RATIONALE FOR AGENDA ITEMS

Agenda Item No. 4. Approval of the Minutes of the Previous Meeting of Stockholders held on 22 June 2017

Copies of the Minutes of the 22 June 2017 Annual Stockholders’ Meeting will be made available during the 2018 Annual Stockholders’ Meeting. It is likewise currently posted on the Corporation’s website (www.discovery.com.ph) and can be viewed at any time. Stockholders will be asked to approve the Minutes of the 2017 Annual Stockholders’ Meeting.

Agenda Item No. 5. Approval of 2017 Operations and Results

A report on the highlights of the financial performance of the Corporation for the year ended 2017 will be presented to the Stockholders. The same was reviewed by the Audit Committee and the Board of Directors, and have been audited by the external auditors who declared an unqualified opinion on the Audited Financial Statements (AFS). A summary of the 2017 AFS shall be also be presented to the Stockholders. Stockholders, after identifying themselves, will be given an opportunity to raise questions regarding the operations and report of the Corporation.

Agenda Item No. 6. Ratification of all Acts of the Board of Directors and Management from the date of the last Annual Stockholders’ Meeting to the date of this meeting

All actions, proceedings and contracts entered into, as well as resolutions made and adopted by the Board of Directors and of Management from the date of the Stockholders Meeting held on 22 June 2017 to the date of this meeting shall be presented for confirmation, approval, and ratification. The items covered with respect to the ratification of the acts of the Board of Directors and officers for the past year up to the date of the meeting are those items entered into in the ordinary course of business.

Agenda Item No. 7. Election of Directors for 2018 to 2019

The current members of the Board of Directors, as reviewed, qualified and recommended by the Corporate Governance Committee, have been nominated for re-election. In view of increase in the number of members of the Board from seven (7) to nine (9), the Corporate Governance Committee likewise recommended individuals to for election as new Directors of the Corporation. Their proven expertise and qualifications, based on current regulatory standards and the Corporation’s own criteria, will help sustain the Company’s solid performance that will result to its stockholders’ benefit. The profiles of the Directors are available in the Company website as well as in this Information Statement. If elected, they shall serve as such for one (1) year from 9 November 2018 or until their successors shall have been duly elected and qualified.

Agenda Item No. 8. Appointment of External Auditors

The Audit Committee has pre-screened and recommended, and the Board has endorsed for consideration of the stockholders, the re-appointment of Reyes Tacandong & Co. as the Corporation's External Auditor for 2018-2019. Reyes Tacandong & Co. is one of the most reputable auditing firms in the country and is duly accredited by the Securities and Exchange Commission. The Stockholders will also be requested to delegate to the Board the authority to approve the appropriate audit fee for 2018.

Agenda Item No. 9 Amendment of the Articles of Incorporation

The Board of Directors in separate meetings held on 29 August 2017 and 28 February 2018 approved the amendment of the Articles of Incorporation, particularly the addition of “Terra Spa” as a tradename and Articles II and VII. Article II shall be amended to include its secondary purpose the business of dealing in foreign exchange transactions, while Article VII shall be amended to convert 265,000,000 common shares into preferred shares in consideration of a possible capital raising exercise that will be conducted by the Company in the future.

PROXY FORM

The undersigned stockholder of DISCOVERY WORLD CORPORATION (the “Company”) hereby appoints ______or in his absence, the Chairman of the meeting, as attorney and proxy, with power of substitution, to represent and vote all shares registered in his/her/its name as proxy of the undersigned stockholder, at the Annual Meeting of Stockholders of the Company on 9 November 2018 and at any of the adjournments thereof for the purpose of acting on the following matters:

1. Election of Directors. 1.1 Vote for all nominees listed below: 1.1.1. John Y. Tiu, Jr. 1.1.2. Romualdo C. Macasaet 1.1.3. Lamberto R. Villena 1.1.4. A. Bayani K. Tan 1.1.5. Christopher John A.D. Tiu 1.1.6. Jose C. Parreño, Jr. 1.1.7. Elizabeth Ann C. Parpan (Independent Director) 1.1.8. William L. Chua (Independent Director) 1.1.9. Eric Yu (Independent Director)

1.2 Withhold authority for all nominees listed above 1.3 Withhold authority to vote for the nominees listed below:

2. Approval of minutes of previous Annual Stockholders’ Meeting. Yes No Abstain

3. Approval of 2017 Operations and Results Yes No Abstain

4. Ratification of all acts and resolutions of the Board of Directors and Management from date of last Stockholders’ Meeting to 9 November 2018. Yes No Abstain

5. Election of Reyes Tacandong & Co. as external auditor. Yes No Abstain

6. Amendment of Articles of Incorporation 6.1 Vote for all amendments to the Articles of Incorporation 6.1.1 Corporate Name: to include the tradename, "Terra Spa" which pertains to the Spa located within Discovery Shores Boracay; 6.1.2 Article II: to include its secondary purpose the business of dealing in foreign exchange transactions; and 6.1.3 Article VII: to convert 265,000,000 common shares into preferred shares

6.2 Withhold authority for all amendments listed above 6.3 Withhold authority to vote for the nominees listed below:

7. At their discretion, the proxies named above are authorized to vote upon such other matters as may be properly come before the meeting. Yes No Abstain

Printed Name of Stockholder

Signature of Stockholder /Authorized Signatory

Date

THIS PROXY FORM SHOULD BE RECEIVED BY THE CORPORATE SECRETARY AT LEAST TEN (10) DAYS BEFORE THE DATE SET FOR THE ANNUAL MEETING AS PROVIDED IN THE BY-LAWS.

SECRETARY’S CERTIFICATE

I, ______, Filipino, of legal age and with office address at ______, do hereby certify that:

1. I am the duly appointed Corporate Secretary of ______(the “Corporation”), a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with office address at ______;

2. Based on the records, during the lawfully convened meeting of the Board of Directors of the Corporation held on ______, the following resolution was passed and approved:

“RESOLVED, That ______be authorized and appointed, as he is hereby authorized and appointed, as the Corporation’s Proxy (the “Proxy”) to attend all meetings of the stockholders of Discovery World Corporation (“DWC”) whether the meeting is regular or special, or at any meeting postponed or adjourned therefrom, with full authority to vote the shares of stock of the Corporation held in DWC and to act upon all matters and resolution that may come before or presented during meetings, or any adjournments thereof, in the name, place and stead of the Corporation.

“RESOLVED, FINALLY, That DWC be furnished with a certified copy of this resolution and DWC may rely on the continuing validity of this resolution until receipt of written notice of its revocation.”

3. The foregoing resolution has not been modified, amended or revoked in accordance with the records of the Corporation presently in my custody.

IN WITNESS WHEREOF, I have signed this instrument in ______on ______.

______Printed Name and Signature of the Corporate Secretary

SUBSCRIBED AND SWORN TO BEFORE ME on ______in ______. Affiant exhibited to me his Competent Evidence of Identity by way of ______issued on ______at ______.

Doc. No. ______; Page No. ______; Book No. ______; Series of ______.

PART I.

A. GENERAL INFORMATION

Item 1. Date, time and place of meeting of security holders

(a) Date - 9 November 2018 (Friday) Time - 2:00 P.M. Place - Discovery Shores Boracay, Station 1, Balabag, Malay, Aklan

(b) The approximate date on which the Information Statement will be sent or given to security holders is on 12 October 2018.

(c) The complete mailing address of the principal office of DISCOVERY WORLD CORPORATION (the “Company”) is:

Discovery Shores Boracay, Station 1, Balabag, Malay, Aklan.

Item 2. Dissenters’ Right of Appraisal

The matters to be voted upon in the Annual Stockholders’ Meeting on 9 November 2018 are not among the instances enumerated in Sections 42 and 81 of the Corporation Code whereby the right of appraisal, defined to be the right of any stockholder to dissent and demand payment of the fair value of his shares, may be exercised. The instances where the right of appraisal may be exercised are as follows:

1. In case any amendment to the Articles of Incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those outstanding shares of any class, or of extending or shortening the term of corporate existence;

2. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in the Corporation Code;

3. In case the Company decides to invest its funds in another corporation or business outside of its primary purpose; and

4. In case of merger or consolidation.

Item 3. Interest of Certain Persons in or Opposition to Matters to be Acted Upon

(a) No person who has been a director or officer or any nominee for election as director of the Company or associate of such persons, have substantial interest, direct or indirect, in any matter to be acted upon other than the election of directors for the year 2018-2019.

(b) The Company is not aware of any director or security holder who intends to oppose any action to be taken by the registrant during the stockholders’ meeting.

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B. CONTROL AND COMPENSATION INFORMATION

Item 4. Voting Securities and Principal Holders Thereof

a) As of 31 August 2018, the Registrant had 626,000,000 common shares outstanding and each share is entitled to one vote.

b) The record date with respect to the determination of the stockholders entitled to notice of and vote at the Annual Stockholders' Meeting is 9 October 2018.

c) With respect to the election of nine (9) directors, each stockholder may vote such number of shares for as many as nine (9) persons he may choose to be elected from the list of nominees, or he may cumulate said shares and give one candidate as many votes as the number of his shares multiplied by nine (9) shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit, provided that the total number of votes cast by him shall not exceed the number of shares owned by him multiplied by nine (9).

d) Security ownership of certain record and beneficial owners and management.

(1) Security Ownership of Certain Record and Beneficial Owners

The following persons or groups are known to the Company as directly or indirectly the record or beneficial owners of more than five percent (5%) of the Company’s voting securities as of 31 August 2018:

NAME OF BENEFICIAL NAME, ADDRESS OF RECORD TITLE OF OWNER AND NUMBER OF PERCENT OWNER AND RELATIONSHIP CITIZENSHIP CLASS RELATIONSHIP SHARES HELD OF CLASS WITH ISSUER WITH RECORD OWNER PCD Nominee Corporation G/F Makati Stock Exchange Common Building, 6767 Ayala Avenue, Please see note below Filipino 564,472,998* 90.174% Makati City Shareholder PCD Nominee Corporation G/F Makati Stock Exchange Common Building, 6767 Ayala Avenue, Please see note below Non-Filipino 61,527,202 9.826% Makati City Shareholder PCD Nominee Corporation (“PCDNC”) is a wholly-owned subsidiary of Philippine Central Depository, Inc. (“PCD”). The beneficial owners of such shares registered under the name of PCDNC are PCD’s participants who hold the shares in their own behalf or in behalf of their clients. The PCD is prohibited from voting these shares; instead, the participants have the power to decide how the PCD shares in Discovery are to be voted.

*includes shares of directors.

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As of 31 August 2018, the participants of PCD who own more than 5% of the Company’s outstanding capital are as follows:

NAME, ADDRESS OF RECORD NUMBER TITLE OF PERCENT OWNER AND RELATIONSHIP WITH CITIZENSHIP OF SHARES CLASS OF CLASS ISSUER HELD JTKC Equities, Inc. 130 Amorsolo St., Legaspi Village, Common Filipino 302,599,998 48.34% Makati City Shareholder The Discovery Leisure Company, Inc. 2F JTKC Center, 2155 Chino Roces Common Filipino 155,399,995 24.82% Avenue, Makati City Shareholder

The shares held by JTKC Equities, Inc. and The Discovery Leisure Company will be voted or disposed by the persons who shall be duly authorized by its respective record/beneficial owners

(2) Security Ownership of Management

The following table shows the shares beneficially owned by the directors and executive officers of the Company as of 31 August 2018:

DIRECT OWNERSHIP BY BOARD OF DIRECTORS AND MANAGEMENT AMOUNT AND NATURE TITLE OF NAME OF BENEFICIAL PERCENT OF BENEFICIAL CITIZENSHIP CLASS OWNER OF CLASS OWNERSHIP 1 Direct -nil- Ruben C. Tiu Common 750,000 Indirect Filipino Chairman of the Board 0.12 Demikk Holdings, Inc. 1,200,001 Direct 0.19 John Y. Tiu, Jr. Common 5,899,000 Indirect Filipino Director and President JT Perle Corporation 0.94 (60% shareholding) Romualdo C. Macasaet Common Director, Chief Financial 10,001 Direct Filipino -nil- Officer, and Treasurer A. Bayani K. Tan Common Director and 50,001 Direct Filipino 0.01 Corporate Secretary Lamberto R. Villena Common 50,001 Direct Filipino 0.01 Director William L. Chua Common 50,000 Direct Filipino 0.01 Independent Director Elizabeth Ann C. Parpan Common 50,001 Direct Filipino 0.01 Independent Director Total 1.32%

(3) Voting Trust Holders of Five Percent (5%) or More

There is no party known to the Company as holding any voting trust or any similar arrangement for five percent (5%) or more of the Company’s voting securities.

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(4) Changes in Control

There is no arrangement that may result in a change in control of the Company.

Item 5. Directors and Executive Officers

The names, ages, and periods of service of all incumbent Directors and Executive Officers of the Company are as follows:

Board of Directors

The Company’s Board of Directors is responsible for the over-all management and direction of the Company. The Board meets to review and monitor the Company’s future plans. Each Board member serves for a term of one (1) year, subject to re-election. A director who was elected to fill any vacancy holds office only for the unexpired term of his/her predecessor.

As of the date of this report, the composition of the Company’s Board of Directors is as follows, as elected during the Company’s annual stockholders’ meeting held on 22 June 2017. Mr. William L. Chua was elected on 27 February 2018 vice Mr. Chun Bing G. Uy. Mr. W. L. Chua assumed his position as Independent Director on 3 April 2018.

PERIOD OF SERVICE IN NAME AGE NATIONALITY PRESENT POSITION THE COMPANY Ruben C. Tiu 62 Filipino Chairman of the Board Since 25 July 2003 John Y. Tiu, Jr. 42 Filipino Director and President Since 25 July 2003 Romualdo C. Macasaet 81 Filipino Director, Chief Financial Since 1 March 2013 Officer and Treasurer A. Bayani K. Tan 62 Filipino Director and Corporate Since 25 July 2003 Secretary Lamberto R. Villena 71 Filipino Director Since 1 March 2013 William L. Chua 67 Filipino Independent Director Since 3 April 2018 Elizabeth Ann C. 46 Filipino Independent Director Since 1 March 2013 Parpan

To describe the business experience of the Company’s directors for the past five (5) years, we have outlined hereunder their professional and business affiliations, as follows:

Ruben C. Tiu, Filipino, Chairman of the Board

Mr. Ruben C. Tiu is concurrently the Chairman and President of Star Equities, Inc., President of Sterling Bank of Asia, Inc. (a Savings Bank), JTKC Leisure Holdings Corporation (formerly JTKC Realty Corporation), Pan Asean Multi Resources Corp., Aldex Realty Corporation, Oakridge Properties, Inc., Hotel Systems Asia, Inc., JTKC Land, Inc., The Discovery Leisure Company, Inc., and Discovery Country Suites, Inc.. He is the Executive Vice President of JTKC Equities, Inc. and Union Pacific Ace Industries, Inc., and a Director of Palawan Cove Corporation, Cay Islands Corporation, Tera Investments, Inc., Sonoran Corporation, and I-Remit, Inc. He holds a Bachelor of Science degree in Business Administration from the De La Salle University.

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John Y. Tiu, Jr., Filipino, Director and President

Mr. John Y. Tiu, Jr. is concurrently the Chairman and President of Discovery Fleet Corporation, Cay Islands Corporation, Palawan Cove Corporation, Sonoran Corporation, Long Beach Property Holdings, Inc., Balay Holdings, Inc., Tera Investments, Inc., JT Perle Corporation, One Cerrada Corporation, One Urdaneta Corporation, Ninety Nine Urdaneta Holdings Corp, One Luscara Corporation and One Legaspi Corporation. He is also the Director and President of Euro-Pacific Resorts, Inc., The Discovery Leisure Co Inc., Discovery Country Suites, Inc., and Lucky Cloud 9 Resort, Inc. He is a member of the Board of Directors of Sterling Bank of Asia, Inc. (A Savings Bank), I-Remit Inc., Oakridge Properties, Inc., Sagesoft Solutions, Inc., Lunch Bucks Gourmet, Inc., and Winstone Industrial Manufacturing Corp. He is a Director and Executive Vice President of Aldex Realty Corporation. He is a Director and First Vice President of JTKC Leisure Holdings Corporation (formerly JTKC Realty Corporation). He is a Director and Treasurer of Star Equities, Inc., JTKC Land, Inc., and JTKC Equities, Inc.

