CEBU HOLDINGS, INC.

ABOUT THE COVER

As limited public transportation compelled more people to bike to work or to complete essential errands in 2020, we designated bike lanes within Cebu Business Park and Cebu IT Park. Among its many lessons, the pandemic has affirmed our vision to create safer and more sustainable communities, for both people and planet. It created an opportunity to reinforce our commitment to building and redeveloping estates where pedestrians, cyclists, and commuters can move about safely, in the way that best fits the lifestyle they desire. 2020 INTEGRATED REPORT

Building more sustainable communities 1 CEBU HOLDINGS, INC.

ABOUT THIS REPORT GRI 102-45, 102-50, 102-52, 102-53 102-54

This integrated report combines financial and sustainability data to inform stakeholders of Cebu Holdings, Inc. (CHI) and the public about the Company’s performance.

CHI expands and updates its reporting framework subscriptions to better track and manage issues material for its business. The preparation of this report follows the Integrated Report Framework and the Global Reporting Initiative Standards. The industry-specific Sustainability Accounting Standards Board (SASB) metrics were used to make more effective disclosures of sustainability-related risks and opportunities.

This report documents CHI’s endeavors to improve its financial and non-financial performance through the integration of sustainability principles into its core strategies and operations.

Key Features and Scope Fourth Integrated Report (14th combined Three years of historical information for report) covering CHI’s performance on comparison. financial, economic, social and environment aspects Additional Reference Operational and financial performance of the Contributions to the UN Sustainable Company filed with the Securities and Exchange Development Goals and the Four Focus Areas Commission are available on the Information of parent company Ayala Land, Inc. Statement given to stockholders and in the CHI website. This report has been prepared in accordance with the GRI Standards: Core Option and As in past reports, this successfully completes ASEAN Corporate Governance Scorecard the GRI Materiality Disclosures Service which (ACGS), see pages 128 to 129 for the ACGS was reviewed by GRI services that GRI 102: Index. General Disclosures 2016 102-40 to 102-49 were correctly located in both the GRI Content Index Consolidated data for fiscal year January 1 to and in the pages of this report. December 31, 2020, covering CHI’s internal business units and general contractors for Feedback property management (Ayala Property Feedback and comments about this report may Management Corporation) and construction be emailed to [email protected]. (Makati Development Corporation).

2 Building more sustainable communities 2020 INTEGRATED REPORT

TABLE OF CONTENTS

2 ABOUT THIS REPORT

4 JOINT MESSAGE FROM THE CHAIRMAN AND PRESIDENT

12 MESSAGE FROM THE CHIEF FINANCE OFFICER

18 WHO WE ARE

22 SUSTAINABLE DEVELOPMENT GOALS

24 HOW WE CREATE VALUE

26 HOW WE PERFORMED IN 2020

28 OPERATIONAL REVIEW

ESTATE DEVELOPMENT

OFFICE SPACE LEASING

RETAIL SPACE LEASING

HOTEL AND LEISURE

46 STAKEHOLDER ENGAGEMENT

58 CORPORATE GOVERNANCE

88 ENTERPRISE-WIDE RISK MANAGEMENT

94 APPENDICES AND INDICES

130 FINANCIAL REPORT

Building more sustainable communities 3 CEBU HOLDINGS, INC.

Bernard Vincent O. Dy CHAIRMAN

4 Building more sustainable communities 2020 INTEGRATED REPORT

JOINT MESSAGE FROM THE CHAIRMAN AND PRESIDENT

The year 2020 started off on a high note for the company. We had just opened Central Bloc, a new mixed-use development in Cebu IT Park (CITP). This added 54,182 square meters of retail leasable space, two new office towers with a combined 72,172 square meters of office leasable space and 214 rooms at the brand new Seda Central Bloc. Our commercial leasing business was poised for growth having expanded to close to 383,817 sqm of leasable area or 12% higher than 2019.

We were also looking forward to constructing at full blast and opening of our two co-living facilities: The Flats in Cebu Business Park and Cebu IT Park as well as the completion of another Ayala Mall in our Gatewalk Central in Mandaue in 2022.

But these were not meant to be.

With COVID-19, we had to quickly and decisively refocus our attention to three key priorities – achieving financial sustainability, creating safe communities and keeping our people engaged.

Achieving financial sustainability The pandemic bifurcated the business world. While some businesses thrived, others were challenged. This was also seen among our different business lines.

Our office business was steady and continued to grow amid the pandemic with revenues of P963.1 million, 13% higher compared to 2019. We maintained 100 percent occupancy across our six buildings in CBP and CITP. We are happy to report that we renewed 100% of the 17,375 square meters of leasable area up for renewal in 2020. We also signed up four new tenants for our recently completed Central Bloc Corporate Center One and two.

On the other hand, our mall business, which traditionally brings in almost half of our revenue, struggled as a result of the lockdowns. Cebu suffered a spike in cases which led to strict barangay and city lockdowns, closing of shops and work sites except for essential services, limited mobility and the suspension of public transportation.

We extended up to 70% in rental concessions amounting to P707.4m – to assist our merchants through these trying times. They have been our

Building more sustainable communities 5 CEBU HOLDINGS, INC.

Our office business was steady and continued to grow amid the pandemic with revenues of P963 million, 13% higher compared to 2019.

partners for many years. In these difficult times, arduous Although this was a difficult decisions had to be made. decision, it had to be done. We reined in our spending and cut back as much as 32% Gradual recovery in our malls of our GAE or General and began in August, with gross Administrative Expenses versus sales eventually reaching 47% the previous year. We prioritized of 2019 levels and occupancy our capital expenditures rising to 89 percent in focusing on projects that December. met any of three criteria: 1) in advance stages of development, Our hotel business likewise 2) committed for delivery to our experienced limited operations. customers and 3) had an impact We needed to quickly pivot on health and safety. As a result to serve a new need, shifting of this judicious spending, we from business travel and cut back 41% of our capex in tourism to serving employees 2020. of business process outsourcing companies and corporate All told, at the end of 2020, we clients. Seda Ayala Center Cebu posted revenue of P2.9 billion average 74% in occupancy the and a net income of P391.9 previous year. In 2020, due to million. This reflects a 39 % and limited operations, combined 76% decline in revenue and occupancy for both Seda hotels, NIAT respectively, from 2019. occupancy averaged at 35% by Despite these challenges, we yearend. Throughout this all, continued to keep our balance our hotels continued to operate, sheet healthy with our debt at remained self-sufficient and still P6.3 billion — lower compared provided livelihood for our 97 to 2019, thus resulting in a debt- hotel employees. to-equity ratio of 0.64.

6 Building more sustainable communities 2020 INTEGRATED REPORT

Anna Ma. Margarita B. Dy PRESIDENT

Building more sustainable communities 7 CEBU HOLDINGS, INC.

For 32 years, CHI transformed nearly 156 hectares of land into Cebu’s prime central business districts.

Creating safe communities For 32 years, CHI transformed • First: We strictly and effectively implemented the nearly 156 hectares of land into guidelines set by the IATF and the DOH. Given we Cebu’s prime central business were in unknown territory, rules were constantly districts. We are very proud of being adjusted and we needed to quickly adapt the impact we have had on the and ensure we were always in compliance. regional economy of Cebu being • Second: We invested in tools such as thermal home to close to 50,000 jobs scanners and sanitation equipment to ensure and more than 1,000 business that people within our developments were kept establishments. These are truly safe. Some of our systems, like access to permits noteworthy achievements. and forms, were shifted online to limit physical transactions. At our malls, we introduced A.N.A. But during the pandemic, it is or the AyalaMalls Neighborhood Assistant, which the focus and attention to the gives shoppers easy access to products from our well-being of each and every hundreds of merchants from the comfort of their individual in our estate that we homes. can be particularly proud of. • Third: and most important, we had a dedicated Be it a locator, a salesperson, and hardworking group of men and women who a customer, an employee – we remained on the ground, manning our estates took special care to ensure the and facilities through these hard times. At the safety of all. start of the lockdown, our property managers from Ayala Property Management Corporation Our people on the ground (APMC) stayed on site, away from their families enabled us to operate our for weeks at a time, just to ensure they can keep offices, malls and hotels our community safe.We thank them for their despite the risks. This was unwavering commitment, despite the personal accomplished by doing the sacrifices this entailed. following:

8 Building more sustainable communities 2020 INTEGRATED REPORT

Keeping our people The employees themselves took engaged part in Ayala Land’s fundraising We are grateful for, and efforts which generated P83.0m proud of the way our Team in donations. The amount was CHI stayed dedicated to used to provide medical supplies their responsibilities. They and equipment to COVID-19 adapted quickly to new ways designated treatment hospitals of working and meeting their and partly to help affected commitments to the business, Filipino families through Project to the locators and customers, Ugnayan. Project Ugnayan is an and to one another. Like other initiative spearheaded by Ayala organizations, we had to learn Corporation in cooperation new tools and processes to be with the Philippine Disaster effective. As we had already Resilience Foundation (PDRF) started to transition to digital which reached out and aided platforms before the lockdown P 1.5 million families affected by started, there was barely the pandemic and the loss of any downtime and were up livelihood. and efficiently running at full capacity. In their personal capacity, the employees of CHI responded to Going beyond crisis the needs of others by helping management, we commend our our outsourced personnel and CHI family for their generosity of the residents of the neighboring spirit. Barangay Luz in Cebu City.

Building more sustainable communities 9 CEBU HOLDINGS, INC.

To help address the need for The company remains resilient quarantine facilities for patients and strong and when this with mild COVID symptoms in pandemic is controlled, we Cebu City, CHI contributed to are ready and excited to meet the construction of the 350- the challenge of a V-shaped bed New Normal Oasis for recovery. Adaptation and a Home (NOAH) Complex, at the South Road South Coast City, a 26-hectare Properties. waterside estate located at the South Road Properties in Cebu On top of this, we still continued City will create a new business to take part in various Ayala and lifestyle address in Cebu. Foundation initiatives in Cebu The project is a partnership including Brigada ng Eskwela between Ayala Land and SM for students, Tuloy ang Byahe Prime Holdings. With the for affected jeepney drivers, combined investment of these and the BuyAni project where leading property developers and care packs sourced from local the strengthening infrastructure farmers and Ayala companies in the area, there is no doubt were distributed to neighboring South Coast City will redefine communities. Cebu’s landscape the same way CBP and CITP have. Looking Ahead Achieving financial sustainability, As business climate improves, creating safe communities and we will resume the construction Keeping our people engaged, of an Ayala Mall at Gatewalk fired up our sense of purpose as Central in Mandaue, break a company to build and nurture ground on our hotel at sustainable communities. Seagrove, Mactan and complete

10 Building more sustainable communities 2020 INTEGRATED REPORT

our co-living facilities at CBP and PEZA-accredited business districts, CITP. and three emerging master planned estates. Over the years, 2021 will be another year of change our developments have become for CHI as we consolidate with platforms for businesses to thrive, parent company Ayala Land. With and families and individuals to this merger, we expect to achieve realize their aspirations. The lifestyle operational synergies, more efficient destinations we have created funds management and simplified have become go-to places for reporting to government agencies. big and small celebrations alike. Our developments have become This development will also create a entwined with the Cebuano way of wider shareholder base, increasing life. liquidity and allowing investors to focus on one listed company. We are committed to the Cebuanos and will remain attuned to the With the merger and a simplified community’s evolving needs. organization, we will be in a better Together with our stakeholders, we position for growth as we harness will approach each challenge as a the full strength and power of the chance to build better. We believe Ayala Land organization and the this crisis will pave the way for many strength of the brand. We look opportunities to recover … and grow forward to even more projects and even stronger. estates in the province. We thank the Board for their Cebu Holdings was formed in 1988 steadfast guidance; all of our with the vision to grow economic employees for their courageous potential and become a partner commitment to embrace change; and in the progress of Cebu. Today, our shareholders for your support as 32 years later, our company we pivot and execute our plans for has grown with two established the future.

Building more sustainable communities 11 CEBU HOLDINGS, INC.

MESSAGE FROM THE CHIEF FINANCE OFFICER

For Cebu Holdings, Inc. (CHI), 2020 proved to be a test of resolve. What helped your company weather the most challenging global crisis in a century was a sustained commitment over the years to striking a balance between boldness and prudence.

The precautions needed to curb the spread of SARS- CoV-2 virtually brought tourism to a halt for much of last year. From March 28 to May 30, and again from June 16 to 30, restrictions imposed under an enhanced community quarantine (ECQ) in Cebu City compelled all but the most essential businesses to suspend operations.

Of all our business lines, office leasing held steady and contributed 33% of total revenues for the year. It surpassed our mall business which accounted for 24% of topline, as the uncertainty the pandemic unleashed and the necessary restrictions on people’s movements reined in consumption. Meanwhile, commercial lot sales contributed 20% from the sales of commercial lots in Seagrove. Total revenue amounted to P2.9 billion in 2020, a decrease of 39% from the all-time high of P4.8 billion the year before. At P391.9 million, our net income reflected a 76% decrease from our net income of P1.7 billion in from last year.

With gratitude, we acknowledge that the decision that was reached two decades ago to develop the Cebu I.T. Park (CITP), now home to about 70% of Cebu’s business process outsourcing (BPO) and IT-enabled services companies, served us in good stead in 2020.

All throughout the community quarantine in Cebu, BPO companies and other export businesses were allowed to continue operations. This meant that even when companies sent the majority of their employees to work from home, essential activities remained in I.T. Park, where 71% of our total leasable office space of 133,832

12 Building more sustainable communities 2020 INTEGRATED REPORT

Maria Luisa D. Chiong CHIEF FINANCE OFFICER/ COMPLIANCE OFFICER

Building more sustainable communities 13 CEBU HOLDINGS, INC.

REVENUE 4.8 billion 3.7 billion 2.9 billion 3.1 billion

2.7 billion square meters remained in use Prudence compelled us to defer in 2020. Our two newest office further investments in our other towers in the CITP superblock emerging estates: the 13-hectare project added 72,172 square Seagrove project with Taft meters in gross leasable area, and Properties in Lapu-Lapu City and before 2020 ended, about 16% of the 18-hectare Gatewalk estate Tower 1 was already occupied. with AboitizLand in Mandaue City. We have also adjusted the A DETERMINED VIEW OF project timelines for our co- ‘16 ‘17 ‘18 ‘19 ‘20 living projects, The Flats, both THE FUTURE in CITP and our flagship estate, 39% Cebu Business Park. While these Decline from 2019 What else sustained us in 2020? will have to wait for a more Development rights over 8,054 opportune time, we are confident sqm were transferred in Cebu that these developments will Business Park, which signalled NET INCOME attract young families and 1,658 million the continuing market value and professionals who want to live appeal of CHI’s estates. close to their places of work, business, and leisure. In the first quarter, your company broke ground on South Coast Much has been written about City, a 26-hectare commercial how this pandemic will reshape 857 million and residential estate in Cebu the world’s cities and draw 753 million 680 million City’s South Road Properties knowledge workers and capital (SRP). Work on this project, a away from urban centers. joint undertaking with Ayala 392 million Land and SM Prime Holdings,Inc. With estates already being continued last year once the developed in the cities of stricter quarantine restrictions Mandaue and Lapu-Lapu, as well were lifted. All told, we have ‘16 ‘17 ‘18 ‘19 ‘20 as the southeastern flank of Cebu invested P201.1 million in land and City, CHI is well-positioned to help development works last year, with create new integrated districts, 76% construction still ongoing. This Decline from 2019 where Cebu’s communities can is targeted to be completed by gather safely and create more 2022. growth.

14 Building more sustainable communities 2020 INTEGRATED REPORT

A vision to expand to more socially inclusive Even after restrictions were eased starting in July 2020, we markets remains extended up to 70 percent in rental concessions to help our firmly in place. merchants ride out the worst of the crisis. A rapid change in consumer priorities and habits reshaped most businesses last year. Digital transformation, a recurring theme for much of the last decade, went into overdrive, A COMMITMENT TO OUR as producers and consumers alike worked and bought PARTNERS essentials from home. For CHI’s mall business, this may mean pursuing a more diverse mix of tenants or even the We were prepared, which is repurposing of retail space into other uses. another way of saying we were fortunate. Central to these changes will be a continuing effort to understand CHI’s customers and communities, in order to A year before the pandemic, your serve them better. company had reached record levels of income and had invested REVENUE MIX Equity in Net Earnings about P2.4 billion on developing 2 % new commercial and office Interest & Other Income spaces, as well as enhancing 18 % Commercial Lots 20 % its existing estates. A vision to expand to more socially inclusive markets remains firmly in place. Theater & Hotel Income This gave us the ability to support 3 % our mall business partners in both Ayala Center Cebu and AyalaMalls Central Bloc, which opened in the last quarter of 2019. Retail & Office Space Leasing Income Of all our business drivers, 57 % commercial leasing took the hardest hit from the pandemic. Except for supermarkets, In Million Pesos pharmacies, and a handful of other essential shops, malls Commercial Lots 576 remained closed for more than Retail & Office Space Leasing Income 1,660 two months in 2020. Theater & Hotel Income 86 To support mall tenants, who Interest & Other Income 566 have been our growth partners for years, CHI extended P707.4 Equity in Net Earnings from Affiliates 45 million in rental concessions, particularly to merchants who could not operate during ECQ.

Building more sustainable communities 15 CEBU HOLDINGS, INC.

CEBU HOLDINGS, INC. AND SUBSIDIARIES

(Year Ended December 31)

2020 2019 2018 2017 2016

FOR THE YEAR (in million pesos)

Revenues 2,933 4,797 3,722 3,092 2,714 Net Income 392 1,658 857 753 680

Dividend Amount - 324 324 288 230

AT YEAR-END (in million pesos) Total Assets 29,049 29,243 26,342 20,588 19,616 Cash and Cash Equivalents 195 349 260 189 117 Commercial Loans 6,280 6,349 6,401 6,454 6,148 Stockholders' Equity 9,745 9,402 8,062 6,989 6,528

PER SHARE Earnings Per Share (EPS) 0.18 0.77 0.44 0.39 0.35 Price/ Earnings Per Share (P/E) 36.88 8.83 14.48 14.74 14.00 Dividend Per Share - 0.15 0.15 0.15 0.12

FINANCIAL RATIOS Current Ratio 0.28 0.42 0.38 0.59 0.59 Commercial Debt-to-Equity Ratio 0.64 0.68 0.79 0.92 0.94 Net Debt-to-Equity Ratio 0.62 0.64 0.76 0.90 0.92 ROE 4% 19% 11% 11% 11% Stock Price 5.90 6.80 6.37 5.75 4.90

16 Building more sustainable communities 2020 INTEGRATED REPORT

As long as we stay attuned to our communities’ needs and approach each challenge as a chance to build better, this crisis will pave the way for many other opportunities.

That, combined with the prudent operational synergies, efficient use of resources and the careful funds management and simplified management of risks, will form reporting to government part of your company’s priorities agencies. Once the merger is in the months ahead. approved by the shareholders and the Securities and Exchange STOCKHOLDERS’ EQUITY BRUISED, BUT NOT Commission, the projects of the BEATEN Company will continue on under the stewardship of ALI.

10 billion Despite the decline in our

9 billion For 32 years, your company financial results, as of December

8 billion has helped define the new and 2020, we were able to reduce 7 billion better normal in Cebu’s economy, 6 billion our total borrowings by creating master-planned and P68.9 million, to P6.3 billion. inclusive communities where Disciplined reductions in general households and businesses and administrative spending could thrive. This crisis has not allowed CHI to do more than changed that. If anything, it has survive 2020. We reined in GAE strengthened CHI’s commitment spending by 32% from P286.7 to ensure that its estates are made million in 2019 to P195.8 million ‘16 ‘17 ‘18 ‘19 ‘20 safer and that its shareholders’ in 2020. We mitigated our cash investments are well-protected. disbursements, especially on 4% capital expenditure items, on Increase from 2019 Throughout 2020, we drew from which we invested P1.3 billion our experiences in previous in 2020. This included land crises, like the Asian Financial development in South Coast City, STOCK PRICE Contagion of 1997-1998 and the

6.8 which demonstrates our enduring Global Financial Crisis of 2008- 6.4 commitment to Cebu’s growth. 2009. While the public health 5.9 5.8 and economic crisis that began in At the end of 2020, our total 2020 is novel, our experiences as commercial loans amounted to well as the strength of our parent 4.9 P6.3 billion, total shareholder company keep us confident equity increased to P9.7 billion, that we can power through this and our commercial debt-to- pandemic. equity ratio stood at 0.64.

As long as we stay attuned to Last February, the Board our communities’ needs and approved the merger of CHI approach each challenge as a with parent company, Ayala ‘16 ‘17 ‘18 ‘19 ‘20 chance to build better, this crisis Land Inc. (ALI). The merger will pave the way for many other is an internal restructuring as opportunities. Our resolve to 13% well as a consolidation of ALI’s Decline from 2019 recover and to grow stronger Cebu portfolio under one listed holds steady. entity. It is expected to result in

Building more sustainable communities 17 CEBU HOLDINGS, INC.

WHO WE ARE

CEBU HOLDINGS, INC. (CHI) is a leading full-line property developer that owns and manages both Cebu Business Park and Cebu I.T. Park, where the most sought-after office, commercial, and residential spaces in Cebu are located.

18 Building more sustainable communities 2020 INTEGRATED REPORT

In 32 years, it has developed, managed, and reinvested into these two flagship estates.

Going beyond that, it has ventured as well into master- planned integrated estates that are now emerging in the cities of Cebu (South Coast City), Mandaue (Gatewalk Central), and Lapu-Lapu (Seagrove).

