Let's Build for Tomorrow's Generations

Let's build for tomorrow's generations

2014 Annual and Sustainability Report This is why we are looking closely at our environmental, social and economic impacts today.

Our performance and how we improve it will deﬁne our developments and how we create signiﬁcant value for our business and for society − inclusive of tomorrow's generations. 4 Table of Contents

Envision. Deliver. 010. 2014 Performance at a Glance 012. Joint Message from the Chairman and the President 022. Message from the Chief Finance Ofcer

Build To Last. 033. Who We Are: Vision/Mission and Core Values 034. Ownership Structure/Membership in Associations/Awards and Recognitions 2014 035. Subsidiaries and Afliates 036. Business Review

120. Measure and Track Progress: Improving our Efciencies Take Responsibility. Environmental Health and Safety Policy 069. Corporate Governance Climate Change Policy 070. Governance Structure 074. Board of Directors 148. Take Action: Engaging our Employees 078. Board Committees Employee Engagement Drivers 092. Enterprise-Wide Risk Management 160. Exceed Expectations: Understanding Our Customers Quality Policy Inspire Positive Change. Customer Satisfaction Ratings 105. Our Sustainability Story Customer Feedback: 24/7 Helpline and 107. Sustainability Policy Text Feedback Hotline 108. Sustainability Framework PWD Awareness 109. Materiality Process 110. Sustainability Structure 170. Build Capacity: Empowering Our Communities 111. Material Aspects Community Development Programs 112. Stakeholder Engagement Catalyze Economic Development: 118. Sustainability Performance at a Glance Contributing to Society Signiﬁcant Indirect Economic Impacts

182. Inﬂuence. Set Sandards: Supply Chain Management Value Delivery Chain

186. Appendices

210. GRI Content Index

214. ASEAN Corporate Governance Scorecard Index

Keep The Balance. 216. Financial Statements

5 About this Report

Scope and Coverage Data References and Assurance

Our 2014 Annual and Sustainability Report covers The references of each sector performance the business operations and activities of Cebu are taken from the following documents Holdings, Inc. (CHI) in Cebu, Philippines including or guidelines: its subsidiaries and afliates for the calendar year Economic Performance 2014. G4-3, G4-5, G4-6, G4-28, G4-30 • Audited ﬁnancial statements conforming with The scope of our environmental data was generally accepted accounting principles in the expanded. Data for 2013 was updated Philippines, and accordingly for alignment. G4-22 • Internally-generated reports consolidated from Finance, Commercial Business Group and Purpose of Report Corporate Communication and CSR Division detailing our community investments for this This Report is a valuable opportunity for us reporting period. to assess and improve on our economic, environmental and social performance. Environmental Performance

This has been designed to provide our • Energy and water consumption from meter stakeholders with relevant information about our readings by utility companies we subscribe to; Company’s annual ﬁnancial and sustainability • Actual volume or weight of materials used as initiatives, programs and progress. This was shown in the records of our general contractor; developed using the Global Reporting Initiative (GRI) G4 reporting framework which we • Diesel consumption (generating sets) are from pioneered in the country in 2014. characteristic fuel consumption given by the manufacturer; Included here are Construction and Real Estate • Greenhouse gas (GHG) emissions from Sector disclosures. This report successfully direct energy; Computations derived using completed GRI’s Materiality Disclosures Service. the GHG Protocol Corporate Standard and See pages 211 to 214 for further information. Intergovernmental Panel for Climate Change (IPCC) Reporting Guidelines; and • Emission factor for the indirect energy consumption is based on National Grid Emission Factors by the Department of Energy (DOE).

6 Social Performance companies (PLCs). It helps us benchmark against international best corporate governance • Internally-generated reports on our labor practices by publicly-listed companies and and humtan rights aspects, health and safety, encourages us to go beyond our national product responsibility, and community legislative requirements. See pages 214 for the development programs. ACGS Index. • We benchmarked with Corporate Knights The data assurance for non-ﬁnancial data is Capital’s 2015 Global 100 Index. This listing conducted through the Company’s annual audits is a ranking of the world's most sustainable on Quality, Environmental, Occupational Health corporations using 12 key performance and Safety Management Systems (QEHS MS), indicators. It allows us greater transparency and which are held annually by our internal audit a means to quantitatively compare to best in and external certifying body. In between these class global corporate practices. G4-15, G4-32 reviews, we also conduct data assurance through our own Sustainability Technical Working Group (STWG) assessments. G4-33 Additional Reference

Reporting Standards G4-15 The Company’s operational and financial performance filed with the Securities and This report conforms to: Exchange Commission (SEC) is reflected in the Information Statement sent to stockholders and • The Global Reporting Initiative Guidelines 4 is available at www.cebuholdings.com. (GRI-G4) for the non-financial performance of the Company under ‘Core” option. This year Feedback/Contact Information we report on 56 General Standard Disclosures, 39 Material Aspects and 53 Specific Standard For questions, comments and Disclosures (52 GRI and 1 CHI). See pages 210 suggestions, you may email us at to 212 for the GRI Content Index. [email protected]. G4-31 • We have also identified six sector-specific indicators following GRI’s G4 Sector Disclosures for Construction and Real Estate. • Our Report also adopts the ASEAN Corporate Governance Scorecard (ACGS) recommendations for ASEAN publicly-listed

7 01. Envision. Deliver.

Twenty six years ago, Cebu Holdings, Inc. (CHI) laid the groundwork for land development in Cebu. It all started with a big vision. With world class master-planning of large-scale, integrated mixed-use developments, we have helped change the economic and physical landscape of Cebu.

As we expand to new geographies and reach a broader market, we continue to deliver our promise—that of fulflling our share in making Cebu the center of business, IT / BPO and tourism in the region.

Let's build for tomorrow's generations 2014 Performance Highlights

We measure our impacts to the local economy and the society where we are present. As we continue to operate responsibly, we strive to balance our performance across all three criteria against our business objectives and long term goals. This section presents a quick reference on CHI's triple bottom line performance for the year 2014.

OPERATIONAL

RETAIL SPACE LEASING OFFICE SPACE LEASING >> Ayala Center Cebu >> eBloc Towers and The Walk 95% average occupancy 61 sqm gross thousand 129thousand leasable area sqm gross leasable area average 95% lease out rate

RESIDENTIAL >> Cebu Business Park ESTATES and Cebu I.T. Park CONDOMINIUMS

thousand number of sqm residential total772 gross ﬂoor area 924 units sold 87.5% expected GFA increase 1,559number of units in ﬁve years (2019) launched (owned by CHI and ALI) sqm total 308,758 under construction

10 Let’s Build for Tomorrow's Generations ECONOMIC

growth in AAA billion total assets PRS Credit P2 27% gross revenues reaching P16.4 billion Rating current 1.63:1 ratio P531 million commercial net income after tax debt-to-equity 1.23:1 ratio

P2 billion capital expenditure ENVIRONMENT

increase 82species 28% in volume 3,972 existing trees nurtured of recyclables at Cebu Park equivalent to kgs District and 405,312 Amara SOCIAL

rendered a total of out of 10 3,353 total 8.7 training hours provided internal volunteer541 hours customer satisfaction 79% rating employee participation

out of 10 average training hours per employee ZERO 8.5 lost time external from work accidents customer and injuries in satisfaction 39 09 00 construction project HRS MINS SECS sites and in CHI ofces rating

CHI 2014 Annual and Sustainability Report 11 JOINT MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT G4-1, G4-2

Cebu Holdings, Inc. (CHI) is proud to consider itself as a major partner in building Cebu. Since the late eighties, it has worked to unlock the value of land in Cebu Park District, an integrated mixed-use development comprised of Cebu Business Park, and subsidiary Cebu Property Ventures and Development Corporation’s (CPVDC’s) Cebu I.T. Park.

Twenty six years ago, when Ayala Land was looking for a next estate to develop into a central business district after Makati, Cebu was the top choice. The city showed promise as an ideal location where Ayala Land’s afliate company, CHI, could set the stage for even further growth.

Since the late eighties, CHI has worked to unlock the value of land in Cebu Park District, an integrated mixed- use development comprised of Cebu Business Park, and subsidiary CPVDC’s Cebu I.T. Park.

Bernard Vincent O. Dy

12 Let’s Build for Tomorrow's Generations The year 2014 was another record year as we exceeded ﬁnancial targets. The year ended with P2.3 billion in consolidated revenues and a net income of P530.9 million, the highest

Aniceto V. Bisnar, Jr. ever for the Company.

In planting the seeds of progress many Building strong foundations years ago, both CHI and Cebu are reaping the rewards. Last year, Cebu City The year 2014 was another record continued to be ranked one of the top year as we exceeded ﬁnancial targets. ten ofshore BPO locations in the world. The year ended with P2.3 billion in consolidated revenues and a net income Our twin districts – Cebu Business Park of P530.9 million, the highest ever for and Cebu I.T. Park continue to play a vital the Company. role in the city’s economy. Both parks and adjoining areas enjoy a critical mass We achieved this by strengthening of locators in the spheres of business, our foundations. banking and ﬁnance, IT/BPO and tourism services. Today, both parks have We focused on raising capital to enable over 65,000 workers. us to seize opportunities in the market.

CHI 2014 Annual and Sustainability Report 13 We focused on raising capital to enable us to seize opportunities in the market. Last year marked

the success of our maiden We continue to enhance our existing bonds ofering, resulting developments. Ayala Center Cebu, the centerpiece of our flagship development, in a capital infusion of Cebu Business Park, recently expanded with a new wing and introduced P5 billion for projects in premium retail brands and first-in-Cebu concepts, enhancing the Cebuano the pipeline and other shopping experience with a refreshing leisure destination. landbanking activities. We also continue to serve the growing demand for ofce space. Capitalizing on the increasing IT and BPO demand, we concurrently topped of and launched Last year marked the success of our two additional eBloc Towers in Cebu I.T. maiden bonds ofering, resulting in Park through CPVDC. Today, Cebu I.T. a capital infusion of P5 billion. The Park is home to over 70 percent of the funds will be used for projects and city’s BPO industry. developments in the pipeline and other landbanking activities to further grow We were able to build up our leasing our portfolio. Our ofering was over- portfolio’s gross leasable area to 187,555 subscribed by 1.6 times, showing investor square meters of retail and ofce confidence in the Company. space — comprising over half of the

14 Let’s Build for Tomorrow's Generations Company’s revenues. This makes for a to 1.4 million square meters for ofce, strategic mix of revenue sources with a commercial, and residential uses. This steady flow of recurring income. will service the 65,000 workers of Cebu Park District, a number which we expect Sales of residential units also remain to grow by 20 percent in 2015. strong as we start the turnover of various products to buyers, such as Ayala Land We will also develop more projects in Premier’s 1016 Residences, Alveo’s the Cebu I.T. Park to serve its growing Sedona Parc, and the Avida Towers Cebu. population. The two-hectare stacked mixed-use development in Cebu I.T. Building for future generations Park, aptly named Central Bloc, will showcase the convergence of business We will continue to build within our and leisure that the Company is known existing communities and develop for. We expect this landmark project to new estates to ensure sustained be a strong anchor in the estate. long-term growth. Plans for our new mixed-use districts in Cebu Park District continues to see Mactan and Mandaue are well under way. strong development with a total of 17 Our 13-hectare proposed development buildings currently under construction. in Mactan, under a joint venture with These new structures will add 308,758 Taft Property Venture Development square meters of gross floor area (GFA). Corporation, is set to become the This will close to double the amount of mixed-use leisure and resort community built-up GFA within the next five years of choice. We expect this development

CHI 2014 Annual and Sustainability Report 15 In working, we also remember our responsibility to our shareholders, our business partners, the communities that

to service the projected tourism market we develop and our which is estimated to grow to 5.3 million customers. CHI strongly in 2020.

The 15-hectare city center in Mandaue, believes that sustainable on the other hand, will feature innovative residential developments and communities are commercial spaces having retail and long-term drivers of ofce components. CHI has a 10 percent stake in this partnership with Ayala Land, shareholder value. Inc. and AboitizLand, Inc.

Building to last

With these plans, we are confident that we will be able to sustain long-term as one among five finalists at the 3rd growth. Our confidence is built on Philippine Stock Exchange (PSE) Bell several factors: Awards. This is the highest accolade given locally to listed companies with First, our business thrives due to strong “world-class corporate governance corporate governance driven by integrity standards and practices.” Assessments and professional competence. This year, were based on the strength of a we were honored with high distinction company’s adherence to PSE’s corporate

16 Let’s Build for Tomorrow's Generations governance guidelines and relevant rules Lastly, we acknowledge our people and regulations. as critical in ensuring that plans are executed in accordance with our Second, we are prudent in our business brand standards. Our strong culture of outlook but remain adaptive to changes performance and teamwork allows us to in the economic landscape and market achieve solid business results. conditions. As we move forward with our program to expand into new growth Building sustainable communities centers, we plan carefully to ensure high probability of success by understanding In working, we also remember our clearly the needs of our consumers. responsibility to our shareholders, our business partners, the communities Third, our residential, commercial and that we develop and our customers. leasing properties continue to be well- CHI strongly believes that sustainable received by the market. We remain communities are long-term drivers of market leaders in locations where we shareholder value. are present. Given our track record of creating masterplanned, integrated, Our business is closely linked to the mixed-use communities, we are communities in which we operate, conﬁdent that these new locations will and we continue to be integral to their become signiﬁcant contributors to our development. We communicate and bottom line in the near future. work diligently with the government, industry and community groups to

CHI 2014 Annual and Sustainability Report 17 We take great pride in what has been achieved. We remain conﬁdent in the capability of our organization to build on our success

even further. We benchmarked with Corporate Knights Capital’s KPIs and aligned the disclosure requirements with the ASEAN Corporate Governance Scorecard.

develop strategies for the growth We have also refined our Sustainability of Metro Cebu through vibrant and Framework to better align with the key engaged communities. economic drivers of Cebu – tourism, BPO and IT, construction, and real estate Sustainability is a key principle that development. Our three focus areas we have operated on from the very namely, supporting local businesses and beginning. In fact, we pioneered enabling communities; designing and GRI-G4 reporting in the country in developing healthy, dynamic city areas; 2013. In pursuit of greater accountability and bridging global companies to local and transparency, this year, we skilled labor and professionals, contribute increased our General and Specific to sustained performance delivery. Standard Disclosures including one (See more details on our Sustainability CHI-specific indicator. framework on page 108 of this Report.)

18 Let’s Build for Tomorrow's Generations 19

Our eforts to drive growth through positioning them for growth, enabling sustainability was acknowledged strong relationships with local through a Special Recognition at the government, and strengthening our first Sustainable Business Awards (SBA) operating efciency strategies and risk Philippines 2014 for Best Practices in management approach. Workforce Management with CHI being the only Cebu-based company cited. We take great pride in what has been achieved. We remain confident in Our approach to sustainability has the capability of our organization given us a number of benefits: creating to build on our success even high-quality products, enhancing further. We will continue to build for our market reputation as a trusted tomorrow’s generations. brand, empowering our people and

Bernard Vincent O. Dy Aniceto V. Bisnar, Jr. Chairman President

CHI 2014 Annual and Sustainability Report 19 02. Set a target. Exceed it.

We rely on our sustainability framework as our road map to steer us to meet the objectives we set. We strive to maximize the use of our resources and improve productivity to ensure that we deliver or even exceed our targets.

Let's build for tomorrow's generations MESSAGE FROM THE CHIEF FINANCE OFFICER G4-1, G4-2

The Philippine economy showed its continuing resilience despite adversity, ending 2014 with the third highest gross domestic product (GDP) growth in the region, after Vietnam and China. Though the yearend 6.1 percent GDP growth was lower than that of 2013, it was a strong performance considering the efects of recent natural calamities, as well as the uncertainties of the global economic environment.

Against this challenging backdrop, we at Cebu Holdings, Inc. (CHI), have continued to manage our business prudently, aggressively seeking opportunities for further growth while keeping risks within manageable levels. Our balance sheet remains strong, even stronger in fact as we actively managed our debt proﬁle in 2014 ensuring it remained long-dated yet cost efective.

Our Company’s principal strength lies in its involvement in highly diversiﬁed businesses including a range of residential products that cater to various market segments. The various residential condominiums we have launched bring in over 4,500 units upon completion, making us the biggest real estate group,

“... we have continued to manage our business prudently, aggressively seeking opportunities for further growth while keeping risks within manageable levels...”

Enrique B. Manuel, Jr.

22 Let’s Build for Tomorrow's Generations Our brand is very strong, our ﬁnancial position is healthy with a variety of funding sources available and we have the manpower and ofering the most number of units across the widest range of market segments in Cebu. Our the expertise to undertake master planned estates are also the preferred locations for traditional ofce, BPO ofce and both pocket-sized and retail space leasing. large-scale projects or Combining leading-edge product innovation with prudent and efective risk management practices, investments that balance the we have the ability to manage a complex portfolio of projects and developments and are need for sustained earnings able to thrive and prosper through the cyclical nature of the industry. growth and long-term

In Cebu, CHI is synonymous with quality and value creation. prestige and is the most widely-trusted brand in the local real estate industry. CHI, with Ayala Land, maintains market leadership in all of our product lines, with 22.8 percent share in the residential vertical market and 17 percent share P2.2 billion as a result of a strategic balance of in the BPO ofce leasing market. Our Company revenues from both our leasing and real estate is in a very good place, and is positioned well sales businesses. for continued growth. Our brand is very strong, our ﬁnancial position is healthy with a variety Our consolidated assets grew 27 percent, of funding sources available and we have the reaching P16.4 billion at yearend. Our cash and manpower and the expertise to undertake cash equivalents and short-term investments both pocket-sized and large-scale projects or stood at P3.1 billion with a current ratio of 1.63:1 investments that balance the need for sustained as of such date. Commercial debt-to-equity ratio earnings growth and long-term value creation. was at 1.23:1, while total debt-to-equity ratio was at 1.86:1. Maintain a strong balance sheet Total capital expenditure of P2.29 billion was We ended 2014 with a net income of P530.9 spent for the following: 39 percent for ofce million, up by six percent versus that of the building, while 38 percent for investment in previous year-- the highest yet recorded since subsidiaries and afliates, nine percent for 1988. This is the result of the strong performance residential development, six percent each for across all of our business lines including retail and commercial center improvements and land ofce leasing, residential lots and condominium acquisition, one percent each for corporate units sales and other income. Our revenue rose business and commercial lot development. to P2.3 billion, up six percent from last year’s

CHI 2014 Annual and Sustainability Report 23 Cebu Holdings, Inc. and Subsidiaries (Year Ended December 31) G4-9

2014 2013 2012 2011 2010

For the Year (in thousand pesos)

Revenues 2,293,579 2,169,510 1,633,034 1,442,701 1,521,870 Net Income 530,877 501,145 443,640 436,192 406,200 Dividend Amount 230,409 211,208 192,007 134,406 134,406

At Year-End (in thousand pesos)

Total Assets 16,384,951 12,950,353 9,749,063 7,131,313 6,038,390 Cash and Cash Equivalents 3,099,293 1,191,755 1,864,017 1,217,187 923,173 Commercial Loans 6,719,480 4,377,977 1,845,062 950,675 165,000 Stockholders’ Equity 5,466,232 5,174,518 4,942,684 4,704,483 4,415,142

Per Share (in pesos)

Earnings Per Share 0.28 0.26 0.23 0.23 0.21 (EPS) 0.12 0.11 0.10 0.07 0.07 Dividend Per Share 2.85 2.69 2.57 2.45 2.30

Financial Ratios

Current Ratio 1.63 1.21 1.43 2.42 1.84 Commercial Debt-to-Equity Ratio 1.23 0.85 0.37 0.20 0.04 Total Debt-to-Equity Ratio 1.86 1.36 0.91 0.45 0.30 ROE 9.98% 9.91% 9.20% 9.57% 9.49% ROA 3.62% 4.42% 5.26% 6.62% 6.88% Stock Price 5.16 5.73 4.00 2.50 2.70

24 Let’s Build for Tomorrow's Generations 23% 61%

0.54B 1.38B We saw earnings per share increase Interest and Retail Ofce from P0.26 in 2013 to P0.28 in 2014. Our Other Income Space Leasing cash dividends were declared at P0.12 per share or a total of P230.4 million in 10% December 2014. 0.24B Residential Lot and Condo Sales Strengthen operations REVENUE and efciency MIX

We continue to invest in master planned, 6% mixed use developments to drive enhanced 0.14B quality of life within our created spaces, Theater and support our vision of a dynamic, Operations vibrant Cebu. 2.29 BILLION TOTAL REVENUES Recurring income from retail and ofce space leasing made up 60 percent of consolidated revenues, bringing in P1.4 billion. With the opening of our latest expansion, Ayala Center Cebu increased its leasable space to 127,000 square meters. This new wing brought Revenues (in thousand pesos) G4-9 in premium brands such as Zara, Tumi and Fred Perry, as well as the four-storey anchor, Rustan’s, 2,500 complete with supermarket and three levels of 2,293,579

2,000 2,169,510 department store. The mall now has over 500 merchants and a lease out rate of 95 percent. 1,633,034

1,500 1,521,870 1,442,701 With the IT and BPO industry being one of the 1,000 drivers of Cebu’s local economy, we continue to build up our ofce leasing portfolio to cater to

2010 2011 2012 2013 2014 this demand. The ﬁrst three towers of the eBloc

CHI 2014 Annual and Sustainability Report 25 Tower series are host to some of the top global IT Manage risks companies and maintain an average occupancy of 95.3 percent for ofce space. We are currently CHI’s consistently improving profitability has the market leader in BPO ofce stock, with over led to expected improvements in cash flows. 61,439 square meters of leasable space. The Our Company holds a sizeable amount of ongoing construction of eBloc Tower 4 at Cebu landholdings which add to its financial flexibility, I.T. Park and the ACC Corporate Center at Cebu enhancing its ability to pursue expansion plans in Business Park will bring in an additional 46,988 the future. square meters of leasable space by the last quarter of 2015. Apart from maintaining a conservative debt profile, there was no incidence of unexpected Revenue from residential land and condominium systems breakdown nor unexpected asset sales brought in total income of P237.3 milion, impairments or losses. Our debt maturity profile contributing 10 percent to the Company’s remains above five years and we continue to hold revenue. With our robust and committed a high AAA credit rating. We remain within policy operational strategy for growth, the previous year limits for interests cover and asset mix, and we saw four project completion turnovers. aim for improved return on investments for our new partnerships and key developments. Other components of revenue include equity in net earnings of associates, interest and other In the past year, our material risks were well income of P539.1 million, which is 23 percent of managed with the appropriate mitigation the Company’s total revenue.

Net Income (in thousand pesos) G4-9 Total Assets (in thousand pesos) G4-9

700 19,000

17,000

16,384,951 500 530,877 15,000 501, 145 443, 640 436, 192 13,000 406, 200 12,950,353 300 11,000

9,000 9,749,063

100 7,000 7,131,313

5,000 6,038,390

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

26 Let’s Build for Tomorrow's Generations Key Figures in 2014

REVENUE COMMERCIAL DEBT STOCK PRICE P2.3 billion P6.7 billion P5.16/share 6 up from last STOCKHOLDERS’ EQUITY year's P2.2 Billion RETURN ON EQUITY NET INCOME P5.5 billion 9.98% 6 increase from P530.9 million P5.2 Billion in 2013 RETURN ON ASSETS Highest income EARNINGS PER SHARE recorded since 1988 3.62%

DIVIDEND AMOUNT P0.28 CURRENT RATIOS P230.4 million DIVIDEND PER SHARE 1.63:1

TOTAL ASSETS P0.12 COMMERCIAL DEBT-TO-EQUITY RATIO BOOK VALUE PER SHARE P16.4 billion 1.23:1 CASH AND CASH EQUIVALENTS P2.85 P3.1 billion

Stockholder’s Equity (in thousand pesos) G4-9 Stock Price G4-9

6,000 6.00

5.73 5,500 5.00 5,466,232 5.16

5,000 5,174,518 4.00 4,942,684 4,704,483 4.00

4,500 3.00 4,415,142 2.70 4,000 2.50 2.00

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

CHI 2014 Annual and Sustainability Report 27 CHI Debuts on the Local Debt Market with P5B Bonds Due in 2021 Cebu Holdings’ Maiden Bond Issuance Receives PRS AAA Credit Rating

Cebu Holdings, Inc.’s (CHI) P5-billion initial foray into the local debt market was fully subscribed to within its first week of ofering. Through the Philippine Dealing & Exchange Corp. (PDEx) platform last June 6, 2014. The entire subscription amount of P5 billion was raised. This is well and above the P3 billion initial target forecast by CHI. The bonds were oversubscribed 1.6 times over, reflecting high investor confidence and commitment in the Company. Both PDEx and the Philippine Rating Services Corporation (PhilRatings) assigned a PRS AAA credit rating, a Cebu first, to CHI’s maiden bonds due in 2021. This rating is the highest given which indicates minimal credit risk.

The bond issuance will help fund CHI’s projects and continuing landbanking initiatives.

28 Let’s Build for Tomorrow's Generations measures undertaken. We are resolute in Subsidiary CPVDC is also set to embark on a achieving high customer satisfaction rating goals. major redevelopment of a central lot in Cebu In 2014, customer satisfaction scores improved I.T. Park. This will unlock land values, as well as across our business units where we achieved an complement the I.T. Park’s growing population average of 8.7 out of 10 rating, higher than the with a regional mall, hotel and additional previous year’s 8.3 rating. ofce buildings.

Have a sound strategy Our Company is also set to expand in key cities in Metro Cebu, capitalizing on their strengths and moving forward supporting their potential for growth.

We continue to rely on our sustainability All these are calibrated to capitalize on the framework in growing the business. We have expanding market, diversify our product lines and refined our strategy to drive three focus areas grow the business for you, our shareholders. that will complement and boost our economic, environmental and social capitals in the We will continue to deliver solid results from years ahead. As we enter into a management our developments, further strengthen our transitional phase for 2015, we will continue leasing capabilities, engage in smart, sound to rely on strong corporate governance to new venture partnerships, and continue to trust intensify delivery of operational and financial in our adaptability to meet changing market performance. We also continue to look forward conditions for the benefit of our business and all to enabling partnerships beyond those with our our shareholders. parent company.

Moving forward, we will be launching additional residential towers to add to our inventory of units. We also plan to introduce an innovative concept which capitalizes on a growing demand in the ofce leasing business.

Enrique B. Manuel, Jr. Chief Finance Ofcer

CHI 2014 Annual and Sustainability Report 29 03. Build to last.

CHI is stamped with 26 years of building self-sufcient communities. Tis track record guides us in setting the pace of development as we expand to new geographies and create more products of enduring value, that will last even beyond our generation.

Let's build for tomorrow's generations 32 Let’s Build for Tomorrow's Generations The magnitude of CHI’s projects makes CHI the leading real estate company in Cebu.

The Company was established at the time when Cebu was aggressively positioning to become a major investment destination in the Philippines. CHI’s entry into Cebu was both timely and beneﬁcial for an island-province and city that is strategically located at the crossroads of commerce and trade in the Visayas and Mindanao.

The magnitude of CHI’s projects makes CHI the leading real estate company in Cebu. The Company has great faith in the growth and progress of Cebu and it also has served to catalyze the area’s urban development. CHI has set the standard for high-growth commercial zones in Cebu City, and has inﬂuenced the appreciation of land values through world-class development.

Core Values G4-56 Mission and Vision Statement G4-56, E.3

Focus on Customer We shall be the premier real estate company in Cebu Bias for Results creating and providing market-driven products of enduring Entrepreneurial Drive value through a customer-focused and highly-motivated Teamwork team of professionals. Concern for People Empowerment of People We ensure the trust and conﬁdence of our shareholders with Pursuit of Excellence sustainable and proﬁtable growth while improving the quality Love of God Responsibility to the of life of the communities in the markets which we serve Community with honor and integrity. Enhancement of Quality of Life

CHI 2014 Annual and Sustainability Report 33 Ownership Structure

Cebu Holdings, Inc. (CHI) is a publicly-listed Company engaged in real property ownership, development, marketing and management.

The Company was registered with the Securities and Exchange Commission (SEC) on December 9, 1988, with an authorized capitalization of P1.0 billion. As of December 31, 2014, the Company’s capitalization is at P3.0 billion. G4-7, G4-17, D.1

49.80 - Ayala Land, Inc. 17.29 - Aberdeen Asset Management Asia Ltd. 11.52 - First Metro Investment Corp. OWNERSHIP STRUCTURE 10.75 - Aberdeen International Fund Managers Ltd. 5.07 - Government Service Insurance System 3.99 - PCD Nominee Corp. (Filipino) 1.58 - Others

Membership in Associations G4-16 Awards and Recognitions 2014

BUSINESS AND MANAGEMENT CHI maiden bonds issuance received AAA credit rating from the PDEx and the Philippine Rating Services Corporation Ayala Business Club Cebu, Inc. (PhilRatings) (April 30,2014) Cebu Business Park and Neighboring Barangays Altruistic CHI as a finalist in the 3rd Philippine Stock Exchange (PSE) Alliance, Inc. Bell Awards, the highest distinction given to listed companies Cebu Business Park Association, Inc. with ‘world-class corporate governance standards and practices’ (November 10, 2014) Cebu Chamber of Commerce and Industry Chamber of Real Estate and Builders’ Association, Inc. CHI was given a special recognition at the first Sustainable Business Awards (SBA) Philippines for best practices in the Geoplan Cebu Foundation, Inc. workforce category (July 14, 2014) International Council of Shopping Centers Cebu I T Park – Special Citation for its vision, development Management Association of the Philippines and continued support to Cebu’s emerging Information Philippine Quality and Productivity Movement – Visayas and Communication Technology and Business Process Management industry during the Grand Chamber Awards Philippine Retailers Association (June 28, 2014) Philippine Chamber of Commerce and Industry Ayala Center Cebu’s ‘Opening Doors, Breaking Barriers’ Financial Executives Institute of Cebu, Inc. PWD awards finalist (Cause-related Marketing Category) – Asia Pacific Shopping Center Awards, Singapore (November SUSTAINABILITY REPORTING 11, 2014) Global Reporting Initiative Organizational Stakeholder Ayala Center Cebu as the ‘Best Lifestyle Mall’ and The Terraces as the ‘Best Park’ in the Best of Cebu 2014 ENVIRONMENTAL AND ECOSYSTEMS CONSERVATION recognized by Sun Star Cebu Philippine Business for the Environment Ayala Center Cebu received the ‘Kasangga Award’ as an Cebu Uniting for Sustainable Water Foundation Interruptible Load Program (ILP) Partner conferred by the Visayan Electric Company (June 5, 2014)

EDUCATION AND TRANSFORMATIONAL AWARENESS Ayala Group of Companies (in Cebu) – ‘Tribute of Highest Cebu Educational Development Foundation for Distinction’ Tourism and Investors’ Night, Cebu Business Month, June 20, 2014. Information Technology

34 Subsidiaries and Afliates 100 76 CLCI CPVDC CEBU LEISURE COMPANY, INC. CEBU PROPERTY VENTURES 1994 - Formed as a joint- AND DEVELOPMENT venture company of Fun 35 CORPORATION Corporation and CHI SOLINEA, INC. Owner and developer of 1997 - Fun Corporation Cebu I.T. Park sold its shares to CHI A partnership between CHI 1990 - Registered with the and Alveo Land Corporation SEC on August 2 Owner and developer of Solinea and BPI Cebu Corporate Center at Cebu 100 37 Business Park AiO CIHCI ASIAN i-OFFICE CEBU INSULAR HOTEL PROPERTIES, INC. COMPANY, INC.

1995 - Incorporated on April 6 Initially a partnership between 100 CPVDC and Ayala Land, Inc. A partnership between CHI and AyalaLand Hotels and CBPTMI A special purpose vehicle Resorts Corp. CEBU BUSINESS PARK that engages in real estate THEATERS MANAGEMENT Owner and developer of development COMPANY, INC. Cebu City Marriott Hotel Fully acquired by CPVDC in April 2013 Registered with the SEC to engage in all aspects of the theatrical 55 and cinematographic TPEPI entertainment business, 10 TAFT PUNTA ENGAÑO including theater CDPEI PROPERTY, INC. management and other CEBU DISTRICT PROPERTY related undertakings ENTERPRISE, INC. 2013 - Formed as a joint- venture company with Taft Formed as a joint venture Property Development Corp. company with Ayala to develop a 13-hectare Land, Inc., CPVDC and property in Mactan. 35 AboitizLand to develop SPI a 15-hectare property in SOUTHPORTAL Subangdaku, Mandaue PROPERTIES, INC. City, Cebu Formed as a joint venture 30 company with Ayala Land, CBDI Inc. for the development CENTRAL BLOCK DEVELOPERS, INC. of Alcove Residences (Park 35 Point Residences Sequel) ASPI Formed as a joint venture AMAIA SOUTHERN company with Ayala Land, Inc. PROPERTIES, INC. and CPVDC for the Cebu I.T. Park Superblock Development Partnership between CHI and Amaia Land, Inc. for the development of Amaia Steps in Mandaue City, Cebu Capitalizing on the opportunities presented POBLACION PIT-OS

After more than two decades in business, we have aggressively capitalized on the opportunities presentedCONSOLACION by a rapidly expanding Cebu market. With our expansion projects, we continue to make our Company a sustainable investment in the long haul. TALAMBAN

BUSAY

CEBU CITY CANSAGA

NIVEL HILS BANILAD AMAIA STEPS Mandaue PAKNAAN MANDAUE CITY CEBU I.T. PARK MANDAUE

GUADALUPE PROJECT CEBU Subangdaku BUSINESS PARK

MACTAN INTERNATIONAL OSMEÑA BLVD CARRETA AIRPORT

CALAMBA

LABANGON

MACTAN

MAMBALING ISLAND

36 POBLACION AMARA Liloan, Cebu OUR BUSINESS G4-4, G4-8, G4-9, G4-13

LILOAN 1 Strategic Land Management

2 Real Estate Development

3 Real Estate Business - Commercial land sales - Residential subdivision/condominium sales

Commercial Business 4 Operations and Management

- Retail space lease - Office space lease

Hotel Development and Operations MACTAN PUNTA ENGAÑO 5 PROJECT - via affiliate Cebu Insular Hotel Co., Inc. (CIHCI) Punta Engaño

6 Proprietary Sports Club Shares Sales

37 N TA N AN E AB W C POPE JOHN C P.

XXIII SEMINARY A E R R A D

I N A L

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S A L E S N TA A AN V AB E C N P. T U E S QU E POCKET RO SAN GREENS C

ACC Corporate Center ST ÑO NI TO Construction accomplishment: SAN

39.11% as of December 2014 D OA R R JO D UI A IQ O S R Y A E CEBU N U A EN P AV HOLDINGS AO CENTER POCKET LUZ AN CEBU CITY ND GREENS MI MARRIOTT AYALA LIFE- HOTEL CITY SPORTS FGU CENTER CLUB CEBU D OA N R RA ILI 1016 B P RESIDENCES O O THE TERRACES L R Ayala Center Cebu A AM C S

A A R R C D H I B N IS A H AYALA L O R P CENTER O R S E A Y E CEBU L S E S A A V V E PARK POINT E N ACC N U RESIDENCES U E CORPORATE E CENTER

PUV PARKLANE HOTEL TERMINAL SOLINEA E (CYAN) KAMAGONG U B N MANDARIN O E H V HOTEL O A SOLINEA L N A ZO QUEST HOTEL V U (TURQUOISE) E L N U E SOLINEA (LAZULI) KAMPUTHAW

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S ORSO GON TUGKARAN ROAD NURSERY

BAN TAYAN ROAD CARRETA

E NU SORSOGON VE ROAD A Solinea 1 (Cyan)M LO I I AX M ConstructionM accomplishment: L U RA S E N A 36.95%E as of December 2014 V G E N U E

COLEGIO DE LA Solinea 2 (Turquoise) IMMACULADA CONCEPCION Construction accomplishment:

GORORDO AVENUE 16.23% as of December 2014

Solinea 3 (Lazuli) Start of construction

G E N E C H A V E Z S T 39 CEBU BUSINESS PARK Promoting business and commercial growth in the region

The park synthesizes the home-work-leisure dynamics, reshaping the urban landscape of Cebu with the vibrant mix of retail, ofce, living and residential developments, setting the pace for a more sustainable living.

Cebu Business Park has seen 32 projects completed and 12 under construction continuing the build up of innovative spaces positioned for growth.

40 41 AYALA CENTER CEBU Setting a new standard in Cebu’s retail industry

Continuing to complement Cebu’s vibrant community, Ayala Center Cebu’s four level retail expansion adding 36,500 square meters of gross leasable area is now 95 percent leased out. The expansion brings 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.

42 43

Best of Cebu Awards

Ayala Center Cebu was named Cebu's Best Lifestyle Mall in Sun Star's Best of Cebu 2014 Awards. The mall likewise received citations as the Best Customer Restrooms, Best Jeepney Terminal and Best Park.

The six-month selection process by editors of Sun Star included incognito visits to nominated establishments and deliberations on which ones fulﬁlled a particular award or title.

The recognitions are a validation of CHI’s high standard service delivery, giving shoppers the widest range of choices and convenience, the best planned facilities and unparalleled customer service.

Rustan’s Supermarket at Ayala Center Cebu opened on August 9, 2014. The event was lead by CHI’s Aniceto V. Bisnar, Jr. and Rustan Super Center, Inc. CEO and President, Donnie V. Tantoco.

43 AYALA LAND PREMIER: 1016 RESIDENCES, PARK POINT RESIDENCES AND AMARA Ofering exclusive and distinctive living experiences

1016 Residences, which is directly connected to urban resort City Sports Club Cebu, gives residents a range of facilities and amenities for shopping, recreation and business. This 109-unit tower neared completion by the end of 2014.

Park Point Residences is built on top of Ayala Center Cebu, with private access to the city's premier dining, shopping, and entertainment destinations. It posted 49.5 percent completion by yearend.

44 Amara, located in the northern town of Liloan in Cebu, provides the ideal resort-inspired lifestyle where residents can nurture relationships with family, neighbors and friends. Percentage completion as of the end of 2014 stood at 95.6 percent for The Parks at Amara.

45 Solinea Lazuli and BPI Cebu Corporate Center groundbreaking ceremonies

Solinea Inc. marked another important milestone with the groundbreaking ceremony of its two signature projects in Cebu: Solinea Lazuli and the BPI Cebu Corporate Center.

This event formally strengthens and continues the fulﬁllment of Solinea’s distinct city resort living experience with the much-awaited third residential tower, Lazuli. The BPI Cebu Corporate Center, on the other hand, is Alveo‘s ﬁrst ofce development in Cebu, introducing next- level, innovative workscapes as the Southern Philippine’s number one business address.

46 ALVEO: SEDONA PARC AND SOLINEA Introducing vibrant and cosmopolitan communities

Sedona Parc is a stylish residential condominium of only 114 units that will ofer an upscale lifestyle set in a tranquil and highly- accessible parkside location. This innovative residential tower neared completion by the end of 2014.

Solinea is CHI and Alveo’s ﬁrst multi-tower development in Cebu City, master planned and envisioned to ofer city resort living. Located across Ayala Center Cebu, this vibrant community broke ground for its third tower in 2014. 47 CITY SPORTS CLUB CEBU The urban recreational and sports resort

48 The urban recreational and sports resort located at the heart of the metropolis ofers a diverse range of amenities for leisure, dining, health and ﬁtness. Stepping up to modernize its facilities, the club underwent a multi-million peso renovation which started in 2013 to further enhance its multitude of services to ofer to club users. 49 50 CEBU CITY MARRIOTT HOTEL Business and leisure for the discerning traveler

Located within the city’s premier business and lifestyle district, Cebu City Marriott Hotel ofers a quality experience for its guests. The 299-room business hotel is beside Ayala Center Cebu ofering shopping, recreation and leisure activities at their doorstep.

51 GOLDEN SUN DRIVE GOV . M. CU ENCO AVEN UE CEBU COUNTRY CLUB

eBLOC TOWER 4 eBLOC TOWER 1 J. M. DE L M AR ST RE POCKET AVIDA TOWER ET RIALA 1 GREENS

AVIDA TOWER RIALA 2

AVIDA TOWER Avida Tower Riala 1 RIALA 3 Construction accomplishment: T E 18.9% as of December 2014 E R T S IA T S D Avida Tower Riala 2 D N N 2 I T E T Construction accomplishment: S E T S R 1 T S 16.09% as of DecemberSA 2014N M IGUE A L RD L IL V Z T Avida Tower Riala 3 E CENTRAL BLOC E E IN R Grand Launch: T S ST A A EG M July 12, 2014 W G O . I GE R O D NZ A ON P ST RE CAMP LAPU-LAPU ET CENTRAL COMMAND AVIDA TOWER 1

AVIDA eBLOC Avida Tower 1 TOWER 2 TOWER 2 Turnover: August, 2014

eBLOC TOWER 3

Avida Tower 2 Construction accomplishment: 93.7% as of December 2014

LA GUARDIA ST CEBU IT PARK

LA GUARDIA EXT

52 ST LAWRENCE ST

STEPHENSON ST G E N . L IM S T

T S eBloc Tower 4 S O T N A Construction accomplishment: S D A B A

23.30% as of December. 2014 J

INTERNATIONAL PHARMACEUTICALS, INC. BAUHINA DR

GO V. M. CU EN CO AV CEBU MEDICAL EN SOCIETY UE

UE EN Central Bloc AV SAMANTABHADRA NA Site preparation INSTITUTE LU AN JU

J . M . D EL M A R ST TESDA RE REGION VII ET BUREAU OF INTERNAL REVENUE POCKET GREENS T E E R T S D A THE WALK B WATERFRONT A CEBU

POCKET GREENS W . G EO N ZO N E V ST I RE R E D T S A N I L Legend: A S commercial

UCMA office

residential

JADE ST

TORQUOISE ST

FIRST ST METROSPORTS retail

EMERALD ST

DIAMOND ST

SAPPHIRE53 ST CEBU I.T. PARK Strengthening the investment climate in Cebu

Catering to leading global brands of the IT/BPO industry, the foremost technological hub’s current expansion of residential and leasing spaces with its mixed use strategy catapults Cebu as the global gateway and prime investment area. Cebu I.T. Park continues to sustain Cebu’s robust growth with 20 buildings completed and ﬁve more under construction.

54 55 56 Cebu I.T. Park Awarded for Boosting ICT/BPM Industry

In its 2014 Grand Chamber Awards, the In a separate event, the Ayala group of Cebu Chamber of Commerce and Industry companies, was lauded with the “Tribute of gave a Special Citation to Cebu I.T. Park Highest Distinction” award during the Tourism for its vision, development and continued and Investors Night of the Cebu Business Month. support to Cebu’s emerging information and communication technology and business process Signed by heads of the Cebu Chamber of management industry. Commerce and Industry, the Province of Cebu, and the City of Cebu, the award recognizes The PEZA-accredited Cebu I.T. Park is home the Ayala group for its investment in Cebu to over 70 percent of Cebu’s business process which could well be over P100 billion in outsourcing (BPO) industry. It holds the largest economic value. facilities of JP Morgan Chase and Co., NCR Philippines, Accenture, Teletech IBM, Microsoft, “The Ayala group’s investment in the Cebu Convergys and Aegis PeopleSupport and NEC Business Park and the Cebu I.T. Park are the Telecom Software Phils, Inc. outside of Manila. most important components that determined Ayala’s award of Highest Distinction. These two To cater to the still growing workforce of over locations are hosting quite a number of foreign 35,000, the two-hectare superblock of Cebu I. T. direct investors, who are involved in a number Park is set for redevelopment. The leasing portfolio of business ventures and endeavors, and the will expand to include a regional mall, ofce most recent of which, are the BPOs and BPMs,” buildings and a hotel, reinforcing Cebu I.T. Park as said Sabino Dapat, Chair of the Tourism and the top BPO destination in the region. Investment Promotion Committee of the Cebu Business Month 2014. The panel of judges was led by Department of Trade and Industry VII Director Asteria Caberte.

Cebu Holdings Inc. President (2014) Francis Monera receives the Tribute of Highest Distinction bestowed to the Ayala Group of Companies for its contribution to Cebu’s development. The award was given by the Cebu Chamber of Commerce and Industry (CCCI). (L-R) Cebu City Mayor Michael Rama, Cebu Governor Hilario Davide III, CCCI President Ma. Teresa Chan and Cebu Business Month Chairman Felix Tiukinhoy.

57 eBLOC TOWERS Addressing the continuing demand for ofce space

The accelerated growth of the IT/BPO industry has seen the rising demand for more ofce spaces. The modern ofces of the eBloc Towers with its retail provision at the ground ﬂoor accentuate the 24/7 community of Cebu I.T. Park. In 2014, eBloc Tower 3 was completed while eBloc Tower 4 was at 23 percent completion at yearend.

58 59 AVIDA TOWERS CEBU, AVIDA TOWERS RIALA, AMAIA STEPS MANDAUE Comfort and function in a secure investment

Located within the bustling Cebu I.T. Park community, Avida Towers Cebu was a best seller when it was ﬁrst introduced to the Cebuano market.

With the success of Avida Towers Cebu, Avida Towers Riala was launched to cater to the demand for afordable homes in the heart of the city. This multi-tower development ofers the convenience of integrated living right in the city's most dynamic lifestyle district. The development is now on its third tower.

Amaia Steps Mandaue is the ﬁrst mid-rise project of Amaia in Cebu province. Catering to the broad afordable market segment, this development ofers the hardworking family a secure place to call home. 60 61 62 CENTRAL BLOC A refreshing new hub for business and leisure

Central Bloc, which will rise at the center of Cebu I.T. Park, features two BPO ofce towers, a 500-store Ayala Mall, and a 214- room Seda hotel. Connecting Central Bloc to The Walk is a one-storey retail component complemented by open space, further enhancing the work and lifestyle experience of the city’s young business professionals.

63 Expanding to new geographies

MAGELLAN BAY

MACTAN PROJECT

MÖVENPICK HOTEL MACTAN ISLAND CEBU

AD RO O AÑ NG A E NT PU

MACTAN SHRINE

SHANGRI-LA'S MACTAN RESORT AND SPA

CHI forged strong partnerships for its continuing expansion with new large-scale, integrated, master planned mixed-use districts in key cities in Metro Cebu.

Our 13-hectare proposed development in Mactan, is a joint venture with Taft Property Venture Development Corporation. Capitalizing on Cebu’s booming tourism industry, it is envisioned to become the resort and leisure hotel, retail and residential development of choice. SUBANGDAKU V E L ELEMENTARY A S Q SCHOOL U E Z S T R E E T

M .

L O

A G L T B A E A R . PEREZ E N E.O STREET R T T O S A A

A A N E V JA E

N Z

E U DEPARTMENT OF P AGRICULTURE - CEBU LO E

BUREAU OF INTERNAL REVENUE

INNODATA KNOWLEDGE SERVICES INCORPORATED MANDAUE PROJECT NORTH BUS TERMINAL

E U N E V A A T E R U A EN G V O A L O . N A M U O F. CAB AHU G ST.