He previously held positions as Director and Treasurer of Touch Solutions, Inc. (2001-2013), Director and President of Fidelity Securities, Inc. (2000-2017), and Director of Enderun Colleges (2005-2017).

He holds a Bachelor of Science degree in Electrical Engineering Minor in Mathematics from the University of Washington in Seattle, Washington, USA.

Romualdo C. Macasaet, Filipino, Director

Mr. Romualdo C. Macasaet is concurrently the Managing Director and a stockholder of JTKC Land, Inc. He holds a Bachelor of Science degree in Commerce from the De La Salle University and a Bachelor of Science degree in Architecture from the University of Santo Tomas.

A. Bayani K. Tan, Filipino, Director

Mr. A. Bayani K. Tan, 63, Filipino, is a Director of the Corporation (since March 2013, Publicly-Listed). He is also a Director, Corporate Secretary or both of the following reporting and/or listed companies: Belle Corporation (since May 1994, Publicly Listed), Coal Asia Holdings, Inc. (since July 2012, Publicly-Listed), I-Remit, Inc. (since May 2007, Publicly-Listed), Pacific Online Systems Corporation (since May 2007, Publicly-Listed), Philequity Dividend Yield Fund, Inc. (since January 2013), Philequity Dollar Income Fund, Inc. (since March 1999), Philequity Fund, Inc. (since June 1997), Philequity Peso Bond Fund, Inc. (since June 2000), Philequity PSE Index Fund, Inc. (since February 1999), Premium Leisure Corporation (since December 1993, Publicly-Listed), Sterling Bank of Asia Inc (A Savings Bank) (since December 2006), TKC Metals Corporation (since February 2007, Publicly-Listed), Tagaytay Highlands International Golf Club, Inc. (since November 1993), Tagaytay Midlands Golf Club, Inc. (since June 1997), The Country Club at Tagaytay Highlands, Inc. (since August 1995), The Spa and Lodge at Tagaytay Highlands, Inc. (since December 1999), and Vantage Equities, Inc. (since January 1993, Publicly-Listed). He is the Managing Partner of the law offices of Tan Venturanza Valdez (since it was established in 1988), Managing Director/President of Shamrock Development Corporation (since May

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1988), Director of Destiny LendFund, Inc. (since December 2005), Pascual Laboratories, Inc. (since March 2014), and Pure Energy Holdings Corporation (since October 2016), President of Catarman Chamber Elementary School Foundation, Inc. (since August 2012), Managing Trustee of SCTan Foundation, Inc. (since 1986), Trustee and Treasurer of Rebisco Foundation, Inc. (since April 2013) and Trustee and Corporate Secretary of St. Scholastica's Hospital, Inc. (since February 2011).

Mr. Tan holds a Master of Laws degree from New York University (Class of 1988) and earned his Bachelor of Laws degree from the University of the Philippines (Class of 1980) where he was a member of the Order of the Purple Feather (U.P. College of Law Honor Society) and ranked ninth in his class. Mr. Tan passed the bar examinations in 1981 where he placed sixth. He has a Bachelor of Arts major in Political Science degree from the San Beda College (Class of 1976) from where he graduated Class Valedictorian and was awarded the medal for Academic Excellence.

Lamberto R. Villena, Filipino, Director

Atty. Lamberto R. Villena is concurrently a Director of Sterling Bank of Asia, Inc. (A Savings Bank). He was previously the Sterling Bank’s former President and Chief Executive Officer (2006-2015), a Consultant to JTKC Equities, Inc. (2006 - 2009) and Executive Vice President (2004 - 2006) and Head of the Commercial Banking Group as Senior Vice President (1996 - 2004) of Rizal Commercial Banking Corporation. He was also past directors of Pacific Plans, Inc. (2005 - 2008) and Vitarich Philippines (2000 - 2002).

Atty. Villena holds a Bachelor of Laws Degree from the University of the Philippines and is a member of the Philippine Bar. He also holds a Master’s Degree in Business Administration from the same university and is an alumnus of the Ateneo de Manila University.

William L. Chua, Filipino, Independent Director

Mr. William L. Chua, is concurrently an Independent Director of the Sterling Bank of Asia, Inc. (A Savings Bank). He is also the Chairman of the Board, President and CEO of WSI Philippines, Inc., Leadtech Systems, Inc., and LSI Leading Technologies, Inc. He is also the Vice Chairman of Wordtext Systems, Inc., trustee of Adolfo S. Suzara Foundation, Inc., CEO and President of WS Pacific Publications, Inc., Chairman of the Board of Directors of Infotouch Systems, Inc., and Philmont Academic Solutions Inc. and member of the Board of Directors of the following companies: Nexus Technologies, Inc., Jupiter Systems, Inc., Information Technology Supplies Distributors, Inc., and Aikontech Systems, Inc., WSI Phonecare, Inc. and WSI Technologies Corporation.

Mr. Chua holds a Master’s Degree in Business Administration from the Santa Clara University and a Bachelor of Science Degree in Industrial Engineering from California State University in San Jose, CA.

Elizabeth Ann C. Parpan, Filipino, Independent Director

Ms. Elizabeth Ann C. Parpan is concurrently the Treasurer of BISCOM, Inc. She is also the Corporate Secretary of A. Chan Sugar Corporation and Brent Schools, Inc. In addition, she also acts as a director in Morning Glow Development Corp., JEMFA Resources, Inc., Panay Eye Center, Inc., Therapeu-Tech, Inc., and Legaspi Towers 200 Condominium, Inc. She is a

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member of the Board of Trustees of Brent International School Manila, Inc. and Brent International School Baguio, Inc.

She was previously the Corporate Secretary (2011–2012), Director (2010–2012), and Assistant Manager (2008–2012) of Central Azucarera de Bais, Inc. and Executive Vice President of Hotel Enterprises of the Philippines, Inc. (1995 – 2009)

She was the valedictorian of the Hospitality Administration Program of the Centre International De Glion en Gruyere (Glion Hotel School) in 1994. She holds a Bachelor of Science degree in Management with Honors, cum laude, from the Ateneo De Manila University.

The incumbent members of the Board of Directors, with the exception of Mr. Ruben C. Tiu are nominated for re-election during the stockholders’ meeting to be held on 9 November 2018. In addition, the following are nominated for election as members of the Board of Directors to serve for a period of one (1) year from their election or until their successors have been duly elected:

Christopher John A. D. Tiu (nominee for election as Director)

Mr. Christopher Tiu is concurrently the President and Director of Blue Energy Holdings and Management Corp.; Managing Partner and Director of The Designer Boulanger Philippines Corp.; Director and Co-Founder of VLink Interactive, Happy Lemon Philippines, Inc. and Pure Meridian Hydropower Corporation; and Director of Keorim, Inc. and QBF Asia Pacific, Inc.

He is also a Barangay Kagawad and SK Chairman in Barangay Urdaneta, Makati City (2001- 2018); Professional Athlete & National Team Member (Rain or Sine Team in PBA), TV Host (i-Bilib on GMA7) and President and Founder of Charis Leadership Foundation.

He holds Bachelor of Science degree in Management Engineering, minor in Chinese studies from the Ateneo de Manila University.

Jose C. Parreño, Jr. (nominee for election as Director)

Mr. Jun Parreño is the Chief Operating Officer of The Discovery Leisure Company. He has over 20 years of experience in the management of premier hotels and serviced residences around the Philippines. He was previously the General Manager of Discovery Shores Boracay, Hotel Manager/ Director of Operations of Discovery Suites and Discovery Country Suites. As part of the pioneer management team in 2000, he provides innovative direction in the daily operations of the homegrown hospitality Group. He was also the Director for Operations of Pan Pacific Hotel Manila; Front Office Manager/ Duty Manager and Guest Service Manager of Mandarin Oriental Manila.

He holds a Bachelor in Science Degree in Economics from the University of the Philippines, a college scholar and a consistent Dean’s Lister. He has taken a general manager course in the Cornell-Nanyang Institute of Hospitality Management and in the Asian Institute of Management. He has also worked with Mandarin Oriental hotel, and Pan Pacific hotel.

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Eric Yu, (nominee for election as Independent Director)

Mr. Eric Yu, is concurrently the President and CEO of Cellprime Distribution Corporation; a Board Member and Forum Officer of Young Presidents Organization; and a Board Member of Nine Bowls Alliance Food Corporation.

He was previously a Business Development Adviser of Estore Exchange, Inc. (2000-2006) and Authorize.Net Inc. (2001-2003); the Chairman of Marketline Corporation (1997-2005); the Finance Officer of Young Presidents Organization; a member of the Board of Premier City Club (1998-2001) and Secure Payments Networks (1992-2002).

Mr. Yu holds a Bachelor of Arts degree in Economics from the University of British Columbia.

Nomination of Directors

The nomination, pre-screening and election of directors, both regular and independent, were made in compliance with the requirements of the Code of Corporate Governance and the Securities and Exchange Commission’s Guidelines on the Nomination and Election of Independent Directors, which have been adopted and made part of the Corporation’s By- Laws.

The nomination, pre-screening and election of independent directors were made in compliance with the requirements of the Code of Corporate Governance and the Securities and Exchange Commission’s Guidelines on the Nomination and Election of Independent Directors, which have been adopted and made part of the Corporation’s By-Laws.

The Corporate Governance Committee, composed of Mr. William L. Chua and Ms. Elizabeth Ann C. Parpan, determine that the nominees for independent directors possess all the qualifications and have none of the disqualifications for independent directors as set forth in the Company’s Manual on Corporate Governance and Rule 38 of the Implementing Rules of the Securities Regulation Code (SRC).

All new directors undergo an orientation program soon after date of election. This is intended to familiarize the new directors on their statutory / fiduciary roles and responsibilities in the Board and its Committees, the Corporation’s strategic plans, enterprise risks, group structures, business activities, compliance programs, Code Business Conduct and Ethics and the Manual on Corporate Governance.

All directors participate in continuing education programs annually at the Corporation’s expense to promote relevance and effectiveness and to keep them abreast of the latest developments in corporate directorship and good governance.

On 10 August 2018, during its meeting called for that purpose, the Company’s Corporate Governance Committee indorsed the respective nominations given in favor of Mr. William L. Chua by Ms. Jean Codiñera, Ms. Elizabeth C. Parpan by Mr. Ruben C. Tiu, and Mr. Eric Yu by Mr. John Y. Tiu, Jr. Except as co-stockholders of the Company, the nominees Mr. Chua,

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Ms. Parpan, and Mr. Yu are not related to the respective persons nominating them, Ms. Codiñera, Mr. R. Tiu, and Mr. J. Tiu, Jr. respectively.

Independent Directors

Pursuant to the principles of good corporate governance, the Company currently has two (2) independent directors, Mr. Chun Bing Uy and Ms. Elizabeth Anne C. Parpan. As used in Section 38 of the Securities Regulation Code (SRC), an independent director is a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director of the Company. Each independent director of the Company shall submit to the Corporate Secretary a letter of confirmation stating that he holds no interest affiliated with the Company, management or the Company’s substantial shareholders at the time of his election or appointment and/or re-election as a director. The Corporation’s independent directors possess all the qualifications and none of the qualifications thereof pursuant Section 38 of the SRC and undertakes to submit to the Commission their respective certifications on the matter within thirty (30) days from the Annual Stockholders’ Meeting.

Principal Officers

Principal Officers of the Corporation are those expressly stated in the Corporation’s By-Laws and those whose rank is, at least, that of an Assistant Vice-President. As of the date of this report, the following are the principal officers of the Company:

PRINCIPAL OFFICERS YEAR POSITION NAME AGE NATIONALITY PRESENT POSITION WAS ASSUMED John Y. Tiu, Jr. 42 Filipino President 2009 Vice President – Anna May B. Nieva 50 Filipino 2013 Chief Financial Officer Vice President – Mary Jean D. Codiñera 55 Filipino Investor Relations 2012 Officer Assistant Vice President Rupert Terence C. Sykat 44 Filipino 2013 - Project Development Anna Francesca C. Respicio 33 Filipino Corporate Secretary 2017 Assistant Corporate Kristine Jane R. Liu 31 Filipino 2018 Secretary

To describe the business experience of the Company’s officers for the past 10 years, we have outlined hereunder their professional and business affiliations, as follows:

Anna May B. Nieva, Filipino, Vice President - Chief Financial Officer

Ms. Anna May B. Nieva was previously Assistant Vice President of United Coconut Planters Bank (2012-2013) and Chief Financial Officer and Vice President of One Subic Power Generation Corporation (2011-2012). She has more than twenty (20) years experience in the banking industry specializing in Lending. She holds a degree in Bachelor of Arts in Economics from the Assumption College, a Certificate of Startegic Business Economics Program from the

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University of Asia and the Pacific and has taken Masters of Business Administration units from Ateneo Graduate School of Business.

Mary Jean D. Codiñera, Filipino, Vice-President - Investor Relations Officer

Ms. Mary Jean D. Codiñera is concurrently the Vice President for Sales and Marketing of JTKC Land, Inc. She was previously the Vice President for Sales and Marketing for Tofino Corporation(2010-2011) and Membership Head of Filinvest Alabang, Inc. (2009-2010),Sales Manager of Filinvest Land, Inc. (2006-2007), and President of the Corporate Circuit, Inc. (2001- 2006). She holds a double degree in Bachelor of Science in Commerce major in Accounting

Rupert Terence C. Sykat, Filipino, Assistant Vice President - Project Development

Mr. Rupert Terrence C. Sykat is concurrently an Assistant Vice President for Projects of JTKC Land, Inc. (2010 – present). He was a Project Architect of Greenfield Development Corporation (2007 – 2010) and a Design Architect of W.V. Coscolluela and Associates (1997 – 2006). He holds a Bachelor of Science degree in Architecture from the University of Santo Tomas.

Anna Francesca C. Respicio, Filipino, Corporate Secretary

Anna Francesca C. Respicio is the Company’s Corporate Secretary. She is the incumbent Corporate Secretary or Assistant Corporate Secretary of the following listed I-Remit, Inc., Jolliville Holdings Corporation, and First Abacus Financial Holdings Corporation, as well as the following registered corporations: Sterling Bank of Asia, Inc. (A Savings Bank), Tagaytay Highlands International Golf Club, Inc, The Spa and Lodge at Tagaytay Highlands, Inc., and Fidelity Securities, Inc.

Atty. Respicio obtained her Bachelor of Arts degree (major in Philosophy) in 2007 and her Juris Doctor degree in 2011 from the Ateneo de Manila University. She is currently a Senior Associate at Tan Venturanza Valdez. She was admitted to the Philippine bar in April 2012.

Kristine Jane R. Liu, Filipino, Assistant Corporate Secretary

Kristine Jane R. Liu, 31, Filipino, is the Assistant Corporate Secretary of the Corporation. Presently, she is also the Assistant Corporate Secretary of Balay Holdings, Inc., Long Beach Property Holdings, Inc., Lucky Cloud 9 Resort, Inc. Tagaytay Highlands Community Condominium Association, Inc., Tagaytay Midlands Community Homeowners Association, Inc., and Greenlands Homeowners Community Homeowners Association, Inc. She is also the Corporate Secretary of other companies, namely Stage Craft International, Inc., Stronghold Steel Corporation, Treasure Steelworks Corporation, The Quezonians 1923 Livelihood and Learning Center, Inc., and Orbis Valley Corp.

