SEC 17-A 2016 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, 2016

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: 20 th Floor, Ayala Center Cebu Tower, Bohol Street, Cebu Business Park, Cebu City Postal code: 6000

8. Issuer’s telephone number: (63-32) 888-3700

9. Former name, former address , former fiscal year: Unit #701, 7/F, Cebu Holdings Center, Cardinal Rosales Avenue, Cebu Business Park, Cebu City

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

Amount of debt outstanding : P5,000,000,000.00 (Bonds/Registered)

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 9.408 billion (as of end-Dec. 2016)

No. of Shares % Market Value (P4.90/share) Ayala Land, Inc. (Parent Company) 1,283,969,101 66.87% P 6,291,448,594.00 Non-affiliate (Public) 636,104,522 33.13% 3,116,912,157.00 Total 1,920,073,623 100.00% P 9,408,360,751.00

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:

2016 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 30 Item 3. Legal Proceedings 31 Item 4. Submission of Matters to a Vote of Security Holders 32

PART II – OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Issuer’s Common Equity and Related Stockholder Matters 32 Item 6. Management’s Discussion and Analysis or Plan of Operation 34 Item 7. Financial Statements 45 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 45

PART III – CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Issuer 45 Item 10. Executive Compensation 50 Item 11. Security Ownership of Certain Beneficial Owners and Management 51 Item 12. Certain Relationships and Related Transactions 53 Item 13. Compliance with Leading Practice on Corporate Governance 55

PART IV - EXHIBITS AND SCHEDULES

Item 14. Exhibits and Reports on SEC Form 17-C (a) Exhibits 56 (b) Reports on SEC Form 17-C 56

Item 14. Additional Disclosures Data 57

SIGNATURES 60

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. Currently, its authorized capitalization stock is P3 Billion.

It is 66.87%-owned subsidiary of ALI and 33.13% of its outstanding shares are owned by the public.

The Company's operations consist of six (6) 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 39 buildings in Cebu Business Park, with 10 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.

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.

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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, 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 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 ALI, 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.

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.

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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. The latest phase of Amara opened in December of 2016.

To capitalize on the Park’s PEZA Accreditation, CHI launched its first office building in Cebu Business Park. The Ayala Center Cebu Tower 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. It serves as the new headquarters of Cebu Holdings, Inc. and all of ALI’s Special Business Units in Visayas and Mindanao.

The BPI Cebu Corporate Center is Alveo Land’s first office condominium in the Southern Philippines, in partnership with CHI. Offering professional work spaces available for ownership, it is currently 63 percent sold and is scheduled for turnover by the third quarter of 2017.

We also started construction of a new office building concept, the Tech Tower, in 2015. This IT/BPO office building offers units at smaller cuts and more affordable specifications to allow start- ups and smaller companies to locate in a premium PEZA-accredited address.

CHI subsidiary, 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 48,000 – 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 11 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 ALI. The building has redundant power and water supply, optimum telecommunications facilities, centralized sewage and a secure location within the heart of the city.

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.

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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.

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.

To provide a more vibrant and lush development for our communities, CPVDC redesigned and breathed new life into the Cebu I.T. Park landscape with the opening of the Garden Bloc in December 2015. Garden Bloc is an expansive green enclave which now features new and popular dining concepts set amid a tranquil garden setting.

As CHI sees brisk build-up within its properties, it continue to explore opportunities for expansion within Cebu.

Gatewalk Central , a 15-hectare city center project located in Subangdaku, Mandaue City was launched in June of 2016. This project, a partnership with parent company, ALI, and Aboitizland will provide a highly energized lifestyle experience with master-planned residential and commercial spaces. It will feature the city’s unique avor with a dynamic lifestyle row and innovative work spaces and facilities.

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 28 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

(2) Business of the Issuer (Operations).

(A) Description of Registrant

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(i) CHI’s operations consist of six 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 16 20 15 20 14 P Mn % P Mn % P Mn %

Commercial land sales - 0 1,087.3 29 - 0 Residential lot (Amara) 30.6 1 27.6 1 34.1 2 Residential Condo(1016, 265.9 10 222.5 6 204.0 9 Sedona Parc, Park Point, Avida Towers Cebu & Avida Riala Tower) City Sport Club shares 1.2 0 - 0 -.7 -0 Rental Income Ayala Center Cebu 1,290.3 48 1,165.4 31 995.4 43 Cebu Leisure Co., Inc. 67.6 2 65.8 2 57.7 3 AITP Retail (The Walk) 25.7 1 26.9 1 26.2 1 e-Office - 0 - 0 .3 0 eBloc Towers 449.0 16 384.9 10 302.0 13 Land Leased 16.3 1 10.7 0 - - Theater income 132.1 5 143.2 4 135.5 6 Equity in net earnings of 161.3 6 106.3 3 79.7 3 an associate Interest and other income 274.5 10 499.7 13 459.4 20 2,714 .5 100 3,740.3 100 2,293.6 100

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 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. - 5 -

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, Ayala Center Cebu Tower & The Alcoves (jointly with Ayala Land Premier), Sedona Parc, Solinea Towers & BPI Corporate Center (jointly with Alveo Corp.) and CBP Tech 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 2016, 2-Quad, MSY Holdings Corp. Center, FLB

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Corporate Center, Skyrise Beta, Loreta Tower 2, RCBC, Skyrise Alpha and Zenith Central building was completed. The Philam Life Tower, Mandaue Foam building, Buildcomm Center and Grand BPO building, 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.

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

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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.

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.

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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.

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.

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

Ayala Center Cebu Tower 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. Ayala Center Cebu Tower 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). 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

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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 Riala Towers 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.

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.

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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

2016 vs. 2015 Results of Operations

Cebu Property Ventures and Development Corporation (CPVDC) generated consolidated revenues of P= .70 billion as of end of 2016, reflecting a 45% decline versus the previous year’s P=1.26 billion primarily on account of one time sale of commercial lot at Cebu IT Park in 2015. Revenues for the period were attributed to the leasing income in eBloc Towers & the Walk and interest and other income.

Earnings before Interest and Taxes (EBIT) showed a decline from P=606.1 million in 2015 to P=119.7 million in 2016.

Stock price for CPV slightly dropped from a closing of P=6.00 per share in 2015 to P=5.99 per share in 2016. While, CPVB stock price rose from a closing of P=6.10 per share in 2015 to P=6.33 per share in 2016.

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Revenues reached P=.70 billion, 45% short of last year’s P=1.26 billion.

• eBloc Towers yielded a double-digit rental revenue growth of 17% as it amounted to P=449.0 million vis-à-vis last year’s level of P=384.8 million. This was largely due to the high lease occupancy of eBloc Tower 3. As of December 2016, average lease occupancy for eBloc 1 was at 99.3%, eBloc 2 at 99.7%, eBloc 3 at 99.8% and eBloc 4 at 3.5%.

• The Walk registered a total revenue of P=25.7 million, 4% lower versus the P=26.8 million of last year mainly on account of lower lease occupancy at 90.8%.

• CITP Land Lease contributed P=16.3 million in revenues. It registered a year on year growth of 52 percent relative to the preceding year’s level of P=10.7 million.

• Interest and other income totaled P=203.4 million, slightly lower compared to the previous year’s P= 205.9 million.

Cost and Expenses reached P=460.0 million, 23% lower compared to the previous year’s P=597.4 million primarily brought about by costs related to the sale of commercial lot in 2015. Cost and expenses for the period comprised primarily of 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 stood at P=213.6 million, 57% lower than the previous year’s P=497.2 million on account of lower revenues.

2016 Net Income is 33% higher than last year’s P=160.7 million NIAT if we factored out the one-time sale of commercial lot in 2015.

Financial Condition

The Company’s Balance Sheet remains strong with total assets amounting to P=5.5 billion as of December 31, 2016, P=24.5 million of which is cash. It has a current ratio of 0.30: 1 compared to 0.54: 1 in December 2015. Total liabilities as of the period stood at P=3.6 billion, P=2.6 billion of which is current. Debt-to-equity ratio stood at 1.90: 1 compared to the December 2015 level of 2.05: 1. Bank Debt to equity ratio registered at 0.62: 1 compared to the December 2015 level of 0.76: 1.

Key Performance Indicators

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

Indicators 2016 2015 Current Ratio 1 0.30: 1 0.54: 1 Total Debt to Equity Ratio 2 1.90: 1 2.05: 1 Bank Debt to Equity Ratio 3 0:62: 1 0:76: 1 Net Debt /(Cash) to Equity Ratio 4 0.61: 1 0.71: 1 Return on Assets (ROA) 5 4.02% 10.66% Return on Equity (ROE) 6 11.94% 33.37%

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)

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Causes for Material Changes from Period to Period of Financial Statements

Cash and Cash Equivalents amounted to P=23.3 million, 30% decline versus the P=33.3 million in December 2015. The reduction was mainly due to payment to contractors & suppliers and settlement of accounts payables during the period.

Short-term Investments decreased by P=10.4 million.

Financial Assets at Fair Value through Profit or Loss reflected a 96% decline compared to the December 2015 level of P=28.1 million. This was brought about by the withdrawal of UITF placements for the period.

Inventories (Subdivided Land for Sale and Condominium Units for Sale) reached P=17.4 million, 94% lower than the P=278.8 million in December 2015 mainly due to the reclassification of subdivided land for sale to investment properties during the period.

Other Current Assets exceeded the December 2015 level of P=196.4 million by 12% as reached P=219.8 million on account of additional VAT input for the period.

Noncurrent Portion of Receivables stood at P=352.0 million, 14% lower vis-à-vis the December 2015’s P= 409.7 million due to collection on the sale of commercial lot to Avida Land Corp. on installment basis.

Land and Improvements totaled P=266.8 million resulting from the acquisition of land parcel adjacent to the Cebu IT Park for future development.

Property and Equipment stood at P=1.88 million, indicating a 327% improvement vis-à-vis the P=0.44 million as of December 2015 due to purchase of additional office equipment.

Investment Properties amounted to P=3.7 billion, 8% higher vis-à-vis the P=3.4 billion reported in December 2015 mainly brought about by booking of eBloc Tower 4 and reclassification of subdivided land for sale to investment properties.

Investment in an Associate and a Joint Venture posted 74% improvement vis-à-vis the December 2015 level of P=236.5 million as it reached P=412.3 million. The increase was primarily driven by equity infusion to Central Block Developers, Inc. during the period.

Deferred Tax Assets-net amounted to P=18.2 million, higher compared to the previous year’s level.

Other Noncurrent Assets amounted to P=1.2 million indicating a decline of 88% versus last year’s level of P= 10.2 million primarily due to settlement of various suspense accounts.

Accounts and Other Payables increased by 11% compared to the P=1.8 billion of December 2015 as it registered P=2.0 billion. This was primarily due to the booking of advances and intercompany loan, retention payable, interest payable and accrued operating expenses during the period.

Current Portion of Long-term Debt reached P=442.3 million growing by 310% versus the December 2015 level of P=107.9 million. The increase resulted from reclassification of long-term debt to current portion of long term debt during the period.

Income Tax Payable posted a 74% decline compared to the P=27.9 million as of December 2015 mainly due to lower taxable income.

Deposits and Other Current Liabilities registered a year on year rise of 175% (P=98.7m) versus the December 2015 level of P=56.5 million mainly brought about by advances in rental deposits made by new locators at eBloc Towers 3&4 and booking of construction bond.

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Long-term Debt-net of current portion reached P=.74 billion declining by 37% compared to the December 2015 level of P=1.16 billion. The reduction was mainly due to reclassification of long-term debt to current portion of long term debt.

Deferred Tax Liabilities-net rose by P=22.5 million versus the December 2015’s level of P=98.3 million. The increase was primarily brought about by additional deferred tax.

Deposits & Other Noncurrent Liabilities reduced by 19% (P=38.9m) compared against the P=205.3 million as of end of 2015 mainly due to reclassification of non-current to current deposits of eBloc Tower 2 locators.

Retained Earnings showed 28% or P=213.6 million increase as a result of the 2016 Net Income.

• 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.

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.

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.

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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:

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

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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. 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.

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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.

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.

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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.

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:

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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.

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.

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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.

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

- 20 - 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 P513.7 million, P484.3 million and P466.0 million, for the years 2016, 2015 and 2014, respectively. Furthermore, during the same periods, the company posted a net income of P13.0 million, P53.3 million and P41.2 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 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.

For the period ended December 31, 2016, CLCI posted a total revenue of P199.7 million – P46.0 million of which comes from Active Zone; P21.6 million from Food Choices and P132.1 million from Cinema operations.

As we continue to build up our recurring business, CLCI generated a NIAT of P62.8 million.

In 2016, Active Zone hosted various sporting events such as trail trekking talks, fun run registration booths to Cebu’s biggest running events, biking activities, and a running clinic.

The Active Zone also welcomed the opening of new stores such as Oakley, Blade, Apple Service Center, and Café Caw.

Moreover, Ayala Cinemas remain to be at the forefront of cinema culture having successfully hosted the first Cinemalaya Film Festival Screening held outside of Luzon, and continuing its partnerships with the different embassies for the Japan Film Festival “Eiga Sai”, French Film Festival and CineEuropa.

Food Choices closed the year 2016 with 100% occupancy, maintaining its position among the near-by office workers as the preference for value dining experience.

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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 2016

Market Assessment

The Region 7 economy remained bullish in 2016 with growth across major economic sectors.

The Cebu office sector posted growth with an additional 95,000 sq.m. of new office space to the BPO 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 +10.6% as per the latest DOT partial reading (Jan-Oct) with 4.3 Million arrivals.

CEBU RESIDENTIAL MARKET The market for residential condominiums is estimated at P 21.5 B, this is a +31% increase vs 2015 as more competitive activity drove higher take-up for the market.

Principal Compeitors, Estimated Size and Financial Strength The top competitors in the vertical market are estimated to have the following take up sales values as of YE 2016:

Developer Segment Take up Value 2016 Taft Property Entry 5,256.1 M Tytans Prop. Entry 2,507.7 M MEG Mid-High 1,569.7 M 8990 Dev't. Corp Affordable 1,173.2 M FLI Premier High-end 914.5 M Cebu Landmasters Entry 753.5 M

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FLI Entry 687.5 M Rockwell High-end 601.4 M VLL Entry 536.5 M Grand Land Entry 508.6 M *Source: Colliers

CEBU COMMERCIAL (BPO/IT) Office stock in Metro Cebu increased by approximately 95,000 sq.m. in 2016 from the completion of 8 Newtown Bldv Offices, Galleria BPO, PPC24, and Tower One Plaza Magellan. This is a +17% growth versus with previous year.

The Business Process Outsourcing (BPO) continues to fuel the Cebu office market and now accounts for 72% 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, continues to identify Cebu City as the seventh (7 th ) most favorable location in the world for outsourcing.

CEBU MALL LEASING

Cebu City remains a bright spot for retailers as consumer spending continues to drive the province’s economic growth. Consumer spending in the region is sustained by three major growth drivers: BPO revenues, OFW remittances, and tourist expenditures.

Looking ahead, Metro Cebu will remain a key retail hub outside of Metro Manila. The Cebuanos’ continuously increasing disposable incomes have enticed foreign brands to set up shops in the city. Swedish clothing chain H&M opened its 3,800 sqm outlet at Ayala Center Cebu in November 2015. Among the major foreign brands in Cebu include Uniqlo and Zara and their Cebu branches are among the largest in the country. Other foreign brands that have set up shops in the city include Tony Moly, Pull & Bear, Sfera, and Bershka.

Ayala Center Cebu | 2016 Performance Continuing to complement Cebu’s vibrant community, Ayala Center Cebu is now 98% 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 first NBA Store outside of Luzon Philippines in November 2016. The other major brands that opened in 2016 are: Under Armour, Melissa, Aldo and Pandora.

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. . 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.

Cebu’s Retail Stock Almost Doubled in 7 years 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.

At present, super-regional malls such as Ayala Center Cebu, SM Seaside City Cebu (SRP) and SM City Cebu, account for 60% of Cebu’s total retail space. The district centers predominantly owned by local developers comprise about a fifth of the Cebu retail market.

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The completion of SM Seaside City in 2015 expanded SM Group’s retail reach to nearly 480,000 sqm or almost half of Cebu’s current retail stock. Meanwhile, the Robinsons Galleria Cebu, which also opened last year, stretched the Gokongweis’ retail presence to more than 80,000 sqm or close to a tenth of Cebu’s retail stock. These developments reflect the major retailers’ continued confidence in Cebu as a dynamic retail market.

(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, Ayala Center Cebu Tower, BPI Corporate Center, The Alcoves, CBP Tech Tower & Cebu IT Park (eBloc Towers, Avida Towers Cebu, Avida Riala Towers, Garden Bloc & 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

(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.

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(xiv) Number of Employees;

The company has a total of eighty-one (81) 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 26 • Supervisors 30 • Non Senior Personnel – Technical 19 • 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 take a strategic approach in managing risks encountered in our business. Key risks are managed to an acceptable level—both holistically and individually—at all levels of the company.

EMBEDDED IN OUR CORPORATE CULTURE

Our Enterprise-wide Risk Management (ERM) program adopts a top-driven, bottom-focused approach. Risk awareness is embedded in our corporate culture with management taking on an active role in managing risks. Identification, management and monitoring of key risks are done in all levels of the company and are part of daily operations.

GUIDED BY A FRAMEWORK

Our ERM framework details the process of identifying risks for the company and its subsidiaries. This is further supported by a comprehensive risk identification, review, monitoring and reporting process at all levels in the company.

Our ERM framework focuses on four main risk categories: strategic, operational, financial, and environmental risks.

PROTECTED BY LINES OF DEFENSE

We have identified the company’s three main risks: Competitor Risk, Project Execution and Delivery Risk, and Changing Market Risk.

To manage these risks, we apply three lines of defense in ERM and internal controls:

1. Risk Management and Accountability at Source

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Risk Owners/Business Group Level

• Risk management embedded within critical processes

• Risk owners take active role in identifying, assessing, and treating risks in daily operations

• Processes, procedures, control instituted at business group level

2. Risk Governance

ERM Team

• Chief Risk Officer leads the ERM Team to ensure risks are effectively managed and relevant risks are addressed

• Periodic review and monitoring of key risks and indicators

• Periodic reporting of key risks and mitigation plans to Risk Committee

3. Risk Oversight

Board Committees/Audit (Internal and External)

• Risk Committee provides oversight on risk management activities, approves ERM policy, reviews status of top corporate risks and effectiveness of the ERM process • Risk Committee oversight through continuous input, evaluation and feedback, quarterly updates, and periodic reporting to the Board on status of key risks • Audit Committee provides oversight functions on financial reporting, internal control, internal audit, external audit, and compliance • Internal audit periodically reviews processes and controls and recommends areas for improvement through its assurance and consulting activities • External audit conducts periodic independent assessment of financial controls and processes in conjunction with the preparation of the financial statements

KEY RISKS

COMPETITOR RISKS

Actions of competitors or new entrants to the market may affect the company’s competitive advantage and may pose difficulties in achieving our business objective.

PROJECT EXECUTION AND DELIVERY RISK

Market-driven factors (e.g., costs and availability of labor), fortuitous events (e.g. earthquakes, typhoons) or natural environment conditions (e.g., soil type) may affect the company’s ability to deliver projects within agreed timelines, customer expectations and agreed costs. - 26 -

CHANGING MARKET RISK

Changes in the market brought about by macro-economic, social, political and consumer conditions (e.g. lifestyle demands) may affect the company’s ability to respond to opportunities in the marketplace, anticipate and respond to the demands of our consumers, and maintain or increase our revenue and profitability in the specific business environment where we operate.

A DRIVER OF KEY STRATEGIC ACTIONS

Through the ERM, the company continued to direct the following key strategic actions in 2016:

1. PROTECTING THE BALANCE SHEET THROUGH FINANCIAL RISK MANAGEMENT

We continue to take advantage of the current low but slowly increasing interest rates by maximizing its leverage and converting our 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 maturity with a steady recurring income.

2. MONITORING OF MAJOR MARKET INDICATORS

We rely on close monitoring of major market indicators for guidance in project investments. Forecasts, industry and sales reports are regularly monitored and reported to the project teams and senior management to provide them a clearer perspective of prevailing market conditions and issues on the ground for more informed decision- making.

3. CLOSE MONITORING OF ONGOING PROJECTS

The 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 each and depth in the Cebu market.

In 2016, our continued partnership with strong local developers, Taft Punta Engano Property with the Gaisano Group in Mactan, and Cebu District Property Enterprise with Ayala Land and Aboitizland in Mandaue, allow us to maintain market presence and expand our portfolio through strong synergies, advanced master- planning, stronger combined branding, and deeper market knowledge. The partnership benefits from the combined financial muscle, technical expertise and real estate experience of the companies.

5. DIVERSIFICATION OF PRODUCT LINES

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We continue to build on our expertise and extend our market reach. Since 2013, we have been diversifying our portfolio with the introduction of the Amaia brand for affordable housing, and office condominiums for sale.

6. PROACTIVE MANAGEMENT OF ENVIRONMENTAL RISKS

Our operations have a major impact on the environment and social conditions in the areas in which we operate. Together with parent company Ayala Land, we outlined our sustainability focus areas where we can affect positive change through our developments. These include: (1) site resilience, (2) eco-efficiency, (3) pedestrian-transit connectivity and (4) local economic development. Programs have been implemented in 2016 for these focus areas.

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

ASSESSING OUR RISK MATURITY

Aon PLC, the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services, designed the Aon Risk Maturity Index—an innovative tool to assess an organization’s risk management practices through a Risk Maturity Rating.

This assessment tool focuses on the 10 characteristics of risk maturity, as follows:

1. Board Understanding and Commitment to Risk Management 2. Risk Management Stewardship 3. Risk Communication 4. Risk Culture Engagement & Accountability 5. Risk Identification 6. Risk Management Strategy Development 7. Risk Information & Decision Making Processes 8. Risk Information & Human Capital Processes 9. Risk Analysis & Quantification 10. Risk Management Focus & Strategy

Using this tool to self-assess our existing risk management approach, findings showed that the company is at an Operational of Risk Maturity.

Aon’s recommendations to further develop risk management capabilities were as follows:

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• Incorporate risk management responsibilities into job descriptions and performance evaluations • Formalize risk tolerances, including metrics and reporting requirements • Identify opportunities for efficiency, consistency and collaboration among risk-based functions and processes • Incorporate risk correlation within existing risk quantification approaches • Conduct a robust assessment of emerging risks with key stakeholders (internal and external) • Confirm and enhance risk reporting frameworks at management, executive and Board levels • Implement a risk management technology solution • Expand understanding of the impact of employee life cycle and employee engagement, and • Confirm that risk management practices add value and support identification of opportunities as well as risk avoidance and mitigation.

MECHANISMS FOR ENFORCEMENT AND COMPLIANCE

We strive to achieve full compliance of all pertinent laws and regulations affecting our operations.

The identification and our compliance to specific orders and rules, such as those related to labor practices, human rights, and environmental laws, are championed by CHI’s various units and support teams based on their respective functions and areas of expertise.

Practice 2016 Performance

HR-Admin Department ensures the full implementation of all policies and procedures related to employee hiring, development, and retention No cases filed against CHI for Labor practices discrimination and non-observance In lieu of a formal employee union, an HR of labor standards and employment

Committee is organized among employee contract clauses representatives from all levels. The group acts as an alternative vehicle for employee participation in management

HR Officer orients all employees on policies, processes and procedures related to human rights provisions Human rights Compliance is extended to general None to report contractors, suppliers, and service providers

A stringent supplier accreditation process is in place to ensure all investment

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agreements and contracts do not violate human rights

Business Development Group coordinates closely with APMC and MDC to ensure compliance to pertinent environmental laws

CHI leverages on the comprehensive monitoring system of both companies to Environmental identify and record incidents of violation No reported incident of violation

Pollution Control Officers submit a quarterly Self- Monitoring Report to the Environmental Management Bureau of the Department of Environment and Natural Resources. Consolidated results are submitted to the management committee at least twice a year

Retail Business Group champions customer programs for merchants and shoppers No reported incidents of violation to Product responsibility marketing, information and labeling, The Information Systems Department and other products and services manages our existing customer regulations including customer complaints handling system privacy APMC directly handles concerns from unit owners and office building occupants

The Community Relations/Sustainability Community Department, through the employee engagement volunteer program, executes the None to report company’s community development

programs

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

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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 P4.018 billion in 2016 and P4.030 billion in 2015.

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.

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 eight (8) months, commencing on 1 January 2016 and expiring 31 August 2016.

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-2016, CPVDC, a subsidiary of Cebu Holdings, Inc., is currently involved in a legal proceeding and the outcome of this legal proceeding is not presently determinable.

In the opinion of management and its legal counsel, the eventual liability under this legal proceeding, if any, will not have a material effect on the Group’s financial position and results of operations. The information usually required under PAS 37 is not disclosed on the ground that it may prejudice the outcome of the legal proceeding.

