20192019 ANNANNUALUAL REPORTREPORT Banner year for LT Group, Inc. Vision Mission Seven years ago, Dr. Lucio C. Tan formed LT Group, Inc., a conglomerate with diversified To be a world-class conglomerate at the forefront Anchored to its Vision, the LT Group commits: interests in banking, beverages, alcohol and of Philippine economic growth, successfully distillery, tobacco and property development. maintaining a strong presence and dominant To increase stockholder values through long-term growth in its Their mission: provide the best products and position in key Philippine industries while ensuring major business groups. services to the Filipino consumer. continuous benefits to its consumers, communities, Today, LT Group, Inc. is stronger than ever. employees, business partners, and shareholders. To continuously improve the value of its products and services As a reward for years of hard work and the and to provide consumers with and better choices. pursuit of excellence, the company ends 2019 with its best financial performance on record. To build the largest, most effective distribution network and A banner year indeed! Contents widest customer reach in the . Financial Summary 2 To leverage on synergies between its various businesses to continuously improve revenues and cost structure. Our Businesses at a Glance 3

Our Partnerships 4 To enhance the welfare of its employees and the communities Message from the Chairman 6 where it lives and works. LT GROUP, INC. Message from the President 8 (The Vision and Mission Statements are reviewed and approved Message from the CFO 12 annually by the Board of Directors. The latest reviews were on January 15, 2019 and January 17, 2020.) , Inc. 14 Eton Properties Philippines, Inc. 16 PMFTC Inc. 18 LT Group, Inc. Logo 24 Strength and solidarity. This is the essence , Inc. 26 of the LT Group, Inc. (LTG) logo. The clean Corporate Governance Report 28 balanced lines and curves are central elements – a mystical symmetrical tree. Drawn in an Corporate Social Responsibility 36 Eastern-Oriental style, it gives hint to the Company’s Chinese Tan Yan Kee Foundation, Inc. heritage. Asia Brewery, Inc. Tree is life. Life is growth. Like a tree, a company with firm Eton Properties Philippines, Inc. roots, properly nurtured, will continuously grow and give value. PMFTC Inc. Philippine National Bank The tree’s trunk is upright, and the branches spread out – a symbolic consolidation of the subsidiaries and stakeholders Tanduay Distillers, Inc. within two circles, one for continuity, the other one for Sustainability 46 solidarity. Asia Brewery, Inc. PMFTC Inc. Philippine National Bank Tanduay Distillers, Inc. About the Cover

Statement of Management’s Responsibility The cover reflects a hard-earned celebration as LT Group, Inc. (LTG) saw a banner year for Financial Statements 50 with record profits for 2019. Just as a Independent Auditor’s Report 51 mountaineer devotes rigorous effort and dedication to reach the peak of a mountain, Consolidated Financial Statements and Notes 54 LTG has tirelessly worked to achieve the 20192019 ANNANNUALUAL REPORTREPORT heights it has achieved today. The climb is Sustainability Report 133 not without challenges as the Group came across a more competitive environment—but Tribute to Lucio K. Tan, Jr. 152 this has only made the success sweeter.

Board of Directors 154 To showcase the Group’s component Investor Information 156 companies, their prominent products are shown on the line chart that reflects the path ASIA BREWERY, INC. ETON PROPERTIES PHILIPPINES, INC. PMFTC INC. and trajectory of LTG’s annual attributable net income. PHILIPPINE NATIONAL BANK TANDUAY DISTILLERS, INC.

2019 ANNUAL REPORT 1 BANNER FINANCIAL SUMMARY OUR BUSINESSES AT A GLANCE YEAR

REVENUES EBITDA NET INCOME in Php Millions in Php Millions in Php Millions B25% B25% B25% B25% B34% B34% Asia Brewery, Inc. started as a brewery in 1982. Eton Properties Philippines, Inc. is the real Philippine National Bank is one of the largest It offers non-alcoholic beverages as well as estate arm of the group. It has a diversified private universal banks in the country. B18% B35% packaging materials. It is a market leader in the portfolio of residential subdivisions, high-rise and 94,244

36,950 B41% 27,566 energy drinks and soymilk categories. It is ranked mid-rise condominiums, BPO office buildings and second in the bottled water segment. Its alcoholic commercial centers. beverages, namely and alcopop, were spun 75,630

29,658 off into AB Heineken Philippines, Inc. in 2016. 20,558 64,012 99.9% 99.6% 56.47%

21,941 Ownership Ownership Ownership 14,581 NET INCOME NET INCOME NET INCOME in Php Millions in Php Millions in Php Millions ‘ 1 7 552 ‘ 1 7 348 ‘ 1 7 8,557

‘17 ’18 ’19 ‘17 ’18 ’19 ‘17 ’18 ’19 ’ 1 8 421 ’ 1 8 479 ’ 1 8 9,777

’19 398 ’19 900 ’19 9,938

Note: Pooling Method TOTAL ASSETS TOTAL LIABILITIES TOTAL EQUITY in Php Millions in Php Millions in Php Millions B15% B17% B10% B15% B17% B10% B18% B20% B20% PMFTC Inc. is the business combination of Tanduay Distillers, Inc. has a 99% market share Company, Inc. is one of Philip Morris Philippines Manufacturing Inc. and of rum in the Philippines and 28.8% market share of the country’s largest sugar refineries, based in

254,008 Fortune Tobacco Corporation. It is the leading the distilled spirits industry in 2019. It is the world’s Negros Occidental. In crop year 2018-2019, it 1,265,831 1,011,823

231,190 manufacturer in the Philippines. number one rum in terms of volume. In 2016, Tanduay milled 2.7 million tons of cane.

866,586 started selling bioethanol to fuel companies. 1,097,777 195,315 917,096 721,780 49.6% 100.0% 30.9% Ownership Ownership Ownership

NET INCOME NET INCOME NET INCOME in Php Millions in Php Millions in Php Millions ‘17 ’18 ’19 ‘17 ’18 ’19 ‘17 ’18 ’19 ‘ 1 7 8,298 ‘ 1 7 631 ‘ 1 7 654

’ 1 8 16,793 ’ 1 8 909 ’ 1 8 764

’19 30,801 ’19 676 ’19 816

Note: For crop year September 2018 to August 2019 PER SHARE DATA RATIOS in Php, except Pay-out Rate

2017 2018 2019 2017 2018 2019 Attributable Net Income Contribution to LTG

Earnings per Share 1.00 1.50 2.14 Current Ratio 0.62 0.61 0.60 in Php Millions 2018 % to total Tobacco 8,716 54% Book Value (at year end) 13.71 15.98 17.27 Current Ratio (without PNB) 4.39 4.03 2.31 Banking 5,468 33% Cash Dividend 0.18 0.20 0.30 Debt to Equity Ratio 3.70 3.75 3.98 Property Development 479 3% 2019 % to total Distilled Spirits 890 5% Pay-out Rate 20.74% 19.98% 20.04% Debt to Equity Ratio (without PNB) 0.15 0.14 0.17 Beverage 421 3% Tobacco 15,499 67% VMC 247 2% Return on Average Assets 1.2% 1.6% 1.6% Banking 5,565 24% Others (-26) 0% Return on Average Equity 7.6% 10.1% 10.1% Property Development 896 4% Total 16,195 100% Distilled Spirits 667 3% Beverage 398 2% VMC 251 1% 2017 % to total Others (-158) -1% Tobacco 4,385 40% Banking 4,826 45% Property Development 348 3% Total 23,118 100% Distilled Spirits 631 6% Beverage 551 5% Note: Banking attributable to LTG, net of inter-company transactions VMC 174 2% Others (-84) -1%

Total 10,831 100%

2 LT GROUP, INC. 2019 ANNUAL REPORT 3 BANNER OUR PARTNERSHIPS YEAR

AB Pascual Holdings Pte. Ltd. is a 50-50 joint venture between Asia Brewery, Inc. and Corporacion Empresarial Pascual SL of Spain. Currently, the Company imports yogurt from Spain and distributes it in the Philippine market under the Pascual Creamy Delight Brand. Different variants cater to a wide array of customers, from Original, Non-fat, Thick and Creamy to Greek Style. As of end 2019, Pascual Yogurt has a market share of 36%, based on AC Nielsen estimates and internal data. The continuous success of Pascual Yogurt has paved the way for a new product launch of yet another revolutionary product- Bifrutas. It is the first Milk and Juice product that is low in sugar in the Philippine market. 2019 proved to be the start for AB Pascual Holdings Pte. Ltd. in building a robust dairy portfolio that offers high quality, healthy and affordable products for . In conjunction with saving for the future, Allianz’s offering for the health space is an international health product: Allianz Well! This health plan is meant to redefine the insurer’s role from simply being an insurance payer to being an engaged provider with value-added wellness and lifestyle services and benefits. While its bancassurance partnership with PNB remains to be the main business, Allianz PNB Life has also strengthened its reach to a wider customer base. The Company has already on-boarded more than 1,600 agents, enhancing its agency sales channel in , Visayas, and Mindanao. This will ensure that the Company can reach and secure the futures of more Allianz PNB Life Insurance, Filipino families nationwide. AB Heineken Philippines, Inc. (ABHP) is a 50%-50% Inc. is a joint venture between The Company has embarked on strengthening its digital capabilities meant joint venture between Asia Brewery, Inc. (ABI) and the global insurance leader Allianz to provide better customer and distributor experience through e-applications, globally-renowned Dutch brewer, Heineken International SE, and local banking giant, e-policies, e-notices, and e-learning. This digitalization aims to make the B.V. This joint venture officially commenced operations the Philippine National Bank (PNB). In 2016, Allianz SE acquired 51% of services more streamlined and efficient while also promoting a paperless and in November 2016. Armed with Asia Brewery’s local PNB Life, the life insurance arm of PNB. The joint venture included a 15-year more sustainable organization. knowledge and distribution network as well as with exclusive bancassurance agreement where products of Allianz PNB Life are Heineken’s brewing and marketing expertise, ABHP sold in PNB’s more than 700 branches nationwide. Outside the business, and in contribution to being the most sustainable continues to deliver quality beer brands and an insurer for three years running based on the Dow Jones Sustainability Index, exceptional experience for its customers. With a diverse product portfolio, Allianz PNB Life offers insurance and Allianz PNB Life has increased its sustainability focus in the country. The ABHP’s portfolio combines internationally acclaimed investment solutions for young and growing, and middle established families; Company embarked on a tree-planting activity in partnership with Mr. Lucio brands such as Heineken and Tiger with local brands high net-worth individuals, as well as millennials. These products are made Tan III’s Green Canopy Project, which aims to plant a million trees across the such as Beer Na Beer, 45 and Tanduay Ice. available to PNB customers by Financial Advisors stationed in PNB branches. archipelago. It also partnered with eSakay by sponsoring ejeepneys, which This comprehensive portfolio addresses PNB’s customer needs, particularly are public utility electric vehicles that spew far fewer emissions than standard ABHP operates two breweries -- one in , saving for the future and growing their money. and another in El Salvador, Misamis Oriental. gasoline or diesel-powered ones. The Company has also adopted 10 hectares Significant investments in infrastructure and equipment On the back of Filipinos’ rising incomes, the Company offers AZpire, a regular of mangrove wetlands in the E.B. Magalona district of Negros Occidental. have been made in the last three years, giving ABHP the pay unit-linked life insurance plan which focuses on faster fund accumulation Other sustainability activities—this time putting emphasis on social inclusion— capacity and capability to brew in the Philippines for investment needs. The product series is aimed at millennials, most of are the sponsorship of the Philippine para-OCR team, the Philippine Cerebral with the highest international quality standards. whom are in the early stages of building their professional careers and starting Palsy football team, as well as the Aetas of Porac, Pampanga. Allianz PNB Life their own families. It is geared towards providing the best returns to customers’ also continues its advocacy to promote grassroots football and futsal in the country through the Allianz National Youth Futsal Invitational. investments.

ALI-Eton Development Corporation

The Company is a 50%-50% joint venture between , Inc. and LT Group, Inc. It was formed to develop a 35-hectare property along the C-5 corridor that spans portions PMFTC Inc. (PMFTC) is the business of Pasig City and into a mixed-use estate. combination between Philip Morris The project, called Parklinks is envisioned to be the greenest urban estate in Metro , Philippines Manufacturing Inc. with 50% of the area devoted to open spaces. A 110-meter long iconic bridge will link and Fortune Tobacco Corporation, a 99.6%-owned subsidiary of Pasig and Quezon City over the Marikina River, creating a new route to help ease vehicular LT Group, Inc. It continues to be the leading cigarette manufacturer traffic in the northeast and east of . The ground breaking ceremony was in the Philippines, with a market share of 70.5% in 2019. PMFTC held in January 2018, while the bridge began construction in 2019 and targeted for manufactures 7 out of the top 10 brands available in the market today completion in 2021. led by , the world’s number one cigarette brand, and Fortune, the largest heritage home-grown brand in the Philippines. The first phase will cover 16 hectares. It will have a mall with 58,000 square meters which is targeted to open in 2022. Five towers of residential buildings under the Ayala PMFTC continued the Promote Learning Activities for the Youth Land Premier brand will be launched in the five years, while another five towers will program (PLAY), which focuses on child labor elimination on tobacco be under the Alveo brand, creating a portfolio of over 5,000 units. The first residential fields by providing off-farm activities for children and skills training building, Parklinks North Tower, was launched in November 2018. for adolescents. The program, in collaboration with Universal Leaf Brisk residential sales of Parklinks North Tower paved the way for the launching of its Philippines Inc. and the Jaime V. Ongpin Foundation, Inc. welcomed second tower in 2019. Also launched was “The Lattice”. over 3,300 children from 36 barangays of Ilocos Sur, La Union, and Abra, and 20 schools in Isabela and Cagayan. The Parklinks lifestyle mall that broke ground in December 2018, is expected to open in 2023. There will be 12,000 square meters of office space stacked on top of the mall.

4 LT GROUP, INC. 2019 ANNUAL REPORT 5 BANNER MESSAGE FROM THE CHAIRMAN YEAR

“Our record-breaking accomplishment reflects the hard work across our operations. Just a few years back, it was hard to imagine that we could bounce back...” - Dr. Lucio C. Tan

T Group, Inc. (LTG) concluded 2019 with a foundations, we conceptualized and supported L strong financial position. At the end of our fiscal sustainable philanthropic efforts. We continue to Dear Fellow year, we posted a net income of Php23.1 billion – make good progress on our sustainability goals 43% higher than 2018. By far, this is our highest detailed in this report. recorded income since our public listing seven Shareholders years ago in 2013. While we have much to thank for, we also end 2019 on a sad note. The untimely passing of my Two-thirds or 67 percent of our 2019 income son and our Director Lucio ‘Bong’ K. Tan, Jr., casts a came from tobacco. At Php15.5 billion, our tobacco pall over my family and the entire Group. income share from PMFTC is 78% higher than the We thank you for your prayers and for sharing previous year. It’s also worth noting that Philippine our grief. To honor Bong’s memory, we pledge to National Bank accounted for a quarter or 24 continue his legacy and good works. percent of our income. This is 2 percent higher than 2018. Moving forward, I believe our collective commitment to innovation, sustainability and productivity will Our record-breaking accomplishment reflects the drive our business to greater heights in 2020 and hard work across our operations. Just a few years beyond. back, it was hard to imagine that we could bounce back from the longest and deepest downturn in our On behalf of our Board of Directors, the Company’s history due to illicit tobacco trade. management team and our hardworking employees, I want to express my sincere It is incredible how we fought, adapted and stayed appreciation to all our shareholders. With your the course to emerge a much stronger company. continuing trust, I’m confident that we can surpass For making LTG’s Banner Year possible, our our 2019 Banner Year in the years ahead. shareholders, management and staff deserve much praise and gratitude.

Although strong operating results and record financial performance are crucial yardsticks of our Company’s health, it is equally important to DR. LUCIO C. TAN share the fruits of our labor. Through our different Chairman and Chief Executive Officer

6 LT GROUP, INC. 2019 ANNUAL REPORT 7 BANNER MESSAGE FROM THE PRESIDENT YEAR

“For LTG, 2019 was a banner year… This is the second year that earnings have reached all-time highs, and the fifth consecutive year of continuous growth.”

From Php35 per pack in 2019, it increased to Php45 per pack in 2020, increasing by Php5 per pack annually from 2021 to 2023, then increasing by 5% annually thereafter. LTG is not against tax increases, but believes that 14.1% the hikes should be moderate. Continual price increases to pass on higher excise taxes may result Tier 1 ratio in further volume drops. The industry’s volume consolidated was estimated at 108.9 billion sticks in 2012 and declined by 35% to an estimated 70.5 billion sticks in 2019. The industry is estimated to have declined by 4% in 2019. From a low of Php2.72 per pack Philippine National Bank (PNB) recapitalized of 20 sticks in 2012 for the lower tier and Php12 PNB had a Php12 billion stock rights offering per pack for the upper tier, the excise tax was at Php6.93 billion or 43% higher than the Php16.19 in July, and LTG participated to the extent of its he Philippine economy continued its expansion Php35 per pack in 2019, and increased to Php45 billion we reported in 2018. This is the second year ownership, for Php7.178 billion. The higher capital T in 2019 with Gross Domestic Product (GDP) per pack starting 2020. growing by 5.9%. However, this was lower that earnings have reached all-time highs, and the will enable the bank to further grow and cushion than 2018’s 6.2% growth, largely due to the fifth consecutive year of continuous growth. The Government has kept the illicit trade under somehow the impact of non-performing loans late approval of the General Appropriations Act control by conducting more raids. In 2019, there (NPLs) with the expected downturn in the economy which saw delays in the implementation of the were 116 enforcements, 53% more than 2018’s 76 in 2020 brought about by the COVID-19 pandemic.

Government’s infrastructure projects. PMFTC EQUITY enforcements, with twelve illegal factories raided PNB’s net income under the pooling method IN NET EARNINGS (vs. seven in 2018), and 47 machines seized with a in Php Billions was Php9.94 billion for 2019, 2% more than the Inflation was lower at 2.5% from 2018’s 5.2%, capacity of producing 30 million sticks per day. brought about mainly by lower rice prices. This Php9.78 billion reported for 2018. Both periods

enabled consumer spending to remain healthy, 15.40 LTG’s tobacco business reported a net income of included gains from the sale of Real and Other with Household Consumption and Expenditure Php15.56 billion in 2019, Php6.81 billion or 78% Properties Acquired (ROPA), at Php425 million, increasing by 5.8% and accounted for 68.4% 8.46 more than the Php8.75 billion reported in 2018. net of taxes, in 2019 and Php3.85 billion in 2018.

of GDP. Remittances sent by Overseas Filipino 4.37 Equity in net earnings from LTG’s 49.6% stake Excluding the ROPA gains, the Bank’s core income Workers (OFWs) to their families in the Philippines ‘17 ‘18 ‘19 in PMFTC was Php15.40 billion, Php6.93 billion was at Php9.51 billion in 2019, 61% higher increased by 3.9% to USD33.5 billion, while or 82% more than 2018’s Php8.46 billion. The compared to 2018’s Php5.92 billion. the number of employees of the Information higher income is attributed to the higher share of Net Interest Income was 20% higher as loans and Technology-Business Process Outsourcing (IT- PMFTC continues to account for the premium Marlboro as well as the price increases receivables grew by 12% year-on-year, as well as BPO) industry expanded by around 6% to 1.3 bulk of our earnings implemented in late August 2019. Volume an increase in its investment portfolio while Net million and revenues reached USD26.3 billion. declined by 3% in 2019. On July 25, 2019, President Duterte signed Interest Margin slightly improved. Net Service Fees For LTG, 2019 was a banner year. Our Republic Act (RA) 11346 which increased further and Commission Income grew 20% and Trading attributable net income reached Php23.12 billion, the excise tax on tobacco starting January 2020. and Foreign Exchange Gains were 98% higher.

8 LT GROUP, INC. 2019 ANNUAL REPORT 9 BANNER YEAR

Eton Properties Philippines, Inc.’s (Eton) leasing The Government estimates that the economy will TDI’S GROSS ABI’S NET INCOME contract by 2% in 2020, but some economists revenues continue to grow PROFIT MARGIN in Php Millions in Percentage expect a higher deceleration of 10-20%. With

Eton’s net income for 2019 was at Php900 million, 552 purchasing power affected, demand for consumer 18%

88% more than 2018’s Php479 million. 17% goods is expected to be weak, and will affect the 421 16% 398 sales volumes of the products of PMFTC, TDI and Eton continued to expand its leasing portfolio with ABI. Eton will also be affected as some tenants the opening of Eton WestEnd Square in may end their lease contracts while demand for City during the second quarter of 2019. Its retail ‘17 ‘18 ‘19 ‘17 ‘18 ‘19 residential units will be weak. PNB will have to component, eWestMall, has two floors of retail grapple with NPLs and slower demand for loans. spaces with a total leasable area of approximately 3,600 square meters. The office component, Total revenues were Php19.28 billion, 6% more ABI’s earnings for 2019 was Php398 million, 5% Even as the economy is restarted under different eWestPod, has over 13,000 square meters of than 2018. Revenues from were 3% higher lower than 2018 due to higher selling expenses on permutations of the quarantine thereafter, it will office space. with the 2% increase in volume and an average advertising and promotions, despite the 6% growth take a while before our economy goes back to the

Php14 per case increase in selling prices to in revenues. Our equitized share in a joint venture normal, or to what it used to be. The key to a faster At the end of 2019, Eton had a leasing portfolio pass on the higher excise taxes. Revenues from continues to be a drag to our earnings as well. recovery would be the availability of a vaccine, of approximately 181,000 square meters of office bioethanol were 30% higher as volume increased which we hope will be sooner than later. space and over 43,500 square meters of retail by 18% and selling prices by 12%. Cobra energy drink remains the market leader with space. Construction is ongoing in a number of a 72% market share. Our bottled water brands To conclude, I would like to thank our stakeholders projects to increase further the leasing portfolio. As of end-2019, TDI’s nationwide market share have the second largest market share at 25%, for the continued support and trust in our Company. for distilled spirits was at 27.8%, slightly lower while Vitamilk has 77%. To our Board of Directors, management team than end-2018’s 29.0%. In the Visayas and and employees, thank you for your dedication, Mindanao regions where most of TDI’s sales are Guarded Outlook for 2020 due to COVID-19 commitment and hard work. Thank you for being ETON’S LEASING generated, market share was at 64.2% and 73.1%, with us through good and difficult times. REVENUES With the Coronavirus Disease 2019 (COVID-19) in Php Billions respectively, as of December 2019, compared to pandemic, we have a guarded outlook for 2020.

1.71 64.7% and 72.6%, respectively, as of December The strong results we had for 2019 gives a strong 1.50 2018. 1.39 foundation for our Group, and will hopefully help us Asia Brewery, Inc.’s (ABI) Cobra recovers from sugar weather this pandemic. tax; bottled water and soymilk continue to grow. Since the Government ordered an Enhanced ‘17 ‘18 ‘19 Community Quarantine (ECQ) in Metro Manila MICHAEL G. TAN The imposition of the sugar tax starting 2018 President and Chief Operating Officer and the island of Luzon starting March 17, 2020, adversely affected the sales volume of Cobra due followed by other areas around the country, many to the price increase to pass it on, exacerbated industries have been disrupted, many people have Tanduay Distillers, Inc.’s (TDI) higher revenues by higher rice prices which affected the target lost their livelihood and jobs, while businesses are affected by higher alcohol costs that saw margins market’s purchasing power. In 2019, Cobra’s struggling to keep afloat. Moreover, thousands of decline sales volume was able to recover, but is still lower OFWs have gone back to the Philippines as their than the 2017 level. Meanwhile, the sales volume TDI’s net income for 2019 was Php676 million, host countries and employers also feel the impact growth of Absolute and Summit bottled water and Php233 million or 26% lower than 2018. The of the pandemic. Vitamilk soymilk continue to be strong. Our new lower income was due to lower margins from higher bottled water plant in Pampanga started operating alcohol costs and higher interest expenses. in May 2019.

10 LT GROUP, INC. 2019 ANNUAL REPORT 11 BANNER MESSAGE FROM THE CFO YEAR

“The 2019 attributable net income of LTG reached Php23.12 billion, Php6.93 billion or 42.8% higher than 2018’s Php16.19 billion.”

from Php35 per pack to Php45 per pack starting On May 9, 2019, LTG paid a regular cash dividend January 2020, a step-up of Php5 per pack annually of Php0.15 per share and a special cash dividend of from 2021 to 2023, then a 5% increase from 2024 Php0.15 per share, or a total of Php3.25 billion to onwards. shareholders on record as of April 29, 2019. This is equivalent to 20.04% of 2018’s attributable income PNB’s 2019 contribution amounted to Php5.57 of Php16.19 billion, in line with the Company’s billion in 2019. The bank saw an increase in its dividend policy of a 20% pay-out rate. core income, but was partially dragged by an increase in operating expenses. Gains from real On July 12, 2019, LTG participated in PNB’s Php12 and other properties acquired (ROPA) likewise billion stock rights offering in the amount of Php7.18 contributed, albeit more tempered than previous billion. In the latter part of the year, LTG redeemed years. This brought PNB’s net contribution to LTG Php9.52 billion of its Php18.06 billion preferred in 2019 higher by Php97 million or 1.8% versus shares issued in 2013 and 2014. the previous year. Total capital expenditure was Php15.54 billion in or the year 2019, LT Group, Inc.’s (LTG) total posted higher net income versus the previous year. Eton’s contribution amounted to Php896 million, 2019. PNB invested Php2.63 billion, primarily for F revenues amounted to Php94.24 billion, an Beverages and distilled spirits netted lower income Php417 million or 87.1% higher than the previous IT and branch-related projects. ABI spent Php1.94 increase of Php18.61 billion or 24.6% over 2018’s year-on-year. year’s Php479 million from improved margins billion as it increased capacity of its bottled water Php75.63 billion in revenues. Banking, beverages in its residential sales segment as well as lower business. Eton invested Php1.58 billion for the The tobacco business contributed 67% while PNB and distilled spirits segments reported an increase operating expenses. ongoing construction of its projects. TDI spent accounted for 24% of LTG’s attributable income in in revenues over the previous year, while the 1.08 billion for various plant upgrades. Meanwhile, 2019. Eton contributed 4%, TDI 3% and 2% from TDI’s contribution was Php667 million, Php223 property development segment had a slight LTG subscribed to Php7.18 billion in PNB’s stock ABI. Equity in net earnings from 30.9%-owned million or 25.1% lower than 2018’s Php890 million. decrease year-on-year. rights offering. The Company also invested close to Victorias Milling Company, Inc. (VMC) amounted to Cost increases affected margins in both liquor and Php1.14 billion in its joint venture with Ayala Land, Philippine National Bank (PNB) had the highest Php251 million, or 1% of total attributable income. bioethanol segments. These, along with higher Inc. for the 35-hectare Parklinks project. increase in revenues, followed by Tanduay Distillers, operating expenses, led to a decrease in TDI’s The contribution of the tobacco business reached Inc. (TDI), Asia Brewery, Inc. (ABI), then Eton bottom line in 2019. Php15.50 billion, a Php6.78 billion or 77.8% LTG’s balance sheet remains strong, with the parent Properties Philippines, Inc. (Eton). PNB’s revenues improvement over 2018’s Php8.72 billion. The ABI contributed Php398 million to LTG, Php23 company’s cash balance at Php441 million as of the were driven by higher interest income and trading tobacco business’ income is primarily from the million or 5.5% lower than 2018. ABI’s 2019 end of 2019. Debt-to-Equity Ratio was at 3.98:1 gains, while ABI’s revenues were driven by higher equity in net earnings of its 49.6% stake in PMFTC income was driven by volume improvements with the Bank, and at 0.17:1 without the Bank. contribution of its bottled water, packaging and Inc. (PMFTC), which amounted to Php15.40 billion in bottled water and energy drinks, as well as soymilk products. Bioethanol sales improved TDI’s in 2019, a Php6.93 billion or 81.9% increase locally produced soymilk. This was weighed down revenues, and Eton revenues were fairly flat. compared to 2018’s Php8.46 billion. This was by higher costs for advertising, overhead and The 2019 attributable net income of LTG reached mainly due to favorable sales mix and higher packaging, as well as marketing spend by AB Php23.12 billion, Php6.93 billion or 42.8% higher prices implemented during the year. The excise Heineken Philippines, Inc. as the joint venture JOSE GABRIEL D. OLIVES than 2018’s Php16.19 billion. The tobacco, tax law on tobacco, Republic Act (RA) 11346, was continues to heavily invest in the local market. Chief Financial Officer property development and banking segments passed on July 25, 2019. This law increased taxes

12 LT GROUP, INC. 2019 ANNUAL REPORT 13 BANNER BEVERAGES YEAR

In 2019, the Heineken, Tiger Black and Tiger Crystal beer brands continued their growth trajectory. In line with the Company’s ambition to create new experiences for Filipino consumers, the Company introduced the Blade Draught beer system for Heineken. Blade enables customers and consumers to serve high quality draught beer at any location, especially in bars that do not have enough space for keg systems. The Blade also allows consumers to experience draught beer for their parties at home. ABHP has been expanding Tiger’s presence in the market with increased distribution, supported by barangay activations. tarting from a humble vision to break the beer monopoly in 1982, SAsia Brewery, Inc. (ABI) is now a major player in the Philippine beverage and industrial packaging industry. In 2016, ABI formed a joint venture with Heineken International B.V. for the alcoholic beverage segment. The 50%-owned joint venture was named AB Heineken REVENUES Philippines, Inc. (ABHP). This allowed ABI to focus on its top-selling in Php Billions non-alcoholic brands in the local beverage market: Cobra (#1 energy drink), Vitamilk (#1 soymilk), and trusted drinking water brands, share, just trailing behind the low-cost competitor. Backed by strong Absolute and Summit. 15.93 15.10

marketing and advertising support, Absolute and Summit continue to 13.89 ABI’s revenues grew by 6% year-on-year, to Php15.93 billion in 2019 strengthen brand equity with nationwide thematic and trade programs. from Php15.10 billion in 2018. Higher revenues were realized by Summit’s “Thirst for the Win” campaign and Absolute’s “Pure water. capitalizing on the continued growth in the bottled water segment and Pure love.” campaign of Judy Ann Santos reinforced its position as the maintaining strong market positions in the energy drinks and soymilk affordable and most trusted bottled water brand for the Filipino family ‘17 ‘18 ‘19 segments. The Company commissioned a new bottled water plant in and consumer. Pioneering the local production of drinking water in Central Luzon to meet the growing consumer demand for its bottled premium glass packaging, Summit Still and Summit Sparking were water products in the North. Cobra’s strong brand allowed it to regain launched in November 2017. In 2019, Summit became the #1 brand in lost volumes as the energy drinks segment bounced back from demand the still and sparkling water in glass format category. contraction brought about by the tax on sugar sweetened beverages ABI continues to invest in its partnerships and research and imposed starting 2018. Vitamilk maintains its leading position in the Vitamilk continued to dominate the soymilk market with 77% market development efforts for new products, while strengthening operational soymilk segment allowing it to reap the benefits of shifting consumer share and has maintained its position as the #2 brand in the ready-to- and distribution efficiencies in order to focus on delivering product preference towards healthier food and drink offerings. drink milk category. With the “Pagud-tom, Fills Good” campaign, Vitamilk innovation and affordability to its customers in the Philippines and other positions itself as the healthy and energizing drink for the youth market. In the packaging segment, the volume of commercial glass bottles sold markets. True to its mission to offer quality products at affordable price points, Commencement of the local production of Vitamilk in one-way glass to third pyparty customers slowed by 4% as more capacity is shifted back ABI’s continuous efforts to innovate and improve manufacturing costs format helped fuel brand growth by 22% while controlling product costs. to production for internal requirements. This decrease was partially allowed it to maintain its gross profit margin despite price increases offset by a 6% improvement in corrugated carton box sales. The on most of its inputs brought about by the fresh round of excise tax packaging division has aggressively pursued large commercial glass increase on petroleum products at the beginning of 2019. customers through the emphasis on excellence in quality and customer service. As a result, it is now the preferred supplier of a leading soft Operating expenses were 10% higher year-on-year as the Company drinks manufacturer and a leading condiments and sauce producer, invested more on advertising and marketing. ABI’s net income amounted among others, for their glass container requirements. to Php398 million in 2019, Php23 million or 5% lower than in 2018. Other emerging product lines continue to experience encouraging Cobra upheld its market leadership commanding 72% of the energy growth. Creamy Delight Yogurt for one, has achieved healthy market drinks market. Cobra volumes remained stable despite aggressive price- shares in consumer markets outside of Metro Manila where its expanded offs waged by indirect competitors in the carbonated soft drinks market. flavor line and long shelf life have distinct competitive advantages. Under Building on the success of its campaigns with primetime king and “Idol a joint venture with Corporacion Empresarial Pascual SL of Spain, ng Masa” Coco Martin, Cobra launched the “Angat ang Lakas Mo!” continuous product innovations and improved distribution strategies campaign in 2019 to further strengthen its foothold in the mass market. have resulted in a 34% growth in volume for 2019. Also in 2019, ABI With its sustained revenue base, Cobra remained as the Company’s Pascual Foods Incorporated launched Bifrutas, the first milk with juice flagship product, accounting for over a third of revenues. drink in the Philippines.

Bottled water, the second biggest contributor to revenues, continued Nestea ready-to-drink iced tea, on the other hand, under license from its growth momentum with 13% volume growth in 2019. Absolute Nestle Philippines, Inc. grew by 5% in 2019 in the midst of a crowded and Summit bottled water brands ranked second with a 25% market market.

14 LT GROUP, INC. 2019 ANNUAL REPORT 15 BANNER PROPERTY DEVELOPMENT YEAR

Once completed, it will add approximately 10,500 square meters of office space and 14,000 square meters of residential space to the Company’s leasing portfolio. Construction is also ongoing for the 4.3-hectare Eton City Square in Sta. Rosa, Laguna. The first phase of the neighborhood retail and commercial center will offer 6,900 square meters of gross leasable area when finished. Likewise, construction is on track for NXTower I, an office

balanced portfolio propelled Eton Properties Philippines, A Inc.’s (Eton’s) net income in 2019, which soared 88% to Php900 million compared to the Php479 million reported in the previous year. Total revenues slightly decreased to Php3.14 billion from Php3.20 billion.

The growth in Eton’s recurring income was driven by the strong uptake of its commercial spaces following the opening of neighborhood lifestyle and community center, Eton Square Ortigas in San Juan City, as well as stable occupancy of office spaces. As a result, Eton’s rental income reached Php1.71 billion, representing a 14% increase compared to the same period last year.

Cyberpod Five Lobby

building along Emerald Avenue and Ruby Road in Ortigas adding Eton WestEnd Square 21,000 square meters of gross leasable area to the Company’s Real estate sales, on the other hand, were recorded at Php1.43 leasing portfolio once completed. billion. Consolidated assets increased to Php32 billion from Php31 Eton continued to expand its leasing portfolio with the opening billion in 2018. Total liabilities, on the other hand, stood at Php14 of Eton WestEnd Square in Makati City. Its retail component, billion. eWestMall, has two floors of retail spaces with a total leasable area of approximately 3,600 square meters. Dining and functional service establishments have already opened their doors to the public, and more tenants are expected to do so in the next few TOTAL REVENUES in Php Billions months. Alongside this, eWestPod, the office component of the 3.20 3.14 nano-township, also opened offering over 13,000 square meters of office space. 2.24 1.70 1.43 0.85

At the end of 2019, Eton has a leasing portfolio of approximately 1.71 1.39 1.50 181,000 square meters of office space and over 43,500 square

meters of retail space. ‘17 ‘18 ‘19

Meanwhile, Eton’s construction activities remained in high gear. In Residential Sales Leasing 2019, the 36-storey Blakes Tower in Makati City was topped off. Cyberpod Five

16 LT GROUP, INC. 2019 ANNUAL REPORT 17 BANNER TOBACCO YEAR

Sales and Marketing

MFTC Inc. (PMFTC), the business combination P between Philip Morris Philippines Manufacturing Inc. (PMPMI) and Fortune Tobacco Corporation (FTC), continues to be the leading cigarette manufacturer in the Philippines and has been providing the country’s adult smokers with the best smoking experience through its diverse brand portfolio.

PMFTC manufactures 7 out of the top 10 brands available in the market today, led by Marlboro, the world’s #1 cigarette brand, and Fortune, the largest heritage home-grown brand in the Philippines.

In 2019, excise tax on was increased following Marlboro via Scanpack – a technology which allows the President signing into law RA 11346. The new adult smokers to scan any pack of Marlboro to discover excise rates increased from Php35.00 to Php45.00 per brand stories, play games and win prizes. pack from January 2020 until December 2020 with an increase of Php5.00 every year until 2023. These efforts strengthened the Brand Power of Marlboro and also increased market share vs. previous year, PMFTC’s market share ended at 70.5%, up by 0.6 share making Marlboro still the #1 cigarette brand in the points versus prior year. Philippines.

PMFTC employs around 3,900 employees and indirectly contracts around 13,500 tobacco farmers through Marlboro’s solid performance continued in 2019. The its suppliers, Universal Leaf Philippines and Trans year was kicked-off with the Marlboro Tipping and Gold Manila Inc.. The Company relies on its competent and pack upgrade, a sleek and progressive look intended for SALES VOLUME MIX diverse workforce supported by individual development the modern-day adult smoker. To keep things fresh and 15% 14% 10% 8% and a -based career management program that relevant in the menthol segment, this was then followed 9% 6% recognizes potential and rewards achievements. PMFTC with the Marlboro Ice Blast Mega launch which provided 26% 27% 32% is continually shaping its people and culture in order to adult smokers with increased menthol sensation via the continue to thrive in the coming years and beyond. Mega capsule. Both initiatives had extensive support

through visibility materials, and trade engagement that 56% As a responsible corporate citizen, PMFTC, through 49% 48% yielded impressive results. its CSR program “Embrace”, believes that giving back creates shared value that benefits the communities where To continue the momentum, Discovered by Marlboro it operates. Community investments depend on their ‘17 ‘18 ‘19 was launched in August 2019. An integrated online and needs with the aim to help achieve the global Sustainable offline program which brings to life the brand values of Development Goals (SDGs). Programs include access Marlboro Fortune Jackpot Others to quality education or vocational training, income- generating initiatives, and the promotion of women’s leadership roles in society. The Company is also active in helping address natural or man-made disasters and other emergencies.

18 LT GROUP, INC. 2019 ANNUAL REPORT 19 BANNER TOBACCO YEAR

In 2019, Fortune showed resilient performance despite Digital Trade Engagement (DTE) November 2019 provided the best opportunity to fully its reposition from low to mid-price segment, mainly test digital retail engagement with the national launch due to sustained and consistent support to the brand of Philip Morris Red. Tasks were developed and aligned in the last three years. In line with the strategy to build with the retailer’s journey through this new product the brand through upgrades and enhance differentiation launch, providing more compelling rewards for those that versus competition, 3 Fortune SKUs (Original, 100s drive consumer sales. While expansion is continuing with Menthol and Blue) were upgraded to FIRM FILTER along new POS accessing the platform for the first time, we with a tipping design change in mid-July. are purposely limiting the complexity of tasks with high repetition.

Moving forward into 2020 PMFTC’s focus will be to In October 2019, following a successful pilot in general expand the APPwards footprint in sari-sari stores, trade (sari-sari) stores in Manila, PMFTC commenced continually evolve user experience/engagement, platform scaling up its new digital platform APPwards nationally. efficiency and impact of tasks to generate business value The dedicated mobile website is for the exclusive growth. use of PMFTC approved retail customers delivering a user-friendly interface for them to earn points and Operations redeem for rewards. Augmenting the current Field Sales Force regular retail engagement, PMFTC is now 2019 was a game able to centrally allocate customized “digital tasks” and changer for PMFTC provide relevant information direct to retailers at a higher Operations. Coming frequency than normal physical visits allow. from the breakthrough performance last 2018, the challenge for 2019 was to This product upgrade is supported with Marlboro’s Tasks can include surveys, quizzes and brand information deliver further step-change in overall performance to endorsement to further build quality credentials for used to create greater understanding and feedback accelerate the organization closer to its 100+1 vision. Fortune. To further build its image as the tropa’s ally in on our products from retailers. In addition, traditional To do this, the team embarked on the journey of Phase 0 the Philippines, yearlong activations were conducted at Trade Programs designed to drive sales and launch new deployment, wherein a bold goal of significantly reducing major fiestas and music festivals offering a thematically products can be digitalized to increase efficiency, by production losses has been strategically charted. Amid designed “Festival” and “Music” limited edition packs both reducing complexity and increasing the speed of some challenges faced at the start of the journey, the to help reconnect the brand with its core audience and execution. team forged on with growing focus to significantly reduce bring to life the brands promise of “Tatak Ng Tropang production losses in the model line – the pilot machine Tapat.” To date, Fortune remains to be the #1 local Despite potential barriers from optimization initiatives are iterated and evaluated. cigarette brand in the Philippines. with smartphone ownership To date, substantial milestones have been made by the and connectivity, by year end model line team. The vast learnings from their journey has In November 2019, Philip Morris Red launched nationally PMFTC has enrolled 28,500 been and will be the source of improvement programs as PMFTC’s full-flavor mid-price offer. The product retail outlets on the platform. and ways of working that will be scaled up to the whole provides a strong functional unique selling proposition, Retailer acceptance and Operations organization. FIRMSTICK – the only cigarette designed with FIRM engagement was faster than FILTER and extra tobacco to give a rich, consistent expected with weekly logins smoking experience from beginning to end. The launch as high as 81% and task was supported by massive visibility materials at point of completion rate of 50%. sale, aggressive sampling targeting full flavor legal age smokers through extensive consumer engagement efforts nationwide.

20 LT GROUP, INC. 2019 ANNUAL REPORT 21 BANNER TOBACCO YEAR

2019 was another internal talent, injecting new expertise and capabilities, in ensuring that the Company develops the centralized breakthrough year in the and continuously strengthening the engagement of its and coordinated management of all critical & strategic fight against illicit trade. proud and committed employees. projects. Initial win was achieved as these projects were Twelve (12) illegal factories made visible across functions with a common lens to were shut down by To further build employees’ capabilities, PMFTC update, speed up decision making for project teams via various law enforcement continuously fosters a learning culture. A new digitally governance reviews. agencies such as the enabled learning platform, FUSE, was launched in BIR, BOC, NBI and the 2019 to provide employees both internal and external Follow through was done on the previous year’s PNP. Illegal cigarette learning content, anytime and anywhere. LearnX sessions success milestones on the New Ways of Working via factories were discovered facilitated by external subject matter experts enriched Fast Forward (FFWD) by integrating the ownership of and raided in San Simon, employees’ perspective on key trends and emerging this within PMO. A number of FFWD projects pitched Pampanga; Tacloban, competencies such as storytelling, consumer centricity, in 2018 saw progress and scale-up efforts such as Leyte; San Fernando, La intentional learning, and digital. E-Ordering and E-payments that got folded under Digital Hand in hand, PMFTC Operations remains faithful Union; Marilao, Bulacan; Sta.Maria, Bulacan; Valenzuela Trade Engagement & Cigarette Butt collection brand and proactive to its commitment to environmental City; Malabon City; Villasis, Pangasinan and even the The year culminated on a high note. After a stringent promotion, to name a few. Key individuals that also sustainability. Several projects on reduction of single- local government of Cauayan, Isabela conducted its 6-month vetting process, PMFTC was certified as a were pivotal practicing the New Ways of Working in the use plastic, waste disposal and CO2 emission have own enforcement operation and shuttered a new illicit TOP Employer in the Philippines by the TOP Employer previous year progressed in further honing their skills set been successfully implemented. And while, year-on-year, cigarette factory. A total of 47 machines used for (1) Institute which is the global authority on recognizing and contributing back to the Company by applying as sustainability metrics continue to improve, the team printing fake labels and tax stamps, (2) making and excellence in human resource practices. The certification internal FFWD catalysts (3) and functional builders (21) remains dedicated in working relentlessly to explore more packing cigarettes; and (3) manufacturing cigarette filters process consisted of a detailed critical assessment in order to further increase the growing critical mass of effective sustainability programs in all fronts. were seized. Perceived presence of illicit is increasing of our practices & programs in the following areas: employees who are already actualizing a more consumer- as evidenced by the rising number of raided factories Talent Strategy, Workforce Planning, Talent Acquisition, centric mindset. Illicit Trade (~71% increase: 2019 vs. 2018), number of seized Onboarding, Learning and Development, Performance cigarettes (~70% increase: 2019 vs. 2018), increased Management, Career and Succession Management, Inclusion and Diversity The National Committee on Intellectual Property Rights number of enforcement actions (~40% increase: 2019 Compensation and Benefits, and Culture. To date, there (NCIPR) reported that for January to July 2019, various vs. 2018). are only 11 companies in the Philippines that have been PMFTC continued to strengthen its commitment to law enforcement agencies seized Php13.73 billion worth awarded this recognition. achieve a nurturing, fair and inclusive environment where of counterfeit products, close to 60% of the total value The Philippine government has observed that recently our employees thrive and celebrate diversity. In 2019, of fake goods seized in the entire 2018 which stood at the illegal tobacco trade has shifted from smuggling As part of the Company’s external transformation efforts, for the second year in a row, the Company retained its Php23.6 billion. Same as 2018, the bulk of the validated cigarettes to producing counterfeit brands here using PMFTC also started on its Digital Employer Branding Equal Salary Certification which proves that we stand inventory are counterfeit cigarettes. The legislated undocumented cigarette-making machines acquired initiative. Through various social media channels, PMFTC true behind our commitment to equal pay among men annual increase of excise taxes on tobacco products from China. Chinese government has assured gives the public a realistic glimpse of life inside—its rich and women. A significant addition to its portfolio of well- widened price gaps and make illicit cigarettes even more cooperation with the Philippines in its anti-illicit cigarette culture, authentic stories of our diverse employees and being related initiatives is the introduction of the Agile attractive. These price gap between illicit cigarettes and trade campaign, particularly in stopping the entry of their experiences, and the exciting career opportunities and Balanced Life Program - ABLE. Under this program, legitimate cigarettes range from 60% - 80%. As a result, illegal equipment from the mainland according to the that await those who are interested to disrupt the PMFTC launched its Flexible Work Around Core illicit cigarettes are cheaper than PMFTC’s low priced Department of Finance. The Secretary of Finance has tobacco industry and be part of the change the Company Hours and Remote Work setup, allowing employees brands and the former becomes an attractive alternative also asked the Philippine Bureau of Customs to alert is leading. greater flexibility around managing and balancing their for smokers, particularly the youth and those with low their counterparts in China and all ASEAN countries of professional and personal commitments. Likewise, a income. the increasing presence of smuggled cigarettes from Project Management Organization 24/7 Employee Assistance Program Helpline was also those countries. established to further support and sustain the emotional National illicit trade incidence was relatively stable PMFTC completed the formation of the Project and mental well-being of our employees. when measured via an empty pack survey in the second People and Culture Management Office (PMO) organization with a line-up quarter of 2019 at 5.7% compared to 5.3% in 2018. that combined internal members from different functions The landscape of illicit cigarette has quickly evolved Across 2019, PMFTC stayed strong and resolute and newly acquired talent to supplement Project from non-tax paid genuine products to non-tax paid on its determination to progress along the internal Management and Agile Ways of Working expertise. counterfeits and cheap contraband. transformation journey. The thrust of the organization The team in less than a year was able to mobilize was to maximize its potential via further developing our functional PMO in order for the unit to be responsible

22 LT GROUP, INC. 2019 ANNUAL REPORT 23 BANNER BANKING YEAR

Meanwhile, net gains from sale of acquired assets declined to Php690.7 first local bank to join the Philippine Business Coalition for Women million compared to last year’s Php5.9 billion. Despite the reduction, Empowerment (PBCWE), an organization comprised of large influential total operating income registered a 6% improvement on account of solid companies that promote gender equality in the workplace. The Bank aims LOANS AND RECEIVABLES in Php Billions growth in core revenues. Excluding net gains from sales of foreclosed to undergo the Economic Dividends for Equality (EDGE) Certification, assets, total operating income increased by 22% year-on-year. a leading global assessment methodology and business standard 658

for gender equality that evaluates the workplace’s performance of an 586 PNB’s total consolidated resources stood at Php1.2 trillion, up Php159.5 organization against global and industry benchmarks. 502 billion or 16% from year-ago level. The year’s financial results reflect the strength of PNB’s franchise in its wholesale and retail businesses. PNB proactively engages employees in living out the Bank’s sustainability mission. In September, the Bank launched Project P.L.A.N.E.T. which The Bank’s asset quality remained strong with non-performing loan hilippine National Bank (PNB) sustained healthy financial results in stands for Protect, Love, and Nurture the Environment Together. This (NPL) ratios of 0.68% net of valuation reserves and 1.99% at gross. ‘17 ‘18 ‘19 P2019 and scored milestones in various areas in the business. PNB campaign is our journey towards making the Bank a planet-friendly NPL coverage on the other hand stood at 118.91%. PNB’s consolidated registered a net income of Php9.9 billion, slightly higher than the earnings workplace. In November, PNB held its first Sustainable Lifestyle Fair risk-based capital adequacy ratio (CAR) stood at 14.80%, exceeding the of Php9.8 billion in 2018. The growth in net profit resulted from sustained featuring a bazaar showcasing eco-friendly, sustainably sourced products minimum regulatory requirement of 10% and Common Equity Tier (CET) efforts in strengthening the Bank’s core business. Excluding the impact and organic food items. The Bank hosted the 36th Asian Bankers 1 ratio at 14.10% by end-2019. of non-recurring gains from the sale of foreclosed assets, the Bank’s core Association Conference and General Meeting on the same month. With net income grew by 55% year-on-year. In 2019, PNB funded several projects in the power, water supply, and the theme, Reshaping the Asian Financial Landscape, the gathering is the largest conference of its kind in Asia, bringing together more than Net interest income reached Php32.5 billion, 20% higher compared to infrastructure industries thereby giving underserved areas access to 150 different decision-makers of peer banks across Asia. PNB also the previous year, driven by improved earnings from loans to corporate, facilities and/ or improving agricultural activity from the rural areas to the became the official partner of the 30th Southeast Asian Games held in the commercial and small and medium enterprises, and other interest-earning metropolis. country. This momentous event granted significant exposure, not only with assets. Loan receivables registered double digit growth to Php657.9 PNB continues to be very active in offering investment opportunities to Filipinos, but also with the international community. The Bank’s Prepaid billion, higher by 12% from 2018. On the other hand, deposit liabilities customers. During the year, the Bank issued Php8.22 billion Long-Term Card product was issued to 9,000 volunteers where their allowances reached Php826.0 billion, up by 13% versus 2018 year-end level. Negotiable Certificates of Time Deposit (LTNCDs), at a coupon rate were credited. Net service fees and commission income grew by 20%, propelled by of 5.750% per annum with a tenor of five years and six months. This enhanced cross selling efforts resulting in improvements in underwriting is the largest LTNCD issuance of the Bank to date and was 2.7 times fees from capital market transactions as well as loan, deposit and credit oversubscribed. PNB likewise listed its maiden offering for fixed rate card-related fees. Net trading and foreign exchange gains expanded by Philippine Peso bonds, which reached Php13.9 billion, equivalent to 98%, resulting mainly from favorable opportunities in the market. an oversubscription of almost three times the announced issue size of Php5 billion. Moreover, PNB issued USD750 million worth of Senior Notes, which is the largest in the Philippine banking history. At orderbook value of over USD3.25 billion, this is the biggest in terms of demand size in Philippine banking history. To commemorate its 103rd Anniversary, PNB launched a Php12 billion Stock Rights Offering, earning a positive feedback from investors. With the additional capital, we foresee a solid On the awards front, several accolades were given to PNB. The Bank support for our growth strategy in the medium term. received an award for “Best FIG Bond-Philippines”, recognizing its On the other hand, PNB’s overseas branches specifically those located USD750 million fixed rate notes issued in June 27, 2019. The deal in Hong Kong, Japan, and Singapore actively conducted financial marked the Bank’s successful return to the offshore bond market with wellness programs to educate Filipinos on the importance of savings the largest offering size from the Philippine banking sector. PNB was and investment. This initiative, coupled with financial literacy programs also awarded by the Social Security System (SSS) as its “Best Paying for students in the greater Metro Manila area, was a fertile ground for the Commercial Bank” partner during the 2019 Balikat Ng Bayan Awards acquisition of new customers. proving that the Bank is a reliable partner in providing diverse banking services to SSS and its members. Lastly, for the second straight year, PNB recognizes the significance of digital transformation in creating a PNB was recognized by the Institute of Corporate Directors (ICD) safe, secure, and seamless banking experience for our customers. To for being one of the awardees of its ASEAN Corporate Governance support the Philippine government’s National Retail Payment System Scorecard (ACGS) Arrow for 2018. (NRPS), the Bank enhanced its mobile banking services with PESONet and InstaPay. Using the PNB Mobile App, customers can perform real- As a new decade unfolds, 2020 ushers in a landscape filled with time electronic fund transfers to participating banks in the Philippines. For potentials for growth. Moving forward, the Bank aims to continue to the millions of Filipinos overseas, PNB has embarked on a digital strategy strengthen its core business and digital capabilities to make end-to-end of launching a mobile remittance application. Finally, the Bank’s Trust banking seamless for customers. PNB is part of your community. No Banking Group implemented the country’s first end-to-end fully automated matter who you are or where you came from, PNB will gladly open its UITF online facility where customers can enroll, invest, and redeem funds doors as it is the Partner that you can always lean on. through the internet or with the convenience of their mobile phones. PNB is committed to embodying the values of diversity and inclusion as part of its professional culture. In August 2019, PNB became the

24 LT GROUP, INC. 2019 ANNUAL REPORT 25 BANNER DISTILLED SPIRITS YEAR

he local spirits industry grew by 2% in 2019 Trecovering from a slowdown last year due to weakened consumer purchasing power. The growth in spirits was due to the strong showing of the Visayas and Mindanao area which grew by 6% compared to the flat volumes in Luzon. Rum, the leading spirits brand in Southern Philippines, posted a 6% growth compared to the 3% increase of the segment and the 7% decline of the category.

Riding on the higher demand in Visayas and Mindanao, Tanduay continued to expand its market reach abroad as the Company’s market share in terms of sales volume it added more distribution points in the USA and opened improved further from 27% to 29% year-on-year. up marketing channels in Guam, Singapore and the Intensive dealer retention programs and aggressive United Arab Emirates. marketing campaigns continue to bear good results leading to a stronger grip of the Southern Philippine Tanduay’s business landscape is fraught with difficulties spirits market at 68%. Liquor sales volume stayed at and pressure from a highly competitive environment the twenty million cases mark in 2019 improving by 2%. and tightening regulatory framework. The Tanduay Sales of bioethanol and other alcohol products continued organization, with firmer resolve, will continuously nurture to grow in double digits. a strategic team-based agile culture to attain its vision of being the best in its business. Revenues improved by 6% from Php18.1 billion to Php19.3 billion as the volume increase was complemented by higher average selling prices of both liquor and bioethanol. Cost of sales however grew at a SALES VOLUME faster pace of 8% to Php16.1 billion due to higher excise in Million Cases tax and packaging materials costs that offset the slight 20.1 20.520.5 lowering of alcohol costs. Gross profit thus declined by 19.5 17.117 16.516. 16.9 1% to Php3.2 billion. 14.6

Net income after tax amounted to Php676 million which is 26% lower compared to 2018, also on account of higher operating expenses.