E U N VE A G LI EL U . Z E F. D R VA LE U K A O O B H A S N IU E This is a 15-hectare cityN center project locatedM in Subangdaku, Mandaue City. This G S S O T R O E I E G will feature residential developmentsT andR commercial spaces having retail and SE ofce components. CEBU PORT AUTHORITY

CHI has a 10 percent stake in this partnership with Ayala Land, Inc., and AboitizLand, Inc.

CEBU DAILY NEWS CEBU INTERNATIONAL MACTAN CHANNEL PORT 04. Take responsibility.

We operate under the principles of fairness, transparency, and integrity. As a publicly- listed company since 1994, CHI has adhered to the rules and regulations of the Securities and Exchange Commission and Philippine Stock Exchange. To further strengthen our corporate governance, we have adopted internationally-recognized best practices.

Let's build for tomorrow's generations

Good corporate governance is key to CHI’s development and sustainability.

Solid corporate governance, unwavering commitment to sustainability, strong business ethics, and risk management are intrinsic to Cebu Holdings, Inc. (CHI). These pillars translate to accountability, transparency, determination, and sound management that are core to CHI’s corporate responsibility.

CHI is a publicly listed company with the directors holding no more than two percent of Philippine Stock Exchange (PSE) since 1994. the outstanding capital stock. CHI is compliant to all the rules and regulations of the PSE and the Securities and Exchange Each director is elected annually. As a rule, any Commission (SEC), and in applicable rules and former partner or employee of CHI’s current regulations relating to the development of the external auditor is excluded from election. Philippine capital market. Rule exclusion applies only in cases of elapsed termination of service reaching a minimum of two years. Composition G4-40, E.4, E.12

There is a balanced and diverse mix of There are nine members of the Board of competencies and experiences in business, Directors and three are independent. CHI is ﬁnance and law among the board. The proﬁle fully compliant to the SEC and PSE governance of each director is found on pages 188 of 191 standards of a minimum of two independent this Report.

CHI 2014 Annual and Sustainability Report 69 GOVERNANCE STRUCTURE G4-34

BOARD OF EXECUTIVE COMMITTEE DIRECTORS COMPENSATION COMMITTEE

Internal AUDIT AND RISK COMMITTEE Audit RISK COMMITTEE PRESIDENT NOMINATION COMMITTEE

SUSTAINABILITY COMMITTEE

CHIEF FINANCE OFFICER Compliance Ofcer

MANAGEMENT COMMITTEE

Business Commercial Corporate Finance Development Business Services Division Group Group Group

Land Acquisition Leasing Operations Control and Security Analysis Strategic Land Marketing Human Resources Management Accounting and Admin Project Support / Treasury / Funds Project Development Technical Asset Corporate Management Management Communication Ofce Leasing and Corporate Operations Social Responsibility

Customer Relations Information Systems Project Support / Technical Asset Management

70 Let’s Build for Tomorrow's Generations G4-34

CORPORATE GOVERNANCE

The revised manual of Corporate Governance Independent Directors G4-40, E.12 efective July 21, 2014 stipulates the qualifications, appointment and election of CHI has three independent directors – independent directors. Fr. Roderick C. Salazar, Jr., SVD, Enrique L. Benedicto and Pampio A. Abarintos. Persons appointed as Chairman “Emeritus”, “Ex-Ofcio” Directors/Ofcers or Members of We comply with the rules of the SEC with any Executive/Advisory Board, or otherwise regard to the nomination and election of an appointed in a capacity to assist the Board in independent director. the performance of its duties shall be subject to a one (1) year “cooling-of period” prior to his We define an independent director as an qualification as an independent director. individual (1) who can and does exercise independent judgment, (2) with nothing to afect his independence from the Company or Chairman management nor interfere with the exercise of independent judgment in carrying out The chairman of the board has the responsibility the responsibilities of a director, and (3) of ensuring that the Board of Directors exercises holding no interests or no relations within the strong oversight over the Company and Company by blood (within the second degree its management. of consanguinity) or marriage to significant stockholders, the CEO or any member of our top Antonino T. Aquino served as chairman of the management team. board, assuming the position in 2009. He was replaced by Bernard Vincent O. Dy on August We also excluded from the list of independent 15, 2014. It is within the Chairman’s discretionary directors those who may have served the duties to level governance issues raised by non- company as an ofcer or significant service executive independent directors. Reputational provider, unless two years have elapsed since the risk management also falls under his jurisdiction. termination of that service.

In order to ensure that adequate time and It is CHI policy that the Chairman should not be attention is given to the fulﬁllment of each an immediate past president. E.6 director’s duties, CHI imposes a limit of ﬁve board seats in any group of publicly-listed companies.

Independent directors may serve for a period of not more than nine consecutive years.

CHI 2014 Annual and Sustainability Report 71 President authority within CHI’s management structure. Collectively, the Board of Directors is responsible Francis O. Monera held the position of president, for the success of the Company and ensures that assuming the position in 2007 until December 31, CHI’s obligations to its stakeholders are met. 2014. He was accountable for the Corporation’s organizational and procedural controls including The duties and responsibilities of the Board internal control mechanisms. He had general of Directors include, but are not limited to supervision of the business, afairs of the the following: Corporation extending to employees and ofcers. He had overseen the efective implementation • Approval and final adoption of the of all orders and resolutions of the strategies and corporate strategy, with pro-active policies promulgated by the Board of Directors. oversight of strategy execution; Francis O. Monera was replaced by Aniceto V. • Formulation and adoption of a corporate Bisnar, Jr. efective January 1, 2015. policy, starting with a policy related to corporate governance and oversight of The clear delineation of Board and Executive strategy execution; responsibilities within the governance structure ensures balance, accountability and enhanced • Performance monitoring, which covers independent decision-making. The duties and financial and non-financial performance as responsibilities of the Chairman of the Board and well as oversight of risk management; the President are complementary. • Setting up of an accountability system, which includes provision for rewards, Responsibilities of the Board incentives and penalties; and

and Processes G4-34, G4-35, G4-36, G4-42, G4-45, G4-46 • Promotion of a culture of ethics, social responsibility and good governance. CHI has adopted a Code of Corporate CHI’s Board of Directors adopts clear and specific Governance as mandated by the SEC. Specific guidelines on internal Board processes, and roles, duties and responsibilities of the Board in particular, the types of decisions requiring of Directors are clearly defined and aligned to Board approval. relevant Philippine laws, rules and regulations.

Included in the Company’s Board protocol are Key Roles and Responsibilities policies concerning the skills and competencies of the Board of Directors. These policies include: Overall stewardship of the Company rests on the Board of Directors, the highest governing

72 Let’s Build for Tomorrow's Generations Composition of the Board as of December 31, 2014 G4-38, E.4

DIRECTOR'S NAME TYPE PRINCIPAL NOMINATOR DATE FIRST DATE LAST ELECTED WHEN NUMBER aaaa aaaa IN THE LAST ELECTED ELECTED OF YEARS ELECTION SERVED AS DIRECTOR

BERNARD NED Ayala Land, Nomination August 15, August 15, Board Meeting new VINCENT O. DY Inc. Committee 2014 2 2014 ANTONINO T. NED Ayala Land, Nomination April 2009 2 April 2014 Annual 5 AQUINO Inc. Committee Stockholders' Meeting FRANCIS O. ED Ayala Land, Nomination April 2006 3 April 2014 Annual 8 MONERA Inc. Committe Stockholders' Meeting ANICETO V. ED Ayala Land, Nomination January 1, January 1, Board Meeting new BISNAR, JR. Inc. Committe 2015 3 2015 - Nov. 11, 2014

EMILIO J. NED Ayala Land, Nomination April 2008 April 2014 Annual 6 TUMBOCON Inc. Committe Stockholders' Meeting

JAIME E. NED Ayala Land, Nomination April 2008 April 2014 Annual 6 YSMAEL Inc. Committe Stockholders' Meeting MA. THERESA M. NED BPI Capital Nomination July 2012 April 2014 Board 2 JAVIER Corp. - Committe Meeting AMTG ANTONIO S. NED First Metro Nomination November April 2014 Annual 21 ABACAN, JR. Investment Committe 1993 Stockholders' Corp. Meeting

FR. RODERICK C. ID N/A Nomination April 2005 April 2014 Annual 9 SALAZAR, JR., SVD Committe Stockholders' Meeting ENRIQUE L. ID N/A Nomination April 2003 April 2014 Annual 11 BENEDICTO Committe Stockholders' Meeting

HERNANDO O. ID N/A Nomination April 2006 1 April 2014 Annual 8 STREEGAN Committe Stockholders' Meeting

PAMPIO A. ID N/A Nomination April 2014 1 April 2014 Annual new ABARINTOS Committee Stockholders' Meeting

1 Pampio A. Abarintos replaced Mr. Hernando O. Streegan efective April 8, 2014. 2 Bernard Vincent O. Dy replaced Mr. Antonino T. Aquino efective August 15, 2014. 3 Aniceto V. Bisnar, Jr. replaced Francis O. Monera efective January 1, 2015.

CHI 2014 Annual and Sustainability Report 73 THE BOARD OF DIRECTORS

(from left to right) Jaime E. Ysmael Filipino, 53, has served as Director of CHI since April 29, 2008. He has been the Treasurer of CHI since August 2014.

Antonio S. Abacan, Jr. Filipino, 71, has served as Director of CHI since November 1993. Concurrently, he is the Vice Chairman of Metrobank Group of Companies.

Ma. Theresa M. Javier Filipino, 44, has served as a Director of CHI since July 16, 2012. She is a Director of CPVDC, a publicly listed company.

Bernard Vincent O. Dy Emilio J. Tumbocon Filipino, 51, has been the Chairman of the Board of Directors Filipino, 58, has served as director of CHI of CHI since August 2014. He is the President and Chief since April 29, 2008. He is a Senior Vice- Executive Ofcer of Ayala Land, Inc. and Chairman of the President at Ayala Land, Inc., and a member Board of Directors of CPVDC. of its Management Committee.

74 The Board of Directors’ Profle is found in pages 188 - 191 of this Report. Aniceto V. Bisnar, Jr. Filipino, 51, has been the President of CHI since January 1, 2015. He is also the President of CPVDC, a publicly listed company. Concurrently, he is the Vice President and Chief Operating Ofcer of the Visayas-Mindanao Group of Ayala Land, Inc. Prior to being appointed as President, he was Executive Vice President of CHI and CPVDC since March 17, 2014.

Francis O. Monera Filipino, 60, served as director of CHI and CPVDC, from April 28, 2006 until Dec. 31, 2014. He served as President of CHI and CPVDC from 2006 to 2014. He was the Chief Operating Ofcer of CHI before he was elected president of the Company efective January 1, 2007.

(from left to right) Enrique L. Benedicto Filipino, 73, has served as an Independent Director of CHI since April 25, 2003. He is currently the Honorary Consul of Belgium.

Pampio A. Abarintos Filipino, 71, has served as an Independent Director of CHI since April 8, 2014.

Fr. Roderick C. Salazar Jr., SVD Filipino, 67, has served as an Independent Director of CHI since April 29, 2005.

75 • Ensuring that at least one of its non- CHI requires of its directors, at least 75 percent executive directors has prior working attendance of all Board meetings. Considerate experience in the sector or broad industry provision for electronic presence is given. group to which the Company belongs; Individual physical attendance is required in at • Requiring all directors to undergo an least 50 percent of the Board meetings. orientation program on corporate The Board undergoes a formal self-rating governance; and system annually. Assessments are made on both • Encouraging and supporting its directors to individual and collective capacities. Focus is given attend continuing education programs on to level of compliance with leading practices corporate directorship. E.8, E.9 and principles on good governance. Areas for improvement are determined. Independence, The Company’s Board of Directors also approves experience, judgment, knowledge, time and implements our vision/mission and core commitment, and teamwork are factored in. values. A Board calendar is also adopted to allow E.1, E.14, E.15, E.16 for periodic revisit and review of our governance charter and of our corporate strategy map, along Group meetings, without the presence of any with its related performance scorecards. E.1 executive director or management representative, are supported and arranged for all non-executive

Board Performance G4-44 directors at least once annually. E.7, E.13

Director and Senior Executive The Board meets at least three times a year. Dissemination of agenda, presentation materials Compensation and items for approval are made available at least three days prior to meeting schedule. Non-executive directors are members of the Board of Directors who are neither ofcers Information is provided by the Corporate nor consultants of the Company. Per diem Secretary who may also serve as adviser to the remuneration consists of P40,000 for each board of directors. Board meeting attended and P20,000 per Board committee meeting actually attended. Stated The passage of important decisions that remuneration of non-executive directors became signiﬁcantly impact the Company requires the efective April 28, 2006. None of the directors presence of a quorum of the directors. The has been contracted and compensated by the Company requires two thirds of the directors Company for services other than as a director. to be present for determining the quorum of the meeting.

76 Let’s Build for Tomorrow's Generations Record of Attendance E.7

Attendance of Directors - for Board and Organizational Meetings held last February 27, April 8, August 15 and November 11, 2014 BOARD NAME OF DIRECTOR ELECTION DATE NUMBER OF NUMBER OF % MEETINGS MEETINGS ATTENDANCE HELD DURING ATTENDED THE YEAR

August 15, Chairman Bernard Vincent O. Dy 2 2 2 100% 2014

Chairman Antonino T. Aquino 2 April 8, 2014 2 2 100%

Member Francis O. Monera April 8, 2014 4 4 100%

Member Ma. Theresa M. Javier April 8, 2014 4 3 75%

Member Antonio S. Abacan, Jr. April 8, 2014 4 3 75%

Member Emilio J. Tumbocon April 8, 2014 4 4 100%

Member Jaime E. Ysmael April 8, 2014 4 4 100%

Independent Fr. Roderick C. Salazar, Jr., SVD April 8, 2014 4 4 100%

Independent Enrique L. Benedicto April 8, 2014 4 4 100%

Independent Hernando O. Streegan 1 April 22, 2013 1 1 100%

Independent Pampio A. Abarintos 1 April 8, 2014 3 3 100%

1 Pampio A. Abarintos replaced Hernando O. Streegan efective April 8, 2014. 2 Bernard Vincent O. Dy replaced Antonino T. Aquino efective August 15, 2014.

CHI 2014 Annual and Sustainability Report 77 The Board is organized into five committees. The five committees support the Board in the exercise of its authority. It is an organized means by which Company performance may be monitored, specific goals realized and issues addressed, including but not limited to governance.

Board Committees and Functions G4-37, G4-40, G4-46, G4-47, G4-48, E.4, E.11, E.17, E.19

ROLES ACTIVITIES CONDUCTED IN 2014

EXECUTIVE COMMITTEE

Exercises the powers and attributes of the Board Adopted resolutions pertaining to the strategic and of Directors, and reports all resolutions adopted tactical objectives of the Company. by this committee to the Board of Directors.

AUDIT AND RISK COMMITTEE

Oversees external audit, internal audit, ﬁnancial Approved quarterly and annual audited ﬁnancial reporting and risk management through its statements, annual external and internal audit regular quarterly and special meetings held plan, quarterly internal audit reports, quarterly risk in 2014. management updates, improvements to Committee and Internal Audit charter, quarterly and annual report of the Committee to the Board of Directors.

NOMINATION COMMITTEE

Reviews and evaluates qualiﬁcations of all Considered and approved the ﬁnal list of nominees for persons nominated to positions in the Company directors for the year 2014-2015. which require appointment by the Board.

REMUNERATION COMMITTEE

Oversees remuneration of senior management Considered and approved the 1) 2013 performance and other key personnel. Ensures the conduct evaluation and promotion of associates, managers of formal and transparent procedure for ﬁxing and executives; 2) 2013 performance bonus for the remuneration packages of corporate ofcers associates, managers and executives; 3) the salary and directors. adjustments for the qualiﬁed managers and executives for 2014.

78 Let’s Build for Tomorrow's Generations ROLES ACTIVITIES CONDUCTED IN 2014

SUSTAINABILITY COMMITTEE

Provides assistance to the Board of Directors Through the support of the Sustainability Technical in its responsibility to the Company’s Working Group (STWG) headed by the Corporate stakeholders that relate to the growth in Sustainability Ofcer (CSO), published the Company’s the areas of economic, environmental, and Annual and Sustainability Report based on the GRI social performance. G4 standard; In 2014, a joint executive session of the Sustainability and the Audit and Risk Committee of the board revisited the Company’s sustainability framework and strategy, management approaches, targets, programs and initiatives. The agenda also included materiality assessment and stakeholder engagement process and alignment of these initiatives to the Company’s existing quality, environment, occupational health and safety plans and programs.

Board Committees and Memberships

EXECUTIVE AUDIT AND RISK SUSTAINABILITY COMPENSATION NOMINATION COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE

CHAIRMAN (NED) Emilio J. (ID) Fr. Roderick (ED) Francis O. (NED) Bernard (ED) Francis O. Tumbocon C. Salazar, Jr., Monera Vincent O. Dy 2 Monera SVD (NED) Antonino T. Aquino 2

MEMBERS (NED) Bernard (ID) Enrique L. (NED) Emilio J. (ED) Francis O. (NED) Bernard Vincent O. Dy 2 Benedicto Tumbocon Monera Vincent O. Dy 2

(NED) Antonino T. (ID) Pampio A. (ID) Pampio A. (NED) Ma. (NED) Antonino Aquino 2 Abarintos 1 Abarintos 1 Theresa M. T. Aquino 2 Javier 3 (ED) Francis O. (ID) Hernando O. (ID) Hernando (ID) Enrique L. Monera Streegan 1 O. Streegan 1 Benedicto

(NED) Ma. Theresa M. Javier 3

(ED) Jaime E. Ysmael 3

1 Pampio A. Abarintos replaced Hernando O. Streegan, efective April 8, 2014. 2 Berndard Vincent O. Dy replaced Antonino T. Aquino efective August 15, 2014. 3 Resignation of Ma. Theresa M. Javier as Treasurer(ED) of the Company efective July 14, 2014. 3 Appointment of Mr. Jaime E. Ysmael as Company Treasurer., efective July 14, 2014.

CHI 2014 Annual and Sustainability Report 79 Director and Senior Executive Compensation G4-51, G4-52

Options Outstanding

The Company does not have stock options for its directors, executives, and employees.

TOP FOUR (4) HIGHEST PAID PROCESS CEO MANAGEMENT OFFICERS

(1) Fixed remuneration Basic Salary Basic Salary

(2) Variable remuneration None None

(3) Per diem allowance None None (4) Bonus Performance bonuses are given to Performance bonuses are given to management ofcers annually management ofcers annually

(5) Stock options and other None for CHI None for CHI ﬁnancial instruments

(6) Others (specify) None to report None to report

Aggregate Remuneration

NON-EXECUTIVE DIRECTORS REMUNERATION ITEM EXECUTIVE DIRECTORS (OTHER THAN INDEPENDENT INDEPENDENT DIRECTORS DIRECTORS)

(a) Fixed remuneration Francis O. Monera None None - none to report

(b) Variable remuneration Francis O. Monera None None - none to report

(c) Per diem allowance Ma. Theresa M. Javier - P600k for all board P760K for all board and P120k meetings attended in 2014 committee meetings attended in 2014

(d) Bonus Francis O. Monera None None - none to report

(e) Stock options and None None None other ﬁnancial instruments

(f) Others (specify) Francis O. Monera None None - none to report

Ma. Theresa M. Javier - P600k for all board P760K for all board and TOTAL P120k meetings attended in 2014 committee meetings attended in 2014

80 Let’s Build for Tomorrow's Generations NON-EXECUTIVE DIRECTORS OTHER BENEFITS EXECUTIVE DIRECTORS (OTHER THAN INDEPENDENT INDEPENDENT DIRECTORS DIRECTORS)

(1) Advances Francis O. Monera None None - none to report

(2) Credit Granted Francis O. Monera None None - none to report

(3) Pension Plan/s Francis O. Monera None None Contributions - none to report

(d) Pension Plans, Francis O. Monera None None Obligations incurred - none to report

(e) Life Insurance Premium Francis O. Monera None None - none to report

(f) Hospitalization Plan Francis O. Monera None None - none to report

(g) Car Plan Francis O. Monera None None - none to report

(h) Others (specify) Francis O. Monera None None - none to report

None None None TOTAL

Board of Directors Stock Rights, Options and Warrants

The Company does not have stock rights, options or warrants of its shares for the Board of Directors.

CHI applies a performance-based compensation guaranteed bonus and performance-based scheme for its senior executives. The incentive), for non-executive directors as Balanced Scorecard (BSC) Management well as ofcers is annually disclosed in the System, which utilizes financial and non- Definitive Information Statement. This is sent to financial goals, measures our performance as shareholders with the Notice of Annual General an organization. E.15, E.16 Meeting 15 business days prior to the Annual Stockholders’ Meeting. E.18 Remuneration disclosure, inclusive of the basic salary and other variable pay (i.e.

CHI 2014 Annual and Sustainability Report 81 The Management Committee targets which they are accountable for to the Board of Directors. The management and Board The day-to-day operations of the Company are of Directors are co-responsible for ensuring that overseen by the management committee and good governance is always in place. the management team. A speciﬁc vision and strategic plan of action is laid out to achieve

Executive Ofcers

OTHER NAME AND PRINCIPAL POSITION YEAR SALARY VARIABLE PAY

Francis O. Monera President

Enrique B. Manuel, Jr. Vice President and Chief Finance Ofcer / Compliance Ofcer

Ma. Clavel G. Tongco Vice President and Head, Commercial Business Group

Nerissa J. Mediano Vice President and Head, Business Development and Ofce Leasing Group

Ma. Cecilia Crispina T. Urbina Assistant Vice President and Head, Corporate Services Group and Human Resources and Administration

All above-named Ofcers as a group Actual 2013 P 18.2 million P 4.7 million Actual 2014 P 26.1 million P 2.3 million Projected 2015 P 27.4 million P 2.4 million

All other ofcers * as a group unnamed Actual 2013 P 17.1 million P 3.2 million Actual 2014 P 19.1 million P 1.2 million Projected 2015 P 20.1 million P 1.2 million

82 Let’s Build for Tomorrow's Generations THE MANAGEMENT COMMITTEE

1 2

(from left to right) 3 1 Aniceto V. Bisnar, Jr.

Enrique B. Manuel, Jr. Filipino, 41, is the Chief Finance Ofcer, Compliance Ofcer and Chief Risk Ofcer of Cebu Holdings, Inc. Concurrently, he also holds the same positions for Cebu Property Ventures and Development Corporation. 2 Francis O. Monera

(from left to right) 3 Maria Clavel G. Tongco Filipino, 47, is the Vice President and Head of Commercial Business Group of Cebu Holdings, Inc. and Cebu Property Ventures and Development Corporation. Concurrently, she is the Assistant Vice President of Ayala Land, Inc.

Ma. Cecilia Crispina T. Urbina Nerissa J. Mediano Filipino, 45, is the Assistant Vice President and Filipino, 43, is the Vice President and Head of the Head of Corporate Services Group and Human Business Development Group for Cebu Holdings, Resources and Administration Division. She is Inc. and Cebu Property Ventures and Development the Quality, Environment, Health and Safety Corporation. Concurrently, she is the Assistant Vice (QEHS MS) champion at the mancom level. President of Ayala Land, Inc.

CHI 2014 Annual and Sustainability Report 83 THE MANAGEMENT TEAM

1 1. Finance Division

(from left to right)

Maria Sampaguita D. Daculan Noel F. Alicaya Finance Manager (CLCI) Finance and Control Ofcer and Finance Division Head Judyline L. Boholst Accounting Manager Jasmine R. Calero Funds Management Manager Elvira G. Mawe Finance Manager

2. Business Development Group

(from left to right)

Romulo M. Alajid Raul S. Mananquil Business Development Manager Land Banking/Ofce Leasing Manager

Catrina S. Martinez Hannah Myrh A. Ngujo Marketing Manager Business Development Manager 2 Jonas R. Suan Ernesto T. Alfante, Jr. Business Development Manager Project Support/Technical Asset Manager

3. Corporate Services Group

(from left to right)

Vera R. Alejandria Joseph Francisco A. Dee Corporate Communication and Network and Systems Admin Manager Corporate Social Responsibility 4 Manager Suzette T. Go Information Systems Manager Ma. Cecilia Crispina T. Urbina Human Resources and Admin Head Jennifer G. Sia Internal Audit Manager Jeanette A. Japzon Corporate Communication and Media Relations Manager

4. Commercial Business Group

(from left to right)

Edwin S. Layese Rudy I. Reuyan Security Manager Project Support/Technical Asset Management Unit Head

Celeste Bernardine K. Dy Anne C. Climaco Deputy General Manager Marketing Manager Ayala Center Cebu 84 Let’s Build for Tomorrow's Generations Dividend Shares of Directors as of December 31, 2014

NUMBER OF INDIRECT SHARES NUMBER OF NAME OF DIRECTOR / THROUGH (NAME OF RECORD % OF CAPITAL STOCK DIRECT SHARES OWNER)

Bernard Vincent O. Dy 1 1 - 0.0000%

Francis O. Monera 2 1 - 0.0000%

Aniceto V. Bisnar, Jr. 2 1 - 0.0000%

Antonio S. Abacan, Jr. 18,751 - 0.0010%

Ma. Theresa M. Javier 1 - 0.0000%

Emilio J. Tumbocon 112,500 - 0.0059%

Enrique L. Benedicto 1 - 0.0000%

Fr. Roderick C. Salazar, Jr., SVD 1 - 0.0000%

Pampio A. Abarintos 1,000 - 0.0001% 13,500 Jaime E. Ysmael 3,375 0.0009% (PCD NOMINEE CORP.-FILIPINO)

TOTAL 135,632 13,500 0.0078%

1 Bernard Vincent O. Dy replaced Antonino T. Aquino efective August 15, 2014. 2 Aniceto V. Bisnar, Jr. replaced Francis O. Monera efective January 1, 2015.

AUDIT AUDIT AND AUDIT- OTHER Accountability and Audit YEAR RELATED FEES FEES

2010 P 628K P 227K The Audit and Risk Committee serves as an oversight to ﬁnancial reporting, external audit, 2011 P 649K P 213K internal audit and risk management. A separate 2012 P 849K P 279K charter governs the oversight functions of the Audit and Risk Committee. 2013 P 1,065K P 145K

2014 P 1.041K P 317.8K

* Exclusive of VAT and out-of-pocket expenses

CHI 2014 Annual and Sustainability Report 85 Records of Trainings – Board and Management Levels G4-43

The Board of Directors was able to attend Corporate Governance-related seminars and trainings ofered by the Institute of Corporate Directors (ICD) and those in coordination with Ayala Corporation’s (AC) Corporate Governance working group for 2014. Training subjects are covered in the Corporate Governance and Risk Management Summit (AC and ICD) and Distinguished Corporate Governance Series (ICD).

NAME OF DIRECTOR / DATE OF TRAINING PROGRAM NAME OF TRAINING OFFICER INSTITUTION

Corporate Governance and The Institute of Corporate Bernard Vincent O. Dy 1 February 4, 2014 Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate Antonino T. Aquino 1 February 4, 2014 Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate Francis O. Monera February 4, 2014 Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate Emilio J. Tumbocon February 4, 2014 Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate Ma. Theresa M. Javier February 4, 2014 Risk Management Summit Directors (ICD)

Fr. Roderick C. Salazar, Corporate Governance and The Institute of Corporate February 4, 2014 Jr., SVD Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate Enrique L. Benedicto February 4, 2014 Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate Hernando O. Streegan 2 February 4, 2014 Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate Jaime E. Ysmael February 4, 2014 Risk Management Summit Directors (ICD)

Enrique B. Manuel, Jr. Corporate Governance and The Institute of Corporate CFO / Compliance February 4, 2014 Risk Management Summit Directors (ICD) Ofcer

Distinguished Corporate The Institute of Corporate Antonio S. Abacan, Jr. February 5, 2014 Governance Speaker Series Directors (ICD)

Distinguished Corporate The Institute of Corporate Pampio A. Abarintos 2 April 29, 2014 Governance Speaker Series Directors (ICD)

1 Bernardo Vincent O. Dy replaced Antonino T. Aquino efective August 15, 2014

86 Let’s Build for Tomorrow's Generations Key ofcers and personnel attended the Ayala Group 2014 Sustainability Summit. Internationally renowned sustainability and shared Value practitioner, Incite Director and co-Founder, Nicola Robins facilitated training on embedding sustainability and shared value principles in business operations.

NAME OF DIRECTOR / DATE OF TRAINING PROGRAM NAME OF TRAINING OFFICER INSTITUTION

Ayala Group Francis O. Monera October 13, 2014 Incite Sustainability Summit

Ayala Group Aniceto V. Bisnar, Jr. October 13, 2014 Incite Sustainability Summit

Ayala Group Enrique B. Manuel, Jr. October 13, 2014 Incite Sustainability Summit

Ayala Group Noel F. Alicaya October 13, 2014 Incite Sustainability Summit

Ayala Group Vera R. Alejandria October 13, 2014 Incite Sustainability Summit

We also conducted an in-house orientation program for our newly-elected director, Justice Pampio A. Abarintos (Ret.) on May 15, 2014.

This in-house program is designed to give the Board member a better view and appreciation of the Company in the discharge of his oversight functions and responsibilities.

CHI 2014 Annual and Sustainability Report 87 Independent Public Accountants The IAD provides independent and objective assurance and consultancy services to the SGV & Co. is the principal accountant and Company with the objective of adding value external auditor of CHI. Jessie D. Cabaluna was and assisting the organization in accomplishing the partner-in-charge for 2014. The Audit and its objectives through efective control, risk Risk Committee is empowered to independently management and governance processes. Annual review the integrity of our financial reporting audit plans, status updates and accomplishment and oversee the independence of the external reports are submitted by the IAD to the Audit and auditors. The Audit and Risk Committee is Risk Committee for review and approval, through responsible for reviewing all financial reports its regular quarterly meetings. for compliance with the internal financial management handbook and pertinent Regular audits of the key processes of the accounting standards, including regulatory Company's business and corporate service requirements. It also recommends to the Board groups are conducted in accordance with the and stockholders the appointment of the approved Internal Audit Plan. Special audits external auditors and the setting of appropriate are undertaken when necessary. The QEHS MS audit fees. Over the past two years, CHI paid or internal audits are conducted every 12 months accrued the billed fees to its external auditor, and in accordance with the QEHS MS annual SGV & Co., who was engaged to audit the audit program. The IAD also heads a cross- Company’s annual financial statements. SGV & functional team of QEHS MS auditors. E.20 Co. also performed non-audit services this year. Risk-Based Audit Approach Internal Audit The IAD executed its activities in 2014 in The Internal Audit Department (IAD) reports accordance with the risk-based and process- to the Audit and Risk Committee of the Board focused audit approach. This approach is in of Directors. Through the Audit and Risk accordance with the Institute of Internal Auditors‘ Committee, the IAD assists the Board in the International Standards for the Professional discharge of its duties and responsibilities as Practice of Internal Auditing (ISPPIA) and likewise provided for in the July 2014 Revised Code of complies with the July 2014 Revised Code of Corporate Governance. Corporate Governance.

88 Let’s Build for Tomorrow's Generations External Quality Assurance Review Aside from compliance with IIA’s International Professional Practices Framework which includes An external assessment opinion by Punongbayan the definition of Internal Auditing, the ISPPIA & Araullo (P&A), a member firm within Grant and the Code of Ethics, the EQAR covered Thornton International Ltd, in 2014 concluded the assessment of IAD’s compliance with its that the Company’s internal audit activities charter, plans, policies, procedures, practices generally conforms with the International and applicable legislative and regulatory Standards for the Professional Practice of Internal requirements; expectations of the IAD as Auditing (ISPPIA) as issued by the Institute of expressed by stakeholders (includes the Board of Internal Auditors (IIA). Directors and Audit and Risk Committee, Senior Management and IAD’s auditees); integration Internal Auditing Standard 1312 of the Institute of the IAD into the organization’s governance of Internal Auditors (IIA) requires external process, including the attendant relationships assessments be conducted at least once every between and among the key groups involved in five years by a qualified, independent assessor or that process; tools and techniques employed assessment team from outside the Company. by the IAD; mix of knowledge, experience and

CHI 2014 Annual and Sustainability Report 89 disciplines within the staf, including staf focus Reporting of Transactions on process improvement; and areas on which the IAD is able to add value to help improve the CHI is compliant to SEC requirements that organization’s operations. directors and principal ofcers report any acquisition, disposal or change in their Compliance Ofcer shareholdings in the Company to the SEC and to report changes in ownership of Company Enrique B. Manuel, Jr. is CHI’s Chief Finance shares within ﬁve trading days. This reporting Ofcer and Compliance Ofcer. He monitors requirement has been expanded to include strict adherence to the Code of Corporate management committee members. All other Governance and to the rules and regulations ofcers submit a quarterly report on their trades of regulatory agencies. He is responsible of Company shares to the Compliance Ofcer. for reporting any violations incurred directly to the Board. These reports are supported Dividend Policy and supplemented by recommendations on appropriate disciplinary actions applying It is our policy to periodically declare part of to responsible parties, as well as preventive our unrestricted retained earnings as dividends measures to be adopted to avoid recurrence. to shareholders. This may be in the form of stock or cash, or both. Company earnings, cash Dealings in Securities ﬂow, investment programs, and other factors determine future dividend payments. Every CHI adheres to a uniform policy on securities dividend declaration is subject to Board approval. transactions to reinforce and formalize existing government regulations against insider trading. In 2014, CHI declared cash dividends from unappropriated retained earnings of the Company as of December 31, 2013, of P0.12 per share to all shareholders as of record date November 25, 2014 and paid on December 9, 2014.

90 Let’s Build for Tomorrow's Generations CHI Finalist in PSE Bell Awards

CHI was awarded and recognized as a Finalist in the 3rd Philippine Stock Exchange (PSE) Bell Awards. Held last November 10, 2014 at the Makati Shangri-La, it is the highest distinction given to listed Trading Blackouts/Insider Trading Policy companies with “world-class corporate governance standards and practices.” CHI adheres to a uniform Inside Trading Policy in Assessments were based on the strength of all securities dealings. This means that directors, a company’s adherence to PSE’s corporate ofcers and employees who are considered to governance guidelines and relevant rules have knowledge of material facts or changes in and regulations. the afairs of CHI which have not been disclosed to the public, including any information likely to afect the market price of the securities of the Company, are prohibited from buying or selling the Company’s securities during trading blackout periods. Trading blackouts are required covering ten trading days before and three trading days after disclosure of quarterly and annual reports.

CHI’s shares of stocks, options to purchase stocks, bonds and other evidence of indebtedness are all covered under this policy, as are all members of the Board of Directors, all key ofcers, consultants, advisers and employees of the Company who are made aware of undisclosed material information, including members of the immediate families of key ofcers. D.4

In 2014, trading blackout notices were issued for structured disclosures covering 10 trading days before and three trading days after the disclosure of quarterly and annual ﬁnancial results. Compliance with these periods is strictly enforced. There was no case of violation of the Company’s policy for the year. B.3

91 Enterprise-wide Risk Management G4-2, G4-14, G4-EC2, E.21

We continue to implement our Enterprise- Periodic reviews are done at all levels of the wide Risk Management (ERM) Program to Organization, including the ERM Team lead by manage key risks and safeguard shareholder the Audit and Risk Committee and the Chief value in the face of our growing business and Risk Ofcer, to ensure that risks are efectively evolving environment. managed and the Company is addressing relevant key risks. ERM Framework Results of monitoring of the ERM process are also presented to the Board of Directors by the The ERM framework continues to achieve Audit and Risk Committee, at least quarterly or its objective of systematic approach in risk more frequently if necessary, to update them of management throughout the Company. The the status of the Company’s key risks to serve as framework embodies the policy, scope, process inputs in executive decision-making. methodology, and organizational structure of the risk management program. We utilize an all-encompassing risk framework covering A Driver of Key Strategic Actions oversight, management and internal control. This framework systematically guides us through The Company was able to direct the following monitoring, identifying, analyzing and treating key strategic actions in 2014: risks in a timely and proactive manner at both corporate and business-group levels. 1. Protecting the Balance Sheet through Financial Risk Management A Pro-Active Process Across We continue to take advantage of the current the Organization low but slowly increasing interest rate business environment by increasing its leverage and converting short-term to long-term debt, at The ERM program adopts a top-driven, bottom- favorable rates to fund the construction of our focused approach and has the full support of the leasing projects. This allows us to better balance Organization’s management all the way up to our debt capacity and debt maturity with a steady the Board of Directors. It is a process by which recurring income. Management takes on a very active and key role in managing risk. The identification, management In 2014, we issued P5 billion Fixed-rate Corporate and monitoring of its key risks are made part of Bonds, allowing for conversion of long-term the normal operations of the Company not just variable debt to fixed long-term. This allowed us at the corporate level, but also at the individual to have a more predictable and manageable debt business-group levels. This allows CHI to profile while freeing up additional debt capacity manage its key risks to an acceptable level both through bank lines, should it become necessary. holistically and individually and to address issues in a timely manner.

92 Let’s Build for Tomorrow's Generations Strategic Risk Operational Risk Financial Risk Environmental Risk

RISK IDENTIFICATION RISK ANALYSIS RISK TREATMENT RISK MONITORING AND REVIEW

2. Monitoring of Leading Market Indicators of the Amaia brand, for afordable housing, and We rely on close monitoring of leading market ofce condominiums for sale through our afliate indicators for guidance in current and future Solinea, Inc. project investments. Forecasts, industry and 6. Proactive Management of Environmental Risks sales reports are regularly monitored and reported to the operating project teams and We continue to adapt measures to reinforce our senior management from where direct inputs in fully-functional Business Continuity Plan (BCP). decision-making are derived for strategic and on- Our Crisis Management Team (CMT) ensures the-ground issues. continuous operations or minimal disruption during calamities and unforeseen events. 3. Close Monitoring of Ongoing Projects Improvements on our services and facilities Early identiﬁcation and management of delivery have also been implemented to ensure safety risk allows us to keep our projects on-track, meet of our stakeholders and enhance our readiness our customers’ requirements and achieve our capacity in times of emergencies and calamities. sales and turnover targets. These allow us to protect our assets, including our employees, customers and locators in 4. Expanded Partnerships Beyond our facilities. Parent Company In 2014, our BCP and CMT enabled us to mobilize Strong synergies diversify risk and create the our team to conduct relief operations for the opportunity for us to increase our reach and typhoon victims in Borongan, Easter Samar in the depth in the Cebu market. wake of typhoon Ruby in December.

In 2014, we partnered with strong local In the years ahead, we commit to broaden developers for the development of new estates in our risk management activities and further Cebu speciﬁcally Taft Punta Engaño Property, Inc. minimize the occurrence of risk-related incidents (TPEPI) with the Gaisano group in Mactan and and losses. Our ERM gives us structure and Cebu District Property Enterprise, Inc. (CDPEI) timeliness in assessing and managing our main with both the Ayala Land, Inc and AboitizLand in risks. By appropriately managing our risk issues, Mandaue. This strong strategic partnership allows we continue to be a trusted brand, maintain us to expand our product portfolio through and improve on our operational efciencies, synergies, master planning, combined branding, and foster long-term economic viability in and deeper market knowledge. the communities and environment where we operate. 5. Diversification of Product Lines We continue to build on our expertise and extend our market reach. Since 2013, we have further diversiﬁed our portfolio with the introduction

CHI 2014 Annual and Sustainability Report 93 Rights of Shareholders Shareholder Voting Rights

Shareholders have the right to nominate, elect, Transparency in our Board of Director remove and replace directors and vote on Nomination Process certain corporate acts in accordance with the Corporation Code. Cumulative voting shall The nominees were formally nominated to the be used in the election of directors. Directors Nomination Committee by a shareholder of the may be removed with or without cause, but Company, Ms. Suzette T. Go. Messrs. Abarintos, directors shall not be removed without cause if Benedicto and Salazar, all incumbent directors it will deny minority shareholders representation except for Mr. Abarintos, were nominated as in the Board. Removal of directors requires independent directors. Ms. Go is not related to an afrmative vote of two-thirds (2/3) of the any of the nominees for independent directors. outstanding capital stock of the Corporation.

Shareholder Meeting and Voting Procedures

The annual stockholders’ meeting is preceded by a notice period of at least 21 business days. The Corporate Secretary issues the call for the regular or special meetings. The notiﬁcation includes the agenda, date, time and venue of the meeting. The agenda is clear on the resolutions to be taken up for the meeting. Each resolution is to be limited to a single agenda item with a brief rationale for its inclusion. B.2

Shareholders have the right to ask questions as well as be given answers on concerns particular to the Corporation, its performance and prospects. The presence of the Chairman of the Board, the CEO, and the Chair of the Board Audit Committee is required at these meetings. Directors are urged to attend as much as is possible. Their participation, or lack thereof,

94 Let’s Build for Tomorrow's Generations is duly noted in the minutes of the Annual of Directors. In this regard, the notice of Stockholders’ Meeting. These same minutes call for the annual stockholders’ meeting must necessarily contain a compact summary of shall include a profile of all nominees for questions and answers raised. seats in the board of directors inclusive of the nominees’ age, qualifications and The Company respects each shareholder’s right experience, date of first appointment to to participate and vote in its annual stockholders’ the Board of the Company, and other meeting. Each person, whose name appears in directorships in other publicly-listed the Company’s books, is entitled to one vote corporations (or subsidiaries, whether listed per common share of stock, given that payment or non-listed, within a group of companies. conditions have been met. The vote may be • All shareholders are to approve the made in person or by proxy. Strict adherence to appointment of the external auditor. A.2 applicable rules and regulations is followed in cases of proxy voting or voting in absentia. The Resolutions put forth in the annual stockholders’ Notice to Stockholders specifies the date, time meeting related to mergers and acquisitions will and place for validation of proxies, which should have an accompanying report defending and be no less than five business days prior to the promoting the rights of these other stakeholders. annual stockholders’ meeting. A.1, A.3, B.1, B.2 CHI upholds all laws concerning the proper and An independent body is enlisted for assurance fair treatment of all its external stakeholders, of compliance with voting procedures and in particularly our customers, creditors, the keeping to ethics of transparency, fairness and government, and the local communities we professionalism. Shareholders are asked to vote serve. Any and all violations of such laws such on all matters of substance including but not as violations of the country’s commercial and limited to: competition laws are deemed a grave ofense.

• Changes or amendments to the Company’s Our Stakeholder Engagement section is found on by-laws and articles of incorporation; pages 113-117 of this Report. • Sale or purchase (or transfer) of a signiﬁcant share of corporate assets that Employee Relations may result in a change in the character of the Company; CHI's employees are among its chief foundation and strength. Supporting, providing for and • Authorization for the issuance of additional enabling them growth is a primary concern. We shares of the Company; • All shareholders are given an opportunity to elect individually the members of the Board

CHI 2014 Annual and Sustainability Report 95 apply a holistic approach to their welfare – both employee workforce. Company employees are in and out of the workplace and throughout their required to annually disclose any business and tenure with us. Open lines of communication are family-related transactions to the Company by nurtured embodying the Company’s concern for accomplishing the Conflict of Interest Disclosure their welfare and safety. Statement submitted to the Human Resources and Admin Division that monitors compliance of CHI also upholds all laws concerning the this policy. C.4, E.2 proper and fair treatment of its ofcers and employees. Those within the Company found to Whistle-blowing Policy G4-57, G4-58 be responsible for such violations are to be dealt with in line with CHI’s policy on sanctions. C.1, C.2 It is of primary importance that a business, in all of its activities, must operate in full The policies concerning employee engagement, compliance with applicable laws, rules, and benefits and welfare, and various trainings are regulations. Therefore, all employees must given further detail on the Human Capital section exemplify the behavior and professional on pages 148-159 of this Report. C.3 demeanor consistent with such laws, rules, and regulations, as well as the Company’s Code of Ethical Behavior G4-41 applicable policies and procedures. Also, third-party business partners must share and The Code of Ethical Behavior outlines the general embrace the spirit of commitment to these sets expectations and set standards for behavior and of standards. ethical conduct. It provides guidelines for all directors, ofcers and CHI employees, and that of All employees, third party business partners, its subsidiaries and afliates. It aims to promote or other stakeholders are encouraged and and foster observance of principles founded empowered to report their concerns should on ethics, sustainability, social responsibility they suspect or become aware of any illegal or and good governance. CHI and its employees unethical activities. This can be done through all commit to adhere to the Company’s core values CHI business integrity channels. in conducting personal and business afairs. The policy covers any of the following The Code of Ethical Behavior is intended to concerns: 1) conflicts of interest; 2) be read in conjunction with the Company’s misconduct or policy violations; 3) theft, Human Resources Manual of Personnel fraud or misappropriation; 4) falsification of Policies. This includes the Code of Conduct documents; 5) financial reporting concerns, and; on acceptable ofce behavior for the orderly 6) retaliation complaints. operation of the Company and the protection of the rights, safety and benefit of the whole

96 Let’s Build for Tomorrow's Generations This policy provides employees, third-party DMA Anti-corruption, DMA Public Policy, DMA Anti-competitive Behavior G4-S06, G4-SO7, G4-SO8 business partners and other stakeholders every possible means for coming forward, so that they Non-partisan Policy report information to top management or to the Board of Directors. No contributions, either financial or in kind, are given or awarded to political parties and Certifications politicians and/or other related institutions by the Company. In 2014, CHI and its subsidiary Cebu Property Ventures and Development Corporation’s Anti-Money Laundering (CPVDC’s) Quality, Environmental, Occupational Health and Safety Management Systems CHI complies with all the rules, regulations (QEHS MS) continued to be certified to ISO and directives issued by Bangko Sentral ng 9001:2008 and ISO 14001:2004 and OHSAS Pilipinas and its Anti-Money Laundering Council 18001:2007. With the organizational changes (AMLC). These cover general information and implemented by the Company, the QEHS MS documentation requirements for customers and covers design and development and commercial record-keeping standards. business operations and management. CHI is scheduled for recertification audit in 2015.

CHI 2014 Annual and Sustainability Report 97 Disclosure and Transparency Updates and additional information are included in the Investor Relations section of our website CHI remains committed to the highest standards for shareholders to access information in a timely of disclosure and transparency. manner. For example, proceedings of analysts’ briefings by way of presentations are immediately We aim to enable the investing community to made available in the Company website for understand the true financial condition of the reference. The details of investors and analysts Company and the management and quality of its briefings are found in the investor relations section corporate governance. of the website. D.9

We aim to meet all disclosure requirements We welcome the interest of both individual and mandated by regulators, particularly those institutional shareholders who wish to purchase involving material events, disclosing them within shares of the Company through the PSE. The the prescribed reporting period. Company maintains a minimum public ﬂoat of its shares openly traded in the exchange in order to The Finance Division, headed by our Chief comply with the PSE requirements. A.4 Finance Ofcer directly reporting to our President, ensures that we address the varying For institutional investors, we aim to have at information requirements of the investing public least ﬁve percent of the Company’s shares and communicate with minority shareholders held by them at any given time. We endeavor through timely and full disclosures to the PSE and to work closely with them and encourage SEC, Annual Stockholders’ Meetings, one-on-one increased participation through their attendance meetings, conference calls, investor visits and at our annual stockholders’ meetings at a place tours, website and emails or telephone calls. accessible to all.