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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 2016 and 2015:

201 6 High Low Close 1st Quarter 5.15 5.15 5.15 2nd Quarter 5.10 5.02 5.10 3rd Quarter 5.15 5.08 5.14 4th Quarter 4.90 4.90 4.90

201 5 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 5.0 0 4th Quarter 5.20 5.00 5.18

The market capitalization of the Company as of end-2016 based on the closing price of P4.90/share was approximately P9.41 billion.

The price information as of the close of the latest practicable trading date, March 23, 2017, is ₱5.01 per share.

(2) Holders

There are approximately 4,073 registered holders of common equity security of the Company as of January 31, 2017. The following are the top 20 registered holders of the common equity securities of the Company:

Stockho lder Name No. of Shares Percentage 1. Ayala Land, Inc. 1,283,969,101 66.87% 2. PCD Nominee Corp. (Non-Filipino) 359,180,628 18.71% 3. PCD Nominee Corp. (Filipino) 218,144,579 11.36% 4. Makati Supermarket Corporation 3,013,265 0.16% 5. Laguna Properties Holdings, Inc. 1,875,000 0.10% 6. Alfonso Lao 1,750,000 0.09% 7. Jose C. Lee 1,000,000 0.05% 8. Aurora E. Panlilio 937,500 0.05%

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9. Vicente Jayme Jr. 767,500 0.04% 10. Fermin P. Angcao 670,000 0.03% 11. Victor G. Sy 625,000 0.03% 12. Jose E. Suarez 618,750 0.03% 13. Maximo S. Uy 470,000 0.02% 14. Alejandra R. Malaya 385,000 0.02% 15. Alberto Mendoza &/or Jeanie C. Mendoza 376,250 0.02% 16. Salvador Mariposa 375,000 0.02% 16. Mercedes A. Tuason 375,000 0.02% 16. Vincent Y. Tan 375,000 0.02% 16. Carolyn Chua 375,000 0.02% 17. Robert Tan 358,750 0.02% 18. Edan Corporation 347,500 0.02% 19. Philippine International Life Insurance Co., Inc. 344,750 0.02% 20. Pan Malayan Management and Investment Corp. 337,500 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 November 2012 07 December 2012 21 December 2012 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 Decembe r 16, 2015 December 23, 2015 0.12 November 17, 2016 December 02, 2016 December 12, 2016

(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.

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

2016 vs. 2015 Results of Operations

The company generated consolidated revenues of P2.7 billion in 2016, registering a 27% decline compared to the P3.7 billion reported in the same period last year mainly due to the one-time sale of commercial lot sale in 2015 amounting to P759.3 million. This year’s revenues were derived from the leasing income at Ayala Center Cebu, eBloc Towers, and sale of residential lots in Amara, sale of condominium units & sale of City Sports Club shares, interest & other income and equity in net earnings of affiliates.

Earnings before Interest and Taxes (EBIT) posted a decrease from P1.117 billion in 2015 to P.784 billion in 2016.

CHI declared cash dividend of P0.12 per share to all shareholders as of record date on December 02, 2016 and paid on December 12, 2016.

Stock price decreased from a closing of P5.18 per share in 2015 to P4.90 per share in 2016.

Rental Income

Commercial Business

To bring in foot traffic to augment the sales of merchants, the marketing group initiated mall-wide events like the Pink Celebrations, Crossfit, BPI Automadness, Kasalang Pilipino, Pre-Holiday Sale, Symphony of Lights, Superfans Day and Pre-New Year Party for the 4 th quarter.

Leasing group introduced new concepts and popular brands to expand the offerings of the mall and provide what the market needs. The recently-opened stores include NBA Store, Pandora, Etta’s and Golden Cowrie.

Overall gross sales performance of the mall for the period ended December 31, 2016 was 1% higher versus same period of last year. Aside from the events above mentioned, new expansion’s sales provided a significant contribution for the overall growth.

In terms of revenue, the mall registered a favorable performance of P1.29 billion, which is 11% higher than the same period of last year while net operating income was at 6% better than 2015.

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

As we continue to build up our recurring business, CLCI generated a NIAT of P62.8 million.

In 2016, Active Zone hosted various sporting events such as trail trekking talks, fun run registration booths to Cebu’s biggest running events, biking activities, and a running clinic.

The Active Zone also welcomed the opening of new stores such as Oakley, Blade, Apple Service Center, and Café Caw.

Food Choices closed the year 2016 with 100% occupancy, maintaining its position among the near-by office workers as the preference for value dining experience.

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The Walk reported a total revenue of P25.7 million, reflecting a 4% reduction versus the P26.8 million of last year mainly on account of lower lease occupancy which was at 90.8%. eBloc Towers yielded a double-digit rental revenue growth of 17% as it reached P449.0 million vis-à-vis last year’s level of P384.8 million. This was largely due to the high lease occupancy of eBloc Tower 3. As of December 2016, average lease occupancy for eBloc 1 was at 99.3%, eBloc 2 at 99.7%, eBloc 3 at 99.8% and eBloc 4 at 3.5%.

CITP Land Lease contributed P16.3 million in revenues. It registered a year on year growth of 52% relative to the preceding year’s level of P10.7 million.

Real Estate Income

Amara registered total revenue of P30.6 million from the sale of residential lots. It posted an 11% increase versus preceding year’s level of P27.6 million mainly due to higher number of lots sold. The project is already complete and ready for turnover to buyers.

1016 Residences generated total revenues of P12.3 million from sale of a condominium unit. The project is already complete and turnover to buyers is ongoing.

Park Point Residences revenue reached P254.5 million from the current sale of several condominium units and prior year’s sale computed based on percentage of completion. It is slightly higher compared to the previous year’s level of P250.9 million. As of end 2016, percentage of completion was at 100%.

City Sports Club Shares posted P= 1.2 million in revenues.

The company also derived income from interest and other income primarily from well placed short-term investments and other income from fees and recovery charges amounting to P274.5 million. Compared to prior year’s figure of P499.7 million, it posted a decline of 45%.

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 Block Developers, Inc.) amounted to P161.3 million, exceeding the previous year’s level of P106.3 million by 52%. The improvement was mainly due to higher income from Solinea, Inc. and Amaia Southern Properties, Inc. in 2016.

Net Income amounting to P679.7 million is 18% lower compared to the same period last year of P827.2 million mainly due to lower revenues during the period.

2016 Net Income is 13% higher than the previous year’s P600.3 million if CPVDC sale of commercial lot in 2015 is factored out.

Financial Condition

CHI’s Balance Sheet remains strong with total assets amounting to P19.6 billion as of December 31, 2016, P116.8 million of which is cash. It has a current ratio of 0.59: 1 compared to 0.89: 1 in December 2015. Total liabilities as of the period stood at P12.2 billion, P5.6 billion of which is current. Debt-to-equity ratio stood at 1.87: 1 compared to the December 2015 level of 2.11: 1. Bank Debt to equity ratio registered at 0.94: 1 compared to 1.03: 1 in December 2015.

Key Performance Indicators

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

Indicators 2016 2015 Current Ratio 1 0.59: 1 0.89: 1

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Total Debt to Equity Ratio 2 1.87: 1 2.11: 1 Bank Debt to Equity Ratio 3 0.94: 1 1.03: 1 Net Debt /(Cash) to Equity Ratio 4 0.92: 1 0.99: 1 Return on Assets (ROA) 5 3.45% 4.58% Return on Equity (ROE) 6 10.79% 14.35% 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 stood at P94.9 million declining by 18% vis-à-vis the P115.5 million as of December 2015. The decrease was primarily brought about by settlement of the company’s various obligations to contractors and suppliers and capital expenditures.

Short-term Investments registered at P45.3 million, lower compared to the previous year’s level due to renewal of investment for a shorter term.

Financial Assets at Fair Value through Profit or Loss posted a 70% decrease compared to the December 2015’s level of P73.6 million as it reached P21.9 million, mainly on account of withdrawal of Unit Investment Trust Fund placements during the period.

Receivables showed a 37% (P1.1 billion) reduction versus the P3.1 billion as of December 2015. The decline was mainly due to collection of receivables from leasing & residential projects, settlement of due from affiliates and advances to contractors.

Inventories (Subdivided Land for Sale and Condominium Units for Sale) grossed P.72 billion causing a 32% downtrend versus the December 2015’s level of P1.06 billion particularly due to the reclassification of subdivided land for sale at Cebu IT Park to investment properties account and sale of residential projects (Condo units from Park Point Residences & Amara lots) for the period.

Other Current Assets reached P524.1 million, 7% lower than December 2015’s level of P561.6 million due to settlement of Prepaid Taxes and other prepaid expenses.

Property and Equipment grossed P79.6 million showing an improvement of 9% vis-à-vis the P73.3 million as of December 2015 due to purchase of additional office equipments.

Investments in Associates and a Joint Venture improved by 36% versus the December 2015’s level of P= 1.4 billion as it reached P1.8 billion. The increase was primarily brought about by equity infusion to Central Block Developers, Inc. and higher equity net earnings from Solinea, Inc. & Amaia Southern Properties, Inc. during the period.

Investment Properties registered a 7% increase versus the December 2015 level of P10.3 billion primarily due to booking of eBloc Tower 4, assets under construction and reclassification of subdivided land for sale at CITP to investment properties.

Land and Improvements was 14% (P326 million) higher versus the December 2015 of P2.2 billion. The improvement was due to payment of South Road Property (SRP) lot on installment basis for the period.

Deferred Tax Assets-net posted an increase of P18.18 million versus the December 2015 level of P.65 million driven by AiO’s NOLCO for the period.

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Other Noncurrent Assets exhibited 64% decline compared to December 2015’s level of P43.4 million mainly due to reclassification of suspense account and deferred VAT Input.

Accounts and Other Payables totaled P4.4 billion, 7% lower versus the P4.7 billion reported in December 2015 primarily due to settlement of payables to contractors & suppliers, advances & intercompany loan, dividends payable, interest payable and accrued operating expenses.

Current Portion of Long-term Debt grew by 310% (P334.4 million) versus the December 2015’s level of P107.9 million mainly due to reclassification of AiO’s long-term debt to current portion of long term debt for the period.

Income Tax Payable registered at P10.1 million, 83% lower compared to the December 2015 level of P61.2 million on account of payment of income taxes in 2015, creditable withholding tax and lower taxable income in 2016.

Deposits and Other Current Liabilities was 23% higher than the December 2015 level of P650.8 million as it stood at P799.3 million mainly due to advance rental deposits made by new mall merchants & office locators at eBloc Towers 3&4.

Long-term Debt-net of current portion stood at P5.7 billion declining by 7% compared to the December 2015 level of P6.1 billion. The reduction was mainly due to reclassification of long-term debt to current portion of long term debt.

Pension Liabilities totaled P32.2 million indicating a 43% reduction versus the December 2015 level of P56.0 million mainly due to additional contribution on retirement fund.

Deferred Tax Liabilities-net posted a growth of P67.1 million versus the December 2015’s level of P169.1 million. The increase was primarily brought about by additional provision of deferred tax for the period.

Deposits and Other Noncurrent Liabilities decreased by 38% or P362.0 million mainly on account of reclassification of non-current to current portion of financial liability during the period.

Retained Earnings showed a growth of P449.3 million as a result of the 2016 Net Income net of P230.4 million cash dividend in December 12, 2016.

• 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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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.

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)

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.

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

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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 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)

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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.

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.

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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.

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

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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.

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%.

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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.

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.

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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.

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.

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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.

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 ANNA MA. MARGARITA B. DY ANICETO V. BISNAR JR. FR. RODERICK C. SALAZAR JR.* JOSE EMMANUEL H. JALANDONI EMILIO LOLITO J. TUMBOCON PAMPIO A. ABARINTOS* JAIME E. YSMAEL ENRIQUE L. BENEDICTO* *Independent Directors

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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.

Bernard Vincent O. Dy , Filipino, 53, 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 and Chief Executive Officer of Ayala Land, Inc. (ALI) and Chairman of the Board of Directors of Cebu Property Ventures and Development Corporation (CPVDC) and Prime Orion Philippines, Inc. His other significant positions include: Chairman of Ayala Property Management Corporation, Makati Development 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., Nuevocentro, Inc., Philippine Integrated Energy Solutions, Inc., SIAL Specialty Retailers, Inc. and SIAL CVS Retailers, Inc.; 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, Inc. and Cebu District Property Enterprise, Inc. ; Director of Whiteknight Holdings, Inc., AyalaLand Medical Facilities Leasing, Inc., Alveo- Federal Land Communities, Inc., and ALI Eton Property Development Corporation; Trustee of Ayala Foundation, Inc.; and Member of Ayala Group Club, Inc. In 2015, he was inducted as member of the Advisory Council of the National Advisory Group for the Police Transformation Development of the Philippine National Police. 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 in 1989 and Masters in International Relations in 1997 both at the University of Chicago.

Aniceto V. Bisnar Jr., Filipino, 53, has been the Director and President of CHI since January 1, 2015. He is also a Director and the President of CPVDC, a publicly listed company. Concurrently, he is also a Vice President of ALI and Chief Operating Officer of the Visayas-Mindanao Group of ALI. His other significant positions are: Chairman of Adauge Commercial Corporation and Amaia Southern Properties, Inc.; Chairman and President of Taft Punta Engano Property, Inc., North Point Estate Association, Inc., Cebu Leisure Company, Inc., and Asian I-Office Properties, Inc., Cebu Business Park Association, Inc. and Asiatown I.T. Park Association, Inc.;and Vice Chairman of South Portal Properties, Inc., Avenco South Corporation and Central Block Developers, Inc. He is also the President of CBP Theatre Management Company, Inc., and Lagdigan Land Corporation; and theVice President of Solinea, Inc. He is a director 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., and Cebu District Property Enterprise, Inc.; and a member of the 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 Program at Harvard University School of Urban Design.

Jose Emmanuel H. Jalandoni , Filipino, 48, has served as director of Cebu Holdings Inc. since August 17, 2016. He is a Senior Vice President, Group Head of Commercial Malls & Offices and member of the Management Committee of ALI. He is also the President of Prime Orion Philippines, Inc., a publicly listed company. He is the Group Head of commercial businesses in ALI including malls, offices, hotels, resorts and ALI Capital. His other significant positions include: Chairman of AyalaLand Offices, AyalaLand Hotels and Resorts Corporation, Cebu Insular Hotel Co., Inc., Ten Knots Philippines, Inc., Ten Knots Development Corporation, Chirica Resorts Corporation, Bacuit Bay Development Corporation, Ecoholdings Company, Inc., Pangulasian Island Resort Corp., Paragua Eco-Resort Ventures, Inc., Sicogon Town Hotel, Inc., Lio Resort Ventures, Inc., North Liberty Resort Ventures, Inc., Asterio Technopad Incorporated, Laguna Technopark, Inc., Arvo Commercial Corporation, Central Block Developers, Inc.; Arca South Terminal Inc. and ALI Commercial Center, Inc. He is also a director of OCLP Holdings, Inc., North Triangle Depot

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Commercial Corporation, Alabang Commercial Corporation, Station Square East Commercial Corporation, Accendo Commercial Corporation, Integrated Eco-Resort, Inc., Philippine Integrated Energy Solutions, Inc., ALI Eton Property Development Corporation and Philippine FamilyMart CVS, Inc. He joined ALI in 1996 and held various positions in the company. He graduated with a degree of Bachelor of Science in Legal Management from Ateneo de Manila University in 1989. He earned his Master’s Degree in Business Administration from Asian Institute of Management in 1992. He is a Chartered Financial Analyst.

Pampio A. Abarintos , Filipino, 73, has served as an independent director of CHI since April 8, 2014. He retired as Executive Justice of the Court of Appeals, Visayas Station from 2004 to 2013. Awarded as Presiding Justice 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 Presiding Judge of the Regional Trial Court in Negros Oriental and in Cebu City from 1987 to 2013 and Executive Judge of the Regional Trial Court Cebu Province from 2012 to 2014. 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 Philippine 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, 75, 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 BS Commerce at the University of San Jose-Recoletos in 1964.

Anna Ma. Margarita B. Dy , Filipino, 47, has served as a director of CHI since August 17, 2016. She is a Senior Vice President and member of the Management Committee of ALI . She is the Head of the Strategic Landbank Management Group (SLMG) of ALI. Her other significant positions include: Director and Executive Vice President of Fort Bonifacio Development Corporation; Director and President of Nuevocentro, Inc. and Alviera Country Club, Inc.; Director of Aurora Properties, Inc., Vesta Properties Holdings, Inc., CECI Realty, Inc., AyalaLand Medical Facilities Leasing, Inc. and Next Urban Alliance Development Corp; President of ALI Eton Property Development Corp. Prior to joining ALI, she was a Vice President of Benpres Holdings Corporation. She graduated magna cum laude from Ateneo De Manila University with BS of Arts Degree in Economics Honors Program in 1990. She earned her Master’s degree in economics from London School of Economics and Political Science UK 1991 and MBA at Harvard Graduate School of Business Administration in Boston, U.S.A. in 1996.

Fr. Roderick C. Salazar Jr. SVD , Filipino, 69, has served as an independent director of CHI 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 and St. Scholastica’s College in Alabang. He is currently the Chairman of the Board of Trustees of St. Agnes Academy in Legazpi City, Center for Educational Measurement (CEM) and Unified Property and Accident Insurance System for Education (UPRAISE). He is a member of the Board of Trustees of St. Paul University in Dumaguete City and member of the Board of Directors of First Metro Asset Management, Inc. (FAMI). He is the Regional Secretary for Asia, and the Vice-President of the Office

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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). Past President of the Office Internationale de l’Enseignement Catholique (OIEC). 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); and Word Broadcasting Corporation. As past CEAP president, he served three terms as past Chair of the Coordinating Council of Private Educational Associations (COCOPEA). 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, Cebu Technological University and as well as of the Visayas Cluster of the Daughters of Charity (DC) Schools. He was a member of the Board Directors of People’s Television Network (PTV4). 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.

Emilio Lolito J. Tumbocon , Filipino, 60, has served as director of CHI since April 29, 2008. He was the: Group Head of Vismin Group, Human Resources & Public Affairs Group and Construction Management Group and a member of the Management Committee of ALI. He was also the President of Makati Development Corporation. He is also a Director of Taft Punta Engaño Property, Inc. He was a Senior Vice President of ALI and served as a director of various companies under the ALI Group. 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 presently a Commissioner of the Construction Industry Arbitration Commission of the Construction Industry Authority of the Philippines, Department of Trade & Industry; a certified Project Management Professional (PMP) of the Project Management Institute (PMI), and a Trustee of the PMI, Philippine Chapter; and a director of the UP Alumni Engineers, Inc., UP Engineering Research & Development Foundation, Inc. & Keyland Corporation. He is also a Consultant of Datem, Inc. & Bank of the Philippine Islands. He has 37 years of extensive work experience in the construction and real estate industry.

Jaime E. Ysmael, Filipino, 56 , 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, Group Chief Finance Officer, Chief Information Officer, Compliance Officer, and a member of the Management Committee of ALI, Managing Director of Ayala Corporation and Director and Treasurer of CPVDC. He was elected as Chairman, President & Chief Executive Officer of OCLP Holdings, Inc. (An Ortigas Company) and Concrete Aggregates Corporation. His other significant positions include: Chairman of the Board of Directors of and Compliance Officer of Anvaya Cove Beach and Nature Club, Inc.; Chairman of the Board of nvaya Golf and Sports Club, Inc. and Aprisa Business Process Solutions, Inc.; Director and Vice Chairman of CMPI Holdings, Inc.; Chairman and President of Tower One & Exchange Plaza Condominium Corporation; Director and Treasurer of Alveo Land Corp., Serendra, Inc., Philippine Integrated Energy Solutions, Inc., Ayala Property Management Corporation, BGNorth Properties, Inc., BGWest Properties, Inc., BGSouth Properties, Inc. and Alinet..Com, Inc., ; Director of Alviera Country Club, Inc., Alabang Commercial Corp., Amaia Land Corp., Avida Land Corp., North Triangle Depot Commercial Corp., Station Square East Commercial Corp., Nuevocentro, Inc., Aurora Properties, Inc, Vesta Properties Holdings, Inc., Ayala Greenfield Development Corporation, Ayalaland Commercial Reit, Inc., Bellavita Land Corp., DirectorPower Services, Inc., Ecozone Power Management, Inc. Laguna Technopark, Northgate

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Hotel Ventures, Inc., Portico Land Corp., Southcrest Hotel Ventures, Inc., ALI Eton Property Development Corporation and AG Counselors Corporation; Director and President of CMPI Land, Inc.; and Treasurer of Ayala Property Management Corporation, He is also a Director of t FINEX Research and Development Foundation, Inc. and the Asia Pacific Real Estate Association Ltd. Philippine Chapter. Mr. Ysmael holds a degree in Business Administration, Major in Accounting (Summa 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 MBA 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.

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 L. Perez -Paras Assistant Corporate Secretary * Members of the Board of Directors

Enrique B. Manuel Jr. , Filipino, 43, is the Vice President, Chief Finance Officer and Compliance Officer of CHI and CPVDC. He is an Assistant Vice President of ALI and the Group Chief Finance Officer of ALI- Visayas and Mindanao Group. . His other significant positions include: Director and Treasurer of Cagayan De Oro Gateway Corp., Accendo Commercial Corp., Asian I-Office Properties, Inc., SouthPortal Properties, Inc. and North Point Estate Association, Inc., Director of Cebu Leisure Company, Inc., Westview Commercial Ventures Corp., Cebu Business Park Association, Inc. and AsiaTown I.T. Park Association, Treasurer of Solinea, Inc., General Manager of Aviana Development Corp. and Lagdigan Land Corporation; and Chief Finance Officer of Cebu District Property Enterprise, 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, 45, is the Corporate Secretary of CHI since February 2014. She is the General Counsel and Assistant Corporate Secretary of ALI. She is a Director (management position) and Corporate Secretary of AG Counselors Corporation. Currently, she also holds the position of Director of AyalaLand Commercial Reit, Inc.; Corporate Secretary of CPVDC, Alveo Land Corp., Avida Land Corp., ALI Eton Property Development Corporation, Prime Orion Philippines, Inc., and Orion Land, Inc.. Prior to joining ALI in 2007, she was a Senior Associate at SyCip Salazar Hernandez & Gatmaitan. She graduated from the University of St. La Salle in Bacolod with a Bachelor of Arts with a Major in Economics and a Bachelor of Commerce with a Major in Data Processing in 1993. She earned a Bachelor of Laws degree from the University of the Philippines in 1997.

Nimfa Ambrosia L. Perez-Paras, Filipino, 51, 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: ALI and CPVDC and Prime Orion Philippines, Inc. 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 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.

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(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 2016 amounted to P 25.0 million. During the previous year, the total compensation paid of the Corporation amounted to P 22.4 million. For the current year, it is projected that the total annual compensation will total P26.2 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 All above-named Officers as a Actual 2015 P21.34M P1.02 M group Actual 2016 P24.07M P0.92M Projected 2017 P25.27M P0.97M All other officers* as a group Actual 2015 P19.06 M P1.39 M unnamed Actual 2016 P19.20 M P1.44 M Projected 2017 P20.16 M P1.51 M * Senior Personnel with pay class of SP-C.

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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.

The current remuneration of non-executive directors is as follows:

Board meeting fee per meeting attended P 40,000.00 Committee meeting fee per meeting attended P 20,000.00

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, 2017.

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 Owner Common Ayala Land, Inc. 1 Ayala Land, Inc. 2 Filipino 1,283,969,101 66.87% 31/F Tower One & Exchange Plaza Ayala Triangle, Ayala Ave. Makati City Common PCD Nominee Corp. Aberdeen Asset Singaporean 331,960,700 17.29% (Non-Filipino) 3 Management Asia G/F MSE Bldg. Limited 4 Ayala Ave., Makati City Common PCD Nominee Corp. PCD Nominee Corp. Filipino 218,144,579 11.36% (Filipino) 4 (Filipino) 5 G/F MSE Bldg. Ayala Ave., Makati City Common PCD Nominee Corp. Aberdeen Fund British 108,198,000 5.64% (Non-Filipino) 4 Managers Limited 5 G/F MSE Bldg. 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) of Aberdeen Asset Management Asia Limited filed in August 2016 and the Revised Report by Owner of More Than Five Percent (SEC Form 18-A) filed in December 2016 by Aberdeen Fund Managers Limited, the two 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 The Company has no record relating to the power to decide how the shares held by PCD are to be voted.

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2. Security Ownership of Directors and Management (Corporate Officers) as of January 31, 2017.

Title of Name of Beneficial Amount and Nature Citizenship Percent of Class Owner of Beneficial Class Ownership Directors Common Bernard Vincent O. Dy 1 (direct) Filipino 0.0000% Common Aniceto V. Bisnar Jr. 1 (direct) Filipino 0.0000% Common Jose Emmanuel H. 1 (direct) Filipino Jalandoni 0.0000% Common Anna Ma. Margarita B. Dy 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 L. Perez- 0 Filipino n/a Paras All Directors and Officers as a group 138,506 0.0072%

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.

