Revenue 2015 2014 2013 (In Thousands) Associates SPI P=330,711 P=− P=− CDPEI 122,978 − − Parent Company ALI 8,115 3,855 12,098 Subsidiaries of ALI ALC 633,613 − − LAIP 1,035 2,084 − Alveo 1,121 811 − Total P=1,097,573 P=6,750 P=12,098

Costs/Expenses 2015 2014 2013 (In Thousands) Parent Company ALI P=180,268 P=122,322 P=73,461 Subsidiaries of ALI Alveo − 5,201 10,475 ALC 293 1,568 7,523 Ayala Property Management Corp. (APMC) 26,753 7,860 8,346 Total P=207,314 P=136,951 P=99,805

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Receivables from/payables to Solinea, Avida and Alveo pertain mostly to advances for and reimbursements of operating expenses, development costs and land acquisitions. Other related party receivables and payables pertain to advances and reimbursements arising from the Group’s ordinary course of business. These are generally trade-related, unsecured with no impairment, noninterest- bearing and payable within one (1) year. The loans from DPSI, MDC and Serendra, Inc. bear interest ranging from 2.3% to 2.5% and are due and demandable as of December 31, 2015 and 2014.

In December 2015, the Group sold land to ALC amounting to P=633.61 million which is payable in installment basis for twenty (20) years starting 2015.

Included under accrued project costs in accounts and other payables are construction costs payable to MDC amounting to P=1,301.6 million and P=572.6 million as of December 31, 2015 and 2014, respectively. Advances to MDC, which are included under advances to contractors in accounts receivable amounted to P=187.9 million and P=324.6 million as of December 31, 2015 and 2014, respectively.

The nature and amounts of material transactions with related parties as of December 31, 2015 and 2014 are as follows:

Expenses to ALI pertain to management fees, professional fees and systems costs.

Management and service fees charged by ALI amounted to P=133.1 million, P=79.8 million, and P=73.4 million in 2015, 2014 and 2013, respectively. Payable to ALI as of December 31, 2015 and 2014 arising from this transaction amounted to P=187.61 million and P=111.8 million, respectively. Professional fees charged by ALI amounted to P=20.7 million, P=18.9 million and P=33.0 million in 2015, 2014 and 2013, respectively. Systems costs which were included in the Group’s manpower costs amounted to P=25.06 million, P=32.1 million and P=19.7 million in 2015, 2014 and 2013, respectively.

Included in the Group’s other current assets and other noncurrent assets is a dividend receivable from CIHCI with a total amount of P=31.1 million as of December 31, 2015. This is collectible in installment until 2017. This was previously included under other current assets with carrying amount of P=29.9 million as of December 31, 2014. The reclassification was due to change in expected schedule of payment by CIHCI.

As of December 31, 2015 and 2014, the Group has entered into transactions with Bank of the Philippine Islands (BPI), an affiliate, consisting of cash and cash equivalents, financial assets at FVPL and long- term debt with carrying amounts as follows:

2015 2014 (In Thousands) Cash and cash equivalents (Note 4) P=92,250 P=564,726 Financial assets at FVPL (Note 6) 73,565 204,077 Long-term debt (Note 16) 1,272,562 1,359,513 P=1,438,377 P=2,128,316

Compensation of key management personnel by benefit type follows:

2015 2014 2013 (In Thousands)

Short -term employee benefits P=21,336 P=26,067 P=20,634 Post-employment pension and other benefits 1,025 2,270 2,237 P=22,361 P=28,337 P=22,871

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Item 13. Compliance with Leading Practice on Corporate Governance- Pls. refer to the attached (Annual Corporate Governance Report for the year 2015).

Compliance with leading practice on Corporate Governance

a. The evaluation system which was established to measure or determine the level of compliance of the Board of Directors and top level management with its Revised Manual of Corporate Governance consists of a Customer Satisfaction Survey form that is filled out by the various functional groups indicating the compliance rating of certain institutional units and their activities. The evaluation process also includes a Board Performance Assessment that is accomplished by the Board of Directors indicating the compliance ratings. The aforementioned forms are submitted to the Compliance Officer who issues the required certificate of compliance with the Company’s Revised Manual of Corporate Governance to the Securities and Exchange Commission.

b. To ensure good governance, the Board establishes the vision, strategic objectives, key policies, and procedures for the management of the Company, as well as the mechanism for monitoring and evaluating Management’s performance. The Board also ensures the presence and adequacy of internal control mechanisms for good governance.

c. There was no deviation committed by any of the Company’s directors and officers on the Revised Manual of Corporate Governance during the period covered in this report. The Company adopted the Revised Manual of Corporate Governance, and full compliance with the same has been made since the adoption of the Revised Manual.

d. The Company is taking further steps to enhance adherence to principles and practices of good corporate governance. Below are some of the initiatives being undertaken by the Company to ensure adherence to corporate governance. o Adoption of Risks Management System o Adherence to Organizational and Procedural Controls o Independent Audit Mechanism o Regular Reporting to Audit Committee o Creation of Board Committees o Financial and Operational Reporting o Compliance to government regulatory and reportorial requirements o Disclosure and Transparency to the Public

There was no deviation committed by any of the Company’s directors’ and officers on the Manual of Corporate Governance during the period covered in this report.

List of all parents of the registrant showing the basis of control and as to each parent, the percentage of voting securities owned or the basis of control by its immediate parent, if any.

* Ayala Land, Inc. (ALI) 56.36% owner (1,082,109,737 shares) ALI is majority owned by Ayala Corporation.

PART IV EXIBITS AND SCHEDULES

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

(a) Exhibits - See accompanying Index to Exhibits The following exhibit is incorporated by reference in this report:

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2015 Consolidated Financial Statements

The other exhibits, as indicated in the Index to Exhibits are either not applicable to the Company or require no answer.

(b) Reports on Sec Form 17-C

The following current reports have been reported by Cebu Holdings, Inc. during the year 2015 through official disclosure letters dated:

February 23, 2015 The Company’s Executive Committee agreed to reset the Annual Stockholders’ Meeting from April 30, 2015 to April 24, 2015 at 10:00 o’clock in the morning at the same venue.

February 27, 2015 Cebu Holdings, Inc. submitted the copy of the certificates of attendance of the following Directors and Key Officers of our Company who participated in the Ayala Corporate Governance and Risk Management Summit held on 18 February 2015 at the Fairmont Makati in compliance with the SEC Memoranda 20, Series of 2013 and 1, Series of 2014.

April 24, 2015 CHI announced the Results of the Annual Stockholders’ Meeting and Organizational Board of Directors’ Meeting.

April 30, 2015 Cebu Holdings, Inc. submitted the copy of the certificate of attendance of Mr. Antonio S. Abacan, Jr., one of our directors who participated in the Annual Training Program for Corporate Governance held on 22 April 2015 at the GT Tower, Makati City in compliance with the SEC Memoranda 20, Series of 2013 and 1, Series of 2014.

May 18, 2015 Cebu Holdings, Inc. submitted the enclosed certification of its Independent Directors in compliance with the notice of the Securities & Exchange Commission implementing Section 38 of the Securities Regulation Code (SRC).

June 30, 2015 CHI through SM-ALI Group consortium, participated and won in the bidding for Lot No. 8-B-1, containing an area of 263,384 square meters, w/c is a portion of Cebu City-owned lot located at the South Road Properties, Cebu City.

July 20, 2015 CHI informed that the SEC approved today the amendment to the Second Article of our Articles of Incorporation to allow the Company to engage in all forms of business and mercantile acts and transactions.

December 01, 2015 Cebu Holdings, Inc. Board of Directors (BOD) approved the following: 1. Declaration and payment of a cash dividend of P0.12 per share to all outstanding shares of the company as of record date December 16, 2015, payable on December 23, 2015. 2. Setting of the 2016 annual stockholders’ meeting on 18 April 2016 at 10:00 o’clock in the morning at Cebu City Sports Club, Cebu City.

December 21, 2015 Cebu Holdings, Inc. certified the attendance of the Board of Directors in all meetings of the corporation’s Board of Directors in 2015 in compliance w/ the SEC Memorandum Circular No. 1, Series of 2014.

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Item 14. Additional Disclosures Data:

a. External Audit Fees: Independent Public Accountants

Audit and Audit-Related Fees

The Company paid its external auditor the following fees in the past two years:

Audit & Audit-related Fees Tax Fees Other Fees 2015 P 605k* None P 25k 201 4 P 57 5k* None P 25 k * Exclusive of value-added tax and out of pocket expenses

SGV & Co. was engaged by the Company to audit its annual financial statements.

b. Tax Fees

No tax fees or other consultancy services were secured from external auditors, specifically SGV & Co.

c. The audit committee’s approval policies and procedures for the above services:

As indicated in the Audit & Risk Committee Charter, the Committee is responsible for the recommendation on the appointment of the external auditors and the fixing of their remuneration to the full Board. The Audit & Risk Committee reviews and approves the appointment &/or renewal of external auditors (SGV & Co.) for the fiscal year. A presentation of the scope of services to be rendered by external auditors and its corresponding professional fees are presented to the Committee for its approval during the 1 st Quarter regular Audit & Risk Committee meeting. The Committee, through its Chairman, recommends to the board en banc the approval of the external auditor appointment.

d. Financial Ratios (SRC Rule 68, Amended) – Pls. refer to Index to the 2015 Audited Financial Statements and Supplementary Schedules – (Schedule L).

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C O V E R S H E E T for AUDITED FINANCIAL STATEMENTS

SEC Registration Number 1 5 7 9 1 2

C O M P A N Y N A M E C E B U HOLD I NGS , INC. AND SUBS I D

I ARI ES

PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province ) 7 t h Fl oor , Cebu Ho l d i ngs Cen t e

r , Cebu Bus i ness Pa r k , Cebu C i

t y

Form Type Department requiring the report Secondary License Type, If Applicable AAFS CGFD N/A

C O M P A N Y I N F O R M A T I O N Company’s Email Address Company’s Telephone Number Mobile Number www.cebuholdings.com (032) 231-5301 N/A

No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day) 4,151 April 12/31

CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Email Address Telephone Number/s Mobile Number Enrique B. Manuel, Jr. manuel.rico@ayalaland. N/A N/A com.ph

CONTACT PERSON’s ADDRESS 28/F Ayala Tower I & Exchange Plaza, Makati City NOTE 1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated. 2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the Commission and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies.

*SGVFS015631* SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001, 6760 Ayala Avenue Fax: (632) 819 0872 December 14, 2015, valid until December 31, 2018 1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-4 (Group A), Philippines November 10, 2015, valid until November 9, 2018

INDEPENDENT AUDITORS’ REPORT

The Stockholders and the Board of Directors Cebu Holdings, Inc. 7th Floor, Cebu Holdings Center Cebu Business Park, Cebu City

We have audited the accompanying consolidated financial statements of Cebu Holdings, Inc. and its subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2015 and 2014, and the consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for each of the three years in the period ended December 31, 2015, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

*SGVFS015631*

A member firm of Ernst & Young Global Limited - 2 -

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Cebu Holdings, Inc. and its subsidiaries as at December 31, 2015 and 2014, and their financial performance and their cash flows for each of the three years in the period ended December 31, 2015 in accordance with Philippine Financial Reporting Standards.

SYCIP GORRES VELAYO & CO.

Jessie D. Cabaluna Partner CPA Certificate No. 36317 SEC Accreditation No. 0069-AR-3 (Group A), February 14, 2013, valid until April 30, 2016 Tax Identification No. 102-082-365 BIR Accreditation No. 08-001998-10-2015, March 24, 2015, valid until March 23, 2018 PTR No. 5321616, January 4, 2016, Makati City

February 23, 2016

*SGVFS015631*

A member firm of Ernst & Young Global Limited CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in Thousands)

December 31 2015 2014 ASSETS Current Assets Cash and cash equivalents (Notes 4 and 25) P=115,511 P=2,895,215 Short-term Investments (Note 5) 45,318 − Financial assets at fair value through profit or loss (Notes 6 and 25) 73,565 204,077 Accounts receivable (Notes 7, 18 and 25) 3,081,143 1,282,039 Inventories (Note 8) 1,379,202 1,177,799 Other current assets (Notes 9 and 25) 561,603 278,922 Total Current Assets 5,256,342 5,838,052 Noncurrent Assets Noncurrent accounts receivable (Notes 7 and 25) 425,469 106,048 Property and equipment (Note 10) 73,323 71,954 Investments in associates and a joint venture (Note 11) 1,368,384 1,058,281 Investment properties (Note 12) 10,311,290 9,210,770 Land and improvements (Note 13) 2,254,286 − Deferred tax assets - net (Note 23) 652 16,238 Other noncurrent assets (Notes 14 and 25) 43,441 83,608 Total Noncurrent Assets 14,476,845 10,546,899 P=19,733,187 P=16,384,951

LIABILITIES AND EQUITY Current Liabilities Accounts and other payables (Notes 15, 18, 25 and 26) P=4,697,960 P=2,377,386 Current portion of long-term debt (Notes 16 and 25) 107,873 492,561 Income tax payable 61,209 37,128 Deposits and other current liabilities (Notes 17 and 25) 650,852 669,766 Total Current Liabilities 5,517,894 3,576,841 Noncurrent Liabilities Long-term debt - net of current portion (Notes 16 and 25) 6,124,667 6,226,919 Pension liabilities (Note 22) 56,032 55,734 Deferred tax liabilities - net (Note 23) 169,091 77,836 Deposits and other noncurrent liabilities (Notes 17 and 25) 953,397 225,891 Total Noncurrent Liabilities 7,303,187 6,586,380 Total Liabilities 12,821,081 10,163,221 Equity (Note 26) Equity attributable to equity holders of Cebu Holdings, Inc. Paid-in capital 2,776,758 2,776,758 Retained earnings 3,335,602 2,738,804 Equity reserves (9,474) (9,474) Remeasurement loss on defined benefit plan (Notes 11 and 22) (37,615) (39,856) 6,065,271 5,466,232 Non-controlling interests 846,835 755,498 Total Equity 6,912,106 6,221,730 P=19,733,187 P=16,384,951

See accompanying Notes to Consolidated Financial Statements.

*SGVFS015631* CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, except Earnings Per Share Figures)

Years Ended December 31 2015 2014 2013 REVENUE Real estate (Note 19) P=3,134,246 P=1,754,474 P=1,780,194 Equity in net earnings of associates and a joint venture (Note 11) 106,303 79,679 47,050 Interest income (Notes 4 and 20) 98,119 71,168 72,835 Other income (Note 20) 401,591 388,258 269,431 3,740,259 2,293,579 2,169,510 COSTS AND EXPENSES Real estate (Note 21) 1,793,984 1,127,172 1,150,340 General and administrative expenses (Note 21) 223,177 229,843 226,180 Interest and other expenses (Note 21) 449,108 205,654 58,833 2,466,269 1,562,669 1,435,353 INCOME BEFORE INCOME TAX 1,273,990 730,910 734,157 PROVISION FOR INCOME TAX (Note 23) Current 207,432 145,519 182,041 Deferred 121,220 19,537 22,320 328,652 165,056 204,361 NET INCOME P=945,338 P=565,854 P=529,796 Net Income Attributable to: Equity holders of Cebu Holdings, Inc. P=827,207 P=530,877 P=501,145 Non-controlling interests 118,131 34,977 28,651 P=945,338 P=565,854 P=529,796 Basic/Diluted Earnings Per Share (Note 24) P=0.43 P=0.28 P=0.26

See accompanying Notes to Consolidated Financial Statements.

*SGVFS015631* CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in Thousands)

Years Ended December 31 2015 2014 2013 Net income P=945,338 P=565,854 P=529,796 Other comprehensive loss Other comprehensive loss not to be reclassified to profit or loss in subsequent years: Remeasurement gain (loss) on defined benefit plan (Notes 11 and 22) 3,201 (12,506) (10,830) Tax effect relating to components of other comprehensive gain (loss) (960) 3,752 3,249 Total other comprehensive loss 2,241 (8,754) (7,581) Total comprehensive income P=947,579 P=557,100 P=522,215 Total comprehensive income attributable to: Equity holders of Cebu Holdings, Inc. P=829,448 P=522,123 P=493,564 Non-controlling interests 118,131 34,977 28,651 P=947,579 P=557,100 P=522,215

See accompanying Notes to Consolidated Financial Statements.

*SGVFS015631* CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Amounts in Thousands, except Par Value and Cash Dividends Per Share Figures)

Years Ended December 31 2015 2014 2013 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF CEBU HOLDINGS, INC. Capital Stock - P=1 par value (Note 26) Balance at beginning and end of year P=1,920,073 P=1,920,073 P=1,920,073 Additional Paid-in Capital Balance at beginning and end of year 856,685 856,685 856,685 Total Paid-in Capital 2,776,758 2,776,758 2,776,758 Remeasurement loss on defined benefit plan (Notes 11 and 22) Balance at beginning of year (39,856) (31,102) (23,521) Remeasurement gain (loss) 2,241 (8,754) (7,581) Balance at end of year (37,615) (39,856) (31,102) Equity reserves Balance at beginning and end of year (9,474) (9,474) (9,474) Retained Earnings (Note 26) Appropriated for future expansion 1,300,000 1,300,000 1,300,000 Unappropriated: At beginning of year 1,438,804 1,138,336 889,446 Effect of pooling of interests − – (41,047) Net income 827,207 530,877 501,145 Cash dividends - P=0.12 per share in 2015, P=0.12 per share in 2014 and P=0.11 per share in 2013 (230,409) (230,409) (211,208) At end of year 2,035,602 1,438,804 1,138,336 3,335,602 2,738,804 2,438,336 NON-CONTROLLING INTERESTS Balance at beginning of year 755,498 747,315 327,892 Effect of pooling of interests − – (31,403) Net income 118,131 34,977 28,651 Additions to non-controlling interests − – 448,969 Dividends paid to non-controlling interests (26,794) (26,794) (26,794) Balance at end of year 846,835 755,498 747,315 P=6,912,106 P=6,221,730 P=5,921,833

See accompanying Notes to Consolidated Financial Statements.

*SGVFS015631* CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands)

Years Ended December 31 2015 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=1,273,990 P=730,910 P=734,157 Adjustments for: Interest and other financing charges (Note 21) 449,107 205,654 58,833 Depreciation and amortization (Notes 10, 12 and 21) 358,025 312,744 218,763 Loss (gain) on disposal of investment properties 2,114 − − Equity in net earnings of associates (Note 11) (106,303) (79,679) (47,050) Interest income (Note 20) (98,119) (71,168) (72,835) Unrealized foreign exchange losses (gains) (1,315) 371 (223) Gain on disposal of property and equipment (40) (52) (115) Unrealized gain on financial assets at fair value through profit or loss (38) (2,654) (3,307) Realized profit from downstream sale (Note 11) − – (4,127) Operating income before working capital changes 1,877,421 1,096,126 884,096 Decrease (increase) in: Accounts receivable (2,028,888) 169,902 14,710 Other current assets (282,682) (83,989) (103,399) Inventories (Notes 8 and 30) (144,803) 82,928 69,983 Increase (decrease) in: Accounts and other payables (Notes 15 and 30) 1,693,519 216,947 (948,452) Deposits and other liabilities 5,455 224,891 40,122 Pension liabilities 3,499 5,445 3,832 Net cash generated from (used in) operations 1,123,521 1,712,250 (39,108) Interest received 51,681 31,910 13,674 Interest paid (351,104) (223,572) (40,095) Income taxes paid (198,691) (157,988) (153,069) Net cash provided by (used in) operating activities 625,407 1,362,600 (218,598) CASH FLOWS FROM INVESTING ACTIVITIES Additions to: Investment properties (Notes 12 and 30) (1,321,780) (928,403) (831,631) Land and improvements (Notes 13 and 30) (1,199,579) − − Financial assets at fair value through profit or loss (1,077,425) (2,011,485) (423,297) Short-term investments (45,318) − – Property and equipment (Notes 10 and 30) (12,548) (20,042) (31,750) Other noncurrent assets (3,032) (28,854) (3,419) Proceeds from sale/redemption of financial assets at fair value through profit or loss (Note 6) 1,207,975 2,236,666 − Proceeds from sale of property and equipment (Note 10) 129 322 3,394 Proceeds from sale of investment properties (Note 12) 30 − − Acquisition of associates and a joint venture (Note 11) (203,800) (551,574) (52,500)

(Forward)

*SGVFS015631* - 2 -

Years Ended December 31 2015 2014 2013 Acquisition of subsidiaries, net of cash acquired P=− P=− (P=530,129) Dividends received − − 59,994 Net cash used in investing activities (2,655,348) (1,303,370) (1,809,338) CASH FLOWS FROM FINANCING ACTIVITIES Payments of long-term debt (493,875) (2,622,250) (324,693) Availments of long-term debt − 4,950,658 1,491,542 Dividends paid to: Equity holders of Cebu Holdings, Inc. (230,409) (230,409) (211,208) Non-controlling interests (26,794) (26,794) (26,794) Net cash provided by (used in) financing activities (751,078) 2,071,205 928,847 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,315 (371) 223 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,779,704) 2,130,064 (1,098,866) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 4) 2,895,215 765,151 1,864,017 CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) P=115,511 P=2,895,215 P=765,151

See accompanying Notes to Consolidated Financial Statements.

*SGVFS015631* CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Group Information

Cebu Holdings, Inc. (the Parent Company) is domiciled and was incorporated on December 9, 1988 in the Republic of the Philippines. The Parent Company is a 56.36%-owned subsidiary of Ayala Land, Inc. (ALI), a publicly listed company. ALI is a subsidiary of Ayala Corporation (AC), a publicly listed company which is 49.01%-owned by Mermac, Inc., 10.18%- owned by Mitsubishi Corporation and the rest by public.

The registered office address of the Parent Company is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines. The Parent Company is engaged in real estate development, sale of subdivided land, residential and office condominium units, sports club shares, and lease of commercial spaces.

The Parent Company’s shares of stock are publicly traded in the Philippine Stock Exchange (PSE).

Details on the Parent Company’s subsidiaries are as follows:

Cebu Leisure Company, Inc. (CLCI), a wholly owned subsidiary, is engaged in subleasing of commercial spaces, food courts and entertainment facilities. The registered office address of CLCI is at 7th Floor Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.

CBP Theatre Management Company, Inc. (CBP Theatre), a wholly owned subsidiary, is engaged in all aspects of the theatrical and cinematographic entertainment business, including theatre management and other related undertakings. The registered office address of CBP Theatre is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines. CBP Theatre has not yet started its operations as of December 31, 2014.

Cebu Property Ventures and Development Corporation (CPVDC), a subsidiary, is engaged in real estate development and sale of subdivision land and residential units. The registered office address of CPVDC is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.

Asian I-Office Properties, Inc. (AiO) is wholly owned by CPVDC and is engaged in all aspects of real estate development and in leasing of corporate spaces. The registered office address of AiO is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.

Taft Punta Engaño Property Inc. (TPEPI) was incorporated on September 8, 2011. TPEPI’s primary purpose is to create a mixed-use commercial and residential district within a 12-hectare property in Lapu-Lapu City. A joint venture agreement was entered into last April 26, 2013 between TPVDC and ALI. Under the agreement, ALI will own 55% of TPEPI and TPVDC will own the remaining 45% of TPEPI. ALI’s rights to the venture were subsequently transferred to the Parent Company on September 18, 2013 to enhance the latter’s portfolio and operations. It is consistent with the thrust of the Parent Company to expand its business. The registered office address of TPEPI is at Vicsal Building, Corner of C.D. Seno & W.O. Seno Streets, San Miguel Extension, Barangay Guizo, North Reclamation Area, Mandaue City, Cebu, Philippines.

The consolidated financial statements of Cebu Holdings Inc. and its subsidiaries (the Group) as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015 were endorsed for approval by the Audit and Risk Committee on February 3, 2016 and were approved and authorized for issue by the Board of Directors (BOD) on February 23, 2016.

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2. Summary of Significant Accounting Policies

Basis of Preparation The accompanying consolidated financial statements of the Group have been prepared using the historical cost basis, except for financial assets at fair value through profit or loss (FVPL) which have been measured at fair value. The consolidated financial statements are presented in Philippine Peso (P=), which is also the functional currency of the Parent Company. All values are rounded to the nearest thousand (P=000) except when otherwise indicated.

Statement of Compliance The consolidated financial statements of the Group have been prepared in compliance with Philippine Financial Reporting Standards (PFRS).

Basis of Consolidation The consolidated financial statements comprise the financial statements of the Parent Company and the following wholly owned and majority-owned subsidiaries as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015:

Percentage of ownership December 31 2015 2014 2013 CLCI 100% 100% 100% CBP Theatre 100 100 100 CPVDC 76 76 76 AiO* 76 76 76 TPEPI 55 55 55 * wholly owned by CPVDC

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); • Exposure, or rights, to variable returns from its involvement with the investee; and • The ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: • The contractual arrangement with the other vote holders of the investee; • Rights arising from other contractual arrangements; and • The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting year as the Parent Company, using consistent accounting policies. All intra-group balances and transactions, including income, expenses and dividends relating to transactions between members of the Group, are eliminated in full on consolidation. *SGVFS015631* - 3 -

Non-controlling interests (NCI) represent the portion of profit or loss and net assets in subsidiaries not wholly owned by the Parent Company and are presented separately in the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and within equity in the consolidated statement of financial position, separately from the equity attributable to the Parent Company.

The excess of the Parent Company’s cost of investment in CPVDC over its proportionate share in the underlying net assets at the date of acquisition was allocated to the “Inventories” and “Investment properties” accounts in the consolidated statement of financial position. The purchase premium is amortized in proportion to the area of lots (in square meters) sold by CPVDC.

The excess of the Parent Company’s cost of investment in TPEPI over its proportionate share in the underlying net assets at the date of acquisition was allocated to the “Investment properties” account in the consolidated statement of financial position. The purchase premium shall be amortized in proportion to the area of lots (in square meters) sold by TPEPI.

Total comprehensive income within a subsidiary is attributed to the NCI even if that results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

• Derecognizes the assets (including goodwill) and liabilities of the subsidiary • Derecognizes the carrying amount of any non-controlling interest • Derecognizes the cumulative translation differences recorded in equity • Recognizes the fair value of the consideration received • Recognizes the fair value of any investment retained • Recognizes any surplus or deficit in profit or loss • Reclassifies the parent’s share of components previously recognized in other comprehensive income (OCI) to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities

The Parent Company considers a subsidiary as a subsidiary with material NCI if its net assets exceed 5% of the total consolidated net assets of the Group as of the reporting period. There are no significant restrictions on the Parent Company’s ability to use assets and settle liabilities of the Group.

The Group has two subsidiaries with material NCI. Additional information regarding the subsidiaries is as follows:

Accumulated Balances of Non-controlling Profit (Loss) Allocated to Non- Interest controlling Interest Subsidiary 2015 2014 2015 2014 2013 (In Thousands) (In Thousands) CPVDC P=398,458 P=311,031 P=118,043 P=35,658 P=32,472 TPEPI 448,377 444,467 88 (681) (3,821) P=846,835 P=755,498 P=118,131 P=34,977 P=28,651

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The summarized financial information of CPVDC and TPEPI is provided below. This information is based on amounts before intercompany eliminations.

2015 CPVDC TPEPI (In Thousands) Statement of financial position Current assets P=1,076,388 P=229,281 Noncurrent assets 4,055,750 769,384 Current liabilities 1,981,442 10,765 Noncurrent liabilities 1,468,267 − Dividends paid to non-controlling interests − −

Statement of comprehensive income Revenue P=1,263,920 P=2,546 Profit (loss) attributable to: Equity of holders of the parent 379,192 107 Non-controlling interest 118,044 88 Total comprehensive income attributable to: Equity of holders of the parent − − Non-controlling interest − −

Statement of cash flows Operating activities P=978,853 (P=31,297) Investing activities (420,261) 37,245 Financing activities (605,002) (35,000) Net decrease in cash and cash equivalents (P=46,410) (P=29,052)

2014 CPVDC TPEPI (In Thousands) Statement of financial position Current assets P=882,420 P=372,631 Noncurrent assets 3,313,079 615,640 Current liabilities 1,459,097 566 Noncurrent liabilities 1,438,367 − Dividends paid to non-controlling interests 26,794 −

Statement of comprehensive income Revenue P=550,730 P=1,719 Profit (loss) attributable to: Equity of holders of the parent 114,543 (832) Non-controlling interest 35,658 (681)

Statement of cash flows Operating activities P=451,318 (P=3,921) Investing activities (478,586) (13,606) Financing activities (174,993) Net decrease in cash and cash equivalents (P=202,261) (P=17,527)

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Adoption of New and Amended Accounting Standards and Interpretations The accounting policies adopted in the preparation of the Group’s consolidated financial statements are consistent with those of the previous financial year except for the amended and improved PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions and the following amendments to existing PFRS that became effective beginning January 1, 2015 and which have no impact on the Group’s consolidated financial statements.

Annual Improvements to PFRSs (2010-2012 cycle) The Annual Improvements to PFRSs (2010-2012 cycle) contain non-urgent but necessary improvements to the following standards:

• PFRS 2, Share-based Payment: Definition of Vesting Condition • PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business Combination • PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the Total of the Reportable Segments’ Assets to the Entity’s Assets • PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Revaluation Method - Proportionate Restatement of Accumulated Depreciation and Amortization • PAS 24, Related Party Disclosures - Key Management Personnel Services

Annual Improvements to PFRSs (2011-2013 cycle) The Annual Improvements to PFRSs (2011-2013 cycle) contain non-urgent but necessary improvements to the following standards:

• PFRS 3 - Scope Exceptions for Joint Arrangements • PFRS 13, Fair Value Measurement - Portfolio Exception • PAS 40, Investment Property

Standards and interpretation issued but not yet effective The Group will adopt the following new and amended Standards and Philippine Interpretations of International Financial Reporting Interpretations Committee (IFRIC) enumerated below when these become effective. Except as otherwise indicated, the Group does not expect the adoption of these new and amended PFRS and Philippine Interpretations to have significant impact on the consolidated financial statements.

Effective January 1, 2016

• PAS 1, Presentation of Financial Statements – disclosure initiative (Amendments) • PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortization (Amendments) • PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture – Bearer Plants (Amendments) • PAS 27, Separate Financial Statements – Equity Method in Separate Financial Statements (Amendments) • PFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations (Amendments) • PFRS 10, Consolidated Financial Statements, and PAS 28, Investment in Associates and Joint Ventures - Investment Entities: Applying the Consolidation Exception (Amendments) • PFRS 14, Regulatory Deferral Accounts

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Annual Improvements to PFRSs (2012-2014 cycle) The Annual Improvements to PFRSs (2012-2014 cycle) are effective for annual periods beginning on or after January 1, 2016 and are not expected to have a material impact on the Group. This includes:

• PFRS 5, Non-current Assets Held for Sale and Discontinued Operations – Changes in Methods of Disposal • PFRS 7, Financial Instruments: Disclosures – Servicing Contracts • PFRS 7, Applicability of the Amendments to PFRS 7 to Condensed Interim Financial Statements • PAS 19, Employee Benefits – Regional Market Issue Regarding Discount Rate • PAS 34, Interim Financial Reporting – Disclosure of Information ‘Elsewhere in the Interim Financial Report’

Effective January 1, 2018

• PFRS 9, Financial Instruments – Classification and Measurement (2010 version) • PFRS 9, Financial Instruments – Hedge Accounting and amendments to PFRS 9, PFRS 7 and PAS 39 (2013 version) • PFRS 9, Financial Instruments (2014 or final version)

Standards and Interpretation with Deferred Effectivity

• Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate • PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The following standard issued by the IASB has not yet been adopted by the FRSC

• Philippine Interpretation PFRS 15, Revenue from Contracts with Customers

PFRS 15 was issued in May 2014 by the International Accounting Standards Board (IASB) and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under PFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in PFRS 15 provide a more structured approach to measuring and recognizing revenue.

The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under PFRS. Either a full or modified retrospective application is required for annual periods beginning on or after January 1, 2018. Early adoption is permitted. The Group is currently assessing the impact of PFRS 15 and plans to adopt the new standard on the required effective date once adopted locally.

These amendments are expected to have an impact to the Group given that the Group has revenue arising from contracts with customers.

• PFRS 16, Leases (effective January 1, 2019)

On January 13, 2016, the IASB issued its new standard, PFRS 16, Leases, which replaces International Accounting Standards (PAS) 17, the current leases standard, and the related Interpretations.

Under the new standard, lessees will no longer classify their leases as either operating or finance leases in accordance with PAS 17. Rather, lessees will apply the single-asset model. Under this model, lessees will recognize the assets and related liabilities for most leases on *SGVFS015631* - 7 -

their balance sheets, and subsequently, will depreciate the lease assets and recognize interest on the lease liabilities in their profit or loss. Leases with a term of 12 months or less or for which the underlying asset is of low value are exempted from these requirements.

The accounting by lessors is substantially unchanged as the new standard carries forward the principles of lessor accounting under PAS 17. Lessors, however, will be required to disclose more information in their financial statements, particularly on the risk exposure to residual value.

The new standard is effective for annual periods beginning on or after January 1, 2019. Entities may early adopt PFRS 16 but only if they have also adopted PFRS 15, Revenue from Contracts with Customers. When adopting PFRS 16, an entity is permitted to use either a full retrospective or a modified retrospective approach, with options to use certain transition reliefs. The Group is currently assessing the impact of PFRS 16 and plans to adopt the new standard on the required effective date once adopted locally.

These amendments are expected to have an impact to the Group given that the Group given that the Group has operating leases.

Cash and Cash Equivalents Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amount of cash with original maturities of three (3) months or less from date of placement and that are subject to an insignificant risk of changes in value.

Short-term Investments Short-term investments are short term, higly liquid investments with maturities of more than three (3) months and are intended for short term cash requirements of the Group.

Current and Noncurrent Classification The Group presents assets and liabilities in the statement of financial position based on current/noncurrent classification. An asset as current when it is:

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

All other assets are classified as noncurrent.

A liability is current when:

• It is expected to be settled in normal operating cycle • It is held primarily for the purpose trading • It is due to be settled within twelve months after the reporting period or • There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Group classifies all other liabilities as noncurrent.

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

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Fair Value Measurement The Group measures financial instruments such as financial assets at FVPL at fair value and discloses the fair value of its investment properties at each reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: · In the principal market for the asset or liability, or · In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

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

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

· Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities · Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable · Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Group’s management determines the policies and procedures for recurring fair value measurement of financial assets at FVPL and investment properties.

External valuers are involved for valuation of significant assets, such as investment properties. Involvement of external valuers is decided upon annually by management after discussion with and approval by the Group’s audit committee. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The management decides, after discussions with the Group’s external valuers, which valuation techniques and inputs to use for each case.

At each reporting date, the Group analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, the Group verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

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The Group, in conjunction with its external valuers, also compares each of the changes in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

Financial Assets and Financial Liabilities Date of recognition The Group recognizes a financial asset or a financial liability in the consolidated statement of financial position when it becomes a party to the contractual provisions of the instrument. In the case of a regular way purchase or sale of financial assets, recognition and derecognition, as applicable, is done using the settlement date accounting.

Initial recognition Financial assets and financial liabilities are recognized initially at fair value. Transaction costs are included in the initial measurement of all financial assets and liabilities, except for financial instruments measured at FVPL.

Financial assets within the scope of PAS 39 are classified as either financial assets at FVPL, loans and receivables, held-to-maturity financial assets, or available-for-sale (AFS) financial assets, as appropriate. Financial liabilities are classified as either financial liabilities at FVPL or other financial liabilities. The classification depends on the purpose for which the investments were acquired or liabilities were incurred and whether they are quoted in an active market. Management determines the classification of its financial instruments at initial recognition and, where allowed and appropriate, re-evaluates such designation at every reporting date.

As of December 31, 2015 and 2014, the Group’s financial assets are of the nature of loans and receivables and financial assets at FVPL.

“Day 1” difference Where the transaction price in a non-active market is different to the fair value from other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Group recognizes the difference between the transaction price and fair value (a “Day 1” difference) in the consolidated statement of income under “Interest income” and “Interest and other financing charges” accounts unless it qualifies for recognition as some other type of asset. In cases where variables used are made of data which is not observable, the difference between the transaction price and model value is only recognized in the consolidated statement of income when the inputs become observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of recognizing the “Day 1” difference amount.

Financial assets and financial liabilities at FVPL Financial assets and financial liabilities at FVPL include financial assets and financial liabilities held for trading and financial assets and financial liabilities designated upon initial recognition as at FVPL.

Financial assets and financial liabilities are classified as held for trading if they are acquired for the purpose of selling and repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments or a financial guarantee contract. Fair value gains or losses on investments held for trading, net of interest income accrued on these assets, are recognized in the consolidated statement of income under “Other income” or “Other charges”.

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Financial assets may be designated at initial recognition as FVPL if any of the following criteria are met: · the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them on a different basis; or · the assets are part of a group of financial assets which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy; or · the financial instrument contains an embedded derivative that would need to be separately recorded.

As of December 31, 2015 and 2014, the Group holds its investment in Unit Investment Trust Fund (UITF) BPI Short-term fund as held for trading and classified these as financial assets at FVPL. Management takes the view that it is held for trading and is a portfolio of diversified short-term fixed income instruments invested and managed by professional managers.

Loans and receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They are not entered into with the intention of immediate or short-term resale and are not designated as AFS financial assets or financial assets at FVPL.

After initial measurement, the loans and receivables are subsequently measured at amortized cost using the effective interest method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate (EIR). The amortization is included in “Interest income” account in the consolidated statement of income. The losses arising from impairment of such loans and receivables are recognized under “General and administrative expenses” account in the consolidated statement of income.

Loans and receivables are included in current assets if maturity is within twelve months from the reporting date. Otherwise, these are classified as noncurrent assets.

As of December 31, 2015 and 2014, the Group’s loans and receivables include cash and cash equivalents, short-term investments, accounts receivables except advances to contractors and dividends receivable included under other current assets.

Other financial liabilities Other financial liabilities are financial liabilities not designated as at FVPL where the substance of the contractual arrangement results in the Group having an obligation either to deliver cash or another financial asset to the holder, or to satisfy the obligation other than by the exchange of a fixed amount of cash or other financial asset for a fixed number of own equity shares. The components of issued financial instrument that contain both liability and equity element are accounted for separately, with the equity component being assigned the residual amount after deducting from the instrument as a whole the amount separately determined as fair value of the liability component on the date of issue. After initial measurement, other financial liabilities are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any discount or premium on the issue and fees that are an integral part of the EIR. The amortization is included in the “Interest and other financing charges” account in the consolidated statement of income.