‘13‘13 ‘14 ‘15‘15 ‘16 ‘17 ‘ ‘1818 ‘‘1919

26 LT GROUP, INC. 2019 ANNUAL REPORT 27 BANNER CORPORATE GOVERNANCE REPORT YEAR

Good corporate governance dictates that a corporation should adhere to the In 2019, to comprise of its Board of Directors, the Company elected five (5) Progressive Farms, Inc., The Charter House, Inc., Tangent Holdings Corporation, of the Board of Trustees of Xavier School Educational & Trust Fund. He was principles of prompt disclosure and transparency to allow “the regulators, women and six (6) men who are known to be knowledgeable and successful Trustmark Holdings Corporation, Shareholdings, Inc. and Zuma Holdings and formerly the Chairman of the Board of Trustees of the Advertising Foundation of shareholders and the general public the opportunity to access accurate in their respective fields. Unfortunately, Mr. Lucio K. Tan, Jr. passed away last Management Corporation. He graduated from the University of California, Davis in the Philippines. information about its financial, operational, and other aspects of the company.” November 11, 2019. To continue his legacy, his son, Mr. Lucio C. Tan III, took 1991 with a Bachelor of Science degree in Civil Engineering and had a Master’s Board Attendance: 92%: 11 of 12 Board Meetings By doing so, a company establishes its credibility and standing that generates the over and was appointed as a member of the Board of Directors on December Degree in Business Administration from the Kellogg School of Management trust of the people and its stakeholders. And, by earning trust, the rest will follow. 17, 2019. Nevertheless, it is undisputed that collectively, their service has Date of First Appointment: May 8, 2018 undoubtedly contributed to the continued success of the Company. Northwestern University. No. of Years on the Board: 2 Years For LT Group, Inc., otherwise known as LTG, trust of all its partners, stakeholders, Other Information: No conflict of interest transactions in the past one (1) year. stockholders, customers, suppliers, the government and the community, is vital in Moreover, the Board is composed of Non-Executive Directors (NED) (73%) Board Attendance: 91%: 10 of 11 Board Meetings (Passed away on November 11, 2019) ensuring its mark in the industry. For without trust, there would be no customers and Executive Directors (ED) (27%), with four (4) men and women of probity MARY G. NG, 66, Independent Director who will support its products and services. and intelligence to serve as Independent Directors (ID). This is consistent with Date of First Appointment: February 21, 2003 the recommendations of the Securities and Exchange Commission (SEC) and No. of Years on the Board: 16 Years Ms. Ng was elected as member of the Board of Directors Thus, for the past years, the Company made sure to work side by side with men to ensure a balanced outlook and assessment in making the various business Other Information: No conflict of interest transactions in the past one (1) year. in 2019. She is the Chief Executive Officer of H&E and women of knowledge, competence and dedication in bringing the Company decisions on behalf of the Company. Group of Companies and an Honorary President of the to greater heights. These people served as members of its Board of Directors LUCIO C. TAN III, 27, Director Packaging Institute of the Philippines, the Philippine and Management. As further required by the SEC, the Independent Directors do not own more Mr. Tan was elected as Director and Chief Operating Plastic Industrial Association of the Philippines, and the than 2% of the Company’s outstanding capital stock; have no ties to the BOARD COMPOSITION MacroAsia Management; and are free from any business or other relationships which Officer of Tanduay Distillers, Inc. and Director of Association of Volunteer Fire Chiefs and Firefighters of The Company believes that healthy and unbiased differences in opinions and could, or could possibly be perceived to materially interfere with their exercise Corporation, PAL Holdings, Inc., , Inc., the Philippines. She is the first woman Chairman of the ASEAN Federation of points of views are necessary for the proper management of any corporation since of independent judgment in carrying out their responsibility as Independent and Air Philippines Corporation in 2019. He earned his Plastic Industries (AFPI), Executive Vice President of Federation of Filipino- diversity brings with it more ideas to help a corporation look beyond what is normal Directors of the Company. Bachelor’s Degree in Electrical Engineering from Stanford Chinese Chamber of Commerce and Industries, a Tripartite Board member and what is expected of it. University in 2015 and Master’s Degree in Computer Science The Company’s Board of Directors are composed of the following men and of the Department of Labor and Employment, a Board member of Technical Thus, throughout the years, the Company maintained both men and women of women: from Stanford University in 2017. Educational and Skills Development Authority (TESDA), Vice President of the diverse beliefs and opinions, but with the same vision of keeping the interest of the Board Attendance: 100%: 1 of 1 Board Meeting Philippine Piak O Eng Chamber of Commerce and Philippine Piak O Eng Uy’s Company a top priority. Date of First Appointment: December 17, 2019 Association and Director of Philippine Dongshi Townmate Association, Inc. No. of Years on the Board: Less than a year Board Attendance: 75%: 6 of 8 Board Meetings Other Information: No conflict of interest transactions in the past one (1) year. Date of First Appointment: May 7, 2019 Chairman and CEO Director No. of Years on the Board: 1 Year DR. LUCIO C. TAN, 85, HARRY C. TAN, 73, VIVIENNE K. TAN, 51, Director Other Information: No conflict of interest transactions in the past one (1) year. Dr. Tan is the Chairman of Absolut Distillers, Inc., Mr. Tan is a Director of Eton Properties Philippines, Inc., Ms. Tan was elected as member of the Board of Directors in Alliedbankers Insurance Corporation, Allianz PNB Life Pan-Asia Securities Corp. and Lucky Travel Corporation; 2019. She serves as Director of Philippine National Bank, WILFRIDO E. SANCHEZ, 83, Independent Director Insurance, Air Philippines Corporation, Asia Brewery, Inc., Managing Director of The Charter House, Inc.; Director and PAL Holdings, Inc., and Philippine Airlines, Inc.; Member of Mr. Sanchez is the Tax Counsel of Quiason Makalintal Barot Asian Alcohol Corporation, Holdings Corporation, Chairman for Tobacco Board of Fortune Tobacco Corporation; the Board of Trustees of and University Torres Ibarra Sison & Damaso Law Offices; Vice Chairman Buona Sorte Holdings, Inc., Eton Properties Philippines, Director and President of Maranaw Hotel () of the East Ramon Magsaysay Memorial Medical Center; of The Center for Leadership & Change, Inc.; Independent Inc., Fortune Tobacco Corporation, Foremost Farms, Inc., and Landcom Realty Corporation; Director of Asia Brewery, Executive Vice President of Philippine Airlines, Inc.; Founding Director of Adventure International Tours, Inc., Amon Trading Grandspan Development Corporation, Himmel Industries, Inc., Lucky Travel Inc., Alliedbankers Insurance Corporation, Absolut Distillers, Inc., Basic Holdings Chairperson of Entrepreneurs School of Asia; and Founding Trustee of Philippine Corporation, EEI Corporation, Grepalife Asset Management Corporation, Mabuhay Maritime Express Transport, Inc., MacroAsia Corporation, Corporation, Foremost Farms, Inc., Himmel Industries Inc., PMFTC Inc., Progressive Center for Entrepreneurship (Go Negosyo). Corporation, Grepalife Fixed Income Fund Corporation, House Philippine Airlines, Inc., PMFTC Inc., Progressive Farms, Inc., PAL Holdings, Farms, Inc., Grandspan Development Corporation and Tanduay Distillers, Inc. He is of Investments, Inc., JVR Foundation, Inc., Kawasaki Motor Corporation, Magellan Inc., Tanduay Distillers, Inc., Tanduay Brands International, Inc., Tangent Holdings also the Advisor of the Board of Philippine National Bank. He holds a Bachelor of Board Attendance: 100%: 8 of 8 Board Meetings Date of First Appointment: May 7, 2019 Capital Holdings Corporation, Omico Corporation, PETNET, Inc., PETPLANS, Corporation, The Charter House, Inc., Trustmark Holdings Corporation, University Science degree in Chemical Engineering from the Mapua Institute of Technology. No. of Years on the Board: 1 Year Inc., Transnational Diversified Corporation, Transnational Diversified Group, of the East, Zuma Holdings and Management Corporation. He is also a Director of Board Attendance: 92%: 11 of 12 Board Meetings Other Information: No conflict of interest transactions in the past one (1) year. Inc., Transnational Financial Services, Inc., and Corporation; Philippine National Bank. He holds a Bachelor of Science degree in Chemical Date of First Appointment: May 28, 2008 Independent Director of Eton Properties Philippines, Inc., Asia Brewery, Inc., and Engineering from . He was awarded the degree of Doctor of No. of Years on the Board: 11 Years JUANITA T. TAN LEE, 77, Director and Treasurer Tanduay Distillers, Inc. He holds a Bachelor of Arts degree from the Ateneo de Philosophy, major in Commerce, by the University of Santo Tomas in 2003 and is Other Information: No conflict of interest transactions in the past one (1) year. Ms. Tan Lee is Director of Asia Brewery, Inc., Eton Properties Manila University and has a Post-Graduate degree in Bachelor of Laws from the an awardee of several other honorary Doctorate degrees. Philippines, Inc., and Tanduay Distillers, Inc.; Director and Ateneo De Manila University and Masters of Law from Yale Law School. President and COO Board Attendance: 83%: 10 of 12 Board Meetings MICHAEL G. TAN, 53, Corporate Secretary of Fortune Tobacco Corporation, Board Attendance: 92%: 11 of 12 Board Meetings Date of First Appointment: July 2, 1999 Mr. Tan is a Director, President and Chief Operating Officer of Corporate Secretary of Absolut Distillers, Inc., Asian Date of First Appointment: July 31, 2012 No. of Years on the Board: 20 Years Asia Brewery, Inc.; Director of Tanduay Distillers, Inc., Tangent Alcohol Corporation, The Charter House, Inc., Foremost No. of Years on the Board: 7 Years Other Information: No conflict of interest transactions in the past one (1) year. Holdings Corp., Philippine National Bank, Eton Properties Farms, Inc., Grandspan Development Corporation, Himmel Other Information: No conflict of interest transactions in the past one (1) year. Industries, Inc., Landcom Realty Corporation, Lucky Travel Corporation, PMFTC Director Philippines, Inc., PMFTC Inc., Victorias Milling Company, CARMEN K. TAN, 78, Inc., Sabre Travel Network (Philippines), Inc., Alliedbankers Inc., Progressive Farms, Inc. and Total Bulk Corporation; Assistant Corporate FLORENCIA G. TARRIELA, 73, Independent Director Ms. Tan is the Vice Chairman of Philippine Airlines, Inc. and Insurance Corporation, Lucky Travel Corp., Maranaw Hotel Secretary of Basic Holdings Corporation; and a member of the Board of Trustees Ms. Tarriela is the Chairman and Independent Director Director of Air Philippines Corporation, Asia Brewery, Inc., (Century Park Hotel), Pan-Asia Securities Corp., MacroAsia of the University of the East. She holds a Bachelor of Science degree in Business of Philippine National Bank, PNB Capital and Investment Buona Sorte Holdings, Inc., Foremost Farms, Inc., Dynamic Corporation and Philippine Airlines, Inc. He holds a Bachelor of Science degree Administration major in Accounting from the University of the East. Corporation, PNB-IBJL Leasing and Finance Corporation, Holdings, Ltd, Eton City, Inc., Fortune Tobacco Corporation, in Applied Science in Civil Engineering, major in Structural Engineering, from the and PNB-IBJL Equipment Rentals Corporation; Independent Himmel Industries, Inc., Lucky Travel Corporation, MacroAsia Board Attendance: 100%: 12 of 12 Board Meetings University of British Columbia, Canada. Date of First Appointment: May 2, 2012 Director of PNB International Investments Corporation; Corporation, PAL Holdings, Inc., Philippine National Director of Bankers Association of the Philippines; Director/ Board Attendance: 100%: 12 of 12 Board Meetings No. of Years on the Board: 7 Years Bank, PMFTC Inc., Progressive Farms, Inc., Tanduay Distillers, Inc., Manufacturing Other Information: No conflict of interest transactions in the past one (1) year. Vice President of Tarriela Management Company and Services and Trade Corporation, Sipalay Trading Corporation, Saturn Holdings, Date of First Appointment: February 21, 2003 No. of Years on the Board: Director/Vice President/Assistant Treasurer of Gozon Development Corporation; Inc., Tangent Holdings Corporation, Trustmark Holdings Corporation and Zuma 16 Years Other Information: No conflict of interest transactions in the past one (1) year. JOHNIP G. CUA, 63, Independent Director and Life Sustaining Member of Bankers Institute of the Philippines (BAIPHIL) Holdings and Management Corporation. Mr. Cua has served as a member of the Board of Directors and Financial Executives of the Philippines (FINEX). She has also been a Board Board Attendance: 83%: 10 of 12 Board Meetings LUCIO K. TAN, JR.+, 53, Director since May 2018. He was formerly the President of Procter Trustee of Tulay sa Pag-unlad, Inc. (TSPI) since 2003. A former Undersecretary Date of First Appointment: May 5, 2010 Mr. Tan was the Director, President and Chief Operating & Gamble Philippines, Inc., currently the Chairman of the of Finance, and used to be an alternate Board Member of the following: Monetary No. of Years on the Board: 9 Years Officer of Tanduay Distillers, Inc. and Tanduay Brands Board of the P&Gers Fund, Inc. and Xavier School, Inc., and Board of BSP, Land Bank of the Philippines, and the Philippine Deposit Insurance Other Information: No conflict of interest transactions in the past one (1) year. International, Inc.; Director and President of Eton Properties the Chairman & President of Taibrews Corporation. He is an Corporation (PDIC). She was a Managing Partner and the first Filipina Vice Philippines, Inc. and PAL Holdings, Inc.; Director and Independent Director of BDO Private Bank, PhilPlans First, President of Citibank N.A., Philippines. Currently, she is a columnist for “Business Executive Vice President of Fortune Tobacco Corporation; Inc., Eton Properties Philippines, Inc., Asia Brewery, Inc., Tanduay Distillers, Inc., Options” of the Manila Bulletin and “FINEX Folio” of BusinessWorld. MacroAsia Corporation Director of Absolut Distillers, Inc., Alliedbankers Insurance , MacroAsia Catering Services, Inc., MacroAsia Airport Board Attendance: 92%: 11 of 12 Board Meetings Corporation, Asian Alcohol Corporation, Asia Brewery, Inc., Services Corporation, PAL Holdings, Inc. and Philippine Airlines, Inc. He is also a Date of First Appointment: August 9, 2012 Philippine Airlines, Inc., Philippine National Bank, MacroAsia Corporation, member of the Board of Directors of Interbake Marketing Corporation, Teambake No. of Years on the Board: 7 Years Victorias Milling Company, Inc., PMFTC Inc., Lucky Travel Corporation, Foremost Marketing Corporation, Bakerson Corporation, Lartizan Corporation, Alpha Other Information: No conflict of interest transactions in the past one (1) year. Farms, Inc., Grandspan Development Corporation, Himmel Industries, Inc., Alleanza Manufacturing, Inc., and Allied Botanical Corporation, and a member 28 LT GROUP, INC. 2019 ANNUAL REPORT 29 BANNER CORPORATE GOVERNANCE REPORT YEAR

BOARD RESPONSIBILITIES AUDIT AND RISK MANAGEMENT COMMITTEE (ARMC) As provided in its charter, the EXCOM holds meetings on an as-need basis. MANAGEMENT The Company’s By-Laws require the Board of Directors to regularly hold meetings In compliance with the SEC’s recommendation for good corporate governance, Since no urgent matters arose requiring their approval, it did not conduct any For several years, the Company’s brand has continued to grow and gain every second Tuesday of the month. During said meetings, all companies under the ARMC is composed of five (5) Directors, three (3) of whom, including the meeting in 2019. worldwide appreciation under the able and experienced leadership of its Chairman Chairman, are Independent Directors. Its members are Mr. Johnip G. Cua as the conglomerate are represented by their respective Chief Financial Officers NOMINATION AND COMPENSATION COMMITTEE (NCC and CEO, Dr. Lucio C. Tan, and its President and COO, Mr. Michael G. Tan. (CFOs) or Chief Operating Officers (COOs) who are tasked to report on the Chairman, Mr. Lucio K. Tan, Jr.+, Ms. Juanita T. Tan Lee, Ms. Florencia G. Tarriela ) and Mr. Wilfrido E. Sanchez. The NCC is composed of six (6) directors with Dr. Lucio C. Tan as Chairman and Both the Chairman/CEO’s and the President/COO’s close coordination with operational results of their respective divisions and brief the Board on other + developments in the market place, including their plans and initiatives for the year. Mr. Harry C. Tan, Mr. Lucio K. Tan, Jr. , Mr. Michael G. Tan, Ms. Juanita T. Tan Lee each other and with its directors and officers has dealt with the highly critical The ARMC Chairman has served the Company as a member of the Board of and Mr. Wilfrido E. Sanchez as members. and sensitive issues. Throughout the years, it is without a doubt that, with the On the other hand, quarterly meetings are attended by all Presidents/ Chief Advisors since August 2014 and has been a director thereof since May 2018. continued support and hard work of the different subsidiaries, the Company will In compliance with its charter, and for purposes of ensuring a formal and Executive Officer (CEO) or COOs of the subsidiaries, together with their CFOs. He likewise serves as Director/Officer of other companies within and outside the only continue to prosper. Company. transparent Board nomination process in the selection, compensation, monitoring In 2019, the Board conducted 12 meetings which were religiously attended to by and, when necessary, replacement of key executives as well as overseeing the its members, as shown in the table below: During the Annual Stockholders’ Meeting (ASM) held last May 7, 2019, 10 out of As provided in its charter, the ARMC is tasked to assist the Board in its oversight succession planning of the Company, the Committee conducts a meeting at least 11 Directors attended, as shown in the table below: functions. During its meetings, the ARMC is informed of the financial and non- once a year. Date of No. of Meetings No. of Board Name Election Held during the Meetings % financial status of the Company, the management of its risks, the system of internal year (2019) Attended control, the audit process, and the Company’s process for monitoring compliance On March 8, 2019, the Committee convened and passed upon the qualifications Name Present Absent of candidates who are nominated to hold key positions in the Company: Chairman Lucio C. Tan 05/07/2019 12 10 83 with laws and regulations including Related Party Transactions (RPTs). Lucio C. Tan Member Carmen K. Tan 05/07/2019 12 10 83 In 2019, the Committee conducted six (6) meetings, as provided in the table No. of No. of Length of Carmen K. Tan Date of Member Harry C. Tan 05/07/2019 12 11 92 below: Office Name Meetings Meetings % Service in the Appointment Harry C. Tan Member Michael G. Tan 05/07/2019 12 12 100 Held Attended Committee No. of No. of Length of Michael G. Tan Member Juanita T. Tan Lee 05/07/2019 12 12 100 Office Name Date of Meetings Meetings % Service in the Chairman (ED) Lucio C. Tan 05/07/2019 1 1 100 5 years Appointment Committee Lucio K. Tan, Jr.+ Independent Johnip G. Cua 05/07/2019 12 11 92 Held Attended (years) Member (NED) Harry C. Tan 05/07/2019 1 1 100 5 years Vivienne K. Tan Independent Wilfrido E. Sanchez 05/07/2019 12 11 92 Chairman (ID) Johnip G. Cua 05/07/2019 6 6 100 2 Member (ED) Michael G. Tan 05/07/2019 1 1 100 5 years Independent Florencia G. Tarriela 05/07/2019 12 11 92 Member (NED) Lucio K. Tan, Jr.+ 05/07/2019 1 1 100 5 years Juanita T. Tan Lee Member (NED) Lucio K. Tan, Jr.+ 05/07/2019 6 0 0 6 Member (ED) Juanita T. Tan Lee 05/07/2019 1 1 100 7 years Johnip G. Cua Ms. Vivienne K. Tan and Ms. Mary G. Ng were both elected on May 7, 2019. Below table Member (ED) Juanita T. Tan Lee 05/07/2019 6 6 100 6 shows the participation of the newly elected directors of 2019. Member (ID) Wilfrido E. Sanchez 05/07/2019 1 1 100 5 years Mary G. Ng Member (ID) Wilfrido E. Sanchez 05/07/2019 6 6 100 6 + No. of Meetings No. of Deceased on November 11, 2019 Wilfrido E. Sanchez Date of Member (ID) Florencia G. Tarriela 05/07/2019 6 6 100 6 Board Name Election Held during the Meetings % CORPORATE GOVERNANCE COMMITTEE (CGC) Florencia G. Tarriela year (2019) Attended + Deceased on November 11, 2019. In 2019, the Company consistently implemented various activities, projects and + Deceased on November 11, 2019 Member Vivienne K. Tan 05/07/2019 8 8 100* actions necessary to achieve good corporate governance. It updated its Charters For the calendar year 2019, the Committee: Independent Mary G. Ng 05/07/2019 8 6 75* and Manuals to conform to the recommendations set by the SEC and executed its TRAINING OF DIRECTORS * Percentage based on number of meetings attended from date of appointment. • Reviewed and approved the Audit Report and Audited Financial Statements as Related Party Transactions Policy to ensure that all transactions are conducted at The SEC Memorandum Circular No. 20, series of 2013 requires that the officers of and for the period ended December 31, 2018 as examined and presented arm’s length. and directors of the Company attend the Corporate Governance seminars Below table shows the directorship participation of Mr. Lucio K. Tan, Jr. before his untimely by Sycip Gorres Velayo & Co. (“SGV & Co.”) and endorsed them to the Board conducted by the different SEC-accredited institutions within the year to keep death on November 11, 2019. He attended 10 of 11 meetings in his 2019 tenure. The CGC is composed of five (5) directors, namely, Ms. Florencia G. Tarriela as of Directors for approval. themselves up-to-date with the current trends and necessities of being globally its Chairman and Mr. Lucio K. Tan, Jr.+, Mr. Michael G. Tan, Mr. Johnip G. Cua and Mr. Lucio C. Tan III was appointed a Director on December 17, 2019. He attended the competitive. 1 meeting held in his 2019 tenure. • Approved the recommendation to select and appoint the auditing firm of SGV Mr. Wilfrido E. Sanchez, as its members, all eager to bring the Company to its best & Co. as the Company’s External Auditor for the year 2019. potential. Thus, throughout the year, they met thrice to ensure that the Company is On July 29, 2019, the Company conducted a Group-wide Corporate Governance compliant with the recommendations of the SEC. Date of No. of Meetings No. of Seminar for all companies under the Lucio Tan Group at the Grand Ballroom of Board Name Election Held during tenure Meetings % • Reviewed and approved the Unaudited Consolidated Quarterly Financial (2019) Attended To start the year off, the CGC met to be informed of the Company’s standing Century Park Hotel Manila with SGV & Co. as its service provider. The seminar Statements and endorsed the same for notation of the Board and submission + + with regard the ASEAN Scorecard. Through their guidance, the Company has was attended by all the Directors, Officers and essential employees of the Group. Member Lucio K. Tan, Jr. 05/07/2019 11 10 91 to the appropriate government regulatory agencies. achieved a higher rating which proved the Company’s various efforts to become a Among the attendees are as follows: Member Lucio C. Tan III 12/17/2019 1 1 100* world class conglomerate able to keep its brand in a good light and able to ensure + • Reviewed the scope of work and fees of the external auditors, assessed their Deceased on November 11, 2019. the continuous benefits received by its consumers, employees, business partners, Board of Directors * Percentage based on number of meetings attended from date of appointment. independence and effectiveness, and endorsed them to the Board of Directors. stockholders and by the community. Dr. Lucio C. Tan BOARD COMMITTEES • Noted and approved the grant to the President or Chief Financial Officer of the Further to their purpose of assisting the Board into leading the Company to Carmen K. Tan The Company has created four (4) committees to assist the Board in managing the Company the authority to negotiate and sign contracts of audit and non-audit greater heights, a Group-wide Corporate Governance Seminar was held last July Harry C. Tan Company and its subsidiaries. These committees are: (i) the Audit and Risk Management engagements with the External Auditor and endorse the same for approval of 29, 2019 with the firm of SGV & Co. as the service provider. This seminar was Michael G. Tan Committee, (ii) the Executive Committee, (iii) the Nomination and Compensation Committee, the Board. attended by the different directors, officers and employees of the whole Group. + and (iv) the Corporate Governance Committee. Each was created to oversee the proper Lucio K. Tan, Jr. Vivienne K. Tan operations of the Company, including its subsidiaries, and likewise to create the necessary • Reviewed and approved the Internal Audit Reports as well as the Audit Risk Lastly, as the CGC is tasked to oversee the periodic performance evaluation of Juanita T. Tan Lee check and balances to ensure the fair and transparent transactions of the Company. Ratings and Recommendations given as presented by the Internal Auditors. the Board, its committees and the executive management, among others, the Company will conduct a performance evaluation meeting to make sure that a Johnip G. Cua Name Audit and Risk Executive Nomination and Corporate Management Compensation Governance As part of its responsibilities to oversee RPTs, the Committee likewise reviewed Director is capable of fulfilling and has been adequately carrying out his duties and Mary G. Ng responsibilities as such. Wilfrido E. Sanchez Lucio C. Tan C C the RPT Policy of the Company, in compliance with the SEC Memorandum Florencia G. Tarriela Carmen K. Tan Circular No. 10, Series of 2019, otherwise known as the Rules on Material In 2019, the Committee conducted three (3) meetings attended to by majority of Related Party Transactions for Publicly-Listed Companies. its members, including the Chairman, as shown in the table below: Harry C. Tan Board Advisor Michael G. Tan EXECUTIVE COMMITTEE (EXCOM) No. of No. of Length of Peter Y. Ong Date of + Office Name Meetings Meetings % Service in the Lucio K. Tan, Jr. The EXCOM is responsible in ensuring that the Board manages the businesses Appointment Held Attended Committee Officers Lucio C. Tan III and affairs of the Company properly. Their authority, however, is limited to functions not expressly reserved to the Board of Directors under the laws of Chairman (ID) Florencia G. Tarriela 05/07/2019 3 3 100 6 years Vivienne K. Tan Ma. Cecilia L. Pesayco – Corporate Secretary the Philippines, the corporate By-Laws and the Company’s Revised Corporate Member (ED) Michael G. Tan 05/07/2019 3 2 67 6 years Marivic T. Moya – Assistant Corporate Secretary and Compliance Officer Juanita T. Tan Lee Governance Manual. Jose Gabriel D. Olives – Chief Financial Officer and Chief Risk Officer Member (NED) Lucio K. Tan, Jr.+ 05/07/2019 3 1 33 6 years Johnip G. Cua C Nestor C. Mendones – Deputy Chief Financial Officer As part of good governance, the EXCOM is composed of eight (8) directors Member (ID) Johnip G. Cua 05/07/2019 3 3 100 2 years Dioscoro Teodorico L. Lim – Chief Audit Executive Mary G. Ng + namely, Dr. Lucio C. Tan as Chairman and Mr. Harry C. Tan, Mr. Lucio K. Tan, Jr. , Member (ID) Wilfrido E. Sanchez 05/07/2019 3 3 100 6 years Erwin C. Go – Chief Legal Counsel Wilfrido E. Sanchez Mr. Michael G. Tan, Ms. Vivienne K. Tan, Ms. Juanita T. Tan Lee, Mr. Johnip G. Cua +Deceased on November 11, 2019 Florencia G. Tarriela C and Ms. Florencia G. Tarriela as members. +Deceased on November 11, 2019.

30 LT GROUP, INC. 2019 ANNUAL REPORT 31 BANNER CORPORATE GOVERNANCE REPORT YEAR

DISCLOSURE AND TRANSPARENCY In 2020, the Company’s Audited Financial Statement was submitted to the SEC DEALINGS IN SECURITIES As Company practice and in compliance with the recommendations for good UNSTRUCTURED DISCLOSURES and the PSE on March 20, 2020, at least 41 days before the ASM. The Company adopts and strictly enforces a policy against insider trading on corporate governance, the Stockholders are sent Notices to the Annual and In 2019, the Company made the following disclosures to the SEC and the stock transactions by reporting to the SEC and the PSE, within three (3) trading Special Stockholders’ Meeting with sufficient and relevant information, at least Philippine Stock Exchange (PSE) which disclosures were subsequently uploaded The interim and quarterly financial statements and results of operations are days, any acquisition or disposal of the Company shares, or any change in the 30 days before the meetings, to encourage them to personally attend the same. in its website for proper and efficient dissemination of information likewise submitted to the regulators within the prescribed period of 45 days shareholdings therein, of its directors and principal officers. They are reminded that should they be unavailable to personally attend the same, to its Stockholders: from the end of the financial period. Throughout the year, analysts’ briefings they shall have the right to appoint a proxy, in which case, they are informed of the are regularly conducted by the Company to allow the public access to the As provided in the table below, the following are the current shares held by its proper procedure on how to appoint one. • Clarification of News Report: “Tanduay eyes Central Azucarera Don Pedro” periodic financial statements relative to the stock market. During these briefings, Directors: dated March 18, 2019 it is necessary that members of the Management be present to answer any RIGHT TO VOTE questions raised by the analysts. In accordance with the Corporation Code, the Company grants the Stockholders • Press Release: “LTG’s Net Income for 2018 at Php16.19 Billion” dated Indirect shares / % of Name Direct shares Direct shares Through (name Capital the right to vote on corporate acts of fundamental importance, such as, but shall March 18, 2019 All necessary disclosures are uploaded in the Company website as soon as As of end-2018 As of end-2019 not be limited to the election, removal and replacement of Directors and the information becomes available. of record owner) Stock • Declaration of Regular and Special Cash Dividends dated April 10, 2019 changes or amendments made to the Company’s Articles of Incorporation and Lucio C. Tan 2,200 2,200 NIL - By-Laws. OWNERSHIP STRUCTURE • Press Release: “LT Group looks to a better 2019, but will not be an easy task” Carmen K. Tan 2,200 2,200 NIL - dated May 07, 2019 The Company’s outstanding common shares held by record owners of more than Nevertheless, matters submitted to a vote at the ASM, except the election of 5% are as follows: Harry C. Tan 3,300 3,300 NIL - Directors and such other matters where the law requires a different threshold for

• Press Release: “LTG’s Income for the First Quarter of 2019 Increased by 22% Michael G. Tan 1,100 146,100 NIL - approval, shall require the affirmative vote of at least a majority of the Stockholders to Php4.42 Billion” dated May 10, 2019 Title of Percent of present in person or by proxy during the said meeting. Class Name of Record Owner Citizenship No. of Shares Class Lucio K. Tan, Jr.+ 1,100 N.A. NIL - • Clarification of News Report: “LT Group plans $1.5-B LNG plant” dated RIGHT TO INSPECT OR EXAMINE CORPORATE RECORDS Common Tangent Holdings Corporation Filipino 8,046,318,193 74.36% Lucio C. Tan III N.A. 1,100 NIL - June 17, 2019 All Stockholders shall have the right to inspect corporate books and records, Common PCD Nominee Corporation Non-Filipino 1,320,749,751 12.20% Vivienne K. Tan N.A. 1,000 NIL - • Amendment of By-Laws: “Approval of the Amendment of Articles IX and X to including minutes of Board meetings, stock registries, annual reports and financial restore the position of Vice Chairman” dated June 18, 2019 Juanita T. Tan Lee 1,100 1,100 NIL - statements, provided that a written notice is sent to the Corporate Secretary by a Stockholder who has not improperly used any information secured through any BOARD REMUNERATION Johnip G. Cua 1,000 1,000 NIL - • Clarification of News Report: “Absolut in talks with MVP to build waste-to- COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS previous examination of records of the Company before he is allowed to exercise energy facility” dated June 19, 2019 The Company’s Directors receive an allowance of Php30,000.00 a month and a Mary G. Ng N.A. 1,000 NIL - such right. Statement of Changes in Beneficial Ownership of Securities dated per diem of Php25,000.00 for every Board meeting and Php15,000.00 for every Wilfrido E. Sanchez 1,000 1,000 NIL - • Committee meeting attended. RIGHT TO INFORMATION July 08, 2019 Florencia G. Tarriela 1,000 1,000 NIL - Stockholders and the investing public are allowed immediate access to Company information through its website, www.ltg.com.ph. While minority Stockholders Change in Shareholdings of Directors and Principal Officers dated Other than those mentioned above, no other standard arrangements are received TOTAL 14,000 161,000 NIL - • by the Directors of the Company as compensation, directly or indirectly, for are furnished, on a timely and regular basis, with relevant information as may be July 08, 2019 +Deceased on November 11, 2019 any services rendered as such, including any additional amounts payable for required by law. Committee participation or special assignments, for the last completed fiscal year • Change in Directors and/or Officers: Appointment of Mr. Jose Gabriel D. Olives TRADING BLACKOUTS as Chief Risk Officer dated July 09, 2019 and the ensuing year. RIGHT TO DIVIDENDS The Company strictly implements the Blackout Period by timely and constantly The Company declares dividends and the Stockholders shall have the right to • Clarification of News Report: “Roxas agrees to sell sugar mill to Tanduay” dated SUMMARY COMPENSATION TABLE: ANNUAL COMPENSATION reminding its directors, officers, advisers, consultants and employees who receive dividends out of the Unrestricted Retained Earnings of the Company when August 02, 2019 may have knowledge on material facts regarding matters which may affect the its earnings become in excess of 100% of its Paid-in Capital Stock, except: Year Salary Bonus Others* Company, through electronic mail and during board meetings, that they are • Press Release: “LTG’s Attributable Net Income of Php9.24 Billion for the First prohibited from trading on the Company’s shares within the Blackout Period. (a) When justified by definite corporate expansion projects or programs approved Half of 2019 is 3% Higher than 1H18” dated August 13, 2019 Four (4) most highly 2020 8,679,000 737,000 3,074,500 by the Board; compensated executive (Estimate) Under the Company policy, Blackout Periods are observed during the following: • Statement of Changes in Beneficial Ownership of Securities dated officers (see below) (1) for quarterly reports, two weeks before disclosure; and (2) for the year-end (b) When the Company is prohibited under any loan agreement with any financial August 30, 2019 2019 7,890,000 670,000 2,795,000 financials, one month or 30 days before disclosure. institution or creditor, whether local or foreign, from declaring dividends without its consent, and such consent has not been secured; or • Change in Shareholdings of Directors and Principal Officers dated 2018 7,440,000 620,000 2,725,000 Due to the constant reminder of the Corporate Secretary and the discipline and August 30, 2019 All other officers and 2020 2,530,000 210,834 7,166,500 coordination of the persons within the Group, there were no reported instances of (c) When it can be clearly shown that such retention is necessary under special directors as a group (Estimate) any insider trading within the Company in 2019. circumstances in obtaining in the Company, such as when there is a need for • Change in Directors and/or Officers: Death of Mr. Lucio K. Tan, Jr. unnamed special reserve for probable contingencies. dated November 11, 2019 RIGHTS OF STOCKHOLDERS 2019 2,300,000 191,667 6,515,000 It is a fact that a smart investor is one who makes the necessary research, study APPRAISAL RIGHT Press Release: “LTG’s 9M19 Attributable Net Income at Php14.72 Billion, 17% • 2018 2,400,000 200,000 6,410,000 and analysis before jumping into any investment decision since investments tend Stockholders of the Company enjoy the right to dissent and demand payment Higher than 9M18” dated November 13, 2019 *Others – includes per diem of directors to make one feel intimidated and overwhelmed, especially when the establishment of the fair value of his shares in cases of: (1) an amendment to the Articles of Change in Directors and/or Officers: Appointment of Mr. Lucio C. Tan III as in which he will invest in does not have a good reputation. Incorporation will change or restrict the rights of such stockholder or otherwise • The following constitute LTG’s four (4) most highly compensated executive officers Director dated December 17, 2019 extends or shortens the term of corporate existence; (2) sale, lease, exchange, (on a consolidated basis): This is where the benefits of having a good corporate governance comes in. When transfer, mortgage, pledge, or other disposition of all or substantially all of DISCLOSURE AND TIMING a corporation is fair and transparent to the investing public and respects the rights Dr. Lucio C. Tan is the Chairman of the Board of Directors and CEO. the corporate property and assets; (3) merger or consolidation; and (4) the As a publicly listed corporation, it is the responsibility of the Company to of its Stockholders, the investing public becomes more trusting and such company Mr. Michael G. Tan is the President and COO. Company’s decision to invest its funds in another corporation or business or any religiously comply with the rules and regulations of the SEC and PSE to make becomes more attractive in the eyes of investors. Atty. Ma. Cecilia L. Pesayco is the Corporate Secretary. purpose other than its primary purpose. sure that the investing public is immediately informed of any material information Ms. Juanita T. Tan Lee is the Treasurer. With that in mind, the Company encourages Stockholders to participate in its relating to or affecting the Company. business endeavors within and outside the ASM. They are allowed to raise any STAKEHOLDERS RELATIONS EXTERNAL AUDITOR For many years, the Company has operated in a way as to ensure its stockholders, Therefore, as part of good corporate governance, the Company files with the SEC, concerns or give suggestions as to how the Company may improve. The Company maintains the services of the auditing firm of SGV & Co. with Martin employees, customers and trade partners, including itself, would feel secure in immediately after approval or confirmation by the Board, any material information, C. Guantes as the partner-in-charge, as its external auditor since the year 2016. Some of the rights a Stockholder may exercise are as follows: their own rights. Thus, it is necessary that all decisions and transactions made by actions or decisions which may or might affect the Company. These submissions Since their engagement, the External Auditors have consistently provided the either parties be done with fairness and integrity. are subsequently disclosed to the PSE and thereafter uploaded in the Company RIGHT TO PARTICIPATE Company with latest updates on the latest circulars, rulings or revenue regulations website at www.ltg.com.ph for immediate dissemination of information to its from the Bureau of Internal Revenue, as well as updates on Philippine Financial The Company’s Revised Manual on Corporate Governance provides that To show its sincerity, the Company included in its vision and mission all its Stockholders and the investing public. Reporting Standards for the entire group of companies. Stockholders holding at least one-third (1/3) of the subscribed and paid-up partners, ensuring that in all its business decisions, their partners will share its capital stock of Company shall have (1) the right to call for a Special Stockholders’ success and likewise benefit from its growth. For the past years, it has been Company practice and policy to immediately, and AUDIT AND OTHER FEES Meeting by written notice to the Corporate Secretary at least 90 days before the when necessary, disclose its financial condition, investments and acquisitions, The Company incurred audit fees of Php1,200,000 for the year 2019, suggested date of the meeting; and (2) the right to propose items in the agenda STOCKHOLDERS’ MEETING AND VOTING PROCEDURES if any. The disclosures would include the uploading in the Company’s website Php300,000 less than that of last year’s (2018) audit fees at Php1,500,000. of the Stockholders’ Meeting, provided the items are for legitimate business As part of Company practice, and in compliance with the recommendations of the within five (5) days from the date of the ASM the Minutes thereof and the Audited For its quarterly review of financial statements for the years 2019 and 2018, the purposes and written notice to request inclusion of the same is sent to the SEC, the Stockholders receive a copy of the Notice of the Stockholders’ Meeting Financial Statements (SEC 17-A) for the year which should be submitted to Company incurred nil and Php1,100,000, respectively. Corporate Secretary at least 90 days before the date of the meeting. at least 30 days prior to the date set for the said meeting. the SEC and PSE at least two (2) months before the ASM is held.

32 LT GROUP, INC. 2019 ANNUAL REPORT 33 BANNER CORPORATE GOVERNANCE REPORT YEAR

DIVIDENDS LTG conducts meetings regularly with investors and analysts to keep them In 2019, the Company declared and distributed Regular Cash Dividend of updated on developments with the Company and its subsidiaries. LTG arranges Php0.15 per share and Special Cash Dividend of Php0.15 per share to all its conference calls and plant visits, and participates in non-deal roadshows and Stockholders as of April 29, 2019, in compliance with a 20% dividend payout conferences in various locations arranged by several stock brokerages. The policy. Company also communicates through emails and telephone calls. Further to its pursuit of good corporate governance, the Company strictly In 2019, LTG attended seven (7) conferences with four (4) different brokers in implements its dividend policy to distribute the Dividends within 30 days from Manila (2), Singapore (4) and Hong Kong (1). The Company accommodates the time it is approved and declared, and the Stockholders were paid on May 9, requests for visits to its subsidiaries’ facilities from groups of sell-side and buy- 2019, twenty-nine (29) days after it was approved by the Board and disclosed side analysts. However, in 2019, there were no requests. to the PSE. During the 2019 calendar year, LTG conducted four (4) Analysts’ Briefings jointly EMPLOYEE RELATIONS with subsidiary Philippine National Bank (PNB) that were attended by analysts “To win in the marketplace, you must from different brokerages and analysts of local and foreign funds. first win in the workplace.” • Full Year 2018 Results on March 18, 2019 – Doug Conant, CEO of Campbell’s Soup. • First Quarter 2019 Results on May 10, 2019 It is a fact that when employees have a good relationship with the company • First Half 2019 Results on August 13, 2019 where they are employed, they tend to produce better outputs. Hence, the • Nine Months 2019 Results on November 13, 2019 Company makes sure to include the safety, welfare and career development of The briefing for Full Year 2019 Results was cancelled as the Government its employees in its operations, knowing that it is also for its benefit when its declared an Enhanced Community Quarantine in Metro Manila starting March employees feel secured and appreciated. Open lines of communications, wide 17, 2020 due to the coronavirus disease 2019 pandemic. LTG disclosed Full health insurance for its employees, as well as their children and beneficiaries, Year 2019 Results on March 19, 2020 and distributed what should have been and scholarship opportunities are likewise provided for by the Company. the presentation materials via email and WhatsApp. Aside from all these, the Code of Business Conduct and Ethics, with emphasis LTG disclosed the schedule of these briefings to the PSE at least a week before on the “Whistle-Blower Policy”, is strictly observed and implemented all the briefing date. throughout the Company, including its subsidiaries so as to protect itself, its partners and employees from any possible yet unforeseen harm or damage. Regular press releases are disclosed to the PSE and SEC and distributed to the INVESTOR RELATIONS media, on quarterly earnings results as well as events that may have a significant The Company maintains open communications with the investing community impact on the operations of the Company and its subsidiaries. to promote greater understanding of the Company. Reports to the SEC and After the Annual Stockholders’ Meeting on May 7, 2019, a press briefing was PSE are disclosed on time, and are available for viewing and downloading in the conducted where members of the media had access to the President and Chief Company’s website, ltg.com.ph. There is also a dedicated Investor Relations Operating Officer, as well as the Chief Financial Officer. Officer whose contact details are available in the website.

In 2019, the Management sent the necessary Notices to the Stockholders beginning April 2, 2019 or more than 30 days prior to the meeting set on May 7, 2019. To allow the Stockholders the opportunity to be informed of the actions and decisions made by the Company within the year, among others, the Notices sent to the Stockholders include the Agenda for the meeting. Moreover, as recommended by the SEC, a statement explaining that a Stockholder is allowed a Proxy should he/she be unavailable to personally attend the Meeting and the process for its application is included in said Notice. To ensure that the Stockholders are properly informed of the status and actions of the Company, are given the opportunity to evaluate the performance of the Board and of Management, and are able to ask questions pertaining to the Company, a copy of the Definitive Information Statement is attached to the Notices sent to them. Moreover, in proposing nominees to the Board, the Stockholders are encouraged to send their list to the office of the Corporate Secretary for proper consideration by the Nomination and Compensation Committee prior to its meeting held not later than the end of April. Each outstanding common share entitles the registered Stockholders to one (1) vote.

34 LT GROUP, INC. 2019 ANNUAL REPORT 35 BANNER CORPORATE SOCIAL RESPONSIBILITY YEAR

HEALTH SERVICES SOCIAL WELFARE Tan Yan Kee Asia Brewery Monthly Medical Forum Training in Good Governance and Solid Waste Management Foundation, Inc. The companies under LT Group, Inc. and other companies that are majority-owned by the Tan family conduct most of their Corporate Social Responsibility (CSR) activities under the Tan Yan Kee Foundation, Inc. (TYKFI). Dr. Lucio C. Tan and his siblings established TYKFI in 1986. The Foundation is named in honor of the late Tan patriarch and is governed by a 15-member Board. The Foundation and its partners pursue projects that In April, TYKFI sponsored the training of seven local government officials and TYKFI continues to hold the monthly Asia Brewery Medical Forum in six teachers on good governance and solid waste management. The training focus on four advocacies: Education, Health Services, cooperation with the Association of Asia Brewery Medical Specialty Scholars. was conducted along a boardwalk in Boracay where TYKFI has a Roots for Social Welfare and the Environment. These forums provide the public with better health information as well as Boracay Project in partnership with Tanduay Distillers, Inc., the Department of information on the latest treatment options. Some of Environment and Natural Resources and the local government of Barangay the topics discussed in 2019 include eye conditions, Manoc-Manoc. Aside from a clean-up drive where almost 50 sacks of gastrointestinal tract, common childhood diseases, kidneys garbage was collected, the participants also planted api-api, a local mangrove and women’s health. Doctors who are Asia Brewery Medical species. Scholars also provided free consultations during the forums. PMFTC President Denis Gorkun hands over the annual donation to TYKFI Chairman Dr. Lucio C. Tan and Trustee Carmen K. Tan

EDUCATION TYKFI-Asia Brewery, Inc. (ABI) Medical Specialty St. Teresita’s Academy Scholars from Farming Families Brigada Eskwela 2019 Scholarship Program ENVIRONMENT Dr. Andrei Paolo S. Angbue-Te completed a year of Oculoplastic training at the Tan Tock Seng Hospital in Singapore. The Lucio C. Tan Dr. Noruel Gerard A. Salvador completed his Legacy Forest Project fellowship training on Hepato-Pancreato-Bilary Surgery and Liver Transplantation at Kaohsiung Started in 2014, over 600 hectares have Chang Gung Memorial Hospital in Kaohsiung been planted in the University of the City, . Philippines’ (UP) Land Grant in Laguna and Dr. Andrei Paolo S. Angbue-Te Quezon while close to 300 hectares were planted in Carranglan, Nueva Ecija. Aside Dr. Janet Wenceslao-Elcano finished her one- from providing indigenous people jobs by year training in Electrophysiology at the Yonsei planting trees, the project also provides University Health System in Seoul, South Korea. livelihood training programs by teaching TYKFI has 150 scholars from grades 7 to 12 in Sta. TYKFI donated materials to repair three classrooms at the scientific ways of producing vegetables Dr. Rosemarylin L. Or completed a two-year Teresita’s Academy in Aritao, Nueva Vizcaya. Nagtenga Elementary School in Sta. Cruz, Ilocos Sur. (including organic) and ornamental plants. clinical fellowship in Neuro-Oncology at the University of Toronto-Princess Margaret Cancer In April 2019, more than 150 students from the UP – Los Baños visited Center in Canada. the project’s Nueva Ecija site and learned about the goals, experiences and sustainability efforts of the project. Dr. Giselle L. Gotamco completed On its fifth year, the project has a one-year fellowship Basic Cosmetology University of the East (UE) – TYKFI Scholarship Program covered 787 hectares of the on Neuro-Otology Training: Ganda Mo, 930 hectares earmarked for and Audiology For school year 2019-2020, the UE-TYKFI scholarship program has 123 reforestation and protection in Hanapbuhay Ko (Your at the Taichung Tzu Chi scholars, including 47 new scholars. TYKFI Chairman Dr. Lucio C. Tan Barangay R.A. Padilla, Carranglan, General Hospital. Beauty, My Livelihood) welcomed the students and their parents during the annual Scholars’ Nueva Ecija. In 2019, 198,040 Recognition Day on August 20, 2019. seedlings were grown, ready for In February, housewives from Dr. Janet Wenceslao-Elcano planting during the rainy season farming communities in the towns of the next year. of Kayapa and Sta. Fe, Nueva Vizcaya and Sta. Cruz, Ilocos Sur attended basic cosmetology training in partnership with Ang Hortaleza Foundation.

36 LT GROUP, INC. 2019 ANNUAL REPORT 37 BANNER CORPORATE SOCIAL RESPONSIBILITY YEAR

ASIA BREWERY, INC.

Bantay Bata Sports Education is Adaptation Help Flows for Mindanao Community Tournament Program Earthquake Victims Outreach Program On September 13, 2019, In October 2019, Summit Natural In September 2019, a strong earthquake On February 23, 2019, a sports festival was held Drinking Water partnered with hit the parts of Mindanao. ABI, through Asia Brewery, Inc. (ABI) in the ABI Multi-Purpose World Wide Fund for Nature disaster relief partners such as the and subsidiaries joined Covered Court and (WWF) Philippines to increase Philippine Red Cross and television the Community Outreach was attended by ABI environmental awareness to school networks distributed Absolute bottled Program (COP) initiated Cabuyao, Head Office communities on importance of water to the affected areas. Meanwhile, by Bantay Bata 163 and Pasig sales office proper waste segregation. Training for teachers and program sessions were in November 2019, an Laguna Chapter at employees. The purpose conducted at Molino Elementary School, Panipuan Elementary School and Agua Vida Mobile Water Southville IV National of this is to develop Baliti Elementary School. Station was deployed to High School in Sta. Rosa, appreciation for sportsmanship and foster camaraderie Kidapawan where people Laguna. The COP catered and teamwork through healthy competition among the ABI were provided access to 150 families of three or employees. clean and potable water. 450 individuals. Part of this COP was a medical mission, parenting seminar, children’s advocacy games and ABI’s Other CSR Programs gift giving. ABI donated a total of 142 boxes of ABI products such as Absolute, Nestea, Vitamilk and Creamy Delight. The Energy of Summit Partnership the Community with Philippine Olympic – Cabuyao Committee (POC) Brigada and Balik Environmental Eskwela Donation Drive Police Since 2016, Summit Natural Drinking Water has been On June 13, 2019, ABI was invited supporting the Philippine Olympic This is an annual activity A half-day event for the by the Children’s Joy Foundation Inc. Committee (POC) and providing wherein ABI donates products Environmental Police was (CJFI) for a Dinner for a Cause held at Filipino athletes with proper like Absolute, Creamy Delight, organized and sponsored a Chinese restaurant in Calamba City, hydration. In 2019, Summit Nestea, Cobra and Vitamilk to by ABI subsidiary, Laguna. The said event was to raise provided Php500,000 worth of students of selected schools. Interbev Philippines, Inc. money to help the foundation’s goal to product support. During the May 2019 Brigada (IPI) on September 30, send 3 million children to school. Eskwela, ABI donated to 9 2019. Aside from games To further extend support, Summit schools located in Cabuyao (5) and , an ABI EHS Team representative imparted Meanwhile, on July 27, ABI subsidiary, AB Nutribev Corp. was a sponsor of launched the “Thirst For The Win” and Sta. Rosa (3), Laguna, and knowledge about Waste Segregation and Management to CJFI’s Nutrition Month celebration with the theme Kumain ng Wasto at Maging campaign with national athlete in Alabang (1). the Environmental Police. Cobra products and promotional Aktibo, Push Natin ‘To! in Canlubang and Calamba, Laguna where Vitamilk and Hidilyn Diaz as the face of Summit’s official campaign, as a items such as shirts and tumblers were given while some other ABI products were given aside from the hygiene kits and snacks. way to rally support for the National Athletes for the 30th Also, on August 20, 2019 during Disaster Resilience Month, items like arm sleeves, gloves, masks, towels and boots Southeast Asian Games held in December 2019. an ABI’s Environment, Health and Safety (EHS) Team were donated. Vital signs check-up, medicine and massage On September 20, 2019, as part of Grandparents’ Month Celebration, ABI representative conducted a discussion with the students on were also provided. participated in the “Share Pure Love with the Most Absolute Grandparents” preparedness for fire, earthquake, typhoon and floods. ABI program at Bahay ni Maria in Calamba and Mary Mother of Mercy Home for products were also given along with umbrellas, raincoats the Abandoned Elderly and Children with Special Needs in San Pedro, Laguna. and hygiene products. Vitamilk School ABI products and individual hygiene kits were distributed. The two institutions Absolute were also given a month’s supply of Absolute Water, home supplies and Caravan grocery items. Clean-up Activities Mommy Vitamilk launched its Welfare Month On February 16, 2019, advocacy, Kalusugan employees in ABI’s El Para sa Kinabukasan to This is an annual Salvador Plant participated support the Department activity where ABI’s in a region wide clean-up of Education and Absolute Distilled activity held in Barangay Department of Health’s Drinking Water Amoros, El Salvador, initiatives in promoting supports first-time Misamis Oriental. ABI also a culture of health and mothers and their Recognition for CSR Activities participated in the coastal wellness in school newborns as they clean-up in Cagayan de communities participated go through postnatal In 2019, ABI was recognized by Oro on September 21, by 100 schools in South Luzon and Central Luzon. The care and wellness. several institutions for its support and 2019. school caravan provides educational activities and insightful This year, ABI partnered with 32 hospitals commitment in Community Relations discussions to students, teachers and institutions in Luzon and the Visayas Program. One such recognition was and parents. and distributed 3,500 mommy wellness kits. on August 8, 2019 from the Armed Forces of the Philippines (AFP) – Office of Chief Dental Service recognized ABI’s generous support rendered during the AFP Dental Service Fun Run, AFP Dental Service Sports Fest, AFP Dental Service First Anniversary Ball and 65th AFP Dental Service Founding Anniversary.

38 LT GROUP, INC. 2019 ANNUAL REPORT 39 BANNER CORPORATE SOCIAL RESPONSIBILITY YEAR

ETON PROPERTIES PHILIPPINES, INC.

Eton and TYKFI launch Masaganang Palayan Permanent Housing for Families Refurbished Classrooms in Tawi-Tawi Mingo Meals (Prosperous Ricefield) of TYKFI Scholars On November 28, 2019, PMFTC in partnership with the Negrense Volunteers for Change Foundation, Inc. (NVC), started a supplemental feeding program for 400 children in the Municipality of Carles in Iloilo Province. In April 2019, PMFTC’s CSR Program, NVC manufactures Mingo Embrace, together with Joint Task Force- meals, a nutritious instant Eton sponsored housing units for indigent families of Tawi-Tawi, Marine Battalion Landing complementary food made of rice, mung beans and moringa. Mingo meals farmers in Aritao and Sta. Fe, Nueva Vizcaya. The donation Team-9 and the 39th Marine Company refurbished classrooms in the Datu provides nutritional support and help the children reach normal nutritional was coursed through TYKFI. In July, four families, with Dawila Primary School, located in the farthest sitio (part of status. Children enrolled in the program are weighed at the start and are children who are scholars of TYKFI at the Saint Teresita’s a barangay, the smallest administrative unit) of Sitangkal in monitored monthly throughout the Academy, received their new houses from Eton. the Province of Tawi-Tawi. The classrooms were painted program’s duration. Field officers teach and windows, ceilings, roofs, fence and blackboards were parents the importance of proper nutrition, In December, Eton and TYKFI launched the Masaganang repaired. This benefited 142 school children and 5 teachers. give instructions for preparing Mingo and Palayan Project where free rice seeds and fertilizer were also go house-to-house to check on the given to 18 farmers in Comon and Tabueng Aritao, Nueva beneficiaries. Vizcaya. Each farmer received three to five sacks of hybrid seeds. Educational Materials for School in Zamboanga Disaster Relief PMFTC INC. Multi-Purpose shelter and Fish Dryers for Fisherfolk Livelihood Project in on Salted Egg Production On May 27, 2019, PMFTC turned over to the Batanes Local Government Unit the multi-purpose shelter and fish dryers in Mavulis Island for the use of the On October 18, 2019, ten Ivatan fisherfolk. women of Buhanginan, Nagcarlan in the province of Laguna, received training and starter kits on salted egg production. Their produce from their small- scale business is purchased by local fast food chains. In October 2019, PMFTC donated educational materials In November 2019, PMFTC provided and conducted a short training on hygiene to 124 students relief assistance to victims of earthquakes. on Simariki, a small island a few minutes by boat from the In the northern province of Batanes, center of Zamboanga City. This was one of the places 3,200 individuals were given aid, while where the Zamboanga Siege in September 2013 took place. in different parts of Mindanao, 22,568 individuals were helped. Training on Sustainable World Clean-Up Day Global Equal Salary Certification Fishing Techniques and On September 21-22, 2019, 247 In 2019, Philip Morris International became employees of PMFTC participated in the first multinational consumer goods Fishing Boats the World Clean-Up Day in Taguig company to be awarded the distinction City (Metro Manila), Cebu City of not having gender-based bias in terms Livelihood Project for Thirty fishermen and City. A total of salary distribution. PMFTC got its from Marantao, in Indigenous People in of 62,078 kilograms of litter was certification in 2019. the Province of Batiawan, Zambales collected. Lanao del Sur, who were displaced by In September 2019, the the Marawi Seige, Samahang Mangagawa at received training on fish production and sustainable Mambubukid ng Barangay fishing techniques, fish processing and environmental Batiawan (Organization of production. Materials needed to build non-motorized boats Workers and Farmers of Barangay Batiawan), a local were given and the boats were awarded to the fishermen organization of farmers from indigenous peoples, received in October 2019. goats from PMFTC for their livelihood. This benefited 100 families.

40 LT GROUP, INC. 2019 ANNUAL REPORT 41 BANNER CORPORATE SOCIAL RESPONSIBILITY YEAR

PHILIPPINE NATIONAL BANK

Sustainable Lifestyle Fair Scholarships for Ateneo de Manila University Fitness Program Zumba for Workers’ Health and Wellness and Health Bulletins

At PNB’s Head Office, physical fitness activities are offered to employees year-round. These include Mixed Martial Arts, Dance and Pilates, Yoga and Zumba.

Moreover, monthly email blasts are sent to employees to increase health awareness, share tips and encourage employees to live a healthy lifestyle.

In November, a one-day holistic fair was held at the Head Office where topics on physical, social, spiritual and financial health were discussed. This was participated by over 50 A three-day eco-bazaar featuring sustainably employees. sourced products and organic food items In November, PNB donated Php5 million to the Gov. Amando was held on November 23 to 25, 2019 at M. Tetangco Scholarship Fund of the Ateneo Scholarship Since August of 2018, employees in the Cabuyao plant have the Head Office premises. Sessions on Foundation, Inc. This is to support the education of in-need been joining the Zumba hour everyday at noontime for better climate change and resilient communities, students taking business-related courses at the Ateneo de health and wellness. zero waste lifestyle and environment- Manila University. TANDUAY DISTILLERS, INC. conscious living were also provided. River Clean-Ups

Financial Literacy and Donation of Decommissioned Desktop PCs On April 26, 2019, Financial Wellness employees of the Cabuyao, Lecture on Seminars Laguna plant participated in the clean-up of the Cardiovascular In June, August, May, September, Salanglanka River, in Diseases October and November, the Cabuyao, Laguna, with the In August 2019, Bank conducted Financial Cabuyao River Protection TDI’s Cabuyao plant Literacy Seminars for students, Advocates (CaRPA) and had a lecture on teachers, parents and Overseas the City Environment and cardiovascular diseases Filipino Workers (OFWs). The Natural Resources Office and stress and stress participants were taught the (CENRO). management. 25 basics of money management, persons attended. specifically identifying needs On June 28, 2019, TDI and wants, budgeting, spending employees from the Cabuyao plant again participated and saving where applicable bank products and services were also presented. in a similar activity, for the Banlic River. An environment In April and December, PNB donated 170 decommissioned Desktop Personal awareness lecture was conducted. These were conducted in various parts of Metro Manila, Cainta, Rizal. Computers to ACTION, Inc. in Olongapo City, H.O.U.S.E. Foundation and the Meanwhile, Financial Wellness Seminars were conducted for corporate clients Pentecostal Missionary of Christ in Cainta, Rizal. in Iloilo and OFWs in Japan and Singapore. ACTION (A Child’s Trust is Ours to Nurture) is an organization that provides On October 24, 2019, a seminar on Financial Literacy was educational materials for children and facilitates scholarship conducted for 20 members of the Barangay Association of programs for impoverished communities in Zambales Treasurers of the Municipality of Aritao in Nueva Vizcaya. Province in Central Luzon. H.O.U.S.E (Helping OUrselves This was conducted in cooperation with the Tan Yan Kee through Sustainable Enterprises) educates, employs and Lecture on Environment Preservation Adopt-an-Estero Foundation, Inc. empowers at risk youth to give them a second start in life. (Estuary)

TDI’s Murcia, Negros Occidental plant conducts a quarterly Partnership Relief Operations for clean-up of its adopted Cabungan- with Philippine Mindanao Earthquake Victims an Creek. In 2019, Red Cross the clean-ups were On December 21, 2019, PNB and conducted on TYKFI conducted relief operations for PNB partnered with March 24, June 23, victims of the earthquakes in Digos City, the Philippine Red September 29 and Davao del Sur and Kidapawan City in Cross for the training November 30. of employees on North Cotabato. Around a thousand families were given assistance. Standard First Aid and Basic Life Support, Meanwhile, in January, Absolut Distillers, Inc. as well as on Disaster Preparedness. In had a clean-up activity of the Palico-Lian Meanwhile, the bank launched “A Boxful of Love” in October, PNB donated Php5 million to Red River in the Province of Batangas. Cross for two ambulances in Visayas and November, a call for in-kind donations from bank employees TDI sponsored a lecture on the effects of environment Mindanao. for the victims of the Mindanao earthquake. preservation and degradation of livelihood in October for farmers, fishermen and local government officials in Barangay Mamatid in Cabuyao, Laguna. Around 35 people attended the lecture.

42 LT GROUP, INC. 2019 ANNUAL REPORT 43 BANNER CORPORATE SOCIAL RESPONSIBILITY YEAR

TANDUAY DISTILLERS, INC.

Voluntary Bloodletting Program for Fisherfolk Sports Development Tilapia Fingerlings Christmas Gift Giving Program On December 16, 2019, 21 employees On August 6, 2019, Absolut Seventy bags of foodstuff of TDI’s plant in Murcia, Negros Distillers, Inc. provided livelihood TDI and Absolut Distillers, Inc. were distributed to residents Occidental donated blood for the assistance to fishermen working sponsor basketball teams in Lian near the plant. Corazon Locsin Montelibano Memorial along the Palico – Lian River and other towns. Regional hospital. This was in in Barangay Bucana, Nasugbu, participation with the Coast Guard. Batangas.

Area Clean-Up Brigada Eskwela On the Job Training (OJT) Ten thousand tilapia fingerlings were dispersed in the Palico Lian River in Batangas on September 25, 2019. This was a project of Absolut Distillers, Inc. Absolut Distillers, Inc. and government agencies – the Bureau of Fisheries and allows students from Aquatic Resources Region 4-A, City Environment and various schools to get Natural Resources Office (CENRO) of Calaca, the Lian local OJT. Partner schools government unit (LGU) and Municipality Environment and are the Nicolites Natural Resources Office (MENRO). Montessori School, Lian Senior High School, Lian Institute, STI Balayan Campus, Batangas State University, Technological Institue of the Philippines, Adamson University and the University of Negros Occidental Recoletos.

Employees of TDI’s El Salvador Plant in Misamis Oriental conducted a clean-up round the plant’s vicinity on September Perimeter Fence for Police Station Plant Tours for Students 20, 2019. They were able to collect 8 bags or 92 kilograms For the Brigada Eskwela activities in May at the Malaruhatan of trash. Elementary School and Lian National High School in Batangas, Absolut Distillers, Inc. donated cleaning materials, brooms, rags, garbage bags and paint. Employees also joined in cleaning.

Lian Town Fiesta, Beauty Pageant License to Own and Possess Firearms (LTOPF) Caravan

Absolut Distillers, Inc. provided materials and manpower Students from Adamson University, Bicol University, University of the for the construction of the perimeter fence around the Philippines (UP) - Diliman Campus, ALCHEMES (organization of chemical Lian Municipal Police Station. It was completed on engineering majors), BIOTECH (organization of molecular November 4, 2019. biology and biotechnology students) and the Philippine Institute of Chemical Engineers (PiChe) have visited Absolut Distillers, Inc. to broaden their knowledge and see the actual application of what they learn in school. TDI subsidiary, Absolut Distillers, Inc. donated and installed banderitas (small flags strung up during fiestas) and paid for a band during the June 24, 2019 Some staff of Absolut Distillers, Inc. helped during the 2-day fiesta of Lian town in Batangas. event in September, in cooperation with the Philippine National Police (PNP) and the local government unit of Lian, In April 2019, the Company sponsored the town’s beauty pageant. Batangas. Some equipment owned by Absolut Distillers, Inc. were also used during the event.

44 LT GROUP, INC. 2019 ANNUAL REPORT 45 BANNER SUSTAINABILITY YEAR

ASIA BREWERY, INC.