She is a Junior Associate at Tan Venturanza Valdez Law Offices specializing in litigation and corporate laws. Ms. Liu earned her L.L.B degree as well as her Bachelor of Arts Major in Journalism degree, from the University of Santo Tomas in 2015 and 2008, respectively. Ms. Liu was admitted to the Philippine Bar in 2016.

Significant Employees

No single person is expected to contribute more significantly than others do to the business since the Company considers the collective efforts of all its employees as instrumental to the overall success of

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the Company’s performance. Other than standard employment contracts, there are no arrangements with non-executive employees that will assure the continued stay of these employees with the Company.

Family Relationships

Messrs. Ruben C. Tiu and John Y. Tiu, Jr. are brothers.

There are no other family relationships known to the Company other than the ones disclosed.

Involvement in Legal Proceedings

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

Except as otherwise discussed above and to the best of the Company’s knowledge, there has been no occurrence during the past five (5) years up to the date of this Prospectus of any of the following events that are material to an evaluation of the ability or integrity of any director, any nominee for election as director, executive officer, underwriter, or controlling person of the Company:

 any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer, either at the time of the bankruptcy or within two (2) years prior to that time;  any conviction by final judgment, including the nature of the offense, in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses;  being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; and  being found by a domestic or foreign court of competent jurisdiction (in a civil action), the SEC or comparable foreign body, or a domestic or foreign exchange or other organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation, and the judgment has not been reversed, suspended or vacated.

Certain Relationships and Related Transactions

The following agreements have been entered into by the parties at arm’s length, under terms and conditions normally acceptable between willing parties that are unrelated and acting independently of each other and pursuing their own best interest. All related party transactions are pursued for the purpose of furthering the business of the Company by tapping the expertise and

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competencies of related parties. The respective transaction prices have been determined at arm’s length basis.

Management Agreement with HSAI-Raintree, Inc.

On May 9, 2008, the Company and HSAI-Raintree, Inc. executed a Management Agreement for the operation and management of Discovery Shores Boracay. However, this was amended on August 22, 2012.

Under the amended Management Agreement, the operating term of the Management Agreement shall terminate on December 31, 2013. However, the operating term may be extended upon mutual agreement of the parties, for periods of two (2) years in each instance and subject to terms and conditions as may further be agreed upon by the parties.

The amendment also provided that the management fee shall be Thirty-Seven Million Two Hundred Ninety Thousand Pesos (₱37,290,000.00) for 2012 and Twenty-Nine Million Nine Hundred Sixty Thousand Pesos (₱29,960,000.00) for 2013, exclusive of VAT and subject to withholding tax. The management fee for 2012 and 2013 shall be paid on July 16, 2012 and July 16, 2013 respectively.

Management Agreement with TDLCI

On March 7, 2013, the Company and TDLCI executed a Management Agreement for the operation and management of Discovery Shores Boracay, effective from March 1, 2013 until February 28, 2022. By virtue of this agreement, TDLCI took over the operation and management of Discovery Shores Boracay from HSAI-Raintree, Inc.

The Company shall pay TDLCI a management fee broken down as follows: (a) Base Fee, which is equivalent to three percent (3.00%) of gross operating revenue and payable monthly; and (b) Incentive Fee, which is equivalent to eight percent (8.00%) of gross operating profit and payable quarterly

Subscription to Preferred Shares of Sterling Bank of Asia

On March 22, 2012, the Company entered into a Subscription Agreement with Sterling Bank, effective upon approval of the SEC of the increase in authorized capital stock of Sterling Bank. The Company subscribed to twenty-five million (25,000,000) of the preferred shares to be created, with a par value of Ten Pesos (₱10.00) per share, for a total consideration of Two Hundred Fifty Million Pesos (₱250,000,000.00). Sixty-Two Million Five Hundred Thousand Pesos (₱62,500,000.00) of the total subscription price have been paid in cash. The SEC approved the increase in authorized capital stock of Sterling Bank on December 27, 2012.

Disagreement with Director

No director has resigned nor declined to stand for re-election to the Board of Directors since the date of the last Annual Stockholders’ Meeting because of a disagreement with the Company on any matter relating to the latter's operations, policies, or practices.

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Item 6. Compensation of Directors and Executive Officers

Compensation of Directors

The following summarizes the executive compensation received by the President and the top four (4) most highly compensated officers of the Company for 2015, 2016, and 2017. It also summarizes the aggregate compensation received by all the officers and directors, unnamed.

NAME AND OTHER ANNUAL PRINCIPAL YEAR SALARY BONUS COMPENSATION POSITION John Y. Tiu, Jr. President Anna May B. Nieva Chief Financial Officer Mary Jean D. Codinera VP - Investors Relation Officer Rupert Terrence C. Sykat AVP Project Development Erwin Peter Z. Lopez Director for Operations Total compensated 2018 ₱11,280,784.20 ₱2,145,086.68 ₱1,446,519.24 officers named above (est) 2017 ₱11,169,093.27 ₱2,123,848.20 ₱1,432,197.27 2016 ₱10,081,045.98 ₱1,916,951.61 ₱1,293,001.61 Aggregate 2015 ₱7,754,650.76 ₱1,474,596.62 ₱994,616.62 compensation 2018 ₱11,596,423.26 ₱2,186,125.87 ₱1,455,783.70 paid to all officers and (est) directors as a group 2017 ₱11,481,607.19 ₱2,164,481.06 ₱1,441,370.00 unmaned 2016 ₱10,363,114.63 ₱1,954,528.77 ₱1,300,958.54 2015 ₱7,922,870.51 ₱1,494,288.05 ₱994,616.62

Under the By-Laws of the Company, by resolution of the Board, each director shall receive a reasonable per diem allowance for his attendance at each meeting of the Board. As compensation, the Board shall receive and allocate an amount of not more than ten percent (10.00%) of the net income before income tax of the Company during the preceding year. Such compensation shall be determined and apportioned among the directors in such manner as the Board may deem proper, subject to the approval of stockholders representing at least a majority of the outstanding capital stock at a regular or special meeting of the stockholders.

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

There was no compensatory plan or arrangement with respect to named executive officers that resulted or will result from the resignation, retirement or termination of such executive officer or from a change-in-control in the Company.

Warrants and Options Outstanding

Warrants

There were no outstanding warrants as of 31 August 2018.

Options

There are no option grants outstanding as of 31 August 2018.

Item 7. Independent Public Accountants

Reyes Tacandong & Co. (“RT&Co.”) was appointed as external auditor for the year ended December 31, 2017 and will be recommended for re-appointment as such for the current year. Representatives of RT&Co. are expected to be present at the Annual Shareholders’ Meeting to respond to appropriate questions and will be given the opportunity to make a statement if they so desire.

There was no event where RT & Co. and the Company had any disagreement with regard to any matter relating to accounting principles and practices, disclosure of financial statements or auditing scope or procedure

In compliance with SEC Memorandum Circular No. 8, Series of 2003, Ms. Carolina P. Angeles was assigned as RT&Co.’s engagement partner for the Company, and in line with the guidelines set forth in SRC Rule 68, Paragraph 3(b)(iv) which provides that the external auditor should be rotated every five (5) years or earlier or the handling partner shall be changed.

RT&Co. was appointed as the Company’s Independent External Auditor for the calendar year ending 31 December 2017, by the stockholders in the annual stockholders’ meeting held on 22 June 2017 and its appointment was duly endorsed by the Audit Committee which approved the policies and procedures of RT&Co. RT&Co. is a leading professional services firm with a proven track record of high quality work. They provide value-added serviced to clients through their client caring team of outstanding audit, tax, and business professionals who utilize leading-edge systems and technology and are guided by the highest standards of quality integrity and competence.

FEES 2017 2016 A. Audit and Audit-Related Fees 1. Audit of the Registrant’s annual financial statements or services that are normally provided by the external ₱1,080,000.00 ₱1,120,000.00 auditor in connection with the statutory and regulatory filings or engagements (exclusive of (exclusive of 2. Other assurance and related services by the external VAT) VAT)

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auditor that are reasonably related to the performance of the audit or review of the Registrant’s financial statements --- B. Taxes Fees ------C. All Other Fees ------

D. OTHER MATTERS

Item 15. Action with Respect to Reports

The Company will seek the approval by the stockholders of the Minutes of the Annual Stockholders' Meeting held on 22 June 2017 during which the following were taken up: (1) Call to Order; (2) Certification of Attendance of Stockholders owning at least two-thirds of the Corporation’s Outstanding Capital Stock; (3) Ratification of Corporate Acts (4) Presentation of Financial Statements, (5) Election of Directors and (6) Adjournment.

The Company will also seek approval by the stockholders of the 2017 Operations and Financial Results (the “President’s Report”), as contained and discussed in the Management Report attached and made part of this Information Statement. Approval of the reports will constitute approval and ratification of the acts of management and of the Board of Directors for the past year.

Two inspectors, who are officers or employees of the Company, shall be appointed by the Board of Directors to count the votes to be cast before or at each meeting of the stockholders, if no such appointment shall have been made or if the inspectors appointed by the Board of Directors refused to act or fail to attend then the appointment shall be made by the presiding officer of the meeting.

Item 17. Amendment of Charter, By-laws or Other Documents

The Board of Directors in separate meetings held on 29 August 2017 and 28 February 2018 approved the amendment of the Articles of Incorporation, subject to the approval of the stockholders in accordance with the Corporation Code:

1. The amendment of the Articles of Incorporation of the Corporation to change the corporate name to include the “Terra Spa” as a tradename. Terra Spa is the Spa located within Discovery Shores Boracay.

2. The amendment to Article SECOND to include in its secondary purpose the business of dealing in foreign exchange transactions, and

3. The amendment to Article SEVENTH to convert 265,000,000 common shares into preferred shares in consideration of a possible capital raising exercise that will be conducted by the Company in the future.

Item 18. Other Proposed Actions

The following are to be proposed for approval during the Annual Stockholders’ Meeting:

1. Approval of the Minutes of the Previous Meeting of Stockholders 2. President's Report and Presentation of Financial Statements 3. Ratification of all Acts of the Board of Directors and Officers

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4. Appoint an External Auditor 5. Election of Directors 6. Other Matters

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

1. Resignations and Appointments of officers; 2. Membership in the relevant committees; 3. Designation of authorized signatories; 4. Opening of accounts; 5. Financing activities; 6. Funding support for projects; 7. Amendment of By-Laws

Management reports which summarize the acts of management for the year 2015 are included in the Company’s Annual Report to be sent to the stockholders together with this Information Statement and shall be submitted for approval by the stockholders at the meeting. Accordingly, approval of the Annual Report will constitute approval and ratification of the acts of Management stated in the Annual Report during the period covered thereby.

Item 19. Voting Procedures

(a) Actions to be taken at the Annual Stockholders’ Meeting shall require the vote of the stockholders representing at least a majority of the Company’s outstanding capital stock.

(b) Two inspectors, who are officers or employees of the Company, shall be appointed by the Board of Directors before or at each meeting of the stockholders, at which an election of directors shall take place. If no such appointment shall have been made or if the inspectors appointed by the Board of Directors refused to act or fail to attend, then the appointment shall be made by the presiding officer of the meeting. For purposes of the Annual Stockholders’ Meeting on 9 November 2018, the Corporate Secretary and/or his representative together with the Audit Partner of the External Auditor and/or his representative, have been designated as inspectors who have been tasked to oversee the counting of votes.

(c) Stockholders may vote at all meetings either in person or by proxy duly given in writing in favor of any person of their confidence and each stockholder shall be entitled to one vote for each share of stock standing in his name in the books of the Company; provided, however, that in the election of Directors, each stockholder shall be entitled to cumulate his votes in the manner provided for by law.

(d) The By-Laws of the Company is silent as to the method by which votes are to be counted. In practice, however, the same is done by the raising of hands or viva voce.

(e) With respect to the election of nine (9) directors, each stockholder may vote such number of shares for as many as nine (9) persons he may choose to be elected from the list of nominees, or he may cumulate said shares and give one candidate as many votes as the number of his shares multiplied by nine (9) shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit, provided that the total number of votes cast by him shall not exceed the number of shares owned by him multiplied by nine (9).

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(f) Upon confirmation by the inspectors that there is a mathematical impossibility for certain nominees to be elected into office based on proxies held and votes present/represented in the meeting, the actual casting and counting of votes for the election of Directors may be dispensed with.

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

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DISCOVERY WORLD CORPORATION

GENERAL NATURE AND SCOPE OF BUSINESS

DISCOVERY WORLD CORPORATION (DWC) was incorporated and registered with the SEC on January 5, 1993 as Southern Visayas Property Holdings, Inc. On March 31, 2010, the SEC approved the change of the Company’s name to “Southern Visayas Property Holdings, Inc. (doing business under the names and styles of Discovery Shores Boracay, Discovery Shores, Platitos Resto-Bar, Sands Lounge, Indigo Resto-Bar and Sunken Pool Bar)”. On March 21, 2013, the SEC approved the change of the Company’s name to “Discovery World Corporation (doing business under the names and styles of Discovery Shores Boracay, Discovery Shores, Platitos Resto-Bar, Sands Lounge, Indigo Resto-Bar and Sunken Pool Bar)”.

The Company’s primary purpose is to develop, invest in, own, acquire, administer, construct and operate hotels, resorts, apartelles, condominiums, townhouses, buildings, other tourist-related structures, and their usual facilities, including but not limited to, the operation of transportation or shuttle services for tourists in all its various forms by means of automobiles, motor cars, buses, trucks, cruise lines, yachts, boats, luxury vessels, leisure and sports crafts, and other similar modes of transportation and conveyances of every kind and description as may be allowed by law.

The Company derives its revenues from the operations of Discovery Shores Boracay, Club Paradise and Discovery Fleet. Discovery Shores Boracay and Club Paradise are in the resort business, thus both its revenues comprise of renting out the suites/rooms to guests and food & beverage sales from the restaurants, bars, room service, and banquets while Discovery Fleet is into the cruise business that generates its revenue from the full diving and non-diving programs from its voyage in the Philippine’s renowned dive sites.

Discovery Shores Boracay (DSB), a resort hotel located in Boat Station 1 of the island of Boracay, Aklan. The Company’s commercial operations started only upon its acquisition by The Discovery Leisure Company, Inc. (TDLCI) which gave the Company a feasible business opportunity in the resort hotel business. This was the second project of TDLCI outside of Metro Manila and its first venture into the resort hotel business. In 2012, JTKC Equities, Inc. acquired a majority stake in the Company or 66.07% ownership, leaving TDLCI with 33.93% ownership. Both TDLCI and JEI are holding companies with investments in various companies in the real estate business, particularly in the leisure and hospitality sector. The registered office of TDLCI is located at 2/F JTKC Center, 2155 Chino Roces Avenue, Makati City. The registered office of JEI is located in Felix Avenue, Cainta, Rizal.

The company also operates Club Paradise in Dimakya Island, Coron, Palawan, after its acquisition of 67% of Euro-Pacific Resorts, Inc. (EPRI) on September 27, 2013. In May 14, 2014, DWC subscribed the remaining shares and effectively increased its ownership to 100%. EPRI, doing business under the names and styles of “Club Paradise, Ocean Restaurant, Beach Street, Shack Bar, Dugong Bar and Glow Spa”, is a domestic corporation engaged to operate resorts and recreational centres. It was incorporated on May 3, 1989 and duly registered with the Securities and Exchange Commission (SEC) on June 23, 1993. On September 30, 2014, DWC and TDLCI entered into a Deed of Assignment of Shares for the acquisition of the 100% ownership interest of TDLCI in Palawan Cove Corporation (PCC). The Company was incorporated and registered with the SEC on July 10, 2008. It is engaged in investing, purchasing, developing, leasing, selling, transferring or otherwise disposing of all properties of every kind, nature and description and wherever situated, including, but not limited to real estate. This company is in its pre-development phase which entails permit acquisition, surveying, data gathering, engagement of

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consultants and designs master planning of the area aimed todevelop a beach front resort hotel property in San Vicente Palawan.