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

Parties are considered to be related if, among others, one (1) party has the ability directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or the party is an associate or a joint venture.

Terms and Conditions of Transactions with Related Parties

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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 Company and its subsidiaries (the “Group”) do 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 to Amounts owed by related parties related parties 2016 2015 2016 2015 (In Thousands)

Subsidiaries of ALI P=953,436 P=1,775,962 P=966,372 P=1,454,777 Associates

SouthPortal Properties, Inc. (SPI) 395,253 445,116 − − Solinea, Inc. (SI) 251,295 251,234 − − Central Block Developers, Inc. (CBDI) 72,501 65,104 − − Cebu Insular Hotel Company, Inc. 8,144 − − − (CIHC) Parent Company - ALI 22,009 13,806 600,869 495,060 Joint venture – Cebu District Property 1,551 125,807 − − Enterprise, Inc. (CDP EI) Others 379 1,804 20 1,074 P=1,704,568 P=2,678,833 P=1,567,261 P=1,950,911

Revenue Costs/Expenses

2016 2015 2014 2016 2015 2014 (In Thousands) (In Thousands)

Associates - SPI P=− P=330,711 P=− P=− P=− P=− Joint venture - CDPEI − 122,978 − − − − Parent Company - ALI 5,635 8,115 3,855 168,636 180,268 122,322 Subsidiaries of ALI 8,876 635,769 2,895 30 ,755 27,046 14,629 P=14,511 P=1,097,573 P=6,750 P=199,391 P=207,314 P=136,951

Receivables from/payables to Solinea, Inc., Avida Land Corp. (ALC) and Alveo Land Corp. 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 DirectPower Services Inc., Makati Development Corporation (MDC) and Serendra, Inc. bear interest ranging from 2.3% to 2.5% and are due and demandable as of December 31, 2016 and 2015.

In December 2015, the Group sold land to ALC amounting to P=633.6 million which is payable in installment basis for twenty (20) years starting 2015. The related receivable is interest bearing and was recognized at present value.

Included under accrued project costs in accounts and other payables are construction costs payable to MDC amounting to P=381.1 million and P=1,301.6 million as of December 31, 2016 and 2015, respectively. Advances to MDC, which are included under advances to contractors in accounts receivable amounted to P=61.26 million and P=187.9 million as of December 31, 2016 and 2015, respectively.

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The nature and amounts of material transactions with related parties as of December 31, 2016 and 2015 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=125.03 million, P=133.1 million, and P=79.8 million in 2016, 2015 and 2014, respectively. Payable to ALI as of December 31, 2016 and 2015 arising from this transaction amounted to P=187.61 million and P=187.61 million, respectively. Professional fees charged by ALI amounted to P=1.2 million, P=20.7 million and P=18.9 million in 2016, 2015 and 2014, respectively. Systems costs which were included in the Group’s manpower costs amounted to P=27.6 million, P=25.06 million and P=32.1 million in 2016, 2015 and 2014, respectively.

As of December 31, 2016 and 2015, 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, fair value of plan assets and long-term debt with carrying amounts as follows:

2016 2015 (In Thousands) Cash and cash equivalents (Note 5) P=82,315 P=564,726 Financial assets at FVPL (Note 7) 21,908 73,565 Long-term debt (Note 18) 1,181,781 1,359,513 Fair value of plan assets (Note 24) 46,499 33,210

Compensation of key management personnel by benefit type follows:

2016 2015 2014 (In Thousands) Short-term employee benefits P=24,073 P=21,336 P=26,067 Post-employment pension and other benefits 924 1,025 2,270 P=24,997 P=22,361 P=28,337

Item 13. Compliance with Leading Practice on Corporate Governance- Pls. refer to the attached (Annual Corporate Governance Report for the year 2016).

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

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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) 66.87% owner (1,283,969,101 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:

2016 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 2016 through official disclosure letters dated:

January 12, 2016 ALI and CHI signed a Memorandum of Agreement (MOA) with Manila Water Philippine Ventures, Inc., a wholly-owned subsidiary of Manila Water Company, Inc.

February 15, 2016 CHI announced the Annual Stockholders’ Meeting set on April 18, 2016 at 10:00 o’clock in the morning at City Sports Club Cebu, Cebu City.

March 17, 2016 Cebu Holdings, Inc. submitted the copy of the certificates of attendance of its Directors and Key Officers who participated in the Ayala Corporate Governance and Risk Management Summit held on 8 March 2016 at the Fairmont Makati in compliance with the SEC Memoranda 20, Series of 2013 and 1, Series of 2014. - 56 -

April 18, 2016 CHI announced the Results of the Annual Stockholders’ Meeting and Organizational Board of Directors’ Meeting.

May 13, 2016 CHI announced that a credit rating of PRS Aaa was granted by Philippine Rating Services Corp. to the company.

May 17, 2016 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 1, 2016 CHI announced the resignation of Ms Maria Theresa M. Javier as member of its board of directors effective June 1, 2016.

August 17, 2016 CHI announced the following: 1. The resignation of Mr. Antonio S. Abacan as member of its board of directors effective August 17, 2016. 2. The election of Mr. Jalandoni and Ms Dy as replacement of the members of the board of directors who resigned.

August 19, 2016 Cebu Holdings, Inc. submitted the copy of the certificates of attendance of its newly elected directors, namely, Mr. Jalandoni and Ms Dy who participated in the Ayala Corporate Governance and Risk Management Summit held on 8 March 2016 at the Fairmont Makati in compliance with the SEC Memoranda 20, Series of 2013 and 1, Series of 2014.

November 17, 2016 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 stockholders of the company as of record date December 02, 2016, payable on December 12, 2016. 2. Setting of the 2017 annual stockholders’ meeting on 24 April 2017 at 10:00 o’clock in the morning at City Sports Club Cebu, Cebu City.

November 21, 2016 CHI announced its new corporate address at 20 th Floor, Ayala Center Cebu Tower, Bohol Street, Cebu Business Park, Cebu City and its new contact number (032) 888-3700.

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 2016 P 635.2k* None P 25k 201 5 P 605.0 k* 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.

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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 2016 Audited Financial Statements and Supplementary Schedules – (Schedule L).

e. Schedule – Use of Proceeds from Bonds

Schedule – Use of Proceeds from Bonds P5.0 Billion Fixed Rate Bonds due 2021

ESTIMATED ACTUAL PER PROSPECTUS Issue Amount 5,000,000,000.00 5,000,000,000.00 Expenses Documentary Stamp Tax 25,000,000.00 25,000,000.00 SEC Registration 1,812,500.00 1,812,500.00 Legal Research Fee 18,125.00 18,125.00 Upfront Fees - - Underwriting Fee 18,750,000.00 18,750,000.00 Professional Expenses and Agency Fees 3,828,500.00 4,051,801.20

Out of Pocket Expenses (publication, printing etc.) 2,500,000.00 275,128.39 Total Expenses 52.051.125.00 49,907,554.59 Net Proceeds 4,947,978,875.00 4,950,092,445.41

Balance of Proceeds as of 12.31.2016 P518.45M

Cebu Holdings, Inc. raised from the Bonds gross proceeds of P5.0 billion. After issue-related expenses, actual net proceeds amounted to approximately P4.95 billion. Net proceeds were used to fund various projects like ACC Corporate Center, Amara, 1016 Residences, Park Point Residences, Sedona Parc, CITP Redevelopment and Land acquisitions.

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Cebu Holdings, Inc. Breakdown - Use of Proceeds from Bonds As of December 31, 2016

Projects Gross Amount Expenses Net Amount Ongoing: 1016 Residences 130,000,000 113,153,754 16,846,246 Park Point Residences 519,000,000 248,118,092 270,881,908 Amara the Parks/Phase 3b 422,000,000 234,968,866 187,031,134 Sedona Parc 29,000,000 2,607,337 26,392,663 Under Construction: ACC Corporate Center 1,094,000,000 797,587,029 296,412,971 BPO400 - 150,810,208 (150,810,208) CT3 Retail - 9,671,041 (9,671,041) Land Acquisition (SRP Lot) 1,175,500,000 1,464,715,883 (289,215,883) Investment to CITP Redevelopment/Equity Infusion 1,580,500,000 827,069,866 753,430,134 Others (Interest Expense & Maintenance Fees) - 582,847,095 (582,847,095) Total 4,950,000,000 4,431,549,171 518,450,829

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Cebu Holdings, Inc. and Subsidiaries

Consolidated Financial Statements December 31, 2016 and 2015 And Years Ended December 31, 2016, 2015 and 2014 and

Independent Auditors’ Report SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001, 6760 Ayala Avenue Fax: (632) 819 0872 December 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 AUDITOR’S REPORT

The Board of Directors and Stockholders Cebu Holdings, Inc. and Subsidiaries

Opinion

We have audited the consolidated financial statements of Cebu Holdings, Inc. (the Parent Company) and its subsidiaries (collectively referred to as “the Group”), which comprise the consolidated statements of financial position as at December 31, 2016 and 2015, 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, 2016, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2016 and 2015, and their consolidated financial performance and their cash flows for each of the three years in the period ended December 31, 2016 in accordance with Philippine Financial Reporting Standards (PFRSs).

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report, including in relation to these matters. Accordingly, our audits included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated and parent company financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

*SGVFS021348*

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

Provision and Contingencies

As disclosed in Note 33 to the consolidated financial statements, the Group is currently involved in a legal proceeding. This matter is significant to our audit because the recognition and measurement of provision related to this legal proceeding require management to exercise significant judgment and estimation.

Audit response

We discussed with the management and the Group’s legal counsel the status of the legal proceeding and obtained legal confirmation reply. We reviewed management’s assessment on the possible outcome of the legal proceeding and the need to recognize any provision based on the status of the case and considering relevant local rules and regulations.

Other Information

Management is responsible for the other information. The other information comprises the information included in the SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report for the year ended December 31, 2016, but does not include the consolidated financial statements and our auditors’ report thereon. The SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report for the year ended December 31, 2016 are expected to be made available to us after the date of this auditors’ report.

Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits, or otherwise appears to be materially misstated.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with PFRSs, 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.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

*SGVFS021348*

A member firm of Ernst & Young Global Limited - 3 -

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

· Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

· Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

*SGVFS021348*

A member firm of Ernst & Young Global Limited - 4 -

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Dolmar C. Montañez.

SYCIP GORRES VELAYO & CO.

Dolmar C. Montañez Partner CPA Certificate No. 112004 SEC Accreditation No. 1561-A (Group A), April 21, 2016, valid until April 21, 2019 Tax Identification No. 925-713-249 BIR Accreditation 08-001998-119-2016 February 15, 2016, valid until February 15, 2019 PTR No. 5908733, January 3, 2017, Makati City

February 22, 2017

*SGVFS021348*

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

December 31 2016 2015 ASSETS Current Assets Cash and cash equivalents (Notes 5 and 27) P=94,908 P=115,511 Short-term investments (Note 6) − 45,318 Financial assets at fair value through profit or loss (Notes 7, 22 and 27) 21,908 73,565 Receivables (Notes 8, 22 and 27) 1,937,557 3,081,143 Inventories (Notes 9 and 34) 723,851 1,060,066 Other current assets (Notes 10 and 27) 524,074 561,603 Total Current Assets 3,302,298 4,937,206 Noncurrent Assets Noncurrent portion of receivables (Notes 8 and 27) 434,758 425,469 Available-for-sale financial assets (Notes 11 and 34) 318,574 319,136 Property and equipment (Note 12) 79,560 73,323 Investments in associates and a joint venture (Note 13) 1,854,694 1,368,384 Investment properties (Note 14) 11,011,106 10,311,290 Land and improvements (Note 15) 2,580,250 2,254,286 Deferred tax assets - net (Notes 25) 18,836 652 Other noncurrent assets (Notes 16 and 27) 15,547 43,441 Total Noncurrent Assets 16,313,325 14,795,981 P=19,615,623 P= 19,733,187

LIABILITIES AND EQUITY Current Liabilities Accounts and other payables (Notes 17, 20, 27 and 28) P=4,371,300 P=4,697,960 Current portion of long-term debt (Notes 18 and 27) 442,279 107,873 Income tax payable 10,149 61,209 Deposits and other current liabilities (Notes 19 and 27) 799,299 650,852 Total Current Liabilities 5,623,027 5,517,894 Noncurrent Liabilities Long-term debt - net of current portion (Notes 18 and 27) 5,706,032 6,124,667 Pension liabilities (Note 24) 32,199 56,032 Deferred tax liabilities - net (Note 25) 236,165 169,091 Deposits and other noncurrent liabilities (Notes 17, 19, 27) 591,366 953,397 Total Noncurrent Liabilities 6,565,762 7,303,187 Total Liabilities 12,188,789 12,821,081 Equity (Note 28) Equity attributable to equity holders of Cebu Holdings, Inc. Capital stock 1,920,074 1,920,074 Additional paid-in capital 856,684 856,684 Retained earnings 3,784,856 3,335,602 Equity reserves (9,474) (9,474) Remeasurement loss on defined benefit plan (Note 24) (24,249) (37,615) 6,527,891 6,065,271 Non-controlling interests (Note 4) 898,943 846,835 Total Equity 7,426,834 6,912,106 P=19,615,623 P=19,733,187

See accompanying Notes to Consolidated Financial Statements. *SGVFS021348* CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, except Earnings Per Share Figures)

Years Ended December 31 2016 2015 2014 REVENUE Real estate (Notes 14, 21 and 30) P=2,278,689 P=3,134,246 P=1,754,474 Equity in net earnings of associates and a joint venture (Note 13) 161,310 106,303 79,679 Interest income (Notes 5, 6, 8 and 22) 35,915 98,119 71,168 Other income (Note 22) 238,559 401,591 388,258 2,714,473 3,740,259 2,293,579 COSTS AND EXPENSES Real estate (Note 23) 1,295,847 1,793,984 1,127,172 Interest expense (Note 18) 247,716 346,215 182,372 General and administrative expenses (Note 23) 199,021 223,177 229,843 Other charges (Note 23) 64,886 102,893 23,282 1,807,470 2,466,269 1,562,669 INCOME BEFORE INCOME TAX 907,003 1,273,990 730,910 PROVISION FOR INCOME TAX (Note 25) Current 132,071 207,432 145,519 Deferred 43,161 121,220 19,537 175,232 328,652 165,056 NET INCOME P=731,771 P=945,338 P=565,854 Net Income Attributable to: Equity holders of Cebu Holdings, Inc. P=679,663 P=827,207 P=530,877 Non-controlling interests (Note 4) 52,108 118,131 34,977 P=731,771 P=945,338 P=565,854 Basic/Diluted Earnings Per Share (Note 26) P=0.35 P=0.43 P=0.28

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 2016 2015 2014 Net income P=731,771 P=945,338 P=565,854 Other comprehensive income (loss) Other comprehensive loss not to be reclassified to profit or loss in subsequent years: Remeasurement gain (loss) on defined benefit plan (Note 24) 19,095 3,201 (12,506) Tax effect relating to components of other comprehensive gain (loss) (5,729) (960) 3,752 Total other comprehensive income (loss) 13,366 2,241 (8,754) Total comprehensive income P=745,137 P=947,579 P=557,100 Total comprehensive income attributable to: Equity holders of Cebu Holdings, Inc. P=693,029 P=829,448 P=522,123 Non-controlling interests 52,108 118,131 34,977 P=745,137 P=947,579 P=557,100

See accompanying Notes to Consolidated Financial Statements.

*SGVFS015631* CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Amounts in Thousands)

Attributable to Parent Total Equity Additional Remeasurement Attributable to Non- Capital Paid-in Equity Gain (Loss) on Equity Holder controlling Stock Capital Reserve Retained Earnings (Note 28) Defined Benefit of Parent Interest (Note 28) (Note 28) (Note 28) Appropriated Unappropriated Total Obligation Company (Note 4) Total For the Year Ended December 31, 2016 Balance as of January 1, 2016 P=1,920,074 P=856,684 (P=9,474) P=1,300,000 P=2,035,602 P=3,335,602 (P=37,615) P=6,065,271 P=846,835 P=6,912,106 Comprehensive income Net Income − − − − 679,663 679,663 − 679,663 52,108 731,771 Other comprehensive income − − − − − − 13,366 13,366 − 13,366 Total Comprehensive income − − − − 679,663 679,663 13,366 693,029 52,108 745,137 Dividends declared (Note 28) − − − − (230,409) (230,409) − (230,409) − (230,409) Balance as of December 31, 2016 P=1,920,074 P=856,684 (P=9,474) P=1,300,000 P=2,484,856 P=3,784,856 (P=24,249) P=6,527,891 P=898,943 P=7,426,834

For the Year Ended December 31, 2015 Balance as of January 1, 2015 P=1,920,074 P=856,684 (P=9,474) P=1,300,000 P=1,438,804 P=2,738,804 (P=39,856) P=5,466,232 P=755,498 P= 6,221,730 Comprehensive income Net Income − − − − 827,207 827,207 − 827,207 118,131 945,338 Other comprehensive income − − − − − − 2,241 2,241 − 2,241 Total Comprehensive income − − − − 827,207 827,207 2,241 829,448 118,131 947,579 Dividends declared (Note 28) − − − − (230,409) (230,409) − (230,409) (26,794) (257,203) Balance as of December 31, 2015 P=1,920,074 P=856,684 (P=9,474) P=1,300,000 P=2,035,602 P=3,335,602 (P=37,615) P=6,065,271 P=846,835 P=6,912,106

For the Year Ended December 31, 2014 Balance as of January 1, 2014 P=1,920,074 P=856,684 (P=9,474) P=1,300,000 P=1,138,336 P=2,438,336 (P=31,102) P=5,174,518 P=747,315 P=5,921,833 Comprehensive income Net Income − − − − 530,877 530,877 − 530,877 34,977 565,854 Other comprehensive income − − − − − − (8,754) (8,754) − (8,754) Total Comprehensive income − − − − 530,877 530,877 (8,754) 522,123 34,977 557,100 Dividends declared (Note 28) − − − − (230,409) (230,409) − (230,409) (26,794) (257,203) Balance as of December 31, 2014 P=1,920,074 P=856,684 (P=9,474) P=1,300,000 P=1,438,804 P=2,738,804 (P=39,856) P=5,466,232 P=755,498 P=6,221,730

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

Years Ended December 31 2016 2015 2014 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=907,003 P=1,273,990 P=730,910 Adjustments for: Interest expense (Notes 18 and 22) 247,716 346,215 182,372 Depreciation and amortization (Notes 12, 14 and 23) 402,070 358,025 312,744 Loss on disposal of investment properties − 2,114 − Equity in net earnings of associates (Note 13) (161,310) (106,303) (79,679) Interest income (Note 22) (35,915) (98,119) (71,168) Pension expense (contribution) - net (Notes 23 and 24) (4,738) 3,499 5,445 Unrealized foreign exchange losses (gains) (68) (1,315) 371 Loss (gain) on disposal of property and equipment 13 (40) (52) Unrealized loss (gain) on financial assets at fair value through profit or loss 438 (38) (2,654) Operating income before working capital changes 1,355,209 1,778,028 1,078,289 Decrease (increase) in: Receivables 1,146,215 (2,028,888) 169,902 Financial assets at fair value through profit or loss 51,219 130,550 225,181 Other current assets 37,528 (282,682) (83,989) Inventories (5,664) (144,803) 82,928 Increase (decrease) in: Accounts and other payables (Notes 17 and 32) (899,799) 1,693,518 216,947 Deposits and other liabilities 135,476 5,455 224,891 Net cash generated from operations 1,820,184 1,151,178 1,914,149 Interest received 24,214 51,681 31,910 Interest paid (285,480) (248,211) (200,290) Income taxes paid (183,131) (198,691) (157,988) Net cash provided by operating activities 1,375,787 755,957 1,587,781 CASH FLOWS FROM INVESTING ACTIVITIES Additions to: Investment properties (Notes 14 and 32) (109,435) (1,321,780) (928,403) Land and improvements (Notes 15 and 32) (325,964) (1,199,579) − Short-term investment – (45,318) – Property and equipment (Notes 12 and 32) (26,455) (12,548) (20,042) Associates and a joint venture (Note 13) (325,000) (203,800) (551,574) Decrease (increase) in other noncurrent assets 27,893 (3,032) (28,854) Proceeds from sale/redemption of: Short-term investment 45,318 – – Property and equipment 300 129 322 Investment properties 3,558 30 − Net cash provided by (used in) investing activities (709,785) (2,785,898) (1,528,551)

(Forward)

*SGVFS021348* - 2 -

Years Ended December 31 2016 2015 2014 CASH FLOWS FROM FINANCING ACTIVITIES Availments of long-term debt P=378,100 P=− P=4,950,658 Dividends paid (242,329) (257,203) (257,203) Payment for purchased land (351,569) − − Payments of long-term debt (470,875) (493,875) (2,622,250) Net cash provided by (used in) financing activities (686,673) (751,078) 2,071,205 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 68 1,315 (371) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (20,603) (2,779,704) 2,130,064 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 5) 115,511 2,895,215 765,151 CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 5) P=94,908 P=115,511 P=2,895,215

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 66.87%-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 48.96%-owned by Mermac, Inc., 10.17%-owned by Mitsubishi Corporation and the rest by public.

The previous registered office address of the Parent Company is at Unit 701, 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City. On December 2, 2016, the Parent Company registered and filed amendment of office address at 20th Floor, Ayala Center Cebu Tower, Bohol Street, Cebu Business Park, Cebu City. 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.

· 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. CBP Theatre has not yet started its operations as of December 31, 2016.

· Cebu Property Ventures and Development Corporation (CPVDC), a partially-owned subsidiary, is engaged in real estate development and sale of subdivision land and residential units. The shares of stocks of CPVDC are also publicly traded in the PSE.

· Asian I-Office Properties, Inc. (AiO), wholly owned by CPVDC, is engaged in all aspects of real estate development and in leasing of corporate spaces.

· Taft Punta Engaño Property Inc. (TPEPI), a partially-owned subsidiary, is engaged in real estate development of mixed-use commercial and residential district within a 12-hectare property in Lapu-Lapu City.

The consolidated financial statements of Cebu Holdings Inc. and its subsidiaries (the Group) as of December 31, 2016 and 2015 and for each of the three years in the period ended December 31, 2016 were endorsed for approval by the Audit and Risk Committee on February 8, 2017 and were approved and authorized for issue by the Board of Directors (BOD) on February 22, 2017.

*SGVFS021348* - 2 -

2. Summary of Significant Accounting Policies

Basis of Preparation The 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 partially-owned subsidiaries, and the corresponding percentage of ownership of the Parent Company as of December 31:

Percentage of ownership December 31 2016 2015 2014 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

The Parent Company and all its subsidiaries are incorporated and are operating in the Philippines.

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 • 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(s) with the other vote holders of the investee • Rights arising from other contractual arrangements • 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 period as the Parent Company, using consistent accounting policies. All intra-group balances and transactions,

*SGVFS021348* - 3 - including income, expenses and dividends relating to transactions between members of the Group, are eliminated in full on consolidation.

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.

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

Changes in Accounting Policies The accounting policies adopted in the preparation of the Group’s consolidated financial statements are consistent with those of the previous financial year except that the Group has adopted the following new accounting pronouncements starting January 1, 2016. Adoption of these new pronouncements did not have any significant impact on the Group’s financial position or performance unless otherwise indicated.

· Amendments to PFRS 10, PFRS 12 and PAS 28, Investment Entities: Applying the Consolidation Exception · Amendments to PFRS 11, Accounting for Acquisitions of Interests in Joint Operations · PFRS 14, Regulatory Deferral Accounts · Amendments to PAS 1, Disclosure Initiative · Amendments to PAS 16 and PAS 38, Clarification of Acceptable Methods of Depreciation and Amortization · Amendments to PAS 16 and PAS 41, Agriculture: Bearer Plants · Amendments to PAS 27, Equity Method in Separate Financial Statements · Annual Improvements to PFRSs 2012 - 2014 Cycle • Amendment to PFRS 5, Changes in Methods of Disposal • Amendment to PFRS 7, Servicing Contracts • Amendment to PFRS 7, Applicability of the Amendments to PFRS 7 to Condensed Interim Financial Statements • Amendment to PAS 19, Discount Rate: Regional Market Issue • Amendment to PAS 34, Disclosure of Information ‘Elsewhere in the Interim Financial Report’

*SGVFS021348* - 4 -

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 that the future adoption of these new and amended PFRS and Philippine Interpretations to have significant impact on the consolidated financial statements.

Effective beginning on or after January 1, 2017

· Amendment to PFRS 12, Clarification of the Scope of the Standard (Part of Annual Improvements to PFRSs 2014 - 2016 Cycle)

The amendments clarify that the disclosure requirements in PFRS 12, other than those relating to summarized financial information, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale.

The amendments do not have any impact on the Group’s financial position and results of operations.