CHI was incorporated on Dec. 9, 1988, after its parent company Ayala Land, Inc. won a competitive bidding for the redevelopment of a golf course that sprawled on land the Cebu Provincial Government had owned. That land is now the What We Aim For 50-hectare CBP estate, which showcases the company’s operational excellence in We shall be the premier real estate company in strategic land management, the region, creating and enhancing integrated, integrated development, master planned, and sustainable mixed-use commercial business operations developments through a customer-focused and and management, and hotel empowered team of professionals. development operations. We ensure the trust and confidence of Before the COVID-19 pandemic our stakeholders with sustainable growth of 2020, CHI has weathered two other transformative crises in the while improving the quality of life of the Asian Financial Contagion (1997- communities we serve with passion and 1998) and the Global Financial integrity. Crisis (2008-2009). What Inspires Us Key lessons gained from these crises on the need to diversify, • Focus on the Customer anticipate how the community’s • Bias for Results and consumers’ needs may • Entrepreneurial Drive change, and transform land • Teamwork into mixed-use districts where • Concern for People immense value can be created • Empowerment of People have served the company well. • Pursuit of Excellence • Love of God A more comprehensive discussion • Responsibility to the Community of our corporate governance • Enhancement of Quality of Life practices is found on pages 58 to 87 of this report.

Building more sustainable communities 19 CEBU HOLDINGS, INC.

4.03% Ownership Structure 3.83% 7.64%

Cebu Holdings, Inc. (CHI) was incorporated on December 9, 1988 as a company engaged 13.37% in real property ownership, development, marketing and management. It has operated as a listed company (Philippine Stock Exchange) since February 14, 1994. Its 71.13% publicly floated shares account for 28.8 percent of total. Ayala Land Inc. As of Dec. 31, 2020, its authorized capital stock amounted to P3.0 billion. PCD Nominee Corp. (Non-Filipino) PCD Nominee Corp. (Filipino) The Province of Cebu Corporate Structure Others

100% Asian i-Office Properties Inc. 100% Cebu Leisure Company, Inc. 100% Cebu Business Park Theaters Management, Inc. 55% Central Block Developers, Inc. 55% Taft Punta Engaño Property, Inc. 37% Cebu Insular Hotel Company, Inc. 35% Amaia Southern Properties, Inc. 35% Solinea, Inc. 35% Southportal Properties, Inc. 15% Cebu District Property Enterprise, Inc.

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Our Businesses Office Space Leasing and Office Condominium Sales eBloc Towers Ayala Center Cebu Tower Tech Tower Central Bloc Corporate Towers BPI Cebu Corporate Center

Retail Space Leasing Ayala Center Cebu AyalaMalls Central Bloc Gatewalk Central The Walk Garden Bloc Garden Row eBloc Towers retail Tech Tower retail

Residential Sales Co-living Space Leasing Amara The Flats at CBP 1016 Residences The Flats at CITP Park Point Residences The Alcoves Solinea Sedona Parc Avida Towers Cebu Amaia Steps Mandaue

Estate Development and Management Cebu Business Park Cebu IT Park Hotels and Leisure Gatewalk Central Seda Ayala Center Cebu Seagrove Seda Central Bloc Cebu South Coast City City Sports Club Cebu

Building more sustainable communities 21 CEBU HOLDINGS, INC.

In 2020, the world had a decade left to meet the Sustainable Development Goals (SDG) that the United Nations had adopted in 2015. In the earliest days of the new decade, it seemed that while achieving the goals in 2030 would be a challenge, the conditions on which commitments to these goals were anchored were still in place.

Global economic growth the world’s governments, which remained possible, and the have more urgent and localized global connections that made stresses to address. Everyone cooperation and trade happen must play a part so that decent could still be depended upon. work and economic growth, reduced inequality, and climate The COVID-19 pandemic changed action become real conditions for those conditions rapidly. As of more people. February 2020, the pandemic has afflicted 111 million people and As a builder of transformed and ended 2.46 million lives. transformational communities, Cebu Holdings Inc. (CHI) remains Yet this has also driven home firmly committed to contributing the urgency of investing in the to the targeted goals that are SDGs, particularly universal health within its competencies and coverage, and well-being and resources. reduced inequality.

“The SDGs can help fill the deep social and economic fissures that the current pandemic has laid bare,” Liu Zhenmin, head of the SUSTAINABLE CITIES United Nations Department of AND COMMUNITIES Economic and Social Affairs, said in September 2020 during the • Infrastructure enhancements which 75th UN General Assembly. “They provide better services to customers and can guide us to a greener and communities. more sustainable recovery path.” • 46,737 workers in two operational estates • Provided master-planned, mixed-use More than ever, achieving these developments that promote resilience, 17 SDGs and their 169 associated inclusion, and eco-efficiency. targets cannot be left entirely to

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CLIMATE ACTION RESPONSIBLE CONSUMPTION • Combined allocation of over 11,000 sqm. of AND PRODUCTION space intended for the native tree nursery • Preservation of native trees in Seagrove estate • Zero Plastics to Landfill Challenge • Raised awareness on ecosystems services A total of 34.3 kgs of plastic laminates and clear and protection plastics were diverted and recycled to produce • Vegetable gardening eco-bricks Harvested 72 kgs of various vegetables and Collected a total of 829 kgs of PET bottles for fruits in Cebu IT Park the River “Trip Trap System.” This was done in • Composting site at Upland Greens support of the rehabilitation of the Mahiga River. 16 tons of yard waste for compost production • Collected 70 cubic meters of silt, which can help to ease the flooding during the rainy season • CBP and CITP effluent quality: Beyond Compliance • 2,676 kgs of glass bottles were used as components in pavers REDUCED INEQUALITIES

• 47,890 jobs generated • Women in board and senior leadership • 64% of the workforce is female

GOOD HEALTH AND WELL-BEING • Employees spent 430 hours to render various PARTNERSHIP FOR THE GOALS volunteer activities; a total of 1,940 educare kits provided by Ayala Foundation for select provinces in the Visayas were packed by the Strong partnerships were built with the local volunteers. market and communities • Provided assistance to CHI’s front liners, who were housed inside for safety during ECQ. • The local market sold fresh produce • Provision of access to CHI Plus, wherein and seafood items to the unit owners, employees learned new skills and attended residents, BPO workforce, and stay- webinars to maintain connection and avoid in personnel during the enhanced burnout. community quarantine in Cebu. • E-learnings, community involvements, • Assisted the Ayala Foundation with employee engagements, and wellness LGU coordination for its were provided to the employees #BuyAni Project and workers

Building more sustainable communities 23 CEBU HOLDINGS, INC.

HOW WE CREATE We finetune our strategies and invest our capitals in ways attuned to our communities’ highest priorities, creating value in our estates for the greater safety and prosperity of our VALUE stakeholders.

363,007 sqm 174,873 sqm CONSTRUCTED FLOOR AREA OPEN AND GREEN SPACE

CAPITALS

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which help us compass in creating and G delivering value to our stakeholders. IN

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333,465 sqm 47,890 SOCIAL AND OPERATIONAL BUILDINGS JOBS GENERATED

RELATIONSHIP

NATURAL PERFORMANCE METRICS For us to keep track and measure our progress across our business activities, we are guided by these criteria. These are strengthened by our Four Focus Areas. ACTIVITIES

We transform land into master-planned and integrated OPERATIONAL BUILDINGS estates, building spaces for business, homes, and leisure, and managing them with sustainability as our compass. CONSTRUCTION PROJECTS/ OPERATIONAL PROJECTS LAND ACQUISITION WORKFORCE CONSTRUCTION AND DEVELOPMENT GREEN AND OPEN SPACE OPERATIONS

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OUTPUT OUTCOME

With all the resources that we have, we We recognize the impacts which emanate ensure that we deliver and develop them from the capitals and output we deliver. through various products and services Hence, this contributes to the improvement which our stakeholders enjoy and of quality life in the society and create experience. sustainable and master planned estates.

Financial Performance Positive balance sheet Economic contribution pp 12-17, 27 amidst the pandemic pp 18 -19

Business Portfolio Strong and resilient estates, Scale & Occupancy Safe homes and workspaces pp 21, 30-45 On-going projects pp 32 - 38

Design & Innovation Brand loyalty Processes & Systems pp 52 -54

Employee Engagement Sense of community Training Hours within the employees Inclusion and Diversity pp 52 -54 pp 54 - 59

Customer experience Strengthened partnerships Community Contributions with stakeholders pp 44, 50-51, 56 -59 pp 50-51, 56 -59

Reduced environmental Resource Efficiency impact, Responsible stewards (Energy, Water, Waste) of the environment pp 40, 45, 47 pp 40, 45, 47

MARKET OUTLOOK For 2021, Colliers Philippines is projecting an 18 percent vacancy in Metro Cebu’s office spaces. It expects, however, that rates in key business districts The national economy contracted by 9.5 percent in like Cebu IT Park will recover fastest. 2020, the sharpest drop in 70 years.

When the vaccine rollout allows confidence to pick

Travel bans and quarantine restrictions, especially in

up, the safety and sustainability measures we’ve April and May, severely hit the services sector, which adopted in the Cebu Business Park and Cebu IT Park accounted in recent years for more than 60 percent will keep them in high demand. of the Central Visayas economy.

Prudence has compelled CHI to pace the Foreign arrivals in the Mactan Cebu International development of Seagrove in Lapu-Lapu City and Airport dropped from 1.68 million in 2019 to 289,115 Gatewalk Central in Mandaue City in 2020. Yet we in 2020. That 82.7 percent decline (practically the continued to develop South Coast City in Cebu City’s same as the national figure) directly hit tourism and South Road Properties, where we broke ground in retail. January 2020. There will be plenty of room to grow when this pandemic abates.

Building more sustainable communities 25 CEBU HOLDINGS, INC.

HOW WE PERFORMED IN 2020 OUR STRATEGIES WORKING TOGETHER WITH CONSOLIDATION AND THE STAKEHOLDERS TO ENSURE SUSTAINABLE USE OF OUR MUTUAL BENEFIT RESOURCES

We continue to emphasize sanitation protocols, Moving forward to a better normal will require preparedness, and property management as that we continue to use all of our resources part of our commitment to the well-being of prudently. all our tenants and customers. High customer satisfaction feedback on how we sustained The merger between CHI and our parent COVID-19 precautions within our office buildings company Ayala Land, as well as other affiliates reinforced an already strong relationship with our and subsidiaries, will create operational tenants. synergies and allow for more efficient funds management. This consolidation is one of the We pivoted as quickly as possible so that services ways we will adapt as an organization to to our retail, office, and residential customers better position ourselves for the many would proceed smoothly, yet safely. Responding opportunities that have emerged. to the changing needs of our stakeholders remains a crucial part of the trust that keeps our relationships strong.

PREPARING OUR ESTATES 515 FOR POST-PANDEMIC HOTEL KEY ROOMS DEMAND GROWTH 383,817 TOTAL LEASING While we paced the work on our Gatewalk PORTFOLIO Central and Seagrove estates as part of fiscal prudence, land development on South Coast City in the South Road 167 hectares Properties continued all throughout LANDBANK 2020. The decision to develop this block will serve the needs of committed buyers. 174,873 sqm GREEN & OPEN SPACES When it is feasible to do so, work on Gatewalk in Mandaue and Seagrove in Lapu-Lapu City will 12 km be ramped up. Our company’s commitment to BIKE LANES create these new growth districts will support Cebu’s efforts to recover from the economic 1:0.64 impacts of the pandemic. It will help disperse DEBT TO EQUITY opportunities to more areas of the province.

CHI is in a good position to capitalize on STOCKP 5.90 PRICE opportunities as the market starts picking up. We have various projects in the pipeline, and we’re innovating in our current estates so that we P 3 Billion P 392 Million keep abreast of the changes in our communities’ REVENUE NET INCOME AFTER TAX priorities, habits, and needs.

26 Building more sustainable communities 2020 INTEGRATED REPORT

FOCUS AREAS 102-31, GRI 203-1, 203-2 SITE RESILIENCE LOCAL ECONOMIC With the help of CHI stakeholders, the right DEVELOPMENT strategies are identified, actions were taken, Economic growth is being sustained through and risks are managed to ensure that its providing productive and decent jobs from small location is capable to persist climate-related to large businesses generated across the sites. stress and impacts

NUMBER3,776 OF TREES 1,495EMERGENCY JOBS47,890 GENERATED RESPONSE DRILLS Offices (BPO & Traditional) 45NATIVE PLANT SPECIES Retail/Hotel/Leisure Construction Residential NATIVE3,010 NURSERY sqm TREE ALLOCATION Others (utility, guard)

PEDESTRIAN-TRANSIT CONNECTIVITY Through urban planning and management, ECO-EFFICIENCY CHI contributes towards sustainable cities and The footprints are being managed through efficient communities. The priority is to ensure that the use of resources and right ways of reducing wastes. transport systems and pedestrians are safe and accessible to all.

TOTAL67,352.23 ENERGY CONSUMPTION GJ

334 14,010PUBLIC sqm LARGEST 3 BLOCK TRANSPORT TOTAL355,523.42 WATER CONSUMPTION m LENGTH TERMINAL

3,033.39WASTE COLLECTED tonnes IN COMMON AREAS ECONOMIC VALUE DISTRIBUTED 102-31, GRI 203-1, 203-2 15%

8%

2%

2%

73%

In Million Pesos

Payment to Suppliers 3,317 Payment to Employees 69 Payment to Providers of Capitals 78 Payment to Government 354 Payment to Communities 714

Building more sustainable communities 27 CEBU HOLDINGS, INC.

28 Building more sustainable communities 2020 INTEGRATED REPORT

OPERATIONAL REVIEW

Without a doubt, the pandemic that began in 2020 was the most severe test Cebu Holdings has faced in its 32 years, as it was for a generation of businesses. After years of rapid growth, tourism virtually ground to a halt for 10 months of the year, a development that challenged our hotels and malls, which constitute a large part of our commercial leasing revenue. Our office leasing business sustained us in 2020. These sections provide our operational highlights for a transformative year.

30 36 40 44 ESTATE OFFICE SPACE RETAIL SPACE HOTEL AND DEVELOPMENT LEASING LEASING LEISURE

Building more sustainable communities 29 CEBU HOLDINGS, INC.

Estate Development

Over the past 32 years, Cebu Holdings, Inc. (CHI) has built large-scale, masterplanned, mixed-use, and integrated developments that have become the centers for business and lifestyle in Cebu.

Over the past 32 years, Cebu ground for South Coast City in Holdings, Inc. (CHI) has built the South Road Properties of large-scale, master-planned, Cebu City. This 26.3-hectare mixed-use, and integrated waterside commercial area is developments that have become designed to attract and spur the centers for business and new business investments lifestyle in Cebu. in the province. It will have 156 Hectares infrastructure and amenities that of developed estates When 2020 started, CHI with support the creation of a vibrant parent company Ayala Land and community. SM Prime Holdings Inc., broke

30 Building more sustainable communities 2020 INTEGRATED REPORT

South Coast City

South Coast City reflects the network is designed to link the companies’ track record for main areas of the development developing well-integrated and its centerpiece, a 1.1-hectare and sustainable estates that civic park. An array of retail and are strategically positioned entertainment concepts anchored to become catalysts of local by an arena and convention economic growth. center are also planned for the area. South Coast City is strategically located along the Cebu South Within South Coast City is Coastal Road and can be District Square. This prime area accessed via the new CCLEX offers commercial lots that bridge (the third Mactan-Cebu present landbank and investment Bridge), which is expected to be opportunities to those who aspire completed by 2022. As it faces to locate in South Coast City and the Cebu Strait, South Coast will be ideal for offices, hotels, City will offer waterside views and other commercial uses. and features. A pedestrian road

Building more sustainable communities 31 CEBU HOLDINGS, INC.

Cebu Business Park

This 50-hectare centrally located estate continues to attract leading local and multinational firms, and people seeking the best facilities for leisure and entertainment.

Gross Floor Area Cebu Business Park, CHI’s drainage systems, as well as flagship development, has create a network of bike lanes, become Cebu’s central business jogging trails, and pathways, so district. This 50-hectare that people can move around the 8 centrally located estate estate and access transportation continues to attract leading local services more safely and more and multinational firms, and pleasantly. people seeking the best facilities for leisure and entertainment.

It currently has 45 buildings 45 and eight more under construction. Total gross floor area of operational buildings 201k sqm now amounts to an estimated Ongoing Construction 712,000 square meters. 712k sqm Operational Buildings CBP’s facilities, road network, parks and green areas are continuously being improved to serve its growing community. One major project is the redevelopment of CBP, which will improve its traffic and

32 Building more sustainable communities 2020 INTEGRATED REPORT

Cebu IT Park HOW WE Cebu IT Park, CHI’s 27-hectare PEZA- KEPT OUR accredited park, is the leading IT hub in the region. Home to over 200 locators, it ESTATES continues to attract internationally known brands in IT, BPO, and other outsourcing SAFE services. There are currently 34 buildings, with a total of 603,000 square meters of gross floor area. Five more buildings are As Cebu imposed various levels of being built. quarantine to curb the spread of COVID-19, the safety of our communities within these A pioneer in the IT industry in Cebu, CITP two operating estates was our top priority. is designed for the needs of its locators, This included residents in condominiums, with safe and efficient office spaces, shoppers visiting our malls for essentials, redundant telecommunications and and employees of companies that were power supply, 24/7 retail support, and allowed to continue to operate. green and recreational spaces. Through Ayala Property Management Corp. Gross Floor Area (APMC), which managed these estates, various initiatives were taken to ensure the health and safety of the community. These 5 include:

• the disinfection and sanitation of all common areas in the estates every four hours; this was in addition to the regular estate upkeep, such as proper garbage collection and disposal, 162k sqm landscaping, and security measures that were 34 Ongoing Construction reviewed daily; 603k sqm • mandatory temperature check on all persons Operational Buildings entering any facility; • the provision of personal protective equipment (PPE), meals, and vitamins for our estate frontliners, as well as thermal scanning before they were deployed to work and regular sanitation and disinfection of their quarters; • the posting of safety reminders and precautions in all entry points of residential buildings, malls, offices, hotels, and construction sites.

Building more sustainable communities 33 CEBU HOLDINGS, INC.

Gatewalk Central & Seagrove

When the enhanced community lifestyle enclave. Gatewalk’s quarantine (ECQ) began last first locator is an Ayala Mall. As March 28, 2020 in Cebu City, with of the end of 2020, the central the cities of Mandaue and Lapu- superblock that hosts the mall Lapu following suit within days, and an office building was 52 work in our two upcoming estate percent complete. – Gatewalk Central in Mandaue City and Seagrove in Lapu- Meanwhile, Seagrove in Punta Lapu City – were temporarily Engaño, Lapu-Lapu City is suspended. Work resumed in envisioned to be an ecotourism June 2020, following safety destination which leverages regulations on distancing, use Ayala Land’s expertise in of PPEs, temperature checks, master-planned developments, frequent sanitation, and other while showcasing the location’s protocols. As of December 2020, impressive natural setting. This land development in Seagrove 14-hectare development in was completed, while 18% of partnership with Taft Properties landscaping works in Gatewalk Development Inc. will feature Central were done. a unique retail boardwalk that winds across a vast mangrove Gatewalk Central is a joint venture forest. between CHI, Ayala Land, and Aboitizland. This 17.5-hectare In all its estates, Cebu Holdings mixed-use development in aims to promote safe and Subangdaku, Mandaue City is breathable spaces which help envisioned to transform one of promote economic development Cebu’s most promising cities in its environs, while showcasing into an all-around business and best practices in sustainability.

34 Building more sustainable communities 2020 INTEGRATED REPORT

ESTATE SUSTAINABILITY PERFORMANCE

CBP Introduces Bike Lanes For Safer Roads

With the growing number of commuters using bicycles as a sustainable mode of transportation, CBP installed seven (7) kilometers of designated bike lanes within estate CITP Transport Hub back roads. The bike lane network spreads to daily operation for along the main streets of CBP, and are commuters physically marked by safety bollards, The Cebu IT Park Transport Hub hosts which serve as an added safety feature more routes for essential workers for the bicycle-riding public such around the park. After months of as frontline workers, residents and closure, some buses, public jeepneys employees. and e-jeeps return, plying Cebu roads for a more convenient transportation Molave Wildlings Rescued for workers and commuters heading and Seedlings Planted at to Lapu-Lapu City, North and South of Seagrove Cebu. Three years after Molave (Vitex parviflora) wildlings were rescued Cebu IT Park Records 72% prior to excavation at Seagrove, they Drop in Air Pollutants have now grown bigger, some of which During ECQ are now about 7 to 8 feet tall with a With the suspension of public transport 3-feet crown diameter. A Philippine and limiting of the number of private hardwood, Molave (locally known as vehicles plying the streets during ECQ, Tugas) is indigenous to the Philippines air quality at CITP has significantly and is threatened by habitat loss. improved. In a study conducted by Molave is a dominant species at the DENR Environmental Management Seagrove, among other native species Bureau, CITP registered a 72% drop that thrive on site. in Total Suspended Particulates (TSP) from a 134 before the ECQ to 37 recorded on April 19, 2020. The data gathered shows a strong case for finding more ways to reduce vehicular traffic and improve the quality of air within our communities.

Building more sustainable communities 35 CEBU HOLDINGS, INC.