During the same period, DWC and TDLCI entered into another Deed of Assignment of Shares for the acquisition of the 100% ownership interest of TDLCI in Discovery Fleet Corporation (DFC), a company incorporated and registered with the SEC on August 31, 2012. It is primarily engaged in the business of transportation service in all various forms and to carry on the business by means of yachts, boats, luxury vessels, leisure and sports crafts, and other similar modes of transportation and conveyances of every kind and description, the general business of transporting passengers, merchandise, freight and cargoes, including but not limited to tourist transport and shuttle as well as other kinds of transport services or combinations thereof allowed by law. DFC has two (2) cruise boats with about 50 rooms and facilities. This business has two (2) main seasons, namely the Tubbataha season from March to June and the Northern Route season from October to March.

Cay Islands Corporation (CIC) was incorporated and registered with the SEC on October 29, 2008. The Company is engaged in investing, purchasing, developing, leasing, selling, transferring or otherwise disposing of all properties of every kind, nature and description and wherever situated, including, but not limited to real estate. As at December 31, 2015, the Company is 98.87% owned by DWC.This company is also in its pre-development phase covering its 5-hectare property in Barangay Corong-Corong, Maregmeg, ElNido in Palawan.

Sonoran Corporation (SC) was incorporated and registered with the SEC on May 27, 2008, and is engaged in the investing, purchasing, developing, leasing, selling, transferring or otherwise disposing of all properties of every kind, nature and description and wherever situated, including, but not limited to real estate. As at December 31, 2015, the Company is 92.59% owned by DWC.This company is also in its pre-development phase covering its property in Beckel, Baguio.

Since its incorporation, DWC has not been the subject of any bankruptcy, receivership, or similar proceedings. For the last three (3) years prior to this Report and to date, the Company has not undergone any material reclassification, or purchase or sale of a significant amount of assets not classified as ordinary.

Long Beach Property Holdings, Inc. (LBPHI) was incorporated and registered with the SEC on July 14, 2016, and is engaged in the investing, purchasing, developing, leasing, selling, transferring or otherwise disposing of all properties of every kind, nature and description and wherever situated, including, but not limited to real estate. This company is also in its pre-development phase covering a 22,247 square meters property in San Vicente, Palawan.

Balay Holdings Incorporated (BHI) was incorporated and registered with the SEC on September 11, 2017 and is a property holding company. As of date, the company is 100%-owned by DWC. The company is currently in process of acquiring a 40,732 sqm. property located at El Nido, Palawan which is intended for future development.

Lucky Cloud 9 Resort Inc. (LCRI) was incorporated and registered with the SEC on August 2, 2017 and is engaged in developing, investing, acquiring real estate to construct and operate hotels, resorts, and other tourist-related structures, including the operation and maintenance of any and all services and amenities incident thereto. As of date, the company is 99.99%-owned by DWC. The company is currently in the pre-development phase covering its 23,937-sqm. property in General Luna, Siargao, Surigao del Norte.

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Products / Business Lines

Discovery Shores Boracay

The multi-awarded Discovery Shores Boracay offers 88 suites, consisting of 65 Junior Suites, six (6) One Bedroom Suites, 12 One Bedroom Suite Premiers, three (3) Two Bedroom Suites and two (2) Two Bedroom Suite Premiers. The hotel suites are divided into seven (7) clusters, with each cluster built on a 3-storey structure.

The resort hotel features dining and bar outlets; the award-winning Indigo Restaurant, Sands Restaurant offering sumptuous local cuisines and Sandbar/Pool Bar. Other hotel amenities include Terra Wellness Spa, an outdoor swimming pool for the kids and adults, outdoor Jacuzzi, The Sandbox Kids Room, fitness facility, a library, an entertainment room, a billiards table, a gift/souvenir corner and a wide beach area ideal for afternoon lounging or for viewing the magnificent Boracay sunset.

The five-star resort hotel is also an ideal destination for weddings, other social gatherings and even business meetings as it offers two function rooms and an expansive beachfront perfect for an unforgettable Boracay beach wedding.

Soon to open is the Signature Suites, Discovery Shores Boracay’s premier wing consisting of 11 indulgent suites and Forno Osteria, an Italian restaurant.

Discovery Shores Boracay’s market is comprised of 46% local tourists and 54% foreign travelers, primarily coming from China, United States and South Korea.

Club Paradise

Club Paradise Palawan, a private island resort in Dimakya Island, offers 48 suites divided into four (4) room categories namely, Sunset Villa which has three different categories - Premier (1), Deluxe (12) and Standard (7), Sunrise Villa (4), Garden Suites (20) and Garden View Room (4).

The island resort features a dining outlet, Firefish Restaurant which offers Pan Asian cuisines, as well as several bar outlets namely, Sand Bar, Dugong Bar and Shack Bar. Hotel amenities include Glow Spa, fitness facility, kids’ room, entertainment room, gift/souvenir outlet, outdoor swimming pool for kids and adults, hiking trail, outdoor recreational area, dive center and picnic area.

The island resort is likewise ideal for weddings, other social gatherings and team buildings because of its expansive beach area. Aside from an outdoor event area, the resort has two functions rooms perfect for business meetings and other important gatherings.

Club Paradise Palawan’s market is comprised of 60% local tourists and 40% foreign travelers, primarily from China, United States and Australia.

Discovery Fleet

DFC offers 4 destinations, Tubbataha, Palau, Apo Reef-Coron and Cebu-Malapascua-Visayas.

The Tubbataha (Palawan) route is intended for scuba safari expeditions to this UNESCO World Heritage site from late March to mid-June.

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Apo Reef-Coron offers World War 2 shipwrecks as well as a chance to snorkel and dive in the world’s 2nd largest contiguous coral reef on the planet.

The Cebu-Malapascua-Visayas route brings guests up close and personal with whale sharks, sardine schools and thresher sharks, amidst rich colorful reefs.

Palau is the 4th destination and remains in the top 3 diving destinations in the world due to its prolific fishlife, wrecks and sharks.

The Tubbataha and Palau routes are "divers-only" trips, while the Cebu-Malapascua-Visayas and Apo Reef-Coron routes welcome both divers and non-divers.

Marketing and Sales Channels

DWC offers its products mainly through direct bookings, travel agents, online travel agencies (OTAs), corporate and free independent travelers (“FIT”).

Competition

Discovery Shores Boracay

There are a very few resort hotels in Boracay that offer premium all-suite accommodations and world- class amenities. The principal factors that affect the Company’s business are service, location, room rate, the supply and demand for hotel rooms, and changes in travel patterns and preferences.

The Company has identified Shangri-La Boracay Resort & Spa, The Lind Boracay and Crimson Boracay as its major competitors in the island.

Shangri-La Boracay Resort & Spa

Shangri-La’s Boracay Resort and Spa is located on a hillside overlooking the ocean at the northern tip of Boracay Island. It is the first international deluxe resort in Boracay and the only resort in Boracay with a private jetty port.

The Lind Boracay

The Lind Boracay is a 5-star hotel situated in Boracay. Found on the coveted beachfront of the exclusive end of White Beach’s Station 1, this property is a lifestyle hotel with a boutique aesthetic, designed with the contemporary and discerning traveler in mind.

Crimson Resort and Spa Boracay

Crimson Resort and Spa Boracay is located in the Boracay Island, 601 m from Willy's Rock and 1.7 mi from White Beach.

The following table presents comparable key information about the Company and its competitors

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TABLE 1: DISCOVERY SHORES BORACAY COMPETITION DISCOVERY SHANGRI-LA CRIMSON THE LIND SHORES BORACAY RESORT AND SPA 1 2 BORACAY BORACAY RESORT & SPA BORACAY Location Station 1 Bgy. Yapak Station 1 Station 0 No. of Rooms/Suites 88 219 119 192 No. of Restaurants/ Bars 4 8 4 3 Rooms, Suites, Rooms, Suites, Rooms Suites Suites Villas Villas ₱20,000 – ₱28,000 – ₱13,600 – ₱24,500 – Super Peak ₱42,500 ₱200,000 ₱58,000 ₱28,000 ₱17,000 – ₱18,500 – ₱24,600 – ₱24,500 – Peak ₱35,300 ₱187,000 ₱65,000 ₱28,000 ₱14,000 – ₱16,000 – ₱13,100 – ₱16,300 – Lean ₱27,500 ₱150,000 ₱56,000 ₱20,000

The Company believes that Discovery Shores Boracay can effectively compete with other resorts in its area of competition because it provides luxurious guestrooms and excellent resort facilities that attract high-end leisure markets. It also delivers outstanding, consistent, and personalized service with unique “wow factors” and provides continuous enhancements and innovations to keep guests coming back. Furthermore, it offers world-class cuisine through its bar and restaurants. Lastly, it ensures that it provides sufficient investment in the property to retain and attract guests and industry partners.

Because of all these, Discovery Shores Boracay received several accreditations and various local and international accolades, which includes the following: Best for Families in Asia at the 2018 Condé Nast Johansens Awards for Excellence, Country Winner: Luxury Wedding Destination and Luxury Family Resort at the 2017 World Luxury Hotel Awards, No. 1 Hotel Spa in Asia, Top Family Hotel in Asia, the No. 2 Top Resorts in Asia, and No. 5 Top Resorts in the World in 2012, which makes Discovery Shores Boracay rise above its competition.

Club Paradise

For its size and price positioning, Club Paradise does not have a direct competition in Coron but its closest competitors are Two Seasons Coron Island Resort & Spa and Huma Island Resorts and Spa.

Two Seasons Coron Island Resort & Spa

Two Seasons Coron has been providing high-quality accommodations on Bulalacao Island’s breathtaking Malaroyroy Peninsula. It is a turtle and giant clam sanctuary as well as the first eco- friendly luxury island resort in Coron.

Huma Island Resorts and Spa

Huma Island boasts of over-water beach villas and over-water spa located in Dicilingan Island, Busuanga. It is built on an enclave blessed with abundant marine life, white beaches and a lush rainforest

1 http://reservation.discoveryhotels-resorts.com/booking-start.php?property_id=1 2http://www.shangri-la.com/boracay/boracayresort/reservations/

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The following table presents comparable key information about the Company and its competitors.

TABLE 2: CLUB PARADISE COMPETITION CLUB PARADISE3 HUMA ISLAND4 TWO SEASONS5 Dimakya Island, Dicilingan Island, Location Malaroyroy, Coron Coron Busuanga No. of Rooms/Suites 48 81 42 Average Room 32.4 sqm. 34 sqm. 43 Sqm. Sizes No. of Restaurants/ 1 Restaurant / 1 Restaurant / 1 Restaurant / Bars 2 Bars 1 Bar 2 Bars Published Rates ₱13,600 – ₱26,500 ₱28,000 – ₱80,000 ₱21,000 – ₱30,000

Club Paradise currently enjoys “AA” resort accreditation rating from the DOT. It received the Kalakbay “Resort of the Year (AA category)” awards in 2001 and 2003 from the DOT.

Discovery Fleet Corporation There is no significant competition identified in its present route, although there are also several other liveaboards plying the same routes.

Suppliers

Discovery Shores Boracay

Discovery Shores Boracay sources most of its products and services inputs from suppliers located in the Boracay Island and from the mainland Aklan. These include food and beverages, outside services, supplies, and utilities.

Club Paradise

Club Paradise sources most of its products from mainland Coron and Metro Manila. These include food and beverages, outside services, supplies, and utilities.

Discovery Fleet Corporation

DFC sources its food and beverages from Metro Manila and the ports the vessels are based in depending on the destination.

3www.agoda.com 4www.humaisland.com 5www.twoseasonsresorts.com

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Customers

Discovery Shores Boracay

Table 3: Discovery Shores Boracay Customer Types by Country of Residence: 2015 to 2017 2015 2016 2017 Philippines 51% 54% 46% Korea 8% 9% 7% China 8% 11% 21% USA 13=% 15% 9% Australia 5% 2% 3% Others 15% 9% 14% Total 100% 100% 100%

Club Paradise

Table 4: Club Paradise Customer Types by Country of Residence: 2015 to 2017 2015 2016 2017 Philippines 56% 66% 60% Japan 6% 5% 5% US 18% 10% 12% UK 4% 3% 3% China 5% 6% 12% Others 11% 10% 8% Total 100.00% 100.00% 100.00%

Discovery Fleet

The following table presents the breakdown of Discovery Fleet’s customers by nationality. Table 5: DFC Customer Types by Nationality: 2014 to 2017 2014 2015 2016 2017 Chinese 26% 30% 47% 41% Filipino 18% 18% 18% 13% Danish 15% 24% 19% 7% American 8% 16% 0 7% Others 33% 12% 16% 32% Total 100.0% 100.0% 100.0% 100.0%

Business Development

DWC actively carries out refurbishment works to keep the resorts and the boat modern and new to potentially attract visitors, promote repeat guests and increase their length of stay.

Resort promotions done include the following: Tourism Trade Conventions and Exhibitions

DWC participates in tourism trade conventions and exhibitions in the Asia-Pacific region such as the China Luxury Travel Mart, ASEAN Tourism Forum, and Malaysian Association of Tour and Travel

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Agents International Travel Exhibition. In addition, DWC also actively participates in overseas road shows, consumer fairs, and product updates organized by the DOT.

Advertisements and Online Reservations

DWC makes placements in trade magazines that are circulated in the Asia-Pacific region as well as worldwide. It also has promotional materials intended for the guests of the hotels owned by TDLCI including the Discovery Suites in Ortigas, Pasig, Discovery Country Suites in Tagaytay and Discovery Primea in Ayala Avenue in Makati.

The Company accepts online hotel reservations through its websites:

Discovery Shores Boracay – www.discoveryshoresboracay.com Club Paradise Palawan – www.clubparadisepalawan.com My Discovery Elite (for members) - www.mydiscovery.ph

Promotional tie-ups with Tourism-Related Companies

The resorts are marketed through collaborations with tourism-related companies. For example, certain packages with certain airlines include accommodations at Discovery Shores Boracay and airline tickets. In addition, Discovery Shores Boracay has tie-ups with local and foreign travel agencies offering customized travel packages at preferred rates.

Business Partners The resorts have established a good working relationship with major local and overseas travel agents and Online Travel Agents.

Land

Discovery Shores Boracay

DSB has approximately 1-hectare contiguous lots at the prime portion of Boracay Island’s beachfront called Boat Station 1 with a frontage of more than 60 meters. Boracay Island is famous for its stunning white sand and leisure activities. It competes strongly as one of the most popular destinations and best beaches worldwide.

In 2018, Discovery Shores expanded its operations on a 1,453-sqm. lot within the property of the existing resort with a project called “Signature Suites.” This project has a frontage along Boracay Highway. This lot is intended to complement the resort’s existing accommodations and to create a new luxury experience for customers.

Club Paradise

Club Paradise is built on a 14-hectare property located in Coron, Palawan that has 700 meters of white sand beach gently sloping into the renowned waters of Palawan. The company leases, through the Department of DENR, a 14-hectare portion of forest lands located in Dimakya Island by virtue of a Forest Land Use Agreement for Tourism Purposes (FLAgT). The existing FLAgT allows the Company to occupy, manage and develop the leased area for a period of 25 years until December 31, 2029, renewable for another 25 years.

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Coron is known for its dive sites including a dozen of sunken Japanese warships off the island, its pristine beaches and other nature-oriented activities.