Cabuyao River Protection Advocates (CaRPA) Activities Environment, Health and Elimination of Single Use Plastic We Care: Mission Zero Level Up, Safety (EHS) Summit 2019 I-Care, 1001 Small Interventions Cabuyao River Protection In line with the Company’s goal of PMFTC has an ongoing Advocates (CaRPA) instilling and strengthening an EHS program in its plants where is a multi-sectoral culture of all plants, EHS Summit the aim is to achieve a group, with a 2019 was arranged. EHS Summit with culture of safety and have no representative of this year’s theme “Go the Extra Mile: incidents of accidents. ABI currently as Taking EHS Beyond Compliance” was President. As an successfully celebrated last September The Company also has active member, ABI 24-27, 2019 at ABI Complex, Cabuyao I-Care, a behavior observation aims to protect the Plant. program that enables rivers within the all employees to provide Cabuyao area where The EHS Summit was participated feedback to anyone in the organization, reminding them to always be safe. ABI’s effluents are widely by all EHS Officers from ABI- discharged. Cabuyao, IPI-Cabuyao, ABI-Sta. Rosa, Another program is the 1001 Small PWI, ABN, ABI-El Salvador, IPI-Davao, Interventions where simple yet impactful On April 26, 2019, CaRPA conducted a clean-up, dredging and desilting of and IPI-Pampanga plants. interventions are done to encourage Tiwaytiway-Salanglanka River, one of the most economically significant rivers employees to be safe all the time. in Cabuyao. A community clean-up was also conducted on June 28, 2019 At the Batangas and Marikina Plants, PMFTC is on the road to the elimination which was followed by an environmental education program on proper waste of single-use plastic waste in these facilities. Activities include the management, water scarcity, household sanitation and hygiene for the local implementation of the EcoBricks Program, raising awareness on the impact community. On August 20, 2019, CaRPA held a Lakbay Aral-Benchmarking of single-use plastic and the phase-out of single-use plastic. Activity at the Pasig River Rehabilitation Commission.

Department of Energy Sustainable Education and Public Awareness (SEPA)

Plant Clean-up Drive Activities On September 7, 2019, ABI Reduction of Waste to Landfills Cigarette Butt Litter Collection Program conducted a cleaning activity of the Bottled Water Plant 2 Areas in For two months in the 2nd quarter Barangay Malitlit, Sta. Rosa City. On October 4, 2019, ABI employees attended the training conducted by of 2019, PMFTC tested a cigarette On October 19, 2019, cleaning and Department of Energy on updates on the development program of the butt litter collection program for adult segregation of accumulated waste country’s downstream natural gas industry and awareness campaign on smokers in two test communities in outside the plant was conducted. natural gas being a new sector in energy. This promotes Marikina City and Quezon City, both continuous learning and improvement among ABI in Metro Manila. The target is to have employees. a nationwide expansion in 2020. The litter will be upcycled into fillers for cement or additives for energy production.

PMFTC INC.

Reduction of C02 Emissions with Equipment Efficiency and Change PMFTC has a Disposal Ratio Reduction Program where the target is to of Energy Source have zero non-mandated waste for landfills. These were implemented in the Marikina and Batangas factories starting 2017 where waste is composted At the PMFTC Batangas plant. four two-ton modular or used for energy and has since reduced the amount of waste disposed in boiler were installed that will maintain operating landfills by 90%. efficiency of 95% at any given demand from production. This will reduce C02 emissions by 606 tons annually. Coal-Fired Boiler

Meanwhile at the Marikina plant, the coal-fired boiler was decommissioned and replaced by a fuel-fired boiler. This will reduce reduce C02 emissions by 334 tons annually.

Fuel-Fired Boiler

46 LT GROUP, INC. 2019 ANNUAL REPORT 47 BANNER SUSTAINABILITY YEAR

PHILIPPINE NATIONAL BANK

Green Loans Energy Conservation Project PLANET EDGE Certification (Protect, Love The Bank reduced its energy consumption by replacing And Nurture the conventional light fixtures to Environment Together) LED, reducing the number of lights turned on after office This is an internal hours in parking and common environmental awareness and areas of the head office building. carbon footprint reduction At the Makati Center, the six old campaign among bank traditional elevators are being employees focusing on energy replaced with more energy efficiency, water conservation, efficient models and the conventional air conditioning units banning single-use plastic and are being replaced with inverter-type units. These activities proper waste management. are estimated to result in electricity savings of Php6.7 million The campaign was formally per year. launched in July 2019 during the Bank’s 103rd anniversary.

PNB has allotted Php215.2 billion for loans to eco-friendly and sustainable businesses and projects such as food manufacturing, agricultural production, In August 2019, PNB initiated through the Philippine Business Coalition for water distribution and supply, energy generation and distribution, operation Water Conservation Initiatives Women Empowerment the road towards the EDGE (Economic Dividends of toll roads and bridges, telecommunications, responsible packaging and for Gender Equality) Certification of the bank. The EDGE Certification is the construction of green buildings. To reduce water consumption, leading global assessment methodology and business certification standard the volume of water needed for gender equality. for toilet and urinal flushing was reduced; and leaking or defective pipes, fittings, valves and flushers were replaced or fixed. An estimated Php356,000 was reduced from the water consumption of the Head Office and the Makati Center in 2019. TANDUAY DISTILLERS, INC. Evaporation Plant Lessens Use of Water Solar Panels at the Warehouse and Gym

Solar panels were installed on the roof of TDI’s building in Quiapo, Manila. A Earth Hour total of capacity of 330 kilowatt “peak” (kWp) was installed, 232 kWp at the warehouse and 98 kWp at the gym. At 65% utilization for six hours a day, this PNB donated Php50,000 to is estimated to translate of savings of 38.6 thousand kilowatt hours per month. the World Wide Fund (WWF) – Philippines for the Earth Hour Kick-Off on March 30 in Circuit Makati. The Bank also initiated a call tree advisory among employees to encourage participation in the symbolic 60-minute switch off of non- essential lights and appliances in their homes.

The evaporation plant decreases the volume of distillery effluent by up to 80%, while the remaining product condensate can be reused in the fermentation process, lessening groundwater extraction.

48 LT GROUP, INC. 2019 ANNUAL REPORT 49 INDEPENDENT AUDITOR’S REPORT

:`*PW.VYYLZ=LSH`V *V ;LS!  )6(79*9LN5V (`HSH(]LU\L -H_!    6J[VILY ]HSPK\U[PS(\N\Z[ 4HRH[P*P[` L`JVTWO :,*(JJYLKP[H[PVU5V-9.YV\W( 7OPSPWWPULZ 5V]LTILY ]HSPK\U[PS5V]LTILY STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

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MVYLHJOVM[OL[OYLL`LHYZPU[OLWLYPVKLUKLK+LJLTILY  Audit Response PU HJJVYKHUJL ^P[O 7OPSPWWPUL -PUHUJPHS 9LWVY[PUN :[HUKHYKZ >L VI[HPULK HU \UKLYZ[HUKPUN VM [OL .YV\W»Z WYVJLZZ PU 7-9:Z PTWSLTLU[PUN [OL UL^ Z[HUKHYK PUJS\KPUN [OL KL[LYTPUH[PVU VM [OL WVW\SH[PVU VM [OL SLHZL JVU[YHJ[Z JV]LYLK I` 7-9:  [OL Basis for Opinion HWWSPJH[PVU VM [OL ZOVY[[LYT HUK SV^]HS\L HZZL[Z L_LTW[PVUZ [OL ZLSLJ[PVU VM [OL [YHUZP[PVU HWWYVHJO HUK HU` LSLJ[PVU VM >LJVUK\J[LKV\YH\KP[ZPUHJJVYKHUJL^P[O7OPSPWWPUL:[HUKHYKZ H]HPSHISLWYHJ[PJHSL_WLKPLU[Z>L[LZ[LK[OLJVTWSL[LULZZVM[OL Lucio C. Tan VU (\KP[PUN 7:(Z  6\Y YLZWVUZPIPSP[PLZ \UKLY [OVZL Z[HUKHYKZ WVW\SH[PVUVMSLHZLJVU[YHJ[ZI`JVTWHYPUN[OLU\TILYVMSLHZLZ *OHPYTHUHUK*OPLM,_LJ\[P]L6ѝJLY HYLM\Y[OLYKLZJYPILKPU[OLAuditor’s Responsibilities for the Audit WLYVWLYH[PVUHSYLWVY[HNHPUZ[[OLSLHZLJVU[YHJ[KH[HIHZL6UH of the Consolidated Financial Statements ZLJ[PVU VM V\Y YLWVY[ [LZ[IHZPZ^LPUZWLJ[LKSLHZLHNYLLTLU[ZPLSLHZLHNYLLTLU[Z >L HYL PUKLWLUKLU[ VM [OL .YV\W PU HJJVYKHUJL ^P[O [OL *VKL L_PZ[PUNWYPVY[V[OLHKVW[PVUVM7-9:HUKUL^SLHZLHNYLLTLU[Z VM,[OPJZMVY7YVMLZZPVUHS(JJV\U[HU[ZPU[OL7OPSPWWPULZ*VKLVM MYVT[OLJVU[YHJ[KH[HIHZLPKLU[PÄLK[OLPYJVU[YHJ[\HS[LYTZHUK ,[OPJZ[VNL[OLY^P[O[OLL[OPJHSYLX\PYLTLU[Z[OH[HYLYLSL]HU[[V JVUKP[PVUZ HUK [YHJLK [OLZL JVU[YHJ[\HS [LYTZ HUK JVUKP[PVUZ V\YH\KP[VM[OLJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[ZPU[OL7OPSPWWPULZ [V[OLSLHZLJHSJ\SH[PVUWYLWHYLKI`THUHNLTLU[^OPJOJV]LYZ HUK^LOH]LM\SÄSSLKV\YV[OLYL[OPJHSYLZWVUZPIPSP[PLZPUHJJVYKHUJL [OL JHSJ\SH[PVU VM [OL ÄUHUJPHS PTWHJ[ VM 7-9:  PUJS\KPUN [OL Michael G. 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50 LT GROUP, INC. 2019 ANNUAL REPORT 51 INDEPENDENT AUDITOR’S REPORT

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52 LT GROUP, INC. 2019 ANNUAL REPORT 53 LT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in Thousands)

December 31 December 31   (Z9LZ[H[LK (Z9LZ[H[LK 2019 5V[L 2019 5V[L ASSETS Total Current Liabilities (Brought Forward) P876,661,623 7   Current Assets Noncurrent Liabilities P184,913,132 *HZOHUKJHZOLX\P]HSLU[Z5V[L 7  +LWVZP[SPHIPSP[PLZUL[VMJ\YYLU[WVY[PVU5V[L 46,095,883   -PUHUJPHSHZZL[ZH[MHPY]HS\L[OYV\NOWYVÄ[VYSVZZ-=;73B5V[LZHUKD 13,469,380   )PSSZHUKHJJLW[HUJLZWH`HISL5V[L 4,141,689   -PUHUJPHSHZZL[ZH[MHPY]HS\L[OYV\NOV[OLYJVTWYLOLUZP]LPUJVTL 71,566,863 -=;6*0B5V[LZHUKD 16,968,590    3VUN[LYTKLI[ZUL[VMJ\YYLU[WVY[PVU5V[L    1,699,743 -PUHUJPHSHZZL[ZH[HTVY[PaLKJVZ[5V[LZHUK 25,252,670  5L[YL[PYLTLU[ILULÄ[ZSPHIPSP[`5V[L    8,510,128 3VHUZHUKYLJLP]HISLZ5V[LZ HUK 260,926,594  +LMLYYLKPUJVTL[H_SPHIPSP[PLZUL[5V[L     3,147,053 0U]LU[VYPLZ5V[L  12,196,871   6[OLYUVUJ\YYLU[SPHIPSP[PLZ5V[L    +\LMYVTYLSH[LKWHY[PLZ5V[L 2,029,436   Total Noncurrent Liabilities 135,161,359   6[OLYJ\YYLU[HZZL[Z5V[L 11,379,265   Total Liabilities 1,011,822,982   Total Current Assets 527,135,938    Equity Noncurrent Assets ([[YPI\[HISL[VLX\P[`OVSKLYZVM[OL*VTWHU`5V[LZHUK! 3VHUZHUKYLJLP]HISLZUL[VMJ\YYLU[WVY[PVU5V[LZ HUK 411,253,754   *HWP[HSZ[VJR 10,821,389   -PUHUJPHSHZZL[ZH[-=;6*05V[LZHUK 110,549,031   *HWP[HSPUL_JLZZVMWHY 35,906,231   -PUHUJPHSHZZL[ZH[HTVY[PaLKJVZ[5V[LZHUK 75,212,087   7YLMLYYLKZOHYLZVMZ\IZPKPHYPLZPZZ\LK[V7HYLU[*VTWHU` 8,538,837   0U]LZ[TLU[ZPUHZZVJPH[LZHUKQVPU[]LU[\YLZ5V[L 27,254,278  6[OLYJVTWYLOLUZP]LPUJVTLUL[VMKLMLYYLKPUJVTL[H_LќLJ[ 18,038,315   7YVWLY[`WSHU[HUKLX\PWTLU[5V[L! 6[OLYLX\P[`YLZLY]LZ 1,024,653    ([HWWYHPZLK]HS\LZ 59,811,911  9L[HPULKLHYUPUNZ 112,604,635     ([JVZ[ 12,087,216   :OHYLZVMZ[VJRVM[OL*VTWHU`OLSKI`Z\IZPKPHYPLZ (12,519)   0U]LZ[TLU[WYVWLY[PLZ5V[L 32,631,441    186,921,541   2,386,671 +LMLYYLKPUJVTL[H_HZZL[ZUL[5V[L    5VUJVU[YVSSPUNPU[LYLZ[Z5V[LZHUK 67,086,030   7,508,226 6[OLYUVUJ\YYLU[HZZL[Z5V[L  Total Equity 254,007,571   Total Noncurrent Assets 738,694,615     TOTAL LIABILITIES AND EQUITY P1,265,830,553 7   TOTAL ASSETS P1,265,830,553 7   See accompanying Notes to Consolidated Financial Statements. LIABILITIES AND EQUITY Current Liabilities +LWVZP[SPHIPSP[PLZ5V[L P772,143,072 7  -PUHUJPHSSPHIPSP[PLZH[-=;735V[LZHUK 245,619  )PSSZHUKHJJLW[HUJLZWH`HISL5V[L 51,821,601   (JJV\U[ZWH`HISLHUKHJJY\LKL_WLUZLZ5V[L  26,700,462    :OVY[[LYTKLI[Z5V[L  5,150,000  *\YYLU[WVY[PVUVMSVUN[LYTKLI[Z5V[L  1,002,593   0UJVTL[H_WH`HISL 690,518  +\L[VYLSH[LKWHY[PLZ5V[L 65,325  6[OLYJ\YYLU[SPHIPSP[PLZ5V[LZHUK  18,842,433   Total Current Liabilities (Carried Forward) 876,661,623   

54 LT GROUP, INC. 2019 ANNUAL REPORT 55 LT GROUP, INC. AND SUBSIDIARIES LT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in Thousands, Except for Basic/Diluted Earnings Per Share) (Amounts in Thousands)

Years Ended December 31 Years Ended December 31      (Z9LZ[H[LK  (Z9LZ[H[LK  (Z9LZ[H[LK  (Z9LZ[H[LK 2019 5V[L 5V[L 2019  5V[L 5V[L REVENUE 5V[L NET INCOME P27,565,757 7  7  )HURPUN P56,615,631 7 7  OTHER COMPREHENSIVE INCOME (LOSS) Distilled spirits 19,261,735     6[OLYJVTWYLOLUZP]LPUJVTLSVZZ[VILYLJSHZZPÄLK[VWYVÄ[VYSVZZPU Beverage 15,234,051      subsequent periods: 7YVWLY[`KL]LSVWTLU[ 3,132,431     5L[JOHUNLZPUMHPY]HS\LVMÄUHUJPHSHZZL[ZH[   94,243,848     -=;6*05V[L 2,260,682   – COST OF GOODS SOLD AND SERVICES 5V[L 46,802,568        0UJVTL[H_LќLJ[ – – – GROSS INCOME 47,441,280      2,260,682   –  5L[JOHUNLZPUMHPY]HS\LVM(-:PU]LZ[TLU[Z5V[L – – EQUITY IN NET EARNINGS OF ASSOCIATES AND JOINT VENTURES 5V[L 14,813,251       0UJVTL[H_LќLJ[ – – 62,254,531      – –  OPERATING EXPENSES  ;YHUZSH[PVUHKQ\Z[TLU[Z (916,208)    :LSSPUNL_WLUZLZ5V[L 3,011,424     5L[V[OLYJVTWYLOLUZP]LPUJVTLSVZZ[VILYLJSHZZPÄLK[VWYVÄ[VY 1,344,474 .LULYHSHUKHKTPUPZ[YH[P]LL_WLUZLZ5V[L 32,720,730         SVZZPUZ\IZLX\LU[WLYPVKZ     Other comprehensive income (loss) not to be 35,732,154   YLJSHZZPÄLK[VWYVÄ[VYSVZZPUZ\IZLX\LU[WLYPVKZ! OPERATING INCOME 26,522,377       5L[JOHUNLZPUMHPY]HS\LVMÄUHUJPHSHZZL[ZH[-=;6*05V[L 4,974,003   – OTHER INCOME (CHARGES)  0UJVTL[H_LќLJ[ (1,492,201)   – -VYLPNUL_JOHUNLNHPUZUL[ 1,049,980    3,481,802   – -PUHUJLPUJVTL5V[L 146,253    9LTLHZ\YLTLU[NHPUZSVZZLZVUKLÄULKILULÄ[WSHUZ5V[L (1,448,458)    -PUHUJLJVZ[Z5V[L (450,841)     0UJVTL[H_LќLJ[ 276,868     6[OLYZUL[5V[L  3,995,302   (1,171,590)    4,740,694     :OHYLPUYLTLHZ\YLTLU[NHPUVUKLÄULK   INCOME BEFORE INCOME TAX 31,263,071     ILULÄ[WSHUZVMHZZVJPH[LZ5V[L 1,001,641    PROVISION FOR (BENEFIT FROM) INCOME TAX 5V[L   9L]HS\H[PVUPUJYLHZLKLJYLHZLVU    *\YYLU[ 4,210,851       WYVWLY[`WSHU[HUKLX\PWTLU[5V[L 858,633   – Deferred (513,537)       0UJVTL[H_LќLJ[ (257,590)  – 3,697,314     601,043  – NET INCOME P27,565,757 7  7  5L[V[OLYJVTWYLOLUZP]LPUJVTLSVZZUV[[VILYLJSHZZPÄLK[VWYVÄ[ VYSVZZPUZ\IZLX\LU[WLYPVKZ 3,912,896    NET INCOME ATTRIBUTABLE TO: OTHER COMPREHENSIVE INCOMENET OF TAX 5,257,370    ,X\P[`OVSKLYZVM[OL*VTWHU` 23,117,524     TOTAL COMPREHENSIVE INCOME P32,823,127 7  7   5VUJVU[YVSSPUNPU[LYLZ[Z 4,448,233      TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: P27,565,757     ,X\P[`OVSKLYZVM[OL*VTWHU` P26,501,864 7   7 Basic/Diluted Earnings Per Share Attributable to Equity 5VUJVU[YVSSPUNPU[LYLZ[Z 6,321,263     Holders of the Company 5V[L P2.14 7 7 P32,823,127 7  7   See accompanying Notes to Consolidated Financial Statements. See accompanying Notes to Consolidated Financial Statements.

56 LT GROUP, INC. 2019 ANNUAL REPORT 57 LT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands)   231,190,388 254,007,571 Years Ended December 31 Total  

   (Z9LZ[H[LK  (Z9LZ[H[LK HUK       58,223,689 P 67,086,030 P 2019  5V[L 5V[L Interests – – CASH FLOWS FROM OPERATING ACTIVITIES                                                                               0UJVTLILMVYLPUJVTL[H_ P31,263,071 7 7  136,097,985 42,506,591 178,604,576 172,966,699 P 186,921,541 P Total (KQ\Z[TLU[ZMVY! HU` 12,519) P 12,519) P 12,519) P  ,X\P[`PUUL[LHYUPUNZVMHZZVJPH[LZ5V[L (14,857,739)      +LWYLJPH[PVUHUKHTVY[PaH[PVU5V[LZHUK 5,235,817    – – of the Shares of controlling – – – – – – – – – – – – – – 3 (12,519) 148,314,503 47,000,912 195,315,415

12 (12,519) 149,572,127 46,288,764 195,860,891  .HPUVUKPZWVZHSVM! YUPUNZ  :\IZPKPHYPLZ

    6[OLYUVUJ\YYLU[HZZL[Z5V[LZHUK  (829,758)       ò          91,998,914 (P 68,640,783 (P        112,604,635 (P   (-:PU]LZ[TLU[Z5V[LZHUK  – –  – – – – –  7YV]PZPVUMVYSVZZLZ5V[LZ HUK 2,862,442    ;H_  9L[HPULK  /LSKI` 5V[LZ                 4V]LTLU[PUHJJY\LKYL[PYLTLU[ILULÄ[Z5V[L (1,153,690)    1,878,006 P     15,410,482 P 18,038,315 P  -PUHUJLPUJVTL5V[L (146,253)   ò  -PUHUJLJVZ[Z5V[L 450,841    HUK 90,980 P                +P]PKLUKPUJVTL5V[L  (145,704)    202,066 P         ò 1,203,707 P HZ\YLTLU[  ;V[HS6[OLY  :OHYLPUSVZZLZVMQVPU[]LU[\YL5V[LZHUK  44,488      4HYR[VTHYRL[NHPUVUÄUHUJPHSHZZL[ZH[-=;735V[L  (10,018)     +LÄULK  0UJVTL3VZZ – –P –P 6WLYH[PUNPUJVTLILMVYLJOHUNLZPU^VYRPUNJHWP[HS 21,663,517    

172,507 P +LJYLHZLPUJYLHZLPU!  -PUHUJPHSHZZL[ZH[-=;73 (2,675,012)     – –  Transferred ,X\PWTLU[  .HPUZVU  *VTWYLOLUZP]L  VM:[VJR  5VU  9L]HS\H[PVU Increment  VU7YVWLY[` – – – – – –  9LJLP]HISLZ (76,418,419)        6[OLY*VTWYLOLUZP]L0UJVTL3VZZ       Inventories 628,416    4,473,280 P 12,689,666 P 12,726,318 P  6[OLYJ\YYLU[HZZL[Z (899,998)    Increment – – – – – – – – – – – – – – 0UJYLHZLKLJYLHZLPU! 7SHUZ  7SHU[HUK  [V(ZZVJPH[L  )LULÄ[7SHUZ  5L[VM+LMLYYLK  *VTW

331,706) P Deposit liabilities 92,702,273      1,581,187) P 1,203,707) P ([[YPI\[HISL[V,X\P[`/VSKLYZVM[OL*VTWHU`5V[LZ  -PUHUJPHSSPHIPSP[PLZH[-=;73 (225,029)   

– – – – – –  (JJV\U[ZWH`HISLHUKHJJY\LKL_WLUZLZ 3,878,633      6[OLYJ\YYLU[HUKUVUJ\YYLU[SPHIPSP[PLZ 18,824,568            1,697,797 (P 1,971,897) (P  4,619,445 (P *HZONLULYH[LKMYVTVWLYH[PVUZ 57,342,461      5L[  .HPUZ3VZZLZ  (ZZL[ZH[  -=;6*0  ,X\PWTLU[ 5V[LZ  VMHU(ZZVJPH[L  0UJVTL +P]PKLUKZYLJLP]LK5V[LZHUK  201,880      *VU[YPI\[PVUZ[VYL[PYLTLU[WSHU ò    694,323 (P                               692,552 P               P P 1,152,659 P 1,152,659 1,682,196 (337,998) 12,689,666 – 202,066 15,388,589 91,998,914 (12,519) 172,966,699 58,223,689 231,190,388 Interest paid (348,849)      – – – – – – – Translation  (KQ\Z[TLU[Z 5V[L 5V[L 5V[L HUK 5V[L  ,ќLJ[  ,H – – – – – – – – – – – – – – – – – – – – – – – – Interest received 183,812    ò ò 0UJVTL[H_LZWHPKPUJS\KPUNJYLKP[HISL^P[OOVSKPUNHUKÄUHS[H_LZ (4,016,112)        21,893) P     5L[JHZOMYVTVWLYH[PUNHJ[P]P[PLZ 53,363,192     ò ò – – – – – Sale ò ò ò ò ò ò -VY^HYK   804,095 (P 804,095 P 1,024,653 P – òò 8,538,837 P   18,060,000 P 18,060,000 P  :\IZPKPHYPLZ  .YV\W  *OHUNLZPU  VU+LÄULK  VU7YVWLY[` Shares of Shares Disposal  7YLMLYYLK  9LZLY]LZVM  9LTLHZ\YLTLU[  9L]HS\H[PVU  7SHU[HUK  9LTL 35,906,231 P 35,906,231 P 35,906,231 P  *HWP[HS  0ZZ\LK  6[OLY  *SHZZPÄLKHZ  *\T\SH[P]L  -PUHUJPHS  )LULÄ[ 10,821,389 P 10,821,389 P 10,821,389 P – – – – – – – – – –  *HWP[HS  PU,_JLZZ :[VJR   [V7HYLU[  VM7HY  *VTWHU` ,X\P[`   9LZLY]LZ /LSKMVY – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

VUWYVWLY[`WSHU[HUKLX\PWTLU[ YLHSPaLK[OYV\NOKLWYLJPH[PVUHUK disposal – – – – WVSPJ`VUIVYYV^PUNJVZ[Z5V[L loss of controlof loss – – – – [OL`LHY AS ADJUSTED 10,821,389 35,906,231 18,060,000 804,095 held for salefor held – – – – VUWYVWLY[`WSHU[HUKLX\PWTLU[ YLHSPaLK[OYV\NOKLWYLJPH[PVUHUK disposal – – – – – – – – MVY[OL`LHY held for salefor held – – – – VUWYVWLY[`WSHU[HUKLX\PWTLU[ YLHSPaLK[OYV\NOKLWYLJPH[PVUHUK disposal – – – – – – – – BALANCES AT DECEMBER 31, 2019BALANCES AT P ;YHUZMLYVMWVY[PVUVMYL]HS\H[PVUPUJYLTLU[ ,ќLJ[VMJOHUNLPUHJJV\U[PUN 6[OLYLX\P[`YLZLY]L 0UJYLHZLPUUVUJVU[YVSSPUNPU[LYLZ[^P[OV\[ ,HYS`YLKLTW[PVUVMWYLMLYYLKZOHYLZ *HZOKP]PKLUKZKLJSHYLK ;V[HSJVTWYLOLUZP]LPUJVTLSVZZMVY See accompanying Notes to Consolidated Financial Statements. 6[OLYJVTWYLOLUZP]LPUJVTLSVZZ BALANCES AT DECEMBER 31, 2018 BALANCES AT 5L[PUJVTLMVY[OL`LHY 9L]LYZHSVMKPZWVZHSNYV\WJSHZZPÄLKHZ LT GROUP, INC. AND SUBSIDIARIES GROUP, LT OF CHANGES IN EQUITY STATEMENTS CONSOLIDATED FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 (Amounts in Thousands) DECEMBER 31, 2016 BALANCES AT P 5L[PUJVTLMVY[OL`LHY 6[OLYJVTWYLOLUZP]LPUJVTL ;V[HSJVTWYLOLUZP]LPUJVTLMVY[OL`LHY *HZOKP]PKLUKZKLJSHYLK ;YHUZMLYVMWVY[PVUVMYL]HS\H[PVUPUJYLTLU[ BALANCES AT DECEMBER 31, 2017BALANCES AT ,ќLJ[VM7-9: HKVW[PVUPU 10,821,389 35,906,231 18,060,000 804,095 – 983,878 371,483 (934,595) 3,733,860 – 145,048 4,299,674 78,435,63 ,ќLJ[VM7-9:HKVW[PVUPU BALANCES AT JANUARY 1, 2018 JANUARY BALANCES AT 5L[PUJVTLMVY[OL`LHY 10,821,389 35,906,231 18,060,000 804,095 – 983,878 2,835,828 (934,595) 3,733,860 – 145,048 6,764,019 77,228,9 6[OLYJVTWYLOLUZP]LPUJVTL ;V[HSJVTWYLOLUZP]LPUJVTLSVZZ *HZOKP]PKLUKZKLJSHYLK 9L]LYZHSVMKPZWVZHSNYV\WJSHZZPÄLKHZ ;YHUZMLYVMWVY[PVUVMYL]HS\H[PVUPUJYLTLU[ BALANCES AT DECEMBER 31, 2018BALANCES AT P

58 LT GROUP, INC. 2019 ANNUAL REPORT 59 LT GROUP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in Thousands, Except for Par Value Per Share and Basic/Diluted Earnings Per Share)

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)PSSHUKHJJLW[HUJLWH`HISL5V[L 1,465,130,227   7LYJLU[HNLVM6^ULYZOPW 3VUN[LYTKLI[Z5V[L  51,899,720  –  2019 5V[L  *V\U[Y`VM 7YVJLLLKZMYVTPZZ\HUJLVMZ[VJRZ 11,850,316 òò Direct Indirect Direct Indirect Direct Indirect Incorporation 7H`TLU[ZVM! Distilled Spirits )PSSHUKHJJLW[HUJLWH`HISL5V[L (1,422,555,288) òò ;HUK\H`+PZ[PSSLYZ0UJ;+0HUKZ\IZPKPHYPLZ 100.0 -     7OPSPWWPULZ +P]PKLUKZ5V[L (3,330,741)      (IZVS\[+PZ[PSSLYZ0UJ(+0 - 96.0     7OPSPWWPULZ (ZPHU(SJVOVS*VYWVYH[PVU((* - 95.0     7OPSPWWPULZ 7YPUJPWHSWVY[PVUVMSLHZLSPHIPSP[PLZ (775,341)  ;HUK\H`)YHUKZ0U[LYUH[PVUHS0UJ;)0 - 100.0     7OPSPWWPULZ  :[VJRPZZ\HUJLJVZ[Z ò – Beverages  :OVY[[LYTKLI[Z5V[L  ò  (ZPH)YL^LY`0UJVYWVYH[LK()0HUKZ\IZPKPHYPLZ 99.9 -     7OPSPWWPULZ 3VUN[LYTKLI[Z5V[L  – –   (N\H=PKH:`Z[LTZ0UJ - 99.9     7OPSPWWPULZ 0U[LYIL]7OPSPWWPULZ0UJ - 99.9     7OPSPWWPULZ 5L[JHZOMYVTÄUHUJPUNHJ[P]P[PLZ 105,318,893      >H[LYPJO9LZV\YJLZ*VYW - 99.9     7OPSPWWPULZ 7HJRHNL^VYSK0UJ - 99.9     7OPSPWWPULZ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,939,367     ()5\[YPIL]*VYW - 99.9     7OPSPWWPULZ - 99.9 Singapore CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 176,973,765   (ZPH7HJPÄJ)L]LYHNL7[L3[K(7):PUNHWVYL     (ZPH7HJPÄJ)L]LYHNLZ4`HUTHY *VTWHU`3PTP[LK(7)4`HUTHY - 90.0     4`HUTHY CASH AND CASH EQUIVALENTS AT END OF YEAR 5V[L 184,913,132 7  7 Tobacco :OHYLOVSKPUNZ0UJ:OHYLOVSKPUNZ 97.7 -     7OPSPWWPULZ See accompanying Notes to Consolidated Financial Statements. -VY[\UL;VIHJJV*VYWVYH[PVU-;* 82.7 16.9     7OPSPWWPULZ Property Development :H[\YU/VSKPUNZ0UJ 100.0 -     7OPSPWWPULZ 7HYHTV\U[3HUKLX\P[PLZ0UJ730HUK:\IZPKPHYPLZ 100.0 -     7OPSPWWPULZ ,[VU7YVWLY[PLZ7OPSPWWPULZ0UJ,[VU - 99.6     7OPSPWWPULZ )LS[VU*VTT\UP[PLZ0UJ)*0 - 99.6     7OPSPWWPULZ ,[VU*P[`0UJ,*0 - 99.6     7OPSPWWPULZ -PYZ[/VTLZ0UJ-/0 - 99.6     7OPSPWWPULZ ,[VU7YVWLY[PLZ4HUHNLTLU[*VYWVYH[PVU,74* - 99.6     7OPSPWWPULZ Banking )HUR/VSKPUN*VTWHUPLZ5V[L 80-100 -     =HYPV\Z 7OPSPWWPUL5H[PVUHS)HUR75)HUK:\IZPKPHYPLZ - 56.5     7OPSPWWPULZ 75)*HWP[HSHUK0U]LZ[TLU[*VYWVYH[PVU 75)*HWP[HS - 56.5     7OPSPWWPULZ 75):LJ\YP[PLZ0UJ75):LJ\YP[PLZ - 56.5     7OPSPWWPULZ 75)-VYL_0UJ - 56.5     7OPSPWWPULZ 75)/VSKPUNZ*VYWVYH[PVU 75)/VSKPUNZ - 56.5     7OPSPWWPULZ

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(,+* :LNTLU[ YL]LU\L HUK L_WLUZLZ HYL [OVZL KPYLJ[S` H[[YPI\[HISL [V [OL QVPU[]LU[\YLZ P2,605,473 P–P21,171 P19,193,993 P–P5,433,641 P27,254,278 7HYHTV\U[ :H[\YU :OHYLOVSKPUNZ HUK )HUR /VSKPUN *VTWHUPLZ ZLNTLU[L_JLW[[OH[PU[LYZLNTLU[YL]LU\LHUKL_WLUZLHYLLSPTPUH[LK [OH[ WYV]PKL ÄUHUJPUN MVY ^VYRPUN JHWP[HS HUK JHWP[HS L_WLUKP[\YL VUS` H[ [OL JVUZVSPKH[LK SL]LS ;YHUZMLY WYPJLZ IL[^LLU VWLYH[PUN ,X\P[`H[[YPI\[HISL[V! YLX\PYLTLU[ZVM[OLVWLYH[PUNI\ZPULZZLZVM[OL.YV\W ZLNTLU[ZHYLVUHUHYT»ZSLUN[OIHZPZPUHTHUULYZPTPSHY[V[YHUZHJ[PVUZ  ,X\P[`OVSKLYZVM[OL*VTWHU` 156,398,876 17,341,825 23,133,222 26,477,901 17,835,398 (54,265,681) 186,921,541 ^P[O[OPYKWHY[PLZ 2,882,039 179,874 37,590 – – 63,986,527 67,086,030 ;OL )6+ VM 3;. YL]PL^Z [OL VWLYH[PUN YLZ\S[Z VM [OL I\ZPULZZ \UP[Z  5VUJVU[YVSSPUNPU[LYLZ[Z [V THRL KLJPZPVUZ VU YLZV\YJL HSSVJH[PVU HUK HZZLZZLZ WLYMVYTHUJL ;OLJVTWVULU[ZVMJHWP[HSL_WLUKP[\YLZYLWVY[LK[V[OL*6+4HYL[OL (KKP[PVUZ[VUVUJ\YYLU[HZZL[Z! :LNTLU[YL]LU\LHUKZLNTLU[L_WLUZLZHYLTLHZ\YLKPUHJJVYKHUJL HJX\PZP[PVUZVMWYVWLY[`WSHU[HUKLX\PWTLU[K\YPUN[OLWLYPVK  7YVWLY[`WSHU[HUKLX\PWTLU[ 2,761,203 2,878,969 794,790 80,689 20,526 (32,479) 6,503,698 ^P[O 7-9:Z ;OL WYLZLU[H[PVU HUK JSHZZPÄJH[PVU VM ZLNTLU[ YL]LU\LZ HUKZLNTLU[L_WLUZLZHYLJVUZPZ[LU[^P[O[OLJVUZVSPKH[LKZ[H[LTLU[Z ;OL .YV\W»Z KPZ[PSSLK ZWPYP[Z ZLNTLU[ KLYP]LZ YL]LU\L MYVT [^V THQVY Investment properties 967,611 5,814 – – 1,651,591 2,111 2,627,127 VMPUJVTL-PUHUJLJVZ[ZPUJS\KPUNPU[LYLZ[L_WLUZLHUKPUJVTL[H_LZ KPZ[YPI\[VYZ^OPJOH]LYHNLK   HUK  VM[OLZLNTLU[»Z[V[HS :OVY[[LYTKLI[Z – 200,000 2,850,000 – – 2,100,000 5,150,000 HYLTHUHNLKWLYI\ZPULZZZLNTLU[ YL]LU\LPU  HUKYLZWLJ[P]LS`;OLV[OLYZLNTLU[ZVM 3VUN[LYTKLI[Z 68,421,487 433,209 596,589 – 6,764,380 (3,646,209) 72,569,456 [OL.YV\WOH]LUVZPNUPÄJHU[J\Z[VTLY[OH[JVU[YPI\[LZ VYTVYLVM [OLPYZLNTLU[YL]LU\LZ -VY[OL`LHYLUKLK+LJLTILY HZYLZ[H[LK5V[L! ;OLMVSSV^PUN[HISLZWYLZLU[[OLPUMVYTH[PVUHIV\[[OL.YV\W»ZVWLYH[PUNZLNTLU[Z!  ,SPTPUH[PVUZ -VY[OL`LHYLUKLK+LJLTILY !  7YVWLY[`  (KQ\Z[TLU[Z  )HURPUN Distilled Spirits Beverage Tobacco Development  HUK6[OLYZ Total Eliminations, (In Thousands) Distilled Property Adjustments :LNTLU[YL]LU\L! Banking Spirits Beverage Tobacco Development and Others Total  ,_[LYUHSJ\Z[VTLYZ 7 7  7 7– 7  7– 7   (In Thousands)  0U[LYZLNTLU[      – –   – :LNTLU[YL]LU\L!        –        ,_[LYUHSJ\Z[VTLYZ P56,615,631 P19,261,735 P15,234,051 P–P3,132,431 P–P94,243,848 *VZ[VMNVVKZZVSKHUKZLY]PJLZ       –      0U[LYZLNTLU[ 249,877 17,460 696,240 – – (963,577) – .YVZZWYVÄ[      –       56,865,508 19,279,195 15,930,291 –3,132,431 (963,577) 94,243,848 ,X\P[`PUUL[LHYUPUNZSVZZVM *VZ[VMNVVKZZVSKHUKZLY]PJLZ 19,143,606 16,068,978 11,643,204 –1,107,876 (1,161,096) 46,802,568 HZZVJPH[LZHUKQVPU[]LU[\YLZ   –   –     .YVZZWYVÄ[ 37,721,902 3,210,217 4,287,087 –2,024,555 197,519 47,441,280              ,X\P[`PUUL[LHYUPUNZSVZZVM :LSSPUNL_WLUZLZ –     – –  HZZVJPH[LZHUKQVPU[]LU[\YLZ (97,608) – (725,985) 15,437,243 – 199,601 14,813,251 .LULYHSHUKHKTPUPZ[YH[P]L 37,624,294 3,210,2 17 3,561,102 15,437,243 2,024,555 397,120 62,254,531 L_WLUZLZ                :LSSPUNL_WLUZLZ – 1,561,758 1,338,050 – 111,616 – 3,011,424 6WLYH[PUNPUJVTL            .LULYHSHUKHKTPUPZ[YH[P]L 29,627,829 661,940 1,248,334 205,045 807,684 169,898 32,720,730 -VYLPNUL_JOHUNLNHPUZUL[          L_WLUZLZ -PUHUJLPUJVTL –        6WLYH[PUNPUJVTL 7,996,465 986,519 974,718 15,232,198 1,105,255 227,222 26,522,377 -PUHUJLJVZ[Z –    –     -VYLPNUL_JOHUNLNHPUZ- net 1,105,918 1,599 6,064 (51,889) (2,228) (9,484) 1,049,980 6[OLYZUL[          -PUHUJLPUJVTL Ě1,060 27,006 369,459 105,948 (357,220) 146,253 0UJVTLILMVYLPUJVTL[H_            -PUHUJLJVZ[Z Ě(98,948) (166,018) Ě(364,340) 178,465 (450,841) 7YV]PZPVUMVYPUJVTL[H_             6[OLYZ- net 3,306,872 (9,900) 96,036 150,900 434,107 17,287 3,995,302 :LNTLU[WYVÄ[ 7  7    7  7   7  7  7  0UJVTLILMVYLPUJVTL[H_ 12,409,255 880,330 937,806 15,700,668 1,278,742 56,270 31,263,071 7YV]PZPVUMVYPUJVTL[H_ 2,470,986 204,549 539,567 98,530 378,358 5,324 3,697,314 :LNTLU[WYVÄ[H[[YPI\[HISL[V! :LNTLU[WYVÄ[ P9,938,269 P675,781 P398,239 P15,602,138 P900,384 P50,946 P27,565,757 ,X\P[`OVSKLYZVM[OL*VTWHU` 7   7   7 7   7  7 7  5VUJVU[YVSSPUNPU[LYLZ[Z       – –    :LNTLU[WYVÄ[H[[YPI\[HISL[V!  ,X\P[`OVSKLYZVM[OL*VTWHU` P9,858,543 P666,507 P399,380 P15,602,138 P900,384 (P4,309,428) P23,117,524 +LWYLJPH[PVUHUKHTVY[PaH[PVU L_WLUZL            5VUJVU[YVSSPUNPU[LYLZ[Z 79,726 9,274 (1,141) – – 4,360,374 4,448,233 +LWYLJPH[PVUHUKHTVY[PaH[PVU L_WLUZL 2,660,409 575,294 1,546,624 38,220 386,300 28,971 5,235,818

84 LT GROUP, INC. 2019 ANNUAL REPORT 85 6[OLYÄUHUJPHSPUMVYTH[PVUVM[OLVWLYH[PUNZLNTLU[ZHZVM+LJLTILY PZHZMVSSV^Z! 6[OLYÄUHUJPHSPUMVYTH[PVUVM[OLVWLYH[PUNZLNTLU[ZHZVM+LJLTILYPZHZMVSSV^Z!

 ,SPTPUH[PVUZ  ,SPTPUH[PVUZ  7YVWLY[`  (KQ\Z[TLU[Z  7YVWLY[`  (KQ\Z[TLU[Z  )HURPUN Distilled Spirits Beverage Tobacco Development  HUK6[OLYZ Total  )HURPUN Distilled Spirits Beverage Tobacco Development  HUK6[OLYZ Total (In Thousands) (In Thousands) (ZZL[Z! (ZZL[Z!  *\YYLU[HZZL[Z 7   7   7  7  7  7 7   *\YYLU[HZZL[Z 7  7    7  7   7   7  7   5VUJ\YYLU[HZZL[Z                   5VUJ\YYLU[HZZL[Z             7   7 7   7  7  7  7   7   7 7  7 7  7 7   3PHIPSP[PLZ! 3PHIPSP[PLZ!  *\YYLU[SPHIPSP[PLZ 7 7  7  7 7 7  7   *\YYLU[SPHIPSP[PLZ 7  7  7  7  7  7 7    5VUJ\YYLU[SPHIPSP[PLZ              5VUJ\YYLU[SPHIPSP[PLZ           7    7   7  7  7 7  7   7  7 7 7  7 7  7  Investments in associates and QVPU[]LU[\YLZ 7 7– 7 7 7– 7  7 Investments in associates and QVPU[]LU[\YLZ 7 7– 7 7 7– 7  7  ,X\P[`H[[YPI\[HISL[V! ,X\P[`H[[YPI\[HISL[V!  ,X\P[`OVSKLYZVM[OL*VTWHU`                     ,X\P[`OVSKLYZVM[OL*VTWHU`                5VUJVU[YVSSPUNPU[LYLZ[Z       – –     5VUJVU[YVSSPUNPU[LYLZ[Z      – –     (KKP[PVUZ[VUVUJ\YYLU[HZZL[Z! (KKP[PVUZ[VUVUJ\YYLU[HZZL[Z!  7YVWLY[`WSHU[HUKLX\PWTLU[              7YVWLY[`WSHU[HUKLX\PWTLU[               Investment properties   – –     – Investment properties  – –   –  :OVY[[LYTKLI[Z –  – –   :OVY[[LYTKLI[Z –   – –    3VUN[LYTKLI[Z  – – –        3VUN[LYTKLI[Z – – – –      

-VY[OL`LHYLUKLK+LJLTILYHZYLZ[H[LK5V[L!

5. *HZOHUK*HZO,X\P]HSLU[Z 6. -PUHUJPHS(ZZL[ZH[-HPY=HS\L[OYV\NO7YVÄ[VY3VZZ  ,SPTPUH[PVUZ  7YVWLY[`  (KQ\Z[TLU[Z *HZOHUKJHZOLX\P]HSLU[ZJVUZPZ[VM! -PUHUJPHSHZZL[ZH[MHPY]HS\L[OYV\NOWYVÄ[VYSVZZJVUZPZ[VM!  )HURPUN Distilled Spirits Beverage Tobacco Development  HUK6[OLYZ Total (In Thousands)   :LNTLU[YL]LU\L!  (Z9LZ[H[LK  (Z9LZ[H[LK ,_[LYUHSJ\Z[VTLYZ 7  7  7    7– 7 7– 7 2019  5V[L 2019  5V[L (In Thousands) (In Thousands) 0U[LYZLNTLU[    – –   – *HZOHUKV[OLYJHZOP[LTZ P33,823,608 7   .V]LYUTLU[ZLJ\YP[PLZ P8,503,822 7        –    *HZOLX\P]HSLU[Z! 7YP]H[LKLI[ZLJ\YP[PLZ 3,130,156   *VZ[VMNVVKZZVSKHUKZLY]PJLZ       –          +\LMYVT)HUNRV:LU[YHSUN ,X\P[`ZLJ\YP[PLZ 1,455,435  .YVZZWYVÄ[     –      7PSPWPUHZ):7 105,981,801  +LYP]H[P]LHZZL[Z5V[LZHUK 373,040  ,X\P[`PUUL[LHYUPUNZSVZZVM +\LMYVTV[OLYIHURZ 17,758,143 

86 LT GROUP, INC. 2019 ANNUAL REPORT 87 (ZVM+LJLTILY HUK [OLMHPY]HS\LVMÄUHUJPHSHZZL[H[ I -PUHUJLSLHZLYLJLP]HISL KLUVTPUH[LKYLJLP]HISLZHUKMYVT [V  PU MYVT  7. Financial Assets at FVTOCI and Financial Assets at Amortized Cost HTVY[PaLKJVZ[PU]LZ[TLU[ZPU[OLMVYTVMNV]LYUTLU[HUKWYP]H[LIVUKZ [V PU HUKMYVT [V PUMVYWLZVKLUVTPUH[LK WSLKNLK [V M\SÄSS P[Z JVSSH[LYHS YLX\PYLTLU[Z ^P[O ZLJ\YP[PLZ ZVSK \UKLY (UHUHS`ZPZVM[OL.YV\W»ZÄUHUJLSLHZLYLJLP]HISLZHZVM+LJLTILY YLJLP]HISLZ -PUHUJPHS(ZZL[ZH[-=;6*0 YLW\YJOHZL HNYLLTLU[Z [YHUZHJ[PVUZ ^P[O JV\U[LYWHY[PLZ HTV\U[LK [V PZWYLZLU[LKHZMVSSV^Z! 7IPSSPVUHUK7IPSSPVUYLZWLJ[P]LS`ZLL5V[L :HSLZ JVU[YHJ[ YLJLP]HISLZ ILHY Ä_LK PU[LYLZ[ YH[L WLY HUU\T YHUNPUN ;OPZHJJV\U[JVUZPZ[ZVM! MYVT [V  [V HUK [V PU  2019   HUKYLZWLJ[P]LS` 8. 3VHUZHUK9LJLP]HISLZ (In Thousands)  .YVZZPU]LZ[TLU[PUÄUHUJLSLHZL ;YHKL9LJLP]HISLZ  (Z9LZ[H[LK 3VHUZHUKYLJLP]HISLZJVUZPZ[VM! receivables ;YHKLYLJLP]HISLZJVUZPZ[VM! 2019  5V[L  +\L^P[OPUVUL`LHY P1,260,542 7 (in thousands)  +\LIL`VUKVUL`LHYI\[UV[  2019 .V]LYUTLU[ZLJ\YP[PLZ5V[L P91,540,723 7      (Z9LZ[H[LK  V]LYÄ]L`LHYZ 1,164,893  (In Thousands) 6[OLYKLI[ZLJ\YP[PLZ 30,390,001    2019  5V[L  +\LIL`VUKÄ]L`LHYZ Ě *VUZ\TLYNVVKZ P13,899,237 7   ,X\P[`ZLJ\YP[PLZ! (In Thousands) 2,425,435   *VU[YHJ[YLJLP]HISLZ 1,374,425   8\V[LK 4,174,897   P672,252,455 -PUHUJLYLJLP]HISLZ5V[LZ 7   9LZPK\HS]HS\LVMSLHZLKLX\PWTLU[ Lease receivables Ě 

H

6U ]HYPV\Z KH[LZ PU (WYPS   [OL 7HYLU[ *VTWHU` ZVSK H WVY[PVU VM P[Z PU]LZ[TLU[ ZLJ\YP[PLZ H[ HTVY[PaLK JVZ[ ^P[O H JHYY`PUN ]HS\L VM 7 TPSSPVUHUKJVYYLZWVUKPUNNHPUVM7TPSSPVUHZWHY[VMP[ZYPZR THUHNLTLU[WVSPJPLZ

88 LT GROUP, INC. 2019 ANNUAL REPORT 89 Investment in PMFTC :\TTHYPaLK ÄUHUJPHS PUMVYTH[PVU VM 74-;* IHZLK VU P[Z ÄUHUJPHS 9. 0U]LU[VYPLZ 10. Other Current Assets +L[HPSZVMPU]LZ[TLU[PU74-;*HYLHZMVSSV^Z! Z[H[LTLU[Z HZ H[ +LJLTILY    HUK   HUK YLJVUJPSPH[PVU ^P[O [OL JHYY`PUN HTV\U[ VM [OL PU]LZ[TLU[ PU JVUZVSPKH[LK ÄUHUJPHS 0U]LU[VYPLZJVUZPZ[VM! Z[H[LTLU[ZHYLZL[V\[ILSV^! 2019  2019  (In Thousands) (In Thousands) 2019 2019  *YLKP[HISL^P[OOVSKPUN[H_LZ*>; P4,488,682 7  (JX\PZP[PVUJVZ[ P13,483,541 7    (In Thousands) (In Thousands) (K]HUJLZ[VZ\WWSPLYZ 1,629,372  (JJ\T\SH[LKLX\P[`PUUL[LHYUPUNZ! P170,872,448 $W&RVW 0UW\[=(; 1,519,068    )HSHUJLH[ILNPUUPUNVM`LHY (908,866)     9L]LU\L 7  7   (126,819,405)  *VUZ\TLYNVVKZ! 7YLWHPKL_WLUZLZ 1,399,984   ,X\P[`PUUL[LHYUPUNZ 15,396,195  *VZ[ZHUKL_WLUZLZ    P3,011,993 Income before income   (SJVOVS 7 +LMLYYLKYLPUZ\YHUJLWYLTP\TZ 1,135,113    *HZOKP]PKLUKZ5V[L (9,778,726)   Beverage 2,831,328 [H_ 44,053,043       Deferred rent 244,206  )HSHUJLH[LUKVM`LHY 4,708,603     7YV]PZPVUMVYPUJVTL 5,843,321  185,043 ,_JPZL[H_5V[L    (JJ\T\SH[LKZOHYLPUV[OLY [H_ (13,252,072)     9LHSLZ[H[LPU]LU[VYPLZ! comprehensive income 226,476  :[H[PVULYPLZVѝJLZ\WWSPLZHUK 5L[PUJVTL 30,800,971       *VUKVTPUP\THUKYLZPKLU[PHS stamps on hand 86,843  P18,418,620 7      \UP[ZMVYZHSL 457,731  6[OLYJVTWYLOLUZP]L 4PZJLSSHULV\ZJHZOHUKV[OLYJHZO income (35,854)     3HUKOLSKMVYM\[\YL  items 86,542  6U -LIY\HY`   -;* HUK 74740 JVTIPULK [OLPY YLZWLJ[P]L KVTLZ[PJ I\ZPULZZ VWLYH[PVUZ I` [YHUZMLYYPUN ZLSLJ[LK HZZL[Z Total comprehensive development 217,542  44,132 :LJ\YP[`KLWVZP[   HUK SPHIPSP[PLZ [V 74-;* PU HJJVYKHUJL ^P[O [OL WYV]PZPVUZ VM [OL income P30,765,117 7    7    :\IKP]PZPVUSHUK\UKLY  Deferred charges 3,134  development 3,927,357  (ZZL[7\YJOHZL(NYLLTLU[(7(IL[^LLU-;*HUKP[ZYLSH[LKWHY[PLZ .YV\W»ZZOHYLVM[V[HS 6[OLYZ 557,146  HUK 74740 ;OL LZ[HISPZOTLU[ VM 74-;* HSSV^Z -;* HUK 74740 comprehensive 4,602,630   P11,379,265 7  [V ILULÄ[ MYVT [OLPY YLZWLJ[P]L JVTWSLTLU[HY` IYHUK WVY[MVSPVZ HZ PUJVTLMVY[OL`LHY P16,305,060 7  7   -\LSTH[LYPHSZHUKZ\WWSPLZ 915,984   ^LSS HZ JVZ[ Z`ULYNPLZ MYVT [OL YLZ\S[PUN PU[LNYH[PVU VM THU\MHJ[\YPUN 11,361,935   H *>;ZWLY[HPUTHPUS`[V[OLHTV\U[Z^P[OOLSKMYVTPUJVTLKLYP]LK KPZ[YPI\[PVU HUK WYVJ\YLTLU[ HUK [OL M\Y[OLY KL]LSVWTLU[ HUK Investment in VMC At NRV - 4H[LYPHSZHUKZ\WWSPLZ 834,936   MYVTZHSLVMJVUZ\TLYNVVKZHUKYLHSLZ[H[LPU]LU[VYPLZ;OL*>;Z HK]HUJLTLU[ VM [VIHJJV PUK\Z[Y` NYV^PUN PU [OL 7OPSPWWPULZ +L[HPSZVMPU]LZ[TLU[PU=4*HYLHZMVSSV^Z! JHUILHWWSPLKHNHPUZ[HU`PUJVTL[H_SPHIPSP[`VMHJVTWHU`PU[OL P12,196,871 7  .YV\W[V^OPJO[OL*>;ZYLSH[L -;*HUK74740OVSKLX\HSLJVUVTPJPU[LYLZ[PU74-;*:PUJL74740 2019  (SSV^HUJL MVY PU]LU[VY` VIZVSLZJLUJL VU TH[LYPHSZ HUK Z\WWSPLZ OHZTHQVYP[`VM[OLTLTILYZVM[OL)6+P[OHZJVU[YVSV]LY74-;*-;* I (K]HUJLZ [V Z\WWSPLYZ WLY[HPU [V KLWVZP[Z THKL MVY YH^ TH[LYPHS JVUZPKLYZ74-;*HZHUHZZVJPH[L (In Thousands) HTV\U[LK[V7  TPSSPVUHUK7TPSSPVUHZVM+LJLTILY  W\YJOHZLZHUKHYLHWWSPLK\WVUKLSP]LY`VM[OLYLSH[LKPU]LU[VYPLZ HUK YLZWLJ[P]LS` (JX\PZP[PVUJVZ[! J ,_JPZL[H_WLY[HPUZ[VHK]HUJL[H_WH`TLU[Z[V[OL)\YLH\VM0U[LYUHS (Z H YLZ\S[ VM -;*»Z KP]LZ[TLU[ VM P[Z JPNHYL[[L I\ZPULZZ [V 74-;* )HSHUJLH[ILNPUUPUNVM`LHY P1,459,768 7  H *VTWVULU[ZVM[OLJVUZ\TLYNVVKZPU]LU[VYPLZHYLHZMVSSV^Z! 9L]LU\L)09VUZHSLVMHSJVOVSPJIL]LYHNLZZLL5V[L  -;* PUP[PHSS` YLJVNUPaLK [OL PU]LZ[TLU[ HTV\U[PUN [V 7 IPSSPVU (KKP[PVUZ – – YLWYLZLU[PUN[OLMHPY]HS\LVM[OLUL[HZZL[ZJVU[YPI\[LKI`-;*UL[VM )HSHUJLH[LUKVM`LHY 1,459,768   K 7YLWHPK L_WLUZLZ PUJS\KL WYLWHPK PTWVY[H[PVU JOHYNLZ HTV\U[PUN \UYLHSPaLKNHPUVM7IPSSPVU;OL[YHUZHJ[PVU^HZHJJV\U[LKMVYZPTPSHY 2019  to 7 TPSSPVU HUK 7 TPSSPVU HZ VM +LJLTILY    [V H JVU[YPI\[PVU PU H QVPU[ ]LU[\YL IHZLK VU :[HUKPUN 0U[LYWYL[H[PVUZ (JJ\T\SH[LKLX\P[`PUUL[LHYUPUNZ! (In Thousands) HUK YLZWLJ[P]LS`7YLWHPKPTWVY[H[PVUJOHYNLZWLY[HPU[V[OL *VTTP[[LL :0* 0U[LYWYL[H[PVU  Jointly Controlled Entities-Non-  )HSHUJLH[ILNPUUPUNVM`LHY 1,139,120   W\YJOHZLZVMYH^TH[LYPHSZI`[OLKPZ[PSSLKZWPYP[Z -PUPZOLKNVVKZ P1,046,445 7 Monetary Contributions by Venturers ^OLYL -;* YLJVNUPaLK VUS`  ,X\P[`PUUL[LHYUPUNZ 251,171   >VYRPUWYVJLZZ 1,816,060   L 6[OLYZPUJS\KLPU[LYVѝJLÅVH[ZHUKHK]HUJLZ[VJVU[YHJ[VYZ [OH[WVY[PVUVM[OLNHPU^OPJOPZH[[YPI\[HISL[V[OLPU[LYLZ[ZVM74740  ,_JLZZVMMHPY]HS\LVMUL[HZZL[Z HTV\U[PUN[V7IPSSPVUPU;OLWVY[PVUH[[YPI\[HISL[V-;*PZILPUN 9H^TH[LYPHSZ 2,980,816   of associate over cost of YLJVNUPaLKVUJL[OLYLSH[LKHZZL[ZHUKSPHIPSP[PLZHYLYLHSPaLKKPZWVZLK investment – – P5,843,321 7 VY ZL[[SLK  -;* YLJVNUPaLK H NHPU VM HIV\[ 7  TPSSPVU LHJO `LHY 11. 0U]LZ[TLU[PU(ZZVJPH[LZHUK1VPU[=LU[\YLZ 1,390,291 Z[HY[PUN\U[PSHUKHUV\[YPNO[SVZZVM7IPSSPVUPU^OPJO )HSHUJLH[LUKVM`LHY   *VZ[VMJVUZ\TLYNVVKZPU]LU[VYPLZYLJVNUPaLKHZL_WLUZLZ\UKLYJVZ[ HYLPUJS\KLKPU[OL¸,X\P[`PUUL[LHYUPUNZ¹PU[OLZLWLYPVKZ-\Y[OLYHZ :OHYLPUYLTLHZ\YLTLU[NHPUVU VMNVVKZZVSKHTV\U[LK[V7IPSSPVU7IPSSPVUHUK7IPSSPVU 0U]LZ[TLU[ZPU(ZZVJPH[LZHUK1VPU[=LU[\YLZ H YLZ\S[ VM [OL [YHUZMLY VM ZLSLJ[LK HZZL[Z HUK SPHIPSP[PLZ WVY[PVU VM [OL KLÄULKILULÄ[WSHUZ (1,015)    PU  HUKYLZWLJ[P]LS`ZLL5V[L ;OL.YV\WOHZ[OLWV^LY[VWHY[PJPWH[LPU[OLÄUHUJPHSHUKVWLYH[PUN WVSPJ` KLJPZPVUZ VM 74-;* =PJ[VYPHZ 4PSSPUN *VTWHU` 0UJ =4* YL]HS\H[PVUPUJYLTLU[VU-;*»ZWYVWLY[`WSHU[HUKLX\PWTLU[HTV\U[PUN Balance of convertible notes 58,460   to 7 IPSSPVU^HZ[YHUZMLYYLK[VYL[HPULKLHYUPUNZ I 4V]LTLU[ZPUYLHSLZ[H[LPU]LU[VYPLZHYLZL[V\[ILSV^! () /70 HUK (7300  ;OL .YV\W HSZV OHZ   PU[LYLZ[ PU ()0 7HZJ\HS P2,907,504 7  /VSKPUNZ7YP]H[L3PTP[LK()07HZJ\HS/VSKPUNZHUK(30,[VU7YVWLY[` +L]LSVWTLU[*VYWVYH[PVU(,7+*^OPJOHYLQVPU[S`JVU[YVSSLKLU[P[PLZ (SZVHZHYLZ\S[VM[OL[YHUZHJ[PVU-;*OHZVI[HPULK[OLYPNO[[VZLSSW\[ 6U-LIY\HY`=4*HWWYV]LK[OLHJX\PZP[PVUVMP[ZV^UZOHYLZ 2019  VW[PVUP[ZPU[LYLZ[PU74-;*[V74740L_JLW[PUJLY[HPUJPYJ\TZ[HUJLZ ;OL ZHSL HNYLLTLU[ OHK ILLU L_LJ\[LK VU -LIY\HY`    HUK (In Thousands) K\YPUN[OLWLYPVKMYVT-LIY\HY`[OYV\NO-LIY\HY`  SLK[V[OLHJX\PZP[PVUVMTPSSPVU[YLHZ\Y`ZOHYLZ;OPZYLZ\S[LKPU 6^ULYZOPW (TV\U[ H[ HU HNYLLK\WVU ]HS\L  6U +LJLTILY   [OL )6+ VM 3;. HU PUJYLHZL PU [OL 7HYLU[ *VTWHU`»Z WLYJLU[HNL VM V^ULYZOPW MYVT )HSHUJLH[ILNPUUPUNVM`LHY P5,268,060 7  2019  2019  HWWYV]LK[OL^HP]LYI`-;*VMP[ZYPNO[Z\UKLY[OL,_P[9PNO[Z(NYLLTLU[  [V 6U[OLZHTLKH[L[OL.YV\W[OYV\NO-;*HJX\PYLK ,ќLJ[VMJOHUNLPUHJJV\U[PUNWVSPJ` (In Thousands) LU[LYLK PU[V ^P[O 740 HUK JVUÄYTLK [OL L_LJ\[PVU VM [OL ;LYTPUH[PVU HKKP[PVUHSZOHYLZVMZ[VJRVM=4*HTV\U[PUN[V7TPSSPVUYLZ\S[PUN VUIVYYV^PUNJVZ[Z5V[L (135,424) ò [VHUPUJYLHZLPU[OL.YV\W»ZLќLJ[P]LV^ULYZOPWPU=4*[V  (ZZVJPH[LZ! (NYLLTLU[ *VUZ[Y\J[PVUKL]LSVWTLU[JVZ[Z PUJ\YYLK 262,303     74-;* 49.6%   P18,418,620 7    :\TTHYPaLK ÄUHUJPHS PUMVYTH[PVU VM 74-;* IHZLK VU P[Z ÄUHUJPHS 6U4H`WVY[PVUZVM[OLJVU]LY[PISLUV[LZHTV\U[PUN[V ;YHUZMLYMYVT[VWYVWLY[`WSHU[  =4* 30.9%  2,898,208   Z[H[LTLU[ZHZVM+LJLTILYHYLZL[V\[ILSV^! 7  TPSSPVU^LYLJVU]LY[LK[VZOHYLZVMZ[VJRVM=4*YLZ\S[PUN[V HUKLX\PWTLU[HUKPU]LZ[TLU[  (7300 44.0%  2,605,473  HUPUJYLHZLPU[OL.YV\W»ZWLYJLU[HNLVMV^ULYZOPW[V HZVM 2,038 +LJLTILY WYVWLY[PLZ5V[LZHUK      ()/70 50.0%  Ě   2019  Disposals and others (794,347)   1VPU[=LU[\YLZ! (In Thousands) ;OLZ\TTHYPaLKÄUHUJPHSPUMVYTH[PVUVM=4*HZVM5V]LTILY  )HSHUJLH[LUKVM`LHY P4,602,630 7   ()07HZJ\HS/VSKPUNZ 50.0%  21,171  *\YYLU[HZZL[Z P47,037,934 7    HUK HUKYLJVUJPSPH[PVU^P[O[OLJHYY`PUNHTV\U[VM[OLPU]LZ[TLU[  (,7+* 50.0%  3,310,806  5VUJ\YYLU[HZZL[Z 29,206,664   PUJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[ZHYLZL[V\[ILSV^! P27,254,278 7 *\YYLU[SPHIPSP[PLZ 13,449,004  5VUJ\YYLU[SPHIPSP[PLZ 6,127,518    2019  ,X\P[` 56,668,076  (In Thousands) ,X\P[`PU[LYLZ[VM[OL7HYLU[*VTWHU` 49.6%    *\YYLU[HZZL[Z P2,919,787 7 :OHYLPUUL[HZZL[ZVM[OLHJX\PYLL 28,107,366   5VUJ\YYLU[HZZL[Z 6,588,422   (JX\PZP[PVUYLSH[LKMHPY]HS\LHKQ\Z[TLU[Z *\YYLU[SPHIPSP[PLZ 1,246,250   HKQ\Z[TLU[ZYLSH[PUN[VKPќLYLUJLZPU 5VUJ\YYLU[SPHIPSP[PLZ 1,005,420   HJJV\U[PUNWVSPJPLZHUKV[OLYZ (9,688,746)   ,X\P[` 7,256,539   *HYY`PUN]HS\LVMPU]LZ[TLU[ P18,418,620 7    ,X\P[`PU[LYLZ[VM[OL7HYLU[ *VTWHU` 30.9%  :OHYLPUUL[HZZL[ZVM[OLHJX\PYLL 2,242,271   -HPY]HS\LHKQ\Z[TLU[ZHUKV[OLYZ 665,233   *HYY`PUN]HS\LVMPU]LZ[TLU[ P2,907,504 7 

90 LT GROUP, INC. 2019 ANNUAL REPORT 91 :\TTHYPaLKZ[H[LTLU[ZVMJVTWYLOLUZP]LPUJVTLVM=4*MVY[OL`LHYZ :\TTHYPaLK Z[H[LTLU[Z VM JVTWYLOLUZP]L PUJVTL VM () /70 MVY [OL :\TTHYPaLKÄUHUJPHSPUMVYTH[PVUVM(7300HZVM+LJLTILY HUK ;OLZ\TTHYPaLKZ[H[LTLU[ZVMJVTWYLOLUZP]LPUJVTLVM()07HZJ\HS LUKLK5V]LTILYHYLHZMVSSV^Z! `LHYZLUKLK+LJLTILYHYLHZMVSSV^Z!  MVSSV^Z! /VSKPUNZMVY[OL`LHYZLUKLK+LJLTILYHYLHZMVSSV^Z!