As of December 31, 2015 and 2014, the Group’s other financial liabilities include accounts and other payables, long-term debt, deposits and other liabilities except for ‘advance rent’ and ‘customers deposits’ and other obligations that meet the above definition (other than liabilities covered by other accounting standards, such as income tax payable).

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Deposits and Other Liabilities Deposits and other liabilities which include tenants’ deposits are measured initially at fair value. The difference between the cash received and the fair value of tenants’ deposits is recognized under “Deposits and other liabilities” in the consolidated statement of financial position and amortized using the straight-line method under the “Real estate revenue” account in the consolidated statement of income. After initial recognition, tenants’ deposits are subsequently measured at amortized cost using effective interest method. Accretion of discount is recognized under “Interest and other financing charges” in the consolidated statement of income.

Derecognition of Financial Assets and Financial Liabilities Financial asset A financial asset (or, where applicable, a part of a group of financial assets) is derecognized when: a. the right to receive cash flows from the assets has expired; b. the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third-party under a “pass-through” arrangement; or c. the Group has transferred its right to receive cash flows from the asset and either: (i) has transferred substantially all the risks and rewards of the asset; or (ii) has neither transferred nor retained the risks and rewards of the asset but has transferred control of the asset.

Where the Group has transferred its right to receive cash flows from an asset or has entered into a “pass-through” arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

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

Impairment of Financial Assets The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is measurable decrease in the estimated future cash flows, such as changes in economic conditions that correlate with defaults.

Loans and receivables For loans and receivables carried at amortized cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses for impairment. Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated. Assets *SGVFS015631* - 12 - that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment for impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred). The carrying amount of the asset is reduced through use of an allowance account and the amount of loss is charged to the consolidated statement of income under the “Cost and expenses” account. Interest income continues to be recognized based on the EIR of the asset. Loans and receivables, together with the associated allowance accounts, are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognized in the consolidated statement of income, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.

For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of such credit risk characteristics as customer type, credit history, past-due status and term.

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group to reduce any differences between loss estimates and actual loss experience.

Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Inventories Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory and is valued at the lower of cost or net realizable value (NRV). NRV is the estimated selling price in the ordinary course of business, less estimated costs to complete and sell.

Cost includes: · Land cost · Land improvement cost · Amount paid to contractors for construction and development · Borrowing costs, planning and design costs, cost of site preparation, professional fees, property transfer taxes, construction overheads and other related costs

The cost of inventory recognized in the consolidated statement of income as disposal is determined with reference to the specific costs incurred on the property sold and is allocated to saleable area based on relative size.

Club shares are valued at the lower of cost or NRV. Cost is determined on the basis mainly of the actual development cost incurred plus the estimated development cost to complete the project based on the estimates as determined by in-house engineers, adjusted with the actual cost incurred as the development progresses. NRV is the estimated selling price in the ordinary course of business, less estimated costs to sell. *SGVFS015631* - 13 -

Input Value-Added-Tax Input value-added-tax (VAT) represents taxes due or paid on purchases of goods and services subjected to VAT that the Group can claim against any future liability to the Bureau of Internal Revenue (BIR) for output VAT received from sale of goods and services subjected to VAT. The input VAT can also be recovered as tax credit against future income tax liability of the Group upon approval of the BIR. A valuation allowance is provided for any portion of the input tax that cannot be claimed against output tax or recovered as tax credit against future income tax liability.

Prepaid Expenses Prepaid expenses are carried at cost less the amortized portion. These typically comprise prepayments for commissions, marketing fees, advertising and promotion, taxes and licenses, rentals and insurance.

Property and Equipment Property and equipment are carried at cost less accumulated depreciation and amortization and any impairment in value. The initial cost of property and equipment comprises its construction cost or purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use, including borrowing costs.

Major repairs are capitalized as property and equipment only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the items can be measured reliably. All other repairs and maintenance are charged against current operations as incurred.

Depreciation and amortization of assets commence once the property and equipment are available for their intended use and are computed on a straight-line basis over the estimated useful lives of the property and equipment as follows:

Years Buildings and improvements 40 Furniture, fixtures and equipment 3 - 10 Transportation equipment 3 - 5

The useful lives and depreciation and amortization method are reviewed periodically to ensure that the period and method of depreciation and amortization are consistent with the expected pattern of economic benefits from items of property and equipment.

When property and equipment are retired or otherwise disposed of, the cost of the related accumulated depreciation and amortization and accumulated provision for impairment losses, if any, are removed from the accounts and any resulting gain or loss is credited or charged against current operations.

Fully depreciated property and equipment are retained in the accounts while still in use although no further depreciation is credited or charged to current operations.

Investments in Associates and a Joint Venture An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. *SGVFS015631* - 14 -

The Group’s investments in associates and a joint venture is accounted for using the equity method.

Under the equity method, the investment in an associate or a joint venture is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment individually.

The consolidated statement of income reflects the Group’s share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognized directly in the equity of the associate or joint venture, the Group recognizes its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.

The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face of the consolidated statement of income outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in associates and a joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, then recognizes the loss as ‘Equity in net earnings of associates and a joint venture’ in the statement of income.

Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognized in the consolidated statement of income.

Investment Properties Investment properties consist of completed properties and properties under construction or redevelopment that are held to earn rentals and for capital appreciation or both and that are not occupied by the companies in the Group. The Group uses the cost model in measuring investment properties since this represents the historical value of the properties subsequent to initial recognition. Investment properties, except for land, are carried at cost less accumulated depreciation and amortization and any impairment in value. Land is carried at cost less any impairment in value. The initial cost of investment properties consists of any directly attributable costs of bringing the investment properties to their intended location and working condition, including borrowing costs.

Expenditures incurred after the investment property has been put in operation, such as repairs and maintenance costs, are normally charged against income in the period in which the costs are incurred.

Depreciation and amortization is computed using the straight-line method over its useful life. The estimated lives of investment properties under buildings and improvements are 5 to 40 years.

*SGVFS015631* - 15 -

Construction in progress is stated at cost. This includes cost of construction and other direct costs. Construction in progress is not depreciated until such time that the relevant assets are available for their intended use.

Investment properties are derecognized when either they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the consolidated statement of income in the year of retirement or disposal.

Transfers are made to investment properties when, and only when, there is a change in use, evidenced by ending of owner-occupation and commencement of an operating lease to another party. Transfers are made from investment properties when, and only when, there is a change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale. Transfers between investment properties, owner-occupied properties and inventories do not change the carrying amount of the property transferred and they do not change the cost of that property for measurement or disclosure purposes.

Land and Improvements Land and improvements deals with land assets that were acquired and will be used as site for future developments. These are assets that are not yet developed, and hence not yet considered as part of inventory. Although they are being held for future use, these are not classified as under Investment Properties as they have a definite use. Neither will these be classified under Inventory since they are not yet ready or available for sale.

All capitalizable expenses related to the land acquisition are recorded to Land and improvements once a Contract to Sell/Purchase Agreement has been executed between the parties.

Combinations of Entities Under Common Control Business combinations of entities under common control are accounted for using the pooling of interests method. The pooling of interests method is generally considered to involve the following: · The assets and liabilities of the combining entities are reflected in the consolidated financial statements at their carrying amounts as of date of acquisition. No adjustments are made to reflect fair values, or recognize any new assets or liabilities, at the date of the combination. The only adjustments that are made are those adjustments to harmonize accounting policies. · No new goodwill is recognized as a result of the combination. The only goodwill that is recognized is any existing goodwill relating to either of the combining entities. Any difference between the consideration paid or transferred and the equity acquired is reflected within equity. · The consolidated statement of income reflects results of the combining entities for the full year, irrespective of when the combination took place. · Comparatives are presented as if the entities had always been combined.

The financial information in the consolidated financial statements are not restated for periods prior to the combination of the entities under common control as allowed by the Philippine Interpretations Committee (PIC) Q&A No. 2012-01.

Asset Acquisitions If the assets acquired and liabilities assumed in an acquisition transaction do not constitute a business, the transaction is accounted for as an asset acquisition. The Group identifies and recognizes the individual identifiable assets acquired (including those assets that meet the definition of, and recognition criteria for, intangible assets) and liabilities assumed. The acquisition cost is allocated to the individual identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Such a transaction or event does not give rise to goodwill. Where the Group acquires a controlling interest in an entity that is not a business, but obtains less than 100% of the entity, after it has allocated the cost to the individual assets acquired, it notionally grosses up those assets and recognizes the difference as non-controlling interests.

*SGVFS015631* - 16 -

Impairment of Nonfinancial Assets Investment properties, property and equipment and other noncurrent assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. Impairment losses of continuing operations are recognized in the consolidated statement of income in those expense categories consistent with the function of the impaired asset.

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

The following criteria are also applied in assessing impairment of specific assets:

Investments in associates and a joint venture After application of the equity method, the Group determines whether it is necessary to recognize any additional impairment loss with respect to the Group’s net investment in the investee companies. The Group determines at each reporting date whether there is any objective evidence that the investment in associates or joint venture is impaired. If this is the case, the Group calculates the amount of impairment as being the difference between the recoverable amount of the investee companies and the carrying value, and recognizes the amount in the consolidated statement of income.

Equity Capital stock and additional paid-in capital Capital stock is measured at par value for all shares issued. When the shares are sold at premium, the difference between the proceeds at the par value is credited to “Additional paid-in capital” account. Direct costs incurred related to equity issuance are chargeable to “Additional paid-in capital” account. If additional paid-in capital is not sufficient, the excess is charged against retained earnings. When the Group issues more than one class of stock, a separate account is maintained for each class of stock and the number of shares issued.

Retained earnings Retained earnings represent the cumulative balance of net income or loss, dividend distributions, prior period adjustments, effects of the changes in accounting policy and other capital adjustments.

*SGVFS015631* - 17 -

Unappropriated retained earnings Unappropriated retained earnings represent the portion of retained earnings that is free and can be declared as dividends to stockholders.

Appropriated retained earnings Appropriated retained earnings represent the portion of retained earnings which has been restricted and therefore is not available for dividend declaration.

Dividend distributions Dividends on common shares are recognized as a liability and deducted from equity when approved by the BOD of the Group. Dividends for the year that are approved after the reporting date are dealt with as a non-adjusting event after the reporting date.

Equity reserves Equity reserves pertain to the difference between the consideration transferred and the equity acquired in common control business combination.

NCI NCI represents the portion of profit or loss and the net assets not held by the Parent Company and are presented separately in the consolidated statement of income, consolidated statement of comprehensive income and within equity in the consolidated statement of financial position separate from the equity attributable to the stockholders of the Parent Company.

Revenue and Cost Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be measured reliably, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as a principal or an agent. In arrangements where the Group is acting as a principal to its customers, revenue is recognized on a gross basis. The following specific recognition criteria must also be met before revenue is recognized:

Rental income Rental income from noncancellable and cancellable leases are recognized in the consolidated statement of income on a straight-line basis and the terms of the lease, respectively, or based on a certain percentage of the gross revenue of the tenants, as provided for under the terms of the lease contract.

Real estate sales For real estate sales, the Group assesses whether it is probable that the economic benefits will flow to the Group when the sales prices are collectible. Collectability of the sales price is demonstrated by the buyer’s commitment to pay, which in turn is supported by substantial initial and continuing investments that give the buyer a stake in the property sufficient that the risk of loss through default motivates the buyer to honor its obligation to the seller. Collectability is also assessed by considering factors such as the credit standing of the buyer, age and location of the property.

Revenue from sales of completed real estate projects is accounted for using the full accrual method. In accordance with PIC No. Q&A 2006-01, the percentage-of-completion method is used to recognize income from sales of projects where the Group has material obligations under the sales contract to complete the project after the property is sold, the equitable interest has been transferred to the buyer, construction is beyond preliminary stage (i.e., engineering, design work, construction contracts execution, site clearance and preparation, excavation and the building foundation are finished), and the costs incurred or to be incurred can be measured reliably. Under this method, revenue is recognized as the related obligations are fulfilled, measured principally on the basis of the estimated completion of a physical proportion of the contract work. *SGVFS015631* - 18 -

Any excess of collections over the recognized receivables are included in the “Deposits and other current liabilities” account in the liabilities section of the consolidated statement of financial position.

If any of the criteria under the full accrual or percentage-of-completion method is not met, the deposit method is applied until all the conditions for recording a sale are met. Pending recognition of sale, cash received from buyers are presented under the “Deposits and other current liabilities” account in the liabilities section of the consolidated statement of financial position.

Cost of real estate sales is recognized consistent with the revenue recognition method applied. Cost of residential and commercial lots and units sold before the completion of the development is determined on the basis of the acquisition cost of the land plus its full development costs, which include estimated costs for future development works, as determined by the Group’s in-house technical staff.

Theater income Theater income is recognized when earned.

Interest income Interest income is recognized as it accrues using the effective interest method.

Other income Recoveries are recognized as they accrue. Service income is recognized when the services are rendered.

Cost and Expense Recognition Cost and expenses are recognized in the consolidated statements of comprehensive income when decrease in future economic benefit related to a decrease in an asset or an increase in a liability has arisen that can be measured reliably.

Cost and expenses are recognized in the consolidated statement of comprehensive income: · On the basis of a direct association between the costs incurred and the earning of specific items of income; · On the basis of systematic and rational allocation procedures when economic benefits are expected to arise over several accounting periods and the association can only be broadly or indirectly determined; or · Immediately when expenditure produces no future economic benefits or when, and to the extent that, future economic benefits do not qualify or cease to qualify, for recognition in the consolidated statement of financial position as an asset.

Borrowing Costs Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets (included in “Investment properties” account in the consolidated statement of financial position). All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

The interest capitalized is calculated using the Group’s weighted average cost of borrowings after adjusting for borrowings associated with specific developments. Where borrowings are associated with specific developments, the amounts capitalized is the gross interest incurred on those borrowings less any investment income arising on their temporary investment. Interest is capitalized from the commencement of the development work until the date of practical completion. The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is interrupted. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

*SGVFS015631* - 19 -

Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. A reassessment is made after inception of the lease only if one of the following applies: (a) There is a change in contractual terms, other than a renewal or extension of the arrangement; (b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term; (c) There is a change in the determination of whether fulfillment is dependent on a specified asset; or (d) There is substantial change to the asset.

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

Group as lessor Leases where the Group does not transfer substantially all the risk and benefits of ownership of the assets are classified as operating leases. Lease payments received are recognized as an income in the consolidated statement of income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as the rental income. Contingent rents are recognized as revenue in the period in which they are earned.

Group as lessee Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Fixed lease payments are recognized as an expense in the consolidated statement of income on a straight-line basis while the variable rent is recognized as an expense based on terms of the lease contract.

Pension Cost The Group maintains a defined contribution (DC) plan that covers all regular full-time employees. Under its DC plan, the Group pays fixed contributions based on the employees’ monthly salaries. The Group, however, is covered under Republic Act (RA) No. 7641, The Philippine Retirement Law, which provides for its qualified employees a defined benefit (DB) minimum guarantee. The DB minimum guarantee is equivalent to a certain percentage of the monthly salary payable to an employee at normal retirement age with the required credited years of service based on the provisions of RA No. 7641.

In accordance with PIC Q&A No. 2013-03, the obligation for post-employment benefits of an entity that provides a defined contribution plan as its only post-employment benefit plan, is not limited to the amount it agrees to contribute to the fund, if any. In this case, therefore, the Group’s retirement plan shall be accounted for as a defined benefit plan. Accordingly, the Group accounts for its retirement obligation under the higher of the DB obligation relating to the minimum guarantee and the obligation arising from the DC plan.

The DC liability is measured at the fair value of the DC assets upon which the DC benefits depend, with an adjustment for margin on asset returns, if any, where this is reflected in the DC benefits.

For the DB minimum guarantee plan, the liability is determined based on the present value of the excess of the projected DB obligation over the projected DC obligation at the end of the reporting period. The DB obligation is calculated annually by a qualified independent actuary using the projected unit credit method.

*SGVFS015631* - 20 -

Pension costs comprise: · Service cost · Net interest on the net defined benefit liability or asset · Remeasurements of net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses on non- routine settlements are recognized as expense in profit or loss. Past service costs are recognized when plan amendment or curtailment occurs. These amounts are calculated periodically by independent qualified actuaries.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on government bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognized as expense or income in consolidated statement of income.

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

The liability recognized in the consolidated statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the reporting date less fair value of the plan assets. The present value of the defined benefit obligation is determined by using risk-free interest rates of long-term government bonds that have terms to maturity approximating the terms of the related pension liabilities or applying a single weighted average discount rate that reflects the estimated timing and amount of benefit payments.

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

Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statement of income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax Deferred tax is provided, using the balance sheet liability method, on all temporary differences with certain exceptions, at the reporting date between the tax bases of assets and liabilities and its carrying amounts for financial reporting purposes.

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

Deferred tax liabilities are not provided on nontaxable temporary differences associated with investments in associates and a joint venture.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at *SGVFS015631* - 21 - each reporting date and are recognized to the extent that it has become probable that future taxable income will allow the deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted as of reporting date. Movements in the deferred income tax assets and liabilities arising from changes in tax rates are charged against or credited to income for the period.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.

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

Foreign Currency Denominated Transactions The consolidated financial statements are presented in Philippine Peso, which is the Parent Company’s functional and presentation currency. Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded using the exchange rate at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are restated using the closing exchange rate prevailing at reporting dates. Exchange gains or losses arising from foreign exchange transactions are credited to or charged against operations for the year.

Earnings Per Share (EPS) Basic EPS is computed by dividing net income for the year attributable to common stockholders of the parent by the weighted average number of common shares issued and outstanding during the year adjusted for any subsequent stock dividends declared. Diluted EPS is computed by dividing net income for the year attributable to common stockholders of the parent by the weighted average number of common shares issued and outstanding during the year after giving effect to assumed conversion of potential common shares, if any.

Segment Reporting The Group’s operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Financial information on business segments is presented in Note 27 of the consolidated financial statements.

Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of the provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the consolidated statement of comprehensive income net of any reimbursement. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimates.

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

*SGVFS015631* - 22 -

Events after the Reporting Date Post year-end events up to the date the financial statements were authorized for issue that provide additional information about the Group’s position at the reporting date (adjusting events) are reflected in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the consolidated financial statements when material.

3. Significant Accounting Judgments and Estimates

The preparation of the accompanying consolidated financial statements of the Group in conformity with PFRS requires management to make judgments and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. The judgments and estimates used in the consolidated financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the consolidated financial statements. Actual results could differ from such estimates.

Management believes the following represent a summary of these significant judgments, estimates and assumptions:

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

Operating lease commitments - Group as lessor The Group has entered into commercial property leases on its investment property portfolio. Leases where the Group does not transfer substantially all the risks and rewards of ownership of the asset are classified as operating leases. The Group considered, among others, the length of the lease term as compared with the estimated life of the assets. The Group has determined that it retains all significant risks and rewards of ownership of its properties.

A number of the Group’s operating lease contracts are accounted for as non-cancellable operating leases and the rest are cancellable. In determining whether a lease contract is cancellable or not, the Group considered, among others, the significance of the penalty, including economic consequence to the lessee.

Operating lease commitments - Group as lessee Management exercises judgment in determining whether substantially all the significant risks and rewards of ownership of the leased assets are transferred to the Group. Lease contracts, which transfer to the Group substantially all the significant risks and rewards incidental to ownership of the leased items, are classified as finance leases. Otherwise, they are considered as operating leases.

The Group has entered into lease contracts with various parties for certain properties. The Group has determined based on an evaluation of the terms and conditions of the arrangements, that all significant risks and rewards of ownership of these properties are retained by the lessor and accounts for these contracts as operating leases. In determining whether the lease is cancellable or not, the Group considered, among others, the significance of the lease term as compared with the estimated useful life of the related asset.

Classification of club shares Being a real estate developer, the Group determines how these shares shall be accounted for. In determining whether these shares shall be accounted for as inventories or as financial instruments, the Group considers its role in the development of the Club and its intent for holding these shares.

*SGVFS015631* - 23 -

The Group classifies such shares as inventories when the Group acts as the developer and its intent is to sell a developed property together with the club share.

Distinction between investment properties and inventories The Group determines whether a property is classified as investment property or inventory as follows: · Investment property comprises land and buildings (principally offices, commercial and retail property) which are not occupied substantially for use by, or in the operations of, the Group, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. · Inventory comprises property that is held for sale in the ordinary course of business. Principally, this is a residential or industrial property that the Group develops and intends to sell before or on completion of construction.

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

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of services or for administrative purposes. If these portions cannot be sold separately as of reporting date, the property is accounted for as investment property only if an insignificant portion is held for use in the supply of services or for administrative purposes. Judgment is applied in determining whether ancillary services are so significant that a property does not qualify as investment property. The Group considers each property separately in making its judgment.

Evaluating impairment of nonfinancial assets The Group reviews investments in associates, property and equipment, investment properties and other noncurrent assets (other than financial assets, such as dividends receivable) for impairment of value. This includes considering certain indications of impairment such as significant changes in asset usage, significant decline in assets’ market value, obsolescence or physical damage of an asset, plans in the real estate projects, significant underperformance relative to expected historical or projected future operating results and significant negative industry or economic trends.

Distinction between business combination and property acquisition The Group acquires subsidiaries that own real estate. At the time of acquisition, the Group considers whether the acquisition represents the acquisition of a business. The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property. More specifically, consideration is made with regard to the extent to which significant processes are acquired and, in particular, the extent of ancillary services provided by the Group. The significance of any process is judged with reference to the guidance in PAS 40 on ancillary services.

When the acquisition of subsidiaries does not represent a business, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognized.

Assessment of control of an investment and the type of investment An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee; thus, the principle of control sets out the following three elements of control: · power over the investee; · exposure, or rights, to variable returns from involvement with the investee; and *SGVFS015631* - 24 -

· the ability to use power over the investee to affect the amount of the investor's returns.

Management assessed that the Group does not have control of Central Block Developers, Inc. (CBDI) since majority of the governing body and the key management personnel are represented by ALI.

Assessment of joint control of an arrangement and the type of arrangement Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Management assessed that the Group has joint control of Cebu District Property Enterprise, Inc. (CDPEI) by virtue of a contractual agreement with other shareholders.

The Group applies judgment when assessing whether a joint arrangement is a joint operation or a joint venture. In making this judgment, the Group determines the type of joint arrangement in which it is involved by considering its rights and obligations arising from the arrangement. The Group assesses its rights and obligations by considering the structure and legal form of the arrangement, the terms agreed by the parties in the contractual arrangement and, when relevant, other facts and circumstances. Management assessed that CDPEI is a joint venture arrangement as it is a separate legal entity and its stockholders have rights to its net assets.

Collectability of the sales price In determining whether the sales prices are collectible, the Group considers that the initial and continuing investments by the buyer of about 10% would demonstrate the buyer’s commitment to pay.

Contingencies The Group is contingently liable for various claims. The estimate of the probable costs for the resolution of these claims has been developed in consultation with the legal counsels and based upon an analysis of potential results. The Group currently does not believe these proceedings will have a material adverse effect on the Group’s financial position. It is possible, however, that the results of operations could be materially affected by changes in the estimates. As of December 31, 2015, the Group has a pending litigation disclosed in Note 31.

Management’s Use of Estimates The key assumptions concerning the future and other key sources of estimation and uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are as follows:

As described in the accounting policy, the Group estimates the recoverable amount as the higher of an asset’s fair value less costs to sell and value in use. In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets, the Group is required to make estimates and assumptions that may affect investments in associates and a joint venture, investment properties, property and equipment and other noncurrent assets. See Notes 10, 11, 12 and 14 for the related balances.

Revenue and cost recognition The Group’s revenue recognition policies require management to make use of estimates and assumptions that may affect the reported amounts of revenues and costs. The Group’s revenue from real estate is recognized based on the percentage of completion measured principally on the basis of the estimated completion of a physical proportion of the contract work. See Notes 19 and 21 for the related balances.

Estimating allowance for impairment losses The Group maintains allowance for impairment losses based on the result of the individual and collective assessment under PAS 39. Under the individual assessment, the Group is required to obtain the present value of estimated cash flows using the receivable’s original EIR. Impairment loss is determined as the difference between the receivables’ carrying balance and the computed *SGVFS015631* - 25 - present value. Factors considered in individual assessment are payment history, past due status and term. The collective assessment would require the Group to group its receivables based on the credit risk characteristics (customer type, credit history, past-due status and term) of the customers. Impairment loss is then determined based on historical loss experience of the receivables grouped per credit risk profile. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. The methodology and assumptions used for the individual and collective assessments are based on management’s judgment and estimate. Therefore, the amount and timing of recorded expense for any period would differ depending on the judgments and estimates made for the year. See Note 7 for the related balances.

Estimating the NRV of inventories Inventories are valued at the lower of cost or NRV. To determine the NRV, the Group is required to make an estimate of the inventories’ estimated selling price in the ordinary course of business, cost of completion and costs necessary to make a sale. NRV for completed real estate inventories is assessed with reference to market conditions and prices existing at the reporting date and is determined by the Group in light of recent market transactions. NRV in respect of real estate inventories under construction is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and less estimated costs to sell. In the event that NRV is lower than the cost, the decline is recognized as an expense. The amount and timing of recorded expenses for any period would differ if different judgments were made or different estimates were utilized. No provision for inventory obsolescence was recognized in 2015 and 2014. The Group’s inventories carried at cost are disclosed in Note 8.

Estimating useful lives of property and equipment and investment properties The Group estimates the useful lives of its property and equipment and investment properties based on the period over which these assets are expected to be available for use. The estimated useful lives of property and equipment and investment properties are reviewed at least annually and are updated if expectations differ from previous estimates due to physical wear and tear and technical or commercial obsolescence on the use of these assets. It is possible that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. See Notes 10 and 12 for the related balances.

Determining the fair value of investment properties The Group discloses the fair values of its investment properties in accordance with PAS 40. The Group engaged independent valuation specialist to assess the fair value as at December 31, 2015 and 2014. See Note 12 for the related balances.

Deferred tax assets The Group reviews the carrying amounts of deferred taxes at each reporting date and reduces deferred tax assets to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax assets to be utilized. However, there is no assurance that the Group will generate sufficient taxable income to allow all or part of deferred tax assets to be utilized. The Group looks at its projected performance in assessing the sufficiency of future taxable income. See Note 23 for the related balances.

Estimating pension liabilities and other retirement benefits The cost of defined benefit pension plans and other post-employment medical benefits as well as the present value of the pension obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. These include the determination of the discount rates, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, defined benefit obligations are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

*SGVFS015631* - 26 -

In determining the appropriate discount rate, management considers the interest rates of government bonds that are denominated in the currency in which the benefits will be paid, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The mortality rate is based on publicly available mortality tables for the specific country and is modified accordingly with estimates of mortality improvements. Future salary increases and pension increases are based on expected future inflation rates.

While the Group believes that the assumptions are reasonable and appropriate, significant differences in actual experience or significant changes in assumptions could materially affect retirement obligations. See Note 22 for the related balances.

Fair value of financial instruments PFRS requires certain financial assets and liabilities to be carried at fair value or have the fair values disclosed in the notes, which requires use of extensive accounting estimates and judgments. While significant components of fair value measurement were determined using verifiable objective evidence (i.e., foreign exchange rates and interest rates), the amount of changes in fair value would differ if the Group utilized different valuation methodology. Any changes in fair value of these financial assets and liabilities would affect directly the consolidated statement of income and consolidated statement of changes in equity. Certain financial assets and liabilities of the Group were initially recorded at its fair value by using the discounted cash flow methodology. See Note 25 for the related balances.

4. Cash and Cash Equivalents

This account consists of:

2015 2014 (In Thousands) Cash on hand and in banks P=95,511 P=156,967 Cash equivalents 20,000 2,738,248 P=115,511 P=2,895,215

Cash in banks earn interest at the prevailing bank deposit rates. Cash equivalents are short-term, highly liquid investments that are made for varying periods of up to three (3) months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term rates.

Total interest income earned from cash and cash equivalents amounted to P=48.7 million, P=31.1 million and P=23.2 million in 2015, 2014 and 2013, respectively (see Note 20).

5. Short-term Investments

Short-term investments consist of money market placements with maturity date of more than 90 days and up to one (1) year and earn at the respective short-term investment rates.

In 2015, the Group entered into various short-term investments with BPI to be used for short-term cash requirements. These investments earn interest ranging from 0.50% to 2.75%.

Interest income earned from short-term investments amounted to P=1.0 million in 2015 (see Note 20).

*SGVFS015631* - 27 -

6. Financial Assets at Fair Value through Profit or Loss

This account pertains to investments in BPI Short Term Fund (the Fund), a money market unit investment trust fund which the Group holds for trading and is a portfolio of funds invested and managed by professional managers. The Fund aims to generate liquidity and stable income by investing in a diversified portfolio of primarily short-term fixed income instruments. This is measured at fair value with gains or losses arising from changes in fair value recognized in the consolidated statement of income under “Other income”. Realized and unrealized gains recognized from changes in fair value through profit or loss amounted to P=2.8 million, P=3.5 million and P=4.3 million in 2015, 2014 and 2013, respectively (see Note 20).

The fair value of the investment in UITF is based on net asset value per unit determined by using valuation techniques and is classified under Level 2 of the fair value hierarchy. These valuation techniques maximize the use of observable market data where it is available such as quoted market prices or dealer quotes for similar instruments.

7. Accounts Receivable

This account consists of:

2015 2014 (In Thousands) Trade: Residential development P=236,086 P=311,340 Shopping centers 172,219 145,964 Corporate business 81,445 68,083 Commercial development 10,095 30,617 Others 13,452 1,626 Receivables from related parties (Note 18) 2,678,833 345,236 Advances to contractors (Note 18) 262,029 415,098 Receivables from employees 17,191 15,452 Accrued receivable 5,900 14,958 Others 46,045 53,290 3,523,295 1,401,664 Less allowance for impairment losses 16,683 13,577 3,506,612 1,388,087 Less noncurrent portion 425,469 106,048 P=3,081,143 P=1,282,039

The classes of trade receivables of the Group are as follows:

· Residential development pertains to receivables arising from sale of residential lots and condominium units. · Shopping centers pertain to receivables arising from lease of retail space and land therein, movie theaters, food courts, entertainment facilities and carparks. · Corporate business pertains to receivables arising from lease of office buildings and accrued rent receivable arising from the difference between the amounts of rental revenue earned based on the straight-line computation for noncancellable leases per PAS 17, Leases and the amount of actual rent collected. · Commercial development pertains to receivables arising from sale of commercial lots and club shares. · Other receivables pertain to receivable related to interests and penalties.

*SGVFS015631* - 28 -

Terms and conditions of receivables are as follows:

· Sales contract receivables, included under residential development, are noninterest-bearing and are collectible in monthly installments over a period of one to two years. Titles to real estate properties are transferred to the buyers only once full payment has been made. · Leases of retail space and land therein, included under shopping centers, are noninterest- bearing and are collectible monthly based on the terms of the lease contracts. · Leases of office spaces, included under corporate business, are noninterest-bearing and are collectible monthly based on the terms of the lease contracts. · Receivables from sale of commercial lots, included under commercial development are noninterest-bearing and are collectible in monthly or quarterly installments over a period ranging from two to four years. Titles to real estate properties are not transferred to buyers until full payment has been made. · Advances to contractors are recouped upon every progress billing payment depending on the percentage of accomplishment. · Receivables from related parties are noninterest-bearing and collectible within one year. · Receivables from employees are composed of both interest and noninterest-bearing advances and are collectible over a period of one year through salary deduction. · Other receivables are due and demandable.

As of December 31, 2015 and 2014, residential development trade receivables with a nominal amount of P=252.3 million and P=317.6 million, respectively, were initially recorded at fair value. The fair value of the receivables was obtained by discounting future cash flows using the applicable rates of similar types of instruments.

The aggregate unamortized discount on trade receivables amounted to P=16.2 million and P=6.3 million as of December 31, 2015 and 2014, respectively.

Movements in the unamortized discount on trade receivables as of December 31, 2015 and 2014, respectively are as follows:

2015 2014 (In Thousands) Balance at January 1 P=6,258 P=17,968 Additions 32,525 28,401 Accretion (Note 20) (22,542) (40,111) Balance at December 31 P=16,241 P=6,258

Provision for impairment losses recognized by the Group amounted to P=3.1 million for the year ended December 31, 2015 (see Note 21). Gross amount of receivables individually determined to be impaired amounted to P=16.7 million and P=13.6 million as of December 31, 2015 and 2014.

8. Inventories

This account consists of:

2015 2014 (In Thousands) Subdivision lot for sale and development P=725,682 P=582,830 Condominium units under development 334,384 239,315 Club shares 319,136 355,654 P=1,379,202 P=1,177,799

*SGVFS015631* - 29 -

A summary of the movements in inventories is set out below:

2015 Subdivision lot for Condominium sale and units under development development Club shares Total (In Thousands) Balance at January 1 P=582,830 P=239,315 P=355,654 P=1,177,799 Construction/development costs incurred 624,114 246,447 − 870,561 Disposals (recognized as cost of sales) (429,255) (142,690) − (571,945) Provision for impairment − − (36,518) (36,518) Transfers to investment property (52,007) − − (52,007) Other Adjustments − (8,688) − (8,688) Balance at December 31 P=725,682 P=334,384 P=319,136 P=1,379,202

2014 Subdivision lot for Condominium sale and units under development development Club shares Total (In Thousands) Balance at January 1 P=636,728 P=255,428 P=355,092 P=1,247,248 Construction/development costs incurred 5,813 79,623 − 85,436 Disposals (recognized as cost of sales) (25,721) (129,726) 562 (154,885) Transfers (33,990) 33,990 − − Balance at December 31 P=582,830 P=239,315 P=355,654 P=1,177,799

9. Other Current Assets

This account consists of:

2015 2014 (In Thousands) Input VAT - net P=386,366 P=133,178 Prepaid expenses 156,737 115,663 Dividends receivable (Note 18) 18,500 29,858 Others − 223 P=561,603 P=278,922

Input VAT is applied against output VAT. The remaining balance is recoverable in future periods.

Prepaid expenses consist of advance payments for project management fees, business taxes, office supplies, rentals, advertising and promotions, commissions and other expenses.

*SGVFS015631* - 30 -

10. Property and Equipment

The rollforward analyses of this account follow:

2015

Buildings Furniture, and Fixtures and Transportation Improvements Equipment Equipment Total (In Thousands) Cost At January 1 P=110,200 P=110,839 P=21,242 P=242,281 Transfer from (to) investment property (Note 12) 14,296 (10) − 14,286 Additions 279 6,861 5,408 12,548 Reclassifications 69 (69) − − Disposals (87) (2,053) − (2,140) At December 31 124,757 115,568 26,650 266,975 Accumulated Depreciation At January 1 78,396 79,821 12,110 170,327 Depreciation and amortization (Note 21) 5,043 10,191 3,650 18,884 Transfer from (to) investment property (Note 12) 6,561 (69) − 6,492 Disposals (70) (1,981) − (2,051) At December 31 89,930 87,962 15,760 193,652 Net Book Value P=34,827 P=27,606 P=10,890 P=73,323

2014 Buildings Furniture, and Fixtures and Transportation Improvements Equipment Equipment Total (In Thousands) Cost At January 1 P=108,499 P=113,464 P=18,633 P=240,596 Additions 7,506 7,255 5,281 20,042 Disposals (5,805) (9,852) (2,672) (18,329) Transfer to investment property (Note 12) − (28) − (28) At December 31 110,200 110,839 21,242 242,281 Accumulated Depreciation At January 1 77,601 81,182 11,547 170,330 Depreciation and amortization (Note 21) 6,600 8,494 2,973 18,067 Disposals (5,805) (9,844) (2,410) (18,059) Transfer to investment property (Note 12) − (11) − (11) At December 31 78,396 79,821 12,110 170,327 Net Book Value P=31,804 P=31,018 P=9,132 P=71,954

Depreciation and amortization charged to general and administrative expenses amounted to P=18.9 million, P=18.1 million and P=13.9 million for the years ended December 31, 2015, 2014 and 2013 respectively (see Note 21).

Fully depreciated assets that are still in use amounted to P=102.4 million and P=89.7 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015 and 2014, there are no capital commitments related to the Group’s property and equipment.

*SGVFS015631* - 31 -

11. Investments in Associates and a Joint Venture

This account consists of:

2015 2014 Cost Balance at January 1 P=967,626 P=967,626 Capital infusion 203,800 − Balance at December 31 1,171,426 967,626 Accumulated equity in net income Balance at January 1 91,733 12,054 Equity in net income for the year 106,303 79,679 Balance at December 31 198,036 91,733 Accumulated equity in other comprehensive loss Balance at January 1 (1,078) − Equity in other comprehensive loss for the year − (1,078) Balance at December 31 (1,078) (1,078) P=1,368,384 P=1,058,281

There were no dividends for the years ended December 31, 2015, 2014 and 2013.

The Group’s equity in net assets of associates and a joint venture and the related percentages of ownership are shown below.

Percentages of Ownership Carrying Amounts December 31 December 31 2015 2014 2015 2014 (In Thousands) Associates: Solinea, Inc. (Solinea) 35% 35% P=304,160 P=229,376 Cebu Insular Hotels Company, Inc. (CIHCI) 37 37 242,407 222,666 Central Block Developers, Inc. (CBDI) 57 − 162,432 − Amaia Southern Properties, Inc. (ASPI) 35 35 108,657 98,436 Southportal Properties, Inc. (SPI) 35 35 103,575 60,200 Joint Venture: CDPEI 14 14 447,153 447,603 P=1,368,384 P=1,058,281

The significant transactions affecting the Group’s investments in associates and a joint venture are as follows:

2015 In 2015, ALI, CPVDC, and CHI incorporated a new company (CBDI) with 35%, 35%, and 30% ownership interest, respectively. CBDI will take the development and operation of mixed-use development with residential, commercial and retail components. Total consideration made by the Group amounted to P=162.5 million.

The Parent Company also made additional capital infusion to SPI amounting to P=41.3 million in relation to the latter’s increase in authorized capital stock. The transaction did not change the Parent Company’s ownership interest in SPI.

2014 In 2014, a joint venture agreement was made and executed between ALI and Aboitiz Land, Inc. to incorporate with 50% interest each, a new company (CDPEI) which will take the development and operation of mixed-use developments with residential, commercial and retail components within the parcels of land located in the City of Mandaue, Province of Cebu and other areas. ALI subsequently assigned 10% and 5% interests to the Parent Company and CPVDC, respectively for a consideration of P=300.0 million and P=150.0 million, respectively. For the year ended *SGVFS015631* - 32 -

December 31, 2015 and 2014, the Group recognized equity in net loss amounting to P=0.4 million and P=2.4 million, respectively.