Vanilla Beach

Vanilla Beach prides itself on Cay Islands Corporation’s 5-hectare beach front property located in Corong Corong, El Nido, Palawan, one of the town proper in the said province. El Nido is a major tourist destination in Palawan. It is known for its beaches, water sports such as diving, snorkeling and kayaking and extraordinary natural splendor and ecosystem. The company is building a hotel, hostel, and commercial complex in the area.

Palawan Cove Corporation

Palawan Cove’s property is located in Boayan Island, the largest island in San Vicente, Palawan. On February 27, 2012, then company entered into a Forest Land Use Agreement for Tourism Purposes (FLAgT) agreement with the Department of Environment and Natural Resources (DENR) covering a 24- hectare beach front property located in Sitio Daplac, Barangay Poblacion, San Vicente, Palawan. The FLAgT allows the Company to occupy, manage and develop the leased area for a period of 25 years, renewable for another 25 years.

Sonoran Corporation

Sonoran Corporation takes great value of its 5.7-hectare property situated on a mountain top in La Trinidad, a first class and capital municipality of the province of Benguet that’s dubbed as the “Strawberry Capital of the Philippines”. The area’s elevated state also allows for a panoramic view of La Trinidad and the majestic Cordillera Mountains. Given its postcard-perfect appeal, Sonoran Corp. perceives the property as a suitable sanctuary for tourists and corporate people alike. It will soon feature a plush mountain resort with top-of-the-line amenities, cool and cozy hilltop residences, and retail shops to serve the visitors and occupants’ needs.

Long Beach Property Holdings, Inc.

LBPHI owns a 38,373 sqm. property in Bgy. Inarayan, San Vicente, Palawan. This area is touted as the longest white beach in the Philippines spanning 14 kilometers of undeveloped shorelines. The project is currently in its design and pre-development phase.

Lucky Cloud 9 Resort Inc.

Lucky Cloud 9 owns a 23,937 sqm. property in Siargao located at Catangnan, General Luna, Surigao del Norte. General Luna, the main street where Cloud 9 is accessed from, is a melting pot of foreign-inspired and vernacular-designed lodging places that have somehow preserved the idyllic surfing town. The project is currently in its design and pre-development phase.

Buildings

Discovery Shores Boracay

The buildings and improvements of Discovery Shores Boracay have a total area coverage of 7,290 sqm., consisting of 88 guest rooms. The Signature Suites expansion, which boasts of a 4-storey building with 11 villas, has an estimated gross floor area of 5,643.34 sqm.

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Club Paradise

Club Paradise’s property has a floor area of around 8,700 sqm. comprised of various cottages and other improvements.

Vanilla Beach

The Vanilla Beach project, which is currently in its development phase, will utilize approximately 39,000 sqm. of land area for the construction of commercial buildings (commercial clusters, beach club, hotel, etc.). By end-2018, the retail strip comprising of 4 anchor stores and 6 retail clusters, shall be completed The average area for anchor stores is 200 sqm. per unit, while the retail stores will have an average area of 50 sqm. per unit.

Palawan Cove Corporation, Sonoran Corporation, and Long Beach Property Holdings Inc., and Lucky Cloud 9 Resort Inc., are currently in their pre-development phase which entails permit acquisition, surveying, data gathering, engagement of consultants and designs master planning.

Passenger Ships

Discovery Shores Boracay

The following passenger ships are registered with the MARINA under the name of the Company:

DATE AND PLACE OF CATEGORY OF PLACE AND YEAR NAME OF SHIP REGISTRATION NO. REGISTRATION OPERATION BUILT MB Discovery Shores 1 06-0000491 July 8, 2010; Iloilo Bay and River Calamba, Laguna; 2007 September 14, 2010; MB Discovery Shores 2 06-0000493 Bay and River Calamba, Laguna; 2007 Iloilo MB Discovery Shores 3 06-0000492 July 8, 2010; Iloilo Bay and River Pandan, Antique; 2008 New Washington, MB Summerwind 06-0001814 April 24, 2013; Iloilo Bay and River Aklan; 2012

Club Paradise

Passenger Ships

The following passenger ships are registered with the MARINA under the name of the Company:

DATE AND PLACE OF CATEGORY OF PLACE AND NAME OF SHIP REGISTRATION NO. REGISTRATION OPERATION YEAR BUILT M/BCA PARAISO 1 04-0003345 April 2014 / Batangas Bay and River Coron, Palawan / 2001 M/BCA PARAISO 2 c/o ALS MARINE c/o ALS MARINE Bay and River Cavite/2015 OCEAN CRUISER 2 c/o ALS MARINE c/o ALS MARINE Bay and River c/o ALS MARINE

Discovery Fleet Corp. DFC has 2 vessels, namely Discovery Palawan and Discovery Adventure. The M/V “Discovery Palawan” is a single-screw, pleasure boat passenger carrier of all steel welded construction with raked stem, transom stern, superstructure from forward to aft and machinery space located at aft of midship. M/V “Discovery Palawan” made its maiden voyage in April 2013.

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The superstructure houses the wheelhouse and open passenger space at bridge deck, four (4) air conditioned passenger accommodation, master cabin and open saloon space at upper deck, galley, main saloon, waterclosets, air con room, CO2 room, diving equipment room, crews’ cabins and steering room at main deck. Accommodation below main deck consisted on twenty (18) cabins, 16 cabins for vessel’s guest and two (2) cabins for crew.

The other vessels is called M/V “Discovery Adventure”, also a pleasure boat with four upper deck rooms and eight standard rooms is set to sail in 2017.

Item 3. Legal Proceedings

Discovery World Corporation

In September 2013, a Petition for cancellation of corporate name was filed by the Corporation against Aldanco Discovery Resort and Discover Divers Coron, Inc. before the Securities and Exchange Commission. Both cases remain pending with the SEC.

In March 2015 a criminal case for infringement was filed against Vitoria S. Pangan, Vincent Paul S. Pangan, et. al, directors/officers of Anilao Discovery Bay Resort, Inc., for their unauthorized use of the marks, “Discovery” and “Discovery Bay” not only as part of its corporate name, “Anilao Discovery Bay Resort, Inc.” but also in its resort business situated in Barangay Solo, Mabini, Batangas. Pursuant to an Order dated 10 April 2017, the case shall be permanently dismissed upon non-filing of Affidavit of Desistance within 10 days from receipt thereof. The Company did not file the said Affidavit and thus the case is now subject to dismissal.

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MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE AND FINANCIAL CONDITION

The table below presents the summary of operating and financial information of the Company for periods ending December 31, 2015, 2016 and 2017 and as of December 31, 2015, 2016 and 2017. The summary financial information should be read in conjunction with the auditor’s reports and the financial statements and notes thereto contained in this Report. The summary financial data below are based on its audited financial statements prepared in accordance with PFRS.

The information below is not necessarily indicative of the results of future operations or financial condition of the Company.

SUMMARY OF COMPREHENSIVE INCOME Amounts in ₱millions 2017 2016 2015 Revenues 658.15 565.30 508.71 Costs of Sales and Services 389.62 305.98 271.94 Gross Income 268.53 259.32 236.77 Operating Expenses 252.17 214.47 186.95 Operating Income 16.36 44.85 49.82 Other Income (Charges) (19.84) (11.67) 32.86 Profit (Loss) Before Tax (3.48) 33.18 82.68 Net (Loss) Profit (7.24) 18.81 71.41 Differences in decimal numbers are due to rounding off.

DWC SUMMARY OF FINANCIAL POSITION Amounts in ₱millions 2017 2016 2015 Assets Cash and cash equivalents 95.42 109.34 88.84 Trade and other receivables - 12.37 12.81 17.49 net Due from related parties 49.33 51.72 70.77 Inventories 31.83 27.08 22.92 Financial assets at FVTPL 70.00 70.00 70.00 Other current assets 93.36 53.65 45.52 Total Current Assets 352.31 324.60 315.54 Property and equipment - net 2,620.27 2,185.34 1,872.86 Investment property - 48.79 48.79 Available for sale (AFS) 13.84 14.95 21.07 Goodwill 151.88 151.88 151.88 Net deferred tax asset 30.65 36.36 31.58 Other non-current assets 239.00 120.56 86.51 Total Non-current assets 3,055.64 2,557.88 2,212.69 Total Assets 3,407.95 2,882.48 2,528.23

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Liabilities and

Shareholder's Equity Current portion of loans payable 1,007.08 639.08 570.69 Trade and other payables 413.32 352.43 243.28 Due to related parties 147.37 139.12 142.25 Current portion – finance lease .34 .32 0.30 Income tax payable - 3.08 -

Total Current Liabilities 1,568.11 1,134.03 956.52 Non-Current Liabilities Loans payable – net of 428.33 240.00 current portion 538.75 Finance lease liability – net .52 .86 1.17 of current portion Retirement benefit liability 2.81 6.62 7.82 Deferred tax liability 87.00 94.58 90.07 Total non-current liabilities 629.08 530.39 339.06 TOTAL 2,197.19 1,664.42 1,295.58 Capital stock 626.00 626.00 626.00 Additional paid-in capital 353.54 353.54 353.54 Other equity reserve (48.07) (48.01) (36.57) Retained earnings 279.29 286.53 283.29 Stockholders’ Equity 1,210.76 1,218.06 1,226.26 Non-Controlling Interest - - 6.39 TOTAL LIABILITIES 3,407.95 2,882.48 2,528.23 AND EQUITY

First Quarter 2018 vs. First Quarter 2017

A. Material changes to the Statements of Comprehensive Income for the period ended March 31, 2018 and March 31, 2017.

Revenue

The contributors in the Group’s revenues for First Quarter of 2018 and 2017 are as follows. 2018 2017 Change Amount Percentage Amount Percentage Amount Percentage DWC P=129,207,771 64% P=118,541,088 67% P=10,666,683 9% EPRI 60,205,915 30% 48,015,728 27% 12,190,187 25% DFC 13,523,402 7% 10,099,914 6% 3,423,488 34% P=202,937,088 100% P=176,656,730 100% P=26,280,358 15%

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Movements in this account are as follows:

2018 2017 Change % Change Rooms P=173,218,926 P=136,138,639 P=37,080,287 27% Food and beverage 29,718,162 40,518,091 (10,799,929) -27% P=202,937,088 P=176,656,730 P=26,280,358 15%

Revenues

For the period March 31, 2018 revenues increased by 15% or P26.2million from P176.6million in March 31, 2017 to P202.9million. The revenue generated for the room increased by P37million and for food, beverages and others decreased by P10.8million.

Cost of Sales and Services

The cost of sales and services incurred for the 1st quarter of 2018 increased by 23% from 1st quarter of last years’ P86.3million and is attributed to the increase in revenues earned from rooms.

Gross Income and Gross Profit Margin

The gross profit margin for March 31, 2018 and March 31, 2017 is 48% and 51% respectively which resulted to an increase of 7% or P6.4million.

Operating Expenses

In 2018, total operating expenses incurred for the 1st quarter amounts to P80.52million or an increase of 10% from last years’ expenses of P72.96million. These expenses were administrative, sales and marketing and other operating expenses.

Net Profit Margin

The company made a net profit margin of P24.13million for 1st quarter of 2018 as against last years’ of P33.73million. This is due to the increase in cost of sales and services incurred for the quarter.

Twelve months’ ended December 31, 2017 vs. Twelve months’ ended December 31, 2016

A. Comprehensive Income for the year ended December 31, 2017 vs. Comprehensive Income for the year ended December 31, 2016.

Revenue

The contributors in the Group’s revenues are as follows. 2017 2016 Change Amount Percentage Amount Percentage Amount Percentage DWC P=396,371,586 60% P=369,863,047 65% P=26,508,539 7% EPRI 193,294,154 29% 154,068,571 28% 39,225,583 25% DFC 68,487,711 11% 41,369,819 7% 27,117,892 66% P=658,153,451 100% P=565,301,437 100% P=92,852,014 16%

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Movements in this account are as follows:

2017 2016 Change % Change Room P=523,614,377 P=451,494,089 P=72,120,288 16% Food and beverage 134,539,074 113,807,348 20,731,726 18% P=658,153,451 P=565,301,437 P=92,852,014 16%

Total revenues increased by 16% in 2017 which were derived from 80% rooms and 20% food, beverage and others. Main contributor of revenues in 2017 is DWC with 61% share, followed by EPRI with 29% and DFC with 10%.

The contribution of DFC in terms of revenues increased from 7% in 2016 to 10% in 2017 because of the operation of Discovery Adventure.

The increase in revenues is attributable to the increase in number of guests of DWC and EPRI. It increased by 11% from a total of 83,697 guests to 93,063 guests.

Cost of Sales and Services

Movements in this account are as follows:

COST OF ROOM % 2017 2016 Change Change Depreciation P=67,872,708 P=52,579,374 P=15,293,334 29% Communication, light and water 49,444,473 37,085,118 12,359,355 33% Salaries and employee benefits 46,025,586 35,032,660 10,992,926 31% Supplies 31,742,490 29,284,776 2,457,714 8% Outside services 27,228,351 24,283,733 2,944,618 12% Transportation and travel 27,134,762 20,599,797 6,534,965 32% Food and beverage 22,089,570 16,008,331 6,081,239 38% Professional fee 3,931,029 1,362,691 2,568,338 188% Laundry 1,553,387 1,514,142 39,245 3% Others 13,163,373 11,168,455 1,994,918 18% P=290,185,729 P=228,919,077 P=23,711,001 27%

COST OF FOOD AND BEVERAGE % 2017 2016 Change Change Food and beverages P=62,150,403 P=48,284,895 P=13,865,508 29% Outside services 9,772,239 7,496,199 2,276,040 30% Supplies 7,129,025 5,578,944 1,550,081 28% Salaries and employee benefits 6,199,506 4,458,001 1,741,505 39%

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% 2017 2016 Change Change Communication, light and water 4,970,986 3,999,896 971,090 24% Kitchen fuel 2,611,698 1,905,997 705,701 37% Taxes and licenses 2,052,956 2,024,820 28,136 1% Others 4,547,483 3,312,730 1,234,753 37% P=99,434,296 P=77,061,482 P=22,372,814 29%

The increase in cost of sales and services of 28% in 2017 is attributable to the increase in food and beverage, depreciation and amortization, communication, light and water, salaries and employee benefits, outside services, resident lounge costs and transportation and travel.

The increase in food and beverage is attributable to the increase in food consumption due to the 11% increase in the number of guests.

Additional property and equipment was acquired during the year which caused the increase in depreciation and amortization.

Communication, light and water also increased because of the fuel cost used for the generator set due to the fluctuations in power supply in Boracay.

The increase in salaries and employee benefits and outside services is attributable to the costs incurred in Signature Suites while still under construction. The Parent Company started incurring costs in June 2017 though no revenue was generated from this property. The Group had an expectation that the outlet will be fully operational in October 2017 which led to outsourcing of 51 additional employees from Primepower Manpower Services for the Food and beverage and Romac Visayas Services, Inc. for Housekeeping personnel. They also added 9 employees to the normal operations of Discovery Shores.

Resident lounge cost also increased which refers to the free buffet breakfast for guests. The increase is due to the increased number of guests during the year by 6,383. Further, the allocated cost for each guest has increased from P=600 to P=685 to cater customers’ request of increasing the food selection.

The increase in the account is due to the increase in cost of rented boats for transfers beyond 5PM by 128% (P=40 to P=91 per occupied room). The Parent Company rent out boats for transfers beyond 5PM since the boat capable of night navigation is in dry dock. The prices of diesel had also increased affecting cost of transport from the port to the hotel. The average price of fuel in Aklan has increased by 19% averaging in 2016 and 2017 to P=34 and P=41 per liter respectively.