· Amendments to PAS 7, Statement of Cash Flows, Disclosure Initiative

The amendments to PAS 7 require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). On initial application of the amendments, entities are not required to provide comparative information for preceding periods. Early application of the amendments is permitted. Application of amendments will result in additional disclosures in the 2017 consolidated financial statements of the Group. · Amendments to PAS 12, Income Taxes, Recognition of Deferred Tax Assets for Unrealized Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognized in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. Early application of the amendments is permitted.

These amendments are not expected to have any impact on the Group.

Effective beginning on or after January 1, 2018

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

The amendments to PFRS 2 address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and the accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. *SGVFS021348* - 5 -

On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and if other criteria are met. Early application of the amendments is permitted.

These amendments are not expected to have any impact in the Group’s consolidated financial statements since the Group has no share-based payment transactions.

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

The amendments address concerns arising from implementing PFRS 9, the new financial instruments standard before implementing the forthcoming insurance contracts standard. They allow entities to choose between the overlay approach and the deferral approach to deal with the transitional challenges. The overlay approach gives all entities that issue insurance contracts the option to recognize in other comprehensive income, rather than profit or loss, the volatility that could arise when PFRS 9 is applied before the new insurance contracts standard is issued. On the other hand, the deferral approach gives entities whose activities are predominantly connected with insurance an optional temporary exemption from applying PFRS 9 until the earlier of application of the forthcoming insurance contracts standard or January 1, 2021.

The overlay approach and the deferral approach will only be available to an entity if it has not previously applied PFRS 9.

The amendments are not applicable to the Group since none of the entities within the Group have activities that are predominantly connected with insurance or issue insurance contracts.

· PFRS 15, Revenue from Contracts with Customers

PFRS 15 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 PFRSs. Either a full or modified retrospective application is required for annual periods beginning on or after January 1, 2018.

The Group is engaged in selling activities of real estate projects while construction is still in progress or even before it has started. The standard is expected to impact the revenue recognition on these pre-completed real estate sales whether revenue will be recognized at a point-in-time or over time. If there will be a change in revenue recognition, this will also impact the corresponding costs and the related trade receivables, deferred tax liabilities and retained earnings account. The Group is currently assessing the potential impact of this new standard to the consolidated financial statements.

· PFRS 9, Financial Instruments

PFRS 9 reflects all phases of the financial instruments project and replaces PAS 39, Financial Instruments: Recognition and Measurement, and all previous versions of PFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. PFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is required, but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

*SGVFS021348* - 6 -

The adoption of PFRS 9 will have an effect on the classification and measurement of the Group’s financial assets and impairment methodology for financial assets, but will have no impact on the classification and measurement of the Group’s financial liabilities. The Group is currently assessing the impact of adopting this standard.

· Amendments to PAS 28, Measuring an Associate or Joint Venture at Fair Value (Part of Annual Improvements to PFRSs 2014 - 2016 Cycle)

The amendments clarify that an entity that is a venture capital organization, or other qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss. They also clarify that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries. This election is made separately for each investment entity associate or joint venture, at the later of the date on which (a) the investment entity associate or joint venture is initially recognized; (b) the associate or joint venture becomes an investment entity; and (c) the investment entity associate or joint venture first becomes a parent. The amendments should be applied retrospectively, with earlier application permitted.

These amendments are not expected to have any impact in the Group’s consolidated financial statements

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

The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. The amendments should be applied prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. Retrospective application is only permitted if this is possible without the use of hindsight.

· Philippine Interpretation IFRIC 22, Foreign Currency Transactions and Advance Consideration

The interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognizes the nonmonetary asset or non- monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration. The interpretation may be applied on a fully retrospective basis. Entities may apply the interpretation prospectively to all assets, expenses and income in its scope that are initially recognized on or after the beginning of the reporting period in which the entity first applies the interpretation or the beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the interpretation.

*SGVFS021348* - 7 -

Effective beginning on or after January 1, 2019

· PFRS 16, Leases

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

Entities may early adopt PFRS 16 but only if they have also adopted PFRS 15. 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 adopting this standard.

Deferred effectivity

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

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

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

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 of 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 of trading; · It is due to be settled within twelve months after the reporting period; or,

*SGVFS021348* - 8 -

· 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.

Fair Value Measurement The Group measures financial instruments such as financial assets at FVPL at fair value and discloses the fair value of its other financial instruments as well as 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. *SGVFS021348* - 9 -

At each reporting date, the Group analyzes 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.

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. Purchases or sales of financial assets that are requires delivery or assets within the time frame establish by regulation or convention in the marketplace are recognized on the settlement date.

Initial recognition Financial assets and financial liabilities are initially recognized at fair value. The initial measurement of all financial assets includes transaction costs except for financial instruments measured at FVPL.

The Group classifies its financial assets within the scope of PAS 39 in the following categories: financial assets at FVPL, loans and receivables, held-to-maturity financial assets, or available-for-sale (AFS) financial assets. Financial liabilities are classified into financial liabilities at FVPL or other financial liabilities. The classification depends on the purpose for which the financial assets were acquired or financial 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, 2016 and 2015, the Group’s financial assets are of the nature of loans and receivables, financial assets at FVPL and AFS financial assets.

“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 “Other 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 *SGVFS021348* - 10 - 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”.

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, 2016 and 2015, the Group holds investment in Unit Investment Trust Fund (UITF) held for trading and classified these as financial assets at FVPL. .

Available-for-sale financial assets AFS financial assets pertain to equity investments. Equity investments classified as AFS are those that are neither classified as held for trading nor designated at fair value through profit or loss.

After initial measurement, AFS financial assets are subsequently measured at fair value with unrealized gains or losses recognized in OCI and credited to unrealized gain (loss) on available- for-sale financial assets account until the investment is derecognized, at which time the cumulative gain or loss is recognized in other income, or the investment is determined to be impaired, when the cumulative loss is reclassified from unrealized gain (loss) on available-for-sale financial assets account to the consolidated statement of comprehensive income. Dividend earned whilst holding AFS financial assets is reported as dividend income.

The Group evaluates whether the ability and intention to sell its AFS financial assets in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets, the Group may elect to reclassify these financial assets if the management has the ability and intention to hold the assets for foreseeable future or until maturity.

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 profit or loss. The losses arising from impairment of such loans and receivables are recognized under “General and administrative expenses” account in the profit or loss.

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, 2016 and 2015, the Group’s loans and receivables include cash and cash equivalents, short-term investments, receivables (except advances to contractors), and dividends receivable (included under other current assets).

*SGVFS021348* - 11 -

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 “Other charges” account in the consolidated statement of income.

As of December 31, 2016 and 2015, the Group’s other financial liabilities include accounts and other payables, long-term debt, deposits and other liabilities excluding for ‘advance rent’, and ‘customers deposits’ excluding statutory liabilities and other obligations that meet the above definition (other than liabilities covered by other accounting standards, such as income tax payable).

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 in “Tenants deposits” 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 “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 or cancelled or has 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.

*SGVFS021348* - 12 -

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.

AFS financial assets The Group treats AFS financial assets as impaired when there has been a significant or prolonged decline in fair value below its cost or where other objective evidence of impairment exists. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. The Group treats ‘significant’ generally as 20% or more and ‘prolonged’ as greater than 12 months for unquoted securities. In addition, the Group evaluates other factors, including normal volatility in secondary price for unquoted equities.

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 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

*SGVFS021348* - 13 - 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 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.

The Group assesses that it has a currently enforceable right to offset if the right is not contingent on a future event, and is legally enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the Group.

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 carried 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 of the properties (i.e. planning and design costs, cost of site preparation, professional fees, property transfer taxes, construction overheads and other related costs) · Borrowing costs on loans directly attributable to the projects which were capitalized during construction.

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.

Other Assets Other assets include input value added tax (VAT), creditable withholding tax (CWT) and prepaid expenses.

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.

CWT represents the amount withheld by the payee. These are recognized upon collection of the related sales and are utilized as tax credits against income tax due.

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.

*SGVFS021348* - 14 -

Expenditures incurred after the fixed assets have been put into operations, such as repairs and maintenance are normally charged to expenses in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be in the future economic benefits expected to be obtained from the use of an item of property and equipment beyond its originally assessed standard of performance.

Depreciation and amortization commences once the property and equipment are available for their intended use and are computed on a straight-line basis over the estimated useful lives 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.

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 comprehensive 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.

*SGVFS021348* - 15 -

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 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 (losses) of associates and a joint venture’ in the statement of comprehensive 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 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.

Investment properties are depreciated using straight-line method over their estimated useful life as follows:

Years Land and improvements Up to 20 Buildings and improvements Up to 20

Expenditure 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.

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 *SGVFS021348* - 16 - 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 are carried at cost less any impairment in value. Land and improvement deal with land assets that were acquired and will be used as site for future developments. These are assets neither classified as inventories or investment properties since these are undeveloped land and has no definite use as of reporting date and to whether these are held to earn rentals or for capital appreciation to be classified as investment properties or are held for sale in the ordinary course of business. Its use is yet to be determined by management as approved by the BOD.

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.

Transfers are made to inventories or investment properties when, and only when, there is a definite use as evidenced by commencement of development with a view to sale or commencement of an operating lease to another party, respectively.

Impairment of Nonfinancial 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 profit or loss 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.

For 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.

*SGVFS021348* - 17 -

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 net accumulated earnings (losses) of the Group less dividends declared and any adjustments arising from application of new accounting standards or policies applied retrospectively. The individual accumulated earnings of the subsidiaries are available for dividends only after declared by their respective BOD.

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.

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 is recognized in the consolidated statement comprehensive of income on a straight-line basis over the lease term 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.

Contingent rents are recognized as revenue in the period in which they are earned.

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 *SGVFS021348* - 18 - 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.

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. Income is recognized when the services are rendered. Others are recognized when earned.

Cost and Expense Recognition Cost and expenses are recognized in the profit or loss 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.

*SGVFS021348* - 19 -

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.

The borrowing costs capitalized as part of investment properties are depreciated using straight line method over estimated useful life of the assets.

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 retains 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 *SGVFS021348* - 20 - 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.

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.

*SGVFS021348* - 21 -

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.

Deferred tax Deferred tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and 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 with certain exceptions, 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 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 in the other comprehensive income. 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 *SGVFS021348* - 22 -

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 29 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.

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, Estimates and Assumptions

The preparation of the 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:

Distinction between investment properties and inventories The Group determines whether a property is classified as investment property or inventory as follows: • Investment properties 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.

*SGVFS021348* - 23 -

• 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.

In making this judgment, the Group considers whether the property will be sold in the normal operating cycle (Inventories) or whether it will be retained as part of the Group’s leasing activities or for future development or sale which are yet to be finalized by the Group (Investment properties).

Evaluating impairment of nonfinancial assets The Group reviews investments in associates and a joint venture, 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.

≅ρ νε Χδβδλαδθ 20+ 1/05 µχ 1/04+ σγδ Φθντο ρρδρρδχ σγσ σγδθδ θδ µν ηµχηβσνθρ νε ηλοηθλδµσ+ σγτρ+ σγδ Φθντο χηχ µνσ θδβνφµηψδχ µξ ηλοηθλδµσ κνρρ νµ ησρ µνµεηµµβηκ ρρδσρ ∋ρδδ Μνσδρ 01+ 02+ 03 µχ 05(−

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 · 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 over Central Block Developers, Inc. (CBDI) even with 57% effective ownership interest because the Group has no control over CBDI’s relevant activities and it does not have the majority representation in its BOD.

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 Revenue and cost recognition on real estate sales selecting an appropriate revenue recognition method for a particular real estate sale transaction requires certain judgment based on, among others:

• Buyer’s commitment on the sale which may be ascertained through the significance of the buyer’s initial investment; and • Stage of completion of the project

*SGVFS021348* - 24 -

The Group has set a certain percentage (%) of collection over the total selling price in determining buyer’s commitment on the sale. It is when the buyer’s investment is considered adequate to meet the probability criteria that economic benefits will flow to the Group.

Provisions and 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 (see Note 33).

Estimates and Assumptions 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:

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 21 and 23 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 2016 and 2015. The Group’s inventories carried at cost are disclosed in Note 9.

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 27 for the related balances.

*SGVFS021348* - 25 -

4. Non-controlling Interests

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

Accumulated balances Share of NCI in net income (loss) NCI % 2016 2015 2016 2015 2014 (In Thousands) (In Thousands) CPVDC 24% P=449,165 P=398,458 P=50,707 P=118,043 P=35,658 TPEPI 45% 449,778 448,377 1,401 88 (681) P=898,943 P=846,835 P=52,108 P=118,131 P=34,977

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

2016 1/04 CPVDC TPEPI ΒΟΥΧΒ ΣΟ∆ΟΗ (In Thousands) (In Thousands) Statement of financial position Βτθθδµσ ρρδσρ P=774,028 P=226,469 P= 0+/65+277 P= 118+170 Μνµβτθθδµσ ρρδσρ 4,731,448 776,470 3+/44+64/ 658+273 Βτθθδµσ κηαηκησηδρ 2,582,819 11,926 0+870+331 0/+654 Μνµβτθθδµσ κηαηκησηδρ 1,026,635 − 0+357+156 − Χηυηχδµχρ χδβκθδχ σν ΜΒΗ − − 15+683 −

Statement of comprehensive income Θδυδµτδ P=694,984 P=4,798 P= 0+152+81/ P= 1+435

Μδσ ηµβνλδ.Σνσκ βνλοθδγδµρηυδ ηµβνλδ σσθηατσακδ σν9 ∆πτησξ νε γνκχδθρ νε σγδ οθδµσ βνλοµξ 162,886 1,712 268+081 0/6 ΜΒΗ 50,707 1,401 007+/33 77

Statement of cash flows

Βργ οθνυηχδχ αξ ∋τρδχ ηµ(9 Νοδθσηµφ βσηυησηδρ P=702,495 (P=6,786) P= 887+262 ∋Ο<1//+282( Ηµυδρσηµφ βσηυησηδρ (609,728) (7,086) ∋328+670( ∋032+556( Εηµµβηµφ βσηυησηδρ (102,795) − ∋5/4+//1( −

Μδσ χδβθδρδ ηµ βργ µχ βργ δπτηυκδµσρ (P=10,028) (P=13,872) ∋Ο<35+30/( ∋Ο<233+/5/(

*SGVFS021348* - 26 -

5. Cash and Cash Equivalents

This account consists of:

2016 1/04 (In Thousands) Βργ νµ γµχ µχ ηµ αµϕρ P=73,059 Ο<84+400 Βργ δπτηυκδµσρ 21,849 1/+/// P=94,908 Ο<004+400

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=0.8 million, P=8.0 million and P=11.8 million in 2016, 2015 and 2014, respectively (see Note 22).

6. 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%.

As of December 31, 2016 and 2015, the Group’s short term investments amounted to nil and P=45.3 million, respectively.

Interest income earned from short-term investments amounted to P=0.5 million, P=1.0 million and nil in 2016, 2015 and 2014, respectively (see Note 22).

7. 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 (UITF) 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 statements of income under “Other income”. Realized and unrealized gains recognized from changes in fair value through profit or loss amounted to P=0.32 million, P=2.8 million and P=3.5 million in 2016, 2015 and 2014, respectively (see Note 22).

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8. Receivables

This account consists of:

2016 2015 (In Thousands) Receivables from related parties (Note 20) P=1,704,568 P=2,678,833 Trade: Residential development 160,587 235,272 Shopping centers 114,665 136,033 Corporate business 36,592 26,195 Commercial development 11,115 10,812 Accrued receivable 162,657 93,111 Advances to contractors (Note 20) 117,627 262,029 Receivables from employees 18,424 17,191 Others 62,763 63,819 2,388,998 3,523,295 Less allowance for impairment losses 16,683 16,683 2,372,315 3,506,612 Less noncurrent portion 434,758 425,469 P=1,937,557 P=3,081,143

The nature 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. · Commercial development pertains to receivables arising from sale of commercial lots and club shares. · Other receivables pertain to receivable related to interests and penalties.

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 (1) to two (2) 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. These are unpaid billed receivables as of reporting date. · Leases of office spaces, included under corporate business, are noninterest-bearing and are collectible monthly based on the terms of the lease contracts. These are unpaid billed receivables as of reporting date. · 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 (2) to four (4) years. Titles to real estate properties are not transferred to buyers until full payment has been made.

*SGVFS021348* - 28 -

· Advances to contractors are recouped upon every progress billing payment depending on the percentage of accomplishment. · Receivables from related parties are composed of interest and 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. · Accrued receivable consist of receivables from rental income arising from operating lease on investment properties which is accounted for on a straight-line basis over the lease term and accrual of interest income. · Other receivables are due and demandable.

As of December 31, 2016 and 2015, “sales contract receivable” under residential development trade receivables with a nominal amount of P=160.6 million and P=235.3 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=50.5 million and P=16.2 million as of December 31, 2016 and 2015, respectively.

Movements in the unamortized discount on trade receivables in 2016 and 2015 are as follows:

2016 2015 (In Thousands) Balance at January 1 P=16,241 P=6,258 Additions 57,186 32,525 Accretion (Note 22) (22,903) (22,542) Balance at December 31 P=50,524 P=16,241

Allowance for impairment losses pertains to trade receivable that are individually and collectively identified as impaired. The movements in the allowance for impairment losses follow:

2016 2015 (In Thousands) January 1 P=16,683 P=13,577 Provision for impairment loss (Note 23) − 3,106 December 31 P=16,683 P=16,683

9. Inventories

This account consists of:

2016 2015 (In Thousands) Subdivision lot for sale and development P=441,764 P=725,682 Condominium units for sale 282,087 334,384 P=723,851 P=1,060,066

The subdivision lot and condominium units are carried at cost.

*SGVFS021348* - 29 -

A summary of the movements in inventories is set out below:

2016 Subdivision lot Condominium for sale and units under development development Total (In Thousands) Balance at January 1 P=725,682 P=334,384 P=1,060,066 Transfers to investment property (Note 14) (231,727) − (231,727) Disposals (recognized as cost of sales) (22,442) (156,893) (179,335) Construction/development costs incurred − 104,596 104,596 Other adjustments (29,749) − (29,749) Balance at December 31 P=441,764 P=282,087 P=723,851

2015 Subdivision lot Condominium for sale and units under development development Total (In Thousands) Balance at January 1 P=582,830 P=239,315 P=822,145 Transfers to investment property (Note 14) (52,007) − (52,007) Disposals (recognized as cost of sales) (429,255) (142,690) (571,945) Construction/development costs incurred 624,114 246,447 870,561 Other adjustments − (8,688) (8,688) Balance at December 31 P=725,682 P=334,384 P=1,060,066

The amount of inventories recognized as cost of sales in the consolidated statements of income amounted to P=179.3 million, P=571.9 million and P=154.9 million in 2016, 2015 and 2014, respectively (see Note 23).

There are no inventories as of December 31, 2016 and 2015 that are pledged as securities to liabilities.

10. Other Current Assets

This account consists of:

2016 2015 (In Thousands) Input VAT P=454,460 P=386,366 Creditable withholding tax (CWT) 42,569 − Prepaid expenses 25,683 156,737 Dividends receivable − 18,500 Others 1,362 − P=524,074 P=561,603

Input VAT is applied against output VAT. The remaining balance is recoverable in future periods. This also includes input VAT deferred pertaining to unpaid services which are incurred and billings which had been received as of date.

CWTs are applied against income tax payable and are 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.

*SGVFS021348* - 30 -

11. Available-for-sale financial assets

AFS financial assets consist of investments in unquoted club shares of City Sports Club Cebu (CSCC) amounting to ₱318.6 million and ₱319.1 million as of December 31, 2016 and 2015, respectively. There is no change in the fair value of the investments in club shares in 2016.

12. Property and Equipment

The rollforward analysis of this account follow:

2016 Buildings Furniture, and Fixtures and Transportation Improvements Equipment Equipment Total (In Thousands) Cost At January 1 P=124,757 P=115,568 P=26,650 P=266,975 Transfer to investment property (Note 14) − (23) − (23) Additions 329 20,688 5,438 26,455 Reclassifications (3,301) 3,301 − − Disposals − (1,387) (1,225) (2,612) At December 31 121,785 138,147 30,863 290,795 Accumulated Depreciation At January 1 89,930 87,962 15,760 193,652 Depreciation and amortization (Note 23) 6,062 9,919 3,917 19,898 Reclassifications (4,436) 4,436 − − Transfer to investment property (Note 14) − (16) − (16) Disposals − (1,358) (941) (2,299) At December 31 91,556 100,943 18,736 211,235 Net Book Value P=30,229 P=37,204 P=12,127 P=79,560

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 14) 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 23) 5,043 10,191 3,650 18,884 Transfer from (to) investment property (Note 14) 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

Depreciation and amortization charged to general and administrative expenses amounted to P=19.9 million, P=18.9 million and P=18.1 million in 2016, 2015 and 2014, respectively (see Note 23).

Fully depreciated assets that are still in use amounted to P=245.3 million and P=102.4 million as of December 31, 2016 and 2015, respectively.

As of December 31, 2016 and 2015, there are no property and equipment items that are pledged as security to liabilities.

*SGVFS021348* - 31 -

13. Investments in Associates and a Joint Venture

The movements in investment in associates and joint venture accounted for under equity method follow:

2016 2015 (In Thousands) Cost Balance at January 1 P=1,171,426 P=967,626 Additional capital infusion 325,000 203,800 Balance at December 31 1,496,426 1,171,426 Accumulated equity in net income Balance at January 1 198,036 91,733 Equity in net income for the year 161,310 106,303 Balance at December 31 359,346 198,036 Accumulated equity in other comprehensive loss Balance at January 1 (1,078) (1,078) Equity in other comprehensive loss for the year − − Balance at December 31 (1,078) (1,078) P=1,854,694 P=1,368,384

There were no dividend income in 2016, 2015 and 2014.

The details of the Group’s investment in associates and a joint venture and the related percentages of ownership are shown below.

Percentages of Ownership Carrying Amounts December 31 December 31 2016 2015 2016 2015 (In Thousands) Associates: Solinea, Inc. (Solinea) 35% 35% P=421,107 P=304,160 Cebu Insular Hotels Company, Inc. (CIHCI) 37 37 247,243 242,407 Central Block Developers, Inc. (CBDI)* 57 57 489,409 162,432 Amaia Southern Properties, Inc. (ASPI) 35 35 136,802 108,657 Southportal Properties, Inc. (SPI) 35 35 113,950 103,575 Joint Venture: CDPEI 14 14 446,183 447,153 P=1,854,694 P=1,368,384 *Direct ownership and indirect ownership of the Parent Company is 30% and 56.6%, respectively.

The significant transactions affecting the Group’s investments in associates and a joint venture are as follows:

2016 In 2016, CHI and CPVDC made additional capital infusion to CBDI amounting to P=150.0 million and P=175.0 million, respectively, in relation to the latter’s increase in authorized capital stock. The transaction did not change the Parent Company’s ownership interest in CBDI.

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. Management assessed that ALI has control over CBDI through its BOD representation and its involvement in the relevant activities of CBDI.

*SGVFS021348* - 32 -

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 for a consideration of P=300.0 million and P=150.0 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.

As of December 31, 2016 and 2015, the statements of financial position of these investments in associates and a joint venture are as follows:

2016 CBDI CIHCI Solinea CDPEI (In Thousands) Current assets P=238,448 P=189,719 P=2,324,322 P=226,531 Noncurrent assets 914,085 592,180 1,477,482 3,258,004 Total assets P=1,152,533 P=781,899 P=3,801,804 P=3,484,535 Current liabilities P=399,591 P=117,661 P=2,809,976 P=181,949 Noncurrent liabilities − 10,816 127,129 328,027 Equity 752,942 653,422 864,699 2,974,559 Total liabilities and equity P=1,152,533 P=781,899 P=3,801,804 P=3,484,535

2015 CBDI CIHCI Solinea CDPEI (In Thousands) Current assets P=250,062 P=167,029 P=2,153,961 P=116,786 Noncurrent assets 67 636,574 1,133,939 3,013,443 Total assets P=250,129 P=803,603 P=3,287,900 P=3,130,229 Current liabilities P=229 P=153,046 P=2,738,110 P=149,206 Noncurrent liabilities − 10,816 19,222 − Equity 249,900 639,741 530,568 2,981,023 Total liabilities and equity P=250,129 P=803,603 P=3,287,900 P=3,130,229

*SGVFS021348* - 33 -

Σγδ ρσσδλδµσρ νε βνλοθδγδµρηυδ ηµβνλδ νε σγδρδ ηµυδρσλδµσρ ενθ σγδ ξδθρ δµχδχ Χδβδλαδθ 20+ 1/05+ 1/04 µχ 1/03 θδ ρ ενκκνϖρ9

CBDI CIHCI Solinea CDPEI (In Thousands)

For the year ended December 31, 2016 Revenue P=3,744 P=513,662 P=2,150,599 P=690 Costs and expenses 702 500,613 1,816,469 (7,155) Net income 3,042 13,049 334,130 (6,465) Other comprehensive loss − − − − Total comprehensive income (loss) P= 3,042 P=13,049 P=334,130 (P= 6,465)

For the year ended December 31, 2015 Revenue P=298 P=484,342 P=1,572,557 P=4,282 Costs and expenses 403 431,079 1,358,889 (7,276) Net income (loss) (105) 53,263 213,668 (2,994) Other comprehensive loss − − − − Total comprehensive income (loss) (P=105) P=53,263 P=213,668 (P=2,994)

For the year ended December 31, 2014 Revenue P=− P=465,913 P=954,347 P=− Costs and expenses − 421,797 787,863 − Net income − 44,116 166,484 − Other comprehensive loss − (2,908) − − Total comprehensive income P=− P=41,208 P=166,484 P=−

The Group’s total share in net income (loss) of associates and joint venture amounted to P=161.3 million, P=106.3 million and P=79.7 million in 2016, 2015 and 2014, respectively.