The Parent Company also acquired 35% interest in SPI for a consideration of P=60.2 million. The other 65% interest was acquired by ALI.

The Parent Company also made additional capital infusion to ASPI amounting to P=40.6 million in relation to the latter’s increase in authorized capital stock. The transaction did not change the Parent Company’s ownership interest in ASPI.

2013 In 2013, the Parent Company acquired a 35% interest in ASPI for a consideration of P=52.5 million from Amaia Land, Inc. (Amaia), a subsidiary of ALI.

The following tables present the summarized financial information of the associates and a joint venture based on their PFRS financial statements, as of December 31, 2015 and 2014 and for the years ended December 31, 2015, 2014 and 2013:

CBDI The Group has a 57% interest in CBDI, a company incorporated on July 28, 2015 with principal place of business at 28th Floor, Tower One and Exchange Plaza, Ayala Triangle, Ayala Avenue, Makati City. The Group does not have control over CBDI but only a significant influence even if its ownership interest is above 50%. ALI controls CBDI since it represents majority of the board of directors of CBDI and in addition, ALI is the Parent Company of the Group. CBDI’s summarized financial information follows:

2015 (In Thousands) Current assets P=250,062 Noncurrent assets 67 Total assets P=250,129

Current liabilities P=229 Noncurrent liabilities − Equity 249,900 Total liabilities and equity P=250,129

2015 (In Thousands) Revenue P=298 Costs and expenses 403 Net loss (105) Other comprehensive loss − Total comprehensive loss (P=105)

CIHCI

The Group has a 37% interest in CIHCI, a company incorporated on April 6, 1995 with principal place of business at Cebu City Marriott Hotel, Cardinal Rosales Avenue, Cebu Business Park, Cebu City. CIHCI’s summarized financial information follows:

2015 2014 (In Thousands) Current assets P=167,029 P=257,044 Noncurrent assets 636,574 662,460 Total assets P=803,603 P=919,504 Current liabilities P=153,046 P=172,730 Noncurrent liabilities 10,816 163,436 Equity 639,741 583,338 Total liabilities and equity P=803,603 P=919,504 *SGVFS015631* - 33 -

2015 2014 2013 (In Thousands) Revenue P=484,342 P=465,913 P=126,436 Costs and expenses 431,079 421,797 91,553 Net income 53,263 44,116 34,883 Other comprehensive loss − (2,908) − Total comprehensive Income P=53,263 P=41,208 P=34,883

Solinea

The Group has a 35% interest in Solinea, a company incorporated on April 2, 2007 with principal place of business at 7th Floor, Cebu Holdings Center, Cardinal Rosales Avenue, Cebu Business Park, Cebu City. Solinea’s summarized financial information follows:

2015 2014 (In Thousands) Current assets P=2,153,961 P=1,875,332 Noncurrent assets 1,133,939 892,439 Total assets P=3,287,900 P=2,767,771

Current liabilities P=2,738,110 P=2,243,360 Noncurrent liabilities 19,222 207,510 Equity 530,568 316,901 Total liabilities and equity P=3,287,900 P=2,767,771

2015 2014 2013 (In Thousands) Revenue P=1,572,557 P=954,347 P=381,847 Costs and expenses 1,358,889 787,863 323,351 Net income P=213,668 P=166,484 P=58,496

CDPEI The Group has a 14% interest in CDPEI, a company incorporated on February 20, 2014 with principal place of business at Aboitiz Corporate Center, Gov. Manuel Cuenco Ave., Kasambagan, Cebu City. CDPEI’s summarized financial information follows:

2015 2014 (In Thousands) Current assets P=116,786 P=432,481 Noncurrent assets 3,013,443 2,552,883 Total assets P=3,130,229 P=2,985,364

2015 2014 Current liabilities P=149,206 P=1,346 Equity 2,981,023 2,984,018 Total liabilities and equity P=3,130,229 P=2,985,364

2015 2014 Revenue P=4,282 P=3,700 Costs and expenses 7,276 19,682 Net loss (P=2,994) (P=15,982)

*SGVFS015631* - 34 -

The aggregate financial information on associates with immaterial interest (ASPI and SPI) follows:

2015 2014 (In Thousands) Carrying amount P=212,232 P=158,636 Share in net income (loss) from continuing operations 12,297 5,548 Share in total comprehensive income − −

12. Investment Properties

The rollforward analyses of this account follow:

2015

Buildings and Construction Land Improvements in Progress Total (In Thousands) Cost At January 1 P=1,900,552 P=7,818,604 P=1,552,026 P=11,271,182 Additions 160,881 145,630 1,091,080 1,397,591 Transfers from inventories 52,007 − − 52,007 Reclassification − 695,525 (695,525) − Transfer to property and equipment (Notes 10 and 30) − (14,286) − (14,286) Disposals − (138,348) − (138,348) At December 31 2,113,440 8,507,125 1,947,581 12,568,146 Accumulated Depreciation At January 1 − 2,060,412 − 2,060,412 Depreciation and amortization (Note 21) − 339,141 − 339,141 Transfer to property and equipment (Notes 10 and 30) − (6,492) − (6,492) Disposals − (136,205) − (136,205) At December 31 − 2,256,856 − 2,256,856 Net Book Value P=2,113,440 P=6,250,269 P=1,947,581 P=10,311,290

2014 Buildings and Construction Land Improvements in Progress Total (In Thousands) Cost At January 1 P=1,719,393 P=7,549,132 P=740,325 P=10,008,850 Additions 181,159 150,563 943,115 1,274,837 Transfers − 131,414 (131,414) – Transfer from property and equipment (Notes 10 and 30) − 28 − 28 Disposals − (12,533) − (12,533) At December 31 1,900,552 7,818,604 1,552,026 11,271,182 Accumulated Depreciation At January 1 − 1,778,257 − 1,778,257 Depreciation and amortization (Note 21) – 294,677 − 294,677 Transfer from property and equipment (Notes 10 and 30) − 11 − 11 Disposals – (12,533) − (12,533) At December 31 – 2,060,412 – 2,060,412 Net Book Value P=1,900,552 P=5,758,192 P=1,552,026 P=9,210,770

*SGVFS015631* - 35 -

The Group’s investment properties are currently used for commercial leasing. Construction-in- progress includes cost of eBloc 4, ACC Corporate Center commercial buildings and BPO 400.

Depreciation and amortization on buildings and improvements charged to operations amounted to P=339.1 million, P=294.7 million and P=204.9 million and for the years ended December 31, 2015, 2014 and 2013, respectively (see Note 21).

Total rental income from investment properties amounted to P=1,653.6 million, P=1,381.6 million, and P=1,131.1 million for the years ended December 31, 2015, 2014 and 2013, respectively (see Note 19). Total direct operating expenses related to investment properties that generated rental income amounted to P=844.7 million, P=781.0 million and P=542.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Borrowing costs capitalized to construction-in-progress amounted to P=31.8 million and P=67.7 million in 2015 and 2014, respectively (see Note 16). Capitalization rate used for general borrowings is at 4.75% for years ended 2015 and 2014.

The aggregate fair value of the Group’s investment properties amounted to P=17,395.82 million and P=16,930.8 million as of December 31, 2015 and 2014, respectively. The fair values were classified under Level 3 of the fair value hierarchy.

The fair values of the investment properties were determined by independent professionally qualified appraisers.

The fair values of the land and buildings were arrived at using the Market Data Approach and Cost Approach, respectively. In Market Data Approach, the value of the land is based on sales and listings of comparable property registered within the vicinity. The technique of this approach requires the establishment of comparable property by reducing reasonable comparative sales and listings to a common denominator. This is done by adjusting the differences between the subject property and those actual sales and listings regarded as comparable. The properties used as basis of comparison are situated within the immediate vicinity of the subject property. In the Cost Approach, the value of the buildings is determined by the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation based on physical wear and tear, and obsolescence plus an estimate of developers’ profit margin.

For Market Data approach, the higher the price per sqm., the higher the fair value. For Cost Approach, whose unobservable inputs include estimated costs to complete and estimated profit margin and hold and develop property to completion, the higher these costs and required profit margin, the lower the fair value.

As of December 31, 2015, capital commitments for investment properties amounted to P=1,690.1 million.

13. Land and improvements

On August 7, 2015, the Group, together with Ayala Land, Inc. (Ayala Group), in consortium with SM Group, purchased the South Road Property Lot 8-B-1 from the City Government of Cebu for P=2.3 billion payable in equal annual installments until August 7, 2018.

*SGVFS015631* - 36 -

14. Other Noncurrent Assets

This account consists of:

2015 2014 (In Thousands) Deferred input tax P=16,066 P=17,103 Dividends receivable (Note 18) 12,644 − Deposits 3,032 64,764 Others 11,699 1,741 P=43,441 P=83,608

Deposits include advance payments made by the Group for future land and building developments.

Deferred input tax arises from purchase of capital goods and is recoverable in future periods.

Dividends receivable represents dividends declared by CIHCI which are due to be received by the Parent Company in installment until December 31, 2017.

15. Accounts and Other Payables

This account consists of:

2015 2014 (In Thousands) Payable to related parties (Note 18) P=1,950,911 P=893,611 Accrued project costs 1,388,197 832,472 Retentions payable 421,788 258,454 Accrued expenses 330,215 257,230 Liability for purchased land (Note 13) 351,569 − Taxes payable 147,074 71,463 Interest payable 57,581 34,414 Dividends payable 13,672 11,957 Others 36,953 17,785 P=4,697,960 P=2,377,386

Payable to related parties generally are due and demandable and are settled in cash at market prices.

Accrued project costs arise from progress billings or unbilled completed work on the development of residential and commercial projects.

Retentions payable pertains to the portion of the progress billings of constructions retained by the Group which will be released after the completion of the contractor’s projects. The retention serves as a security from the contractor in case of defects in the project.

Accrued expenses consist mainly of direct operating and administrative expenses, payroll, systems cost and marketing expenses.

Taxes payable pertains to amusement taxes, net output VAT and expanded withholding taxes.

Dividends payable pertains to dividends declared by CPVDC (see Note 26).

*SGVFS015631* - 37 -

Accrued project costs and accrued expenses are noninterest-bearing and are normally settled on 30 to 180-day terms.

Other payables are noninterest-bearing and are normally settled within one year.

16. Long-term debt

This account consists of long-term bonds and bank loans of the Group as follows:

2015 2014 (In Thousands) Bonds: Due 2021 (Note 16e) P=5,000,000 P=5,000,000 Bank Loans: At 0.65% per annum spread over the average floating rate of 91-day treasury bill rate (Note 16b) 472,500 540,000 Fixed rate corporate notes with interest rate of 4.75% per annum (Note 16d) 420,000 420,000 At 0.38% per annum spread over the average floating based on Mart 1 rate (Note 16c) 380,000 400,000 At 0.50% per annum spread over the average fixed rate of 7-year treasury bond rate on PDST-R2 rate (Note 16b) 3,500 4,000 At 0.50% per annum spread over the fixed rate based on PDST-R1 rate (Note 16a) − 296,050 At 0.50% per annum spread over the fixed rate based on PDST-R2 rate (Note 16a) − 85,950 At 0.88% per annum spread over the average floating rate of 91-day treasury bill rate (Note 16a) − 23,875 6,276,000 6,769,875 Less unamortized debt issue cost 43,460 50,395 6,232,540 6,719,480 Less current portion 107,873 492,561 P=6,124,667 P=6,226,919

a. In April 2008, the Group obtained loans with principal amount of P=425.0 million from Metropolitan Bank & Trust Company. The loan shall be paid for a maximum term of seven years from and after the initial drawdown date and is subject to fixed interest rates ranging from 7.76% to 9.73% per annum. In May 2015, the loans from MBTC matured. The principal repayments for these matured loans amounted to P=405.9 million. Total principal repayments for loans amounted to P=493.9 million during the year.

b. In October 2010, loans were availed amounting to P=680.0 million which are due on 2017. In respect with the fixed rated portion of these loans, fixed interest is the weighted average yield of the 7-year treasury bonds based on PDST-R2 plus a spread of 50 basis points per annum. Outstanding balance amounted to P=3,500 and P=4,000 as of December 31, 2015 and 2014, respectively. In respect of the floating interest portion, floating interest rate is based on the weighted average yield for the 91-day treasury bills based on PDST-R2 plus a spread of 65 basis points per annum. Outstanding balance amounted to P=472,500 and P=540,000 as of December 31, 2015 and 2014, respectively.

*SGVFS015631* - 38 - c. In December 2012 and February 2013, the Group obtained loans with a maximum principal amount of P=400.0 million. These loans are expected to mature on 2018 and 2019, respectively. The loan bears a floating interest rate based on the average yield for the 91-day treasury bills on PDST-R2 plus a spread of 80 basis points per annum or Bangko Sentral ng Pilipinas Overnight Reverse Repurchase Agreement rate plus a spread of 37.5 basis points, whichever is higher. Outstanding balance amounted to P=380,000 and P=400,000, as of December 31, 2015 and 2014, respectively. d. In December 2013, the Group availed loans with a principal sum of P=420.0 million which are due in 2021. The loan is subject to fixed interest rate of 4.75% per annum. Outstanding balance amounted to P=420,000 as of December 31, 2015 and 2014. e. On June 6, 2014, the Parent Company issued P=5.0 billion fixed rate bonds. These bonds have a term of 7 years, payable in 2021, with a fixed rate of 5.32% per annum. The proceeds will be used to fund the Group’s projects in the pipeline, including on-going projects within the Cebu Business Park and Cebu I.T. Park and land banking initiatives.

The loans which were availed from local banks in 2013, are used to finance the construction of eBloc 3 and eBloc 4 commercial buildings and are included under “Investment properties” (see Note 12).

The loan agreements provide for certain restrictions and requirements with respect to, among others, major disposal of property, pledge of assets, liquidation, merger or consolidation and maintenance of ratio between debt and the tangible net worth not to exceed 3:1. These restrictions and requirements were complied with by the Group as of December 31, 2015 and 2014.

Interest on long-term debt recognized in the consolidated statement of comprehensive income amounted to P=346.2 million, P=182.4 million and P=51.7 million for the year ended December 31, 2015, 2014 and 2013, respectively (see Note 21). Interest rates range from 1.73% to 4.75% and 2.15% to 4.75% per annum for the years ended December 31, 2015 and 2014, respectively.

For the years ended December 31, 2015 and 2014, the Group has capitalized interest from borrowed funds as part of the investment properties account amounting to P=31.8 million and P=67.7 million, respectively. Capitalization rate used for general borrowings is at 4.75%.

The rollforward analyses of the unamortized debt issue cost follow:

2015 2014 (In Thousands) At January 1 P=50,395 P=14,148 Additions − 49,342 Amortization (Note 21) (6,935) (13,095) At December 31 P=43,460 P=50,395

The maturities of long-term debt at nominal values as of December 31 follow:

2015 2014 (In Thousands) Due in: 2015 P=− P= 493,875 2016 109,000 168,000 2017 449,000 508,000 (Forward)

*SGVFS015631* - 39 -

2015 2014 (In Thousands) 2018 P=361,000 P= 420,000 2019 21,000 80,000 2020 21,000 80,000 2021 5,315,000 5,020,000 P=6,276,000 P= 6,769,875

17. Deposits and Other Liabilities

This account consists of the following:

December 31 2015 2014 (In Thousands) Liability for purchased land (Note 13) P=703,138 P=− Tenants’ deposits 632,110 610,375 Customers’ deposits 203,750 183,775 Construction bond 65,251 10,828 Advance rent − 74,382 Retentions payable − 16,297 1,604,249 895,657 Less noncurrent portion 953,397 225,891 P=650,852 P=669,766

The rollforward analyses of deferred credits under tenants’ deposits follow:

2015 2014 At January 1 P=10,208 P=13,591 Additions 13,253 3,868 Amortization (Note 21) (6,975) (7,251) At December 31 P=16,486 P=10,208

Tenants’ deposits consist of rental security deposits to be refunded by the Group at the end of the lease contracts. These are initially recorded at fair value, which was obtained by discounting its future cash flows using the applicable rates for similar types of instruments.

Customers’ deposits include customers’ down payments related to real estate sales and excess of collections over the recognized receivables based on percentage of completion. The Group requires buyers of condominium units to pay a minimum percentage of the total selling price before the two parties enter into a sale transaction. In relation to this, the customers’ deposits represent payment from buyers which have not reached the minimum required percentage. When the level of required payment is reached by the buyer, a sale is recognized and these deposits and down payments are considered as payments to the total contract price.

Advance rent pertains to tenants’ advances which are to be applied by the Group against the rent and service due at the end of the lease terms.

Retention payable pertains to the portion of the progress billings of contractors retained by the Group to be released after the guarantee period, usually within one year after the completion of projects. The retention serves as security from the contractor against potential defects in the projects.

*SGVFS015631* - 40 -

Construction bond payable pertains to deposits made by tenants as security for the construction and design of the leased premises, to be refunded upon completion, which usually takes less than a year.

18. Related Party Transactions

Terms and Conditions of Transactions with Related Parties The Group in its regular conduct of business has entered into transactions with related parties. Parties are considered to be related if, among others, one party has the ability, directly or indirectly, to control the other party in making financial and operating decisions, the parties are subject to common control or the party is an associate or a joint venture. Except as otherwise indicated, the outstanding accounts with related parties shall be settled in cash. The transactions are made at terms and prices agreed upon by the parties. There have been no guarantees provided or received for any related party receivables or payables and are generally unsecured. Furthermore, these accounts are non-interest bearing except for intercompany loans.

The following tables provide the total amount of transactions that have been entered into with related parties for the relevant financial year:

*SGVFS015631* - 41 -

*SGVFS015631* - 42 -

Receivables from/payables to Solinea, Avida and Alveo pertain mostly to advances for and reimbursements of operating expenses, development costs and land acquisitions. Other related party receivables and payables pertain to advances and reimbursements arising from the Group’s ordinary course of business. These are generally trade-related, unsecured with no impairment, noninterest-bearing and payable within one year. The loans from DPSI, MDC and Serendra, Inc. bear interest ranging from 2.3% to 2.5% and are due and demandable as of December 31, 2015 and 2014.

In December 2015, the Group sold land to ALC amounting to P=633.61 million which is payable in installment basis for twenty (20) years starting 2015.

The nature and amounts of material transactions with related parties as of December 31, 2015 and 2014 are as follows:

Expenses to ALI pertain to management fees, professional fees and systems costs.

Management and service fees charged by ALI amounted to P=133.1 million, P=79.8 million, and P=73.4 million in 2015, 2014 and 2013, respectively. Payable to ALI as of December 31, 2015 and 2014 arising from this transaction amounted to P=187.61 million and P=111.8 million respectively. Professional fees charged by ALI amounted to P=20.7 million, P=18.9 million and P=33.0 million in 2015, 2014 and 2013, respectively. Systems costs which were included in the Group’s manpower costs amounted to P=25.06 million, P=32.1 million and P=19.7 million in 2015, 2014 and 2013, respectively.

2015 2014 (In Thousands) Cash and cash equivalents (Note 4) P=92,250 P=564,726 Financial assets at FVPL (Note 6) 73,565 204,077 Long-term debt (Note 16) 1,272,562 1,359,513 P=1,438,377 P=2,128,316

Compensation of key management personnel by benefit type follows:

2015 2014 2013 (In Thousands) Short-term employee benefits P=21,336 P=26,067 P=20,634 Post-employment pension and other benefits 1,025 2,270 2,237 P=22,361 P=28,337 P=22,871

*SGVFS015631* - 43 -

19. Real Estate Revenue

This account consists of:

2015 2014 2013 (In Thousands) Rental income P=1,653,632 P=1,381,638 P=1,131,136 Real estate sales 1,337,422 237,295 546,794 Theater income 143,192 135,541 102,264 P=3,134,246 P=1,754,474 P=1,780,194

In 2015, the Group generated revenue from land sale to ALC and recognized revenue amounting to P=633.61 million (see Note 18).

20. Interest and Other Income

Interest income consists of:

2015 2014 2013 (In Thousands) Interest income: Cash equivalents (Note 4) P=48,324 P=29,240 P=21,798 Short-term investments (Note 5) 971 – – Cash in banks (Note 4) 406 1,817 1,354 Accretion of receivables (Note 7) 22,542 40,111 49,683 Others 25,876 − − P=98,119 P=71,168 P=72,835

Other income consists of:

2015 2014 2013 (In Thousands) Recoveries P=311,482 P=339,929 P=206,091 Service income 29,389 32,795 32,660 Beverage 5,659 5,488 17,729 Realized/unrealized gain on financial assets at FVPL (Note 6) 2,820 3,489 4,281 Others 52,241 6,557 8,670 P=401,591 P=388,258 P=269,431

Recoveries pertain to income from sewer, light and power and water charges from its rental operations. These are recognized when earned.

Service income pertains to various management fees charged by the Group to various parties.

*SGVFS015631* - 44 -

21. Costs and Expenses

Real estate, rental and theater expenses consist of: 2015 2014 2013 (In Thousands) Cost of real estate sales (Note 8) P=571,945 P=154,885 P=369,344 Depreciation and amortization (Note 12) 339,141 294,677 204,899 Marketing and management fees (Note 18) 246,609 151,264 167,310 Producers’ film share 79,159 75,424 56,492 Manpower cost (Note 18) 17,640 13,846 11,790 Rental 2,661 1,179 1,355 Direct operating expenses: Light and water 179,159 180,030 119,349 Repairs and maintenance 90,292 65,176 54,417 Security and janitorial 88,830 85,224 56,312 Taxes and licenses 55,739 60,114 39,399 Provision for impairment loss 36,518 − − Commission 28,152 7,809 19,606 Insurance 16,562 3,239 4,515 Dues and fees 10,537 6,332 13,579 Professional fees 8,763 2,450 4,806 Transportation and travel 691 399 245 Entertainment, amusement and recreation 230 70 47 Others 21,356 25,054 26,875 P=1,793,984 P=1,127,172 P=1,150,340

General and administrative expenses consist of: 2015 2014 2013 (In Thousands) Manpower cost (Notes 18 and 22) P=119,526 P=129,267 P=124,856 Depreciation and amortization (Note 10) 18,884 18,067 13,864 Stockholders' meeting 9,948 4,286 7,712 Repairs and maintenance 7,030 6,903 10,106 Professional fees 5,814 9,664 8,076 Transportation and travel 5,414 7,770 10,144 Postal and communication 3,801 3,582 3,672 Trainings 3,548 9,642 3,788 Provision for impairment loss (Note 7) 3,105 − − Utilities 2,143 2,745 3,341 Supplies 2,880 3,443 2,130 Rental 2,370 2,631 754 Advertising 2,112 7,213 11,378 Security and janitorial 2,029 5,270 3,579 Entertainment, amusement and recreation 1,163 1,022 930 Dues and fees 1,132 − − Taxes and licenses 806 13,742 10,861 Insurance 621 1,188 1,581 Others 30,851 3,408 9,408 P=223,177 P=229,843 P=226,180 *SGVFS015631* - 45 -

Interest and other financing charges consist of:

2015 2014 2013 (In Thousands) Interest on long-term debt (Note 16) P=346,215 P=182,372 P=51,699 Amortization of discount on long-term debt (Note 16) 6,935 13,095 2,241 Amortization of deferred credits (Note 17) 6,975 7,251 4,785 Provisions and other expenses 88,983 2,936 108 P=449,108 P=205,654 P=58,833

22. Pension Plan

As discussed in Note 2, the Group maintains a defined contribution (DC) plan which is accounted for as a defined benefit (DB) plan with minimum guarantee due to the requirements of RA No. 7641.

The asset allocation of the plan is set and reviewed from time to time by the Plan Trustees taking into account the membership profile, the liquidity requirements of the Plan and the risk appetite of the Plan sponsor.

The principal actuarial assumptions used to determine retirement benefits with respect to the discount rate, salary increases and return on plan assets were based on historical and projected normal rates. Actuarial valuations are made annually. The Group’s annual contributions are agreed between the Plan Trustees and the Group, in consideration of the contribution advice from the Plan Actuary.

The Group’s fund is in the form of a trust fund being maintained by BPI Asset Management. The primary objective of the Retirement Fund is to achieve the highest total rate of return possible, consistent with a prudent level of risk. The investment strategy articulated in the asset allocation policy has been developed in the context of long-term capital market expectations, as well as multi-year projections of actuarial liabilities. Accordingly, the investment objectives and strategies emphasize a long-term outlook, and interim performance fluctuations will be viewed with the corresponding perspective.

The components of pension expense (included in manpower costs under “General and administrative expenses”) in the consolidated statements of income are as follows:

2015 2014 2013 (In Thousands) Current service cost P=9,917 P=12,442 P=2,297 Net interest expense 1,278 1,275 1,535 Total pension expense P=11,195 P=13,717 P=3,832

*SGVFS015631* - 46 -

The remeasurement effects recognized in other comprehensive income (included in Equity under “Remeasurement loss on defined benefit plan”) in the consolidated statements of financial position follow:

2015 2014 2013 (In Thousands) Actuarial loss due to liability experience P=2,309 P=10,429 P=616 Actuarial (gain) loss due to liability assumption changes (5,605) − 6,965 Return on plan assets greater than discount rate 95 537 – Remeasurement (gains) losses in other comprehensive income (P=3,201) P=10,966 P=7,581

The amounts recognized under pension liability in the consolidated statements of financial position for the pension plan are as follows:

2015 2014 (In Thousands) Defined benefit obligation P=67,431 P=63,403 Fair value of plan assets (11,399) (7,669) Liability recognized in the statements of financial position P=56,032 P=55,734

Changes in the present value of the defined benefit obligation are as follows:

2015 2014 (In Thousands) Balance at January 1 P=63,403 P=39,323 Remeasurement loss arising from changes in experience 2,309 – Remeasurement loss arising from changes in financial assumptions (5,605) 10,429 Current service cost 9,917 12,442 Interest expense 2,566 2,233 Benefits paid (5,159) (1,024) Balance at December 31 P=67,431 P=63,403

Changes in the fair value of the plan assets are as follows:

2015 2014 (In Thousands) Balance at January 1 P=7,669 P=– Interest income on plan assets 1,288 958 Contributions 7,696 8,272 Benefits paid (5,159) (1,024) Return on plan assets less than discount rate (95) (537) Balance at December 31 P=11,399 P=7,669

*SGVFS015631* - 47 -

The Group expects to contribute P=4.2 million to its retirement fund in 2016.

In 2015, the allocations of the fair value of plan assets follow:

Fixed income instruments 76.12% Cash and payables 23.88 Total 100.00%

The cost of defined benefit pension plans and other post-employment medical benefits as well as the present value of the pension obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. The principal assumptions used in determining pension and post-employment medical benefit obligations for the defined benefit plans are shown below:

2015 2014 Discount rate 5.00% 4.50% Salary increase rate 7.00 7.00

The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the defined benefit obligation as of the end of the reporting period, assuming all other assumptions were held constant:

Effect on DBO December 31, December 31, 2015 2014 Discount rate 1.0% increase (11.05%) (10.20%) Discount rate 1.0% decrease 13.14 12.18 Rate of salary increase 1.0% increase 12.75 11.75 Rate of salary increase 1.0% decrease (10.96) (10.07)

The weighted average duration of the defined benefit obligation at the end of the reporting period is 14.28 years.

The following table shows the maturity profile of the Group’s defined benefit obligation based on undiscounted benefit payments:

2015 2014 (In Thousands) Within 1 year P=673 P=1,722 More than 1 year to 5 years 5,871 19,714 More than 5 years to 10 years 10,644 25,462 More than 10 years 175,413 426,930 P=192,601 P=473,828

*SGVFS015631* - 48 -

23. Income Taxes

Reconciliation between the statutory income tax rate and the effective income tax rate follows:

2015 2014 2013 Statutory income tax rate 30.00% 30.00% 30.00% Tax effects of: Interest income and capital gains taxed at lower rates (0.03) (0.02) (0.08) Income subjected to lower income tax rates (2.44) (5.18) (1.09) Equity in net earnings of associates and a joint venture (9.60) (3.31) (2.25) Others 7.87 1.09 1.26 Effective income tax rate 25.80% 22.58% 27.84%

The components of net deferred tax assets as of December 31, 2015 and 2014 follow:

2015 2014 (In Thousands) Deferred tax assets on: Allowance for impairment losses P=641 P=2,102 Unamortized discount on customers’ deposits 79 − Unapplied NOLCO − 21,642 Advance rent − 6,267 Difference between tax and book basis of accounting for real estate transactions − 2,269 Interest accretion − 1,104 Unrealized foreign exchange loss − 923 Others − 515 720 34,822 Deferred tax liabilities on: Deferred credits P=68 P=1,100 Capitalized interest − 12,982 Accrued rental income − 2,033 Difference between tax and book basis of accounting for real estate transactions − 1,357 Others − 1,112 68 18,584 P=652 P=16,238

The components of net deferred tax liabilities as of December 31, 2015 and 2014 are as follows:

2015 2014 (In Thousands) Deferred tax assets on: Unapplied NOLCO P=30,813 P=− Allowance for impairment losses 26,929 − Accrued expenses 23,925 4,454 Interest accretion on sale of land 16,115 − Retirement benefits 13,344 10,273 Advance rent 8,849 − Interest accretion on rental deposits 1,340 −

(Forward) *SGVFS015631* - 49 -

2015 2014 (In Thousands) Unrealized foreign exchange loss P=923 P=800 Allowance for probable losses − 2,983 Others 20,496 − 142,734 18,510

Deferred tax liabilities on: Unrealized gross profit on lot sale 147,255 − Unamortized capitalized interest 75,840 53,732 Difference between tax and book basis of accounting for real estate transactions 74,564 24,572 Accrued rent 6,582 − Amortized deferred income 1,367 − Capitalized transaction cost 619 − Unrealized foreign exchange gain 196 − Unrealized gain on UITF 152 − Excess of acquisition cost over the net assets of a subsidiary − 15,272 Others 5,250 2,770 311,825 96,346 P=169,091 P=77,836

As of December 31, 2015 and 2014, deferred tax assets of P=4.6 million and P=4.2 million, respectively, arising from NOLCO amounting to P=15.3 million and P=13.9 million, respectively, have not been recognized by TPEPI.

The table below shows the details of NOLCO that may be used by the Group as deductions against future income tax liabilities:

Year Incurred Amount Applied/Expired Balance Expiry Date 2012 P=16,519,174 P=16,519,174 P=− 2015 2013 32,131,800 − 32,131,800 2016 2014 37,354,687 − 37,354,687 2017 2015 48,495,209 − 48,495,209 2018 P=134,500,870 P=16,519,174 P=117,981,696

24. Basic/Diluted Earnings Per Share

The following table presents information necessary to compute EPS:

2015 2014 2013 (In Thousands, except EPS) a. Net income attributable to the equity holders of the Parent Company P=827,207 P=530,877 P=501,145 b. Weighted average number of outstanding shares 1,920,073 1,920,073 1,920,073 c. Basic/Diluted Earnings per share (a/b) P=0.43 P=0.28 P=0.26

*SGVFS015631* - 50 -

25. Financial Instruments

Fair Value Information The following tables set forth the carrying values and estimated fair values of the Group’s financial assets and liabilities:

December 31, 2015 December 31, 2014 Carrying Carrying Value Fair Value Value Fair Value (In Thousands) LOANS AND RECEIVABLES Trade receivables Residential development P=236,086 P=236,086 P=311,340 P=311,340 Corporate receivables 81,445 65,204 68,083 64,856 OTHER FINANCIAL LIABILITIES Long-term debt P=6,232,540 P=6,818,216 P=6,719,480 P=7,263,808 Deposits and other liabilities 1,604,249 1,587,763 821,275 818,786

The methods and assumptions used by the Group in estimating the fair value of the financial instruments are as follows:

Financial assets at FVPL - The fair value estimates are based on net asset value as of the reporting dates.

Cash and cash equivalents and current accounts - The carrying amounts approximate fair values due to the relatively short-term maturities of these instruments.

Noncurrent accounts and dividends receivable. - The fair values are estimated based on the discounted cash flow methodology using the applicable discount rates for similar types of instruments. The discount rates used ranged from 3.7% to 5.0% and 2.4% to 3.8% as of December 31, 2015 and 2014, respectively.

Accounts and other payables and current portion of deposits and other liabilities and long-term debt - The fair values approximate the carrying amounts due to the short-term nature of these accounts.

Noncurrent portion of deposits and other liabilities and long-term debt - The fair value of fixed rate instruments are estimated using the discounted cash flow methodology using the Group’s current incremental borrowing rates for similar borrowings with maturities consistent with those remaining for the liability being valued. The discount rates used ranged from 1.8% to 5.3% and 1.8% to 3.8% as of December 31, 2015 and 2014, respectively.

Fair Value Hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation technique:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly or indirectly Level 3: inputs for the asset or liability that are not based on observable market data

The Group categorized the fair value of long-term debt and deposits and other noncurrent liabilities under Level 3 as of December 31, 2015. The fair value of these financial instruments was determined by discounting future cash flows using the applicable rates of similar types of instruments plus a certain spread. This spread is the unobservable input and the effect of changes to this is that the higher the spread, the lower the fair value.

*SGVFS015631* - 51 -

There have been no reclassifications from Level 1 to Level 2 or 3 categories in 2015 and 2014.

Financial Risk Management Objectives and Policies The Group’s principal financial instruments comprise cash and cash equivalents, financial assets at FVPL and long-term debt. The main purpose of the Group’s financial instruments is to fund its operations, capital expenditures and finance the projects. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

Exposure to credit risk, liquidity risk and market risk (i.e., foreign currency risk and interest rate risk) arises in the normal course of the Group’s business activities. The main objectives of the Group’s financial risk management are as follows:

· to identify and monitor such risks on an ongoing basis; · to minimize and mitigate such risks; and · to provide a degree of certainty about costs.

The Group’s financing and treasury function operates as a centralized service for managing financial risks and activities as well as providing optimum investment yield and cost-efficient funding for the Group. The Group’s BOD reviews and approves policies for managing each of these risks.

Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Group’s credit risks are primarily attributable to financial assets such as cash and cash equivalents, financial assets and FVPL and accounts receivables. To manage credit risk, the Group maintains defined credit policies and monitors on a continuous basis the Group’s exposure to credit risks.

Cash and cash equivalents and financial assets at FVPL. The Group adheres to fixed limits and guidelines in its dealing with counterparty banks and its investment in financial instruments. Bank limits are established on the basis of the Group’s rating that covers the area of liquidity, capital adequacy and financial stability. Given the high credit standing of its accredited counterparty banks, management does not expect any of these financial institutions to fail in meeting their obligation. The Group’s exposure to credit risk from these financial assets arise from the default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Commercial development and residential development trade receivables. With respect to trade receivables from the sale of real estate properties, credit risk is managed primarily through credit reviews and monitoring of receivables on a continuous basis. The Group undertakes supplemental credit review procedures to ensure the adequacy of provisioning for certain installment payment structures. Customer payments are facilitated through various collection modes including the use of post-dated checks and auto-debit arrangements. Exposure to bad debts is not significant and the requirement for remedial procedures is minimal given the profile of buyers. As for the sale of lots, the Group includes in the contract to sell provisions that the title to the properties will only be transferred to the buyers upon full payment of the contract price.

Corporate business and shopping center trade receivables. Credit risk arising from rental income from leasing properties is primarily managed through a tenant selection process. Prospective tenants are evaluated on the basis of payment track record and other credit information. In accordance with the provisions of the lease contracts, the lessees are required to deposit with the Group security deposits and advance rentals which help reduce the Group’s credit risk exposure in case of defaults by the tenants. For existing tenants, the Group has put in place a monitoring and follow-up system. Receivables are aged and analyzed on a continuous basis to minimize credit risk associated with these receivables. Regular meetings with tenants are also undertaken to provide opportunities for counseling and further assessment of paying capacity.

*SGVFS015631* - 52 -

As for the receivables from related parties, receivable from employees, dividends receivable and other receivables, the maximum exposure to credit risk from these financial assets arise from the default of the counterparty with a maximum exposure equal to their carrying amounts.

An analysis of the maximum exposure to credit risk from the Group’s trade receivables and the fair values of the related collaterals are shown below:

December 31, 2015 Financial effect Maximum of collateral exposure to Fair value of or credit credit risk collaterals Net Exposure enhancement (In Thousands) Trade receivables Residential development P=236,086 P=156,753 P=79,333 P=156,753 Shopping centers 155,536 510,121 − 155,536 Corporate business 81,445 204,705 − 81,445 Commercial development 10,095 − 10,095 − Total P=483,162 P=871,579 P=89,428 P=393,734

December 31, 2014 Financial effect Maximum of collateral exposure to Fair value of or credit credit risk collaterals Net Exposure enhancement (In Thousands) Trade receivables Residential development P=311,340 P=731,792 P=– P=311,340 Shopping centers 132,387 440,913 − 132,387 Corporate business 68,083 77,958 − 68,083 Commercial development 30,617 89,148 – 30,617 Total P=542,427 P=1,339,811 P= P=542,427

The table below shows the credit quality by class of the Group’s financial assets (gross of allowance for impairment losses):

December 31, 2015

Neither Past Due nor Impaired Medium Past Due or High Grade Grade Low Grade Impaired Total (In Thousands) Cash and cash equivalents (excluding cash on hand) P=115,166 P=− P=− P=− P=115,166 Financial assets at FVPL 73,565 − − − 73,565 Trade Residential development 176,398 − − 59,688 236,086 Shopping centers 102,656 2,274 10,163 57,126 172,219 Corporate business 71,820 − − 9,625 81,445 Commercial development 8,982 − − 1,113 10,095 Others 13,452 − − − 13,452 Receivable from related parties 2,678,833 − − − 2,678,833 Receivables from employees 4,547 − − 12,644 17,191 Accrued receivable 5,900 − − − 5,900 Others 46,045 − − − 46,045 Other current assets Dividends receivable 31,144 − − − 31,144 P=3,328,508 P=2,274 P=10,163 P=140,196 P=3,481,141

*SGVFS015631* - 53 -

December 31, 2014 Neither Past Due nor Impaired Medium Past Due or High Grade Grade Low Grade Impaired Total (In Thousands) Cash and cash equivalents (excluding cash on hand) P=2,894,822 P=− P=− P=− P=2,894,822 Financial assets at FVPL 204,077 − − − 204,077 Trade Residential development 294,570 − − 16,770 311,340 Shopping centers 81,472 2,604 22,876 39,012 145,964 Corporate business 59,131 82 − 8,870 68,083 Commercial development 30,617 − − − 30,617 Others 1,626 − − − 1,626 Receivable from related parties 345,236 − − − 345,236 Receivables from employees 15,452 − − − 15,452 Accrued receivable 14,958 − − − 14,958 Others 53,290 − − − 53,290 Other current assets Dividends receivable 29,858 − − − 29,858 P=4,025,109 P=2,686 P=22,876 P=64,652 P=4,115,323

Others includes non-trade receivables from sewer and management fees, receivable from SSS and accrued interest receivable from money market placements.