36 Building more sustainable communities 2020 INTEGRATED REPORT

Office Space Leasing

In 2020, Cebu ranked 15th among operate in Cebu as part of the world’s most competitive efforts to curb the spread of the outsourcing destinations in the virus that causes COVID-19. But Tholons Services Globalization business process outsourcing Lease out Rate and Index, the only other Philippine (BPO) companies were allowed, Actual Occupancy location, along with Metro Manila, along with essential and

71% to merit a place on this list. export-oriented businesses, 65% to keep operating. BPO firms While this was a less stellar operated with up to 20 percent performance than in 2019, when of personnel allowed to work Cebu placed 12th on that list, on-site in April and May, when it was nevertheless a positive enhanced community quarantine development in what has been (ECQ) was in effect, and then the most turbulent year for the up to 50 percent once ECQ Lease out Occupancy global economy since the Global was downgraded to general Financial Crisis (GFC) of 2008- community quarantine. This 150k sqm 2009. development helped Cebu Gross Leasable Area Holdings’ office leasing business For two months, only essential to stay strong in 2020. businesses were allowed to

Building more sustainable communities 37 CEBU HOLDINGS, INC.

As a developer, our top priority was to ensure that our properties continued to operate and remained safe for the community.

Our existing office buildings, As a developer, our top priority which comprise four eBloc was to ensure that our properties Towers, Ayala Center Cebu Tower, continued to operate and and Tech Tower, maintained remained safe for the community. 100 percent occupancy. This We swiftly activated our Business exceeded the industry’s overall Continuity Plan (BCP) to protect performance, with Colliers the health of our employees and Philippines projecting an increase continue to serve our locators in the office vacancy from 11.6 and customers. We established Office Space Leasing Portfolio percent in 2019 to 12.8 percent in and implemented protocols to 191k sqm 2020. limit the spread of the virus.

Central Bloc Corporate Center One, located on top of the two-hectare superblock in EFFICIENT RESOURCE USE AND WASTE MANAGEMENT Cebu IT Park, started operating in December 2019, while construction of the second tower ELECTRICITY GHG EMISSION WATER CONSUMPTION INTENSITY CONSUMPTION was completed in 2020. These Intensity, GJ/sqm (Scope 1 and 2), GJ/sqm intensity, cum/sqm two office towers add 71,172 square meters of leasable space to our office portfolio. 1.81 1.78 0.13 0.72 0.62 1.4 0.11 0.55 Combined, our office tow 0.9 ers provide 191,177 square meters of gross leasable area. With the effects of the lockdowns on our retail leasing and other business, 18 19 20 18 19 20 18 19 20 office leasing brought in the biggest revenue for CHI in 2020.

38 Building more sustainable communities 2020 INTEGRATED REPORT

HOW WE KEPT OUR

OFFICES Despite the widespread adoption of work from home arrangements, some of our tenants’ employees still SAFE chose to report to their offices in 2020. Building occupancy ranged from 6 to 33 percent across our office towers. To ensure that everyone in these spaces stayed safe, we worked with our office locators to:

• Control access to each property: We reduced the • Increase cleaning: Common areas were frequently number of entry points to ensure that everyone misted and wiped. would be screened before entering the building. • Sanitize parcels and other deliveries: Each tower We provided thermal scanning and sanitation had a designated area where packages would be mats for footwear. received and disinfected before being forwarded • Prepare each property: We updated our to the correct offices. cleaning procedures and aligned these with • Sustain engagement: Using video conference IATF guidelines. In elevators, for example, the tools instead of convening in-person meetings, number of occupants was limited so that physical we kept our tenants updated of our sanitation distancing could be observed, and elevator protocols and other prevention measures; set up buttons were covered and repeatedly disinfected protocols for dealing with positive cases; and did throughout each day. our best to assist them with their concerns.

One of the lessons from the GFC was that recessions tend to hit the office sector hard, as these diminish the demand for EFFICIENT RESOURCE USE AND WASTE MANAGEMENT such spaces. As challenging as 2020 was, the performance of our office leasing business has transcended this trend. Colliers Philippines shared this forecast in the final quarter of 2020: “In our view, rates in key business districts such as Cebu IT and Business Park and their fringe areas are likely to post the fastest pace of recovery as we see occupants, particularly outsourcing firms, gravitating towards these business hubs.”

Building more sustainable communities 39 CEBU HOLDINGS, INC.

Retail Space Leasing

Of all our business drivers, commercial leasing took the hardest hit from the pandemic as restrictions limited the operation of shops and decreased foot traffic as well.

Ayala Center Cebu and AyalaMalls Central Bloc quickly put in place safety and sanitation measures as the malls continued to be open for the public for essentials such as groceries, pharmacies, banks and hardware shops. Other than these shops, majority of mall tenants remained closed for more than two months in 2020.

To support our merchants who have been our partners in growth for years, we extended up to 70 percent in rental concessions to help them ride out the worst of the crisis. CHI extended P707.4 million in rental concessions, particularly to merchants who could not operate during ECQ.

Foot traffic in the two malls significantly decreased due to the restrictions during the pandemic. This gradually improved as quarantine measures were eased. To address this, we rolled out various promotions to give incentives to shoppers, while communicating the safety measures we implemented in the mall to strengthen customer confidence.

As an added convenience for shoppers, we also introduced ways where they can do their shopping online including DriveBuy, Today’s Menu and A.N.A., or the Ayala Malls Neighborhood Assistant.

AYALA CENTER CEBU

127k sqm Gross Leasable Area

27,853 Daily foot traffic

4,640 Daily vehicle count

40 Building more sustainable communities 2020 INTEGRATED REPORT

AYALAMALLS CENTRAL BLOC

54k sqm Gross Leasable Area

13,843 Daily foot traffic

965 Daily vehicle count

Lease out Rate and Ayala Center Cebu AyalaMalls Central Bloc Actual Occupancy

80% Ayala Center Cebu in Cebu AyalaMalls Central Bloc at Cebu 79% Business Park continued to IT Park had only opened the year serve the community around it before in December of 2019. with its central location in the Foot traffic was also greatly city. Absence of tourists and the affected due to limited pubic regional market continued to transportation and work-from- affect traffic count, but essentials home arrangements of the BPO such as Rustan’s Fresh and Metro companies surrounding the Lease out Occupancy Supermarket brought in the mall. AyalaMalls Central Bloc most foot traffic. This gradually capitalized on the high online increased for the rest of the mall, engagement of its vibrant target reaching its highest in December market and introduced various due to holiday shopping. The mall online promotions and shopping reached 80 percent operational conveniences. In December of 193k sqm occupancy by the end of the year. 2020, occupancy was at 88 Gross Leasable Area percent of pre-COVID levels and foot traffic count was up to 42 percent.

Building more sustainable communities 41 CEBU HOLDINGS, INC.

Ayala Malls Neighborhood Assistant

To uphold its commitment to the communities it serves, Ayala Malls introduced an innovative shopping solution dubbed A.N.A. or the Ayala Malls Neighborhood Assistant, a pioneering concept which provides a personalized shopping experience for errands, daily essentials and other items needed at the mall.

With A.N.A., mall patrons can have easy access to products from our hundreds of merchants from the comfort of their homes. Well-trained personal shoppers are there to ensure they get an easy, convenient and worry-free shopping experience. Orders can be delivered straight to the customer, or arranged for curbside pick-up at DriveBuy points at the malls.

The goal of this smart shopping solution is to help consumers navigate this new normal with as much ease as possible. This program can empower the consumers to still get their needs and wants without the worry. The A.N.A. initiative also provides employment for displaced personnel brought about by the pandemic.

A.N.A. was acknowledged by Sun Star Cebu as the Best Personal Shopping Service in Cebu in 2020.

42 Building more sustainable communities 2020 INTEGRATED REPORT

EFFICIENT RESOURCE USE AND WASTE MANAGEMENT

ELECTRICITY WATER WASTE CONSUMPTION CONSUMPTION GENERATED Intensity, GJ/sqm intensity, cum/sqm tonnes

Non-Recyclable Recyclable 13.24 7,412 0.27 7.85 6.44 0.16 3,633 0.14 2,442

18 19 20 18 19 20 18 19 20

Total GHG emissions (TCO2e) declined by 95 % compared to emissions in 2019. Both ACC and AMCB ran on renewable energy sources in 2020.

HOW WE KEPT OUR RETAIL SPACES SAFE

It was a hard year for brick-and-mortar retail stores. For 2.5 months, only providers of essential goods, such as pharmacies and supermarkets, were allowed to operate in Cebu. As restrictions were eased starting in July, more establishments reopened but observed strict occupancy limits. To keep our mall locators and all customers safe, we:

• Employed a sanitation team that focused on high- • Provided sanitizers or alcohol dispensers at touch points and common areas such as elevators, entrances, outside elevators, lounges, and rest escalators, and railings all throughout the day. rooms. • Worked with merchants to ensure IATF guidelines • Enforced social distancing in all retail spaces. were enforced, including seating capacity limits in • Canceled or postponed assemblies, religious restaurants and all other shared spaces. services, and other group events, to help the • Pivoted to personal shopping service with ANA, public adopt the recommended behaviors that will which provided both safety and convenience to curb the spread of this coronavirus. shoppers. • Sustained an omni-channel information campaign on safety and prevention measures, using mall print announcements, banners, radio ads, and social media.

Building more sustainable communities 43 CEBU HOLDINGS, INC.

Hotel and Leisure

Rising 17 floors atop AyalaMalls Central Bloc, this new Seda hotel offers a unique combination of hotel rooms for short stays, and serviced residences with home-like conveniences for extended visits.

Seda Central Bloc Cebu had just In 2020, our two Seda hotels opened in February of 2020, operated on a limited capacity, bringing in an additional 214 serving mostly employees of key rooms. Rising 17 floors atop business process outsourcing AyalaMalls Central Bloc, this companies, and corporate clients. new Seda hotel offers a unique 515 combination of hotel rooms With restrictions imposed by KEY ROOMS for short stays, and serviced various levels of quarantine, the residences with home-like hotels explored other income conveniences for extended visits. opportunities such as providing alternative workspaces and Food- In addition to Seda Ayala Center to-Go offerings for its patrons. Cebu’s 301 guest rooms, this brings our total inventory up to 515 key rooms.

Local and international tourism was among the first industries affected when the pandemic hit.

44 Building more sustainable communities 2020 INTEGRATED REPORT

HOW WE KEPT OUR HOTELS • Limit occupancy in rooms to align with IATF guidelines and limit elevator loads to enforce SAFE physical distancing. • Provide shoe disinfection mats and hand sanitizers in no-touch dispensers at the main Although at a limited capacity, both our Seda entrance. Ayala Center Cebu and the new Seda Central • Install a transparent protective divider at the Bloc Cebu sustained operations in 2020. In reception desks and enable online, contactless keeping with IATF guidelines and to protect check-in. our employees and guests, in our hotels we • Frequently communicate reminders about chose to: preventive measures with our hotel staff.

• Enforce a comprehensive sanitation and hourly disinfection of all high-touch surfaces, using hospital-grade products. • Equip our team with the personal protective equipment appropriate for their different tasks. • Observe daily mandatory temperature checks for all guests and staff before entry. • Collect a travel history checklist before check-in.

KEY ROOMS

EFFICIENT RESOURCE USE AND WASTE MANAGEMENT

ELECTRICITY WATER WASTE CONSUMPTION CONSUMPTION GENERATED intensity, cum/sqm Intensity, GJ/sqm tonnes

Non-Recyclable Recyclable 160.84 72.12 0.5790 126.81 0.4565 26.48 26.48 17.20

19 20 19 20 19 20

* Figures of Seda Central Bloc Cebu is unavailable due to limitations of pandemic

Building more sustainable communities 45 CEBU HOLDINGS, INC. STAKEHOLDER ENGAGEMENT

46 Building more sustainable communities 2020 INTEGRATED REPORT

CEBU HOLDINGS, INC. (CHI) maintains a list of key stakeholders to engage, listen, and respond to. These stakeholder groups were identified according to their level of influence and interest in the organization as well as the extent of the impact of its operations on them.

INVESTORS

Investors provide Revenues generated capital - invested in by merchants, locators employee development, and customers flow project planning and back to the employees, execution and investors

EMPLOYEES MERCHANTS COMMUNITY CONSULTANTS LOCATORS CUSTOMERS SUPPLIERS Customers are part of the Develop products to Locators and merchants community at large meet the requirements of deliver their products to their locators and merchants customers

A portion of the revenues is paid to government in the form of taxes and a portion GOVERNMENT / is investment for the community REGULATORS We ensure that all processes across the value chain meet minimum standards of government and regulators

Building more sustainable communities 47 CEBU HOLDINGS, INC.

STAKEHOLDER ENGAGEMENT 102-21, 102-40, 102-42, 102-43, 102-44, 307-1, SDG 16

We honor all our legal and voluntary commitments to stakeholder rights and provide all our key stakeholders with the opportunity to obtain effective and prompt redress whenever their rights are at risk or violated.

CUSTOMERS The Company has a Customer First Policy that prioritizes added value in the delivery of products LOCAL COMMUNITIES and services to continually satisfy the changing expectations of customers. (OP14.1) We strive to be socially responsible in all our dealings with our neighboring communities in the areas where we operate. We ensure MERCHANTS AND SHOPPERS that our interactions serve our environment and stakeholders in a positive and progressive manner, fully supportive of comprehensive and balanced type of development. CHI cultivates a customer- centric culture where every We regularly engage representatives from our local communities to assess their needs, pursue possible areas of collaboration, and use process begins and ends with the shared resources for programs that benefit our larger community. customer in mind. CSOs AND COMMUNITY PARTNERS Customer reviews are conducted The Company works with civil society regularly focusing on customer organizations (CSOs) to ensure the protection satisfaction and market of people and planet. CHI conducts leadership. Customer feedback orientations on forest ecosystem services for is gathered at every opportunity community partners and volunteers. and used to improve the business process and the overall business CHI conducts periodic training on forest strategy. ecosystem services for community partners, which includes assisted natural regeneration The malls that CHI operates and native-tree growing activities. have been found to be a good venue for collecting feedback. Ayala Land, CHI’s parent company, nurtures Moreover, these malls hold 586 hectares of carbon forests country-wide, programs that support initiatives of which 65 hectares of biodiversity reserve in of merchants and promote their Upland Cebu is managed by CHI. brand and service.

48 Building more sustainable communities 2020 INTEGRATED REPORT

Employees

Our employees are integral to our corporate governance processes. For instance, our Health, Safety and Welfare Policy keeps our people well- informed about CHI’s policies on hiring, employee engagement, training, health, safety, and welfare. The highlights of our 2020 CHI Personality and Lifestyle Upliftment Strategy (PLUS) Program and other human capital initiatives are outlined in pages 50 to 55. (R15.1-1)

Suppliers and Contractors Compliance

The Company implements standard procurement The Company complies with all legal, policies and procedures across its business consumer, and financial reporting units. Regular supplier accreditation and annual requirements against corruption, performance evaluation are observed. (OP14.2) including extortion and bribery.

Data on local sourcing and workforce count of all The company is in compliance with our units are on page 26. all applicable laws and regulations. To this end, there has been no WORKFORCE AT reported incident of any violation. CONSTRUCTION SITES Creditors CHI has a successful and The company presents creditors decades-long partnership with all the information required to with Makati Development evaluate our credit standing. Corporation (MDC). MDC leads SHAREHOLDERS, INVESTORS in construction management AND ANALYSTS practices that minimize the risk inherent in the construction CHI is dedicated to building process – from daily safety stakeholder relationships vital meetings and site inspections to for the long-term success of its workers’ training and responsible business. waste management. Investors and shareholders are apprised of project developments • Weekly and monthly health and other relevant information and safety-related meetings through regular meetings, conducted in 2020 disclosures, publications and news • Orientation on emergency releases. response and COVID-19 related safety protocols and CHI responds promptly to initiatives concerns directly addressed to the • 77 Emergency drills Company by way of visits, phone conducted across all calls or online communication. construction projects

Building more sustainable communities 49 CEBU HOLDINGS, INC. PEOPLE DEVELOPMENT

It was imperative that everyone in Cebu Holdings adapted quickly in 2020 because the livelihoods of thousands of others depended on our ability to do so.

Everyone’s safety and well-being was our top priority, and this ensured that everyone remained dedicated to our commitments to our customers, locators, and the business.

Flexible work arrangements that were introduced when enhanced community quarantine took effect in late March 2020 have since been updated. Thanks to our IT team, office equipment, connectivity, and other requirements were quickly supplied so that everyone could continue to perform their functions while sheltering at home.

While we had started using online collaboration tools before than 50 percent onsite. Everyone was also 2020, we made the most out of required to fill up daily health declaration these platforms to enhance our forms upon entry, use masks in the office, skill sets and to keep one another and socially-distance from colleagues at all engaged. When quarantine times. restrictions were eased and greater numbers allowed to Employees were also briefed on information return to their offices, we chose should they or their dependents experience to divide the CHI team into symptoms related to COVID-19. These separate schedules, so that at included what the procedures were, who no time would there be more were medical contacts they could reach, and what were the available testing centers.

50 Building more sustainable communities 2020 INTEGRATED REPORT

Access to agile providers helped us to continue providing training for employees.

External training providers moved their training online Internal training (finance for non-finance teams) also moved online

Our IT Department hosted webinars to assist employees in the transition to working from home (such as by providing support for those who needed access to a scanner or printer while at home or who needed to better understand how the Docusign process works)

Our e-Learning sessions included health and nutrition, mental wellness, nurturing creativity, safety protocols, and thriving while working from home.

Employees were also encouraged to attended various online technical courses to enhance competences.

Building more sustainable communities 51 CEBU HOLDINGS, INC.

EMPLOYEE ENGAGEMENT Keeping employees safe and engaged

Keeping the organization abreast of events and project became even more important with the modified work arrangement. In lieu of our physical meetings and office moodwall, the Inside CHI Online, a digital weekly newsletter, was also re-launched to keep employees informed of company and project updates, events, and community news.

We continued employee engagement despite not being able to physically meet, we introduced online sessions of our CHI P.L.U.S (Personality and Lifestyle Upliftment Strategy), to include exercise sessions, gardening, cooking, arts and crafts, technology discussions and Earth Warriors.

Employees were able to engage in various hobbies to de-stress, especially during the lockdown, and meet colleagues outside of work meetings as well.

52 Building more sustainable communities 2020 INTEGRATED REPORT

We also introduced our monthly virtual hangouts where employees participated in online trivia, games and raffles, and had casual catch-up conversations over drinks online.

This included themed events such as Halloween and Christmas where employees won prizes for showing up in their best costumes.

As with any disruption or crisis, this one has created opportunities to reimagine the way people work and connect. These include: making the most out of digital infrastructure; rethinking the workplace; driving greater inclusion; emphasizing local sufficiency in our supply chains; improvements in hygiene and health systems; and flexibility in the face of the unknown.

We are reflecting on these further and looking into opportunities for growth in the coming years.

Building more sustainable communities 53 CEBU HOLDINGS, INC.

VOLUNTEER & COMMUNITY INITIATIVES

CHI employees Pay It Forward

In the spirit of “Bayanihan”, CHI employees came together to help those in need, especially in these difficult times. Through Ayala Land’s “Pay-it-Forward” campaign, the employees were able to raise funds to donate 100 sacks of rice to neighboring Brgy. Luz, one of the areas badly-hit at the height of the outbreak in Cebu.

Employees also pooled funds to assist the company’s outsourced personnel. In their personal capacity, some employees also donated food and PPEs to frontliners and the community.

CHI Donates to NOAH Quarantine Facility

To help address the need for quarantine facilities, CHI contributed to the construction of the 350 bed New Normal Oasis for Adaptation and a Home (Noah) Complex at the South Road Properties.

#BuyAni project benefits residents of neighboring communities

With funding from the Ayala Foundation and the Macquarie Foundation, 1,800 families of communities surrounding Cebu Business Park, Cebu IT Park and South Coast City received care packs which included fruits, veggies, rice & eggs, vitamins and bottled water. Fresh produce included in care packs were supplied by 41 farmers and local producers in Cebu.

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Brigada ng Ayala Educare kits

CHI volunteers packed 1,940 out of a total of 6,250 educare kits prepared for the entire Visayas for the Brigada ng Ayala program. The kits, provided by Ayala Foundation, contain face masks, face shield, bar soaps, alcohol and hygiene flyers.

Estate vegetable gardens

Vegetable gardens or sustainable ‘edible landscapes’ were established in our estates. These also addressed food security for the grounds-keeping team. Vegetables grown included malunggay, eggplants, bell pepper, alugbati, Chinese kangkong, string beans and sequa.

Building more sustainable communities 55 CEBU HOLDINGS, INC.

Opened fresh markets in partnership with local vendors in CBP and CITP

To serve our communities and limit travel out the estate during the ECQ, Cebu IT Park and Cebu Business Park opened fresh markets. Residents, employees and personnel had access to fresh fruits and vegetables. Security was deployed in the area to ensure physical distancing. Shoppers were also required to wear masks and bring their quarantine pass (if resident) or company ID (for those employed within the estate).

CITP partnered with a people’s cooperative to establish a mobile market to bring fresh meat, vegetables, and fruits to residents and stay-in locator employees during the lockdown. This reduced their need to travel outside the estate and generated PHP 2,000 to 3,000 per day in sales to partner vendors.

On the other hand, CBP already had an existing Farm Fresh Market featuring vendors from Barangays Sirao and Adlaon. Their participation was facilitated by the Cebu City Agriculture Office in 2014 by providing free transportation from their farms to CBP. After that, the farmers hired their own transportation.

CBP also partnered with fruit and vegetable vendors from the Cebu City Carbon Market to bring fresh fruit and vegetables to the residents of CBP during the lockdown. These vendors are locals of Barangay Hippodromo, a neighboring community of the estate.