The aggregate financial information on associates with immaterial interest (ASPI and SPI) follows:

2016 2015 (In Thousands) Carrying amount P=250,753 P=212,232 Share in net income/total comprehensive income 38,521 12,297

*SGVFS021348* - 34 -

14. Investment Properties

The rollforward analysis of this account follow:

2016 Land Buildings and Construction Land Improvements Improvements in Progress Total (In Thousands) Cost At January 1 P=2,113,440 P=− P=8,507,125 P=1,947,581 P=12,568,146 Additions 3,349 14,059 194,807 641,808 854,023 Transfers from inventories − − (Note 9) 231,727 − 231,727 Reclassification (211) − 832,744 (832,744) (211) Transfer from property and equipment (Note 12) − − 23 − 23 Disposals − − (28,697) − (28,697) At December 31 2,348,305 14,059 9,506,002 1,756,645 13,625,011 Accumulated Depreciation At January 1 − − 2,256,856 − 2,256,856 Depreciation and amortization (Note 23) − 2,343 379,829 − 382,172 Transfer from property and equipment (Note 12) − − 16 − 16 Disposals − − (25,139) − (25,139) At December 31 − 2,343 2,611,562 − 2,613,905 Net Book Value P=2,348,305 P=11,716 P=6,894,440 P=1,756,645 P=11,011,106

2015 Land Buildings and Construction Land Improvements Improvements in Progress Total (In Thousands) Cost At January 1 P=1,900,552 P=− 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 − (Note 9) 52,007 − − 52,007 Reclassification − − 695,525 (695,525) − Transfer to property and equipment (Notes 12 and 32) − − (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 23) − − 339,141 − 339,141 Transfer from property and equipment (Notes 12 and 32) − − (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=− P=6,250,269 P= 1,947,581 P=10,311,290

The Group’s investment properties consist of land and building held for commercial leasing to earn rentals.

The Group transferred P=231.7 million and P=57.0 million worth of subdivision lot to investment properties from inventories in 2016 and 2015, respectively (see Note 9).

Depreciation charged to operations amounted to P=382.2 million, P=339.1 million and P=294.7 million in 2016, 2015 and 2014, respectively (see Note 23). *SGVFS021348* - 35 -

Total rental income from investment properties amounted to P=1,849.0 million, P=1,653.6 million and P=1,381.6 million in 2016, 2015 and 2014, respectively (see Note 21). Total direct operating expenses related to investment properties that generated rental income amounted to P=915.5 million, P=844.7 million and P=781.0 million in 2016, 2015 and 2014, respectively.

Borrowing costs capitalized to construction-in-progress amounted to P=55.09 million and P=31.8 million in 2016 and 2015, respectively (see Note 18). Capitalization rate used for general borrowings is at 4.75% in 2016 and 2015, respectively.

As of December 31, 2016 and 2015, there are no investment properties that are pledged as security to liabilities.

The aggregate fair value of the Group’s investment properties amounted to P=25,672.7 and P=17,395.8 million as of December 31, 2016 and 2015 which is based on the latest appraisal report. 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 Sales Comparison Approach and Cost Approach, respectively.

Sales comparison approach is comparative approach to value that considers the sales of similar or substitute properties and related market data and establishes a value estimate by processes involving comparison. Listings and offerings may also be considered.

Cost Approach is a comparative approach to the value of property or another asset that considers as a substitute for the purchase of a given property, the possibility of constructing another property that is a replica of, or equivalent to, the original or one that could furnish equal utility with no undue cost resulting from delay. It is based on the reproduction/replacement cost (new) of the subject property or asset, less total (accrued) depreciation, plus the value of the land to which an estimate of entrepreneurial incentive or developer’s profit/loss is commonly added.

Description of valuation techniques used and key inputs to valuation on land and buildings included under investment properties as of December 31, 2016 and 2015 follows:

Significant unobservable Property Valuation technique inputs Range Land Sales comparison Price per square Approach meter P=7,000 - P=96,000

Buildings Cost approach Reproduction cost Current cost of constructing a replica of the existing structures, employing the same design and similar building materials. The current cost of an identical new item

Replacement cost Cost of replacing an asset with an equally satisfactorily substitute asset. Normally derived from the current acquisition cost of a similar asset, new or used, or of an equivalent productive capacity or service potential.

*SGVFS021348* - 36 -

15. Land and improvements

On February 9, 2016, the Group purchased two (2) parcel of land located in Lahug, Cebu City for a total consideration of P=257.0 million and incurred additional related costs amounting to P=6.8 million.

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. In 2016, the Group incurred additional land development costs amounting to P=59.2 million.

As of December 31, 2016 and 2015, the Group’s land and improvements amounted to P=2.6 billion and P=2.3 billion, respectively. Outstanding liability for land acquisition amounted to P=703.1 million and P=1.1 billion as of December 31, 2016 and 2015, respectively (see Note 17).

16. Other Noncurrent Assets

This account consists of:

2016 2015 (In Thousands) Deferred input tax P=13,762 P=16,066 Deposits 1,208 3,032 Dividends receivable − 12,644 Others 577 11,699 P=15,547 P=43,441

Deferred input tax arises from purchase of capital goods and is recoverable in future periods. This is amortized over five (5) years or the assets’ useful life, whichever is lower, and is applied against output tax.

Deposits include advance payments made by the Group for future land and building developments.

Dividends receivable represents dividends declared by CIHCI in prior periods.

17. Accounts and Other Payables

This account consists of:

2016 2015 (In Thousands) Payable to related parties (Note 20) P=1,567,261 P=1,950,911 Accrued project costs (Note 20) 1,290,771 1,388,197 Liability for purchased land (Notes 15 and 19) 703,138 1,054,707 Accrued expenses 573,674 330,215 Retentions payable 250,399 421,788 Taxes payable 245,974 147,074 Interest payable 48,315 57,581 Dividends payable 1,751 13,672 Others 41,586 36,953 4,722,869 5,401,098 Noncurrent portion of liability purchased (Note 19) 351,569 703,138 P=4,371,300 P=4,697,960 *SGVFS021348* - 37 -

Accrued expenses consist mainly of utilities, marketing and management fees, professional fees and repairs and maintenance. These are non-interest bearing and are normally settled within a year.

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.

Taxes payable includes amusement taxes, expanded withholding taxes and deferred output VAT on uncollected receivables. These are settled on a monthly basis.

Dividends payable pertains to dividends declared by CPVDC payable to noncontrolling interest (see Note 28).

Interest payable pertain to unpaid interest expense on long-term debt as of reporting date.

Noncurrent portion of liability for land purchased is presented as part of Deposits and other noncurrent liabilities in the statement of financial position.

Other payables are noninterest-bearing and are normally settled within one year.

18. Long-term debt

This account consists of long-term bonds and bank loans of the Group as follows:

2016 2015 (In Thousands) Bonds: Due 2021 (Note 18a) 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; Interest payable every quarter, 50% of principal is payable in equal quarterly installment and the remaining 50% is payable on maturity date (Note 18b) 405,000 472,500 Fixed rate corporate notes with interest rate of 4.75% per annum (Note 18c) 399,000 420,000 At 0.95% of BSP overnight reverse repurchase Agreement rate inclusive of gross receipts tax (Note 18d) 378,125 − At 0.50% per annum spread over the average fixed rate of 7-year treasury bond rate on PDST-R2 rate (Note 18b) 3,000 3,500 At 0.38% per annum spread over the floating rate of BSP overnight reverse repurchase agreement rate (Note 18e) − 380,000 6,185,125 6,276,000 Less unamortized debt issue cost 36,814 43,460 6,148,311 6,232,540 Less current portion 442,279 107,873 P=5,706,032 P=6,124,667

*SGVFS021348* - 38 -

The Group’s long-term debt are all unsecured. Debt issue costs are deferred and amortized using effective interest method over the term of the loans.

The rollforward analysis of the unamortized debt issue cost follow:

2016 2015 (In Thousands) At January 1 P=43,460 P=50,395 Additions 1,900 − Amortization (Note 23) (8,546) (6,935) At December 31 P=36,814 P=43,460 a. 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 was 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. b. In October 2010, the Group obtained various loans with a total principal amount of P=680.0 million which are due on 2017. In respect with the fixed rate 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=3.0 million and P=3.5 million as of December 31, 2016 and 2015, 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=405.0 million and P=472.5 million as of December 31, 2016 and 2015, respectively. The interest is payable every quarter. Fifty percent (50%) of principal is payable in equal quarterly installments and the remaining balance is payable on maturity date. c. In December 2013, the Group obtained a loan with a principal amount of P=420.0 million which are due in 2021. The loan is subject to fixed interest rate of 4.75% per annum. This loan was used to finance the construction of eBloc 3 and eBloc 4 commercial buildings included under “Investment properties”. The related outstanding balance amounted to P=399.0 million and P=420.0 million as of December 31, 2016 and 2015, respectively. The interest is payable every quarter. Twenty five percent (25%) of principal is payable in twenty (20) installments starting on the first quarter of 2016 and the remaining seventy five percent (75%) is payable on maturity date. Total payments related to this loan amounted to P=21.0 million in 2016. d. In March 2016, the Group obtained a credit facility amounting to P=800.0 million. In 2016, the Group made the first drawdown amounting to P=380.0 million which will mature in 2023 and was used to finance the construction of eBloc 3. 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 70 basis points per annum or 95% of Banko Sentral ng Pilipinas Overnight Reverse Repurchase Agreement rate, inclusive of gross receipts tax, whichever is higher. The related outstanding balance amounted to P=378.1 million as of December 31, 2016. e. In December 2012 and February 2013, the Group obtained loans with a maximum principal amount of P=400.0 million. These loans will 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. In March 2016, the loans were pre-terminated. As of December 31, 2015, outstanding balance amounted to P=380.00 million. The loan was preterminated in 2016.

*SGVFS021348* - 39 -

Interest on long-term debt recognized in the consolidated statements of income amounted to P=247.7 million, P=346.2 million, and P=182.4 million in 2016, 2015 and 2014, respectively.

For the years ended December 31, 2016 and 2015, the Group has capitalized interest from borrowed funds as part of the investment properties account amounting to P=115.9 million and P=31.8 million, respectively (see Note 14).

Debt covenant 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, 2016 and 2015.

19. Deposits and Other Liabilities

This account consists of the following:

2016 2015 (In Thousands) Tenants’ deposits P=782,399 P=632,110 Liability for purchased land (Note 17) 351,569 703,138 Customers’ deposits 189,719 203,750 Construction bond 66,978 65,251 1,390,665 1,604,249 Less noncurrent portion 591,366 953,397 P=799,299 P=650,852

The rollforward analysis of deferred credits under tenants’ deposits follow:

2016 2015 At January 1 P=16,486 P=10,208 Additions 4,858 13,253 Amortization (Note 23) (5,594) (6,975) At December 31 P=15,750 P=16,486

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.

Construction bond 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.

*SGVFS021348* - 40 -

20. Related Party Transactions

Parties are considered to be related if, among others, one party has the ability directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or the party is an associate or a joint venture.

Terms and Conditions of Transactions with Related Parties 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 Amounts owed to parties related parties 2016 2015 2016 2015 (In Thousands) Subsidiaries of ALI P=953,436 P=1,775,962 P=966,372 P=1,454,777 Associates SPI 395,253 445,116 − − Solinea 251,295 251,234 − − CBDI 72,501 65,104 − − CIHC 8,144 − − − Parent Company - ALI 22,009 13,806 600,869 495,060 Joint venture - CDPEI 1,551 125,807 − − Others 379 1,804 20 1,074 P=1,704,568 P=2,678,833 P=1,567,261 P=1,950,911

Revenue Costs/Expenses 2016 2015 2014 2016 2015 2014 (In Thousands) (In Thousands) Associates - SPI P=− P=330,711 P=− P=− P=− P=− Joint venture - CDPEI − 122,978 − − − − Parent Company - ALI 5,635 8,115 3,855 168,636 180,268 122,322 Subsidiaries of ALI 8,876 635,769 2,895 30,755 27,046 14,629 P=14,511 P=1,097,573 P=6,750 P=199,391 P=207,314 P=136,951

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, 2016 and 2015.

*SGVFS021348* - 41 -

The nature and amounts of material transactions with related parties as of December 31, 2016 and 2015 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=125.0 million, P=133.1 million and P=79.8 million in 2016, 2015 and 2014, respectively. Payable to ALI as of December 31, 2016 and 2015 arising from this transaction amounted to P=187.61 million and P=187.61 million respectively. Professional fees charged by ALI amounted to P=1.2 million, P=20.7 million and P=18.9 million in 2016, 2015 and 2014, respectively. Systems costs which were included in the Group’s manpower costs amounted to P=27.6 million, P=25.06 million and P=32.1 million in 2016, 2015 and 2014, respectively.

Compensation of key management personnel by benefit type follows:

2016 2015 2014 (In Thousands) Short-term employee benefits P=24,073 P=21,336 P=26,067 Post-employment pension and other benefits 924 1,025 2,270 P=24,997 P=22,361 P=28,337

21. Real Estate Revenue

This account consists of:

2016 2015 2014 (In Thousands) Rental income (Note 14) P=1,848,997 P=1,653,632 P=1,381,638 Real estate sales (Note 20) 297,610 1,337,422 237,295 Theater income 132,082 143,192 135,541 P=2,278,689 P=3,134,246 P=1,754,474

*SGVFS021348* - 42 -

22. Interest and Other Income

Interest income consists of:

2016 2015 2014 (In Thousands) Interest income derived from: Cash and cash equivalents (Note 5) P=841 P=8,049 P=11,846 Short-term investments (Note 6) 472 971 – Accretion of receivables (Note 8) 22,903 22,542 40,111 Others 11,699 66,557 19,211 P=35,915 P=98,119 P=71,168

Accretion of receivables includes interest accretion from sale of land and condominium units.

Others includes interest earned from intercompany and employee loans and interest and penalty charges on real estate sales.

Other income consists of:

2016 2015 2014 (In Thousands) Recoveries - net P=175,379 P=311,482 P=339,929 Service income 5,082 29,389 32,795 Beverage 4,112 5,659 5,488 Realized and unrealized gain on financial assets at FVPL (Note 7) 316 2,820 3,489 Others 53,670 52,241 6,557 P=238,559 P=401,591 P=388,258

Recoveries pertain excess collection 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.

Others include annexation and service fees wherein, on July 31, 2015, a third party owning a land adjacent to Cebu IT Park, paid for annexation fee amounting to P=29.5 million to gain an access on roads and IT Park Association membership. The land was subsequently sold to another third party on August 26, 2016 which requires service fee to the Group amounting to P=27.07 million for processing of titles as well as application with PEZA and HLURB.

*SGVFS021348* - 43 -

23. Costs and Expenses

Real estate, rental and theater expenses consist of:

2016 2015 2014 (In Thousands) Cost of real estate sales (Note 9) P=179,335 P=571,945 P=154,885 Depreciation and amortization (Note 14) 382,172 339,141 294,677 Marketing and management fees (Note 20) 199,567 246,609 151,264 Producers’ film share 74,051 79,159 75,424 Manpower cost (Note 20) 22,838 17,640 13,846 Rental 2,540 2,661 1,179 Direct operating expenses: Security and janitorial 101,935 88,830 85,224 Repairs and maintenance 100,160 90,292 65,176 Light and water 86,454 179,159 180,030 Taxes and licenses 79,208 55,739 60,114 Commission 17,579 28,152 7,809 Dues and fees 11,320 10,537 6,332 Professional fees 6,689 8,763 2,450 Insurance 6,188 16,562 3,239 Transportation and travel 588 691 399 Representation 399 230 70 Provision for impairment loss − 36,518 − Others 24,824 21,356 25,054 P=1,295,847 P=1,793,984 P=1,127,172

General and administrative expenses consist of:

2016 2015 2014 (In Thousands) Manpower cost (Notes 20 and 24) P=120,623 P=119,526 P=129,267 Depreciation and amortization (Note 12) 19,898 18,884 18,067 Stockholders' meeting 11,171 9,948 4,286 Professional fees 7,956 5,814 9,664 Repairs and maintenance 6,542 7,030 6,903 Transportation and travel 5,072 5,414 7,770 Postal and communication 3,625 3,801 3,582 Utilities 3,568 2,143 2,745 Trainings 3,336 3,548 9,642 Security and janitorial 2,899 2,029 5,270 Supplies 2,844 2,880 3,443 Advertising 2,601 2,112 7,213 Rental 2,487 2,370 2,631 Representation 1,561 1,163 1,022 Dues and fees 1,082 1,132 − Taxes and licenses 892 806 13,742 Insurance 510 621 1,188 Provision for impairment loss (Note 8) − 3,106 − Others 2,354 30,850 3,408 P=199,021 P=223,177 P=229,843

*SGVFS021348* - 44 -

Other charges consist of:

2016 2015 2014 (In Thousands) Amortization of discount on long-term debt (Note 18) P=8,546 P=6,935 P=13,095 Amortization of deferred credits (Note 19) 5,594 6,975 7,251 Provisions and other expenses 50,746 88,983 2,936 P=64,886 P=102,893 P=23,282

Other expenses include interest on intercompany loans, provision for various claims, write-off of assets, etc.

24. 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 covering all regular and permanent employees. The retirement plan is intended to provide for benefit payments to employees equivalent to higher of retirement fund credit or 150% of plan salary for every year of credited services. Benefits are paid in lump sum payable immediately.

The plan assets are being managed by BPI. 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 Group contributes to the fund based on the provision of the Defined Contribution Plan. The Group updates the actuarial valuation every year by hiring the services of a third party professional qualified actuary. The latest actuarial valuation report was as of reporting date.

*SGVFS021348* - 45 -

Changes in net defined liability in 2016 and 2015 are as follows:

2016 Net benefit cost in consolidated statement of comprehensive income Remeasurement in other comprehensive income Actuarial changes arising from Current Past Benefits Benefits paid Return on changes in January service service Net paid from directly by plan financial Experience December 31, 1, 2016 cost cost interest Subtotal plan assets the Group assets assumptions adjustments Subtotal 2016 Present value of defined benefit obligation P=89,242 P=7,596 P=− P=4,420 P=12,016 (P=1,989) P=− P=− (P=21,646) P=1,075 (P=20,571) P=78,698 Fair value of plan assets (33,210) − − (1,749) (1,749) 1,989 (15,005) 1,476 − − 1,476 (46,499) Net defined benefit liability (asset) P=56,032 P=7,596 P=− P=2,671 P=10,267 P=− (P=15,005) P=1,476 (P=21,646) P=1,075 (P=19,095) P=32,199

2015 Net benefit cost in consolidated statement of comprehensive income Remeasurement in other comprehensive income Actuarial changes arising Current Past Benefits paid Benefits paid from changes January service service Net from plan directly by the Return on in financial Experience December 31, 1, 2016 cost cost interest Subtotal assets Group plan assets assumptions adjustments Subtotal 2016 Present value of defined benefit obligation P=85,214 P=9,917 P=− P=2,566 P=12,483 (P=5,159) P=− P=− (P=5,605) P=2,309 (P=3,296) P=89,242 Fair value of plan assets (29,480) − − (1,288) (1,288) 5,159 (7,696) 95 − − 95 (33,210) Net defined benefit liability (asset) P=55,734 P=9,917 P=− P=1,278 P=11,195 P=− (P=7,696) P=95 (P=5,605) P=2,309 (P=3,201) P=56,032

*SGVFS021348* - 46 -

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 Group expects to contribute P=7.2 million to its retirement fund in 2017.

The major categories of the Group’s plan asset follows:

2016 2015 Fixed income instruments 99.84% 76.12% Cash and cash equivalents 0.16 23.88 100.00% 100%

All debt instrument held have quoted prices in active market.

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:

2016 2015 2014 Discount rate 5.25% 5.00% 4.50% Salary increase rate 5.00 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, 2016 2015 Discount rate 1.0% increase (9.45%) (11.05%) Discount rate 1.0% decrease 11.19 13.14 Rate of salary increase 1.0% increase 11.11 12.75 Rate of salary increase 1.0% decrease (9.55) (10.96)

The weighted average duration of the defined benefit obligation at the end of the reporting period is 12 years.

The following table shows the maturity profile of the Group’s defined benefit obligation based on undiscounted benefit payments:

2016 2015 (In Thousands) Within 1 year P=4,727 P=673 More than 1 year to 5 years 16,231 5,871 More than 5 years to 10 years 2,362 10,644 More than 10 years 38,920 175,413 P=62,240 P=192,601

*SGVFS021348* - 47 -

25. Income Taxes

The provision for current income tax represents 30% regular income tax (RCIT,) 2% minimum corporate income tax (MCIT) and 5% rate on gross income tax (GIT) totaling P=132.1 million, P=207.4 million and P=145.5 million in 2016, 2015 and 2014, respectively.

Reconciliation between the statutory income tax rate and the effective income tax rate follows:

2016 2015 2014 Statutory income tax rate 30.00% 30.00% 30.00% Tax effects of: Income subjected to lower income tax rates (13.27) (2.44) (5.18) Equity in net earnings of associates and a joint venture (7.28) (9.60) (3.31) Interest income and capital gains taxed at lower rates (0.03) (0.03) (0.02) Expired NOLCO 3.54 1.30 − Others 6.36 6.57 1.09 Effective income tax rate 19.32% 25.80% 22.58%

The components of net deferred tax assets as of December 31, 2016 and 2015 are as follow:

2016 2015 (In Thousands) Deferred tax assets on: Unapplied NOLCO P=24,329 P=− Advance rent 15,304 − Interest accretion 7,708 − MCIT 2,193 − Allowance for impairment losses 641 641 Unamortized discount on customers’ deposits 79 79 Others 181 − 50,435 720 Deferred tax liabilities on: Capitalized interest 16,892 − Accrued rental income 9,377 − Difference between tax and book basis of accounting for real estate transactions 2,322 − Others 3,008 68 31,599 68 P=18,836 P=652

The components of net deferred tax liabilities as of December 31, 2016 and 2015 are as follows:

2016 2015 (In Thousands) Deferred tax assets on: Allowance for impairment losses P=25,458 P=26,929 Accrued expenses 20,020 23,925 Interest accretion on sale of land 13,794 16,115 Retirement benefits 8,117 13,344 Advance rent 1,195 8,849 Unrealized foreign exchange loss 715 923 Interest accretion on rental deposits 10 1,340 Unapplied NOLCO − 30,813 Others 2,329 20,496 71,638 142,734

(Forward) *SGVFS021348* - 48 -

2016 2015 (In Thousands) Deferred tax liabilities on: Unrealized gross profit on lot sale P=145,813 P=147,255 Unamortized capitalized interest 92,215 75,840 Difference between tax and book basis of accounting for real estate transactions 63,615 74,564 Accrued rent − 6,582 Amortized deferred income − 1,367 Capitalized transaction cost − 619 Others 6,160 5,598 307,803 311,825 P=236,165 P=169,091

As of December 31, 2016 and 2015, deferred tax assets arising from NOLCO amounting to P=4.8 million and P=15.3 million, respectively, have not been recognized by TPEPI.

The Group has deductible temporary differences, NOLCO and MCIT that are available for offset against future income tax liabilities for which deferred tax assets have not been recognized. These deductible temporary differences, NOLCO and MCIT follow:

NOLCO Year Incurred Amount Applied/Expired Balance Expiry Date 2013 P=32,131,800 P=32,131,800 P=− 2016 2014 37,354,687 − 37,354,687 2017 2015 48,495,209 − 48,495,209 2018 P=117,981,696 P=32,131,800 P=85,849,896

MCIT Year Incurred Amount Applied/Expired Balance Expiry Date 2016 P=2,192,808 P=− P=2,192,808 2019 2015 194,886 − 194,886 2018 2014 76,948 − 76,948 2017 P=2,464,642 P=− P=2,464,642

26. Basic/Diluted Earnings Per Share

The following table presents information necessary to compute EPS:

2016 2015 2014 (In Thousands, except EPS) a. Net income attributable to the equity holders of the Parent Company P=679,663 P=827,207 P=530,877 b. Weighted average number of outstanding shares 1,920,074 1,920,074 1,920,074 c. Basic/Diluted Earnings per share (a/b) P=0.35 P=0.43 P=0.28

There were no potential dilutive shares in 2016, 2015, and 2014.