A. Operating Expenses

Movements in this account are as follows: % 2017 2016 Change Change Salaries and employee benefits P=57,820,331 P=45,359,970 P=12,460,361 27% Management fees 33,443,128 30,631,456 2,811,672 9%

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% 2017 2016 Change Change Advertising and marketing 24,328,341 22,260,774 2,067,567 9% Transportation and travel 21,763,978 13,685,669 8,078,309 59% Depreciation and amortization 19,538,472 17,384,553 2,153,919 12% Repairs and maintenance 18,612,965 14,710,481 3,902,484 27% Outside services 16,212,536 13,729,064 2,483,472 18% Supplies 13,449,450 13,096,233 353,217 3% Taxes and licenses 11,927,351 11,447,406 479,945 4% Utilities 9,322,876 6,158,700 3,164,176 51% Commission 9,142,399 5,445,764 3,696,635 68% Credit card charges 8,720,799 8,005,381 715,418 9% Professional fees 7,498,776 11,745,680 (4,246,904) -36% Rentals 3,983,052 3,084,104 898,948 29% Representation and entertainment 3,620,075 3,475,828 144,247 4% Insurance 1,534,765 2,026,807 (492,042) -24% Docking cost 486,460 3,242,234 (2,755,774) -85% Donations 26,490 20,000 6,490 32% Others 15,414,380 10,401,921 5,012,459 48% P=276,846,624 P=235,912,025 P=40,934,599 18%

This account consists of administrative and selling and marketing costs which increase 17% and 20%, respectively, in 2017. The overall increase is attributable to the increase in salaries and employee benefits, commission, management fees, taxes and licenses and offset by the decrease in professional fees.

Increase in salaries and employee benefits are attributable to the increase in minimum wage from P=298 to P=323 in Region VI.

The increase in management fee is directly attributable to the increase in revenues and gross operating profit. Since, these fees are based on 3% of revenues and 8% of gross operating profit.

The increase in taxes and licenses is due to the increase in business permits which is usually based on the revenues.

The decrease in professional fees is due to the decrease in appraisal and consultancy fees.

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B. Other Operating Income

This account consists of: 2017 2016 Change % Change Service charge P=12,416,096 P=10,036,265 P=2,379,831 24% Massage 8,174,598 7,485,311 689,287 9% Diving fees 1,629,569 977,997 651,572 67% Bar sales 921,632 750,841 170,791 23% Park fees - 286,082 (286,082) -100% Others 1,535,585 1,903,852 (368,267) -19% P=24,677,480 P=21,440,348 P=3,237,132 15%

Diving Fees Diving fees include income from diving, income from boat transfers and income from equipment rental. During 2017, DFC recorded an increase of P=0.65 million on due to the increase in the number of guests and because of the operation of another cruise ship.

Bar Sales DFC has its own bar and sells liquors and drinks to its guests. It is DFC’s policy to only sell liquors eight (8) hours before the scheduled first dive.

Park Fees Recognized park fee revenues are net of its corresponding park fee expense as paid by the Boat Manager to the local officers in the dive spots. The decrease in income from park fee is attributable to the decrease in the number guests during the year.

Twelve months’ ended December 31, 2016 vs. Twelve months’ ended December 31, 2015

A. Comprehensive Income for the year ended December 31, 2016 vs. Comprehensive Income for the year ended December 31, 2015.

Revenue

The contributors in the Group’s revenues are as follows.

2016 2015 Change Amount Percentage Amount Percentage Amount Percentage DWC P=369,863,047 65% P=338,122,711 66% P=31,740,336 9% EPRI 154,068,571 28% 127,771,979 25% 26,296,592 21% DFC 41,369,819 7% 39,701,017 8% 1,668,802 4% PCC - - 3,110,571 1% (3,110,571) -100% P=565,301,437 100% P=508,706,278 100% P=56,595,159 11%

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Movements in this account are as follows:

2016 2015 Change % Change Room P=451,494,089 P=408,632,292 P=42,861,797 10% Food and beverage 113,807,348 96,963,415 20,731,726 17% Others - 3,110,571 (3,110,571) -100% P=565,301,437 P=508,706,278 P=56,595,158 11%

DWC’s occupancy rate increased from 62% in 2015 to 71% in 2016. Per variance analysis based on number of room nights and average rate per room, change in revenue due to sales price variance has decreased by P=15.9 million while change in revenue due to sales volume variance has increased by P= 35.8 million. Volume variance has been mainly caused by high room nights sold during month of June, July, September and October.

While there was a decrease in average room rates in DWC, EPRI had increased its room rates with an average of 4%.

For food, beverage and other revenues, banquets and restaurants remain to be the highest earning source of this revenue at 22% and 42% respectively for this year. The increase is brought by increase in number of orders, from 83,323 to 95,318 for the year 2015 to 2016, respectively.

Cost of Sales and Services

Movements in this account are as follows:

COST OF ROOM % 2016 2015 Change Change Depreciation P=52,579,374 P=46,094,723 P=6,484,651 14% Communication, light and water 37,085,118 31,849,753 5,235,365 16% Salaries and employee benefits 35,032,660 31,077,345 3,955,315 13% Supplies 29,284,776 23,729,438 5,555,338 23% Outside services 24,283,733 24,080,038 203,695 1% Transportation and travel 20,599,797 21,005,650 (405,853) -2% Food and beverage 16,008,331 15,661,791 346,540 2% Laundry 1,514,142 1,736,204 (222,062) -13% Professional fee 1,362,691 1,425,280 (62,589) -4% Others 11,168,455 8,547,854 2,620,601 31% P=228,919,077 P=205,208,076 P=23,711,001 12%

COST OF FOOD AND BEVERAGE % 2016 2015 Change Change Food and beverages P=48,284,895 P=39,780,731 P=8,504,164 21% Outside services 7,496,199 6,233,201 1,262,998 20%

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% 2016 2015 Change Change Supplies 5,578,944 4,914,773 664,171 14% Salaries and employee benefits 4,458,001 4,991,796 (533,795) -11% Communication, light and water 3,999,896 4,471,518 (471,622) -11% Taxes and licenses 2,024,820 1,922,621 102,199 5% Kitchen fuel 1,905,997 1,565,202 340,795 22% Others 3,312,730 2,851,406 461,324 16% P=77,061,482 P=77,061,482 P=10,330,234 15%

Food and beverage, Communication, light and water, Supplies The increase in food and beverage, communication, light and water, as well as supplies is attributable to the average increase of 10% in guests and room nights sold in 2016.

Outside Services Outside services pertains to the salaries of housekeeping personnel, kitchen crews and security services. The increase is mainly attributable to the 6% increase in the daily wage rates from 357.69 to 377.84 in 2015 and 2016, respectively. The Group hired more casual employees towards the end of the year.

A. Operating Expenses

Movements in this account are as follows: % 2016 2015 Change Change Salaries and employee benefits P=45,359,970 P=45,392,664 (P=32,694) 0% Management fees 30,631,456 12,280,896 18,350,560 149% Advertising and marketing 22,260,774 23,061,998 (801,224) -3% Depreciation and amortization 17,384,553 12,832,037 4,552,516 35% Repairs and maintenance 14,710,481 14,349,143 361,338 3% Outside services 13,729,064 11,476,027 2,253,037 20% Transportation and travel 13,685,669 11,697,624 1,988,045 17% Supplies 13,096,233 13,142,212 (45,979) 0% Taxes and licenses 11,447,406 16,700,997 (5,253,591) -31% Professional fees 11,745,680 5,755,683 5,989,997 104% Credit card charges 8,005,381 6,935,405 1,069,976 15% Utilities 6,158,700 5,691,389 467,311 8% Commission 5,445,764 5,208,554 237,210 5% Representation and entertainment 3,475,828 3,228,521 247,307 8% Docking cost 3,242,234 - 3,242,234 100% Rentals 3,084,104 3,346,256 (262,152) -8% Insurance 2,026,807 2,838,314 (811,507) -29% Donations 20,000 213,900 (193,900) -91% Others 10,401,921 13,870,110 (3,468,189) -25% P=235,912,025 P=208,021,730 P=27,890,295 13%

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Salaries and Employees Benefits Increase in salaries and employee benefits are due to the additional regular employees hired during the year. The net increase monthly in basic salary is P=0.2 million.

Management Fees DWC and EPRI have existing management service agreements with TDLCI wherein TDLCI provides services in connection with the operations, management and marketing of Discovery Shores and Club Paradise. DWC and EPRI shall pay a base fee equivalent to 3% of its gross operating revenue and an incentive fee equivalent to 8% of its gross operating income.

The 2015 management fee only reflects 5 months of management fee and incentive fee which commenced last August 2015, while the 2016 management fee already pertains to the 12-month period.

Depreciation In 2016, EPRI purchased water tanks, NEC universe, recreational equipment and transportation equipment amounting to P=5.45 million. Related depreciation expense was booked under operating expense that caused the increase in current year’s depreciation.

Taxes and Licenses Taxes and licenses mainly pertain to documentary stamp tax paid for the loans availed in 2016 and registration and filing fees of SC for the application of the increase in authorized capital stock. However, the decrease is due to few loan availments during the year as the Group availed more long- term loans in 2016 compared to availing short-term loans during the prior years.

Professional Fees The increase in professional fee is attributable to the appraisal fee paid to International Finance Corporation for the due diligence and appraisal to seek potential investors for the Group’s projects in El Nido, Palawan and Beckel, La Trinidad. The increase is also due to the corporate reimbursement billed by TDLCI to the Group for their share on the Discovery Hotels’ promotion and advertisements.

Docking fees This account includes expenses incurred in connection with the docking of Discovery Palawan which includes payroll expense for crews, fuel expense for generator sets, and dry-docking costs which amounted to P=5.8 million.

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B. Other Operating Income

This account consists of:

2016 2015 Change % Change Service charge P=10,036,265 P=9,136,426 P=899,839 10% Massage 7,485,311 6,402,980 1,082,331 17% Diving fees 977,997 1,639,609 (661,612) -40% Bar sales 750,841 1,486,049 (735,208) -49% Park fees 286,082 535,375 (249,293) -47% Others 1,903,852 1,873,580 30,272 2% P=21,440,348 P=21,074,019 P=366,329 2%

Diving Fees Diving fees include income from diving, income from boat transfers and income from equipment rental. During 2016, DFC recorded a decrease of P=0.66 million on its income from diving and a decrease of P=0.21 million on its income from equipment rental due to the decrease in the number of guests and because most guests bring their own equipment.

Bar Sales DFC has its own bar and sells liquors and drinks to its guests. It is DFC’s policy to only sell liquors eight (8) hours before the scheduled first dive. During 2016, the Group classified its sales from bar under revenue.

Park Fees Recognized park fee revenues are net of its corresponding park fee expense as paid by the Boat Manager to the local officers in the dive spots. The decrease in income from park fee is attributable to the decrease in the number guests during the year.

Twelve months’ ended December 31, 2015 vs. Twelve months’ ended December 31, 2014

A. Comprehensive Income for the year ended December 31, 2015 vs. Comprehensive Income for the year ended December 31, 2014.

Revenue

The contributors in the Group’s revenues are as follows.

2015 2014 Change Amount Percentage Amount Percentage Amount Percentage DWC P=338,122,711 66% P=336,952,708 74% P=1,170,003 - EPRI 127,771,979 25% 118,783,022 26% 8,988,957 8% DFC 39,701,017 8% 334,251 - 39,366,766 118% PCC 3,110,571 1% - - 3,110,571 100% P=508,706,278 100% P=456,069,981 100% P=52,636,297 11%

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Movements in this account are as follows:

2015 2014 Change % Change Room P=408,632,292 P=373,201,594 P=35,430,698 9% Food and beverage 96,963,415 82,868,387 14,095,028 17% Others 3,110,571 - 3,110,571 100% P=508,706,278 P=456,069,981 P=52,636,297 11%

Cost of Sales and Services

Movements in this account are as follows:

COST OF ROOM Amount 2015 2014 % Change Change Depreciation ₱46,094,723 P=51,405,476 (₱5,310,753) (10%) Communication, light and water 31,849,753 30,738,878 1,110,875 3% Salaries and employee benefits 31,077,345 27,311,353 3,765,992 13% Outside services 24,080,038 20,669,878 3,410,160 16% Supplies 23,729,438 19,426,208 4,303,230 22% Transportation and travel 21,005,650 19,075,350 1,930,300 10% Food and beverage 15,661,791 11,385,137 4,276,654 37% Laundry 1,736,204 2,002,751 (266,547) (13%) Professional fees 1,425,280 - 1,425,280 100% Membership dues 1,178,096 1,004,732 173,364 17% Others 7,369,758 2,354,018 5,015,740 213% ₱205,208,076 P=182,017,045 ₱19,834,295 11%

COST OF FOOD, BEVERAGES AND OTHERS Amount 2015 2014 % Change Change Food and beverages ₱39,780,731 P=36,028,686 ₱3,752,045 10% Outside services 6,233,201 7,024,625 (791,424) (11%) Communication, light and (4%) water 4,471,518 4,685,276 (213,758) Supplies 4,914,773 4,444,519 470,254 10% Salaries and employee benefits 4,991,796 3,854,314 1,137,482 29% Kitchen fuel 1,565,202 2,704,351 (1,139,149) (42%) Taxes and licenses 1,922,621 1,992,464 (69,843) (3%) Others 2,851,406 2,386,692 464,714 19% ₱66,731,248 P=60,736,249 ₱3,610,321 5%

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The details of the cost of sales and services in 2015 per entity are as follows:

Cost of sales and services DWC ₱180,647,499 EPRI 69,557,764 DFC 20,107,304 PCC 1,626,757

A. Operating Expenses

Movements in this account are as follows:

OPERATING EXPENSES 2015 2014 Amount Change % Change Salaries and employee benefits ₱45,392,664 P=39,307,563 ₱6,085,101 15% Advertising and marketing 23,061,998 18,500,894 4,564,104 24% Supplies 13,142,212 15,158,023 (2,015,811) (13%) Repairs and maintenance 14,349,143 13,962,935 386,208 2% Taxes and licenses 16,700,997 10,957,042 5,743,955 52% Outside services 11,476,027 11,508,189 (32,162) 0% Transportation and travel 11,697,624 11,356,768 340,856 3% Management fees 12,280,896 7,278,030 5,002,866 68% Credit card charges 6,935,405 6,241,586 693,819 11% Depreciation 12,832,037 4,483,299 8,348,738 186% Utilities 5,691,389 4,446,996 1,244,393 27% Professional fees 5,755,683 4,130,022 1,625,661 39% Commission 5,208,554 3,337,196 1,871,358 56% Insurance 2,838,314 2,096,000 742,314 35% Representation and entertainment 3,228,521 2,094,200 1,134,321 54% Rentals 3,346,256 2,091,377 1,254,879 60% Provision for doubtful accounts 1,691,801 1,691,201 100% Foreign currency loss - net 1,009,360 1,009,360 100% Bad debts write-off 618,673 962,015 (343,342) (35%) Freight 256,663 256,663 100% Donations 213,900 923,878 (709,978) (76%) Others 10,293,613 8,198,318 2,095,295 25% ₱208,021,730 P=157,914,149 ₱40,990,399 24%

B. Other Operating Income

This pertains to income from service charge, massage and other services. The increase mainly pertains to the services rendered for the transportation services wherein more guests had opt to avail the Kalibo to Boracay transfers and vice versa. This amounted to P=2.0 million in 2015 compared to last year’s ₱3.8 million.

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Consolidated Statement of Financial Position as of December 31, 2017 vs. Consolidated Statement of Financial Position as of December 31, 2016.

Cash and Cash Equivalents

This account consists of:

2017 2016 Change % Change Cash on hand P=4,088,224 P=5,071,118 (P=982,894) -19% Cash in banks 91,329,795 104,268,294 (12,938,899) -12% P=95,418,019 P=109,339,812 (P=13,921,793) -13%

The movement in cash is mainly due to the following movements in the cash flows from operating, investing and financing activities:

2017 2016 Net cash flows provided by operating activities P=(4,189,775) P=133,480,020 Net cash flows used in investing activities (461,489,803) (327,962,962) Net cash flows provided by financing activities 453,675,231 213,095,800

Decrease in cash is attributable to the negative results of operations. The Group availed loans payables during the year and used the proceeds for the construction of Signature Suites in Boracay, Vanilla Beach in El Nido and renovation of Club Paradise.