98 Let’s Build for Tomorrow's Generations To help ensure that the disclosure remains • Disclosure of significant ownership. adequate, CHI adopts the following The Company reports on its Annual and disclosure practices: Sustainability Report and provides regular updates of the shareholders with significant • Timely issuance of the audited financial ownership of the Company’s shares as statement. CHI targets the release of well as on their relationship with, including such a statement 60 business days after their ownership, of related companies on the close of the financial year. In no case its website. shall the issuance of the audited financial statement be later than 90 business days Content and Timing of Disclosures after the close of the financial year. In addition, the Board of Directors shall issue We also provide the investing public with a certification together with the audited strategic, operational and financial information financial statement that the financial through adequate and timely disclosures filed statement is true and fair. with the SEC and PSE. Apart from the usual • Updating of the Company website. The periodic reporting requirements, we also aim to website shall provide information on the promptly disclose major and market-sensitive results, both financial and non-financial, information such as dividend declarations, joint of CHI’s business operations, as well as ventures and acquisitions, sale and disposition on changes in the Company’s ownership of significant assets, as well as other material structure and business group structure. information that may afect the investment The website has a downloadable Annual decision of the investing public. and Sustainability Report as well as copies of notice of call for the annual 2014 Disclosure Citing stockholders’ meeting, current by-laws and Disclosures made by the Company in 2014 articles of incorporation. include the acquisition of shares in the joint • Handling investor concerns. These are venture company handling the Mandaue project, addressed jointly by the Company’s Control PRS AAA rating from PhilRatings, CHI’s P5 billion and Analysis Department and by the bond issuance, resignation of Ma. Theresa M. Corporate Communication Division. The Javier as board treasurer, and the appointment responsible ofcers of these ofces are of Aniceto V. Bisnar, Jr. as new president of CHI identified, including information on their efective January 1, 2015. contact details. D.6

CHI 2014 Annual and Sustainability Report 99 Consolidated audited financial statements financial period. The results are submitted for 2013 were submitted to the SEC on April to the SEC and PSE. Upon confirmation 15, 2014, as required. The audited annual by the SEC of its receipt of disclosure, report is submitted at least 15 working days it is made available on the Company’s before the Annual Stockholders’ Meeting. corporate website. D.2, D7 The audited Annual Report as contained in the Definitive Information Statement was Ownership Structure submitted to the SEC and the PSE on March 14, 2014. Interim financial report are released We continually adhere to transparency in between 30 and 45 days from the end of the disclosing our ownership structure. The

Top Holders of the Common Equity Securities

SHAREHOLDING COMPANY NUMBER OF PERCENT BENEFICIAL OWNER SHARES

Ayala Land, Inc. 956,241,738 49.80% Ayala Land, Inc.

PCD Nominee Corporation 331,962,700 17.29% Aberdeen Asset (Non-Filipino) Management Asia Limited

First Metro Investment 186,695,363 9.72% First Metro Investment Corporation Corporation

PCD Nominee Corporation 34,505,001 1.80% First Metro Investment (Filipino) Corporation

PCD Nominee Corporation 206,395,200 10.75% Aberdeen International (Non-Filipino) Fund Managers Limited

PCD Nominee Corporation 97,278,800 5.07% Government Service (Filipino) Insurance System *

* The Company has no record on how the Government Service Insurance System exercises the power to decide how their shares in the Company are to be voted.

100 Let’s Build for Tomorrow's Generations Company annually discloses the top 20 holders • total revenues of the common equity securities of the Company • operating profit and the security ownership of certain record and • net income beneficial owners owning more than five percent as it applies to directors and management. This • segment assets information is also contained in the Definitive • investments in associates and jointly- Information Statement sent to shareholders. controlled entities Included are additional information on • segment liabilities subsidiaries, joint ventures, and special purpose vehicles of the Company and the participation in • depreciation and amortization them of CHI’s significant shareholders, directors and senior ofcers. This information is also Transactions entered into with associates reflected in the Company website as required by and other related parties in their conduct of business are on an arm’s length basis. Sales SEC. MEMO CIRCULAR # 11, D.1 and purchases of goods and services to and from related parties are made at normal Financial Reporting G4-41, D.7 market prices. Related party transactions are discussed and quantified in the Notes The Company’s financial statements comply to the Consolidated Financial Statements. with the Philippine Accounting Standards and Information on the Company’s financial the Philippine Financial Reporting Standards, instruments is accompanied by a presentation as well as with the International Accounting of the Company’s risk management Standards. The annual consolidated financial objectives and policies to allow for a better statements provide a breakdown of total assessment of financial performance and assets, total liabilities and equity, revenues, cash flows. Significant accounting judgments costs and expenses, income before income and estimates are also disclosed. B.4, D.3 tax, net income attributable to equity holders of CHI and minority interests and earnings Additional information on our corporate per share. A more extensive, transparent governance initiatives may be viewed at disclosure of segment results such as www.cebuholdings.com D.8, E.10 assets, liabilities and revenues is provided to enable shareholders to appreciate various businesses and their impact on overall value enhancement. The following are disclosed in the Note on Business Segments:

CHI 2014 Annual and Sustainability Report 101 05.102 Let’s Build for Tomorrow's Generations Inspire positive change.

The concept of sustainability is anchored on change. And in today’s world, the pace of change is immensely faster and will continue to accelerate. By looking at sustainability as an overarching concept and broad- based sstem that unifes all other management sstems approaches and initiatives into a common process and common goal, we can be catalysts of change.

As we confront and respond to the challenges of sustainable development and growth, we depend on each individual in our organization who can initiate, inspire and even be the change.

Let's build for tomorrow's generations

CHI 2014 Annual and Sustainability Report 103 104 Let’s Build for Tomorrow's Generations Our sustainability framework and strategy is geared towards conscientious development.

Cebu Holdings, Inc. (CHI) is dependent on land. All of our developments today and in the future will have various impacts on the environment, the local economy and communities. Our sustainability framework and strategy is geared towards conscientious development enabling us to grow our business and deliver quality products to last for generations.

With the view of creating a better world, a strong Our sustainability framework is our key to good financial base is the foundation of all of our land development and operations management. sustainability engagements. Our sustainability As a business model, an adaptive visionary business model needs to deliver value aligned to design allows us to integrate sustainability in the long-term viability and enhancement of our our operations. environmental, financial and social capitals. This is why it is essential that we embed sustainability We again commissioned the Philippine Business into our Company culture with a clear alignment for the Environment (PBE), a non-profit to our overall vision and mission. Stated in the organization, to conduct a sustainability strategy simplest of terms, our sustainability strategy and forum with CHI employees as well as to facilitate business model share intrinsic value. our stakeholder workshops for the review and enhancement of our sustainability framework.

CHI 2014 Annual and Sustainability Report 105 In our reworked Sustainability Framework, we Some key opportunities: leverage ourselves as a trusted brand steered by good corporate governance. We leverage our • Economic value distribution people who are empowered through training • Creating direct or indirect inclusive and volunteerism. We leverage our efciency businesses in the community strategies in resource management and enable • Procurement opportunities for shared value creation. • Corporate Social Responsibility Within our framework, we identified three focus areas of equal importance. Designing and developing healthy, dynamic city areas Growing local businesses and markets and enabling local communities We invest heavily in master planning, design development, research, consultation, and due Through our direct engagements, community diligence. We see Cebu as a healthy, dynamic, initiatives, strong network of merchants and prosperous integrated community. In our vision, locators, and other relationship-building we see shared spaces enjoyed by both young and initiatives, we look beyond our infrastructure old - confident of a sustainable future. developments. We also focus on the people we engage on a day-to-day basis. Knowing Some key opportunities: their needs and capacities, we are able to make potential connections within our cross • Systems to make developments resilient, platform stakeholders for mutually beneficial accessible, and have low eco-footprint; and business opportunities with lower risks and • Access to the best architectural designers. increased viability.

106 Let’s Build for Tomorrow's Generations Sustainability Policy G4-14

At CHI, we are committed to continuously improve our (1) corporate sustainability performance throughout our value delivery chain and (2) core business strategy to maintain a long-term strategic position while driving society towards a sustainable path. CHI will therefore:

1 Anticipate the future scenarios through our understanding of the ‘megaforces’ that will shape the future and continuously develop strategies to maintain a strategic position in the market;

2 Make business decisions based on a wider understanding of our impacts and dependencies to its natural, manufactured, ﬁnancial, human, intellectual, social and relationship capitals;

3 Ensure the Company's relevance by continuously engaging with our stakeholders and aligning our value creation model to their changing needs; and

4 Take leadership in driving society towards a sustainable path, in areas that are most relevant to our business, and those that will bring signiﬁcant beneﬁts to the business.

CHILet’s 2014 Build Annual for Tomorrow's and Sustainability Generations Report 107 SUSTAINABILITY FRAMEWORK G4-2, G4-18

Developing land, shaping the future Creating better spaces, providing opportunities - for a better quality of life

Growing local businesses Designing and developing Bridging global companies and markets + enabling healthy, dynamic to local top-level skilled neighboring communities city areas labor and professionals

* Economic value distribution * Systems to make developments * Marketing Communications/ Product Responsibility * Creating direct or indirect resilient, accesible and have inclusive businesses in low eco-footprint * Partnership with local talents the community * Access to the best * Indirect economic impacts * Procurement architectural designers and urban planners * Corporate Social Responsibility

SYSTEMS AND ENABLERS

Trusted Efciency Empowered Brand Strategies People

* Corporate Governance * Resource Management/ * Employee Engagement Better ways of building * AAA Credit Rating * Training and Capacity and operating Building * Customer Satisfaction * CHI Plus * Feedback Mechanism/ Open Communication * Employee Volunteerism Channels * Health and Safety

LEGAL AND REGULATORY COMPLIANCE

108 Let’s Build for Tomorrow's Generations Bridging global companies to local top Some key opportunities: level skilled labor and professionals • Marketing communications / Product responsibility; We contribute to the improvement of the • Partnerships for local talents; and local talent pool, culture and over-all quality • Indirect economic impacts. of life not just within Cebu but within the region. We continue to invest in enhancing Materiality Process G4-18 our developments, carefully conforming to international standards, so that our businesses Below is a framework we adopted in the exercise will continue to contribute to economic growth of our materiality process. This follows a linear and national development. progression that covers a full reporting period.

1) IDENTIFICATION 2) PRIORITIZATION

Value delivery chain review Ranking of aspects based on perceived degree of impact to business and to Impact assesment vis-à-vis natural, human, stakeholders social and relationship, intellectual, manufactured, and financial capitals Quantitative and qualitative assessments

Localizing global sustainability megatrends Risk and opportunities analysis vis-à-vis identified impacts

3) VALIDATION 4) REVIEW

Core Sustainability Team review and Continuing evaluation of future processes indentification of key topics Reference for emerging sustainable development Accounting for our stakeholders’ views and expectations Review of performance against targets and benchmarks challenges

Legend: Sustainability Context Stakeholder Inclusiveness Materiality Completeness Stakeholder Engagement

CHI 2014 Annual and Sustainability Report 109 SUSTAINABILITY STRUCTURE

EXECUTIVE COMMITTEE BOARD OF DIRECTORS COMPENSATION COMMITTEE

AUDIT AND RISK COMMITTEE Internal Audit

NOMINATION COMMITTEE

PRESIDENT SUSTAINABILITY COMMITTEE

MANAGEMENT COMMITTEE / SUSTAINABILITY COUNCIL

CORPORATE SUSTAINABILITY OFFICER

Energy, Water and Mobility, Trafc, Business Model Materials Efciency and GHG Reduction Air Quality and Sustainability - Waste Management CLUSTER 1 Pedestrianization Innovation, Solutions CLUSTER 4 CLUSTER 2 for Unserved Markets CLUSTER 3 Project Support/ Project Support Technical Asset Business /Technical Asset Management Development Business Development Management • APMC • MDC • APMC • MDC Ofce Leasing Finance Human Resources Business Development Commercial Business Commercial Business and Admin Commercial Business Project Support/ Information Systems Technical Asset Finance Business Development Management • APMC • MDC Commercial Business

Sustainability in the Human and Climate Change Supply Chain/Sustainable Intellectual Capital Adaptation, Biodiversity Consumption CLUSTER 6 CLUSTER 7 CLUSTER 5 Corporate Services Project Support/Technical Asset Marketing Management Business Development Corporate Communication • APMC • MDC Commercial Business Business Development Corporate Communication / Finance Corporate Social Responsibility Cross-functional Team: Review and Recommendation Finance (to champion)

Audit Marketing

Commercial Project Support/Technical Asset APMC - Ayala Property Management Corporation Business Management MDC - Makati Development Corporation

110 Let’s Build for Tomorrow's Generations G4-18, G4-19, G4-20, G4-21, G4-23

MATERIAL ASPECTS WHY THIS IS MATERIAL ASPECT BOUNDARY

Economic Performance Delivering returns for our shareholders is our Internal top responsibility.

Indirect Economic Impacts We rely on two keys to a thriving business: Internal and External Procurement Practices creating shared value and the practice of inclusive growth.

Anti-corruption We are an ethical Company, our values and Internal Anti-competitive Behavior codes are clearly deﬁned and practiced. We Public Policy are compliant to laws in all areas and aspects of our operations.

Local Communities We believe in the principle of creating Internal and Security Practices shared value and the social license to External Procurement Practices operate. Inclusive growth and harmonious Compliance (Society) relationships in our areas of operations lead to Indigenous Rights a continuously growing business.

Customer Health and Safety We take steps to ensure that we are attuned Internal and Product and Service Labeling and responsive to the needs of our customers External Customer Privacy through service delivery and health and safety (shoppers and Security Practices initiatives. They are given information for merchants, lot/unit Compliance (Product Responsibility) making educated decisions and at all times owners, security personnel and we ensure trust and conﬁdentiality in keeping suppliers) customer data safe.

Employment CHI is composed of capable and talented Internal and Labor/Management Relations employees. We are clear on policies, programs External Occupational Health and Safety and management systems targeted to their (suppliers) Training and Education well-being and safety. We extend the same Diversity and Equal Opportunity standards to be met by our suppliers. Grievance Mechanisms for Labor Practices Forced/Compulsory Labor Child Labor

Materials Overall We recognize our impacts on resources and Internal and Energy Compliance the environment and work hard to mitigate External Emissions Environmental them. We adopt policies and revise them (suppliers) Water Grievance accordingly to ensure that we keep our Effluents and Mechanisms impacts to the barest minimum possible. Waste We extend the same standards to be met by Biodiversity our suppliers.

CHI 2014 Annual and Sustainability Report 111 Material Aspects in the

Global Sustainability Context G4-2

In 2013, we viewed our Sustainability Framework against KPMG's identiﬁed Megaforces. In 2014, we aligned it to Kate Rasworth's expansion of the Planetary Bounderies concept of Johan Rockström with an inclusive view to social and environmental Boundaries.

While the business is geographically bound, we The knowledge that the causal efect of our adapt our sustainability strategies within the actions today afect tomorrow's generations conditions of our localized aspects vis-a-vis a makes us accountable. We go back to the basics global context. To keep the business sustainable, of sound sustainable management, ethical we endeavor to maintain healthy, secure, practice, and balance of capitals for solid triple forward-looking communities and conﬁne our bottom line performance to continue to shape impacts within sensible limits of planetary and our envisioned future. social boundaries.

PLA NE CYCLES TA RY B OZONE

DEPLETION O PHOSPHOROUS

NITROGEN AND NITROGEN U

CHANGE N CLIMATE CLIMATE CHEMICAL D POLLUTION A R mpacts IE i tha ATMOSPHERIC S t d AEROSOL ire LANDING CO c MPLIA t NC ly E JOBS EFFLUEN • re TS & S la W U FRESHWATER BIOD A P t

IV ST P e USE

E E L I R

N GHG S I

EM SI E t E

P IS T

D S R o C R Y

IO •

I A O

R O N o

S S E

C •

N M S u

INCOME C

U E r O

• A S

R E C W T

S OCEAN

b M E

E E M O E A

R u ACIDIFICATION I M

C N T

P C E M Real Estate I

O E

A N

E L E

P P R R L

O n N T

N Development/

E L

T e

R Y A

Commercial and s SOCIAL F M P N

E O R s I Residential Business C EQUITY N C R O E T M I C Operations M A E BIODIVERSITY N P S A S C LOSS C E S E T S FOOD C S OMPLIANCE UP S PL NT P IER SME R LO ASSES LAND USE S O CA ES DU L CO NITI TS CHANGE O O C MMU EC C T R SP C C ESPO ITY A TY UP NSIBIL FE I ATI SA A ONA AND L L HEALTH

B RESILIENCE O GENDER

U EQUALITY N EDUCATION D VOICE A HEALTH RI ES

112 Let’s Build for Tomorrow's Generations Our 2014 Stakeholder Engagement

We underwent a series of focus group stakeholder In 2014, our engagement process moved beyond engagements last 2013. It was the ﬁrst time for clarifying perceptions and addressing issues to us and our stakeholders to engage in meaningful planning for meaningful collaboration. dialogue speciﬁcally identifying the positive and negative impacts of CHI’s operations to the The diagram below and table found on the next community and distilling the most important issues page identify our stakeholders, their concerns, from the point of view of various stakeholders. and how we respond. These give a general view of our engagement. Our discussions elicited how they perceive us as a Company in the conduct of our business and our impacts to the environment and to society.

ent em ag ng E er ld o Shoppers and Mall Merchants h e Mall Merchants’ Employees k a Third-party Organizers/Exhibitors t S

Local Communities/Fenceline Barangays Local Government Units Overseas Filipino National Government Agencies Shareholders Professionals Regulatory Bodies Tourists

CEBU

Property Buyers/Lessees HOLDINGS, Institutional Investors Brokers and Property Specialists Financial Analysts Homeowners Associations INC. Securities and Exchange Business Park Association Commission/Philippine I.T. Park Association Stock Exchange Condo Corporations

Employees Business Partners

Suppliers Business Organizations Service Contractors Non-Government Organizations Manpower Agencies Civil Society Organizations Socio-Civic/Charitable Institutions Banks and other Event and Talent Agencies Educational Institutions Financial Institutions Utility Companies Allied Industries Insurers/Insurance Brokers

CHI 2014 Annual and Sustainability Report 113 Outcome of Stakeholder Engagement Program in 2014 G4-8, G4-24, G4-26, G4-27

REASON FOR CHANNELS OF SUSTAINABILITY STAKEHOLDER INTEREST AREAS HOW WE RESPOND ENGAGEMENT ENGAGEMENT PRIORITIES

CUSTOMERS: End users of real Text Feedback - On-time - Minimizing heavy - Ofering discounts, CUSTOMERS:shoppers, estate products and and TCS-MS completion trafc promos and various merchants, services (multimedia format of building payment terms shoppers, - Extended market locators helpline) integrated construction merchants, services for C, D - Customer marketing, locators - One-day and E sectors satisfaction surveys, customer surveys office lessees resolution of complaints handling and complaints - Ban on use of complaints handling plastic bags - Farmers' City Market - Immediate or (weekends) - TCS-MS time-bound help - Venue for family - Text Feedback response activities system

CHI complies Submission of Compliant with Beyond - Practice REGULATORS: with regulatory reports, disclosures rules, regulations compliance on transparency and SEC/PSE requirements as and other and environmental economic, social full disclosure a publicly-listed requirements; laws and environmental including the Company to assure involvement in regulations provision of this shareholders of SEC/ICD programs Report good corporate and initiatives; - Prompt submission governance transparency of requirements and adequacy of disclosure - Review of reports prior to submission

Protect the Sale of shares of Improving Dividends Investor brieﬁngs; INDIVIDUAL / interests of stocks, shareholder shareholder value declaration of INSTITUTIONAL shareholders inquiries and dividends SHAREHOLDERS by increasing updates; report shareholder of Company value; continue performance its position as through an excellent stockholders' investment meetings and vehicle annual reports

Monitor - Payment of taxes, Hiring of local - Health, safety, - Prompt payment GOVERNMENT: compliance with all business permits employees from employment, of taxes and LGUs and applicable statutory and licenses, neighboring environment, submission of national and regulatory partnerships/co- barangays and local trafc reports government requirements sponsored events, conditions - Regular reviews agencies and regular - Venue for civic of compliance reviews interaction with regulatory - Neighboring requirements - Availability of communities as new and efcient - Provision and partners and/or technology maintenance of beneﬁciaries to that minimizes good road networks the Company's environmental development - Practice impacts programs transparency and full disclosure including the provision of this Report

- Sharing of best sustainability practices

114 Let’s Build for Tomorrow's Generations G4-8, G4-24, G4-26, G4-27

REASON FOR CHANNELS OF SUSTAINABILITY STAKEHOLDER INTEREST AREAS HOW WE RESPOND ENGAGEMENT ENGAGEMENT PRIORITIES

EMPLOYEES: Our important Townhall meetings, Adequate Wellness and work- Beneﬁts upgrade; EMPLOYEES:organic and resource to climate survey, compensation and life balance merit increases; organicoutsourced and achieve the volunteer programs beneﬁts, health and wellness program outsourced Company's goals safety, employee (CHI P.L.U.S.); development competency development programs; health and safety programs

Provide products Accreditation, - Continuing - Equal - Establishment of EXTERNAL: and services for bidding, payment employment opportunities for and compliance to the Company; conformity with local contractors PCT standards employees of - Health and safety implement Process Cycle Time merchants, - Identify and - Implement projects, programs (PCT) standards, contractors, develop programs to and initiatives programs to park sustainable water educate and orient educate and orient associations sources (finite contractors and contractors and and suppliers ground water suppliers on QEHS suppliers on QEHS resource) best practices and best practices and benefits benefits

Means of Conduct of press - Truthfulness - Publicity - Regular fellowships communication conferences, and usefulness MEDIA - Issues-handling - Regular updates on through which fellowships, of information PARTNERS new developments CHI promotes its placement of paid shared - Media relations brand, image and advertisements - High courtesy/ reputation reliability rating of media relations personnel or any Company representative - provide sufcient information about the Company's projects and understanding of its brands

Neighbors beyond Implementation - Local - Stringent - Partnerships with LOCAL the Company’s of development employment selection process LGU or the local fencelines programs on /implementation communities COMMUNITIES: - Livelihood education, of policy for for Solid Waste barangay assistance employment, subcontractors Management (SWM) alliance environment, - Environmental to lessen unpaid programs peace and program labor incidents - Strengthening of order, livelihood - Trafc congestion - Scholarship the alliance and alliance program - Sidewalk vendors strengthening and fragmented - Implementation of initiatives - Encouraging small access roads programs aligned entrepreneurs by - Suspected illegal to the needs of the supporting their drug use by BPO community products employees - Local employment - Increase in - High fuel prioritization barangay income consumption through barangay used in waste permits from mall collection merchants and - Reporting of locators the number of employees per barangay

CHI 2014 Annual and Sustainability Report 115 OUR STAKEHOLDERS AND THEIR SUSTAINABILITY MATERIAL ASPECTS CUSTOMERS REGULATORS SHAREHOLDERS GOVERNMENT EMPLOYEES G4-24, G4-26, G4-27

Materials, Effluents and Waste, Energy, Emissions, Wa t e r, B i o d iv e r s i t y

Employment, Labor/ Management Relations, Occupational Health and Safety, Training and Education, Diversity and Equal Opportunity

Customer Health and Safety, Product and Service Labeling, Customer Privacy, Security Practices

Community Engagement

Economic Performance, Indirect Economic Impacts

Procurement Practices and Supplier Impact Assessments

Compliance and Grievance Mechanism aspects covering relevant categories

LEGEND:

Submission of timely Contractors’ training Tie-ups/involvement in transparent reports, seminars on QEHS Surveys stakeholders’ activities disclosures and best practices by invitation other requirements

Regular monitoring/ Townhall Volunteer reviews/audits meetings programs

116 Let’s Build for Tomorrow's Generations PRIORITIES G4-24, G4-27 MATERIAL MODES OF ENGAGEMENT ASPECTS SUPPLIERS AND LOCAL G4-26 CUSTOMERS REGULATORS SHAREHOLDERS GOVERNMENT EMPLOYEES MEDIA PARTNERS COMMUNITIES

Annual Supplier Accreditation Integrated Concerns Stockholders’ and Annual Performance marketing handling Meeting Evaluation

Agbayay Volunteer Shareholder Press Program and Inquiries and Conferences Employee Updates Engagement Initiatives CHI 2014 Annual and Sustainability Report 117 Our Sustainability Performance

WATER reduction of water consumption Water intensity 19% equivalent to (per GFA) 3 down by 36% 45,961 m at Ayala Center Cebu and CHI at the CHI Corporate Ofce corporate ofce EMISSIONS BIODIVERSITY

Expanded data gathering trees mechanism to include Scope 3 8,437 700 propagules of CO e reduced reduction in 2 average GHG planted in across Scopes 1-3 2% intensity 2014 368 at retail, ofce and at Ayala Center Cebu tonnes estate developments and The Walk

reduction in average GHG intensity at Cebu Business 17% Park and Cebu I.T. Park

Let’s Build for Tomorrow's Generations MATERIALS recycled rebars 3 in 2014 totaled 1,764 m Improved instruments of measurement for data reporting using project lifecycles WASTES

proper disposal, reuse, reduction and recycling 24% tons waste reduction 14,780 of wastes ENERGY

reduction 4% in energy reduction in electricity 17% intensity at consumption at Ayala Center Cebu Business Park Cebu, Cebu Business Park and and Cebu I.T. Park Cebu I.T. Park (478,451 kwH)

reduction 57% 10,697 in energy reduction in intensity liters 2% diesel at Ayala Center Cebu consumption at The Walk and and The Walk eBloc Towers

CHI 2014 Annual and Sustainability Report Measure and track ENVIRONMENT progress. For the implementation of our Environmental, Health and Safety and Climate Change Policies, we rely on our Project Support/Technical Asset Management Unit and Health and Safety Committee in coordination with our general At CHI, we have an contractor, Makati Development Corporation and service provider, Ayala Property Management opportunity to do things Corporation. This team regularly creates synergies on efciency improvements. right in the way that we As a check and balance for the continued implementation of our environmental manage and use our engagements, we ensure compliance to all applicable laws and conduct timely impact and resources directl reecting risk assessments, monthly performance reviews, and recurring up-to-date capacity building value in the way we programs. We rely on our employees, our partners, and our customers as contributors to do business. our environmental sustainability initiatives. DMA Environmental, Health and Safety Policy

In providing real estate products and services, we commit to sustainable development and the safety and health of our employees by:

Mitigating land, air and water pollution by addressing the 1 signiﬁcant environmental impacts of our operations;

Mitigating the occupational risks by addressing the signiﬁcant 2 hazards in the workplace and operations;

Complying with relevant environmental and occupational health 3 and safety laws and regulations;

Continuously reviewing our operational processes for resource 4 conservation, waste reduction and the mitigation of occupational hazards and risks; and

Continually improving efciencies through new, safe and 5 innovative technologies and processes.

CHI 2014 Annual and Sustainability Report 121 Handling our Materials Responsibly

The materials management is a key component of our business practice. We have existing procedures for handling and disposal of waste. DMA Materials

On Our Construction Materials

Materials Use

In 2014, Cebu Holdings, Inc. (CHI) completed four residential developments and one ofce building. This added a total of 135,829 square meters to the Company’s portfolio of constructed projects. Below are the details of each completed project:

CONSTRUCTED FLOOR PROJECT PROJECT AREA (sqm) START COMPLETION

RESIDENTIAL

1016 Residences 25,921.42 May 2, 2011 2014

Avida Tower 1 34,882.29 July 20, 2010 2014

Avida Tower 2 30,510.99 June 17, 2011 2014

Sedona Parc 14,566.00 May 4, 2011 2014

OFFICE

eBloc Tower 3 29,948.41 June 18, 2012 2014

In 2015, CHI looks forward to the turn-over of two more ofce buildings and four more residential properties between 2016 and 2017. Strategically located in the city’s business districts, these developments contribute to the growing demand for home and ofce spaces ably supported by retail areas near project sites.

122 Let’s Build for Tomorrow's Generations CONSTRUCTED FLOOR PERCENTAGE PROJECT AREA (sqm) COMPLETION COMPLETION

RESIDENTIAL

Park Point Residences 46,781.00 44% 2016

Solinea Tower 1 53,362.56 25% 2016

Avida Tower Riala 1 37,794.00 19% 2017

Avida Tower Riala 2 32,510.00 16% 2017

OFFICE

ACC Corporate Center 57,540.59 39% 2015

eBloc Tower 4 27,482.61 23% 2015

Within a project’s life cycle, the amount of construction materials used in real estate construction is considerable.

It is of signiﬁcant note that having simultaneous CEMENT: SAND AND GRAVEL: projects in development means diferent stages or progression in view of completion. To render 384,358 116,446 data more relevant, CHI discloses its use of bags bags materials based on the entire project lifespan as opposed to a year-on-year comparison.

Total materials used per completed project is reported, for comparison purposes, upon project completion. Most commonly used materials in building construction include cement, sand and gravel, wood, and rebars which have been REBARS: WOOD: identiﬁed and measured. G4-EN1 47,773 1,446 kilograms cubic meters

CHI 2014 Annual and Sustainability Report 123 Breakdown of materials used per project is To read on additional data, refer to page 204 of detailed on pages 192 to 206 of this Report. this Report.

Our contractor also made use of 1,764 m3 of recycled rebars in 2014, ofsetting a portion of Managing our Waste, the required construction materials. G4-EN2 Collaborating for Shared Value

As part of our conservation eforts on resource Proper waste management is crucial to our scarcity, CHI reports on materials intensity, environmental performance. It has the potential computed as the total consumption of materials to afect our water supply, air quality, and per square meter of constructed ﬂoor area. contribute to our greenhouse gas emissions. We are committed to the proper handling of Projects have varying intensities per type of our wastes and advocate to reduce, reuse and material used. For cement, 1016 Residences recycle where applicable. posted 7.38 bags per sqm, the highest for a residential property. Sedona Parc reported an We have tapped our neighboring communities intensity of 6.59 bags of sand and gravel per sqm, for increased awareness and support on this issue the highest among the three residential projects.

Materials Intensity per Project G4-9

8 7.38 7 6.59

6.01 6

Materials consumed per sqm of CFA consumed per sqm of Materials 0.74 1 0.43 0.04 0.08 0.08 0.01 0.07 0.02 0.01 0 Cement Sand and Gravel Wood Rebars

1016 Residences Avida Towers Sedona Parc eBloc Tower 3

124 Let’s Build for Tomorrow's Generations and have arrived at a long term, deeply-rooted, and residuals collected from the Company’s mutually-beneﬁcial solution. DMA Efuents and Waste properties and activities. G4-EN23

Waste Management As part of our social value initiatives, a neighboring community is our accredited Our Generated Waste collector. They received previous and ongoing seminars on proper waste management and In 2014, total waste generated from CHI-owned handling. Once the sorting process has been properties was at 14,790 tons, 24 percent below properly done, recyclables are sold and residual the registered total of 19,381 tons in the previous wastes are delivered to the city landﬁll. year. This covers all compostable, recyclables

Total Solid Waste Generated G4-EN23

15 Thousand tons

0 2013 2014

Pojects under Operational Properties Completed Projects construction*

CHI 2014 Annual and Sustainability Report 125 ACC-Corporate Center, currently under construction, generates the bulk of the waste produced with 10,808 tons in 2013 and 5,521 tons in 2014. This is followed by Ayala Center .04 Cebu and the two business parks. Our other BIODEGRADABLE properties contributed at smaller scales. 1,300 kg Busted bulbs are tracked as hazardous waste across all properties. In 2014, 261 kilograms of 88.17 bulbs were sent for on-site storage, a 131-percent RESIDUAL WASTE 11.79 RECYCLABLE WASTE increase from the 113 kilograms collected and 3,030,910 reported the year before. kg 405,313 kg

Total Wastes Total Wastes collected from collected RECYCLABLES (in tons) Ayala Center Cebu COLLECTED (in kg)

2013 2014 2013 2014

Completed 3,312.40 2,908.84 Biodegradable 122,544 1,300 Projects Recyclables 305,684 405,313 Operational 4,054.97 4,937.41 Properties Residuals 2,214,024 3,030,910 Properties under 12,013.52 6,933.74 construction

* Data does not include ﬁgures from Park Point Residences and Avida Towers Riala

126 Wastes Generated at Ayala Center Cebu G4-EN23

4,000

Solid Waste Management Program Highlights 3,500

3,000 CHI continued with its strong solid waste Thousand kilos management partnership with Barangay Luz 2,500 in 2014. A total collection of 3,437,523 kilos of 2,000 biodegradables, recyclables and residuals by the 1,500 community was made in 2014, up 31 percent 1,000 from the 2,631,641 kilos accounted in 2013.

500

0 2013 2014

Residual Recyclable Biodegradable

The recyclables collected generated an income of P2,949,363.06 for the community workers of Brgy. Luz in 2014.

To read on additional data, refer to pages 192-193 RECYCLABLES of this Report. COLLECTED

35 dry cartons 6 plastic cups mineral mixed waste 13 5 water bottles straw, aluminum cans, glass paper, plastic, galons, 9 4 chipboard, newspaper, 8 tin cans metal sheets 3 wet cartons 8 assorted plastic 2 plastic galons 7 poly bag

CHI 2014 Annual and Sustainability Report 127 Cebu Business Park Green Space and Composting Facility

Tugkaran (Cebuano term for yard) is a 2,805-square meter facility that features the full cycle of solid waste management at Cebu Business Park (CBP). This has served as a venue to showcase best practices on segregation, recycling and composting.

This provides a space that will allow Cebu Business Park and Ayala Center Cebu to divert organic materials from the solid waste stream. Organic waste (i.e. grass cuttings from the business park, food waste, and fruit peelings and vegetables from the mall’s supermarkets) will go into the system of compost production until organic fertilizer is harvested, sold or used locally. Income generated from this project goes to the composting team from Barangays Luz, Kamputhaw, Apas and Hipodromo.

This space serves as a venue to make the Cebu Business Park a model of eco-friendly practices as means to educate the community. This area also has become a venue to engage barangay volunteers in the planning and development of a small-scale ecopark.

128 Let’s Build for Tomorrow's Generations In 2014, CHI partnered with the Cebu Uniting In addition, CUSW facilitated the conduct for Sustainable Water Foundation, Inc. (CUSW) of weekly meetings and workshops on the to revisit the composting facility and process production of plastic pots out of 1.5-liter pet in Tugkaran. Activities included the 1) conduct bottles to be used for planting vegetables. of training and workshops to enhance the knowledge and skills of the barangay volunteers in biodegradable waste handling and vegetable growing; 2) development of a portion of the area into a vegetable garden as a source of additional livelihood income for barangay volunteers.

The training highlighted the basic provisions of RA-9003 or the Ecological Solid Waste Management Act of 2000 and focused on the target to reduce and divert the volume of garbage brought to the landﬁll. By yearend, the team generated four compost heaps with a total of 1,250 kilos that can be In addition, Takakura Composting was used as soil conditioner. To improve on the introduced to replace the current vermin- team’s productivity, the barangay’s composting composting methods and techniques applied and the segregation teams, with CUSW and the at Tugkaran. A demonstration on the use of property management of Cebu Business Park and PET bottles as an alternative material for wall Ayala Center Cebu are looking into the process container gardening was rendered in order to improvement to generate more output from encourage participants in establishing backyard this program. vegetable and herb gardens. This activity was also supplemented by an actual demonstration on the process of loading and mixing 200 kilos of fresh garbage collected from Ayala Center Cebu.

CHI employee volunteers, together with the residents of Barangays Luz, Kamputhaw, Apas and Hipodromo, participated in the clean-up activity Tugkaran on September 24, 2014. This was in celebration of the National Clean-Up Month.

CHI 2014 Annual and Sustainability Report 129 Minding our Energy Consumption CHI’s total direct energy consumption from diesel usage (specific to use of power generator Rising energy costs and a projected decrease in sets at operational properties) was 108,711 power supply is a continuing challenge for timely liters, 76 percent higher than the 61,617 liters delivery of our projects. Electricity consumption consumed in 2013. This is attributable to the makes for a good proportion of our operational mall's engagement with PhilEnergy, Ayala Land's costs. Improving our energy efciency allows partner, to improve its aircon facilities. During us to reduce cost. We introduce technological the first four months of the year, PhilEnergy innovations as cost efcient, high standard consumed 85,440 liters of diesel or 85 percent of alternatives that can lower our carbon footprint. the year's total consumption. Integrating energy efciency considerations into our own design and construction enable long Total indirect energy consumption from term benefits for the Company. DMA Energy electricity consumption at operational properties was 57 million kWh, up 10 percent from 51.9 Our Energy Readings million kWh reading in 2013. The increase is attributed to the expansion of Ayala Center In 2014, total energy consumption was Cebu with additional 125 merchants occupying 217,378 gigajoules (GJ), 10 percent higher than 29,600 sqm. 197,122 GJ in 2013. Ninety six percent or 209.2

thousand GJ came from leased properties. Total Energy Consumption G4-EN3, G4-EN4

Energy consumed from completed projects and 250 construction activities contributed 4.2 and 3.9 thousand GJ, respectively. G4-EN3 200

Total Energy Consumed (in GJ) 150 Thousand Gigajoules

2013 2014

100

Completed Projects 1,818.00 4,245.80

Projects under 50 5,987.10 3,888.60 construction

Operational Properties 189,316.90 209,243.00 0 2013 2014

Completed Projects Properties under construction Operational Properties

130 Let’s Build for Tomorrow's Generations Climate Change Policy

We believe that climate change is among the greatest of threats to mankind and business sustainability, and its efect is global, local and personal.

We recognize our important role in mitigating climate change through our business practices.

As a response we will:

1 Become more energy-efcient in our operations; Begin to account and reduce the carbon footprint in our 2 operations, our products and services through our own eforts and by inﬂuencing our contractors; and

Continue to ensure the health and viability of our controlled 3 protected areas, which serve as carbon sinks.

CHI 2014 Annual and Sustainability Report 131 Reducing Our Energy Consumption On 10,697 liters of fuel was recorded, with the two Our Properties eBloc Towers contributing 82 percent or 8,808 liters, and The Walk with 1,889 liters. CHI tracks total energy consumed (fuel + purchased electricity) and energy intensity from Similarly, reductions from common areas was at its properties. This is based on total energy 210,506 kWh for Ayala Center Cebu; 184,700 kWh consumption of retail merchants, ofce building for eBloc Tower 1; 57,734 kWh for Cebu I.T. Park; locators and common areas. and 25,511 kWh for Cebu Business Park, totaling 478,451 kWh of electricity consumption reduced CHI is consistently working towards reducing in 2014. This accomplishment is attributable to energy use. From 2013, a total reduction of

Total Energy Consumed per Operational Property G4-EN4

160

140

120

100

20 Energy Consumed (thousand Gigajoules)

0 Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Ofce Mall Admin Cebu Park Park Ofce

2013 2014

Energy Consumed (Gigajoules)

RETAIL OFFICE ESTATE* CORPORATE OFFICE

CEBU AYALA eBLOC eBLOC CEBU I.T. CHI MALL ADMIN THE WALK BUSINESS CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE OFFICE PARK

2013 134,972.1 5,463.4 25,637.3 20,378.9 1,341.5 784.5 477.4 261.8

2014 149,183.7 5,370.8 24,522.3 27,278.9 1,249.6 576.7 645.6 415.4

*Data includes purchased electricity consumption from common areas only.

132 Let’s Build for Tomorrow's Generations 133

our energy efciency initiatives which include LED retroﬁt program at the basement parking area and lighting schedule adjustment. G4-EN6

To measure energy efciency, we monitor Ayala Center Cebu total energy consumed by each property per square meter of gross ﬂoor area. This presented with measure is important to gauge reduction Kasangga Award of our environmental impact in view of business expansion. At the simultaneous Cebu Unplugged Retail spaces and ofce buildings posted higher Advocacy campaign launch and Kasangga intensities primarily because of high energy use. Awards on June 5, 2014, Ayala Center Ayala Center Cebu remains our biggest energy Cebu was recognized as one of the Visayan consumer across our properties, followed by Electric Company’s (VECO’s) Interruptible our two eBloc Towers. We continue to work Load Program (ILP) partners. The ILP on improving our building designs and chiller System adopted by VECO seeks to address systems among other innovations to drive the energy supply insufciencies. It also takes numbers down in succeeding years. into account blackout concerns seen to afect Cebu arising from the destruction of several power plants in 2013 by Properties having the same use (e.g. retail, ofce) typhoon Yolanda. have consistent, similar intensities.

As an ILP partner, Ayala Center Cebu’s power Our Completed Projects source automatically shifts from the grid to the Company’s generators during peak The entire period of construction per project hours. This would allow energy redistribution is the data basis for CHI’s measures of total to consumers with lesser capabilities. The energy consumption (fuel + purchased electricity Kasangga award is given in approbation of consumption). This is done to account for Ayala Center Cebu’s commitment to action. variations in type, number and construction stages within a given year giving better application of our measurements.

TOP PHOTO: L-R: VECO Vice President for operations, Ricky Lacson, Ayala Center Cebu's Bong Dy and Rudy Reuyan, and VECO Chief Operating Ofcer Sebastian Lacson. Total energy consumed was 2,930.9 GJ or 0.11 GJ/sqm of constructed ﬂoor area for 1016 Residences; 3,485.7 GJ or 0.05 GJ/sqm for Avida Towers 1 and 2; 2,228.2 GJ or 0.15 GJ/sqm for Sedona Parc; and 1,075 GJ or 0.04 GJ/sqm for eBloc Tower 3, the only ofce building completed in 2014.

Among the three residential projects, Sedona Parc is the most energy intensive.

To read on additional data, refer to pages 194-197, 204-205 of this Report.

Total Energy Consumption and Intensity per Completed Project G4-EN4, G4-EN5

4,000 0.18

3,500 0.16

0.14 3,000

0.12 Intensity (GJ/sqm) 2,500 0.10

2,000

Total energy consumed (GJ) Total 0.08

1,500 0.06

1,000 0.04

500 0.02

0 0.00 1016 Residences Avida Towers Sedona Parc eBloc Tower 3

Fuel Consumed Purchased Electricity Intensity

Total energy consumed and energy intensity

RESIDENTIAL OFFICE

1016 RESIDENCES AVIDA TOWERS SEDONA PARC eBLOC TOWER 3

Fuel Consumed (GJ) 191.2 544.4 840.0 157.9

Purchased Electricity Consumed (GJ) 2,739.6 2,941.3 1,388.2 11.9

Intensity (GJ per sqm) 0.11 0.05 0.15 0.01

134 Let’s Build for Tomorrow's Generations Lowering Our Emissions, Expanding our Scope

Development and construction projects are major sources of our emissions. We track and work with our contractors to identify opportunities for reductions in fuel consumption while helping improve our emissions performance. Achieving this not only delivers mutual cost beneﬁts and maximised efciencies, it also leads to improved environmental outcomes that beneﬁt the business for the longer term. DMA Emissions

Energy Intensity per Operational Property G4-EN5 CRE1

1.20

1.00

0.80

0.60

0.40

0.20

Total Energy Consumed per sqm of GFA Energy Consumed per sqm of Total 0 Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Ofce Mall Admin Cebu Park Park Ofce

2013 2014

Total Energy Consumed (Gigajoules per sqm)

RETAIL OFFICE ESTATE* CORPORATE OFFICE

CEBU AYALA eBLOC eBLOC CEBU I.T. CHI MALL ADMIN THE WALK BUSINESS CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE OFFICE PARK

2013 1.13 1.07 0.99 0.59 0.007 0.007 0.7 0.3

2014 1.11 1.05 0.95 0.78 0.006 0.005 1.0 0.5

*Denominator used to compute for intensity was the diference between gross ﬂoor area and gross leasable area to account for consumption from common areas only.

CHI 2014 Annual and Sustainability Report 135 Our Direct and Indirect Emissions collaborative engagement with our locators to further lower our indirect emissions in the future. Emissions to Air

The Company’s carbon emissions include direct In 2014, total carbon emission was 35,699 tonnes

emissions from fuel used in power generators of CO2 equivalent, 11 percent up from last year’s and loss of refrigerant in air conditioning systems 32,211 tonnes. The largest contributor was (Scope 1), indirect emissions due to purchased energy usage by mall merchants, ofce building electricity consumed at common areas of locators and from our construction activities, various properties (Scope 2) as well as other accounting for 26,564 tonnes or 74 percent indirect emissions arising from fuel and electricity of the Company’s carbon footprint. Emissions usage by our retail mall merchants, ofce from electricity use reached 8,843 tonnes or building locators and from our construction 25 percent while Scope 1 emissions from diesel activities (Scope 3). usage was at 293 tonnes or one percent of the total emissions. This is the ﬁrst time that CHI expanded its data collection system and report on Scope 3. We consider these new measures as guidance for

Total GHG Emissions G4-EN15, G4-EN16, G4-EN17

30 e ₂

Total GHG Emissions (tonnes of CO2e)

20 2013 2014

Projects under 10

456.3 380.7 CO Thousand tonnes of construction

Completed Projects 267.9 671.2

0 2013 2014 Operational Properties 31,487.3 34,647.3 Projects Under Construction Completed Projects Operational Properties

136 Let’s Build for Tomorrow's Generations EMISSIONS perspective, reduction of Scope 1 emissions was

at 29 tonnes of CO2e, Scope 2 at 289 tonnes, and Our Leased Properties Scope 3 at 368 tonnes. G4-EN19

CHI monitors its carbon emissions per property Normalizing the carbon emissions by total ﬂoor creating more opportunity to reduce its area per property, data shows GHG or carbon environmental impacts. Communication via intensities having slight decreases for our audio or video conferencing is encouraged operating developments. This observation is true where possible, to minimize overseas travel. for Ayala Center Cebu, The Walk, eBloc Tower 1 and the two estates, Cebu Business Park and Scope 3 emissions, retail and ofce properties, Cebu I.T. Park. contributed the largest portion of our total emissions: Ayala Center Cebu - 17,410 tonnes of Our goal in the future is to lower our properties’

CO2e, The Walk - 807 tonnes, eBloc Tower 1 - GHG intensity, especially for eBloc Tower 2 and 3,579 tonnes, and eBloc Tower 2 - 3,716 tonnes. our corporate ofces.