2019   2019  2019  2019  (In Thousands) (In Thousands) (In thousands) (In Thousands) 9L]LU\L P6,343,290 7   7    9L]LU\L P2,913,073 7   *\YYLU[HZZL[Z P1,287,221 7  9L]LU\L P353,909 7 *VZ[ZHUKL_WLUZLZ (5,296,131)         *VZ[ZHUKL_WLUZLZ (4,346,353)   5VUJ\YYLU[HZZL[Z 35,866,453   *VZ[ZHUKL_WLUZLZ (364,563)   0UJVTLILMVYLPUJVTL[H_ 1,047,159   3VZZILMVYLPUJVTL[H_ 1,433,280  *\YYLU[SPHIPSP[PLZ 1,130,146    3VZZILMVYLPUJVTL[H_ (10,654)  7YV]PZPVUMVYPUJVTL[H_ (234,308)    7YV]PZPVUMVYPUJVTL[H_ – – 5VUJ\YYLU[SPHIPSP[PLZ 33,766,163  7YV]PZPVUMVYPUJVTL[H_ 381 – 5L[PUJVTL 812,851     5L[SVZZ 1,433,280  ,X\P[` 2,257,365  5L[SVZZ (11,035)  6[OLYJVTWYLOLUZP]L 6[OLYJVTWYLOLUZP]LSVZZ – – ,X\P[`PU[LYLZ[VM[OL7HYLU[*VTWHU` 44%  6[OLYJVTWYLOLUZP]LPUJVTL – – PUJVTLSVZZ (3,285)     Total comprehensive loss 1,433,280  :OHYLPUUL[HZZL[ZVM[OLHJX\PYLL 993,241  Total comprehensive loss (P11,035) 7 Total comprehensive .YV\W»ZZOHYLVM[V[HSJVTWYLOLUZP]L 7YLTP\TVUHJX\PZP[PVU 1,601,389  .YV\W»ZZOHYLVM[V[HSJVTWYLOLUZP]L income 809,566 7 7  SVZZMVY[OL`LHY P274,897 7  *HYY`PUN]HS\LVMPU]LZ[TLU[ P2,594,630 7 SVZZMVY[OL`LHY (P5,518) 7  .YV\W»ZZOHYLVM[V[HS comprehensive income Investment in APLII :\TTHYPaLKZ[H[LTLU[ZVM[V[HSJVTWYLOLUZP]LPUJVTLVM(7300MVY[OL Investment in AEPDC MVY[OL`LHY P250,156 7 7 6U +LJLTILY   75) LU[LYLK PU[V H `LHY L_JS\ZP]L `LHYLUKLK+LJLTILYHYLHZMVSSV^Z! 6U 1HU\HY`   [OL *VTWHU` LU[LYLK PU[V HU HNYLLTLU[ ^P[O WHY[ULYZOPW^P[O(SSPHUa:,\UKLY[OLMVSSV^PUNHYYHUNLTLU[ZZ\IQLJ[[V (`HSH3HUK0UJ(30[VQVPU[S`KL]LSVWHWYVQLJ[HSVUN[OL*JVYYPKVY 0U]LZ[TLU[PU()/70 YLN\SH[VY`HWWYV]HSZ! ;OL WYVQLJ[ PZ LU]PZPVULK [V IL H [V^UZOPW KL]LSVWTLU[ [OH[ ZWHUZ 6U 4H`   () /70 ^HZ PUJVYWVYH[LK HUK YLNPZ[LYLK ^P[O [OL 2019  WVY[PVUVM7HZPN*P[`HUK8\LaVU*P[`6U(WYPS[OL*VTWHU` 7OPSPWWPUL :,* MVY  H\[OVYPaLK ZOHYLZ H[ 7 WHY ]HS\L WLY ‹ (SSPHUa:,^PSSHJX\PYLZOHYLZYLWYLZLU[PUN Z[VJROVSKPUNZ (In Thousands) PUM\ZLK7TPSSPVU[V[OLQVPU[WYVQLJ[^P[O(30 ZOHYL \UKLY [OL UHTL VM )YVUJVIYL^ 0UJVYWVYH[LK )YVUJVIYL^  VM(7300HUK^PSSOH]LTHUHNLTLU[JVU[YVSV]LY[OLUL^QVPU[]LU[\YL 9L]LU\L P3,721,320 7 ;OL 7OPSPWWPUL :,* HWWYV]LK [OL JOHUNL PU JVYWVYH[L UHTL VM JVTWHU`" *VZ[ZHUKL_WLUZLZ (3,881,720)  6U 1\S`   [OL *VTWHU` Z\IZJYPILK [V HKKP[PVUHS  )YVUJVIYL^[V()/LPULRLU7OPSPWWPULZ0UJVU1\S` ‹ ;OL UL^ QVPU[ ]LU[\YL JVTWHU` ^PSS VWLYH[L \UKLY [OL UHTL VM JVTTVU ZOHYLZ HUK   WYLMLYYLK ZOHYLZ MYVT (,7+*»Z 5L[PUJVTLSVZZ (160,400)  ¸(SSPHUa75)3PML0UZ\YHUJL0UJ¹" PUJYLHZL PU H\[OVYPaLK JHWP[HS Z[VJR MVY H JVUZPKLYH[PVU [V[HSPUN [V 6U 4H`   [OL .YV\W [OYV\NO ()0 W\YJOHZLK  ZOHYLZ ‹ ( `LHY KPZ[YPI\[PVU HNYLLTLU[ ^OPJO ^PSS WYV]PKL (SSPHUa HU 6[OLYJVTWYLOLUZP]LPUJVTL 297,095    7TPSSPVU VM Z[VJR VM () /70 MVY H JVUZPKLYH[PVU HTV\U[PUN [V 7 TPSSPVU 6U L_JS\ZP]LHJJLZZ[V[OLIYHUJOUL[^VYRVM75)HUK75):H]PUNZ Total comprehensive income P136,695 7   5V]LTILY[OL.YV\WW\YJOHZLKHKKP[PVUHS JVTTVU )HUR .YV\W»ZZOHYLVM[V[HSJVTWYLOLUZP]L 6U5V]LTILY[OL*VTWHU`THKLHKKP[PVUHSJHWP[HSPUM\ZPVU ZOHYLZV\[VM[OLWYVWVZLKPUJYLHZLPU[OLH\[OVYPaLKJHWP[HSZ[VJRVM() PUJVTLMVY[OL`LHY P60,145 7 HTV\U[PUN[V7TPSSPVUMVY[OLQVPU[]LU[\YL»ZPUP[PHSW\YJOHZLVMSHUK /70MVYHJVUZPKLYH[PVUVM7 TPSSPVU;OL.YV\W»ZZ\IZJYPW[PVU[V() ;OLZHSLVM(7300^HZJVTWSL[LKVU1\ULMVYH[V[HSJVUZPKLYH[PVU PUL_JOHUNLMVYJVTTVUZOHYLZ /70YLWYLZLU[Z V^ULYZOPWPU[LYLZ[ VM<: TPSSPVU7IPSSPVU7\YZ\HU[[V[OLZHSLVM(730075)HSZV 0U]LZ[TLU[PU()07HZJ\HS/VSKPUNZ LU[LYLK PU[V H KPZ[YPI\[PVU HNYLLTLU[ ^P[O (7300 ^OLYL 75) ^PSS HSSV^ 6U-LIY\HY`()0HUK*VYWVYH[PVU,TWYLZHYPHS7HZJ\HS:3 0U [OL*VTWHU`THKLHKKP[PVUHSJHWP[HSPUM\ZPVU[V[HSPUN[V 0U HJJVYKHUJL ^P[O [OL :OHYLOVSKLYZ» (NYLLTLU[ LU[LYLK PU[V I` (7300[VOH]LL_JS\ZP]LHJJLZZ[V[OLKPZ[YPI\[PVUUL[^VYRVM75)HUKP[Z *,7HULU[P[`VYNHUPaLKHUKL_PZ[PUN\UKLY[OLSH^ZVM:WHPUHNYLLK 7 IPSSPVU MVY [OL QVPU[ ]LU[\YL»Z WYVQLJ[ WSHUUPUN HUK KL]LSVWTLU[ [OL .YV\W HUK /LPULRLU [OL .YV\W ZVSK UVUTVUL[HY` HZZL[Z PL Z\IZPKPHY`75):H]PUNZ)HURV]LYHWLYPVKVM`LHYZ)V[O[OLZOHYL [VMVYT()07HZJ\HS/VSKPUNZHQVPU[S`JVU[YVSSLKLU[P[`VYNHUPaLKHUK HUKKPYLJ[VWLYH[PUNL_WLUZLZ PU]LU[VYPLZ YL[\YUHISL JVU[HPULYZ HUK IYHUKZ [V () /70 MVY H [V[HS W\YJOHZLHNYLLTLU[HUKKPZ[YPI\[PVUHNYLLTLU[OH]LWYV]PZPVUZYLMLYYPUN KVTPJPSLKPU:PUNHWVYL0UHJJVYKHUJL^P[O[OL(NYLLTLU[()0HUK*,7 consideration of 7 TPSSPVU;OLUVUTVUL[HY`HZZL[Z^LYLZVSKH[ [VVULHUV[OLYTHRPUN[OLKPZ[YPI\[PVUHNYLLTLU[HUPU[LNYHSJVTWVULU[ [OL¸]LU[\YLYZ¹^PSSOVSK PU[LYLZ[PU()07HZJ\HS/VSKPUNZ-\Y[OLY +L[HPSZ VM [OL PU]LZ[TLU[ PU H QVPU[ ]LU[\YL HZ VM +LJLTILY  HYL HZ [OLPYJHYY`PUNHTV\U[ZL_JLW[MVY[OLIYHUKZ^OPJOYLZ\S[LK[VHNHPU VM [OL ZHSL [YHUZHJ[PVU (JJVYKPUNS` [OL W\YJOHZL JVUZPKLYH[PVU VM [OL HYYHUNLTLU[ YLX\PYLZ \UHUPTV\Z HNYLLTLU[ MVY ÄUHUJPHS HUK MVSSV^Z! MYVTMHPY]HS\H[PVUHTV\U[PUN[V7TPSSPVU <: TPSSPVU7IPSSPVU^HZHSSVJH[LKIL[^LLU[OLZHSLVM[OL  VWLYH[PUNKLJPZPVUZHTVUN]LU[\YLYZ PU[LYLZ[PU(7300HUK[OL,_JS\ZP]L+PZ[YPI\[PVU9PNO[Z,+9HTV\U[PUN 2019  Details of the investment in an associate as of December 31 are as [V <:   TPSSPVU 7 IPSSPVU HUK <:  TPSSPVU 7 IPSSPVU 6U 5V]LTILY   ()0 7HZJ\HS /VSKPUNZ JYLH[LK ()0 7HZJ\HS MVSSV^Z! YLZWLJ[P]LS` -VVKZ 0UJVYWVYH[LK ()0 7HZJ\HS -VVKZ HU VWLYH[PUN JVTWHU` (In Thousands) PUJVYWVYH[LK HUK KVTPJPSLK PU [OL 7OPSPWWPULZ [OH[ ^PSS KL]LSVW H )LNPUUPUNIHSHUJLHJX\PZP[PVUJVZ[ P2,176,000 7 75)^PSSHSZVYLJLP]L]HYPHISLHUU\HSHUKÄ_LKIVU\ZLHYUV\[WH`TLU[Z I\ZPULZZVMTHYRL[PUNHUKKPZ[YPI\[PUNJLY[HPUHNYLLKWYVK\J[Z(ZWHY[ 2019  (KKP[PVUHSJHWP[HSPUM\ZPVUK\YPUN[OL IHZLKVUTPSLZ[VULZHJOPL]LKV]LY[OL`LHY[LYTVM[OLKPZ[YPI\[PVU VM[OLQVPU[]LU[\YLHNYLLTLU[[OL]LU[\YLYZHSZVHNYLLK[VL_LJ\[LH `LHY 1,195,000  (In Thousands) HNYLLTLU[ WYVK\J[KPZ[YPI\[PVUHNYLLTLU[ (JJ\T\SH[LKLX\P[`PUUL[LHYUPUNZ! )LNPUUPUNIHSHUJLHJX\PZP[PVUJVZ[ P787,400 7  )HSHUJLH[[OLILNPUUPUNVM[OL`LHY (49,674) – (JJ\T\SH[LKLX\P[`PUUL[LHYUPUNZ! ;OL .YV\W YLJVNUPaLK NHPU VU ZHSL VM [OL   PU[LYLZ[ PU (7300 (Z VM +LJLTILY   ()0 OHZ HU PU]LZ[TLU[ PU ()0 7HZJ\HS :OHYLPUUL[SVZZVMHQVPU[]LU[\YL (8,973)    )HSHUJLH[[OLILNPUUPUNVM[OL`LHY (512,503)  HTV\U[PUN [V 7 TPSSPVU UL[ VM [H_LZ HUK [YHUZHJ[PVU JVZ[Z /VSKPUNZ HTV\U[PUN [V 7 TPSSPVU ^OPSL ()0 7HZJ\HS /VSKPUNZ HTV\U[PUN [V 7 TPSSPVU HUK 7 TPSSPVU YLZWLJ[P]LS` ;OL OHZ HU PU]LZ[TLU[ PU ()0 7HZJ\HS -VVKZ HTV\U[PUN [V 7 TPSSPVU )HSHUJLH[LUKVM`LHY (58,647)   Share in net loss of an associate (274,897)    KLMLYYLKYL]LU\LHTV\U[PUN[V7 TPSSPVUHSSVJH[LK[V[OL,+9^HZ ;OLQVPU[]LU[\YLOHZZ[HY[LKVWLYH[PVUZPU:LW[LTILY ,UKPUNIHSHUJL P3,312,353 7 )HSHUJLH[LUKVM`LHY (787,400)  WYLZLU[LKHZ¸6[OLYKLMLYYLKYL]LU\L¹HUK^PSSILHTVY[PaLK[VPUJVTL *Includes catch-up adjustment of share in net loss in prior years ,UKPUNIHSHUJL PĚ 7  V]LY`LHYZMYVTKH[LVMZHSLZLL5V[L(TVY[PaH[PVUHTV\U[PUN ;OL.YV\WKL[LYTPULK[OH[P[ZHK]HUJLZ[V()07HZJ\HS-VVKZYLWYLZLU[Z to 7TPSSPVU^HZYLJVNUPaLKPUZLL5V[L 7YPVY[V[OLZHSL [OL.YV\W»ZSVUN[LYTPU[LYLZ[PU()07HZJ\HS/VSKPUNZHUKP[ZZ\IZPKPHY` *\T\SH[P]L\UYLJVNUPaLKZOHYLPUUL[ :\TTHYPaLKÄUHUJPHSPUMVYTH[PVUVM(,7+*HZVM+LJLTILY  VMZOHYLZ[V(SSPHUa:,75)HJX\PYLKHKKP[PVUHS Z[VJROVSKPUNZ [OH[PUZ\IZ[HUJLMVYTWHY[VM[OL.YV\W»ZUL[PU]LZ[TLU[PU[OLQVPU[ SVZZLZPU()/70 P441,743 7ò HUK MVSSV^Z! MYVT[OLTPUVYP[`ZOHYLOVSKLYZMVYHJVUZPKLYH[PVUHTV\U[PUN[V ]LU[\YL :\TTHYPaLKÄUHUJPHSPUMVYTH[PVUVM()/70HZVM+LJLTILY  7 TPSSPVUIL[^LLU1\ULHUK1\UL HUK HUKYLJVUJPSPH[PVU^P[O[OLJHYY`PUNHTV\U[VM[OLPU]LZ[TLU[ ;OL Z\TTHYPaLK ÄUHUJPHS PUMVYTH[PVU VM ()0 7HZJ\HS /VSKPUNZ HZ VM 2019  PUJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[ZHYLZL[V\[ILSV^! *VUZLX\LU[S`75)HJJV\U[LKMVYP[ZYLTHPUPUN V^ULYZOPWPU[LYLZ[ +LJLTILYMVSSV^Z! (In thousands) PU(7300HZHUHZZVJPH[L([[OLKH[LVMSVZZVMJVU[YVS75)»ZPU]LZ[TLU[ *\YYLU[HZZL[Z P12,780,696 7  PU (7300 ^HZ YLTLHZ\YLK [V 7 IPSSPVU IHZLK VU [OL MHPY ]HS\L VM P[Z 2019  2019  YL[HPULKLX\P[`75)YLJVNUPaLKNHPUVUYLTLHZ\YLTLU[HTV\U[PUN[V 5VUJ\YYLU[HZZL[Z 3,868,199   (In Thousands) 7IPSSPVUPU[OLJVUZVSPKH[LKZ[H[LTLU[VMPUJVTL (In thousands) *\YYLU[SPHIPSP[PLZ 7,783,092   *\YYLU[HZZL[Z P3,423,754 7 *\YYLU[HZZL[Z P250,991 7  5VUJ\YYLU[SPHIPSP[PLZ 2,241,098  5VUJ\YYLU[HZZL[Z 2,537,818   ;OLMHPY]HS\LVM[OLYL[HPULKLX\P[`^HZIHZLKVUHJVTIPUH[PVUVM[OL 5VUJ\YYLU[HZZL[Z 4,031   ,X\P[` 6,624,705  *\YYLU[SPHIPSP[PLZ 3,088,271  PUJVTLHWWYVHJOHUKTHYRL[HWWYVHJO *\YYLU[SPHIPSP[PLZ 205,670  5VUJ\YYLU[SPHIPSP[PLZ 3,765,330  5VUJ\YYLU[SPHIPSP[PLZ 13,753 – 6U:LW[LTILY[OL7OPSPWWPUL:,*HWWYV]LK[OLHTLUKTLU[ ,X\P[`JHWP[HSKLÄJPLUJ` (892,029)  VM75)3PML0UZ\YHUJL0UJ»ZHY[PJSLVMPUJVYWVYH[PVU[VYLÅLJ[[OLJOHUNL ;V[HSLX\P[` 35,599   50%  PUJVYWVYH[LUHTL[V(SSPHUa75)3PML0UZ\YHUJL0UJ :OHYLPUUL[HZZL[ZVM[OLHJX\PYLY Ě 6[OLYZ Ě *HYY`PUN]HS\LVMPU]LZ[TLU[ PĚ 7 

92 LT GROUP, INC. 2019 ANNUAL REPORT 93 :\TTHYPaLKZ[H[LTLU[ZVM[V[HSJVTWYLOLUZP]LPUJVTLVM(,7+*MVY :[H[LTLU[ZVM*VTWYLOLUZP]L0UJVTL!

[OL`LHYLUKLK+LJLTILYHYLHZMVSSV^Z! 

   (822,224) (1,759,187)       71,899,127 2019  (Z9LZ[H[LK  (Z9LZ[H[LK 49,434,233  117,569,421

2019 5V[L 5V[L P (In Thousands) (In Thousands)

9L]LU\L P3,153,413 7 Total 9L]LU\L P56,865,508 7 7  Ě *VZ[ZHUKL_WLUZLZ (3,126,471)    *VZ[VMZLY]PJLZ (19,143,606)       0UJVTLSVZZILMVYLPUJVTL[H_ 26,942   .LULYHSHUKHKTPUPZ[YH[P]L   L_WLUZLZ (29,627,829)     2,933,745 P    7YV]PZPVUMVYPUJVTL[H_ 47,982    7          7 5L[SVZZ (21,040)   -VYLPNUL_JOHUNLNHPUZUL[ 1,105,918    Right-of-Use Right-of-Use Assets Total Ě Ě 6[OLYJVTWYLOLUZP]LPUJVTL – –6[OLYPUJVTLUL[ 3,209,264   Ě 0UJVTLILMVYLPUJVTL[H_ 12,409,255    Total comprehensive loss (P21,040) 7  7YV]PZPVUMVYPUJVTL[H_ (2,470,986)    .YV\W»ZZOHYLVM[V[HSJVTWYLOLUZP]L 5L[PUJVTL 9,938,269     

SVZZMVY[OL`LHY (P10,520) 7  9,153,471 P 6[OLYJVTWYLOLUZP]LPUJVTL 27,827,237 P  7   7 +PZJSVZ\YLZVU:\IZPKPHY`^P[O4H[LYPHS5VUJVU[YVSSPUN0U[LYLZ[ SVZZ 4,821,405       -VSSV^PUNPZ[OLÄUHUJPHSPUMVYTH[PVUVM75)^OPJOOHZTH[LYPHS Total comprehensive income P14,759,674 7 7   UVUJVU[YVSSPUNPU[LYLZ[ZVM HZVMHUKMVY[OL`LHYZLUKLK 5L[PUJVTLH[[YPI\[HISL[V! – – – –  *VUZ[Y\J[PVU PU7YVNYLZZ  :\I[V[HS +LJLTILY!  ,X\P[`OVSKLYZVM[OL7HYLU[  *VTWHU` P9,858,543 7 7 

 5VUJVU[YVSSPUNPU[LYLZ[Z 79,726     1,713,838 P 1,382,293 P 2019   Total comprehensive income         7

(In Thousands)  H[[YPI\[HISL[V!    7 in Progress Construction Subtotal in (JJ\T\SH[LKIHSHUJLZVM  ,X\P[`OVSKLYZVM[OL7HYLU[ TH[LYPHSUVUJVU[YVSSPUN  *VTWHU` 14,522,733        -P_[\YLZHUK ,X\PWTLU[ 6[OLY  -\YUP[\YL interest P2,882,039 7  7   5VUJVU[YVSSPUNPU[LYLZ[Z (14,705)    (240,206) (1,281,189) (1,159,564) (888,315) – (1,157,637)

Dividends declared to 2,695,653 P

5L[PUJVTLHSSVJH[LK[V 12,504,073 P TH[LYPHSUVUJVU[YVSSPUN UVUJVU[YVSSPUNPU[LYLZ[Z 3,372  

interest 79,726    7   7     :[H[LTLU[ZVM-PUHUJPHS7VZP[PVU! and Furniture, Fixtures Other Equipment Total comprehensive income HSSVJH[LK[VTH[LYPHSUVU 2019 controlling interest (14,705)     9L[\YUHISL *VU[HPULYZ

(In Thousands) 4,192,636 P 1,131,576 P ([*VZ[(Z9LZ[H[LK5V[L At Cost 6U-LIY\HY` 75)HJX\PYLK VM[OL]V[PUNJVTTVUZ[VJR *\YYLU[HZZL[Z P488,857,140 7 

VM()*75)HJJV\U[LKMVY[OLI\ZPULZZJVTIPUH[PVU^P[O()*\UKLY  7 Returnable Containers Ě 5VUJ\YYLU[HZZL[Z 665,367,850    Ě [OL HJX\PZP[PVU TL[OVK VM 7-9:   0U [OL 3;. JVUZVSPKH[LK ÄUHUJPHS  7 Z[H[LTLU[Z [OL TLYNLY VM 75) HUK ()* HUK [OL HJX\PZP[PVU VM 75) *\YYLU[SPHIPSP[PLZ 865,580,704   

[OYV\NO[OL)HUR/VSKPUN*VTWHUPLZHYLHJJV\U[LKMVY\UKLY[OLWVVSPUN 5VUJ\YYLU[SPHIPSP[PLZ 129,363,371     (In Thousands) 834,207 P

VMPU[LYLZ[ZTL[OVK;O\Z[OLZ\TTHYPaLKÄUHUJPHSPUMVYTH[PVUVM75) Transportation  ,X\PWTLU[ 2,569,749 P ,X\P[`H[[YPI\[HISL[V!

     ILSV^PZIHZLKVU[OLHTV\U[ZPU[OLJVUZVSPKH[LKÄUHUJPHSZ[H[LTLU[ZVM  ,X\P[`OVSKLYZVM[OL7HYLU[             75)WYLWHYLK\UKLY[OLWVVSPUNVMPU[LYLZ[ZTL[OVKILMVYL[OL.YV\W»Z 156,398,876

 *VTWHU`          PU[LYJVTWHU`LSPTPUH[PVUZ Transportation Equipment

             

 5VUJVU[YVSSPUNPU[LYLZ[ 2,882,039     7  7 (In Thousands) :[H[LTLU[ZVM*HZO-SV^Z! 6,846,941 P 3,109,742 P –  (KTPUPZ[YH[PVU Improvements 6ѝJLHUK )\PSKPUNZHUK 2019           

(In Thousands)  Administration 2τFHDQG Buildings and Improvements 6WLYH[PUN P22,079,130 7   7   Investing (66,100,996)       7  7 -PUHUJPUN 51,891,720    5L[PUJYLHZLKLJYLHZL 89,742,184 P 59,811,911 P in cash and cash LX\P]HSLU[Z P7,869,854 7  7    7   7 7,341,355 P 28,362,171 P – Machineries  HUK,X\PWTLU[  :\I[V[HS Machineries Equipment and Subtotal                7   7 20,947,525 P 13,951,514 P ([(WWYHPZLK=HS\LZ  Improvements )\PSKPUNZHUK 7SHU[ )\PSKPUN Buildings and Plant Buildings Building Improvements At Appraised Values 4,232 483,278 1,593,260 2,080,770 346,564 304,970 415,081 1,347,474 949,644 3,363,733 461,918 5,906,421 294,494 482,951 (1,377,068) (599,623) 463,078 (101,247) 126,335605,566 562,019 (832,172) 560,746 335,413 (107,390) 964,503 (161,932) 1,651,584 382,717 245,787 303,997 1,093,261 – 2,025,762 654,329 4,331,675   7    7 1,480,271 6,839,475 21,104,677 29,424,423 4,271,514 1,855,410 3,172,144 10,710,742 – 20,009,810 2,212,172 7,962,240 21,237,0082,212,172 7,962,240 31,411,420 4,546,841 1,939,265 3,476,141 10,915,688 – 20,877,935 654,329 52,943,684 7 40,432,488 P 38,519,042 P 40,432,488 20,947,525 28,362,171 89,742,184 6,846,941 2,569,749 4,192,636 12,504,073 1,713,838 27,827,237 3,126,156 120,695,577 40,731,214 21,913,754 28,578,36321,913,754 40,731,214 91,223,331 7,656,583 2,773,472 4,607,717 13,611,341 1,382,293 30,031,406 3,588,074 124,842,811 P – Land and Land Land Improvements Improvements Land and – – – – – – – – – – 3,126,156 3,126,156 5V[L  Amortization and Impairment Losses 5V[L             WYL]PV\ZS`YLWVY[LK 5V[L  restated 5V[L  Amortization and Impairment Losses 5V[L  +PZWVZHSZ[YHUZMLYZV[OLYZ Accumulated Depreciation, Accumulated Depreciation, )HSHUJLH[ILNPUUPUNVM`LHY      +LWYLJPH[PVUHUKHTVY[PaH[PVU)HSHUJLH[LUKVM`LHY                 Net Book Value )HSHUJLH[LUKVM`LHY         +PZWVZHSZ[YHUZMLYZV[OLYZ (KKP[PVUZ[YHUZMLYZ5V[L5L[PUJYLTLU[PUHWWYHPZLK]HS\L           Cost )HSHUJLH[ILNPUUPUNVM`LHY 7 Cost )HSHUJLH[ILNPUUPUNVM`LHYHZ 7YVWLY[`7SHU[HUK,X\PWTLU[ +LJLTILY +LJLTILY ,ќLJ[VMHKVW[PVUVM7-9: )HSHUJLH[ILNPUUPUNVM`LHYHZ (KKP[PVUZ[YHUZMLYZ5V[L +PZWVZHSZ[YHUZMLYZV[OLYZ )HSHUJLH[LUKVM`LHY Accumulated Depreciation, )HSHUJLH[ILNPUUPUNVM`LHY +LWYLJPH[PVUHUKHTVY[PaH[PVU +PZWVZHSZ[YHUZMLYZV[OLYZ )HSHUJLH[LUKVM`LHY Net Book Value P 12. 12.

94 LT GROUP, INC. 2019 ANNUAL REPORT 95 9PNO[VM\ZLHZZL[Z 13. 0U]LZ[TLU[7YVWLY[PLZ +LJLTILY 4V]LTLU[ZVM[OL.YV\W»ZPU]LZ[TLU[WYVWLY[PLZHYLHZMVSSV^ZPU[OV\ZHUKZ! Plant Buildings and December 31, 2019 Land and Land Building Machineries Buildings and Residential Construction Bank Premises Improvements Improvements and Equipment Total Land Improvements Unit in Progress Total Cost Cost )HSHUJLH[ILNPUUPUNVM`LHY P1,817,349 P1,185,608 P73,661 P49,538 P3,126,156 (KKP[PVUZ[YHUZMLYZ 461,918 ĚĚĚ461,918 )HSHUJLH[ILNPUUPUNVM`LHY P22,137,643 P11,397,724 P7,620 P4,179,574 P37,722,561 )HSHUJLH[LUKVM`LHY 2,279,267 1,185,608 73,661 49,538 3,588,074 (KKP[PVUZ 845,792 166,338 35,551 1,579,446 2,627,127 Accumulated Depreciation, Amortization +PZWVZHSZ[YHUZMLYZV[OLYZ (833,430) 3,266,202 (1,075) (3,294,549) (862,852) and Impairment Losses )HSHUJLH[LUKVM`LHY 22,150,005 14,830,264 42,096 2,464,471 39,486,836 )HSHUJLH[ILNPUUPUNVM`LHY ĚĚĚĚĚ Accumulated Depreciation and Impairment +LWYLJPH[PVUHUKHTVY[PaH[PVU 568,067 70,542 4,911 10,809 654,329 Losses )HSHUJLH[LUKVM`LHY 568,067 70,542 4,911 10,809 654,329 )HSHUJLH[ILNPUUPUNVM`LHY 3,558,186 3,837,854 7,620 – 7,403,660 Net Book Value P1,711,200 P1,115,066 P68,750 P38,729 P2,933,745 Depreciation – 528,023 – – 528,023 7YV]PZPVUMVYPTWHPYTLU[SVZZLZ – 500,253 – – 500,253 9L]HS\H[PVU VM 3HUK HUK 3HUK 0TWYV]LTLU[Z 7SHU[ )\PSKPUNZ HUK Depreciation +PZWVZHSZ[YHUZMLYZV[OLYZ (1,056,283) (472,147) (48,111) – (1,576,541) 4HJOPULYPLZHUK,X\PWTLU[ +LWYLJPH[PVUVMWYVWLY[`WSHU[HUKLX\PWTLU[JOHYNLK[VVWLYH[PVUZPZ )HSHUJLH[LUKVM`LHY 2,501,903 4,393,983 (40,491) – 6,855,395 ;OL JVYYLZWVUKPUN MHPY ]HS\LZ VM SHUK HUK SHUK PTWYV]LTLU[Z WSHU[ HZMVSSV^Z! Net Book Value P19,648,102 P10,436,281 P82,587 P2,464,471 P32,631,441 I\PSKPUNZHUKI\PSKPUNPTWYV]LTLU[ZHUKTHJOPULYPLZHUKLX\PWTLU[HYL KL[LYTPULKIHZLKVU]HS\H[PVUWLYMVYTLKI`7OPSPWWPUL:,*HJJYLKP[LK   HUKPUKLWLUKLU[HWWYHPZLYZ;OLMHPY]HS\LVM[OLSHUK^HZKL[LYTPULK +LJLTILY (Z9LZ[H[LK (Z9LZ[H[LK \ZPUN[OLTHYRL[KH[HHWWYVHJOIHZLKVUH]HPSHISLTHYRL[L]PKLUJLHUK 2019 5V[L 5V[L  )\PSKPUNZHUK  9LZPKLU[PHS  *VUZ[Y\J[PVU [OLMHPY]HS\LZMVYSHUKPTWYV]LTLU[ZWSHU[I\PSKPUNZHUKTHJOPULYPLZ HUK LX\PWTLU[ ^LYL KLYP]LK \ZPUN [OL KLWYLJPH[LK YLWSHJLTLU[ JVZ[ (In Thousands) Land Improvements 

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96 LT GROUP, INC. 2019 ANNUAL REPORT 97 O ;OL .YV\W YLJVNUPaLK NVVK^PSS ^OPJO WLY[HPUZ THPUS` [V (+0 3VUN[LYT5LNV[PHISL*LY[PÄJH[LZVM;PTL+LWVZP[Z 14. Other Noncurrent Assets HTV\U[PUN[V7TPSSPVUYLZWLJ[P]LS`(ZVM+LJLTILY  ;PTLKLWVZP[VM[OL.YV\WPUJS\KLZ[OLMVSSV^PUN3VUN[LYT5LNV[PHISL*LY[PÄJH[LZVM;PTL+LWVZP[Z3;5*+Z! HUK   [OL .YV\W WLYMVYTLK P[Z HUU\HS PTWHPYTLU[ [LZ[PUN VM 6[OLYUVUJ\YYLU[HZZL[ZJVUZPZ[VM! NVVK^PSSYLSH[LK[VP[Z*.LPNO[LK9H[PV[OL;PLY9PZR>LPNO[LK  HUKYLZWLJ[P]LS`ZLL5V[L 9H[PVHUK[OL8\HSPM`PUN*HWP[HS9PZR>LPNO[LK9H[PV^PSSH[HSS[PTLZ ILLX\HS[VVYNYLH[LY[OHU[OLWLYJLU[HNLWYLZJYPILKI`):7MYVT 0U     HUK  PU[LYLZ[ L_WLUZL VU 3;5*+Z VM [OL .YV\W [PTL[V[PTL-HPS\YL[VJVTWS`^P[OZ\JOÄUHUJPHSJV]LUHU[Z^PSSYLZ\S[ PUJS\KLZ HTVY[PaH[PVU VM [YHUZHJ[PVU JVZ[Z HTV\U[PUN [V 7 TPSSPVU to cancellation of the total commitments of the lenders and declare all 7  TPSSPVU HUK 7 TPSSPVU YLZWLJ[P]LS`

98 LT GROUP, INC. 2019 ANNUAL REPORT 99 ‹ 75)TH`]VS\U[HYPS`WYLWH`^OVSLVYHU`WHY[VMHU`SVHUV\[Z[HUKPUN ;YHKLWH`HISLZHSZVPUJS\KLPTWVY[H[PVUJOHYNLZYLSH[LK[VYH^TH[LYPHSZ  ,HJOUV[LOVSKLYI`HJJLW[PUN[OL5V[LZPYYL]VJHIS`HNYLLZ HUK PU PU[LNYHS T\S[PWSLZ VM <:  TPSSPVU 7  TPSSPVU Z\IQLJ[ W\YJOHZLZHZ^LSSHZVJJHZPVUHSHJX\PZP[PVUZVMWYVK\J[PVULX\PWTLU[ HUK HJRUV^SLKNLZ [OH[ P[ TH` UV[ L_LYJPZL VY JSHPT HU` YPNO[ VM 20. 6[OLY3PHIPSP[PLZ [V WYPVY UV[PJL VM [OL (NLU[ MVY UV[ SLZZ [OHU  I\ZPULZZ KH`Z HUKZWHYLWHY[Z ZL[VќPUYLZWLJ[VMHU`HTV\U[V^LKI`75)HYPZPUN\UKLYVYPU 7YLWH`TLU[ ZOHSS IL THKL VU [OL SHZ[ KH` VM HU PU[LYLZ[ WLYPVK JVUULJ[PVU^P[O[OL5V[LZ 2019  HWWSPJHISL[V[OLSVHU4HUKH[VY`WYLWH`TLU[TH`VJJ\YPMHJOHUNL (JJY\LK7YVQLJ[+L]LSVWTLU[*VZ[Z VMJVU[YVSVYJYLKP[YH[PUNKV^UNYHKLVJJ\YZ0U[OPZJHZL[OLSLUKLYZ (JJY\LK WYVQLJ[ KL]LSVWTLU[ JVZ[Z YLWYLZLU[ JVZ[Z PUJ\YYLK I` [OL 0U H YLZVS\[PVU KH[LK 1HU\HY`   [OL ):7 4VUL[HY` )VHYK (In Thousands) TH`JHUJLS[OLMHJPSP[`HUKKLJSHYLHSSV\[Z[HUKPUNSVHUZ[VNL[OLY^P[O 7YVWLY[`+L]LSVWTLU[ZLNTLU[PU[OLKL]LSVWTLU[HUKJVUZ[Y\J[PVUVM HWWYV]LK[OLYLX\LZ[VM75)[VL_LYJPZLP[ZJHSSVW[PVUVU[OL7)PSSPVU 0UZ\YHUJLJVU[YHJ[SPHIPSP[PLZ P5,745,820 7 HJJY\LKPU[LYLZ[PTTLKPH[LS`K\LHUKKLTHUKHISL YLHSLZ[H[LWYVQLJ[Z :\IVYKPUH[LK5V[LZZ\IQLJ[[VJVTWSPHUJLVMYLSL]HU[YLN\SH[PVUZ;OL 7H`HISL[VSHUKV^ULYZ 1,828,949     5V[LZ ^HZ YLKLLTLK VU 4H`   H[ HU HTV\U[ LX\HS [V 0U[LYVѝJLÅVH[Z 1,584,289  (Z VM +LJLTILY    75) OHZ JVTWSPLK ^P[O [OL HIV]L KLI[ (JJY\LK,_WLUZLZ [OLHNNYLNH[LPZZ\LWYPJLVM[OL5V[LZWS\ZHJJY\LKHUK\UWHPKPU[LYLZ[ 9LZLY]LMVY\ULHYULKWYLTP\TZ 1,470,274  JV]LUHU[Z 6[OLY HJJY\LK L_WLUZLZ JVUZPZ[ VM HJJY\HSZ MVY JVTTPZZPVU V\[ZPKL [OLYLVU\W[VI\[L_JS\KPUN4H` ZLY]PJLZ M\LS HUK VPS HUK WYVMLZZPVUHS MLLZ ^OPJO HYL PUKP]PK\HSS` UV[ 4HUHNLYZ»JOLJRZHUKKLTHUKKYHM[Z (Z VM +LJLTILY    HUK   IPSSZ WH`HISL ^P[O H JHYY`PUN ZPNUPÄJHU[HZ[VHTV\U[Z  7)PSSPVU:\IVYKPUH[LK5V[LZ V\[Z[HUKPUN 1,393,535  HTV\U[ VM 7 IPSSPVU HUK 7  IPSSPVU HYL ZLJ\YLK I` H WSLKNL VM 6U 1\UL   75)»Z)6+ HWWYV]LK [OL PZZ\HUJL VM \UZLJ\YLK )PSSZW\YJOHZLKJVU[YH5V[L  1,348,148   ÄUHUJPHSHZZL[ZH[-=6*0^P[OMHPY]HS\LZVM7 IPSSPVUHUK7IPSSPVU 9L[LU[PVU7H`HISL Z\IVYKPUH[LKUV[LZVM7IPSSPVU[OH[X\HSPM`HZ3V^LY;PLYJHWP[HS 6[OLYKLMLYYLKYL]LU\L5V[L 1,188,312  YLZWLJ[P]LS`HUK PU]LZ[TLU[ ZLJ\YP[PLZ H[ HTVY[PaLK JVZ[ ^P[O JHYY`PUN 9L[LU[PVUWH`HISLPZ[OLHTV\U[KLK\J[LKMYVT[OL[V[HSIPSSPUNVM[OL ,09VU[OPZUV[LPZ   6[OLYKVYTHU[JYLKP[Z 1,100,311  ]HS\LZVM7IPSSPVUHUK7IPSSPVUYLZWLJ[P]LS`HUKMHPY]HS\LZVM JVU[YHJ[VY^OPJO^PSSILWHPK\WVUJVTWSL[PVUVM[OLJVU[YHJ[LKZLY]PJLZ 978,618 7IPSSPVUHUK7 IPSSPVUYLZWLJ[P]LS`ZLL5V[L VM,[VU :PNUPÄJHU[[LYTZHUKJVUKP[PVUZVM[OLZ\IVYKPUH[LKUV[LZMVSSV^! 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;YHKL7H`HISLZ  ;OL5V[LZILHYPU[LYLZ[H[[OLYH[LVM WLYHUU\TMYVT ;YHKLWH`HISLZHYLUVUPU[LYLZ[ILHYPUNHUKHYLUVYTHSS`ZL[[SLKVU[V HUKPUJS\KPUN4H` [VI\[L_JS\KPUN4H` 0U[LYLZ[ KH`Z[LYTZ;YHKLWH`HISLZHYPZLTVZ[S`MYVT[YHKLW\YJOHZLZVM[OL ^PSSILWH`HISLX\HY[LYS`PUHYYLHYZVU[OL [OVM(\N\Z[5V]LTILY IHURPUNNYV\WHUKW\YJOHZLZVMPU]LU[VYPLZ^OPJOPUJS\KLYH^TH[LYPHSZ -LIY\HY` HUK 4H` VM LHJO `LHY JVTTLUJPUN VU 4H`   HUKPUKPYLJ[TH[LYPHSZPLWHJRHNPUNTH[LYPHSZHUKZ\WWSPLZMVY\ZLPU \USLZZ[OL5V[LZHYLYLKLLTLKH[HYLKLTW[PVUWYPJLLX\HS[V THU\MHJ[\YPUNHUKV[OLYVWLYH[PVUZ  VM[OLWYPUJPWHSHTV\U[VU4H`JHSSVW[PVUKH[L

100 LT GROUP, INC. 2019 ANNUAL REPORT 101 Parent Company, Subsidiaries, Parent Company, Subsidiaries, 21. +LYP]H[P]L-PUHUJPHS0UZ[Y\TLU[Z Associates and Joint Ventures Entities Under Common Control Associates and Joint Ventures Entities Under Common Control -;* 5L[^VYRZ/VSKPUNZ ,X\P[PLZ0UJ  :VSHY/VSKPUNZ*VYW ;OL[HISLZPU[OLUL_[WHNLZOV^[OLMHPY]HS\LZVMKLYP]H[P]LÄUHUJPHSPUZ[Y\TLU[ZLU[LYLKPU[VI`[OL.YV\WYLJVYKLKHZKLYP]H[P]LHZZL[ZVYKLYP]H[P]L Shareholdings *\IL-HJ[VY/VSKPUNZ0UJ  (SS:LHZVUZ9LHS[`*VYW SPHIPSP[PLZPUJS\KLK\UKLY¸-PUHUJPHSHZZL[ZHUKSPHIPSP[PLZH[-=;73¹[VNL[OLY^P[O[OLUV[PVUHSHTV\U[Z;OLUV[PVUHSHTV\U[PZ[OLHTV\U[VMHKLYP]H[P]L»Z :H[\YU ;Y\Z[THYR/VSKPUNZ*VYWVYH[PVU  +`UH^VYSK/VSKPUNZ0UJ \UKLYS`PUNHZZL[YLMLYLUJLYH[LVYPUKL_HUKPZ[OLIHZPZ\WVU^OPJOJOHUNLZPU[OL]HS\LVMKLYP]H[P]LZHYLTLHZ\YLK;OLUV[PVUHSHTV\U[ZPUKPJH[L[OL 7HYHTV\U[HUK:\IZPKPHYPLZ 7VSPTH0U[LYUH[PVUHS3PTP[LK  -PS*HYL/VSKPUNZ0UJ ]VS\TLVM[YHUZHJ[PVUZV\[Z[HUKPUNHZVM+LJLTILY HUK HUKHYLUV[PUKPJH[P]LVMLP[OLYTHYRL[YPZRVYJYLKP[YPZRHTV\U[ZPU[OV\ZHUKZ  ,[VU *VZTPJ/VSKPUNZ*VYW  2LU[^VVK+L]LSVWTLU[*VYW L_JLW[H]LYHNLMVY^HYKYH[L   )*0 5LNYVZ)PVJOLT*VYWVYH[PVU  3H=PKH+L]LSVWTLU[*VYW   ,*0 .YHUK^H`2VUZ[Y\J[0UJ  7YVMV\UK/VSKPUNZ0UJ December 31, 2019 +LJLTILY   -/0 /HYTVUPJ/VSKPUNZ*VYW  7\YWSL*Y`Z[HS/VSKPUNZ0UJ (]LYHNL   ,74* 7YV[VU9LHS[` +L]LSVWTLU[*VYWVYH[PVU  :HML^H`/VSKPUNZ ,X\P[PLZ0UJ Average Notional -VY^HYK 5V[PVUHS )HUR/VSKPUN*VTWHUPLZ! Billinge Investments Limited  :VJPL[`/VSKPUNZ*VYW Assets Liabilities Forward Rate Amount* (ZZL[Z Liabilities 9H[L (TV\U[  (SSTHYR/VSKPUNZ*VYW :[LW+YHNVU*V3PTP[LK  ;V[HS/VSKPUNZ*VYW (In Thousands)  +\UTVYL+L]LSVWTLU[*VYW /PNO(IV]L7YVWLY[PLZ3[K   75)HUK:\IZPKPHYPLZ -YLLZ[HUKPUNKLYP]H[P]LZ!  2LUYVJR/VSKPUNZ*VYW 7LUPJR.YV\W3PTP[LK 4HI\OH`.SVIHS/VSKPUN*VTWHU` *\YYLUJ`MVY^HYKZ  3LHK^H`/VSKPUNZ0UJ 0U:OHWL.YV\W3[K 7[L3[K  4\S[PWSL:[HY/VSKPUNZ*VYW /PILYZOHT(ZZL[Z3[K 4HI\OH`+PNP[HS7OPSPWWPULZ0UJ  )<@! 4HI\OH`+PNP[HS;LJOUVSVNPLZ  7PVULLY/VSKPUNZ ,X\P[PLZ0UJ 6YPLU[3LNLUK+L]LSVWTLU[Z3[K <:+ P23,951 P179,106 P50.64 P1,042,766 7 7  7 7   0UJ  +VUMHY4HUHNLTLU[3[K *VTWSL[L)LZ[+L]LSVWTLU[3[K 17@ 2 – 0.01 666       Associates  -HZ[9L[\YU,U[LYWYPZLZ3[K *VYTHJR0U]LZ[TLU[Z3[K /2+ ––––       74-;*  4H]LSZ[VUL0U[LYUH[PVUHS3[K 3PUR.YLH[0U[LYUH[PVUHS3[K =4* *5@ 39 – 0.14 2,000 33 ò    <[[LYTVZ[:\JJLZZ3[K )YPNO[(ISL/VSKPUNZ3[K  (7300 .)7 278 – 1.31 1,700  ò    0]VY`/VSKPUNZ0UJ  ()/70 ,<9 39 2,114 1.11 11,173        4LYP[/VSKPUNZ ,X\P[PLZ*VYW Joint Ventures 3 – 0.74 23,394 ––––  ;Y\L:\JJLZZ7YVÄ[Z3[K :.+  ()07HZJ\HS/VSKPUNZ  2L`3HUKTHYR0U]LZ[TLU[Z3[K  :,33!  ()07HZJ\HS-VVKZ  -YHNPSL;V\JO0U]LZ[TLU[Z3[K <:+ 280,652 8,432 50.64 1,677,221          (,7+* *(+ – 809 0.77 1,500  ò    *HYH]HU/VSKPUNZ*VYW .)7 176 211 1.31 5,150 ò    */- –––– ò   ;OLJVUZVSPKH[LKZ[H[LTLU[ZVMPUJVTLPUJS\KL[OLMVSSV^PUNYL]LU\LHUKV[OLYPUJVTLYLSH[LKJVZ[ZHUKV[OLYL_WLUZLZHJJV\U[IHSHUJLZHYPZPUNMYVT /2+ – 7,010 0.13 399,627     [YHUZHJ[PVUZ^P[OYLSH[LKWHY[PLZ! ,<9 4,613 51 1.11 28,691 ò    17@ 2,869 66 0.01 1,152,909     Nature 2019   :.+ ––––ò    (In Thousands) (<+ – 27 0.70 100  –   Dividend income P9,778,726 7 7   0U[LYLZ[YH[LZ^HWZ 60,418 47,687 ––  –– 7\YJOHZLZVMPU]LU[VYPLZ (547,273)     Associates >HYYHU[Z –––– ––– Sales 516,812      P373,040 P245,513 7 7 Leases 35,100   ;OLUV[PVUHSHTV\U[ZWLY[HPU[V[OLVYPNPUHSJ\YYLUJ`L_JLW[MVY[OLLTILKKLKKLYP]H[P]LZ^OPJOYLWYLZLU[[OLLX\P]HSLU[[V<:+HTV\U[ )HURPUNYL]LU\LPU[LYLZ[VUSVHUZHUK receivables 1,255,819      H (Z VM +LJLTILY    HUK   75) OVSKZ UPS ZOHYLZ HUK ;OLJOHUNLZPUMHPY]HS\LVM[OLKLYP]H[P]LZHYLPUJS\KLKPU¸;YHKPUNHUK :HSLZVMJVUZ\TLYWYVK\J[Z 30,656     ZOHYLZHUKZOHYLZVM967>HYYHU[Z:LYPLZ)H[ PU]LZ[TLU[ZZLJ\YP[PLZNHPUZ¹WYLZLU[LKHZWHY[VM¸)HURPUNYL]LU\LZ¹PU Entities Under Interest income on loans and advances 23,090     [OLPYMHPY]HS\LVM<: TPSSPVU7 TPSSPVUHUK<: TPSSPVU [OLJVUZVSPKH[LKZ[H[LTLU[ZVMPUJVTLZLL5V[L Common Control 17,968 7 TPSSPVUYLZWLJ[P]LS` 9LU[PUJVTL    6[OLYPUJVTL 73,199    I ;OL [HISL ILSV^ ZOV^Z [OL YVSSMVY^HYK HUHS`ZPZ VM UL[ KLYP]H[P]LZ 22. 9LSH[LK7HY[`;YHUZHJ[PVUZ -YLPNO[HUKOHUKSPUN (13,802)     HZZL[ZSPHIPSP[PLZ! 7\YJOHZLZVMPU]LU[VYPLZ (6,336)     ;OL*VTWHU`OHZ[YHUZHJ[LK^P[OP[ZZ\IZPKPHYPLZHZZVJPH[LZHUKV[OLY *VZ[VMIHURPUNZLY]PJLZPU[LYLZ[L_WLUZLVU YLSH[LKWHY[PLZHZMVSSV^Z! 2019  deposit liabilities (246,104)      (In Thousands) Entities Under *VZ[VMNVVKZZVSKHUKZLY]PJLZ (2,035)    )HSHUJLH[ILNPUUPUNVM`LHY Common Control Management and professional fees (581,793)      Parent Company, Subsidiaries, Derivative assets 574,629   Associates and Joint Ventures Entities Under Common Control 6\[ZPKLZLY]PJLZ (71,668)    Derivative liabilities 470,649  Parent Company (ZJV[/VSKPUNZ0UJ 9LU[L_WLUZL (23,698)   103,980   Tangent 7VS/VSKPUNZ0UJ (K]LY[PZPUNL_WLUZL (130)    :PLYYH/VSKPUNZ ,X\P[PLZ0UJ :OVY[[LYTLTWSV`LLILULÄ[Z (572,547)    *OHUNLZPUMHPY]HS\L Key Management Subsidiaries .YHUK*HYNVHUK>HYLOV\ZPUN:LY]PJLZ0UJ 7VZ[LTWSV`TLU[ILULÄ[Z (77,652)    *\YYLUJ`MVY^HYKZHUKZWV[Z (663,118)   ;+0HUK:\IZPKPHYPLZ )HZPJ/VSKPUNZ*VYWVYH[PVU  0U[LYLZ[YH[LZ^HWZHUK^HYYHU[Z (3,733)   (+0 -VYLTVZ[-HYTZ0UJ ;OLJVUZVSPKH[LKZ[H[LTLU[ZVMÄUHUJPHSWVZP[PVUPUJS\KL[OLMVSSV^PUNHZZL[SPHIPSP[`HJJV\U[IHSHUJLZ^P[OYLSH[LKWHY[PLZ! (666,851)    ((* .YHUKZWHU+L]LSVWTLU[*VYW (]HPSTLU[Z 690,292    TBI /PTTLS0UK\Z[YPLZ0UJ (TV\U[=VS\TL 6\[Z[HUKPUN)HSHUJL )HSHUJLH[LUKVM`LHY ()0HUK:\IZPKPHYPLZ 3HW\3HW\7HJRHNPUN Financial Statement Account Terms and Conditions 2019  2019   (N\H=PKH:`Z[LTZ0UJ 3\JR`;YH]LS*VYWVYH[PVU (In Thousands) Derivative assets 373,040  Interbev 7OPSPWWPUL(PYSPULZ0UJ +\L[VYLSH[LKWHY[PLZ 6UKLTHUK"UVUPU[LYLZ[ILHYPUN P– 7– (P15,325) 7 Derivative liabilities 245,619   >H[LYPJO 9HWPK4V]LYZ -VY^HYKLYZ*V0UJ Parent Company +\LMYVTYLSH[LKWHY[PLZ 6UKLTHUK"UVUPU[LYLZ[ILHYPUN – –509,000   127,421    7HJRHNL^VYSK