The credit quality of the financial assets was determined as follows:

Cash and cash equivalents and financial assets at FVPL - based on the nature of the counterparty and the Group’s rating procedure. These are held by counterparty banks with minimal risk of bankruptcy and are therefore classified as high grade.

Accounts and dividends receivables - high grade pertains to receivables with no default in payment; medium grade pertains to receivables with up to 3 defaults in payment; and low grade pertains to receivables with more than 3 defaults in payment.

As of December 31, 2015 and 2014, the Group does not have restructured financial assets.

The Group has no significant credit risk concentrations on its receivables. Policies are in place to ensure that lease contracts and contracts to sell are made with customers with good credit history.

Given the Group’s diverse base of counterparties, it is not exposed to large concentration of credit risk. As of December 31, 2015 and 2014, the aging analyses of receivables presented per class, is as follow:

December 31, 2015

Neither Past Past Due but not Impaired Due nor 30-60 60-90 90-120 Individually Impaired <30 days days days days >120 days Impaired Total (In Thousands) Trade Residential development P=176,398 P=− P=855 P=11,870 P=20,341 P=26,622 P=− P=236,086 Shopping centers 115,093 − 7,388 4,534 5,571 22,950 16,683 172,219 Corporate business 71,820 − 3,171 705 1,864 3,885 − 81,445 Commercial development 8,982 − 1 8 − 1,104 − 10,095 Others 13,452 − − − − − − 13,452 Receivable from related parties 2,678,833 − − − − − − 2,678,833 Dividends receivable 18,500 − − − − 12,644 − 31,144 Receivable from employees 17,191 − − − − − − 17,191 Accrued receivable 5,900 − − − − − − 5,900 Others 46,045 − − − − − − 46,045 Total P=3,152,214 P=− P=11,415 P=17,117 P=27,776 P=67,205 P=16,683 P=3,292,410 *SGVFS015631* - 54 -

December 31, 2014

Neither Past Past Due but not Impaired Due nor 30-60 60-90 90-120 Individually Impaired <30 days days days days >120 days Impaired Total (In Thousands) Trade Residential development P=294,570 P=– P=7,756 P=988 P=4,930 P=3,096 P=− P=311,340 Shopping centers 106,952 9,296 2,894 4,113 2,681 6,451 13,577 145,964 Corporate business 59,213 – 1,015 – – 7,855 – 68,083 Commercial development 30,617 – – – – – – 30,617 Others 1,626 – – – – – – 1,626 Receivable from related parties 345,236 – – – – – – 345,236 Dividends receivable 29,858 – – – – – – 29,858 Receivable from employees 15,452 – – – – – – 15,452 Accrued receivable 14,958 – – – – – – 14,958 Others 53,290 – – – – – – 53,290 Total P=951,772 P=9,296 P=11,665 P=5,101 P=7,611 P=17,402 P=13,577 P=1,016,424

Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from either the inability to sell financial assets quickly at their fair values; or the counterparty failing on repayment of a contractual obligation; or inability to generate cash inflows as anticipated.

The Group monitors its cash flow position, debt maturity profile and overall liquidity position in assessing its exposure to liquidity risk. The Group maintains a level of cash and cash equivalents deemed sufficient to finance operations and to mitigate the effects of fluctuation in cash flows. Accordingly, its loan maturity profile is regularly reviewed to ensure availability of funding through an adequate amount of credit facilities with financial institutions.

As of December 31, 2015, current ratio is 1.0:1.0, with cash and cash equivalents and financial assets at FVPL of P=189.1 million accounting for 3.6% of the total current assets, and resulting in a net current liability of P=260.5 million.

As of December 31, 2014, current ratio is 1.6:1.0, with cash and cash equivalents and financial assets at FVPL of P=3,099.3 million accounting for 53.1% of the total current assets, and resulting in a net working capital of P=2,261.2 million. Overall, the Group’s funding arrangements are designed to keep an appropriate balance between equity and debt, to give financing flexibility while continuously enhancing the Group’s businesses.

The table below summarizes the maturity profile of the Group’s financial assets and financial liabilities at December 31, 2015 and 2014 based on the contractual undiscounted payments.

December 31, 2015

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total (In Thousands) Cash and cash equivalents (excluding cash on hand) P=115,166 P=− P=− P=− P=115,166 Financial assets at fair value through profit or loss 73,565 − − − 73,565 Accounts receivable 3,173,684 54,561 16,683 − 3,244,928 Dividends receivable 18,500 12,644 − − 31,144 Total financial assets P=3,380,915 P=67,205 P=16,683 P=− P=3,464,803 Accounts and other payables P=4,140,659 P=− P=− P=− P=4,140,659 Long-term debt 107,873 407,588 359,327 5,357,752 6,232,540 Deposits and other liabilities 1,567,338 − − − 1,567,338 Total other financial liabilities P=5,815,870 P=407,588 P=359,327 P=5,357,752 P=11,940,537 Interest payable P=57,581 P=− P=− P=− P=57,581

*SGVFS015631* - 55 -

December 31, 2014

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total (In Thousands) Cash and cash equivalents (excluding cash on hand) P=2,894,822 P=– P=– P=– P=2,894,822 Financial assets at fair value through profit or loss 204,077 204,077 Accounts receivable 938,192 42,858 9,207 2,567 992,824 Dividends receivable 29,858 – – – 29,858 Total financial assets P=4,066,949 P=42,858 P=9,207 P=2,567 P=4,121,581 Accounts and other payables P=2,305,923 P=– P=– P=– P=2,305,923 Long-term debt 492,561 168,000 508,000 5,550,919 6,719,480 Deposits and other liabilities 369,674 91,890 171,229 4,707 637,500 Total other financial liabilities P=3,168,158 P=259,890 P=679,229 P=5,555,626 P=9,662,903 Interest payable P=34,414 P=532,729 P=266,000 P=931,364 P=1,764,507

Cash and cash equivalents, financial assets at FVPL, accounts receivable and dividends receivable are used for the Group's liquidity requirements. Please refer to the terms and maturity profile of these financial assets under the maturity profile of the interest-bearing financial assets and liabilities disclosed under interest rate risk section.

Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Majority of the Group’s transactions are denominated in Philippine Peso. There are only minimal placements in foreign currencies and the Group does not have any foreign currency denominated debt. As such, the Group’s foreign currency risk is minimal.

The following table shows the Group’s consolidated foreign currency-denominated monetary assets and their peso equivalents as of December 31, 2015 and 2014:

December 31, 2015 December 31, 2014 Php Php US Dollar Equivalent US Dollar Equivalent (In Thousands) Cash and cash equivalents $25,868 P=1,220,194 $990 P=44,273

In translating the foreign currency-denominated monetary assets into peso amounts, the exchange rates used were P=47.17 to US$1.00 and P=44.72 to US$1.00, the Philippine Peso-US Dollar exchange rates as at December 31, 2015 and 2014, respectively.

The following table demonstrates the sensitivity to a reasonably possible change in the US dollar rate, with all variables held constant, of the Group’s profit before tax (due to changes in the peso equivalent of the dollar denominated cash and cash equivalents and short-term investments). There is no other impact on the Group’s equity other than those already affecting the profit or loss.

Increase (Decrease) Effect on Profit in exchange rate Before Tax (In Thousands) December 31, 2015 P=1.00 P=25,868 (1.00) (25,868) December 31, 2014 1.00 990 (1.00) (990)

*SGVFS015631* - 56 -

Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group’s interest rate exposure management policy centers on reducing the Group’s overall interest expense and exposure to changes in interest rates. Changes in market interest rates relate primarily to the Group’s interest-bearing debt obligations with floating interest rate as it can cause a change in the amount of interest payments.

The Group manages its interest rate risk by leveraging on its premier credit rating and maintaining a debt portfolio mix of both fixed and floating interest rates. The portfolio mix is a function of historical, current trend and outlook of interest rates, volatility of short term interest rates, the steepness of the yield curve and degree of variability of cash flows.

The following tables demonstrate the sensitivity of the Group’s profit before tax and equity to a reasonably possible change in interest rates on December 31, 2015 and 2014 with all variables held constant, (through the impact on floating rate borrowings):

December 31, 2015

Effect on income before income tax Increase (decrease) + 100 basis - 100 basis Change in basis points points points (In Thousands) Floating rate borrowings (P=8,541) P=8,541

December 31, 2014

Effect on income before income tax Increase (decrease) + 100 basis - 100 basis Change in basis points points points (In Thousands) Floating rate borrowings (P=14,879) P=14,879

*SGVFS015631* - 57 -

The terms and maturity profile of the interest-bearing financial assets and liabilities, together with its corresponding nominal amounts and carrying values (in thousands) are shown in the following table:

December 31, 2015

Interest terms (p.a.) Rate Fixing Period Nominal Amount < 1 year 1 to 5 years Carrying Value Group Cash and cash equivalents Fixed at the date of investment Various P=115,166 P=115,166 P=− P=115,166 Accounts receivable Fixed at the date of sale Date of sale 3,244,928 3,173,684 71,244 3,244,928 P=3,360,094 P=3,288,850 P=71,244 P=3,360,094 Parent Company Long-term debt Fixed Peso Fixed rate of average 5-year treasury bond + 0.60% spread Maturity date P=4,959,978 P=– P=4,959,978 P=4,959,978 Floating Peso Floating rate of average 91-day treasury bill rate + 0.60% spread Maturity date 1,272,562 107,873 1,164,689 1,272,562 P=6,232,540 P=107,873 P=6,124,667 P=6,232,540

December 31, 2014 Interest terms (p.a.) Rate Fixing Period Nominal Amount < 1 year 1 to 5 years Carrying Value Group Cash and cash equivalents Fixed at the date of investment Various P=2,882,693 P=2,882,693 P=− P=2,882,693 Accounts receivable Fixed at the date of sale Date of sale 1,385,475 1,282,427 103,048 1,385,475 P=4,268,168 P=4,165,120 P=103,048 P=4,268,168 Parent Company Long-term debt Fixed Peso Fixed rate of average 5-year treasury bond + 0.60% spread Maturity date P=4,954,092 P=– P=4,954,092 P=4,954,092 Floating Peso Floating rate of average 91-day treasury bill rate + 0.60% spread Maturity date 1,765,388 492,561 1,275,827 1,768,388 P=6,719,480 P=492,561 P=6,229,919 P=6,722,480

*SGVFS015631* - 58 -

Equity price risk Financial assets at FVPL are acquired at a certain price in the market. Such investment securities are subject to price risk due to changes in market values of instruments arising either from factors specific to individual instruments or their issuers or factors affecting all instruments traded in the market. Depending on several factors such as interest rate movements, country’s economic performance, political stability, domestic inflation rates, these prices change, reflecting how market participants view the developments.

The Group measures the sensitivity of its investment securities based on the average historical fluctuation of the investment securities’ net asset value per unit (NAVPU). All other variables held constant, with a duration of 0.18 year and 0.05 year for 2015 and 2014, respectively, a 1.0% change in NAVPU will increase/decrease net income and equity by P=0.1 million for the year ended December 31, 2015 and 2014, respectively.

26. Equity

Capital Stock The details of the Parent Company’s common shares are as follows:

2015 2014 Authorized shares 3,000,000,000 3,000,000,000 Par value per share P=1.0 P=1.0 Shares issued and outstanding 1,920,073,623 1,920,073,623

In accordance with SRC Rule 68, as Amended (2011), Annex 68-D, below is a summary of the Parent Company’s track record of registration of securities.

2015 2014 Number of Number of Number of holders of holders of shares Issue/offer Date of securities as of securities as of registered price approval December 31 December 31 Common shares 3,000,000,000 P=1.00 par value February 14, 1994 4,151 4,350 P=4.00 issue price

Retained Earnings The retained earnings available for dividend distribution amounted to P=1,398.1 million and P=1,147.4 million as of December 31, 2015 and 2014, respectively. Retained earnings include undistributed net earnings of subsidiaries and associates amounting P=919.0 million and P=701.0 million as of December 31, 2015 and 2014, respectively. These amounts are not available for dividend declaration until declared by the subsidiaries and affiliates.

On December 1, 2015, the Parent Company’s BOD declared P=0.12 per share cash dividends from unappropriated retained earnings to all its issued and outstanding shares as of record date December 16, 2015, and paid on December 23, 2015. On November 11, 2014, the Parent Company’s BOD declared P=0.12 per share cash dividends from unappropriated retained earnings to all its issued and outstanding shares as of record date November 25, 2014, and paid on December 9, 2014.

On December 11, 2015, the CPVDC’s BOD declared P=0.12 per share cash dividends from unappropriated retained earnings to all its issued and outstanding shares as of record date December 16, 2015, and paid on December 23, 2015. On November 11, 2014, the CPVDC’s BOD declared P=0.12 per share cash dividends from unappropriated retained earnings to all its issued and outstanding shares as of record date November 25, 2014, and paid on December 9, 2014.

*SGVFS015631* - 59 -

Capital Management The primary objective of the Group’s capital management policy is to ensure that debt and equity capital are mobilized efficiently to support business objectives and maximize shareholder value. The Group establishes the appropriate capital structure for each business line that properly reflects its premier credit rating and allows it the financial flexibility, while providing it sufficient cushion to absorb cyclical industry risks.

The Parent Company is not subject to externally imposed capital requirements. No changes were made in the objectives, policies and processes from the previous years.

The Group monitors its capital structure using leverage ratios on both a gross and net basis, and makes adjustments to it in light of economic conditions. Debt consists of long-term debt. Net debt includes long-term debt less cash and cash equivalents and financial assets at FVPL. The Group considers as capital the equity attributable to equity holders of the Parent Company.

As of December 31, 2015 and 2014, the Group had the following ratios:

2015 2014 (In Thousands) Long-term debt P=6,232,540 P=6,719,480 Less: Cash and cash equivalents 115,511 2,895,215 Short-term investments 45,318 − Financial assets at fair value through profit or loss 73,565 204,077 Net debt 5,998,146 3,620,188 Equity attributable to equity holders of Cebu Holdings, Inc. P=6,065,271 P=5,467,310 Debt to equity 102.76% 122.90% Net debt to equity 98.89% 66.22%

27. Segment Information

The business segments where the Group operates are as follows:

Core business: · Commercial development - sale of commercial lots and club shares · Residential development - sale of residential lots and condominium units · Shopping centers - development of shopping centers and lease to third parties of retail space and land therein; operation of movie theaters, food courts, entertainment facilities and carparks in these shopping centers; management and operation of malls · Corporate business - development and lease of office buildings · Others - other investing activities such as investment in joint ventures and sale of non-core assets

No business segments have been aggregated to form the reportable business segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The accounting and measurement policies used are consistent with the policies used in preparing general-purpose financial statements.

Sales, costs and expenses include amounts that are directly attributable to each segment. Items that are not directly identified are allocated based on the segment’s proportionate share on the total revenue.

*SGVFS015631* - 60 -

Business Segments

The following tables regarding business segments present assets and liabilities as of December 31, 2015, 2014 and 2013 and revenue and expense information for the three-year period ended December 31, 2015.

2015

Eliminations Commercial Residential Shopping Corporate and Development Development Centers Business Others Adjustments Total (In Thousands) Revenue Sales to external customers P=330,711 P=883,733 P=1,437,466 P=496,028 P=455,324 (P=469,016) P=3,134,246 Equity in net earnings of associates and a joint venture − − − − 106,303 − 106,303 Total revenue 330,711 883,733 1,437,466 496,028 561,627 (469,016) 3,240,549 Operating expenses (228,054) (358,366) (637,436) (520,021) (280,317) 7,033 (2,017,161) Operating profit (loss) 102,657 525,367 800,030 (23,993) 281,310 (461,983) 1,223,388 Interest income 591 45,080 2,341 46,268 3,839 − 98,119 Other income − 3,778 235,472 95,232 67,109 − 401,591 Interest and other financing charges − − − − (449,108) − (449,108) Provision for income tax (31,059) (23,309) (127,910) (11,808) (134,445) (121) (328,652) Net income (loss) P=72,189 P=550,916 P=909,933 P=105,699 (P=231,295) (P=462,104) P=945,338 Net income (loss) attributable to: Equity holders of Cebu Holdings, Inc, P=59,830 P=517,890 P=856,213 P=87,162 (P=231,784) (P=462,104) P=827,207 Non-controlling interests 12,359 33,026 53,720 18,537 489 − 118,131 P=72,189 P=550,916 P=909,933 P=105,699 (P=231,295) (P=462,104) P=945,338 Other Information Segment assets P=519,725 P=2,542,693 P=5,225,776 P=5,611,795 P=4,316,037 P=148,125 P=18,364,151 Investments in associates and a joint venture − − − − 1,368,384 – 1,368,384 Deferred tax assets − − − − 652 − 652 Total assets P=519,725 P=2,542,693 P=5,225,776 P=5,611,795 P=5,685,073 P=148,125 P=19,733,187 Segment liabilities P=71,418 P=531,946 P=1,398,228 P=3,231,185 P=7,518,899 (P=99,686) P=12,651,990 Deferred tax liabilities − − − − 153,603 15,488 169,091 Total liabilities P=71,418 P=531,946 P=1,398,228 P=3,231,185 P=7,672,502 (P=84,198) P=12,821,081 Segment additions to property and equipment and investment properties P=633,563 P=− P=168,408 P=607,737 P=431 P=− P=1,410,139 Depreciation and amortization P=− P=− P=209,937 P=145,295 P=2,793 P=− P=358,025 *SGVFS015631* - 61 -

2014

Eliminations Commercial Residential Shopping Corporate and Development Development Centers Business Others Adjustments Total (In Thousands) Revenue Sales to external customers P=747 P=238,042 P=1,250,299 P=291,661 P=159,587 (P=185,862) P=1,754,474 Equity in net earnings of associates and a joint venture − − − − 79,679 − 79,679 Total revenue 747 238,042 1,250,299 291,661 239,266 (185,862) 1,834,153 Operating expenses (6,070) (210,308) (576,430) (233,571) (355,859) 25,223 (1,357,015) Operating profit (loss) (5,323) 27,734 673,869 58,090 (116,593) (160,639) 477,138 Interest income − 35,560 2,915 − 32,693 − 71,168 Other income − 36,949 180,364 128,767 42,178 − 388,258 Interest and other financing charges − − − − (205,654) − (205,654) Provision for income tax − (8,320) (71,511) (17,427) (67,798) − (165,056) Net income (loss) (P=5,323) P=91,923 P=785,637 P=169,430 (P=315,174) (P=160,639) P=565,854 Net income (loss) attributable to: Equity holders of Cebu Holdings, Inc, (P=5,323) P=90,008 P=783,777 P=155,639 (P=332,585) (P=160,639) P=530,877 Non-controlling interests − 1,915 1,860 13,791 17,411 − 34,977 (P=5,323) P=91,923 P=785,637 P=169,430 (P=315,174) (P=160,639) P=565,854 Other Information Segment assets P=158,078 P=1,200,286 P=6,242,584 P=2,182,047 P=5,286,393 P=241,044 P=15,310,432 Investments in associates and a joint venture − − − − 1,058,281 – 1,058,281 Deferred tax assets − − − − 16,238 − 16,238 Total assets P=158,078 P=1,200,286 P=6,242,584 P=2,182,047 P=6,360,912 P=241,044 P=16,384,951 Segment liabilities P=169,373 P=307,721 P=1,609,069 P=2,059,518 P=5,924,059 P=15,646 P=10,085,385 Deferred tax liabilities − − − − 77,836 − 77,836 Total liabilities P=169,373 P=307,721 P=1,609,069 P=2,059,518 P=6,001,895 P=15,646 P=10,163,221 Segment additions to property and equipment and investment properties P=720,581 P=− P=165,833 P=402,529 P=5,936 P=− P=1,294,879 Depreciation and amortization P=− P=− P=192,699 P=101,979 P=18,066 P=− P=312,744

*SGVFS015631* - 62 -

28. Leases

Operating Leases - Group as Lessor The Group enters into lease agreements with third parties covering rentals of commercial and office spaces and land therein. These leases generally provide for either (a) fixed monthly rent, or (b) minimum rent on a certain percentage of gross revenue, whichever is higher. All leases include a clause to enable upward revision on its rental charge on annual basis based on prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases of the Group are as follows:

December 31 2015 2014 (In Thousands) Within one year P=461,008 P=379,046 After one year but not more than five years 1,035,146 970,450 More than five years 1,258,083 1,358,094 P=2,754,237 P=2,707,590

Contingent rent recognized in 2015, 2014 and 2013 amounted to P=107.1 million, P=108.0 million and P=102.6 million, respectively.

Operating Leases - Group as Lessee The Group entered into lease agreements with third parties. These leases generally provide for either (a) fixed monthly rent, or (b) minimum rent or a certain percentage of gross revenue, whichever is higher.

29. Philippine Economic Zone Authority (PEZA) Registration

CPVDC was registered with PEZA on April 6, 2000 as an Information Technology (IT) Park developer or operator and was granted approval by PEZA on October 10, 2001. The PEZA registration entitled CPVDC to a four-year tax holiday from the start of approval of registered activities. At the expiration of its four-year tax holiday, CPVDC pays income tax at the special rate of 5% on its gross income earned from sources within the PEZA economic zone in lieu of paying all national and local income taxes.

30. Notes to Consolidated Statements of Cash Flows

The noncash activities of the Group pertain to:

· Reclassification from other noncurrent assets to receivables from related parties amounting to P=43.2 million in 2015; · Transfers from property and equipment to investment properties with net book value amounting to P=7.77 million P=0.02 million in 2015 and 2014, respectively; · Transfer from investment properties to inventories amounting to P=52.0 million in 2015. · Liability for purchased land recognized under land and improvements amounting to P=1,054.7 million; · Accrued construction billings (included in accounts and other payables) recognized under inventories amounting to P=108.6 million, P=13.5 million and P=332.1 million in 2015, 2014 and 2013, respectively; and · Accrued construction billings under investment properties amounting to P=75.8 million and P=346.4 million in 2015 and 2014, respectively.

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31. Contingencies

CPVDC is currently involved in a legal case related to property restriction violation. The outcome of this legal proceeding is not presently determinable.

INDEPENDENT AUDITORS’ REPORT ON THE SUPPLEMENTARY SCHEDULES

The Stockholders and the Board of Directors Cebu Holdings, Inc. 7th Floor, Cebu Holdings Center Cebu Business Park, Cebu City

We have audited in accordance with Philippine Standards on Auditing, the consolidated financial statements of Cebu Holdings, Inc. and its subsidiaries (the Group) as at December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015 included in this Form 17-A, and have issued our report thereon dated February 23, 2016. Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedules A to K listed in the Index to the Consolidated Financial Statements and Supplementary Schedules are the responsibility of the Group’s management. These schedules are presented for purposes of complying with Securities Regulation Code Rule 68, as Amended (2011) and are not part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state, in all material respects, the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

February 23, 2016

*SGVFS015631*

A member firm of Ernst & Young Global Limited INDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

Schedule Contents

A Financial Assets

B Amounts Receivable from Directors, Officers, Employees, Related Parties, and Principal Stockholders (Other than Related parties)

C Amounts Receivable from Related Parties which are Eliminated during the Consolidation of Financial Statements

D Intangible Assets - Other Assets

E Long-Term Debt

F Indebtedness to Related Parties

G Guarantees of Securities of Other Issuers

H Capital Stock

I Reconciliation of Retained Earnings Available for Dividend Declaration

J Map Showing the Relationships Between and Among the Companies in the Group, its Ultimate Parent Company and Co-subsidiaries

K Schedule of All Effective Standards and Interpretations Under Philippine Financial Reporting Standards

L Financial Ratios

*SGVFS015631* SCHEDULE A

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF FINANCIAL ASSETS DECEMBER 31, 2015

Number of shares or principal Amount Income Name of Issuing entity and association amount of bonds shown in the received or of each issue and notes balance sheet accrued Cash and Cash Equivalents Bank of the Philippine Islands P=92,249,825 P=92,249,825 P=48,712,691 Deutsche Bank 6,424,138 6,424,138 − Rizal Commercial Banking Corporation 100,805 100,805 201 DBP 16,390,972 16,390,972 17,299 Accounts Receivable Trade 513,297,417 513,297,417 − Receivable from related parties 2,678,832,694 2,678,832,694 − Receivable from employees 17,190,854 17,190,854 − Accrued receivable 5,900,468 5,900,468 − Others 46,045,485 46,045,485 − Other Assets Dividends receivable 31,143,558 31,143,558 − Financial Assets at FVPL Bank of the Philippine Islands 73,564,856 73,564,856 2,819,583 P=3,481,141,072 P=3,481,141,072 P=51,549,774

*SGVFS015631* SCHEDULE B

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS, EMPLOYEES, RELATED PARTIES, AND PRINCIPAL STOCKHOLDERS (OTHER THAN RELATED PARTIES) DECEMBER 31, 2015

Balance at Balance at Name and Designation of beginning Amounts the end of debtor of period Additions collected Current Not Current the period ALAGON, IZABELLE P= − P= 434,992 P= 57,999 P= 43,499 P= 333,494 P= 376,993 ALAJID, ROMULO M 1,884,049 875,631 230,554 134,195 2,394,931 2,529,126 ALFANTE, ERNESTO T 188,497 − 75,399 37,699 75,399 113,098 ALICAYA, NOEL F 193,109 170,098 56,532 21,262 285,413 306,675 BOHOLST, JUDILYNE L 84,724 − 58,149 26,575 − 26,575 CALERO, JASMIN R. 360,503 − 86,999 43,499 230,005 273,504 DACULAN, MA. SAMPAGUITA D. 256,190 − 75,399 37,699 143,092 180,791 DEE, JOSEPH FRANCISCO A. 213,299 − 74,466 37,233 101,600 138,833 GO, SUZETTE T 952,760 − 179,992 85,064 687,704 772,768 JAPZON, JEANETTE A 136,502 2,282,621 118,198 94,765 2,206,160 2,300,925 LAYESE, EDWIN F. 243,222 − 77,366 38,683 127,173 165,856 MANANQUIL, RAUL S 1,526,135 192,996 345,189 189,683 1,184,259 1,373,942 MAWE, ELVIRA G 1,054,750 − 261,543 130,771 662,436 793,207 NGUJO, HANNAH 410,209 − 86,999 43,499 279,711 323,210 PARRENA, JANICE 245,045 − 245,045 – – – REUYAN, RUDY I 84,432 − 84,432 – – – SIA, JENNIFER 182,696 − 69,599 34,799 78,298 113,097 SUAN, JONAS 188,496 − 75,399 37,699 75,398 113,097 URBINA, MA. CECILIA T 458,084 − 219,861 109,930 128,293 238,223 P=8,662,702 P=3,956,338 P=2,479,120 P=1,146,554 P=8,993,366 P=10,139,920

*SGVFS015631* SCHEDULE C

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM RELATED PARTIES WHICH ARE ELIMINATED DURING THE CONSOLIDATION OF FINANCIAL STATEMENTS DECEMBER 31, 2015

Receivable Payable Balance Balance per CHI per CHI Parent Subsidiaries Current Portion CPVDC&S P=73,727,156 P=73,727,156 P=73,727,156 CLCI 4,478,430 4,478,430 4,478,430 Total Eliminated Receivables P=78,205,586 P=78,205,586 P=78,205,586

*SGVFS015631* SCHEDULE D

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF INTANGIBLE ASSETS - OTHER ASSETS DECEMBER 31, 2015

Intangible Assets - Other Assets Other Charged to Charged to changes Beginning Additions at cost and other additions Ending Description Balance cost expenses accounts (deductions) Balance

Not Applicable The Group does not have intangible assets in its statements of financial position.

*SGVFS015631* SCHEDULE E

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF LONG-TERM DEBT DECEMBER 31, 2015

Long-term Debt Amount shown under caption Amount shown "current portion under caption Amount of long-term” in “long-term debt” authorized by related balance in related balance Title of Issue and type of obligation indenture sheet sheet Bank Loan (BPI) P=680,000,000 P=67,522,711 P=407,588,419 Bank Loan (BPI) 400,000,000 19,651,957 359,326,581 Bank Loan (BPI) 420,000,000 20,698,656 397,773,906 Bonds (BPI) 5,000,000,000 − 4,959,978,218 P=6,500,000,000 P=107,873,324 P=6,124,667,124

*SGVFS015631* SCHEDULE F

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF INDEBTEDNESS TO RELATED PARTIES (LONG-TERM LOANS FROM RELATED COMPANIES) DECEMBER 31, 2015

Indebtedness to related parties (Long-term loans from Related Companies) Name of related party Balance at beginning of period Balance at end of period BPI P=6,226,919,213 P=6,124,667,124

*SGVFS015631* SCHEDULE G

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF GUARANTEES OF SECURITIES OF OTHER ISSUERS DECEMBER 31, 2015

Guarantees of Securities of Other Issuers Name of issuing entity of securities Title of issue of guaranteed by the each class of Total amount Amount owned by company for which securities guaranteed and person for which this statement is filed guaranteed outstanding statement is file Nature of guarantee

Not Applicable The Group does not have any guarantees of securities of other issuing entities by the issuer for which the statement is filed.

*SGVFS015631* SCHEDULE H

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF CAPITAL STOCK DECEMBER 31, 2015

Capital Stock Number of Number of shares issued shares and reserved for outstanding options as shown warrants, Number of Number of under related conversion shares held Directors, shares balance sheet and other by related officers and Title of Issue authorized caption rights parties employees Others Capital Stock 3,000,000,000 1,920,073,623 1,082,258,868 52,724 837,762,031

*SGVFS015631* SCHEDULE I

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION DECEMBER 31, 2015

Unappropriated Retained Earnings, beginning P=1,166,751,292 Adjustments: Previous year’s reconciliation adjustments (19,345,207) Unappropriated Retained Earnings, as adjusted, beginning 1,147,406,085 Net income based on the face of AFS 481,323,518 Other adjustments: Fair value adjustments on financial assets at FVPL (193,486) Dividends declared (230,408,835) Unappropriated Retained Earnings, end available for dividend distribution P=1,398,127,282

*SGVFS015631* SCHEDULE J

CEBU HOLDINGS INC. AND SUBSIDIARIES MAP SHOWING THE RELATIONSHIPS BETWEEN AND AMONG THE COMPANIES IN THE GROUP, ITS ULTIMATE PARENT COMPANY AND CO-SUBSIDIARIES DECEMBER 31, 2015

MERMAC, Inc.

49.01%

10.18% 10.18% MITSUBISHI CORPORATION Ayala Corporation Public

47.17%

52.83% Ayala Land, Inc. Public

*SGVFS015631* CEBU HOLDINGS INC. AND SUBSIDIARIES MAP SHOWING THE RELATIONSHIPS BETWEEN AND AMONG THE COMPANIES IN THE GROUP, ITS ULTIMATE PARENT COMPANY AND CO-SUBSIDIARIES DECEMBER 31, 2015

Laguna Properties Holdings, Inc BPI Capital Corp (0.10%) Ayala Land, Inc. (56.36%) (0.10%)

PCD Nominee Corp. Public (2.87%) (Filipino) (10.09%)

Cebu Holdings, Inc.

First Metro Investment Makati Supermarket Corp (11.52%) Corp (0.16%)

PCD Nominee Corp (Non- Filipino) (18.80%)

*SGVFS015631* - 2 - AYALA LAND, INC.

Cagayan de Oro Gateway Corp. (70%) Adauge Commercial Corporation (72%) Alabang Commercial Corporation (50%) Ayala Property Management Corp. (100%)

Soltea Commercial Corp. (60%) Southgateway Development Corp. (100%) Makati Development Corporation (100%) Ayala Theatres Management, Inc. & S. ((100%)

CMPI Holdings, Inc. (60%) Ayalaland MetroNorth, Inc. (100%) Ayala Hotels, Inc. (50%) DirectPower Services, Inc. (100%)

ALI-CII Development Corporation (50%) North Triangle Depot Commercial Corp. (49%) AyalaLand Hotels and Resorts Corp. (100%) Phil. Integrated Energy Solutions, Inc. (100%)

Roxas Land Corporation (50%) BGWest Properties, Inc. (50%) Lagdigan Land Corp. (60%) Five Star Cinema, Inc. (100%)

Ten Knots Phils, Inc. (60%) Ten Knots Development, Corp. (60%) Southportal Properties Inc. (65%) Leisure and Allied Industries Philippines, Inc. (50%)

ALInet.com, Inc. (100%) First Longfield Investments Limited (100%) Aprisa Business Process Solutions, Inc. (100%) AyalaLand Club Management, Inc. (100%)

Varejo Corp. (100%) Solerte, Inc. (100%) Verde Golf Development Corporation (100%) Whiteknight Holdings, Inc. (100%)

ALI Commercial Center Inc. (100%) Cebu Holdings Inc. (50%)

*SGVFS015631* AYALA LAND, INC.

Alveo Land Corporation (100%) Crimson Field Enterprises, Inc. (100%) Primavera Towncentre, Inc. (100%) Cavite Commercial Town Center, Inc. (100%)

Serendra, Inc. (28%) Ecoholdings Company, Inc. (100%) Summerhill E-Office Corporation (100%) AyalaLand offices, Inc. (100%)

Amorsedia Development Corporation (100%) NorthBeacon Commercial Corporation (100%) Sunnyfield E-Office Corporation (100%) Laguna Technopark, Inc. (75%)

Avida Land Corporation (100%) Red Creek Properties, Inc. (100%) Subic Bay Town Centre, Inc. (100%) Aurora Properties Incorporated (78%)

Amaia Land Co. (100%) Regent Time International, Limited (100%) Regent Wise Investments Limited (100%) Vesta Property Holdings, Inc. (70%)

Ayala Land International Sales, Inc. (100%) Asterion Technopod, Incorporated (100%) AyalaLand Commercial REIT, Inc. (100%) Station Square East Commercial Corporation (69%)

Ayala Land Sales, Inc. (100%) Westview Commercial Ventures Corp. (100%) Arvo Commercial Corporation (100%) Ceci Realty, Inc. (60%)

Buendia Landholdings, Inc. (100%) Fairview Prime Commercial Corp. (100%) BellaVita Land Corporation (100%) Accendo Commercial Corp. (67%)

Crans Montana Holdings, Inc. (100%) Hillsford Property Corporation (100%) Nuevo Centro, Inc. (100%) Aviana Development Corporation (50%)

*SGVFS015631* CEBU HOLDINGS, INC.