The 2014 higher ﬁgures are commensurate to Our Completed Projects increased business activities resulting from the expansion of Ayala Center Cebu as those of CHI recognizes the signiﬁcant environmental the ofces. impact of construction activities and takes note of direct and indirect emissions resulting from Our Operational Properties our construction projects. It is a direction we are looking into for future collaboration on As a result of our efciency initiatives, our emissions reduction. properties achieved total GHG reduction of 368 tonnes of CO2e. Broken down per property, The Company measures and monitors energy carbon reduction was 167 tonnes for eBloc and emission data from its construction sites. Tower 1, 127 tonnes for Ayala Center Cebu, 35 Consistently adopting the same principle of tonnes for Cebu I.T. Park, and Cebu Business Park, and 39 tonnes for The Walk and eBloc Tower 2. Correspondingly, on a per scope

CHI 2014 Annual and Sustainability Report 137 disclosure on project life cycles, we track our tonnes or 0.020 tonne per sqm for Sedona Parc; emissions through data comparison per project and 13 tonnes or 0.00043 tonne per sqm for completion rather than a per annual evaluation. eBloc Tower 3. Total direct and indirect emissions was 472 tonnes or 0.018 tonne per sqm. Constructed To read on additional data, refer to pages ﬂoor area for 1016 Residences, 531 tonnes or 197-201, 205-206 on this Report. 0.008 tonne per sqm for Avida Towers, 291

GHG Emissions per Property: Estates and Corporate Ofces' Common Areas G4-EN15, G4-EN16, G4-EN17

0.3

0.2

0.1

0.1 ₂ e CO Thousand tonnes of

0.0 2013 2014 2013 2014 2013 2014 2013 2014 CBP CBP CITP CITP CHI Ofce CHI Ofce Mall Admin Ofce Mall Admin Ofce

Scope 2

Total GHG Emissions (tonnes of CO2e) ESTATE* CORPORATE OFFICE

2013 CEBU 2014 CEBU 2013 2014 2013 2014 2013 2014 BUSINESS BUSINESS CEBU I.T. CEBU I.T. MALL ADMIN MALL ADMIN CHI OFFICE CHI OFFICE PARK PARK PARK PARK OFFICE OFFICE

Scope 2 224.8 209.4 131.4 96.6 80.0 108.2 43.9 69.6

*Data was derived from electricity usage in common areas only.

138 Let’s Build for Tomorrow's Generations GHG Intensity per Operational Property G4-EN18, CRE3

0.200

0.180

0.160

0.140

0.120

0.100

0.080

0.060

0.040 Total GHG emissions per sqm of GFA GHG emissions per sqm of Total

0.020

0 Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Ofce Mall Admin Cebu Park Park Ofce 2013 2014

Total GHG emissions per sqm of GFA

RETAIL OFFICE ESTATE* CORPORATE OFFICE*

AYALA CEBU eBLOC eBLOC CEBU I.T. CHI MALL ADMIN CENTER THE WALK BUSINESS TOWER 1 TOWER 2 PARK OFFICE OFFICE CEBU PARK

Scope 1 0.188 0.177 0.164 0.098 0.0012 0.0011 0.119 0.055

Scope 2 0.182 0.176 0.158 0.131 0.0011 0.0008 0.160 0.087

*Data was derived from electricity usage in common areas only.

CHI 2014 Annual and Sustainability Report 139 GHG Emissions per Completed Project G4-EN17, G4-EN18, CRE4

500 0.050

450 0.045

400 0.040

350 0.035

300 0.030 e ₂

250 0.025

200 0.020 e / sqm of CFA e / sqm of ₂

150 0.015 Total Tonnes of C0 of Tonnes Total

100 0.010 Tonnes CO Tonnes

50 0.005

0 0.000 1016 Residences Avida Towers Sedona Parc eBloc Tower 3

Scope 3 Intensity

GHG Emissions (tonnes of CO2e) RESIDENTIAL OFFICE

1016 AVIDA SEDONA eBLOC RESIDENCES TOWERS PARC TOWER 3

Scope 3 (tonnes of CO2e) 472.3 530.6 290.9 13.0

Intensity (tonnes of CO2e/sqm) 0.018 0.008 0.020 0.0004

Sewage Treatment Plant

Cebu Business Park Cebu I.T. Park The hours of operation of the Sewage Treatment Construction of a Sequencing Batch Reactor Plant (STP) has been adjusted for both scheduled (SBR) with a capacity of 5,000 cu.m. per day is running and idle hours for better electricity scheduled for 2015 to be located beside the consumption efciency. This optimizes STP existing wetland. This is to address increase in operations where only an average daily 3,500 build-up and occupancy that may be beyond the cu.m. of wastewater is generated in view of the existing wetlands' capacity of efciently treating STP’s 10,000 cu.m. design capacity per day. waste water.

140 Let’s Build for Tomorrow's Generations Using Water Wisely

Water is a vital resource. We use water in the increase is due to higher water consumption development and management of our projects generated by the mall expansion and from at all phases. It is important that we source our completed projects. water responsibly, use it efciently and cost- efectively, and manage its quality. We adhere Improving on last year’s data, we tracked water to a strong focus of our water management and consumption of our retail merchants and quality in our operations. We strive to efectively ofce building. We hope to use these numbers manage our water consumption and quality per to advocate for over-all improved water point of project life cycles. Where applicable, we use efciency. consider access to alternate water infrastructure and support innovations promoting water On a per source basis, all properties of CHI use efciency. DMA Water located at Cebu Business Park withdraw water from water utility providers. All Cebu Our Water Usage I.T. Park developments (construction activities included) source water from the ground. CHI Water Consumption acknowledges the environmental impact of this and is on an ongoing consultation with In 2014, CHI’s total water consumption was experts and related parties for recourse to better 603,526 cubic meters (m3), 13 percent higher sustainable sourcing of water. than the 532,362 m3 recorded in 2013. This

Total Water Consumption G4-EN8 Total Water Consumed (m3)

600 2013 2014

500

Projects under 400 8,903.8 16,542.3 construction

300 Completed Projects 24,973.5 62,099.5 200

Thousand Cubic Meters Operational 100 498,484.6 524,883.8 Properties

0 2013 2014

Projects Under Construction Completed Projects Operational Properties

CHI 2014 Annual and Sustainability Report 141 Our Operational Properties m3 of 2013. Speciﬁc to common areas at the mall, Ayala Center Cebu realized decreased water Water consumption at retail and ofce consumption by 45,812 m3. Meanwhile, The Walk developments including estates increased from showed a 41 percent increase in consumption last year. from last year’s 15,589 m3, translating to an intensity of 4.31 m3 per square meter. This is a Ayala Center Cebu recorded a total of result of increased water consumption by new 388,033 m3 or 2.87 m3 per square meter of gross additional mall merchants. ﬂoor area, three percent higher than the 378,207

Water Consumed per Operational Property G4-EN8

450

400

350

300

250

200

150 Thousand Cubic Meters

100

0 Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Ofce Cebu Park Park

2013 2014

Water Consumed (m3)

RETAIL OFFICE ESTATE* CORPORATE OFFICE

CEBU AYALA eBLOC eBLOC CEBU I.T. CHI THE WALK BUSINESS CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE PARK

2013 378,206.5 15,588.5 62,551.4 39,948.0 1,128.7 643.5 418.0

2014 388,033.0 22,033.9 49,361.6 57,335.0 3,632.0 4,249.3 269.0

*Data derived from common areas only.

142 Let’s Build for Tomorrow's Generations Overall, total water usage at ofce properties was particularly measured by a lower intensity. In our 106,697 m3 in 2014, a four percent increase from CHI Ofce, we achieved a 36 percent decrease 102,499 m3 in 2013. eBloc Tower 1 reported of water consumed per square meter of total a 21 percent decrease in water consumption common area space. from 62,551 m3 to 49,362 m3 or 1.9 m3 per sq. m. However, eBloc Tower 2 had a 44 percent Our leasing, commercial and residential increase in water usage translating to a higher properties, make use of water sub metering 3 intensity of 1.65 m per sq. m from 1.15 in 2013. systems to monitor water consumption by our residents, tenants, merchants, and locators. Our Water usage at common areas of our estates service provider Ayala Property Management and corporate ofces are continually monitored Corporation, monitors and analyzes data to help for water efciency improvements. This is identify areas of excessive water consumption.

Water Intensity per Operational Property CRE2

5.0

4.0

3.0

2.0 Cubic meters per sqm

1.0

0 Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Ofce Cebu Park Park

2013 2014

Water Intensity (m3 per sqm)

RETAIL OFFICE ESTATE* CORPORATE OFFICE

CEBU AYALA eBLOC eBLOC CEBU I.T. CHI THE WALK BUSINESS CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE PARK

2013 3.17 3.05 2.41 1.15 0.006 0.006 0.6

2014 2.87 4.31 1.90 1.65 0.019 0.037 0.4

CHI 2014 Annual and Sustainability Report 143 Moving forward, we will conduct discussions with year comparison for water data has allowed us our residents, tenants, merchants, and locators to better understand and make changes on our for more participative and committed measures approach to water consumption. Our total water for using water wisely. We will continue to use consumption was 24,090 m3 or 0.93 m3 per sqm our sub-metering system as a key tool to manage of constructed ﬂoor area for 1016 Residences, consumption and provider of critical data to 29,417 m3 or 0.45 m3 per sqm for Avida Towers, achieve our targets. 31,827 m3 or 2.19 m3 per sqm. for Sedona Parc; and 227,459 m3 or 0.92 for eBloc Tower 3 ofce Our Completed Projects in 2014.

Understanding a project life’s cycle, and using To read on additional data, refer to pages project completion metrics as against a year-on- 201-203, 206 of this Report.

Total Water Consumption and Intensity per Completed Project G4-EN8, CRE2

35 2.50

30 2.00

1.50 Intensity (m ³ /sqm) 20

15 1.00

Water consumed (thousand m ³ ) Water 10

0.50 5

0 0.00 1016 Residences Avida Towers Sedona Parc eBloc Tower 3

Total Water Consumed Intensity

RESIDENTIAL OFFICE

1016 RESIDENCES AVIDA TOWERS SEDONA PARC EBLOC TOWERK 3

Total water consumed (m3) 24,090.1 29,417.1 31,827.3 27,458.9

Intensity (m3/sqm) 0.93 0.45 2.19 0.92

144 Let’s Build for Tomorrow's Generations Biodiversity

We strive to maintain a delicate balance of Parallel to the development of the master plan is biodiversity impacts to enhance the liveability and the rehabilitation and the protection of adjacent vitality of our communities. mangrove site to enrich existing vegetation and to eventually help protect the adjoining We ensure that we are compliant with applicable community in the future. laws. We invest heavily in the research, design, planning and development of our projects. In 2014, we engaged an ecological specialist, Site assessments are carried out, biodiversity Cebu Uniting for Sustainable Water Foundation, management plans are developed and Inc. (CUSW) to conduct an initial site mapping appropriate actions are delivered. We strive to and characterization of a portion of the property better understand the value that biodiversity where planting, rehabilitation and enrichment brings to our communities— making them can be done. stronger and healthier, more resilient of natural stressors by design, and with a higher quality of As a kick-of activity of our engagement, an initial life as a result of being part of an area with high mangrove trial planting activity was conducted biodiversity value. DMA Biodiversity, G4-EN12 in the last quarter of 2014. Participated ably by 27 employee volunteers from CHI and ten from the community. The group was briefed on the Current Development: Our Project proper way of planting propagules on varying in Mactan surfaces. It is projected that further activities will identify metrics to support and promote This is a 13-hectare master planned mixed-use positive contribution. development. This project is located in Barangay Punta Engaño, Lapu-lapu City where mangroves are found along the project coastline.

CHI 2014 Annual and Sustainability Report 145 Our Sustainability Technical Working Group (STWG) oversees this aspect of our biodiversity initiative. Our Business Development Group, TOTAL NUMBER assesses long term protection mechanisms for SPECIES OF TREES land development. Taking on an innovative management approach ensures long term Cebu Business Park 31 2,531 conservation that beneﬁts the project and our community. Our pulse surveys with our Cebu I.T. Park 26 918 stakeholders tell us that customers value green Amara 25 703 breathable spaces. Developing land while keeping in mind restoration of biodiverse areas add value TOTA L : 82 3,972 to our estates. Trees planted Tree count data In 2014, CHI, through its employee volunteers Existing trees in our areas for development and external partnerships planted 8,437 seedlings are incorporated into our landscape design. and 700 propagules as part of the Company's We conduct our inventory of trees grown and environmental initiatives. nurtured in our estates.

146 Let’s Build for Tomorrow's Generations Protection and Rehabilitation Eforts

Cebu Holdings, Inc. (CHI) employee volunteers The volunteers also participated in the Forest took part in two nature restoration activities in Restoration Program kick-of activity of Ayala separate initiatives in the fourth quarter of 2014. Business Club Cebu, Inc. (ABCCI) in Bgy. Pung-ol Sibugay also in partnership with CUSW and the The volunteers with the team of Cebu Uniting people's organization of Bgy. Pung-ol Sibugay. for Sustainable Water (CUSW) conducted a Activities include collection of wildlings, bagging trial mangrove planting and coastal clean up and establishment of a recovery chamber for the on October 21, 2014. This activity was done in wildings collected. The group bagged a total of preparation for the planned mangrove planting 1,200 seedlings that are scheduled to be planted scheduled in 2015 as the Company's support to help on the ﬁrst quarter of 2015. protect and rehabilitate the mangroves in the coastal project site in Punta Engaño in Lapu-Lapu City.

CHI volunteers participated in a trial mangrove planting and coastal clean-up in Bgy. Punta Engaño.

CHI volunteers help establish a recovery chamber for wildlings in Bgy Pung-ol Sibugay, to support the Forest Restoration Program of Ayala Business Club Cebu, Inc.

CHI 2014 Annual and Sustainability Report 147 Take action. HUMAN CAPITAL

Employee Engagement

We strive to create a CHI is committed to provide a positive, engaging, healthy, and empowering environment for its culture that promotes employees. The workplace brings together a diverse set of skilled individuals guided by continual improvement. our set of core values and driven to achieve CHI’s business goals while also fulﬁlling their We continue to invest in personal goals. We strive to create a culture that promotes the development, training continual improvement. We continue to invest in the development, training and capacity building and capacity building of of our employees. We continue to provide and improve our employee wellness programs, and we will continue to foster a safe, nurturing and our employees. enabling workplace for our people.

We benchmarked with global real estate companies listed in Corporate Knights Capital’s 2015 Global 100 Index as only the most sustainable global corporations are included in their annual assessment ranking. DMA At CHI, we encourage our employees to balance work, home and leisure activities. We provide an avenue where we can promote the value of teamwork through our CHI PLUS (employee wellness program) and 'Agbayay' Employee Volunteer Program.

CHI 2014 Annual and Sustainability Report 149 Measuring Engagement Engagement Driver 2: Teamwork / Work environment In partnership with an external consultant, CHI underwent an Organizational Climate Survey We believe in an open, dynamic workplace where (OCS) in 2013 with the next one slated for 2015. each employee contributes to the best of his or Ninety-seven percent of the total number of her ability. Diferent viewpoints yield creativity employees participated in the survey. and feed innovation. We work through task groups here at CHI depending upon the needed Engagement Drivers function. This structure and approach gives us flexibility and support in achieving operational efciencies. It enhances our ability and agility to Our four key engagement drivers are 1) pride adapt to diferences at any point of any process in working; 2) teamwork/work environment; 3) – it fosters respect within and across CHI’s personal; and 4) work-life balance. These four employees and creates further opportunities for indicators not only reflect how well we perform learning and growth. as an employer, it is also characteristic of a work culture aligned to our corporate objectives. Engagement Driver 3: Engagement Driver 1: Personal and professional growth Pride in working with the Company Empowering our people is crucial to our lasting growth. Attracting top-level talent and retaining Our employees take pride that we know their them allows us to engage and build on their needs and act in their interest. They work with talent, commitment and drive for the long us to help derive sustainable business solutions term. We maintain top bottom and bottom and engage in partnerships that strengthen top open lines of communications. We train, community relations. support, reward, and empower our people to be innovative solution providers confident to make the right decisions. At CHI, we have decentralized Individual Competency Plans where a manager works closely with an employee in their development plan.

150 Let’s Build for Tomorrow's Generations Performance Indicators under this sustainability of our business. It is an integral part Engagement Driver: of our corporate responsibility to innovate ways to better help all employees and their families 1. New hires and turnover by age group realize health goals, achieve a greater sense 2. Ratio of external hires to internal movements of well-being and work-life balance. As our 3. Average competency-based training hours employees become healthier and more balanced, by employee category they become more efcient and inspired. This provides a reciprocal beneﬁt to our business Engagement Driver 4: and cascades into the communities we serve Work-life balance as a whole. Two key indicators drive our work- life balance engagement – CHI PLUS and CHI CHI’s people drive its success. Their health Agbayay Employee Volunteer Program. and well-being are critical components to the

Average Competency-based Training Hours by Employee Category G4-LA9

60 45 39.92 40 50 35 27.59 40 30

25 30 20 13.32 20 15

10 10 5

2012 2013 2014

Probationary/ Supervisors Associates Average for the Year Regular MTs

CHI 2014 Annual and Sustainability Report 151 ENGAGEMENT DRIVERS

Pride in Working Teamwork / Work #1 with the Company #2 Environment Employees’ pride in working with the Employees’ workplace is a safe, dynamic organization shows trust in our environment where a culture of positive Corporate Governance, sustainability engagements and mutual respect are initiatives and conﬁdence in continued predominant among employees. employee engagement initiatives 90% 82% 96% 94% “The company takes “We work with a of the employees takes pride in efective measures for mutual respect that proudly tell others recommending the our health and safety allows our team to that they work in CHI company to others as at work” function smoothly.” a good place to work 93% 94% Working for the Company gives me a sense of pride because “Our immediate “We work with a of the Company’s products manager/boss commitment to the and reputation. encourages company that goes professional and beyond expectations/ considerate conduct extra mile.” in the workplace.”

The opportunities 88% that are tied when working in this company “We help each other are endless. One’s innovate and adapt as the team responds potential is fully to new developers.” maximized and utilized.

152 Let’s Build for Tomorrow's Generations Personal and Work-life Balance #3 Professional Growth #4 Learning oppotunities through varied A responsible employer focuses on the approaches that allow employees to gain health and well-being of its employees. knowledge and develop skills that contribute Healthier, well-balanced CHI employees to their current job and career advancement. are more energized, better motivated and more efcient. 88% 90% 98% 79% “We are actively “We work in a variety encouraged to of tasks that are CHI PLUS employee CHI Employee enhance our skills interesting and participation Volunteer/Agbayay and knowledge.” challenging participation 541 volunteer hours Performance Indicators: 15 volunteer activities 1. New Hires and Turnover by Age Group CHI develops programs 2. Ratio of External Hires not just focusing on work-related to Internal Movements goals but also on wellness 3. Average Competency-based of the employees Training Hours by Employee Category

The Company invests in trainings and seminars to expose the employees and enhance competencies.

CHI 2014 Annual and Sustainability Report 153 154

CHI Recognized in the Cultivating a Culture of Sustainable Business Sustainability Awards Embedding the sustainability mindset within the Cebu Holdings, Inc. (CHI) was awarded a special company’s culture is critical. Thus, we educate recognition at the ﬁrst Sustainable Business our employees across business lines and have Awards (SBA) Philippines 2014 on July 14 at systems in place to ensure that our sustainability the Dusit Thani, Manila. CHI is the only Cebu- initiatives are aligned with our long-term based company cited for best practices in the business goals. Workforce category.

The goals of the first Sustainable Business Awards are: (1) to increase awareness of sustainable business best practices, and (2) to demonstrate Employee Profile by Gender G4-9, G4-10 how sustainable businesses benefit companies, the environment and all stakeholders. The business actions of various companies and 100% 68% 71% 74% its environmental impacts are quantitatively 80% assessed in the SBA. Ten categories comprise this comprehensive framework. 60%

40% CHI’s high score was in terms of employee development program and other employee 20% 32% 29% 26% engagement activities. The Company also 0% supports of-hour capacity and diversity building 2012 2013 2014 activities under its CHI P.L.U.S employee Female Male wellness program.

Leading sustainability experts forming part of the 26% 74% National Advisory Panel judged the Sustainable Business Awards.

TOP PHOTO: L-R: Philippine Stock Exchange President and CEO Hans Sicat, CHI's Francis Monera and Aniceto Bisnar, Jr., and Philippine Business for the Environment Executive Director Bonar Laureto. We encourage a culture of sustainability through various employee activities. We continue to strengthen our organization by optimizing use of human capital, streamlining processes and empowering our people to achieve the goals we have set.

CHI 2014 Annual and Sustainability Report 155 Composition of Governance Body and Breakdown of Employees by Gender G4-LA12

MALE FEMALE

2012 2013 2014 2012 2013 2014

Board of Directors 8 8 8 1 1 1

Management Team 7 8 8 10 12 13

Supervisors 6 6 6 18 21 24

Associates 10 8 8 25 24 25

Leadership Diversity Percentage of Women on Board of Directors

2012 2013 2014 Benchmark

Percentage of Women on Board of Directors 11% 11% 11% 20%

Percentage of Women in Executive Management Employee Proﬁle by Employee Category G4-9, G4-10

100%

15% 21% 24% 24% 80%

8 62% 32% 32% 34% 60%

6 60% 40%

4 40% 38% 39% 59% 20%

0% 2012 2013 2014 0% 10% 20% 30% 40% 50% 60% 70%

Associates Supervisors Probationary/Regular MTs 2012 2013 2014 Benchmark

Note: This benchmark is based on the median values of companies in the same sector in Corporate Knights Capital’s 2015 Global 100.

156 Let’s Build for Tomorrow's Generations Employee Hires by Age Group G4-LA1 Employee Turnover by Age Group G4-LA1

12 12

10 2 10 2 6 8 8 9

6 6 1 8 8 4 4 4 5 4 2 2 2

2012 2013 2014 2012 2013 2014

30-40 years old Below 20 - 30 years old 30-40 years old Below 20 - 30 years old

*Data includes 3 project hires absorbed in 2014. Note: Reason for turnover data in 2014 is all personal such as marriage or full time pursuit of further education.

The Balanced Scorecard (BSC) Turn over Rate

CHI continually reﬁnes its Balanced Scorecard 14% (BSC), a strategic management system. It is based on four vantages of sustainability impacts 8 7% –ﬁnancial, customer, internal business process, and learning and growth. Embedded into our 6 7% corporate culture, it enables our people to be aware and able to assess and align their 4 12% contributions to the business’ sustainability goals through their individual BSCs. This performance and productivity framework aligns 0% 5% 10% 15% with the Quality, Environment, Health and Safety Management Systems (QEHS MS). 2012 2013 2014 Benchmark

Note: This benchmark is based on the median values of companies in the same sector in Corporate Knights Capital’s 2015 Global 100.

CHI 2014 Annual and Sustainability Report 157 Our employees, including new hires, undergo Occupational Health and Safety CRE6 seminars, orientations and workshops that help embed sustainability in all aspects of their CHI strives to provide a safe and healthy work functions and for them to gain a clear correlation environment at all times for its employees. We have of our business goals and the individual Key a clear policy covered in our Quality, Environment, Result Areas. Health and Safety Management Systems (QEHS MS). Safety is of premium consideration at CHI and Competency Development we regularly conduct safety training as needed. Audits are conducted at regular intervals across our on Sustainability facilities. We identiﬁed Work Illnesses and Safety Performance as our indicators. Sustainability is prevalent in our communications across our electronic Inside CHI newsletter Work Illnesses G4-LA6 and our intranet. Actual sustainability practices observed by CHI employees include monitoring of C0 emission, waste segregation and recycling. 2 stomach Earth Hour, Earth Day, Clean Up Drive initiatives 21 ache have become regular employee engagements in conjunction with other CSR activities through our employee volunteer program. 35 fever

39 flu

40 headache

158 Let’s Build for Tomorrow's Generations Lost Time Injury Rate G4-LA6

The Safety Organization of the Philippines presented awards of honor to our general contractor, Makati Development Corporation (MDC). This is in recognition of achieving safe man-hours without lost time accident in the following projects:

1016 Residences Avida Tower Two ACC Corporate Center million safe million safe million safe 3.1 man-hours 3.3 man-hours 1.3 man-hours January 1, 2013-September 30, 2014 July 20, 2013-September 30, 2014 January 1, 2013-September 30, 2014

MDC was also recognized for their Perfect Safety Record in the two projects:

Avida Tower One Sedona Parc million safe million safe 2.9 man-hours 2.2 man-hours without lost time accident continuously without lost time accident continuously (January 1, 2013-September 30, 2014) (January 1, 2013-September 30, 2014)

Benchmarking against real estate companies Number of Fatalities G4-LA6 included in Corporate Knights Capital’s 2015 Global 100, CHI’s zero rate is the highest • We recorded zero incidents of occupational achieved of any company in the same sector. related disease.

Note: This benchmark is based on the median values of • We recorded zero fatalities in 2014, a record companies in the same sector in Corporate Knights Capital’s 2015 Global 100. Benchmark is at 14%. maintained throughout our reporting period. Comparing our performance to the median values of companies in the same sectors that are part of Corporate Knights Capital’s 2015 Global 100 shows that we are at par with the world’s best when it comes to ensuring a safe and secure work environment.

CHI 2014 Annual and Sustainability Report 159 160

Exceed

Delivering on Our Commitment, expectations. Continuing as a Trusted Brand

DMA Customer Health and Safety, DMA Product and Safety Labeling, DMA Customer Privacy, DMA Security Practices

We have a strong, clear commitment to our This section details how we customers across our business lines. Their value is reﬂected in the products we develop and in deliver social value to our how we engage, respect and give high standard service delivery. Our customers range from merchants, retailers, shoppers, and locators. As customers. We look after we seek to understand, respond and deliver on their changing needs, we monitor, measure and their satisfaction, safety innovate on improving customer experience and in how we continue to be a trusted brand. and security. We rely on our Quality Policy and our “Focus on the Customer” core value in meeting our customers' needs.

Understanding our Customers to Serve Them Better

Our customer handling process reinforces customer ﬁdelity and serves to protect our reputation for developing safe communities.

We have business units in place handling speciﬁc aspects of our customer engagements. Our Commercial Business Group handles external customer programs speciﬁcally geared to mall merchants and shoppers. Quality Policy G4-14

For us, the customer is ﬁrst and quality is everyone’s job. We commit to:

Deliver our products and services to continually satisfy ever 1 changing expectations of our customers while meeting all applicable regulatory and statutory requirements;

Provide our employees with competence-building programs to 2 improve productivity; and

Continually improve the Quality Management System's 3 efectiveness through a regular review process.

We have a broad-based customer complaints Our regular reviews touch on the following handling system, the Total Customer Satisfaction measures: customer acquisition, retention, Management System (TCS-MS), managed by market leadership and internal and external our Corporate Communication and Corporate customer satisfaction. Our customers’ Social Responsibility Division. This covers experiences help us strategize and deliver documentation, management, investigation and on additional value for our customers in our resolution of customers’ complaints, positive and operations, service delivery and facilities design. negative feedback as well as inquiries. We empower them to share inputs for our overall improvement, thus building mutual respect We conduct internal customer satisfaction between them and our Company. surveys twice a year. The Ayala Property Management Corporation (APMC) interfaces We are committed to providing safe and healthy with our Project Support / Technical Asset spaces for everyone engaging our business: Management Unit on resolving concerns customers, visitors, contractors, employees and of owners and tenants of our ofce neighboring communities. The measures we building facilities.

CHI 2014 Annual and Sustainability Report 161 undertook in 2014 to improve public safety and Customer Satisfaction Survey Results security are found in the ERM and Communities G4-PR5 section of this Report found on pages 92-93 and 171-177, respectively. Internal Customer Survey An uptrend in the Internal Customer Survey Customer Satisfaction results show that we are improving in our operations and management processes in pursuit In envisioning a dynamic and vibrant Cebu, of delivering higher quality products and services. retaining happy customers is critical to our continued business sustainability and in leading CHI’s Internal Customer Survey is conducted our success to the future. We believe that twice a year as a check and balance of our healthier communities make for a better quality organization’s social climate. In 2014, an average of life, and in turn, improved well-being. When rating of 8.7 out of 10, taken from 16 units our customers are engaged and happy, they surveyed, reﬂects an overall healthy business let others know in their social interactions. We environment for our employees. not only get to keep our customers, they help us expand our customer base. This leads to an Shoppers’ and Merchants’ Survey increase in ﬁnancial returns for the Company. In 2014, shoppers and merchants at Ayala Center We conduct annual surveys to evaluate and Cebu voiced higher satisfaction as to the mall’s monitor our performance on customer personnel, services, procedures and facilities. An satisfaction. The results of these surveys are overall excellent rating of 9.1 was given, up six then considered to further improve on our percent from the 8.6 rating record in 2013. The products and services and analyzed for strategic building itself, mall ambiance, security, facilities improvements on business performance. and directional signs were the most appreciated attributes of Ayala Center Cebu according to In 2014, CHI saw an increase in customer ratings the surveyed shoppers. Additionally, retail store from shoppers and merchants of Ayala Center owners and managers/supervisors rated Ayala Cebu and ofce building locators at our eBloc Center Cebu highly giving an overall rating of 8.1, Towers. This tool gives us an additional direct line up seven percent up from last year's 7.6. High and follow-up of our formal annual stakeholder satisfaction areas are building facilities, utilities, engagement. Moving forward, we intend to services, personnel, systems and procedures. pursue more shared value collaborations with our customers at the malls and ofces.

162 Let’s Build for Tomorrow's Generations Ofce Building Occupants' Survey maintenance rated very good. The ofce leasing Ofce building locators at Cebu I.T. Park gave a team likewise did well on policy knowledge, higher overall satisfaction rating of 8.3 for the telephone handling, tenant relations and services rendered by the property management feedback mechanism for requests. and ofce leasing teams servicing the building occupants. This rating is up six percent than the Our 2014 survey identiﬁed areas for improvement 7.8 rating in 2013. On building administration, our on building administration particularly on the power supply back-up system rated excellent. repair and maintenance of common areas. Criteria on courteousness, cleanliness and

SURVEY 2012 2013 2014

Internal Customers 8.6 8.7 Average of 8.7 results from 16 divisions / Ayala Center Cebu departments Shoppers 8.7 8.6 9.1 surveyed

Ayala Center Cebu Merchants 7.5 7.6 8.1

eBloc Towers 1 and 2 Locators 8.3 7.8 8.3

CHI 2014 Annual and Sustainability Report 163 164

To strengthen the emergency response system within the communities of Cebu Business Park and Cebu I.T. Park, an estate-wide communication line to all locators, building occupants, mall merchants and shoppers was launched. Various emergency rescue teams of the local government units also demonstrated disaster preparedness skills in the Safety and Emergency Preparedness Fair. Cebu Park District Emergency Helplines Launched

A joint afair on Safety and Emergency Preparedness was held last December 3, 2014 at the Cebu Business Park. Over 75,000 employees from all locators participated in a park-wide drill. Demonstrations on basic first aid, firefighting/rescue, bomb detection, and awareness then followed at The Terraces in Ayala Center Cebu.

The event highlight was the launch of the Cebu Park District Emergency Helplines. These are dedicated landline and mobile helplines serving the Cebu I.T. Park and Cebu Business Park locators, building occupants, mall merchants and shoppers, and extending to residents within Metro Cebu.

Partners include the Ofce of Civil Defense, Cebu City Disaster Risk Reduction Management Council, Cebu City Police Ofce, Bureau of Fire Protection, Philippine Red Cross, Emergency Rescue Unit Foundation (ERUF), and the emergency response teams of the neighboring communities of Cebu Business Park and Cebu CHI's Aniceto V. Bisnar, Jr. addresses the emergency drill I.T. Park. volunteers and participants at the Emergency Helpline launch at the Terraces.

EMERGENCY HELPLINES Ayala Center Cebu Ü-First Campaign

Ayala Center Cebu continues to provide its patrons a pleasurable shopping and dining experience by making their convenience its top priority. In line with Ayala Malls’ Ü-First Campaign, Ayala Center Cebu implements a continuing program that provides facilities for the elderly, families and persons with disabilities.

The Concierge at Ayala Center Cebu provides the The Concierge becomes an avenue for valuable following services: 1) general information on store feedback for the mall’s continual improvement. locations, merchants' contact details, events, Priority treatment is provided to the senior promotions and mass schedules; 2) restaurant citizens and persons with disability (PWD) with reservation; 3) hotel bookings 4) ﬂight and travel the mall’s wheel-in service, dedicated parking conﬁrmation; 5) personal shopper assistance; slots and seating areas around the mall. 6) call-a-taxi assistance.

166 Exceeding Our Own Expectations

Performance Monitoring of Outsourced Moving forward, We are also developing the Processes SLA rating guide for our other contracting We monitor and evaluate the annual performance partner, MDC. of our property management at Ayala Center Cebu on agreed service levels. This covers areas Total Customer Satisfaction of facilities management, ﬁnancial management, Management System customer service, and environment, health and safety. Our Total Customer Satisfaction Management System (TCS-MS) documents and deploys Service Level Agreement (SLA) points of policy concerns from customers and merchants at consider overall ratings or any two of the four Ayala Center Cebu. Speciﬁc concerns cover areas rating below 75 percent as performance issues related to the building’s common areas, failure. Two successive failures count as a ground rest rooms, customer service, merchants, and for termination. In 2014, our assessment found security. CHI has a customer feedback hotline the average total SLA rating to be 89 percent, integrated in the TCS-MS. Complaints received with customer service and facilities management from the system are recorded and reports are cited as the strongest service delivery points generated periodically. of APMC.

CUSTOMER FEEDBACK HOTLINE text

TEXT: Project Name & LocationFeedback Details example: Ayala Center Cebu Level 3 - no water at family lounge restroom

CHI 2014 Annual and Sustainability Report 167 PWD Awareness Campaign

In July 2014 a series of activities promoting dignity and respect for Persons With Disabilities (PWDs) was conducted in Ayala Center Cebu, for the PWD Awareness Month. This month- long event was cited as Finalist in the International Council of Shopping Centers Asia Paciﬁc Shopping Center Awards 2014. This honor for excellence was given under category one of the Asia Awards for Traditional Marketing on Cause-Related Marketing.

168 169

The PWD Awareness Month was in partnership with the Cebu Provincial Government, Gualandi Volunteer Service Programme, Inc. (GVSP), and the Down Syndrome Association of the Philippines Inc. (DSAPI). Provincial Board Member Arleigh Sitoy and Vice Governor Agnes Magpale spearheaded the launch.

Celebrate diversity by promoting dignity, respect and inclusiveness this Persons with Disability month

Activity highlights included 1.) “Inspiration” a photo exhibit of inspired stories of individuals overcoming odds, 2.) “Clarissa” a self-titled painting from a young artist with Down Syndrome, 3.) a job fair, 4.) the PWD Run and Roll, 5.) PWD Summit and 6.) PWD Got Talent show.

CHI 2014 Annual and Sustainability Report 169 170

Build capacity. Helping Shape the Future

Empower At CHI, it is of importance that we help our clients and our communities maneuver through communities. their own economic, environmental and social challenges. We use our expertise, local knowledge and partnerships to make positive impacts in the cities and communities where we do business.

This section underscores In our Company, we see how prudent development shapes the economic landscape. how we partner with our When we grow and expand our business, we have to ensure that our communities have the capacity to grow with us for equitable economic fenceline communities. prosperity. DMA Local Communities

Agbayay and CHI Plus Match-up

We match the interests and passions of our employees to meaningful and needed community services where we operate. Each year, employees lend time and expertise to help non-proﬁt initiatives and organizations and people in identiﬁed neighboring communities. We strive to develop innovative programs that use the core strengths, capabilities and expertise of our business and of our people to maximize impacts.

Fifteen volunteer activities, which translated into 541 volunteer hours of service in local communities within the Metro Cebu area, were rendered in 2014. We work hand in hand with community residents to create opportunities for livelihood, employment, education, peace Community Investments G4-EC1 and order, disaster risk management and arts and culture. This is how we invested capital to support our community programs in 2014. It is not simply about doing the right thing. Helping people gain on skills to improve the CHI’s community investments is centralized quality of life is transformative— for the individual, through the Corporate Communication and their families, communities, our business and our Corporate Social Responsibility Division. economy at large. The other group with signiﬁcant community investment is the mall where people converge Growing local businesses and markets and use mall space for schools, business and and enabling local communities socio-civic organizations.

The Company distributed P11.4 million in We’ve found through our community community investments. Distribution is engagements that capacity building, access detailed below. to markets, and basic business management skills go a long way as starter seeds for growth potential and in building conﬁdence. We bridge our community relations to our local government units or business partners and our CSR initiatives 37 19 to address the gap. Tourism, Arts, Environment Culture and Initiative and Religion Sustainability Strategy Small Business Development G4-EN31 We help small businesses acquire the capital, 10 21 expertise and other resources they need to Education Relationship grow. Through our own business network, CHI and Advocacy Building for Children's connects small businesses to crucial resources Welfare that help them succeed. Our support covers the full spectrum with the intent for the business to do well enough to be independent. We take part in investing, product development and 5 8 Relief Health and sharing access to markets and clients, business Operations Wellness management training, facilities and the tapping of new markets.

CHI 2014 Annual and Sustainability Report 171 'Agbayay' is the term we use to refer to both our community engagement and employee volunteer programs. Our employee volunteer program initiatives support the community development programs of the alliance of neighboring communities of Cebu Business Park and Cebu I.T. Park.

CSR Programs / Highlights of Agbayay Program in 2014

New Ofcers Inducted for CPVDC Inks Project Trabaho with CBPNBAAI Barangay Apas

The Cebu Business Park and Neighboring In addressing unemployment and promoting Barangays Altruistic Alliance, Inc. (CBPNBAAI) inclusive growth among its neighboring inducted a new set of ofcers last July 4 at communities, we partnered with neighboring the City Sports Club Cebu. The induction of barangays surrounding Cebu Business Park and ofcers was witnessed by the barangay captains Cebu I.T. Park in a job fair on August 8, 2014 at of CBPNBAAI member barangays. CBPNBAAI Barangay Apas. includes Cebu Business Park, Cebu I.T. Park and neighboring barangays: Apas, Carreta, Kamputhaw, Hipodromo, Luz and Mabolo. This organization expanded to include Barangays Lahug and Kasambagan.

All the member barangays are partners in the implementation of community development programs.

172 Let’s Build for Tomorrow's Generations CHI Organizes Team Building Activity for Neighboring Communities

Cebu I.T. Park hosted an adventure race for the neighboring communities of Cebu Business Park and Cebu I.T. Park.

Barangay Apas, Kamputhaw, Hipodromo, Luz, and Mabolo competed in the Biochallenge. Cebu Holdings Inc. and the Ayala Property The move was done to promote the hiring of Management Corp. ﬁelded a guest team. construction workers and help meet operational Challenges included the planting of seedlings and and manpower requirements relevant to the emergency preparedness and response. redevelopment of the mixed-use superblock in Cebu I.T. Park. Candidates came from barangays The activity also featured supersized Pinoy games Apas, Mabolo, Luz, Hipodromo, Carreta and of takyan, tirador, jolen and other fun games. Kamputhaw. The six barangays are members Barangay Apas emerged as the winner. of the Cebu Business Park and Neighboring Barangays Altruistic Alliance, Inc. (CBPNBAAI).

CHI 2014 Annual and Sustainability Report 173 CHI Partners with City Agriculture for Farmers' Market

Cebu Holdings Inc. (CHI) combines community needs at the Farmers’ Market at the Linear Park of Cebu Business Park. Open from Wednesday to Friday every second and fourth week of the month, upland farmers sell to ofce workers who get easy access to fresh produce.

The Farmers’ Market is a joint initiative of CHI and the City Agriculture Department. The city government provides market outlets for upland farmers, cutting of the need for middlemen.

There are 19 satellite markets which are with farmers selling vegetables, fruits and organized and distributed in urban barangays ornamental plants. Farmers from barangays Adlaon, Pamutan, Sirao and Tabunan get to sell their crops at the Farmers' Market.

According to City Agriculturist Joelito Baclayon, farmer participants feel a sense of contentment and satisfaction because they have established regular customers.

Income and sales for farmers' families were also noted to signiﬁcantly improve to an average of seven to nine thousand pesos per market week. Due to direct customer feedback, crop productions may also be better adjusted to suit market needs.

174 Let’s Build for Tomorrow's Generations Manu Manu also provided the barangay leaders training on product photography and encouraged the We continue to support the livelihood and crafts use of social media to reach a broader market program, for the women folk of Barangay Luz, for Manu Manu products. As a future initiative, which is now on its seventh year. They use rolled the Company’s volunteer program will include or woven recycled ofce paper, newspaper, training on the basics of business management magazines and the glossy side of sticker papers for the women of Barangay Luz. The goal for in crafting bags, baskets, coasters, placemats, Manu Manu is to be independently managed in candle holders, notepads, and pen holders under the future. the Manu Manu brand.

Trainings on product design and development has been successful. For 2014, we have helped establish a Manu Manu community store within the barangay hall. Employee volunteers

ALI President and CHI Chairman of the Board, Bernard Vincent O. Dy, with Joy S. Sanciangco of ALI- SLMG survey the products sold by Barangay Luz during the Ayala sa Komunidad Fair on November 18 – 20 in Glorietta.

CHI 2014 Annual and Sustainability Report 175 Tugkaran Learning Series

Residents from the member communities of bottles. The materials were collected from the CBPNBAAI participated in a learning series mall's Material Recovery Facility (MRF) and from conducted by Cebu Uniting for Sustainable the participants’ own household. Water (CUSW) at Tugkaran, the tree nursery and composting facility at Cebu Business Park. A single chair is made out of 150 PET bottles and will take up to six to eight hours to produce. The The participants from Barangays Luz, Apas and collection of the biodegradable material was also Hipodromo spent six consecutive Mondays in maximized with the vertical gardening method chair making and vertical gardening preparation. where PET bottles were utilized as pot hangers.

In the activity, the participants composed of In December, a culmination activity was held nine representatives per barangay were able to where barangays were judged according to produce three chairs made out of recycled PET the quality of the chairs and the volume of PET bottles collected.

176 Let’s Build for Tomorrow's Generations CHI Supports Brigada Eskwela Shoe Box Campaign and Milk Drive

Cebu Holdings, Inc. (CHI) remains steadfast in In addition to the relief eforts for typhoon helping improve the conditions by which children Yolanda-afected Northern towns in Cebu, in communities receive basic education. In its two campaigns for children were supported by Agbayay para sa Edukasyon program, CHI’s CHI employees. support of DepEd’s Brigada Eskwela campaign was threefold – Shoe boxes ﬁlled with school supplies were given out to students of Tindog Elementary (1) signage for Mabolo Elementary School and School in Medellin. The wrapped box donations Kamputhaw Elementary School; replaced the traditional peer-to-peer yuletide gift exchanges last Christmas. (2) paint for classroom repainting of Barrio Luz Elementary School and Camp Lapulapu Employees within companies of the Ayala Elementary School; and Business Club Cebu, Inc. (ABCCI), including those of CHI, were likewise engaged in the Northern (3) an afternoon cleanup campaign by CHI Cebu Milk Drive, a partnership with Children’s employee volunteers at Mabolo Elementary Hour and Tetra Pak, Inc.. Milk products worth School on May 23, 2014. P1.5 million were distributed to over 1,200 elementary students in Yolanda afected towns. Beneﬁciaries are from Tindog Elementary School in Medellin and Hagnaya Elementary School in San Remegio.

CHI 2014 Annual and Sustainability Report 177 178

Catalyze economic ECONOMIC

development. Our Management Approach DMA Economic Performance, DMA Indirect Economic Impacts

CHI achieved significant progress in 2014. Sound growth strategies and strong leadership, balanced with strategic sourcing of financial capital enables the business towards a sustainable future. As we continue to improve our economic This section details our performance, inclusive growth expansion will benefit communities within and around our areas economic value generation of operation. and distribution, including Economic Value Generated and Distributed G4-EC1

the positive indirect The 2014 Economic Value Retained (total revenue less the total economic value distributed) economic impacts of our comprises 26 percent of our total revenue. In computing the ﬁgures of our economic value projects in the areas where distribution, we account for the following components as shown in the table on page 180 we operate. of this Report. Supporting the Local Economy G4-EC7

In 2014, we continued to contribute to direct government income by remaining one of the top corporate taxpayers in Cebu. We have supported the hiring of over 60,000 employees— across our facilities and through our retail and ofce space leasing and developments. The salaries given in turn are further redirected into local area spending. Property leasing and developments have also helped generate various service industries catering to newly-created A continuing testament of our direct impact to and expanded markets such as food services, the local economy and the efectiveness of our among others. The public utility vehicle terminal sustainability direction is the increase in land at Ayala Center Cebu gives income capacity value per square meter of our Cebu Business Park to transport providers delivering mobility and development. From a range of P700 to P1,500 in transport connectivity among our patrons the 1980’s, it is now at P80,000 to over P100,000 within Metro Cebu. Green spaces such as per square meter in fair market value. Adjacent those of The Terraces have also contributed and nearby properties have benefitted similarly. to greater environmental awareness for the general populace. General suppliers not only We will continue to build on the strong share in this eco-awareness but also received performance of our current portfolio, optimize profit benefits in our adaptation and use of more assets and further our capabilities. eco-efcient technologies.