102 LT GROUP, INC. 2019 ANNUAL REPORT 103 (TV\U[=VS\TL 6\[Z[HUKPUN)HSHUJL ;OLMVSSV^PUN[HISLZZ\TTHYPaL[OLJVTWVULU[ZVMUL[YL[PYLTLU[WSHUHZZL[ZHUKUL[YL[PYLTLU[ILULÄ[ZSPHIPSP[`YLJVNUPaLKPU[OLJVUZVSPKH[LKZ[H[LTLU[Z Financial Statement Account Terms and Conditions 2019  2019  VMÄUHUJPHSWVZP[PVU[OLUL[ILULÄ[L_WLUZLZYLJVNUPaLKPU[OLJVUZVSPKH[LKZ[H[LTLU[ZVMPUJVTLHUK[OLYLTLHZ\YLTLU[SVZZLZNHPUZYLJVNUPaLKPU JVUZVSPKH[LKZ[H[LTLU[ZVMJVTWYLOLUZP]LPUJVTL (In Thousands) :LJ\YLKI`OVSKV\[VUKLWVZP[Z 5L[YL[PYLTLU[WSHUHZZL[Z! NV]LYUTLU[ZLJ\YP[PLZYLHSLZ[H[L HUKTVY[NHNL[Y\Z[PUKLU[\YL" P[OPU[LYLZ[YH[LZ 2019   YHUNPUNMYVT  [V ^P[O  'HðQHG Net  +LÄULK  5L[  +LÄULK  5L[ TH[\YP[`[LYTZYHUNPUNMYVT KH`Z  %HQHðW Fair Value of Retirement  )LULÄ[  -HPY=HS\LVM  9L[PYLTLU[  )LULÄ[  -HPY=HS\LVM  9L[PYLTLU[ Obligations Plan Assets Plan Assets  6ISPNH[PVUZ  7SHU(ZZL[Z  7SHU(ZZL[Z  6ISPNH[PVUZ  7SHU(ZZL[Z  7SHU(ZZL[Z [V`LHYZHUKWH`TLU[[LYTZVM (In Thousands) YHUNPUNMYVTTVU[OS`[VX\HY[LYS` -PUHUJLYLJLP]HISLZ WH`TLU[Z P1,255,819 7   P39,487,080 7    Beginning balance P201,030 (P481,494) (P280,464) 7 7 7 7  7  7  *OHUNLPUZ[H[\ZVMYL[PYLTLU[WSHU – – – – – – – – – Trade receivables KV 30,656  14,298    Entities Under 5L[YL[PYLTLU[ILULÄ[ZL_WLUZLPUJVTL Common 6[OLYYLJLP]HISLZ KV 73,199  16,590  PUWYVÄ[VYSVZZ! Control +\LMYVTYLSH[LKWHY[PLZ 6UKLTHUK"UVUPU[LYLZ[ILHYPUN 127  778,948   *\YYLU[ZLY]PJLJVZ[ 10,478 (1,380) 9,098    –     –  (K]HUJLZ[VZ\WWSPLYZ KV (2,035)  3,026  5L[PU[LYLZ[JVZ[ 7,389 (26,178) (18,789)            >P[OHUU\HSYH[LZYHUNPUNMYVT 17,867 (27,558) (9,691)             [V HUKTH[\YP[` *VU[YPI\[PVUZ (655) (3,620) (4,275) –  –   Deposit liabilities YHUNPUNMYVTKH`Z[VVUL`LHY (916,094)   15,138,059  )LULÄ[ZWHPK (3,995) 3,995 –   –     – (JJV\U[WH`HISLHUKV[OLY [V KH`Z[LYTZ"UVUPU[LYLZ[ 9LTLHZ\YLTLU[SVZZLZNHPUZPUV[OLY liabilitites bearing (80,744)   (376,414)   JVTWYLOLUZP]LPUJVTLHJ[\HYPHS JOHUNLZHYPZPUNMYVTJOHUNLZPU! +\L[VYLSH[LKWHY[PLZ 6UKLTHUK"UVUPU[LYLZ[ILHYPUN 14,874  (50,000)   -PUHUJPHSHZZ\TW[PVUZ 32,296 –32,296  –   –  [V KH`Z[LYTZ"UVUPU[LYLZ[ +LTVNYHWOPJHZZ\TW[PVUZ – (8,841) – – – – – – – 6[OLYWH`HISLZ bearing – – – – ,_WLYPLUJLHKQ\Z[TLU[Z 11,927 (911) 11,016           (Z VM +LJLTILY    HUK   [OL V\[Z[HUKPUN YLSH[LK WHY[` ‹ ;OLWYVWLY[`KL]LSVWTLU[ZLNTLU[W\YJOHZLZWHYJLSZVMSHUKMYVT 44,223 (9,752) 34,471          IHSHUJLZHYL\UZLJ\YLKHUKZL[[SLTLU[VJJ\YZPUJHZO\USLZZV[OLY^PZL V[OLYYLSH[LKWHY[PLZMVY\ZLPUP[Z]HYPV\ZWYVQLJ[Z ,UKPUNIHSHUJL P258,470 (P518,429) (P259,959) 7 7   7  7 7 7 PUKPJH[LK ;OL .YV\W OHZ UV[ YLJVYKLK HU` PTWHPYTLU[ VM YLJLP]HISLZ YLSH[PUN [V HTV\U[Z V^LK I` YLSH[LK WHY[PLZ ;OPZ HZZLZZTLU[ PZ ‹ :L]LYHS LU[P[PLZ \UKLY JVTTVU JVU[YVS THPU[HPU WLZV HUK MVYLPNU \UKLY[HRLULHJOÄUHUJPHS`LHY[OYV\NOL_HTPUPUN[OLÄUHUJPHSWVZP[PVUVM J\YYLUJ`KLUVTPUH[LKKLWVZP[ZHUKZOVY[[LYTHUKSVUN[LYTSVHUZ 5L[YL[PYLTLU[ILULÄ[ZSPHIPSP[PLZ! [OLYLSH[LKWHY[PLZHUK[OLTHYRL[PU^OPJO[OLZLYLSH[LKWHY[PLZVWLYH[L ^P[O 75) 0U[LYLZ[ PUJVTL HUK ÄUHUJPUN JOHYNLZ YLSH[LK [V [OLZL [YHUZHJ[PVUZ HYL YLWVY[LK \UKLY ¸)HURPUN YL]LU\L¹ HUK ¸*VZ[ VM   6[OLY[LYTZHUKJVUKP[PVUZYLSH[LK[V[OLHIV]LYLSH[LKWHY[`IHSHUJLZ IHURPUNZLY]PJLZ¹YLZWLJ[P]LS`ZLL5V[L (ZYLZ[H[LK (ZYLZ[H[LK HUK[YHUZHJ[PVUZHYLHZMVSSV^Z! 2019 5V[L 5V[L  'HðQHG Accrued  (JJY\LK +LÄULK  (JJY\LK Transactions with Tangent, parent company 23. 9L[PYLTLU[)LULÄ[Z  %HQHðW Fair Value of Retirement +LÄULK)LULÄ[  -HPY=HS\LVM  9L[PYLTLU[ )LULÄ[  -HPY=HS\LVM  9L[PYLTLU[ Obligations Plan Assets  %HQHðWV  6ISPNH[PVUZ  7SHU(ZZL[Z  )LULÄ[Z  6ISPNH[PVUZ  7SHU(ZZL[Z  )LULÄ[Z ‹ 6U(WYPS HUK4HYJO 3;.KLJSHYLKJHZOKP]PKLUKZ ;OL .YV\W OHZ M\UKLK UVUJVU[YPI\[VY` KLÄULK ILULÄ[ YL[PYLTLU[ (In Thousands) of 7 HUK 7 WLY ZOHYL [V HSS Z[VJROVSKLYZ VM YLJVYK HZ VM WSHUZHKTPUPZ[LYLKI`H[Y\Z[LLJV]LYPUNHSSVMP[ZWLYTHULU[ Beginning balance P9,239,745 (P7,601,607) P1,631,868 7   7  7  7   7  7  (WYPS  HUK4HYJO  YLZWLJ[P]LS`VM^OPJO7IPSSPVU LTWSV`LLZ(ZVM+LJLTILY HUK [OL.YV\WPZPU *OHUNLPUZ[H[\ZVMYL[PYLTLU[WSHU – – – – – – – – – PU HUK7IPSSPVUPU ^LYLWHPK[V;HUNLU[ JVTWSPHUJL ^P[O (Y[PJSL   VM [OL 3HIVY *VKL HZ HTLUKLK I` 5L[YL[PYLTLU[ILULÄ[ZJVZ[PUWYVÄ[VY 9LW\ISPJ(J[5V SVZZ! Transactions with Associates  *\YYLU[ZLY]PJLJVZ[ 625,316 – 625,316    –    – +L[HPSZ VM [OL .YV\W»ZUL[ YL[PYLTLU[ WSHU HZZL[Z HUK SPHIPSP[PLZ HYL HZ  5L[PU[LYLZ[JVZ[ 542,042 (431,789) 110,253         ‹ +P]PKLUKPUJVTLMYVT74-;*HTV\U[LK[V7  IPSSPVUPU HUK MVSSV^Z!  7HZ[ZLY]PJLJVZ[ 3,774 – 3,774  – – – – 7IPSSPVUPU ZLL5V[L 2019  1,171,132 (431,789) 739,343            *VU[YPI\[PVUZ (1,000) (1,904,683) (1,905,683) –    –    ‹ ;OL.YV\WW\YJOHZLZYH^TH[LYPHSZZ\JOHZYH^HUKYLÄULKZ\NHY (In Thousands) )LULÄ[ZWHPKMYVTWSHUHZZL[Z (419,579) 419,579 –     –    – HUKTVSHZZLZMYVT=4* 5L[YL[PYLTLU[WSHUHZZL[Z! )LULÄ[ZWHPKKPYLJ[S`MYVTIVVRYLZLY]LZ (20,590) – (20,590)  – – – –  -;* P246,112 7 ‹ ()0LU[LYLKPU[VHUVWLYH[PUNSLHZLHNYLLTLU[^P[O()/70[VSLHZL 9LTLHZ\YLTLU[SVZZLZNHPUZPUV[OLY TDI 2,648  JVTWYLOLUZP]LPUJVTLHJ[\HYPHS WVY[PVUZVMP[Z[^VIYL^LYPLZPU*HI\`HV3HN\UHHUK,S:HS]HKVY Ě JOHUNLZHYPZPUNMYVTJOHUNLZPU! 4PZHTPZ6YPLU[HSZ\IQLJ[[V[OL[LYTZHUKJVUKP[PVUZVMHUHZZL[  ((*  -PUHUJPHSHZZ\TW[PVUZ 1,322,604 – 1,322,604  –  – SLHZLHNYLLTLU[ZPNULKSHZ[5V]LTILY;OLSLHZLOHZH TBI 3,011 ò (26,893) – (26,893) – – Ä_LK`LHYS`PUJYLHZLHZZWLJPÄLKPU[OLJVU[YHJ[(ZVM+LJLTILY 3;. 8,188  +LTVNYHWOPJHZZ\TW[PVUZ           ,_WLYPLUJLHKQ\Z[TLU[Z 69,174 (116,350) (47,176)            HUK [OLYLSH[LKYLU[YLJLP]HISLMVY[OLSLHZLVMSHUK P259,959 7  1,364,885 (116,350) 1,248,535            HTV\U[LK[V7TPSSPVUHUK7TPSSPVUYLZWLJ[P]LS` 5L[YL[PYLTLU[ILULÄ[ZSPHIPSP[PLZ! ,UKPUNIHSHUJL P11,334,593 (P9,634,850) P1,699,743 7   7 7  7   7  7 P776,936 ‹ ()0ZVSKPU]LU[VYPLZ[V()/70HZPKLMYVT[OLUVUTVUL[HY`HZZL[Z  75)HUKZ\IZPKPHYPLZ 7  ZVSKVU5V]LTILYPUJS\KPUN^VYRPUWYVNYLZZHTV\U[PUN  ()0HUKZ\IZPKPHYPLZ 749,049  to 7TPSSPVU0U HUK ()0YLUKLYLKZLY]PJLZPUMH]VY  (+0 29,578   VM ()/7 YLSH[LK [V Z\WWSPLZ IV[O PTWVY[LK HUK SVJHSS`W\YJOHZLK  ((* 15,452 ò HK]LY[PZPUN L_WLUZL WYVTV[PVUZ WYVMLZZPVUHS MLLZ LUNPULLYPUN MLL  ,[VU 128,728  HUKZOHYLKL_WLUZLZPU[OLWSHU[ P1,699,743 7  Transactions with Entities under Common Control

‹ +\L[VYLSH[LKWHY[PLZPUJS\KLJHZOHK]HUJLZWYV]PKLK[V[OL.YV\W[V Z\WWVY[P[Z^VYRPUNJHWP[HSYLX\PYLTLU[Z

‹ :L]LYHS Z\IZPKPHYPLZ VM [OL .YV\W LU[LYLK PU[V THUHNLTLU[ ZLY]PJLZ HNYLLTLU[Z ^P[O )HZPJ /VSKPUNZ *VYWVYH[PVU MVY JLY[HPU JVUZPKLYH[PVUZ 4HUHNLTLU[ MLLZ HYL YLJVYKLK \UKLY ¸6\[ZPKL ZLY]PJLZ¹ PU ¸*VZ[ VM NVVKZ ZVSK¹ HUK ¸7YVMLZZPVUHS MLLZ¹ PU [OL ¸.LULYHSHUKHKTPUPZ[YH[P]LL_WLUZLZ¹

104 LT GROUP, INC. 2019 ANNUAL REPORT 105 ;OLMHPY]HS\LVMWSHUHZZL[ZHZVM+LJLTILYPZHZMVSSV^Z! :OV^U ILSV^ PZ [OL TH[\YP[` HUHS`ZPZ VM [OL \UKPZJV\U[LK ILULÄ[ )HURPUNYL]LU\LJVUZPZ[ZVM! WH`TLU[ZVM[OL.YV\W(in thousands)! 25. :LSSPUN,_WLUZLZ 2019 2019   (In Thousands) 2019  (Z9LZ[H[LK (Z9LZ[H[LK 2019   *HZOHUKJHZOLX\P]HSLU[Z P142,365 7  6UL`LHYHUKSLZZ 1,348,317  2019 5V[L 5V[L (In Thousands) 9LJLP]HISLZ 22,375  4VYL[OHUVUL`LHY\W[VÄ]L`LHYZ 5,106,816   (In Thousands) (K]LY[PZPUNHUKWYVTV[PVUZ P1,458,151 7 7  ,X\P[`PU]LZ[TLU[Z! 4VYL[OHUÄ]L`LHYZ\W[V`LHYZ 4,775,894   0U[LYLZ[PUJVTLVU! -YLPNO[HUKOHUKSPUN 560,738    Loans and receivables P39,618,639 7   7   -PUHUJPHSPUZ[P[\[PVUZ 313,744   4VYL[OHU`LHYZ\W[V`LHYZ 3,326,514   +LWYLJPH[PVUHUKHTVY[PaH[PVU Trading and investment  6[OLY Ě  4VYL[OHU`LHYZ 50,368,706  5V[L 292,805   ZLJ\YP[PLZ5V[L 9,425,264    +LI[PU]LZ[TLU[Z! 4HUHNHTLU[JVUZ\S[PUNHUK ;OL .YV\W L_WLJ[Z [V JVU[YPI\[L 7 IPSSPVU [V [OL KLÄULK ILULÄ[ +LWVZP[Z^P[OIHURZHUKV[OLYZ 652,539    professional fees 170,507   49,393 0U]LZ[TLU[PUWYP]H[LKLI[ZLJ\YP[PLZ    WLUZPVU WSHU PU  ;OL H]LYHNL K\YH[PVU VM [OL KLÄULK ILULÄ[ 0U[LYIHURSVHUZYLJLP]HISL 668,211     VISPNH[PVUZH[[OLLUKVM[OLYLWVY[PUNWLYPVKYHUNLMYVT`LHYZHZ 7LYZVUULSJVZ[Z 130,180    0U]LZ[TLU[ZPUNV]LYUTLU[ZLJ\YP[PLZ 419,520   50,364,653      VM+LJLTILY HUK[V`LHYZHZVM+LJLTILY  *VTTPZZPVUZ 101,545   6[OLYZ Ě   Service fees and commission 9V`HS[PLZ 72,239     -HPY]HS\LVMWSHUHZZL[Z P947,397 7  income 5,176,500       ;YHUZHJ[PVUZ^P[O9L[PYLTLU[7SHUZ -\LSHUKVPS 28,939      4HUHNLTLU[VM[OLYL[PYLTLU[M\UKZVM[OLIHURPUNZLNTLU[PZOHUKSLK ;YHKPUNHUKZLJ\YP[PLZNHPUZUL[ 1,074,478     ;OLTHQVYJH[LNVYPLZVMWSHUHZZL[ZHZHWLYJLU[HNLVM[OLMHPY]HS\LVM 4H[LYPHSZHUKJVUZ\THISLZ 37,901     [V[HSWSHUHZZL[ZHYLHZMVSSV^Z! I`[OL75);Y\Z[)HURPUN.YV\W;).;OLMHPY]HS\LVM[OLWSHUHZZL[Z P56,615,631 7 7  HZVM+LJLTILY HUK MVY[OL.YV\WPUJS\KLZPU]LZ[TLU[ZPU 9LWHPYZHUKTHPU[LUHUJL 32,860    [OL75)ZOHYLZVMZ[VJR^P[OMHPY]HS\LHTV\U[PUN[V7TPSSPVUHUK :HSLVMJVUZ\TLYNVVKZJVUZPZ[ZVM! 6[OLYZ 125,559   2019  7TPSSPVUJSHZZPÄLKHZÄUHUJPHSHZZL[ZH[-=;735VSPTP[H[PVUZHUK P3,011,424 7  7  15% YLZ[YPJ[PVUZHYLWYV]PKLKHUK]V[PUNYPNO[ZV]LY[OLZLZOHYLZHYLL_LYJPZLK *HZOHUKJHZOLX\P]HSLU[Z  2019   2% I`H[Y\Z[VѝJLYVYHU`VMP[ZKLZPNUH[LKHS[LYUH[LVѝJLYVM;). 9LJLP]HISLZ  (In Thousands) 6[OLYZ PUJS\KL VJJ\WHUJ` MLLZ M\LS HUK VPS PUZ\YHUJL KVUH[PVUZ ,X\P[`PU]LZ[TLU[Z 33%  TLTILYZOPWHUKZ\IZJYPW[PVUK\LZ^OPJOHYLPUKP]PK\HSS`UV[ZPNUPÄJHU[ (ZVM+LJLTILY HUK ÄUHUJPHSHZZL[ZH[-=;73HUKH[ .YVZZZHSLZ P37,323,117 7 7 Debt investments 50%  HZ[VHTV\U[Z HTVY[PaLK JVZ[Z PUJS\KL NV]LYUTLU[ HUK WYP]H[L KLI[ ZLJ\YP[PLZ HUK 3LZZZHSLZYL[\YUZKPZJV\U[ZHUK -HPY]HS\LVMWSHUHZZL[Z 100%  ]HYPV\Z M\UKZ +LWVZP[Z ^P[O V[OLY IHURZ WLY[HPU [V :WLJPHS +LWVZP[ HSSV^HUJLZ 2,827,331      (JJV\U[ZWSHJLTLU[^P[O):7 P34,495,786 7  7  26. .LULYHSHUK(KTPUPZ[YH[P]L,_WLUZLZ 2019   +PZJV\U[YH[L 4.7%-5.1%      ;OLYL[PYLTLU[M\UKZVM[OLV[OLYJVTWHUPLZPU[OL.YV\WHYLTHPU[HPULK *VZ[VMNVVKZZVSKHUKZLY]PJLZJVUZPZ[ZVM! I`75)HZ[OL[Y\Z[LLIHUR75)»ZYL[PYLTLU[M\UKZOH]LUVPU]LZ[TLU[Z  -\[\YLZHSHY`PUJYLHZLZ 4.0%-8.0%      PUKLI[VYLX\P[`ZLJ\YP[PLZVM[OLJVTWHUPLZPU[OL.YV\W (Z9LZ[H[LK 2019   2019  5V[L (ZVM+LJLTILY [OLKPZJV\U[HUKM\[\YLZHSHY`PUJYLHZLYH[LZ (In Thousands) HYL  HUK YLZWLJ[P]LS` (In Thousands) 24. 9L]LU\LHUK*VZ[VM.VVKZ:VSKHUK:LY]PJLZ *VZ[VMJVUZ\TLYNVVKZZVSK! 7LYZVUULSJVZ[Z P10,399,515 7 7   ;OLZLUZP[P]P[`HUHS`ZPZILSV^OHZILLUKL[LYTPULKIHZLKVUYLHZVUHIS`  4H[LYPHSZ\ZLKHUKJOHUNLZPU ;H_LZHUKSPJLUZLZ 5,113,559      WVZZPISLJOHUNLZVMLHJOZPNUPÄJHU[HZZ\TW[PVUVU[OLKLÄULKILULÄ[ 9L]LU\LJVUZPZ[VM!  PU]LU[VYPLZ5V[L  P14,326,602 7  7 +LWYLJPH[PVUHUKHTVY[PaH[PVU VISPNH[PVUZ HZ VM [OL LUK VM [OL YLWVY[PUN WLYPVK HZZ\TPUN HSS V[OLY  +LWYLJPH[PVUHUKHTVY[PaH[PVU 5V[LZHUK 3,052,122     HZZ\TW[PVUZ^LYLOLSKJVUZ[HU[(in thousands)!    5V[L 1,578,423    7YV]PZPVUMVYJYLKP[SVZZLZ5V[L  2,459,444    (Z9LZ[H[LK (Z9LZ[H[LK  -\LSHUKWV^LY 1,192,723    0UZ\YHUJL 1,874,192   2019 5V[L 5V[L 2019   ;H_LZHUKSPJLUZLZ 6,141,929     6\[ZPKLZLY]PJLZ 1,860,478    (In Thousands) Increase (Decrease) 0UJYLHZL+LJYLHZL  7LYZVUULSJVZ[Z 959,764   4HYRL[PUNHUKWYVTV[PVUHS 1,141,243     in Present )HURPUNYL]LU\L5V[L P56,615,631 7 7  PU7YLZLU[  *VTT\UPJH[PVUSPNO[HUK^H[LY 820,024   6JJ\WHUJ` 1,040,989     Change in 9DOXHRI'HðQHG *OHUNLPU =HS\LVM+LÄULK :HSLVMJVUZ\TLYNVVKZ 34,495,786      6\[ZPKLZLY]PJLZ 501,097     4HUHNLTLU[JVUZ\S[PUNHUK rate %HQHðW2EOLJDWLRQV rate )LULÄ[6ISPNH[PVUZ 9LU[HSPUJVTL5V[L 1,707,833     512,175 professional fees 1,031,532     +PZJV\U[YH[LZ 0.50% (474,462)    9LHSLZ[H[LZHSLZ 1,424,598    9LWHPYZHUKTHPU[LUHUJL    -0.50% (315,804)     -YLPNO[HUKOHUKSPUN 435,428       7VSPJ`OVSKLYILULÄ[ZHUKJSHPT P94,243,848 7   7 ILULÄ[Z 909,975     -\[\YLZHSHY`  6[OLYZ 530,317    increases 1.00% (230,197) 0UMVYTH[PVU[LJOUVSVN` 818,896       +PZZHNYLNH[LKYL]LU\LPUMVYTH[PVU 26,998,482    -1.00% (537,972)    Travel and transportation 453,325   :L[ V\[ ILSV^ PZ [OL KPZHNNYLNH[PVU VM [OL .YV\W»Z YL]LU\LZ MYVT *VZ[VMIHURPUNZLY]PJLZ 18,696,210     JVU[YHJ[Z^P[OJ\Z[VTLYZHUKYL]LU\LZUV[JV]LYLK\UKLY7-9:MVY Litigation 326,588    -\SS HJ[\HYPHS ]HS\H[PVUZ ^LYL WLYMVYTLK [V [LZ[ [OL ZLUZP[P]P[` VM [OL *VZ[VMYLHSLZ[H[LZHSLZ5V[L  663,789     [OL`LHYLUKLK+LJLTILY (in thousands)! *VTT\UPJH[PVUSPNO[HUK^H[LY 314,066   KLÄULKILULÄ[VISPNH[PVU[VH PUJYLTLU[PUZHSHY`PUJYLHZLYH[L  *VZ[VMYLU[HSPUJVTL5V[L 444,087    4H[LYPHSZHUKJVUZ\THISLZ 286,716    KLJYLTLU[PU[OLKPZJV\U[YH[LHUKH PTWYV]LTLU[PU[OLLTWSV`LL *VZ[VMNVVKZZVSKHUKZLY]PJLZ P46,802,568 7  7    [\YUV]LYYH[L;OLYLZ\S[ZHSZVWYV]PKLHNVVKLZ[PTH[LVM[OLZLUZP[P]P[` .VVKZ 9LWHPYZHUKTHPU[LUHUJL 230,192     Services VM[OLKLÄULKILULÄ[VISPNH[PVU[VH KLJYLTLU[PUZHSHY`PUJYLHZL 9L]LU\LZ 6[OLY L_WLUZLZ PUJS\KL PUZ\YHUJL \[PSP[PLZ HUK V\[ZPKL ZLY]PJLZ ^OPJO -YLPNO[HUKOHUKSPUN 78,884      transferred Services V\[ZPKL[OL YH[L   PUJYLTLU[ PU [OL KPZJV\U[ YH[L HUK H   PUJYLHZL PU [OL at a point in transferred scope of HYLPUKP]PK\HSS`UV[ZPNUPÄJHU[HZ[VHTV\U[Z -\LSHUKVPS 11,767   LTWSV`LL[\YUV]LYYH[LI\[^P[OYL]LYZLPTWHJ[ time over time 7-9: Total 7YV]PZPVUMVYYL]LYZHSVMSLNHSJHZLZ :HSLVMJVUZ\TLYNVVKZ 7   7ò7ò7   *VZ[VMIHURPUNZLY]PJLZJVUZPZ[VM! HUKV[OLYSVZZLZUL[5V[LZ ;OL .YV\W LTWSV`Z HZZL[SPHIPSP[` TH[JOPUN Z[YH[LNPLZ [V TH_PTPaL Service fees and HUK  Ě   PU]LZ[TLU[YL[\YUZH[[OLSLHZ[YPZR[VYLK\JLJVU[YPI\[PVUYLX\PYLTLU[Z commission income  ò ò  2019   6[OLYZ 1,317,247    ^OPSLTHPU[HPUPUNHZ[HISLYL[PYLTLU[WSHU9L[PYLTLU[WSHUZHYLPU]LZ[LK 9LHSLZ[H[LZHSLZ ò  ò  P32,720,730 7     7   [V LUZ\YL [OH[ SPX\PK M\UKZ HYL H]HPSHISL ^OLU ILULÄ[Z ILJVTL K\L (In Thousands) Interest income ò ò   [V TPUPTPaL SVZZLZ K\L [V PU]LZ[TLU[ WYL[LYTPUH[PVUZ HUK TH_PTPaL 0U[LYLZ[L_WLUZLVU! 9LU[HSPUJVTL ò ò     6[OLYZPUJS\KLL_WLUZLP[LTZTHPUS`YLSH[PUN[VIHURPUNVWLYH[PVUZ^OPJO VWWVY[\UP[PLZMVYOPNOLYWV[LU[PHSYL[\YUZH[[OLSLHZ[YPZR  +LWVZP[SPHIPSP[PLZ5V[L P13,577,503 7 7  ;YHKPUNHUKZLJ\YP[PLZ HYLPUKP]PK\HSS`UV[ZPNUPÄJHU[HZ[VHTV\U[Z NHPUZUL[ ò ò    )PSSZWH`HISLHUKV[OLY  ;OL J\YYLU[ WSHU HZZL[ VM [OL .YV\W PZ HSSVJH[LK [V JV]LY ILULÄ[  IVYYV^PUNZ5V[LZHUK 2,185,046    7   7 7  7   WH`TLU[ZPU[OLVYKLYVM[OLPYWYV_PTP[`[V[OLWYLZLU[[PTL,_WLJ[LK  )VUKZWH`HISL 1,945,497  –

ILULÄ[ WH`TLU[Z HYL WYVQLJ[LK HUK JSHZZPÄLK PU[V ZOVY[[LYT VY Services fees and commission SVUN[LYT SPHIPSP[PLZ  0U]LZ[TLU[ PUZ[Y\TLU[Z [OH[ ^V\SK TH[JO[OL  L_WLUZL 988,164      SPHIPSP[PLZHYLPKLU[PÄLK;OPZZ[YH[LN`TPUPTPaLZ[OLWVZZPIPSP[`VM[OL P18,696,210 7    7 HZZL[SPHIPSP[`TH[JOILPUNKPZ[VY[LKK\L[V[OL.YV\W»ZMHPS\YL [V JVU[YPI\[LPUHJJVYKHUJL^P[OP[ZNLULYHSM\UKPUNZ[YH[LN`

106 LT GROUP, INC. 2019 ANNUAL REPORT 107  2019  27. Finance Costs and Finance Income (Z9LZ[H[LK Net Net  5L[  5L[ 2019  5V[L Deferred Deferred Deferred Deferred (In Thousands) +L[HPSZ VM ÄUHUJL JVZ[Z HUK ÄUHUJL PUJVTL V[OLY [OHU [OL IHURPUN Income Tax Income Tax  0UJVTL;H_  0UJVTL;H_ ZLNTLU[HYLHZMVSSV^Z! 4HYR[VTHYRL[NHPUVUÄUHUJPHS Assets(1) Liabilities(2)  (ZZL[Z Liabilities HZZL[ZKLZPNUH[LKH[-=;73 5V[L P17,800 7 7  (In Thousands) 2019   9LMLYYHSWYVJLZZPUNHUK[Y\Z[MLLZ Ě   +PќLYLUJLIL[^LLU[H_HUKIVVRIHZPZVMHJJV\U[PUNMVYYLHSLZ[H[L (In Thousands) .HPUVUKPZWVZHSVM(-:PU]LZ[TLU[Z Ě ò   HUKIHURPUN[YHUZHJ[PVUZ PĚ P– 7 7– -PUHUJLJVZ[Z5V[L ! 6[OLYZ 473,477   ,_JLZZ4*0; Ě – – :OVY[[LYTKLI[Z P166,018 7 7ò P3,995,302 7  7 0HUK-;* (1) (2)   Assets Liabilities  (ZZL[Z Liabilities  7LY[HPU[V7>0070(+0,[VUHUK75) (In Thousands)  7LY[HPU[V3;.:H[\YU730((*;+0()0HUK-;* 9LJVNUPaLKKPYLJ[S`PU[OLJVUZVSPKH[LKZ[H[LTLU[ZVMPUJVTL! 'HIHUUHGLQFRPHWD[DVVHWVRQ I 7YV]PZPVUMVYJ\YYLU[PUJVTL[H_JVUZPZ[ZVM! (SSV^HUJLMVYPTWHPYTLU[SVZZVU! 2019 2019 9LJLP]HISLZ P5,764,478 P97,356 7  7     (In Thousands) (In Thousands) Inventories 1,440 1,223   9*0; P2,711,115 7   7   P7,512,006 7YVWLY[`WSHU[HUKLX\PWTLU[ – 50,202 – (SSV^HUJLMVYJYLKP[SVZZLZ 7  4*0; 2,251   (JJY\LKL_WLUZLZ 58,711    (JJ\T\SH[LKKLWYLJPH[PVUVUPU]LZ[TLU[WYVWLY[PLZ 836,233 (14,700)  – -PUHS[H_ 1,497,485    5L[YL[PYLTLU[ILULÄ[ZSPHIPSP[` 819,428 

108 LT GROUP, INC. 2019 ANNUAL REPORT 109 +L[HPSZVM[OL.YV\W»Z563*6MVSSV^(in thousands)! I ;YHJRYLJVYKVMYLNPZ[YH[PVU! 6[OLY,X\P[`9LZLY]LZ :OHYLZVM:[VJRVM[OL*VTWHU`/LSKI`:\IZPKPHYPLZ 6[OLYLX\P[`YLZLY]LZHZH[+LJLTILY HUK JVUZPZ[VM :OHYLZ OLSK I` Z\IZPKPHYPLZ PUJS\KL   TPSSPVU ZOHYLZ V^ULK I` (SS (in thousands)! :LHZVUZHTV\U[PUN[V7TPSSPVUHZVM+LJLTILY HUK  @LHY0UJ\YYLK  (TV\U[  (WWSPLK  ,_WPYLK Balance  ,_WPY`@LHY 5\TILYVM:OHYLZ HUKTPSSPVUZOHYLZV^ULKI`:H[\YUHTV\U[PUN[V7 TPSSPVUHZ  7  7– 7  7   5( Date Licensed 0ZZ\L6ќLY7YPJL VM+LJLTILY6U1\S`[OLZOHYLZVMZ[VJRZV^ULK 2019        ò  (\N\Z[   7 I` :H[\YU ^LYL ZVSK [V ;HUNLU[H[ 7 WLY ZOHYL  (Z H YLZ\S[ [OL    – ò    5V]LTILY    ,X\P[`HKQ\Z[TLU[ZHYPZPUNMYVT L_JLZZVM[OLZLSSPUNWYPJLV]LY[OLJVZ[VM[OL[YLHZ\Y`ZOHYLZHTV\U[PUN      ò   +LJLTILY    I\ZPULZZJVTIPUH[PVU\UKLY to 7 TPSSPVUPZWYLZLU[LKHZHUHKKP[PVU[VV[OLYLX\P[`YLZLY]LZ     ò  ò    P445,113 4HYJO    JVTTVUJVU[YVS5V[L 7 7  7 7 7 4HYJO    ,X\P[`HKQ\Z[TLU[ZMYVTZHSLVM[OL *VTWHU`»ZZOHYLZVMZ[VJROLSKI` +L[HPSZVM[OL.YV\W»Z4*0;MVSSV^(in thousands)! 6J[VILY    HZ\IZPKPHY` 413,769   6J[VILY     ,ќLJ[VM[YHUZHJ[PVU^P[O @LHY0UJ\YYLK  (TV\U[  (WWSPLK  ,_WPYLK Balance  ,_WPY`@LHY (WYPS    UVUJVU[YVSSPUNPU[LYLZ[ 66,658   7  7– 7  7ò  0U(WYPS3;.PZZ\LK7 TPSSPVUZOHYLZMVY7IPSSPVU ,ќLJ[VMZHSLVMHZ\IZPKPHY`[V    ò    ^OLYL L_JLZZ V]LY WHY ]HS\L HTV\U[PUN [V 7  IPSSPVU ^HZ *VTWHU` 99,655       ò   YLJVYKLKHZJHWP[HSPUL_JLZZVMWHY:[VJRPZZ\LJVZ[ZHTV\U[PUN ,ќLJ[VMZHSLVMKPYLJ[PU[LYLZ[PUH   – ò   to 7IPSSPVU^LYLJOHYNLKHNHPUZ[JHWP[HSPUL_JLZZVMWHYPU Z\IZPKPHY` (543)  7  7 7  7 6[OLYVќLYPUNYLSH[LKL_WLUZLZHTV\U[PUN[V7 TPSSPVU^LYL P1,024,652 7   JOHYNLKKPYLJ[S`[V¸.LULYHSHUKHKTPUPZ[YH[P]LL_WLUZLZ¹ K ( YLJVUJPSPH[PVU VM [OL .YV\W»ZWYV]PZPVU MVY PUJVTL [H_ JVTW\[LK IHZLKVUPUJVTLILMVYLPUJVTL[H_H[[OLZ[H[\[VY`PUJVTL[H_YH[LZ H 6U 4HYJO    3;.»Z )6+ HWWYV]LK [OL KLJSHYH[PVU HUK 5VUJVU[YVSSPUN0U[LYLZ[Z [V[OLWYV]PZPVUMVYPUJVTL[H_ZOV^UPU[OLJVUZVSPKH[LKZ[H[LTLU[Z KPZ[YPI\[PVUVMYLN\SHYJHZOKP]PKLUKZVM7WLYZOHYLHUKZWLJPHS )LSV^HYL[OLJOHUNLZPUUVUJVU[YVSSPUNPU[LYLZ[Z! VMPUJVTLPZHZMVSSV^Z! cash dividends of 7WLYZOHYLVYH[V[HSVM7 TPSSPVU[V HSSZ[VJROVSKLYZVMYLJVYKHZVM4HYJO  [VILWHPKUV[SH[LY 2019   2019   [OHU(WYPS  (In Thousands) (In Thousands) )HSHUJLHZVM1HU\HY`HZWYL]PV\ZS`YLWVY[LK P58,223,689 7  7  7YV]PZPVUMVYPUJVTL[H_H[ I 6U (WYPS    3;.»Z )6+ HWWYV]LK [OL KLJSHYH[PVU HUK Z[H[\[VY`PUJVTL[H_YH[L KPZ[YPI\[PVUVMYLN\SHYJHZOKP]PKLUKZVM7WLYZOHYLHUKZWLJPHS ,ќLJ[VMHKVW[PVUVM! MYVT! cash dividends of 7WLYZOHYLVYH[V[HSVM7TPSSPVU[V  7-9: Ě – HSSZ[VJROVSKLYZVMYLJVYKHZVM(WYPS  [VILWHPKUV[SH[LY P7,586,748  7-9: Ě –  *VU[PU\PUNVWLYH[PVUZ 7  7 [OHU4H`   (KQ\Z[TLU[ZYLZ\S[PUNMYVT! )HSHUJLHZVM1HU\HY`HZHKQ\Z[LK 58,223,689     ,X\P[`PUUL[LHYUPUNZVM J 9L[HPULK LHYUPUNZ PUJS\KL \UKPZ[YPI\[LK LHYUPUNZ HTV\U[PUN [V 5L[PUJVTLH[[YPI\[HISL[VUVUJVU[YVSSPUNPU[LYLZ[Z 4,448,233      associates 217,708     7IPSSPVUPU 7IPSSPVUPU HUK7IPSSPVUPU :OHYLPUV[OLYJVTWYLOLUZP]LPUJVTLUL[VMKLMLYYLKPUJVTL[H_LќLJ[! 0UJVTLZ\IQLJ[LK[VÄUHS[H_ (1,103,293)      YLWYLZLU[PUNHJJ\T\SH[LKLHYUPUNZVMZ\IZPKPHYPLZHUKLX\P[`PUUL[  9L]HS\H[PVUPUJYLTLU[VUWYVWLY[`WSHU[HUKLX\PWTLU[ (170,223)  – 5VU[H_HISLPUJVTL (3,708,409)     LHYUPUNZVMHZZVJPH[LZHUKQVPU[]LU[\YLZ^OPJOHYLUV[H]HPSHISL  *\T\SH[P]L[YHUZSH[PVUHKQ\Z[TLU[Z (456,101)       MVYKP]PKLUKKLJSHYH[PVU\U[PSYLJLP]LKPU[OLMVYTVMKP]PKLUKZMYVT 1,711,882 (305,881)  5VUKLK\J[PISLL_WLUZLZ    [OLJVTIPUPUNLU[P[PLZHUKHZZVJPH[LZ9L[HPULKLHYUPUNZH]HPSHISL  9LTLHZ\YLTLU[NHPUZSVZZLZVUKLÄULKILULÄ[WSHUZ5V[LZHUK    5VUKLK\J[PISLKLÄJPLUJ` MVY KP]PKLUK KLJSHYH[PVU HZ H[ +LJLTILY    HTV\U[LK [V  5L[JOHUNLZPU(-:PU]LZ[TLU[Z5V[L 2,805,235     [H_LZ 25,904 òò 7IPSSPVU  :OHYLPUYLTLHZ\YLTLU[NHPUVUKLÄULKILULÄ[WSHUZVMHZZVJPH[LZ – – ,ќLJ[VMH]HPSTLU[VM0;/ (51,911)òò 9LZLY]LZVMKPZWVZHSNYV\WJSHZZPÄLKHZOLSKMVYZHSL – – 563*6HUKV[OLYKLK\J[PISL 9L[HPULKLHYUPUNZHYLM\Y[OLYYLZ[YPJ[LKMVY[OLWH`TLU[VMKP]PKLUKZ Dividends received (3,372)   – [V[OLL_[LU[VM[OLJVZ[VM[OLZOHYLZOLSKPU[YLHZ\Y`ZOHYLZVMZ[VJR [LTWVYHY`KPќLYLUJLZMVY (JX\PZP[PVUVMZOHYLZVMZ\IZPKPHYPLZMYVT[OL*VU[YVSSPUN:OHYLOVSKLYZ 2,539,185 – – ^OPJOUVKLMLYYLKPUJVTL VM [OL JVTWHU` OLSK I` Z\IZPKPHYPLZ \UYLHSPaLK MVYLPNU L_JOHUNL 5,264 [H_HZZL[Z^LYLYLJVNUPaLK NHPUZ L_JLW[ [OVZL H[[YPI\[HISL [V JHZO HUK JHZO LX\P]HSLU[Z MHPY 6[OLYLX\P[`YLZLY]LZ PUJ\YYLU[`LHY (875,332)    ]HS\L HKQ\Z[TLU[ VY NHPUZ HYPZPUN MYVT THYR[VTHYRL[ ]HS\H[PVU Balance as of December 31 P67,086,029 7  7  KLMLYYLKPUJVTL[H_HZZL[ZYLJVNUPaLK[OH[YLK\JLK[OLPUJVTL[H_ (WWSPJH[PVUVM563*6HUK L_WLUZLHUKPUJYLHZLKUL[PUJVTLHUKYL[HPULKLHYUPUNZHUKV[OLY V[OLYKLK\J[PISL[LTWVYHY` \UYLHSPaLKNHPUZVYHKQ\Z[TLU[ZHZVM+LJLTILY HUK  31. )HZPJ+PS\[LK,HYUPUNZ7LY:OHYL KPќLYLUJLZMVY^OPJOUV KLMLYYLKPUJVTL[H_HZZL[Z 7YLMLYYLK:OHYLZVM:\IZPKPHYPLZPZZ\LK[V7HYLU[*VTWHU` ;OLMVSSV^PUN[HISLZYLÅLJ[[OLUL[PUJVTLHUKZOHYLKH[H\ZLKPU[OLLHYUPUNZWLYZOHYLJVTW\[H[PVUZ! ^LYLYLJVNUPaLKPUWYPVY 6U4HYJO[OLYLZWLJ[P]L)6+»ZHUKZ[VJROVSKLYZVM]HYPV\Z `LHYZ (24,949)    )HUR /VSKPUN *VTWHUPLZ HWWYV]LK [OL PUJYLHZL PU [OLPY H\[OVYPaLK )HZPJKPS\[LKLHYUPUNZWLYZOHYL^LYLJHSJ\SH[LKHZMVSSV^Z! +PќLYLUJLVMP[LTPaLK JHWP[HSZ[VJRZJVTWYPZPUNVMJVTTVUZOHYLZHUKWYLMLYYLKZOHYLZ^P[O KLK\J[PVUHNHPUZ[ VM WHY ]HS\L VM 7 WLY ZOHYL ;OL WYLMLYYLK ZOHYLZ ^LYL Z\IZJYPILK (51,750) – [H_HISLPUJVTL   I` ;HUNLU[ [OYV\NO JVU]LYZPVU VM P[Z HK]HUJLZ PU[V PU]LZ[TLU[Z PU 2019   32. -PUHUJPHS9PZR4HUHNLTLU[6IQLJ[P]LZHUK7VSPJPLZ 6[OLYZ (29,284)   –JLY[HPU)HUR/VSKPUN*VTWHUPLZZLL5V[L

110 LT GROUP, INC. 2019 ANNUAL REPORT 111 ;OL.YV\WTVUP[VYZP[ZWYVJLZZLZHZZVJPH[LK^P[O[OLMVSSV^PUNV]LYHSS L JVUJLU[YH[PVU YPZR WLY JSHZZPÄLK HJJV\U[ WLY PUK\Z[Y` JSLHU *VUZVSPKH[LK(Z9LZ[H[LK5V[L J *VUJLU[YH[PVUI`0UK\Z[Y` YPZRJH[LNVYPLZ! L_WVZ\YLSHYNLL_WVZ\YLJVU[PUNLU[L_WVZ\YLJ\YYLUJ`ZLJ\YP[`   ;OL [HISL ILSV^ ZOV^ [OL PUK\Z[Y` ZLJ[VY HUHS`ZPZ VM [OL IHURPUN MHJPSP[`KLTVNYHWOPJL[J -PUHUJPHS ZLNTLU[»ZÄUHUJPHSHZZL[ZH[HTV\U[ZILMVYL[HRPUNPU[VHJJV\U[[OL ‹ *YLKP[9PZR 4H_PT\T -HPY=HS\LVM 5L[ ,ќLJ[VM MHPY]HS\LVM[OLSVHUJVSSH[LYHSOLSKVYV[OLYJYLKP[LUOHUJLTLU[Z! ‹ 4HYRL[9PZR ;OL.YV\WMVSSV^Z[OL)6+HWWYV]LKWVSPJ`VU[OLNLULYPJJSHZZPÄJH[PVU ,_WVZ\YL *VSSH[LYHS ,_WVZ\YL *VSSH[LYHS ‹ 3PX\PKP[`9PZR VMSVHUZIHZLKVU[OL[`WLVMIVYYV^LYZHUK[OLW\YWVZLVM[OLSVHU :LJ\YP[PLZOLSK\UKLY 7 7   7 7   2019 ‹ 6WLYH[PVUHS9PZR agreements to resell Trading and Other Credit-related commitments 3VHUZHUKYLJLP]HISLZ! Loans and investment ðQDQFLDO -\Y[OLY [OL .YV\W PZ HSZV JVNUPaHU[ VM [OL ULLK [V HKKYLZZ ]HYPV\Z ;OL L_WVZ\YLZ YLWYLZLU[ N\HYHU[LLZ Z[HUKI` SL[[LYZ VM JYLKP[ 3*Z  9LJLP]HISLZMYVT receivables* securities assets*** Total V[OLYYPZRZ[OYV\NO[OLWYPTHY`KP]PZPVUZWYLZLU[LKHIV]L;OLMVSSV^PUN PZZ\LK I` 75) HUK KVJ\TLU[HY`JVTTLYJPHS 3*Z ^OPJO HYL ^YP[[LU   J\Z[VTLYZ! (In Millions) HYLHSZV[HRLUPU[VJVUZPKLYH[PVUHZWHY[VM[OLV]LYHSS,U[LYWYPZL9PZR \UKLY[HRPUNZI`75)   *VYWVYH[LZ        7YPTHY`[HYNL[PUK\Z[Y`! 4HUHNLTLU[,94-YHTL^VYR!   3.<       -PUHUJPHSPU[LYTLKPHYPLZ P106,952 P23,769 P42,590 P173,311 ;VTP[PNH[L[OPZYPZR75)YLX\PYLZOHYKJVSSH[LYHSZHZKPZJ\ZZLK\UKLY   *YLKP[*HYKZ  ò  ò  >OVSLZHSLHUKYL[HPS 88,529 ĚĚ88,529 ‹ 0U[LYLZ[9H[L9PZRPU)HURPUN)VVR099)) Collateral and other credit enhancement MVY Z[HUKI` 3*Z SPULZ ^OPSL   9L[HPS:4,        ‹ :[YH[LÄJ)\ZPULZZ9PZR JVTTLYJPHS3*ZHYLJVSSH[LYHSPaLKI`[OL\UKLYS`PUNZOPWTLU[ZVMNVVKZ  ,SLJ[YPJP[`NHZHUK    /V\ZPUN3VHUZ     ‹ 9LW\[H[PVUHS9PZR [V^OPJO[OL`YLSH[L  ^H[LY 72,582 4,618 Ě 77,200   (\[V3VHUZ        ‹ *YLKP[*VUJLU[YH[PVU9PZR  ;YHUZWVY[Z[VYHNLHUK ‹ *`ILY:LJ\YP[`9PZR +LYP]H[P]LÄUHUJPHSPUZ[Y\TLU[Z   6[OLYZ         JVTT\UPJH[PVU 31,625 144 Ě 31,769 *YLKP[ YPZR HYPZPUN MYVT KLYP]H[P]L ÄUHUJPHS PUZ[Y\TLU[Z PZ H[ HU` [PTL  6[OLYYLJLP]HISLZ       4HU\MHJ[\YPUN 45,365 352 Ě 45,717 ;OL IHURPUN ZLNTLU[»Z )6+ OHZ V]LYHSS YLZWVUZPIPSP[` MVY [OL SPTP[LK[V[OVZL^P[OWVZP[P]LMHPY]HS\LZHZYLJVYKLKPU[OLJVUZVSPKH[LK 7 7 7   7   7\ISPJHKTPUPZ[YH[PVU  LZ[HISPZOTLU[HUKV]LYZPNO[VM[OL.YV\W»ZYPZRTHUHNLTLU[MYHTL^VYR Z[H[LTLU[VMÄUHUJPHSWVZP[PVU *Receivables from customers exclude residual value of the leased asset (Note 10). and defense 15,627 ĚĚ15,627 (Z KLSLNH[LK I` [OL IHURPUN ZLNTLU[»Z )6+ [OL 9PZR 6]LYZPNO[  (NYPJ\S[\YLO\U[PUNHUK *VTTP[[LL96*PZTHUKH[LK[VZL[YPZRHWWL[P[LHWWYV]LMYHTL^VYRZ Collateral and other credit enhancement ;OL TH_PT\T JYLKP[ YPZR ^P[OV\[ [HRPUN PU[V HJJV\U[ [OL MHPY ]HS\L VM   MVYLZ[Y` 9,716 ĚĚ9,716 WVSPJPLZHUKWYVJLZZLZMVYTHUHNPUNYPZRHUKHJJLW[YPZRZIL`VUK[OL (ZHNLULYHSY\SLJOHYHJ[LYPZ[OLZPUNSLTVZ[PTWVY[HU[JVUZPKLYH[PVUPU HU`JVSSH[LYHSHUKUL[[PUNHNYLLTLU[ZPZSPTP[LK[V[OLHTV\U[ZVU[OL :LJVUKHY`[HYNL[PUK\Z[Y`! HWWYV]HS KPZJYL[PVU WYV]PKLK [V THUHNLTLU[ ;OL 96* HK]PZLZ VU NYHU[PUNSVHUZ/V^L]LYJVSSH[LYHSZHYLYLX\LZ[LK[VTP[PNH[LYPZR;OL Z[H[LTLU[VMÄUHUJPHSWVZP[PVUWS\ZJVTTP[TLU[Z[VJ\Z[VTLYZZ\JOHZ  .V]LYUTLU[ Ě 155,871 108,500 264,371 [OLV]LYHSSJ\YYLU[HUKM\[\YLYPZRHWWL[P[LHUKZ[YH[LN`HUKHZZPZ[ZPU SVHU]HS\LHUK[`WLVMJVSSH[LYHSYLX\PYLKKLWLUKVU[OLHZZLZZTLU[VM \U\ZLKJVTTLYJPHSSL[[LYZVMJYLKP[V\[Z[HUKPUNN\HYHU[LLZHUKV[OLYZ  9LHSLZ[H[LYLU[PUNHUK V]LYZLLPUN[OLPTWSLTLU[H[PVUVM[OVZLZ[YH[LNPLZHUKI\ZPULZZWSHUZI` [OLJYLKP[YPZRVM[OLIVYYV^LYVYJV\U[LYWHY[`;OLIHURPUNZLNTLU[ HZKPZJSVZLKPU5V[L [V[OLÄUHUJPHSZ[H[LTLU[Z   I\ZPULZZHJ[P]P[PLZ 87,039 22,826 Ě 109,865 [OLIHURPUNZLNTLU[»ZZLUPVYTHUHNLTLU[ MVSSV^ZN\PKLSPULZVU[OLHJJLW[HIPSP[`VM[`WLZVMJVSSH[LYHSHUK]HS\H[PVU  *VUZ[Y\J[PVU 41,520 ĚĚ41,520 WHYHTL[LYZ Excessive risk concentration  6[OLYZ 158,313 29,494 121 187,928 ;OL9PZR4HUHNLTLU[.YV\W94.WYV]PKLZ[OLSLN^VYRMVY[OL96* ;OLIHURPUNZLNTLU[»ZJYLKP[YPZRJVUJLU[YH[PVUZJHUHYPZL^OLUL]LY P657,268 P237,074 P151,211 P1,045,553 PUP[ZYVSLVMMVYT\SH[PUN[OLYPZRTHUHNLTLU[Z[YH[LN`[OLKL]LSVWTLU[ ;OLTHPU[`WLZVMJVSSH[LYHSVI[HPULKHYLHZMVSSV^Z! H ZPNUPÄJHU[ U\TILY VM IVYYV^LYZ OH]L ZPTPSHY JOHYHJ[LYPZ[PJZ ;OL * Loans and receivables exclude residual value of the leased asset. HUKTHPU[LUHUJLVM[OLPU[LYUHSYPZRTHUHNLTLU[MYHTL^VYRHUK[OL IHURPUNZLNTLU[HUHS`aLZ[OLJYLKP[YPZRJVUJLU[YH[PVU[VHUPUKP]PK\HS ** Others include the following sectors - Other community, social and personal services, private KLÄUP[PVUVM[OLNV]LYUPUNYPZRTHUHNLTLU[WYPUJPWSLZ;OL94.WYV]PKLZ ‹ -VYJVYWVYH[LHJJV\U[ZKLWVZP[OVSKV\[ZN\HYHU[LLZZLJ\YP[PLZ household, hotel and restaurant, education, mining and quarrying, and health and social work. IVYYV^LY YLSH[LK NYV\W VM HJJV\U[Z PUK\Z[Y` NLVNYHWOPJ PU[LYUHS 6[OLY ÄUHUJPHS HZZL[Z PUJS\KL [OL MVSSV^PUN ÄUHUJPHS HZZL[Z! ¸+\L MYVT ):7¹ ¸+\L MYVT V[OLY HZZPZ[HUJL [V [OL (ZZL[Z HUK 3PHIPSP[PLZ *VTTP[[LL (3*6 VU JHWP[HS WO`ZPJHS JVSSH[LYHSZ LN YLHS LZ[H[L JOH[[LSZ PU]LU[VY` L[J" HZ H YH[PUNI\JRL[ZJ\YYLUJ`[LYTHUKZLJ\YP[`-VYYPZRJVUJLU[YH[PVU IHURZ¹ ¸0U[LYIHUR SVHUZ YLJLP]HISL¹ ¸:LJ\YP[PLZ OLSK \UKLY HNYLLTLU[Z [V YLZLSS¹ HUK V[OLY THUHNLTLU[HUK[OL)VHYK7VSPJ`*VTTP[[LLVU[OLTHUHNLTLU[VM NLULYHSY\SLJVTTLYJPHSPUK\Z[YPHSHUKYLZPKLU[PHSSV[ZHYLWYLMLYYLK TVUP[VYPUN W\YWVZLZ [OL ÄUHUJPHS HZZL[Z HYL IYVHKS` JH[LNVYPaLK ÄUHUJPHSHZZL[ZIVVRLK\UKLY¸6[OLY(ZZL[Z¹ YLN\SH[VY`JHWP[HS ‹ -VYYL[HPSSLUKPUNTVY[NHNLZVUYLZPKLU[PHSWYVWLY[PLZHUK]LOPJSLZ PU[VSVHUZHUKYLJLP]HISLZHUK[YHKPUNHUKÄUHUJPHSPU]LZ[TLU[ ÄUHUJLK ZLJ\YP[PLZ ;V TP[PNH[L YPZR JVUJLU[YH[PVU [OL IHURPUN ZLNTLU[  ;OLTHUKH[LVM[OL94.PU]VS]LZ! ‹ -VYZLJ\YP[PLZSLUKPUNHUKYL]LYZLYLW\YJOHZL[YHUZHJ[PVUZJHZOVY JVUZ[HU[S`JOLJRZMVYIYLHJOLZPUYLN\SH[VY`HUKPU[LYUHSSPTP[Z*SLHY Trading and 6[OLY ZLJ\YP[PLZ LZJHSH[PVUWYVJLZZHUKV]LYYPKLWYVJLK\YLZHYLPUWSHJL^OLYLI` Loans and investment ÄUHUJPHS ‹ PTWSLTLU[PUN [OL YPZR THUHNLTLU[ MYHTL^VYR VM PKLU[PM`PUN HU`L_JLZZPUSPTP[ZHYLJV]LYLKI`HWWYVWYPH[LHWWYV]PUNH\[OVYP[`[V YLJLP]HISLZ ZLJ\YP[PLZ HZZL[Z Total TLHZ\YPUNJVU[YVSSPUNHUKTVUP[VYPUN[OL]HYPV\ZYPZR[HRPUNHJ[P]P[PLZ ;OL KPZWVZHS VM [OL MVYLJSVZLK WYVWLY[PLZ PZ OHUKSLK I` [OL (ZZL[ YLN\SHYPaLHUKTVUP[VYIYLHJOLZPUSPTP[Z (In Millions) VM[OL.YV\WPUOLYLU[PUHSSÄUHUJPHSPUZ[P[\[PVUZ" 4HUHNLTLU[ :LJ[VY ^OPJO HKOLYLZ [V [OL NLULYHS WVSPJ` VM KPZWVZPUN 7YPTHY`[HYNL[PUK\Z[Y`! ‹ WYV]PKPUN ZLY]PJLZ [V [OL YPZR[HRPUN \UP[Z HUK WLYZVUULS PU [OL HZZL[ZH[[OLOPNOLZ[WVZZPISLTHYRL[]HS\L H 3PTP[WLY*SPLU[VY*V\U[LYWHY[`  -PUHUJPHSPU[LYTLKPHYPLZ 7   7  7 7 PTWSLTLU[H[PVUVMYPZRTP[PNH[PVUZ[YH[LNPLZ"HUK  ;OLPU[LYUHSSPTP[ZZL[I`[OL7HYLU[*VTWHU`MVYNYV\WL_WVZ\YLZ ‹ LZ[HISPZOPUNYLJVTTLUKLKSPTP[ZIHZLKVU[OLYLZ\S[ZVMP[ZHUHS`ZPZVM 4HUHNLTLU[ YLN\SHYS` TVUP[VYZ [OL THYRL[ ]HS\L VM [OL JVSSH[LYHS HYLHZMVSV^Z!  ,SLJ[YPJP[`NHZHUK   ^H[LY   ò ò   L_WVZ\YLZ HUK YLX\LZ[Z HKKP[PVUHS JVSSH[LYHS PU HJJVYKHUJL ^P[O [OL \UKLYS`PUN  *99¶\W[V  VM[OLYLN\SH[VY`:PUNSL)VYYV^LYZ3PTP[:)3  >OVSLZHSLHUKYL[HPS     ò  HNYLLTLU[  ;OL L_PZ[PUN THYRL[ ]HS\L VM [OL JVSSH[LYHS PZ JVUZPKLYLK  *99 ¶\W[VVM[OLYLN\SH[VY`:)3 *YLKP[9PZR K\YPUN [OL YL]PL^ VM [OL HKLX\HJ` VM [OL HSSV^HUJL MVY JYLKP[ SVZZLZ  *99 ¶\W[V VM[OLYLN\SH[VY`:)3  4HU\MHJ[\YPUN     ò   -VY [OL IHURPUN ZLNTLU[ JYLKP[ YPZR PZ [OL UVUYLJV]LY` VM JYLKP[ .LULYHSS` JVSSH[LYHS PZ UV[ OLSK V]LY SVHUZ HUK HK]HUJLZ [V IHURZ  ;YHUZWVY[Z[VYHNLHUK L_WVZ\YLZVUHUKVќIHSHUJLZOLL[L_WVZ\YLZ4HUHNPUNJYLKP[YPZR L_JLW[MVYYL]LYZLYLW\YJOHZLHNYLLTLU[Z;OLIHURPUNZLNTLU[PZUV[  -VY[YHKPUNHUKPU]LZ[TLU[ZLJ\YP[PLZ[OL.YV\WSPTP[ZPU]LZ[TLU[Z   JVTT\UPJH[PVU    ò   HSZV PU]VS]LZ TVUP[VYPUN VM TPNYH[PVU YPZR JVUJLU[YH[PVU YPZR JV\U[Y` permitted to sell or repledge the collateral held over loans and advances [V NV]LYUTLU[ PZZ\LZ HUK ZLJ\YP[PLZ PZZ\LK I` LU[P[PLZ ^P[O OPNO  7\ISPJHKTPUPZ[YH[PVU and defense   ò ò   YPZRHUKZL[[SLTLU[YPZR;OLIHURPUNZLNTLU[THUHNLZP[ZJYLKP[YPZR [VJV\U[LYWHY[`IHURZHUK):7PU[OLHIZLUJLVMKLMH\S[I`[OLV^ULY X\HSP[`PU]LZ[TLU[YH[PUNZ H[ ]HYPV\Z SL]LSZ PL Z[YH[LNPJ SL]LS WVY[MVSPV SL]LS KV^U [V PUKP]PK\HS VM[OLJVSSH[LYHS  (NYPJ\S[\YLO\U[PUN   HUKMVYLZ[Y`   ò ò   [YHUZHJ[PVU I .LVNYHWOPJ*VUJLU[YH[PVU Maximum exposure to credit risk after collateral held or other credit  ;OL[HISLILSV^ZOV^Z[OLIHURPUNZLNTLU[»ZJYLKP[YPZRL_WVZ\YLZ :LJVUKHY`[HYNL[PUK\Z[Y`! ;OLJYLKP[YPZRTHUHNLTLU[VM[OLLU[PYLSVHUWVY[MVSPVPZ\UKLY[OLKPYLJ[ enhancements ILMVYL [HRPUN PU[V HJJV\U[ HU` JVSSH[LYHS OLSK VY V[OLY JYLKP[  .V]LYUTLU[     V]LYZPNO[VM[OL96*HUK,_LJ\[P]L*VTTP[[LL*YLKP[YPZRHZZLZZTLU[ (U HUHS`ZPZ VM [OL TH_PT\T L_WVZ\YL [V JYLKP[ YPZR HM[LY [HRPUN PU[V LUOHUJLTLU[ZJH[LNVYPaLKI`NLVNYHWOPJSVJH[PVU!  9LHSLZ[H[LYLU[PUNHUK VM PUKP]PK\HS IVYYV^LY PZ WLYMVYTLK I` [OL I\ZPULZZ ZLJ[VY  YLTLKPHS HJJV\U[HU`JVSSH[LYHSOLSKVYV[OLYJYLKP[LUOHUJLTLU[ZMVY[OL.YV\W»Z   I\ZPULZZHJ[P]P[PLZ   ò  ZLJ[VYHUKJYLKP[THUHNLTLU[ZLJ[VY9PZRTHUHNLTLU[PZLTILKKLK IHURPUNZLNTLU[PZZOV^UILSV^!  *VUZ[Y\J[PVU    ò  2019 PU [OL LU[PYL JYLKP[ WYVJLZZ PL MYVT JYLKP[ VYPNPUH[PVU [V YLTLKPHS   6[OLYZ      (In Millions) 7  7  7  7  THUHNLTLU[PMULLKLK Consolidated 7OPSPWWPULZ P900,502 7   * Loans and receivables exclude residual value of the leased asset. 2019 (TVUN [OL [VVSZ \ZLK I` [OL .YV\W PU PKLU[PM`PUN HZZLZZPUN HUK ** Others include the following sectors - Other community, social and personal services, private Fair Value Financial (ZPHL_JS\KPUN[OL7OPSPWWPULZ 95,755   household, hotel and restaurant, education, mining and quarrying, and health and social work. THUHNPUNJYLKP[YPZRPUJS\KL! Maximum of Net (σHFWRI <:(HUK*HUHKH 16,555   6[OLY ÄUHUJPHS HZZL[Z PUJS\KL [OL MVSSV^PUN ÄUHUJPHS HZZL[Z! ¸+\L MYVT ):7¹ ¸+\L MYVT V[OLY ‹ +VJ\TLU[LK JYLKP[ WVSPJPLZ HUK WYVJLK\YLZ! ZV\UK JYLKP[ NYHU[PUN Exposure Collateral Exposure Collateral IHURZ¹ ¸0U[LYIHUR SVHUZ YLJLP]HISL¹ ¸:LJ\YP[PLZ OLSK \UKLY HNYLLTLU[Z [V YLZLSS¹ HUK V[OLY 6JLHUPH Ě    ÄUHUJPHSHZZL[ZIVVRLK\UKLY¸6[OLY(ZZL[Z¹ WYVJLZZYPZRHZZL[HJJLW[HUJLJYP[LYPH[HYNL[THYRL[HUKHWWYV]PUN (In Millions) H\[OVYP[PLZ" 6[OLY,\YVWLHUVYRV\[Z`Z[LTMVYTHUHNPUNWYVISLTJYLKP[Z"   J\Z[VTLYZ! ‹ 9LN\SHYYL]PL^VM[OLZ\ѝJPLUJ`VM]HS\H[PVUYLZLY]LZ"   *VYWVYH[LZ 540,584 287,490 378,128 162,456 ‹ 4VUP[VYPUN VM [OL HKLX\HJ` VM JHWP[HS MVY JYLKP[ YPZR ]PH [OL *HWP[HS *YLKP[X\HSP[`WLYJSHZZVMÄUHUJPHSHZZL[Z Local government 6,729 130 6,694 35 (KLX\HJ`9H[PV*(9YLWVY["    \UP[Z3.< ‹ 4VUP[VYPUNVMIYLHJOLZPUYLN\SH[VY`HUKPU[LYUHSSPTP[Z" 0U [OLIHURPUNZLNTLU[YLL]HS\H[LK[OLZLNTLU[H[PVUVMP[ZSVHU   *YLKP[*HYKZ 14,264 Ě 14,264 Ě ‹ *YLKP[9PZR4HUHNLTLU[+HZOIVHYK" WVY[MVSPVZV[OH[P[PZNYV\WLKIHZLKVU[OL\UKLYS`PUNYPZRJOHYHJ[LYPZ[PJZ ‹ +P]LYZPÄJH[PVU"   9L[HPSZTHSSHUKTLKP\T 18,943 28,248 5,494 13,449 [OH[ HYL L_WLJ[LK [V YLZWVUK PU H ZPTPSHY THUULY [V THJYVLJVUVTPJ    LU[LYWYPZLZ:4, ‹ 0U[LYUHS9PZR9H[PUN:`Z[LTMVYJVYWVYH[LHJJV\U[Z" MHJ[VYZHUKMVY^HYKSVVRPUNJVUKP[PVUZ4VYLV]LY[OLIHURPUNZLNTLU[ 32,017 28,805 12,633 19,385 ‹ *YLKP[:JVYPUNMVYYL[HPSHJJV\U[Z"HUK   /V\ZPUN3VHUZ OHZHSPNULK[OLWVY[MVSPVZLNTLU[H[PVU[VZV\UKWYHJ[PJLN\PKLSPULZVM ‹ (J[P]LSVHUWVY[MVSPVTHUHNLTLU[\UKLY[HRLU[VKL[LYTPUL[OLX\HSP[`   (\[V3VHUZ 12,861 13,688 9,681 3,180 PU[LYUHSYH[PUNZIHZLKIHURZ VM[OLSVHUWVY[MVSPVHUKPKLU[PM`[OLMVSSV^PUN!   6[OLYZ 10,897 18,436 2,778 8,119 H WVY[MVSPVNYV^[O  6[OLYYLJLP]HISLZ 20,973 5,515 18,278 2,695 I movement of loan portfolio P659,786 P384,830 P447,950 P211,837 J HKLX\HJ`VMSVHUSVZZYLZLY]LZ *Receivables from customers exclude residual value of the leased asset (Note 10). K [YLUKVMUVUWLYMVYTPUNSVHUZ573Z