Cebu Property Taft Punta CBP Theatre Ventures and Cebu Leisure Engaño Management Development Company, Inc. Property, Inc. Company, Corporation 100.00% (55.00 %) Inc. 76.26% 100.00%

Asian I- Cebu Insular Amaia Office Hotel, Solinea, Inc. Southern Properties, Company, 35.00% Properties, Inc. Inc. Inc. 100.00% 37.06% 35.00%

Cebu District Property Central Block Enterprise Inc Developer’s 10% CHI Inc. 5% CPVDC 56.69 %

*SGVFS011215* SCHEDULE K

CEBU HOLDINGS, INC AND SUBSIDIARIES SCHEDULE OF ALL THE EFFECTIVE STANDARDS AND INTERPRETATIONS UNDER PHILIPPINE FINANCIAL REPORTING STANDARDS (PFRS) AS OF DECEMBER 31, 2015

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 Framework for the Preparation and Presentation of Financial Statements Conceptual Framework Phase A: Objectives and qualitative characteristics ü PFRSs Practice Statement Management Commentary ü Philippine Financial Reporting Standards PFRS 1 First-time Adoption of Philippine Financial (Revised) Reporting Standards ü Amendments to PFRS 1 and PAS 27: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate ü Amendments to PFRS 1: Additional Exemptions for First-time Adopters ü Amendment to PFRS 1: Limited Exemption from Comparative PFRS 7 Disclosures for First-time Adopters ü Amendments to PFRS 1: Severe Hyperinflation and Removal of Fixed Date for First-time Adopters ü Amendments to PFRS 1: Government Loans ü Amendments to PFRS 1: Borrowing costs ü Amendments to PFRS 1: Meaning of ‘Effective PFRSs Not early adopted PFRS 2 Share-based Payment ü Amendments to PFRS 2: Vesting Conditions and Cancellations ü Amendments to PFRS 2: Group Cash-settled Share-based Payment Transactions ü Amendments to PFRS 2: Definition of Vesting Condition* ü PFRS 3 Business Combinations ü (Revised) Amendment to PFRS 3: Accounting for Contingent Consideration in a Business Combination* ü Amendment to PFRS 3: Scope Exceptions for Joint Arrangements* ü *SGVFS011215* - 2 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PFRS 4 Insurance Contracts ü Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts ü PFRS 5 Non-current Assets Held for Sale and Discontinued Operations ü Amendments to PFRS 5: Changes in Methods of Disposal* Not early adopted PFRS 6 Exploration for and Evaluation of Mineral Resources ü PFRS 7 Financial Instruments: Disclosures ü Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets ü Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets - Effective Date and Transition ü Amendments to PFRS 7: Improving Disclosures about Financial Instruments ü Amendments to PFRS 7: Disclosures - Transfers of Financial Assets ü Amendments to PFRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities ü Amendments to PFRS 7: Mandatory Effective Date of PFRS 9 and Transition Disclosures Not early adopted Amendments to PFRS 7: Disclosures - Servicing Not early adopted Contracts* Applicability of the Amendments to PFRS 7 to Not early adopted Condensed Interim Financial Statements* PFRS 8 Operating Segments ü Amendments to PFRS 8: Aggregation of Operating Segments and Reconciliation of the Total of the Reportable Segments’ Assets to the Entity’s Assets* ü PFRS 9 Financial Instruments: Classification and Movement (2010 version) Not early adopted Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and PAS 39 (2013 version)* Not early adopted Financial Instruments (2014 or final version)* Not early adopted Amendments to PFRS 9: Mandatory Effective Date of PFRS 9 and Transition Disclosures Not early adopted

*SGVFS015631* - 3 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PFRS 10 Consolidated Financial Statements ü Amendments to PFRS 10: Investment Entities ü Amendments to PFRS 10: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture*** Not early adopted Amendments to PFRS 10: Investment Entities: Applying the Consolidation Exception Not early adopted PFRS 11 Joint Arrangements ü Amendments to PFRS 11: Accounting for Acquisitions of Interests in Joint Operations* Not early adopted PFRS 12 Disclosure of Interests in Other Entities ü Amendments to PFRS 12: Investment Entities ü PFRS 13 Fair Value Measurement ü Amendments to PFRS 13: Short-term receivable and payables ü Amendments to PFRS 13: Portfolio Exception* ü PFRS 14 Regulatory Deferral Accounts* Not early adopted PFRS 15 Revenue from Contracts with Customers** Not early adopted Philippine Accounting Standards PAS 1 Presentation of Financial Statements ü (Revised) Amendment to PAS 1: Capital Disclosures ü Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on Liquidation ü Amendments to PAS 1: Presentation of Items of ü Other Comprehensive Income Amendments to PAS 1: Clarification of the ü requirements for comparative information Amendments to PAS 1: Disclosure Initiative Not early adopted PAS 2 Inventories ü PAS 7 Statement of Cash Flows ü PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors ü PAS 10 Events after the Reporting Date ü PAS 11 Construction Contracts ü PAS 12 Income Taxes ü Amendment to PAS 12-Deferred Tax: Recovery of Underlying Assets ü

*SGVFS015631* - 4 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PAS 16 Property, Plant and Equipment ü Amendment to PAS 16: Classification of servicing equipment ü Amendment to PAS 16: Revaluation Method - Proportionate Restatement of Accumulated Depreciation* ü Amendment to PAS 16 and PAS 38: Clarification of Acceptable Methods of Depreciation and Amortization* Not early adopted Amendment to PAS 16: Bearer Plants* Not early adopted PAS 17 Leases ü PAS 18 Revenue ü PAS 19 Employee Benefits ü Amendments to PAS 19: Actuarial Gains and Losses, Group Plans and Disclosures ü PAS 19 Employee Benefits ü (Amended) Amendments to PAS 19: Defined Benefit Plans: ü Employee Contributions Amendments to PAS 19: Actuarial Gains and Losses, Group Plans and Disclosures Not early adopted Amendments to PAS 19: Regional Market Issue regarding Discount Rate* Not early adopted PAS 20 Accounting for Government Grants and Disclosure of Government Assistance ü PAS 21 The Effects of Changes in Foreign Exchange Rates ü Amendment: Net Investment in a Foreign Operation ü PAS 23 Borrowing Costs (Revised) ü PAS 24 Related Party Disclosures ü (Revised) Amendments to PAS 24: Key Management Personnel* ü PAS 26 Accounting and Reporting by Retirement Benefit Plans ü PAS 27 Consolidated and Separate Financial Statements ü PAS 27 Separate Financial Statements ü (Amended) Amendments to PAS 27: Investment Entities ü Amendments to PAS 27: Equity Method in Separate Not early adopted Financial Statements*

*SGVFS015631* - 5 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PAS 28 Investment in Associate and Joint Venture ü Amendments to PAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture*** Not early adopted Amendments to PAS 28: Investment Entities: Applying the Consolidation Exception Not early adopted PAS 29 Financial Reporting in Hyperinflationary Economies ü PAS 31 Interests in Joint Ventures ü PAS 32 Financial Instruments: Disclosure and Presentation ü Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on Liquidation ü Amendment to PAS 32: Classification of Rights Issues ü Amendments to PAS 32: Offsetting Financial Assets and Financial Liabilities ü PAS 33 Earnings per Share ü PAS 34 Interim Financial Reporting ü Amendments to PAS 34: Interim financial reporting and segment information for total assets and liabilities Not early adopted Amendments to PAS 34: – Disclosure of information ‘elsewhere in the interim financial report* Not early adopted PAS 36 Impairment of Assets ü Amendments to PAS 36: Recoverable Amount Disclosures for Non-Financial Assets ü PAS 37 Provisions, Contingent Liabilities and Contingent Assets ü PAS 38 Intangible Assets ü Amendments to PAS 38: Revaluation Method - Proportionate Restatement of Accumulated Amortization* Not early adopted Amendments to PAS 16 and PAS 38: Clarification of Acceptable Methods of Depreciation and Amortization* Not early adopted PAS 39 Financial Instruments: Recognition and Measurement ü Amendments to PAS 39: Transition and Initial Recognition of Financial Assets and Financial Liabilities ü

*SGVFS015631* - 6 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 Amendments to PAS 39: Cash Flow Hedge Accounting of Forecast Intragroup Transactions ü Amendments to PAS 39: The Fair Value Option ü Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts ü Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets ü Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets - Effective Date and Transition ü Amendments to Philippine Interpretation IFRIC-9 and PAS 39: Embedded Derivatives ü Amendment to PAS 39: Eligible Hedged Items ü Amendment to PAS 39: Novation of Derivatives and Continuation of Hedge Accounting ü PAS 40 Investment Property ü Amendment to PAS 40: Interrelationship between PFRS 3 and PAS 40* Not early adopted PAS 40 Investment Property (Amended) ü PAS 41 Agriculture ü Amendment to PAS 41: Bearer Plants* Not early adopted Philippine Interpretations IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities ü IFRIC 2 Members' Share in Co-operative Entities and Similar Instruments ü IFRIC 4 Determining Whether an Arrangement Contains a Lease ü IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds ü IFRIC 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment ü IFRIC 7 Applying the Restatement Approach under PAS 29 Financial Reporting in Hyperinflationary Economies ü IFRIC 8 Scope of PFRS 2 ü IFRIC 9 Reassessment of Embedded Derivatives ü Amendments to Philippine Interpretation IFRIC–9 ü

*SGVFS015631* - 7 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 and PAS 39: Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment ü IFRIC 11 PFRS 2- Group and Treasury Share Transactions ü IFRIC 12 Service Concession Arrangements ü IFRIC 13 Customer Loyalty Programmes ü IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction ü Amendments to Philippine Interpretations IFRIC- 14, Prepayments of a Minimum Funding Requirement ü IFRIC 15 Agreements for the Construction of Real Estate*** Not early adopted IFRIC 16 Hedges of a Net Investment in a Foreign Operation ü IFRIC 17 Distributions of Non-cash Assets to Owners ü IFRIC 18 Transfers of Assets from Customers ü IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments ü IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine ü SIC-7 Introduction of the Euro ü SIC-10 Government Assistance - No Specific Relation to Operating Activities ü SIC-12 Consolidation - Special Purpose Entities ü Amendment to SIC - 12: Scope of SIC 12 ü SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers ü SIC-15 Operating Leases - Incentives ü SIC-25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders ü SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease ü SIC-29 Service Concession Arrangements: Disclosures. ü SIC-31 Revenue - Barter Transactions Involving Advertising Services ü SIC-32 Intangible Assets - Web Site Costs ü * Approved by Financial Reporting Standards Council (FRSC) but still for approval by the Board of Accountancy (BOA) ** New standards and amendments issued by the International Accounting Standards Board (IASB) has not yet been adopted by the FRSC. *** Effectivity has been deferred by the Securities and Exchange Commission (SEC) and FRSC

*SGVFS015631* CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF FINANCIAL RATIOS DECEMBER 31, 2015

December 31 2015 2014

CURRENT / LIQUIDITY RATIOS Current assets P=5,256,342 P=5,838,052 Current liabilities 5,517,894 3,576,841 Current Ratios 0.95 1.63

Current assets P=5,256,342 P=5,838,052 Accounts receivable 3,081,143 1,282,039 Inventories 1,379,202 1,177,799 Other current assets 561,603 278,922 Quick assets 234,394 3,099,292 Current liabilities 5,517,894 3,576,841 Quick Ratios 0.04 0.87

December 31 2015 2014 SOLVENCY / DEBT-TO-EQUITY RATIOS Current portion of loans payable P=107,873 P=492,561 Loans payable 6,124,667 6,226,919 Debt P=6,232,540 P=6,719,480 Equity P=6,912,106 P=6,221,730 Less: Non-controlling interests 846,835 755,498 Equity attributable to parent 6,065,271 5,466,232 Add/Less: Unrealized gain - FVTPL & Forex 1,002,748 936,584 Equity, Net of Unrealized Gain 5,062,523 4,529,648 Debt to Equity Ratio 1.23 1.48

Debt P=6,232,540 P=6,719,480 Less: Cash and cash equivalents 115,511 2,895,215 Short-term investments 45,318 − Financial assets at fair value through profit or loss 73,565 204,077 Net Debt 5,998,146 3,620,188 Equity, Net of Unrealized Gain 5,062,523 4,529,648 Net Debt to Equity Ratio 1.18 0.80

December 31 2015 2014 ASSET TO EQUITY RATIOS Total assets P=19,733,187 P=16,384,951 Total equity 6,065,271 5,466,232 Asset to Equity Ratios 3.25 3.00

*SGVFS011215* - 2 -

December 31 2015 2014

INTEREST RATE COVERAGE RATIO NET INCOME P=945,338 P=565,854 Add: Provision for income tax 328,652 165,056 Interest and other financing charges 449,108 205,654 1,723,098 936,564 Less: Interest income 98,119 71,168 EBIT 1,624,979 865,396 Depreciation and amortization 358,025 312,744 EBITDA 1,983,004 1,178,140 Interest and other financing charges 449,108 205,654 Interest expense coverage ratio 4.42 5.73

December 31 2015 2014 PROFITABILITY RATIOS Net income attributable to parent P=827,207 P=530,877 Revenue 3,740,259 2,293,579 Net Income Margin 22.12% 23.15%

Net Income P=945,338 P=565,854 Total assets CY 19,733,187 16,384,951 Total assets PY 16,384,951 12,950,353 Average Total Assets 18,059,069 14,667,652 Return on Total Assets 5.23% 3.86%

Net Income P=945,338 P=565,854 Total equity CY 6,912,106 6,221,730 Total equity PY 6,221,730 5,921,833 Average Total Equity 6,566,918 6,071,782 Return on Equity 14.40% 9.32%

*SGVFS015631*

SECURITIES AND EXCHANGE COMMISSION

SEC FORM – ACGR

CONSOLIDATED CHANGES IN THE ANNUAL CORPORATE GOVERNANCE REPORT FOR THE YEAR 2015

GENERAL INSTRUCTIONS

(A) Use of Form ACGR

This SEC Form shall be used to meet the requirements of the Revised Code of Corporate Governance.

(B) Preparation of Report

These general instructions are not to be filed with the report. The instructions to the various captions of the form shall not be omitted from the report as filed. The report shall contain the numbers and captions of all items. If any item is inapplicable or the answer thereto is in the negative , an appropriate statement to that effect shall be made. Provide an explanation on why the item does not apply to the company or on how the company’s practice differs from the Code.

A. Three (3) complete set of the report shall be filed with the Main Office of the Commission.

B. At least one complete copy of the report filed with the Commission shall be manually signed.

C. All reports shall comply with the full disclosure requirements of the Securities Regulation Code.

D. This report is required to be filed annually together with the company’s annual report.

(D) Filing an Amendment

Any material change in the facts set forth in the report occurring within the year shall be reported through SEC Form 17-C. The cover page for the SEC Form 17-C shall indicate “Amendment to the ACGR”.

SECURITIES AND EXCHANGE COMMISSION

SEC FORM – ACGR

CONSOLIDATED CHANGES IN THE ANNUAL CORPORATE GOVERNANCE REPORT FOR THE YEAR 2015

1. Report is Filed for the Year December 31, 2015

2. Exact Name of Registrant as Specified in its Charter: CEBU HOLDINGS, INC.

3. Unit #701, 7/F, Cebu Holdings Center, Cardinal Rosales Avenue, Cebu Business Park, Cebu City 6000 Address of Principal Office Postal Code

4. SEC Identification Number 157912 5. (SEC Use Only) Industry Classification Code

6. BIR Tax Identification Number 000-551-890-000

7. (032) 231-5301 Issuer’s Telephone number, including area code 8. not applicable Former name or former address, if changed from the last report

TABLE OF CONTENTS

A. BOARD MATTERS ………………………………………………………………………………………………………………………….……….5 1) BOARD OF DIRECTORS (a) Composition of the Board………………………………………………………………………………….………5 (b) Directorship in Other Companies……………………………………………………………………………….7 (c) Shareholding in the Company……………………………………….……………………………………...... 9 2) CHAIRMAN AND CEO…………………………………………………………………………………………………………………9 3) OTHER EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT DIRECTORS……………………………………. 10 4) CHANGES IN THE BOARD OF DIRECTORS………………………………………………………………………………… 12 5) ORIENTATION AND EDUCATION PROGRAM…………………………………………………………………………… 18

B. CODE OF BUSINESS CONDUCT & ETHICS …………………………………………………………………………………………… 20 1) POLICIES………………………………………………………………………………………………………………………………… 20 2) DISSEMINATION OF CODE………………………………………………………………………………………………….…… 22 3) COMPLIANCE WITH CODE……………………………………………………………………………………………………… 22 4) RELATED PARTY TRANSACTIONS…………………………………………………………………………………………… 22 (a) Policies and Procedures………………………………………………………………………………………… 22 (b) Conflict of Interest………………………………………………………………………………………………… 24 5) FAMILY, COMMERCIAL AND CONTRACTUAL RELATIONS…………………………………………………….……24 6) ALTERNATIVE DISPUTE RESOLUTION……………………………………………………………………………………….25

C. BOARD MEETINGS & ATTENDANCE ……………………………………………………………………………………………….…….26 1) SCHEDULE OF MEETINGS…………………………………………………………………………………………………………26 2) DETAILS OF ATTENDANCE OF DIRECTORS………………………………………………………………………………..26 3) SEPARATE MEETING OF NON-EXECUTIVE DIRECTORS………………………………………………………………26 4) ACCESS TO INFORMATION……………………………………………………………………………………………………….27 5) EXTERNAL ADVICE……………………………………………………………………………………………………………………28 6) CHANGES IN EXISTING POLICIES……………………………………………………………………………………………….28

D. REMUNERATION MATTERS………………………………………………………………………………………………………………28 1) REMUNERATION PROCESS……………………………………………………………………………………………………….28 2) REMUNERATION POLICY AND STRUCTURE FOR DIRECTORS…………………………………………………….30 3) AGGREGATE REMUNERATION …………………………………………………………………………………………………31 4) STOCK RIGHTS, OPTIONS AND WARRANTS………………………………………………………………………………32 5) REMUNERATION OF MANAGEMENT…………………………………………………………………………………….….32

E. BOARD COMMITTEES……………………………………………………………………………………………………………………….33 1) NUMBER OF MEMBERS, FUNCTIONS AND RESPONSIBILITIES…………………………………………………..33 2) COMMITTEE MEMBERS……………………………………………………………………………………………………………40 3) CHANGES IN COMMITTEE MEMBERS……………………………………………………………………………………….44 4) WORK DONE AND ISSUES ADDRESSED…………………………………………………………………………………….44 5) COMMITTEE PROGRAM……………………………………………………………………………………………………………46

F. RISK MANAGEMENT SYSTEM……………………………………………………………………………………………………………48 1) STATEMENT ON EFFECTIVENESS OF RISK MANAGEMENT SYSTEM…………………………………………..48 2) RISK POLICY……………………………………………………………………………………………………………………………..50 3) CONTROL SYSTEM……………………………………………………………………………………………………………………51

G. INTERNAL AUDIT AND CONTROL………………………………………………………………………………………………………54 1) STATEMENT ON EFFECTIVENESS OF INTERNAL CONTROL SYSTEM…………………………………………..54 3

2) INTERNAL AUDIT (a) Role, Scope and Internal Audit Function…………………………………………………………………..55 (b) Appointment/Removal of Internal Auditor………………………………………………………………56 (c) Reporting Relationship with the Audit Committee…………………………………………………..56 (d) Resignation, Re-assignment and Reasons…………………………………………………………………56 (e) Progress against Plans, Issues, Findings and Examination Trends………………………………………………………..….……………………………………56 (f) Audit Control Policies and Procedures……………………………………………………………………..57 (g) Mechanisms and Safeguards…………………………………………………………………………………...57

H. RIGHTS OF STOCKHOLDERS……………………………………………………………………………………………………………...66 1) RIGHT TO PARTICIPATE EFFECTIVELY IN STOCKHOLDERS’ MEETINGS……………………………………….66 2) TREATMENT OF MINORITY STOCKHOLDERS…………………………………………………………………………….73

I. INVESTORS RELATIONS PROGRAM…………………………………………………………………………………………………..73 J. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES…………………………………………………………………………….77 K. BOARD, DIRECTOR, COMMITTEE AND CEO APPRAISAL…………………………………………………………………….78 L. INTERNAL BREACHES AND SANCTIONS…………………………………………………………………………………………….78

A. BOARD MATTERS

1) Board of Directors

Number of Directors per Articles of Incorporation 9

Actual number of Directors for the year 9

(a) Composition of the Board

Complete the table with information on the Board of Directors:

If nominee, Nominator in No. of Date last Type [Executive identify the the last Elected years elected (if (ED), Non- principal election (if ID, when served Date first ID, state the Director’s Name Executive (NED) state the (Annual as elected number of or Independent relationship /Special director years served Director (ID)] with the Meeting) as ID) 1 nominator)

Bernard Vincent O. NED Ayala Land, Nomination August 15, April 2015 Annual new (9 Dy Inc. Committee 2014 Stockholders’ months) Meeting Aniceto V. Bisnar, ED Ayala Lan d, Nomination January 1, April 2015 Annual new (4 Jr. Inc. Committee 2015 Stockholders’ months) Meeting Emilio J. Tumbocon Ayala Land, Nomination April 2008 April 201 5 Annual 7 NED Inc. Committee Stockholders’ Meeting Jaime E. Ysmael NED Ayala Land, No mination April 2008 April 201 5 Annual 7 Inc. Committee Stockholders’ Meeting Ma ria Theresa M. NED BPI Capital Nomination July 2012 April 201 5 Annual 3 Javier Corp.-AMTG Committee Stockholders’ Meeting Antonio S. Abacan, NED First Metro No mination November April 201 5 Annual 22 Jr. Investment Committee 1993 Stockholders’ Corp. Meeting Fr. Roderick C. ID N.A. Nomination April 2005 April 201 5 Annual 10 Salazar, Jr., SVD Committee Stockholders’ Meeting Enrique L. ID N.A. Nomination April 2003 April 201 5 Annual 12 Benedicto Committee Stockholders’ Meeting Pampio A. ID N.A. Nomination April 2014 April 201 5 Annual 1 Abarintos Committee Stockholders Meeting

These nominees were formally nominated to the Nomination Committee by a shareholder of the Company, Ms. Judilyne L. Boholst. Messrs. Abarintos, Benedicto and Salazar, all incumbent directors, were nominated as independent directors. Ms. Boholst is not related to any of the nominees for independent directors.

Provide a brief summary of the corporate governance policy that the board of directors has adopted. Please emphasis the policy/ies relative to the treatment of all shareholders, respect for the rights of minority shareholders and of other stakeholders, disclosure duties, and board responsibilities.

CHI has adopted a code of corporate governance, as mandated by SEC. This code specifies the role, duties and responsibilities of the Board of Directors, in line with relevant Philippine laws, rules and regulations, and in full consistency with the principles of corporate governance.

On Treatment of Shareholders CHI welcomes both individual and institutional shareholders who wish to purchase shares of the Company through the Philippine Stock Exchange (PSE). In compliance with PSE requirements, CHI maintains a minimum public float of its shares openly traded in the exchange. On all matters of importance to all investors, the Company observes the principle of fair treatment of all shareholders.

The Company respects the right of shareholders to participate and vote in its annual stockholders’ meeting. Each common share of stock entitles the person in whose name it is registered in the books of the Company, to one vote, provided the conditions as regards payment have been complied with.

Shareholders are asked to vote on all matters of fundamental importance.

CHI welcomes the participation of all shareholders by giving them an opportunity to ask, and receive answers to, questions of relevance to the corporation, its performance and prospects

On Respect for rights of minority shareholders and of other stakeholders CHI adopts and observes the basic principle of “one vote per one common share”.

CHI commits to provide adequate protection to minority shareholders from abusive and inequitable conduct on the part of majority shareholders, directors, officers and employees of the Company. In this regard, CHI has adopted clear rules and explicit prohibition against any shareholder, director, officer or employee benefiting from knowledge not available to minority shareholders and the general public.

Our stakeholders and the way in which we engage them, are defined in our stakeholder engagement process. As a responsible corporate citizen, CHI upholds all laws concerning the proper and fair treatment of all its external stakeholders, particularly our customers, creditors, the environment and its sustainability, the government and the local communities where we have operations.

On Disclosure duties CHI is committed to high standards of disclosure and transparency to enable the investing community to understand the true financial condition of the Company and the quality of its corporate governance.

The Company commits to meet all disclosure requirements, mandated by its regulators, particularly those involving material events. Moreover, the Company shall make such disclosure within the prescribed reporting period.

To help ensure that the disclosure remains adequate and robust, CHI adopts the following disclosure practices: • Timely issuance of the audited financial statement. CHI targets the release of such a statement 60 business days after the close of the financial year. In no case shall the issuance of the audited financial statement be later than 90 business days after the close of the financial year. In addition, the Board of Directors shall issue a certification together with the audited financial statement that the financial statement is true and fair. • Updating of the Company website to provide information on the results, both financial and nonfinancial, of CHI’s business operations, as well as on changes in the Company’s ownership structure, business group structure. The website shall have a downloadable Annual and Sustainability Report as well as copies of notice of call for the annual stockholders’ meeting, current by-laws and articles of incorporation. • Investor concerns are addressed jointly by the Company’s Control and Analysis Department and by the Corporate Communication and Corporate Social Responsibility Division. The responsible officers of these offices are identified, including information on their contact parameters.

On Board Responsibilities Overall stewardship of the Company rests on the Board of Directors, the highest governing authority within CHI’s management structure. Collectively, the Board of Directors is responsible for the success of the Company and ensures that CHI’s obligations to its stakeholders are met.

The duties and responsibilities of the Board of Directors include, but are not limited to, the following: 6

• Approval and final adoption of the corporate strategy, with pro-active oversight of strategy execution. • Formulation and adoption of a corporate policy, starting with a policy related to corporate governance and oversight of strategy execution. • Performance monitoring, which covers financial and non-financial performance as well as oversight of risk management. • Setting up of an accountability system, which includes provision for rewards, incentives and penalties. • Promotion of a culture of ethics, social responsibility, and good governance.

CHI’s Board of Directors has adopted a board protocol, which contains clear and specific guidelines on internal Board processes and in particular the types of decisions requiring Board approval.

The Company’s Board of Directors has approved and adopted the Company’s mission and core values. Moreover, the Board has adopted a Board calendar, which allows for a periodic revisit and review of the elements of the Company governance charter and of its corporate strategy map, with its corresponding performance scorecards.

How often does the Board review and approve the vision and mission? The Board reviews its vision and mission as necessary or at least annually as an agenda through its regular scheduled Board meetings.

(b) Directorship in Other Companies

(i) Directorship in the Company’s Group 2

Identify, as and if applicable, the members of the company’s Board of Directors who hold the office of director in other companies within its Group:

Type of Directorship Corporate Name of the (Executive, Non-Executive, Director’s Name Group Company Independent). Indicate if director is also the Chairman.

Ayala Land, Inc. Executive Director Bernard Vincent O. Dy Cebu Property Ventures & Non-Executive Director Development Corp. Ayala Land International Sales, Inc. Anvaya Cove Golf & Sports Club Amicassa Process Solutions, Inc. Amaia Land Corp. Avida Land Corp. Alveo Alviera Country Club, Inc. Ayalaland Commercial Reit, Inc. Lagdigan Land, Corp. Cagayan De Oro Gateway Corp. Chairman BGSouth Properties, Inc. BGNorth Properties, Inc. BGWest Properties, Inc. Portico Land Corp. Directpower Services, Inc. Philippine Integrated Energy Solutions, Inc. Bonifacio Estate Services Corp. Amaia Southern Properties, Inc. Aniceto V. Bisnar, Jr. Cebu Property Ventures & Executive Director Development Corp. Crimson Field Enterprises, Inc. Chairman

2 The Group is composed of the parent, subsidiaries, associates and joint ventures of the company. 7

Red Creek Properties, Inc. Non-Executive Director Emilio J. Tumbocon Cebu Property Ventures & Non-Executive Director Development Corp. Cebu Insular Hotel, Company, Inc. Non-Executive Director Asian I-Office Properties, Inc. Non-Executive Director Jaime E. Ysmael Cebu Insular Hotel Company, Inc. Non-Executive Director

(ii) Directorship in Other Listed Companies

Identify, as and if applicable, the members of the company’s Board of Directors who are also directors of publicly-listed companies outside of its Group:

Type of Directorship (Executive, Non-Executive, Director’s Name Name of Listed Company Independent). Indicate if director is also the Chairman. Antonio S. Abacan, Jr. Metropolitan Bank & Trust Company Chairman, Advisory Board (Executive Director) GT Capital Holdings, Inc. Member, Advisory Board (Non- Executive Director) Vivant Corporation Member of the Board (Non- Executive Director)

Maria Theresa M. Javier Cebu Property Ventures & Member, (Non-Executive Director) Development Corp.

Enrique L. Benedicto SPC Power Corporation Member, (Independent Director)

(iii) Relationship within the Company and its Group

Provide details, as and if applicable, of any relation among the members of the Board of Directors, which links them to significant shareholders in the company and/or in its group:

Name of the Director’s Name Description of the relationship Significant Shareholder Bernard Vincent O. Dy Ayala Land, Inc. President of Ayala Land, Inc. Emilio J. Tumbocon Ayala Land, Inc. Group Head - Human Resources & Public Affairs Group of Ayala Land, Inc. Jaime E. Ysmael Ayala Land, Inc. Senior Vice President, Group CFO & Compliance Officer of Ayala Land, Inc. Aniceto V. Bisnar, Jr. Ayala Land, Inc. Vice President of Ayala Land, Inc.

(iv) Has the company set a limit on the number of board seats in other companies (publicly listed, ordinary and companies with secondary license) that an individual director or CEO may hold simultaneously? In particular, is the limit of five board seats in other publicly listed companies imposed and observed? If yes, briefly describe other guidelines:

Yes. In order to ensure that adequate time and attention is given to the fulfillment of each director’s duties, CHI imposes a limit of five (5) board seats in any group of publicly-listed companies.

Independent directors may serve for a period of not more than nine (9) consecutive years.

Maximum Number of Guidelines Directorships in other companies Executive Director Limit of five (5) board seats in any group of publicly-listed companies. Non-Executive Director CEO

Complete the following table on the members of the company’s Board of Directors who directly and indirectly own shares in the company:

Number of % of Name of Director Number of Direct shares Indirect shares / Through Capital (name of record owner) Stock Bernard Vincent O. Dy 1 - 0.0000% Aniceto V. Bisnar, Jr. 1 - 0.0000% Antonio S. Abacan, Jr. 18,751 - 0.0010% Maria Theresa M. Javier 1 - 0.0000% Emilio J. Tumbocon 112,500 - 0.0059% Enrique L. Benedicto 1 - 0.0000% Fr. Roderick C. Salazar, Jr 1 - 0.0000% Pampio A. Abarintos 1,000 - 0.0001% 13,500 (PCD Nominee Jaime E. Ysmael 3,375 0.0009% Corp-Filipino TOTAL 135,631 13,500 0.0078%

2) Chairman and CEO

(a) Do different persons assume the role of Chairman of the Board of Directors and CEO? If no, describe the checks and balances laid down to ensure that the Board gets the benefit of independent views.

Yes V No

Identify the Chair and CEO:

Chairman of the Board Bernard Vincent O. Dy CEO/President Aniceto V. Bisnar, Jr.

(b) Roles, Accountabilities and Deliverables

Define and clarify the roles, accountabilities and deliverables of the Chairman and CEO.

Chairman Chief Executive Officer Minimum internal control mechanisms for Role Preside at all meetings of the Board; management’s operational responsibility To listen to and address satisfactorily any Ultimately accountable for Corporation’s governance-related issues that non- organizational and procedural controls. executive independent directors may raise; Ensuring that the Board of Directors Accountabilities exercises strong oversight over the Company and its management such that the prospect of any corporate scandals is minimized if not totally eliminated. 9

• Schedule meetings to enable the • Have general supervision of the Board to perform its duties business, affairs, and property of the responsibly while not interfering with Corporation, and over its employees the flow of the Corporation’s and officers; operations; • See to it that all orders and resolutions • Prepare the meeting agenda in of the Board of Directors are carried consultation with the CEO; into effect; • Exercise control over quality, quantity • Submit to the Board as soon as and timeliness of the flow of possible after the close of each fiscal Deliverables information between Management year, and to the stockholders at the and the Board; and annual meeting, a complete report of • Assist in ensuring compliance with the the operations of the Corporation for Corporation’s guidelines on corporate the preceding year, and the state of its governance affairs; and • Report to the Board from time to time all matters within his knowledge which the interest of the Corporation may require to be brought to their notice.

Explain how the board of directors plan for the succession of the CEO/Managing Director/President and the top key management positions?

The succession plan is taken up as one of the discussion point during one of the regular Board meetings scheduled within each year.

One of the functions required by The Board of Directors per Corp Governance Manual is to adopt a professional development program for employees and officers, and succession planning for senior management and key positions in the Corporation.

3) Other Executive, Non-Executive and Independent Directors

Does the company have a policy of ensuring diversity of experience and background of directors in the board? Please explain.

Yes, the company has a policy of ensuring diversity of experience and background of directors in the Board. The Revised Manual of Corporate Governance reflects the relevant qualifications of directors, including membership to the Board’s various committees. Apart from educational requirements, a director should have sufficient understanding of business fundamentals and experience in managing a business.

The CHI Board brings to the organization a balanced mix of business, legal, and finance competencies, with each director capable of adding value and rendering independent judgment in relation to the formulation of sound corporate policies, on issues of strategy, resources, standards and performance related to corporate social responsibility, environmental and economic sustainability.

The Company also requires that at least one of its non-executive directors should have prior working experience in the sector or broad industry group to which our company belongs.

Does it ensure that at least one non-executive director has an experience in the sector or industry the company belongs to? Please explain.

Yes, the Company requires that at least one of its non-executive directors should have prior working experience in the sector or broad industry group to which the company belongs.

Define and clarify the roles, accountabilities and deliverables of the Executive, Non-Executive and Independent Directors:

Executive Non-Executive Independent Director Responsible for the Custodians of Provides independent successful leadership and the governance process. perspective in improving management of the Constructively contribute corporate credibility and organization according to to the development of the governance standards. Role the strategic direction set strategy of the Plays an active role in by the Board of Directors. Corporation. Provides various committees in the independent views to the Company to ensure good Board. governance.

Responsible for the day-to- Contributes to Provides oversight of the day an overall operations development of strategy financial reporting process, of the Company. and achievement of internal controls, internal Determines the Corporation’s goals, and external audit, risk Corporation’s activities by monitors executive activity. management. Accountabilities putting the Corporation’s targets in concrete terms and by formulating the basic strategies for achieving these targets

Puts in place the Provides independent As an oversight function: infrastructure for the views and analysis on the check financial reports Company’s success by performance and against compliance with establishing the following management in meeting financial reporting mechanisms in the the goals and strategies of standards, periodic review organization :1). Purposeful the Corporation. of financial statements, Legal and organizational Monitoring of achievement approves audit plans prior Deliverables structure, 2.) useful of performance, service to conduct of audit planning, control, and risk quality, accuracy of (internal and external), management systems, 3.) financial information, and information systems, 4.) systems of internal control. foral plan of succession for key positions in the Company.

Provide the company’s definition of "independence" and describe the company’s compliance to the definition.

The Company defines an independent director as one holding no interests or relationships with the Company that may hinder his independence from the Company or management or would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Company complies with the rules of the SEC with regard to the nomination and election of an independent director.

The Company nominates to its Board of Directors only those individuals who can and do exercise independent judgment. In this regard, CHI follows the policy of excluding from the list of independent directors, those with any close relationship, either by blood (within the second degree of consanguinity) or marriage, with significant stockholders, the CEO or any member of the Company’s top management team. The Company also excludes from the list of independent directors those who may have served the Company as an officer or significant service provider, unless two years have elapsed since the termination of that service.

As a publicly-listed company in the PSE, CHI complies with the legal requirement to have at least two independent directors or at least twenty percent of its board size, whichever is less. CHI has three independent directors, Fr. Roderick C. Salazar, Jr., SVD, Enrique L. Benedicto and Pampio A. Abarintos. Their identity as independent directors is clearly marked, with the information on the date of their first election to the Board of Directors.

Does the company have a term limit of five consecutive years for independent directors? If after two years, the company wishes to bring back an independent director who had served for five years, does it limit the term for no more than four additional years? Please explain.

Yes. The Company has a term limit for its independent directors. Independent directors may serve for a period of 11

not more than nine (9) consecutive years.

4) Changes in the Board of Directors (Executive, Non-Executive and Independent Directors)

(a) Resignation/Death/Removal

Indicate any changes in the composition of the Board of Directors that happened during the period:

Name Position Date of Cessation Reason Retirement by end of President and Francis O. Monera December 31, 2014 the calendar year Director 2014 Director and Antonino T. Aquino Chairman of the August 15, 2014 Retirement Board Resignation as Maria Theresa M. Treasurer(Executive company treasurer July 14, 2014 Javier Director) effective July 14, 2014 for personal reasons Hernando O. Streegan Member April 8, 2014 Retirement

(b) Selection/Appointment, Re-election, Disqualification, Removal, Reinstatement and Suspension

Describe the procedures for the selection/appointment, re-election, disqualification, removal, reinstatement and suspension of the members of the Board of Directors. Provide details of the processes adopted (including the frequency of election) and the criteria employed in each procedure:

Procedure Process Adopted Criteria a. Selection/Appointment The Nomination Committee of CHI adopts the principle of the Board installs and “one vote per common maintains a process that share” ensures all directors nominated for election at To qualify, the Director must annual stockholder’s meeting own at least 1 share of capital have all the qualifications and stock; be a college graduate none of the disqualifications to or have sufficient serve as Directors required by understanding of the pertinent rules and regulations fundamental of doing (i.e., SEC, By-Laws, Revised business of sufficient Manual of Corporate experience in managing a Governance. The Nomination business in substitute for (i) Executive Directors Committee reviews and such formal education; evaluates the qualifications of Must also possess relevant all persons nominated in the qualification, such as previous Company that require business experience, appointment by the Board. membership in good standing in relevant industry, and Elected at the Annual Meeting membership in business or by the Companies’ professional organizations, stockholders who are entitled must possess integrity and to vote shall be assiduous.

Shareholders have the right to elect, remove and replace directors and vote on certain

corporate acts in accordance with the Corporation Code.

Cumulative voting shall be used in the election of directors. Directors may be removed with or without cause, but directors shall not be removed without cause if it will deny minority shareholders representation in the Board. Removal of directors requires an affirmative vote of two-thirds (2/3) of the outstanding capital of the Corporation.

Elected at the Annual Meeting CHI adopts the principle of by the Companies’ “one vote per common stockholders who are entitled share” to vote To qualify, the Director must own at least 1 share of capital stock; be a college graduate or have sufficient understanding of the fundamental of doing business of sufficient experience in managing a (ii) Non-Executive Directors business in substitute for such formal education; Must also possess relevant qualification, such as previous business experience, membership in good standing in relevant industry, and membership in business or professional organizations, must possess integrity and shall be assiduous.

Elected at the Annual Meeting CHI adopts the principle of by the Companies’ “one vote per common stockholders who are entitled share” to vote To qualify, the Director must own at least 1 share of capital stock; be a college graduate or have sufficient understanding of the fundamental of doing business of sufficient experience in managing a (iii) Independent Directors business in substitute for such formal education; Must also possess relevant qualification, such as previous business experience, 13

membership in good standing in relevant industry, and membership in business or professional organizations, must possess integrity and shall be assiduous.

Independent directors must constitute 20% of the members of the board, but not lower than two (2). Must hold no interests or relationships with the Company that may hinder independence. The Company nominates to the Board only those who can and do exercise independent judgment. CHI follows the policy of excluding from the list of independent directors, those with any close relationship, either by blood (within the second degree of consanguinity) or marriage, with significant stockholders, the CEO or any member of the Company’s top management team. The Company also excludes from the list of independent directors those who may have served the Company as an officer or significant service provider, unless two years have elapsed since the termination of that service. b. Re-appointment (i) Executive Directors Assessment of qualifications CHI adopts the principle of and disqualifications “one vote per common (ii) Non-Executive Directors By Nomination Committee share”

Must not possess any of the Re-appointed at the Annual criteria for disqualification. (iii) Independent Directors Meeting by the Companies’ stockholders who are entitled to vote c. Permanent Disqualification (i) Executive Directors Assessment of qualifications Any person finally convicted and disqualifications by by a competent judicial or (ii) Non-Executive Directors Nomination Committee administrative body for crime involving purchase or sale of (iii) Independent Directors securities, crime as an

underwriter, broker, dealer, investment corporation, investment adviser, principal distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, floor broker; and any crime arising out of his relationship with a bank, quasi-bank, trust company, investment house or as an affiliated person of any of them;

Any person who, by reason of any misconduct, after hearing or trial, is permanently or temporarily enjoined by order, judgment or decree of the Commission or any court or other administrative body of competent jurisdiction from: (i) acting as an underwriter, broker, dealer, investment adviser, principal distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or a floor broker; (ii) acting as a director or officer of a bank, quasi-bank, trust company, investment house, investment company or an affiliated person of any of them; (iii) engaging in or continuing any conduct or practice in connection with any such activity or willfully violating laws governing securities, and banking activities. Such disqualification shall also apply when such person is currently subject to an effective order of the Commission or any court or other administrative body refusing, revoking or suspending any registration, license or permit issued under the Corporation Code, Securities Regulation Code, or any other law administered by the Commission or Bangko Sentral ng Pilipinas, or under any rule or regulation promulgated by the

Commission or Bangko Sentral ng Pilipinas, or otherwise restrained to engage in any activity involving securities and banking. Such person is also disqualified when he is currently subject to an effective order of a self- regulatory organization suspending or expelling him from membership or participation or from association with a member or participant of the organization;

Any person finally convicted judicially of an offense involving moral turpitude or fraudulent acts or transgressions;

Any person finally found by the Commission or a court or other administrative body to have willfully violated, or willfully aided, abetted, counseled, induced or procured the violation of, any provision of the Securities Regulation Code, the Corporation Code of the Philippines, or any other law administered by the SEC, or any rule, regulation or order of the Commission or the Bangko Sentral ng Pilipinas;

Any person judicially declared to be insolvent;

Any person finally found guilty by a foreign court or equivalent financial regulatory authority of acts, violations or misconduct listed in the foregoing paragraphs; and

Any person convicted by final and executory judgment of an offense punishable by imprisonment for a period exceeding six (6) years, or a violation of the Corporation Code, committed within five

(5) years prior to the date of his election or appointment. d. Temporary Disqualification (i) Executive Directors Temporary disqualification Refusal to fully disclose the shall be at the discretion of the extent of his business interest (ii) Non-Executive Directors Board and shall require a as required under the resolution of a majority of the Securities Regulation Code Board. and its Implementing Rules and Regulations. This Assessment of qualifications disqualification shall be in and disqualifications effect as long as his refusal By Nomination Committee persists;

Absence or non-participation for whatever reason(s) for A temporarily disqualified more than fifty percent (50%) director shall, within sixty (60) of all meetings, both regular business days from such and special, of the Board of disqualification, take the Directors during his appropriate action to remedy incumbency, or any twelve or correct the disqualification. (12) month period during said If he fails or refuses to do so incumbency unless the for unjustified reasons, the absence is due to illness, disqualification shall become death in the immediate family permanent. or serious accident. This disqualification applies for (iii) Independent Directors purposes of the succeeding election;

Dismissal/termination from directorship in another listed corporation for cause. This disqualification shall be in effect until he has cleared himself of any involvement in the alleged irregularity;

Being under preventive suspension by the Corporation for any reason; and

Conviction that has not yet become final referred to in the grounds for disqualification of directors; e. Removal (i) Executive Directors Cumulative voting shall be Removal of directors requires used in the election of an affirmative vote of two- (ii) Non-Executive Directors directors. thirds (2/3) of the outstanding capital of the Directors may be removed Corporation. (iii) Independent Directors with or without cause, but directors shall not be removed without cause if it will deny The commission of a third

minority shareholders violation of the Revised representation in the Board. Manual of Corporate Governance by any member of the Board shall be a sufficient cause for removal from directorship. f. Re-instatement (i) Executive Directors Assessment of qualifications To qualify, the Director must and disqualifications own at least 1 share of capital (ii) Non-Executive Directors By Nomination Committee stock; be a college graduate or have sufficient understanding of the fundamental of doing business of sufficient experience in managing a business in substitute for such formal education; Must also possess relevant qualification, such as previous business experience, (iii) Independent Directors membership in good standing in relevant industry, and membership in business or professional organizations, must possess integrity and shall be assiduous. He will be evaluated also based on his previous contributions to the Corporation. g. Suspension (i) Executive Directors Assessment of qualifications Violation of provisions in the and disqualifications Revised Manual of Corporate (ii) Non-Executive Directors By Nomination Committee Governance.