Our control mechanisms to stimulate economic performance remain as follows:

ROLE/ FUNCTION VIS-À-VIS DEPARTMENT / DIVISION / MECHANISM ECONOMIC PERFORMANCE

Key Performance Indexes (KPIs) Attainment of business objectives Business Development Group Scrutiny of our growth margins, capital Commercial Business Group strengths, performances and operational efciencies Marketing and Operations Departments for retail and ofce leasing Finance Division

Finance Division Prudent management of general administrative expenses, capital expenditures and direct operating expenses

Corporate Communication and Corporate Monitoring and consolidation of Community Social Responsibility Division (CC-CSRD) Investments

Ayala Land Sales, Inc. (ALSI) Outsourced company handling marketing and sales for residential projects

CHI 2014 Annual and Sustainability Report 179 Signiﬁcant Indirect Economic

Impacts and its Extent G4-EC8, G4-SO2 Employee Wages and Benefits From a broader view, our indirect economic impacts have led us to: 6 Payments to Providers of • Change the productivity of organizations, Capital 11 sectors, or the whole economy Payments to Government • Spur transformative economic development 12 within bottom-of-pyramid communities • Help improve environmental and social Economic Value Retained awareness and conditions 26 • Make products available for low to medium income markets Operating Costs • Enhance skills, training and knowledge in communities 45 • Support jobs along the value delivery chain • Stimulate and enable foreign direct investments

ECONOMIC VALUE DISTRIBUTED ACCOUNTED FOR COMPONENT

Operating Costs Total cost of sales, general and administrative expenses, excluding manpower costs, taxes and licenses, donations, and amortization and depreciation

Employee Wages and Beneﬁts Personnel costs less expenses incurred for in-house training

Payments to Providers of Capital Sum of dividends and interest expense paid for the year Payments to Government Sum of provision for current and ﬁnal taxes, including taxes and licenses paid

Community Investments Total donations made and direct cost of social programs and activities conducted for the year

180 Let’s Build for Tomorrow's Generations placement of nearby community residents for Linking Local Talents our locators. Unemployment is an ongoing issue, yet Cebu has sufcient numbers to meet skilled labor and Local Sourcing professional job positions. CHI believes that if the proper physical structure is in place, it can serve As a real estate developer, CHI aims for local as a powerful means to reduce unemployment sourcing in as much as the business allows. This and build economies within and around our strategy promotes greater operations efciency developments. Our retail and ofce space leasing as well as contributes to local employment and business provide an opportunity for us to link Cebu’s economic growth. local talents with global companies particularly in the area of information technology and business In 2014, the Company, through its general process outsourcing. CHI and subsidiary CPVDC contractor Makati Development Corporation are involved in and provide continuing support to (MDC), employed close to 6,000 construction the Cebu Educational Development Foundation workers. This number includes employees of for IT (CEDF-IT). It is a consortium of industry, subcontractors. Within the same reporting period, academe, government and non-government organic workforce at MDC-Cebu was at 401 with organizations that seeks to increase the quantity 55 percent sourced locally. Mapping ahead, CHI and improve the quality of professionals in the will coordinate with MDC on targets as to local Information and Communications Technology sourcing of workforce. (ICT) and IT-enabled services industry. We also help facilitate job fairs for the successful

7.8% 0.6%

Total Workforce at Cebu Park District: 0.4% 5,142 400 Cebu Business Park and Cebu I.T. Park G4-10 Construction Hotel/Sports Club 229 CATEGORY CITP CBP Residential 1.3%

BPO Ofces 36,128 14,969 12.0% 828 Retail 919 6,940 Others 7,859 (Building/ Residential 144 85 Retail 65,555 Estate Admin) TOTAL Construction 2,033 3,109 WORKFORCE Hotel / Sports Club - 400 Others 537 291 77.9%

39,761 25,794 51,097 BPO/Ofces TOTAL: 65,555

CHI 2014 Annual and Sustainability Report 181 182

Inﬂuence. Set SUPPLY CHAIN

standards. G4-12, DMA Procurement Practices, G4-EC9, DMA Supplier Environmental Assessment, G4-EN32, DMA Supplier Assessment for Labor Practices, G4-LA14, DMA Supplier Human Rights Assessment,

G4-HR10, DMA Supplier Assessment for Impacts on Society, G4-SO9

Our relationship with We take supplier accreditation as an opportunity to help our suppliers improve and grow. Our relationship with contractors, suppliers and contractors, suppliers service providers are essential to our success and to the overall growth of Cebu. We strive to and service providers are influence our accredited suppliers to align their sustainability values with ours. essential to our success All our policies, engagements, purchasing and and to the overall growth bidding requirements are defined and guided by the Quality, Environmental, Occupational, Health and Safety (QEHS) manual (PM 01-010 of Cebu. and PM 01-011). Our procurement process is decentralized. Each department handles its own requirements. Legal, financial and technical evaluations are done ranging from stringent to rigorous, based on the purchase caps of the given project. The Limits of Authority define the total contract amount of products and services required to undergo a bidding process.

We set our standards high to provide positive impacts to the communities we mutually serve. Relevant suppliers undergo technical evaluation as part of our supplier accreditation Property Management Market Research

CHI VALUE DELIVERY CHAIN

Commericial Center Operations and Project Conceptualization Management / Office Space Leasing / Design Development Residential Business

Punchlisting / Project Turnover Construction

process documented in our QEHS Management Through capacity building and partnership, System manual. As a check and balance of their we enable our suppliers to be industry leaders alignment to our sustainability goals, we conduct in their own right. In this light, local suppliers supplier performance evaluations and make comprise a fair share of our spending. This assessments based on the following criteria— is in line with our general contractor, Makati environment, labor, human rights, and societal Development Corporation’s practice of favoring impacts. Labor compliance audits are done on a local subcontractors in our projects. In 2014, quarterly basis. In 2014, there were no reports of local suppliers were paid a total of P1.5 billion. violations to labor laws.

CHI 2014 Annual and Sustainability Report 183 06. Appendices

Let's build for tomorrow's generations Legal and Compliance received any grievance concerns pertaining to our environmental practices to date. DMA Compliance (Environment), G4-EN29, DMA Non-discrimination, G4-HR3, DMA Freedom of We encourage our employees to be aware of and Association and Collective Bargaining, G4-HR4, DMA drive actions that address corporate and personal Child Labor, G4-HR5, DMA Forced or Compulsory environmental footprints. We continually gauge Labor, G4-HR6, DMA Indigenous Rights, G4-HR8, and reﬁne our systems to optimize our resource DMA Anti-corruption, DMA Public Policy, G4-SO6, consumption. We remain open to partnerships, DMA Anti-competitive Behavior, G4-S07, G4-SO3, initiatives and new technologies that help mitigate our DMA Customer Health and Safety, G4-PR2, DMA direct and indirect environmental impacts. Marketing Communications, G4-PR7, DMA Customer Employees and Labor Privacy, G4-PR8, DMA Compliance, G4-PR9, DMA Environmental Grievance Mechanisms, G4-EN34, We adhere to a strict code of non-discrimination Labor Practices Grievance Mechanisms, G4-LA16, in our employment policies. This covers all areas of DMA Human Rights Grievance Mechanisms, G4- employee engagement including hiring, compensation, HR12, DMA Grievance Mechanisms for Impacts on promotion and/or discipline. We do not tolerate Society, G4-SO11. discrimination in any aspect of race, color, gender, religion, age, disability, sexual orientation, gender Environment identity and expression, political bias, union afliations, Our core values and commitment to sustainability lead and/or ethnic origin. us to the highest standards of business ethics. We value our people and encourage open In 2014, no incidents of non-compliance were found communication by everyone at any level. Our with all laws and regulations relating to any of our communication and feedback process is clearly operations extending to our supply chain. detailed in pp.25-26, and p.33 of our Code of Ethics.

We comply and protect the environment by meeting We are guided by our QEHS manual in the procedural applicable regulatory requirements. Our Pollution handling of internal communications coursed through Control Ofcers (PCOs) submit consolidated results the Human Resources (HR) and Admin Division. of departmental monthly performance reviews to HR policies and the Company’s Code of Ethics and the Management Committee. This reporting is done employee handbook are found on the website (www. at a minimum of twice a year and is facilitated by cebuholdings.com/corporategovernance/manuals- the Company’s Project Support/Technical Asset and-policies). Sources of information and channels Management Unit (PTAMU) in coordination with Ayala of communication include the Inside CHI, HR Property Management Corporation (APMC) and Makati e-Bulletin, and CHI Intranet and directives from the Development Corporation (MDC). management team.

We consistently monitor our energy efciency, water We have a clear mandate for the handling of labor consumption (water catchment and reuse), green related grievances as defined in our Code of Ethics. design and landscaping, and waste management Full confidentiality is observed throughout the process. (solid and hazardous wastes) to help us further Managers are open and trained for the proper handling develop sound strategies to drive and improve our and procedure of related concerns. CHI observes an environmental performance. (See pages 192-206 of open communications culture. We have not received this Report). any grievance concerns pertaining to our labor practices to date. We refer to our organizational Impact and Risk Assessment procedure in our QEHS manual as We continually streamline our processes to proactively procedure PM-EHS-01-001. A summarized flowchart eliminate injury, accident or illness incidents relating is uploaded on our website, www.cebuholdings. to, or concerning, our employees. We implement and com. Compliance with all applicable legal, regulatory follow clear rules and standards aligned to local and and statutory requirements follows the procedure national health and safety regulations. PM-EHS-01-002 of the QEHS manual. We have not

186 Let’s Build for Tomorrow's Generations We observe a zero tolerance policy on child labor Consumer Advocacy throughout our operations. This policy extends to our supply chain where we require a Certiﬁcation We observe transparency in our marketing of Compliance to RA 9231 on Anti Child Labor Law communications for all our projects across our full as an integral component of their accreditation line of business. We ensure that our integrity and requirements. Further, we neither engage in nor core values are not compromised by misleading or tolerate in any form the use of forced labor. Voluntary misrepresenting our intentions and developments or its employment is practiced throughout tenure. impacts to the environment.

Community and IP Engagement We hold ourselves accountable to all stakeholders and give correct and adequate information on health We rely on our Corporate Communication and and safety, quality control standards and intended Corporate Social Responsibility Division (CC-CSRD) enhancements to the commercial, retail, residential for the management of our community initiatives and and business communities we develop. There are no engagements. Any communications and/or concerns incidents of non-compliance with regulations and to and from the communities we engage are coursed voluntary codes relating to health and safety impacts through them as well. of our products and services.

We have no current engagement with indigenous We respect our customers’ right to privacy. We apply peoples or developments on land they inhabit. the same rigor of integrity and accountability in the handling and protection of sensitive information – Regulatory, Market and personal, financial and otherwise – given to us in the Community Practices course of our day-to-day engagements. We have no incidents of breach of customer privacy and/or loss of We comply with all legal, consumer, and financial customer information. reporting requirements working against corruption, including extortion and bribery. We have clear policies Compliance - Product Responsibility to address and investigate thoroughly any and all allegations of misconduct relating to the Company. We take shareholder and consumer concerns Direct and indirect references are found on pp.14-22 seriously from land acquisition, design development, Code of Ethics; pp.1-3 (Conflict of Interest Policy), construction to operations and property management. pp.1-3 (Related Party Transactions Policy); and pp. 1-4 We implement a comprehensive risk management (Insider Trading Policy). approach throughout our processes extending to our supply chain, to ensure our product delivery is of the We adhere to free competition principles and non- highest of standards. We fully comply with all safety, restrictive practices that foster an open market and fair quality and regulatory requirements relating to our trade policies. business. To ensure continuity of high quality service delivery we conduct regular reviews on the following We recognize that policy changes may have significant measures: customer acquisition, retention, market impact to our operations, revenues and development leadership, internal and external customer satisfaction. costs. We lend our expertise especially on long term We align, adopt and adjust accordingly to customer land design and development to policy makers upon and market needs. their invitation. We do not participate in lobbying and/ or political contributions. Our stakeholder engagement with regulators and local government units are detailed on pages 115-118 of this Report. Our memberships in associations is listed on page 34 of this Report as well.

CHI 2014 Annual and Sustainability Report 187 DIRECTORS' PROFILE

Bernard Vincent O. Dy, North Triangle Depot Commercial AFFILIATIONS Filipino, 51 Corporation Asiatown LT. Park Association, Inc. Chairman of the Board of Directors of CHI Station Square East Commercial Cebu Business Park Association, Inc., since August 2014. Corporation Chairman and President (January 1, 2015) ala reenfeld olf eisure Club North Point Estate Association, Inc., Ayala Property Management Corporation Chairman, EDUCATION Makati Development Corporation Hero Foundation, Board of Trustee Masters in International Relations Nuevocentro, Inc. (MIR ’97), University of Chicago TREASURER Masters in Business Administration SIAL Specialty Retailers, Inc. (MBA ’89), University of Chicago Francis O. Monera, SIAL CVS Retailers, Inc. B.S in Business Administration (BSBA ‘85), Filipino, 60 University of Notre Dame Director of Cebu Holdings, Inc. and Cebu DIRECTORSHIP IN LISTED COMPANIES Property Ventures & Development Corp., President Chief ecutie ffcer Aniceto V. Bisnar, Jr., from April 28, 2006 to December 31, 2014 Ayala Land, Inc. Filipino, 51 Chairman, Cebu Holdings, Inc. President of Cebu Holdings, Inc. since EDUCATION Chairman, Cebu Property Ventures & January 1, 2015 Manuel L. Quezon University, B.S in Development Corp. Commerce major in Accounting (BSC '75), Past Executive Vice President, Senior Vice EDUCATION Magna Cum Laude President, Vice President and Assistant Vice Philippine Military Academy, Bachelor of Certifed Public ccountant CP President, Ayala Land, Inc. Science (PMA BS ’85, top 5% of class) Ateneo Graduate School of Business, Past Group Head Residential Business and Asian Institute of Management, Master in Masters in Business Administration (MBA) Commercial Business Group, Ayala Business Management (MBM 1989) DIRECTORSHIP IN LISTED COMPANIES Land Inc. Harvard University Graduate School of DIRECTOR Corporate Marketing and Sales, Ayala Design, Master Planning, Urban Housing Land Inc. Cebu Holdings, Inc. and Mixed-Use Development Program Cebu Property Ventures & Development DIRECTORSHIP IN LISTED COMPANIES Corporation OTHER DIRECTORSHIPS/ POSITIONS President, Cebu Holdings, Inc. PAST PRESIDENT PRESIDENT President, Cebu Property Ventures & Cebu Holdings, Inc. Serendra, Inc. Development Corporation Cebu Property Ventures & Development Varejo Corporation Vice President Visayas-Mindanao Group, Alabang Commercial Corporation Ayala Land, Inc. Corporation Accendo Commercial Corporation Chief perating ffcer of the isaas VICE PRESIDENT Aurora Properties Incorporated Mindanao Group, Ayala Land, Inc. Ayala Land, Inc. Ceci Realty Inc. OTHER DIRECTORSHIPS/ POSITIONS PAST CHIEF OPERATING OFFICER Vesta Property Holdings, Inc. Chairman and President Bonifacio Land Corporation Cebu Holdings, Inc. Taft Punta Engano Property, Inc. Berkshires Holdings, Inc. PRIOR GOVERNMENT POSITION HELD CHAIRMAN AND DIRECTOR Columbus Holdings, Inc Senior AVP/Corporate Controller, Amaia Southern Properties, Inc. Philippine National Construction CHAIRMAN VICE CHAIRMAN Ayala Land International Sales, Inc. Corporation Anvaya Cove Golf & Sports Club SouthPortal Properties, Inc., AFFILIATIONS Amicassa Process Solutions, Inc. PRESIDENT Past President, Cebu Chamber of Amaia Land Corporation Cebu Leisure Company, Inc. Commerce and Industry (2006-2008) Avida Land Corporation Vice President for Visayas, Philippine VICE PRESIDENT Alveo Land Corporation Chamber of Commerce and Industry Alviera Country Club, Inc. sian ffce Properties nc Ayalaland Commercial Reit, Inc. DIRECTOR AND PRESIDENT Emilio Lolito J. Tumbocon, Lagdigan Land Corporation CBP Theatre Management Company, Inc. Filipino, 58 Cagayan De Oro Gateway Corp. DIRECTOR Director of Cebu Holdings Inc. since BGSouth Properties, Inc. Cebu District Property Enterprise, Inc. April 29, 2008 BGNorth Properties, Inc. Accendo Commercial Corporation BGWest Properties, Inc. Westview Commercial Ventures Corporation EDUCATION Portico Land Corp. Adauge Commercial Corporation Directpower Services, Inc. B.S. in Civil Engineering (BSCE ’79), Cagayan de Oro Gateway Corporation Philippine Integrated Energy Solutions, Inc. University of the Philippines Bonifacio Estates Services Corp. Bonifacio Estate Services Corporation, Masters in Business Administration (MBA Bonifacio Gas, Inc. ‘85), University of the Philippines Amaia Southern Properties, Inc. Ceci Realty, Inc. Construction Executive Program (CEPS VICE CHAIRMAN Aurora Properties, Inc. ’87), Stanford University Bellavita Land Corporation Vesta Property Holdings, Inc. Senior Business Executive Program ala reenfeld Deelopment Corporation HLC Development Corporation BP’ niersit of sia the Pacifc DIRECTOR The Executive Program (TEP’97), Fort Bonifacio Development Corporation Darden Graduate School of Business Ayala Land Sales, Inc. Administration, University of Virginia

188 Let’s Build for Tomorrow's Generations International Studies (MBA), The School Chairman of the Board of Directors, of Arts and Sciences of the University of sia Pacifc eal state ssociation td DIRECTORSHIP IN LISTED COMPANIES Pennsylvania Philippine Chapter DIRECTOR Fellow, The Joseph H. Lauder Institute of Cebu Holdings, Inc. DIRECTORSHIP IN LISTED COMPANIES Management and International Studies Cebu Property Ventures & Development DIRECTOR Corporation Antonio S. Abacan, Jr., Cebu Holdings, Inc. GROUP HEAD OF THE VISAYAS- Filipino, 71 TREASURER MINDANAO GROUP AND THE HUMAN Director of Cebu Holdings Inc. since Cebu Holdings, Inc. RESOURCES & PUBLIC AFFAIRS GROUP November 1993 Cebu Property Ventures and Development Ayala Land, Inc. Corporation MANAGEMENT COMMITTEE MEMBER EDUCATION SENIOR VICE PRESIDENT, CHIEF FINANCE Ayala Land, Inc. B.S in Business Administration (BSBA, OFFICER, COMPLIANCE OFFICER ’62) Major in Banking and Finance, PAST SENIOR VICE PRESIDENT Ayala Land, Inc. Mapua Institute of Technology Ayala Land, Inc. MEMBER, MANAGEMENT COMMITTEE, Major in Accounting (’63), Far Eastern OTHER DIRECTORSHIPS/ POSITIONS University Ayala Land, Inc. Cebu Insular Hotel Co., Inc. Executive Program (’91), Graduate MANAGING DIRECTOR Cebu District Property Enterprise, Inc., school of Business at Stanford Accendo Commercial Corporation Ayala Corporation Doctorate Degree of Business Cagayan de Oro Gateway Corporation Administration (’10), Philippine Women’s Taft Punta Engaño Property, Inc. University (Honoris Causa) Alveo Land Corporation OTHER DIRECTORSHIPS/POSITIONS DIRECTORSHIP IN LISTED COMPANIES Amaia Land Corporation DIRECTOR Makati Development Corporation CHAIRMAN, PRESIDENT & CHIEF MDC Buildplus, Inc. EXECUTIVE OFFICER Cebu Holdings, Inc. MDC Equipment Solutions, Inc. OCLP Holdings, Inc. CURRENT SENIOR ADVISER MDC Subic, Inc. CHAIRMAN OF THE BOARD OF Metropolitan Bank and Trust Company Ecozone Power Management DIRECTORS MEMBER, ADVISORY BOARD Laguna Technopark, Inc. GT Capital Holdings Inc. Anvaya Cove Golf & Sports Club, Inc. Aprisa Business Process Solutions, Inc. OTHER DIRECTORSHIPS/POSITIONS Northgate Hotel Ventures, Inc. DIRECTOR AND VICE CHAIRMAN ALI Makati Hotel Property, Inc. CHAIRMAN CMPI Holdings, Inc. ALI Makati Hotel and Residences, Inc. Toyota Financial Services (Phils) Inc. CHAIRMAN AND PRESIDENT Aviana Development Corporation Sumisho Motor Finance AyalaLand Hotels and Resorts Corporation Tower One & Exchange Plaza Manila Medical Services Inc. (Manila Cebu Leisure Company, Inc. Condominium Corporation Doctors Hospital) Lagdigan Land Corporation DIRECTOR AND TREASURER Circa 2000 Homes, Inc. Corp Southcrest Hotel Ventures, Inc. Ayala Land International Sales, Inc. Manila- GT Medical Center Westview Commercial Ventures Corporation Ayala Land Sales, Inc. Manila Tytana Colleges Avencosouth Corporation Alveo Land Corporation VICE CHAIRMAN AND DIRECTOR Whiteknight Holdings, Inc. Laguna Technopark, Inc. sian ffce Properties nc Serendra, Inc. Panay Energy Development Corporation Adauge Commercial Corporation. Ayala Hotels, Inc. VICE CHAIRMAN AND EXECUTIVE AFFILIATIONS AyalaLand Hotels and Resorts Corporation DIRECTOR Member, Construction Industry Arbitration Philippine Integrated Energy Solutions, Inc. Global Business Power Corporation Commission of the Construction Industry DIRECTOR, TREASURER AND DIRECTOR Authority of the Philippines - Department COMPLIANCE OFFICER Cebu Energy Development Corporation of Trade & Industry Panay Power Corporation Certifed Proect anagement Professional Anvaya Golf and Sports Club Panay Power Holdings DIRECTOR OF ALABANG (PMP) of the Project Management Institute ARB Power Ventures, Inc. Commercial Corp. GBH Power Resources Inc. Amaia Land Corp. Global Formosa Power Holdings Inc. Avida Land Corp. Global Energy Supply Corporation Jaime E. Ysmael, North Triangle Depot Commercial Corp. Filipino, 53 Station Square East Commercial Corp. CURRENT CORPORATE SECRETARY AND Director of CHI since April 29, 2008 Ceci Realty, Inc. TREASURER Aurora Properties, Inc. LGU Guarantee Corp. EDUCATION Vesta Properties Holdings, Inc. MEMBER, ADVISORY BOARD Business Administration, Major PAST EXCOM MEMBER Metrobank Foundation in Accounting Ayala Hotels, Inc. Toyota, Manila Bay Corp. Summa Cum Laude, University of the East, Enjay Hotels, Inc. Toyota, Cubao Inc. and Certifed Public ccountant Masters in Business Administration, Major AFFILIATIONS MEMBER, BOARD OF TRUSTEES in Finance (MBA), The Wharton School Director sia Pacifc eal state Manila Tytana Colleges Masters in Business Administration in Association Ltd.

CHI 2014 Annual and Sustainability Report 189 DIRECTORS' PROFILE

PAST CHAIRMAN AFFILIATIONS PRIOR GOVERNMENT POSITIONS HELD Coordinating Council of Private Director for Banking, Finance and Economic Development Specialist, Educational Associations (COCPEA) Taxation, Philippine Chamber of National Economic and Development Commerce and Industry (three terms) Authority (NEDA) Member, Board of Governors, Makati PAST VICE PRESIDENT Commercial Estate Association (MACEA) ffce nternationale de l’nseignement Fr. Roderick C. Salazar, Jr. RECOGNITIONS Catholique (OIEC) Huwarang Anak ng Bulacan / Outstanding SVD, PAST MEMBER Filipino, 67 Bulakeno Achievers, Club Bulakeno, Inc. FILIPINO, Inc. (Filipino Institute for the Independent Director of Cebu Holdings Inc. (2011) Promotion of since April 29, 2005 Outstanding Filipino Award (TOFIL) for Integrity and Nobility) San Carlos Banking, Philippine Jaycee Senate, (2008) Community Development Foundation Outstanding Alumnus Award, Far Eastern EDUCATION Divine Word Educational Association University (2007) Divine Word Seminary, Master of (DWEA) CEO Excel, International Association of Philosophy (M.Phil.) Philippine Accrediting Association of Business Communicators (2006) MA/MS Mass Communications, University Schools, Colleges, and Universities Communications and Leadership Award, of Leicester (PAASCU) Toastmasters International (1999) Honorary Doctorate in the Humanities Private Educational Advisory Council Outstanding Alumnus, Mapua Institute (Hon. D. Hum, ’10), St Paul University, (PEAC) Honorary Doctorate in the Humanities Word Broadcasting Corporation (Hon. D. Hum, ‘11), Aquinas University, Ma. Theresa M. Javier, PAST MEMBER, BOARD OF TRUSTEES Filipino, 44 DIRECTORSHIP IN LISTED COMPANIES St. Paul University, Tuguegarao Director of Cebu Holdings, Inc. since Independent Director Cebu Holdings, Inc. St. Paul College, Pasig July 16, 2012 OTHER DIRECTORSHIPS/POSITIONS St. Paul College, Iloilo DIRECTOR St. Paul College, Surigao Visayas Cluster, Daughters of Charity EDUCATION SVD Mission Philippines (DC) Schools University of the Philippines Los Baños, CHAIRMAN, BOARD OF TRUSTEES RECOGNITION BS Economics (BSE ’90), Cum Laude St. Scholastica’s College, Westgrove Croce Pro cclesia et Pontifce Papal University of the Philippines Diliman, St. Agnes Academy, Legazpi City Award for his years of service to Catholic MS Economics (MSE ’95) MEMBER, BOARD OF TRUSTEES Education conferred August 14, 2010, in Harvard Business School, CFA Institute the Archdiocese of Cebu Investment Management Workshop (’06) St. Paul University, Dumaguete City, Center Harvard Business School, Advanced for Educational Measurement (CEM) Management Program (’10) PRESIDENT Enrique L. Benedicto, Filipino, 73 DIRECTORSHIP IN LISTED COMPANIES ffce nternationale de l’nseignement Independent Director of CHI since Catholique (OIEC) DIRECTOR April 25, 2003 Cebu Holdings, Inc. REGIONAL SECRETARY FOR ASIA Cebu Property Ventures and Development ffce nternationale de l’nseignement EDUCATION Corporation Catholique (OIEC) BS Commerce ('64), University of San Jose OTHER DIRECTORSHIPS/POSITIONS EXECUTIVE SECRETARY Recoletos DIRECTOR ffce of ducation and aith ormation of DIRECTORSHIP IN LISTED COMPANIES BPI Investment Management, Inc. the Federation of Asian Bishops Independent Director, Cebu Holdings, Inc. McCann World Group Philippines, Inc. Conferences (FABC-OEFF) Independent Director, SPC Power Corp. Fintec Holdings, Inc., PAST CHAIRMAN, BOARD OF TRUSTEES OTHER DIRECTORSHIPS/POSITIONS Roxas Land Corp. St. Jude Catholic School, Manila (1998- ALFM Peso Bond Fund CURRENT DIRECTOR June 2014) ALFM Dollar Bond Fund Enrison Land, Inc. St. Scholastica’s Academy in Tabunok, ALFM Euro Bond Fund Enrison Holdings, Inc. Talisay City, Cebu Divine Word University ALFM Money Market Fund Berbenwood Industries, Inc. (now Liceo del ALFM Growth Fund Benedict Ventures, Inc. Verbo Divino), Tacloban City Philippine Stock Index Fund Divine Word College of Tagbilaran (now CURRENT CHAIRMAN HEAD, ASSET MANAGEMENT AND TRUST Holy Name University) Mabuhay Filcement, Inc. GROUP PAST BOARD OF DIRECTOR CURRENT VICE-CHAIRMAN Bank of the Philippine Islands People’s Television Network (PTV4) Bernardo Benedicto Foundation, Inc. MEMBER, BOARD OF SENIOR ADVISERS First Metro Asset Management, Inc. (FAMI) RECOGNITIONS Fund Managers Association of the PAST PRESIDENT ffcer in the rder of eopold ’ b his Majesty Baudowin King of the Belgians Philippines University of San Carlos (four 3-year ffcer in the rder of eopold’ b is Trust ffcers ssociation of the Philippines terms: 1987-1990; 1990-1993; 2002- Majesty King Albert II of the Kingdom PAST PRESIDENT 2005; 2005-2008) Fund Managers Association of the Catholic Educational Association of the Philippines Philippines (CEAP) (1992-2008) Trust ffcers ssociation of the Philippines

190 Let’s Build for Tomorrow's Generations CORPORATE OFFICERS PROFILE

of Belgium, this is the highest award AFFILIATIONS Avida Sales Corp. that can be given to civilians, Belgian or Ayala Land Sales, Inc. Past ffcer ntegrated Bar of the non-Belgian Ayala Retirement Fund Holdings, Inc. Philippines, Cebu City Chapter Garbo sa Sugbu Awardee given by Buklod Bahayan Realty and Past President, Rotary Club of Cebu, the Province of Cebu for outstanding Development Corp. University District achievement in International Relations as North Triangle Depot Commercial Corp. Honorary Consul of Belgium OLC Development Corp. Enrique B. Manuel Jr., Southportal Properties, Inc. Cebu City Council Resolution, Most Filipino, 42 CURRENT DIRECTOR AND CORPORATE Outstanding Cebuano Citizen, February SECRETARY 18, 1991 EDUCATION AG Counselors Corporation BS Business Administration (BSBA, '94), Current Assistant Corporate Great Cebuano Award (conferred by) University of the Philippines, Secretary and Deputy General Counsel The Province of Cebu Sugbuanong Masters in Business Administration with a Ayala Land, Inc. Kumintaristang Nagpakabana (SUKNA) double major in Operations and Finance Current Assistant Corporate Secretary (MBA, 2000), Boston University Graduate Ayala Corporation Kapisanan Ng Mga Brodkaster Ng Pilipinas (KBP) School of Business Alinet.Com, Inc. CURRENT POSITIONS HELD Mandaue Chamber of Commerce and Chief inance ffcer Chief Compliance Nimfa Ambrosia L. Perez- Industry, Inc. ffcer Chief isk ffcer and Paras, Filipino, 49 Member, Management Committee Assistant Corporate Secretary of CHI since Entrepreneur of the Year Award, Cebu February 27, 2014 Chamber of Commerce and Industry on its Cebu Holdings, Inc. (March 2011-Current) Cebu Property Ventures and Development Centennial +10 Anniversary EDUCATION Corporation Bachelor of Law ('90), Manuel L. Quezon University of San Jose-Recoletos, Most School of Law Current Assistant Vice President and Group Outstanding Alumnus’ Award Chief inance ffcer ala and nc CURRENT ASSISTANT CORPORATE Visayas and Mindanao Group SECRETARY Pampio A. Abarintos, CURRENT DIRECTOR Cebu Holdings, Inc. Filipino, 71 Cagayan De Oro Gateway Corporation Cebu Property Ventures and Development Independent director of Cebu Holdings Inc. Corporation CURRENT TREASURER (CHI) since April 8, 2014 Integrated Micro-Electronics Inc. Accendo Commercial Corporation Philippine Integrated Energy Solutions, Inc. Solinea, Inc. EDUCATION CURRENT CORPORATE SECRETARY PAST SENIOR MANAGER Bachelor of Arts, (BA '65) Cum Laude, Adauge Commercial Corporation Risk Management Group, Ernst & Young University of San Jose Recoletos, Laguna Technopark, Inc. LLP, New Yorkt Bachelor of Laws ('69), University of the Ecozone Power Management, Inc. Visayas, Northbeacon Commercial Corporation Masters Degree in Business Administration June Vee D. Monteclaro- Nuevocentro, Inc. (MBA, '81), Southwestern University Navarro, CURRENT SENIOR COUNSEL DIRECTORSHIP IN LISTED COMPANIES Filipino, 43 Ayala Group Legal Corporate Secretary of Cebu Holdings, Inc. Independent Director, Cebu Holdings, Inc. PRIOR GOVERNMENT POSITION HELD since February 27, 2014 OTHER DIRECTORSHIPS/POSITIONS State Counsel, Department of Justice past work at the Regional Trial Courts of Makati Current Member, Management Committee EDUCATION (MANCOM), Current Chairman, and Quezon City Bachelor of Laws (L.L.B. ’97), University Committee on Discipline Current Arbitrator PAST LEGAL COUNSEL of the Philippines Alta Vista Golf and Country Club, Cebu Coca-Cola Bottlers Philippines, Inc. City CURRENT CORPORATE SECRETARY RFM Corporation PRIOR GOVERNMENT POSITIONS HELD Cebu Holdings, Inc. Roasters Philippines, Inc. Cebu Property Ventures and Development Executive Justice, Court of Appeals, Corporation Visayas Station (2004-2013) Alabang Commercial Corp. Judge, Regional Trial Court in Negros Alveo Land Corp. Oriental and in Cebu (1987-2004) Asterion Technopod Inc. Current Member, Regional Advisory Avencosouth Corp. Council of the Philippine National Avida Land Corp. Police (PNP) Region 7 RECOGNITIONS Presidential Award, Court of Appeals, given in Manila in 2005, for speedy case disposal Retired with zero backlog of cases Awardee for the Judicial Excellence, Most Outstanding Judge of the Philippines (2003)

CHI 2014 Annual and Sustainability Report 191 Data Annexes

A. Environment A.1 Year-on-Year Comparative Data

Recyled Rebars (in m3) 2013 2014

Park Point Residences - 24.0

Solinea Tower 1,206.5 966.5

Avida Towers Riala - 20.8

ACC Corporate Center - 561.4

Sedona Parc 20.0 29.0

eBloc Tower 3 52.9 162.0

TOTAL (G4-EN2) 1,279.4 1,763.7

Non-hazardous Waste Generated (in tons) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 3,185.6 3,984.3

The Walk 12.4 12.8

TOTAL FOR RETAIL 3,197.9 3,997.1

eBloc Tower 1 89.9 99.5

eBloc Tower 2 98.3 154.8

TOTAL FOR OFFICE 188.3 254.3

Cebu Business Park 562.1 567.7

Cebu I.T. Park 106.7 118.4

TOTAL FOR ESTATES 668.8 686.1

TOTAL FOR OPERATIONAL PROPERTIES 4,055.0 4,937.4

COMPLETED PROJECTS

1016 Residences 546.9 306.2

Sedona Parc 658.2 1,261.9

TOTAL FOR RESIDENTIAL 1,205.1 1,568.1

eBLOC TOWER 3 (OFFICE) 2,107.3 1,340.7

TOTAL FOR COMPLETED PROJECTS 3,312.4 2,908.8

PROJECTS UNDER CONSTRUCTION

Solinea Tower (Residential) 1,206.0 1,412.7

ACC Corporate Center (Ofce) 10,807.5 5,521.0

TOTAL FOR PROJECTS UNDER CONSTRUCTION 12,013.5 6,933.7

TOTAL1 (G4-EN23) 19,380.9 14,780.0 1 Covers all compostable, recyclables and residuals collected from the Company’s properties and activities

192 Let’s Build for Tomorrow's Generations Waste Collected by Brgy. Luz Collectors (in kilos) 2013 2014

Residual 2,214,024 3,030,910

Recyclable 305,684 405,313

Biodegradable 122,544 1,300

TOTAL (G-EN23) 2,642,252 3,437,523

Recyclables Collected (in kilos) 2013 2014

Plastic Gallons 5,846 6,632

Assorted Plastic 20,759 31,175

Mineral Water Bottles 18,171 21,441

Cups 25,348 25,472

Straw 8,488 5,138

Tin Cans 20,569 30,945

Glass 34,289 35,454

Aluminum Cans 3,700 5,002

Paper 2,460 4,526

Chip Board 9,854 1,636

Mixed Waste 30,769 54,650

Dry Cartons 102,100 140,559

Wet Cartons 17,708 11,218

Newspapers 4,784 797

Metal Sheets 839 1,072

Rejected Plastic - 447

Poly Bag - 16,991

Poly Bag 2 - 12,161

TOTAL (G4-EN23) 305,684 405,313

Busted Bulbs (in kg) 2013 2014

1016 Residences 100 186

Sedona Parc 13 0

Park Point Residences 0 70 eBloc Tower 3 0 0

TOTAL (GE4-EN23) 113 256

CHI 2014 Annual and Sustainability Report 193 Total Energy Consumption (in GJ) 2013 2014

BY PROPERTY STATUS AND TYPE OF ENERGY

OPERATIONAL PROPERTIES

Retail

Direct Energy 1,747.4 3,911.6

Indirect Energy2 138,688.1 150,643.0

TOTAL 140,435.5 154,554.6

Ofce

Direct Energy 638.1 297.1

Indirect Energy2 45,378.1 51,504.1

TOTAL 46,016.2 51,801.1

Estates

Indirect Energy 2,126.0 1,826.3

TOTAL 2,126.0 1,826.3

Corporate Ofce

Indirect Energy 739.2 1,061.0

TOTAL 739.2 1,061.0

TOTAL FOR OPERATIONAL PROPERTIES 189,316.9 209,243.0

COMPLETED PROJECTS

Residential

Direct Energy 264.2 338.9

Indirect Energy 1,438.1 3,832.1

TOTAL 1,702.3 4,171.1

Ofce

Direct Energy 110.3 70.7

Indirect Energy 5.5 4.0

TOTAL 115.7 74.7

TOTAL FOR COMPLETED PROJECTS 1,818.0 4,245.8

PROJECTS UNDER CONSTRUCTION

Residential

Direct Energy 5,530.7 2,645.5

Indirect Energy 36.3 665.2

TOTAL 5,567.0 3,310.7

194 Let’s Build for Tomorrow's Generations Total Energy Consumption (in GJ) 2013 2014

Ofce

Direct Energy 39.1 112.8

Indirect Energy 381.1 465.2

TOTAL 420.2 578.0

TOTAL FOR PROJECTS UNDER CONSTRUCTION 5,987.1 3,888.6

TOTAL (G4-EN3, G4-EN4) 197,122.0 217,377.5 2 Includes electricity consumption from common areas, retail mall merchants and ofce building locators

Direct Energy Consumption - Internal (in GJ) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 1,652.9 3,890.2

The Walk 94.5 21.4

TOTAL FOR RETAIL 1,747.4 3,911.6

eBloc Tower 1 386.0 183.7

eBloc Tower 2 252.0 113.4

TOTAL FOR OFFICE 638.1 297.1

TOTAL FOR OPERATIONAL PROPERTIES (G4-EN3) 2,385.5 4,208.7

Indirect Energy Consumption - Internal (in GJ) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 42,145.2 41,387.4

The Walk 501.6 534.0

TOTAL FOR RETAIL 42,646.8 41,921.4

eBloc Tower 1 3,646.3 2,981.4

eBloc Tower 2 3,962.8 4,987.2

TOTAL FOR OFFICE 7,609.1 7,968.6

Cebu Business Park 1,341.5 1,249.6

Cebu I.T. Park 784.5 576.7

TOTAL FOR ESTATES 2,126.0 1,826.3

CHI Ofce 477.4 645.6

Mall Admin Ofce 261.8 415.4

TOTAL FOR CORPORATE OFFICES 739.2 1,061.0

TOTAL FOR OPERATIONAL PROPERTIES3 (G4-EN3) 53,121.1 52,777.3

3 Electricity consumption derived from common areas

CHI 2014 Annual and Sustainability Report 195 Direct Energy Consumption - External (in GJ) 2013 2014

COMPLETED PROJECTS

1016 Residences 61.6 66.7

Avida Towers Cebu 121.8 186.3

Sedona Parc 80.8 85.9

TOTAL FOR RESIDENTIAL 264.2 338.9

eBLOC TOWER 3 (OFFICE) 110.3 70.7

TOTAL FOR COMPLETED PROJECTS 374.5 409.6

PROJECTS UNDER CONSTRUCTION

Solinea Tower 599.7 423.3

Avida Towers Riala 4,931.0 2,222.2

TOTAL FOR RESIDENTIAL 5,530.7 2,645.5

ACC CORPORATE CENTER (OFFICE) 39.1 112.8

TOTAL FOR PROJECTS UNDER CONSTRUCTION 5,569.8 2,758.3

TOTAL (G4-EN4) 5,944.3 3,167.9

Indirect Energy Consumption - External (in GJ) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 91,174.0 103,906.1

The Walk 4,867.3 4,815.5

TOTAL FOR RETAIL 96,041.3 108,721.6

eBloc Tower 1 21,605.0 21,357.2

eBloc Tower 2 16,164.1 22,178.2

TOTAL FOR OFFICE 37,769.0 43,535.5

TOTAL4 (G4-EN4) 133,810.3 152,257.1

COMPLETED PROJECTS

1016 Residences 792.7 1,138.8

Avida Towers Cebu 169.0 2,215.2

Sedona Parc 476.4 478.2

TOTAL FOR RESIDENTIAL 1,438.1 3,832.1

eBLOC TOWER 3 (OFFICE) 5.5 4.0

TOTAL FOR COMPLETED PROJECTS 1,443.5 3,836.2

PROJECTS UNDER CONSTRUCTION

Solinea Tower (Residential) 36.3 665.2

ACC Corporate Center (Ofce) 381.1 465.2

TOTAL FOR PROJECTS UNDER CONSTRUCTION 417.4 1,130.4

TOTAL (G4-EN4) 54,982.0 57,743.9 4 Electricity consumption by retail mall merchants and ofce building locators 196 Let’s Build for Tomorrow's Generations Energy Intensities (G4-EN5, CRE1) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 1.13 1.11

The Walk 1.07 1.05

AVERAGE INTENSITY FOR RETAIL 1.10 1.08

eBloc Tower 1 0.99 0.95

eBloc Tower 2 0.59 0.78

AVERAGE INTENSITY FOR OFFICE 0.79 0.86

Cebu Business Park 0.007 0.006

Cebu I.T. Park 0.007 0.005

AVERAGE INTENSITY FOR ESTATE 0.0069 0.0058

CHI Ofce 0.7 1.0

Mall Admin Ofce 0.3 0.5

AVERAGE INTENSITY FOR CORPORATE OFFICE 0.60 0.67 5 Calculated as total energy consumed per square meter of gross ﬂoor area

Reduction in Electricity Consumption (in kWh) 2013 2014

Ayala Center Cebu - 210,506.0

eBloc Tower 1 - 184,700.2

Cebu Business Park - 25,510.8

Cebu I.T. Park - 57,734.0

TOTAL (G4-EN6) - 478,450.9

7 Total GHG Emissions (in tonnes CO2e) 2013 2014

BY PROPERTY STATUS AND TYPE OF ENERGY

OPERATIONAL PROPERTIES

Retail

Scope 1 121.5 272.0

Scope 2 7,145.7 7,024.2

Scope 3 16,09.2 18,216.9

TOTAL 23,359.5 25,513.1

Ofce

Scope 1 44.4 20.7

Scope 2 1,274.9 1,335.2

Scope 3 6,328.4 7,294.6

TOTAL 7,647.7 8,650.5

CHI 2014 Annual and Sustainability Report 197 7 Total GHG Emissions (in tonnes CO2e) 2013 2014

Estates

Scope 2 356.2 306.0

TOTAL 356.2 306.0

Corporate Ofce

Scope 2 123.9 177.8

TOTAL 123.9 177.8

TOTAL FOR OPERATIONAL PROPERTIES 31,487.3 34,647.3

SCOPE 3: COMPLETED PROJECTS

Residential 259.3 665.6

Ofce 8.6 5.6

TOTAL FOR COMPLETED PROJECTS 267.9 267.9

SCOPE 3: PROJECTS UNDER CONSTRUCTION

Residential 389.7 295.0

Ofce 66.6 85.8

TOTAL FOR PROJECTS UNDER CONSTRUCTION 456.3 380.7

TOTAL (G4-EN15, G4-EN16, G4-EN17) 32,211.4 35,699.2

7 Gases reported include carbon dioxide (CO2 ), methane (CH4 ), and nitrous oxide (N2O) with global warming potential of 1, 21 and 310, respectively. Emission factor used is 0.6032. Assumption: Electricity is generated from diesel thermal power plants. There are no traded GHGs.