112 LT GROUP, INC. 2019 ANNUAL REPORT 113 .LULYHSS`[OLIHURPUNZLNTLU[»ZL_WVZ\YLZJHUILJH[LNVYPaLKHZLP[OLY 26-grade CRR system Credit quality  Used beginning January 1, 2018 5VU9L[HPS HUK 9L[HPS  5VU9L[HPS ZLNTLU[ VM [OL IHURPUN ZLNTLU[ Stage 1 :[HNL Stage 3 Total TH` IL KLÄULK HZ KLI[ VISPNH[PVU VM H ZV]LYLPNU ÄUHUJPHS PU[\P[PVU Standard BRR 13-15 Average (In Millions) JVYWVYH[PVU WHY[ULYZOPW VY WYVWYPL[VYZOPW  0U WHY[PJ\SHY [OL IHURPUN )VYYV^LY Z[PSS OHZ [OL JHWHJP[` [V TLL[ P[Z ÄUHUJPHS ZLNTLU[»Z 5VUYL[HPS WVY[MVSPV ZLNTLU[Z HYL HZ MVSSV^Z! :V]LYLPNUZ : 7,X\P]HSLU[ JVTTP[TLU[Z HUK ^P[OZ[HUK UVYTHS I\ZPULZZ J`JSLZ :\IQLJ[[V*99 -PUHUJPHS0UZ[P[\[PVUZ:WLJPHSPZLK3LUKPUNLN7YVQLJ[-PUHUJL3HYNL .SVIHS9H[PUN! OV^L]LY HU` WYVSVUNLK \UMH]VYHISL LJVUVTPJ HUKVY 5VU9L[HPS*VYWVYH[L ))[V)) THYRL[JVUKP[PVUZ^V\SKJYLH[LHUPTTLKPH[LKL[LYPVYH[PVU *VYWVYH[LZ4PKKSL4HYRL[HUK*VTTLYJPHS:4,.6**Z3.P[O PKLU[PÄLK KPZY\W[PVUZ MYVT /PNO 7 7 7ò7  L_WVZ\YLZHYLL_WVZ\YLZ[VPUKP]PK\HSWLYZVUVYWLYZVUZVY[VHZTHSS L_[LYUHSMVYJLZPTWHJ[VU[OLIVYYV^LYPZ\UJLY[HPU+LMH\S[ Standard    ò  I\ZPULZZ HUK HYL UV[ \Z\HSS` THUHNLK VU HU PUKP]PK\HS IHZPZ I\[ HZ PZHWVZZPIPSP[` NYV\WZVML_WVZ\YLZ^P[OZPTPSHYYPZRJOHYHJ[LYPZ[PJZ;OPZPUJS\KLZ*YLKP[ :\IZ[HUKHYK    ò    *HYKZ*VUZ\TLY3VHUZHUK9L[HPS:4,HTVUNV[OLYZ )99 (JJLW[HISL Impaired ò ò   )VYYV^LY \UKLY [OPZ YH[PUN ZJHSL IHZPJHSS` WVZZLZZLZ [OL     JOHYHJ[LYPZ[PJZVMIVYYV^LYZYH[LKHZ)99[V)99^P[O 3VHUZHUK9LJLP]HISLZ ZSPNO[S`SLZZLYX\HSP[`+LMH\S[PZHWVZZPIPSP[` ;OL JYLKP[ X\HSP[` VM 5VU9L[HPS ZLNTLU[ PZ L]HS\H[LK HUK TVUP[VYLK :\IQLJ[[V:JVYPUN LHR  /V\ZPUN3VHUZ      9L[HPSZLNTLU[;OLIVYYV^LYYPZRYH[PUNPZTLHZ\YLKIHZLKVUÄUHUJPHS )VYYV^LYPZTVYL]\SULYHISL[OHU[OLIVYYV^LYZYH[LK)99 JVUKP[PVUVM[OLIVYYV^LYJVTIPULK^P[OHUHZZLZZTLU[VMUVUÄUHUJPHS : 7,X\P]HSLU[  HUK)99I\[[OLIVYYV^LYJ\YYLU[S`OHZ[OLJHWHJP[`[V  9L[HPS:4,      MHJ[VYZZ\JOHZTHUHNLTLU[PUK\Z[Y`V\[SVVRHUKTHYRL[JVTWL[P[PVU .SVIHS9H[PUN! TLL[P[ZÄUHUJPHSJVTTP[TLU[Z(K]LYZLI\ZPULZZÄUHUJPHS *YLKP[*HYK      ;OL)99TVKLSZJHW[\YLZV]LYSH`ZHUKLHYS`^HYUPUNZPNUHSZHZ^LSS )[V*** VY LJVUVTPJ JVUKP[PVUZ ^PSS SPRLS` PTWHPY [OL IVYYV^LY»Z JHWHJP[` VY ^PSSPUNULZZ [V TLL[ P[Z ÄUHUJPHS JVTTP[TLU[Z 6[OLYZ         +LMH\S[PZTVYL[OHUHWVZZPIPSP[`      ;OL IHURPUN ZLNTLU[ \ZLZ H ZPUNSL ZJHSL ^P[O  YPZR NYHKLZ MVY HSS 7 7 7 7  P[Z IVYYV^LY YPZR YH[PUN TVKLSZ ;OL YPZR NYHKL PU[LYUHS KLMH\S[ )99>H[JOSPZ[ THZ[LYZJHSLPZHYLWYLZLU[H[PVUVMHJVTTVUTLHZ\YLVMYLSH[P]LKLMH\S[ )VYYV^LY PZ J\YYLU[S` ]\SULYHISL HUK PZ KLWLUKLU[ \WVU ;OLHUHS`ZPZVMWHZ[K\LZ[H[\ZVMYLJLP]HISLZMYVTJ\Z[VTLYZ[OH[HYLZ\IQLJ[[VZJVYPUNHUK\UYH[LKMVSSV^Z! YPZR HZZVJPH[LK ^P[O [OL VISPNVYZJV\U[LYWHY[PLZ ;OL PU[LYUHS KLMH\S[ MH]VYHISL I\ZPULZZ ÄUHUJPHS HUK LJVUVTPJ JVUKP[PVUZ [V THZ[LYZJHSLPZTHWWLK[VHNSVIHSYH[PUNZJHSL TLL[ P[Z ÄUHUJPHS JVTTP[TLU[Z )VYYV^LY TH` HSYLHK` IL L_WLYPLUJPUNSVZZLZHUKPTWHPYLKJHWP[HSPU[OLJHZLVM)99 Consolidated  -HJPSP[` 9PZR 9H[PUN VU [OL V[OLY OHUK HZZLZZLZ WV[LU[PHS SVZZ VM [OL 2019 IHURPUNZLNTLU[PUJHZLVMKLMH\S[^OPJOJVUZPKLYZJVSSH[LYHS[`WLHUK Impaired BRR 26 Default Less than More than SL]LSVMJVSSH[LYHSPaH[PVUVM[OLMHJPSP[`;OL-99OHZ NYHKLZPL-99 +LMH\S[^PSSILHNLULYHSKLMH\S[)VYYV^LY^PSSMHPS[VWH`HSSVY 30 days 31 to 90 days 91 to 180 days 180 days Total ([V-990 : 7,X\P]HSLU[ Z\IZ[HU[PHSS`HSSVMP[ZVISPNH[PVUZHZ[OL`JVTLK\L (In Millions) .SVIHS9H[PUN! ;OL *99 VY ÄUHS JYLKP[ YPZR YH[PUN ZOHSS IL L_WYLZZLK PU HSWOHU\TLYPJ D 3.< PĚ P69 PĚ P27 P96 [LYTZLN*99(^OPJOPZHJVTIPUH[PVUVM[OLNLULYHSJYLKP[^VY[OPULZZ *YLKP[*HYK Ě 420 Ě 1,867 2,287 -VY[OL9L[HPSZLNTLU[VM[OLWVY[MVSPVZ\JOHZ9L[HPS:4,*YLKP[*HYKZ VM[OLIVYYV^LY)99HUK[OLWV[LU[PHSSVZZVM[OLIHURPUNZLNTLU[PU 9L[HPS:4, 366 345 903 2,028 3,642 [OLL]LU[VM[OLIVYYV^LY»ZKLMH\S[-99( /V\ZPUNHUK(\[V3VHUZJYLKP[ZJVYPUNPZILPUN\ZLKPUL]HS\H[PUN[OL JYLKP[^VY[OPULZZVM[OLIVYYV^LY /V\ZPUN3VHUZ 422 1,571 1,340 4,057 7,390 ;OL JYLKP[ X\HSP[` HUK JVYYLZWVUKPUN )99Z VM [OL IHURPUN ZLNTLU[»Z (\[V3VHUZ 157 460 273 793 1,683 YLJLP]HISLZMYVTJ\Z[VTLYZHYLKLÄULKILSV^! ;OL [HISL ILSV^ ZOV^Z [OL JYLKP[ X\HSP[` VM [OL IHURPUN ZLNTLU[»Z 6[OLYZ 66 737 184 395 1,382 YLJLP]HISLZ MYVT J\Z[VTLYZ NYVZZ VM HSSV^HUJL MVY JYLKP[ SVZZLZ HUK Total P1,011 P3,602 P2,700 P9,167 P16,480 \ULHYULKHUKV[OLYKLMLYYLKPUJVTLI\[UL[VMYLZPK\HS]HS\LZVMSLHZLK 26-grade CRR system Credit quality HZZL[ZHZVM+LJLTILY! Used beginning January 1, 2018 *VUZVSPKH[LK /PNO BRR 1 Excellent  )VYYV^LY OHZ HU L_JLW[PVUHSS` Z[YVUN JHWHJP[` [V TLL[ P[Z 2019 Less than More than : 7,X\P]HSLU[ ÄUHUJPHS JVTTP[TLU[Z 5V L_PZ[PUN KPZY\W[PVUZ VY M\[\YL Stage 1 Stage 2 Stage 3 Total .SVIHS9H[PUN! KPZY\W[PVUZHYLOPNOS`\USPRLS`7YVIHIPSP[`VMNVPUNPU[VKLMH\S[ KH`Z [V KH`Z [V KH`Z  KH`Z Total (In Millions) ((([V))) PU[OLJVTPUN`LHYPZ]LY`TPUPTHSSV^ (In Millions) Subject to CRR 3.< 7 7 7 ò 7 BRR 2 Very Strong 5VU9L[HPS*VYWVYH[L )VYYV^LY OHZ H ]LY` Z[YVUN JHWHJP[` [V TLL[ P[Z ÄUHUJPHS *YLKP[*HYK 1      /PNO P1,568 PĚ PĚ P1,568 JVTTP[TLU[Z5VL_PZ[PUNKPZY\W[PVUZVYM\[\YLKPZY\W[PVUZ 9L[HPS:4,       HYL\USPRLS`0[KPќLYZMYVT)99IVYYV^LYZVUS`[VHZTHSS Standard 450,194 2,477 19 452,690 /V\ZPUN3VHUZ ò     KLNYLL7YVIHIPSP[`VMNVPUNPU[VKLMH\S[PU[OLJVTPUN`LHYPZ :\IZ[HUKHYK 65,136 13,318 311 78,765 ]LY`TPUPTHSSV^ (\[V3VHUZ 1  3   Impaired ĚĚ10,655 10,655 BRR 3 Strong 516,898 15,795 10,985 543,678 6[OLYZ        )VYYV^LY OHZ H Z[YVUN JHWHJP[` [V TLL[ P[Z ÄUHUJPHS Total 7 7 7 7 7  JVTTP[TLU[Z5VL_PZ[PUNKPZY\W[PVUZVYM\[\YLKPZY\W[PVUZ HYL \USPRLS` /V^L]LY HK]LYZL LJVUVTPJ JVUKP[PVUZ VY Subject to Scoring & Unrated ;YHKPUNHUK0U]LZ[TLU[:LJ\YP[PLZHUK6[OLY-PUHUJPHS(ZZL[Z JOHUNPUN JPYJ\TZ[HUJLZ JV\SK SLHK [V ZVTL^OH[ SLZZLY 5VU9L[HPS 11,194 358 450 12,002 0ULUZ\YPUNX\HSP[`PU]LZ[TLU[WVY[MVSPV75)\ZLZ[OLJYLKP[YPZRYH[PUNIHZLKVU[OLL_[LYUHSYH[PUNZVMLSPNPISLL_[LYUHSJYLKP[YH[PUNPUZ[P[\[PVUZPL JHWHJP[` [V TLL[ ÄUHUJPHS VISPNH[PVUZ [OHU PU OPNOLYYH[LK  *VYWVYH[L 4,490 289 423 5,202 4VVK`»Z0U]LZ[VYZ:LY]PJLHZMVSSV^Z! IVYYV^LYZ 7YVIHIPSP[` VM NVPUN PU[V KLMH\S[ PU [OL JVTPUN `LHYPZ]LY`TPUPTHSSV^  3.< 6,704 69 27 6,800 (HH[V(HÄ_LKPUJVTLHYLQ\KNLK[VILVMOPNOX\HSP[`HUKHYLZ\IQLJ[[V]LY`SV^JYLKP[YPZRI\[[OLPYZ\ZJLW[PIPSP[`[VSVUN[LYTYPZRZHWWLHYZ 9L[HPS 69,064 2,795 11,261 83,120 )99.VVK ZVTL^OH[NYLH[LY 11,443 459 1,067 12,969 )VYYV^LY OHZ HU HKLX\H[L JHWHJP[` [V TLL[ P[Z ÄUHUJPHS  (\[V3VHUZ JVTTP[TLU[Z PU [OL UVYTHS JV\YZL VM P[Z I\ZPULZZ >P[O  /V\ZPUN3VHUZ 26,601 1,571 5,396 33,568 ([V(Ä_LKPUJVTLVISPNH[PVUZHYLJVUZPKLYLK\WWLYTLKP\TNYHKLHUKHYLZ\IQLJ[[VSV^JYLKP[YPZRI\[OH]LLSLTLU[ZWYLZLU[[OH[Z\NNLZ[H PKLU[PÄLKKPZY\W[PVUZMYVTL_[LYUHSMHJ[VYZI\[JVTWHU`OHZ  9L[HPS:4, 17,437 345 2,931 20,713 Z\ZJLW[PIPSP[`[VPTWHPYTLU[V]LY[OLSVUN[LYT VY^PSSSPRLS`V]LYJVTL+LMH\S[WVZZPIPSP[`PZTPUPTHSSV^ *YLKP[*HYK 13,583 420 1,867 15,870 )99 :H[PZMHJ[VY` 6[OLYZ 10,699 737 579 12,015 )HHHUKILSV^YLWYLZLU[Z[OVZLPU]LZ[TLU[Z^OPJOMHSS\UKLYHU`VM[OLMVSSV^PUNNYHKL! )VYYV^LY \UKLY [OPZ YH[PUN ZJHSL IHZPJHSS` WVZZLZZLZ [OL 90,957 3,890 12,290 107,137 JOHYHJ[LYPZ[PJZVMIVYYV^LYZYH[LKHZ)99[V)99^P[O ‹ )HH)HH)HHÄ_LKPUJVTLVISPNH[PVUZHYLZ\IQLJ[[VTVKLYH[LJYLKP[YPZR;OL`HYLJVUZPKLYLKTLKP\TNYHKLHUKHZZ\JOWYV[LJ[P]LLSLTLU[Z ZSPNO[S`SLZZLYX\HSP[`+LMH\S[WVZZPIPSP[`)99 PZTPUPTHSSV^ P607,855 P19,685 P23,275 P650,815 TH`ILSHJRPUNVYTH`ILJOHYHJ[LYPZ[PJHSS`\UYLSPHISL ‹ )H)H)HVISPNH[PVUZHYLQ\KNLK[VOH]LZWLJ\SH[P]LLSLTLU[ZHUKHYLZ\IQLJ[[VZ\IZ[HU[PHSJYLKP[YPZR BRR 10-12 Adequate ‹ )))VISPNH[PVUZHYLJVUZPKLYLKZWLJ\SH[P]LHUKHYLZ\IQLJ[[VOPNOJYLKP[YPZR )VYYV^LY OHZ HU HKLX\H[L JHWHJP[` [V TLL[ P[Z ÄUHUJPHS JVTTP[TLU[Z\UKLY[OLUVYTHSJV\YZLVMI\ZPULZZ/V^L]LY ‹ *HH*HH*HHHYLQ\KNLK[VILVMWVVYZ[HUKPUNHUKHYLZ\IQLJ[[V]LY`OPNOJYLKP[YPZR HK]LYZLLJVUVTPJJVUKP[PVUZHUKJOHUNPUNJPYJ\TZ[HUJLZ ‹ *HHYLOPNOS`ZWLJ\SH[P]LHUKHYLSPRLS`PUVY]LY`ULHYKLMH\S[^P[OZVTLWYVZWLJ[VMYLJV]LY`VMWYPUJPWHSHUKPU[LYLZ[ HYLTVYLSPRLS`[V^LHRLU[OLIVYYV^LY»ZJHWHJP[`[VTLL[ ‹ *HYL[OLSV^LZ[YH[LKJSHZZVMIVUKZHUKHYL[`WPJHSS`PUKLMH\S[^P[OSP[[SLWYVZWLJ[MVYYLJV]LY`VMWYPUJPWHSVYPU[LYLZ[ P[ZÄUHUJPHSJVTTP[TLU[Z+LMH\S[WVZZPIPSP[`PZTPUPTHSSV^

114 LT GROUP, INC. 2019 ANNUAL REPORT 115 )LSV^HYL[OLÄUHUJPHSHZZL[ZVM[OLIHURPUNZLNTLU[L_JS\KPUNYLJLP]HISLZMYVTJ\Z[VTLYZ^OPJOHYLTVUP[VYLK\ZPUNL_[LYUHSYH[PUNZ ;OL[HISLILSV^ZOV^Z[OLIHURPUNZLNTLU[»ZÄUHUJPHSHZZL[ZHUKÄUHUJPHSSPHIPSP[PLZ»SPX\PKP[`PUMVYTH[PVU^OPJOPUJS\KLZJV\WVUJHZOÅV^ZJH[LNVYPaLK IHZLKVU[OLL_WLJ[LKKH[LVU^OPJO[OLHZZL[^PSSILYLHSPaLKHUK[OLSPHIPSP[`^PSSILZL[[SLK-VYV[OLYHZZL[Z[OLHUHS`ZPZPU[VTH[\YP[`NYV\WPUNPZIHZLK VU[OLYLTHPUPUNWLYPVKMYVT[OLLUKVM[OLYLWVY[PUNWLYPVK[V[OLJVU[YHJ[\HSTH[\YP[`KH[LVYPMLHYSPLY[OLL_WLJ[LKKH[L[OLHZZL[Z^PSSILYLHSPaLK December 31, 2019 Rated Baa1 and December 31, 2019 Aaa to Aa3 A1 to A3 below Subtotal Unrated Total More than More than 3 More than 6 (In Millions) Up to 1 Month to Months to 6 Months to 1 +\LMYVT):7 PĚ PĚ PĚ PĚ P105,982 P105,982 1 Month 3 Months Months Year Beyond 1 year Total +\LMYVTV[OLYIHURZ 5,038 3,090 7,990 16,118 1,643 17,761 (In Millions) 0U[LYIHURSVHUZYLJLP]HISLZ 9,595 13,182 435 23,212 1,627 24,839 Financial Assets :LJ\YP[PLZOLSK\UKLYHNYLLTLU[Z[VYLZLSS ĚĚĚĚ2,520 2,520 *6*0 P30,501 P– P– P– P–P30,501 -PUHUJPHSHZZL[ZH[-=;6*0 +\LMYVT):7HUKV[OLYIHURZ 123,755 – – – – 123,755  .V]LYUTLU[ZLJ\YP[PLZ 460 2,125 88,335 90,920 129 91,049 0U[LYIHURSVHUZYLJLP]HISL 19,539 2,295 1,517 – 1,921 25,272  7YP]H[LKLI[ZLJ\YP[PLZ 3,443 3,330 6,367 13,140 17,250 30,390 :LJ\YP[PLZOLSK\UKLYHNYLLTLU[Z[VYLZLSS 2,520 – – – – 2,520  8\V[LKLX\P[`ZLJ\YP[PLZ ĚĚ160 160 912 1,072 

3PX\PKP[`PZTVUP[VYLKI`[OLIHURPUNZLNTLU[VUHKHPS`IHZPZ[OYV\NO[OL;YLHZ\Y`.YV\W3PRL^PZL[OL94.TVUP[VYZ[OLZ[H[PJSPX\PKP[`]PH[OL4*6 (JJY\LKPU[LYLZ[WH`HISLHUKHJJY\LKV[OLY 1,254 708 473 404 275 3,114 \UKLYUVYTHSHUKZ[YLZZLKZJLUHYPVZ L_WLUZLZWH`HISL 6[OLYSPHIPSP[PLZ 11,914 Ě Ě Ě 1,075 12,989 ;V[HSÄUHUJPHSSPHIPSP[PLZ P749,702 P66,785 P20,840 P10,170 P143,198 P990,695

116 LT GROUP, INC. 2019 ANNUAL REPORT 117 +LJLTILY \UKLYLZ[PTH[LKPMJOHUNLZPUYPZRMHJ[VYZMHPS[VHSPNU^P[O[OLUVYTHS Foreign Interest Equities KPZ[YPI\[PVUHZZ\TW[PVU=H9TH`HSZVIL\UKLYVYV]LYLZ[PTH[LK Trading Portfolio Exchange* Rate Price Total VaR** More than More than More than K\L[V[OLHZZ\TW[PVUZWSHJLKVUYPZRMHJ[VYZHUK[OLYLSH[PVUZOPW (In Millions) 1 Month to 3 Months to 

4HYRL[9PZRZ HUKHYLIHZLKVUOPZ[VYPJHSKH[HMVYHYVSSPUNKH`WLYPVK^OPSL`PLSKZ 4HYRL[ YPZR PZ [OL YPZR [V LHYUPUNZ VY JHWP[HS HYPZPUN MYVT HK]LYZL HUKWYPJLZPU[OLOPZ[VYPJHS=H9HWWYVHJOHYLHSZV\WKH[LKKHPS`;OL TV]LTLU[Z PU MHJ[VYZ [OH[ HќLJ[ [OL THYRL[ ]HS\L VM PUZ[Y\TLU[Z 94.YLWVY[Z[OL=H9\[PSPaH[PVUHUKIYLHJOLZ[VSPTP[Z[V[OLYPZR[HRPUN WYVK\J[ZHUK[YHUZHJ[PVUZPUHUPUZ[P[\[PVUZ»V]LYHSSWVY[MVSPV4HYRL[YPZR WLYZVUULSVUHKHPS`IHZPZHUK[V[OL(3*6HUK96*VUHTVU[OS`IHZPZ HYPZLZMYVTTHYRL[THRPUNKLHSPUNHUKWVZP[PVU[HRPUNPUPU[LYLZ[YH[L (SSYPZRYLWVY[ZKPZJ\ZZLKPU[OL96*TLL[PUNHYLUV[LKI`[OLIHURPUN MVYLPNUL_JOHUNLHUKLX\P[`THYRL[Z ZLNTLU[»Z )6+  ;OL =H9 ÄN\YLZ HYL IHJR[LZ[LK [V ]HSPKH[L [OL YVI\Z[ULZZ VM [OL =H9 TVKLS 9LZ\S[Z VM IHJR[LZ[PUN VU H YVSSPUN VUL ;OLZ\JJLLKPUNZLJ[PVUZWYV]PKLKPZJ\ZZPVUVU[OLPTWHJ[VMTHYRL[YPZR `LHY WLYPVK HYL HSZV YLWVY[LK [V [OL 96*  )LSV^ HYL [OL VIQLJ[P]LZ VU[OLIHURPUNZLNTLU[»Z[YHKPUNHUKZ[Y\J[\YHSWVY[MVSPVZ HUKSPTP[H[PVUZVM[OL=H9TL[OVKVSVN`=H9HZZ\TW[PVUZWHYHTL[LYZ IHJR[LZ[PUNZ[YLZZ[LZ[PUNHUK=H9SPTP[Z Trading market risk ;YHKPUN THYRL[ YPZR L_PZ[Z PU [OL IHURPUN ZLNTLU[ HZ [OL ]HS\LZ VM H 6IQLJ[P]LZHUKSPTP[H[PVUZVM[OL=H9TL[OVKVSVN` P[Z [YHKPUN WVZP[PVUZ HYL ZLUZP[P]L [V JOHUNLZ PU THYRL[ YH[LZ Z\JO HZ  ;OL =H9 TVKLSZ HYL KLZPNULK [V TLHZ\YL THYRL[ YPZR PU H UVYTHS PU[LYLZ[YH[LZMVYLPNUL_JOHUNLYH[LZHUKLX\P[`WYPJLZ75)PZL_WVZLK THYRL[LU]PYVUTLU[;OLTVKLSZHZZ\TL[OH[HU`JOHUNLZVJJ\YYPUN [V[YHKPUNTHYRL[YPZRPU[OLJV\YZLVMTHYRL[THRPUNHZ^LSSHZMYVT PU[OLYPZRMHJ[VYZHќLJ[PUN[OLUVYTHSTHYRL[LU]PYVUTLU[^PSSMVSSV^ [HRPUNHK]HU[HNLVMTHYRL[VWWVY[\UP[PLZ-VYPU[LYUHSTVUP[VYPUNVM[OL HUVYTHSKPZ[YPI\[PVU;OL\ZLVM=H9OHZSPTP[H[PVUZILJH\ZLP[PZ YPZRPU[OL[YHKPUNWVY[MVSPV[OLIHURPUNZLNTLU[\ZLZ[OL=HS\LH[9PZR IHZLK VU OPZ[VYPJHS ]VSH[PSP[PLZ PU THYRL[ WYPJLZ HUK HZZ\TLZ [OH[ =H9HZHWYPTHY`YPZRTLHZ\YLTLU[[VVS0[HKVW[ZIV[O[OL7HYHTL[YPJ M\[\YLWYPJLTV]LTLU[Z^PSSMVSSV^HZ[H[PZ[PJHSKPZ[YPI\[PVU+\L[V[OL =H9 TL[OVKVSVN` HUK /PZ[VYPJHS :PT\SH[PVU TL[OVKVSVN` ^P[O  MHJ[[OH[=H9YLSPLZOLH]PS`VUOPZ[VYPJHSKH[H[VWYV]PKLPUMVYTH[PVU JVUÄKLUJL SL]LS TVKLSZ ^LYL ]HSPKH[LK I` HU L_[LYUHS PUKLWLUKLU[ HUK TH` UV[ JSLHYS` WYLKPJ[ [OL M\[\YL JOHUNLZ HUK TVKPÄJH[PVUZ ]HSPKH[VY=VSH[PSP[PLZ\ZLKPU[OLWHYHTL[YPJHYL\WKH[LKVUHKHPS`IHZPZ VM [OL YPZR MHJ[VYZ [OL WYVIHIPSP[` VM SHYNL THYRL[ TV]LZ TH` IL

118 LT GROUP, INC. 2019 ANNUAL REPORT 119 ;OLMVSSV^PUN[HISLZL[ZMVY[O[OLYLWYPJPUNNHWWVZP[PVUVM[OLIHURPUNZLNTLU[! -VYLPNUJ\YYLUJ`KLWVZP[ZHYLNLULYHSS`\ZLK[VM\UK75)»ZMVYLPNUJ\YYLUJ`KLUVTPUH[LKSVHUHUKPU]LZ[TLU[WVY[MVSPVPU[OL-*+<)HURZHYLYLX\PYLK I`[OL):7[VTH[JO[OLMVYLPNUJ\YYLUJ`SPHIPSP[PLZ^P[O[OLMVYLPNUJ\YYLUJ`HZZL[ZOLSK[OYV\NO-*+;OHPSHUKIHO[;/)HUK +LWVZP[SPHIPSP[PLZ! ;HP^HUKVSSHY;>+ Savings 7 7 7 7   7   7 0UMVYTH[PVU YLSH[PUN [V [OL IHURPUN ZLNTLU[»Z J\YYLUJ` KLYP]H[P]LZ PZ TP[PNH[LKILJH\ZL[OLJVYYLZWVUKPUN[P[SL[V[OLWYVWLY[`ZVSK\UKLY[OPZ  ;PTL           JVU[HPULKPU5V[L HYYHUNLTLU[PZ[YHUZMLYYLK[V[OLI\`LYZVUS`\WVUM\SSWH`TLU[VM[OL )VUKZWH`HISL òòòò  JVU[YHJ[WYPJL )PSSZHUKHJJLW[HUJLZWH`HISL         Financial Risk Management Objectives and Policies of the Companies in the Group other than the Banking Segment Concentration risk ;V[HSÄUHUJPHSSPHIPSP[PLZ 7  7  7  7  7  7 *VUJLU[YH[PVUZHYPZL^OLUHU\TILYVMJV\U[LYWHY[PLZHYLLUNHNLKPU Repricing gap            9PZR4HUHNLTLU[:[YH[LNPLZ ZPTPSHY I\ZPULZZ HJ[P]P[PLZ OH]PUN ZPTPSHY LJVUVTPJ MLH[\YLZ [OH[ ^V\SK Cumulative gap 7  7   7   7   7   7ò ;OL .YV\W»Z WYPUJPWHS ÄUHUJPHS PUZ[Y\TLU[Z JVTWYPZL VM ZOVY[[LYT JH\ZL[OLPYHIPSP[`[VTLL[JVU[YHJ[\HSVISPNH[PVUZ[VILZPTPSHYS`HќLJ[LK HUK SVUN[LYT KLI[Z HUK *6*0 ;OL THPU W\YWVZL VM [OLZL ÄUHUJPHS I` JOHUNLZ PU LJVUVTPJ WVSP[PJHS VY V[OLY JVUKP[PVUZ *VUJLU[YH[PVUZ * Financial instruments that are not subject to repricing/rollforward were excluded. PUZ[Y\TLU[Z PZ [V LUZ\YL HKLX\H[L M\UKZ MVY [OL .YV\W»Z VWLYH[PVUZ PUKPJH[L [OL YLSH[P]L ZLUZP[P]P[` VM [OL .YV\W»Z WLYMVYTHUJL [V ** Receivables from customers excludes residual value of leased assets (Note 10). HUK JHWP[HS L_WHUZPVU ,_JLZZ M\UKZ HYL PU]LZ[LK PU H]HPSHISLMVYZHSL KL]LSVWTLU[Z HќLJ[PUN H WHY[PJ\SHY PUK\Z[Y` VY NLVNYHWOPJHS SVJH[PVU ***Excludes LTNCD. ÄUHUJPHSHZZL[Z^P[OH]PL^[VSPX\PKH[L[OLZL[VTLL[]HYPV\ZVWLYH[PVUHS :\JO JYLKP[ YPZR JVUJLU[YH[PVUZ PM UV[ WYVWLYS` THUHNLK TH` JH\ZL YLX\PYLTLU[Z^OLUULLKLK;OL.YV\WOHZ]HYPV\ZV[OLYÄUHUJPHSHZZL[Z ZPNUPÄJHU[SVZZLZ[OH[JV\SK[OYLH[LU[OL.YV\W»ZÄUHUJPHSZ[YLUN[OHUK ;OL MVSSV^PUN [HISL ZL[Z MVY[O MVY [OL `LHY PUKPJH[LK [OL PTWHJ[ VM YPZRPU[OLIHURPUNIVVRZ[VJVTWSLTLU[[OLLHYUPUNZH[YPZRHWWYVHJO HUK ÄUHUJPHS SPHIPSP[PLZ Z\JO HZ YLJLP]HISLZ HUK HJJV\U[Z WH`HISL HUK \UKLYTPULW\ISPJJVUÄKLUJL*VUJLU[YH[PVUYPZRWLYI\ZPULZZZLNTLU[ JOHUNLZPUPU[LYLZ[YH[LZVU[OLIHURPUNZLNTLU[»ZYLWYPJPUNNHWMVY[OL \ZPUN[OLTVKPÄLKK\YH[PVUHWWYVHJO*VNUPaHU[VM[OPZYLX\PYLTLU[[OL HJJY\LKL_WLUZLZ^OPJOHYPZLKPYLJ[S`MYVTP[ZVWLYH[PVUZ JV\SKHYPZLVU[OLMVSSV^PUN! `LHYZLUKLK+LJLTILY! 7HYLU[*VTWHU`OHZ\UKLY[HRLU[OLPUP[PHSHJ[P]P[PLZZ\JOHZPKLU[PÄJH[PVU VM[OLI\ZPULZZYLX\PYLTLU[HUKKLZPNUVM[LTWSH[LZMVYLHJOHJJV\U[ ;OLTHPUYPZRZHYPZPUNMYVT[OL\ZLVMÄUHUJPHSPUZ[Y\TLU[ZHYLJYLKP[YPZR ‹ +PZ[PSSLKZWPYP[ZZLNTLU[»ZHUU\HSZHSLZWLY[HPUTHPUS`[V[^V[Y\Z[LK HUK[OLPUJS\ZPVUVM[OPZYLX\PYLTLU[PU[OL(ZZL[3PHIPSP[`4HUHNLTLU[ 2019  SPX\PKP[`YPZRHUKTHYRL[YPZRZJVUZPZ[PUNVMMVYLPNUL_JOHUNLYPZRPU[LYLZ[ WHY[PLZ^P[OZHSLZ[V[OLTJVTWYPZPUNHIV\[  VM[OL[V[HSZLNTLU[ I\ZPULZZYLX\PYLTLU[KLÄUP[PVU YH[LYPZRHUKLX\P[`WYPJLYPZR YL]LU\L Income Income ‹ )L]LYHNLZLNTLU[HUU\HSZHSLZWLY[HPUTHPUS`[VWHY[PLZ^P[OZHSLZ Before Before Foreign currency risk *YLKP[9PZR [V[OLTJVTWYPZPUNHIV\[ VM[OL[V[HSIL]LYHNLZHSLZ Income Tax Equity 0UJVTL;H_ ,X\P[` -VYLPNUL_JOHUNLPZ[OLYPZR[VLHYUPUNZVYJHWP[HSHYPZPUNMYVTJOHUNLZ ;OL.YV\WTHUHNLZP[ZJYLKP[YPZRI`[YHUZHJ[PUN^P[OJV\U[LYWHY[PLZVM ‹ ;VIHJJV HUK WYVWLY[` KL]LSVWTLU[ ZLNTLU[Z HYL UV[ L_WVZLK [V (In Millions) PUMVYLPNUL_JOHUNLYH[LZ;OLIHURPUNZLNTLU[[HRLZVUL_WVZ\YL[V NVVKÄUHUJPHSJVUKP[PVUHUKZLSLJ[PUNPU]LZ[TLU[NYHKLZLJ\YP[PLZ;OL JVUJLU[YH[PVUYPZRILJH\ZLP[OHZKP]LYZLIHZLVMJV\U[LYWHY[PLZ LќLJ[ZVMÅ\J[\H[PVUZPU[OLWYL]HPSPUNMVYLPNUJ\YYLUJ`L_JOHUNLYH[LZ IWZ P574 P574 7 7 .YV\W[YHKLZVUS`^P[OYLJVNUPaLKJYLKP[^VY[O`[OPYKWHY[PLZ0UHKKP[PVU VUP[ZÄUHUJPHSZHUKJHZOÅV^Z YLJLP]HISLIHSHUJLZHYLTVUP[VYLKVUHUVUNVPUNIHZPZ^P[O[OLYLZ\S[ *YLKP[X\HSP[`WLYJSHZZVMÄUHUJPHSHZZL[Z IWZ (574) (574)   [OH[[OL.YV\W»ZL_WVZ\YL[VIHKKLI[ZPZUV[ZPNUPÄJHU[4HUHNLTLU[ ¸:[HUKHYKNYHKL¹HJJV\U[ZJVUZPZ[VMÄUHUJPHSHZZL[ZMYVT[Y\Z[LKWHY[PLZ -VYLPNUJ\YYLUJ`SPHIPSP[PLZNLULYHSS`JVUZPZ[VMMVYLPNUJ\YYLUJ`KLWVZP[Z IWZ 1,147 1,147   JSVZLS`TVUP[VYZ[OLM\UKHUKÄUHUJPHSJVUKP[PVUVM[OL.YV\W ^P[O NVVK ÄUHUJPHS JVUKP[PVU ¸:\IZ[HUKHYK NYHKL¹ HJJV\U[Z VU [OL PU75)»Z-*+<IVVRZHJJV\U[ZTHKLPU[OL7OPSPWWPULZVY^OPJOHYL V[OLYOHUKHYLÄUHUJPHSHZZL[ZMYVTV[OLYJV\U[LYWHY[PLZ^P[OYLSH[P]LS` IWZ (1,147) (1,147)   NLULYH[LK MYVT YLTP[[HUJLZ [V [OL 7OPSPWWPULZ I` -PSPWPUV L_WH[YPH[LZ 0U HKKP[PVU JYLKP[ YPZR VM WYVWLY[` KL]LSVWTLU[ ZLNTLU[ PZ THUHNLK SV^ KLMH\S[Z ;OL .YV\W KPK UV[ YLNHYK HU` ÄUHUJPHS HZZL[ HZ ¸OPNO HUK V]LYZLHZ -PSPWPUV ^VYRLYZ ^OV YL[HPU MVY [OLPY V^U ILULÄ[ VY MVY (Z VUL VM [OL SVUN[LYT NVHSZ PU [OL YPZR THUHNLTLU[ WYVJLZZ [OL WYPTHYPS` [OYV\NO HUHS`ZPZ VM YLJLP]HISLZ VU H JVU[PU\V\Z IHZPZ  ;OL NYHKL¹PU]PL^VM[OLLYYH[PJJHZOÅV^ZVY\UJLY[HPU[`HZZVJPH[LK^P[O[OL [OLILULÄ[VMH[OPYKWHY[`MVYLPNUJ\YYLUJ`KLWVZP[HJJV\U[Z^P[O75) JYLKP[ YPZR MVY JVU[YHJ[Z YLJLP]HISLZ PZ TP[PNH[LK HZ [OL .YV\W OHZ [OL ÄUHUJPHSPUZ[Y\TLU[Z¸7HZ[K\LI\[UV[PTWHPYLK¹HYLP[LTZ^P[OOPZ[VY` IHURPUN ZLNTLU[ OHZ OHZ HSZV PTWSLTLU[LK [OL HKVW[PVU VM [OL HUKMVYLPNUJ\YYLUJ`KLUVTPUH[LKIVYYV^PUNZHWWLHYPUNPU[OLYLN\SHY LJVUVTPJ]HS\LHWWYVHJOPUTLHZ\YPUN[OLPTWHJ[VM[OLPU[LYLZ[YH[L YPNO[[VJHUJLS[OLZHSLZJVU[YHJ[^P[OV\[[OLYPZRMVYHU`JV\Y[HJ[PVU VM MYLX\LU[ KLMH\S[ UL]LY[OLSLZZ [OL HTV\U[ K\L HYL Z[PSS JVSSLJ[PISL IVVRZVM75) HUKJHU[HRLWVZZLZZPVUVM[OLZ\IQLJ[WYVWLY[`PUJHZLVMYLM\ZHSI`[OL 3HZ[S` ¸0TWHPYLK ÄUHUJPHS HZZL[Z¹ HYL [OVZL [OH[ HYL SVUNV\[Z[HUKPUN I\`LY[VWH`VU[PTL[OLJVU[YHJ[ZYLJLP]HISLZK\L;OPZYPZRPZM\Y[OLY HUKOH]LILLUWYV]PKLK^P[OHSSV^HUJLMVYKV\I[M\SHJJV\U[Z

120 LT GROUP, INC. 2019 ANNUAL REPORT 121 :L[V\[ILSV^PZ[OLPUMVYTH[PVUHIV\[[OLJYLKP[YPZRL_WVZ\YLVU[OL*VTWHU`»ZÄUHUJPHSHZZL[Z\ZPUNWYV]PZPVUTH[YP_PUTPSSPVUZ! Equity price risk MHPY ]HS\L PU[LYLZ[ YH[L YPZR ^OPSL ÅVH[PUN YH[L ÄUHUJPHS PUZ[Y\TLU[Z HYL ,X\P[` WYPJL YPZR PZ [OL YPZR [OH[ [OL MHPY ]HS\L VM LX\P[PLZ ^PSS KLJYLHZL Z\IQLJ[[VJHZOÅV^PU[LYLZ[YH[LYPZR9LWYPJPUNVMÅVH[PUNYH[LÄUHUJPHS (ZVM+LJLTILY ! HZ H YLZ\S[ VM JOHUNLZ PU [OL SL]LSZ VM LX\P[` PUKPJLZ HUK ]HS\L VM PUZ[Y\TLU[ZPZTVZ[S`H[PU[LY]HSVM[OYLLTVU[OZVYZP_TVU[OZ PUKP]PK\HS Z[VJRZ 0U     HUK  JOHUNLZ PU MHPY ]HS\L VM LX\P[`PUZ[Y\TLU[ZOLSKHZ(-:LX\P[`PUZ[Y\TLU[ZK\L[VHYLHZVUHISL Foreign currency risk Trade and other receivables WVZZPISLJOHUNLPULX\P[`PU[LYLZ[^P[OHSSV[OLY]HYPHISLZOLSKJVUZ[HU[ ;OLUVUIHURPUNZLNTLU[VM[OL.YV\WPZUV[ZPNUPÄJHU[S`HќLJ[LKI` Cash in Due from Days past due ^PSSPUJYLHZLWYVÄ[I`7TPSSPVU7TPSSPVUHUK7TPSSPVU MVYLPNUJ\YYLUJ`YPZRZPUJL[OL.YV\WOHZUVZPNUPÄJHU[MVYLPNUJ\YYLUJ` related YLZWLJ[P]LS`PMLX\P[`WYPJLZ^PSSPUJYLHZLI`    HUK  [YHUZHJ[PVUZ < 30 days 30-60 days 61-90 days > 90 days banks parties Current Total YLZWLJ[P]LS` (U LX\HS JOHUNL PU [OL VWWVZP[L KPYLJ[PVU ^V\SK OH]L KLJYLHZLLX\P[`I`[OLZHTLHTV\U[ Expected credit loss rate 0.13% - 0.13% - 0.13% - 0.13% - 5.00% - 33. 6MMZL[[PUNVM-PUHUJPHS(ZZL[ZHUK-PUHUJPHS3PHIPSP[PLZ –% –% 82.00% 78.9% 36.00% 93.06% 47.00% Interest rate risk Estimated total gross carrying 0U[LYLZ[YH[LYPZRHYPZLZMYVT[OLWVZZPIPSP[`[OH[JOHUNLZPUPU[LYLZ[YH[LZ ;OL .YV\W PZ YLX\PYLK [V KPZJSVZL PUMVYTH[PVU HIV\[ YPNO[Z VM VќZL[ amount at default P3,322.7 P2,029.4 P6,934.0 P2,097.7 P2,327.6 P1,274.3 P2,552.3 P15,185.9 ^V\SK\UMH]VYHIS`HќLJ[M\[\YLJHZOÅV^ZMYVTÄUHUJPHSPUZ[Y\TLU[Z(Z HUKYLSH[LKHYYHUNLTLU[ZZ\JOHZJVSSH[LYHSWVZ[PUNYLX\PYLTLU[ZMVY VM+LJLTILY HUK [OL.YV\W»ZSVUN[LYTKLI[ZHYLUV[ Expected credit loss P–P–P1.2 P5.8 P10.1 P14.2 P302.6 P333.9 ÄUHUJPHSPUZ[Y\TLU[Z\UKLYHULUMVYJLHISLTHZ[LYUL[[PUNHNYLLTLU[ZVY L_WVZLK[V[OLYPZRPUJOHUNLZPUTHYRL[PU[LYLZ[YH[LZZPUJL[OLKLI[Z ZPTPSHYHYYHUNLTLU[Z;OLLќLJ[ZVM[OLZLHYYHUNLTLU[ZHYLKPZJSVZLK (ZVM+LJLTILY ! HYLPZZ\LKH[Ä_LKYH[LZ-P_LKYH[LÄUHUJPHSPUZ[Y\TLU[ZHYLZ\IQLJ[[V PU[OLZ\JJLLKPUN[HISLZ

Trade and other receivables Financial assets *HZOPU +\LMYVT +H`ZWHZ[K\L December 31, 2019 related #KH`Z KH`Z  KH`Z % KH`Z IHURZ parties *\YYLU[ Total (σHFWRIUHPDLQLQJULJKWVRI Gross Net amount VHWRσ LQFOXGLQJULJKWVWRVHW ,_WLJ[LKJYLKP[SVZZYH[L           RσðQDQFLDOFROODWHUDO WKDW ¶ ¶       amounts presented Gross RσVHWLQ in the GRQRWPHHW3$6RσVHWWLQJ ,Z[PTH[LK[V[HSNYVZZJHYY`PUN carrying accordance consolidated criteria HTV\U[H[KLMH\S[ 7   7 7 7  7 7 7 7  Amounts with the statement of Fair value of ,_WLJ[LKJYLKP[SVZZ 7– 7– 7   7 7 7 Financial assets recognized at (before RσVHWWLQJ ðQDQFLDOSRVLWLRQ Financial Financial Net exposure end of reporting period by type RσVHWWLQJ criteria [a-b] instruments collateral [c-d] 3PX\PKP[`9PZRHUK-\UKPUN4HUHNLTLU[ [a] [b] [c] [d] [e] 3PX\PKP[`YPZRPZNLULYHSS`KLÄULKHZ[OLJ\YYLU[HUKWYVZWLJ[P]LYPZR[VLHYUPUNZVYJHWP[HSHYPZPUNMYVT[OL.YV\W»ZPUHIPSP[`[VTLL[P[ZVISPNH[PVUZ^OLU [OL`JVTLK\L^P[OV\[PUJ\YYPUN\UHJJLW[HISLSVZZLZVYJVZ[Z (In Thousands) Derivative assets (Notes 6 and 21) P74,965,186 (P74,592,146) P373,040 (P45,891) PĚ P327,149 ;OL.YV\W»ZVIQLJ[P]LPZ[VTHPU[HPUHIHSHUJLIL[^LLUJVU[PU\P[`VMM\UKPUNHUKZV\YJPUNÅL_PIPSP[`[OYV\NO[OL\ZLVMH]HPSHISLÄUHUJPHSPUZ[Y\TLU[Z ;OL.YV\WTHUHNLZP[ZSPX\PKP[`WYVÄSL[VTLL[P[Z^VYRPUNHUKJHWP[HSL_WLUKP[\YLYLX\PYLTLU[ZHUKZLY]PJLKLI[VISPNH[PVUZ(ZWHY[VM[OLSPX\PKP[`YPZR Securities sold under agreements THUHNLTLU[WYVNYHT[OL.YV\WYLN\SHYS`L]HS\H[LZHUKJVUZPKLYZ[OLTH[\YP[`VMP[ZÄUHUJPHSHZZL[ZLN[YHKLYLJLP]HISLZV[OLYÄUHUJPHSHZZL[ZHUK to repurchase (Note 8) 2,517,764 Ě 2,517,764 Ě (2,517,745) 19 YLZVY[Z[VZOVY[[LYTIVYYV^PUNZ^OLUL]LYP[ZH]HPSHISLJHZOVYTH[\YLKWSHJLTLU[ZPZUV[LUV\NO[VTLL[P[ZKHPS`^VYRPUNJHWP[HSYLX\PYLTLU[Z;VLUZ\YL P77,482,950 (P74,592,146) P2,890,804 (P45,891) (P2,517,745) P327,168 H]HPSHIPSP[`VMZOVY[[LYTIVYYV^PUNZ[OL.YV\WTHPU[HPUZJYLKP[SPULZ^P[OIHURZVUHJVU[PU\PUNIHZPZ +LJLTILY ;OL.YV\WYLSPLZVUI\KNL[PUNHUKMVYLJHZ[PUN[LJOUPX\LZ[VTVUP[VYJHZOÅV^JVUJLYUZ;OL.YV\WHSZVRLLWZP[ZSPX\PKP[`YPZRTPUPT\TI`WYLWH`PUN ,ќLJ[VMYLTHPUPUNYPNO[ZVM [V[OLL_[LU[WVZZPISLPU[LYLZ[ILHYPUNKLI[\ZPUNVWLYH[PUNJHZOÅV^Z .YVZZ 5L[HTV\U[ ZL[VќPUJS\KPUNYPNO[Z[VZL[ VќÄUHUJPHSJVSSH[LYHS[OH[ ;OLMVSSV^PUN[HISLZZOV^[OLTH[\YP[`WYVÄSLVM[OL.YV\W»ZV[OLYÄUHUJPHSSPHIPSP[PLZ\UKPZJV\U[LKHTV\U[ZVMWYPUJPWHSHUKYLSH[LKPU[LYLZ[HZ^LSSHZ[OL HTV\U[Z presented .YVZZ VќZL[PU in the KVUV[TLL[7(:VќZL[[PUN ÄUHUJPHSHZZL[Z\ZLKMVYSPX\PKP[`THUHNLTLU[(in millions)! criteria JHYY`PUN accordance consolidated (TV\U[Z ^P[O[OL statement of -HPY]HS\LVM 2019  -PUHUJPHSHZZL[ZYLJVNUPaLKH[ ILMVYL VќZL[[PUN ÄUHUJPHSWVZP[PVU -PUHUJPHS -PUHUJPHS 5L[L_WVZ\YL Less than 1 to less than Less than 1 to less than LUKVMYLWVY[PUNWLYPVKI`[`WL VќZL[[PUN criteria BHID PUZ[Y\TLU[Z collateral BJKD one year 3 years Total VUL`LHY `LHYZ Total BHD BID BJD BKD BLD *HZOHUKV[OLYJHZOP[LTZ P3,323 P–P3,323 7 7– 7 (In Thousands) Trade receivables 14,940 – 14,940  –  +LYP]H[P]LHZZL[Z5V[LZHUK 7  7   7  7    7ò 7 6[OLYYLJLP]HISLZ 3,401 – 3,401   –   :LJ\YP[PLZZVSK\UKLYHNYLLTLU[Z [VYLW\YJOHZL5V[L   ò  ò     +\LMYVTYLSH[LKWHY[PLZ 2,029 – 2,029  –  7 7   7  7    7   7   9LM\UKHISLKLWVZP[Z 178 – 178  –  -PUHUJPHSHZZL[ZH[-=;73 7–7  –   Financial liabilities P23,878 P–P23,878 7  7– 7  December 31, 2019 2019  (σHFWRIUHPDLQLQJULJKWVRI Less than 1 to less than Less than 1 to less than Gross Net amount VHWRσ LQFOXGLQJULJKWVWRVHW RσðQDQFLDOFROODWHUDO WKDW one year 3 years Total VUL`LHY `LHYZ Total amounts presented Gross RσVHWLQ in the GRQRWPHHW3$6RσVHWWLQJ Short term debts P3,323 P–P3,323 – 7 7 7 carrying accordance consolidated criteria (JJV\U[ZWH`HISLHUKV[OLY Amounts with the statement of Fair value of SPHIPSP[PLZ 14,940 – 14,940  –  Financial assets recognized at (before RσVHWWLQJ ðQDQFLDOSRVLWLRQ Financial Financial Net exposure 3VUN[LYTKLI[Z 443 3,705 4,148      end of reporting period by type RσVHWWLQJ criteria [a-b] instruments collateral [c-d] +\L[VYLSH[LKWHY[PLZ 65 – 65  –  [a] [b] [c] [d] [e] 6[OLYSPHIPSP[PLZ 2,456 1,519 3,975    (In Thousands) P21,227 P5,224 P26,451 7 7 7 +LYP]H[P]LSPHIPSP[PLZ5V[LZHUK P60,131,350 (P59,885,731) P245,619 (P155,245) PĚ P90,374 ,_JS\KPUNUVUÄUHUJPHSSPHIPSP[PLZHTV\U[PUN[VP134.3 million and PTPSSPVUHZVM+LJLTILY HUK YLZWLJ[P]LS` :LJ\YP[PLZZVSK\UKLYHNYLLTLU[Z [VYLW\YJOHZL5V[L  23,268,257 Ě 23,268,257 Ě (29,655,404) (6,387,147) 4HYRL[9PZRZVM[OL.YV\WV[OLY[OHU[OL)HURPUN:LNTLU[ 4HUHNLTLU[VMÄUHUJPHSTHYRL[YPZRPZHRL`WYPVYP[`MVY[OL.YV\W;OL Total P83,399,607 (P59,885,731) P23,513,876 (P155,245) (P29,655,404) P6,296,773 ;OL .YV\W»Z VWLYH[PUN PU]LZ[PUN HUK ÄUHUJPUN HJ[P]P[PLZ HYL KPYLJ[S` .YV\WNLULYHSS`HWWSPLZZLUZP[P]P[`HUHS`ZPZPUHZZLZZPUNHUKTVUP[VYPUN 0UJS\KLKPUIPSSZHUKHJJLW[HUJLZWH`HISLPU[OLJVUZVSPKH[LKZ[H[LTLU[VMÄUHUJPHSWVZP[PVU HќLJ[LK I` JOHUNLZ PU MVYLPNU L_JOHUNL YH[LZ HUK PU[LYLZ[ YH[LZ P[ZTHYRL[YPZRZ:LUZP[P]P[`HUHS`ZPZLUHISLZTHUHNLTLU[[VPKLU[PM`[OL 0UJYLHZPUNTHYRL[Å\J[\H[PVUZPU[OLZL]HYPHISLZTH`YLZ\S[PUZPNUPÄJHU[ YPZRWVZP[PVUVM[OL.YV\WHZ^LSSHZWYV]PKLHUHWWYV_PTH[LX\HU[PÄJH[PVU LX\P[`JHZOÅV^HUKWYVÄ[]VSH[PSP[`YPZRZMVY[OL.YV\W-VY[OPZYLHZVU VM[OLYPZRL_WVZ\YLZ,Z[PTH[LZWYV]PKLKMVYMVYLPNUL_JOHUNLYPZRJHZO [OL.YV\WZLLRZ[VTHUHNLHUKJVU[YVS[OLZLYPZRZWYPTHYPS`[OYV\NOP[Z ÅV^ PU[LYLZ[ YH[L YPZR WYPJL PU[LYLZ[ YH[L YPZR HUK LX\P[` WYPJL YPZR HYL YLN\SHYVWLYH[PUNHUKÄUHUJPUNHJ[P]P[PLZ IHZLKVU[OLOPZ[VYPJHS]VSH[PSP[`MVYLHJOTHYRL[MHJ[VY^P[OHKQ\Z[TLU[Z ILPUN THKL [V HYYP]L H[ ^OH[ [OL .YV\W JVUZPKLYZ [V IL YLHZVUHIS` WVZZPISL