Suspension to be imposed upon second violation of the (iii) Independent Directors provisions.

Voting Result of the last Annual General Meeting April 24, 2015 – 1,635,682,732 or 85.19%

Name of Director Votes Received Bernard Vincent O. Dy 1,371,098,586 or 83.82% Aniceto V. Bisnar, Jr. 1,371,098,586 or 83.82% Emilio J. Tumbocon 1,371,098,586 or 83.82% Jaime E. Ysmael 1,371,098,586 or 83.82% Maria Theresa M. Javier 1,371,098,586 or 83.82% Antonio S. Abacan, Jr. 1,371,098,586 or 83.82% Fr. Roderick C. Salazar, Jr., SVD 1,414,451,186 or 86.47% Enrique L. Benedicto 1,414,451,186 or 86.47% Pampio A. Abarintos 1,414,451,186 or 86.47%

5) Orientation and Education Program

(a) Disclose details of the company’s orientation program for new directors, if any.

Included in the Company’s Board protocol are policies concerning the “skills and competencies” of the Board of Directors. These policies include: The Company requires that at least one of its nonexecutive directors should have prior working experience in the sector or broad industry group to which the Company belongs. Requiring all directors to undergo an orientation program on corporate governance. CHI also actively encourages and supports its directors to attend continuing education programs on corporate directorship.

(b) State any in-house training and external courses attended by Directors and Senior Management 3 for the past two (2) years:

All directors were able to attend Corporate Governance-related seminars and trainings offered by the Institute of Corporate Directors (ICD) and those in coordination with Ayala Corporation’s (AC) Corporate Governance team. These trainings include the following: 1. Corporate Governance and Risk Management Summit (AC and ICD) 2. Distinguished Corporate Governance Series (ICD)

For 2014: Name of Name of Training Date of Training Program Director/Officer Institution Corporate Governance and The Institute of Corporate Francis O. Monera Feb. 4, 2014 Risk Management Summit Directors (ICD) Corporate Governance and The Institute of Corporate Emilio J. Tumbocon Feb. 4, 2014 Risk Management Summit Directors (ICD) Maria Theresa M. Corporate Governance and The Institute of Corporate Feb. 4, 2014 Javier Risk Management Summit Directors (ICD) Fr. Roderick C. Corporate Governance and The Institute of Corporate Feb. 4, 2014 Salazar, Jr., SVD Risk Management Summit Directors (ICD) Corporate Governance and The Institute of Corporate Enrique L. Benedicto Feb. 4, 2014 Risk Management Summit Directors (ICD) Hernando O. Corporate Governance and The Institute of Corporate Feb. 4, 2014 Streegan* Risk Management Summit Directors (ICD) Enrique B. Manuel, Corporate Governance and The Institute of Corporate Jr.-CFO/Compliance Feb. 4, 2014 Risk Management Summit Directors (ICD) Officer Distinguished Corporate The Institute of Corporate Antonio S. Abacan, Jr. Feb. 5, 2014 Governance Speaker Series Directors (ICD) Distinguished Corporate The Institute of Corporate Pampio A. Abarintos* April 29, 2014 Governance Speaker Series Directors (ICD) *PAAbarintos replaces Mr. Hernando O. Streegan

For 2015: Name of Name of Training Date of Training Program Director/Officer Institution Ayala Corporate Bernard Vincent O. The Institute of Corporate Feb. 18, 2015 Governance and Risk Dy Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Aniceto V. Bisnar, Jr. Feb. 18, 2015 Governance and Risk Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Emilio J. Tumbocon Feb. 18, 2015 Governance and Risk Directors (ICD)

3 Senior Management refers to the CEO and other persons having authority and responsibility for planning, directing and controlling the activities of the company.

Management Summit Ayala Corporate The Institute of Corporate Jaime E. Ysmael Feb. 18, 2015 Governance and Risk Directors (ICD) Management Summit Ayala Corporate Maria Theresa M. The Institute of Corporate Feb. 18, 2015 Governance and Risk Javier Directors (ICD) Management Summit Ayala Corporate Fr. Roderick C. The Institute of Corporate Feb. 18, 2015 Governance and Risk Salazar, Jr., SVD Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Enrique L. Benedicto Feb. 18, 2015 Governance and Risk Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Pampio A. Abarintos Feb. 18, 2015 Governance and Risk Directors (ICD) Management Summit Enrique B. Manuel, Ayala Corporate The Institute of Corporate Jr.-CFO/Compliance Feb. 18, 2015 Governance and Risk Directors (ICD) Officer Management Summit June Vee D. Ayala Corporate The Institute of Corporate Monteclaro-Navarro- Feb. 18, 2015 Governance and Risk Directors (ICD) Corporate Secretary Management Summit Nimfa Ambrosia L. Ayala Corporate The Institute of Corporate Perez-Paras-Asst. Feb. 18, 2015 Governance and Risk Directors (ICD) Corporate Secretary Management Summit Annual Training Program The Institute of Corporate Antonio S. Abacan, Jr. April 22, 2015 for Corporate Governance Directors (ICD)

B. CODE OF BUSINESS CONDUCT & ETHICS

1) Discuss briefly the company’s policies on the following business conduct or ethics affecting directors, senior management and employees:

Business Conduct & Directors Senior Management Employees Ethics The Code of Ethical The Company has a The Code of Ethical Behavior Behavior outlines the Conflict of Interest Policy is intended to be read in general expectations that covers all senior and conjunction with the and set standards for non-senior personnel of Company’s Human behavior and ethical the Company, including Resources Manual of conduct. It provides its subsidiaries and Personnel Policies which guidelines for all affiliates. The policy includes the Code of directors, officers and serves as a guide in the Conduct governing CHI employees, and manner by which all acceptable office conduct that of its subsidiaries Company employees, its for the orderly operation of and affiliate. It aims to subsidiaries and affiliates the Company as well as for (a) Conflict of Interest promote and foster are to conduct the protection of the rights, observance of themselves in going about safety and benefit of the principles founded on their jobs in pursuit of the total employee force. ethics, sustainability, business of the Company. social responsibility This policy provides the and good governance. parameters by which the employees are guided in CHI and its employees the propriety of their commit to adhere to actions, decisions and the Company’s core business practices. values in conducting 20

personal and business affairs.

A director is required CHI seeks to adhere to a CHI employees who are to conduct fair high level of moral transacting (also referred to business transactions conduct and fair dealings as the act of buying with the corporation with all its stakeholders. and selling) for their and ensure that The Company believes respective accounts in CHI personal interest does this is the basis and shares of stock/securities not bias Board foundation for building are advised to consult the decisions. A director long-term, mutually- Company’s policy on insider shall not use his beneficial relationships. trading. position to make profit or to acquire benefit or It is the policy of CHI that Directors are required to advantage for himself directors, officers and report their dealings in and/or his related employees of the company shares within 3 interests. He should Company who are business days. (b) Conduct of Business avoid situations that considered to have and Fair Dealings may compromise his knowledge, from time to impartiality. He should time, of observe the conflict of materials facts or changes interest policy stated in in the affairs of CHI, which the Manual of have not been Corporate Governance. disclosed to the public, including any information likely to affect the market price of CHI’s securities, cannot buy or sell (“trade”) CHI securities, except in accordance with this policy.

The Conflict of Interest Policy requires that all employees to immediately report to their superiors any offer or gift of any value given to them or their immediate (c) Receipt of gifts from family meant to either get favors in return or influence their recommendation or third parties decision on certain proposals affecting the Company.

Being ISO-accredited , the Company commits to comply with all applicable (d) Compliance with regulatory and statutory requirements, relevant environmental and occupational Laws & Regulations health & safety laws and regulations.

Observe confidentiality. A director shall observe the confidentiality of non-public (e) Respect for Trade information acquired by reason of his position as a director. He should not disclose Secrets/Use of Non- any information to any other person without the authority of the Board. public Information

The Code of Ethics covers section on prudent use of Company resources. (f) Use of Company All CHI employees are responsible for the proper use of all Company Funds, Assets and property covers Company funds, assets and information. Information

The Company complies with all existing labor laws including retrenchment, redundancy and resignation. (g) Employment &

Labor Laws & As in ISO-accredited company , the Company commits to comply with all applicable Policies regulatory and statutory requirement)

(h) Disciplinary action Covered in Code of Ethical Behavior (Employee Handbook issued to employees and

available in website)

The Code of Ethical Behavior covers all of the Company’s employees, its subsidiaries and affiliates. It outlines the general expectations of and sets standards for employee behavior and ethical conduct.

As contained in the Code of Ethics, It is the right and obligation of a CHI employee to bring to the attention of the management, any suspected or observed violation of the Code, Company policy and Philippine laws.

To reinforce this, CHI has adopted a Whistle-blowing policy.

(i) Whistle Blower All employees, third party business partners, or other stakeholders are encouraged and empowered to report their concerns should they suspect or become aware of any illegal or unethical activities. This can be done through all CHI business integrity channels. The policy covers any of the following concerns: 1) conflicts of interest; 2) misconduct or policy violations; 3) theft, fraud or misappropriation; 4) falsification of documents; 5) financial reporting concerns, and; 6) retaliation complaints.

Board meeting as a A committee may be convened by the President for cases mechanism to handle concerning the non-compliance with this Code. conflict resolution. Discussion during This Committee is a fact-finding body meeting of the Board and all its reports, particularly as regards functions are (j) Conflict Resolution en banc. recommendatory in nature. The committee shall document the proceedings which will form part of the records of the case. The President will make the final decision on the case based on the report, recommendation and/or conclusion of the Committee.

2) Has the code of ethics or conduct been disseminated to all directors, senior management and employees?

Yes, the Code of Ethical behavior has been disseminated to the Company’s directors, senior management and employees through orientations.

Copy of the Code of Ethical Behavior has been provided to directors and employees of the Company and is also available via the Company’s website for reference.

3) Discuss how the company implements and monitors compliance with the code of ethics or conduct.

CHI requires all directors, officers, and employees disclose any interest in any transactions of the Company that may place them in a conflict of interest position. Directors, Key Officers and Company employees are required to annually disclose any business and family-related transactions to the Company by accomplishing the Conflict of Interest Disclosure Statement.

4) Related Party Transactions

(a) Policies and Procedures

Describe the company’s policies and procedures for the review, approval or ratification, monitoring and recording of related party transactions between and among the company and its parent, joint ventures, subsidiaries, associates, affiliates, substantial stockholders, officers and directors, including their spouses, children and dependent siblings and parents and of interlocking director relationships of members of the Board.

Related Party Transactions Policies and Procedures (1) Parent Company Transactions entered into with associates and other related 22

(2) Joint Ventures parties in their conduct of business are on an arm’s length (3) Subsidiaries basis. (4) Entities Under Common Control (5) Substantial Stockholders A committee of independent directors is given the responsibility to pass upon any related party transaction with any material significance, and to render an opinion on whether the transaction can be cleared, after assessing that the transaction is in the best interest of the corporation.

Sales and purchases of goods and services to and from related parties are made at normal market prices. Related party transactions are discussed and quantified in the Notes to the Consolidated Financial Statements. Information on the Company’s financial instruments is accompanied by a presentation of the company’s risk management objectives and policies to allow for a better assessment of financial performance and cash flows. Significant accounting judgments and estimates are also disclosed.

(6) Officers including All directors, officers and employees are required to disclose spouse/children/siblings/parents one business day in advance before they deal in the Company’ shares. All dealings and transactions in the Company’s shares by any director, officer, or employee are to be disclosed within three business days after the transaction.

CHI requires all directors, officers, and employees to disclose any interest in any transactions of the Company that may place them in a conflict of interest position.

CHI has also adopted the rule that directors should inhibit themselves from participating in any discussion, deliberation, and decision making concerning any issue or transaction where they may be conflicted.

(7) Directors including All directors, officers and employees are required to disclose spouse/children/siblings/parents one business day in advance before they deal in the Company’ shares. All dealings and transactions in the Company’s shares by any director, officer, or employee are to be disclosed within three business days after the transaction.

CHI requires all directors, officers, and employees to disclose any interest in any transactions of the Company that may place them in a conflict of interest position.

(8) Interlocking director relationship of Board of Directors CHI has adopted the rule that directors should inhibit themselves from participating in any discussion, deliberation, and decision making concerning any issue or transaction where they may be conflicted. 23

The Company, within the ambit of law, does not permit the continued service of any director, officer or employee who has been convicted for insider trading.

A committee of independent directors is given the responsibility to pass upon any related party transaction with any material significance, and to render an opinion on whether the transaction can be cleared, after assessing that the transaction is in the best interest of the corporation.

(b) Conflict of Interest

(i) Directors/Officers and 5% or more Shareholders

Identify any actual or probable conflict of interest to which directors/officers/5% or more shareholders may be involved.

Details of Conflict

of Interest (Actual or Probable) Name of Director/s None to report, all transactions are kept Name of Officer/s at arm’s-length Name of Significant Shareholders

(ii) Mechanism

Describe the mechanism laid down to detect, determine and resolve any possible conflict of interest between the company and/or its group and their directors, officers and significant shareholders.

Directors/Officers/Significant Shareholders Company The Board ensures the presence and adequacy of internal control mechanisms for good governance. The Board’s oversight responsibility include, but shall not be limited to: • Ensuring presence of organizational and procedural controls • Reviewing conflict of interest situations and providing appropriate remedial measures for the same • Appointing a CEO with the appropriate ability, integrity, and experience to fill the role • Reviewing proposed senior management appointments; • Ensuring the selection, appointment and retention of Group qualified and competent management; • Institutionalizing the internal audit function; and • Ensuring the presence of, and regularly reviewing, the performance and quality of external audit.

5) Family, Commercial and Contractual Relations

(a) Indicate, if applicable, any relation of a family, 4 commercial, contractual or business nature that exists between the holders of significant equity (5% or more), to the extent that they are known to the company:

Names of Related Brief Description of the Type of Relationship Significant Shareholders Relationship Nature of Relationship: Business

Partnership with parent & its subsidiaries. Expanding the Ayala Land, Inc (56.36%) Parent Company Company’s portfolio through use parent’s strength in property management, construction, business development.

(b) Indicate, if applicable, any relation of a commercial, contractual or business nature that exists between the holders of significant equity (5% or more) and the company:

Names of Related Type of Relationship Brief Description Significant Shareholders Nature of Relationship: Business

(c) Indicate any shareholder agreements that may impact on the control, ownership and strategic direction of the company:

% of Capital Stock affected Brief Description of the Name of Shareholders (Parties) Transaction None to report

6) Alternative Dispute Resolution

Describe the alternative dispute resolution system adopted by the company for the last three (3) years in amicably settling conflicts or differences between the corporation and its stockholders, and the corporation and third parties, including regulatory authorities.

Alternative Dispute Resolution System Corporation & Stockholders No conflicts or differences have occurred in the last 3 Corporation & Third Parties years between the Company and its stockholders, third parties, regulatory authorities.

The Company, as required in its Corporate Governance Manual, has established an alternative dispute resolution Corporation & Regulatory Authorities system that amicably settles conflicts between the Corporation and its stockholders, and the Corporation and third parties.

4 Family relationship up to the fourth civil degree either by consanguinity or affinity. 25

C. BOARD MEETINGS & ATTENDANCE

1) Are Board of Directors’ meetings scheduled before or at the beginning of the year? Yes, BOD meetings are scheduled at the beginning of the year. Scheduling is coordinated through the office of the Corporate Secretary of the Company.

2) Attendance of Directors -for Board & Organizational Meetings

For 2014: Feb. 27, April 8, August 15 and November 11

No. of No. of Date of Meetings Held Board Name Meetings % Election during the Attended year Chairman Bernard Vincent O. Dy** August 2 2 100% 15, 2014 Chairman Antonino T. Aquino** April 2014 2 2 100% Member Aniceto V. Bisnar, Jr.*** Nov. 11, - - 0% 2014 Member Francis O. Monera*** April 2014 4 4 100% Member Ma. Theresa M. Javier April 2014 4 3 75% Member Antonio S. Abacan Jr. April 2014 4 3 75% Member Emilio J. Tumbocon April 2014 4 4 100% Member Jaime E.Ysmael April 2014 4 4 100% Independent Fr. Roderick C. Salazar, Jr., SVD April 2014 4 4 100% Independent Enrique L. Benedicto April 2014 4 4 100% Independent Hernando O. Streegan* April 2014 1 1 100% Independent Pampio A. Abarintos* April 2014 3 3 100% *PPAbarintos elected last April 8, 2014 **BVODy replaces Mr. Antonino T. Aquino effective August 15, 2014 ***AVBisnar replaces Mr. Monera effective January 1, 2015

For 2015: March 11, April 24, August 13, and December 01, 2015

No. of No. of Date of Meetings Held Board Name Meetings % Election during the Attended year Chairman Bernard Vincent O. Dy April 2015 4 4 100% Member Aniceto V. Bisnar, Jr.* April 2015 4 4 100% Member Ma. Theresa M. Javier April 2015 4 4 100% Member Antonio S. Abacan Jr. April 2015 4 3 75% Member Emilio J. Tumbocon April 2015 4 4 100% Member Jaime E.Ysmael April 2015 4 4 100% Independent Fr. Roderick C. Salazar, Jr., SVD April 2015 4 4 100% Independent Enrique L. Benedicto April 2015 4 3 75% Independent Pampio A. Abarintos April 2015 4 4 100% *AVBisnar replaces Mr. Monera effective January 1, 2015

3) Do non-executive directors have a separate meeting during the year without the presence of any executive? If yes, how many times?

Yes, non-executive directors meet without any executives present. In particular, meetings of the Audit Committee and Risk Committee are held quarterly with session allocated for an executive session. Both the Committees are comprised of independent/non-executive directors.

Is the minimum quorum requirement for Board decisions set at two-thirds of board members? Please explain.

Two-thirds of the number of directors shall constitute a quorum for transaction of corporate business.

The Board meets at least three times a year. Dissemination of agenda, presentation materials and items for approval are made available at least three days prior to meeting schedule. Information is provided by the Corporate Secretary who may also serve as adviser to the board of directors. The passage of important decisions that significantly impact the Company requires the presence of a quorum of the directors. The Company requires two thirds of the directors to be present for determining the quorum of the meeting.

CHI requires of its directors, at least 75 percent attendance of all Board meetings. Considerate provision for electronic presence is given. Individual physical attendance is required in at least 50 percent of the Board meetings. The Board undergoes a formal self-rating system annually. Assessments are made on both individual and collective capacities. Focus is given to level of compliance with leading practices and principles on good governance. Areas for improvement are determined. Independence, experience, judgment, knowledge, time commitment, and teamwork are factored in. Group meetings, without the presence of any executive director or management representative, are supported and arranged for all non-executive directors at least once annually.

4) Access to Information

(a) How many days in advance are board papers 5 for board of directors meetings provided to the board? Dissemination of agenda, presentation materials and items for approval are made available at least three days prior to meeting schedule.

(b) Do board members have independent access to Management and the Corporate Secretary? Yes, board members have independent access to management and Corporate Secretary.

(c) State the policy of the role of the company secretary. Does such role include assisting the Chairman in preparing the board agenda, facilitating training of directors, keeping directors updated regarding any relevant statutory and regulatory changes, etc?

As per Revised Manual of Corporate Governance, the Corporate Secretary must be a Filipino. He should have the administrative skills of the chief administrative officer of the Corporation and the interpersonal skills of the chief human resources officer. If the Corporate Secretary is not the general counsel, then he must have the legal skills of a chief legal officer. He must also have the financial and accounting skills of a chief financial officer, and lastly shares the vision and decisiveness of the CEO.

Functions of the Corporate Secretary are as follows: 1.) Serve as an adviser to the directors on their responsibilities and obligations; 2.)Keep the minutes of meetings of the stockholders, the Board of Directors, the Executive Committee, and all other committees in a book or books kept for that purpose, and shall furnish copies thereof to the Chairman, the President and other members of the Board as appropriate; 3.)Keep in safe custody the seal of the Corporation and affix it to any instrument requiring the same; 4.)Have charge of the stock certificate book and such other books and papers as the Board may direct; 5.) Attend to the giving and serving of notices of Board and shareholder meetings; 6.)Be fully informed and be part of the scheduling process of other activities of the Board; 7.)Prepare an annual schedule of board meetings and the regular agendas of meetings, and put the Board on notice of such agenda at every meeting; 8.)Oversee the adequate flow of information to the Board prior to meetings; and 9.) Ensure fulfillment of disclosure requirements to the SEC and the PSE.

(d) Is the company secretary trained in legal, accountancy or company secretarial practices? Please explain should the answer be in the negative. Yes, the Corporate Secretary is trained legal, accountancy or company secretarial practices.

(e) Committee Procedures

5 Board papers consist of complete and adequate information about the matters to be taken in the board meeting. Information includes the background or explanation on matters brought before the Board, disclosures, budgets, forecasts and internal financial documents. 27

Disclose whether there is a procedure that Directors can avail of to enable them to get information necessary to be able to prepare in advance for the meetings of different committees:

Yes V No

Committee Details of the procedures Executive For all Committees of the Board, standard days have been set on Audit the preparation and dissemination of agenda, presentation Nomination materials, and items for approval prior to the meeting (e.g.., at Remuneration least 3-4 days prior to meeting) Others (Sustainability)

5) External Advice

Indicate whether or not a procedure exists whereby directors can receive external advice and, if so, provide details:

Procedures Details Audit Committee Discussion in executive session with external The Board, through its Audit Committee, can auditors and Audit & Risk Committee of the conduct a separate meeting in executive session Board. This shall allow the discussion of any with the Company’s external auditors. matter that the Committee or external auditors believe should be discussed privately, including results of audit, year-end financial statements and the quality of management, financial and accounting controls.

6) Change/s in existing policies

Indicate, if applicable, any change/s introduced by the Board of Directors (during its most recent term) on existing policies that may have an effect on the business of the company and the reason/s for the change:

Existing Policies Changes Reason None to report

D. REMUNERATION MATTERS

1) Remuneration Process Disclose the process used for determining the remuneration of the CEO and the four (4) most highly compensated management officers:

Discussion and approval of remuneration for CEO and management officers are done through the Compensation Committee of the Board. The Compensation Committee establishes a formal and transparent procedure for fixing the remuneration packages of corporate officers and directors. It provides oversight over remuneration of senior management and other key personnel.

Directors and Executive Officers Directors

Article IV, Section 15 of the Company’s By-Laws provides:

“Section 10 - The Chairman and members of the Board shall receive such remuneration as may be fixed by the Board of Directors.”

None of the directors, in their personal capacity, has been contracted and compensated by the Company for services other than those provided as a director. 28

The Company has no other arrangement with regard to the remuneration of its existing directors and officers aside from the compensation received as herein stated.

Executive Officers Name and Principal Position Year Salary Other Variable Pay Francis O. Monera* President Enrique B. Manuel Jr. Vice President and Chief Finance Officer/Compliance Officer Ma. Clavel G. Tongco VisMin Assistant Vice President, Commercial Business Group/Head of Operations for VisMin Nerissa N. Josef-Mediano Vice President and Division Head, Business Development Group Ma. Cecilia Crispina T. Urbina Assistant Vice President and Division Head, Human Resource and Administration All above-named Officers as a Actual 2013 P 18.2 M P 4.7 M group Actual 2014 P 26.1 M P 2.3 M Projected 2015 P 27.4 M P 2.4 M

All other officers** as a group Actual 2013 P 17.1 M P 3.2 M unnamed Actual 2014 P 19.1 M P 1.2 M Projected 2015 P 20.1 M P 1.2 M * Until December 31, 2014. ** Senior Personnel with pay class of SP-C.

The total annual compensation was all paid in cash. The total annual compensation included the basic salary and other variable pay (performance bonus).

The executive officers are composed of regular employees of the Company and four (4) are seconded personnel from ALI.

The above named executive officers are covered by Letters of Appointment with the Company stating therein their respective job functionalities, among others matters.

Options Outstanding

The Company does not offer stock options to its directors, executives, and employees.

Top 4 Highest Paid Process CEO Management Officers (1) Fixed remuneration Basic salary Basic salary (2) Variable remuneration None None (4) Per diem allowance none None Performance bonuses are given Performance bonuses are given (4) Bonus to management officers to management officers annually. annually. (5) Stock Options and None for CHI None for CHI other financial

instruments

(6) Others (specify) None to report None to report

2) Remuneration Policy and Structure for Executive and Non-Executive Directors

Disclose the company’s policy on remuneration and the structure of its compensation package. Explain how the compensation of Executive and Non-Executive Directors is calculated.

Per Revised Manual of Corporate Governance: The Board of Directors shall determine a level of remuneration for Directors that shall be sufficient to attract and retain directors and compensate them for attendance at meetings of the Board and Board Committees, and performance of numerous responsibilities and undertaking certain risks as a Board member. The compensation which maybe in the form of cash remuneration and/or stock option plans, shall be fixed by way of a resolution of the Board of Directors. The Board of Directors may provide that only non-executive directors shall be entitled to such compensation.

No director shall be involved in deciding his or her own remuneration.

The Corporation, to ensure effectiveness of holding directors accountable and to attract competent persons as directors, may purchase at its own expense liability insurance coverage for its directors.

Structure of How Remuneration Policy Compensation Compensation is Packages Calculated The Compensation Total annual Fixed monthly Committee establishes compensation compensation, the formal and includes basic salary guaranteed bonus, transparent procedure and other variable performance- for fixing the pay (i.e. guaranteed based remuneration bonus, performance- compensation packages of corporate based incentive incentive officers and directors.

Executive Directors As required in the By- laws, “The Chairman and members of the Board shall receive such remuneration as may be fixed by the Board of Directors each year.”

The members of the Non-executive Per diem received Board of Directors are directors, defined as per meeting entitled to receive a members of the Board actually attended reasonable per diem of Directors who are (P40,000 for each for attendance at each neither officers nor Board Meeting, meeting of the Board consultants of the P20,000 for each of Directors. Other Company, receive Board Committee Non-Executive Directors than such per diem, remuneration meeting) there is no other consisting of a per arrangement pursuant diem of P40,000 for to which any amount each Board meeting or compensation is due attended and P20,000 to the directors for per Board committee services rendered as meeting actually such. attended. The said 30

remuneration of non- executive directors was implemented effective April 28, 2006. None of the directors, in their personal capacity, has been contracted and compensated by the Company for services other than those provided as a director.

Do stockholders have the opportunity to approve the decision on total remuneration (fees, allowances, benefits- in-kind and other emoluments) of board of directors? Provide details for the last three (4) years.

Date of Remuneration Scheme Stockholders’ Approval BOD receives Per diem allowance per attendance Ratification of all acts an resolutions by the to Board meetings (PhP40K) and Committee Board during April 2007 stockholders meeting meetings attended (PhP20K)

Non-executive directors (members of the Board who are neither officers nor consultants of the Company) receive per diem allowance of PhP40K for each board meeting actually attended and PhP20K per Board committee meeting actually attended.

3) Aggregate Remuneration

Complete the following table on the aggregate remuneration accrued during the most recent year:

Non-Executive Executive Independent Remuneration Item Directors (other than Directors Directors independent directors) Francis O. Monera (a) Fixed Remuneration None None - None to report Francis O. Monera (b) Variable Remuneration None None - None to report P 760K for all P600K for all board board and Ma. Theresa M. (c) Per diem Allowance meetings attended in committee Javier – P120k 2014 meetings attended in 2014 Francis O. Monera (d) Bonuses None None - None to report (e) Stock Options and/or other financial None None None instruments Francis O. Monera (f) Others (Specify) None None - None to report P 760K for all P600K for all board Ma. Theresa M. board and Total meetings attended in Javier – P120k committee 2014 meetings attended

in 2014

Non-Executive Director Executive Independent Other Benefits (other than Directors Directors independent directors) Francis O. Monera 1) Advances None None - None to report Francis O. Monera 2) Credit granted None None - None to report 3) Pension Plan/s Francis O. Monera None None Contributions - None to report (d) Pension Plans, Francis O. Monera None None Obligations incurred - None to report Francis O. Monera (e) Life Insurance Premium None None - None to report Francis O. Monera (f) Hospitalization Plan None None - None to report Francis O. Monera (g) Car Plan None None - None to report Francis O. Monera (h) Others (Specify) None None - None to report Francis O. Monera Total None None - None to report

4) Stock Rights, Options and Warrants

(a) Board of Directors

Complete the following table, on the members of the company’s Board of Directors who own or are entitled to stock rights, options or warrants over the company’s shares:

Number of Number of Direct Number of Indirect Total % from Director’s Name Option/Rights/ Equivalent Option/Rights/ Capital Stock Warrants Shares Warrants Board of Directors do not have the stock rights, options or warrants over the company’s shares.

(b) Amendments of Incentive Programs

Indicate any amendments and discontinuation of any incentive programs introduced, including the criteria used in the creation of the program. Disclose whether these are subject to approval during the Annual Stockholders’ Meeting:

Date of Incentive Program Amendments Stockholders’ Approval None to report

5) Remuneration of Management

Identify the five (5) members of management who are not at the same time executive directors and indicate the total remuneration received during the financial year:

Name of Officer/Position Total Remuneration Enrique B. Manuel, Jr./VP, CFO and Compliance Officer Maria Clavel G. Tongco/VP and Head, Commercial Business Group Nerissa N. Josef-Mediano/VP and Head, Business None to report Development & Office Leasing Group

Ma. Cecilia Crispina T. Urbina/AVP and Head, Corporate Services Group and Human Resources & Administration Noel F. Alicaya/Finance & Control Officer and Chief Risk Officer

E. BOARD COMMITTEES

1) Number of Members, Functions and Responsibilities

Provide details on the number of members of each committee, its functions, key responsibilities and the power/authority delegated to it by the Board:

No. of Members Non - Independ Executive Committee Key Committee executive ent Functions Power Director Director Director Charter Responsibilities (ED) (NED) (ID) Purpose and Acts in Oversee Shall exercise function accordance activities of the the powers and indicated in with the Organization. attributes of Revised authority the Board of Manual of granted by Accounts to Directors Corporate the Board or stakeholders for during the Governance in case of organization’s intervening & in the absence of performance period 1 Corporation’ the Board on between the s By-Laws specific Establishes Board’s matters broad policies meetings, and within the and objectives shall report all competence resolutions Executive 1 3 of the Board Ensures adopted by it of Directors availabilities of to the Board of as prescribed resources for the Directors at the in the company first meeting Company’s that the latter By-Laws, may except with subsequently respect to hold. any action for which shareholders’ approval is also required Purpose and Provides It provides The Audit function assistance to Oversight Committee is Audit 3 indicated in the Board of financial expected, Audit Directors in reporting, through the Committee fulfilling its internal audit, provision of 33

Charter , oversight external audit checks and Revised responsibility balances, to Manual of to the bring positive Corporate shareholders results in Governance relating to: 1) supervising and & in the the supporting the Corporation’ Company’s management s By-Laws financial of the statements Corporation. and the financial reporting process; 2) the systems of internal controls and financial reporting controls; 3) the internal audit activity; 4) the annual independent audit of the Company’s financial statements; 5) compliance with legal and regulatory matters; and

Purpose and Install and Installs and Encourage the function maintain a maintains a selection of a indicated in process to process to mix of Revised ensure that ensure that all competent Manual of all directors directors to be directors, each Corporate to be nominated for of whom can Governance nominated election at the add value and & in the for election annual create Corporation’ at the next stockholders’ independent s By-Laws Annual meeting have all judgment as to General the qualifications the formulation Stockholders’ and none of the of sound Nomination 1 1 1 Meeting have disqualifications corporate the for directors as strategies and qualifications stated in the By- policies; and and none of Laws, the Review and the Revised Manual evaluate the disqualificatio of Corporate qualifications ns stated Governance of of all persons above; and the Company nominated to and the positions in the pertinent rules Corporation of the Securities which require and Exchange appointment

Commission, to by the Board. review and evaluate the qualifications of all persons nominated to positions in the Company which require appointment by the Board.

Purpose and Provides Establish a function oversight formal and indicated in over transparent Revised remuneration procedure for Manual of of developing a Corporate senior policy on Governance management executive and other key remuneration personnel and for fixing the remuneration packages of corporate officers and directors, and provide 1 oversight over remuneration of senior management and other key personnel ensuring that Remuneration 1 1 compensation is consistent with the Corporation’s culture, strategy and control environment;

Designate the amount of remuneration, which shall be in a sufficient level to attract and retain directors and officers who are needed to run the Corporation successfully;

Develop a form on Full Business Interest Disclosure as part of the pre- employment requirements for all incoming officers, which among others compel all officers to declare under the penalty of perjury all their existing business interests or shareholdings that may directly or indirectly conflict in their performance of duties once hired;

Disallow any director to decide his or her own remuneration;

Provide in the Corporation’s annual reports, information and proxy statements a clear, concise and understandable disclosure of compensation of its executive officers for the previous fiscal year and the ensuing year;

Review the existing Human Resources Development or Personnel Handbook, to strengthen provisions on

conflict of interest, salaries and benefits policies, promotion and career advancement directives and compliance of personnel concerned with all statutory requirements that must be periodically met in their respective posts;

Or in the absence of such Personnel Handbook, cause the development of such, covering the same parameters of governance stated above.

Purpose and Provides Provides Ensure that an function assistance to oversight to the overall set of indicated in the Board of Corporation’s risk Risk Directors in Risk management policies and Committee the Management procedures 3 Charter, performance activities Revised exist for the of its Corporation. Manual of oversight Corporate functions of Review the Governance the adequacy of the and in the Corporation’s Corporation’s Corporation’ risk Others- risk s by-laws. management management Risk activities framework / Committee through process. continuous input, Review the evaluation results of the and feedback annual risk on the assessment done by the effectiveness Chief Risk of the Officer (CRO), Corporation’s including the risk risks identified, management their impact or process. potential 37 impact on the Corporation’s business and the corresponding measures to address such risks.

Evaluate the risk assessment report submitted by the CRO on a periodic basis, which may include existing and emerging risks faced by the Corporation and/or its subsidiaries as well as the risk mitigation strategies and action plans adopted by Management.

Monitor the risk management activities of the Corporation and evaluate the effectiveness of the risk mitigation strategies and action plans, with the assistance of the internal auditors. This includes ensuring that the Corporation maintains a framework for fraud prevention and detection (i.e. Whistleblower Program) and plans for business continuity (i.e. Business Continuity Plan)

Meet periodically with Management to discuss the Committee’s observations and evaluation on its risk management activities.

With the support The of the Sustainability Sustainability Committee shall Technical oversee Working Group strategy setting, (STWG) headed establishing of by the Corporate goals and 1 Sustainability integrating Officer (CSO), sustainability the Sustainability initiatives into Committee the daily Provides provides business assistance to assistance to the activities across the Board of Board of the Company’s Directors in Directors in its operations. The its responsibility to committee is responsibility the Company’s tasked to to the stakeholders review and Company’s that relate to the evaluate the Stakeholders Company’s following: that relate to growth in the the areas of 1) 1) Initiatives Company’s economic and Others - 1 1 growth in the performance, 2) recommendatio Sustainability areas of 1) environmental ns of the economic stewardship and Company’s performance, 3) corporate STWG. 2) social 2)stakeholder environment responsibility. engagement al processes; stewardship external and 3) partnerships corporate 3)new and social innovative responsibility technologies applied in the Company’s new projects and managed properties 4)communicatio n strategies relating to Sustainability goals, targets and initiatives 5)annual 39

sustainability report performance of the Sustainability Committee, Sustainability Council, the CSO and the STWG.