7 GHG Emissions per Property (in tonnes CO2e) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu

Scope 1 114.9 270.5

Scope 2 7,061.7 6,934.7

Scope 3 15,276.7 17,410.0

The Walk

Scope 1 6.6 1.5

Scope 2 84.0 89.5

Scope 3 815.5 806.9

TOTAL FOR RETAIL 23,359.5 25,513.1

198 Let’s Build for Tomorrow's Generations 7 GHG Emissions per Property (in tonnes CO2e) 2013 2014 eBloc Tower 1

Scope 1 26.8 12.77

Scope 2 611.0 499.5

Scope 3 3,620.0 3,578.5 eBloc Tower 2

Scope 1 17.53 7.89

Scope 2 664.0 835.6

Scope 3 2,708.4 3,716.1

TOTAL FOR OFFICE 7,647.7 8,650.5

Cebu Business Park

Scope 2 224.8 209.4

Cebu I.T. Park

Scope 2 131.4 96.6

TOTAL FOR ESTATES 356.2 306.0

CHI Ofce

Scope 2 80.0 108.2

Mall Admin Ofce

Scope 2 43.9 69.6

TOTAL FOR CORPORATE OFFICES 123.9 177.8

TOTAL FOR OPERATIONAL PROPERTIES 31, 487.3 34,647.3

SCOPE 3: COMPLETED PROJECTS

1016 Residences 137.1 195.4

Avida Towers 36.7 384.1

Sedona Parc 85.4 86.1

TOTAL FOR RESIDENTIAL 259.3 665.6 eBloc Tower 3 (Ofce) 8.6 5.6

TOTAL 267.9 671.2

CHI 2014 Annual and Sustainability Report 199 7 GHG Emissions per Property (in tonnes CO2e) 2013 2014

SCOPE 3: PROJECTS UNDER CONSTRUCTION

Solinea Tower 1 47.7 140.9

Avida Towers Riala 342.1 154.2

TOTAL FOR RESIDENTIAL 389.7 295.0

ACC Corporate Center (Ofce) 66.6 85.8

TOTAL FOR PROJECTS UNDER CONSTRUCTION 456.3 380.7

TOTAL (G4-EN15, G4-EN16, G4-EN17) 32,211.4 35,699.2

GHG Intensities7 (G4-EN18, CRE3) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 0.19 0.18

The Walk 0.18 0.18

AVERAGE INTENSITY FOR RETAIL 0.18 0.18

eBloc Tower 1 0.16 0.16

eBloc Tower 2 0.10 0.13

AVERAGE INTENSITY FOR OFFICE 0.13 0.14

Cebu Business Park 0.0012 0.0011

Cebu I.T. Park 0.0011 0.0008

AVERAGE INTENSITY FOR ESTATE 0.00116 0.00097

CHI Ofce 0.12 0.16

Mall Admin Ofce 0.05 0.09

AVERAGE INTENSITY FOR CORPORATE OFFICE 0.09 0.12

OVERALL AVERAGE INTENSITY 0.10 0.11 8 Calculated as total GHG emissions per square meter of gross ﬂoor area

6, 9 GHG Emissions Reduction Achieved (in T CO2e) 2013 2014

Ayala Center Cebu - 127.0

The Walk - 13.8

eBloc Tower 1 - 167.0

eBloc Tower 2 - 9.6

Cebu Business Park - 15.4

Cebu I.T. Park - 34.8

TOTAL (G4-EN19) - 367.58 9 Includes Scope 1-3 reductions, where applicable

200 Let’s Build for Tomorrow's Generations Water Consumption (in m3) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 378,206.5 388,033.0

The Walk 15,588.5 22,003.9

TOTAL FOR RETAIL10 393,795.0 410,036.9

eBloc Tower 1 62,551.4 49,361.6

eBloc Tower 2 39,948.0 57,335.0

TOTAL FOR OFFICE10 102,499.4 106,696.6

Cebu Business Park 1,128.7 3,632.0

Cebu I.T. Park 643.5 4,249.3

TOTAL FOR ESTATES 1,772.2 7,881.3

CHI Ofce 418.0 269.0

TOTAL FOR CORPORATE OFFICES 418.0 269.0

TOTAL FOR OPERATIONAL PROPERTIES 498,484.6 524,883.8

COMPLETED PROJECTS

1016 Residences 6,197.0 7,687.0

Avida Towers Cebu 9,080.0 19,814.0

Sedona Parc 9,549.0 7,139.6

TOTAL FOR RESIDENTIAL 24,826.0 34,640.6

eBloc Tower 3 (Ofce) 147.5 27,458.9

TOTAL FOR COMPLETED PROJECTS 24,973.5 62,099.5

PROJECTS UNDER CONSTRUCTION

Park Point Residences 1,576.8 4,279.0

Solinea Tower 1,382.7 3,856.4

Avida Towers Riala 1,171.0 1,504.7

TOTAL FOR RESIDENTIAL 4,130.5 9,640.1

ACC Corporate Center (Ofce) 4,773.3 6,902.2

TOTAL FOR PROJECTS UNDER CONSTRUCTION 8,903.8 16,542.3

TOTAL (G4-EN8) 532,361.9 603,525.6 10 Includes water consumption by tenants

CHI 2014 Annual and Sustainability Report 201 Water Intensities11 (CRE2) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 3.17 2.87

The Walk 3.05 4.31

AVERAGE INTENSITY FOR RETAIL 3.11 3.59

eBloc Tower 1 2.41 1.90

eBloc Tower 2 1.15 1.65

AVERAGE INTENSITY FOR OFFICE 1.78 1.78

Cebu Business Park 0.006 0.019

Cebu I.T. Park 0.006 0.037

AVERAGE INTENSITY FOR ESTATE 0.006 0.028

CHI Ofce 0.62 0.40

OVERALL AVERAGE INTENSITY 1.49 1.60 11 Calculated as total water consumed per gross ﬂoor area

Reduction in Water Consumption6, 12 (in m3) 2013 2014

Ayala Center Cebu - 45,811.5

The Walk - 149.0

OVERALL AVERAGE INTENSITY - 45,960.5 11 Water use reduction from common areas only

A.2 Project Lifecycle Data for Completed Projects

Cement (in bags)

1016 Residences 191,190.0

Avida Towers Cebu 12,626.0

Sedona Parc 590.0

eBloc Tower 3 179,952.0

TOTAL (G4-EN1) 384,358.0

202 Let’s Build for Tomorrow's Generations Sand and gravel (in bags)

1016 Residences 1,960

Avida Towers Cebu 16,136

Sedona Parc 95,998 eBloc Tower 3 2,352

TOTAL (G4-EN1) 116,446

Wood (in m3)

1016 Residences 341

Sedona Parc 1,045 eBloc Tower 3 56

TOTAL (G4-EN1) 1,442

Rebars (in kilograms)

1016 Residences 19,127

Avida Towers Cebu 15,466

Sedona Parc 165 eBloc Tower 3 13,015

TOTAL (G4-EN1) 47,773

Materials Intensity13

Cement

1016 Residences 7.38

Avida Towers Cebu 0.19

Sedona Parc 0.04

AVERAGE FOR RESIDENTIAL 2.54 eBloc Tower 3 6.01

CHI 2014 Annual and Sustainability Report 203 Materials Intensity13

Sand and gravel

1016 Residences 0.08

Avida Towers Cebu 0.25

Sedona Parc 6.59

AVERAGE FOR RESIDENTIAL 2.30

eBloc Tower 3 0.08

Wood

1016 Residences 0.01

Sedona Parc 0.07

AVERAGE FOR RESIDENTIAL 0.04

eBloc Tower 3 0.002

Rebars

1016 Residences 0.74

Avida Towers Cebu 0.24

Sedona Parc 0.01

AVERAGE FOR RESIDENTIAL 0.33

eBloc Tower 3 0.43 13 Calculated as total materials used per constructed ﬂoor area

Energy consumption (in GJ)

Direct Energy

1016 Residences 191.2

Avida Towers Cebu 544.4

Sedona Parc 840.0

TOTAL FOR RESIDENTIAL 1,575.7

eBloc Tower 3 157.9

TOTAL DIRECT ENERGY 1,733.6

Indirect Energy

1016 Residences 2,739.6

Avida Towers Cebu 2,941.3

Sedona Parc 1,388.2

TOTAL FOR RESIDENTIAL 7,069.2

eBloc Tower 3 11.9

TOTAL INDIRECT ENERGY 7,081.1

TOTAL (G4-EN4) 8,814.7

204 Let’s Build for Tomorrow's Generations Energy Intensity14 (G4-EN5)

1016 Residences 0.11

Avida Towers Cebu 0.05

Sedona Parc 0.15

AVERAGE FOR RESIDENTIAL 0.11

eBloc Tower 3 0.01 14 Calculated as total energy consumed per square meter of constructed ﬂoor area

7 GHG Emissions (in tonnes CO2e)

Scope 1

1016 Residences 13.3

Avida Towers Cebu 37.8

Sedona Parc 58.3

TOTAL FOR RESIDENTIAL 109.3

eBloc Tower 3 11.0

TOTAL SCOPE 1 EMISSIONS 120.3

Scope 2

1016 Residences 459.0

Avida Towers Cebu 492.8

Sedona Parc 232.6

TOTAL FOR RESIDENTIAL 1,184.5

eBloc Tower 3 2.0

TOTAL SCOPE 2 EMISSIONS 1,186.5

TOTAL EMISSIONS (G4-EN15, G4-EN16, CRE4) 1,306.7

Scope 3

1016 Residences 472.3

Avida Towers 530.6

Sedona Parc 290.9

TOTAL FOR RESIDENTIAL 1,293.8

eBloc Tower 3 13.0

TOTAL EMISSIONS (G4-EN17) 1,306.7

CHI 2014 Annual and Sustainability Report 205 GHG Intensity15 (G4-EN18)

1016 Residences 0.11

Avida Towers Cebu 0.05

Sedona Parc 0.15

AVERAGE FOR RESIDENTIAL 0.11

eBloc Tower 3 0.01 13 Calculated as total emissions per square meter of constructed ﬂoor area

Water Consumption (in m3)

1016 Residences 24,090.1

Avida Towers Cebu 29,417.1

Sedona Parc 31,827.3

TOTAL FOR RESIDENTIAL 85,334.5

eBloc Tower 3 27,458.9

TOTAL (G4-EN8) 112,793.4

Water Intensity16 (CRE2)

1016 Residences 0.93

Avida Towers Cebu 0.45

Sedona Parc 2.19

AVERAGE FOR RESIDENTIAL 3.56

eBloc Tower 3 0.92 13 Calculated as total water consumed per square meter of constructed ﬂoor area

B. SOCIAL B.1 Human Capital

Employee Hires by Age Group (G4-LA1) 2013 2014

Below 30 years old 8 9

30-40 years old 2 2

TOTAL17 10 11

HIRING RATE 12% 13% 16 Data includes 3 project hires absorbed in 2014

206 Let’s Build for Tomorrow's Generations Employee Turnover by Age Group (G4-LA1) 2013 2014

Below 30 years old 5 2

30-40 years old 1 4

TOTAL 6 6

TURNOVER RATE 7% 7%

External Hires and Internal Movements 2013 2014

External Hires18 2 1

Internal Movements19 5 13

TOTAL MOVEMENTS 7 14 18 Data includes SPs/Ofcers only 19 Data includes promotions and movements of SPs/Ofcers

Average Competency-based Training Hours 2013 2014 per Employee Category (G4-LA9)

Probationary/Regular MTs 32.53 33.48

Supervisors 27.22 35.47

Associates 23.03 50.83

AVERAGE FOR THE YEAR 27.59 39.92

Work Illnesses (G4-LA6) 2013 2014

Fever 16 35

Flu 38 39

Headache - 40

Stomach ache - 21

Employee Distribution by Gender (G4-LA10) 2013 2014

Male 23 22

Female 56 62

TOTAL20 79 84

Employee Distribution by Employee Category (G4-LA10) 2013 2014

Probationary/Regular MTs 20 21

Supervisors 27 30

Associates 32 33

TOTAL20 79 84 18 Data excludes project hires

CHI 2014 Annual and Sustainability Report 207 Composition of Governance Body and Breakdown of Employees by 2013 2014 Gender (G4-LA22)

MALE

Board of Directors 8 8

Management Team 8 8

Supervisors 6 6

Associates 8 8

TOTAL 30 30

FEMALE

Board of Directors 1 1

Management Team 12 13

Supervisors 21 24

Associates 24 25

TOTAL 58 63

Corporate Knights Capital’s Key Performance Indicators 2013 2014

Lost time injury rate21 0% 0%

Number of fatalities 0 0

Percentage of Women on Board of Directors 11% 11%

Percentage of Women in Executive Management 60% 62% 21 Calculated as number of lost time incidents (per 200,000 employee hours)

B.2 Customer Satisfaction

Customer Satisfaction Survey Ratings (G4-PR5) 2013 2014

Internal Customer21 8.7 8.7

Ayala Center Cebu Shoppers 8.6 9.1

Ayala Center Cebu Merchants 7.6 8.1

Cebu I.T. Park Locators23 7.8 8.3

22 Data presented is the average of results from 16 divisions/departments surveyed. 23 2014 data is the average of results from APMC and Ofce Leasing surveys

208 Let’s Build for Tomorrow's Generations C. ECONOMIC

Economic Value Generated and Distributed 2013 2014 (in thousand pesos)

Economic Value Generated: Revenue 2,169,510 2,293,580

Economic Value Distributed:

Operating Cost 1,010,592 970,474

Employees’ Wages and Beneﬁts 135,831 142,867

Payements to Providers of Capital 269,933 416,862

Payments to Government 236,039 221,070

Community Investments 15,970 11,430

TOTAL ECONOMIC VALUE DISTRIBUTED 1,668,365 1,762,703

ECONOMIC VALUE RETAINED (G4-EC1) 501,145 530,877

Breakdown of Community Investments 2013 2014 (in thousand of pesos)

Donations 2,552 1,797

Direct Cost of Social Programs:

Education 1,740 489

Entrepreneurship 1,564 386

Environment (G4-EN31) 811 514

Tourism, Arts, Culture and Religion 5,227 3,542

Health and Wellness 363 767

Relationship Building 1,018 2,060

Relief Operations 2,696 434

Sustainability - 921

Advocacy for Children - 520

TOTAL DIRECT COSTS 13,418 9,633

TOTAL (G4-EC1) 15,970 11,430

CHI 2014 Annual and Sustainability Report 209 GRI CONTENT INDEX

GENERAL STANDARD DISCLOSURES

General Standard Section or Sub-section, Page/s External Assurance Disclosures STRATEGY AND ANALYSIS Message from the Chairman and the President, 12-19; G4-1 not assured Message from the Chief Finance Ofcer, 22-29 Message from the Chief Finance Ofcer, 22-29; Enterprise-wide Risk Management, 92- G4-2 not assured 93; Our Sustainability Performance, 108, 112 ORGANIZATIONAL PROFILE G4-3 About This Report, 6 not assured G4-4 Our Business, 36-65 not assured G4-5 About This Report, 6 not assured G4-6 About This Report, 6 not assured G4-7 Ownership Structure not assured G4-8 Our Business, 36-65; Our 2014 Stakeholder Engagement, 115-116 not assured Message from the Chief Finance Ofcer, 24-27; Our Business, 36-65; G4-9 not assured Employee Profile by Employee Category, 156 Employee Profile by Employee Category, 158; Total Workforce at Cebu Park District, 181; G4-10 not assured Human Capital Data Annex, 206-207 G4-11 Legal and Compliance, 186-187 not assured G4-12 Supply Chain, 182-183 not assured G4-13 Our Business, 36-65. No significant changes in supply chain. not assured G4-14 Enterprise-wide Risk Management, 92-93; Sustainability Policy, 107 not assured G4-15 About This Report, 7 not assured G4-16 Membership in Organizations, 34 not assured IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES G4-17 Ownership Structure, 34 not assured G4-18 Materiality Process, 108-109, 111 not assured G4-19 Table of Material Aspects, 111 not assured G4-20 Table of Material Aspects, 111 not assured G4-21 Table of Material Aspects, 111 not assured G4-22 About This Report, 6 not assured G4-23 Table of Material Aspects, 111 not assured STAKEHOLDER ENGAGEMENT G4-24 Our 2014 Stakeholder Engagement, 113-117 not assured Stakeholders were chosen based on their level of influence and interest in our G4-25 not assured organization as well as the extent of our impact of operations on them. G4-26 Our 2014 Stakeholder Engagement, 113-117 not assured G4-27 Our 2014 Stakeholder Engagement, 113-117 not assured REPORT PROFILE G4-28 About This Report, 6 not assured G4-29 Our latest report covers our 2013 performance which was published in 2014. not assured G4-30 About This Report, 6 not assured G4-31 About This Report, 7 not assured G4-32 About This Report, 7; GRI Content Index, 210-213 not assured About This Report, 7; No external assurance for the Sustainability Report sections was G4-33 not assured conducted. GOVERNANCE G4-34 Governance Structure, 70; Key Roles and Responsibilities, 72, 76 not assured G4-35 Key Roles and Responsibilities, 72, 76 not assured G4-36 Key Roles and Responsibilities, 72, 76 not assured G4-37 Board Committees and Functions, 78 not assured G4-38 Composition of the Board, 73 not assured

G4-39 Mr. Bernard Vincent O. Dy, in his sole executive capacity, serves as Chairman of the Board. not assured

210 Let’s Build for Tomorrow's Generations GRI CONTENT INDEX

GENERAL STANDARD DISCLOSURES

G4-40 Composition, 69; Independent Directors, 71; Board Committees and Functions, 78 not assured

G4-41 Code of Ethical Behavior, 95; Financial Reporting, 101 not assured G4-42 Key Roles and Responsibilities, 72, 76 not assured G4-43 Records of Trainings - Board and Management Levels, 86-87 not assured G4-44 Board Performance, 76 not assured G4-45 Key Roles and Responsibilities, 72, 76 not assured G4-46 Key Roles and Responsibilities, 72, 76; Board Committees and Functions, 78 not assured G4-47 Board Committees and Functions, 78 not assured G4-48 Board Committees and Functions, 78 not assured G4-51 Director and Senior Executive Compensation, 80-81 not assured G4-52 Director and Senior Executive Compensation, 80-81 not assured G4-53 This is not applicable. not assured ETHICS AND INTEGRITY G4-56 Core Values and Mission and Vision Statement, 33; Code of Ethical Behavior, 96 not assured G4-57 Whistle-blowing Policy, 96 not assured G4-58 Whistle-blowing Policy, 96 not assured

SPECIFIC STANDARD DISCLOSURES

Reason for External Material Aspects DMA and Indicators - Page/s Omissions Assurance ECONOMIC • G4-DMA – 178-179 not applicable not assured Economic Performance • G4-EC1 – 171, 178, 180, 209 • G4-EC2 – 92-93 • G4-DMA – 178-179 not applicable not assured Indirect Economic Impacts • G4-EC7 – 178-179 • G4-EC8 – 180 • G4-DMA – 182-183 not applicable not assured Procurement Practices • G4-EC9 – 183

ENVIRONMENT • G4-DMA – 120-122, 129 Materials • G4-EN1 – 123, 203 not applicable not assured • G4-EN2 – 124, 192 • G4-DMA – 120-121, 128-129 • G4-EN3 – 130, 132, 194-196, 204-205 Energy • G4-EN4 – 130, 132-133, 194-196 not applicable not assured • G4-EN5 – 134, 197, 205 • G4-EN6 – 131, 197 • G4-DMA – 120-121, 129, 139 Water not applicable not assured • G4-EN8 – 141-144, 201-202, 206 • G4-DMA - 120-121, 130, 145 Biodiversity not applicable not assured • G4-EN12 - 145

• G4-DMA – 141-144, 130, 135-136 • G4-EN15 – 136-138, 140, 197-200, 205 • G4-EN16 – 136-138, 140, 197-200, 205 Emissions not applicable not assured • G4-EN17 – 136-138, 198-200 • G4-EN18 – 139-140, 201, 206 • G4-EN19 - 137, 201

• G4-DMA – 120-121, 124, 125, 131 Efuents and Waste not applicable not assured • G4-EN23 – 125, 192-193

• G4-DMA – 120, 186 Compliance not applicable not assured • G4-EN29 – 186

• G4-DMA – 120 Overall not applicable not assured • G4-EN31 – 171, 209 Supplier Environmental • G4-DMA – 182 not applicable not assured Assessment • G4-EN32 - 182-183

CHI 2014 Annual and Sustainability Report 211 GRI CONTENT INDEX

SPECIFIC STANDARD DISCLOSURES

Reason for External Material Aspects DMA and Indicators - Page/s Omissions Assurance

Environmental Grievance • G4-DMA – 186 not applicable not assured Mechanisms • G4-EN34 - 186 SOCIAL: LABOR PRACTICES AND DECENT WORK • G4-DMA - 148-153 • G4-LA1 – 157, 206-207 • G4-LA2 - In addition to statutory beneﬁts are medical Employment not applicable not assured and clothing allowances, vacation, emergency and sick leaves, and coverage under a group life, health insurance and a retirement program. • G4-DMA – 148-153 • G4-LA4 - Employees are given 30 days or 4 weeks Labor/Management Relations not applicable not assured notice prior to the implementation of signiﬁcant operational changes. • G4-DMA – 148-153 Occupational Health and Safety not applicable not assured • G4-LA6 - 158-159 • G4-DMA - Human Capital, 148-153 • G4-LA9 – 151 • G4-LA11 - Year-end performance reviews are done for all employees of the Company. Probationary employees Training and Education receive their review at least a month prior to conclusion of not applicable not assured probationary period. Project employees receive the same to ascertain contract renewal, extension or termination. All employees regularized as of October 1, 2014 were part of this review • G4-DMA – 148-151 Diversity and Equal Opportunity not applicable not assured • G4-LA12 - 156, 208 Supplier Assessment for Labor • G4-DMA – 182 not applicable not assured Practices • G4-LA14 - 182-183 Labor Practices Grievance • G4-DMA – 186 not applicable not assured Mechanisms • G4-LA16 - 186-187 SOCIAL: HUMAN RIGHTS • G4-DMA – 182 Investment not applicable not assured • G4-HR1 - 182-183 • G4-DMA – 186 Non-discrimination not applicable not assured • G4-HR3 – 186-187 Freedom of Association and • G4-DMA – 186 not applicable not assured Collective Bargaining • G4-HR4 – 186 • G4-DMA – 186 Child Labor not applicable not assured • G4-HR5 – 186 • G4-DMA – 186 Forced or Compulsory Labor not applicable not assured • G4-HR6 – 186 • G4-DMA – 160-161 • G4-HR7 – Upon hiring, all security personnel, including third party organizations providing security Security Practices not applicable not assured personnel, are oriented and trained with Company policies, processes and procedures which ensure compliance with human rights provisions. • G4-DMA – 187 Indigenous Rights not applicable not assured • G4-HR8 – 187 Supplier Human Rights • G4-DMA – 182 not applicable not assured Assessment • G4-HR10 - 182-183 SOCIAL: SOCIETY • G4-DMA – 170 • G4-SO1 – All our operations underwent local Local Communities community engagments and impact assessments as part not applicable not assured of our due diligence. • G4-SO2 - 180

• G4-DMA – 97, 187 Anti-Corruption not applicable not assured • G4-SO5 – 97, 186-187

212 Let’s Build for Tomorrow's Generations GRI CONTENT INDEX

SPECIFIC STANDARD DISCLOSURES

Reason for External Material Aspects DMA and Indicators - Page/s Omissions Assurance

• G4-DMA – 97, 187 Public Policy not applicable not assured • G4-SO6 – 97, 187 • G4-DMA – 97, 187 Anti-competitive Behavior not applicable not assured • G4-SO7 – 97, 187 • G4-DMA – 186-187 Compliance not applicable not assured • G4-SO8 – 186-187

Supplier Assessment for • G4-DMA – 182 not applicable not assured Impacts on Society • G4-SO10 - 182-183

SOCIAL: PRODUCT RESPONSIBILITY

• G4-DMA – 160-161, 187 Customer Health and Safety not applicable not assured • G4-PR2 – 187 • G4-DMA – 160-161 Product and Service Labeling not applicable not assured • G4-PR5 – 162-163 • G4-DMA – 187 Marketing Communications not applicable not assured • G4-PR7 – 187 • G4-DMA – 187 Customer Privacy not applicable not assured • G4-PR8 – 187 • G4-DMA – 187 Compliance not applicable not assured • G4-PR9 – 187

CONSTRUCTION AND REAL ESTATE SECTOR DISCLOSURES

Energy • CRE1 - 134, 197, 205 not applicable not assured Water • CRE2 - 143-144, 202, 206 not applicable not assured • CRE3 - 139 Emissions not applicable not assured • CRE4 - 140, 206 Occupational Health and Safety • CRE6 - 158 not applicable not assured • CRE8 - Sales materials of our real estate products and services are handled by Company partner, Ayala Land Sales, Inc. (ALSI) in full compliance with all regulatory requirements. All marketing communications, advertising Product and Service Labeling not applicable not assured and promotions for retail business operations is done by the Company’s Commercial Business Group’s marketing team in full compliance with all applicable laws and regulations.

UNIQUE CHI INDICATOR

Employee Engagement • Engagement Drivers - 150-153 not assured

CORPORATE KNIGHTS CAPITAL'S KEY PERFORMANCE INDICATORS

Employee Turnover • Turnover Rate - 157 • Lost Time Injury Rate - 159 Safety Performance not assured • Absolute Number of Fatalities - 159 • Percentage of Women on Board of Directors - 156 Leadership Diversity not assured • Percentage of Women in Executive Management - 156

CHI 2014 Annual and Sustainability Report 213 ASEAN CORPORATE GOVERNANCE SCORECARD INDEX

A Rights of Shareholders Page Number A.1 Basic Shareholder Rights 95 A.2 Right to participate in decisions concerning fundamental corporate changes 95 Right to participate efectively in and vote in general shareholder meetings and should be informed of the A.3 95 rules, including voting procedures that govern general shareholder meetings A.4 Markets for corporate control should be allowed to function in an efcient and transparent manner 98 A.5 The exercise of ownership rights by all shareholders, including institutional investors, should be facilitated 99 B Equitable Treatment of Shareholders B.1 Shares and Voting Rights 95 B.2 Notice of AGM 94-95 B.3 Insider trading and abusive self-dealing should be prohibited 91 B.4 Related party transactions by directors and key executives 101 C Role of Stakeholders C.1 The rights of stakeholders that are established by law or through mutual agreements are to be respected 96 Where stakeholder interests are protected by law, stakeholders should have the opportunity to obtain C.2 96 efective redress for violation of their rights C.3 Performance-enhancing mechanisms for employee participation should be permitted to develop 96 C.4 Stakeholders including individual employee and their representative bodies, should be able to freely 96 communicate their concerns about illegal or unethical practices to the board and their rights should not be compromised for doing this D Disclosure and Transparency D.1 Transparent Ownership Structure 101 D.2 Quality of Annual Report 101 D.3 Disclosure of Related Party Transactions (RPT) 101 D.4 Directors and Commissioners Dealings in Shares of the Company 91 D.5 External Auditor and Auditor's Report 217-220

D.6 Medium of Communications 99 D.7 Timely Filing / Release of Annual / Financial Reports 101 D.8 Company Website 101 D.9 Investor Relations 98

E Responsibilities of the Board

E.1 Clearly Deﬁned Board Responsibilities and Corporate Governance Policy 76 E.2 Code of Ethics or Conduct 96 E.3 Corporate Vision / Mission 33 E.4 Board Structure and Composition 69, 73, 78 E.5 Skills and Competencies 188-190 E.6 Board Chairman 71 E.7 Board Meetings and Attendance 76-77 E.8 Orientation Programme for New Directors 76 E.9 Directors' Training 76 E.10 Access to information 101 E.11 Nominating Committee 78 E.12 Board Appointments and Re-Election 69, 71 E.13 CEO / Executive Management Appointments and Performance 76 E.14 Board Appraisal 76 E.15 Director Appraisal 76-81 E.16 Committee Appraisal 76 E.17 Remuneration Committee / Compensation Committee 78 E.18 Remuneration Matters 80-81 E.19 Audit Committee 78 E.20 Internal Audit 88

E.21 Risk Oversight 92-93

214 Let’s Build for Tomorrow's Generations Financial Report

Statement of Management's Responsibility for Financial Statements Report of the Audit and Risk Committee to the Board of Directors Independent Auditor's Report Notes to Consolidated Financial Statements Shareholder Information

Let's build for tomorrow's generations

CHI 2014 Annual and Sustainability Report 215 CEBU HOLDINGS, INC. AND SUBSIDIARIES STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of Cebu Holdings, Inc. and Subsidiaries is responsible for the preparation and fair presentation of the consolidated financial statements for the years ended December 31, 2014 and 2013, including the additional components attached therein, in accordance with Philippine Financial Reporting Standards. This responsibility includes designing and implementing internal controls relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

The Board of Directors reviews and approves the consolidated financial statements and submits the same to the stockholders.

SyCip Gorres Velayo & Co., the independent auditors appointed by the stockholders, has examined the consolidated financial statements of the Company and its subsidiaries in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has expressed its opinion on the fairness of presentation upon completion of such examination.

BERNARD VINCENT O. DY Chairman, Board of Directors

ANICETO V. BISNAR, JR. ENRIQUE B. MANUEL, JR. President Chief Finance Officer

216 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES Report of the Audit &Risk Committee to the Board of Directors REPORTReport of OFthe AuditTHEFor the &RiskAUDIT Year EndedCommittee & DecemberRISK to COMMITTEE the31, 201 Board4 of Directors TO Report of the AuditFor the &Risk Year EndedCommittee December to the31, 201 Board4 of Directors THE BOARD OFFor theDIRECTORS Year Ended December 31, 2014 The Audit & Risk Committee’s roles and responsibilities are defined in the Audit & Risk Committee Charter 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 approvedThe Audit by& Risk the BoardCommittee’s of Directors. roles and Theresponsibilities Audit & Risk are Committee defined in providesthe Audit assistance& Risk Committee to the Board Charter of Directors in fulfilling its oversight responsibility to the shareholders relating to: Directorsapproved in by fulfilling the Board its oversight of Directors. responsibility The Auditto the & shareholders Risk Committee relating provides to: assistance to the Board of a.) the integrity of Cebu Holdings Inc.’s (the “Company”) financial statements and the financial reporting Directorsa.) the integrityin fulfilling of its C ebuoversight Holdings responsibility Inc.’s (the to “Company”)the shareholders financial relating statements to: and the financial reporting process; a.) process;the integrity of Cebu Holdings Inc.’s (the “Company”) financial statements and the financial reporting b.) the effectiveness of the systems of internal controls and the risk management process; b.) process;the effectiveness of the systems of internal controls and the risk management process; c.) the performance and leadership of the internal audit function; b.)c.) the performanceeffectiveness andof the leadership systems ofof theinternal internal controls audit anfunction;d the risk management process; d.) the appointment, remuneration, qualifications, independence and performance of the independent d.)c.) the performance appointment, and remuneration, leadership of qualifications,the internal audit independence function; and performance of the independent auditors and the integrity of the audit process as a whole; d.) auditorsthe appointment, and the integrity remuneration, of the audit qualifications, process as a independence whole; and performance of the independent e.) the Company’s compliance with applicable legal and regulatory requirements; and e.) auditorsthe Company’s and the compliance integrity of withthe audit applicable process legal as anda whole regulatory; requirements; and f.) the preparation of a year-end report of the Committee for approval of the Board and to be included in the f.)e.) annualthe Company’spreparation report. complianceof a year-end with report applicable of the Committeelegal and regulatory for approval requirements of the Board; and and to be included in the f.) annualthe preparation report. of a year-end report of the Committee for approval of the Board and to be included in the

In compliannualance report. with the Audit & Risk Committee Charter, we confirm that: In compliance with the Audit & Risk Committee Charter, we confirm that: An independent director chairs the Audit &Risk Committee; All members of the Committee are In compliAn ance independent with the Audit director & Risk chairs Committee the Audit Charter, &Risk we Committee; confirm that: All members of the Committee are independent directors. Anindependent independent directors. director chairs the Audit &Risk Committee; All members of the Committee are

independent directors. We had five (5) meetings for the year with the following attendance rate: We had five (5) meetings for the year with the following attendance rate:

We had five Co (5)mmittee meetings Member for the year with theNo. following of Meetings attendance Percent rate: Present Committee Member No. of Meetings Percent Present Attended/Held Committee Member Attended/HeldNo. of Meetings Percent Present Fr.Roderick C. Salazar, Jr. 5/5 100% Fr.Roderick C. Salazar, Jr. Attended/Held5/5 100% Enrique L. Benedicto 5/5 100% EnriqueFr.Roderick L. Benedicto C. Salazar, Jr. 5/5 100% Pampio A. Abarintos* 4/4 100% PampioEnrique A.L. BenedictoAbarintos* 4/45/5 100% Hernando O. Streegan* 0/1 0% HernandoPampio A. O.Abarintos Streegan* * 0/14/4 100%0% *PAAbarintos became a member of the CHI Audit and Risk Committee on April 8, 2014 *PAAbarintosHernando O. Streegan became * a member of 0/1 the CHI Audit and Risk0% Committee on April 8, 2014 replacing HOStreegan. replacing*PAAbarintos HOStreegan. became a member of the CHI Audit and Risk Committee on April 8, 2014

replacing HOStreegan. We recommended to the Board of Directors the re-appointment of SGV & Co. as independent external We recommended to the Board of Directors the re-appointment of SGV & Co. as independent external auditor for 2014, based on the review of their performance and qualifications, including consideration of auditorWe recommended for 2014, based to the on Board the review of Directors of their the performance re-appointment and q ofualifications SGV & Co., including as independent consideration external of management’s recommendation; management’sauditor for 2014 recommendation;, based on the review of their performance and qualifications, including consideration of We reviewed and discussed the quarterly consolidated financial statements and annual consolidated Wemanagement’s reviewed and recommendation; discussed the quarterly consolidated financial statements and annual consolidated financial statements of Cebu Holdings Inc and subsidiaries (the “Company”, including Management’s financialWe reviewed statements and discussed of Cebu the Holdings quarterly Inc consolidated and subsidiaries financial (the “Company”,statements and including annual M anagement’s consolidated Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended Discussionfinancial statements and Analysis of Cebu of Financial Holdings Condit Inc andion and subsidiaries Results of (the Operations “Company”, as of including and for the Management’s year ended December 31, 2014), with the Company’s management and SGV & Co.. We confirm the report of the DecemberDiscussion 31,and 20 Analysis14), with of the Financial Company’s Condit managemention and Results and of SGV Operations & Co.. asWe of confirm and for the the report year endedof the external auditors and the results of the review of the 2014 audited financial statements. These activities externalDecember auditors 31, 20 and14), thewith results the Company’s of the review management of the 201 4and audited SGV financial& Co.. Westatements. confirm the These report activ of itiesthe were performed in the following context: wereexternal performed auditors in and the the following results context: of the review of the 2014 audited financial statements. These activities That management has the primary responsibility for the financial statements and the were performed That in the management following context: has the primary responsibility for the financial statements and the reporting process, reportingThat management process, has the primary responsibility for the financial statements and the reporting process, CHI 2014 Annual and Sustainability Report 217 That management has the primary responsibility for the financial statements and the reporting process,

That SGV & Co. is responsible for expressing the opinion on the conformity of the Company’s consolidated audited financial statements with the Philippine Financial Reporting Standards;

We reviewed and approved the management representation letter before submission to the Company’s independent external auditors; We discussed and approved the overall scope and the respective audit plans of the Company’s Internal Auditors and SGV & Co. We 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; We reviewed and approved all audit services provided by SGV & Co. to the Company and have concluded that such services do not impair their independence; We 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. All the activities performed by Internal Audit were conducted in conformity with the International Standards for the Professional Practice of Internal Auditing; We 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.

Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above, the Audit & Risk Committee recommended to the Board of Directors the inclusion of the Company’s consolidated financial statements as of and for the year ended December 31, 2014 in the Company’s Annual Report to the Stockholders and for filing with the Securities and Exchange Commission.

February 12, 2015

FR. RODERICK C. SALAZAR, JR., SVD Committee Chair

CONSUL ENRIQUE L. BENEDICTO JUSTICE PAMPIO A. ABARINTOS (RET.) Member Member

218 Let’s Build for Tomorrow's Generations

CEBU HOLDINGS, INC. AND SUBSIDIARIES

INDEPENDENTINDEPENDENT AUDITORS’ REPORT AUDITOR'S REPORT

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

We have audited the accompanying consolidated financial statements of Cebu Holdings, Inc. and its subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2014 and 2013, 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, 2014, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

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

Auditors’ Responsibility

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

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

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

CHI 2014 Annual and Sustainability Report 219

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Cebu Holdings, Inc. and its subsidiaries as at December 31, 2014 and 2013, and their financial performance and their cash flows for each of the three years in the period ended December 31, 2014 in accordance with Philippine Financial Reporting Standards.

SYCIP GORRES VELAYO & CO.

Jessie D. Cabaluna Partner CPA Certificate No. 36317 SEC Accreditation No. 0069-AR-3 (Group A), February 14, 2013, valid until February 13, 2016 Tax Identification No. 102-082-365 BIR Accreditation No. 08-001998-10-2012, April 11, 2012, valid until April 10, 2015 PTR No. 4751262, January 5, 2015, Makati City

March 11, 2015

220 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTS OF FINANCIAL POSITION CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in Thousands)

December 31 2014 2013 ASSETS Current Assets Cash and cash equivalents (Notes 4 and 24) P=2,895,215 P=765,151 Financial assets at fair value through profit or loss (Notes 5 and 24) 204,077 426,604 Accounts receivable (Notes 6, 16 and 24) 1,282,039 1,044,920 Inventories (Note 7) 1,177,799 1,247,248 Other current assets (Notes 8 and 24) 278,922 194,933 Total Current Assets 5,838,052 3,678,856 Noncurrent Assets Noncurrent accounts receivable (Notes 6 and 24) 106,048 473,810 Property and equipment (Note 9) 71,954 70,266 Investments in associates and a joint venture (Note 10) 1,058,281 428,106 Investment properties (Note 11) 9,210,770 8,230,593 Deferred tax assets - net (Note 21) 16,238 13,968 Other noncurrent assets (Notes 12 and 24) 83,608 54,754 Total Noncurrent Assets 10,546,899 9,271,497 P=16,384,951 P=12,950,353

LIABILITIES AND EQUITY Current Liabilities Accounts and other payables (Notes 13, 16, 24 and 25) P=2,377,386 P=1,831,538 Current portion of long-term debt (Notes 14 and 24) 492,561 669,225 Income tax payable 37,128 49,597 Deposits and other current liabilities (Notes 15 and 24) 669,766 488,065 Total Current Liabilities 3,576,841 3,038,425 Noncurrent Liabilities Long-term debt - net of current portion (Notes 14 and 24) 6,226,919 3,708,752 Pension liabilities (Note 20) 55,734 39,323 Deferred tax liabilities - net (Note 21) 77,836 59,319 Deposits and other noncurrent liabilities (Notes 15 and 24) 225,891 182,701 Total Noncurrent Liabilities 6,586,380 3,990,095 Total Liabilities 10,163,221 7,028,520 Equity (Note 25) Equity attributable to equity holders of Cebu Holdings, Inc. Paid-in capital 2,776,758 2,776,758 Retained earnings 2,738,804 2,438,336 Equity reserves (Note 23) (9,474) (9,474) Remeasurement loss on defined benefit plan (Note 20) (38,778) (31,102) Equity in remeasurement loss on retirement plan of an associate (Note 10) (1,078) − 5,466,232 5,174,518 Non-controlling interests 755,498 747,315 Total Equity 6,221,730 5,921,833 P=16,384,951 P=12,950,353

See accompanying Notes to Consolidated Financial Statements.

CHI 2014 Annual and Sustainability Report 221 CEBU HOLDINGS, INC. AND SUBSIDIARIES STATEMENTS OF COMPREHENSIVE INCOME

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

Years Ended December 31 2014 2013 2012 REVENUE Real estate (Note 17) P=1,754,474 P=1,780,194 P=1,260,651 Equity in net earnings of associates and a joint venture (Note 10) 79,679 47,050 73,901 Interest income (Notes 4 and 18) 71,168 72,835 83,179 Other income (Note 18) 388,258 269,431 215,303 2,293,579 2,169,510 1,633,034 COSTS AND EXPENSES Real estate (Note 19) 1,127,172 1,150,340 751,590 General and administrative expenses (Note 19) 229,843 226,180 194,334 Interest and other financing charges (Note 19) 205,654 58,833 43,545 Other charges – – 1,528 1,562,669 1,435,353 990,997 INCOME BEFORE INCOME TAX 730,910 734,157 642,037 PROVISION FOR INCOME TAX (Note 21) Current 145,519 182,041 161,570 Deferred 19,537 22,320 5,463 165,056 204,361 167,033 NET INCOME P=565,854 P=529,796 P=475,004 Net Income Attributable to: Equity holders of Cebu Holdings, Inc. P=530,877 P=501,145 P=443,640 Non-controlling interests 34,977 28,651 31,364 P=565,854 P=529,796 P=475,004 Basic/Diluted Earnings Per Share (Note 22) P=0.28 P=0.26 P=0.23

See accompanying Notes to Consolidated Financial Statements.

222 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES STATEMENTS OF COMPREHENSIVE INCOME

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

Years Ended December 31 2014 2013 2012 Net income P=565,854 P=529,796 P=475,004 Other comprehensive loss Other comprehensive loss not to be reclassified to profit or loss in subsequent years: Remeasurement loss on defined benefit plan (Note 20) (7,676) (7,581) (13,433) Equity in remeasurement loss on retirement plan of an associate (Note 10) (1,078) − − Total other comprehensive loss (8,754) (7,581) (13,433) Total comprehensive income P=557,100 P=522,215 P=461,571 Total comprehensive income attributable to: Equity holders of Cebu Holdings, Inc. P=522,123 P=493,564 P=430,207 Non-controlling interests 34,977 28,651 31,364 P=557,100 P=522,215 P=461,571

See accompanying Notes to Consolidated Financial Statements.

223 CHI 2014 Annual and Sustainability Report CEBU HOLDINGS, INC. AND SUBSIDIARIES

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

Years Ended December 31 2014 2013 2012 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF CEBU HOLDINGS, INC. Capital Stock - P=1 par value (Note 25) Balance at beginning and end of year P=1,920,073 P=1,920,073 P=1,920,073 Additional Paid-in Capital Balance at beginning and end of year 856,685 856,685 856,685 Total Paid-in Capital 2,776,758 2,776,758 2,776,758 Remeasurement loss on defined benefit plan (Note 20) Balance at beginning of year (31,102) (23,521) (10,088) Remeasurement loss (7,676) (7,581) (13,433) Balance at end of year (38,778) (31,102) (23,521) Remeasurement gain on retirement plan of associate (Note 10) Balance at beginning of year − − − Equity in remeasurement loss on retirement plan of an associate (1,078) − − Balance at end of year (1,078) − − Equity reserves (Note 23) Balance at beginning and end of year (9,474) (9,474) – Retained Earnings (Note 25) Appropriated for future expansion 1,300,000 1,300,000 1,300,000 Unappropriated: At beginning of year 1,138,336 889,446 1,937,813 Effect of pooling of interests (Note 23) – (41,047) – Net income 530,877 501,145 443,640 Cash dividends - P=0.12 per share in 2014, P=0.11 per share in 2013 and P=0.10 per share in 2012 (230,409) (211,208) (192,007) Appropriations during the year – – (1,300,000) At end of year 1,438,804 1,138,336 889,446 2,738,804 2,438,336 2,189,446 NON-CONTROLLING INTERESTS Balance at beginning of year 747,315 327,892 323,322 Effect of pooling of interests (Note 23) – (31,403) – Net income 34,977 28,651 31,364 Additions to non-controlling interests – 448,969 – Dividends paid to non-controlling interests (26,794) (26,794) (26,794) Balance at end of year 755,498 747,315 327,892 P=6,221,730 P=5,921,833 P=5,270,575

See accompanying Notes to Consolidated Financial Statements.

224 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTSCEBU HOLDINGS, INC. OFAND SUBSIDIARIESCASH FLOWS CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands)

Years Ended December 31 2014 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=730,910 P=734,157 P=642,037 Adjustments for: Depreciation and amortization (Notes 9, 11 and 19) 312,744 218,763 138,362 Interest and other financing charges (Note 19) 205,654 58,833 43,545 Unrealized foreign exchange losses (gains) 371 (223) 1,531 Unrealized gain on financial assets at fair value through profit or loss (2,654) (3,307) − Pension expense (Note 20) 13,717 3,832 (4,153) Loss (gain) on disposal of property and equipment (52) (115) (217) Realized profit from downstream sale (Notes 10 and 29) – (4,127) (9,005) Equity in net earnings of associates (Note 10) (79,679) (47,050) (73,901) Interest income (Note 18) (71,168) (72,835) (83,179) Operating income before working capital changes 1,109,843 887,928 655,020 Decrease (increase) in: Accounts receivable 169,902 14,710 (98,241) Inventories (Notes 7 and 29) 82,928 69,983 75,610 Other current assets (83,989) (103,399) (60,897) Increase (decrease) in: Accounts and other payables (Notes 13 and 29) 216,947 (948,452) 213,284 Deposits and other liabilities 224,891 40,122 93,454 Pension liabilities (8,272) − − Net cash generated from (used in) operations 1,712,250 (39,108) 878,230 Interest received 31,910 13,674 63,938 Interest paid (223,572) (40,095) (38,099) Income taxes paid (157,988) (153,069) (181,920) Net cash provided by (used in) operating activities 1,362,600 (218,598) 722,149 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of: Investment properties (Notes 11 and 29) (928,403) (831,631) (757,864) Property and equipment (Notes 9 and 29) (20,042) (31,750) (22,886) Financial assets at fair value through profit or loss (2,011,485) (423,297) – Decrease (increase) in: Short-term investments − – 2,956 Other noncurrent assets (28,854) (3,419) 34,710 Acquisition of associates and a joint venture (Note 10) (551,574) (52,500) – Acquisition of subsidiaries, net of cash acquired (Note 23) − (530,129) – Proceeds from sale/redemption of financial assets at fair value through profit or loss (Note 5) 2,236,666 − − Proceeds from sale of property and equipment (Note 9) 322 3,394 803 Dividends received − 59,994 − Net cash used in investing activities (1,303,370) (1,809,338) (742,281) (Forward)

CHI 2014 Annual and Sustainability Report 225 CEBU HOLDINGS, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS

Years Ended December 31 2014 2013 2012 CASH FLOWS FROM FINANCING ACTIVITIES Payments of long-term debt (P=2,622,250) (P=324,693) (P=55,000) Availments of long-term debt 4,950,658 1,491,542 945,250 Dividends paid to: − − − Non-controlling interests (26,794) (26,794) (26,794) Equity holders of Cebu Holdings, Inc. (230,409) (211,208) (192,007) Net cash provided by financing activities 2,071,205 928,847 671,449 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (371) 223 (1,531) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,130,064 (1,098,866) 649,786 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 4) 765,151 1,864,017 1,214,231 CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) P=2,895,215 P=765,151 P=1,864,017

See accompanying Notes to Consolidated Financial Statements.

226 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 49.80%-owned subsidiary of Ayala Land, Inc. (ALI), a publicly listed company. ALI is a subsidiary of Ayala Corporation (AC), a publicly listed company which is 49.03%-owned by Mermac, Inc., 10.18%-owned by Mitsubishi Corporation and the rest by public.

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

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

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

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

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

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

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

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

The consolidated financial statements of Cebu Holdings Inc. and its subsidiaries (the Group) as of December 31, 2014 and 2013 and for each of the three years in the period ended December 31, 2014 were endorsed for approval by the Audit and Risk Committee on February 12, 2015 and were approved and authorized for issue by the Board of Directors (BOD) on March 11, 2015.

CHI 2014 Annual and Sustainability Report 227

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

2. Summary of Significant Accounting Policies

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

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

Basis of Consolidation The consolidated financial statements comprise the financial statements of the Parent Company and the following wholly owned and majority-owned subsidiaries as of December 31, 2014 and 2013 and for each of the three years in the period ended December 31, 2014:

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

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

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

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

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

228 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

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

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

Accumulated Balances of Non-controlling Profit (Loss) Allocated to Non- Interest controlling Interest Subsidiary 2014 2013 2014 2013 2012 (In Thousands) (In Thousands) CPVDC P=311,030 P=302,167 P=35,658 P=32,472 P=31,364 TPEPI 444,467 445,148 (681) (3,821) −

229 CHI 2014 Annual and Sustainability Report CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

2013 CPVDC TPEPI (In Thousands) Statement of financial position Current assets P=904,871 P=388,833 Noncurrent asset 3,048,387 602,034 Current liabilities 663,397 901,648 Noncurrent liabilities 1,896,906 − Dividends paid to non-controlling interests 26,794 −

Statement of comprehensive income Revenue P=460,834 P=679 Profit(loss) attributable to: Equity of holders of the parent 104,311 (4,671) Non-controlling interest 32,472 (3,822) Total comprehensive income attributable to: Equity of holders of the parent − − Non-controlling interest − −

Statement of cash flows Operating activities P=304,542 (P=8,351) Investing activities (856,186) (51,602) Financing activities 403,625 448,758 Net increase (decrease) in cash and cash equivalents (P=148,019) P=388,805

230 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Adoption of New and Amended Accounting Standards and Interpretations The Group applied, for the first time, certain standards and amendments, which are effective for annual periods beginning on or after January 1, 2014.

The nature and impact of each new standards and amendments are described below:

Investment Entities (Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12, Disclosure of Interests in Other Entities, and PAS 27, Separate Financial Statements) These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under PFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. The amendments must be applied retrospectively, subject to certain transition relief. These amendments have no impact to the Group since none of the entities within the Group qualifies to be an investment entity under PFRS 10.

PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (Amendments) These amendments clarify the meaning of ‘currently has a legally enforceable right to set-off’ and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting and are applied retrospectively. These amendments have no impact on the Group, since none of the entities in the Group has any offsetting arrangements.

PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting (Amendments) These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria and retrospective application is required. These amendments have no impact on the Group as the Group does not have derivatives during the current or prior periods.

PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets (Amendments) These amendments remove the unintended consequences of PFRS 13, Fair Value Measurement, on the disclosures required under PAS 36. In addition, these amendments require disclosure of the recoverable amounts for assets or cash-generating units (CGUs) for which impairment loss has been recognized or reversed during the period. The application of these amendments has no material impact on the disclosure in the Group’s financial statements.

Philippine Interpretation IFRIC 21, Levies (IFRIC 21) IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. Retrospective application is required for IFRIC 21. This interpretation has no impact on the Group as it has applied the recognition principles under PAS 37, Provisions, Contingent Liabilities and Contingent Assets, consistent with the requirements of IFRIC 21 in prior years.

Annual Improvements to PFRSs (2010-2012 cycle) In the 2010-2012 annual improvements cycle, seven amendments to six standards were issued, which included an amendment to PFRS 13, Fair Value Measurement. The amendment to PFRS 13 is effective immediately and it clarifies that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial. This amendment has no impact to the Group.

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Annual Improvements to PFRSs (2011-2013 cycle) In the 2011-2013 annual improvements cycle, four amendments to four standards were issued, which included an amendment to PFRS 1, First-time Adoption of Philippine Financial Reporting Standards - First-time Adoption of PFRS. The amendment to PFRS 1 is effective immediately. It clarifies that an entity may choose to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entity’s first PFRS financial statements. This amendment has no impact on the Group as it is not a first time PFRS adopter.