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Compost Production

Sixteen tons of yard waste from Cebu Business Park and Cebu I.T. Park were brought to the composting facility at Upland Greens. This generated five tons of compost used for the landscaping requirements of our estates.

Through composting the amount of garbage sent to the landfill is reduced, the organic matter is reused rather than dumped, and it is recycled into a useful soil amendment.

Plastic Collection Campaign

As part of our continuing advocacy to reduce residual waste, our plastic collection campaign in our corporate office successfully diverted and recycled clean and dry plastic waste. A total of 34.3 kilograms of plastic laminates and clear plastics were collected for eco-bricks production. River Trip Trap System

Also part of the waste reduction drive within our estates was the collection of 829 kilograms of PET bottles. These were assembled into river trip trap systems which are designed to float in waterways and capture litter before it floats further downstream. These were installed in five stations along Mahiga River and other water bodies in SRP and in Mambaling where tons of garbage are collected regularly.

Building more sustainable communities 57 CEBU HOLDINGS, INC. CORPORATE GOVERNANCE

In 2020, our commitment The year put our risk to provide an inclusive and management processes and enabling environment for all previous years of preparations our stakeholders compelled to the test. Yet it is precisely us to adopt several changes. challenges like this pandemic that These have transformed how we hone great companies and, if they communicate and do business make the right choices, position with one another, as well as them for new levels of growth. strengthened our commitments to greater board diversity and our policies on full disclosure.

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GOVERNANCE STRUCTURE

BOARD OF CHIEF DIRECTORS FINANCE OFFICER

PRESIDENT COMMITTEES

• EXECUTIVE • AUDIT • CORPORATE GOVERNANCE &

NOMINATION CHIEF • PERSONNEL & COMPENSATION OPERATIONS • RISK OVERSIGHT OFFICER • SUSTAINABILITY • RELATED PARTY TRANSACTIONS REVIEW MANAGEMENT COMMITTEE

BUSINESS CORPORATE SERVICES FINANCE GROUP DEVELOPMENT GROUP GROUP

ACCOUNTING HUMAN SUSTAINABILITY/ CONTROL LAND PROJECT RESOURCES COMMUNITY AND ACQUISITION DEVELOPMENT AND ADMIN RELATIONS ANALYSIS

SALES AND INNOVATION AND LEASING DESIGN INFORMATION CORPORATE TREASURY/ FUNDS RETAIL SYSTEMS COMMUNICATIONS, MANAGEMENT BUSINESS MEDIA RELATIONS FINANCE AND LEGAL AFFAIRS

MARKETING

Building more sustainable communities 59 CEBU HOLDINGS, INC.

CORPORATE GOVERANCE PRACTICES

As mandated by the Securities We have also adopted the and Exchange Commission (SEC), ASEAN Corporate Governance CHI recognizes and abides by Scorecard and the requirements the principles of good corporate of the Philippine Stock Exchange governance and complies with the (PSE) and SEC Integrated Annual Code of Corporate Governance, Corporate Governance Report which specifies the roles, duties, for assessing our performance and responsibilities of our Board and reporting on other matters of Directors in line with Philippine related to governance. CHI has laws. D.2.12 been listed on the PSE since February 1994. Our Board and Management constantly aim for high Institutionalizing these principles governance standards and are and systems in our operations held accountable for upholding guarantees CHI’s long-term ethical behavior at all times. ability to create value for its Corporate governance is our shareholders, stakeholders, and primary system of stewardship the nation. and control that guides our Company in fulfilling its long-term Further information on our economic, moral, legal, and social corporate governance systems obligations. may be accessed through our Company website https://www. cebuholdings.com/.

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Rights of Shareholders

Our shareholders are important Third, shareholders have a right to CHI and have rights that are to to participate effectively and vote be respected and upheld. in general shareholder meetings (A.3.1, A.3.2, A.3.3, A.5.1, 102-21, First, they have the right to 102.37). share in profits and dividends (A.1, D.2.5). It is a Company They have the right to nominate, policy to declare a portion of its elect, remove and replace unrestricted retained earnings as directors, and vote on certain dividends to shareholders, either corporate acts in accordance in the form of stock or cash, or with the Corporation Code. They both. are also free to ask any questions or to voice out concerns during Second, shareholders have a meetings. right to participate in decisions concerning fundamental Lastly, they have a right to corporate changes (A.2). propose holding of special Examples of these changes are shareholders’ meetings. amendments to the Company’s Shareholders are given the constitution, authorization for the opportunity to initiate meetings issuance of additional shares of and include agenda items ahead the Company, etc. of time.

Building more sustainable communities 61 CEBU HOLDINGS, INC.

Equitable Treatment of Shareholders (B.4, B.5, D)

CHI treats all shareholders who has knowledge of material equitably, and recognizes, facts or changes in the affairs protects, and facilitates the of the Company that have not exercise of their rights through been disclosed to the public is constant and open communication. not allowed to buy or sell the Adequate protection is also given Company’s securities during to minority shareholders against trading blackout periods. any unfair conduct on the part of the majority. Moreover, related party transactions or RPTs (B.4, B.5, In terms of shares and voting rights D.3) may only be conducted on (B.1, B.1.1), shareholders are entitled an arm’s length basis. It must to one vote per common share of be in a manner that ensures stock in the Annual Stockholders’ fairness to the Company’s best Meeting. They may vote manually, interest, and no less favorable electronically, or through a proxy. than those generally available Results of the voting will be to non-related parties under the validated by the external auditor, same or similar circumstances. In SyCip Gorres Velayo & Co. (SGV). cases of conflict, CHI abides by the Alternative Dispute Resolution For the Annual Stockholders’ Act of 2004 (RA 9825) to settle Meeting, notices are mailed to disputes without resorting to shareholders at least 21 days prior excessive litigation. to the scheduled date (A.3, B.2, A.3.18, A.3.19, B.2.3, B.2.4, E.3.11). The Company’s Control This notice specifies the agenda and Analysis and Corporate and rationale for each item, and Communications departments the profiles of directors seeking set up an avenue to receive election or re-election. Auditors feedback, complaints, and queries who seek appointment and from shareholders. reappointment are also clearly identified in the notice.

CHI exhibits a strict Insider Trading Policy (B.3, D.4), in which it prohibits insider trading in all its securities dealings. Anyone

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Role of Stakeholders (C.1, C.3, C.4, 102-16, 102-17, 102-21, 102-40, 102-42, 102-43, 102-44, SDG 16, 307-1)

Suppliers and Contractors. The CHI honors all its legal and OUR STAKEHOLDERS voluntary commitments to Company implements standard stakeholder rights and provides procurement policies and CUSTOMERS all its key stakeholders with the procedures across its business LOCAL COMMUNITIES opportunity to obtain effective units. and prompt redress whenever Employees. They are integral SUPPLIERS AND their rights are at risk or violated. to the organization and to the CONTRACTORS All stakeholders are encouraged corporate governance processes. EMPLOYEES to communicate their concerns Highlights of the 2020 Personality about unethical practices to the and Lifestyle Upliftment Strategy CREDITORS board. Their rights will not be (PLUS) are outlined in pages 52 GOVERNMENT AND compromised for doing so. and 53 of the report. REGULATORY INSTITUTIONS Key stakeholders are as follows: Compliance. The Company Customers. The Company has complies with all legal, consumer, a Customer First Policy that and financial reporting prioritizes added value in the requirements against corruption, delivery of products and services including extortion and bribery. to satisfy the expectations of To this end, there has been no customers. reported incident of any violation. Local Communities. CHI strives Government and Regulatory to be socially responsible in their Institutions. CHI presents them dealings with their neighboring with all information required to communities in the areas where it evaluate its credit standing. operates.

Building more sustainable communities 63 CEBU HOLDINGS, INC.

In the aspect of sustainability, Sustainability the Company Reporting suspected or known illegal or discloses all its In the aspect of sustainability, unethical activity. non-financial the Company discloses all its non-financial information, with Our Online Whistleblowing information, with emphasis on the management Report allows reporting emphasis on the of environmental, social and through the website, making it governance (ESG) issues of CHI. open and easily accessible to management of The Integrated Report all stakeholders. We have an environmental, Framework, GRI Sustainability identified Ethics Committee at Reporting Standards and both the management and Board social and and industry-specific level to handle complaints. governance (ESG) Sustainability Accounting issues of CHI. Standards Board (SASB) metrics This policy was made to are adopted in publishing this encourage the reporting of integrated report. suspected or known illegal or unethical activity by CHI’s Right to voice employees, third-party business concerns and partners, and other stakeholders.

complaints It covers concerns such as: Contact details are provided conflicts of interest, misconduct on the inside back cover of this or policy violations, theft, report and on the Company fraud and misappropriation, website for stockholders and falsification of documents, stakeholders to access in the financial reporting concerns, and event of concerns and/or retaliation complaints. The goal complaints of possible violation of the Whistleblowing Policy is of rights. to provide stakeholders with the means to come forward in order Whistleblowing to directly provide information to top management or the Board of Policy Directors (SR7.1, 14.3, 15.3-1). (C.2, C.4, D.2.6, 102-17, 102-33, 102-34, 103-2, SDG 16) For more information, details The Company’s Whistleblowing are on the Company’s corporate Policy encourages transparency governance page, at https://www. and empowers all employees, cebuholdings.com/governance_ third-party business partners list / 1/. and stakeholders to report any

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DISCLOSURE AND TRANSPARENCY

C.2.1, D.6.1, D.6.2, D.7, D.9.1

CHI follows a mature disclosure policy and Stakeholders may also contact the Stakeholders procedure that are practical and aligned with Information Desk for assistance. Contact details best practices and regulatory expectations. are found on the inside back cover page of this (R8.1) report. (R8.5)

To ensure the adequacy and Interim reports are published within 45 days comprehensiveness of each disclosure, the from end of reporting period. All disclosures are Company adopts the following disclosure immediately posted on the Investor Relations practices: section of our website and may be accessed through the following link: https://www. »» Release of financial statements 60 calendar cebuholdings.com/disclosure_list/2/. (SR.8.1) days after the close of the financial year, along with a certification from the Board of Directors declaring the report to be fair and accurate (D.7); Furthermore, CHI’s Manual on Corporate »» The Company website to constantly be updated Governance is submitted to the SEC and PSE, to provide information on the financial as well as and is regularly updated should there by any non-financial results of CHI’s business operations; changes. All information about our corporate »» Timely disclosure of every material fact or event governance practices are found on this link: that occurs, particularly on the acquisition or disposal of significant assets, will be provided to https://www.cebuholdings.com/governance_ the public; list / 1/. »» Investor concerns will be addressed by the Control and Analysis and Corporate Communications departments, whose names and contact details are made available to the public; »» Policies governing Related Party Transactions will be disclosed; and »» The fairness of the transaction price on the acquisition or disposal of assets will be evaluated by an independent party.

Building more sustainable communities 65 CEBU HOLDINGS, INC.

Corporate Governance Report, and the Definitive Information Statement sent to CHI’s shareholders.

CHI also discloses the percentage of foreign ownership in the Company on a monthly basis. (SR8.2; R14.1) To better communicate CHI’s programs and initiatives, the Company has further enhanced As of December 31, 2020, the total number its website by presenting information in a of shares owned by the public amounted manner that is more convenient for the public to 622,601,402 shares, equivalent to 28.87 to read and access while being compliant with percent of total outstanding shares. (SR13.2) SEC’s prescribed website template. Corporate CHI continues to strictly implement guidelines Governance and investor relations disclosures covering securities dealings to comply with are also regularly updated online for easier government regulations. access. (AP11.1) Details of this report are found on: https:// A. Transparent Ownership www.cebuholdings.com/wp-content/ Structure uploads/2016/12/2021-01-15-PSE-BIR-PUBLIC- D.1 OWNERSHIP-REPORT_12.31.20.pdf. As of December 31, 2020, the total number of shares CHI regularly discloses the top 100 holders owned by the public amounted to 622,570,484 of its common shares, the security ownership shares, equivalent to 28.87 percent of total of beneficial owners having more than five outstanding shares. (SR13.2) percent of the Company’s total outstanding stock, and the shareholdings of members of CHI continues to strictly implement guidelines the Board of Directors and key management covering securities dealings to comply with officers. government regulations.

These are submitted to the SEC, PSE and B. External Audit Philippine Dealing and Exchange Corporation (PDEx), and made available to the general The Company has established appropriate public regularly through postings on the standards for the selection of an external Company’s Investor Relations website auditor, and exercise effective oversight on the page, the PSE/SEC’s Integrated Annual process to strengthen the external auditor’s

66 Building more sustainable communities 2020 INTEGRATED REPORT independence and enhance audit quality. The selected external auditor should have adequate quality control procedures and the ability to C.1 Audit and Audit Related Fees D.5 understand the Company’s complex related The Company and its various subsidiaries and party transactions, its counterparties, and affiliates paid SGV the following fees in the valuations of such transactions. (SR9.2-1, 9.2-2) past three years. (SR9.3)

AUDIT & AUDIT RELATED NON-AUDIT The appointment, reappointment, removal, and YEAR FEES FEES fees of the external auditor are recommended 2020 1,172 142 by the Audit Committee, approved by the 2019 1,146 458 Board and ratified by the shareholders. 2018 1,300 477 Following CHI’s Revised Manual of Corporate Figures are in thousand pesos and exclusive of value-added- tax (VAT) and out of pocket expenses Governance, the external auditor position rotates every five (5) years or earlier, or the handling partner is replaced within the said D. Internal Audit E.3 time period. (SR9.1) The Internal Audit Department (IAD) is an The percentage of shareholders that ratified independent unit that reports to the Audit the appointment, reappointment, removal, Committee. Through this committee, IAD and fees of the external auditor are provided assists the Board in the discharge of its duties in the results of the Annual Stockholders’ and responsibilities as provided for in the Meeting and Voting. They may be accessed Code of Corporate Governance for Publicly through the following links: Results of Annual Listed Companies. Stockholders’ Meeting (April 14, 2020) https://www.cebuholdings.com/wp-content/ The department provides independent and uploads/2016/12/2020-04-14-SEC_PSE_ objective assurance and consultancy services PDEx-RESULT-OF-ASM_4.14.20.pdf and to the Company with the objective of adding https://www.cebuholdings.com/wp-content/ value and assisting the organization in uploads/2016/12/MINUTES-OF-ASM-2020_14- accomplishing its objectives through effective APRIL-2020.pdf. control, risk management, and governance processes. C. Independent Public Accountants Assurance services involve the internal auditor’s objective assessment of evidence to provide opinions or conclusions regarding an SGV & Co. is the principal accountant and entity, operation, function, process, system or external auditor of CHI, with Margem A. other subject matters. Tagalog as the partner-in-charge for the 2020 audit year. Consulting services are advisory in nature

and are generally performed at the specific The Audit Committee is empowered to request of the engagement client. The nature independently review the integrity of financial and scope of consulting engagement are reporting and oversee the independence subject to agreement with the engagement of external auditors. The Committee, in its client. oversight function, is likewise responsible for reviewing all financial reports for compliance The Internal Audit Plan is formulated annually. with the internal financial management Any revisions and/or updates thereto within handbook and pertinent accounting standards, the year are presented to the Audit Committee including regulatory requirements. It also for its approval. recommends to the Board and stockholders the appointment of external auditors and the setting of appropriate audit fees. Building more sustainable communities 67 CEBU HOLDINGS, INC.

The Department adopts an Internal Quality Aside from compliance with IIA’s International Assurance Improvement Program that Professional Practices Framework which involves periodic self-assessment and review. includes the definition of Internal Auditing, The department likewise conducts periodic the ISPPIA and the Code of Ethics, the EQAR departmental performance review against its covered the assessment of IAD’s compliance commitments. with its charter, plans, policies, procedures, practices and applicable legislative and An external quality assurance review is regulatory requirements; expectations of the conducted every five years. (R12.1-1) IAD as expressed by stakeholders (includes Jennifer G. Sia serves as the Company’s Internal the Board of Directors and Audit Committee, Audit Manager. (R12.3-1) Senior Management and IAD’s auditees); integration of the IAD into the organization’s Risk-Based Process-Focused Approach governance process, including the attendant relationships between and among the key IAD conducts its audits in compliance with the groups involved in that process; tools and International Standards for the Professional techniques employed by the IAD; mix of Practice of Internal Auditing (ISPPIA). knowledge, experience and within the staff, including staff focus on process improvement; In 2020, engagements were executed in and areas on which the IAD is able to add accordance with the risk-based, process- value to help improve the organization’s focused approach. Regular audits of the operations. Company’s high-risk key processes were conducted in accordance with an approved E. Analysts’ Briefings Internal Audit Plan, and special audits were D.6.3 undertaken as necessary. CHI conducts quarterly briefings for both External Quality Assurance Review (EQAR) equity and credit analysts and communicates directly with institutional and individual An external assessment opinion by investors through one-on-one meetings, Punongbayan & Araullo (P&A), a member firm conference calls, and written communications within Grant Thornton International Ltd, in such as email. (R11.1-1) 2019 concluded that the Company’s internal audit activities generally conforms with the Analysts and investors who are unable to International Standards for the Professional attend the quarterly briefings in person are Practice of Internal Auditing (ISPPIA) as issued invited to participate through a by the Institute of Internal Auditors (IIA). teleconference facility.

Internal Auditing Standard 1312 of the Institute of Internal Auditors (IIA) requires external assessments be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the Company.

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G. Company Website D.8

All information on Corporate Governance and Investor Relations related matters are available online at www.cebuholdings.com.

Compliance with the Data Privacy Act of 2012

In 2012, the Congress of the Philippines passed Republic Act No. 10173, also known as the Data Privacy Act (DPA) of 2012. The DPA Implementing Rules and Regulations were The list of the briefings can be found on the made effective on September 9, 2016. CHI website at https://www.cebuholdings.com/ investor_rel_list/11/. The DPA protects individuals from unauthorized processing of personal information that is F. Media Briefings private, not publicly available and identifiable D.6.4 and where the identity of the individual is apparent either through direct attribution CHI’s Corporate Communications, Media or when put together with other available Relations and Legal Affairs Department information. regularly engages the media through multiple channels, such as media conferences, briefings, CHI appointed and registered a Data Privacy news releases, fact sheets, social gatherings Officer (DPO) through its parent Ayala Land, and one-on-one meetings. CHI occasionally and a Compliance Officer for Privacy (COP) supports media-initiated causes and events that from CHI. are aligned with our principles and advocacies. (R11.1) The Company formulated a Data Privacy and an Employee Data Privacy Policy to set the In 2020, the Company met with representatives guidelines for compliance. The guidelines and from local media outlets, business reporters, policy were already in place and observed in and marketing and social or lifestyle writers 2020. and bloggers to disseminate information on CHI’s new development, South Coast City, CHI has established its privacy and data which broke ground in January of 2020. Due to protection programs and have prioritized critical government restrictions, no other gatherings activities such as the implementation of privacy were held the rest of the year. Dissemination of consent clauses on its data collection forms, information was done via email and other virtual the implementation of cyber security programs channels. which include security penetration testing of critical websites to prevent data hacking, Data on media briefings are made available and the dissemination of internal educational in the Company’s website at https://www. campaigns on data privacy and security. cebuholdings.com/investor_rel_list/12/ For more information, you may refer to our corporate governance page, at https://www. cebuholdings.com/governance_list/6/.

Building more sustainable communities 69 CEBU HOLDINGS, INC.

RESPONSIBILITIES OF THE BOARD

The overall stewardship of our Company rests on the Board of Directors, the highest governing authority within CHI’s management structure.

The overall stewardship of our Company master-planned, and sustainable mixed-use rests on the Board of Directors, the highest developments through a customer-focused and governing authority within CHI’s management empowered team of professionals. We ensure structure. The Board is responsible for the the trust and confidence of our stakeholders Company’s long-term success and sustained with sustainable growth while improving the global competitiveness. It ensures that CHI’s quality of life of the communities we serve with obligations to its stakeholders are met while passion and integrity.” adhering to the principles of sound corporate governance as a model of best practices in the This is reviewed by the Board as necessary corporate sector. or at least annually as an agenda through its regular scheduled Board meetings. (R2.2) Through this report, we attempt to make known to our stockholders and other stakeholders The Board Charter serves as a guide to the the fiduciary roles, responsibilities, and directors in the performance of their functions. accountabilities of the Board as provided under It states the duties and responsibilities of the the law, the Company’s articles and by-laws, and Board of Directors, particularly its imperative other legal pronouncements and guidelines. for good governance of the Corporation.

The charter operationalizes this through Board duties and responsibilities different facets including, but not limited to: E.1 implementation, assessment, succession, and risk management. The Board is driven by the Company’s mission and vision statement as follows: The Board charter contains clear and specific guidelines on internal processes, particularly “We shall be the premier real estate Company in the types of decisions requiring Board the region, creating and enhancing integrated, approval.

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The Board is responsible for the approval and adoption of a corporate policy and corresponding strategy, with proactive oversight of strategy execution. Thus far, it has approved and adopted the Company’s mission and The Board, through its core values as well as a Board calendar which various committees, is allows for a periodic review of the Company’s governance charter and its corporate strategy responsible for approving map with its corresponding performance metrics certain decisions that and targets. impact the Company greatly. The assessments of actual performance against targets are regularly conducted. (R2.2, 2.9)

Our management committee keeps the Board Board Structure updated on issues concerning the Company’s E.2.4 strategy, risk management, and compliance, and explains any deviation from the approved plans The Board is composed of nine members, three and targets. of whom are independent directors.