2) Committee Members

(a) Executive Committee

For 2014: August 15 & Nov. 11, 2014

Length of No. of No. of Date of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman Bernard Vincent O. Dy*** April 24, 2015 2 2 100% new Chairman Emilio J. Tumbocon*** April 2008 2 2 100% 6 Member (ED) Aniceto V. Bisnar, Jr.** Nov. 11, 2014 - - 0% new Member (ED) Francis O. Monera** April 2006 2 2 100% 8 Member (NED) Maria Theresa M. Javier* July 2012 2 2 100% 3 Member (ED) Jaime E. Ysmael* April 2008 2 2 100% 7 Member (ID) Pampio A. Abarintos**** April 24, 2015 - - 0% new *Resignation of Ms. Maria Theresa M. Javier as Treasurer(ED) of the Company effective July 14, 2014 *Appointment of Mr. Jaime E. Ysmael as company Treasurer **AVBisnar replaces Mr. Monera effective January 1, 2015 ***Appointment of BVODy as chairman effective April 24, 2015 ****Appointment of Pampio A. Abarintos effective April 24, 2015

For 2015: January 28, February 11, February 23, June 8, September 29, 2015

Length of No. of No. of Date of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman new Bernard Vincent O. Dy April 24, 2015 2 2 100% (NED) Chairman until 6 Emilio J. Tumbocon*** April 2008 3 3 100% April 24, 2015 Member (ED) Aniceto V. Bisnar, Jr. Nov. 11, 2014 5 5 100% 1 Member (NED) Maria Theresa M. Javier July 2012 5 5 100% 3 Member (ED) Jaime E. Ysmael April 2008 5 5 100% 7 Member (ID) Pampio A. Abarintos April 24, 2015 2 2 100% new ***Appointment of BVODy as chairman effective April 24, 2015

(b) Audit Committee for AC Meeting

For 2014: Feb. 12, May 16, Aug. 7, Sept. 23 & Nov. 7, 2014

Length of No. of Date of No. of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman (ID) Fr. Roderick C. Salazar, Jr. April 2005 5 5 100% 9 SVD Member (ID) Enrique L. Benedicto April 2003 5 5 100% 11 Member (ID) Pampio A. Abarintos April 2014 4 4 100% new

For 2015: Feb. 12, May 13, Aug. 5, 2015, November 10, 2015

Length of No. of Date of No. of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman (ID) Fr. Roderick C. Salazar, Jr. April 2005 4 4 100% 10 SVD Member (ID) Enrique L. Benedicto April 2003 4 4 100% 12 Member (ID) Pampio A. Abarintos April 2014 4 4 100% 1

Disclose the profile or qualifications of the Audit Committee members.

Fr. Roderick C. Salazar Jr. SVD , Filipino, 67, has served as an independent director of Cebu Holdings Inc. since April 29, 2005. For more than 15 years, until June 2014, he was Chairman of the Board of Trustees of St. Jude Catholic School in Manila. He is currently the Chair of the Board of Trustees of St. Scholastica’s College, Westgrove; and St. Agnes Academy in Legazpi City. He is a member of the Board of Trustees of St. Paul University in Dumaguete City and Center for Educational Measurement (CEM). He is the Regional Secretary for Asia, and the President of the Office Internationale de l’Enseignement Catholique (OIEC), while concurrently serving as the Executive Secretary of the Office of Education and Faith Formation of the Federation of Asian Bishops Conferences (FABC-OEFF). He worked in various academic and administrative positions at the University of San Carlos for 34 years (1975-2009) since his ordination to the priesthood on June 21, 1974. He was USC president for twelve years (four 3-year terms: 1987-1990; 1990-1993; 2002- 2005; 2005-2008). From 1992 to 2008, he was also President of the Catholic Educational Association of the Philippines (CEAP). Before being elected OIEC president in October 2011, he was Vice President for Asia of the same organization. Outside USC, he was member of various groups like FILIPINO, Inc. (Filipino Institute for the Promotion of Integrity and Nobility); San Carlos Community Development Foundation, Divine Word Educational Association (DWEA); Philippine Accrediting Association of Schools, Colleges, and Universities (PAASCU); Private Educational Advisory Council (PEAC); Word Broadcasting Corporation. As CEAP president, he served three terms as chair of the Coordinating Council of Private Educational Associations (COCPEA). He has also been Chair of the Board of Trustees of St. Scholastica’s Academy in Tabunok, Talisay City, Cebu; Divine Word University (now Liceo del Verbo Divino) in Tacloban City; and Divine Word College of Tagbilaran (now Holy Name University). He was a member of the Board of Trustees of St. Paul University in Tuguegarao, and, at different times, of the St Paul Colleges in Pasig, Iloilo, and Surigao, as well as of the Visayas Cluster of the Daughters of Charity (DC) schools. He was a Board Director of People’s Television Network (PTV4), and of First Metro Asset Management, Inc. (FAMI). He has two Master’s Degree, one in Philosophy from Divine Word Seminary, Tagaytay City in 1976, and another in Mass Communications from the University of Leicester, England (October 1982 to September 1983), degree conferred on July 1984. He has two honorary Doctorates in the Humanities, the first given in March 2010 by St Paul University, Tuguegarao City; the second, awarded by Aquinas University, Legazpi City on April 8, 2011. On August 14, 2010, in the Archdiocese of Cebu, he received the Papal Award Croce Pro Ecclesia et Pontifice for his years of service to Catholic Education. In June 2014 his congregation appointed him Director of SVD Mission Philippines.

Pampio A. Abarintos , Filipino, 71, has served as an independent director of Cebu Holdings Inc. (CHI) since April 8, 2014. He retired as Executive Justice of the Court of Appeals, Visayas Station. Appointed CA Justice in 2004 and served until December 2013. Awarded with the Presidential Award for speedy case disposal by the 41

Court of Appeals, Manila in 2005. He retired with ZERO backlog of cases. After practicing as a Lawyer for 17 years, he was appointed as Regional Trial Court Judge in Negros Oriental and in Cebu in 1987 up to his promotion to the Court of Appeals in 2004. He was the Executive Judge of the RTC, Cebu from 2001 up to 2004. He was an awardee for the Judicial Excellence as the Most Outstanding Judge of the Philippines in 2003. He was former Officer of the Integrated Bar of the Philippines, Cebu City Chapter and President of the Rotary Club of Cebu University District. Presently he is a member of the Regional Advisory Council of the Philippines National Police (PNP) Region 7; Member of the Management Committee (MANCOM) and Chairman of the Committee on Discipline and Arbitrator of Alta Vista Golf and Country Club, Cebu City. He graduated as cum laude in Bachelor of Arts from the University of San Jose Recoletos, Cebu City in 1965. In 1969, he also graduated Bachelor of Laws from the University of the Visayas, Cebu City. He has a Masters Degree in Business Administration (MBA) from the Southwestern University, Cebu City in 1981.

Enrique L. Benedicto , Filipino, 73, has served as an independent director of CHI since April 2003. He is currently the honorary consul of Belgium. His other regular directorships include: Chairman of Mabuhay Filcement, Inc., Enrison Land, Inc., Enrison Holdings, Inc., Berbenwood Industries, Inc., Benedict Ventures, Inc., Vice-Chairman of Bernardo Benedicto Foundation, Inc. He also serves as an Independent Director of SPC Power Corp., a publicly listed company. He received the following awards: ‘Officer in the Order of Leopold II’ by his Majesty Baudowin King of the Belgians, ‘Officer in the Order of Leopold’ by His Majesty King Albert II of the Kingdom of Belgium, the highest award that can be given to civilians, Belgian or non-Belgian, Garbo sa Sugbu Awardee given by the Province of Cebu for his outstanding achievement in International Relations as Honorary Consul of Belgium, Most Outstanding Cebuano Citizen per Cebu City Council Resolution dated February 18, 1991, Great Cebuano Award conferred by the Province of Cebu, Sugbuanong Kumintaristang Nagpakabana (SUKNA), Kapisanan ng mga Brodkaster ng Pilipinas (KBP) and Mandaue Chamber of Commerce and Industry, Inc., Entrepreneur of the Year Award conferred by the Cebu Chamber of Commerce & Industry in celebration of its Centennial +10 Anniversary, ‘Most Outstanding Alumnus’ award given by the University of San Jose-Recoletos. He earned his degree in Commerce at the University of San Jose Recoletos in 1964.

Describe the Audit Committee’s responsibility relative to the external auditor.

Per the Audit Committee’s charter, the responsibilities relative to the external auditor are as follows:

1. Recommendation on the appointment of the external auditors and the fixing of their remuneration to the full Board 2. Review the performance of the external auditors and exercise final approval on their appointment or discharge of auditors. 3. Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the organization, including non-audit services, and discussing the relationship with the auditors. 4. Review and pre-approval of the external auditor’s plans to understand the basis for their risk assessment and financial statement materiality, including the scope and frequency of the audits. In this regard, the Committee shall discuss with the external auditors, before such audits commences; the nature and scope of the audit, and ensure cooperation when more than one professional service firm is needed. 5. Monitoring of the coordination efforts between the external and internal auditors. 6. Review of the reports of the external auditors and regulatory agencies, where applicable, and ensure that management is taking appropriate corrective actions in a timely manner, including addressing control and compliance issues. 7. Conducting a separate meeting in executive session, with the external auditors to discuss any matter that the Committee or external auditors believe should be discussed privately, including results of the audit, year-end financial statements, and the quality of management, financial and accounting controls. 8. Review and determination of the proportion of audit versus non-audit work both in relation to their significance to the external auditor and in relation to the Corporation’s year-end financial statements, and total expenditure on consultancy, to ensure that non-audit work will not be in conflict with the audit functions of the external auditor. The amount of nonaudit work of external auditors shall be disclosed in the annual report.

For 2014: August 15, November 11, 2014

Length of No. of Date of No. of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman (ID) Enrique L. April 24, 2015 2 2 100% new Benedicto** Chairman (ED) Francis O. Monera** April 2007 2 2 100% 7 Member (NED) Bernard Vincent O. Dy August 15, 1 1 100% new 2014 Member (ED) Aniceto V. Bisnar, Jr.* Nov. 11, 2014 - - 0% new *AVBisnar replaces Mr. Monera effective January 1, 2015 **Appointment of ELBenedicto as chairman effective April 24, 2015

For 2015: March 11, April 24, September 29, 2015 Length of No. of Date of No. of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman (ID) Enrique L. April 24, 2015 2 2 100% new Benedicto** Chairman (ED) Francis O. Monera* April 2007 1 1 100% 7 Member (NED) Bernard Vincent O. Dy August 15, 2 2 100% 1 2014 Member (ED) Aniceto V. Bisnar, Jr.* Nov. 11, 2014 3 3 100% 1 *AVBisnar replaces Mr. Monera effective January 1, 2015 **Appointment of ELBenedicto as chairman effective April 24, 2015

(d) Remuneration (Personnel and Compensation) Committee

For 2014: August 15, 2014

Length of No. of Date of No. of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman (ID) Fr. Roderick C. Salazar, April 24, 2015 - - 0% new Jr.** Chairman (NED) Bernard Vincent O. Dy** August 15, 1 1 100% new 2014 Member (ED) Aniceto V. Bisnar, Jr.* Nov. 11, 2014 - - 0% new *AVBisnar replaces Mr. Monera effective January 1, 2015 **Appointment of Fr. Salazar as chairman effective April 24, 2015 Note: length of service reckoned since 2007

For 2015: September 29, 2015

Length of No. of Date of No. of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman (ID) Fr. Roderick C. Salazar, April 24, 2015 1 1 100% new Jr.** Chairman (NED) Bernard Vincent O. Dy** August 15, 1 1 100% 1 2014 Member (ED) Aniceto V. Bisnar, Jr.* Nov. 11, 2014 1 1 100% 1 *AVBisnar replaces Mr. Monera effective January 1, 2015 **Appointment of Fr. Salazar as chairman effective April 24, 2015 Note: length of service reckoned since 2007 43

(e) Others (Specify) – SUSTAINABILTY COMMITTEE for SC Meeting held in Sept. 23, 2014 Provide the same information on all other committees constituted by the Board of Directors:

Length of No. of Date of No. of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman (ID) Pampio A. Abarintos** April 24, 2015 1 1 100% new Member (ED) Francis O. Monera* April 2009 1 1 100% 5 Chairman (ED) Aniceto V. Bisnar, Jr.* Jan. 1, 2015 - - 0% new Member (NED) Emilio J. Tumbocon April 2009 1 1 100% 5 *AVBisnar replaces Mr. Monera effective January 1, 2015 **Appointment of Pampio A. Abarintos as chairman effective April 24, 2015

(f) Others (Specify) – RISK COMMITTEE for RC Meeting held in May 13 & May 22, 2015, Aug. 5, 2015, Oct. 12, 2015 and November 10, 2015

Length of No. of Date of No. of Service in Office Name Meetings Meetings % Appointment the Held Attended Committee Chairman (ID) Enrique L. Benedicto April 2015 5 5 100% new Member (ID) Fr. Roderick C. Salazar, Jr. April 2015 5 3 60% new SVD Member (ID) Pampio A. Abarintos April 2015 5 5 100% new

3) Changes in Committee Members as of April 24, 2015

Indicate any changes in committee membership that occurred during the year and the reason for the changes:

Name of Committee Name Reason Executive Francis O. Monera Retirement Audit None None Nomination Francis O. Monera Retirement Remuneration Francis O. Monera Retirement Others (Sustainability) Francis O. Monera Retirement Others (Risk) None None

4) Work Done and Issues Addressed

Describe the work done by each committee and the significant issues addressed during the year.

Name of Committee Work Done Issues Addressed Executive Exercises the powers and attributes Resolutions pertaining to the of the Board of Directors during the strategic and tactical objectives of intervening period between the the Company. Board’s meetings, and shall report all resolutions adopted by it to the Board of Directors at the first meeting that the latter may subsequently hold.

Audit Oversight of internal audit, external Approval of quarterly and annual audit, financial reporting and risk audited financial statements, annual management (as Audit & Risk external and internal audit plan, 44

Committee); through regular quarterly internal audit reports, quarterly meetings held in 2014 quarterly risk management updates, improvements to Committee charter particularly in the areas of Risk Management oversight function, quarterly and annual report of the Committee to the Board of Directors.

Nomination Review and evaluation of Considered and approved the final qualifications of all persons list of nominees for directors for the nominated to positions in the year 2014-2015 Company which require appointment by the Board.

Remuneration Oversight and remuneration of Considered and approved the 1.) senior management and other key 2013 performance evaluation and personnel. Ensures the conduct of promotion of associates, managers formal and transparent procedure and associates; 2.) 2013 for fixing remuneration packages of performance bonus for the corporate officers and directors. associates, managers and executives; 3.) the salary adjustments for the qualified managers and executives for 2014.

Others (Sustainability) Provides assistance to the Board of Through the support of the Directors in assistance to the Board Sustainability Technical Working of Directors in its responsibility to Group (STWG) headed by the the Company’s stakeholders that Corporate Sustainability Officer relate to the Company’s growth in (CSO), publishes the Company’s the areas of economic performance, Annual Sustainability Report environmental stewardship, (integrated with Annual Report). The corporate social responsibility. committee reviewed the company’s sustainability framework and discussed targets, plans, programs and initiatives. The agenda included materiality assessment and stakeholder engagement process. Alignment of these initiatives to the company’s existing quality, environment, health and safety plans and programs, and to the Balanced Scorecard targets was reviewed. Part of the discussion included plans for the integrated annual and sustainability reporting process based on the GRI standard.

Others (Risk) Provides assistance to the Board of 1.) Ensured that an overall set of risk Directors in the performance of its management policies and procedures oversight functions of the exist for the Corporation; 2.) Corporation’s risk management Reviewed the adequacy of the activities through continuous input, Corporation’s risk management evaluation and feedback on the framework / process.; 3.) Reviewed effectiveness of the Corporation’s the results of the annual risk assessment done by the Chief Risk risk management process. Officer (CRO), including the risks

identified, their impact or potential impact on the Corporation’s business 45

and the corresponding measures to address such risks; 4.) Evaluated the risk assessment report submitted by the CRO on a periodic basis, which may include existing and emerging risks faced by the Corporation and/or its subsidiaries as well as the risk mitigation strategies and action plans adopted by Management; 5.) Monitored the risk management activities of the Corporation and evaluate the effectiveness of the risk mitigation strategies and action plans, with the assistance of the internal auditors; 6.) Met periodically with Management to discuss the Committee’s observations and evaluation on its risk management activities.

5) Committee Program

Provide a list of programs that each committee plans to undertake to address relevant issues in the improvement or enforcement of effective governance for the coming year.

Name of Committee Planned Programs Issues to be Addressed Executive Oversee activities of the Acts in accordance with the Organization. authority granted by the Board or in case of absence of the Board on Accounts to stakeholders for specific matters within the organization’s performance competence of the Board of Directors as prescribed in the Establishes broad policies and Company’s By-Laws, except with objectives respect to any action for which shareholders’ approval is also Ensures availabilities of resources for required. the company

Audit External Quality Assurance Review Closure of all audit (QAR) for the Internal Audit recommendations within specified Department time period

Accomplishment of Internal Audit Annual Plan Nomination Installs and maintains a process to ensure that all directors to be nominated for election at the annual stockholders’ meeting have all the Install and maintain a process to qualifications and none of the ensure that all directors to be disqualifications for directors as nominated for election at the next stated in the By-Laws, the Revised Annual General Stockholders’ Manual of Corporate Governance of Meeting have the qualifications and the Company and the pertinent rules none of the disqualifications stated of the Securities and Exchange above. Commission, to review and evaluate the qualifications of all persons nominated to positions in the Company which require 46

appointment by the Board. Remuneration Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of corporate officers and directors, and provide oversight over remuneration of senior management and other key personnel ensuring that compensation is consistent with the Corporation’s culture, strategy and control environment;

Designate the amount of remuneration, which shall be in a sufficient level to attract and retain directors and officers who are needed to run the Corporation successfully;

Develop a form on Full Business Interest Disclosure as part of the pre-employment requirements for all incoming officers, which among others compel all officers to declare under the penalty of perjury all their existing business interests or shareholdings that may directly or Provides oversight over indirectly conflict in their remuneration of senior management performance of duties once hired; and other key personnel. Disallow any director to decide his or her own remuneration;

Review the existing Human Resources Development or Personnel Handbook, to strengthen provisions on conflict of interest, salaries and benefits policies, promotion and career advancement directives and compliance of personnel concerned with all statutory requirements that must be periodically met in their respective posts;

Or in the absence of such Personnel Handbook, cause the development of such, covering the same parameters of governance stated

above.

Others (specify)- Provides assistance to the Board of With the support of the Sustainability Directors in its responsibility to the Sustainability Technical Working Company’s Group (STWG) headed by the Stakeholders that relate to the Corporate Sustainability Officer Company’s growth in the areas of 1) (CSO), the Sustainability Committee economic performance, 2) provides assistance to the Board of environmental stewardship and 3) Directors in its responsibility to the corporate social responsibility. Company’s stakeholders in matters concerning direct /indirect impacts to the local economy; resource use maximization, environmental impacts and social responsibility. Others – Risk Provides assistance to the Board of 1.) Ensured that an overall set of risk Committee Directors in the performance of its management policies and procedures oversight functions of the exist for the Corporation; 2.) Corporation’s risk management Reviewed the adequacy of the activities through continuous input, Corporation’s risk management evaluation and feedback on the framework / process.; 3.) Reviewed effectiveness of the Corporation’s the results of the annual risk assessment done by the Chief Risk risk management process. Officer (CRO), including the risks

identified, their impact or potential impact on the Corporation’s business and the corresponding measures to address such risks; 4.) Evaluated the risk assessment report submitted by the CRO on a periodic basis, which may include existing and emerging risks faced by the Corporation and/or its subsidiaries as well as the risk mitigation strategies and action plans adopted by Management; 5.) Monitored the risk management activities of the Corporation and evaluate the effectiveness of the risk mitigation strategies and action plans, with the assistance of the internal auditors; 6.) Met periodically with Management to discuss the Committee’s observations and evaluation on its risk management activities.

F. RISK MANAGEMENT SYSTEM

1) Disclose the following:

(a) Overall risk management philosophy of the company;

Risk management is an essential component in the strategic management of Cebu Holdings, Inc. Launched in 2009, the Enterprise-wide Risk Management Program of the Company continues to put in place robust risk management capabilities to protect and enhance shareholder value amidst a rapidly changing business environment.

The ERM framework continues to achieve its objective of systematic approach in risk management throughout the Company. The framework embodies the policy, scope, process methodology, and 48

organizational structure of the risk management program. We utilize an all-encompassing risk framework covering oversight, management and internal control. This framework systematically guides us through monitoring, identifying, analyzing and treating risks in a timely and proactive manner at both corporate and business-group levels

The ERM program adopts a top-driven, bottom-focused approach and has the full support of the Organization’s management all the way up to the Board of Directors. It is a process by which Management takes on a very active and key role in managing risk. The identification, management and monitoring of its key risks are made part of the normal operations of the Company not just at the corporate level, but also at the individual business-group levels. This allows CHI to manage its key risks to an acceptable level both holistically and individually and to address issues in a timely manner.

Periodic reviews are done at all levels of the Organization, including the ERM Team lead by the Audit and Risk Committee and the Chief Risk Officer, to ensure that risks are effectively managed and the Company is addressing relevant key risks. Results of monitoring of the ERM process are also presented to the Board of Directors by the Audit and Risk Committee, at least quarterly or more frequently if necessary, to update them of the status of the Company’s key risks to serve as inputs in executive decision-making.

(b) A statement that the directors have reviewed the effectiveness of the risk management system and commenting on the adequacy thereof;

In 2014: The Audit & Risk Committee Chairman submits and presents an annual Committee Report to the full Board. The Annual Report of the Audit & Risk Committee to the Board of Directors indicates its compliance with its Charter in terms of its oversight responsibilities and its activities for the period. For Risk Management, the report includes the following: 1. Oversight Responsibility- The Audit & Risk Committee’s roles and responsibilities are defined in the Audit & Risk Committee Charter approved by the Board of Directors. The Audit & Risk Committee provides assistance to the Board of Directors in fulfilling its oversight responsibility to the shareholders relating to the adequacy of risk management. 2. Compliance to Charter- In compliance with its Charter, the Committee confirms that it has reviewed and discussed the adequacy of the Company’s Enterprise-wide Risk Management (ERM) Process, including the major risk exposures, the related risk mitigation efforts and initiatives, and the status of risk mitigation plans. The review was undertaken in the context that management is primarily responsible for the risk management process.

In 2015 The company has a separate board-level Risk Committee. An annual report shall be issued by the Committee at the end of the year to signify its oversight function over the risk management process of the Company, and its review of the effectiveness and adequacy of the risk management system.

The Risk Committee Charter provides 1. Oversight Responsibility – the Risk Committee’s roles and responsibilities are defined in its Charter. It provides oversight over the company’s risk management activities. 2. Compliance to Charter – in compliance with its Charter, the Committee shall confirm that it has reviewed and discussed the effectiveness and adequacy of the Company’s risk management processes.

(c) Period covered by the review; The Annual Report of the Audit & Risk Committee covered the accounting period January 2014 to December 2014. The quarterly report of the Audit & Risk Committee covered the four quarters of the year 2014.

(d) How often the risk management system is reviewed and the directors’ criteria for assessing its effectiveness; and

Key risks and corresponding indicators are assessed & reviewed quarterly by the Chief Risk Officer and the ERM Committee. Results are presented to the Risk Committee on a quarterly basis as an agenda in the Committee’s quarterly meetings.

Risk Register and Key Risk Indicators are updated annually to ensure that risk analysis and assessment are relevant and up-to-date. Periodic risk refresher sessions with executive management and the business units are also conducted, as deemed necessary, to allow for the identification of new and emerging risks brought about by changes in the external and internal operating environment of the Company.

(e) Where no review was conducted during the year, an explanation why not. Not applicable, periodic review conducted as discussed above.

2) Risk Policy

(a) Company

Give a general description of the company’s risk management policy , setting out and assessing the risk/s covered by the system ( ranked according to priority ), along with the objective behind the policy for each kind of risk:

Risk Exposure Risk Management Policy Objective Identified Strategic, Enterprise-wide framework Systematic approach of Operational, Financial adopted by the Company. The identifying, managing, monitoring and Environmental Risks risk management policy defines and reporting of its key risks. the Company’s commitment to effectively and periodically identify, assess, monitor and manage risks. This incorporates a system of risk oversight, risk management and internal control that designed to manage risks.

The board, through its Risk Committee provides oversight responsibilities for risk management. Management is responsible for ensuring that risks are identified, analysed, evaluated and mitigated and for developing and maintaining a control environment that manages significant risks and implements the risk management processes throughout the organization

(b) Group

Give a general description of the Group’s risk management policy, setting out and assessing the risk/s covered by the system (ranked according to priority), along with the objective behind the policy for each kind of risk:

Indicate the principal risk of the exercise of controlling shareholders’ voting power.

Risk to Minority Shareholders There may be inter-company transactions, but there are measures in place to avoid abuse. The Company strictly monitors the related party transactions of the Company.

3) Control System Set Up

(a) Company

Briefly describe the control systems set up to assess, manage and control the main issue/s faced by the company:

Risk Management and Control Risk Exposure Risk Assessment (Monitoring and Measurement Process) (Structures, Procedures, Actions Taken) Identified Strategic, Conduct of periodic risk refresher Monthly monitoring of key risks and Operational, sessions with the executive indicators by operating units. Financial and management and with each of the Quarterly updating to Chief Risk Environmental Risks business units will be conducted. Officer. Quarterly reporting to Audit Annual update of risk register and & Risk Committee of the Board. indicators. The Risk Committee reports to the Regular monthly monitoring by Board on its oversight the various business units. responsibilities with regards to Risk Quarterly updating and Management on a quarterly and monitoring by the ERM team and annual basis. quarterly reporting of status of key risks to Risk Committee of the Board.

(b) Group

Briefly describe the control systems set up to assess, manage and control the main issue/s faced by the company:

Identify the committee or any other body of corporate governance in charge of laying down and supervising these control mechanisms, and give details of its functions:

Committee/Unit Control Mechanism Details of its Functions Risk Committee The Board of Directors, Ensure that an overall set of through its Risk Committee, risk management policies and continues its oversight procedures exist for the functions of the Corporation’s Corporation. risk management activities through continuous input, Review the adequacy of the evaluation and feedback on Corporation’s risk management framework / process. the effectiveness of the

Corporation’s risk Review the results of the management process. annual risk assessment done by the Chief Risk Officer (CRO), including the risks identified, 52

their impact or potential impact on the Corporation’s business and the corresponding measures to address such risks.

Meet periodically with Management to discuss the Committee’s observations and evaluation on its risk management activities. Chief Risk Officer & ERM Team The Chief Risk Officer (CRO) Oversees the conduct of a reports functionally to the systematic and proactive risk Audit & Risk Committee, and management process. Ensures administratively to the the periodic update, review President and the and analysis of key risks, Management Committee. The indicators and mitigation CRO heads the cross-functional strategies as a regular part of ERM Committee and is operations. primarily responsible for enabling the efficient and Quarterly reporting to the effective governance of the Audit & Risk Committee to company’s key risks and determine whether these controls. significant risks are appropriately and adequately addressed by the responsible Business Units.

ERM Committee The ERM Committee ensures Integrated into their day to that the Company’s processes day operations, members of are functioning within normal the cross-functional ERM operating standards and the Committee monitor the business is operating within Company’s adherence to the acceptable risk metrics or risk management policies and limits. The Internal Audit procedures. Department, apart from

functionally reporting to the Audit & Risk Committee, also provides administrative support to the Chief Risk Officer in the discharge of his ERM-related functions.

G. INTERNAL AUDIT AND CONTROL

1) Internal Control System

Disclose the following information pertaining to the internal control system of the company:

(a) Explain how the internal control system is defined for the company; The Company adapts the COSO definition of internal control.

Internal Controls is defined as “ A process, effected by an entity’s board of directors, management and other personnel designed to provide reasonable assurance of the achievement of objectives in the following categories: 1.) Effectiveness and efficiency of operations, 2.) Reliability of financial reporting, 3.) Compliance with applicable laws and regulations.

In an effective internal control system, the following components support the achievement of an entity’s mission, strategies and related business objectives: control environment, risk assessment, control activities, information and communication and monitoring.

(b) A statement that the directors have reviewed the effectiveness of the internal control system and whether they consider them effective and adequate;

The Audit & Risk Committee Chairman submits and presents an annual Committee Report to the full Board. The Annual Report of the Audit & Risk Committee to the Board of Directors indicates its compliance with its Charter in terms of its oversight responsibilities and its activities for the period. For Internal Audit, the report includes the following: 1. Oversight Responsibility- The Audit & Risk Committee’s roles and responsibilities are defined in the Audit & Risk Committee Charter approved by the Board of Directors. The Audit & Risk Committee provides assistance to the Board of Directors in fulfilling its oversight responsibility to the shareholders relating to the following: • the effectiveness of the systems of internal controls and financial reporting controls, • the performance of the internal audit activity, • the appointment, remuneration, qualifications, independence and performance of the independent auditors and the integrity of the audit process as a whole,

2. Compliance to Charter- In compliance with its Charter, the Committee confirms that • It has discussed and approved the overall scope and the respective audit plans of the Company’s Internal Auditors and have also discussed the results of their audits and their assessment of the Company’s internal controls and the overall quality of the financial reporting process; • It has reviewed the reports of the Internal Auditors, ensuring that management is taking appropriate corrective actions in a timely manner, including addressing internal control and compliance with legal and regulatory issues

The Committee also submits quarterly a Report to the Chairman of the Board to apprise the latter on the results of the Committee’s activities for the period. The Committee Chairman presents the report to full Board during its meeting en banc. Based on items presented to the Committee for the period, the Committee indicates, in its report, that it has been reasonably assured of the following: 1.) internal control is in place and effective, 2.) Control activities are undertaken to monitor status of audit observations and to ensure that management is taking appropriate corrective actions in a timely manner.

(d) How often internal controls are reviewed and the directors’ criteria for assessing the effectiveness of the internal control system; and

Results of the audits conducted in accordance with the approved Audit Plan are presented to the Audit & Risk Committee on a quarterly basis through its scheduled quarterly meetings.

Quarterly reviews of reports of internal auditors ensures the Committee, in its oversight function, that management is taking appropriate corrective actions in a timely manner including addressing internal control issues.

These periodic reports to the Committee highlight the status of projects in accordance with the audit plan approved by the Committee, as well as any unplanned projects. Such reports include a summary of key findings and recommendations, including status of implementation.

The Annual report of the Internal Audit Department to the Committee discusses the Department’s activities and performance relative to the audit plans and strategies approved by the Committee.

(e) Where no review was conducted during the year, an explanation why not. Not applicable, periodic review conducted as discussed above.

2) Internal Audit

(a) Role, Scope and Internal Audit Function

Give a general description of the role, scope of internal audit work and other details of the internal audit function.

Indicate whether Name of Chief In-house or Internal Reporting Role Scope Outsource Auditor/Auditing process Internal Audit Firm Function Provides Assurance and In-house function Jennifer Sia/ Audit To provide for independent and consulting Manager independence, objective assurance activities: 1.) to the Internal and consultancy determine Audit services to the adequacy and Department Company with the effectiveness of risk (IAD) reports to objective of adding management, functionally to value and assisting internal control and the Audit the organization in governance Committee of accomplishing its processes (as the Board of objectives through designed and Directors and effective control, represented by administratively risk management management); 2.) to the President. and governance to ensure the processes. achievement of management Assists the Board in objectives. the discharge of its duties and responsibilities as provided for in the Securities and Exchange 55

Commission’s 2009 Revised Code of Corporate Governance.

(b) Do the appointment and/or removal of the Internal Auditor or the accounting /auditing firm or corporation to which the internal audit function is outsourced require the approval of the audit committee? Yes, the Audit & Risk Committee’s roles and responsibilities include the following: • Per Committee Charter: Setting up the Internal Audit Department, including the appointment of the Chief Audit Executive (or the Head of the Audit Department). The Committee shall establish and identify the reporting line of the Chief Audit Executive so that the reporting levels allow the internal audit activity to fulfill its responsibilities. The Chief Audit Executive shall report directly to the Committee functionally. The Committee, having appointed the Chief Audit Executive, shall also concur in his/her replacement, re-assignment or dismissal. [Section F, item 3.2] • Per Revised Manual of Corporate Governance: Recommend and review the appointment of external auditors and their remuneration [Section 2.2,item b.3]

(c) Discuss the internal auditor’s reporting relationship with the audit committee. Does the internal auditor have direct and unfettered access to the board of directors and the audit committee and to all records, properties and personnel?

The Internal Audit Department reports functionally the Audit & Risk Committee of the Board. The Department has direct access to the Committee and to the records, property and personnel of the Organization.

The Audit & Risk Committee’s roles and responsibilities include the following: • Per Committee Charter: 1.) Ensuring that the internal auditors have free and full access to all the Corporations’ records, properties, and personnel relevant to and required by its function and that the internal audit activity shall be free from interference in determining the scope, performing its work and communicating its results. [Section F, item 3.3]; 2.) Conducting separate meetings with the Chief Audit Executive to discuss any matter that the Committee or the internal auditors may deem necessary to be discussed privately. [ Section F, item 3.9] • Per Revised Manual of Corporate Governance: Ensure that internal auditors have free and full access to all the Corporation’s records, properties and personnel relevant to and required by its function and that the internal audit activity shall be free from interference in determining its scope, performing its work and communicating its results [Section 2.2,item b.4]

(d) Resignation, Re-assignment and Reasons

Disclose any resignation/s or re-assignment of the internal audit staff (including those employed by the third- party auditing firm) and the reason/s for them.

Name of Audit Staff Reason None to report

(e) Progress against Plans, Issues, Findings and Examination Trends

State the internal audit’s progress against plans, significant issues, significant findings and examination trends.

Progress Against Plans Within schedule Issues 6 Monitoring &closure conducted within timeframe Findings 7 Monitoring &closure conducted within timeframe Examination Trends Within established process cycle time

6 “Issues” are compliance matters that arise from adopting different interpretations. 7 “Findings” are those with concrete basis under the company’s policies and rules. 56

[The relationship among progress, plans, issues and findings should be viewed as an internal control review cycle which involves the following step-by-step activities: 1) Preparation of an audit plan inclusive of a timeline and milestones; 2) Conduct of examination based on the plan; 3) Evaluation of the progress in the implementation of the plan; 4) Documentation of issues and findings as a result of the examination; 5) Determination of the pervasive issues and findings (“examination trends”) based on single year result and/or year-to-year results; 6) Conduct of the foregoing procedures on a regular basis.]

(f) Audit Control Policies and Procedures

Disclose all internal audit controls, policies and procedures that have been established by the company and the result of an assessment as to whether the established controls, policies and procedures have been implemented under the column “Implementation.”

Policies & Procedures Implementation Internal Quality Assurance Improvement Program, periodic self-assessment and review; Internal Audit Procedure periodic departmental performance review against commitments. Internal Quality Assurance Improvement Internal Audit Charter Program, periodic self-assessment and review. Internal Quality Assurance Improvement Program, periodic self-assessment and review; ISPPIA External Quality Assurance Review in 2007 and 2014 (5-yr cycle), passed for both cycles.

(g) Mechanism and Safeguards

State the mechanism established by the company to safeguard the independence of the auditors, financial analysts, investment banks and rating agencies (example, restrictions on trading in the company’s shares and imposition of internal approval procedures for these transactions, limitation on the non-audit services that an external auditor may provide to the company):

Auditors Financial Analysts Investment Banks Rating Agencies (Internal and External) • We schedule one-on- Underwriting: Rating one meetings and • Securities issued to • Conduct of due site visits to our the public are diligence review various registered with the To provide for developments SEC independence, the separately for each • Conduct of due Internal Audit brokerage house diligence review by Department (IAD) • As a policy, we do not investment bank reports to functionally provide profit • Underwriting to the Audit guidance and allow Commitment subject Committee of the analysts to generate to bank approval Board of Directors and their own forecasts administratively to the and estimates based • Pricing of securities President. on our disclosures, are subject to auction analyst briefings, and or book building operating stats that process we make readily • Securities issued are available held by a trustee in • We provide the same behalf of the 57

information to all investing public research analysts, financial institutions, and fund managers • We schedule one-on- Underwriting: Rating one meetings and • Securities issued to • Conduct of due site visits to our the public are diligence review The Audit Committee various registered with the of the Board developments SEC recommends the separately for each • Conduct of due appointment of the brokerage house diligence review by External Auditors and • As a policy, we do not investment bank the fixing of their provide profit • Underwriting remuneration to the guidance and allow Commitment subject full Board. analysts to generate to bank approval

their own forecasts The Audit Committee is and estimates based empowered to • Pricing of securities on our disclosures, independently review are subject to auction analyst briefings, and the integrity of the or book building operating stats that Company’s financial process we make readily reporting and oversee • Securities issued are available the independence of held by a trustee in • We provide the same the external auditors. behalf of the information to all investing public research analysts, financial institutions, and fund managers

(h) State the officers (preferably the Chairman and the CEO) who will have to attest to the company’s full compliance with the SEC Code of Corporate Governance. Such confirmation must state that all directors, officers and employees of the company have been given proper instruction on their respective duties as mandated by the Code and that internal mechanisms are in place to ensure that compliance.

Aniceto V. Bisnar, Jr., President and Enrique B. Manuel, Jr, CFO & Compliance Officer

ROLE OF STAKEHOLDERS

1) Disclose the company’s policy and activities relative to the following:

Policy Activities Quality Policy Customer Safety For us, the CUSTOMER is FIRST and Initiatives to promote and ensure QUALITY IS EVERYONE’S JOB. customer safety have been We commit to: implemented from the process of • Deliver our products and land acquisition, planning, design, services to continually construction and property satisfy ever changing management. Considerations in expectations of our the implementation of customer Customers' welfare customers while meeting all safety include the natural physical applicable regulatory and environment, compliance with statutory requirements; relevant government regulations • Provide our employees with and the operational control competence building measures put in place by the programs to Company. In the past years, there improve productivity; and was no record of incidents of • Continually improve the non-compliance with regulations 58

Quality Management and voluntary codes concerning System’s effectiveness health and safety impacts of our through a regular review products and services. process. Customer Privacy Customer data is treated with utmost confidentiality. The Company’s Code of Ethics covers guidelines on the use of Company resources, classified or confidential information. Controls on the disclosure of classified information are in place. Procedures on access to information are documented in the management system. In the past years, there have been no Accreditation of Contractors, Supplier/contractor selection Suppliers, Consultants. This is Accreditation Process practice covered as a general procedure the QEHS Manual The Company continues to ensure Implementation of the that its operations, from land Environmental Management acquisition, design development, System Plans and Programs construction and property • Tracking of energy /water management are in conformity with usage (intensity: per unit area) the requirements of international • Continued Implementation of standards for environmental the existing solid waste management. This system provides the means for the Company to management program in manage its resources, wastes and partnership with neighboring emissions, and contribute to communities; track utilization biodiversity restoration. rate of recyclables collected from the company’s Environmental Health and Safety assets/properties. Policy • In providing real estate products and Proper handling and disposal services, we commit to sustainable of hazardous waste development and the safety and • Monitor / reduce GHG Environmentally friendly value- health of our employees by: emissions. • chain Mitigating land, air and • Implement health and safety water pollution by programs; zero lost time due addressing the significant to accidents target. environmental impacts of our operations; • Mitigating the occupational risks by addressing the significant hazards in the workplace and operations; • Complying with relevant environmental and occupational health and safety laws and regulations; • Continuously reviewing our operational processes for resource conservation, waste reduction and the mitigation of occupational hazards and risks; and

• Continually improving efficiencies through new, safe and innovative technologies and processes.