Future Changes in Accounting Policies The Group will adopt the following amended standards and Philippine Interpretations when these become effective.

The nature and impact of each new standard and amendment are described below:

PFRS 9, Financial Instruments - Classification and Measurement (2010 version) PFRS 9 (2010 version) reflects the first phase on the replacement of PAS 39 and applies to the classification and measurement of financial assets and liabilities as defined in PAS 39, Financial Instruments: Recognition and Measurement. PFRS 9 requires all financial assets to be measured at fair value at initial recognition. A debt financial asset may, if the fair value option (FVO) is not invoked, be subsequently measured at amortized cost if it is held within a business model that has the objective to hold the assets to collect the contractual cash flows and its contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal outstanding. All other debt instruments are subsequently measured at fair value through profit or loss. All equity financial assets are measured at fair value either through other comprehensive income (OCI) or profit or loss. Equity financial assets held for trading must be measured at fair value through profit or loss. For FVO liabilities, the amount of change in the fair value of a liability that is attributable to changes in credit risk must be presented in OCI. The remainder of the change in fair value is presented in profit or loss, unless presentation of the fair value change in respect of the liability’s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. All other PAS 39 classification and measurement requirements for financial liabilities have been carried forward into PFRS 9, including the embedded derivative separation rules and the criteria for using the FVO. The adoption of the first phase of PFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will potentially have no impact on the classification and measurement of financial liabilities.

PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1, 2015. This mandatory adoption date was moved to January 1, 2018 when the final version of PFRS 9 was adopted by the Philippine Financial Reporting Standards Council (FRSC). Such adoption, however, is still for approval by the Board of Accountancy (BOA).

Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate This interpretation covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The interpretation requires that revenue on construction of real estate be recognized only upon completion, except when such contract qualifies as construction contract to be accounted for under PAS 11, Construction Contracts or involves rendering of services in which case revenue is recognized based on stage of completion. Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will also be accounted for based on stage of completion. The SEC and the FRSC have deferred the effectivity of this interpretation until the final Revenue standard is issued by the International Accounting Standards Board (IASB) and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed.

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The following new standards and amendments issued by the IASB were already adopted by the FRSC but are still for approval by BOA.

Effective 2015

PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions (Amendments) PAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognize such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after January 1, 2015. It is not expected that this amendment would be relevant to the Group, since none of the entities within the Group has defined benefit plans with contributions from employees or third parties.

Annual Improvements to PFRSs (2010-2012 cycle) The Annual Improvements to PFRSs (2010-2012 cycle) are effective for annual periods beginning on or after January 1, 2015 and are not expected to have a material impact on the Group. They include:

PFRS 2, Share-based Payment - Definition of Vesting Condition This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions, including: A performance condition must contain a service condition A performance target must be met while the counterparty is rendering service A performance target may relate to the operations or activities of an entity, or to those of another entity in the same group A performance condition may be a market or non-market condition If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied.

PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business Combination The amendment is applied prospectively for business combinations for which the acquisition date is on or after July 1, 2014. It clarifies that a contingent consideration that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of PAS 39, Financial Instruments: Recognition and Measurement (or PFRS 9, Financial Instruments, if early adopted). The Group shall consider this amendment for future business combinations.

PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the Total of the Reportable Segments’ Assets to the Entity’s Assets The amendments are applied retrospectively and clarify that: An entity must disclose the judgments made by management in applying the aggregation criteria in the standard, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are ‘similar’. The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities.

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PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Revaluation Method - Proportionate Restatement of Accumulated Depreciation The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the asset may be revalued by reference to the observable data on either the gross or the net carrying amount. In addition, the accumulated depreciation or amortization is the difference between the gross and carrying amounts of the asset.

PAS 24, Related Party Disclosures - Key Management Personnel The amendment is applied retrospectively and clarifies that a management entity, which is an entity that provides key management personnel services, is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services.

Annual Improvements to PFRSs (2011-2013 cycle) The Annual Improvements to PFRSs (2011-2013 cycle) are effective for annual periods beginning on or after January 1, 2015 and are not expected to have a material impact on the Group.

PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements The amendment is applied prospectively and clarifies the following regarding the scope exceptions within PFRS 3: Joint arrangements, not just joint ventures, are outside the scope of PFRS 3. This scope exception applies only to the accounting in the financial statements of the joint arrangement itself.

PFRS 13, Fair Value Measurement - Portfolio Exception The amendment is applied prospectively and clarifies that the portfolio exception in PFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of PAS 39 (or PFRS 9, as applicable).

PAS 40, Investment Property The amendment is applied prospectively and clarifies that PFRS 3, and not the description of ancillary services in PAS 40, is used to determine if the transaction is the purchase of an asset or business combination. The description of ancillary services in PAS 40 only differentiates between investment property and owner-occupied property (i.e., property, plant and equipment).

Effective 2016

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of Acceptable Methods of Depreciation and Amortization (Amendments) The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue- based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. The amendments are effective prospectively for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group given that it has not used a revenue- based method to depreciate its non-current assets.

PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants (Amendments) The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of PAS 41. Instead, PAS 16 will apply. After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of PAS 41 measured at fair value less costs to sell. For government grants related to bearer plants, PAS 20, Accounting for Government Grants and Disclosure of Government Assistance, will apply. The amendments are retrospectively effective for

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annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as it does not have any bearer plants.

PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements (Amendments) The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying PFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively. For first-time adopters of PFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to PFRS. The amendments are effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments will not have any impact on the Group’s financial statements.

PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture These amendments address an acknowledged inconsistency between the requirements in PFRS 10 and those in PAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. These amendments are effective from annual periods beginning on or after January 1, 2016.

PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations (Amendments) The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business must apply the relevant PFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to PFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.

The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group.

PFRS 14, Regulatory Deferral Accounts PFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying most of its existing accounting policies for regulatory deferral account balances upon its first-time adoption of PFRS. Entities that adopt PFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present movements in these account balances as separate line items in the statement of profit or loss and other comprehensive income. The standard requires disclosures on the nature of, and risks associated with, the entity’s rate-regulation and the effects of that rate-regulation on its financial statements. PFRS 14 is effective for annual periods beginning on or after January 1, 2016. Since the Group is an existing PFRS preparer, this standard would not apply.

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

PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in Methods of Disposal The amendment is applied prospectively and clarifies that changing from a disposal through sale to a disposal through distribution to owners and vice-versa should not be considered to be a new plan of

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disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in PFRS 5. The amendment also clarifies that changing the disposal method does not change the date of classification.

PFRS 7, Financial Instruments: Disclosures - Servicing Contracts PFRS 7 requires an entity to provide disclosures for any continuing involvement in a transferred asset that is derecognized in its entirety. The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance in PFRS 7 in order to assess whether the disclosures are required. The amendment is to be applied such that the assessment of which servicing contracts constitute continuing involvement will need to be done retrospectively. However, comparative disclosures are not required to be provided for any period beginning before the annual period in which the entity first applies the amendments.

PFRS 7 - Applicability of the Amendments to PFRS 7 to Condensed Interim Financial Statements This amendment is applied retrospectively and clarifies that the disclosures on offsetting of financial assets and financial liabilities are not required in the condensed interim financial report unless they provide a significant update to the information reported in the most recent annual report.

PAS 19, Employee Benefits - regional market issue regarding discount rate This amendment is applied prospectively and clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used.

PAS 34, Interim Financial Reporting - disclosure of information ‘elsewhere in the interim financial report’ The amendment is applied retrospectively and clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report).

Effective 2018

PFRS 9, Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and PAS 39 (2013 version) PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge accounting model of PAS 39 with a more principles-based approach. Changes include replacing the rules-based hedge effectiveness test with an objectives-based test that focuses on the economic relationship between the hedged item and the hedging instrument, and the effect of credit risk on that economic relationship; allowing risk components to be designated as the hedged item, not only for financial items but also for non-financial items, provided that the risk component is separately identifiable and reliably measurable; and allowing the time value of an option, the forward element of a forward contract and any foreign currency basis spread to be excluded from the designation of a derivative instrument as the hedging instrument and accounted for as costs of hedging. PFRS 9 also requires more extensive disclosures for hedge accounting.

PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of January 1, 2018 was eventually set when the final version of PFRS 9 was adopted by the FRSC. The adoption of the final version of PFRS 9, however, is still for approval by BOA.

The adoption of PFRS 9 is not expected to have any significant impact on the Group’s consolidated financial statements.

PFRS 9, Financial Instruments (2014 or final version) In July 2014, the final version of PFRS 9, Financial Instruments, was issued. 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

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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 comparative information is not compulsory. Early application of previous versions of PFRS 9 is permitted if the date of initial application is before February 1, 2015.

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.

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

IFRS 15, Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognised 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 IFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017 with early adoption permitted. The Group is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date once adopted locally.

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

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

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

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

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

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

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

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

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

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Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

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

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

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

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

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

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

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

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

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

As of December 31, 2014 and 2013, the Group’s financial assets are of the nature of loans and receivables and financial assets at FVPL.

“Day 1” difference Where the transaction price in a non-active market is different to the fair value from other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Group recognizes the difference between the transaction price and fair value (a “Day 1” difference) in the consolidated statement of income under “Interest income” and “Interest and other financing charges” accounts unless it qualifies for recognition as some other type

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of asset. In cases where variables used are made of data which is not observable, the difference between the transaction price and model value is only recognized in the consolidated statement of income when the inputs become observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of recognizing the “Day 1” difference amount.

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

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

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, 2014 and 2013, the Group holds its investment in Unit Investment Trust Fund (UITF) BPI Short-term fund as held for trading and classified these as financial assets at FVPL. Management takes the view that it is held for trading and is a portfolio of diversified short-term fixed income instruments invested and managed by professional managers.

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

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

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

As of December 31, 2014 and 2013, the Group’s loans and receivables include cash and cash equivalents, receivables except ‘advances to contractors’ and ‘dividends receivable’ included under ‘other current assets’.

Other financial liabilities Other financial liabilities are financial liabilities not designated as at FVPL where the substance of the contractual arrangement results in the Group having an obligation either to deliver cash or another financial asset to the holder, or to satisfy the obligation other than by the exchange of a fixed amount of cash or other financial asset for a fixed number of own equity shares. The components of issued financial instrument that contain both liability and equity element are accounted for separately, with the equity component being assigned the residual amount after deducting from the instrument as a whole the amount separately determined as fair value of the liabilitiy 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

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the issue and fees that are an integral part of the EIR. The amortization is included in the “Interest and other financing charges” account in the consolidated statement of income.

As of December 31, 2014 and 2013, the Group’s other financial liabilities include accounts and other payables, long-term debt, deposits and other liabilities except for ‘advance rent’ and ‘customers deposits’ and other obligations that meet the above definition (other than liabilities covered by other accounting standards, such as income tax payable).

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

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

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

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

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

Loans and receivables For loans and receivables carried at amortized cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses for

240 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 “General and administrative expenses” account. Interest income continues to be recognized based on the original effective interest rate (EIR) of the asset. Loans and receivables, together with the associated allowance accounts, are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognized in the consolidated statement of income, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.

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

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

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

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

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

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

Cost includes: Land cost Land improvement cost Amount paid to contractors for construction and development

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Borrowing costs, planning and design costs, cost of site preparation, professional fees, property transfer taxes, construction overheads and other related costs

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

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

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

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

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

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

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

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

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

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

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

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

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

242 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 recognise changes in the Group’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment individually.

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

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

244 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

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

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

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

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

CHI 2014 Annual and Sustainability Report 245 CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Real estate sales For real estate sales, the Group assesses whether it is probable that the economic benefits will flow to the Group when the sales prices are collectible. Collectibility 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. Collectibility is also assessed by considering factors such as the credit standing of the buyer, age and location of the property.

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

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

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

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

Theater income Theater income is recognized when earned.

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

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

246 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

The interest capitalized is calculated using the Group’s weighted average cost of borrowings after adjusting for borrowings associated with specific developments. Where borrowings are associated with specific developments, the amounts capitalized is the gross interest incurred on those borrowings less any investment income arising on their temporary investment. Interest is capitalized from the commencement of the development work until the date of practical completion. The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is interrupted. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. A reassessment is made after inception of the lease only if one of the following applies: (a) There is a change in contractual terms, other than a renewal or extension of the arrangement; (b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term; (c) There is a change in the determination of whether fulfillment is dependent on a specified asset; or (d) There is substantial change to the asset.

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

Group as lessor Leases where the Group does not transfer substantially all the risk and benefits of ownership of the assets are classified as operating leases. Lease payments received are recognized as an income in the consolidated statement of income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as the rental income. Contingent rents are recognized as revenue in the period in which they are earned.

Group as lessee Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Fixed lease payments are recognized as an expense in the consolidated statement of income on a straight-line basis while the variable rent is recognized as an expense based on terms of the lease contract.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pension Cost The Group maintains a defined contribution (DC) plan that covers all regular full-time employees. Under its DC plan, the Group pays fixed contributions based on the employees’ monthly salaries. The Group, however, is covered under Republic Act (RA) No. 7641, The Philippine Retirement Law, which provides for its qualified employees a defined benefit (DB) minimum guarantee. The DB minimum guarantee is equivalent to a certain percentage of the monthly salary payable to an employee at normal retirement age with the required credited years of service based on the provisions of RA No. 7641.

In accordance with PIC Q&A No. 2013-03, the obligation for post-employment benefits of an entity that provides a defined contribution plan as its only post-employment benefit plan, is not limited to the amount it agrees to contribute to the fund, if any. In this case, therefore, the Group’s retirement plan shall be accounted for as a defined benefit plan. Accordingly, the Group accounts for its retirement obligation under the higher of the DB obligation relating to the minimum guarantee and the obligation arising from the DC plan.

The DC liability is measured at the fair value of the DC assets upon which the DC benefits depend, with an adjustment for margin on asset returns, if any, where this is reflected in the DC benefits.

For the DB minimum guarantee plan, the liability is determined based on the present value of the excess of the projected DB obligation over the projected DC obligation at the end of the reporting period. The DB obligation is calculated annually by a qualified independent actuary using the projected unit credit method.

Pension costs comprise: Service cost Net interest on the net defined benefit liability or asset Remeasurements of net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognized as expense in profit or loss. Past service costs are recognized when plan amendment or curtailment occurs. These amounts are calculated periodically by independent qualified actuaries.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on government bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognized as expense or income in consolidated statement of income.

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

The liability recognized in the consolidated statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the reporting date less fair value of the plan assets. The present value of the defined benefit obligation is determined by using risk-free interest rates of long-term government bonds that have terms to maturity approximating the terms of the related pension liabilities or applying a single weighted average discount rate that reflects the estimated timing and amount of benefit payments.

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

Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statement of income. Management periodically evaluates positions taken in the tax returns

248 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax Deferred tax is provided, using the balance sheet liability method, on all temporary differences with certain exceptions, at the reporting date between the tax bases of assets and liabilities and its carrying amounts for financial reporting purposes.

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

Deferred tax liabilities are not provided on nontaxable temporary differences associated with investments in associates and a joint venture.

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted as of reporting date. Movements in the deferred income tax assets and liabilities arising from changes in tax rates are charged against or credited to income for the period.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.

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

Foreign Currency Denominated Transactions The consolidated financial statements are presented in Philippine Peso, which is the Parent Company’s functional and presentation currency. Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded using the exchange rate at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are restated using the closing exchange rate prevailing at reporting dates. Exchange gains or losses arising from foreign exchange transactions are credited to or charged against operations for the year.

Earnings Per Share (EPS) Basic EPS is computed by dividing net income for the year attributable to common stockholders of the parent by the weighted average number of common shares issued and outstanding during the year adjusted for any subsequent stock dividends declared. Diluted EPS is computed by dividing net income for the year attributable to common stockholders of the parent by the weighted average number of common shares issued and outstanding during the year after giving effect to assumed conversion of potential common shares, if any.

Segment Reporting The Group’s operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Financial information on business segments is presented in Note 26 of the consolidated financial statements.

CHI 2014 Annual and Sustainability Report 249 CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO 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 and Estimates

The preparation of the accompanying consolidated financial statements of the Group in conformity with PFRS requires management to make judgments and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. The judgments and estimates used in the consolidated financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the consolidated financial statements. Actual results could differ from such estimates.

Management believes the following represent a summary of these significant judgments, estimates and assumptions:

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

Operating lease commitments - Group as lessor The Group has entered into commercial property leases on its investment property portfolio. Leases where the Group does not transfer substantially all the risks and rewards of ownership of the asset are classified as operating leases. The Group considered, among others, the length of the lease term as compared with the estimated life of the assets. The Group has determined that it retains all significant risks and rewards of ownership of its properties.

A number of the Group’s operating lease contracts are accounted for as non-cancellable operating leases and the rest are cancellable. In determining whether a lease contract is cancellable or not, the Group considered, among others, the significance of the penalty, including economic consequence to the lessee.

Operating lease commitments - Group as lessee Management exercises judgment in determining whether substantially all the significant risks and rewards of ownership of the leased assets are transferred to the Group. Lease contracts, which transfer to the Group substantially all the significant risks and rewards incidental to ownership of the leased items, are classified as finance leases. Otherwise, they are considered as operating leases.

The Group has entered into lease contracts with various parties for certain properties. The Group has determined based on an evaluation of the terms and conditions of the arrangements, that all significant

250 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

risks and rewards of ownership of these properties are retained by the lessor and accounts for these contracts as operating leases. In determining whether the lease is cancellable or not, the Group considered, among others, the significance of the lease term as compared with the estimated useful life of the related asset.

Classification of club shares Being a real estate developer, the Group determines how these shares shall be accounted for. In determining whether these shares shall be accounted for as inventories or as financial instruments, the Group considers its role in the development of the Club and its intent for holding these shares.

The Group classifies such shares as inventories when the Group acts as the developer and its intent is to sell a developed property together with the club share.

Distinction between investment properties and inventories The Group determines whether a property is classified as investment property or inventory as follows: Investment property comprises land and buildings (principally offices, commercial and retail property) which are not occupied substantially for use by, or in the operations of, the Group, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. Inventory comprises property that is held for sale in the ordinary course of business. Principally, this is a residential or industrial property that the Group develops and intends to sell before or on completion of construction.

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

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of services or for administrative purposes. If these portions cannot be sold separately as of reporting date, the property is accounted for as investment property only if an insignificant portion is held for use in the supply of services or for administrative purposes. Judgment is applied in determining whether ancillary services are so significant that a property does not qualify as investment property. The Group considers each property separately in making its judgment.

Distinction between business combination and property acquisition The Group acquires subsidiaries that own real estate. At the time of acquisition, the Group considers whether the acquisition represents the acquisition of a business. The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property. More specifically, consideration is made with regard to the extent to which significant processes are acquired and, in particular, the extent of ancillary services provided by the Group. The significance of any process is judged with reference to the guidance in PAS 40 on ancillary services.

When the acquisition of subsidiaries does not represent a business, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognized. See Note 23 for the acquisitions made by the Group.

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

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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.

Collectibility of the sales price In determining whether the sales prices are collectible, the Group considers that the initial and continuing investments by the buyer of about 10% would demonstrate the buyer’s commitment to pay.

Contingencies The Group is contingently liable for various claims. The estimate of the probable costs for the resolution of these claims has been developed in consultation with the legal counsels and based upon an analysis of potential results. The Group currently does not believe these proceedings will have a material adverse effect on the Group’s financial position. It is possible, however, that the results of operations could be materially affected by changes in the estimates. As of December 31, 2014, the Group has a pending litigation disclosed in Note 30.

Management’s Use of Estimates The key assumptions concerning the future and other key sources of estimation and uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are as follows:

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 17 and 19 for the related balances.

Estimating allowance for impairment losses The Group maintains allowance for impairment losses based on the result of the individual and collective assessment under PAS 39. Under the individual assessment, the Group is required to obtain the present value of estimated cash flows using the receivable’s original EIR. Impairment loss is determined as the difference between the receivables’ carrying balance and the computed present value. Factors considered in individual assessment are payment history, past due status and term. The collective assessment would require the Group to group its receivables based on the credit risk characteristics (customer type, credit history, past-due status and term) of the customers. Impairment loss is then determined based on historical loss experience of the receivables grouped per credit risk profile. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. The methodology and assumptions used for the individual and collective assessments are based on management’s judgment and estimate. Therefore, the amount and timing of recorded expense for any period would differ depending on the judgments and estimates made for the year. See Note 6 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 2014 and 2013. The Group’s inventories carried at cost are disclosed in Note 7.

Estimating useful lives of property and equipment and investment properties The Group estimates the useful lives of its property and equipment and investment properties based on the period over which these assets are expected to be available for use. The estimated useful lives of

252 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

property and equipment and investment properties are reviewed at least annually and are updated if expectations differ from previous estimates due to physical wear and tear and technical or commercial obsolescence on the use of these assets. It is possible that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. See Notes 9 and 11 for the related balances.

Evaluating impairment of nonfinancial assets The Group reviews investments in associates, property and equipment, investment properties and other noncurrent assets (other than financial assets, such as dividends receivable) for impairment of value. This includes considering certain indications of impairment such as significant changes in asset usage, significant decline in assets’ market value, obsolescence or physical damage of an asset, plans in the real estate projects, significant underperformance relative to expected historical or projected future operating results and significant negative industry or economic trends.

As described in the accounting policy, the Group estimates the recoverable amount as the higher of an asset’s fair value less costs to sell and value in use. In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets, the Group is required to make estimates and assumptions that may affect investments in associates and a joint venture, investment properties, property and equipment and other noncurrent assets. See Notes 9, 10, 11 and 12 for the related balances.

Determining the fair value of investment properties The Group discloses the fair values of its investment properties in accordance with PAS 40. The Group engaged independent valuation specialist to assess the fair value as at December 31, 2014 and 2013. See Note 11 for the related balances.

Deferred tax assets The Group reviews the carrying amounts of deferred taxes at each reporting date and reduces deferred tax assets to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax assets to be utilized. However, there is no assurance that the Group will generate sufficient taxable income to allow all or part of deferred tax assets to be utilized. The Group looks at its projected performance in assessing the sufficiency of future taxable income. See Note 21 for the related balances.

Estimating pension liabilities and other retirement benefits The cost of defined benefit pension plans and other post-employment medical benefits as well as the present value of the pension obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. These include the determination of the discount rates, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, defined benefit obligations are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

In determining the appropriate discount rate, management considers the interest rates of government bonds that are denominated in the currency in which the benefits will be paid, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation.

The mortality rate is based on publicly available mortality tables for the specific country and is modified accordingly with estimates of mortality improvements. Future salary increases and pension increases are based on expected future inflation rates.

While the Group believes that the assumptions are reasonable and appropriate, significant differences in actual experience or significant changes in assumptions could materially affect retirement obligations. See Note 20 for the related balances.

Fair value of financial instruments PFRS requires certain financial assets and liabilities to be carried at fair value or have the fair values disclosed in the notes, which requires use of extensive accounting estimates and judgments. While significant components of fair value measurement were determined using verifiable objective evidence (i.e., foreign exchange rates and interest rates), the amount of changes in fair value would differ if the

CHI 2014 Annual and Sustainability Report 253 CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 24 for the related balances.

4. Cash and Cash Equivalents

This account consists of:

2014 2013 (In Thousands) Cash on hand and in banks P=156,967 P=468,782 Cash equivalents 2,738,248 296,369 P=2,895,215 P=765,151

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=31.1 million, P=23.2 million and P=51.7 million in 2014, 2013 and 2012, respectively (see Note 18).

5. Financial Assets at Fair Value through Profit or Loss

This account pertains to investments in BPI Short Term Fund (the Fund), a money market unit investment trust fund which the Group holds for trading and is a portfolio of funds invested and managed by professional managers. The Fund aims to generate liquidity and stable income by investing in a diversified portfolio of primarily short-term fixed income instruments. This is measured at fair value with gains or losses arising from changes in fair value recognized in the consolidated statement of income under “Other income” or “Other charges”. Realized and unrealized gains recognized from changes in fair value through profit or loss amounted to P=3.5 million and P=4.3 million in 2014 and 2013, respectively (see Note 18).

The fair value of the investment in UITF is based on net asset value per unit determined by using valuation techniques and is classified under Level 2 of the fair value hierarchy. These valuation techniques maximize the use of observable market data where it is available such as quoted market prices or dealer quotes for similar instruments.

6. Accounts Receivable

This account consists of:

2014 2013 (In Thousands) Trade: Residential development P=311,340 P=475,576 Shopping centers 145,964 102,199 Corporate business 68,083 96,055 Commercial development 30,617 102,508 Others 1,626 30 Advances to contractors (Note 16) 415,098 403,317 Receivables from related parties (Note 16) 345,236 276,604

(Forward)

254 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2014 2013 (In Thousands) Receivables from employees P=15,452 P=10,770 Accrued receivable 14,958 14,087 Others 53,290 51,161 1,401,664 1,532,307 Less allowance for impairment losses 13,577 13,577 1,388,087 1,518,730 Less noncurrent portion 106,048 473,810 P=1,282,039 P=1,044,920

The classes of trade receivables of the Group are as follows:

Residential development pertains to receivables arising from sale of residential lots and condominium units. Shopping centers pertain to receivables arising from lease of retail space and land therein, movie theaters, food courts, entertainment facilities and carparks. Corporate business pertains to receivables arising from lease of office buildings and accrued rent receivable arising from the difference between the amounts of rental revenue earned based on the straight-line computation for noncancellable leases per PAS 17, Leases and the amount of actual rent collected. Commercial development pertains to receivables arising from sale of commercial lots and club shares.

Terms and conditions of receivables are as follows:

Sales contract receivables, included under residential development, are noninterest-bearing and are collectible in monthly installments over a period of one to two years. Titles to real estate properties are transferred to the buyers only once full payment has been made. Leases of retail space and land therein, included under shopping centers, are noninterest-bearing and are collectible monthly based on the terms of the lease contracts. Leases of office spaces, included under corporate business, are noninterest-bearing and are collectible monthly based on the terms of the lease contracts. Receivables from sale of commercial lots, included under commercial development are noninterest- bearing and are collectible in monthly or quarterly installments over a period ranging from two to four years. Titles to real estate properties are not transferred to buyers until full payment has been made. Advances to contractors are recouped upon every progress billing payment depending on the percentage of accomplishment. Receivables from related parties are noninterest-bearing and collectible within one year. Receivables from employees are composed of both interest and noninterest-bearing advances and are collectible over a period of one year through salary deduction. Other receivables are due and demandable.

As of December 31, 2014 and 2013, residential development trade receivables with a nominal amount of P=317.6 million and P=493.5 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=6.3 million and P=18.0 million as of December 31, 2014 and 2013, respectively.

CHI 2014 Annual and Sustainability Report 255 CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Movements in the unamortized discount on trade receivables as of December 31, 2014 and 2013, respectively are as follows:

2014 2013 (In Thousands) Balance at January 1 P=17,968 P=17,844 Additions 28,401 49,807 Accretion (Note 18) (40,111) (49,683) Balance at December 31 P=6,258 P=17,968

The Group has not recognized provision for impairment losses for the years ended December 31, 2014, 2013 and 2012. Gross amount of receivables individually determined to be impaired amounted to P=13.6 million as of December 31, 2014 and 2013.

7. Inventories

This account consists of:

2014 2013 (In Thousands) Subdivision lot for sale and development P=582,830 P=636,728 Club shares 355,654 355,092 Condominium units under development 239,315 255,428 P=1,177,799 P=1,247,248

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

2014

Subdivision lot for Condominium sale and units under development development Club shares Total (In Thousands)

Balance at January 1 P=636,728 P=255,428 P=355,092 P=1,247,248 Construction/development costs incurred 5,813 79,623 − 85,436 Disposals (recognized as cost of sales) (25,721) (129,726) 562 (154,885) Transfers (33,990) 33,990 − − Balance at December 31 P=582,830 P=239,315 P=355,654 P=1,177,799

2013

Subdivision lot for Condominium sale and units under development development Club shares Total (In Thousands)

Balance at January 1 P=729,660 P=170,763 P=357,340 P=1,257,763 Construction/development costs incurred 79,288 307,225 − 386,513 Disposals (recognized as cost of sales) (90,717) (276,379) (2,248) (369,344) Acquisition through business combination 53,819 53,819 Transfers from (to) investment property (81,503) − − (81,503) Balance at December 31 P=636,728 P=255,428 P=355,092 P=1,247,248

For the years ended December 31, 2014 and 2013, the Group did not record any provision for impairment.

256 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Other Current Assets

This account consists of:

2014 2013 (In Thousands) Input VAT - net P=133,178 P=175,550 Prepaid expenses 115,663 18,005 Dividends receivable 29,858 − Others 223 1,378 P=278,922 P=194,933

Input VAT is applied against output VAT. The remaining balance is recoverable in future periods.

Prepaid expenses consist of advance payments for project management fees, business taxes, office supplies, rentals, advertising and promotions, commissions and other expenses.

9. Property and Equipment

The rollforward analyses of this account follow:

2014

Buildings Furniture, and Fixtures and Transportation Improvements Equipment Equipment Total (In Thousands)

Cost At January 1 P=108,499 P=113,464 P=18,633 P=240,596 Additions 7,506 7,255 5,281 20,042 Disposals (5,805) (9,852) (2,672) (18,329) Transfer to investment property (Note 11) − (28) − (28) At December 31 110,200 110,839 21,242 242,281 Accumulated Depreciation At January 1 77,601 81,182 11,547 170,330 Depreciation and amortization (Note 19) 6,600 8,494 2,973 18,067 Disposals (5,805) (9,844) (2,410) (18,059) Transfer to investment property (Note 11) − (11) − (11) At December 31 78,396 79,821 12,110 170,327 Net Book Value P=31,804 P=31,018 P=9,132 P=71,954

CHI 2014 Annual and Sustainability Report 257 CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2013

Buildings Furniture, and Fixtures and Transportation Improvements Equipment Equipment Total (In Thousands)

Cost At January 1 P=89,354 P=98,103 P=32,985 P=220,442 Acquisitions through business combination (Note 23) − 1,474 − 1,474 Additions 20,354 9,900 1,496 31,750 Disposals (1,209) (1,442) (15,848) (18,499) Transfers (Notes 11 and 29) – 5,429 – 5,429 At December 31 108,499 113,464 18,633 240,596 Accumulated Depreciation At January 1 77,343 71,691 22,143 171,177 Acquisitions through business combination (Note 23) − 510 − 510 Depreciation and amortization (Note 19) 1,467 9,353 3,044 13,864 Disposals (1,209) (372) (13,640) (15,221) At December 31 77,601 81,182 11,547 170,330 Net Book Value P=30,898 P=32,282 P=7,086 P=70,266

Depreciation and amortization charged to general and administrative expenses amounted to P=18.1 million and P=13.9 million for the years ended December 31, 2014 and 2013, respectively (see Note 19).

Fully depreciated assets that are still in use amounted to P=89.71 million and P=63.24 million as of December 31, 2014 and 2013, respectively.

As of December 31, 2014 and 2013, there are no capital commitments related to the Group’s property and equipment.

10. Investments in Associates and a Joint Venture

This account consists of:

2014 2013 Cost Balance at January 1 P=967,626 P=416,052 Accumulated equity in net income Balance at January 1 12,054 (39,123) Equity in net income for the year 79,679 47,050 Equity in realized profit from downstream sales − 4,127 Balance at December 31 91,733 12,054 Accumulated equity in other comprehensive loss Balance at January 1 − − Equity in other comprehensive loss for the year (1,078) − Balance at December 31 (1,078) − P=1,058,281 P=428,106

There were no dividends for the years ended December 31, 2014, 2013 and 2012.

258 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Group’s equity in net assets of associates and a joint venture and the related percentages of ownership are shown below.

Percentages of Ownership Carrying Amounts December 31 December 31 2014 2013 2014 2013 (In Thousands)

Associates: Cebu Insular Hotels Company, Inc. (CIHCI) 37% 37% P=222,666 P=205,844 Solinea, Inc. (Solinea) 35 35 229,376 170,334 Amaia Southern Properies, Inc. (ASPI) 35 35 98,436 51,928 Southportal Properties, Inc. (SPI) 35 – 60,200 – Joint Venture: CDPEI 14 – 447,603 – P=1,058,281 P=428,106

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

2014 In 2014, a joint venture agreement was made and executed between ALI and Aboitiz Land, Inc. to incorporate with 50% interest each, a new company (CDPEI) which will take the development and operation of mixed-use developments with residential, commercial and retail components within the parcels of land located in the City of Mandaue, Province of Cebu and other areas. ALI subsequently assigned 10% and 5% interests to the Parent Company and CPVDC, respectively for a consideration of P=300.0 million and P=150.0 million, respectively. For the year ended December 31, 2014, the Group recognized equity in net loss amounting to P=2.4 million.

The Parent Company also acquired 35% interest in SPI for a consideration of P=60.2 million. The other 65% interest was acquired by ALI.

The Parent Company also made additional capital infusion to ASPI amounting to P=40.6 million in relation to the latter’s increase in authorized capital stock. The transaction did not change the Parent Company’s ownership interest in ASPI.

2013 In 2013, the Parent Company acquired a 35% interest in ASPI for a consideration of P=52.5 million from Amaia Land, Inc. (Amaia), a subsidiary of ALI.

259 CHI 2014 Annual and Sustainability Report CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the summarized financial information of the associates and a joint venture based on their PFRS financial statements, as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013 and 2012:

CIHCI

The Group has a 37% interest in CIHCI, a company incorporated on April 6, 1995 with principal place of business at Cebu City Marriott Hotel, Cardinal Rosales Avenue, Cebu Business Park, Cebu City. CIHCI’s summarized financial information follows:

2014 2013 (In Thousands)

Current assets P=257,044 P=182,470 Noncurrent assets 662,460 702,542 Total assets P=919,504 P=885,012

Current liabilities P=172,730 P=188,049 Noncurrent liabilities 163,436 155,338 Equity 583,338 541,625 Total liabilities and equity P=919,504 P=885,012

2014 2013 2012 (In Thousands) Revenue P=465,913 P=126,436 P=423,385 Costs and expenses 421,797 91,553 386,113 Net income 44,116 34,883 37,272 Other comprehensive loss (2,908) − − Total comprehensive Income P=41,208 P=34,883 P=37,272

Solinea

The Group has a 35% interest in Solinea, a company incorporated on April 2, 2007 with principal place of business at 7th Floor, Cebu Holdings Center, Cardinal Rosales Avenue, Cebu Business Park, Cebu City. Solinea’s summarized financial information follows:

2014 2013 (In Thousands) Current assets P=1,875,332 P=1,024,900 Noncurrent assets 892,439 850,977 Total assets P=2,767,771 P=1,875,877

Current liabilities P=2,243,360 P=1,575,682 Noncurrent liabilities 207,510 149,778 Equity 316,901 150,417 Total liabilities and equity P=2,767,771 P=1,875,877

2014 2013 2012 (In Thousands) Revenue P=954,347 P=381,847 P=315,782 Costs and expenses 787,863 323,351 238,242 Net income P=166,484 P=58,496 P=77,540

260 Let’s Build for Tomorrow's Generations

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

CDPEI

The Group has a 14% interest in CDPEI, a company incorporated on February 20, 2014 with principal place of business at Aboitiz Corporate Center, Gov. Manuel Cuenco Ave., Kasambagan, Cebu City. CDPEI’s summarized financial information follows:

2014 (In Thousands) Current assets P=432,481 Noncurrent assets 2,552,883 Total assets P=2,985,364

2014 (In Thousands) Current liabilities P=1,346 Equity 2,984,018 Total liabilities and equity P=2,985,364

2014 (In Thousands) Revenue P=3,700 Costs and expenses 19,682 Net loss (P=15,982)

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

2014 2013 (In Thousands) Carrying amount P=158,636 P=51,928 Share in net income (loss) from continuing operations 5,548 (572) Share in total comprehensive income − −

11. Investment Properties

The rollforward analyses of this account follow:

2014

Buildings and Construction Land Improvements in Progress Total (In Thousands)

Cost At January 1 P=1,719,393 P=7,549,132 P=740,325 P=10,008,850 Additions 181,159 150,563 943,115 1,274,837 Transfers − 131,414 (131,414) – Transfer from property and equipment (Notes 9 and 29) − 28 − 28 Disposals − (12,533) − (12,533) At December 31 1,900,552 7,818,604 1,552,026 11,271,182

(Forward)

261 CHI 2014 Annual and Sustainability Report CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Buildings and Construction Land Improvements in Progress Total (In Thousands)

Accumulated Depreciation At January 1 P=− P=1,778,257 P=− P=1,778,257 Depreciation and amortization (Note 19) – 294,677 − 294,677 Transfer from property and equipment (Notes 9 and 29) − 11 − 11 Disposals – (12,533) − (12,533) At December 31 – 2,060,412 – 2,060,412 Net Book Value P=1,900,552 P=5,758,192 P=1,552,026 P=9,210,770

2013

Buildings and Construction Land Improvements -in- Progress Total (In Thousands)

Cost At January 1 P=790,644 P=3,411,412 P=1,774,635 P=5,976,691 Acquisitions through business combination (Note 23) 811,173 2,041,823 174,300 3,027,296 Additions 36,073 89,066 803,650 928,789 Transfers from inventories (Notes 7 and 29) 81,503 − − 81,503 Transfers from (to) investment properties and property and equipment (Notes 9 and 29) − 2,006,831 (2,012,260) (5,429) At December 31 1,719,393 7,549,132 740,325 10,008,850 Accumulated Depreciation and Amortization At January 1 − 1,341,490 – 1,341,490 Acquisitions through business combination − 231,868 − 231,868 Depreciation and amortization (Note 19) − 204,899 – 204,899 At December 31 − 1,778,257 − 1,778,257 Net Book Value P=1,719,393 P=5,770,875 P=740,325 P=8,230,593

The Group’s investment properties are currently used for commercial leasing. Construction-in-progress includes cost of eBloc 3, eBloc 4, ACC Corporate Center commercial buildings.

Depreciation and amortization on buildings and improvements charged to operations amounted to P=294.7 million, P=204.9 million and P=125.9 million and for the years ended December 31, 2014, 2013 and 2012, respectively (see Note 19).

Total rental income from investment properties amounted to P=1,381.6 million,P=1,131.1 million, and P=854.9 million for the years ended December 31, 2014, 2013 and 2012, respectively (see Note 17). Total direct operating expenses related to investment properties that generated rental income amounted to P=781.0 million, P=542.6 million and P=234.1 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Borrowing costs capitalized to construction-in-progress amounted to P=67.7 million and P=33.4 million in 2014 and 2013, respectively (see Note 14). Capitalization rate used for general borrowings is at 4.75% for 2014.

The aggregate fair value of the Group’s investment properties amounted to P=16,930.8 million, P=10,725.3 million as of December 31, 2014 and 2013, respectively. The fair values were classified under Level 3 of the fair value hierarchy.

The fair values of the investment properties were determined by independent professionally qualified appraisers.

262 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair values of the land and buildings were arrived at using the Market Data Approach and Cost Approach, respectively. In Market Data Approach, the value of the land is based on sales and listings of comparable property registered within the vicinity. The technique of this approach requires the establishment of comparable property by reducing reasonable comparative sales and listings to a common denominator. This is done by adjusting the differences between the subject property and those actual sales and listings regarded as comparable. The properties used as basis of comparison are situated within the immediate vicinity of the subject property. In the Cost Approach, the value of the buildings is determined by the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation based on physical wear and tear, and obsolescence plus an estimate of developers’ profit margin.

For Market Data approach, the higher the price per sqm., the higher the fair value. For Cost Approach, whose unobservable inputs include estimated costs to complete and estimated profit margin and hold and develop property to completion, the higher these costs and required profit margin, the lower the fair value.

As of December 31, 2014, capital commitments for investment properties amounted to P=1,081.1 million.

12. Other Noncurrent Assets

This account consists of:

2014 2013 (In Thousands) Deposits P=64,764 P=2,205 Deferred input tax 17,103 19,262 Dividends receivable (Note 16) − 32,734 Others 1,741 553 P=83,608 P=54,754

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

Deferred input tax arises from purchase of capital goods and is recoverable in future periods.

Dividends receivable represents dividends declared by CIHCI which are due to be received by the Parent Company in installment until December 31, 2015.

13. Accounts and Other Payables

This account consists of:

2014 2013 (In Thousands) Payable to related parties (Note 16) P=893,611 P=127,695 Accrued project costs 832,472 1,209,562 Retentions payable 258,454 261,787 Accrued expenses 257,230 176,665 Taxes payable 71,463 48,010 Interest payable 34,414 4,968 Dividends payable 11,957 1,858 Others 17,785 993 P=2,377,386 P=1,831,538

Payable to related parties generally are due and demandable and are settled in cash at market prices.

263 CHI 2014 Annual and Sustainability Report CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued project costs arise from progress billings or unbilled completed work on the development of residential and commercial projects.

Retentions payable pertains to the portion of the progress billings of constructions retained by the Group which will be released after the completion of the contractor’s projects. The retention serves as a security from the contractor in case of defects in the project.

Accrued expenses consist mainly of direct operating and administrative expenses, payroll, systems cost and marketing expenses.

Taxes payable pertains to amusement taxes, net output VAT and expanded withholding taxes.

Dividends payable pertains to dividends declared by CPVDC (see Note 25).

Accrued project costs and accrued expenses are noninterest-bearing and are normally settled on 30 to 180-day terms.

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

14. Long-term debt

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

2014 2013 (In Thousands) Bonds: Due 2021 P=5,000,000 P=− Bank Loans: At 0.60% per annum spread over the floating rate of average 91-day treasury bill rate − 2,550,000 At 0.65% per annum spread over the average floating rate of 91-day treasury bill rate 540,000 607,500 Fixed rate corporate notes with interest rate of 4.75% per annum 420,000 420,000 At 0.38% per annum spread over the average floating based on Mart 1 rate 400,000 400,000 At 0.50% per annum spread over the fixed rate based on PDST-R1 rate 296,050 299,150 At 0.50% per annum spread over the fixed rate based on PDST-R2 rate 85,950 86,850 At 0.50% per annum spread over the fixed rate of average 5-year treasury bond rate 4,000 4,500 At 0.88% per annum spread over the average floating rate of 91-day treasury bill rate 23,875 24,125 6,769,875 4,392,125 Less unamortized debt issue cost 50,395 14,148 6,719,480 4,377,977 Less current portion 492,561 669,225 P=6,226,919 P=3,708,752

In April 2008, the Group obtained loans with principal amount of P=425.00 million from Metropolitan Bank & Trust Company. The loan shall be paid for a maximum term of seven years from and after the initial drawdown date and is subject to fixed interest rates ranging from 7.76% to 9.73% per annum.

In October 2010, loans were availed amounting to P=680.0 million which are due on 2017. In respect with the fixed rated portion of these loans, fixed interest is the weighted average yield of the 7-year treasury bonds based on PDST-R2 plus a spread of 50 basis points per annum. In respect of the floating interest

264 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

In March 2011, the Group obtained loans with a maximum principal amount of P=2.8 billion from Bank of the Philippine Islands. The loan shall be paid for a maximum term of five years from and after the initial drawdown date. In respect with the fixed rated portion of these loans, the fixed interest shall be the interpolated yield for treasury bills based on PDST-R2 plus a spread of 60 basis points per annum. 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 60 basis points per annum. The loans were pre-terminated and fully paid in 2014.

In December 2012 and February 2013, the Group obtained loans with a maximum principal amount of P=400.0 million. These loans are expected to mature on 2018 and 2019, respectively. The loan bears a floating interest rate based on the average yield for the 91-day treasury bills on PDST-R2 plus a spread of 80 basis points per annum or Bangko Sentral ng Pilipinas Overnight Reverse Repurchase Agreement rate plus a spread of 37.5 basis points, whichever is higher.

In December 2013, the Group availed loans with a principal sum of P=420.0 million which are due in 2021. The loan is subject to fixed interest rate of 4.75% per annum.

The loans which were availed from local banks in 2013, are used to finance the construction of eBloc 3 and eBloc 4 commercial buildings and are included under “Investment properties” (see Note 11).

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, 2014 and 2013.

On June 6, 2014, the Parent Company issued P=5.0 billion fixed rate bonds. These bonds have a term of 7 years, payable in 2021, with a fixed rate of 5.32% per annum. The proceeds will be used to fund the Group’s projects in the pipeline, including on-going projects within the Cebu Business Park and Cebu I.T. Park and land banking initiatives.

Interest on long-term debt recognized in the consolidated statement of comprehensive income amounted to P=182.4 million and P=51.7 million for the year ended December 31, 2014 and 2013, respectively (see Note 19). Interest rates range from 2.15% to 4.75% and 3.88% to 4.75% per annum for the years ended December 31, 2014 and 2013, respectively.

For the years ended December 31, 2014 and 2013, the Group has capitalized interest from borrowed funds as part of the investment properties account amounting to P=67.7 million and P=33.4 million, respectively. Capitalization rate used for general borrowings is at 4.75%.

The rollforward analyses of the unamortized debt issue cost follow:

2014 2013 (In Thousands) At January 1 P=14,148 P=4,938 Additions through business combination − 3,351 Additions 49,342 8,100 Amortization (Note 19) (13,095) (2,241) At December 31 P=50,395 P=14,148

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

2014 2013 (In Thousands) Due in: 2014 P=− P=72,250 2015 493,875 493,875 2016 168,000 168,000 2017 508,000 508,000 2018 420,000 420,000 2019 80,000 80,000 2020 80,000 80,000 2021 20,000 20,000 P=1,769,875 P=1,842,125

15. Deposits and Other Liabilities

This account consists of the following:

December 31 2014 2013 (In Thousands)

Tenants’ deposits P=610,375 P= 465,891 Customers’ deposits 183,775 145,291 Advance rent 74,382 51,396 Retentions payable 16,297 − Construction bond 10,828 8,188 895,657 670,766 Less noncurrent portion 225,891 182,701 P=669,766 P=488,065

The rollfoward analyses of deferred credits under tenants’ deposits follow:

2014 2013 At January 1 P=13,591 P=15,117 Additions 3,868 3,258 Amortization (Note 19) (7,251) (4,785) At December 31 P=10,208 P=13,590

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’ downpayments 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 downpayments are considered as payments to the total contract price.

Advance rent pertains to tenants’ advances which are to be applied by the Group against the rent and service due at the end of the lease terms.

Retention payable pertains to the portion of the progress billings of contractors retained by the Group to be released after the guarantee period, usually within one year after the completion of projects. The retention serves as security from the contractor against potential defects in the projects.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Construction bond payable pertains to deposits made by tenants as security for the construction and design of the leased premises, to be refunded upon completion, which usually takes less than a year.