A more complete list of their duties and The Board designated a Lead Director among responsibilities can be found in https://www. the independent directors per the Corporate cebuholdings.com/governance_list/8/. Governance provision should the Chairman not be an independent director. The Chairman Decisions Requiring Board is a non-executive director. Currently, Consul Approval Enrique L. Benedicto is the Lead Director of CHI. The functions of the lead director include, The Board, through its various committees, among others, the following: (R5.5) is responsible for approving certain decisions that impact the Company greatly. The following »» Serve as intermediary between the Chairman and the other directors when necessary; decision points require approval of the Board »» Convene and chair meetings of non-executive before the departments involved are allowed to directors; and proceed. »» Contribute to the performance evaluation of the Chairman, as required. »» Declaration of annual dividends to shareholders »» Material or significant related party transactions A. Independent Directors »» Any revisions and/or updates for the Internal Audit E.2.5, E.2.6, E.2.7 Plan within the year »» Corporate policy and corresponding strategy The Company defines independent directors »» Appointment of some executive officers as having no interests, relationships, or »» Changes or revisions to the Related Party Transactions Review Committee charter previous engagements with CHI in any »» Retention of an independent director in the same capacity that may interfere with their exercise capacity after nine years of independent judgment. The independent »» Remuneration for CEO and management officers directors shall possess all the qualifications »» Appointment, reappointment, removal, and fees of (and none of the disqualifications) to hold the the external auditor positions. »» The Company’s mission, core values and Board calendar Independent directors may serve for a period of not more than nine years and may hold only up to five board seats in publicly-listed companies simultaneously. (R4.2-1)

Building more sustainable communities 71 CEBU HOLDINGS, INC.

The committees are For a full description of the powers, duties, and composed of Board members responsibilities of each committee, visit https:// specifically chosen for their www.cebuholdings.com/governance_list/9/ particular background and Process and Criteria for areas of expertise suitable to Nominations to the Board the functions assigned to the (R2.8) committee. The Corporate Governance and Nomination Committee ensures adherence to pertinent We comply with the SEC rules on the rules and regulations in evaluating the nomination and election of an independent qualifications of nominees for the following director, and with the PSE requirement. positions:

CHI has three independent directors. a. Board of Directors b. President and Chief Executive Officer B. Board Committees c. Chief Finance Officer or Treasurer E.2, E.3 d. Group Directors or Vice President e. Corporate Secretary As the Board of Directors is responsible to f. Assistant Corporate Secretary shareholders in ensuring that value is created g. Other executive officers of the company and sustained, committees assist the Board of whose appointments require the Board’s Directors to fulfill its responsibility for oversight approval of the Corporation’s corporate governance processes, particularly with respect to audit, risk management, related party transactions, and Nomination Process for All other key corporate governance concerns, such Directors as nomination and remuneration. The Corporate Governance and Nomination The purpose, composition, functions, and Committee develops and maintains a process responsibilities of all committees are contained that ensures all directors nominated for in their respective Committee Charters election at the annual stockholders’ meetings available at our website. These charters provide have all the qualifications (and none of the standards for evaluating the performance of the disqualifications) to become directors as committees. (R3.6-2, 3.6-3, 9.2-1) required by all applicable rules.

The committees are composed of Board After passing this process, directors are then members specifically chosen for their particular elected by company stockholders who are background and areas of expertise suitable to entitled to vote. Such shareholders also have the functions assigned to the committee. the right to vote on the election, removal, and replacement of directors, and vote on The established committees are the following: certain corporate acts in accordance with the Corporation Code. (R1.1 and 2.6) »»Executive Committee »»Audit Committee Cumulative voting shall be used in the election »»Corporate Governance and Nomination Committee of directors. Directors may be removed with »»Personnel and Compensation Committee or without cause, but directors shall not be »»Risk Oversight Committee, removed without cause if it will deny minority »»Sustainability Committee shareholder representation in the Board . »»Related Party Transactions Review Committee

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The removal of directors, moreover, requires The Board has to be composed in such a way an affirmative vote of two-thirds of the that it possesses, as a group, the necessary outstanding capital of the corporation. knowledge, skills and experience required to properly perform its duties. CRITERIA The Board is composed of members who The Board shall encourage the selection of a mix possess the necessary qualifications to of competent directors, each of whom can add effectively participate and help secure value and contribute independent judgment in objective, independent judgment on the formulation of sound corporate strategies corporate affairs and to substantiate proper and policies. checks and balances. Per the Company’s Corporate Governance Manual, a director of In the selection of candidates for the Board, the Cebu Holdings, Inc. shall have the following objectives set by the Board for its composition qualifications: are to be seriously considered, as well as the required knowledge, abilities and experience 1. He/She must own at least one (1) share of needed to successfully manage the Corporation. the capital stock of the Corporation; Careful attention must be given to ensure 2. He/She must possess a college degree or that there is independence and diversity, and its equivalent or adequate competence and understanding of the fundamentals appropriate representation of women in the of the real estate industry or sufficient Board. (R1.1) experience and competence in managing a business to substitute for such formal discussion; 3. Relevant qualification, such as previous business experience, membership in good standing in relevant industry, and membership in business or professional organizations; and 4. He/She shall possess integrity, probity, and diligence.

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BOARD PROCESS E.3

Board Meetings and where a director contracts illness, death in the immediate family, serious accident or performs Attendance civic obligations. E.3.1, E.3.2, E.3.3, E.3.4, E.3.5

In Board and Committee meetings, the director Board meetings are scheduled at the should review meeting materials and if called beginning of the year. The Board shall for, ask the necessary questions or seek designate the days when it shall meet, at a clarifications and explanations. (R4.1-3) time and place determined by its Chairman, with further meetings to occur when deemed The Board may, to promote transparency, necessary by the Chairman or at least the require the presence of at least one request of two directors. The Board shall independent director in all of its meetings. meet in person, teleconference or video However, the absence of an independent conferencing facility or through such other director shall not affect the quorum similar means. requirement if he is duly notified of the meeting but notwithstanding such notice fails to attend. Two-thirds of the number of directors as fixed in the articles of incorporation shall constitute In 2020, the Board had four regular and a quorum for the transaction of corporate organizational meetings. All the board business. members attended at least 75 percent of the meetings for the year. The Executive Directors are encouraged to attend all Committee likewise convenes regularly Board meetings, either in person or via in lieu of the Board. Attendance of all teleconferencing facility. A minimum directors is detailed in the table found attendance of more than 75 percent for all on https://www.cebuholdings.com/wp- Board meetings shall be required for a director content/uploads/2016/12/2021-01-12-CHI- to be eligible for re-election except in cases ATTENDANCE-OF-DIRECTORS-IN-2020.pdf

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The Corporate Secretary The Company bars an independent director E.3.7, E.3.8 from serving in such capacity after the term limit of nine (9) years, but may continue to The Corporate Secretary, although not a qualify for nomination and election as a non- member of the Board of Directors, plays a key independent director. In the instance that the role in supporting the Board in the discharge Company retains an independent director in of its functions and must share the visions and the same capacity after nine years, the board decisiveness of the CEO. He or she is a Filipino provides meritorious justification and seeks with excellent legal, financial, accounting, shareholders’ approval during the annual administrative, and interpersonal skills. shareholders’ meeting. (R5.3-1, 5.3-2, 5.3-3)

The Corporate Secretary is tasked to attend to In 2020, SGV & Co. was appointed to validate the correspondences and files of the Company, the records. and signs jointly with the president all stock certificates. The position is tasked to also Board Independence and record and process all movements of stock Conflict of Interest certificates. Since February 2014, Atty. June E.2, 102-25 Vee D. Monteclaro-Navarro, Filipino, has served as the Corporate Secretary of the Company. Members of the Board are obligated to follow high ethical standards while bearing in mind the To view the duties and responsibilities of the interests of all stakeholders. Corporate Secretary, see the following link: https://www.cebuholdings.com/governance_ Directors are expected to act only in the best list/10/ interest of the Company and are required to comply with the Code of Ethics. Thus, they Board Appointments and are required to disclose annually any conflict of interest through a Disclosure Form. Any Re-election material conflict of interest found shall cause E.3.9, E.3.10, E.3.11, 102-24 disqualification from the Board. The directors are elected by ballot, and each shareholder is entitled to cast as many votes as the number of his/her shares, multiplied by the number of slots for election. Pursuant to the Corporation Code, any shareholder—including minority shareholders—shall have the right to nominate candidates to the Board.

For the election of directors, it is necessary for one-half plus one of the outstanding shares of stock to be represented.

The Committee of Inspectors of Proxies and Ballots appointed by the Board supervises the election.

Directors hold office for the term of one year or until their successors shall have been elected and qualified, in accordance with the by-laws.

Building more sustainable communities 75 CEBU HOLDINGS, INC.

The CHI Board brings to the organization a balanced mix of business, legal, and finance competencies

Moreover, directors are required to abstain from participating in discussions and voting on any matter where they are in conflict of the Board at least one day before dealing in interest. (R7.1-2 and R15.2) the Company’s shares of stock. No person shall qualify or be eligible for nomination or Directors should keep the information election to the Board if he or she is engaged contained in confidential reports or in any business which competes with, or discussions for at least two years, and ensure is antagonistic to, that of the Company in that all persons who have access to this accordance with the by-laws. information on their behalf comply with this rule. Remuneration D.2.11, E.3.12, E.3.13, E.3.14, E.3.15, 102-35, 102-36 If a director is interested in accepting a directorship in another Company, he/she The Board of Directors determines a level of should first notify the CHI’s board before remuneration for its members that is sufficient accepting it. He/She shall provide a copy of to attract and retain those who are competent, the written notification to the board or minutes and compensate them not only for their of board meeting wherein the matter was performance of numerous responsibilities discussed. but also for undertaking certain risks as a Board member. The compensation which may Executive directors shall hold no more than be in the form of cash remuneration and/or two board seats in listed companies outside stock option plans, shall be fixed by way of a the Corporation’s group. resolution of the Board of Directors. (R2.5)

Independent directors may serve for a period The compensation is determined through a of not more than nine years and may hold resolution of the Board, who may provide that only up to five board seats in publicly-listed only non-executive directors shall be entitled companies simultaneously. This ensures that to such compensation. Moreover, the Company they have sufficient time to fully prepare for may purchase insurance coverage for its meetings, challenge Management’s proposals/ directors at its own expense. (R2.5) views, and oversee the long-term strategy of the Company. (R4.1-2, 5.3-1) No director should be involved in deciding his or her own remuneration. Furthermore, the Insider Trading Policy Company does not have stock rights, options, In line with the Insider Trading Policy of the and warrants for directors, executives, and Company, each director is required to notify employees.

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Non-executive directors, defined as members Diversity, Skills and of the Board who are neither officers nor Competencies consultants of the Company, receive a per E.4.5, E.4.6, 102-26 diem of P40,000 for each Board meeting attended and P20,000 per Board committee The Company has a policy ensuring diversity of meeting actually attended. These amounts experience and background of directors in the were implemented effective April 28, 2006. Board. (R8.4) Apart from educational requirements, a Remuneration Process Discussion and director should have sufficient understanding approval of remuneration for CEO and of business fundamentals and experience in management officers are done through the managing a business. Personnel and Compensation Committee. The CHI Board brings to the organization a The committee establishes a formal and balanced mix of business, legal, and finance transparent procedure for establishing competencies, with each director capable a formal and transparent procedure for of adding value and rendering independent developing a policy for determining the judgment in relation to the formulation of remuneration of directors and officers that is sound corporate policies on issues of strategy, consistent with the Corporation’s culture and resources, standards and performance strategy as well as the business environment related to corporate social responsibility, and in which it operates. It also provides oversight environmental and economic sustainability. over remuneration of senior management and other key personnel. The Company also requires that at least one of its non-executive directors should have prior None of the directors, in their personal working experience in the sector or broad capacity, has been contracted and industry group to which our Company belongs. compensated by the Company for services other than those provided as a director. The board regularly reviews its own composition, taking into account the Details about remuneration matters are found evolving requirements of the Company and on page 104-105. best practices in corporate governance.

Building more sustainable communities 77 CEBU HOLDINGS, INC.

Development and Training D.2.8, E.5.6, E.5.7, 102-27

The Company, particularly the Chairman of the Board, assures the availability of proper orientation for first-time directors and continuing training opportunities for all directors. The Compliance Officer ensures the attendance of board members and key officers at relevant trainings. The Corporate Secretary shall have such other responsibilities as the CHI encourages the selection of a mix of Board may impose upon him or her, including competent directors, where each can add the facilitation of trainings for directors when value and contribute independent judgment to necessary. (R 1.3-1) the formulation of sound corporate strategies and policies. Prior to assuming office, directors and re- elected officers shall attend a seminar CHI gives careful attention to ensure that there on corporate governance which shall be is independence and diversity, and appropriate conducted by a duly recognized private representation of women in the Board, subject or government institutions that are duly to possession of knowledge, abilities, skills accredited by the SEC. If necessary, funds and experience determined by the Board as shall be allocated by the Corporation for this necessary for the Board to properly perform purpose.(R1.3.1) its functions. The Board is currently composed of seven male members and two female An orientation program for new directors is member. The Chairman of the Board is female. held whenever necessary to properly equip (R 1.4) and prepare them for their role as members of the Board. (R1.1) It is important to have Board diversity to avoid groupthink and ensure that optimal decision- To keep our Board and key officers abreast on making is achieved. Diversity is not limited to relevant corporate governance practices, laws, gender and includes age, ethnicity, culture, regulations and changing risks, the Company skills, competence and knowledge. ensured 100 percent attendance to the Ayala Group continuing education program on

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corporate governance. The Company also each top management group based on four actively encourages and supports its directors review clusters. The Assessment covers the to attend continuing education programs on Board of Directors, the Board Committees, corporate directorship.(R1.1, 1.3-2) individual directors, and the president and CEO. Aside from the regular corporate governance training facilitated by the ICD, we ensured The results are compiled by the Compliance the attendance of members of the Board Officer and submitted back to the Board and three key officers to the SEC-accredited for discussion and appropriate action through Ayala Group Corporate Governance and Risk the corporate secretary. This self-assessment Management Summit in 2020. That same year, survey covers compliance with the Corporate a third party assessment was conducted. Governance Manual, individual committee (R1.1, 1.3) charters, and performance scorecard for the president/ CEO. Results of the 2019 self- Performance Appraisal assessment were presented by the compliance E.5.5, E.5.6, E.5.7, E.5.8, E.5.9, E.5.10, 102-28 officer to the board on February 26, 2020. (R6.1, 6.2-1, 6.2-2) and can be found on the Following best practices, the Board measures CHI website, https://www.cebuholdings.com/ its assessment process and regularly carries governance_list/10/ out evaluations to appraise its performance and ensure a balanced composition or mix of backgrounds and competencies.

The Board makes use of a self-assessment exercise, conducted and facilitated by CHI’s external partner, AON, implemented in the form of a formal questionnaire and cuts across

Building more sustainable communities 79 CEBU HOLDINGS, INC.

PEOPLE ON THE BOARD

Directorships (R1.2) The current chairman of the Board is Bernard Vincent O. Dy, who assumed the position on The Board of Directors has nine members, December 3, 2020. As chairman, he acts as majority of whom are independent and/ the legal representative of the Company and or non-executive directors who possess has the following roles and responsibilities the necessary qualifications to effectively (R2.3): properly assesses reports made by participate and help secure objective, Management and assures Board performance is independent judgment on corporate affairs evaluated at least yearly, etc. More information and to substantiate proper checks and on the chairman’s responsibilities may be balances. found on the following link: https://www. cebuholdings.com/governance_list/7/. For CHI, the board is composed of the following members: The current president is Anna Ma. Margarita B. Dy, who assumed the position on December Non-executive Directors 5 3, 2020. The former president was Aniceto Independent Directors 3 V. Bisnar, Jr., who has served in that capacity Executive Directors 1 since 2015. For a full list of their roles and responsibilities, visit https://www.cebuholdings. Chairman and President and CEO com/governance_list/7/ E.4, 102-23, 102-32 (R5.4-1, 5.4-2) Corporate Objectives Of the nine members of the Board, only the D.2 president is an executive director. The rest are non-executive or independent directors The Board and management committee ensure who are neither officers nor consultants of the that the Company achieves its objectives Company. with the implementation of set strategies, maximizing efficiency of operations, exploring ways to grow the business, and ensuring the sustainability of the Company.

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Shareholder Value Creation Code of Ethical Behavior D.2 E.2.1, E.2.2, E.2.3

Our Company seeks to consistently improve The Code of Ethical Behavior outlines the its business fundamentals and prospects to general expectations and standards of deliver increasing value to our shareholders’ behavior and ethical conduct of everyone in investments. Our strategies, business models, the Company—including that of subsidiaries. and operating plans are all oriented towards It is implemented in conjunction with the achieving consistent progress in all aspects of Company’s Human Resources Manual of the business and the value we create. Personnel Policies, and includes the Code of Conduct on acceptable office behavior for We focus on growth, profitability, return on the orderly operation of the Company and the equity, asset efficiency, and total shareholder protection of the rights, safety and benefit of return as key result areas for our management the entire workforce. team on a corporate, divisional, and individual level. These form the basis of incentives such Company employees are required to annually as management promotions, allocation of a disclose any business and family-related performance-based cash bonus, and executive transactions to the Company by submitting a stock ownership plan grants. Conflict of Interest Disclosure Statement to the Human Resources and Admin Division. (R7.2-2; Compliance Officer SR15.2)

Ma. Luisa D. Chiong was CHI’s Chief Financial Our Company’s Code of Ethics and Conflict of Officer and Compliance Officer for 2020. She Interest Policy may be accessed through our was not a member of the Board of Directors. website link: http://www.cebuholdings.com/ (R1.6) She ensured strict adherence to the Code governance_list/12/. of Corporate Governance and to the rules and regulations of regulatory agencies.

She was also responsible for reporting any violations to the Board.

To ensure stricter monitoring and timely compliance with regulations, we have also identified all regulatory requirements of our business operations and put in place an electronic monitoring system for compliance. The system covers all our units, including our business partners or contractors.

Building more sustainable communities 81 CEBU HOLDINGS, INC. BOARD OF DIRECTORS

BERNARD VINCENT O. DY ANNA MA. MARGARITA B. DY

Chairman President Director BOARD SPREAD

82 Building more sustainable communities 2020 INTEGRATED REPORT BOARD OF DIRECTORS

MARIANA ZOBEL DE ANICETO V. BISNAR, JR. JOSE EMMANUEL H. AYALA Director JALANDONI Director Director

Building more sustainable communities 83 CEBU HOLDINGS, INC. BOARD OF DIRECTORS

EMILIO LOLITO J. FR. RODERICK C. TUMBOCON SALAZAR JR., SVD Director Independent Director

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PAMPIO A. ABARINTOS ENRIQUE L. BENEDICTO Independent Director Independent Director

Building more sustainable communities 85 CEBU HOLDINGS, INC.

MANAGEMENT COMMITTEE

ANNA MA. MARGARITA B. DY NERISSA N. JOSEF- President MEDIANO

Filipino, 51, has been President of CHI since COO December 3, 2020. She has been a director of CHI since August 2016, and Chairman Filipino, 49, is the Vice President and of the Board of Directors from April 2017 Head of the Business Development to December 2020. Concurrently, she is Group of CHI. Concurrently, she is Senior Vice President of Ayala Land, a Assistant Vice President of Ayala member of its Management Committee and Land, Inc. Head of Strategic Landbank Management Group.

MA. LUISA D. CHIONG MA. CECILIA CRISPINA T. CFO URBINA Filipino, 48, is Chief Finance Officer (CFO) AVP - Corporate Services Group and Compliance Officer of CHI. She Filipino, 51, Filipino, Assistant Vice assumed the position in August 15, 2017. President of Corporate Services She is also currently the CFO of the Ayala Group and Head of Human Resources Land Vismin Group and Strategic Landbank and Admin Division. She is the Management Group. She is Assistant Vice Chairperson of the Health and Safety President in Ayala Land, Inc. Committee of CHI.

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MANAGEMENT TEAM

BUSINESS DEVELOPMENT (TOP LEFT TO BOTTOM RIGHT) Marie Anne Katherine C. Climaco (Marketing); Grant Norihide B. Saito (Project Development), Fraulein T. Quijada (Land Acquisition), Romulo M. Alajid (Project Development), Jonas R. Suan (Innovation and Design), Catrina S. Martinez (Marketing)

SUPPORT GROUP (TOP LEFT TO BOTTOM RIGHT) Maria Jeanette A. Japzon (Corporate Communications, Media Relations and Legal Affairs), Ma. Cecilia Crispina T. Urbina (Human Resources and Admin), Vera R. Alejandria (Corporate Sustainability Officer/Community Relations), Joseph Francisco A. Dee (Network and Systems Admin), Suzette T. Go (Information Systems)

FINANCE GROUP (TOP LEFT TO BOTTOM RIGHT) Izabelle A. Alagon (Accounting), Noel F. Alicaya (Finance and Control Officer / Chief Risk Officer), Jennifer G. Sia (Audit), Archie T. Obeso (Control and Analysis), Jasmin R. Calero (Funds Management)

Building more sustainable communities 87 CEBU HOLDINGS, INC.

Enterprise-wide Risk 102-30

At CHI, effective risk management is integral to our business’ sustainability and the preparedness and resiliency of our operations, facilities and project sites. We take strategic approaches in managing current and perceived risks to an acceptable level—both holistically and individually—at all levels of the company.