122 LT GROUP, INC. 2019 ANNUAL REPORT 123 +LJLTILY ;OLTL[OVKZHUKHZZ\TW[PVUZ\ZLKI`[OL.YV\WPULZ[PTH[PUN[OLMHPY [LUHU[Z» YLU[HS KLWVZP[Z HUK HK]HUJL YLU[HSZ [OL JHYY`PUN ]HS\LZ ]HS\LVM[OLÄUHUJPHSPUZ[Y\TLU[ZHYL! HWWYV_PTH[LMHPY]HS\LZK\L[VLP[OLY[OLWYLZLUJLVMHKLTHUKMLH[\YL ,ќLJ[VMYLTHPUPUNYPNO[ZVM VY[OLYLSH[P]LS`ZOVY[[LYTTH[\YP[PLZVM[OLZLSPHIPSP[PLZ .YVZZ 5L[HTV\U[ ZL[VќPUJS\KPUNYPNO[Z[VZL[ *HZOLX\P]HSLU[Z*HYY`PUNHTV\U[ZHWWYV_PTH[LMHPY]HS\LZK\L[V[OL HTV\U[Z presented VќÄUHUJPHSJVSSH[LYHS[OH[ YLSH[P]LS`ZOVY[[LYTTH[\YP[`VM[OLZLPU]LZ[TLU[Z +LYP]H[P]L PUZ[Y\TLU[Z  -HPY ]HS\LZ HYL LZ[PTH[LK IHZLK VU X\V[LK .YVZZ VќZL[PU in the KVUV[TLL[7(:VќZL[[PUN THYRL[WYPJLZVYHJJLW[HISL]HS\H[PVUTVKLSZ criteria -PUHUJPHSHZZL[Z JHYY`PUN accordance consolidated +LI[ ZLJ\YP[PLZ  -HPY ]HS\LZ HYL NLULYHSS` IHZLK \WVU X\V[LK THYRL[ YLJVNUPaLKH[ (TV\U[Z ^P[O[OL statement of -HPY]HS\LVM WYPJLZ  0M [OL THYRL[ WYPJLZ HYL UV[ YLHKPS` H]HPSHISL MHPY ]HS\LZ HYL ;PTL KLWVZP[ SPHIPSP[PLZ IPSSZ WH`HISL ^P[O SVUN [LYT TH[\YP[` HUK end of reporting ILMVYL VќZL[[PUN ÄUHUJPHSWVZP[PVU -PUHUJPHS -PUHUJPHS 5L[L_WVZ\YL VI[HPULK MYVT PUKLWLUKLU[ WHY[PLZ VќLYPUN WYPJPUN ZLY]PJLZ LZ[PTH[LK Z\IVYKPUH[LK KLI[ PUJS\KPUN KLZPNUH[LK H[ -=;73  -HPY ]HS\L PZ WLYPVKI`[`WL VќZL[[PUN criteria BHID PUZ[Y\TLU[Z collateral BJKD \ZPUNHKQ\Z[LKX\V[LKTHYRL[WYPJLZVMJVTWHYHISLPU]LZ[TLU[ZVY\ZPUN KL[LYTPULK\ZPUN[OLKPZJV\U[LKJHZOÅV^TL[OVKVSVN`;OLKPZJV\U[ [OLKPZJV\U[LKJHZOÅV^TL[OVKVSVN` YH[L \ZLK PU LZ[PTH[PUN [OL MHPY ]HS\LZ VM [OL Z\IVYKPUH[LK KLI[ HUK BHD BID BJD BKD BLD [PTLKLWVZP[ZYHUNLZMYVT [V HUK [V HZVM (In Thousands) ,X\P[`ZLJ\YP[PLZMHPY]HS\LZVMX\V[LKLX\P[`ZLJ\YP[PLZHYLIHZLKVU +LJLTILY HUK YLZWLJ[P]LS` +LYP]H[P]LSPHIPSP[PLZ5V[LZHUK 7  7  7   7  7ò 7  X\V[LKTHYRL[WYPJLZ>OPSLMHPY]HS\LZVM\UX\V[LKLX\P[`ZLJ\YP[PLZHYL [OLZHTLHZ[OLJHYY`PUN]HS\LZPUJL[OLMHPY]HS\LJV\SKUV[ILYLSPHIS` Fair value hierarchy :LJ\YP[PLZZVSK\UKLYHNYLLTLU[Z[V KL[LYTPULKK\L[V[OL\UWYLKPJ[HISLUH[\YLVMM\[\YLJHZOÅV^ZHUK[OL ;OL.YV\W\ZLZ[OLMVSSV^PUNOPLYHYJO`MVYKL[LYTPUPUNHUKKPZJSVZPUN YLW\YJOHZL5V[L   ò   ò   ò SHJRVMZ\P[HISLTL[OVKZVMHYYP]PUNH[HYLSPHISLMHPY]HS\L [OLMHPY]HS\LVMHZZL[ZHUKSPHIPSP[PLZI`]HS\H[PVU[LJOUPX\L;OLZLSL]LSZ Total 7    7  7  7    7  HYLIHZLKPU[OLPUW\[Z[OH[HYL\ZLK[VKL[LYTPUL[OLMHPY]HS\LHUKJHU 3VHUZ HUK YLJLP]HISLZ  -VY SVHUZ ^P[O Ä_LK PU[LYLZ[ YH[LZ MHPY ]HS\LZ ILZ\TTHYPaLKPU! 0UJS\KLKPUIPSSZHUKHJJLW[HUJLZWH`HISLPU[OLJVUZVSPKH[LKZ[H[LTLU[VMÄUHUJPHSWVZP[PVU HYLLZ[PTH[LKI`KPZJV\U[LKJHZOÅV^TL[OVKVSVN`\ZPUN[OL.YV\W»Z ;OL HTV\U[Z KPZJSVZLK PU JVS\TU K PUJS\KL [OVZL YPNO[Z [V ZL[ ;OL .YV\W»ZTHUHNLTLU[ KL[LYTPULZ [OL WVSPJPLZ HUK WYVJLK\YLZ MVY J\YYLU[ THYRL[ SLUKPUN YH[LZ MVY ZPTPSHY [`WLZ VM SVHUZ -VY SVHUZ ^P[O 3L]LS!X\V[LK\UHKQ\Z[LKWYPJLZPUHJ[P]LTHYRL[ZMVYPKLU[PJHSHZZL[Z Vќ HTV\U[Z [OH[ HYL VUS` LUMVYJLHISL HUK L_LYJPZHISL PU [OL L]LU[ VM IV[OYLJ\YYPUNHUKUVUYLJ\YYPUNMHPY]HS\LTLHZ\YLTLU[ ÅVH[PUNPU[LYLZ[YH[LZ^P[OYLWYPJPUNMYLX\LUJPLZVUHX\HY[LYS`IHZPZ[OL or liabilities KLMH\S[ PUZVS]LUJ` VY IHURY\W[J`  ;OPZ PUJS\KLZ HTV\U[Z YLSH[LK [V .YV\WHZZ\TLZ[OH[[OLJHYY`PUNHTV\U[HWWYV_PTH[LZMHPY]HS\L 3L]LS!V[OLY[LJOUPX\LZMVY^OPJOHSSPUW\[Z^OPJOOH]LHZPNUPÄJHU[ ÄUHUJPHSJVSSH[LYHSIV[OYLJLP]LKHUKWSLKNLK^OL[OLYJHZOVYUVUJHZO ,_[LYUHS]HS\LYZHYLPU]VS]LKMVY]HS\H[PVUVMZPNUPÄJHU[HZZL[ZZ\JOHZ LќLJ[VU[OLYLJVYKLKMHPY]HS\LHYLVIZLY]HISLLP[OLYKPYLJ[S`VYPUKPYLJ[S` JVSSH[LYHSL_JS\KPUN[OLL_[LU[VMV]LYJVSSH[LYHSPaH[PVU PU]LZ[TLU[WYVWLY[PLZSHUKHUKSHUKPTWYV]LTLU[ZWSHU[I\PSKPUNZHUK 3PHIPSP[PLZ,_JLW[MVY[PTLKLWVZP[SPHIPSP[PLZZ\IVYKPUH[LKKLI[IVUKZ 3L]LS![LJOUPX\LZ^OPJO\ZLPUW\[Z^OPJOOH]LHZPNUPÄJHU[LќLJ[VU I\PSKPUNPTWYV]LTLU[ZHUKTHJOPULYPLZHUKLX\PWTLU[0U]VS]LTLU[VM WH`HISL\UZLJ\YLK[LYTSVHUZUV[LZWH`HISLWH`HISL[VSHUKV^ULYZ [OLYLJVYKLKMHPY]HS\L[OH[HYLUV[IHZLKVUVIZLY]HISLTHYRL[KH[H L_[LYUHS ]HS\LYZ PZ KLJPKLK \WVU HUU\HSS` I` THUHNLTLU[  :LSLJ[PVU 34. -HPY=HS\L4LHZ\YLTLU[ JYP[LYPH PUJS\KL THYRL[ RUV^SLKNL YLW\[H[PVU PUKLWLUKLUJL HUK ^OL[OLYWYVMLZZPVUHSZ[HUKHYKZHYLTHPU[HPULK4HUHNLTLU[KLJPKLZ ;OL.YV\WOLSK[OLMVSSV^PUNHZZL[ZHUKSPHIPSP[PLZTLHZ\YLKH[MHPY]HS\LHUKH[JVZ[I\[^OPJOMHPY]HS\LZHYLKPZJSVZLKHUK[OLPYJVYYLZWVUKPUNSL]LSPU ;OL.YV\WOHZHZZL[ZHUKSPHIPSP[PLZ[OH[HYLTLHZ\YLKH[MHPY]HS\LVU HM[LY KPZJ\ZZPVUZ ^P[O [OL .YV\W»Z L_[LYUHS ]HS\LYZ ^OPJO ]HS\H[PVU MHPY]HS\LOPLYHYJO`! H YLJ\YYPUN HUK UVUYLJ\YYPUN IHZPZ PU [OL JVUZVSPKH[LK Z[H[LTLU[Z [LJOUPX\LZHUKPUW\[Z[V\ZLMVYLHJOJHZL VM ÄUHUJPHS WVZP[PVU HM[LY PUP[PHS YLJVNUP[PVU 9LJ\YYPUN MHPY ]HS\L TLHZ\YLTLU[ZHYL[OVZL[OH[HUV[OLY7-9:ZYLX\PYLZVYWLYTP[Z[VIL ([ LHJO YLWVY[PUN KH[L THUHNLTLU[ HUHS`ZLZ [OL TV]LTLU[Z PU [OL December 31, 2019 YLJVNUPaLKPU[OLJVUZVSPKH[LKZ[H[LTLU[ZVMÄUHUJPHSWVZP[PVUH[[OLLUK ]HS\LZVMHZZL[ZHUKSPHIPSP[PLZ^OPJOHYLYLX\PYLK[VILYLTLHZ\YLKVY Level 1 Level 2 Level 3 Total VMLHJOYLWVY[PUNWLYPVK;OLZLPUJS\KLÄUHUJPHSHZZL[ZHUKSPHIPSP[PLZH[ YLHZZLZZLKHZWLY[OL.YV\W»ZHJJV\U[PUNWVSPJPLZ-VY[OPZHUHS`ZPZ -=;73 HUK (-: PU]LZ[TLU[Z  5VUYLJ\YYPUN MHPY ]HS\L TLHZ\YLTLU[Z THUHNLTLU[]LYPÄLZ[OLTHQVYPUW\[ZHWWSPLKPU[OLSH[LZ[]HS\H[PVUI` (In Thousands) HYL[OVZL[OH[HUV[OLY7-9:ZYLX\PYLZVYWLYTP[Z[VILYLJVNUPaLKPU[OL HNYLLPUN[OLPUMVYTH[PVUPU[OL]HS\H[PVUJVTW\[H[PVU[VJVU[YHJ[ZHUK $VVHWVPHDVXUHGDWIDLUYDOXH JVUZVSPKH[LKZ[H[LTLU[VMÄUHUJPHSWVZP[PVUPUWHY[PJ\SHYJPYJ\TZ[HUJLZ V[OLY YLSL]HU[ KVJ\TLU[Z ^P[O YLSL]HU[ L_[LYUHS ZV\YJLZ [V KL[LYTPUL Financial Assets ;OLZL PUJS\KL SHUK HUK SHUK PTWYV]LTLU[Z I\PSKPUNZ HUK I\PSKPUN ^OL[OLY[OLJOHUNLPZYLHZVUHISL PTWYV]LTLU[Z HUK THJOPULYPLZ HUK LX\PWTLU[ TLHZ\YLK H[ YL]HS\LK -PUHUJPHSHZZL[ZH[-=;73! HTV\U[HUKPU]LZ[TLU[WYVWLY[PLZTLHZ\YLKH[JVZ[I\[^P[OMHPY]HS\L /LSKMVY[YHKPUN! TLHZ\YLTLU[KPZJSVZ\YL .V]LYUTLU[ZLJ\YP[PLZ P4,258,245 P4,245,577 P–P8,503,822 Derivative assets – 373,040 – 373,040 (ZVM+LJLTILY HUK [OLJHYY`PUN]HS\LZVM[OL.YV\W»ZÄUHUJPHSHZZL[ZHUKSPHIPSP[PLZHWWYV_PTH[L[OLPYYLZWLJ[P]LMHPY]HS\LZL_JLW[MVY [OLMVSSV^PUNÄUHUJPHSPUZ[Y\TLU[Z! 7YP]H[LKLI[ZLJ\YP[PLZ 2,246,515 883,641 – 3,130,156 ,X\P[`ZLJ\YP[PLZ 1,455,435 – – 1,455,435 +LJLTILY  +LZPNUH[LKH[-=;73! December 31, 2019 (Z9LZ[H[LK5V[L 0U]LZ[TLU[PU<0;-Z 1,373 5,554 – 6,927 Carrying Value Fair Value *HYY`PUN=HS\L -HPY=HS\L P7,961,568 P5,507,812 P–P13,469,380 (In Thousands) -PUHUJPHSHZZL[ZH[-=;6*0! )LQDQFLDO$VVHWV .V]LYUTLU[ZLJ\YP[PLZ P66,204,545 P24,845,170 P–P91,049,715 -PUHUJPHSHZZL[ZH[HTVY[PaLKJVZ[ P100,464,757 P101,580,817 7  7    7YP]H[LKLI[ZLJ\YP[PLZ 9,130,230 18,496,386 2,763,386 30,390,002 3VHUZHUKYLJLP]HISLZ! ,X\P[`ZLJ\YP[PLZ 428,706 790,013 482,404 1,701,123 636,950,500 695,304,130 9LJLP]HISLZMYVTJ\Z[VTLYZ    P75,763,481 P44,131,569 P3,245,790 P123,140,840 P737,415,257 P796,884,947 7  7 1RQðQDQFLDODVVHWV )LQDQFLDO/LDELOLWLHV 7YVWLY[`WSHU[HUKLX\PWTLU[ -PUHUJPHSSPHIPSP[PLZH[HTVY[PaLKJVZ[! Land and land improvements P–P– P38,519,042 P38,519,042 +LWVZP[SPHIPSP[PLZ 7SHU[I\PSKPUNZHUKI\PSKPUNPTWYV]LTLU[Z – – 13,951,514 13,951,514 Time deposits P226,894,643 P226,525,853 7 7  4HJOPULYPLZHUKLX\PWTLU[ – – 7,341,355 7,341,355 53,270,956 56,049,095 )PSSZWH`HISLZ      P–P– P59,811,911 P59,811,911 3VUN[LYTKLI[Z! /LDELOLWLHVPHDVXUHGDWIDLUYDOXH 3,497,797 3,551,484 :\IVYKPUH[LKKLI[      Financial liabilities

124 LT GROUP, INC. 2019 ANNUAL REPORT 125 December 31, 2019 +LJLTILY (Z9LZ[H[LK5V[L Level 1 Level 2 Level 3 Total Level 1 3L]LS Level 3 Total (In Thousands) (In Thousands) 1RQðQDQFLDO$VVHWV 1RQðQDQFLDO$VVHWV 0U]LZ[TLU[WYVWLY[PLZ 0U]LZ[TLU[WYVWLY[PLZ Land P–P– P23,894,410 P23,894,410 Land 7– 7– 7  7  )\PSKPUNZHUKPTWYV]LTLU[Z – – 4,844,980 4,844,980 )\PSKPUNZHUKPTWYV]LTLU[Z ––    P–P–P28,739,390 P28,739,390 7– 7– 7  7  /LDELOLWLHVIRUZKLFKIDLUYDOXHVDUHGLVFORVHG /LDELOLWLHVIRUZKLFKIDLUYDOXHVDUHGLVFORVHG Financial liabilities Financial liabilities -PUHUJPHSSPHIPSP[PLZH[HTVY[PaLKJVZ[! -PUHUJPHSSPHIPSP[PLZH[HTVY[PaLKJVZ[! +LWVZP[SPHIPSP[PLZ! +LWVZP[SPHIPSP[PLZ! Time deposits P–P– P 226,525,853 P 226,525,853 Time deposits 7ò7ò7  7  3VUN[LYTKLI[Z! 3VUN[LYTKLI[Z!  )PSSZWH`HISL ––56,049,095 56,049,095 )PSSZWH`HISL ò ò   

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128 LT GROUP, INC. 2019 ANNUAL REPORT 129 2018 2017 ;OL .YV\W OHZ ZL]LYHS SLHZL JVU[YHJ[Z [OH[ PUJS\KL L_[LUZPVU HUK Excise Tax Refund Claim [LYTPUH[PVU VW[PVUZ ;OLZL VW[PVUZ HYL ULNV[PH[LK I` THUHNLTLU[ ;OLUL^L_JPZL[H_SH^VY9(ILJHTLLќLJ[P]LVU1HU\HY` As previously As previously [V WYV]PKL ÅL_PIPSP[` PU THUHNPUN [OL SLHZLKHZZL[ WVY[MVSPV HUK HSPNU  HUK PUJYLHZLK [OL L_JPZL [H_ YH[LZ VM HTVUN V[OLYZ KPZ[PSSLK Consolidated Statement of Income reported Restatements As restated reported Restatements As restated ^P[O [OL .YV\W»ZI\ZPULZZ ULLKZ  4HUHNLTLU[ L_LYJPZLZ Q\KNLTLU[ ZWPYP[Z(UV[OLYJOHUNL[OH[^HZIYV\NO[PUI`[OLUL^SH^PZ[OLZOPM[ 0U[LYLZ[PUJVTLVU! PU KL[LYTPUPUN ^OL[OLY [OLZL L_[LUZPVU HUK [LYTPUH[PVU VW[PVUZ HYL PU [OL [H_ I\YKLU VM KPZ[PSSLK ZWPYP[Z MYVT YH^ TH[LYPHSZ [V [OL ÄUPZOLK WYVK\J[ Loans and receivables 7  7 7  7  7 7  YLHZVUHIS`JLY[HPU[VILL_LYJPZLK 0U]LZ[TLU[ZLJ\YP[PLZH[HTVY[PaLK 9LU[ L_WLUZL JOHYNLK HNHPUZ[ J\YYLU[ VWLYH[PVUZ PUJS\KLK PU ;V PTWSLTLU[ [OL ZHPK SH^ [OL :LJYL[HY` VM -PUHUJL PZZ\LK 9L]LU\L JVZ[HUK-=6*0(-:HUK/;4 º6JJ\WHUJ`»PU[OLZ[H[LTLU[ZVMPUJVTLHTV\U[LK[V7 TPSSPVU 9LN\SH[PVUZ5V99^OPJOPUVULVMP[Z[YHUZP[VY` investments           7 TPSSPVUHUK7 TPSSPVUPU  HUKYLZWLJ[P]LS` WYV]PZPVUZ KPZHSSV^LK [OL [H_ JYLKP[PUN VM [OL L_JPZL [H_LZ [OH[ ^LYL +LWVZP[Z^P[OIHURZHUKV[OLYZ          MVY[OL.YV\WVM^OPJO7TPSSPVU7  TPSSPVUHUK7 TPSSPVU HSYLHK`WHPK\UKLY[OLVSKSH^VU[OLYH^TH[LYPHSZPU]LU[VY`I`LUKVM PU  HUKYLZWLJ[P]LS`WLY[HPU[V[OL7HYLU[*VTWHU` [OL`LHYVYI`[OLLќLJ[P]P[`VM9(PUMH]VYVM[OLL_JPZL[H_LZ Interest income          9LU[L_WLUZLPU WLY[HPUZ[VL_WLUZLZMYVTZOVY[[LYTSLHZLZHUK K\LVU[OLÄUPZOLKNVVKZPU]LU[VY` 5L[PU[LYLZ[PUJVTL          SLHZLZVMSV^]HS\LHZZL[Z Service fees and commission income                ;OL *VTTPZZPVULY VM 0U[LYUHS 9L]LU\L PZZ\LK VU 1HU\HY`   (ZVM+LJLTILY HUK [OL.YV\WOHZUVJVU[PUNLU[YLU[ 9L]LU\L 4LTVYHUK\T *PYJ\SHY 94* 5V  ;OPZ 94* ZV\NO[ 5L[ZLY]PJLMLLZHUKJVTTPZZPVUPUJVTL            WH`HISL [V JSHYPM` M\Y[OLY JLY[HPU WYV]PZPVUZ VM 99 5V  I\[ PU LќLJ[ 5L[PUZ\YHUJLWYLTP\T –      –  L_[LUKLK[OLPTWVZP[PVUVM[OLL_JPZL[H_VUIV[O[OLL[O`SHSJVOVS (ZVM+LJLTILY [OLJHYY`PUNHTV\U[ZVMº3LHZLSPHIPSP[PLZ»HYL HZYH^TH[LYPHSZPU[OLWYVK\J[PVUVMJVTWV\UKLKSPX\VYZHUK[OL 5L[PUZ\YHUJLILULÄ[ZHUKJSHPTZ –      –  HZMVSSV^Z! THU\MHJ[\YLK ÄUPZOLK WYVK\J[ 7LY [OL 94* IV[O L[O`S HSJVOVS HUK 5L[PUZ\YHUJLWYLTP\TILULÄ[ZHUK JVTWV\UKLKSPX\VYHYLJVUZPKLYLKHZKPZ[PUJ[KPZ[PSSLKZWPYP[ZWYVK\J[Z JSHPTZ –  –    HUKHYL[O\ZZLWHYH[L[H_HISLP[LTZ\UKLY[OLUL^SH^;OPZPU[LYWYL[H[PVU )HSHUJLH[ILNPUUPUNVM`LHY 7  6[OLYPUJVTL VM[OLSH^^HZOV^L]LYTVKPÄLK^P[O[OLPZZ\HUJLVM94*5V  (KKP[PVUZ  ;OLUL^94*HSSV^LK[OLUVUWH`TLU[VML_JPZL[H_VUL[O`SHSJVOVS  -VYLPNUL_JOHUNLNHPUZUL[         0U[LYLZ[L_WLUZL5V[L    [OH[^LYLW\YJOHZLKHM[LY[OLPZZ\HUJLVM94*5V[VIL\ZLK ;YHKPUNHUKPU]LZ[TLU[ZZLJ\YP[PLZ HZYH^TH[LYPHSZPU[OLTHU\MHJ[\YLVMJVTWV\UKLKSPX\VYZWYV]PKLK NHPUZUL[       –   7H`TLU[Z  JLY[HPUYLX\PYLTLU[ZZ\JOHZWVZ[PUNVMZ\YL[`IVUKZHYLJVTWSPLK^P[O 94*5V OV^L]LYZ[PSSTHPU[HPULK[OH[[H_LZWYL]PV\ZS`WHPK Total operating income                 7  VU[OLYH^TH[LYPHSZPLL[O`SHSJVOVSL[OHUVSPU]LU[VY`H[[OL[PTLVM 6WLYH[PUNL_WLUZLZ -\[\YLTPUPT\TSLHZLYLJLP]HISLZ\UKLYÄUHUJLSLHZLZHYLHZMVSSV^Z! [OLLќLJ[P]P[`VM[OLUL^L_JPZL[H_SH^HYLZ[PSSUV[Z\IQLJ[[VYLM\UK[H_ *VTWLUZH[PVUHUKMYPUNLILULÄ[Z              JYLKP[[V[OLTHU\MHJ[\YLYZ

;H_LZHUKSPJLUZLZ              2019  P[OPUVUL`LHY P1,260,542 7 :HPKHTV\U[YLWYLZLU[LK[H_LZWHPKWYL]PV\ZS`VUYH^TH[LYPHSZ +LWYLJPH[PVUHUKHTVY[PaH[PVU              HUK^LYLUV[HSSV^LK[VILKLK\J[LKMYVT[OLL_JPZL[H_LZ[OH[ILJHTL )L`VUKVUL`LHYI\[UV[TVYL[OHU K\LVU[OLÄUPZOLKNVVKZHZ[H_LK\UKLY[OLUL^SH^;+0PZJVU[LZ[PUN 6JJ\WHUJ`HUKLX\PWTLU[YLSH[LK Ä]L`LHYZ 1,164,893   [OLKPZHSSV^HUJLVM[OL[H_JYLKP[HUKPZ\UKLY[HRPUNHWWYVWYPH[LSLNHS costs           4VYL[OHUÄ]L`LHYZ Ě TLHZ\YLZ[VVI[HPUHMH]VYHISLV\[JVTL 4PZJLSSHULV\Z           Total 2,425,435    TDI has paid a total of 7 TPSSPVUPUJS\KLK\UKLY¸6[OLYUVUJ\YYLU[ ;V[HSVWLYH[PUNL_WLUZLZ           3LZZHTV\U[ZYLWYLZLU[PUNÄUHUJL HZZL[Z¹PUPUL_JPZL[H_LZMVY[OLYH^TH[LYPHSZ[OH[^LYLW\YJOHZLK 0UJVTLILMVYLPUJVTL[H_           charges 13,770  PTWVY[LKMVYW\YWVZLZVMJVTWV\UKPUNK\YPUN[OLZ\IZPZ[LUJLVM94* 7YV]PZPVUMVYPUJVTL[H_         7YLZLU[]HS\LVMTPUPT\TSLHZL 5V;+0HSZV^V\SKJSHPT[OPZHTV\U[VU[OLIHZPZ[OH[[OL94* WH`TLU[Z P2,914,569 7  ^HZPZZ\LK^P[OV\[IHZPZHUKIL`VUK[OLH\[OVYP[`NYHU[LKI`SH^[V[OL 5L[PUJVTLSVZZMYVTKPZJVU[PU\LK HKTPUPZ[YH[P]LHNLUJ` VWLYH[PVUZUL[VM[H_       –  – Trust Operations )HZPJKPS\[LK,7:H[[YPI\[HISL[VLX\P[` :LJ\YP[PLZ HUK V[OLY WYVWLY[PLZ OLSK I` 75) PU ÄK\JPHY` VY HNLUJ` 6U-LIY\HY`  ;+0YLJLP]LK[OLKLJPZPVUVM[OL*V\Y[VM;H_(WWLHSZ OVSKLYZVM[OL7HYLU[*VTWHU`MYVT JHWHJP[PLZ MVY P[Z J\Z[VTLYZ HYL UV[ PUJS\KLK PU [OL HJJVTWHU`PUN :LJVUK+P]PZPVUKLU`PUN;+0»ZJSHPTMVYYLM\UKZPUJL;+0MHPSLK[VWYV]L[OH[ JVU[PU\PUNVWLYH[PVUZ             Z[H[LTLU[Z VM ÄUHUJPHS WVZP[PVU ZPUJL [OLZL HYL UV[ HZZL[Z VM 75) [OLYLPZHJ[\HSWH`TLU[VM[OLL_JPZL[H_ILPUNJSHPTLK6U-LIY\HY`  ;+0ÄSLKH4V[PVUMVY9LJVUZPKLYH[PVU(ZVM+LJLTILY  0[LTZ[OH[YLJ`JSL[VWYVÄ[VYSVZZPU :\JO HZZL[Z OLSK PU [Y\Z[ ^LYL JHYYPLK H[ H ]HS\L VM 7   IPSSPVU HUK ;+0YLJSHZZPÄLK[OLWYLWHPKL_JPZL[H_HTV\U[PUN[V7 TPSSPVUMYVT Z\IZLX\LU[WLYPVKZ! 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\U[PSZ\JOYLSH[LKZ\YWS\ZYLZLY]LJVUZ[P[\[LZ VMP[ZYLN\SH[VY`JHWP[HS Leases WHY[PLZ ;[OL.YV\WHZSLZZVY 7YV]PZPVUZHUK*VU[PUNLUJPLZ 2019 6U 1HU\HY`    (ZLHNHZ PZZ\LK H SL[[LY UV[PM`PUN 75) MVY [OL ;OL .YV\W LU[LYLK PU[V SLHZL HNYLLTLU[Z ^P[O [OPYK WHY[PLZ JV]LYPUN  0U[OLUVYTHSJV\YZLVMI\ZPULZZ[OL.YV\WTHRLZ]HYPV\ZJVTTP[TLU[Z [LYTPUH[PVUVM[OL,ў\LU[:\WWS`(NYLLTLU[LќLJ[P]L1HU\HY`  P[Z PU]LZ[TLU[ WYVWLY[` WVY[MVSPV JLY[HPU TV[VY ]LOPJSLZ HUK P[LTZ VM (In Thousands) HUK PUJ\YZ JLY[HPU JVU[PUNLU[ SPHIPSP[PLZ [OH[ HYL UV[ WYLZLU[LK PU [OL JVUZVSPKH[LK ÄUHUJPHS Z[H[LTLU[Z PUJS\KPUN ZL]LYHS Z\P[Z HUK JSHPTZ THJOPULY` ;OLZL SLHZLZ NLULYHSS` WYV]PKL MVY LP[OLY H Ä_LK TVU[OS` >P[OPUVUL`LHY P1,617,061 7  YLU[ VY I TPUPT\T YLU[ VY H JLY[HPU WLYJLU[HNL VM NYVZZ YL]LU\LZ ^OPJO YLTHPU \UZL[[SLK  5V ZWLJPÄJ KPZJSVZ\YLZ VU Z\JO \UZL[[SLK ^OPJOL]LYPZOPNOLY;OL.YV\WYLJVYKZYLU[HSPUJVTLVUHZ[YHPNO[SPUL (M[LYVUL`LHYI\[UV[TVYL[OHU HZZL[Z HUK JSHPTZ HYL THKL ILJH\ZL HU` Z\JO ZWLJPÄJ KPZJSVZ\YLZ IHZPZV]LYSLZZUVUJHUJLSSHISLSLHZL[LYT(U`KPќLYLUJLIL[^LLU[OL Ä]L`LHYZ 2,829,157   ^V\SKWYLQ\KPJL[OL.YV\W»ZWVZP[PVU^P[O[OLV[OLYWHY[PLZ^P[O^OVTP[ JHSJ\SH[LKYLU[HSPUJVTLHUKHTV\U[HJ[\HSS`YLJLP]LKPZYLJVNUPaLKHZ 4VYL[OHUÄ]L`LHYZ 548,242  PZPUKPZW\[L:\JOL_LTW[PVUMYVTKPZJSVZ\YLZPZHSSV^LK\UKLY7(: ¸+LMLYYLKYLU[¹ZLL5V[L  Provisions, Contingent Liabilities and Contingent Assets;OL.YV\WHUK P4,994,460 7  P[ZSLNHSJV\UZLSILSPL]L[OH[HU`SVZZLZHYPZPUNMYVT[OLZLJVU[PUNLUJPLZ ;OL .YV\W OHZ [LUHU[Z» YLU[HS KLWVZP[Z HUK HK]HUJL YLU[HSZ ^OPJO ^OPJOHYLUV[ZWLJPÄJHSS`WYV]PKLKMVY^PSSUV[OH]LHTH[LYPHSHK]LYZL ;OL.YV\WHZSLZZLL LќLJ[VU[OLÄUHUJPHSZ[H[LTLU[Z HYL WYLZLU[LK \UKLY ¸6[OLY UVUJ\YYLU[ SPHIPSP[PLZ¹ ;LUHU[Z» YLU[HS ;OL .YV\W OHZ LU[LYLK PU[V JVTTLYJPHS SLHZLZ MVY P[Z IYHUJO ZP[LZ KLWVZP[ZWLY[HPU[V[OLHTV\U[ZWHPKI`[OL[LUHU[ZH[[OLPUJLW[PVU WYLTPZLZ SHUK ^OLYL [OL YLSH[LK PU]LZ[TLU[ WYVWLY[` VY WYVWLY[` VM[OLSLHZL^OPJOPZYLM\UKHISLH[[OLLUKVM[OLSLHZL[LYT(K]HUJL WSHU[ HUK LX\PWTLU[ PZ I\PSKJVUZ[Y\J[LK ^HYLOV\ZL HUK ^HYLOV\ZL YLU[HSZWLY[HPU[VKLWVZP[ZMYVT[LUHU[Z^OPJO^PSSILHWWSPLKHNHPUZ[ LX\PWTLU[ (;4 VќZP[L SVJH[PVU HUK V[OLY LX\PWTLU[  ;OLZL UVU receivables either at the beginning or at the end of lease term depending JHUJLSLHISLSLHZLZOH]LSLHZL[LYTZVM[V`LHYZ4VZ[VM[OLZLSLHZL VU[OLSLHZLJVU[YHJ[;LUHU[Z»YLU[HSKLWVZP[ZHUKHK]HUJLYLU[HSZ JVU[YHJ[ZPUJS\KLLZJHSH[PVUJSH\ZLZHUHUU\HSYLU[PUJYLHZLVM [V HTV\U[LK[V7 TPSSPVUHUK7TPSSPVUHZVM+LJLTILY  ;OL.YV\W96<HZZL[PZJVTWVZLKVM[OL7HYLU[*VTWHU`»Z  HUK7TPSSPVUHUK7TPSSPVUHZVM+LJLTILY  IYHUJOZP[LZHUKP[ZZ\IZPKPHYPLZVѝJLZ\UKLYSLHZLHYYHUNLTLU[Z YLZWLJ[P]LS`

130 LT GROUP, INC. 2019 ANNUAL REPORT 131 39. Notes to Statements of Cash Flows

Cash Flows from Financing Activities The changes in liabilities arising from financing activities in 2019 and 2018 follow:

Consolidated 2019 Beginning balance (As restated – Net cash Ending Note 37) flows Others balance Bills and acceptances payable P70,082,835 (P11,348,364) (P2,771,181) P55,963,290 Bonds payable 15,661,372 51,899,720 (946,014) 66,615,078 Lease liabilities 1,859,717 (641,613) 588,305 1,806,409 P87,603,924 P39,909,743 (P3,128,890) P124,384,777

Consolidated SUSTAINABILITY 2018 Beginning Net cash Ending balance flows Others balance Bills and acceptances payable P43,916,687 P24,867,590 P1,298,558 P70,082,835 Bonds payable – 15,398,696 262,676 15,661,372 P43,916,687 P40,266,286 P1,561,234 P85,744,207 REPORT 2019 Others include the effects of foreign exchange revaluations, amortization of transaction costs, and accretion of interest.

Non-cash Transactions Building a Sustainable Foundation Effective January 1, 2019, the Group adopted PFRS 16, in which the Group recognized right-of-use asset and the corresponding lease liabilities, adjusted for previously recognized prepaid and accrued lease payments. Additions to the right-of-use assets of the Group in 2019 amounted to P461.9 million. The Group recognized additional lease liabilities in 2019 amounting to P456.6 million.

The Group applied creditable withholding taxes against its income tax payable amounting to P1.3 billion, P2.6 billion and P1.6 billion in 2019, 2018 and 2017, respectively.

The Group acquired investment properties through foreclosure and rescission amounting to P1.0 billion, P0.8 billion, and P0.6 billion in 2019, 2018 and 2017, respectively.

132 LT GROUP, INC. 2019 ANNUAL REPORT 133 MESSAGE FROM THE CHAIRMAN MESSAGE FROM THE PRESIDENT

ur commitment and dedication to service are just a few he landscape of business is changing. Success in renewable energy, and proper waste segregation including Othings we take to heart as a business and as a member Tdoing business is no longer solely limited to the health the transition away from single-use plastics. We also of the global community. We believe that the success of our of our balance sheets but our Company’s interactions support eco-friendly and sustainable ventures with green business is the success of all Filipinos, achieved through with employees, customers and suppliers, contribution to financing schemes. By taking care of the environment, we our collective strength and solidarity working towards a the communities we operate in and role in environmental are able to work better while able to help make sure that common goal to elevate the lives of our fellow countrymen preservation. Beyond creating financial value, we look future generations have clean air to breathe, clean water to who are most in need. to creating sustainable value for this generation and the drink, and a healthy planet to live in. generations to come. As effective stewards of today’s Despite the challenges that the world faced in 2019, the resources, we are able to help pave the way for a better The wellness and safety of our people is another one resilience of humanity remains. We continue to move tomorrow. of our top priorities. We regularly conduct trainings on forward by building better and stronger. We hold on to hope occupational health and safety to inform and update them and continue to see the good in each other. We remain At LT Group, Inc. (LTG), we believe that true excellence is on the dos and don’ts of a safe working environment. committed to a brighter tomorrow as we surge forward to achieved by success in financial as well as environmental Throughout our operations, we ensure fairness, gender a better future. and social aspects. With this in mind, our commitment to equality, and diversity and inclusion. long-term value creation is also a commitment to long-term This is the first sustainability report of LT Group, Inc. You will sustainable development expressed through our alignment find in these pages our contribution to a global movement to the United Nations’ Sustainable Development Goals Our businesses rely on the continued patronage of our to save the future. Guided by our theme, ‘Building a (SDGs). customers and so we work hard to uphold excellence and Sustainable Foundation’, we have stepped up to the quality through the products and services we offer. We challenges of the year that was and continue to look at LTG’s financial success this year was unprecedented. ensure that our customers are able to make well-informed better ways to operate so we can create sustainable value Our total revenues for this reporting period amounted to decisions by ensuring transparency of our products and for all our stakeholders. We look forward to doing more and Php114.25 billion. Of this amount, we spent Php11.49 services through our websites, social media profiles and doing better in the years to come. billion on employee wages and benefits, Php14.95 billion other platforms. We also make sure that any information on payments to government, and Php0.09 billion on that our customers decide to share with us are managed As a new decade unfolds, we remain true to our vision community investments. securely in compliance with the Data Privacy Act of 2012 of excellence and leadership in business while providing and other related regulations. sustainable value for our stakeholders. We believe that Across the Group, we have robust policies and practices although the future might be filled with more challenges, it that allow us to remain consistent with our business values, As the communities where we operate in are key to our will be brighter and better. goals and strategy. success, we work hard to give back and contribute to their progress and development. Our main corporate social We have governance systems in place that help us mitigate responsibility arm, the Tan Yan Kee Foundation, Inc., takes risks and ensure compliance. We continue our drive against the lead in conducting projects in the education, health corrupt practices within the Group with our regular anti- services, social welfare and environmental aspects with corruption information sessions. Our Whistle-Blower Policy projects and activities that continue to touch the lives of our also ensures that any suspected incidents of corruption fellow Filipinos in numerous ways. Dr. Lucio C. Tan are reported and resolved without any threat of retaliation Chairman and Chief Executive Officer to the reporting party. On the other hand, we observe In the year that passed, we have taken new and bolder strict compliance with all applicable laws and regulations. steps on our journey to sustainability. These are our ways Any oversights to compliance are immediately addressed of showing our deep commitment to becoming more with all necessary requirements. Our compliance teams sustainable as a business. In the coming years, we continue are working to achieve our target of surpassing standard to strengthen our efforts in helping build a sustainable compliance. future. We look forward to the new decade with renewed hope to surge forward to greater heights. At LTG, we take very seriously our role in helping save the environment and the responsible usage of natural resources. Across the Group, we have placed measures to monitor our water and energy consumptions, and limit our waste production. These are not only beneficial to the environment but also help optimize our operations. We advocate and support efforts on water conservation and Michael G. Tan the reuse of wastewater, energy efficiency and the use of President and Chief Operating Officer

134 LT GROUP, INC. 2019 ANNUAL REPORT 135 No assurance has been sought for the non-financial disclosures Eton’s Property Management Group and Customer Support Team Materiality Matrix 2019 Highlights presented in this report, but this is of primary consideration in manage on-site concerns and concerns from existing clients, the future as our reporting matures. All financial data and general respectively. PNB’s Customer Experience Division manages all Our materiality matrix shows the 17 key material issues that were information about the business in this report, however, have been client concerns and complaints through a variety of channels 24 identified to have the most significant impact and stakeholder in Economics and Governance disclosed in our 2019 Annual Report. hours a day, 7 days a week. TDI maintains a number of channels test. including their website, email address, phone numbers, and social Php114.25 45% | 55% 100% Economic Performance Boundary media profiles through which customers may relay any issues and billion pesos employees, business Female Male concerns. total revenues LTG Board of partners and Directors governance body LTG’s economic performance data presented in this report is from gender balance members know of our the consolidated financial statements as of and for the year ended The key topics and concerns raised during the Annual Shareholders’ anti-corruption policies Economic December 31, 2019 covering LTG, as the parent company, and Meeting, Annual Press Briefing, and Quarterly Analysts’ Briefings Customer Health Performance and Safety Marketing and Climate Change Labelling all its subsidiaries and associates operating in the Philippines and are the financial results of the Group, future plans of operations, Socio-economic Environment Water Management Compliance Customer Engagement Illicit Trade abroad. For more information, please refer to the 2019 Annual and other significant changes on the operations of the Group. As Energy Efficiency and Satisfaction

Report. for the meetings with the government, significant updates on the Anti-Corruption 52 tons 5,663 161,339 Safety and Well-being Risk Management Managing Waste hazardous waste Community megaliters thousand gigajoules regulatory compliance especially on taxes are discussed. Employment Relations generated and total groundwater direct energy Reporting Approach Customer Data Privacy and Security and Initiatives disposed withdrawal consumption Digital Transformation and Innovation Sustainability Report Feedback In the preparation of this report, we used the principle of Materiality 402,501 tons 1,150 224,820 to determine our key issues. Utilizing a framework developed for We aim to improve our reporting over the course of time to Stakeholder Interest non-hazardous megaliters thousand kilowatt hours this purpose, we came up with a long list of potential material meet the highest standards of reporting and meet stakeholders’ waste generated total third-party electricity consumed and disposed water withdrawal issues gathered from internal and external sources, and prioritized expectations. On our first sustainability report, we would like to according to input from internal stakeholders via both quantitative know how well we have done on any aspect of this report or Employees and qualitative metrics to identify which material issues have the if you have any suggestions for improvement—from content to capacity to impact the Group and our operations, and its impact to design and presentation, among others, you may reach us at 12,390 53% | 47% 40% our various stakeholders. [email protected]. total number of Female Male of all employees covered employees workforce gender by Collective Bargaining balance Agreement1 Sustainability Reporting Guidelines and Standards Our Approach to Materiality Impact

Society This report has been prepared in accordance with the Global Our journey to sustainability is informed by our materiality CATEGORY KEY MATERIAL ISSUE CATEGORY KEY MATERIAL ISSUE Reporting Initiative (GRI) Standards: Core option, and the assessment process. We looked at a variety of sources and ECONOMICS AND GOVERNANCE Economics Performance ENVIRONMENT Water Management 787 of 930 ha. 198,040 2000+ sustainability reporting guide provided by the Philippine SEC in conducted workshops to assess and determine the most critical ECONOMICS AND GOVERNANCE Socio-economic Compliance SOCIETY Community Relations and Initiatives hectares planted seedings ready for number of scholars ECONOMICS AND GOVERNANCE Risk Management EMPLOYEES Safety and Well-being and reforested in planting by the across all scholarship Memorandum Circular No. 4, Series of 2019. We have also aligned material issues that have the highest capacity to impact the Group, this report to the 17 United Nations (UN) Sustainable Development internally, and its stakeholders, externally. EMPLOYEES Employment ENVIRONMENT Managing Waste Barangay R.A. LCT Legacy programs since 1998 ECONOMICS AND GOVERNANCE Anti-Corruption ENVIRONMENT Energy Efficiency Padilla in Carranglan, Forest Project Goals (SDGs) to further our commitment in contributing to the CUSTOMERS Marketing and Labeling ENVIRONMENT Climate Change Nueva Ecija global sustainable development agenda. CUSTOMERS Customer Health and Safety CUSTOMERS Digital Transformation and Innovation 1 The denominator used to calculate this figure is the total number of employees, which CUSTOMERS Customer Engagement and Satisfaction CUSTOMERS Customer Data Privacy and Security includes employees who are eligible and non-eligible by law to form a union. Stakeholder Engagement Mechanisms ECONOMICS AND GOVERNANCE Illicit Trade Scan Prioritize Validate Our Board of Directors is tasked with identifying our stakeholders Our Key Material Issues in the communities where the Group operates in or those that are About this Report directly affected by our operations. The Board then formulates a • Global standards, • Collected • Meeting and Material Issues Relevant SDGs clear policy of accurate, timely, and effective communication with issues and mega data analyzed discussion Reporting Scope and Boundary identified stakeholders. Our stakeholders include ourstockholders , trends that affect quantitatively with key 1 Economic Performance employees, customers, trade partners, and the government. the industries we and qualitatively management Maintaining profitability to return a This is our first sustainability report, which presents our sustainability are engaged in • List of identified executives performance as of and for the year ended December 31, 2019, dividend and re-invest in products We engage with our stakeholders in through a number of ways • Regulatory potential material on prioritized and services. This also covers stable unless otherwise indicated. We at LTG believe that sustainability requirements issues voted material including but not limited to: revenues in the event of political is an essential feature of the way we do business because our • Material issues according issues to see and economic uncertainties, resilience in the future partly depends on it. Together with our identified by our to order of alignment with 1. Annual Shareholders’ Meeting market competition, pressure from annual report, this sustainability report aims to communicate to you peers importance to group strategy 2. Annual Press Briefing regulatory bodies, and employing our commitment to sustainability, what we are doing about it, and • Media coverage stakeholders and 3. Quarterly Analysts’ Briefing strategies to increase market share. where we are going. around the impact on and of 4. Meetings with the Congress Group and the business 2 Socio-economic Compliance 5. Investors’ Conference (as needed) potential material This sustainability report covers LTG, as the holding company, and Complying with socioeconomic 6. Private Meetings (as needed) issues identified our subsidiaries operating within the Philippines particularly ABI, laws and regulations, and regulatory 7. Conference Calls (as needed) • Review of changes in both financial and non- Eton, and TDI. PNB, which was part of the materiality assessment internal policies 8. Plant Visits (as requested) financial reporting process we have conducted for this report, has prepared its own and board sustainability report that complements this report. PMFTC has not papers identifying 3 Risk Management The Group also maintains open communications with the been included in the materiality assessment process and, as such, potential material Managing risks that may greatly investing community to promote greater understanding of our will not be covered in detail because it is under the management issues impact the Group’s operations and businesses. Reports to the SEC and PSE are disclosed on time, of Philip Morris International Inc. (PMI) and will be included in PMI’s performance. This includes systems and are available for viewing and downloading in the Group’s sustainability report. and policies in place to address website. There is also a dedicated Investor Relations Officer and potential credit, market, interest the Group may also be corresponded with through email and/or Due to the diverse nature of our businesses—beverages, property rate, liquidity, security, reputation telephone calls. From a long list of 44 material issues, we were able to prioritize to 17 and other risks relevant to the development, tobacco, banking, and distilled spirits—some top material issues and these were validated by key management differences may be observed in terms of material issues and operations of its subsidiaries. Across our subsidiaries, ABI maintains a Customer Complaint officers. context. However, common issues have been consolidated for the Report and conducts a regular Customer Satisfaction Survey. Group enabling the reader to get a good grasp of our big picture.

136 LT GROUP, INC. 2019 ANNUAL REPORT 137 Material Issues Relevant SDGs Material Issues Relevant SDGs Material Issues Relevant SDGs | Economic Value Distributed, 2019 (in billion pesos) 4 Employment 11 Community Relations and Initiatives ABI % to total  Attracting and retaining highly Maintaining our social license to Greenhouse Gas Emissions Operating Costs 41.01 45% capable individuals to support operate through engagements with  Payments to Providers of Managing and minimizing emissions to free 22.47 25% high performance, and includes the community Capital the air of pollutants – including carbon and employee wages and other forms  Payments to Government 14.95 17% other greenhouse gases (GHGs) of compensation such as bonuses 12 Safety and Well-being  Employee Wages and 11.49 13% and executive remuneration, as well Protecting and promoting health, Benefits as fostering gender equality in the safety and well-being of our  Community Investments 0.09 0% workplace. employees and contractors through Total 90.01 100% 5 Anti-Corruption effective safety risk management Labor/Management Relations | LTG Attributable Net Income, 2019 Demonstrating integrity, and promoting a safety culture Using consultative practices with employees and their representatives, (in billion pesos) transparency, governance, and 13 Managing Waste % to total including communicating significant responsible business practices, Managing and minimizing waste,  Tobacco 15.50 67% operational changes as expected by the marketplace, including responsible waste  Banking 5.56 24% international norms, and management by resource reduction, PNB  Property Development 0.90 4% stakeholders  Distilled Spirits reuse, recycling and reprocessing, Indirect Economic Impact 0.67 3% waste treatment and waste disposal  Beverages 6 Marketing and Labeling Supporting infrastructure investments 0.40 2%  Others Providing customers access to 14 Energy Efficiency and public services that are additional 0.09 0% Total accurate and adequate information Managing and minimizing energy consequences of the direct impact of 23.12 100% on the positive and negative use, increasing efficiency measures financial transactions and the flow of economic, environmental and and using low-carbon emission money between PNB and its stakeholders Socio-economic Compliance social impacts of the products energy sources TDI and services they use–both from 15 Climate Change Businesses play an important role in nation-building. a product and service labeling Materials Stewardship Ensuring that the Group is prepared It provides jobs for people, helps create economic and a marketing communications Using materials efficiently and judiciously, to anticipate, address, and recover value and drive growth, nurtures innovation, and perspective. This also includes whether renewable or non-renewable, from impacts of climate change that can significantly contribute to long-term progress. communication of customer necessary for the provision of products and might pose risks to the workforce, However, due to the numerous areas that protection policies and laws. services cause disruption to operations and/ businesses can affect, it also has the potential to 7 Customer Health and Safety or loss of property Supply Chain Management have negative impacts to societies and economies. We recognize Protecting and promoting health 16 Digital Transformation and Innovation Supporting local suppliers, or those owned the importance of how our businesses operate and its compliance and safety of our customers through Implementing digitalization of by women or members of vulnerable to social and economic laws, rules and regulations. assurance of product quality, products and services to streamline groups, and assessing procurement effective safety risk management customer experience. This also practices that may cause or contribute to Across the Group, our Corporate Governance Committee, together and promotion of a safety culture. refers to other innovations that negative impacts in the supply chain with our Compliance Officer and Corporate Secretary, ensures This also refers to ensuring that capitalize on current trends on that we are able to consistently comply, and aim to go beyond products are free from toxic or blockchain, artificial intelligence, compliance, with all conditions set by Philippine regulatory bodies hazardous contents that may etc. This also includes cybersecurity and legislation, as well as international standards. Our Manual on endanger customer safety. Our Strategy and and cyber resilience measures Corporate Governance, which contains our Code of Business 8 Customer Engagement and within the Group. Performance Conduct and Ethics, mandates that all personnel in the business, Satisfaction 17 Customer Data Privacy and Security regardless of rank or seniority, abide by all government laws, rules Meeting customer expectations and In the following sections, you will find out more about our Managing the privacy of customer and regulations. This is cascaded on to our employees as part of needs in delivery of our products, sustainability journey in 2019. The disclosures have been divided information and ensuring personal onboarding procedures and is available on our corporate website services and experiences. This also information is secure against fraud into five categories — Economics and Governance, Environment, for easy reference to anyone who wishes to access the document. ensures that customer complaints and theft Employees, Customers and Society – with the corresponding are recorded, monitored, resolved key material issues contained therein. In terms of reporting to regulatory bodies, we ensure strict and and reported to regulatory bodies, Unique Material Issues across Subsidiaries timely compliance with the requirements set by the SEC, the PSE as applicable. Economics and Governance and the Bureau of Internal Revenue (BIR), among others. This allows 9 Illicit Trade During the materiality assessment process, we determined unique us to avoid penalties due to late submissions and also paves the Implementing policies and key material issues across some subsidiaries. Although we did not Economic Performance way for us to improve our reporting methods and immediately take measures to ensure the security include specific disclosures for these material issues in this report corrective measures to address regulatory issues and concerns. of aspects in the supply chain as we will be reporting on them in future editions, we have included This year was a banner year for LTG. Our economic performance hit which could be most susceptible them here for information. For 2019, there was one incident of non-compliance with laws and record-breaking heights due to our to illegal trading and counterfeiting. regulations in the social and economic area with a final decision This entails full cooperation with strong commitment to excellence in and a monetary fine amounting to Php61,600.00. This incident of law enforcement agencies, and Material Issues Relevant SDGs doing business. Our total revenues non-compliance was due to an oversight in the updating of the LTG engagement with policymakers for this reporting period is Php114.25 billion. Our total operating ABI and PNB website as per SEC regulation. This was promptly addressed with for a more effective and balanced costs amounted to Php41.01 billion, while employee wages and Learning and Development the necessary fines paid, thus we are now compliant to regulation. regulation. benefits accounted for Php11.49 billion. Payments to government Developing our workforce capabilities, skills We are committed to ensure that no incidents of non-compliance accounted for Php14.95 billion, and payments to providers 10 Water Management and competencies to create a positive and are recorded for the next reporting period and that any incident that of capital amounted to Php22.47 billion. Our total community Optimizing the use of water sustainable organizational culture may arise is resolved immediately. resources, including management investments is at Php0.09 billion from various donations of our of water treatment of drinking subsidiaries. As of the end of the current reporting period, the water, industrial water, sewage or economic value retained is at Php24.24 billion. ABI and TDI wastewater, water resources and flood protection Environmental Compliance Complying with environmental laws and regulations

138 LT GROUP, INC. 2019 ANNUAL REPORT 139 way we operate. We constantly do our best to meet and go We regularly conduct river and creek clean-up activities, the Risk Management To further enhance our action against beyond regulatory compliance to effectively manage our overall installation of trash catchment mechanisms, and an education corruption, our subsidiaries also have environmental footprint. We look to new ideas and innovate on campaign for the community regarding environmental stewardship. Businesses are faced with risks—from shifts in their own policies that complement what we can do to contribute to efficient resource use and address the economy, operations and strategy to changes of100% all our the Group’s Code. ABI, Eton, PNB the impacts of climate change. For this reporting period, our total water withdrawal is 6,813 in legislation and taxation. With this in mind, it is employees, and TDI have their own Code of megaliters (ML), where 5,663 ML is from groundwater sources imperative that businesses manage risks and use business partners Conduct and Ethics. ABI, apart from Water Management and 1,150 ML is from third-party water suppliers. it to its advantage to create value and nurture and governance the Code of Conduct, maintains a sustainability. Labor Management Council and body members As the world feels the effects of Managing Waste Committee on Right Ethics (CORE) climate change, water scarcity has know of our Our Enterprise Risk Management (ERM) system is in place to which helps manage cases of become the new normal. Our Group Waste management help us mitigate risks for value creation and sustainable growth. anti-corruption misconduct and corruption. Eton’s takes very seriously the impact of is an important part Our Chief Risk Officer ensures continued compliance with SEC policies Code of Ethics contains a no-gift water scarcity to our operations of our operations regulations on the implementation of risk management activities policy. PNB maintains a policy on as well as how we impact water resources. Across the Group, and how we manage aligned with its risk management framework. Our ERM system Soliciting and Receiving Gifts and a we strictly observe and comply with regulation related to water our environmental is partly based on the Enterprise Risk Management - Integrated policy on Office Decorum, which includes anti-bribery and anti- consumption and management. footprint. We are continuously looking for better ways to dispose Framework of the Committee of Sponsoring Organizations of the corruption clauses. TDI has Conflict of Interest Policy, aside from of our waste. We are also looking at better ways to work so we Treadway Commission (COSO). the Corporate Code of Conduct. At ABI, we observe strict monitoring of our water consumption and can lessen the amount of waste we produce thereby cutting how we manage our waste water through our Water Treatment cost on waste disposal services and lessening our impact to the At PNB, the Risk Management Group (RMG) ensures that needed Due to our commitment and drive against corruption, there has Process and our Waste Water Treatment Process, respectively. environment. processes and procedures are implemented to successfully been no instance of corruption nor have there been any cases We observe strict compliance with regulation and have secured all operationalize the Bank’s own ERM Framework, aligned to reported through our Whistle-Blower Policy in 2019. We continue necessary permits and installed all required equipment to allow us Across the Group, we have encouraged internal communication the risk governance framework and the three lines-of-defense our commitment to maintain zero cases of corruption for 2020 and to draw water from our deep wells sustainably. to be only be transmitted electronically to limit the use of paper. model. PNB’s Risk Oversight Committee, which meets monthly, moving forward. We have also promoted two-sided printing and repurposing looks into the Bank’s constantly changing risk profile based on | Total Water Withdrawal from all Sources, 2019 scratch paper for second use. LTG, ABI and Eton strictly observe the material risks defined in the its Internal Capital Adequacy Environment (in megaliters) proper waste segregation. Waste from LTG and Eton is handled Assessment Process (ICAAP) document. To ensure consistent risk by the respective building management where LTG and Eton are management and monitoring, the RMG directly engages with all We recognize the importance of the natural environment in building % to total tenants. Waste from ABI is handled by a third-party contractor levels of the organization across its business and support groups, a sustainable foundation for our business. From the environment  Groundwater 5,663 83% that has been accredited by Department of Environment and which includes ongoing training activities and learning sessions to comes the resources that we use to deliver our products and  Third-party water 1,150 17% Natural Resources (DENR) to handle hazardous and non- properly equip personnel. For new employees, the RMG conducts services, and we are committed to protect it not just for the current Total 6,813 100% hazardous wastes. trainings twice a month on business continuity, data privacy generation but for the generations of the future. Our commitment awareness, operational risk, and ICAAP during the New Employees to help save our environment is long-standing as evidenced by our At PNB, our solid waste is managed by third-party contractors. Orientation Program. For existing employees, the RMG conducts initiatives that began prior to 2019. At Eton, we have strengthened our campaign to encourage our We have ensured that these contractors are compliant with the Risk Education and Awareness Program annually to employees property tenants and residents to conserve water at all times. We government regulation as part of our due diligence procedures. in both domestic and overseas branches covering business At ABI, we began producing water in glass bottles to provide an sent out circular memoranda to remind them to check if there are These contractors work with our designated Pollution Control continuity, data privacy awareness, trust risk, credit risk, market alternative to single-use plastics. In 2019, ABI sold 544,776 glass leaks in their faucets and showerheads, and to make sure that Officers who take the lead in monitoring our waste disposal risk, operational risk and ICAAP. RMG maintains a database of bottles of water in 330ml and 1000ml variants. In addition, through their faucets and other water sources are turned off when they system and provide needed insight on how we can continue to employees who have attended and have yet to attend risk trainings. ABI’s partnership with the World Wide Fund for Nature (WWF), leave the premises to prevent any water wastage. improve our performance. we have committed to give Php1.00 million of our sales proceeds Anti-Corruption annually to be used for WWF’s transformational programs for water At PNB, the water that we use is purchased from a third-party At TDI, our Solid Waste Management Plan is strictly implemented conservation. water services provider. At our head office in Pasay, waste water in all our plants to manage and control solid waste in compliance Our strong commitment for fair and equitable is treated at our Sewage Treatment Plant (STP) before being with the conditions set by our Environmental Compliance business practices ensures that we do not engage At Eton, we have shifted to clean and renewable energy sources released to the Manila Bay in strict compliance with conditions set Certificate (ECC). We have third-party contractors who haul in corrupt activities. We comprehend the negative for our office buildings. Our office buildings in Eton Centris are by regulators. At our offices in Makati, waste water is discharged and dispose of our solid waste. As part of due diligence, we effects of corruption on people’s lives and do our powered by geothermal energy through Cleanergy of AboitizPower, to the sewer lines of our third-party water services provider and ensure that our contractors have the necessary government best to counter it. a starting point for more clean energy initiatives in the future for our subsequently treated at their STP. We continue to look for better accreditation. The Pollution Control Officers of each plant evaluate properties. ways to improve our water consumption. For example, we have the performance of their respective plants and report this to the Across the Group, our Code of Business Conduct and Ethics adjusted the flushing mechanisms of our water closets to reduce regulators. The results of the evaluation are discussed during the ensures that we do not engage in nor condone any act of bribery At PNB, we have an ongoing multibillion-peso financing program the volume of water being used per flush in toilets and urinals as regular Environment, Health and Safety (EHS) meetings for steps or corruption with government officials in order to facilitate to support eco-friendly and sustainable businesses and projects well as the replacement of defective faucets and leaking water forward. transactions. The Code also ensures that all our Directors, that promote nation-building and countryside development, valves. Officers, and Employees comply with all government rules, laws, environmental protection and conservation, and sustainable | Hazardous and Non-Hazardous Waste Generated and regulations, and to conduct themselves in a way that avoids development. In 2019, over 40% of the total loans of the Bank were At TDI, our Water Resource Management Toolkit is strictly and Disposed, 2019 conflicts of interest. Approved by our Board, the Code is aligned used to finance green and sustainable businesses and projects in implemented to ensure our operational compliance to regulation. (in tons) to the standards set by SEC in accordance with internationally the food and manufacturing industry, the energy transmission, Using the tool, we conduct monthly monitoring of our water accepted standards. The Board also conducts regular reviews of generation, and generation industry, and the infrastructure consumption through sub-meters on all points-of-use. The % to total  the Code to ensure its continued relevance and to update when development industry. extraction of water from our deep wells is under strict compliance Non-Hazardous Waste 402,501 100%  Hazardous Waste needed. We conduct regular refresher sessions on the Code to with the conditions set by the National Water Resources Board 52 0% Total existing employees, and as part of onboarding procedures for new At TDI, to support the shift for using renewable sources of energy, (NWRB) which regulates and monitors the volume of water we 402,553 100% employees. The Code is also available on our corporate website our solar power and bioethanol facilities in Lian, Batangas have extract. We ensure that our liquid chemical waste is hauled by for easy reference to anyone who wishes to access the document. helped bridge the gap in making clean energy accessible to accredited third-party contractors and is treated properly by interested parties. On the other hand, our carbon dioxide by- requiring a Certificate of Treatment. We also partner with local For any suspected cases of corruption, employees may report to product from TDI’s production, which would otherwise be released non-government organizations (NGOs), like the Cabuyao River For 2019, we generated and disposed of 52 tons and 402,501 their immediate supervisor who shall determine the existence of to the atmosphere, is converted to dry ice. Waste water or sludge Protection Advocates, in activities that improve and protect the tons of hazardous and non-hazardous waste, respectively. We reasonable ground to escalate the matter. Directors and Officers is also converted to fertilizer as part of our effort for zero effluent water quality of receiving water bodies. Ongoing initiatives include also disposed of 633 pieces of lead acid batteries through our shall then report any known or suspected cases of corruption to the discharge. the Adopt-a-River program where we adopted Cabuyao River in accredited third-party service providers. Due to the strict and Chairman of the Corporate Governance Committee. Alternatively, Cabuyao, Laguna and the Adopt-an-Estero program where we efficient implementation of our solid waste management plan, as employees and officers may also use the Whistle-Blower Policy, In a world with rapidly changing climate conditions, our businesses adopted Cabungan-an Creek in Murcia, Negros Occidental. well as a Group-wide campaign to reduce waste, no violations or which allows one to report any instances of suspected or known are faced with new threats and opportunities that shape the non-compliance incidents have been reported. unethical behavior or corruption anonymously.