*SGVFS021348* - 49 -

27. Financial Information and Financial Instruments

Fair Value Information The carrying amount of cash and cash equivalents, short-term investments, financial assets at FVPL, receivables (except trade residential development and certain receivables from related parties), accounts and other payables (excluding statutory liabilities) and deposits and other liabilities (except tenants’ deposits) are approximately equal to their fair value due to the short- term nature of the transaction.

The methods and assumptions used by the Group in estimating the fair value of the financial instruments are as follows:

· Cash and cash equivalents and short-term investments: The fair value of cash and cash equivalents and short-term investment approximate the carrying amounts at initial recognition due to the short-term maturities of these instruments. · Financial assets at FVPL: The fair value estimates are based on net assets value of the reporting date. · Receivables: The fair value of receivables due within one year approximates its carrying amounts. Noncurrent portion of receivables are discounted using the applicable discount rates for similar types of instruments. The discount rates used ranged from 3.7% to 5.0% as of December 31, 2016 and 2015. · AFS financial assets: The fair value of AFS financial assets is determined based on the available selling price in the market. · Accounts and other payables: The fair values of accounts and other payables approximate the carrying amounts due to the short-term nature of these transactions. · Long-term debt and deposits and other liabilities: Current portion of long-term debt and deposits and other liabilities approximates its fair value due to its short-term maturity. 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 value. The discount rates used ranged from 1.8% to 5.3% as of December 31, 2016 and 2015.

The following tables set forth the carrying values and estimated fair values of the Group’s financial assets and liabilities carried at fair values and those which fair value are disclosed:

December 31, 2016 December 31, 2015 Carrying Carrying Value Fair Value Value Fair Value (In Thousands) Loans and Receivables Trade residential development P=160,587 P=110,063 P=235,272 P=219,031 Receivable from related parties 642,978 803,718 947,148 843,185 Other Financial Liabilities Long-term debt P=6,148,311 P=6,185,125 P=6,232,540 P=6,276,000 Tenants’ deposits under deposits and other liabilities 782,399 766,649 632,110 615,624

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 and 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 *SGVFS021348* - 50 -

The quantitative disclosure on fair value measurement hierarchy for assets as of December 31, 2016 and 2015 follow:

2016 Fair value measurements using Quoted prices in active markets Significant for offer Significant identical observable unobservable Carrying assets inputs inputs Date of valuation Values Total (Level 1) (Level 2) (Level 3) Assets measured at fair value AFS December 31, 2016 P=318,574 P=318,574 P=− P=– P=318,574 FVPL December 31, 2016 21,908 21,908 21,908 – – Assets for which fair values are disclosed Investment properties December 31, 2016 11,011,106 11,011,106 − − 25,672,676

2015 Fair value measurements using Quoted prices in active markets Significant for offer Significant identical observable unobservable Carrying assets inputs inputs Date of valuation Values Total (Level 1) (Level 2) (Level 3) Assets measured at fair value AFS December 31, 2016 P=319,136 P=319,136 P= − P=− P=319,136 FVPL December 31, 2016 73,565 73,565 73,565 − − Assets for which fair values are disclosed Investment properties December 31, 2016 10,311,290 10,311,290 − − 17,395,820

The Group categorized the fair value of long-term debt and deposits and other noncurrent liabilities under Level 3 as of December 31, 2016. 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.

There have been no reclassifications between Level 1, 2 and 3 categories in 2016 and 2015.

Financial Risk Management Objectives and Policies The Group’s principal financial instruments comprise cash and cash equivalents, financial assets at FVPL, AFS financial assets 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.

*SGVFS021348* - 51 -

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 receivables. To manage credit risk, the Group maintains defined credit policies and monitors its exposure to credit risks on a continuous basis.

In respect of receivable from the sale of properties, credit risk is managed primarily through credit reviews and an analysis of receivables on a continuous basis. The Group also undertakes supplemental credit review procedures for certain installment payment structures. The Group’s stringent customer requirements and policies in place contribute to lower customer default than its competitors. Customer payments are facilitated through various collection modes including the use of postdated checks and auto-debit arrangements. Exposure to bad debts is not significant as title to real estate properties are not transferred to the buyers until full payment has been made and the requirement for remedial procedures is minimal given the profile of buyers.

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 helps 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.

Other financial assets are comprised of cash and cash equivalents excluding cash on hand, short- term investments, financial assets at FVPL and AFS financial assets. The Group adheres to fixed limits and guidelines in its dealings with counterparty banks and its investment in financial instruments. Bank limits are established on the basis of an internal rating system that principally covers the areas of liquidity, capital adequacy and financial stability. The rating system likewise makes use of available international credit ratings. Given the high credit standing of its accredited counterparty banks, management does not expect any of these financial institutions to fail in meeting their obligations. Nevertheless, the Group closely monitors developments over counterparty banks and adjusts its exposure accordingly while adhering to pre-set limits.

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.

*SGVFS021348* - 52 -

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, 2016 Financial effect Maximum of collateral exposure to Fair value of or credit credit risk collaterals Net Exposure enhancement (In Thousands) Trade receivables Shopping centers P=114,665 P=696,194 P=− P=114,665 Residential development 160,587 53,049 107,538 53,049 Corporate business 36,592 121,116 − 36,592 Commercial development 11,115 − 11,115 − P=322,959 P=870,359 P=118,653 P=204,310

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=235,272 P=156,753 P=78,519 P=156,753 Shopping centers 136,033 510,121 − 136,033 Corporate business 26,195 204,705 − 26,195 Commercial development 10,812 − 10,812 − P=408,312 P=871,579 P=89,331 P=318,981

The table below shows the credit quality by class of the Group’s financial assets (gross of allowance for impairment losses):

December 31, 2016

Neither Past Due nor Impaired Medium Past Due or High Grade GradeLow Grade Impaired Total (In Thousands)

Cash and cash equivalents (excluding cash on hand) P=94,538 P=− P=− P=− P=94,538 Financial assets at FVPL 21,908 − − − 21,908 Trade Residential development 134,891 − − 25,696 160,587 Shopping centers 27,129 6,947 9,008 71,581 114,665 Corporate business 18,870 − − 17,722 36,592 Commercial development 1,488 − − 9,627 11,115 Receivable from related parties 1,541,607 − − 162,961 1,704,568 Receivables from employees 18,424 − − − 18,424 Accrued receivable 162,657 − − − 162,657 Others 62,763 − − − 62,763 AFS financial assets − − 318,574 36,518 355,092 P=2,084,275 P=6,947 P=327,582 P=324,105 P=2,742,909 *SGVFS021348* - 53 -

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 175,584 − − 59,688 235,272 Shopping centers 66,470 2,274 10,163 57,126 136,033 Corporate business 16,570 − − 9,625 26,195 Commercial development 9,699 − − 1,113 10,812 Receivable from related parties 2,678,833 − − − 2,678,833 Receivables from employees 17,191 − − 17,191 Accrued receivable 93,111 − − − 93,111 Others 63,819 − − − 63,819 AFS financial assets − − 319,136 36,518 355,654 Dividends receivable * 31,144 − − − 31,144 P=3,341,152 P=2,274 P=329,299 P=164,070 P=3,836,795 *Presented under other current assets amounting to P=18,500 and other non current assets amounting to P=12,644

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.

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, 2016 and 2015, 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.

*SGVFS021348* - 54 -

Given the Group’s diverse base of counterparties, it is not exposed to large concentration of credit risk. As of December 31, 2016 and 2015, the aging analysis of receivables presented per class, is as follow:

December 31, 2016 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=134,891 P=− P=− P=− P=8,231 P=17,465 P=− P=160,587 Shopping centers 43,084 8,702 6,286 5,957 10,167 23,786 16,683 114,665 Corporate business 18,870 − 1,444 7,237 4,835 4,206 − 36,592 Commercial 1,488 − − − 214 9,413 − 11,115 development Receivable from related 1,541,607 − 33,051 76,093 434 53,383 − 1,704,568 parties Receivable from 18,424 − − − − − − 18,424 employees Accrued receivable 162,657 − − − − − − 162,657 Others 62,763 − − − − − − 62,763 P=1,983,784 P=8,702 P=40,781 P=89,287 P=23,881 P=108,253 P=16,683 P=2,271,371

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=175,584 P=− P=855 P=11,870 P=20,341 P=26,622 P=− P=235,272 Shopping centers 78,907 − 7,388 4,534 5,571 22,950 16,683 136,033 Corporate business 16,570 − 3,171 705 1,864 3,885 − 26,195 Commercial 9,699 − 1 8 − 1,104 − development 10,812 Receivable from related 2,678,833 − − − − − − 2,678,833 parties Receivable from 17,191 − − − − − − 17,191 employees Accrued receivable 93,111 − − − − − − 93,111 Others 63,819 − − − − − − 63,819 Dividends receivable * 31,144 − − − − − − 31,144 P=3,164,858 P=− P=11,415 P=17,117 P=27,776 P=54,561 P=16,683 P=3,292,410 *Presented under other current assets amounting to P=18,500 and other non current assets amounting to P=12,644

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, 2016, current ratio is 0.59:1.0, with cash and cash equivalents and financial at FVPL of P=116.8 million accounting for 3.5% of the total current assets, and resulting in a net working capital of P=260.5 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. *SGVFS021348* - 55 -

The table below summarizes the maturity profile of the Group’s financial assets and financial liabilities at December 31, 2016 and 2015 based on the contractual undiscounted payments.

December 31, 2016

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total (In Thousands) Cash and cash equivalents (excluding cash on hand) P=94,538 P=− P=− P=− P=94,538 Financial assets at fair value through profit or loss 21,908 − − − 21,908 Receivable 1,222,696 364,921 408,969 274,785 2,271,371 Dividends receivable − − − − − Total financial assets P=1,339,142 P=364,921 P=408,969 P=274,785 P=2,387,817 Accounts and other payables P=4,125,326 P=− P=− P=− P=4,125,326 Long-term debt 442,279 39,451 78,931 5,587,650 6,148,311 Interest payable – long-term debt 55,111 297,136 295,416 861,545 1,509,208 Deposits and other liabilities 782,025 527,803 21,348 59,489 1,390,665 Total other financial liabilities P=5,404,741 P=864,390 P=395,695 P=6,508,684 P=13,173,510

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 Receivable 3,190,022 54,561 16,683 3,261,266 Dividends receivable 18,500 12,644 − − 31,144 Total financial assets P=3,397,253 P=67,205 P=16,683 P=− P=3,481,141 Accounts and other payables P=4,550,886 P=− P=− P=− P=4,550,886 Long-term debt 107,873 407,588 359,327 5,357,752 6,232,540 Interest payable – long-term debt 14,474 279,659 278,884 1,064,000 1,637,017 Deposits and other liabilities 1,604,249 − − − 1,604,249 Total other financial liabilities P=6,277,482 P=687,247 P=638,211 P=6,421,752 P=14,024,692 *Presented under other current assets amounting to P=18,500 and other non current assets amounting to P=12,644

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, 2016 and 2015:

December 31, 2016 December 31, 2015 Php Php US Dollar Equivalent US Dollar Equivalent (In Thousands) Cash and cash equivalents $263 P=13,076 $26 P=1,220

*SGVFS021348* - 56 -

In translating the foreign currency-denominated monetary assets into peso amounts, the exchange rates used were P=49.72 to US$1.00 and P=47.06 to US$1.00, the Philippine Peso-US Dollar exchange rates as at December 31, 2016 and 2015, 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, 2016 P=1.00 P=263 (1.00) (263) December 31, 2015 1.00 26 (1.00) (26)

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, 2016 and 2015 with all variables held constant, (through the impact on floating rate borrowings):

Βγµφδ ηµ αρηρ ονηµσρ 2016 1/04 ∋Ηµ Σγντρµχρ( ∆εεδβσ νµ ηµβνλδ αδενθδ ηµβνλδ 0// αρηρ ονηµσρ (P=7,840) ∋P= 7+430( σω Ηµβθδρδ ∋χδβθδρδ( 0// αρηρ ονηµσρ 7,840 7+430

+ -

*SGVFS021348* - 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, 2016

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=94,538 P=94,538 P=− P=94,538 Accounts receivable Fixed at the date of sale Date of Sale 2,271,371 1,222,696 1,048,675 2,271,371 P=2,365,909 P=1,317,234 P=1,048,675 P=2,365,909 Parent Company Long-term debt Fixed Peso Fixed rate of average 5-year treasury bond + 0.60% spread Maturity date P=5,000,000 P=− P=4,966,530 P=4,966,530 Peso Fixed rate corporate notes Maturity date 399,000 20,704 377,070 397,774 Peso Fixed rate 7-year treasury bond + 0.50 spread Maturity date 3,000 2,997 − 2,997 Floating Peso Floating rate of average 91-day treasury bill rate + 0.65% spread Maturity date 405,000 404,591 − 404,591 Peso Floating rate of average 91-day treasury bill rate + 0.70% spread Maturity date 378,125 13,987 362,432 376,419 P=6,185,125 P=442,279 P=5,706,032 P=6,148,311

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=5,000,000 P=– P=4,959,978 P=4,959,978 Peso Fixed rate 8 year loan Maturity date 420,000 20,699 397,902 418,601 Peso Fixed rate 7-year treasury bond + 0.50 spread Maturity date 3,500 497 2,997 3,494 Floating Peso Floating rate of average 91-day treasury bill rate + 0.65% spread Maturity date 472,500 67,026 404,593 471,619 Peso Floating rate of average 91-day treasury bill rate + 0.80% spread Maturity date 380,000 19,652 359,196 378,848 P=6,276,000 P=107,874 P=6,124,666 P=6,232,540 *SGVFS021348* - 58 -

The maturities of long-term debt at nominal values as of December 31 follow:

2016 2015 (In Thousands) Due in: 2016 P=− P= 109,000 2017 443,250 449,000 2018 40,000 361,000 2019 40,000 21,000 2020 40,000 21,000 2021 5,334,000 5,315,000 2022 19,000 − 2023 268,875 − P=6,185,125 P= 6,276,000

In March 2016, the Group obtained a credit facility amounting to P=800.0 million. As of December 31, 2016, the undrawn amount amounted to P=420.0 million.

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 0.09 year and 0.18 year for 2016 and 2015, respectively, a 1.0% change in NAVPU will increase/decrease net income and equity by P=0.01 million and P=0.1 million for the years ended December 31, 2016 and 2015, respectively.

28. Equity

Capital Stock The details of the Parent Company’s common shares are as follows:

2016 2015 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.

2016 2015 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 4,150 4,151 P=4.00 issue price

Additional paid-in capital (APIC) The excess of subscription received over the par value were charged to APIC amounted to P=856.7 million as of December 31, 2016 and 2015.

*SGVFS021348* - 59 -

Unappropriated retained earnings The retained earnings available for dividend distribution amounted to P=1,478.8 million and P=1,398.1 million as of December 31, 2016 and 2015, respectively. Retained earnings include undistributed net earnings of subsidiaries and associates amounting P=1,307.7 million and P=919.0 million as of December 31, 2016 and 2015, respectively. These amounts are not available for dividend declaration until declared by the subsidiaries and affiliates.

On November 17, 2016, the Parent Company’s BOD declared P=0.12 per share cash dividends totaling P=230.4 million from unappropriated retained earnings to all its issued and outstanding shares as of record date December 2, 2016, and paid on December 12, 2016.

On December 1, 2015, the Parent Company’s BOD declared P=0.12 per share cash dividends totaling P=230.4 million 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 totaling P=230.4 million 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, 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.

Appropriated retained earnings On November 22, 2012, the Parent Company’s BOD approved and authorized the appropriation of retained earnings amounting to P=1.3 billion which shall be used for land acquisition and future development projects.

In 2015, the Parent Company bought a land amounting to P=2.3 billion with remaining unpaid balance of P=703.1 million (see Note 15). However, the appropriation was not yet released since the development has not started as of December 31, 2016.

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.

*SGVFS021348* - 60 -

As of December 31, 2016 and 2015, the Group had the following ratios:

2016 2015 (In Thousands) Long-term debt P=6,148,311 P=6,232,540 Less: Cash and cash equivalents 94,908 115,511 Short-term investments − 45,318 Financial assets at fair value through profit or loss 21,908 73,565 Net debt P=6,031,495 P=5,998,146 Equity attributable to equity holders of Cebu Holdings, Inc. P=6,527,891 P=6,065,271 Debt to equity 94.19% 102.76% Net debt to equity 92.40% 98.89%

29. 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.

*SGVFS021348* - 61 -

Business Segments

The following tables regarding business segments present assets and liabilities as of December 31, 2016, 2015 and 2014 and revenue and expense information for the three-year year ended December 31, 2016.

2016 Eliminations Commercial Residential Shopping Corporate and Development Development Centers Business Others Adjustments Total (In Thousands) Revenue Sales to external customers P=578 P=296,437 P=1,560,935 P=431,229 P=17,520 (P=28,010) P=2,278,689 Equity in net earnings of associates and a joint venture − − − − 388,741 (227,431) 161,310 Total revenue 578 296,437 1,560,935 431,229 406,261 (255,441) 2,439,999 Operating expenses (10,640) (260,910) (737,742) (491,934) (37,369) 43,727 (1,494,868) Operating profit (loss) (10,062) 35,527 823,193 (60,705) 368,892 (211,714) 945,131 Interest income 2,418 2,051 4,181 37,727 407 (10,869) 35,915 Other income − 732 54,964 180,201 18,379 (15,717) 238,559 Interest expense − − − (31,895) (226,690) 10,869 (247,716) Other charges − − − − (64,886) − (64,886) Provision for income tax 1,060 (6,609) (144,658) 14,433 (39,458) − (175,232) Net income (loss) (P=6,584) P=31,701 P=737,680 P=139,761 P=56,644 (P=227,431) P=731,771 Net income (loss) attributable to: Equity holders of Cebu Holdings, Inc, (6,597) 25,004 702,419 130,020 56,248 (227,431) 679,663 Non-controlling interests 13 6,697 35,261 9,741 396 − 52,108 (6,584) 31,701 737,680 139,761 56,644 (227,431) 731,771 Other Information Segment assets P=1,449,883 P=1,690,695 P=7,091,013 P=4,869,829 P=2,550,362 P=90,311 P= 17,742,093 Investments in associates and a joint venture − − − − 4,291,683 (2,436,989) 1,854,694 Deferred tax assets − − − − 18,836 − 18,836 Total assets P=1,449,883 P=1,690,695 P=7,091,013 P=4,869,829 P=6,860,881 (P=2,346,678) P=19,615,623 Segment liabilities P=285,906 P=73,172 P=2,486,215 P=7,996,516 P=1,223,904 (P=113,089) P=11,952,624 Deferred tax liabilities − − − − 249,946 (13,781) 236,165 Total liabilities P=285,906 P=73,172 P=2,486,215 P=7,996,516 P=1,473,850 (P=126,870) P=12,188,789 Segment additions to property and equipment and investment properties P=652,572 P=19,474 P=51,089 P=157,138 P=214 P=− P=880,478 Depreciation and amortization P=1,713 P=17 P=212,897 P=178,939 P=8,504 P=− P=402,070 *SGVFS021348* - 62 -

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 expense − − − − (346,215) − (346,215) Other charges − − − − (102,893) − (102,893) 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

*SGVFS021348* - 63 -

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 expense − − − − (182,372) − (182,372) Other charges − − − − (23,282) − (23,282) 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

*SGVFS021348* - 64 -

30. 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. (a) fixed monthly rent, or (b) minimum rent payment or fixed rent plus percentage of gross sales, 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 2016 2015 (In Thousands) Within one year P=397,758 P=461,008 After one year but not more than five years 879,110 1,035,146 More than five years 1,003,876 1,258,083 P=2,280,744 P=2,754,237

The total rent income amounted to P=1,849.0 million, P=1,653.6 million and P=1,381.6 million in 2016, 2015 and 2014, respectively. Contingent rent recognized in December 31, 2016, 2015 and 2014 amounted to P=102.9 million, P=107.1 million and P=102.6 million, respectively. Operating Leases - Group as Lessee The Group entered into short-term operating lease of parking space for a period of one (1) year starting January 1, 2016 to December 31, 2016, renewable every year thereafter under new terms and conditions. The total rent expense amounted to P=2.5 million, P=2.7 million and P=1.2 million in 2016, 2015 and 2014, respectively.

31. 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.

On December 18, 2007, PEZA approved the registration of AiO, the subsidiary, as an Economic Zone Information Technology (IT) Facility Enterprise. As a registered ecozone facilities enterprise, the subsidiary is entitled to establish, develop, construct, administer, manage and operate a 12- storey building and 17-storey building located at Asia town IT Park, in accordance with the terms and conditions on the Registration Agreement with PEZA. The Group shall pay income tax at the special tax 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. Gross income earned refers to gross sales or gross revenues derived from any business activity, net of returns and allowances, less cost of sales or direct costs but before any deduction is made for administrative expenses or incidental losses. Income generated from sources outside of the PEZA economic zone shall be subject to regular internal revenue taxes. It is certified by the Bureau of Interal Revenue under Section 4.106-6 and 4 108-6 of Revenue Regulation No. 16-2005 that the enterprise is conducted for purposes of its VAT zero-rating transactions with its local suppliers of goods, properties and services.

*SGVFS021348* - 65 -

32. Notes to Consolidated Statements of Cash Flows

The noncash investing and financing 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=0.02 million, P=7.8 million and P=0.02 million in 2016, 2015 and 2014, respectively; · Transfer form inventory to investment property amounting to ₱231.7 million and ₱52.0 million in 2016 and 2015 respectively; · Liability for purchased land recognized under land and improvements amounting to P=1,054.7 million in 2015; and · Accrued construction billings under investment properties amounting to P=75.8 million and P=346.4 million in 2015 and 2014, respectively.

33. Contingencies

The Group is currently involved in a legal proceeding and the outcome of this legal proceeding is not presently determinable.

34. Reclassifications of Investment in Club Shares

In 2016, the Philippine Interpretation Committee (PIC) issued PIC Q&A No. 2016-02. The Q&A addresses the accounting for club shares held by an entity assuming that the entity’s holding does not give it control, joint control or significant influence over the club. Based on the Q&A, proprietary club shares should be accounted for as an equity instrument in accordance with PAS 32, Financial Instruments: Presentation.

In accordance with PIC Q&A No. 2016-02, the Group accounted for its investment in club shares amounting to ₱318.6 million as of December 31, 2016 as AFS financial assets. The comparative amount of ₱319.1 million as of December 31, 2015 had been reclassified from Inventories to AFS financial assets to conform with the current year presentation. The Group did not present a third statement of financial position as the change did not have an impact on amounts recognized in the statement of financial position, and resulted only in reclassification that is assessed to be not material to the consolidated financial statements. The net realizable value of investments in club shares previously classified as Inventories as of December 31, 2015 approximates the fair value of the investments. The change also did not have an impact on profit or loss.

*SGVFS021348* 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 ON THE SUPPLEMENTARY SCHEDULES

The Stockholders and the Board of Directors Cebu Holdings, Inc. 20th Floor, Ayala Center Cebu Tower, Bohol Street 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, 2016 and 2015 and for each of the three years in the period ended December 31, 2016 included in this Form 17-A, and have issued our report thereon dated February 22, 2017. Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedules 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 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.