EMBEDDED IN OUR GUIDED BY A FRAMEWORK CORPORATE CULTURE Our ERM framework details the process of identifying risks for the company and its Our Enterprise-wide Risk subsidiaries. This is supported by a comprehensive Management (ERM) program risk identification, review, monitoring and reporting adopts a top-driven, bottom- process at all levels in the company. focused approach. Risk awareness is embedded in Our framework focuses on four main categories: our corporate culture with strategic, operational, financial and environmental management taking on an active risks. role in managing risks. The identification, management and EN S VI monitoring of key risks are done SK RO RI N L M on all levels of the company and A E N N O T are part of daily operations. I ISK A T R AN L A Y A R F L R TI Y I E N Z S P E K E O D R S I I S K

COMMUNICATION CONSULTATION REPORTING M

O N I T O S R T R K R I S A S I S T K R K E T S G EA I R R IC T L R IA I C SK N S NA FI

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CHARACTERISTICS OF THE RISK MANAGEMENT PROCESSES CHIEF RISK »» Board-level understanding »» Use of both operational and and commitment to Risk financial risk information in to OFFICER Management as an integral decision making processes (CRO) aspect in decision making and »» Formal collection and driving value incorporation of operational »» Transparency of risk and financial risk information The Chief Risk Officer and communication into decision-making and his team are responsible »» A risk culture that encourages governance processes for creating a culture that accountability at all levels »» Moving beyond risk avoidance actively recognizes and and mitigation to finding »» A Chief Risk Officer and team addresses risks to our who drives key management value-creating opportunities processes in risk management operations. Together with »» Identification of existing and management, the company emerging risks takes charge of building its capacity to formulate PROTECTED BY LINES OF DEFENSE strategies and execute decisions that will make our We have identified the company’s three main risks: Competitor business sustainable and Risk, Project Execution and Delivery Risk, and Changing Market relevant. Risk. Please see table on pages 90 to 91 for definitions of our key risks. To manage these risks, we apply three lines of defense Specifically, the CRO has in ERM and internal controls: the following tasks:

»» Establish the risk culture Risk Management and Risk Oversight in the company and create Accountability at Source the vision and purpose of Board Committees/Audit the risk function Risk Owners/Business Group (Internal and External) Level »» Oversee risk-identification »» Risk management »» Risk Oversight Committee and mitigation activities embedded within critical provides oversight on risk »» Implement continuous processes management activities, improvement of risk »» Risk owners take active role approves ERM policy, reviews management policies and in identifying, assessing, status of top corporate risks processes and treating risks in daily and effectiveness of the ERM »» Set acceptable levels of operations process risk appetite »» Processes, procedures, »» Audit Committee provides »» Set an effective control control instituted at business oversight functions on financial environment group level reporting, internal control, internal audit, external audit, Risk Governance and compliance The CRO reports on a quarterly »» Internal audit periodically basis to the Risk Oversight ERM Team reviews processes and controls Committee on the status of key »» Chief Risk Officer leads the and recommends areas for risks, performance indicators, ERM Team to ensure risks improvement through its and mitigation plans to manage are effectively managed assurance and consulting those risks. This report presents and relevant risks are activities insights on: addressed »» External audit conducts »» Periodic review and periodic independent »» Established risk monitoring of key risks and assessment of financial controls management policies indicators and processes in conjunction »» Set risk management »» Periodic reporting of key with the preparation of the activities that monitor the risks and mitigation plans to financial statements Company’s key risks Risk Oversight Committee

Building more sustainable communities 89 CEBU HOLDINGS, INC.

MANAGING KEY RISKS 102-11, 102-15

RISK DESCRIPTION ROOT CAUSES IMPLICATIONS MITIGATING ACTIONS FOR VALUE AND OPPORTUNITIES CREATION 1) COMPETITOR RISK • Aggressive marketing • Eroded market share • Regular monitoring of market Actions of competitors or new entrants to the and sales efforts of indicators to be used as basis for market may affect our company’s competitive competitors informed decisions and possible advantage and pose difficulties in achieving • Customer opportunities business objectives. expectations not • Analysis of current and future being met by our situations and develop plans company • Use of integrated mixed-use • Better value model. Diverse product offerings proposition of to various segments of the market (market differentiation) competitors • Focus on key growth centers • Focus on recurring income • Expanded partnerships beyond parent company 2) PROJECT EXECUTION AND • Failure to meet • Project delays • Regular monitoring of status DELIVERY RISKS project schedule • costly products of projects to ensure customer Market driven-factors, fortuitous events or (timeliness) • product not needs and sales targets are met natural environment conditions may affect our • Project exceeding meeting customer • Close partnering with company’s ability to deliver projects within cost expectations construction arm MDC agreed timelines, customer expectations and • Inconsistent quality • Integrity program for vendors and safety standards agreed costs. • Proper selection and evaluation applied across all of vendors through an extensive projects • Natural environment accreditation conditions hampering quality, cost and delivery of projects 3) CHANGING MARKET NEEDS RISK • Changes in macro- • Marginalization of • Diversification of product lines Changes to the market may affect our economic, social, competitors • Partnering with strong local company’s ability to respond to opportunities political and developers in the marketplace, anticipate and respond to consumer conditions • Monitoring of key economic, the demands of our consumers, and maintain social, political and consumer or increase revenue and profitability in the indicators specific business environment where the business is operating. 4) PRODUCT/ SERVICE QUALITY AND • Poor performance of • Low quality of • Conduct of Customer SAFETY RISK vendors product and service Satisfaction Surveys Inability to meet or exceed customer • Delayed &/ • unresolved • Regular coordination meetings expectations in terms of relevance and quality or unresolved complaints at the operational level to of products and/or services complaints from ensure issues and concerns are customers, resulting addressed & resolved within to reduction in target timelines customer satisfaction • Regular monitoring of vendor ratings • Weak safety protocols performance implemented at • Vendor integrity program properties • Close partnering with MDC, ALMI and APMC to ensure quality and safety standards are in place and implemented 5) ORGANIZATIONAL RISK • Employee turnover/ • High attrition rate, • Employee developmental plans CHI’s growth and strategic objectives being attrition low organizational and activities targeted for both impeded by weaknesses in its human resources, • Lack of capturing and climate ratings technical and behavioral skills processes, systems and performance metrics. sharing learnings • lack of knowledge • Succession planning • Decline in management • Employee engagement activities organization climate • Conduct of organizational ratings climate surveys • Cross-posting, workteams

6) POLITICAL RISK • Failure to comply with • Exposure to fines, • Maintaining good relationship CHI’s growth and strategic objectives being legal and regulatory penalties and other and open communication with impacted by governmental or political requirements charges regulatory authorities and LGUs factors which may be brought about by • Failure to secure • Regular monitoring status of updates or changes of government policies, necessary permits permits and timelines for renewal laws and regulations that are unfavorable and licenses thereof to ensure that these are • Failure to establish to the company and inefficient dealings or secured within target timelines relationships with authorities and LGUs. healthy relationship • Review of the permit process to The profitability of our company may be with Local significantly impacted by political events and Government Units determine gaps in the process conditions. (LGUs) and recommend process improvements

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RISK DESCRIPTION ROOT CAUSES IMPLICATIONS MITIGATING ACTIONS FOR VALUE AND OPPORTUNITIES CREATION

7) FINANCIAL RISK • Changes in market • Inaccuracy of • Careful management of cash and Risks associated with authorization, completeness, interest rates financial reports and money market placements. and accuracy of financial transactions processed, • High inflation rate disclosures • Established counterparty bank summarized and reported in our company’s financial • Fluctuations in • Adequate funding for limits for cash and investible application system. . foreign currency projects, including funds exchange rates borrowing of funds • Dealing with counterparties with • Rising interest rates from various sources highest credit standing • Non-compliance to (e.g., debt funding, • Proper timing in obtaining debt financial reporting financial covenants) standards funding at best possible terms and conditions • Maintaining financial covenants

8) MAJOR SECURITY, HEALTH, & • Demonstrations • Loss of lives • Incident Management Team SAFETY INCIDENTS • Major Security Crime • damage to property • Conduct of regular emergency Threats to the safety of the people within and outside Incidents preparedness drills of the organization such as theft, robbery and • Terrorism • Security protocols terrorist attack to the properties brought about by • Property related • Close partnering with and inefficient security protocols. hazards monitoring of security provider • Bad publicity for • Emergency response teams our company and its • Health & Safety Committees products • Failure to immediately • Disaster Recovery Plan (DRP) in or accurately respond place to crisis situations • Business Continuity Plan (BCP) • Robbery: Loss lives in place and damage to • Regulatory requirement bodies property • Travel risks (training, visitation of various properties) • Other manmade types of emergency e.g. fire, strike, etc. 9) ENVIRONMENTAL RISKS • Natural disasters • Environmental • Environmental impact • Environmental damage • Climate change damage assessment • Loss of lives • Typhoons and • Loss of lives • Environmental Management • Damage to property flooding brought • Damage to property Planning • Work stoppage about by extreme • Work stoppage • Resource Conservation Program • Project delays weather conditions • Project delays • Facilities upgrade • Waste (solid & water), • Project monitoring and effluents, emissions, measurement resource depletion • Environmental Compliance 10) IT RISK - CYBERSECURITY RISK • Unauthorized access • Vulnerability of • Regular conduct of vulnerability/ Threat of cyber attacks to critical systems. to critical systems critical systems and penetration testing • System downtime networks to cyber • System security protocols in due to critical attacks place. systems brought • Unauthorized access • Cascading of IT-related policies about by viruses, to personal data to the organization malware, ransomware and other critical/ • Compliance to Data Privacy Act & socially-engineered sensitive information and appointment of group-wide attacks. • Impact: denial of service, malicious DPO and company COPs code, unauthorized access, inappropriate storage 11) PANDEMIC RISK • Novel virus – absence • Exposure of wokforce • Activation of BCPs of vaccine; proper to virus • Business impact analysis and treatment under study • Projects put on hold other financial measures to ensure • Difficulty in early • Limited operations due financial sustainability detection allowing to various quarantine • Taking care of workforce : secure, uncontrolled spread of classifications protect and engage various teams, virus including outsourced personnel, • Delayed implementation WFH arrangements, remote of travel ban / restrictions communication • DOH limited capability; • Health and safety measures within low testing and tracing properties and estates capacity • Use of digital systems and processes • Differing protocols to facilitate work activities and implemented by gov’t management of operations and entities (National, LGU) projects • Leisure and non- • Conducted eLearning Training essential activities Sessions for employees on health immediately effected by and well-being quarantine measures • Post ECQ workplan / Recovery Plans

Building more sustainable communities 91 CEBU HOLDINGS, INC.

A Driver of Key Enterprise-wide Risk Management

PROTECTING THE BALANCE Property, Inc. with Gaisano Group in Mactan, SHEET THROUGH FINANCIAL RISK Cebu District Property Enterprise with Ayala MANAGEMENT Land and Aboitizland in Mandaue, allowed us to maintain a strong market presence and We continue to take advantage of the current expand our portfolio through solid synergies, low but slowly increasing interest rates by advanced master-planning, stronger combined maximizing its leverage and converting our branding, and deeper market knowledge. short-term to long-term debt at favorable These partnerships benefit from the combined rates to fund the construction of our leasing financial strength, technical expertise, and real projects. This allows us to better balance our estate experience of the companies. debt capacity and maturity with a steady recurring income. DIVERSIFICATION OF PRODUCT LINES

MONITORING OF MAJOR MARKET We continue to build on our expertise and INDICATORS extend our market reach. Since 2013, we have been diversifying our portfolio with the We rely on close monitoring of major introduction of the Amaia brand for affordable market indicators for guidance in project housing, and office condominiums for sale. investments. Forecasts, industry, and sales reports are regularly monitored and reported ACTIVE MANAGEMENT OF to the project teams and senior management ENVIRONMENTAL RISKS to provide them a clearer perspective of prevailing market conditions and issues on the Our operations have a major impact on the ground for a more informed decision-making environment and social conditions in the process. areas where we operate. Together with parent company Ayala Land, we outlined CLOSE MONITORING OF ONGOING our sustainability focus areas where we PROJECTS can affect positive change through our developments. These include: (1) site The early identification and management of resilience, (2) eco-efficiency, (3) pedestrian delivery risk allows us to move our projects mobility and transit connectivity and (4) local on the right track, meet our customers’ economic development. Programs have been requirements, and achieve our sales and implemented in 2020 for these focus areas. turnover targets. We also continue to adapt measures to EXPANDED PARTNERSHIPS BEYOND reinforce our Business Continuity Plan. Our PARENT COMPANY Incident Management Team ensures continuous operations, or at least minimal disruption, during calamities and unforeseen events. Strong synergies diversify risk and create the Improvements on our services and facilities opportunity for us to increase our reach and have also been implemented to ensure the depth in the Cebu market. safety of our stakeholders and enhance our readiness in times of emergencies and In 2020, our continued partnership with calamities. strong local developers, Taft Punta Engaño

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Assessing Our Risk Maturity

Aon PLC, the leading global provider »» Predetermined or developing set of of risk management, insurance and loss and tolerance guidelines reinsurance brokerage, and human »» Explicit consideration of risk and risk management information in key resources solutions and outsourcing decisions services, designed the Aon Risk »» Consistent application of analysis Maturity Index—an innovative tool with incorporation of both to assess an organization’s risk qualitative and quantitative techniques management practices through a Risk Maturity Rating. Aon’s recommendations to This assessment tool focuses on the further develop risk management 10 characteristics of risk maturity, as capabilities were as follows: follows: »» Incorporate risk management responsibilities into job descriptions »» Board Understanding and Commitment and performance evaluations to Risk Management »» Formalize risk tolerances, including »» Risk Management Stewardship metrics and reporting requirements »» Risk Communication »» Identify opportunities for efficiency, »» Risk Culture Engagement & consistency and collaboration Accountability among risk-based functions and »» Risk Identification processes »» Risk Management Strategy »» Incorporate risk correlation Development within existing risk quantification approaches »» Risk Information & Decision Making Processes »» Conduct a robust assessment of emerging risks with key stakeholders »» Risk Information & Human Capital Processes (internal and external) » Confirm and enhancing risk »» Risk Analysis & Quantification » reporting frameworks at »» Risk Management Focus & Strategy management, executive and Board levels Using this tool to self-assess our »» Implement a risk management existing risk management approach, technology solution findings showed that the company »» Expand understanding of the impact is at an Operational Level of Risk of employee life cycle and employee engagement, Maturity. »» and Confirm that risk management practices add value and support There is a clear understanding of the identification of opportunities as organization’s key risks and also a well as risk avoidance and mitigation consistent execution of activities to address these risks. Some functional areas employ more sophisticated techniques whenever necessary.

Building more sustainable communities 93 CEBU HOLDINGS, INC.

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APPENDICES & INDICES

96 120 128 APPENDICES AND GRI CONTENT INDEX ASEAN CORPORATE SASB METRICS GOVERNANCE INDEX

Building more sustainable communities 95 APPENDIX 1. Aurora Properties Incorporated ALI Eton Property Development DIRECTORS’ PROFILE Vesta Property Holdings, Inc. Corporation B.2, D.2, E.2, E.4 Ceci Realty Inc. Aurora Properties, Inc. Alabang Commercial Corporation Nuevocentro, Inc. BERNARD VINCENT O. Accendo Commercial Corporation DY PRESIDENT DIRECTOR AND EXECUTIVE VICE FILIPINO, 57 Hero Foundation, Inc. PRESIDENT CHAIRMAN OF THE BOARD OF DIRECTORS, Bonifacio Art Foundation, Inc. Fort Bonifacio Development CEBU HOLDINGS, INC. (CHI) AND HAS BEEN Corporation A DIRECTOR OF CHI SINCE AUGUST 2014. DIRECTOR HE WAS CHAIRMAN OF THE BOARD OF CHI Avida Land Corporation DIRECTOR FROM AUGUST 2014 TO APRIL 2017 Amicassa Process Solutions, Inc. Accendo Commercial Corp. Whiteknight Holdings, Inc. Alveo Land Corp. EDUCATION AyalaLand Medical Facilities Leasing, Aviana Development Corp. Inc. Avida Land Corp. B.B.A Accountancy (BBAA ‘85), Serendra, Inc. Ayala Greenfield Development University of Notre Dame, U.S.A Alveo-Federal Land Communities, Inc. Corporation Master’s Degree in Business ALI Eton Property Development Corp. Berkshires Holdings, Inc. Administration (MBA ’89), University of AKL Properties, Inc. Cagayan de Oro Gateway Corp. Chicago, U.S.A Columbus Holdings, Inc. Master’s Degree in International BOARD MEMBER Emerging City Holdings, Inc. Relations (MIR ’95), University of Ayala Foundation, Inc. CECI Realty, Inc. Chicago, U.S.A Ayala Group Club, Inc. Crans Montana Property Holdings DIRECTORSHIP/OTHER POSITIONS Corporation IN LISTED COMPANIES PAST MEMBER HLC Development Corporation Advisory Council of the National Advisory Group for the Police PAST VICE PRESIDENT DIRECTOR, PRESIDENT AND CHIEF Transformation Development of the Benpres Holdings Corporation EXECUTIVE OFFICER Philippine National Police in 2015 Ayala Land, Inc. TRUSTEE Alagang Ayala Land Foundation Inc. DIRECTOR ANNA MA. MARGARITA B. AyalaLand Logistics Holdings Corp. DY TRUSTEE AND TREASURER FILIPINO, 51 MCT Bhd of Malaysia Bonifacio Art Foundation, Inc. PRESIDENT OF CEBU HOLDINGS, INC. (CHI) OTHER DIRECTORSHIPS/ SINCE DECEMBER 03, 2020. DIRECTOR OF POSITIONS CHI SINCE AUGUST 2016, AND CHAIRMAN ANICETO V. BISNAR, JR. OF THE BOARD OF DIRECTORS FROM APRIL FILIPINO, 56 2017 TO DECEMBER 2020 CHAIRMAN DIRECTOR OF CEBU HOLDINGS, INC SINCE Alveo Land Corporation JANUARY 2015 AND SERVED AS PRESIDENT Ayala Property Management EDUCATION FROM JANUARY 2015 TO DECEMBER 2020. Corporation BS of Arts, Degree in Economics Honors Makati Development Corporation Program, Magna Cum Laude, Ateneo De EDUCATION Amaia Land Corporation Manila University, Philippines 1990 Philippine Military Academy, Bachelor of Avenco South Corporation Master’s Degree in Economics, London Science (PMA BS ’85, top 5% of class), AyalaLand Commercial Reit, Inc. School of Economics and Political Baguio City, Philippines Bellavita Land Corporation Science, UK 1991 Master in Business Management (MBM Cebu Holdings, Inc. Masters in Business Administration, ‘89), Asian Institute of Management Ayagold Retailers, Inc. Harvard Graduate School of Business (AIM), Makati City, Philippines Station Square East Commercial Administration in Boston, U.S.A 1996 Master Planning and Mixed-Use Corporation DIRECTORSHIP / OTHER Development Program, Harvard Aviana Development Corporation University School of Urban Design Cagayan De Oro Gateway Corp. POSITIONS IN LISTED COMPANIES BGSouth Properties, Inc. DIRECTORSHIP/OTHER POSITIONS BGNorth Properties, Inc. DIRECTOR AND PRESIDENT IN LISTED COMPANIES BGWest Properties, Inc. Cebu Holdings, Inc. Nuevocentro, Inc. VICE PRESIDENT Portico Land Corp. SENIOR VICE PRESIDENT Ayala Land, Inc. Philippine Integrated Energy Solutions, Ayala Land, Inc. Inc. CHIEF OPERATING OFFICER AND SENIOR MEMBER, MANAGEMENT COMMITTEE VICE PRESIDENT VICE CHAIRMAN (MANCOM) Ortigas Land Corporation Ayala Greenfield Development Ayala Land, Inc. Corporation OTHER DIRECTORSHIPS/POSITIONS Alviera Country Club, Inc. HEAD, STRATEGIC LANDBANK CHAIRMAN MANAGEMENT GROUP (SLMG) Adauge Commercial Corporation DIRECTOR AND PRESIDENT Ayala Land, Inc. Central Block Developers, Inc. Bonifacio Land Corporation OTHER DIRECTORSHIPS/ Amaia Southern Properties, Inc. Emerging City Holdings, Inc. VICE CHAIRMAN POSITIONS Columbus Holdings, Inc. Avenco South Corporation Berkshires Holdings, Inc. Fort Bonifacio Development DIRECTOR AND PRESIDENT CHAIRMAN AND PRESIDENT Corporation Altaraza Development Corporation North Point Estate Association, Inc.