Receivables

This account consists of:

2017 2016 Change % Change Trade receivables P=9,509,765 P=11,545,764 (P=1,735,934) -15% Advances to Officers & 134,613 6% employees 2,308,595 2,173,982 Advances to suppliers 1,071,990 828,261 243,729 29% Other receivables 266,999 264,803 2,196 1% 13,157,349 14,812,810 1,655,461 11% Allowance for doubtful (2,000,263) 1,209,669 60% accounts (790,594) P=12,366,755 P=12,812,547 (P=445,792) -3%

The decrease in trade and other receivables is due mainly to the decrease of trade receivables. This decrease is due to the shift of related revenue streams from Groups (Corporate events) to Racks. Racks pertain to revenues received from bookings thru on-line travel agents and direct website bookings which are paid in advance.

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AFS Financial Assets

This account consists of investment of shares of publicly-listed companies that are held for trading.

The decrease in this account is from the market to market loss of the shares. Details are as follows.

Closing Rate Closing Rate December December 31, Name No. of Shares 31, 2016 2017 Gain (Loss) Leisure and Resorts World 2,000,000 3.96 3.98 =P40,000 Nikel Asia Corporation 600,000 7.98 6.33 (990,000) Lepanto Cons Mng Co B 11,200,000 0.20 0.15 (560,000) (1,510,000) Purchased in December 0.15 0.15 2017 Lepanto Cons Mng Co B 2,400,000 0.15 0.15 (=P1,510,000

Dividend income earned from AFS financial assets amounted to P=0.3 million in 2017 and 2016.

Related Party Transactions

Transactions with related parties are as follows.

Nature Transaction during the year Balance at End of Year 2017 2016 2017 2016 Due from Related Parties Stockholder - TDLCI Working Capital P=‒ P= P=49,336,24 P=51,298,968 Under common control - Discovery Country Suites, Working Capital - - - - P= P= P=49,336,24 P=51,298,968

Trade and Other Payables Stockholders - TDLCI Management P=33,443,128 P=30,631,456 P=10,514,288 P=11,901,645 fees Acquisition of - 13,300,000 11,095,250 12,269,250 non-controlling interest Retirement 3,453,333 - 3,453,333 - liability Officer Purchase of - 38,993,08 38,993,080 38,993,080 property P=64,055,951 P=63,163,975

Due to Related Parties Under common control Quad Quality Management Working capital P=10,532,429 P= P=93,300,492 P=84,868,063 Ltd. Stockholder - TDLCI Working capital - - 52,074,900 52,254,900 Working capital - - 1,992,302 1,992,301 P=147,367,693 P=139,115,264

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In 2017, the Group received payments from related parties for previous years’ advances. Additional advances for working capital were also received by the subsidiaries.

Inventories

This account consists of:

2017 2016 Change % Change General supplies P=13,073,637 P=13,073,637 P=1,855,366 17% Food supplies 6,907,812 6,960,436 (52,624) -1% Beverage supplies 3,946,426 3,120,522 825,904 26% Engineering supplies 2,629,681 1,853,637 776,044 42% Kitchen supplies 1,575,222 1,215,291 359,931 30% Diving accessories 1,341,069 765,510 575,559 75% Diesel inventory 855,033 524,632 330,401 63% Others 1,499,753 1,419,158 80,595 6% P=31,828,633 P=27,077,457 P=4,751,176 18%

Increase in inventories was attributable to the increase in general supplies which consist of house- keeping supplies expected to be used in the clean-up of newly renovated and constructed rooms and kitchen. Significant increase in fuel cost was also recorded since there was fluctuation in power supply in Boracay. . Other Current Assets

This account consists of:

2017 2016 Change % Change Input VAT =P44,161,009 =P20,627,001 =P23,534,008 114% Restricted funds 20,688,288 20,350,672 337,616 2% Deferred input VAT - - - - Prepayments 12,780,413 7,078,285 5,702,128 81% Advances to contractors and suppliers 4,897,467 1,710,213 3,187,254 186% Current portion of deferred input tax 2,700,595 3,800,659 (1,100,064) -29% Prepaid taxes - 36,436 (36,436) -100% =P309,332,800 =P207,757,066 =P6,702,216 14%

Other current assets mainly consist of input VAT, restricted funds and prepayments. Input VAT increase by significantly due to the on-going construction of Premier Wing and Vanilla Beach. Minimal increase in restricted funds pertains to interest income while the significant increase in prepayments pertains to advance payments for advisory services.

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Property Plant and Equipment

The net increase of this account is due to the additions during the year amounting to P=473.5 million which was offset by depreciation and amortization amounting to P=87.4 million.

Additions during 2017 pertain to the following:

Land and Furnitures Construction Land and Transportat Operating in Progress Improvement Machineries Fixtures ion and Equipment Delivery Total DWC 209,263,36565 283,526 6,362,925 12,495,056 10,449,051 2,554,316 241,408,239 EPRI 66,037,964 4,660,466 183,042 8,019,858 2,392,615 - 81,293,945 DFC 6,224,621 - 6,525,873 450,365 12,193,486 - 25,394,345 PCC 4,579,141 - - 64,621 - - 4,643,762 CIC 109,068,030 - - 137,710 - - 109,205,740 SC 6,962,800 - - - - - 6,962,800 LBPHI 26,631 4,315,311 - - - - 4,341,942 BHI 308,918 - - - - - 308,918 Total 473,559,691

Property and equipment increase significantly in 2017 due to additions in the construction in progress account. Additional P=209.3 million was incurred for the Premier Wing and P=107.9 for the Vanilla Beach.

Additional 102.1 million was spent for new furniture, fixtures and equipment, transportation equipment, IT upgrade, land improvements, renovation of kitchen including new kitchen equipment.

Other Noncurrent Assets

The account consists of:

2017 2016 Change % Change

Advances to contractors P=231,069,073 P=113,496,157 P=117,572,916 1.04% and suppliers Deferred input tax – net 2,995,222 2,887,313 107,909 4% of current portion Deposit 4,940,173 4,182,211 757,962 19% P=239,004,468 P=120,565,681 P=118,437,787 99%

The increase in this account is due to the advances to contractors made by CIC for its on-going construction amounting to P=118.4 million. The Group advanced funds to its contractors to facilitate the general construction and landscaping works of Vanilla Beach Hotel.

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Goodwill

Goodwill recognized as a result of business combination is as follows:

EPRI P=0 DFC 21,835,606 P=21,835,606

Trade and Other Payables

This account consists of:

2017 2016 Change % Change Trade P=92,295,764 P=66,811,299 P=25,484,465 38% Customers deposit 118,751,151 111,640,010 7,111,141 6% Accrued expenses 78,382,311 75,565,962 2,816,349 4% Retention payable 56,329,382 34,3399,672 21,989,710 64% Payable to an officer 38,993,080 38,993,080 - - Subscription payable 11,095,250 12,269,250 (1,174,000) -10% Withholding taxes 3,942,534 2,328,585 1,613,949 69% Interest payable 2,602,243 5,808,634 (3,206,391) -55% Output tax 1,016,257 1,395,339 (379,082) -27% Deferred output VAT 53,281 11,859 41,422 349% Others 9,856,262 3,270,442 6,585,820 201% P=413,317,515 P=352,434,132 P=60,883,383 17%

The 17% increase in trade and other payables is attributable to the increase in trade payables and retention payable. Trade payables increased due to the acquisition of new linens, beddings, glassware and other room items for the anticipated opening of Premier Wing in Boracay.

Retention payable pertains to the portion of billings of the contractors retained by the Group in accordance with the terms of the contract in renovations and rehabilitations being made in the resorts.

Loan Payable

Movements in this account are as follows:

2017 2016 Change % Change Balance at beginning of year P=1,067,416,667 P=810,686,877 P=256,729,790 32% Availments of loans 843,416,668 438,000,000 405,416,668 93% Repayment of loans (365,000,000) (181,270,210) (183,729,790) 102% Balance at end of year P=1,545,833,335 P=1,067,416,667 P=478,416,668 45%

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This account consists of:

DWC EPRI DFC CIC Total Current: East West Banking Corporation (EWB) – – 100,000,000 250,000,000 350,000,000450,000,000 UCPB 450,000,000 – – – 450,000,000 Robinsons Bank – – – 100,000,000 100,000,000 BPI 90,000,000 17,083,332 – – 107,083,332 2,160,000,000 17,083,332 400,000,000 1,400,000,000 1,007,083,332

Non-current - EWB 393,500,000 - – – 393,500,000 BPI – 145,250,003 – – 145,250,003 393,500,000 145,250,003 – – 538,750,003 P=933,500,000 P=162,333,335 P=0 P=0 P=145,250,003

The Group obtained loans for working capital and finance the on-going construction of Signature Suites in Boracay and Vanilla Beach in Palawan.

Consolidated Statement of Financial Position as of December 31, 2016 vs. Consolidated Statement of Financial Position as of December 31, 2015.

Cash and Cash Equivalents

This account consists of:

2016 2016 Change % Change Cash on hand P=5,071,118 =P4,117,050 =P954,068 23% Cash in banks 104,268,294 84,730,010 19,538,284 23% P=109,339,812 =P218,679,224 =P20,492,352 23%

The movement in cash is mainly due to the following movements in the cash flows from operating, investing and financing activities:

2016 2015 Net cash flows provided by operating activities P=133,480,020 P=187,847,706 Net cash flows used in investing activities (330,162,962) (302,751,107) Net cash flows provided by financing activities 215,295,800 125,931,549

Operating Activities The cash flows provided by operating activities were generated from the positive results of operations and increased collections from trade receivables and customer’s deposits.

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Investing Activities The cash flows used in investing activities pertain to the on-going construction of Signature Suites and Vanilla Beach and the renovation of Club Paradise and Discovery Adventure. DWC also acquired the P=2.2 million remaining interest for Cay Islands Corporation from TDLCI.

Financing Activities In 2016, the Group availed loans amounting to P=438.0 million to finance the on-going construction and renovation projects which was offset by loan repayments amounting to P=181.3 million.

Receivables

This account consists of:

% Chan 2016 2015 Change ge Trade receivables P=11,545,764 P=16,168,115 (P=4,622,351) -29% Advances to officers and employees 2,173,982 1,429,094 744,888 52% Advances to suppliers 828,261 972,592 (144,331) -15% Other receivables 264,803 1,143,005 (878,202) -77% 14,812,810 29,625,620 (4,899,996) -25% Allowance for doubtful accounts (2,000,263) (2,219,304) 219,041 -10% P=12,812,547 P=10,812,284 (P=4,680,955) -27%

The decrease in trade receivables is attributable to the decrease in the number of guests during the last week of December 2016. The decrease is also due to the decrease in the sales from the corporate accounts and travel agents having credit lines in the last quarter of the year as compared in the prior year.

AFS Financial Assets

This account consists of investment of shares of publicly-listed companies that are held for trading.

The decrease in this account is from the market to market loss of the shares. Details are as follows.

Closing Rate Closing Rate December 31, December 31, Name No. of Shares 2015 2016 Gain (Loss) Leisure and Resorts World 2,000,000 7.63 3.96 (=P7,340,000) Nikel Asia Corporation 600,000 6.25 7.98 1,038,000 Lepanto Cons Mng Co B 10,200,000 0.202 0.20 (20,400) (6,322,400) Purchased in June 2016 Lepanto Cons Mng Co B 1,000,000 0.29 0.20 (90,000) (=P6,412,400)

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Related Party Transactions

Transactions with related parties are as follows.

Nature Transaction during the year Balance at End of Year 2016 2015 2016 2015 Due from Related Parties Stockholder - TDLCI Working Capital P=‒ P= P=51,298,968 P=69,946,968 Under common control - Discovery Country Suites, Working Capital - - 423,800 823,800 P= P= P=51,722,768 P=70,770,768

Trade and Other Payables Stockholders - TDLCI Management P=30,631,456 P=12,280,896 P=11,901,645 P=4,340,654 fees Acquisition of 12,269,250 - 12,269,250 - non-controlling interest Officer Purchase of 38,993,080 - 38,993,080 - property P=63,163,975 P=4,340,654

Due to Related Parties Under common control Quad Quality Management Working capital P=- P=- P=84,868,063 P=84,868,063 Ltd. Stockholder - TDLCI Working capital - - 52,254,900 54,504,900 Working capital - - 1,992,301 1,992,301 P=139,115,264 P=141,365,264

In 2016, the Group returned advances to TDLCI amounting to P=18.65 million which caused the decrease in due from related parties account. Also, the Group acquired land in San Vicente, Palawan for P=40.0 million which was advanced by the Group’s officer.

Inventories

This account consists of:

2016 2015 Change % Change General supplies P=10,713,204 P=9,528,180 P=1,185,024 12% Food supplies 6,960,436 5,611,123 1,349,313 24% Beverage supplies 3,120,522 3,033,311 87,211 3% Engineering supplies 1,853,637 2,214,240 (360,603) -16% Kitchen supplies 1,215,291 540,503 674,788 125% Diving accessories 765,510 - 765,510 100% Diesel inventory 524,632 1,083,244 (558,612) -52% Others 1,924,225 904,529 1,019,696 113% P=27,077,457 P=22,915,130 P=4,162,327 18%

The increase in inventory is mainly due to the increase of purchase prices especially on the wines, linens and amenities. Due to the accreditation with the Preferred Hotel Group, DWC is required to

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provide better quality of service to its guests wherein some inventories like linens and amenities used are more expensive in the current year as compared to the prior year. The increase is also attributable to the bulk orders of food made during the last week of the year.

Other Current Assets

This account consists of: 2016 2015 Change % Change

Input VAT 20,627,001 12,462,411 8,164,590 66% Restricted funds 20,350,672 20,021,942 328,730 2% Deferred input VAT 3,800,659 4,768,350 (877,691) -19% Prepayments 5,508,247 4,395,137 1,113,110 25% Advances to contractors and suppliers 1,710,213 4,327,981 (2,617,768) -60% Creditable withholdings tax 46,218 325,358 (279,140) -86% Prepaid taxes 36,436 372,392 (335,956) -90% Others 1,570,038 363,697 1,206,341 332% P=53,649,484 P=46,947,268 P=6,702,216 14%

The increase in this account was mainly brought by the increase in input VAT generated from the on- going construction and renovation projects of the Group.

Prepayments pertain mainly to annual membership fee, advertising and insurance.

Property Plant and Equipment

The net increase of this account is due to the additions during the year amounting to P=379.0 million which was offset by depreciation and amortization amounting to P=70.0 million.

Additions during 2016 pertain to the following:

DWC EPRI DFC PCC CIC SC LBPHI Total Construction in- Progress 110,449,485 60,462,262 46,982,066 3,993,047 47,852,467 10,786,208 – 280,525,535 Land – – – – – – 42,512,305 42,512,305 Furniture, fixture and equipment 10,011,673 20,483,364 647,214 254,464 31,027 – – 31,427,742 Transportation equipment 6,767,857 1,586,708 5,679,424 – 1,987,768 1,109,911 – 17,131,668 Buildings 51,339 5,660,264 – – – – – 5,711,603 Machineries 2,941,784 677,524 926,540 – – – – 4,545,848 Operating equipment 591,667 – – – – – – 591,667 130,813,805 88,870,122 54,235,244 4,247,511 49,871,262 11,896,119 42,512,305 382,446,368

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Construction in-progress pertain to the on-going construction of Discovery Villas and Vanilla Beach and the renovation of Club Paradise and Discovery Adventure, while the land pertains to the land acquired in Palawan for LBPHI.