Dolmar C. Montañez C. Montañez Partner CPA Certificate No. 112004 SEC Accreditation No. 1561-A (Group A), April 21, 2016, valid until April 21, 2019 Tax Identification No. 925-713-249 BIR Accreditation 08-001998-119-2016 February 15, 2016, valid until February 15, 2019 PTR No. 5908733, January 3, 2017, Makati City

February 22, 2017

*SGVFS021348*

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 SCHEDULE A

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF FINANCIAL ASSETS DECEMBER 31, 2016

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=76,497,243 P=76,497,243 P=815,339 Deutsche Bank 609,633 609,633 − Rizal Commercial Banking Corporation 100,927 100,927 151 DBP 4,481,042 4,481,042 13,023 Security Bank 12,849,249 12,849,249 485,287 Accounts Receivable Trade 335,113,820 335,113,820 22,902,607 Receivable from related parties 1,704,567,755 1,704,567,755 11,219,143 Receivable from employees 18,424,134 18,424,134 479,689 Accrued receivable 162,657,783 162,657,783 − Others 50,752,022 50,752,022 − Financial Assets at FVPL Bank of the Philippine Islands 21,907,509 21,907,509 316,156 P=2,387,961,117 P=2,387,961,117 P=36,231,395 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, 2016

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= 376,993 P=− P=129,682 P=86,999 P=160,312 P=247,311 ALAJID, ROMULO M 2,529,126 − 544,383 268,389 1,716,354 1,984,743 ALFANTE, ERNESTO T 113,098 − 75,399 37,699 − 37,699 ALICAYA, NOEL F 306,675 112,703 185,631 79,504 154,243 233,747 BOHOLST, JUDILYNE L 26,575 − 26,575 − − − CALERO, JASMIN R. 273,504 − 88,985 86,999 97,520 184,519 CLIMACO, ANNE − 375,000 57,999 86,999 230,002 317,001 CORVERA, MAE FLORENCE − 317,061 93,278 93,278 130,505 223,783 DACULAN, MA. SAMPAGUITA D. 180,791 68,359 99,031 103,328 46,791 150,119 DEE, JOSEPH FRANCISCO A. 138,833 49,490 89,839 40,195 58,289 98,484 GO, SUZETTE T 772,768 121,328 180,600 201,542 511,954 713,496 JAPZON, JEANETTE A 2,300,925 1,011,600 1,088,621 201,044 2,022,860 2,223,904 LAYESE, EDWIN F. 165,856 91,145 88,434 119,424 49,143 168,567 MANANQUIL, RAUL S 1,373,942 − 499,146 379,366 495,430 874,796 MAWE, ELVIRA G 793,207 224,001 213,999 198,217 604,992 803,209 NGUJO, HANNAH 323,210 − 323,210 − − − PEÑAS, LOURDES MABEL − 407,143 59,400 124,912 222,831 347,743 QUIJADA, FRAULEIN − 363,460 92,798 92,798 177,864 270,662 SADOL, JIA − 375,000 57,999 86,999 230,002 317,001 SIA, JENNIFER 113,097 − 69,599 43,498 − 43,498 SUAN, JONAS 113,097 − 75,399 37,698 − 37,698 URBINA, MA. CECILIA T 238,223 37,518 177,237 43,384 55,120 98,504 P=10,139,920 P=3,553,808 P=4,317,244 P=2,412,275 P=6,964,214 P=9,376,484 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, 2016

Receivable Payable Balance Balance per CHI per CHI Parent Subsidiaries Current Portion CPVDC&S P=74,435,241 P=74,435,241 P=74,435,241 CLCI 2,991,230 2,991,230 2,991,230 TPEPI 134,334 134,334 134,334 Total Eliminated Receivables P=77,560,805 P=77,560,805 P=77,560,805 SCHEDULE D

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF INTANGIBLE ASSETS - OTHER ASSETS DECEMBER 31, 2016

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. SCHEDULE E

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF LONG-TERM DEBT DECEMBER 31, 2016

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=407,588,419 P=− Bank Loan (BPI) 420,000,000 20,703,808 377,070,097 Bank Loan (BPI) 380,000,000 13,987,138 362,431,966 Bonds (PDTC) 5,000,000,000 − 4,966,530,395 P=6,480,000,000 P=442,279,365 P=5,706,032,458 SCHEDULE F

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF INDEBTEDNESS TO RELATED PARTIES (LONG-TERM LOANS FROM RELATED COMPANIES) DECEMBER 31, 2016

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=1,272,562,231 P=1,181,781,428 SCHEDULE G

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF GUARANTEES OF SECURITIES OF OTHER ISSUERS DECEMBER 31, 2016

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. SCHEDULE H

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF CAPITAL STOCK DECEMBER 31, 2016

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 1,283,969,101 130,381 635,974,141 SCHEDULE I

CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION DECEMBER 31, 2016

Unappropriated Retained Earnings, beginning P=1,417,665,975 Adjustments: Previous year’s reconciliation adjustments − Unappropriated Retained Earnings, as adjusted, beginning 1,417,665,975 Net income based on the face of AFS 291,663,700 Other adjustments: Fair value adjustments on financial assets at FVPL (167,401) Dividends declared (230,408,835) Unappropriated Retained Earnings, end available for dividend distribution P=1,478,753,439 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, 2016

MERMAC, Inc.

48.96%

10.17% 40.87% MITSUBISHI CORPORATION Ayala Corporation Public

47.17%

52.83% Ayala Land, Inc. Public 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, 2016

Laguna Properties Holdings, Inc BPI Capital Corp (0.10%) Ayala Land, Inc. (66.87%) (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%) - 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%) 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%) 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 % SCHEDULE K CEBU HOLDINGS, INC. AND SUBSIDIARIES SCHEDULE OF ALL EFFECTIVE STANDARDS AND INTERPRETATIONS UNDER PHILIPPINE FINANCIAL REPORTING STANDARDS DECEMBER 31, 2016

Philippine Securities and Exchange Commission (SEC) issued the amended Securities Regulation Code Rule SRC Rule 68 and 68.1 which consolidates the two separate rules and labeled in the amendment as “Part I” and “Part II”, respectively. It also prescribed the additional schedule requirements for large entities showing a list of all effective standards and interpretations under Philippine Financial Reporting Standards (PFRS).

Below is the list of all effective PFRS, Philippine Accounting Standards (PAS) and Philippine Interpretations of International Financial Reporting Interpretations Committee (IFRIC) as of December 31, 2016:

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Adopted Not Not INTERPRETATIONS Adopted Applicable Effective as of December 31, 2016 Framework for the Preparation and Presentation of Financial 3 Statements Conceptual Framework Phase A: Objectives and qualitative characteristics PFRSs Practice Statement Management Commentary 3 Philippine Financial Reporting Standards PFRS 1 First-time Adoption of Philippine Financial Reporting 3 (Revised) Standards Amendments to PFRS 1: Cost of an Investment in a 3 Subsidiary, Jointly Controlled Entity or Associate Amendments to PFRS 1: Additional Exemptions for 3 First-time Adopters Amendment to PFRS 1: Limited Exemption from 3 Comparative PFRS 7 Disclosures for First-time Adopters Amendments to PFRS 1: Severe Hyperinflation and 3 Removal of Fixed Date for First-time Adopters Amendments to PFRS 1: Government Loans 3 Amendments to PFRS 1:Borrowing Cost 3 Amendments to PFRS 1:Meaning of “Effective PFRS” 3 PFRS 2 Share-based Payment 3 Amendments to PFRS 2: Vesting Conditions and 3 Cancellations Amendments to PFRS 2: Group Cash-settled Share- 3 based Payment Transactions Definition of Vesting Condition 3 - 2 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Adopted Not Not INTERPRETATIONS Adopted Applicable Effective as of December 31, 2016 PFRS 3 Business Combinations 3 Accounting for Contingent Consideration in a Business 3 Combination Scope Exceptions for Joint Arrangements 3 PFRS 4 Insurance Contracts 3 Amendments to PFRS 4: Financial Guarantee 3 Contracts PFRS 5 Non-current Assets Held for Sale and Discontinued 3 Operations Changes in Methods of Disposal 3 PFRS 6 Exploration for and Evaluation of Mineral Resources 3 PFRS 7 Financial Instruments: Disclosures 3 Servicing Contracts 3 Amendments to PFRS 7: Reclassification of Financial 3 Assets Amendments to PFRS 7: Reclassification of Financial 3 Assets - Effective Date and Transition Amendments to PFRS 7: Improving Disclosures about 3 Financial Instruments Amendments to PFRS 7: Disclosures - Transfers of 3 Financial Assets Amendments to PFRS 7: Disclosures - Offsetting 3 Financial Assets and Financial Liabilities Amendments to PFRS 7: Mandatory Effective Date of 3 PFRS 9 and Transition Disclosures * Applicability of the Amendments to PFRS 7 to 3 Condensed Interim Financial Statements Amendments to PFRS 7: Hedge Accounting (2013 3 version) * PFRS 8 Operating Segments 3 Aggregation of Operating Segments and Reconciliation 3 of the Total of the Reportable Segments’ Assets to the Entity’s Assets PFRS 9 Financial Instruments * 3 Amendments to PFRS 9: Mandatory Effective Date of 3 PFRS 9 and Transition Disclosures * Financial Instruments: Classification and Measurement 3 (2010 version) * Amendments to PFRS 9: Hedge Accounting (2013 3 version) * - 3 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Adopted Not Not INTERPRETATIONS Adopted Applicable Effective as of December 31, 2016 PFRS 10 Consolidated Financial Statements 3 Amendments to PFRS 10: Investment Entities 3 Sale or Contribution of Assets between an Investor and 3 its Associate or Joint Venture PFRS 11 Joint Arrangements 3 Amendments to PFRS 11: Accounting for Acquisitions 3 of Interests in Joint Operations PFRS 12 Disclosure of Interests in Other Entities 3 Amendments to PFRS 12: Investment Entities 3 PFRS 13 Fair Value Measurement 3 Amendments to PFRS 13:Short Term Receivable and 3 Payable Portfolio Exception 3 PFRS 14 Regulatory Deferral Accounts 3 PFRS 16 Leases * 3 Philippine Accounting Standards PAS 1 Presentation of Financial Statements 3 Amendment to PAS 1: Capital Disclosures 3 Amendments to PAS 1: Puttable Financial Instruments 3 and Obligations Arising on Liquidation Amendments to PAS 1: Presentation of Items of Other 3 Comprehensive Income Amendments to PAS 1:Clarification of the 3 Requirements for Comparative Information Amendments to PAS 1: Presentation of financial 3 statements - disclosure initiative PAS 2 Inventories 3 PAS 7 Statement of Cash Flows 3 Amendments to PAS 7: Disclosure Initiative 3 PAS 8 Accounting Policies, Changes in Accounting Estimates 3 and Errors PAS 10 Events after the Reporting Date 3 PAS 11 Construction Contracts 3 PAS 12 Income Taxes 3 Amendment to PAS 12 - Deferred Tax: Recovery of 3 Underlying Assets Amendment to PAS 12 - Recognition of Deferred Tax 3 Assets for Unrealized Losses * - 4 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Adopted Not Not INTERPRETATIONS Adopted Applicable Effective as of December 31, 2016 PAS 16 Property, Plant and Equipment 3 Revaluation Method – Proportionate Restatement of 3 Accumulated Depreciation and Amortization Amendments to PAS 16: Clarification of Acceptable 3 Methods of Depreciation and Amortization Amendments to PAS 16: Bearer Plants 3 PAS 17 Leases 3 PAS 18 Revenue 3 PAS 19 Employee Benefits 3 Amendments to PAS 19: Defined Benefit Plans: 3 Employee Contributions Regional Market Issue Regarding Discount Rate 3 Amendments to PAS 19:Defined Benefit Plan: 3 Employee Contributions PAS 20 Accounting for Government Grants and Disclosure of 3 Government Assistance PAS 21 The Effects of Changes in Foreign Exchange Rates 3 Amendment: Net Investment in a Foreign Operation 3 PAS 23 Borrowing Costs 3 (Revised) PAS 24 Related Party Disclosures - Key Management 3 Personnel Related Party Disclosures - Key Management 3 Personnel (Amended) PAS 26 Accounting and Reporting by Retirement Benefit Plans 3 PAS 27 Separate Financial Statements 3 Amendments to PAS 27: Equity Method in Separate 3 Financial Statements Amendments to PAS 27: Investment Entities 3 Amendments to PAS 27: Cost of an Investment in a 3 Subsidiary, Jointly Controlled Entity or Associate Amendments to PAS 27: Equity Method in Separate 3 Financial Statements PAS 28 Investments in Associates and Joint Ventures 3 Sale or Contribution of Assets between an Investor and 3 its Associate or Joint Venture Amendments to PAS 28: Investment Entities 3 PAS 29 Financial Reporting in Hyperinflationary Economies 3 - 5 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Adopted Not Not INTERPRETATIONS Adopted Applicable Effective as of December 31, 2016 PAS 32 Financial Instruments: Disclosure and Presentation 3 Amendments to PAS 32: Puttable Financial Instruments 3 and Obligations Arising on Liquidation Amendment to PAS 32: Classification of Rights Issues 3 Amendment to PAS 32: Tax Effect of Distribution to 3 Holders of Equity Instruments Amendments to PAS 32: Offsetting Financial Assets 3 and Financial Liabilities PAS 33 Earnings per Share 3 PAS 34 Interim Financial Reporting 3 Amendments to PAS 34: Interim Financial Reporting 3 and Segment Information for Total Assets and Liabilities Disclosure of Information ‘Elsewhere in the Interim 3 Financial Report’ PAS 36 Impairment of Assets 3 Amendments to PAS 36: Recoverable Amount 3 Disclosures for Non-Financial Assets PAS 37 Provisions, Contingent Liabilities and Contingent 3 Assets PAS 38 Intangible Assets 3 Revaluation Method – Proportionate Restatement of 3 Accumulated Depreciation and Amortization Amendments to PAS 38: Clarification of Acceptable 3 Methods of Depreciation and Amortization PAS 39 Financial Instruments: Recognition and Measurement 3 Amendments to PAS 39: Transition and Initial 3 Recognition of Financial Assets and Financial Liabilities Amendments to PAS 39: Cash Flow Hedge Accounting 3 of Forecast Intragroup Transactions Amendments to PAS 39: The Fair Value Option 3 Amendments to PAS 39: Financial Guarantee 3 Contracts Amendments to PAS 39: Reclassification of Financial 3 Assets Amendments to PAS 39: Reclassification of Financial 3 Assets - Effective Date and Transition Amendments to PAS 39: Embedded Derivatives 3 Amendment to PAS 39: Eligible Hedged Items 3 Amendments to PAS 39: Novation of Derivatives and 3 Continuation of Hedge Accounting - 6 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Adopted Not Not INTERPRETATIONS Adopted Applicable Effective as of December 31, 2016 PAS 40 Investment Property 3 Amendments to PAS 40: Clarification on Ancillary 3 Services PAS 41 Agriculture 3 Amendments to PAS 41: Bearer Plants 3 Philippine Interpretations IFRIC 1 Changes in Existing Decommissioning, Restoration and 3 Similar Liabilities IFRIC 2 Members' Share in Co-operative Entities and Similar 3 Instruments IFRIC 4 Determining Whether an Arrangement Contains a 3 Lease IFRIC 5 Rights to Interests arising from Decommissioning, 3 Restoration and Environmental Rehabilitation Funds IFRIC 6 Liabilities arising from Participating in a Specific Market 3 - Waste Electrical and Electronic Equipment IFRIC 7 Applying the Restatement Approach under PAS 29 3 Financial Reporting in Hyperinflationary Economies IFRIC 8 Scope of PFRS 2 3 IFRIC 9 Reassessment of Embedded Derivatives 3 Amendments to Philippine Interpretation IFRIC 9: 3 Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment 3 IFRIC 11 PFRS 2- Group and Treasury Share Transactions 3 IFRIC 12 Service Concession Arrangements 3 IFRIC 13 Customer Loyalty Programmes 3 IFRIC 14 The Limit on a Defined Benefit Asset, Minimum 3 Funding Requirements and their Interaction Amendments to Philippine Interpretations IFRIC 14, 3 Prepayments of a Minimum Funding Requirement IFRIC 15 Agreements for the Construction of Real Estate * 3 IFRIC 16 Hedges of a Net Investment in a Foreign Operation 3 IFRIC 17 Distributions of Non-cash Assets to Owners 3 IFRIC 18 Transfers of Assets from Customers 3 IFRIC 19 Extinguishing Financial Liabilities with Equity 3 Instruments IFRIC 20 Stripping Costs in the Production Phase of a Surface 3 Mine IFRIC 21 Levies 3 - 7 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Adopted Not Not INTERPRETATIONS Adopted Applicable Effective as of December 31, 2016 SIC-10 Government Assistance - No Specific Relation to 3 Operating Activities SIC-12 Consolidation - Special Purpose Entities 3 Amendment to SIC - 12: Scope of SIC 12 3 SIC-13 Jointly Controlled Entities - Non-Monetary Contributions 3 by Venturers SIC-15 Operating Leases - Incentives 3 SIC-21 Income Taxes - Recovery of Revalued Non- 3 Depreciable Assets SIC-25 Income Taxes - Changes in the Tax Status of an Entity 3 or its Shareholders SIC-27 Evaluating the Substance of Transactions Involving the 3 Legal Form of a Lease SIC-29 Service Concession Arrangements: Disclosures. 3 SIC-31 Revenue - Barter Transactions Involving Advertising 3 Services SIC-32 Intangible Assets - Web Site Costs 3 * These standards are not yet effective as of December 31, 2016.

In addition, the IASB has issued the following new standards that have not yet been adopted locally by the SEC and FRSC. The Group is currently assessing the impact of these new standards and plans to adopt them on their required effective dates once adopted locally.

· IFRS 15, Revenue from Contracts with Customers (effective January 1, 2018)

Standards tagged as “Not Applicable” have been adopted by the Group but have no significant covered transactions for the year ended December 31, 2016.

Standards tagged as “Not adopted” are standards issued but not yet effective as of December 31, 2016. The Group will adopt the Standards and Interpretations when these become effective. CEBU HOLDINGS, INC AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF FINANCIAL RATIOS December 31, 2016

December 31 2016 2015

CURRENT / LIQUIDITY RATIOS Current assets P=3,302,298 P= 4,937,206 Current liabilities 5,623,027 5,517,894 Current Ratios 0.59 0.89

Current assets P=3,302,298 P= 4,937,206 Receivable 1,937,557 3,081,143 Inventories 723,851 1,060,066 Other current assets 524,074 561,603 Quick assets 116,816 234,394 Current liabilities 5,622,602 5,517,894 Quick Ratios 0.02 0.04

December 31 2016 2015 SOLVENCY / DEBT-TO-EQUITY RATIOS Current portion of loans payable P=442,279 P=107,873 Loans payable 5,706,032 6,124,667 Debt 6,148,311 P=6,232,540 Equity 7,426,834 P=6,912,106 Less: Non-controlling interests 898,943 846,835 Equity attributable to parent 6,527,891 6,065,271 Add/Less: Unrealized gain - FVTPL & Forex 30,446 (1,002,748) Equity, Net of Unrealized Gain 6,558,337 5,062,523 Debt to Equity Ratio 0.94 1.23

Debt 6,148,311 P=6,232,540 Less: Cash and cash equivalents 94,908 115,511 Short-term investments − 45,318 Financial assets at fair value through profit or loss 21,908 73,565 Net Debt 6,031,495 5,998,146 Equity, Net of Unrealized Gain 6,558,337 5,062,523 Net Debt to Equity Ratio 0.92 1.18

December 31 2016 2015 ASSET TO EQUITY RATIOS Total assets P=19,615,623 P=19,733,187 Total equity attributable to equity holders of CHI 6,527,891 6,065,271 Asset to Equity Ratios 3.00 3.25 - 2 -

December 31 2016 2015

INTEREST RATE COVERAGE RATIO NET INCOME P=731,771 P=945,338 Add: Provision for income tax 175,232 328,652 Interest and other financing charges 312,602 449,108 1,219,605 1,723,098 Less: Interest income 35,915 98,119 EBIT 1,183,690 1,624,979 Depreciation and amortization 402,070 358,025 EBITDA 1,585,760 1,983,004 Interest and other financing charges 312,602 449,108 Interest expense coverage ratio 5.07 4.42

December 31 2016 2015 PROFITABILITY RATIOS Net income attributable to parent P=679,663 P=827,207 Revenue 2,716,933 3,740,259 Net Income Margin 25.02% 22.12%

Net Income P=731,771 P=945,338 Total assets CY 19,615,623 19,733,187 Total assets PY 19,733,187 16,384,951 Average Total Assets 19,674,405 18,059,069 Return on Total Assets 3.72% 5.23%

Net Income P=731,771 P=945,338 Total equity CY 7,426,834 6,912,106 Total equity PY 6,912,106 6,221,730 Average Total Equity 7,169,470 6,566,918 Return on Equity 10.21% 14.40%

SECURITIES AND EXCHANGE COMMISSION

SEC FORM – ACGR

CONSOLIDATED CHANGES IN THE ANNUAL CORPORATE GOVERNANCE REPORT FOR THE YEAR 2016

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 2016

1. Report is Filed for the Year December 31, 2016

2. Exact Name of Registrant as Specified in its Charter: CEBU HOLDINGS, INC.

3. 20 th Floor, Ayala Center Cebu Tower, Bohol Street, 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) 888-3700 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………………………………………………………………………………… 11 5) ORIENTATION AND EDUCATION PROGRAM…………………………………………………………………………… 18

B. CODE OF BUSINESS CONDUCT & ETHICS …………………………………………………………………………………………… 21 1) POLICIES………………………………………………………………………………………………………………………………… 21 2) DISSEMINATION OF CODE………………………………………………………………………………………………….…… 23 3) COMPLIANCE WITH CODE……………………………………………………………………………………………………… 23 4) RELATED PARTY TRANSACTIONS…………………………………………………………………………………………… 23 (a) Policies and Procedures………………………………………………………………………………………… 23 (b) Conflict of Interest………………………………………………………………………………………………… 24 5) FAMILY, COMMERCIAL AND CONTRACTUAL RELATIONS…………………………………………………….……25 6) ALTERNATIVE DISPUTE RESOLUTION……………………………………………………………………………………….26

C. BOARD MEETINGS & ATTENDANCE ……………………………………………………………………………………………….…….26 1) SCHEDULE OF MEETINGS…………………………………………………………………………………………………………26 2) DETAILS OF ATTENDANCE OF DIRECTORS………………………………………………………………………………..26 3) SEPARATE MEETING OF NON-EXECUTIVE DIRECTORS………………………………………………………………27 4) ACCESS TO INFORMATION……………………………………………………………………………………………………….28 5) EXTERNAL ADVICE……………………………………………………………………………………………………………………29 6) CHANGES IN EXISTING POLICIES……………………………………………………………………………………………….29

D. REMUNERATION MATTERS………………………………………………………………………………………………………………29 1) REMUNERATION PROCESS……………………………………………………………………………………………………….29 2) REMUNERATION POLICY AND STRUCTURE FOR DIRECTORS…………………………………………………….31 3) AGGREGATE REMUNERATION …………………………………………………………………………………………………32 4) STOCK RIGHTS, OPTIONS AND WARRANTS………………………………………………………………………………33 5) REMUNERATION OF MANAGEMENT…………………………………………………………………………………….….33

E. BOARD COMMITTEES……………………………………………………………………………………………………………………….34 1) NUMBER OF MEMBERS, FUNCTIONS AND RESPONSIBILITIES…………………………………………………..34 2) COMMITTEE MEMBERS……………………………………………………………………………………………………………41 3) CHANGES IN COMMITTEE MEMBERS……………………………………………………………………………………….46 4) WORK DONE AND ISSUES ADDRESSED…………………………………………………………………………………….46 5) COMMITTEE PROGRAM……………………………………………………………………………………………………………48

F. RISK MANAGEMENT SYSTEM……………………………………………………………………………………………………………50 1) STATEMENT ON EFFECTIVENESS OF RISK MANAGEMENT SYSTEM…………………………………………..50 2) RISK POLICY……………………………………………………………………………………………………………………………..52 3) CONTROL SYSTEM……………………………………………………………………………………………………………………53

G. INTERNAL AUDIT AND CONTROL………………………………………………………………………………………………………55 1) STATEMENT ON EFFECTIVENESS OF INTERNAL CONTROL SYSTEM…………………………………………..55 3

2) INTERNAL AUDIT (a) Role, Scope and Internal Audit Function…………………………………………………………………..57 (b) Appointment/Removal of Internal Auditor………………………………………………………………57 (c) Reporting Relationship with the Audit Committee…………………………………………………..57 (d) Resignation, Re-assignment and Reasons…………………………………………………………………58 (e) Progress against Plans, Issues, Findings and Examination Trends………………………………………………………..….……………………………………58 (f) Audit Control Policies and Procedures……………………………………………………………………..58 (g) Mechanisms and Safeguards…………………………………………………………………………………...59

H. RIGHTS OF STOCKHOLDERS……………………………………………………………………………………………………………...69 1) RIGHT TO PARTICIPATE EFFECTIVELY IN STOCKHOLDERS’ MEETINGS……………………………………….69 2) TREATMENT OF MINORITY STOCKHOLDERS…………………………………………………………………………….76

I. INVESTORS RELATIONS PROGRAM…………………………………………………………………………………………………..76 J. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES…………………………………………………………………………….79 K. BOARD, DIRECTOR, COMMITTEE AND CEO APPRAISAL…………………………………………………………………….80 L. INTERNAL BREACHES AND SANCTIONS…………………………………………………………………………………………….80

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 2016 Annual 1 yr. Dy Inc. Committee 2014 Stockholders’ and 8 Meeting mos. Aniceto V. Bisnar, ED Ayala Land, Nomination January 1, April 2016 Annual 1 yr and Jr. Inc. Committee 2015 Stockholders’ 4 mos. Meeting Emilio J. Tumbocon Ayala Land, Nomination April 2008 April 2016 Annual 8 NED Inc. Committee Stockholders’ Meeting Jaime E. Ysmael NED Ayala Land, Nomination April 2008 April 2016 Annual 8 Inc. Committee Stockholders’ Meeting Ma ria Theresa M. NED BPI Capital Nomination July 2012 April 2016 Annual 4 Javier* Corp.-AMTG Committee Stockholders’ Meeting Antonio S. Abacan, NED First Metro Nomination November April 2016 Annual 23 Jr.* Investment Committee 1993 Stockholders’ Corp. Meeting Fr. Roderick C. ID N.A. Nomination April 2005 April 2016 Annual 11 Salazar, Jr., SVD Committee Stockholders’ Meeting Enrique L. ID N.A. Nomination April 2003 April 2016 Annual 13 Benedicto Committee Stockholders’ Meeting Pampio A. ID N.A. Nomination April 2014 April 2016 Annual 2 Abarintos Committee Stockholders Meeting Jose Emmanuel H. Ayala Land, Nomination August 17, August 17, Board new Jalandoni* NED Inc. Committee 2016 2016 Meeting Anna Ma. Ayala Land, Nomination August 17, August 17, Board new Margarita B. Dy* NED Inc. Committee 2016 2016 Meeting *Mr. Jalandoni and Ms. Dy replaces Ms. Javier and Mr. Abacan effective August 17, 2016.