140 LT GROUP, INC. 2019 ANNUAL REPORT 141 | Non-Hazardous Waste by Disposal Method, 2019 Climate Change | Employee Breakdown by Gender, 2019 (in tons) At Eton’s head office, our employees are encouraged to turn Climate change is not just a buzzword to the % to total % to total off office equipment when not in use, which includes the Group. It is a real challenge that we consider in our  Female 6,601 53%  Landfill 388,430 96% implementation of our lights-off policy during noon break. For our operations today and on to the future.  Male 5,789 47%  Other (hauled by 10,350 3% buildings, residents and tenants are reminded through memos Total 12,390 third-party contractor) to conserve energy by making sure that lights are turned off and At ABI, our Manufacturing Continuity Program is a 100%  Recycling 3,720 1% appliances such as air-conditioning units are unplugged when not practical guide on how to prevent, prepare, respond and recover  On-site Storage 1 0% in use. before, during and after a disaster, incident or crisis. Our primary Total 402,501 100% considerations include the reduction of employee exposure to Our employment policies have been created in accordance with At PNB, we have an energy conservation program that allows health and safety risks, reducing operations downtime, and labor laws, industry practices, and the existing collective bargaining | Hazardous Waste by Disposal Method, 2019 us not only to save on our energy costs but also to address our managing financial loss. Updated annually, this guide covers agreements (CBAs) with the employees’ unions. Across the Group, (in tons) emissions in compliance with regulation. Our main source of various scenarios that are due to or made worse by the effects of 40% of all our employees are covered by an existing CBA — 22% direct emissions are our standby generator sets, which are only climate change including severe weather conditions, typhoons, of employees at ABI, 49% of employees at PNB, and 22% of % to total used during power interruptions. Our Pollution Control Officers flooding, epidemics, among others. We regularly communicate employees at TDI — and we ensure that we uphold and safeguard  Other (hauled by 24 47% monitor these emissions and ensure effective compliance. We with regulators and other stakeholders on the impact of our the rights of our all employees, whether they are covered by a third-party contractor) also have allocated resources for regular third-party smoke operations to local communities and the climate. CBA or otherwise. We have policies on hiring, transfer, promotion,  On-Site Storage 20 38% emissions testing to ensure accurate data and assessments. In employee benefits, resignation and separation, and learning and  Recovery 5 9% terms of energy efficiency, we have engaged the services of a At Eton, we have taken steps in combating climate change by development, among others, which are regularly reviewed and  Recycling 3 6% third-party provider who provide us with regular reports on the finding ways to use clean and renewable energy. Together with evaluated by senior management. Total 52 100% status of our energy efficiency situation. From these reports, our partners, Eton’s office buildings at Eton Centris in Quezon City adjustments are regularly implemented based on performance currently use clean and renewable energy through the MakBan We have a Code of Business Conduct and Ethics which is a guide on Energy Efficiency and operating conditions. Geothermal Power Plant via Cleanergy of AboitizPower. professional and ethical conduct for all executives and employees of our businesses. The Code is aligned to the standards set by Across the Group, we At TDI, we monitor our energy consumption and emissions in At PNB, our long-standing campaign for climate stewardship is the SEC in accordance with internationally accepted standards. continue to strengthen relation to production outputs by using the energy use ratio expressed through the Bank’s sustainability report highlighting Embedded in the Code is our Whistle-Blower Policy, which helps our energy efficiency (EUR)5. EURs for our three (3) plants differ depending on the the PNB’s drive to address the effects of climate change to the us ensure that all incidents of misconduct and unethical behavior efforts that promote factors affecting their operations. The energy consumption of our business. The Bank is also currently drafting its sustainability are reported anonymously without fear of retaliation. energy conservation Cabuyao plant is limited to usage from production as it does not financing policy and framework, which will enable us to effectively and reduce our overall have bottle washing since it uses brand new bottles. The energy assess and manage the Bank’s environmental and social risks and For any cases of misconduct, disputes or controversies arising from carbon footprint. For consumption of our Negros and El Salvador plants, on the other impacts when doing business. the interpretation, meaning, application and implementation of our example, we use LED hand, consider usage in all aspects as they use second-hand CBAs between the union and the concerned business or between lights across most of bottles requiring bottle washing in their operations. Each plant, At TDI, we observe strict compliance to DENR’s policies on ozone- the concerned business and any covered employee, our Grievance our offices and sites to led by their respective Pollution Control Officers, submits their depleting gases and GHG emissions. Our Incident Management Machinery Policy is in place to address and resolve these cases for replace conventional bulb and tube lights. energy consumption reports to our Group Safety, Environment Crisis Resolution Procedure is climate-informed and includes timely investigation and resolution. and Risk Management (GSERM) Department as part of their various scenarios caused by or made worse by climate change. At the LTG office, we have set the air-conditioning units at25 environmental key performance indicator (KPI) monitoring. Any We use DENR-approved fuels in our operations such as low-sulfur Full-time employees across our subsidiaries are entitled to all degrees Celsius to ensure maximum energy efficiency. Employees positive or negative deviation from the set EUR target is analyzed fuel oil for our boilers. We also participate in various reforestation government-mandated benefits as well as but not limited to life are also asked to only turn on equipment when needed and to and steps are made for mitigation and conservation measures. programs throughout the year. As part of our ongoing plans to insurance coverage, healthcare coverage, vacation and sick leaves, unplug unused equipment. We also promote carpooling and the strengthen our campaign against climate change, we will be parental leaves, retirement provision, loan facilities, among others. use of our company car service to help them in their commute. As of the current reporting period, our total energy consumption mapping out and measuring our GHG emissions in the near future across the Group is 162,148 thousand gigajoules (GJ). Our to implement evidence-based policies to reduce emissions. We take particular pride in our gender equality and diversity and At ABI, we have allocated resources and implemented our Energy direct energy consumption (Scope 1) is at 161,339 thousand GJ, inclusion (D&I) practices where a significant number of women are Management System Policy for our beverage manufacturing plants while our indirect energy consumption (Scope 2) from purchased Employees in our governance bodies and senior management. The Board of where we saw a 15% improvement in energy consumption2. At electricity is 809 thousand GJ. Directors of LTG is comprised of five (5) women and six (6) men. Our ABI Cabuyao, we were able to reduce our coal consumption by Our businesses rely on the people who work to make our every combined workforce also shows a majority of women employees. 33% and increase efficiency after we conducted maintenance and | Direct Energy Consumption (Scope 1), 2019 success possible. Within our workforce can be found exceptional Our robust practices also ensure that there is no difference between rehabilitation work on our steam boiler3. In June 2019, at our ABI (in thousand gigajoules) human capital who are our partners in creating sustainable value. the basic salaries of men and women. Bottled Water Plant (BWP) in Sta. Rosa, Laguna, we optimized our % to total We do our best to recruit, retain and nurture our human capital in PET (polyethylene terephthalate) Blowing Machine Preform Oven  Liquefied petroleum gas 150,908 93% a safe and healthy work environment that not only fosters creativity | Composition of LTG Board of Directors, 2019 by converting it into an Eco-Oven Module Assembly that uses  Coal 7,892 5% and innovation but also gives a strong focus on work-life balance. less power to operate and has resulted in 25% energy efficiency  Gasoline 2,500 2% % to total 4 for two lines of the BWP . Other activities that sought to improve,  Bunker Oil 28 0% Employment  Male 6 55% repair or maintain refrigeration systems, among other equipment,  Diesel 11 0%  Female 5 45% have all led to reduced energy consumption and increased energy Total 161,339 100% Across the Group, we have a strong Total 11 100% efficiency. commitment to ensure fair employment | Indirect Energy Consumption (Scope 2), 2019 practices, gender equality, diversity | Total Energy Consumption, 2019 (in thousand kilowatt hours) and inclusion. We ensure strict (in thousand gigajoules) compliance to all requirements of the % to total Labor Code of the Philippines and the General Labor Standards % to total  Luzon and Visayas 219,783 98% of the Department of Labor and Employment (DOLE) who conduct  Direct Energy 161,339 100%  Mindanao 5,037 2% regular inspections and evaluations on our compliance. Consumption Total 224,820 100%  Indirect energy 809 0% As of 2019, no instances of non-compliance have been recorded consumption and we are at full compliance. Total 162,148 100%

2 Using 2018 as base year 5 Energy Use Ratio (EUR) - Average total amount of electricity and fuel consumed on-site 3 ibid. from all sources converted to mega joules (MJ) for every liter of product produced. 4 ibid.

142 LT GROUP, INC. 2019 ANNUAL REPORT 143 In November 2018, leveraging on its diverse and inclusive | New Hires by Gender, 2019 PZ N\PKLK I` +63,»ZN\PKLSPULZ VU [OL 5V[PÄJH[PVU HUK 2LLWPUN Work-Related Injuries, 2019 workforce, the Philippine National Bank (PNB) approved of Records Accidents and/or Occupational Illnesses (Rule 1050, Number of Rate its Policy on Diversity and Inclusion to further foster % to total 6JJ\WH[PVUHS:HML[`HUK:[HUKHYKZ(Z(TLUKLK +63, cases innovation, create sustainable value and impact, and Male 1,007 62% Our employees across the Group are covered by a healthcare plan For employees improve employee acquisition and retention. The Bank is Female 618 38% which include coverage for occupational health services. also looking at its existing policies and is working to craft Total 1,625 100% Fatalities as a result of work-related 00 gender-responsive provisions that ensure gender equality We conduct regular training programs on occupational safety injuries and non-discrimination. HUKOLHS[OPU[LYUHSS`[OYV\NOV\Y:HML[`6ѝJLYZOLHS[OWYV]PKLYZ /PNOJVUZLX\LUJL^VYRYLSH[LK 00 government agency partners, and third-party providers. Apart injuries (excluding fatalities) ,Q 0D\  31% EHFDPH WKH ƂUVW GRPHVWLF XQLYHUVDO | New Hires by Region, 2019 MYVT [OL +63,WYLZJYPILK THUKH[VY` [YHPUPUN OV\YZ MVY 6:/ bank to join the Philippine Business Coalition for Women Recordable work-related injuries 49 5.82 we conduct other trainings to further commitment to maintaining Empowerment (PBCWE). As part of the membership, the safety and health across all our operations. For example, at Eton’s Number of hours worked (hours) 8,413,664 Bank underwent the Economic Dividends for Gender % to total construction sites, we also conduct loss control management For contract workers (TXDOLW\ ('*( &HUWLƂFDWLRQDVVHVVPHQWLQWKHUGTXDUWHU Luzon 1,360 84% ZLTPUHYZÄYZ[HPK[YHPUPUNZ^VYRPUNH[OLPNO[ZHUKZJHќVSKZHML[` RI  LQ SUHSDUDWLRQ IRU ('*( &HUWLƂFDWLRQ VHW WR EH Mindanao 152 9% Fatalities as a result of work-related 00 trainings, and heavy equipment operation trainings, among others. completed in 2020. Visayas 113 7% injury Total 1,625 100% ;OPZPZVU[VWVMV\YHUU\HS[YHPUPUNZMVY6:/)HZPJ6JJ\WH[PVUHS 00 :HML[`HUK/LHS[O)6:/HUK*VUZ[Y\J[PVU6JJ\WH[PVUHS:HML[` /PNOJVUZLX\LUJL^VYRYLSH[LK As of this reporting period, our workforce is at 12,390 regular injuries (excluding fatalities) employees where 6,601 people or 53% are females. We also have | New Hires by Age Group, 2019 HUK /LHS[O *6:/ H YLX\PYLTLU[ MVY [OL JVUZ[Y\J[PVU PUK\Z[Y` Recordable work-related injuries 15 5.49 360 contractual workers. Our employee turnover rate is at 9.27%. ([ ;+0 V\Y :HML[` 6ѝJLYZ HYL YLX\PYLK [V JVUK\J[ [YHPUPUNZ We hired 1,625 new employees of which 618 were females. % to total on hazardous materials management, hot works operation, Number of hours worked (hours) 2,730,632 Under 30 1,142 70% ZWPSS JVU[YVS JVUÄULK ZWHJL ZHML[` HUK ^VYRPUN H[ OLPNO[Z HUK | Employee Breakdown by Age Group, 2019 30 to 50 456 28% laboratory safety, among others. Group-wide, our businesses also Customers Over 50 27 2% respectively publish health bulletins regularly to promote sustained Total 1,625 100% awareness among our employees. % to total Our journey to creating value would not be complete without our customers. By listening to them, we are able to understand our Under 30 3,928 32% | Employees Who took Parental Leave by Gender, 2019 ([()0^LPTWSLTLU[[OL/HaHYK0KLU[PÄJH[PVU9PZR(ZZLZZTLU[ 30 to 50 6,550 53% businesses better and we are able to move forward and grow HUK+L[LYTPUPUN*VU[YVS/09(+*WYVJLK\YL^OLYLHZ,[VU»ZZP[LZ Over 50 1,912 15% in unprecedented ways. We learn about the changing market, Total 12,390 100% % to total HUK;+0PTWSLTLU[[OL/HaHYK0KLU[PÄJH[PVU9PZR(ZZLZZTLU[HUK developing preferences, and new or recurring trends by listening Female 185 82% *VU[YVS /09(* WYVJLK\YL ;OLZL HSSV^ \Z [V PKLU[PM` OHaHYKZ [VV\YJ\Z[VTLYZ;OPZ^H`^LHYLHISL[VPTWYV]L[OL^H`^L | Employee Breakdown by Category, 2019 Male 41 18% and assess risks according to their likelihood and severity. After do business and create products and services that our customers (for LTG, ABI, Eton and TDI only) Total 226 100% evaluation, we are able to determine and apply controls to manage need, many of which have become homegrown brands we can be these hazards and risks in the workplace. truly proud of. % to total As of 2019, we have zero instances among full-time employees Over the years, our businesses have remained true to its promise of Rank and file 2,736 71% of high-consequence work-related injuries7 during the reporting excellence. We strengthen our commitment and look to innovative Supervisors 750 20% Return to Work Rate by Gender, 2019 period. Managers 244 6% Male Female ways to provide quality products and services and create new and Officers 110 3% Employees due to return after parental leave 39 173 better value for our customers. Total 3,840 100% Employees that returned to work after 39 173 OHS Management System Coverage, 2019 parental leave Marketing and Labeling No. of | Employee Breakdown by Category, Return to Work Rate (%) 100% 100% Percentage employees 2019 (for PNB only)6 ;OL^H`HI\ZPULZZJVTT\UPJH[LZ[VP[ZJ\Z[VTLYZ Retention Rate by Gender, 2019 Covered by occupational health and safety management is an important aspect of doing business. Our system Group ensures transparent and easily-accessible % to total Male Female Regular employees 11,906 100% information about our products and services to Rank and file 4,232 50% Employees retained 12 months after 16 166 help our customers arrive at a well-informed choice. Managers 3,850 45% returning to work following parental leave Contract workers 360 99% Across the Group, we follow local and international standards and Officers 468 5% Number of employees returning from 16 166 Covered by occupational health and safety management parental leave in prior periods regulation on responsible marketing and labeling practices. We Total 8,550 100% system that has been internally audited Retention Rate (%) 100% 100% continue to look at better ways to improve our websites and other Regular employees 11,491 97% information channels for ease-of-access to our clients. Total Number of Employees by Employment Contract, by Region, 2019 Contract workers 360 99% Safety and Well-being At ABI, our Manufacturing Change Control (MCC) document Covered by occupational health and safety management Region Permanent Temporary is a practical guide we follow when we introduce, manage, Z`Z[LT[OH[OHZILLUH\KP[LKVYJLY[PÄLKI`HUL_[LYUHS Luzon 9,580 0 We recognize the great importance party execute and implement changes in terms of raw materials used, Visayas 1,347 0 of our people’s safety and well-being. packaging, operational activities, promotional activities, and Mindanao 1,463 0 Regular employees 8,610 72% A safe working environment is an WYVK\J[ JHTWHPNUZ ;OL 4** [VNL[OLY ^P[O V\Y 5L^ 7YVK\J[ important feature of our operations Contract workers 0 0 +L]LSVWTLU[ KVJ\TLU[ HUK V\Y :[VJR (NPUN 4HUHNLTLU[ Total Number of Employees by Employment Contract, and we make sure we are able to KVJ\TLU[LUHISLZ\Z[VJV]LYKPќLYLU[HZWLJ[ZVMOV^^LTHYRL[ by Gender, 2019 provide this to our employees at all times. HUKSHILSV\YWYVK\J[Z[VJVUZ\TLYZH[KPќLYLU[Z[HNLZ>LLUZ\YL Male Female strict compliance with guidelines on information and labeling set Permanent Temporary Permanent Temporary (JYVZZ [OL .YV\W ^L OH]L HU 6JJ\WH[PVUHS :HML[` HUK /LHS[O by the Philippine Food and Drug Administration (FDA), as well as 5,789 0 6,601 0 6:/ 7VSPJ` [V ZHMLN\HYK V\Y LTWSV`LLZ» YPNO[ HUK HJJLZZ [V HSSYLX\PYLTLU[ZZL[I`[OL7OPSPWWPUL(K:[HUKHYKZ*V\UJPS(:* O\THUL ^VYRPUN JVUKP[PVUZ  6\Y YLZWLJ[P]L 6:/ JVTTP[[LLZ HUK[OL+LWHY[TLU[VM;YHKLHUK0UK\Z[Y`+;0^OPJOTH`PUJS\KL Total Number of Employees by Employment Type, HUK HJJYLKP[LK :HML[` 6ѝJLYZ OLSW LUZ\YL Z[YPJ[ PTWSLTLU[H[PVU information on sourcing, content, safe use, and proper disposal. by Gender, 2019 of this policy in accordance with our policies on good corporate Male Female governance and in compliance with the conditions set by DOLE. Full-time Part-time Full-time Part-time We also conduct regular reviews and evaluation of this policy to 5,789 0 6,601 0 HZZLZZP[ZLќLJ[P]LULZZHUK[VLќLJ[HU`JOHUNLZPMULLKLK;OL respective Committees regularly meet to manage work-related hazards, including investigation and incident reporting, which 6 PNB’s employee breakdown by category has been separated from the Group-wide 7A high-consequence work-related injury is a work-related injury that results in a fatality ÄN\YLZHZ75)OHZUVJVYYLZWVUKPUNYHURZMVY[OL:\WLY]PZVYJH[LNVY` or in an injury from which the worker cannot, does not, or is not expected to recover fully to pre-injury health status within 6 months.

144 LT GROUP, INC. 2019 ANNUAL REPORT 145 At Eton, our Marketing team ensures that our materials are the National Building Code of the Philippines, as well as policies of Digital Transformation and Innovation Officers and Data Protection Program Managers, we ensure firm compliant with our branding guidelines and all applicable laws and the DHSUD (formerly HLURB), the Bureau of Fire Protection (BFP), compliance with both local and international regulations as well regulation set by the Department of Human Settlements and Urban DENR, among others. In today’s information age, businesses are driven by as international standards, including the compliance checklist of Development (DHSUD) [formerly Housing and Land Use Regulatory change that allow them to grow and improve. We the National Privacy Commission and the six (6) data protection Board (HLURB)] and DTI, among others. We regularly conduct a At TDI, our Quality Policy is in place to ensure that our products recognize the importance of digital transformation principles of the EU GPDR. Our DPMD also works with our review of branding guidelines to address and accommodate new are not just of excellent quality but are free of any elements that and innovation as we look to reach new heights in Customer Experience Division for a quick and easy way to trends in industry branding. Likewise, we ensure that our brand could potentially be harmful to our customers. Within our Quality the way we do business. resolve any data privacy-related concerns directly coming from logos and product names are duly registered at the Philippine Management System, and in compliance with the policies of the our customers. Within the Bank, all our personnel are bound by Intellectual Property Office (IPO). FDA, we make sure that strict implementation of our Quality Policy Our businesses are currently looking at ways to continuously keep our confidentiality policy. We also regularly send out data privacy is observed as well as efficient response and resolution to product up with present trends in technology. At Eton, we have integrated advisories to all personnel concerned regarding updates and At PNB, we observe strict compliance with the conditions set by complaints with our product complaints procedure, consumer innovation in our business as we continue to look at smart cities trends on data privacy and security. the Bangko Sentral ng Pilipinas (BSP), as well as guidelines by the response program and corrective action plan. and the impact of smart home systems to our properties. We Philippine Deposit Insurance Corporation (PDIC), ASC, DTI, among are also looking at plans to continue upgrading our Enterprise For 2019, we recorded three (3) incidents of inadvertent leakage others. All our marketing tools have undergone internal reviews During the reporting period, we recorded zero incidents of non- Resource Planning (ERP) system. of customer data, and four (4) incidents of non-compliance with and have the necessary permits from regulators. Our Social Media compliance with regulations on customer health and safety. We rules and regulation on data privacy across the Group. These Framework is also in place to help us manage our reputational risk strengthen our commitment to ensure customer health and safety At PNB, we launched our Ecosystem Strategy in 2016, which is an incidents, which were recorded at PNB, have all been addressed across our social media platforms. at all times and aim to maintain zero cases in the next reporting end-to-end, sustainable value chain concept to provide customized and immediately resolved in accordance with the Bank’s Enterprise period. banking solutions and other services, which include integrated Information Security Policy and Enterprise Data Privacy Policy. At TDI, we are guided by our Brand Guidance Policy, created cash management solutions, bills payment, and payroll services to We also regularly reiterate our Group-wide Data Privacy Policy for through research done by TDI on marketing standards practiced Customer Engagement and Satisfaction parties in the value chain. Digital transformation is at the very core continued awareness. While the rest of our subsidiaries had zero in the Philippines. Our Quality Policy guides our labeling practices of this strategy as we innovate and find better solutions to working cases of non-compliance with rules and regulation on data privacy, where we follow a mandatory minimum standard for information on The longevity of our businesses has always partly depended on with our partners. To make banking accessible to everyone, we our commitment to ensuring data privacy and security remains our labels, which include alcohol content, packing size, intended how well we listen to our customers. By listening well, not only are currently have 1,557 automatic teller machines (ATMs), and 81 strong to avoid similar incidents in the next reporting period. sale placement (whether domestic or export), manufacturing we able to improve the way we work, but we are able to create cash accept machines (CAM) for 24-hour banking convenience. plant address, BIR assessment number, ingredient declaration, better value. We consider customer engagement and satisfaction Society and product traceability, among others. When critical, we also a top priority. At TDI, we are documenting business processes of our new ERP include proper product storage conditions and mixing guides, system, which automates and integrates the management of many Community Relations and Initiatives as well as guidelines on disposal. We continuously monitor this At ABI, as part of our Food Safety and Quality Policy, we regularly business processes. Quarterly operational audits will be conducted under our Quality Management System, and in strict compliance conduct a Customer Satisfaction Survey. Together with our to ensure that written policies and procedures are being followed. We consider the with conditions set by regulatory bodies such as the ASC for our Customer Complaint Report, we use these tools to understand communities we operate television and radio advertisements. Labels of products for local how well we have done and to see which areas of improvement Customer Data Privacy and Security in as our partners in value distribution conform to the guidelines of FDA, while labels for we need to work on based on customer feedback sent through our creation. From these products meant for export are subject to labeling regulations of the website, email, phone and social media profiles. Keeping information safe and secure is a top priority communities, we are importing country. All our products are evaluated and registered for us. We look to new and innovative ways to able to access a wealth by the FDA with their corresponding Philippine Intellectual Property At Eton, our commitment to customer engagement and keep data that we have and data entrusted to us of human and natural Office (IPO) registration. We conduct regular assessments and satisfaction is rooted in our mission and vision as well as our Code safe and secure at all times. We comply with all resources that contribute evaluations throughout the year as we continuously look for new of Ethics. We work hard to ensure that we are able to address applicable regulation and go beyond compliance in greatly to our success. and innovative ways to strengthen our presence in existing markets client concerns and meet client demands in an efficient and timely making sure that our data safekeeping capabilities are continuously We are committed to and heighten our appeal to emerging markets. manner. Our Customer Support team handles all concerns coming updated. contributing back to the very communities that help us grow for their from our existing clients, while our Property Management Group success is our success. In 2019, due to our strict commitment to comply with laws and takes care of on-site concerns. Our Marketing team, on the other Across the Group, we are guided by our Data Privacy Policy regulations on marketing and labeling, we have recorded zero hand, handles all feedback received from our website and social which provides a framework for processing personal data from The Group’s main corporate social responsibility (CSR) arm is the Tan incidents of non-compliance. media platforms from both existing and prospective clients. an individual in compliance with local data privacy laws and Yan Kee Foundation, Inc. (TYKFI). Together with our partners, TYKFI professional standards, most notably the Philippine Data Privacy pursues projects that focus on education, health services, social Customer Health and Safety At PNB, customer engagement and satisfaction is embedded across Act of 2012. Our respective Data Protection Officers ensure strict welfare and the environment. all client touchpoints—from account opening to administration and compliance and implementation of the policy as well as handling of Our customers’ health and safety termination. Our dedicated Customer Experience Division handles inquiries and complaints related to data privacy and security. In education, TYKFI maintains a number of scholarship and education will always be a top priority for us. all client concerns and complaints 24 hours a day, 7 days a week activities. In partnership with the University of the East (UE), the UE- Across all our products and services, through various channels including our Customer Care Hotline, At Eton, we have a Data Privacy Manual, which complements TYKFI Scholarship Program, an academic scholarship program for we make sure that our customers are website, email, secure online messaging platforms and the private our Group-wide Data Privacy Policy. This manual is reviewed and deserving UE undergraduates and faculty members, has 123 new protected and safe from toxins and messaging function of our social media profiles. Our Customer evaluated annually for any changes and improvement needed. Our and continuing scholars this year totaling to over 1,410 beneficiaries, hazards. We continuously look at ways to contribute to improving Care Policy ensures that any complaints brought to our attention Data Protection Officers work closely with our Legal Department to including 18 faculty members and 103 grantees who have benefitted our customers’ quality of life. are acknowledged, processed and resolved in a timely manner. ensure that all required documentation is obtained from our clients. from the program in over 21 school years. Consistent with our Data Privacy Policy, we also ensure proper We also make sure that our employees are compliant with existing At ABI, our Food Safety and Quality Policy ensures that our documentation for these issues and complaints and report them to conditions set by regulation. The TYKFI-STA Scholarship Program for Farmers’ Children, which products meet international standards on quality and safety as set the concerned regulators for compliance. provides free private school education for deserving high school by our Quality Management System and policies of the FDA, as well At PNB, together with our Group-wide Data Privacy Policy, our students from marginalized farming families, currently has 160 as the National Sanitation Foundation and the International Bottled At TDI, we regularly engage in relationship-building activities Enterprise Data Privacy Policy reinforces our strong commitment to scholars from grades 7 to 12 in Sta. Teresita’s Academy in Aritao, Water Association. We continue to ensure that all our plants are between our salesmen and our customers. We are also active data privacy and security. This policy was developed based on the Nueva Vizcaya. certified, that there are zero cases of non-conformance to regular on social media and conduct marketing promotion campaigns Philippine Data Privacy Act of 2012, the General Data Protection internal and external audit procedures, and that key performance throughout the year. We conduct monthly and annual evaluations Regulation 2016/679 (GDPR) of the European Union (EU), ISO In partnership with the Foundation for Liberty and Prosperity (FLP), indicators on quality and packaging are met. of our activities to look at ways to improve. For any complaints, our 27001:2013 for Information Security Management System and our the TYKFI-FLP Legal Scholarship Program, a scholarship for selected customers are able to reach us through our website, telephone, Enterprise Information Security Policy, the Manual of Regulation for junior and senior year law students who are at the top of their class, At Eton, we look to building and developing properties that email and/or our social media profiles. Each bears a distinct code Banks (MORB) of the BSP, and publications and references issued currently has 20 scholars across various law schools in the country. positively impact the way communities live and grow. We strictly which will identify the plant batch, line and date of production to by industry associations as the Information Systems Audit and meet and observe all conditions set out by regulation and secure all pinpoint source of any defective products. Control Association (ISACA) and the International Association of TYKFI together with ABI has a Medical Specialty Scholarship needed permits as required by local zoning laws, regulations set by Privacy Professionals (IAPP), among others. With our Data Privacy Program that helps Filipino doctors finish specialty training abroad. Management Division (DPMD), comprised of our Data Protection Four (4) medical doctors completed their specialty training in

146 LT GROUP, INC. 2019 ANNUAL REPORT 147 2019 with the help of the program: Dr. Andrei Paulo Angbue-Te, In response to the aftermath of the earthquakes that displaced At TDI, we have partnered with Dualtech Training Center to train their PMFTC is part of a multisectoral movement called “Fight IT (Illicit Dr. Noruel Gerard Salvador, Dr. Rosemarylin Or, and Dr. Giselle numerous families in Cotabato, TKYFI, together with Philippine students under the Technical Education and Skills Development Trade)” led by the Federation of Philippine Industries (FPI) to curb Gotamco. Airlines, PNB and TDI, distributed Chairman’s Gift Boxes filled with Authority’s dual training system. Lasting for 18 months, Dualtech unfair trade and secure national revenues and protect legitimate food and drinks to over 2,000 evacuees across five (5) evacuation students spend time training with us at TDI from Monday to Friday players in the domestic market. The Fight IT movement is also Together with the Foundation for Upgrading the Standards of camps in Makilala, Cotabato and Kidapawan City during the HOPE and attending classes and other activities at their school during supported by sectors, of which common issues are smuggling and Education (FUSE), TYKFI sponsored the training of 133 teachers Caravan’s disaster relief campaign. Saturdays. illicit trade in their industries, including rice, sugar, corn, palm oil, to update and upgrade their teaching skills across different tobacco, steel, cement and ceramic tiles. With its strengthened subjects. The school supplies projects benefited 1,076 children TYKFI also helped PNB conduct a financial literacy seminar for 20 In 2019, 89% of our local operations have implemented community fight against illicit trade, Fight IT action plans include: (1) to intensify while the food distribution project reached 1,179 children and barangay treasurers from Aritao, Nueva Vizcaya. initiatives. its public information drive against illicit trade; (2) to develop a teachers alike at the adopted schools. TYKFI also participated regulatory and fiscal information campaign designed to increase in Brigada Eskwela 2019 where Nagtenga Elementary School in In the protection of the environment, one of TYKFI’s biggest LTG’s Unique Key Material Issue the awareness of retailers on illicit trade; and (3) to advocate for Sta. Cruz, Ilocos Sur was provided with materials to help remodel undertakings is the Dr. Lucio C. Tan Legacy Forest Project. Started laws and regulations to mitigate illicit trade and support industry three (3) old Marcos-type classrooms for kindergarten and second in 2014, over 787 hectares of the 930-hectare area for reforestation Over time, our Group has grown and expanded to include investigators who will monitor the illegal tobacco trade for the and third grade students. The Tan Yan Kee Library also conducted and protection in Barangay R.A. Padilla in Carranglan, Nueva Ecija businesses in different industries with different challenges. In our purpose of pushing for enforcements. summer learning activities for children on Chinese literature, have been planted with different varieties of timber, fuelwood, and journey to sustainability, we recognize these unique challenges language and culture from May to July. From August to October, fruit trees. Other planting and reforestation sites include the Laguna- as opportunities for us to show our skill and capability in meeting As part of the global PMI group, we at PMFTC channel our efforts the library gathered a diverse group of 11 people aged 14 to 85 for Quezon Land Grant (LQLG) of the University of the Philippines Los these challenges head on and create long-term value for our on illicit trade through the following: its Chinese Ink Painting classes. Baños (UPLB) and parts of Nueva Vizcaya, as well as the Mangrove stakeholders. Rehabilitation Projects in Ilocos Sur and Boracay. 1. Fighting the diversion of our products by continuously improving In health services, TYKFI continues to hold the monthly Asia Brewery Illicit Trade measures to secure the supply chain with all stakeholders; Medical Forum in cooperation with the Association of Asia Brewery Apart from rehabilitating the forests, TYKFI provided livelihood Medical Specialty Scholars. These forums provide the public opportunities by giving jobs to the farmers and teaching them The presence of smuggled and/or counterfeit 2. Sharing our knowledge with the impacted parties through with better health information as well as information on the latest new scientific methods of producing vegetables, and organic and tobacco products, also known as illicit cigarettes, continuous research, analysis, and communication of illicit trade treatment options. Some of the topics discussed in 2019 include ornamental plants. TYKFI also conducted holistic development in the country has created considerable challenges issues and consequences; and eye conditions, gastrointestinal tract afflictions, common childhood programs for the farm workers that include values formation, to our operations in PMFTC. As illicit cigarettes diseases, kidney health and women’s health. Doctors who are Asia wellness promotion and spiritual development. At the 56-hectare evade paying government-mandated excise taxes 3. Pre-empting attempts to illegally divert our smoke-free products Brewery Medical Scholars also provided free consultations during planting site in Barangay Joson in Carranglan called Friendship and value added tax (VAT), the price gap between by assessing potential risks and by equipping our organization the forums. Meanwhile, TYKFI has partnered with LGUs and private Park, various developmental activities have been conducted illicit cigarettes and legitimate cigarettes is widened resulting to for this new challenge. medical specialists in extending free consultation to goiter patients. like intercropping, ring weeding, fertilizer application, hedgerow low prices of illicits compared to our licit low-priced brands. These establishment, and road gravelling. In April 2019, more than 150 illicit cigarettes then become an attractive alternative for smokers, For further information, please refer to the PMI 2018 Sustainability In social welfare, TYKFI spearheaded a host of projects in students from UPLB visited the project’s Nueva Ecija site and particularly the youth and low-income groups. The legislated Report thru this link: https://www.pmi.com/sustainability/ partnership with sister companies as well as public and private learned about the goals, experiences, and sustainability efforts of annual increase of excise taxes on tobacco products further widen sustainability-report. organizations to help develop communities and improve their the project. price gaps and make illicit cigarettes even more attractive. It is a quality of life. It sponsored the training of seven (7) local government major economic problem for governments. In the Philippines, the officials and six (6) teachers on good governance and solid waste In September and October 2019, 19 farming students from the Intellectual Property Office of the Philippines (IPO) reported that in management through a clean-up drive within a mangrove park in Don Bosco Training Center in San Jose, Nueva Ecija who are NC- 2018 alone, around Php20 billion worth of illicit cigarettes and illicit Boracay, Aklan. Aside from collecting almost 50 sacks of garbage, II-certified also went to the TYKFI farm project site to undergo a 10- cigarette-making paraphernalia were seized. the participants also planted api-api, a local mangrove species day immersion program under their Supervised In-Plant training. in line with the Roots for Boracay Project in partnership with TDI, At PMFTC, we work closely with other DENR and the local government of Barangay Manoc-Manoc. Due to its successful efforts in reaching out to the community, TYKFI affiliates of Philip Morris International, was conferred the 2019 Global NGO Leadership and Excellence Inc. (PMI) to share intelligence and TYKFI sponsored the skills enhancement training of 19 past Award due to its holistic commitment framework in doing CSR that 1000+ resources to fight illicit trade guided trainees from farming communities in the towns of Kayapa and Sta. works to leave no one behind. participants to 63 by the objectives and the principles Fe, Nueva Vizcaya and Sta. Cruz, Ilocos Sur on basic cosmetology engagements by of the WHO Framework Convention in partnership with Ang Hortaleza Foundation. 30 housewives were At ABI, through our Asia Brewery Manufacturing Operations PMFTC on raising on Tobacco Control (FCTC) Protocol also trained in longanisa-making in the community of Las-Ud in Resources & Environment Sustainability (AMORES) project, the awareness about to Eliminate Illicit Trade in Tobacco Sta. Cruz, Ilocos Sur. flagship sustainability project of ABI, we continue to drive further the illegal cigarette Products. We also regularly engage our commitment to environmental and community stewardship. trade problem various internal and external Together with Eton, TYKFI launched the Masaganang Palayan Together with WWF Philippines as our partner, we conducted the stakeholders to raise awareness Project by donating high quality rice seeds and fertilizers to 18 Education is Adaptation program to teach schoolchildren and about the illegal cigarette trade farmers from Comon and Tabueng in Aritao, Nueva Vizcaya. Each teachers the environmental impact of waste and the importance problem, which includes capacity building activities on how to spot of the farmers received an average of three (3) to five (5) sacks of waste segregation. With this program, we were able to conduct an illicit cigarette product. In 2019, PMFTC conducted 63 separate of hybrid rice seeds that can yield up to 100 to 110 cavans of one (1) teachers’ training and three (3) information sessions with engagements with over 1,000 participants who are trade and law high quality palay. Another project together with Eton is the TYKFI- students of Molino Elementary School, Panipuan Elementary enforcement partners, and PMFTC employees. Eton Joint Housing Assistance Project where four (4) newly-built School, and Baliti Elementary School all in the province of houses were turned over to the families of four (4) scholars under Pampanga. the TYKFI-STA Scholarship Project At PNB, our Corporate Social Responsibility Policy drives Together with TDI through Tanduay Athletics, TYKFI co-sponsored forward our commitment to incorporate and implement CSR the Golden KAP Basketball Tournament, a grassroots sports and sustainability-related initiatives in our operations. With the development program participated in by community members from creation of our new Corporate Sustainability Unit, we are currently Aritao, Nueva Vizcaya and Carranglan, Nueva Ecija. The project developing our sustainability policy, roadmap and framework. was initiated to enable the youth to develop their skills in sports, Annually, we allocate at least two percent of our net income to instill the value of sportsmanship, and foster intercommunity various CSR activities as education programs on financial literacy, goodwill and fellowship. Three (3) barangays from each of the two and scholarships, as well as livelihood development initiatives and municipalities participated in the tournament with over 75 youth environmental campaigns. players.

148 LT GROUP, INC. 2019 ANNUAL REPORT 149 APPENDIX Climate Change GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 143 - GRI Content Index Approach 2016 GRI 103 - 2 The management approach and its components 143 - GRI Standard Disclosure Page No. Omissions GRI 103 - 3 Evaluation of the management approach 143 - GRI 201: Economic GRI 201 - 2 Financial implications and other risks and opportunities due to climate change 143 GRI 101: Foundation 2016 (GRI 101 does not include any disclosures) - General Disclosures Performance 2016 GRI 401: Employment 2016 Organizational Profile GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 143-144 - GRI 102 - 1 Name of the organization 61 - Approach 2016 GRI 103 - 2 The management approach and its components 143-144 - GRI 102 - 2 Activities, brands, products, and services 3, 14-27 - GRI 103 - 3 Evaluation of the management approach 143 - GRI 102 - 3 Location of headquarters 61 - GRI 401: Employment GRI 401 - 1 New employee hires and employee turnover 143-144 - GRI 102 - 4 Location of operations 61 - 2016 GRI 401 - 2 Benefits provided to full-time employees that are not provided to temporary or 143 GRI 102 - 5 Ownership and legal form 4-5, 32, 61-62 - - part-time employees GRI 102 - 6 Markets served 14-27 - GRI 401 - 3 Parental leave 144 - GRI 102 - 7 Scale of the organization 2-3, 14-27, 143-144 - GRI 403: Occupational Health and Safety 2018 GRI 102 - 8 Information on employees and other workers 143-144 - GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 144-145 - GRI 102 - 9 Supply chain - Please see pages 17-18 of LTG’s Approach 2016 GRI 103 - 2 The management approach and its components 144-145 - full sustainability report . GRI 403: Occupational GRI 403 - 1 Occupational health and safety management system 144-145 - GRI 102 - 11 Precautionary Principle or approach 137, 140 - Health and Safety 2018 GRI 403 - 2 Hazard identification, risk assessment, and incident investigation 144-145 - GRI 102 - 12 External initiatives 136-137 - GRI 403 - 3 Occupational health services 144-145 - Please see pages 19-20 of LTG’s GRI 403 - 4 Worker participation, consultation, and communication on occupational health and 144-145 GRI 102 - 13 Membership of associations - full sustainability report . GRI 403 - 5 Worker training on occupational health and safety 144-145 - Strategy GRI 403 - 6 Promotion of worker health 143-145 - GRI 102 - 14 Statement from senior decision-maker 7-13, 134-135 - GRI 403 - 7 Prevention and mitigation of occupational health and safety impacts directly linked 144-145 - Ethics and Integrity by business relationships Inside Front Cover, GRI 102 - 16 Values, principles, standards, and norms of behavior - GRI 403 - 8 Workers covered by an occupational health and safety management system 145 - 28-35, 140 GRI 403 - 9 Work-related injuries 145 GRI 102 - 17 Mechanisms for advice and concerns about ethics 140 - GRI 417: Marketing and Labeling 2016 Governance GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 145-146 - GRI 102 - 18 Governance structure 28-33 - GRI 102: General Approach 2016 GRI 103 - 2 The management approach and its components 145-146 - GRI 102 - 22 Composition of the highest governance body and its committee 28-33 - Disclosures 2016 GRI 103 - 3 Evaluation of the management approach 145-146 - GRI 102 - 23 Chair of the highest governance body 28-33 - GRI 417: Marketing and GRI 417 - 1 Requirements for product and service information and labeling 145-146 - GRI 102 - 26 Role of highest governance body in setting purpose, values, and strategy Inside Front Cover - Labeling 2016 GRI 417 - 2 Incidents of non-compliance concerning product and service information and 146 - Stakeholder Engagement labeling GRI 102 - 40 List of stakeholder groups 136 - GRI 417 - 3 Incidents of non-compliance concerning marketing communications 146 - GRI 102 - 41 Collective bargaining agreements 143 - GRI 416: Customer Health and Safety 2016 GRI 102 - 42 Identifying and selecting stakeholders 136 - GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 146 - GRI 102 - 43 Approach to stakeholder engagement 136 - Approach 2016 GRI 103 - 2 The management approach and its components 146 - GRI 102 - 44 Key topics and concerns raised 137 - GRI 103 - 3 Evaluation of the management approach 146 - Reporting Practice GRI 416: Customer Health GRI 416 - 1 Assessment of the health and safety impacts of product and service categories 146 - and Safety 2016 GRI 416 - 2 Incidents of non-compliance concerning the health and safety impacts of products 146 GRI 102 - 45 Entities included in the consolidated financial statements 2-3, 61-63 - - GRI 102 - 46 Defining report content and topic Boundaries 136-137 - and services GRI 102 – 47 List of material topics 137-139 - Customer Engagement and Satisfaction Not applicable as this is the first GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 146 - GRI 102 - 48 Restatements of information year of reporting. Approach 2016 GRI 103 - 2 The management approach and its components 146 - Not applicable as this is the first GRI 103 - 3 Evaluation of the management approach 146 - GRI 102 - 49 Changes in reporting year of reporting. GRI 102: General Standard GRI 102 - 43 Approach to stakeholder engagement 136 - GRI 102 - 50 Reporting period 136 Disclosures 2016 GRI 102 - 44 Key topics and concerns raised 137 - Not applicable as this is our first Digital Transformation and Innovation GRI 102 - 51 Date of most recent report sustainability report. GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 147 - GRI 102 - 52 Reporting cycle 136 - Approach 2016 GRI 103 - 2 The management approach and its components 147 - GRI 102 - 53 Contact point for questions regarding the report 137, 156 - GRI 418: Customer Privacy 2016 GRI 102 - 54 Claims of reporting in accordance with the GRI Standards 136 - GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 147 - GRI 102 - 55 GRI content index 150-151 - Approach 2016 GRI 103 - 2 The management approach and its components 147 - GRI 102 - 56 External assurance 136 - GRI 103 - 3 Evaluation of the management approach 147 - GRI 418: Customer Privacy GRI 418 - 1 Substantiated complaints concerning breaches of customer privacy and losses of 147 Material Topics - GRI 201: Economic Performance 2016 2016 customer data GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 136-137, 139 - GRI 413: Local Communities 2016 Approach 2016 GRI 103 - 2 The management approach and its components 139 - GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 138, 147-149 - GRI 201: Economic Approach 2016 GRI 103 - 2 The management approach and its components 147-149 - GRI 201 - 1 Direct economic value generated and distributed 139 - GRI 413: Local GRI 413 - 1 Operations with local community engagement, impact assessments, and 147-149 Performance 2016 - GRI 419: Socioeconomic Compliance 2016 Communities 2016 development programs GRI 103 - 1 Explanation of the material topic and its boundary 137, 139 - GRI 413 - 2 Operations with significant actual and potential negative impacts on local 147-149 GRI 103: Management - GRI 103 - 2 The management approach and its components 139 - communities Approach 2016 GRI 103 - 3 Evaluation of the management approach 139 - Illicit Trade GRI 419: Socioeconomic GRI 103: Management GRI 103 - 1 Explanation of the material topic and its boundary 22, 138, 149 - GRI 419 - 1 Non-compliance with laws and regulations in the social and economic area 139 - Compliance 2016 Approach 2016 GRI 103 - 2 The management approach and its components 22, 149 - Risk Management Task Force on Climate-related Financial Disclosures (TCFD) Content Index GRI 103 - 1 Explanation of the material topic and its boundary 137, 140 - GRI 103: Management GRI 103 - 2 The management approach and its components 140 - Recommended Disclosures Approach 2016 GRI 103 - 3 Evaluation of the management approach 140 - Governance GRI 102: General Disclose the organization’s governance around climate-related risks and opportunities. GRI 102 - 11 Precautionary principle or approach 140 - Disclosures 2016 a) Describe the board’s oversight of climate related risks and opportunities. 30-35, 137 GRI 205: Anti-Corruption 2016 b) Describe management’s role in assessing and managing climate-related risks and opportunities. 30-35, 137 GRI 103 - 1 Explanation of the material topic and its boundary 138, 140 - GRI 103: Management Strategy GRI 103 - 2 The management approach and its components 140 - Approach 2016 Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s business, strategy, and GRI 103 - 3 Evaluation of the management approach 140 - financial planning where such information is material. GRI 205: Anti-Corruption GRI 205 - 2 Communication and training about anti-corruption policies and procedures 31, 140 - a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. Still being studied 2016 GRI 205 - 3 Confirmed incidents of corruption and actions taken 140 - GRI 303: Water and Effluents 2018 b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. 143 GRI 103 - 1 Explanation of the material topic and its boundary 138, 141 - GRI 103: Management c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or 143 GRI 103 - 2 The management approach and its components 141 - Approach 2016 lower scenario. GRI 103 - 3 Evaluation of the management approach 141 - Risk Management GRI 303 - 1 Interactions with water as a shared resource 141 - GRI 303: Water and Disclose how the organization identifies, assesses, and manages climate-related risks. GRI 303 - 2 Management of water discharge-related impacts 141 - Effluents 2018 a) Describe the organization’s processes for identifying and assessing climate-related risks. 140 GRI 303 - 3 Water withdrawal 141 - b) Describe the organization’s processes for managing climate-related risks. 140, 143 GRI 306: Effluents and Waste 2016 GRI 103 - 1 Explanation of the material topic and its boundary 138, 141-142 - c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk 140 GRI 103: Management GRI 103 - 2 The management approach and its components 141 - management. Approach 2016 GRI 103 - 3 Evaluation of the management approach 141 - Metrics and Targets GRI 306: Effluents and Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. GRI 306 - 3 Waste by type and disposal method 141-142 - Waste 2016 a) Describe the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk 140-143 management process. GRI 302: Energy 2016 b) Disclose Scope 1, Scope 2, and if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. 142 GRI 103 - 1 Explanation of the material topic and its boundary 138, 142 - c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. Processes are still to be set up for the future GRI 103: Management GRI 103 - 2 The management approach and its components 142 - reporting of this metric Approach 2016 GRI 103 - 3 Evaluation of the management approach 142 - GRI 302: Energy 2016 GRI 302 - 1 Energy consumption within the organization 142 - For the digital copy of the full 2019 Sustainability Report, please download at: https://ltg.com.ph/sustainability-reports/

150 LT GROUP, INC. 2019 ANNUAL REPORT 151 Believing in the power of sports in inspiring individuals to work hard for their goals, he promoted the love for sports among employees which, in turn, transcended many barriers in the workplace.

ucio ‘Bong’ Tan, Jr. was a young visionary whose eyes Under his leadership, TDI strengthened into an iconic L were set on building a strong future for LT Group, Inc. Filipino brand. It became the world’s number one rum for and his country, the Philippines. 2018 and 2019, beating Puerto Rican brand Bacardi, according to Drinks International. He followed his destiny as the dutiful son and namesake of taipan Dr. Lucio C. Tan. Together, they shared the vision TDI also started various green initiatives like the bioethanol of building a world-class conglomerate at the forefront of facility of Absolut Distillers, Inc. The Company was among the country’s economic growth. the first distilleries in the Philippines to heed government’s But Bong was also very much his own man, boldly call for bioethanol production, in an effort to provide a pursuing new initiatives and injecting fresh ideas for the sustainable and clean source of energy for the transport advancement of LT Group and society at large. In pursuing sector. this vision, Bong was armed with the rare combination of In Eton, Bong spearheaded the development of the an educational training as an engineer, an unparalleled Company’s various product offerings – from homes to passion as a sportsman and a strong advocacy for the commercial spaces – always keeping in mind the clients’ environment. evolving needs. With him at the helm, Eton was able to Born in Manila in 1966, Bong was into different sports strike an optimal balance between sales and recurring and mind games while growing up. He went to Saint Jude revenue. Catholic School in Manila for his grade school education Though regarded as a prince in Philippine business, Bong during which he became part of the Philippine Swimming always exuded an unassuming, youthful and down-to-earth Team. demeanor. He never lost sight of Chairman Tan’s vision of After grade school, he went to Dunman High School building a world-class conglomerate that contributed to the in Singapore where he developed a keen interest in country’s economic growth. basketball. He later took Chinese Language and Ancient His charismatic leadership style and sportsmanship greatly Chinese History courses at Beijing University, believing endeared him to the employees of the Lucio Tan Group, that one can only be ready for the future by learning their clients and other stakeholders. lessons of the past.

Believing in the power of sports in inspiring individuals to After graduating with a Civil Engineering degree from the work hard for their goals, he promoted the love for sports University of California, Davis in 1991, he pursued higher among employees which, in turn, transcended many barriers LUCIO K. TAN, JR. studies and took up the Executive Master of Business in the workplace. June 14, 1966 – November 11, 2019 Administration Program at Kellogg School of Management Northwestern University through a link-up with the Hong He was a team player himself, leading his employees to Kong University of Science and Technology. Afterwards, always strive for a harmonious work environment that made he returned to the Philippines to help his father manage them better equipped to handle challenges of the future. his many businesses. Young Taipan, Without doubt, Bong left member firms of the Lucio Tan His first job at Fortune Tobacco Corporation was as Group in a better place than when he first found them, a tobacco checker. He studied different grades of enabling these companies to contribute better to nation- Sports Enthusiast, tobacco leaves before they could be processed into building. cigarettes. Years later, he became President of Tanduay Indeed, like his favorite Marvel superhero Iron Man, Distillers, Inc., its subsidiary Absolut Distillers, Inc. and Bong strived to the very end to make his real life Marvel Eton Properties Philippines, Inc. aside from sitting in Universe better and stronger for his countrymen. He will be the Board of LT Group, Inc. and other Lucio Tan Group Man for Others greatly missed. member firms.

152 LT GROUP, INC. 2019 ANNUAL REPORT 153 BANNER BOARDD OF DIRECTORS YEAR

Michael G. Tan Juanita T. Tan Lee Johnip G. Cua Mary G. Ng Wilfrido E. Sanchez President and Chief Operating Officer Director and Treasurer Independent Director Independent Director Independent Director Dr. Lucio C. Tan Chairman and Chief Executive Officer

BOARD OF ADVISORS EXECUTIVE OFFICERS

Carmen K. Tan Harry C. Tan Lucio C. Tan III Director Director Director Appointed on December 17, 2019

Peter Y. Ong Jose Gabriel D. Olives Nestor C. Mendones Atty. Ma. Cecilia L. Pesayco Advisor Chief Financial Officer Deputy Chief Financial Officer Corporate Secretary

Lucio K. Tan, Jr.+ Vivienne K. Tan Florencia G. Tarriela Director Director Independent Director Deceased on November 11, 2019

Dioscoro Teodorico L. Lim Atty. Marivic T. Moya Atty. Erwin C. Go Chief Audit Executive Assistant Corporate Secretary Chief Legal Counsel

154 LT GROUP, INC. 2019 ANNUAL REPORT 155 Investor Information Annual Report 2019

Paper used: MOHAWK Options PC White 216 gsm LT Group, Inc. 210 x 297 mm 11th Floor Unit 3 Bench Tower, 100% post consumer recycled fiber 30th Street corner Rizal Drive, Crescent Park West 5, Bonifacio Global City, Taguig City Limited Edition Planner Cream 80 gsm 50% post consumer Tel: +632 8808 1266; recycled pulp Facsimile: +632 8869 8336 Website: ltg.com.ph Ink used: Printed with soy based ink Alcohol free fountain solution BUSINESS GROUPS: Printer: Velprint Corp. SMETA-certified printer Asia Brewery, Inc. External Auditor www.Velprint.com.ph Head Office: 6th Floor PNB Makati Center SyCip Gorres Velayo & Co. (formerly Allied Bank Center), 6760 Ayala Avenue, Makati City 6754 Ayala Avenue, Makati City Tel: +632 8816 3421 to 40 Stockholder Services and Assistance Facsimile: +632 8810 4041 For matters concerning dividend payments, account status, Website: asiabrewery.com lost or damaged certificates or change of address, please write or call: Eton Properties Philippines, Inc. Head Office: 8th Floor PNB Makati Center Philippine National Bank – Trust Banking Group (formerly Allied Bank Center), (Fiduciary Services Division) 6754 Ayala Avenue, Makati City Attention: Ms. Joanna Marie L. Aviles Tel: +632 8548 4000; or Ms. Emylyn P. Audemard Facsimile: +632 8887 1549 Address: 3rd Floor PNB Financial Center Website: eton.com.ph President Diosdado Macapagal Boulevard, Pasay City PMFTC Inc. Tel: +632 8526 3131 or +632 8891 6040 Head Office: 31st Floor, The Finance Center local 2307 and 4575 26th Street corner 9th Avenue Email: [email protected] or [email protected] Bonifacio Global City, Taguig City Tel: +632 8886 5901 Website: pmi.com Investor Relations LTG welcomes inquiries from institutional investors, Philippine National Bank analysts and the financial community. Head Office: PNB Financial Center, Please write or call: President Diosdado Macapagal Boulevard, Pasay City Ms. Annabelle Arceo Tel: +632 8526 3131 to 70 or +632 8891 6040 to 70; LT Group, Inc. Facsimile: +632 8834 0780 or +632 8573 4580 Tel: +632 8808 1266 Website: pnb.com.ph Email: [email protected] or [email protected]

Tanduay Distillers, Inc. Head Office: Km. 43 National Highway, Barangay Sala, Cabuyao, Laguna Tel: +632 8810 2701 to 10; Facsimile: +632 8816 5101 Website: tanduay.com

Legal Counsel Atty. Erwin C. Go Office of the Legal Counsel Lucio Tan Group of Companies 2nd Floor Allied Bank Center, 6754 Ayala Avenue, Makati City

156 LT GROUP, INC. 11th Floor Unit 3 Bench Tower, 30th Street corner Rizal Drive Crescent Park West 5, Bonifacio Global City, Taguig City, Philippines ltg.com.ph