16. Related Party Transactions

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

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

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

Amounts owed by related parties 2014 2013 (In Thousands) Associates Solinea P=224,657 P=224,431 Parent Company ALI 9,303 5,965 Subsidiaries of ALI Avida Land Corp. (ALC) 77,153 40,151 Alveo Land Corp. (Alveo) 29,665 110 Makati Development Corp. (MDC) 3,015 1,107 Ayala Land Sales, Inc. (ALSI) 611 195 Amicassa Process Solutions, Inc. (APSI) 147 270 Leisure and Allied Industries, Phils. (LAIP) 84 263 Accendo Commercial Corp. (ACC) 55 160 Others 546 3,952 Total P=345,236 P=276,604

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Amounts owed to related parties 2014 2013 (In Thousands) Parent Company ALI P=334,173 P=86,398 Subsidiaries of ALI DirectPower Services, Inc. (DPSI) 150,000 – MDC 150,055 – Serendra, Inc. 100,000 – ALC 73,097 22,793 PhilEnergy 68,085 18,131 Alveo 18,131 154 Alabang Commercial Corp. 10 153 Others 60 66 Total P=893,611 P=127,695

Revenue 2014 2013 2012 (In Thousands) Associate AiO P=− P=− P=15,812 Parent Company ALI 3,855 12,098 – Subsidiries of ALI LAIP 2,084 − − Alveo 811 − − Total P=6,750 P=12,098 P=15,812

Costs/Expenses 2014 2013 2012 (In Thousands) Parent Company ALI P=122,322 P=73,461 P=57,317 Subsidiaries of ALI Alveo 5,201 10,475 – ALC 1,568 7,523 – Ayala Property Management Corp. (APMC) 7,860 8,346 – Total P=136,951 P=99,805 P=57,317

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, 2014.

Included under accrued project costs in accounts and other payables are construction costs payable to MDC amounting to P=572.6 million and P=295.5 million as of December 31, 2014 and 2013, respectively. Advances to MDC, which are included under advances to contractors in accounts receivable amounted to P=324.6 million and P=358.6 million as of Dec. 31, 2014 and 2013, respectively.

268 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The nature and amounts of material transactions with related parties as of December 31, 2014 and 2013 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=79.8 million, P=73.4 million, and P=44.4 million in 2014, 2013 and 2012, respectively. Payable to ALI as of December 31, 2014 and 2013 arising from this transaction amounted to P=111.8 million and P=42.5 million respectively. Professional fees charged by ALI amounted to P=18.9 million, P=33.0 million and P=0.6 million in 2014, 2013 and 2012, respectively. Systems costs which were included in the Group’s manpower costs amounted to P=32.1 million, P=19.7 million and P=13.9 million in 2014, 2013 and 2012, respectively.

Included in the Group’s other current assets is a dividend receivable from CIHCI amounting to P=29.9 million as of December 31, 2014. This is collectible in installment until 2015. This was previously included under other noncurrent assets with carrying amount of P=32.7 million as of December 31, 2013.

As of December 31, 2014 and 2013, the Group has entered into transactions with Bank of the Philippine Islands (BPI), an affiliate, consisting of cash and cash equivalents, financial assets at FVPL and long-term debt with carrying amounts as follows:

2014 2013 (In Thousands) Cash and cash equivalents (Note 4) P=564,726 P=697,125 Financial assets at FVPL (Note 5) 204,077 426,604 Long-term debt (Note 14) 1,359,513 4,387,875 P=2,128,316 P=5,511,604

Compensation of key management personnel by benefit type follows:

2014 2013 2012 (In Thousands) Short-term employee benefits P=26,067 P=20,634 P=18,832 Post-employment pension and other benefits 2,270 2,237 2,807 P=28,337 P=22,871 P=21,639

17. Real Estate Revenue

This account consists of:

2014 2013 2012 (In Thousands) Rental income P=1,381,638 P=1,131,136 P=854,939 Real estate sales 237,295 546,794 309,682 Theater income 135,541 102,264 96,030 P=1,754,474 P=1,780,194 P=1,260,651

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18. Interest and Other Income

Interest income consists of:

2014 2013 2012 (In Thousands) Interest income: Cash in banks (Note 4) P=1,817 P=1,354 P=239 Cash equivalents (Note 4) 29,240 21,798 51,503 Short-term investments – – 400 Accretion of receivables (Note 6) 40,111 49,683 31,037 P=71,168 P=72,835 P=83,179

Other income consists of:

2014 2013 2012 (In Thousands) Recoveries P=339,929 P=206,091 P=110,785 Service income 32,795 32,660 79,210 Beverage 5,488 17,729 4,533 Realized/unrealized gain on financial assets at FVPL (Note 5) 3,489 4,281 − Penalties − − 15,300 Others 6,557 8,670 5,475 P=388,258 P=269,431 P=215,303

Recoveries pertain to income from sewer, light and power and water charges from its rental operations. These are recognized when earned.

Service income pertains to various management fees charged by the Group to various parties.

Penalties represent payments made by a lot buyer in relation to certain construction violations. The lot buyer has agreed to comply with the specified restrictions. Penalties are based on the contractual terms of the agreement.

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19. Costs and Expenses

Real estate, rental and theater expenses consist of:

2014 2013 2012 (In Thousands) Depreciation and amortization (Note 11) P=294,677 P=204,899 P=125,895 Cost of real estate sales (Note 7) 154,885 369,344 203,507 Marketing and management fees (Note 16) 151,264 167,310 91,969 Producers’ film share 75,424 56,492 55,808 Manpower cost (Note 16) 13,846 11,790 10,494 Rental 1,179 1,355 2,773 Direct operating expenses: Light and water 180,030 119,349 92,856 Security and janitorial 85,224 56,312 44,189 Repairs and maintenance 65,176 54,417 30,268 Taxes and licenses 60,114 39,399 41,504 Commission 7,809 19,606 12,635 Dues and fees 6,332 13,579 17,351 Professional fees 2,450 4,806 610 Insurance 3,239 4,515 8,598 Transportation and travel 399 245 475 Entertainment, amusement and recreation 70 47 227 Others 25,054 26,875 12,431 P=1,127,172 P=1,150,340 P=751,590

General and administrative expenses consist of:

2014 2013 2012 (In Thousands) Manpower cost (Notes 16 and 20) P=129,267 P=124,856 P=121,613 Depreciation and amortization (Note 9) 18,067 13,864 12,467 Taxes and licenses 13,742 10,861 285 Professional fees 9,664 8,076 7,643 Trainings 9,642 3,788 3,964 Transportation and travel 7,770 10,144 6,938 Advertising 7,213 11,378 3,973 Repairs and maintenance 6,903 10,106 6,813 Security and janitorial 5,270 3,579 3,265 Stockholders' meeting 4,286 7,712 7,807 Postal and communication 3,582 3,672 4,304 Supplies 3,443 2,130 2,251 Utilities 2,745 3,341 4,495 Rental 2,631 754 1,507 Entertainment, amusement and recreation 1,022 930 1,304 Insurance 1,188 1,581 2,591 Others 3,408 9,408 3,114 P=229,843 P=226,180 P=194,334

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Interest and other financing charges consist of:

2014 2013 2012 (In Thousands) Interest on long-term debt (Note 14) P=182,372 P=51,699 P=22,803 Amortization of discount on long-term debt (Note 14) 13,095 2,241 4,136 Amortization of deferred credits (Note 15) 7,251 4,785 3,020 Other financing charges 2,936 108 13,586 P=205,654 P=58,833 P=43,545

20. Pension Plan

As discussed in Note 2, the Group maintains a defined contribution (DC) plan which is accounted for as a defined benefit (DB) plan with minimum guarantee due to the requirements of RA No. 7641.

The asset allocation of the plan is set and reviewed from time to time by the Plan Trustees taking into account the membership profile, the liquidity requirements of the Plan and the risk appetite of the Plan sponsor.

The principal actuarial assumptions used to determine retirement benefits with respect to the discount rate, salary increases and return on plan assets were based on historical and projected normal rates. Actuarial valuations are made annually. The Group’s annual contributions are agreed between the Plan Trustees and the Group, in consideration of the contribution advice from the Plan Actuary.

The Group’s fund is in the form of a trust fund being maintained by BPI Asset Management. The primary objective of the Retirement Fund is to achieve the highest total rate of return possible, consistent with a prudent level of risk. The investment strategy articulated in the asset allocation policy has been developed in the context of long-term capital market expectations, as well as multi-year projections of actuarial liabilities. Accordingly, the investment objectives and strategies emphasize a long-term outlook, and interim performance fluctuations will be viewed with the corresponding perspective.

The components of pension expense (included in manpower costs under “General and administrative expenses”) in the consolidated statements of income are as follows:

2014 2013 2012 (In Thousands) Current service cost P=12,442 P=2,297 P=1,475 Net interest expense 1,275 1,535 1,233 Curtailment effects – – (6,861) Total pension expense (income) P=13,717 P=3,832 (P=4,153)

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The remeasurement effects recognized in other comprehensive income (included in Equity under “Remeasurement loss on defined benefit plan”) in the consolidated statements of financial position follow:

2014 2013 2012 (In Thousands) Actuarial loss due to liability experience P=10,429 P=616 P=1,863 Actuarial loss due to liability assumption changes − 6,965 11,570 Return on plan assets greater than discount rate 537 – – Remeasurement losses in other comprehensive income P=10,966 P=7,581 P=13,433

The amounts recognized under pension liability in the consolidated statements of financial position for the pension plan are as follows:

2014 2013 (In Thousands) Defined benefit obligation P=63,403 P=39,323 Fair value of plan assets (7,669) – Liability recognized in the statements of financial position P=55,734 P=39,323

Changes in the present value of the defined benefit obligation are as follows:

2014 2013 (In Thousands) Balance at January 1 P=39,323 P=27,910 Remeasurement loss arising from changes in financial assumptions 10,429 7,581 Current service cost 12,442 2,297 Interest expense 2,233 1,535 Benefits paid (1,024) − Balance at December 31 P=63,403 P=39,323

Changes in the fair value of the plan assets are as follows:

2014 2013 (In Thousands)

Balance at January 1 P=– P=– Interest income on plan assets 958 – Contributions 8,272 – Benefits paid (1,024) Return on plan assets less than discount rate (537) – Balance at December 31 P=7,669 P=–

The Group expects to contribute P=4.2 million to its retirement fund in 2015.

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In 2014, the allocations of the fair value of plan assets follow:

Deposit instruments 53.17% Mutual Funds 35.23 Unit investment trust fund 8.13 Government securities 3.60 Cash and payables (0.13) Total 100.00%

The cost of defined benefit pension plans and other post-employment medical benefits as well as the present value of the pension obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. The principal assumptions used in determining pension and post- employment medical benefit obligations for the defined benefit plans are shown below:

2014 2013 Discount rate 4.50% 4.50% Salary increase rate 7.00 7.00

The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the defined benefit obligation as of the end of the reporting period, assuming all other assumptions were held constant:

Effect on DBO December 31, December 31, 2014 2013 Discount rate 1.0% increase (10.20%) (17.7%) Discount rate 1.0% decrease 12.18 21.3 Rate of salary increase 1.0% increase 11.75 20.9 Rate of salary increase 1.0% decrease (10.07) (17.7)

The weighted average duration of the defined benefit obligation at the end of the reporting period is 15.12 years.

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

2014 2013 (In Thousands)

Within 1 year P=1,722 P=723 More than 1 year to 5 years 19,714 7,537 More than 5 years to 10 years 25,462 14,061 More than 10 years 426,930 366,947 P=473,828 P=389,268

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21. Income Taxes

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

2014 2013 2012 Statutory income tax rate 30.00% 30.00% 30.00% Tax effects of: Income subjected to lower income tax rates (5.18) (1.09) (1.47) Equity in net earnings of associates and a joint venture (3.31) (2.25) (3.47) Interest income and capital gains taxed at lower rates (0.02) (0.08) (0.83) Others 1.09 1.26 1.79 Effective income tax rate 22.58% 27.84% 26.02%

The components of net deferred tax assets as of December 31, 2014 and 2013 follow:

2014 2013 (In Thousands)

Deferred tax assets on: Unapplied NOLCO P=21,642 P=11,303 Advance rent 6,267 4,104 Difference between tax and book basis of accounting for real estate transactions 2,269 3,603 Allowance for impairment losses 2,102 2,102 Interest accretion 1,104 755 Unrealized foreign exchange loss 923 923 Accrued expenses − 295 Others 515 411 34,822 23,496 Deferred tax liabilities on: Capitalized interest 12,982 6,120 Accrued rental income 2,033 2,163 Difference between tax and book basis of accounting for real estate transactions 1,357 – Deferred credits 1,100 762 Others 1,112 483 18,584 9,528 P=16,238 P=13,968

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The components of net deferred tax liabilities as of December 31, 2014 and 2013 are as follows:

2014 2013 (In Thousands)

Deferred tax assets on: Accrued expenses P=4,454 P=11,970 Retirement benefits 10,273 9,743 Allowance for probable losses 2,983 3,032 Unrealized foreign exchange loss 800 756 18,510 25,501 Deferred tax liabilities on: Difference between tax and book basis of accounting for real estate transactions 24,572 41,559 Unamortized capitalized interest 53,732 25,773 Excess of acquisition cost over the net assets of a subsidiary 15,272 15,368 Others 2,770 2,120 96,346 84,820 P=77,836 P=59,319

The table below shows the details of NOLCO that may be used by the Group as deductions against future income tax liabilities:

Year Incurred Amount Applied/Expired Balance Expiry Date 2012 P=16,057,533 P=− P=16,057,533 2015 2013 21,617,684 − 21,617,684 2016 2014 34,465,935 − 34,465,935 2017 P=72,141,152 P=− P=72,141,152

22. Basic/Diluted Earnings Per Share

The following table presents information necessary to compute EPS:

2014 2013 2012 (In Thousands, except EPS) a. Net income attributable to the equity holders of the Parent Company P=530,877 P=501,145 P=443,640 b. Weighted average number of outstanding shares 1,920,073 1,920,073 1,920,073 c. Basic/Diluted Earnings per share (a/b) P=0.28 P=0.26 P=0.23

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23. Business Combinations

Asian I- Office Properties, Inc. (AiO) On April 16, 2013, CPVDC acquired the 60% interest of ALI in AiO for a cash consideration of P=436.2 million. Both AiO and CPVDC are under the common control of ALI. This transaction will allow ALI to consolidate into CPVDC the development and operations of BPO offices in Cebu and businesses related thereto, which should lead to value enhancement, improved efficiencies, streamlined processes and synergy creation among ALI and its subsidiaries. This is also consistent with the thrust of the Group to build up its recurring income base. The following were the carrying values of the identifiable assets and liabilities of AiO at the date of acquisition:

April 16, 2013 (In Thousands) Assets: Cash and cash equivalents P=59,993 Accounts receivable 411,183 Inventories 53,819 Other current assets 12,630 Property and equipment* 964 Investment properties* 2,192,588 Deferred tax assets 2,575 Total assets 2,733,752 Liabilities: Accounts and other payables 531,465 Income tax payable 5,515 Other liabilities 120,813 Long-term debt 1,364,700 Total liabilities 2,022,493 Total net assets 711,259 Acquisition cost (720,733) Equity reserves (P=9,474) *net of accumulated depreciation

December 31, 2013 (In Thousands)

Total revenue P=326,200 Total costs and expenses 229,640 Net income P=96,560

Taft Punta Engaño Property, Inc. (TPEPI) On October 31, 2013, the Parent Company acquired a 55% interest in TPEPI for a consideration of P=550.0 million. The acquisition will allow the Group to consolidate its businesses resulting in improved efficiencies and synergy creation to maximize opportunities in the Cebu real estate market. The transaction was accounted for as an asset acquisition. The following table summarizes TPEPI’s assets and liabilities acquired by the Parent Company as of date of acquisition:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2013 (In Thousands)

Cash in bank P=217,858 Input VAT 14 Investment properties 332,128 Net assets acquired 550,000 Acquisition cost 550,000 Excess of cost over net assets acquired P=–

24. Financial Instruments

Fair Value Information The following tables set forth the carrying values and estimated fair values of the Group’s financial assets and liabilities:

December 31, 2014 December 31, 2013 Carrying Carrying Value Fair Value Value Fair Value (In Thousands)

LOANS AND RECEIVABLES Trade receivables Residential development P=311,340 P=311,340 P=475,576 P=483,302 Corporate receivables 68,083 64,856 102,199 89,467 OTHER FINANCIAL LIABILITIES Long-term debt P=6,719,480 P=7,263,808 P=4,377,977 P=4,522,315 Deposits and other liabilities 821,275 818,786 619,370 619,240

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

Financial assets at FVPL - The fair value estimates are based on net asset value as of the reporting dates.

Cash and cash equivalents, current accounts and dividends receivable - The carrying amounts approximate fair values due to the relatively short-term maturities of these instruments.

Noncurrent accounts and dividends receivable. - The fair values are estimated based on the discounted cash flow methodology using the applicable discount rates for similar types of instruments. The discount rates used ranged from 2.4% to 3.8% and 2.8% to 3.2% as of December 31, 2014 and 2013, respectively.

Accounts and other payables and current portion of deposits and other liabilities and long-term debt - The fair values approximate the carrying amounts due to the short-term nature of these accounts.

Noncurrent portion of deposits and other liabilities and long-term debt - The fair value of fixed rate instruments are estimated using the discounted cash flow methodology using the Group’s current incremental borrowing rates for similar borrowings with maturities consistent with those remaining for the liability being valued. The discount rates used ranged from 1.8% to 3.8% and 2.2% to 3.7% as of December 31, 2014 and 2013, respectively.

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Fair Value Hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation technique:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly or indirectly Level 3: inputs for the asset or liability that are not based on observable market data

The Group categorized the fair value of long-term debt and deposits and other noncurrent liabilities under Level 3 as of December 31, 2014. 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 from Level 1 to Level 2 or 3 categories in 2014 and 2013.

Financial Risk Management Objectives and Policies The Group’s principal financial instruments comprise cash and cash equivalents, financial assets at FVPL and long-term debt. The main purpose of the Group’s financial instruments is to fund its operations, capital expenditures and finance the projects. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

Exposure to credit risk, liquidity risk and market risk (i.e., foreign currency risk and interest rate risk) arises in the normal course of the Group’s business activities. The main objectives of the Group’s financial risk management are as follows:

to identify and monitor such risks on an ongoing basis; to minimize and mitigate such risks; and to provide a degree of certainty about costs.

The Group’s financing and treasury function operates as a centralized service for managing financial risks and activities as well as providing optimum investment yield and cost-efficient funding for the Group. The Group’s BOD reviews and approves policies for managing each of these risks.

Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Group’s credit risks are primarily attributable to financial assets such as cash and cash equivalents, financial assets and FVPL and accounts receivables. To manage credit risk, the Group maintains defined credit policies and monitors on a continuous basis the Group’s exposure to credit risks.

Cash and cash equivalents and financial assets at FVPL. The Group adheres to fixed limits and guidelines in its dealing with counterparty banks and its investment in financial instruments. Bank limits are established on the basis of the Group’s rating that covers the area of liquidity, capital adequacy and financial stability. Given the high credit standing of its accredited counterparty banks, management does not expect any of these financial institutions to fail in meeting their obligation. The Group’s exposure to credit risk from these financial assets arise from the default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Commercial development and residential development trade receivables. With respect to trade receivables from the sale of real estate properties, credit risk is managed primarily through credit reviews and monitoring of receivables on a continuous basis. The Group undertakes supplemental credit review procedures to ensure the adequacy of provisioning for certain installment payment structures. Customer payments are facilitated through various collection modes including the use of post-dated checks and auto-debit arrangements. Exposure to bad debts is not significant and the requirement for remedial procedures is minimal given the profile of buyers. As for the sale of lots, the Group includes in the contract to sell provisions that the title to the properties will only be transferred to the buyers upon full payment of the contract price.

CHI 2014 Annual and Sustainability Report 279 CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Corporate business and shopping center trade receivables. Credit risk arising from rental income from leasing properties is primarily managed through a tenant selection process. Prospective tenants are evaluated on the basis of payment track record and other credit information. In accordance with the provisions of the lease contracts, the lessees are required to deposit with the Group security deposits and advance rentals which help reduce the Group’s credit risk exposure in case of defaults by the tenants. For existing tenants, the Group has put in place a monitoring and follow-up system. Receivables are aged and analyzed on a continuous basis to minimize credit risk associated with these receivables. Regular meetings with tenants are also undertaken to provide opportunities for counseling and further assessment of paying capacity.

As for the receivables from related parties, receivable from employees, dividends receivable and other receivables, the maximum exposure to credit risk from these financial assets arise from the default of the counterparty with a maximum exposure equal to their carrying amounts.

An analysis of the maximum exposure to credit risk from the Group’s trade receivables and the fair values of the related collaterals are shown below:

December 31, 2014 Financial effect Maximum of collateral exposure to Fair value of or credit credit risk collaterals Net Exposure enhancement (In Thousands)

Trade receivables Residential development P=311,340 P=731,792 P=– P=311,340 Shopping centers 132,387 440,913 − 132,387 Corporate business 68,083 77,958 − 68,083 Commercial development 30,617 89,148 – 30,617 Total P=542,427 P=1,339,811 P= P=542,427

December 31, 2013 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=475,576 P=1,099,256 P=− P=475,576 Commercial development 102,508 131,134 − 102,508 Corporate business 96,055 13,621 82,434 13,621 Shopping centers 88,622 317,069 − 88,622 Total P=762,761 P=1,561,080 P=82,434 P=680,327

280 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

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

Cash and cash equivalents (excluding cash on hand) P=2,894,822 P=− P=− P=− P=2,894,822 Financial assets at FVPL 204,077 − − − 204,077 Trade Residential development 294,570 − − 16,770 311,340 Shopping centers 81,472 2,604 22,876 39,012 145,964 Corporate business 59,131 82 − 8,870 68,083 Commercial development 30,617 − − − 30,617 Others 1,626 − − − 1,626 Receivable from related parties 345,236 − − − 345,236 Receivables from employees 15,452 − − − 15,452 Accrued receivable 14,958 − − − 14,958 Others 53,290 − − − 53,290 Other current assets Dividends receivable 29,858 − − − 29,858 P=4,025,109 P=2,686 P=22,876 P=64,652 4,115,323

December 31, 2013

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=764,746 P=− P=− P=− P=764,746 Financial assets at fair value through profit or loss 426,604 − − − 426,604 Trade Residential development 475,576 − − − 475,576 Commercial development 102,508 − − − 102,508 Shopping centers 26,839 − − 75,360 102,199 Corporate business 96,055 − − − 96,055 Others 30 − − − 30 Receivable from related parties 276,604 − − − 276,604 Receivables from employees 10,770 − − − 10,770 Accrued receivable 14,087 14,087 Others 51,161 − − − 51,161 Other noncurrent assets Dividends receivable 32,734 − − − 32,734 P=2,277,714 − − P=75,360 P=2,353,074

Others includes non-trade receivables from sewer and management fees, receivable from SSS and accrued interest receivable from money market placements.

The credit quality of the financial assets was determined as follows:

Cash and cash equivalents and financial assets at FVPL - based on the nature of the counterparty and the Group’s rating procedure. These are held by counterparty banks with minimal risk of bankruptcy and are therefore classified as high grade.

Accounts and dividends receivables - high grade pertains to receivables with no default in payment; medium grade pertains to receivables with up to 3 defaults in payment; and low grade pertains to receivables with more than 3 defaults in payment.

As of December 31, 2014 and 2013, the Group does not have restructured financial assets.

CHI 2014 Annual and Sustainability Report 281 CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Group has no significant credit risk concentrations on its receivables. Policies are in place to ensure that lease contracts and contracts to sell are made with customers with good credit history.

Given the Group’s diverse base of counterparties, it is not exposed to large concentration of credit risk. As of December 31, 2014 and 2013, the aging analyses of receivables presented per class, is as follow:

December 31, 2014

Neither Past Past Due but not Impaired Due nor 30-60 60-90 90-120 Individually Impaired <30 days days days days >120 days Impaired Total (In Thousands)

Trade Residential development P=294,570 P=– P=7,756 P=988 P=4,930 P=3,096 P=− P=311,340 Shopping centers 106,952 9,296 2,894 4,113 2,681 6,451 13,577 145,964 Corporate business 59,213 – 1,015 – – 7,855 – 68,083 Commercial development 30,617 – – – – – – 30,617 Others 1,626 – – – – – – 1,626 Receivable from related parties 345,236 – – – – – – 345,236 Dividends receivable 29,858 – – – – – – 29,858 Receivable from employees 15,452 – – – – – – 15,452 Accrued receivable 14,958 – – – – – – 14,958 Others 53,290 – – – – – – 53,290 Total P=951,772 P=9,296 P=11,665 P=5,101 P=7,611 P=17,402 P=13,577 P=1,016,424

December 31, 2013

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=475,576 P=− P=− P=− P=− P=− P=− P=475,576 Commercial development 102,508 − − − − − − 102,508 Shopping centers 26,839 46,893 3,813 5,474 5,431 172 13,577 102,199 Corporate business 96,055 − − − − − − 96,055 Others 30 − − − − − − 30 Receivable from employees 10,770 − − − − − − 10,770 Dividends receivable 32,734 − − − − − − 32,734 Receivable from related parties 285,998 − − − − − − 276,604 Accrued receivable 4,693 − − − − − − 14,087 Others 51,161 − − − − − − 51,161 Total P=1,086,364 P=46,893 P=3,813 P=5,474 P=5,431 P=172 P=13,577 P=1,161,724

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, 2014, current ratio is 1.6:1.0, with cash and cash equivalents and financial assets at FVPL of P=3,099.3 million accounting for 53.1% of the total current assets, and resulting in a net working capital of P=2.3 million.

As of December 31, 2013, current ratio is 1.2:1.0, with cash and cash equivalents and financial assets at FVPL of P=1,191.8 million accounting for 32.4% of the total current assets, and resulting in a net working capital of P=0.6 million.

282 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Overall, the Group’s funding arrangements are designed to keep an appropriate balance between equity and debt, to give financing flexibility while continuously enhancing the Group’s businesses.

The table below summarizes the maturity profile of the Group’s financial assets and financial liabilities at December 31, 2014 and 2013 based on the contractual undiscounted payments.

December 31, 2014

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total (In Thousands)

Cash and cash equivalents (excluding cash on hand) P=2,894,822 P=– P=– P=– P=2,894,822 Financial assets at fair value through profit or loss 204,077 204,077 Accounts receivable 938,192 42,858 9,207 2,567 992,824 Dividends receivable 29,858 – – – 29,858 Total financial assets P=4,066,949 P=42,858 P=9,207 P=2,567 P=4,121,581 Accounts and other payables P=2,305,923 P=– P=– P=– P=2,305,923 Long-term debt 492,561 168,000 508,000 5,550,919 6,719,480 Deposits and other liabilities 369,674 91,890 171,229 4,707 637,500 Total other financial liabilities P=3,168,158 P=259,890 P=679,229 P=5,555,626 P=9,662,903 Interest payable P=34,414 532,729 266,000 931,364 P=1,764,507

December 31, 2013

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total (In Thousands)

Cash and cash equivalents (excluding cash on hand) P=764,746 P=− P=− P=− P=764,746 Financial assets at FVPL 426,604 − − − 426,604 Accounts receivable 881,846 191,606 − − 1,073,452 Dividends receivable 586 32,148 − − 32,734 Total financial assets P=2,073,782 P=223,754 P=− P=− P=2,297,536 Accounts and other payables P=1,783,528 P=− P=− P=− P=1,783,528 Long-term debt 669,225 1,091,588 1,513,160 1,104,004 4,377,977 Deposits and other liabilities 185,690 182,701 − − 368,391 Total other financial liabilities P=2,638,443 P=1,274,289 P=1,513,160 P=1,104,004 P=6,529,896 Interest payable P=761 P=1,237 P=1,717 P=1,253 P=4,968

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, 2014 and 2013:

December 31, 2014 December 31, 2013 Php Php US Dollar Equivalent US Dollar Equivalent (In Thousands)

Cash and cash equivalents $990 P=44,273 $110 P=4,884

CHI 2014 Annual and Sustainability Report 283 CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In translating the foreign currency-denominated monetary assets into peso amounts, the exchange rates used were P=44.72 to US$1.00 and P=44.40 to US$1.00, the Philippine Peso-US Dollar exchange rates as at December 31, 2014 and 2013, 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, 2014 P=1.00 P=990 (1.00) (990) December 31, 2013 1.00 110 (1.00) (110)

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, 2014 and 2013 with all variables held constant, (through the impact on floating rate borrowings):

December 31, 2014

Effect on income before income tax Increase (decrease) + 100 basis - 100 basis Change in basis points points points (In Thousands)

Floating rate borrowings (P=14,879) P=14,879

December 31, 2013

Effect on income before income tax Increase (decrease) + 100 basis - 100 basis Change in basis points points points (In Thousands)

Floating rate borrowings (P=63,511) P=63,511

284 Let’s Build for Tomorrow's Generations

764,746 974,628 489,607 2,882,693 1,385,475 4,268,168 4,954,092 1,768,388 6,722,480 = = P P 1,739,374 3,902,518 4,392,125 = = = = P P P P = = P P Carrying Value Carrying Value

− − − − − = P = = = P P P 103,048 103,048 191,606 191,606 = P 4,954,092 1,275,827 6,229,919 = P = = P P 1 to 5 years 1 to 5 years

– = P 492,561 492,561 764,746 783,022 489,607 < 1 year < 1 year = P 2,882,693 1,282,427 4,165,120 = = P P 1,547,768 3,902,518 4,392,125 = = P P = = P P

764,746 974,628 489,607 2,882,693 1,385,475 4,268,168 4,954,092 1,765,388 6,719,480 = = P P 1,739,374 3,902,518 4,392,125 = = = = P P P P = = P P Nominal Amount Nominal Nominal Nominal Amount

Various Various together with correspondingits nominal amounts and carrying (invalues thousands)

Date of sale Date of sale

Maturity date Maturity date Maturity date Maturity date Maturity Rate Fixing Period Rate Fixing Period

day treasury day treasury - - spread year treasury bond bond treasury year bond treasury year - - financial assets and liabilities, + 0.60% spread 0.60% + spread 0.60% + Interest terms (p.a.) terms Interest Interest terms (p.a.) terms Interest rate of average 91 average of rate bill rate + 0.60% 0.60% + bill rate spread 0.60% + bill rate Fixed at the date of sale Fixed at the date of sale bearing - Fixed at the date of investment of date the at Fixed investment of date the at Fixed Floating rate of average 91 Floating Fixed rate of average 5 Fixed rate of average 5 interest

2013

term debt term debt

- - Company

Peso Peso Peso Peso Cash cashand equivalents Accounts receivable Long Fixed Floating Cash cashand equivalents Accounts receivable Long Fixed Floating The terms maturity and profile of the are shown in the following table: December 31, 2014 Group Company Parent December 31, Group Parent

CHI 2014 Annual and Sustainability Report 285 CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 0.05 year and 0.04 year for 2014 and 2013, respectively, a 1.0% change in NAVPU will increase/decrease net income and equity by P=0.1 million and P=0.2 million for the year ended December 31, 2014 and 2013, respectively.

25. Equity

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

2014 2013 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.

2014 2013 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 4,350 4,508 P=4.00 issue price

Retained Earnings The retained earnings available for dividend distribution amounted to P=1,147.4 million and P=868.2 million as of December 31, 2014 and 2013, respectively. Retained earnings include undistributed net earnings of subsidiaries and associates amounting P=701.0 million and P=551.6 million as of December 31, 2014 and 2013, respectively. These amounts are not available for dividend declaration until declared by the subsidiaries and affiliates.

On November 11, 2014, the Parent Company’s BOD declared P=0.12 per share cash dividends from unappropriated retained earnings to all its issued and outstanding shares as of record date November 25, 2014, and paid on December 09, 2014. On October 9, 2013, the Parent Company’s BOD declared P=0.11 per share cash dividends from unappropriated retained earnings to all its issued and outstanding shares as of record date November 5, 2013, and paid on November 29, 2013.

On November 11, 2014, the CPVDC’s BOD declared P=0.12 per share cash dividends from unappropriated retained earnings to all its issued and outstanding shares as of record date November 25, 2014, and paid on December 09, 2014. On October 9, 2013, the CPVDC’s BOD declared P=0.12 per share cash dividends from unappropriated retained earnings to all its issued and outstanding shares as of record date November 5, 2013, and paid on November 29, 2013. Dividends payable amounting to P=12.0 million and P=1.9 million remained outstanding as of December 31, 2014 and 2013, respectively.

286 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Capital Management The primary objective of the Group’s capital management policy is to ensure that debt and equity capital are mobilized efficiently to support business objectives and maximize shareholder value. The Group establishes the appropriate capital structure for each business line that properly reflects its premier credit rating and allows it the financial flexibility, while providing it sufficient cushion to absorb cyclical industry risks.

The Parent Company is not subject to externally imposed capital requirements. No changes were made in the objectives, policies and processes from the previous years.

The Group monitors its capital structure using leverage ratios on both a gross and net basis, and makes adjustments to it in light of economic conditions. Debt consists of long-term debt. Net debt includes long-term debt less cash and cash equivalents and financial assets at FVPL. The Group considers as capital the equity attributable to equity holders of the Parent Company.

As of December 31, 2014 and 2013, the Group had the following ratios:

2014 2013 (In Thousands)

Long-term debt P=6,719,480 P=4,377,977 Less: Cash and cash equivalents 2,895,215 765,151 Financial assets at fair value through profit or loss 204,077 426,604 Net debt 3,620,188 3,186,222 Equity attributable to equity holders of Cebu Holdings, Inc. P=5,467,310 P=5,174,518 Debt to equity 122.90% 84.61% Net debt to equity 66.22% 61.58%

26. 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.

287 CHI 2014 Annual and Sustainability Report

) 3 5 836 221 , , Total 79,679 71,168 34,977 16,238 77 477,138 388,258 565,854 530,877 565,854 312,744 (205,654) (165,056) = = = = P P P P 1,754,474 1,834,15 1,058,281 1,294,879 (1,357,01 15,310,432 16,384,951 10,085,385 10,163 = = P P = = = = P P P P

) ) )

3 2 9 − − − − − − − − − 40) = = P P information for the

and 25,22 15,646 15,646 27,1 241,044 160,639) 160,639) 160,639) = = = P P P (158,722) (185,86 (160,63 ( = = = = P P P P 1,992,148 ( ( ( (2,233,192)

= P ( Eliminations Adjustments

) 6 836 865 , = P 5,93 32,693 42,178 17,411 16,238 77 18,066 = P Others (67,798) 238,401 239,266 315,174 332,585) 315,174) = P (355,859) (116,593) (205,654) = = = P P P 5,286,393 3,291,473 8,594,104 5,924,059 6,001,895 ( ( (

= = = = P P P P and revenueand and expense

− − − − − − 2012 518 518 , , 58,090 13,791 (17,427) 291,661 291,661 128,767 169,430 155,639 169,430 402,529 101,979 (233,571) ======P P P P P P Business 2,182,047 2,182,047 2,059 2,059 Corporate = = = = P P P P (In (In Thousands)

− − − − − 2014,2013 and 2,915 1,860 (71,511) 673,869 180,364 785,637 783,777 785,637 165,833 192,699 Centers (576,430) = = = = = P P P P P 1,250,299 1,250,299 6,242,584 6,242,584 1,609,069 1,609,069 Shopping = = = = = P P P P P

− − − − − − − = = P P

1,915 (8,320) 27,734 35,560 36,949 91,923 90,008 91,923 238,042 238,042 307,721 307,721 = = = P P P (210,308) = = = P P P 1,200,286 1,200,286 = = P P Residential Development

) − − − − − − − − − − = P 747 747 = P 5,323) 5,323 5,323) (6,070) (5,323) = = = P P P ( ( ( 158,078 158,078 169,373 169,373 720,581

= = = = = P P P P P Commercial Development

. 4

and a joint venture aand

joint venture

and and

financing charges financing

income tax

period ended December 201 31,

assets

controlling interests controlling - Information year

Equity holders of Cebu Holdings, Inc, Equity of holders Holdings, Cebu Non investmentproperties eferred tax liabilitieseferredtax rovision for Revenue customers Sales to external associates Equityearningsof net in Total revenue Operating expenses Operating(loss) profit Interest income Other income Interest other and P Net income (loss) to: Net attributable income (loss) Other Segment Investments associates in assetsDeferredtax Total assets Segment liabilities D Total liabilities andproperty Segmentand to equipment additions Depreciation amortization and Business Segments The tables following regarding business segments present assets and liabilities as of December 31, three 2014

288 Let’s Build for Tomorrow's Generations

145 651 , , Total 47,050 72,835 28 13,968 59,319 (58,833) 450,724 269,431 529,796 501 529,796 428,106 960,539 218,763 (204,361) = = = = = P P P P P 1,780,194 1,827,244 6,969,201 7,028,520 (1,376,520) 12,508,279 12,950,353 = = = P P P = = P P

– – – – – – – = = P P (73) 21,205 22,827) (86,629) 124,903 210,770) 210,770) 210,770) = P (122,446) (145,273) (124,068) ( = = = = P P P P 2,359,720) 1,049,934) 1,049,934) ( ( ( (2,484,623) = = = P P P Eliminations Adjustments ( ( (

and

) ) 1 – 6 = P 993 , 7,622 1,558 (7,81 ( Others 26,967 99,435 99,435 04,280 59,319 31,75 13,748 (56,772) (71,747) 169,496 169,496 208,803 100 = = = = P P P P (226,268) = P 3,2 2,912,729 6,124,631 3,808,136 3,867,455 = = = = P P P P

– – – – – – = = P P 4,464 5,623 (6,616) 57,365 51,742 57,365 (45,334) (22,111) 216,830 216,830 126,962 460,367 102,927 = = = P P P (223,446) Business = = = P P P 3,105,970 3,105,970 Corporate = = P P (In (In Thousands)

– – – 65 (74) 1,942 6,346 11,180 (63,306) Centers 983,415 983,415 453,239 391,866 380,686 391,866 468,421 102,088 (530,176) Shopping ======P P P P P P 4,275,352 4,281,698 3,359,937 3,359,937 = = = = P P P P

– – – – – – = = P P

(5,609) 41,339 18,353 13,406 (25,867) 512,788 512,788 114,086 142,302 128,896 142,302 696,387 696,387 (398,702) ======P P P P P P 1,406,827 1,406,827 Residential = = P P Development

– – – – – – – – – – = = P P 89,988 89,988 70,855 49,598 49,598 49,598 (19,133) (21,257) 390,947 390,947 154,675 154,675 = = = = P P P P = = = = P P P P Commercial Development

income tax

and other financing charges financing other and controlling interests controlling - Information

Equity holders of Cebu Holdings, Inc, Equity of holders Holdings, Cebu Non investmentproperties Revenue customers Sales to external associates Equityearningsof net in Total revenue Operating expenses Operating(loss) profit Interest income Other income Interest Provision for Net income (loss) to: Net attributable income (loss) Other Segment assets Investments associates in assetsDeferredtax Total assets Segment liabilities liabilitiesDeferredtax Total liabilities andproperty Segmentand to equipment additions Depreciation amortization and 2013

CHI 2014 Annual and Sustainability Report 289

Total 8,638 (1,528) 73,901 83,179 43,640 31,364 29,593 (43,545) 388,628 215,303 475,004 4 475,004 606,446 138,362 (945,924) (167,033) = = = = P P P P 1,260,651 1,334,552 9,133,979 9,749,063 4,448,905 4,478,498 1,627,514 ======P P P P P P

) ) ) – – – – – – – = = P P 264 511 , 37,497 11,940 49,437 25,901) 22,968 (86,048) 389,945 208,842) 208,842 208,842 607 = = = P P P (120,125) (146,026) (123,058) ( = = = = P P P P

1,217,566) ( ( ( (1,

= P Eliminations Adjustments (

and

– = P 7,789 8,517 (1,528) Others 42,775 18,367 25,740 22,886 12,467 63,387 (43,545) (58,278) 194,026 194,026 264,346 267,157 248,790 267,157 = = P P (151,251) = = = P P P 1,903,994 2,213,957 4,1 4,056,629 4,065,146 = = = = P P P P

– – – – – – – – = P 235 = P 1,387 4,418 (8,425) (3,876) 29,508 21,083 18,594 14,176 18,594 22,285 22,285 29,508 520,031 520,031 ======P P P P P P Business = = P P Corporate (In (In Thousands)

3 – – – – – 849 1,827 (4,623) 11,056 (81,915) Centers 886,581 415,592 344,733 342,906 344,73 135,404 130,781 125,660 886,581 (470,989) Shopping ======P P P P P P P 4,262,438 4,263,287 1,604,628 = = = P P P

– – – – – – – = = P P

4,497 6,752 24,562 21,162 14,410 21,162 13,759 15,331 (23,228) 283,587 283,587 197,090 210,849 = = = P P P (279,090) = = = P P P 1,339,559 1,339,559 Residential = = P P Development

– – – – – – – – – – – – – = = = = P P P P 200 200 4,461 86,876 27,739 32,200 32, 32, 86,876 (59,137) 718,012 718,012 = = = = P P P P = = P P Commercial Development

financing charges financing

additions to property andproperty and to equipment additions

controlling interests controlling - Information

Equity holders of Cebu Holdings, Inc, Equity of holders Holdings, Cebu Non investmentproperties Revenue customers Sales to external associates Equityearningsof net in Total revenue Operating expenses Operating(loss) profit Interest income Other income Interest other and Other charges income tax for)Benefit (provision from Net income (loss) to: Net attributable income (loss) Other Segment assets Investments associates in assetsDeferredtax Total assets Segment liabilities liabilitiesDeferredtax Total liabilities Segment Depreciation amortization and 2012

290 Let’s Build for Tomorrow's Generations CEBU HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

27. Leases

Operating Leases - Group as Lessor The Group enters into lease agreements with third parties covering rentals of commercial and office spaces and land therein. These leases generally provide for either (a) fixed monthly rent, or (b) minimum rent on a certain percentage of gross revenue, whichever is higher. All leases include a clause to enable upward revision on its rental charge on annual basis based on prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases of the Group are as follows:

December 31 2014 2013 (In Thousands) Within one year P=379,046 P=320,772 After one year but not more than five years 970,450 671,573 More than five years 1,358,094 2,090,119 P=2,707,590 P=3,082,464

Contingent rent recognized in 2014, 2013 and 2012 amounted to P=108.0 million, P=102.6 million and P=99.7 million, respectively.

Operating Leases - Group as Lessee The Group entered into lease agreements with third parties. These leases generally provide for either (a) fixed monthly rent, or (b) minimum rent or a certain percentage of gross revenue, whichever is higher.

28. 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.

29. Notes to Consolidated Statements of Cash Flows

The noncash activities of the Group pertain to:

Transfers from property and equipment to investment properties amounting to P=0.02 million in 2014, Transfers from inventories to investment properties amounting to P=81.5 million in 2013; Transfers from investment properties to property and equipment amounting to P=5.4 million in 2013; Transfers from investment properties to inventories amounting to P=14.1 million in 2012; Equity in realized profit from an associate amounting to P=4.1 million and P=9.0 million in 2013 and 2012, respectively; Acquisitions through business combinations (Note 24);

CHI 2014 Annual and Sustainability Report 291

Accrued construction billings (included in accounts and other payables) recognized under inventories amounting to P=13.5 million, P=332.1 million and P=146.0 million in 2014, 2013 and 2012, respectively; and Accrued construction billings under investment properties amounting to P=346.4 million and P=846.8 million in 2014 and 2012, respectively.

30. Contingencies

CPVDC is currently involved in a legal case related to property restriction violation. The outcome of this legal proceeding is not presently determinable.

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

Publication Team

ADVISER Aniceto V. Bisnar, Jr. President

EDITORIAL TEAM Noel F. Alicaya Finance and Control Ofcer Vera R. Alejandria Corporate Communication and Corporate Social Responsibility Manager Jeanette A. Japzon Corporate Communication and Media Relations Manager Cecil T. Urbina Corporate Services Group / Human Resources and Admin Head Jennifer G. Sia Audit Manager Jonjay O. Camson Analyst Archie T. Obeso Analyst Christine M. Estrella Corporate Communication Assistant

CONTRIBUTORS CHI Sustainability Technical Working Group: Business Development, Finance, Commercial Business and Corporate Services Makati Development Corporation Ayala Property Management Corporation

PHOTOGRAPHY Portraiture Raul V. Arambulo Francisco "Paco" Guerrero Landscape Paul Gotiong Events/Activities Hiede L. Mantilla Christine M. Estrella Grace V. Carino

COVER CONCEPT DESIGN AND LAYOUT Medium 3 Red Apple Creatives, Inc.

FINAL ART Publicis JimenezBasic

SUSTAINABILITY MANAGEMENT CONSULTANT Philippine Business for the Environment

292 Let’s Build for Tomorrow's Generations KK Shareholder Information

CORPORATE HEADQUARTERS Unit 701, 7/F Cebu Holdings Center Cardinal Rosales Avenue Cebu Business Park Cebu City, Cebu 6000 Philippines Tel (6332) 231 5301 Fax (6332) 231 5300

STAKEHOLDER INFORMATION For inquiries from institutional investors, analysts, the financial and business community on the financial report and feedback from our various stakeholder groups on the sustainability report, please write or call:

Cebu Holdings, Inc. Unit 4C1, 4/F Tower One and Exchange Plaza Unit 701, 7/F Cebu Holdings Center Ayala Triangle, Ayala Avenue Cardinal Rosales Avenue Makati City 1226 Philippines Cebu Business Park Tel (632) 908 3575 / 759 4894 Cebu City, Cebu 6000 Fax (632) 750 6647 Philippines Tel (6332) 231 5301 Fax (6332) 231 5300

www.cebuholdings.com [email protected]

SHAREHOLDER SERVICES AND ASSISTANCE For inquiries regarding dividend payments, change of address and account status, lost or damaged stock certificates, please write or call:

Stock Transfer Services, Inc. 34/F, Unit D Rufino Pacific Tower 6784 Ayala Avenue, Makati City Tel (632) 403 2410 (632) 403 2412 Fax (632) 403 2414 [email protected]

Post-consumer Recycled Fiber

Cebu Holdings, Inc. 2014 Annual Report cover is printed on Naturalis which is made from 50% Post Consumer Waste (PCW) and contains 100% Elemental Chlorine Free wood pulps from well-managed forests certified in accordance with the rules of the Forest Stewardship Council. Naturalis is fully recyclable and is manufactured to precise and controlled standards. Tullis Russel is registered under the BS EN ISO 9001 - 2000 quality assurance scheme and the ISO1400 environmental standard.

The main pages of this report are printed on woodfreepaper produced with pulps from PEFC certified (Programme for the Endorsement of Forest Certification) sourced from a sustainably-managed forest.

The Financial Statements of this report are printed on 9Lives Offset recycled which is made of 100% post consumer waste. Unit 701, 7/F Cebu Holdings Center, Cebu Business Park Cebu City 6000 Cebu, Philippines