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

5 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 6

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: • 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.

2 The Group is composed of the parent, subsidiaries, associates and joint ventures of the company. 7

Aniceto V. Bisnar, Jr. Cebu Property Ventures & Executive Director Development Corp. Crimson Field Enterprises, Inc. Chairman 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. 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 8

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% Jose Emmanuel H. 1 - 0.0000% Jalandoni* Anna Ma. Margarita B. 1 - 0.0000% Dy* 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 116,881 13,500 0.0069% *Mr. Jalandoni and Ms. Dy replaces Ms. Javier and Mr. Abacan effective August 17, 2016.

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.

• 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 Deliverables • 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 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 Accountabilities 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. 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 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 Resignation as Antonio S. Abacan, Jr. Member of the Board August 17, 2016 member of the board effective August 17, 11

2016 for personal reasons Resignation as member of the board Maria Theresa M. Member of the Board June 01, 2016 effective June 01, Javier 2016 for personal reasons 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 Committee reviews and such formal education; (i) Executive Directors 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 business in substitute for (iii) Independent Directors such formal education; Must also possess relevant qualification, such as previous business experience, membership in good standing in relevant industry, and 13

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 securities, crime as an (iii) Independent Directors 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. with or without cause, but (iii) Independent Directors 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 17

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 18, 2016 – 1,684,761,005 or 87.74%

Name of Director Votes Received Bernard Vincent O. Dy 1,638,920,505 or 97.28% Aniceto V. Bisnar, Jr. 1,638,920,505 or 97.28% Emilio J. Tumbocon 1,638,920,505 or 97.28% Jaime E. Ysmael 1,638,920,505 or 97.28% Maria Theresa M. Javier 1,638,920,505 or 97.28% Antonio S. Abacan, Jr. 1,638,920,505 or 97.28% Fr. Roderick C. Salazar, Jr., SVD 1,638,920,505 or 97.28% Enrique L. Benedicto 1,638,920,505 or 97.28% Pampio A. Abarintos 1,638,920,505 or 97.28%

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 18

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 three (3) 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)

In 2016, the following trainings were offered to the Directors and Key Officers of the Company: 1. Corporate Governance and Risk Management Summit (ICD and Ayala Corp)

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

3 Senior Management refers to the CEO and other persons having authority and responsibility for planning, directing and controlling the activities of the company.

Ayala Corporate The Institute of Corporate Emilio J. Tumbocon Feb. 18, 2015 Governance and Risk Directors (ICD) 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)

For 2016: Name of Name of Training Date of Training Program Director/Officer Institution Ayala Corporate Bernard Vincent O. The Institute of Corporate March 8, 2016 Governance and Risk Dy Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Aniceto V. Bisnar, Jr. March 8, 2016 Governance and Risk Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Emilio J. Tumbocon March 8, 2016 Governance and Risk Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Jaime E. Ysmael March 8, 2016 Governance and Risk Directors (ICD) Management Summit Ayala Corporate Maria Theresa M. The Institute of Corporate March 8, 2016 Governance and Risk Javier Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Antonio S. Abacan, Jr. March 8, 2016 Governance and Risk Directors (ICD) Management Summit Ayala Corporate Fr. Roderick C. The Institute of Corporate March 8, 2016 Governance and Risk Salazar, Jr., SVD Directors (ICD) Management Summit Ayala Corporate The Institute of Corporate Enrique L. Benedicto March 8, 2016 Governance and Risk Directors (ICD) Management Summit

Ayala Corporate The Institute of Corporate Pampio A. Abarintos March 8, 2016 Governance and Risk Directors (ICD) Management Summit Ayala Corporate Jose Emmanuel H. The Institute of Corporate March 8, 2016 Governance and Risk Jalandoni Directors (ICD) Management Summit Ayala Corporate Anna Ma. Margarita The Institute of Corporate March 8, 2016 Governance and Risk B. Dy Directors (ICD) Management Summit Enrique B. Manuel, Ayala Corporate The Institute of Corporate Jr.-CFO/Compliance March 8, 2016 Governance and Risk Directors (ICD) Officer Management Summit June Vee D. Ayala Corporate The Institute of Corporate Monteclaro-Navarro- March 8, 2016 Governance and Risk Directors (ICD) Corporate Secretary Management Summit Nimfa Ambrosia L. Ayala Corporate The Institute of Corporate Perez-Paras-Asst. March 8, 2016 Governance and Risk Directors (ICD) Corporate Secretary Management Summit Noel F. Alicaya- Ayala Corporate Finance & Control The Institute of Corporate March 8, 2016 Governance and Risk Officer/Chief Risk Directors (ICD) Management Summit Officer

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 Code of Ethical Behavior The Company has a Behavior outlines the is intended to be read in Conflict of Interest Policy general expectations conjunction with the that covers all senior and and set standards for Company’s Human non-senior personnel of behavior and ethical Resources Manual of the Company, including conduct. It provides Personnel Policies which its subsidiaries and guidelines for all includes the Code of affiliates. The policy directors, officers and Conduct governing serves as a guide in the CHI employees, and acceptable office conduct manner by which all that of its subsidiaries for the orderly operation of Company employees, its and affiliate. It aims to the Company as well as for subsidiaries and affiliates promote and foster the protection of the rights, are to conduct (a) Conflict of Interest observance of safety and benefit of the themselves in going about principles founded on total employee force. their jobs in pursuit of the 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

personal and business

affairs.

(b) Conduct of Business A director is required CHI seeks to adhere to a CHI employees who are and Fair Dealings to conduct fair high level of moral transacting (also referred to 21

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. avoid situations that considered to have 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)

Covered in Code of Ethical Behavior (Employee Handbook issued to employees and available in website)

(h) Disciplinary action 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 (2) Joint Ventures parties in their conduct of business are on an arm’s length (3) Subsidiaries basis. (4) Entities Under Common Control A committee of independent directors is given the (5) Substantial Stockholders responsibility to pass upon any related party transaction with any material significance, and to render an opinion on 23

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.

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 24

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.

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.

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 Ayala Land, Inc (66.87%) Parent Company Nature of Relationship:

4 Family relationship up to the fourth civil degree either by consanguinity or affinity. 25

Business

Partnership with parent & its subsidiaries. Expanding the 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

Partnership with parent & its subsidiaries. Expanding the Ayala Land, Inc (66.87%) Parent Company Company’s portfolio through use parent’s strength in property management, construction, business development.

(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.

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 Maria 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 Maria 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

For 2016: February 23, April 18 ASM, April 18 Organizational Meeting, August 17, and November 17, 2016 No. of No. of Date of Meetings Held Board Name Meetings % Election during the Attended year Chairman Bernard Vincent O. Dy April 2016 5 5 100% Member Aniceto V. Bisnar, Jr. April 2016 5 5 100% Member Maria Theresa M. Javier* April 2016 3 3 100% Member Antonio S. Abacan Jr.* April 2016 3 3 100% Member Emilio J. Tumbocon April 2016 5 5 100% Member Jaime E. Ysmael April 2016 5 5 100% Independent Fr. Roderick C. Salazar, Jr., SVD April 2016 5 3 60% 27

Independent Enrique L. Benedicto April 2016 5 5 100% Independent Pampio A. Abarintos April 2016 5 5 100% Member Jose Emmanuel H. Jalandoni* August 2 2 100% 17, 2016 Member Anna Ma. Margarita B. Dy* August 2 2 100% 17, 2016 *Mr. Jalandoni and Ms. Dy replaces Ms. Javier and Mr. Abacan effective August 17, 2016.

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;

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. 28

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

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 29

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.

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 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 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 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. 30

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 other financial None for CHI None for CHI 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 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 Non-Executive Directors such. attended. The said 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: For 2015:

Non-Executive Executive Independent Remuneration Item Directors (other than Directors Directors independent directors) Aniceto V. Bisnar, (a) Fixed Remuneration Jr. - None to None None report

Aniceto V. Bisnar, (b) Variable Remuneration Jr. - None to None None report P 1M for all board P660K for all board Maria Theresa M. and committee (c) Per diem Allowance meetings attended in Javier – P160k meetings attended 2015 in 2015 Aniceto V. Bisnar, (d) Bonuses Jr. - None to None None report (e) Stock Options and/or other financial None None None instruments Aniceto V. Bisnar, (f) Others (Specify) Jr. - None to None None report P 1M for all board P660K for all board Maria Theresa M. and committee Total meetings attended in Javier – P160k meetings attended 2015 in 2015

Non-Executive Director Executive Independent Other Benefits (other than Directors Directors independent directors) Aniceto V. Bisnar, 1) Advances Jr. - None to None None report Aniceto V. Bisnar, 2) Credit granted Jr. - None to None None report Aniceto V. Bisnar, 3) Pension Plan/s Jr. - None to None None Contributions report Aniceto V. Bisnar, (d) Pension Plans, Jr. - None to None None Obligations incurred report Aniceto V. Bisnar, (e) Life Insurance Premium Jr. - None to None None report Aniceto V. Bisnar, (f) Hospitalization Plan Jr. - None to None None report Aniceto V. Bisnar, (g) Car Plan Jr. - None to None None report Aniceto V. Bisnar, (h) Others (Specify) Jr. - None to None None report Aniceto V. Bisnar, Total Jr. - None to None None 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 Executive 1 3 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 34

& 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 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 indicated in the Board of financial expected, Audit Directors in reporting, through the Committee fulfilling its internal audit, provision of 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 Audit 3 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 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 Nomination 1 1 1 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 Remuneration 1 1 packages of corporate officers and directors, and provide 1 oversight over remuneration of senior management and other key personnel

36 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 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 Ensure that an Others- Provides function oversight to the overall set of Risk assistance to risk 38

Committee indicated in the Board of Corporation’s management Risk Directors in Risk policies and Committee the Management procedures 3 Charter, performance activities exist for the Revised of its Corporation. Manual of oversight Corporate functions of Review the adequacy of the Governance the Corporation’s and in the Corporation’s risk Corporation’ risk management s by-laws. management framework / activities process. through continuous Review the input, results of the evaluation annual risk and feedback assessment on the done by the effectiveness Chief Risk of the Officer (CRO), Corporation’s including the risk risks identified, management their impact or potential process. 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 39

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.

Provides With the support The assistance to of the Sustainability the Board of Sustainability Committee shall Directors in Technical oversee its Working Group strategy setting, responsibility (STWG) headed establishing of to the by the Corporate goals and 1 Company’s Sustainability integrating Stakeholders Officer (CSO), sustainability that relate to the Sustainability initiatives into the Committee the daily Others - Company’s provides business 1 1 Sustainability growth in the assistance to the activities across areas of 1) Board of the Company’s economic Directors in its operations. The performance, responsibility to committee is 2) the Company’s tasked to environment stakeholders review and al that relate to the evaluate the stewardship Company’s following: and 3) growth in the corporate areas of 1) 1) Initiatives social economic and responsibility performance, 2) recommendatio 40

environmental ns of the stewardship and Company’s 3) corporate STWG. social 2)stakeholder responsibility. engagement processes; external partnerships 3)new and innovative technologies applied in the Company’s new projects and managed properties 4)communicatio n strategies relating to Sustainability goals, targets and initiatives 5)annual 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

For 2016: Feb. 03, May 11 , Aug. 10, and November 10, 2016

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% 11 SVD Member (ID) Enrique L. Benedicto April 2003 4 2 50% 13 Member (ID) Pampio A. Abarintos April 2014 4 4 100% 2

Disclose the profile or qualifications of the Audit Committee members.

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 42

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 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.

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.

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.

Describe the Audit Committee’s responsibility relative to the external auditor. 43

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 44

For 2016: April 18 and August 17, 2016 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 24, 2015 2 2 100% 1 Member (NED) Bernard Vincent O. Dy August 15, 2 2 100% 1 yr. & 8 2014 mos. Member (ED) Aniceto V. Bisnar, Jr. Nov. 11, 2014 2 2 100% 1 yr. & 5 mos.

(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

(e) Others (Specify) – SUSTAINABILTY COMMITTEE Provide the same information on all other committees constituted by the Board of Directors:

For 2014: September 23, 2014 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

For 2016: December 08, 2016 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% 1 yr & 8 mos. Member (ED) Aniceto V. Bisnar, Jr. Jan. 1, 2015 1 1 100% 2 yrs Member (NED) Emilio J. Tumbocon April 2009 1 1 100% 7 yrs & 8 mos.

(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

For 2016: Feb. 03, May 11, August 10, and November 10, 2016 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 4 2 50% 1 Member (ID) Fr. Roderick C. Salazar, Jr. April 2015 4 4 100% 1 SVD Member (ID) Pampio A. Abarintos April 2015 4 4 100% 1

3) Changes in Committee Members as of June 01, 2016

Indicate any changes in committee membership that occurred during the year and the reason for the changes:

Name of Committee Name Reason Executive Resignation as member of the board Maria Theresa M. Javier effective June 01, 2016 for personal reasons. Audit None None Nomination None None Remuneration None None Others (Sustainability) None None 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. 46

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, Committee); through regular quarterly internal audit reports, quarterly meetings held in 2015 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 2015-2016 Company which require appointment by the Board.

Remuneration Oversight and remuneration of Considered and approved the 1.) senior management and other key 2015 performance evaluation and personnel. Ensures the conduct of promotion of associates, managers formal and transparent procedure and associates; 2.) 2015 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 2015.

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 47

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 risk management process. assessment done by the Chief Risk 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.

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 Install and maintain a process to Installs and maintains a process to ensure that all directors to be ensure that all directors to be nominated for election at the next nominated for election at the annual Annual General Stockholders’ stockholders’ meeting have all the

Meeting have the qualifications and qualifications and none of the none of the disqualifications stated disqualifications for directors as above. stated in the By-Laws, the Revised Manual of Corporate Governance of the Company and the pertinent rules of the Securities and Exchange Commission, to review and evaluate the qualifications of all persons nominated to positions in the Company which require 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 Provides oversight over all incoming officers, which among remuneration of senior management others compel all officers to declare and other key personnel. 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.

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

F. RISK MANAGEMENT SYSTEM

1) Disclose the following: 50

(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 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 51

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: 54

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, their impact or potential impact on the Corporation’s business and the corresponding measures to address such risks.

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. 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 55

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 56

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 57

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 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

[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) To provide for • We schedule one-on- Underwriting: Rating independence, the one meetings and • Securities issued to • Conduct of due Internal Audit site visits to our the public are diligence review Department (IAD) various registered with the

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. 59

reports to functionally developments SEC to the Audit separately for each • Conduct of due Committee of the brokerage house diligence review by Board of Directors and • As a policy, we do not investment bank administratively to the provide profit • Underwriting President. guidance and allow Commitment subject analysts to generate to bank approval their own forecasts and estimates based • Pricing of securities 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 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 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 • non-compliance with regulations Customers' welfare Continually improve the 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 management program in the means for the Company to Environmentally friendly value- manage its resources, wastes and partnership with neighboring chain emissions, and contribute to communities; track utilization biodiversity restoration. rate of recyclables collected from the company’s Environmental Health and Safety assets/properties. Policy • Proper handling and disposal In providing real estate products and of hazardous waste services, we commit to sustainable development and the safety and • Monitor / reduce GHG health of our employees by: emissions. • 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 Community interaction 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 62

strategic position while driving society Barangays Altruistic towards a sustainable path. CHI will Alliance) therefore: • 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

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. 63

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 64

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. 1,283,969,101 66.87% Ayala Land, Inc.

PCD Nominee Corp. 331,960,700 17.29% Aberdeen Asset (Non-Filipino) Management Asia Limited PCD Nominee Corp. 20,247,000 1.05% First Metro Investment (Filipino) Corporation PCD Nominee Corp. 196,895,200 10.25% Aberdeen International (Non-Filipino) Fund Managers Ltd. PCD Nominee Corp. 95,678,800 4.98% 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 2015/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 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 2015 page #56 (Additional disclosures data).

Name of auditor Audit Fee Non-audit Fee SGV & Co. P605k* - 2015 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 2015 (Audited FS-Notes to FS - Note #18 page no. 40).

RPT Relationship Nature Value Southportal Properties, Associates The transactions are P445.1m Inc. made at terms & prices agreed upon by the parties. Solinea Associates The transactions are P251.2m made at terms & prices agreed upon by the parties. Cebu District Property Associates The transactions are P125.8m Enterprise, Inc. made at terms & prices agreed upon by the parties. Central Block Associates The transactions are P65.1m Developers, Inc. made at terms & prices agreed upon by the parties. Ayala Land, Inc. Parent The transactions are P13.8m Company/Shareholder made at terms & prices agreed upon by the parties. Avida Land Corp. Subsidiaries of ALI The transactions are P822.6m made at terms & prices agreed upon by the parties. Amaia Land Corp. Subsidiaries of ALI The transactions are P348.5m made at terms & prices agreed upon by the parties. Accendo Commercial Subsidiaries of ALI The transactions are P225.1m Corp. made at terms & prices agreed upon by the parties. Alveo Land Corp. Subsidiaries of ALI The transactions are P164.9m made at terms & prices agreed upon by the parties. Ayala Land Metro North Subsidiaries of ALI The transactions are P126.2m made at terms & prices agreed upon by the parties. 67

Northbeacon Subsidiaries of ALI The transactions are P27.0m Commercial Corp. made at terms & prices agreed upon by the parties. Southgateway Subsidiaries of ALI The transactions are P20.0m Development Corp. made at terms & prices agreed upon by the parties. Soltea Commercial Subsidiaries of ALI The transactions are P14.3m made at terms & prices agreed upon by the parties. Summerhill Subsidiaries of ALI The transactions are P13.0m made at terms & prices agreed upon by the parties. Avencosouth Corp. Subsidiaries of ALI The transactions are P6.2m made at terms & prices agreed upon by the parties. Makati Development Subsidiaries of ALI The transactions are P5.9m Corp. made at terms & prices agreed upon by the parties. Ayala Land Sales, Inc. Subsidiaries of ALI The transactions are P.7m made at terms & prices agreed upon by the parties. North Triangle Depot 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.4m Solutions, Inc. made at terms & prices agreed upon by the parties. ALI Commercial Center Subsidiaries of ALI The transactions are P.3m made at terms & prices agreed upon by the parties. Leisure and Allied Subsidiaries of ALI The transactions are P.1m Industries, Phils. made at terms & prices agreed upon by the parties. Others The transactions are P1.8m made at terms & prices agreed upon by the parties. Total P2,678.8m

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 68

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.

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 November 17, 2016 December 2, 2016 December 12, 2016

(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 22, 2016

b. Date of the Annual/Special Stockholders’ Meeting: April 18, 2016

4. State, if any, questions and answers during the Annual/Special Stockholders’ Meeting.

Minutes of the Company’s Annual Stockholder Meeting dated April 18, 2016, indicates the information below:

Stockholders’ Questions and Comments:

a. There being no question or comment, the Chairman requested for a motion for approval of the minutes of the last meeting. On motion of Ms. Kriselva Ferrer, seconded by Ms. Liza Gementiza, the stockholders approved the minutes and adopted the following Resolution No. S-01-16, which was shown on the screen: Resolution No. S-01-16 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-01-16 are as follows: For Against Abstain Number of Voted Shares 1,638,938,005 - - % of Voting Shares Present 97.28% - -

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 2015 financial statements.

There being no questions, comments and suggestions from the stockholders, Mr. Ian Joplin Virrey, seconded by Ms. Grace Escoto, moved for the noting of the annual report and the approval of the 2015 consolidated audited financial statements, and the adoption of the following Resolution No. S-02-16, which was shown on the screen: Resolution No. S-02-16 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 2015 consolidated audited financial statements, and the adoption of Resolution No. S-02-16 are as follows: For Against Abstain Number of Shares Voted 1,638,938,005 - - % of Shares Present 97.28% - -

c. The Chairman opened the floor for questions or comments, but no stockholder raised any question or comment. Thereafter, on motion of Mr. Ivan Evangelista, seconded by Mr. Joseph Apura, the stockholders elected SGV as external auditor of the Corporation for the current fiscal year including the approval of SGV’s audit fee and adopted the following Resolution No. S-04-16, which was shown on the screen. Resolution No. S-04-16 As tabulated by the Office of the Corporate Secretary and validated by SGV, the votes on the re-election of SGV as external auditor of the Corporation, the approval of its audit fee, and the adoption of Resolution No. S-04-16 are as follows: For Against Abstain Number of Shares Voted 1,638,938,005 - - % of Shares Present 97.28% - -

No Stockholder voted against or abstained from voting on the matter.

d. 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 asked about the Corporation’s medium and long-term plans, the annual growth path as well as the amount needed by the Corporation for its spending until 2020. The President noted that the Corporation has grown at an average of 16% over the last twenty (20) years and Management plans to continue this growth path until 2020. As for the medium and long-term plans, investments will be done in various estates including the redevelopment of Central Block in Cebu IT Park, the development of the properties in Mandaue with the Aboitiz Group, and the investment in and the development of the South Road Properties. In terms of spending, the President recapped that last year’s capital expenditure was at around Php3.7 Billion and in 2016, another Php5.8 Billion is needed to support the initial growth of the various projects and redevelopment of estates. The President noted that re-investment will be continued while balancing the cash availability, borrowing money and giving out dividends. He further stated that in the next five (5) years, the Corporation is expected to spend more than Php13 Billion of capital expenditures in identified projects together with the Php5.8 Billion investment for 2016. The bulk of investment will be in the sources of recurring income and the build-up of retail and office businesses. The leasing revenues, on the other hand, will be increased to serve as buffer when the low cycle hit the market.

Mr. Po also inquired on the Corporation’s plan in terms of sourcing the funds and if there is enough capital or loans. The President mentioned that Management intends to raise funds through borrowings and will consider other options that are cost efficient.

Mr. Po also asked about how the Corporation is being monitored and rated in relation to its performance and results as a publicly listed company. The Chairman explained that within the Ayala Group there is an annual assessment of the performance of publicly listed companies through a scorecard which takes into consideration the short-term and long-term objectives of the companies. The scorecard includes various dimensions such as commitment in terms of profitability, metric in terms of growth, and execution of the goals of the Corporation. In relation to this, Mr. Po also brought up the metrics used by Forbes in ranking publicly listed companies in over sixty (60) countries which include sales, profit, asset size and market value and inquired on the possibility of having these metrics applied to the Corporation as a means of assessing its performance. The Chairman confirmed that these are actually financial metrics which are applicable to the Corporation. Lastly, the Chairman mentioned that the metrics being used by the Corporation is a good combination of balancing the short-term financial goals and building value for the long-term. He emphasized that the Corporation is not just about making profits but also about making a difference and contributing to various communities and stakeholders.

5. Result of Annual/Special Stockholders’ Meeting’s Resolutions.

Minutes of the Company’s Annual Stockholder Meeting dated April 18, 2016, indicates the information below:

Voting Results-87.74% or 1,684,761,005 shares over 1,920,073,623 total outstanding shares 6. Resolution: 7. Approving: 8. Dissenting: 9. Abstaining: 11. 87.74% 10. Approval of (owners of 12. No 13. No contracts, 1,684,761,00 stockholder stockholder projects, 5 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 18, 2016.

(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 18, By Poll Bernard Vincent O. Dy 2016 had been Aniceto V. Bisnar, Jr. given to Emilio J. Tumbocon the Antonio S. Abacan, Jr. stockhol Maria Theresa M. Javier ders to 87.74% Fr. Roderick C. Salazar, enable (owners of Jr., SVD them to 45 85.34% 1,684,761,0 Pampio A. Abarintos vote in Stockhold proxies 05 shares Enrique L. Benedicto writing ers appointin Annual over per item attending g the 1,920,073,6 Key Officers: in the in person Chairman 23 total Ma. Clavel G. Tongco Agenda. outstanding Nerissa N. Josef-Mediano shares) 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 4,151 Management Report and Other Materials Date of Actual Distribution of Definitive Information Statement and Management Report March 22, 2016 and Other Materials held by market participants/certain beneficial owners

Date of Actual Distribution of Definitive Information Statement and Management Report March 22, 2016 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 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, An explanation of the dividend policy, if any dividend is to be declared. 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. 23, 2015

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 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 2015 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 Women’s group of Barangay Luz 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, 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.