Other Noncurrent Assets

This account mainly includes the advances to contractors related to the on-going construction and renovation projects of the Group.

Advance payments to contractors and suppliers, relating to portion of the project that is classified as property and equipment and to advance payments that will be applied against future billings beyond 12 months from the reporting date amounting to P=113.5 million and P=78.0 million as at December 31, 2016 and 2015.

Goodwill

Goodwill recognized as a result of business combination is as follows:

EPRI P=0 DFC 21,835,606 P=21,835,606

Trade and Other Payables

This account consists of:

% 2016 2015 Change Change Trade P=79,080,549 P=78,918,105 P=162,444 0% Customers’ deposits 111,640,010 84,468,804 27,171,206 32% Accrued expenses 63,296,712 49,915,716 13,380,996 29% Payable to an officer 38,993,080 – 38,993,080 100% Retention payable 34,339,672 14,922,297 19,417,375 130% Subscription payable 12,269,250 – 12,269,250 100% Interest payable 5,808,634 5,625,215 183,419 3% Withholding taxes 2,328,585 2,623,053 (294,468) -11% Output VAT 1,395,339 2,146,001 (750,662) -35% Deferred output VAT 11,859 64,968 (53,109) -82% Others 3,270,442 5,482,586 (2,212,144) -40% P=352,434,132 P=244,166,745 P=108,267,387 44%

Customers’ deposits Increase in customers’ deposit is due to the increase of advance payments made by the guests for their booking in 2017.

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Accruals

Details are as follows:

2016 2015 Change % Change P= P= Outside services 14,450,650 11,031,230 P=3,419,420 31% In progress billings 15,599,459 11,200,693 4,398,766 39% Provision 6,890,296 6,592,812 297,484 5% Employee benefits 5,733,984 4,476,034 1,257,950 28% Management fee 4,866,400 4,340,654 525,746 12% Professional fee 2,792,522 1,017,968 1,774,554 174% Transportation and travel 997,218 851,313 145,905 17% Repairs 870,617 861,301 9,316 1% Utilities 736,217 1,050,637 (314,420) -30% Freight 693,694 999,809 (306,115) -31% Rent 430,625 – 430,625 100% Interest 411,487 250,512 160,975 64% Others 8,823,543 7,242,753 1,580,790 22% P= P=

63,296,712 49,915,716 P=13,380,996 27%

Retention payable The net increase in trade payables is due to the increase in retention payable which is directly related to the increase in the percentage of completion of the construction in Boracay and Palawan. This is being withheld by the Group to the contractors as assurance that they properly complete the activities required of them under the contract.

Loan Payable

Movements in this account are as follows:

2016 2015 Change % Change Balance at beginning of year P=810,686,877 P=701,375,000 P=109,311,877 16% Availments of loans 438,000,000 1,082,752,148 (644,752,148) -59% Repayment of loans (181,270,210) (973,440,271) (792,170,016) -81% Balance at end of year P=1,067,416,667 P=810,686,877 P=256,735,232 32%

This account consists of:

DWC EPRI DFC CIC Total Current: China Banking Corporation P=332,500,000 P=– P=– P=– P=332,500,000 East West Banking Corporation (EWB) – – 79,000,000 – 79,000,000 UCPB 110,000,000 – – – 110,000,000 Robinsons Bank – – – 86,000,000 86,000,000 BPI – 31,583,332 – – 31,583,332 442,500,000 31,583,332 79,000,000 86,000,000 639,083,332

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Non-current - EWB 340,000,000 22,000,000 – – 362,000,000 BPI – 66,333,335 – – 66,333,335 340,000,000 88,333,335 – – 428,333,335 P=

P=782,500,000 P=53,583,332 P=79,000,000 P=86,000,000 1,001,083,332667

The increase in loans payable was generally due to new availments of loans of DWC in UCPB and long term loans in EWB. EPRI, DFC and CIC also availed loans during the year which amounted to P=209.0 million are payable in 60-90 days and with interest rates of 3.00% - 4.00%

The long-term loans with EWB were availed to specifically finance the construction of properties in Boracay and Palawan. These loans have term of 7-10 years with fixed interest rate of 3.25% annually.

Consolidated Statement of Financial Position as of December 31, 2015 vs. Consolidated Statement of Financial Position as of December 31, 2014.

CASH AND CASH EQUIVALENTS

This account consists of: 2015 2014 Cash on hand ₱4,117,050 P=5,571,050 Cash in banks 84,730,010 70,951,323 Short-term placements - 2,531,537 ₱88,847,060 P=88,847,060

The movement in cash is mainly due to the following: 2015 2014 Net cash flows provided by operating activities ₱187,847,706 P=141,967,7400 Net cash flows used in investing activities (302,751,107) (381,027,833) Net cash flows provided by financing activities 125,931,549 0

Operating activities The increase in cash flows from operating activities was mainly due to the more profitable operations of the Parent Company and EPRI.

Investing activities The net cash used in investing activities was basically due to the additions to property and equipment amounting to P=261.9 million, acquisition of financial assets at FVPL amounting to P=33.2 million and the net cash outlay for the acquisition of subsidiaries in September 2014 which amounted to P=86.0 million.

Financing activities The net cash provided by financing activities was generally due to the availments and repayments of loans of the Group. P=501.0 million worth of loans were availed during the year while repayments amounted to P=148.5 million. These loans were obtained mainly for working capital purposes and to partially finance the construction of villas in Boracay.

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TRADE AND OTHER RECEIVABLES

Trade receivables are non-interest bearing and are generally on a 7to 15-day term.

Advances to suppliers and contractors mainly pertain to advances made to suppliers and appraisers

On November 2013, EPRI’s property and equipment were severely damaged by a typhoon. The final settlement of the claim from insurance in December 2014 amounted to P=33.3 million. The amount of the settlement was fully collected in 2015.

DUE FROM RELATED PARTIES

The increase in due from related parties is mainly due to the advances made by the Parent Company to Sonoran Corporation, a related party through common control, amounting to P=130.7 million for working capital purposes.

OTHER CURRENT ASSETS

Restricted funds are funds maintained by the Group in local banks set aside for the acquisition of various assets that will be used in operations as request by its management contract with TDLCI.

Deposit for stock subscription pertain to equity shares in Sonoran Corporation. These were converted into shares when the SEC approved the increase in authorized capital stock of Sonoran Corporation on October 27, 2015.

PROPERTY AND EQUIPMENT

The land owned by the Group includes land with a total area of 57,677 sq.m located at Beckel, Benguet. This land is current under ejectment proceedings filed by the Group with the Municipal Trial Court of La Trinidad and annulment proceedings on the deeds of sale and titles with the Regional Trial Court – Branch 8 where the Group is the defendant. These cases are pending and still awaiting judgement as at December 31, 2015.

As of December 31, 2015 and 2014, fully depreciated property and equipment that are still being used by the Group amounted to ₱172.9 million and ₱125.4 million, respectively

Real estate with carrying value of ₱300.00 million are held for collateral for loans

Capitalized borrowing cost amounted to ₱5.7 million and ₱1.8 million in 2015 and 2014, respectively.

GOODWILL

The increase of this account is due to the acquisition of its subsidiaries in 2014. The additional goodwill was derived from the acquisition of DFC amounting to P=21.8 million. And EPRI for ₱130.00 million

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OTHER NONCURRENT ASSETS

Other non-current assets are advances to contractors and suppliers for the construction of the DSB expansion project and purchase of transportation and delivery equipment. These advances are non-interest bearing and are recouped against contractor’ and supplier’s billings.

TRADE AND OTHER PAYABLES

The account is consists of: 2015 2014 Trade ₱94,876,665 P=48,272,924 Customers’ deposits 83,432,541 75,250,692 Accruals 49,026,726 44,880,368 Withholding taxes 2,623,053 2,333,846 Interest payable 5,625,215 1,959,890 Deferred output VAT 64,698 1,688,408 Output VAT 2,146,001 2,321,620 Others 5,482,586 7,720,883 P243,277,755 P=737,714,524

The net increase in this account was basically due to the following:  Increase in customers’ deposits for hotel room reservations. These deposits for services which have not been rendered as at year end.  Accrulas were caused by the accrual for contracted services and profession fees. These were due to the on-going construction of the DSB expansion project.

LOANS PAYABLES

This account consists of: 2015 2014 Current: China Banking Corporation (CBC) – Trust Group ₱350,000,000 East West Banking Corporation (EWB) 190,000,000 P=547,000,000 Multinational Investment Bancoproation 30,686,877 Bank of the Philippine Islands (BPI) 70,000,000 Development Bank of the Philippines (DBP) 37,500,000 570,686,877 570,686,877 Noncurrent - DBP 46,875,000 Eastwest Banking Corporation 240,000,000 ₱810,686,877 P=570,686,877

In 2015, the Group availed short term loans amounting to P=810.7 million consisting of a term loan of ₱240 million for the construction of Signature Suites in Boracay,₱70 million for the construction of Club Paradise Garden Suites and Phase 1 of the staff house renovation. Some were used as working capital and for the acquisition of the subsidiaries during the year. Interest rate ranges from 3.25% go 4%.

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DUE TO RELATED PARTIES

The increase on this account is attributable to the advances from the Group’s related parties such as Quad Quality Management Ltd. and TDLCI, for working capital purposes.

TAXES

The increase in income taxes was due to the following:  The Parent Company and EPRI’s increased results of operations.  The Parent Company subjected to income tax its outstanding balance of customer’ deposits and deferred certificates.  EPRI’s gain from insurance claims was also subjected to income tax in full.

RETIREMENT BENEFIT LIABILITY

The net change of retirement benefit liability is brought by accrual of retirement benefit costs amounting to P=2.6 million, and contributions to the plan assets amounting to P=1.7 million.

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ANNEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) SECTION

Events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of obligation

None. The Company does not foresee any events that may trigger material financial obligation to the Company, including default or acceleration of an obligation.

All material off-balance sheet transactions, arrangement, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons created during the reporting period

None. There were no material off-balance sheet transactions, arrangement, obligations, and other relationships of the Company with unconsolidated entities or other persons that the Company is aware of during the reporting period.

FINANCIAL STATEMENTS

The consolidated Financial Statements and Supplementary Schedules as of and for the year ended 31 December 2017 listed in the accompanying Index to Financial Statements and Supplementary Schedules are filed as part of this Information Statement. Supplementary information are as follows:

1) Supplementary Schedules

A. Financial Assets B. Amounts Receivable from Directors, Officers, Employees and Principal Stockholders (other than related parties) C. Amounts Receivable from related parties which are eliminated during consolidation of financial statements B. Intangible Assets - Other Assets C. Long-Term Debt D. Indebtedness to Related Parties E. Guarantees of Securities of Other Issuers F. Capital Stock G. Reconciliation of Retained Earnings Available for Dividend Declaration H. Key Financial Ratios

2) Schedule of all the effective standards and interpretations

3) Map of the relationships of the companies within the group

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MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

The common shares of the Company were listed in the Philippine Stock Exchange on 21 November 2013.

Quarter end stock price ranged for 2016 and 2nd Qtr of 2018 were as follows:

QUARTER HIGH LOW CLOSE 1Q 2016 1.53 1.49 1.49 2Q 2016 2.10 1.95 2.08 3Q 2016 2.40 2.22 2.35 4Q 2016 2.28 2.22 2.22 1Q 2017 2.58 2.32 2.58 2Q 2017 2.64 2.23 2.31 3Q 2017 2.51 2.15 2.15 4Q 2017 4.20 2.00 2.49 1Q 2018 3.36 2.10 2.38

As of 31 August 2018 stock prices of DWC reached a high of ₱2.25 and a low of ₱ 2.25 per share, closing at ₱2.25 per share.

Holders

The following are the top twenty (20) common shareholders as of 31 August 2018, the number of shares held and the percentage of total shares outstanding held by each are as follows:

NUMBER OF % TO TOTAL NAME NATIONALITY SHARES OCS 1 PCD Nominee Corporation (Filipino) PH 564,373,004 90.174% 2 PCD Nominee Corporation (Non- OA 61,522,001 9.878% Filipino) 3 Ma. Christmas R. Nolasco PH 5,001 0.00% 7 Ruben C. Tiu PH 1 0.00% 8 John Y. Tiu, Jr. PH 1 0.00% 9 Romualdo M. Macasaet PH 1 0.00% 10 Lamberto R. Villena PH 1 0.00% 11 A.Bayani K. Tan PH 1 0.00% 12 William L. Chua PH 50,000 0.00% 13 Elizabeth Ann C. Parpan PH 1 0.00% Total 626,000,000 100.00%

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Dividends

The Company is authorized to distribute dividends out of its surplus profit, in cash, properties of the Company, shares of stock, and/or securities of other companies belonging to the Company. Dividends paid in the form of cash or property is subject to approval of the Company’s Board of Directors. Dividends paid in the form of additional shares are subject to the approval of the Company’s Board of Directors and stockholders that own at least two-thirds (2/3) of the outstanding capital stock of the Company. Holders of outstanding Common Shares as of a dividend record date will be entitled to full dividends declared without regard to any subsequent transfer of such shares.

On July 22, 2013, the Board of Directors of the Company approved its dividend policy wherein it shall distribute to its shareholders as dividends, whether cash, property or stock, at least ten percent (10.00%) of the Corporation's net income for the previous fiscal year, subject to the provision of sufficient funds for the implementation of the Company’s business plan, operating expenses and budget, appropriation for expansion projects (as applicable), lenders' requirements, appropriate reserves and applicable laws.

The corporation has declared the following dividends in the last 3 years:

DATE OF PAYMENT NATURE TYPE RATE RECORD DATE DECLARATION DATE June 25, 2016 Cash Regular P0.025/share July, 13, 2015 August 6, 2016 March 21, 2016 Cash Regular P0.025/share April 20, 2016 May 16, 2016

Discussion of the Company’s dividends policy and history are discussed in section “Dividends and Dividend Policy”.

Recent Sales of Unregistered or Exempt Securities, Including Recent Issuance of Securities Constituting an Exempt Transaction

For the year ended December 31, 2017, we have not issued any securities constituting an exempt transaction.

DIRECTORS AND EXECUTIVE OFFICERS

Please refer to the portion of this Information Statement on “Directors and Executive Officers

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COMPLIANCE WITH THE MANUAL OF CORPORATE GOVERNANCE

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

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

Even prior to the submission of its Manual, however, the Company already created various Board-level committees. These committees were comprised of:

1. Executive Committee – to oversee the management of the Company and is responsible for the Company’s goals, finances and policies; 2. Audit Committee – to review financial and accounting matters; 3. Nomination Committee – for the selection and evaluation of qualifications of directors and officers. This Committee was merged with the Corporate Governance Committee in June 2017. 4. Compensation and Remuneration Committee – to look into an appropriate remuneration system. This Committee was merged with the Corporate Governance Committee in June 2017. 5. Risk Oversight Committee – to review the policies and procedures relating to the identification, analysis, management, monitoring and reporting of financial and non-financial risks;

A Compliance Officer was also appointed. The Company submits its Corporate Governance Self-Rating reports to the SEC and PSE as proof of its compliance with the leading practices and principles on good corporate governance.

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

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

Independent Directors

The amended By-laws require the Company to have three (3) independent directors in its Board of Directors. Independent directors must hold no interests or relationships with the Company that may hinder their independence from the Company or its management, which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Under the SEC Code of Corporate Governance, an independent director is required to attend board meetings for quorum requirements, unless he is duly notified of the meeting but deliberately and without justifiable cause fails to attend the meeting.

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UNDERTAKING TO PROVIDE PRINTED COPIES OF THE ANNUAL REPORT

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

THE CORPORATE SECRETARY DISCOVERY WORLD CORPORATION DISCOVERY SHORES BORACAY STATION 1, BALABAG, MALAY, AKLAN 5608, PHILIPPINES

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