Climate Change Policy We believe that climate change is the greatest threat to mankind and business sustainability, and its effect is global, local and personal. • We recognize our important role in mitigating climate change through our business practices. As a response we will: • Become more energy- efficient in our operations; • Begin to account and reduce the carbon footprint in our operations and our products and services through our own efforts and by influencing our contractors; and • Continue to ensure the health and viability of our controlled protected areas, which serve as carbon sinks. The company’s policy on Community The company’s Corporate Social interaction or Corporate Social Responsibility initiatives form part Responsibility is covered in the of the stakeholder engagement (on company’s Sustainability Policy. socio-environmental and socio- Focusing on stakeholder economic spheres) activities of the engagement: company. The following are CHI is committed to continually improve specific areas of priority: its 1) corporate sustainability • Community Development performance Programs / Community throughout its value delivery chain and 2) core business strategy to maintain a Alliance (Cebu Business long-term Park and Neighboring strategic position while driving society Barangays Altruistic towards a sustainable path. CHI will therefore: Alliance) Community interaction 1)Anticipate the future scenarios • Employee Volunteer through its understanding of the Program ‘megaforces’ that will shape • External Partnerships the future and continuously develop strategies to maintain a strategic position in the market;

areas that are most relevant to the business, and those that will bring significant benefits.

Orientation of Code of Ethics to employees The Code of Ethical Behavior outlines the general expectations and set standards for behaviour and ethical conduct. It provides guidelines for all directors, officers and CHI employees, and that of its subsidiaries and affiliates. It aims to promote and foster observance of principles founded on ethics, sustainability, social responsibility and good governance. CHI and its employees commit to adhere to the Company’s core values in conducting personal and business affairs. The Code of Ethical Anti-corruption programs and Code of Ethics Behavior is intended to procedures? be read in conjunction with the Company’s Human Resources Manual of Personnel Policies which includes the Code of Conduct governing acceptable office conduct for the orderly operation of the Company as well as for the protection of the rights, safety and benefit of the total employee force. Company employees are required to annually disclose any business and family-related transactions to the Company by accomplishing the Conflict of Interest Disclosure Statement submitted to the Human Resources and Admin Division that monitors compliance of this policy. Safeguarding creditors' rights Loan Covenant Loan Agreement

2) Does the company have a separate corporate responsibility (CR) report/section or sustainability report/section? Yes, the company’s major external communication channels: the annual and sustainability report (ASR) and the website both have sustainability sections that provide information on the social capitals and environmental sustainability initiatives of the company that strike a balance with its financial reporting. These sections detail the company’s social and environmental development programs in partnership with the neighboring communities, LGUs, government and non-government institutions and business /socio-civic organizations.

3) Performance-enhancing mechanisms for employee participation.

CHI's very important internal stakeholders are its employees. CHI owes them more than their due share of attention and care. The company invests in their continuing learning and growth. Strong and open lines of communication are maintained to relay the Company’s concern for their welfare and safety, and deepen their understanding of the Company’s value creating proposition.

(a) What are the company’s policy for its employees’ safety, health, and welfare?

The Company supports and respects the protection of human rights and ensures that the institution does not tolerate human rights abuses. It complies with all existing labor laws including retrenchment, redundancy, and resignation. In terms of employee feedback mechanism, there are various channels to obtain feedback across the organization Open lines of communication are available, including but not limited to, monthly departmental meetings, townhall events and a semi-annual internal customer survey.

(b) Show data relating to health, safety and welfare of its employees.

The Company’s top priority is the safety of its people. During the recent Super Typhoon Haiyan and earthquake, the company ensured that all its employees were prepared and safe. This preparedness reflects on the zero injury, zero casualties, and zero death toll in health and safety reports. In 2013, the company conducted regular earthquake drills and identified open spaces for evacuation of all company-owned properties .

Other programs include: • Hepatitis B policy was established • Health and Safety committee carried out the Work Environment Measurement (WEM) inspections • Emergency Preparedness drills conducted in coordination with the Bureau of Fire Protection. • CHI continued to register zero lost time from work accidents and injuries since 2008, including those projects involving contractors and subcontractors for the year.

State the company’s training and development programs for its employees. Show the data.

The company enrolls its employees to certain training programs on a competency gap basis. The percentages beside the programs enumerated above indicate the number of employees who attended each program.

The training data in 2013 includes external training which caused an increase in training hours. Various technical and functional competency-based trainings were attended by senior personnel and supervisors. There were a total of 28 external trainings and 22 internal orientations on customer service, communication, technical and team building programs.

In 2013 Average training hour per employee registered was at 26.18 hours per employee, an increase of 11.3 hours or 76% from that of 2012. This covers both in-house and external competency-based or technical trainings.

Breakdown of training hours per category as follows: 1. Probationary/regular employees 32.53 hours 2. Supervisors 27.22 hours 3. Associates 23.03 hours

(a) State the company’s reward/compensation policy that accounts for the performance of the company beyond short-term financial measures.

The Company’s HR Policies related to reward and compensation as follows:

On Entry Level Wages - all newly hired employees are paid above minimum wage, about 40% to 50% higher than the minimum wage.

On Full-time employee benefits – on top of the statutory benefits, permanent employees receive medical and clothing allowances, emergency leave, group life and health insurance coverage, and retirement program.

On Retirement plan – the company has funded non-contributory retirement plan for its regular employees.

4) What are the company’s procedures for handling complaints by employees concerning illegal (including corruption) and unethical behaviour? Explain how employees are protected from retaliation.

The Company has adopted a whistle-blowing procedure which allows employees to raise concerns or complaints of suspected or observed improper business conduct with management, for management to investigate and

validate issues. This is reflected in its Code of Ethics on reporting improper conduct.

DISCLOSURE AND TRANSPARENCY

1) Ownership Structure

(a) Holding 5% shareholding or more

Shareholder Number of Shares Percent Beneficial Owner Ayala Land, Inc. 956,241,737 49.80% Ayala Land, Inc.

PCD Nominee Corp. 125,868,000 6.56% Ayala Land, Inc. (Filipino) PCD Nominee Corp. 331,912,700 17.29% Aberdeen Asset (Non-Filipino) Management Asia Limited First Metro Investment 186,695,363 9.72% First Metro Investment Corporation Corporation PCD Nominee Corp. 34,505,001 1.80% First Metro Investment (Filipino) Corporation PCD Nominee Corp. 196,895,200 10.25% Aberdeen International (Non-Filipino) Fund Managers Ltd. PCD Nominee Corp. 97,278,800 5.07% Government Service (Filipino) Insurance System

Number of Name of Senior % of Number of Direct shares Indirect shares / Through Capital Management (name of record owner) Stock None of the members of the Company’s directors and management owns 2.0% or more of the outstanding capital stock of the Company. TOTAL

2) Does the Annual Report disclose the following: Pls. refer to the Integrated Annual and Sustainability Report/SEC 17-A 2014/Code of Ethics

Key risks Yes Corporate objectives Yes Financial performance indicators Yes Non-financial performance indicators Yes Yes , To the extent feasible, it is the policy of the Company to declare periodically a portion of its unrestricted retained earnings as dividends to shareholders, either in the form of stock or cash, or both. The payment of dividends in the future will depend on the Company’s earnings, Dividend policy cash flow, investment program, and other factors. Management aims to declare dividends at a minimum of 40% of prior year’s net income subject to board approval every dividend declaration. CPVDC, CLCI and CBPTMI, follow the same dividend policy with that of the parent company. Details of whistle-blowing policy Yes Biographical details (at least age, qualifications, date of first appointment, relevant experience, and any other directorships of listed companies) of Yes directors/commissioners 63

Training and/or continuing education programme attended by each Yes director/commissioner

Number of board of directors/commissioners meetings held during the year Yes

Attendance details of each director/commissioner in respect of meetings Yes held Details of remuneration of the CEO and each member of the board of Yes directors/commissioners

Should the Annual Report not disclose any of the above, please indicate the reason for the non- disclosure.

(a) External Auditor’s fee: Pls. refer to the SEC 17-A 2014 page #49 (Additional disclosures data).

Name of auditor Audit Fee Non-audit Fee SGV & Co. P574.5k* - 2014 None *Exclusive of value-added tax and out of pocket expenses.

(b) Medium of Communication

List down the mode/s of communication that the company is using for disseminating information.

The Company uses various multi-media channels and tools to establish and sustain linkages with its stakeholders and the rest of the public, e.g. media relations and publicity and the use of social media. Regular group discussions, face-to-face or virtual meetings and other modes of engagements are done via business groups, divisions or departments with each of their specific stakeholder groups (e.g. focused group discussions, regular/periodic meetings. circulars, annual /periodic reports, etc).

Specific to Investor Relations / Communication, the Company, through its Finance Division and Corporate Communications team, facilitates investors’/financial analysts briefing. The same teams in coordination with the Company’s Information Systems Department handles updating of the company’s website (with a dedicated IR section) used as a tool to communicate to existing and potential investors and markets. In addition, the company has expanded its traditional annual report to cover non-financial aspect of the business through its integrated and annual sustainability report released within the month of April, yearly. This serves as a rich source of information, not just for investors but the rest of the company’s stakeholders.

(d) Company Website: www.cebuholdings.com

Does the company have a website disclosing up-to-date information about the following?

Business operations Yes

Financial statements/reports (current and prior years) Yes

Materials provided in briefings to analysts and media Yes

Shareholding structure Yes

Group corporate structure Yes

Downloadable annual report Yes

Notice of AGM and/or EGM Yes

Company's constitution (company's by-laws, memorandum and articles of association) Yes

Should any of the foregoing information be not disclosed, please indicate the reason thereto.

(e) Disclosure of RPT: Pls. refer to the SEC 17-A 2014 (Audited FS-Notes to FS - Note #16 page no. 43).

RPT Relationship Nature Value Solinea Associates The transactions are P224.7m made at terms & prices agreed upon by the parties. Ayala Land, Inc. Parent The transactions are P9.3m Company/Shareholder made at terms & prices agreed upon by the parties. Avida Land Corp. Subsidiaries of ALI The transactions are P77.1m made at terms & prices agreed upon by the parties. Alveo Land Corp. Subsidiaries of ALI The transactions are P29.7m made at terms & prices agreed upon by the parties. Makati Development Subsidiaries of ALI The transactions are P3.0m Corp. made at terms & prices agreed upon by the parties. Ayala Land Sales, Inc. Subsidiaries of ALI The transactions are P.6m made at terms & prices agreed upon by the parties. Amicassa Process Subsidiaries of ALI The transactions are P.1m Solutions, Inc. made at terms & prices agreed upon by the parties. Leisure and Allied Subsidiaries of ALI The transactions are P.084m Industries, Phils. made at terms & prices agreed upon by the parties. Accendo Commercial Subsidiaries of ALI The transactions are P.055m Corp. made at terms & prices agreed upon by the parties. Others The transactions are P.5m made at terms & prices agreed upon by the parties. Total P345.2m

When RPTs are involved, what processes are in place to address them in the manner that will safeguard the interest of the company and in particular of its minority shareholders and other stakeholders?

The Group in its regular conduct of business has entered into transactions with related parties. Parties are considered to be related if, among others, one party has the ability, directly or indirectly, to control the other party in making financial and operating decisions, the parties are subject to common control or the party is an associate or a joint venture. Except as otherwise indicated, the outstanding accounts with related parties shall be settled in cash. The transactions are made at terms and prices agreed upon by the parties. There have been no guarantees provided or received for any related party receivables or payables and are generally unsecured. Furthermore, these accounts are non-interest bearing except for intercompany loans. The Group does not provide any allowance relating to receivable from related parties. This assessment is undertaken each financial year through examining the financial position of the related parties and the markets in 65

which the related parties operate.

H. RIGHTS OF STOCKHOLDERS

1) Right to participate effectively in and vote in Annual/Special Stockholders’ Meetings

(a) Quorum

Give details on the quorum required to convene the Annual/Special Stockholders’ Meeting as set forth in its By-laws.

2/3 or 50% plus 1% of the Quorum Required Outstanding Stock

(b) System Used to Approve Corporate Acts

Explain the system used to approve corporate acts.

The Chairman requested that any stockholder who wished to speak should identify himself after being acknowledged by the Chair and to limit his remarks to the item in the Agenda under consideration. Thereafter, the Secretary discussed the voting procedures. Ballots had been given to the stockholders to enable them to vote in writing per item in the Agenda. The ballots set forth the proposed resolutions for consideration by the stockholders and each proposed resolution would be shown on the screen as the same was taken up at the meeting. The Secretary also informed the stockholders that they generally act by the affirmative vote of the stockholders owning at least a majority of the outstanding voting stock present at the meeting, but the approval of the amendment to the Third Article of the Articles of Incorporation would require the affirmative vote of stockholders representing two-thirds (2/3) of the outstanding capital stock. The election of directors shall be by plurality of votes and every stockholder shall be entitled to cumulate his votes. Each outstanding share of stock entitles the registered stockholder to one vote. The Secretary also announced that the stockholders may cast their votes anytime during the meeting. All votes received would be tabulated by the Office of the Corporate Secretary and the results of the tabulation shall be validated by the external auditor, SyCip Gorres Velayo & Company (SGV). As the stockholders take up an item in the Agenda, the Secretary would report on the votes that have been tabulated and the final tally of votes would be reflected in the minutes of the meeting.

System Used Voting by poll Description Straight and Cumulative Voting

List any Stockholders’ Rights concerning Annual/Special Stockholders’ Meeting that differ from those laid down in the Corporation Code.

Stockholders’ Rights under Stockholders’ Rights not in The Corporation Code The Corporation Code Voting right None Pre-emptive right None Right of Inspection None Right to Information None Right to Dividends None Appraisal Right None

Dividends:

Declaration Date Record Date Payment Date October 9, 2013 November 5, 2013 November 29, 2013 November 11, 2014 November 25, 2014 December 9, 2014 December 01, 2015 December 16, 2015 December 23, 2015

(d) Stockholders’ Participation

1. State, if any, the measures adopted to promote stockholder participation in the Annual/Special Stockholders’ Meeting, including the procedure on how stockholders and other parties interested may communicate directly with the Chairman of the Board, individual directors or board committees. Include in the discussion the steps the Board has taken to solicit and understand the views of the stockholders as well as procedures for putting forward proposals at stockholders’ meetings.

Measures Adopted Communication Procedure Definitive Info Statement report is sent Written through the Definitive Info 15 business days prior the schedule of Statement the meeting to the stockholders During the annual stockholders’ meeting, the Chairman of the Board encourages the stockholders to ask questions for each agenda or matters for Verbal during the stockholders’ meeting approval and solicits questions related to the agenda during the question and answer portion.

2. State the company policy of asking shareholders to actively participate in corporate decisions regarding: a. Amendments to the company's constitution b. Authorization of additional shares c. Transfer of all or substantially all assets, which in effect results in the sale of the company

The Company calls for a regular or special stockholders’ meeting to propose to the stockholders the actions listed above. The details of the proposed actions are presented in the Definitive Information Statement which is made available to the stockholders. During the meeting, the Company’s board and/or management present the proposed actions and encourage stockholders to ask questions. The affirmative vote of stockholders representing at least 2/3 of the issued and outstanding capital stock of the Company is required for the approval of the above items.

3. Does the company observe a minimum of 21 business days for giving out of notices to the AGM where items to be resolved by shareholders are taken up?

Yes. Article 2, section 4 of the Amended By-laws states the requirement to be 15 business days prior the meeting schedule.

a. Date of sending out notices: March 31, 2015

b. Date of the Annual/Special Stockholders’ Meeting: April 24, 2015

4. State, if any, questions and answers during the Annual/Special Stockholders’ Meeting.

Minutes of the Company’s Annual Stockholder Meeting dated April 24, 2015, indicates the information below:

Stockholders’ Questions and Comments: a. There being no questions raised, the Chairman requested for a motion for approval. Thereafter, on motion of Ms. Roxanne Gulmayo, seconded by Ms. Emmylou Torrepalma, the stockholders approved the minutes and adopted the following Resolution No. S-01-15, which was shown on the screen. Resolution No. S-01-15 As tabulated by the Office of the Corporate Secretary and validated by SGV, the votes on the motion for the approval of the minutes and the adoption of Resolution No. S-01-15 are as follows: For Against Abstain Number of Voted Shares 1,635,663,981 0 0 % of Voting Shares Present 99.99% b. The Chairman thanked Mr. Bisnar for his report. Thereafter, the Chairman opened the floor for comments and questions from the stockholders on the annual report or the 2014 financial statements.

There being no questions and comments from the stockholders, Ms. Stella Maris Principe moved for the noting of the annual report and the approval of the 2014 audited financial statements, and the adoption of the following Resolution No. S-02-15, which was shown on the screen, and Ms. Adelina Calunod seconded the motion:

Resolution No. S-02-15 As tabulated by the Office of the Corporate Secretary and validated by SGV, the votes on the motion for the noting of the annual report and the approval of the 2014 audited financial statements, and the adoption of Resolution No. S-02-15 are as follows: Votes For Against Abstain Number of Shares Voted 1,635,663,981 0 0 % of Shares Voted 99.99% c. The Chairman asked the stockholders if they have any questions or comments on the matter sought to be approved. There being no questions raised, the Chairman requested for a motion for approval. On motion of Ms. Mikhail Jo, seconded by Ms. Grace Escoto, the stockholders approved and ratified all acts and resolutions of the Board of Directors, Executive Committee, and other Board Committees and the acts of Management taken and adopted since 8 April 2014 until 24 April 2015 to implement the resolutions of the Board or its Committees or taken in the general conduct of business and for the adoption of Resolution No. S-03-15. The text of the following Resolution No. S-03-15 was shown on the screen. Resolution No. S-03-15 As tabulated by the Office of the Corporate Secretary and validated by SGV, the votes on the motion are as follows: For Against Abstain Number of Shares Voted 1,635,330,981 0 0 % of Shares Voted 99.98% d. The Chairman asked if there are questions to the proposal to amend the Second Article of the Articles of Incorporation. There being no question on the item, the Chairman requested for a motion for approval. On motion of Ms. Grace Carino, seconded by Ms. Lani Capuno, the stockholders ratified and approved the amendment to the Second Article of the Articles of Incorporation to include two (2) incidental

purposes to allow the Corporation to engage in all forms of business and mercantile acts and transactions and adopted Resolution No. S-04-15. The text of the following Resolution No. S-04-15 was shown on the screen. Resolution No. S-04-15 As tabulated by the Office of the Corporate Secretary and validated by SGV, the votes on the amendment to the Second Article of the Articles of Incorporation and the adoption of Resolution No. S-04-15 are as follows: For Against Abstain Number of Shares Voted 1,635,330,981 0 0 % of Outstanding Voting 85.17% Shares e. The Chairman asked the stockholders if they have any questions or comments on the matter sought to be approved. There being no questions raised, the Chairman requested for a motion for approval. On motion of Mr. Gerard Thomas Padriga, seconded by Ms. Emmylou Torrepalma, the stockholders elected SGV as external auditor of the Corporation for the current fiscal year and approved SGV’s audit fee and adopted the following Resolution No. S-06-15, which was shown on the screen. Resolution No. S-06-15 As tabulated by the Office of the Corporate Secretary and validated by SGV, the votes on the election of SGV as external auditor of the Corporation, the approval of its audit fee, and the adoption of Resolution No. S-06-15 are as follows: For Against Abstain Number of Shares Voted 1,635,663,981 0 0 % of Shares Voted 99.99% No Stockholder voted against or abstained from voting on the matter. f. Other Matters The Chairman opened the floor for questions or comments from the stockholders on matters which are relevant and of general concern to the stockholders.

Mr. Ronald Po, a stockholder of the Corporation, welcomed Mr. Dy and Mr. Bisnar to the Corporation and thanked Mr. Antonino T. Aquino and Mr. Francis O. Monera for their invaluable service and contribution to the Corporation. He also congratulated Mr. Dy, the Board of Directors, the Management and staff for a job well done, achieving good revenues as well as the Bell Awards. Mr. Po stated that despite the Corporation’s achieving good results in its Annual Report, the share price of the Corporation has dropped from Php5.73 to around Php5.20, the market capitalization is below Php10 Billion and accordingly, the total shareholder return for the year is negative. He asked for an explanation for these and asked if there are steps to be taken or have been taken to address the share price. Mr. Dy replied that to be able to realize value for the Corporation, we need to build business, increase the revenues and the share price will accordingly move up again. The stock market operates outside what the Corporation does on a daily basis and there is a confluence of factors of different stockholders and activities that occur in the market. He continued that the Corporation cannot explain why the share price dropped. What is important is that the Corporation will continue to build the business, continue to declare dividends and it is hoped that share price will correspondingly follow. Mr. Dy emphasized that it is hard to predict what goes on in the market and the Corporation does not manipulate the share price in the market.

Mr. Po asked if there are steps done to address the liquidity of the share. He said one of the reasons why the share price has not gone with the general trend is that there are few shares being traded in the market. Mr. Dy replied that depending on the projects and the kind of capital expenditures that will be required by the Corporation, the Corporation can actually look into potentially issuing more shares, if necessary, depending on the need of the Corporation and this would increase liquidity. 69

Mr. Po asked if the Corporation has a vision or target like the Corporation’s parent company Ayala Land, Inc. Mr. Bisnar replied that the Corporation is continuing its investment program and will double leasable spaces in terms of retail and office developments in the next 5 years. It can be expected that the Corporation’s revenue base and net income will continue to grow. The Corporation will continue land banking activities, capital will be allocated for several development projects, and the Corporation will continue to look for opportunities around Cebu, expand market segments, and increase product lines.

5. Result of Annual/Special Stockholders’ Meeting’s Resolutions.

Minutes of the Company’s Annual Stockholder Meeting dated April 24, 2015, indicates the information below:

Voting Results-85.19% or 1,635,682,732 shares over 1,920,073,623 total outstanding shares 6. Resolution: 7. Approving: 8. Dissenting: 9. Abstaining: 11. 85.19% 10. Approval of (owners of 12. No 13. No contracts, 1,635,682,73 stockholder stockholder projects, 2 shares over voted against abstained investments, 1,920,073,62 the from the and treasury 3 total resolution votation. matters outstanding shares)

14. Date of publishing of the result of the votes taken during the most recent AGM for all resolutions: April 24, 2015.

(e) Modifications

State, if any, the modifications made in the Annual/Special Stockholders’ Meeting regulations during the most recent year and the reason for such modification:

Modifications Reason for Modification None

(f) Stockholders’ Attendance

(i) Details of Attendance in the Annual/Special Stockholders’ Meeting Held:

Names of Board members / Voting Officers present Procedure % of SH Total % of Type of Date of (by poll, % of SH Attending SH Meeting Meeting show of in Proxy hands, in Person attendance etc.) Board of Directors: April 24, By Poll Bernard Vincent O. Dy 2015 had been Aniceto V. Bisnar, Jr. given to 85.19% Emilio J. Tumbocon the (owners of Antonio S. Abacan, Jr. stockhol 40 70.74% 1,635,682,7 Maria Theresa M. Javier ders to Stockhold proxies 32 shares Fr. Roderick C. Salazar, enable ers appointin Annual over Jr., SVD them to attending g the 1,920,073,6 Pampio A. Abarintos vote in in person Chairman 23 total Enrique L. Benedicto writing outstanding per item shares) Key Officers: in the Ma. Clavel G. Tongco Agenda. Nerissa N. Josef-Mediano 70

Enrique B. Manuel, Jr. Ma. Cecilia Crispina T. Urbina June Vee M. Navarro Nimfa Ambrosia P. Paras

Special N.A

(ii) Does the company appoint an independent party (inspectors) to count and/or validate the votes at the ASM/SSMs?

Representatives of SGV & Co. for the current year and for the most recently completed fiscal year are expected to be present at the Annual Stockholders’ Meeting. They are expected to be available to respond to appropriate questions and to count the on-line voting/manual ballots if the need arises.

(iii) Do the company’s common shares carry one vote for one share? If not, disclose and give reasons for any divergence to this standard. Where the company has more than one class of shares, describe the voting rights attached to each class of shares.

Yes, the company’s common shares carry one vote for one share.

(g) Proxy Voting Policies

State the policies followed by the company regarding proxy voting in the Annual/Special Stockholders’ Meeting. The answers below use the article III, section 6 of the amended by-laws as reference.

Company’s Policies

Any stockholder entitled vote may be represented by a proxy Execution and acceptance of proxies at any regular or special stockholders’ meeting. Proxies shall be in writing and signed and in accordance with Notary the existing laws, rules, and regulations of the SEC. Duly accomplished proxies must be submitted to the office of Submission of Proxy the corporate secretary not later than 7 business days prior to the date of the stockholders’ meeting. Several Proxies None to report Validation of proxies shall be conducted by the Proxy Validity of Proxy Validation Committee at least 5 days prior to the date of the stockholders’ meeting. Proxies executed abroad None to report

Invalidated Proxy None to report Validation of proxies shall be conducted by the Proxy Validation of Proxy Validation Committee at least 5 days prior to the date of the stockholders’ meeting. Violation of Proxy None to report

(h) Sending of Notices

State the company’s policies and procedure on the sending of notices of Annual/Special Stockholders’ Meeting. The answers below use the article III, section 3 of the amended by-laws as reference.

Policies Procedure

Regular or Special meeting of stockholders shall Regular or Special meeting of stockholders shall be called by written or printed notice addressed be called by written or printed notice and shall to the address registered in the books of the be sent by personal delivery, telex, fax, corporation at least 15 business days in advance electronic mail, or by mail, with postage prepaid. of the date for which the meeting is called. The Corporation may also provide information or documents to a stockholder by e-mail or by posting the information or documents on the website of the Corporation or another electronic network; provided that, a separate notice is given to the stockholder of such posting. In case the Corporation provides information or documents by electronic posting, the information or documents shall be deemed delivered or given upon later of (i) the posting of the information or documents or (ii) the giving of a separate notice to the stockholders of such specific posting.

(i) Definitive Information Statements and Management Report

Number of Stockholders entitled to receive Definitive Information Statements and 4,242 Management Report and Other Materials Date of Actual Distribution of Definitive Information Statement and Management Report March 31, 2015 and Other Materials held by market participants/certain beneficial owners Date of Actual Distribution of Definitive Information Statement and Management Report March 31, 2015 and Other Materials held by stockholders State whether CD format or hard copies were CDs & Hardcopies distributed If yes, indicate whether requesting stockholders Yes were provided hard copies

(j) Does the Notice of Annual/Special Stockholders’ Meeting include the following:

Each resolution to be taken up deals with only one item. YES

Profiles of directors (at least age, qualification, date of first appointment, experience, and directorships in other listed companies) YES nominated for election/re-election.

The auditors to be appointed or re-appointed. YES YES, To the extent feasible, it is the policy of the Company to declare periodically a portion of its unrestricted retained earnings as dividends to An explanation of the dividend policy, if any dividend is to be declared. shareholders, either in the form of stock or cash, or both. The payment of dividends in the future will depend on the Company’s earnings, cash flow,

investment program, and other factors. Management aims to declare dividends at a minimum of 40% of prior year’s net income subject to board approval every dividend declaration. CPVDC, CLCI and CBPTMI, follow the same dividend policy with that of the parent company.

YES, P0.12 per share & The amount payable for final dividends. Payment date – Dec. 09, 2014

Documents required for proxy vote. YES

Should any of the foregoing information be not disclosed, please indicate the reason thereto.

2) Treatment of Minority Stockholders - Pls. refer to the Revised Corporate Governance Manual (Right to Information page #31).

(a) State the company’s policies with respect to the treatment of minority stockholders. Yes

Policies Implementation The minority stockholders shall have the right to The Corporation’s website contains all propose the holding of a meeting, and the right to information relating to matters for which the propose items in the agenda of the meeting, management is accountable for. provided the items are for legitimate business purposes. In accordance with existing law and jurisprudence, minority shareholders shall have access to any and all information relating to matters for which the management is accountable for and to those relating to matters for which the management should include such information and, if not included, then the minority shareholders can propose to include such matters in the agenda of stockholders’ meeting provided always that this right of access is conditioned upon the requesting shareholder’s having a legitimate purpose for such access.

(b) Do minority stockholders have a right to nominate candidates for board of directors? No.

I. INVESTORS RELATIONS PROGRAM

1) Discuss the company’s external and internal communications policies and how frequently they are reviewed. Disclose who reviews and approves major company announcements. Identify the committee with this responsibility, if it has been assigned to a committee.

Corporate Communication: External Communication

Objectives The Company’s (internal and external) communication process aims to strengthen the corporate brand, manage corporate reputation and improve public perception of the company and its products by communicating the right information to the right stakeholders through appropriate multi media channels and stakeholder engagement 73

initiative Policy.

Policy / Reviews The External communication process is documented as a procedure in the company’s manual of QEHS / Integrated Management System (IMS) certified with ISO standards on Quality, Environment and Health and Safety. This process is subject to reviews either through the Corporate Communications Division (on specific initiatives) and via internal and certification / surveillance audits. The communication policy is expounded within the external communication procedure. The Corporate Communication Division takes on the role of providing information and feedback to the company’s external publics. • External communication addressed to the company shall be referred to the CorpCom Division for proper handling, while announcements, disclosures, corporate and project milestones are communicated via local and national media-generated news stories (for local/national print and broadcast media) and through the company websites and through engagements with specific stakeholder groups. • External communication related to the company’s QEHS management system that has impact on the company’s image , reputation, business and customer and are addressed to a division/department or anyone in the organization, except those directly addressed to the President, are coursed through the Corporate Communication Division for proper handling. Other forms of communication will be handled at the discretion of the addressee department. • Customer complaints from various sources: departments, divisions, areas of operations, etc. are entered as cases in a program called Total Customer Satisfaction Management System (TCS- MS) and are responded to or addressed through the company’s various customer relations desks from the Commercial Business Group for retail and office leasing operations and from Real Estate Business Group • Corporate information, projects and other updates can be obtained from the company’s website www.cebuholdings.com . A centralized customer contact info is provided for customer inquiry/ feedback: [email protected]

2) Describe the company’s investor relations program including its communications strategy to promote effective communication with its stockholders, other stakeholders and the public in general. Disclose the contact details (e.g. telephone, fax and email) of the officer responsible for investor relations.

Details (1) Objectives The company’s investor communication program aims to provide information and feedback to existing and potential investors about the company’s business activities, projects and programs. (2) Principles As a publicly-listed company, CHI adopts the principles of transparency and accountability. The company has a system to communicate externally its governance structure, business processes, its human resources, its targets and the results of the company’s financial and non-financial performance. To meet the challenges of corporate transparency and accountability, the company ensures that it continually carries out its business by considering the stake of the different parties with which it partners with. This gives its stakeholders the assurance and confidence that the company is practicing the following: • Adequate and prompt disclosure to regulatory bodies and compliance to legal and regulatory requirements, being an important component of our management system. • Adherence to governance framework by every member of the organization • Ensuring competitive advantage and sustainability

In reporting the company’s performance, CHI adopts the following principles:

• Balance : The company’s Annual and Sustainability Reports (ASR) present both positive and negative performance trends with accompanying assessment and analysis of performance.

• Comparability : Consolidated financial data within a three to five- year period are presented in the ASR. For clarity and easy reference, data are presented in graphs, matrices and diagrams.

• Accuracy and Reliability: To ensure reliability of information presented in the report, the Company uses internal and external audit for the verification of data related to the Quality Environment Health and Safety Management System. Verification of other performance data is done by members of the Sustainability Technical Working Group. Financial performance data are obtained from the audited financial statements done by an independent auditor, Sycip Gorres Velayo & Co.

• Timeliness: Release of the report is scheduled in time for the Company’s annual stockholders’ meeting within the month of April.

• Clarity: The Company continues to improve the manner of presenting the data reflected in the report through changes in design and structure. The use of charts, graphs, matrices and lists provide the readers a simpler and more straightforward presentation of data as quick reference. The report is uploaded in the Company’s website in a different format to serve the requirements of other stakeholders who prefer to use the internet as a tool to obtain information.

The company’s 2013 annual and sustainability report is a pioneer in Global Reporting Initiative G4 standard reporting having applied the materiality principle and verified by GRI. The reporting process started with 1) identification of material aspects in terms of sustainability context and stakeholder inclusiveness; then 2) materiality prioritization; 3) validation for completeness; and 4) review in terms of sustainability context and stakeholder engagement. (4) Modes of Communications The company uses various multi-media channels and tools to establish and sustain linkages with its stakeholders and the rest of the public, e.g. media relations and publicity and the use of social media. Regular group discussions, face-to-face or virtual meetings and other modes of engagements are done via business groups, divisions or departments with each of their specific stakeholder groups.

Specific to Investor Relations / Communication, the company, through its Finance Division and Corporate Communications team, facilitates investors’/financial analysts briefing. The same teams in coordination with the Company’s Information Systems

Department handles updating of the company’s website (with a dedicated IR section) used as a tool to communicate to existing and potential investors and markets. (4) Investors Relations Officer As mentioned above, the company’s Finance Division, Corporate Communication and Information Systems Department jointly take on the role of investor relations / communication for CHI. This team is headed by Noel F. Alicaya, the Finance and Control Officer.

3) What are the company’s rules and procedures governing the acquisition of corporate control in the capital markets, and extraordinary transactions such as mergers, and sales of substantial portions of corporate assets?

Company’s Rules and Procedures for Mergers and Acquisitions:

1. Starts with Strategy and Planning where a potential transaction is assessed in the context of strategic goals of the Company, its subsidiaries and affiliates; 2. Once this is pre-cleared through the Investment Committee (IC), the transaction then goes to the second stage of evaluation and screening for a more detailed due diligence procedure. In this stage, a project lead, team members (from financial, technical, legal, commercial, environmental, etc.), steering committee members (preferably composed of business unit, finance and legal representatives) and external advisors are formed and engaged; 3. An inventory of risks with various risk levels / probability of occurrence and suggested risk mitigants are reported to the Steering Committee for evaluation, recommendation and discussion of risk levels, tolerance and mitigation strategies; 4. The key transaction risks and mitigation strategies identified along with the proposed offer, structure and authorized signatories are then subject to IC approval; 5. The proposal will also pass the Board of Directors for approval. 6. Once approved, the final bid or offer is prepared and the binding terms of the definitive agreements are negotiated and discussed. 7. After signing, the transaction is then disclosed to the public.

Company’s Rules and Procedures for Divestments:

1. Starts with strategy and planning on the account of the portfolio review or business unit initiative in the context of strategic goals of Company, its subsidiaries and affiliates; 2. Approval of the Investment Committee is needed in order to determine initial position of whether to hold or sell; 3. Once pre-cleared, a project lead, team members (from financial, technical, legal, commercial, environmental, etc.), steering committee members (preferably composed of business unit, finance and legal representatives) and external advisors are formed and engaged; 4. Divestment plans (with identification of potential buyers and target selling price) are prepared; 5. Investment teaser is provided to the interested buyers and they are asked to sign an Non-Disclosure Agreement (NDA); 6. After signing the NDA/exclusivity agreement, buyers can then perform its own due diligence; 7. Offers are evaluated by the team and steering committee and presented Executive Committee/Board of Directors for approval. 8. Once approved, the final bid or offer is prepared and the binding terms of the definitive agreements are negotiated and discussed; 9. After signing, the transaction is then disclosed to the public.

Name of the independent party the board of directors of the company appointed to evaluate the fairness of the transaction price.

The company engaged various accredited independent parties to issue fairness opinion reports for the Company’s mergers, acquisitions of assets and divestment transactions.

J. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Discuss any initiative undertaken or proposed to be undertaken by the company.

Initiative Beneficiary The company’s community relations initiatives are Barangay Luz residents composing the SWM team of refered to as ‘Agbayay’ – a Cebuano term that garbage collectors and segregators connotes partnerships among equals. The development programs focus on livelihood, environment, education, health, employment and emergency preparedness and response. Agbayay sa Pag-Asenso a. Collection of Recyclables : CHI continued its partnership with Barangay Luz for the collection of recyclables from Ayala Center Cebu and Cebu Business Park. The program provides livelihood for more than 20 members of the solid waste management team from Barangay Luz who are responsible for daily garbage collection and management of the composting facility. In 2013, a total of 317,288 kilos of recyclables were collected with an equivalent cash conversion of P1,705,634 Agbayay sa Pag-Asenso b. Livelihood training Series CHI continues to support the recycling program of Bgy Luz by providing training on product development, marketing and managing a small business and even branding the products. In 2013, Women’s group of Barangay Luz the product brand ‘Manu Manu’ was launched as part

of the ‘Ayala Fair Share Store’ held in Makati on two separate occasions where all community partners of Ayala subsidiary companies were invited to offer their products for sale, both onsite and online. The barangay continues to create and market products from waste. Emergency Preparedness and Response Regular drills are conducted in the company’s Key representatives from neighboring barangays: Luz, properties in coordination with the neighboring Hipodromo, Kamputhaw, Apas, Mabolo and Carreta communities, CHI’s property management arm, APMC, the LGU, BFP and other key agencies. Education Various activities focusing on the graders from Elementary Schools of Neighboring communities: Luz, neighboring communities include clean up, Hipodromo, Kamputhaw, Apas, Mabolo and Carreta renovation. improvements of classrooms and school

facilities via support to Brigada Eskwela and learning sessions via the company’s volunteer program. Environment The company is exploring mangrove planting as an Residents and fisherfolks- Sitio expanded initiative to complement the continuing Tugbongan and Sitio Bandilaan (2013-2014);Sitio livelihood rebuilding program in three (3) sitios in Bgy Alinsoob (2 nd half of 2014), all in Bgy Bagay, Bagay, Daanbantayan, North of Cebu. Daanbantayan, Cebu

K. BOARD, DIRECTOR, COMMITTEE AND CEO APPRAISAL

Disclose the process followed and criteria used in assessing the annual performance of the board and its committees, individual director, and the CEO/President.

Process Criteria Board of Directors Annual self-assessment Corp. Governance Manual Annual self-assessment Board Committees Committee Charters

Individual Directors Annual self-assessment Corp. Governance Manual Corp. Governance Manual, CEO/President Annual self-assessment Balanced Scorecard

L. INTERNAL BREACHES AND SANCTIONS

Discuss the internal policies on sanctions imposed for any violation or breach of the corporate governance manual involving directors, officers, management and employees. The answers below use the Revised CG Manual (Article Vlll – Penalties for non-compliance, page 33 as reference.

Violations Sanctions The following penalties shall be imposed after notice • the subject person shall be reprimanded and hearing, on the Corporation’s directors, officers, • Suspension from office shall be imposed. The staff, in case of violation of any of the provisions of duration shall be at the reasonable discretion of the Revised Manual of Corporate Governance: the Board, depending on the gravity of the In case of first violation violation In case of second violation • Removal from office. The commission of a third violation of this manual by any member of the Board shall be a sufficient cause for removal from For third violation directorship.