96 Building more sustainable communities Asian I-Office Properties, Inc. Bacuit Bay Development Corporation MARIANA ZOBEL DE AYALA Cebu Leisure Company, Inc. Bay Area Hotel Ventures, Inc. FILIPINO, 32 Cebu Business Park Association, Inc. Bonifacio Hotel Ventures, Inc. DIRECTOR OF CEBU HOLDINGS, INC. (CHI) Asia Town I.T. Park Association, Inc Capitol Central Hotel Ventures, Inc. SINCE APRIL 14, 2020 Cebu Insular Hotel Company, Inc. DIRECTOR AND PRESIDENT Central Bloc Hotel Ventures, Inc. EDUCATION Aviana Development Corporation Chirica Resorts Corporation Bachelor of Arts Degree in Social Lagdigan Land Corporation Circuit Makati Hotel Ventures, Inc. Studies (Philosophy, Politics, & Direct Power Services, Inc. Economics) ‘11, Harvard University DIRECTOR Ecoholdings Company Inc. Masters in Business Administration, Accendo Commercial Corporation Econorth Resort Ventures, Inc. INSEAD. Cebu District Property Enterprise, Inc. EcoSouth Hotel Ventures, Inc. Cebu Holdings, Inc. Enjay Hotels, Inc. DIRECTORSHIP/OTHER POSITIONS Cagayan de Oro Gateway Corporation Greenhaven Property Ventures, Inc. IN LISTED COMPANIES Taft Punta Engano Property, Inc. Integrated Eco-Resort, Inc. Lio Resort Ventures, Inc. VICE PRESIDENT VICE PRESIDENT Lio Tourism Estate Management Retail Marketing and Customer Solinea, Inc. Corporation Insighting & Analytics, Bank of the Makati North Hotel Ventures Philippine Islands AFFILIATIONS North Eastern Commercial Corporation North Liberty Resort Ventures, Inc. Hero Foundation, Inc., Board of Trustee DIRECTOR North Triangle Hotel Ventures., Inc. BPI-Asset Management & Trust Northgate Hotel Ventures, Inc. Corporation JOSE EMMANUEL H. JALANDONI One Makati Hotel Ventures, Inc. ALI Eton Property Development Corp. FILIPINO, 53 Pangulasian Island Resort Corporation DIRECTOR OF CEBU HOLDINGS INC. (CHI) AC Health Paragua Eco-Resort Ventures, Inc. SINCE AUGUST 17, 2016 ACTIVE Fund Regent Horizons Conservation Alabang Commercial Corporation Company, Inc. EDUCATION AKL Properties Inc. Sentera Hotel Ventures, Inc. Cebu Holdings, Inc. B.S. in Legal Management (BSLM ’89), Sicogon Island Tourism Sicogon Town Hotel, Inc. Ateneo de Manila University, Philippines PAST DEPUTY HEAD Estate Corporation Master’s Degree in Business Ayala Malls Administration (MBA ‘92), Asian Soltea Commercial Corporation Southcrest Hotel Ventures, Inc. Institute of Management, Makati City, PAST BUSINESS DEVELOPMENT MEMBER Ten Knots Development Corporation Philippines Ayala Corporation Chartered Financial Analyst Ten Knots Philippines, Inc. Whiteknight Holdings, Inc. PAST PROJECT DEVELOPMENT DIRECTORSHIP/OTHER POSITIONS One Makati Residential Ventures, Inc. IN LISTED COMPANIES Alveo Land Corp. CHAIRMAN AND PRESIDENT ANALYST ALINET.Com, Inc. DIRECTOR J.P. Morgan, New York CHAIRMAN Cebu Holdings, Inc. ALI Capital Corporation EMILIO LOLITO J. TUMBOCON, SENIOR VICE PRESIDENT AREIT, Inc., FILIPINO, 64 Ayala Land, Inc. AyalaLand Logistics Holdings Corp. DIRECTOR OF CEBU HOLDINGS INC. (CHI) SINCE APRIL 29, 2008 MEMBER, MANAGEMENT COMMITTEE DIRECTOR Ayala Land, Inc. Accendo Commercial Corporation EDUCATION Alabang Commercial Corporation B.S. in Civil Engineering (BSCE ’79), GROUP HEAD, COMMERCIAL BUSINESSES Arca South Integrated Terminal, Inc. University of the Philippines (MALLS, OFFICES, HOTELS AND Ayagold Retailers, Inc. Master’s in Business Administration RESORTS) Ayala Property Management (MBA ‘85), University of the Philippines Ayala Land, Inc. Corporation Construction Executive Program (CEPS Cagayan de Oro Gateway Corporation ’87), Stanford University, California, OTHER DIRECTORSHIPS/ Columbus Holdings, Inc. POSITIONS U.S.A Fort Bonifacio Development Corporation Senior Business Executive Program CHAIRMAN OF THE BOARD OF Makati Cornerstone Leasing (SBEP ’91), University of Asia & the DIRECTORS Corporation Pacific ALI Commercial Center, Inc. Makati Development Corporation The Executive Program (TEP’97), ALI Makati Hotel and Residences, Inc. Philippine FamilyMart CVS, Inc. Darden Graduate School of Business ALI Makati Hotel Property, Inc. Philippine Integrated Energy Solutions, Administration, University of Virginia, ALI Triangle Hotel Ventures, Inc. Inc. U.S.A. Arca South Hotel Ventures, Inc. Station Square East Commercial Certified Project Management AsiaTown Hotel Ventures, Inc. Corporation Professional (PMP), Project Management Ayala Hotels, Inc. DIRECTOR, PRESIDENTIAL AND CHIEF Institute 2006 AyalaLand Hotels and Resorts EXECUTIVE OFFICER Corporation AREIT, Inc. DIRECTORSHIP IN LISTED AyalaLand Medical Facilities Leasing, COMPANY Inc. VARIOUS POSITIONS SINCE 1996 Ayala Land, Inc. AyalaLand Offices, Inc. DIRECTOR Cebu Holdings, Inc.

Building more sustainable communities 97 OTHER DIRECTORSHIPS/ POSITIONS FR. RODERICK C. SALAZAR, JR., PAST MEMBER COMMISSIONER SVD, FILIPINO, Inc. (Filipino Institute for the Construction Industry Arbitration FILIPINO, 73 Promotion of Integrity and Nobility) Commission INDEPENDENT DIRECTOR OF CEBU San Carlos Community Development HOLDINGS INC. (CHI) SINCE APRIL 29, 2005 Foundation MANAGING DIRECTOR AND TREASURER Divine Word Educational Association Datem, Inc. EDUCATION (DWEA) Divine Word Seminary, Master of Philippine Accrediting Association of DIRECTOR Philosophy (M.Phil.), Tagaytay City, Schools, Colleges, and Universities Keyland Corporation Philippines 1976 (PAASCU) MA/MS Mass Communications, Private Educational Advisory Council PRESIDENT University of Leicester, England (PEAC) Makati Parking Authority (MAPA) (October 1982 to September 1983), Word Broadcasting Corporation Project Management Institute, degree conferred on July 1984 Philippines Chapter Honorary Doctorate in the Humanities PAST MEMBER, BOARD OF TRUSTEES Philippine Events, Exhibition & (Hon. D. Hum, ’10), St. Paul University, St. Paul University, Tuguegarao Convention Corp. (PEECC) Tuguegarao City, Philippines St. Paul College, Pasig Honorary Doctorate in the Humanities St. Paul College, Iloilo VICE PRESIDENT (Hon. D. Hum, ‘11), Aquinas University, St. Paul College, Dumaguete Makati Commercial Estate Association Legazpi City, Philippines St. Paul College, Surigao (MACEA) Visayas Cluster, Daughters of Charity DIRECTORSHIP IN LISTED (DC) Schools PAST GROUP HEAD OF ALI VISMIN COMPANY GROUP, HUMAN RESOURCES & PUBLIC PAST EXECUTIVE SECRETARY AFFAIRS GROUP AND CONSTRUCTION INDEPENDENT DIRECTOR Office of Education and Faith Formation MANAGEMENT GROUP Cebu Holdings, Inc. of the Federation of Asian Bishops Ayala Land, Inc. Conferences (FABC-OEFF) OTHER DIRECTORSHIPS/ PAST MEMBER, MANAGEMENT POSITIONS PAST MISSION DIRECTOR COMMITTEE, SVD Mission Philippines Ayala Land, Inc. DIRECTOR First Metro Asset Management, Inc. RECOGNITION PAST SENIOR VICE PRESIDENT (FAMI) (three Boards) Croce Pro Ecclesia et Pontifice, Papal Ayala Land, Inc. award for his years of service to CHAIRMAN, BOARD OF TRUSTEES Catholic Education conferred August PAST DIRECTOR St. Agnes Academy, Legazpi City 14, 2010, in the Archdiocese of Cebu Cebu Insular Hotel Co., Inc. Center for Educational Measurement Pro Deo Et Patria, an award of Cebu District Property Enterprise, Inc. (CEM) recognition for his life and work Accendo Commercial Corporation UPRAISE (Unified Property and Accident presented by the Catholic Educational Cagayan de Oro Gateway Corporation Insurance System for Education) Association of the Philippines on Taft Punta Engano Property, Inc. September 22, 2020. Alveo Land Corporation MEMBER, BOARD OF TRUSTEES Amaia Land Corporation Immaculate Conception Academy, Makati Development Corp. ENRIQUE L. BENEDICTO, Manila FILIPINO, 79 MDC Buildplus, Inc. REGIONAL SECRETARY AND VICE- INDEPENDENT DIRECTOR OF CEBU MDC Equipment Solutions, Inc. PRESIDENT for Asia HOLDINGS INC. (CHI) SINCE APRIL 25, 2003 MDC Subic, Inc. Office Internationale de l’Enseignement Ecozone Power Management Catholique (OIEC) EDUCATION Laguna Technopark, Inc. St. Joseph’s College, Quezon City Anvaya Cove Golf & Sports Club, Inc. BS Commerce (BSC ‘64), University of Northgate Hotel Ventures, Inc. PAST CHAIRMAN, BOARD OF TRUSTEES San Jose-Recoletos ALI Makati Hotel Property, Inc. St. Jude Catholic School, Manila DIRECTORSHIP IN LISTED ALI Makati Hotel and Residences, Inc. St. Scholastica’s College, Westgrove COMPANIES Aviana Development Corp. St. Scholastica’s Academy in Tabunok, AyalaLand Hotels and Resorts Corp. Talisay City, Cebu Cebu Leisure Company, Inc. Divine Word University (now Liceo del INDEPENDENT DIRECTOR Lagdigan Land Corp. Verbo Divino), Tacloban City Cebu Holdings, Inc. Southcrest Hotel Ventures, Inc. Divine Word College of Tagbilaran (now KEPCO-SPC Power Corporation Westview Commercial Ventures Corp. Holy Name University) Avencosouth Corp. Coordinating Council of Private OTHER DIRECTORSHIPS/POSITIONS Whiteknight Holdings, Inc. Educational Associations (COCOPEA) CURRENT HONORARY CONSUL, (ad Asian i-Office Properties, Inc. (three terms) honorem) Adauge Commercial Corp. Belgium PAST PRESIDENT PAST MEMBER, BOARD OF DIRECTORS Makati Development Corporation People’s Television Network (PTV4) CURRENT CHAIRMAN Ayala Property Management Mabuhay Filcement, Inc. Corporation PAST PRESIDENT Enrison Land, Inc. Ayala Greenfield Golf and Leisure Club, University of San Carlos (four 3-year Enrison Holdings, Inc. Inc. terms: 1987-1990; 1990-1993; 2002- Benedict Ventures, Inc. 2005; 2005-2008) Catholic Educational Association of the CURRENT VICE-CHAIRMAN Philippines (CEAP) (1992-2008) Bernardo Benedicto Foundation, Inc.

98 Building more sustainable communities RECOGNITIONS RECOGNITIONS DIRECTOR & ASSISTANT TREASURER Officer in the Order of Leopold II’ by his Presiding Justice Award, Court of Ayala Greenfield Development Corp. Majesty Baudowin King of the Belgians Appeals, given in Manila in 2005 for Officer in the Order of Leopold II’ by his speedy case disposal DIRECTOR Majesty King Albert II of the Kingdom Judicial Excellence Award, Most AG Counselors Corporation of Belgium, this is the highest award Outstanding Judge of the Philippines Alviera Country Club Inc. that can be given to civilians, Belgian or (2003) Alveo Land Corp. non-Belgian Recognition on Retirement with Zero Ayala Land Premier Inc. Garbo sa Sugbu Awardee given by Backlog of Cases (2013) Makati Development Corp. the Province of Cebu for outstanding Nuevocentro Inc. achievement in International Relations AFFILIATIONS Northgate Hotel Ventures, Inc. as Honorary Consul of Belgium Past Officer, Integrated Bar of the Portico Land Corp. Cebu City Council Resolution, Most Philippines, Cebu City Chapter Station Square East Commercial Corp. Outstanding Cebuano Citizen, February Past President, Rotary Club of Cebu, Southcrest Hotel Ventures, Inc. 18, 1991 University District Great Cebuano Award (conferred by) TREASURER The Province of Cebu, Sugbuanong Alabang Commercial Corporation Kumintaristang Nagpakabana (SUKNA), AKL Properties, Inc. Kapisanan Ng Mga Brodkaster Ng APPENDIX 2. Hero Foundation, Inc. Pilipinas (KBP) and Mandaue Chamber CORPORATE OFFICERS’ of Commerce and Industry, Inc. ASSISTANT TREASURER Awardee of the Asia Pacific Enterprise PROFILE Ayala Greenfield Golf & Leisure Club, Awards in 2017 Inc. Entrepreneur of the Year Award, Cebu AUGUSTO D. BENGZON Chamber of Commerce and Industry on FILIPINO, 57, TRUSTEE its Centennial +10 Anniversary IS THE TREASURER OF CHI SINCE APRIL 24, Philippine National Police Foundation, Most Outstanding Alumnus’ Award, 2017. HE JOINED ALI IN DECEMBER 2004 AND Inc. University of San Jose-Recoletos CURRENTLY SERVES AS ITS SENIOR VICE PRESIDENT, CHIEF FINANCE OFFICER, CHIEF COMPLIANCE OFFICER & TREASURER. NERISSA N. JOSEF-MEDIANO PAMPIO A. ABARINTOS, FILIPINO, 49 FILIPINO, 77 EDUCATION VICE PRESIDENT AND HEAD OF THE INDEPENDENT DIRECTOR OF CEBU BUSINESS DEVELOPMENT GROUP OF CHI. HOLDINGS INC. (CHI) SINCE APRIL 08, 2014 Bachelor of Science Degree in Business CONCURRENT ASSISTANT VICE PRESIDENT Management, Ateneo De Manila OF AYALA LAND, INC. EDUCATION University, and he is a graduate of the Philippine Trust Institute EDUCATION Bachelor of Arts, (BA ’65) Cum Laude, Master’s Degree in Business University of San Jose-Recoletos Management and he was granted the BS Management Engineering, Ateneo de Bachelor of Laws, (Class ’69), University Andres K. Roxas scholarship, Asian Manila University (Class ‘92) of the Visayas Institute of Management (AIM), Makati Master in Business Management, Asian Master’s Degree Units in Business City, Philippines Institute of Management (Class ‘97) Administration (MBA ’81), Southwestern CURRENT POSITIONS HELD University DIRECTOR DIRECTORSHIP IN LISTED AREIT, Inc. COMPANY OFFICER-IN-CHARGE TREASURER Ayala Land Vismin Group AyalaLand Logistics Holding Corp. INDEPENDENT DIRECTOR CHAIRMAN AND PRESIDENT Cebu Holdings, Inc. CHAIRMAN North Point Estate Association, Inc. Aprisa Business Process Solutions Inc. OTHER DIRECTORSHIPS/POSITIONS DIRECTOR AND PRESIDENT Current Member, Regional Advisory DIRECTOR, TREASURER & COMPLIANCE Adauge Commercial Corporation Council of the Philippine National Police OFFICER (PNP) Region 7 Anvaya Cove Golf and Sports Club Inc.; DIRECTOR AND GENERAL MANAGER Current Director, Alta Vista Golf and Asian I-Office Properties, Inc. Country Club, Cebu City DIRECTOR AND CHIEF FINANCE OFFICER Current Member, Management Altaraza Development Corporation DIRECTOR AND TREASURER Committee (MANCOM) and Southportal Properties, Inc. Current Chairman, Committee on DIRECTOR AND TREASURER 1016 Residences Condominium Discipline and Arbitrator, Alta Vista Golf ALI Eton Property Development Corp. Corporation and Country Club, Cebu City Amaia Land Corp. Current Director, South Hills Residents’ Aurora Properties Inc. DIRECTOR Association (SHRA), Cebu City Avida Land Corp. Taft Punta Engaño Property, Inc. Ayala Property Management Corp. Solinea, Inc., PRIOR GOVERNMENT POSITIONS HELD Bellavita Land Corp. Amaia Southern Properties, Inc. Executive Justice, Court of Appeals, BGNorth Properties Inc. Visayas Station (2004-2013) BGSouth Properties Inc. BOARD MEMBER Presiding Judge, Regional Trail Court in BGWest Properties Inc. Asiatown IT Park Association, Inc. Negros Oriental and Cebu City (1987- Ceci Realty Inc. Cebu Business Park Association, Inc. 2013) Philippine Integrated Energy Solutions Executive Judge, RTC Cebu Province Inc. PAST DIRECTOR (2012-2014) Serendra Inc. Westview Commercial Ventures Corp. Vesta Property Holdings Inc. Cebu Leisure Company, Inc.

Building more sustainable communities 99 Cagayan De Oro Gateway Corporation NIMFA AMBROSIA L. PEREZ- PAST BOARD MEMBER Taft Punta Engano Property, Inc. PARAS, City Sports Club Cebu FILIPINO, 55 CHIEF FINANCE OFFICER ASSISTANT CORPORATE SECRETARY PAST PROJECT DEVELOPMENT HEAD Aurora Properties Incorporated OF CEBU HOLDINGS, INC. (CHI) SINCE Ayala Land Strategic Landbank Aviana Development Corporation FEBRUARY 27, 2014 Management Group CECI Realty, Inc. Vesta Property Holdings, Inc. EDUCATION PAST PROJECT DEVELOPMENT GROUP Bachelor of Law (‘90), Manuel L. Quezon HEAD COMPTROLLER School of Law, Philippines Alveo Land Corporation Nuevocentro, Inc. CURRENT POSITIONS HELD PAST PROJECT DEVELOPMENT AFFILIATIONS MANAGER Member of the Philippine Institute of CURRENT ASSISTANT CORPORATE Avida Land Corporation Certified Public Accountants (PICPA) SECRETARY AKL Properties, Inc. Alveo Land Corporation MA. LUISA D. CHIONG JUNE VEE D. MONTECLARO- Anvaya Cove Golf and Sports Club, Inc. FILIPINO, 48 NAVARRO, Avida Land Corporation IS CURRENTLY THE CONTROLLER OF AYALA FILIPINO, 49 Ayagold Retailers, Inc. LAND, INC. SHE WAS ALSO CHIEF FINANCE CORPORATE SECRETARY OF CEBU Ayala Greenfield Development OFFICER (CFO) AND HOLDINGS INC. (CHI) SINCE FEBRUARY 27, Corporation COMPLIANCE OFFICER OF CHI AND CFO OF 2014 Ayala Greenfield Golf & Leisure Club, THE ESTATES GROUP FROM 2017 TO 2020 Inc. EDUCATION Ayala Property Management EDUCATION Bachelor of Arts with a major in Corporation Bachelor of Science in Commerce Major Economics (’93), University of St. La Ayala Land, Inc. (Publicly-Listed in Accounting (BSC ’91), De La Salle Salle, Bacolod City Company) University Bachelor of Commerce with a major in AyalaLand Commercial Reit, Inc. Completed the academic requirements Data Processing (’93), University of St. AyalaLand Logistics Holdings, Corp. (Publicly-Listed Company) for a Master in Business Administration La Salle, Bacolod City AYC Finance, Ltd. degree (MBA ’98), De La Salle University Bachelor of Laws (L.L.B. ’97), University AYC Holdings, Ltd. Certified Public Accountant (CPA), of the Philippines Bacuit Bay Development Corporation 5th Place May 1992 CPA Board CURRENT POSITIONS HELD BGNorth Properties, Inc. She is a member of the Philippine BGSouth Properties, Inc. Institute of Certified Public Accountants BGWest Properties, Inc. (CICPA) VICE PRESIDENT, ASSISTANT CORPORATE SECRETARY AND CHIEF Bonifacio Arts Foundation, Inc. CURRENT POSITIONS HELD LEGAL COUNSEL BYMCW, Inc. Ayala Land, Inc. Cebu District Property Enterprise, Inc. Cebu Holdings, Inc. (Publicly-Listed Controller, Ayala Land CURRENT CORPORATE SECRETARY Company) Cebu Holdings, Inc. (Publicly-Listed Chirica Resorts Corporation DIRECTOR Company) Darong Agricultural Dev. Corp. Cebu Leisure Company, Inc. AyalaLand Logistics Holdings Corp. Dinginin Power GP Corp. Ecoholdings Company, Inc. Central Block Developers, Inc. (Publicly-Listed Company) Fort Bonifacio Development Corp. Alveo Land Corp. HRMall, Inc. DIRECTOR AND TREASURER Avida Land Corp. Isuzu Benguet Corporation Asian I-Office Properties, Inc. AKL Properties, Inc. Kuswagan Power GP Corp. North Point Estate Association, Inc. ALI Eton Property Development Lio Resort Ventures Inc. Vertis North Estate Association, Inc. Corporation Makati Development Corporation Altaraza Development Corporation MDBI Construction Corp. DIRECTOR, TREASURER AND CHIEF Michigan Holdings, Inc. FINANCE OFFICER Monte Solar Energy Inc. Adauge Commercial Corporation MWC Foundation, Inc. CURRENT ASSISTANT CORPORATE North Liberty Resort Ventures, Inc. DIRECTOR AND CHIEF FINANCE OFFICER SECRETARY Pameka Holdings, Inc. ALInet.com, Inc. Alinet.com, Inc. Pangulasian Island Resort Corp. Paragua EcoResort Ventures Inc. TREASURER AND MEMBER OF THE PAST SENIOR ASSOCIATE PFIL Ltd. BOARD OF TRUSTEES SyCip Salazar Hernandez & Gatmaitan PPI Prime Venture, Inc. Lakeside Evozone Association, Inc. PSI Technologies, Inc. Regent Horizon Conservation Company, TRUSTEE AND TREASURER Inc. Altaraza Town Center Estate Sicogon Island Tourism Estate Corp. Association, Inc. Sicogon Town Hotel, Inc. Arca South Estate Association, Inc. Technopark Land, Inc. Ten Knots Development Corporation TREASURER ANDCHIEF FINANCE Ten Knots Philippines, Inc. OFFICER Accendo Commercial Corp. CURRENT CORPORATE SECRETARY Abreeza Central Estate Association, Inc.

100 Building more sustainable communities Accendo Commercial Corporation Collines Du Capitole Clubholdings, Inc. Serendra, Inc. Adauge Commercial Corporation Columbus Holdings, Inc. Solinea, Inc. Alabang Commercial Corporation Crans Montana Property Holdings Corp. Soltea Commercial Corp. ALI Capital Corp. Crescent West Development South Innovative Theater Management, ALI Commercial Center, Inc. Corporation Inc. Ali Makati Hotel & Residences, Inc. Crimson Field Enterprises, Inc. Southcrest Hotel Ventures, Inc. Ali Makati Hotel Property, Inc. Directpower Services, Inc. Southgateway Development Corporation ALI Triangle Hotel Ventures, Inc. Econorth Resort Ventures, Inc. SouthPortal Properties, Inc. ALO Prime Realty Corporation Ecosouth Hotel Ventures, Inc. Station Square East Commercial Altaraza Prime Realty Corporation Ecozone Power Management, Inc. Corporation Altaraza Development Corporation Emerging City Holdings, Inc. Subic Bay Town Center, Inc. Alveo Federal Land Communities, Inc. Enjay Hotels, Inc. Summerhill Commercial Ventures Corp. Alviera Country Club, Inc. Esta Galleria, Inc Sunnyfield EOffice, Inc. Amaia Land Corp. First Gateway Real Estate Corporation Sunshine Plaza Mall Association Amaia Southern Properties, Inc. Five Star Cinema, Inc. (SPMAI), Inc. Amicassa Process Solutions, Inc. FLT Prime Insurance Corp. Taft Punta Engano Property, Inc. Amorsedia Development Corporation Glensworth Development, Inc. Tower One Condo Corp. Amsi Prime Concepts, Inc. Greenhaven Property Ventures, Inc. TPI Holdings Corporation Anvaya Environmental Foundation, Inc. Hero Foundation, Inc. Tutuban Properties, Inc. Aprisa Business Process Solutions, Inc. Hillsford Property Corp. UP North Property Holdings, Inc. Arca South Commercial Ventures Corp, HLC Development Corporation Verde Golf Development Corporation Arca South Integrated Terminal, Inc. Integrated EcoResort, Inc. Vesta Property Holdings, Inc. Arcasouth Hotel Ventures, Inc. Lagdigan Land Corporation Westview Commercial Ventures Corp. Arvo Commercial Corporation Laguna Technopark, Inc. White Knight Holdings, Inc. Asian I-Office Properties, Inc. LCI Commercial Ventures, Inc. ZHI Holdings, Inc. Asterion Technopod Incorporated Leisure and Allied Industries Phils., Inc. Aurora Properties, Inc. Lepanto Ceramics, Inc. CURRENT SENIOR COUNSEL II Avencosouth Corp. Luck Hock Venture Holdings Inc. Ayala Group Legal Aviana Development Corporation Makati Cornerstone Leasing Corp. Avida Sales Corp. Makati Hotel and Residences Condo. PAST ASSISTANT CORPORATE Ayala Hotels, Inc. Corp. SECRETARY Ayala Land International Sales, Inc. Makati North Hotel Ventures, Inc. Integrated Micro-Electronics, Inc. Ayala Land Sales, Inc. MDC Buildplus, Inc. Ayala Theaters Management, Inc. MDC Conqrete, Inc. PRIOR GOVERNMENT POSITION HELD AyalaLand Club Management, Inc. MDC Equipment Solutions, Inc. State Counsel, Department of Justice AyalaLand Estates, Inc. MDC Subic, Inc. Legal Counsel at the Regional Trial AyalaLand Hotels and Resorts Corp. MG Construction Ventures Holdings, Courts of Makati and Quezon City AyalaLand Malls NorthEast, Inc. Inc. AyalaLand Malls Synergies, Inc. Next Urban Alliance Development Corp. PAST LEGAL COUNSEL AyalaLand Malls VisMin, Inc. North Beacon Commercial Corporation Coca-Cola Bottlers Philippines, Inc. AyalaLand Malls, Inc. North Eastern Commercial Corp. RFM Corporation AyalaLand Medical Facilities Leasing, North Point Estate Association, Inc. Roasters Philippines, Inc. Inc. North Triangle Depot Commercial AyalaLand Metro North Inc. Corporation AyalaLand Offices, Inc. North Triangle Hotel Ventures, Inc. AyalaLand Premiere, Inc. North Ventures Commercial Corp. Bay Area Hotel Ventures, Inc. Northgate Hotel Ventures, Inc. Bay City Commercial Ventures Nuevocentro, Inc. Corporation OE Holdings, Inc. Bellavita Land Corp. OLC Development Corporation Berkshires Holdings, Inc. One Dela Rosa Property Development, Bonifacio Estate Services Corporation Inc. Bonifacio Global City Estate Association, One Makati Hotel Ventures, Inc. Inc. One Makati Residential Ventures, Inc. Bonifacio Hotel Ventures, Inc. Orion Beverage Inc. Bonifacio Land Corporation Orion Land, Inc. Bonifacio Transport Corporation Orion I Holdings Philippines, Inc. Bonifacio Water Corporation Orion Maxis Inc. (For dissolution) Buendia Landholdings, Inc. Orion Property Development, Inc. Buklod Bahayan Realty and Orion Solutions, Inc. (For dissolution) Development Corp. Park Terraces Condominium Cagayan De Oro Gateway Corp. Corporation Capital Consostium, Inc. Philippine Family Mart CVS, Inc. Capitol Central Commercial Ventures Philippine Integrated Energy Solutions, Corp. Inc. Capitol Central Hotel Ventures, Inc. Portico Land Corp. Cavite Commercial Towncenter, Inc. Primavera Town Center, Inc. Cebu Insular Hotel Company, Inc. Prime Support Services, Inc. Cebu Leisure Company, Inc. Red Creek Properties, Inc. Ceci Realty, Inc. Roundleaf Holdings Corp. Central Block Developers, Inc. Roxas Land Corporation Circuit Makati Hotel Ventures, Inc. San Rafael Estate Association CMPI Land, Inc. Sentera Hotel Ventures, Inc.

Building more sustainable communities 101 APPENDIX 3. BOARD COMPOSITION1 E.4, G4-38, Goal 5, Goal 16 No. of Directors per Articles of Incorporation: 9 Actual No. of Directors for the year: 9

NOMINATOR DATE NO. OF YEARS PRINCIPAL FOR DATE FIRST DIRECTOR TYPE IN THE LAST LAST ELECTED WHEN SERVED AS NOMINATION ELECTED ELECTION ELECTED DIRECTOR Ayala Land, Nomination August 15, Annual Stockholders’ 5 years and 9 BERNARD VINCENT O. DY ED Apr-20 Inc. Committee 2014 Meeting months Ayala Land, Nomination August 17, Annual Stockholders’ 3 years and 9 ANNA MA. MARGARITA B. DY NED Apr-20 Inc. Committee 2016 Meeting months Ayala Land, Nomination January 1, Annual Stockholders’ 5 years and 4 ANICETO V. BISNAR, JR. NED Apr-20 Inc. Committee 2015 Meeting months

Ayala Land, Nomination August 17, Annual Stockholders’ 3 years and 9 JOSE EMMANUEL H. JALANDONI NED Apr-20 Inc. Committee 2016 Meeting months

Ayala Land, Nomination April 14, Annual Stockholders’ MARIANA E. ZOBEL DE AYALA NED Apr-20 1 year Inc. Committee 2020 Meeting Nomination April 01, Annual Stockholders’ EMILIO LOLITO J. TUMBOCON NED N.A. Apr-20 12 years Committee 2008 Meeting FR. RODERICK C. SALAZAR, JR., Nomination April 01, Annual Stockholders’ ID N.A. Apr-20 15 years SVD Committee 2005 Meeting Nomination April 01, Annual Stockholders’ ENRIQUE L. BENEDICTO ID N.A. Apr-20 17 years Committee 2003 Meeting Nomination April 01, Annual Stockholders’ PAMPIO A. ABARINTOS ID N.A. Apr-20 6 years Committee 2014 Meeting

APPENDIX 4. BOARD OF DIRECTORS’ ATTENDANCE E.2.14, E.2.20, E.2.28, E.3.2, E.3.3, 102-33

COMMITTEE BOARD BOARD DIRECTOR RELATED CORPORATE MEETINGS RISK PARTY GOVERNANCE EXECUTIVE AUDIT SUSTAINABILITY OVERSIGHT TRANSACTION & REVIEW NOMINATION

Chairman BERNARD VINCENT O. DY*** 4/4 2/2 3/3 Member ANNA MA. MARGARITA B. DY*** 4/4 2/2 Member ANICETO V. BISNAR, JR. 4/4 2/2 3/3 0/1

Member EMILIO LOLITO J. TUMBOCON 3/4 1/1

Member JOSE EMMANUEL H. JALANDONI 4/4 1/1 Member AUGUSTO D. BENGZON* 1/1 1/1

Member MARIANA E. ZOBEL DE AYALA** 3/3

Independent FR. RODERICK C. SALAZAR, JR., SVD 3/4 3/4 3/3 0/1 1/1 1/1

Independent ENRIQUE L. BENEDICTO 4/4 4/4 2/3 1/1 1/1

Independent PAMPIO A. ABARINTOS 4/4 2/2 4/4 3/3 1/1 4/4

In 2020 and during the incumbency of the director*

Replaced by Ms. Zobel de Ayala on 14 April 2020**

Replaced by Mr. Dy as chairman effective 3 December 2020***

102 Building more sustainable communities APPENDIX 5. DIRECTOR TRAINING AND CONTINUING EDUCATION PROGRAM D.2, E.5.1, E.5.2

NAME OF TRAINING DIRECTOR / OFFICER DATE OF TRAINING PROGRAM INSTITUTION

BERNARD VINCENT O. DY November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate 2020 Management and Sustainability Summit Directors (ICD)

ANNA MA. MARGARITA B. DY November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate 2020 Management and Sustainability Summit Directors (ICD)

ANICETO V. BISNAR, JR. November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate 2020 Management and Sustainability Summit Directors (ICD)

JOSE EMMANUEL H. JALANDONI November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate 2020 Management and Sustainability Summit Directors (ICD)

EMILIO LOLITO J. TUMBOCON November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate 2020 Management and Sustainability Summit Directors (ICD) September 8 & 9, The Institute of Corporate MARIANA E. ZOBEL DE AYALA* Corporate Governance Orientation Program 2020 Directors (ICD) FR. RODERICK C. SALAZAR, JR., November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate SVD 2020 Management and Sustainability Summit Directors (ICD)

ENRIQUE L. BENEDICTO November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate 2020 Management and Sustainability Summit Directors (ICD)

PAMPIO A. ABARINTOS November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate 2020 Management and Sustainability Summit Directors (ICD) AUGUSTO D. BENGZON** November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate TREASURER 2020 Management and Sustainability Summit Directors (ICD) MA. LUISA D. CHIONG November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate CHIEF FINANCE OFFICER/ 2020 Management and Sustainability Summit Directors (ICD) COMPLIANCE OFFICER JUNE VEE D. MONTECLARO- NAVARRO November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate 2020 Management and Sustainability Summit Directors (ICD) CORPORATE SECRETARY NIMFA AMBROSIA L. PEREZ-PARAS November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate ASSISTANT CORPORATE 2020 Management and Sustainability Summit Directors (ICD) SECRETARY NOEL F. ALICAYA November 10, Ayala Integrated Corporate Governance, Risk The Institute of Corporate FINANCE & CONTROL OFFICER/ 2020 Management and Sustainability Summit Directors (ICD) CHIEF RISK OFFICER In 2020 and during the incumbency of the director*

Replaced by Ms. Zobel de Ayala on 14 April 2020**

APPENDIX 6. OWNERSHIP STRUCTURE Security Ownership of Record and Beneficial Owners (of more than 5%) as of December 31, 2020

NAME, ADDRESS OF TITLE OF NAME OF BENEFICIAL OWNER AND NO. OF SHARES RECORD OWNER AND CITIZENSHIP PERCENT CLASS RELATIONSHIP WITH RECORD OWNER HELD RELATIONSHIP WITH ISSUER Ayala Land, Inc.[1] 31/F Tower One & Common Exchange Plaza Ayala Land, Inc.[2] Filipino 1,534,019,916 71.13% Ayala Triangle, Ayala Ave. Makati City

PCD Nominee Corp. Aggregate of Standard Life Aberdeen plc affiliated investment management (Non-Filipino)[3] Common entities on behalf of multiple managed British 272,144,900 12.62% G/F MSE Bldg. portfolios (the “Standard Life Aberdeen Ayala Ave., Makati City plc”)[4]

PCD Nominee Corp. Common (Filipino)5 PCD Nominee Corp. (Filipino)[5] Filipino 165,400,421 7.67% G/F MSE Bldg. Ayala Ave., Makati City

Building more sustainable communities 103 APPENDIX 7. OWNERSHIP STRUCTURE LIST OF TOP 20 STOCKHOLDERS AS OF DECEMBER 31, 2020

SHAREHOLDING COMPANY NO. OF SHARES % OF CAPITAL STOCK 1. Ayala Land, Inc. 1,534,019,916 71.13% 2. PCD Nominee Corp. (Non-Filipino) 288,378,890 13.37% 3. PCD Nominee Corp. (Filipino) 164,762,990 7.64% 4. The Province of Cebu 82,537,333 3.83% 5. Ronald S. Po 7,514,128 0.35% 6. Makati Supermarket Corporation 3,013,265 0.14% 7. Laguna Properties Holdings, Inc. 1,875,000 0.09% 8. Alfonso Lao 1,750,000 0.08% 9. Robert Coyiuto, Jr. 1,544,992 0.07% 10. Mark C. Tan 1,053,640 0.05% 11. Jose C. Lee 1,000,000 0.05% 12. Aurora E. Panlilio 937,500 0.04% 13. Vicente Jayme Jr. 767,500 0.04% 14. Socorro C. Ramos or Cecilia R. Licauco 764,847 0.04% 15. Luis Moro. Jr. 752,600 0.03% 16. Fermin P. Angcao 670,000 0.03% 17. Victor G. Sy 625,000 0.03% 18. Jose E. Suarez 618,750 0.03% 19. Jimmy T. Sy 535,300 0.02% 20. Douglas Luym 530,000 0.02%

APPENDIX 8. REMUNERATION MATTERS D.2.11

Non-execuctive and Independent Directors In 2020, the non-executive directors and independent directors of the Company received renumeration, net of tax, as follows:

DIRECTOR TOTAL (IN PHP) BERNARD VINCENT O. DY* 280,000.00 ANNA MA. MARGARITA B. DY* 220,000.00 ANICETO V. BISNAR, JR.* 180,000.00 EMILIO J. TUMBOCON 220,000.00 JOSE EMMANUEL H. JALANDONI* 260,000.00 AUGUSTO D. BENGZON* (DIRECTOR UNTIL APRIL 15, 2020) 80,000.00 MARIANA E. ZOBEL DE AYALA** (DIRECTOR SINCE APRIL 15, 2020) 180,000.00

PAMPIO A. ABARINTOS 460,000.00

ENRIQUE L. BENEDICTO 420,000.00

FR. RODERICK C. SALAZAR, JR., SVD 380,000.00

TOTAL 2,680,000.00

*Paid to Ayala Land, Inc. ** Paid to Ayala Corporation

104 Building more sustainable communities APPENDIX 9. REMUNERATION MATTERS D.2.11

Executive Officers

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

OTHER VARIABLE NAME AND PRINCIPAL POSITION YEAR SALARY PAY ANNA MA. MARGARITA B. DY President (effective December 3, 2020) ANICETO V. BISNAR, JR. President (January 1, 2015-December 3, 2020)

NERISSA N. JOSEF-MEDIANO Chief Operating Officer ** and Head, Business Development and Office Leasing Group MA. LUISA D. CHIONG Chief Finance Officer / Compliance Officer

MA. CLAVEL G. TONGCO Vice President and Head, Commercial Business Group MA. CECILIA CRISPINA T. URBINA Assistant Vice President and Head, Corporate Services Group and Human Resources and Administration ALL ABOVE-NAMED OFFICERS AS A GROUP Actual 2019 P19.10 million P1.81 million

Actual 2020 P20.38 million P5.68 million

Projected 2021 P21.51 million P5.68 million ALL OTHER OFFICERS5 AS A GROUP Actual 2019 "P20.87 million P1.68 million UNNAMED Actual 2020 P16.63 million P1.08 million Projected 2021 P17.46 million P1.13 million

APPENDIX 10. APPENDIX 11. SHARES OF DIRECTORS IN THE COMPANY MEMBERSHIP IN ASSOCIATIONS FIGURES ARE AS OF DECEMBER 31, 2020 Business and Management NO. OF NO. OF % OF • American Chamber of Commerce of the INDIRECT DIRECTOR DIRECT CAPITAL Philippines, Inc. SHARES / SHARES STOCK THROUGH • Ayala Business Club - Cebu Chapter • Cebu Business Park Association, Inc. BERNARD VINCENT O. DY 1 - 0.000% • Cebu Chamber of Commerce and Industry • Chamber of Real Estate and Builders’ ANNA MA. MARGARITA B. DY 1 - 0.000% Association, Inc. ANICETO V. BISNAR, JR. • European Chamber of Commerce of the 1 - 0.000% Philippines JOSE EMMANUEL H. JALANDONI 1 - 0.000% • Financial Executives Institute of Cebu, Inc. • International Council of Shopping Centers MARIANA E. ZOBEL DE AYALA 1 - 0.000% • Management Association of the Philippines EMILIO LOLITO J. TUMBOCON 112,500 - 0.005% • Mandaue Chamber of Commerce and Industry, Inc. ENRIQUE L. BENEDICTO 1 - 0.000% • National Real Estate Association, Inc. FR. RODERICK C. SALAZAR, JR., • Philippine Quality and Productivity Movement – SVD 1 - 0.000% Visayas • Philippine Retailers Association PAMPIO A. ABARINTOS 1,000 - 0.000% • Philippine Chamber of Commerce and Industry TOTAL 113,507 - 0.005% Environmental and Ecosystems Conservation • Business for Sustainable Development • Cebu Uniting for Sustainable Water Foundation

Building more sustainable communities 105 APPENDIX 12. ENGAGEMENT PROCESS 102-40, 102-42, 102-43, 102-44

STAKEHOLDER HOW WE ENGAGE ISSUES RAISED INTEREST AREAS OUR STRATEGIC RESPONSE

SHOPPERS, Integrated marketing, • time completion of • Minimizing heavy • Discounts, promotional offers, MERCHANTS, customer surveys and building construction traffic and various payment terms LOCATORS, OFFICE complaints handling, and • One-day resolution • Extended market • Customer satisfaction surveys, LESSEES conduct of stakeholder of complaints> services for C, D, and complaints handling process engagement sessions Immediate or time- E sectors • Farmers’ Market> External End users of real estate bound help response> • Venue for family customer feedback system products and services Safety in all areas activities • Training for emergency • Building and site • Customer response personnel resilience> On-time involvement in waste • Conduct of emergency drills in turnover of residential and recycling efforts all our developments and units> Reliable • Emergency • construction sites maintenance of preparedness • Regular coordination and utilities (i.e. water and • Partnerships and continuing engagement electricity) collaboration for • Conduct of sustainability sustainability learning sessions LGUs AND NATIONAL Payment of taxes, • Communication • Health, safety, • Prompt payment of taxes and GOVERNMENT business permits and of sustainability employment, submission of reports AGENCIES licenses, partnerships/ performance through environment, • Regular reviews of compliance co-sponsored events, this report and and local traffic with regulatory requirements Compliance monitoring and regular reviews; through stakeholder conditions • Provision and maintenance of of all applicable neighboring communities engagement sessions • Venue for civic good road networks statutory and regulatory as partners and/or interaction • Practice transparency and requirements beneficiaries to the • Availability of full disclosure including the company’s development new and efficient provision of this report programs, and conduct of technology • Sharing of best sustainability stakeholder engagement that minimizes practices> sessions. environmental • Attendance to seminars, impacts conferences, and meetings • Job and partnership • Regular coordination and opportunities continuing engagement for local farmers, • Conduct of sustainability businessmen, and learning sessions employees • Partnerships and collaboration for sustainability (urbanizing and greening the city) INDIVIDUAL / Sale of shares of stocks, • Improving • Dividends • Analysts and investor briefings; INSTITUTIONAL shareholder inquiries shareholder value • Monetizing declaration of dividends SHAREHOLDERS and updates; report of • ncreased investment sustainability • Communication of company performance opportunities (quantifying it as an sustainability performance Protect the interests through stockholders’ • indicator of and initiatives through this of shareholders by meetings and annual shareholder and report and through stakeholder increasing shareholder reports, and conduct of company value) engagement sessions value; continue our stakeholder engagement • CHI as a green position as an excellent session3 investment investment vehicle • Environmental sustainability REGULATORS Submission of reports, • Compliance to existing • Beyond compliance • Transparency and full disclosure disclosures and other rules, regulations, and on economic, social, including the provision of this SECURITY EXCHANGE requirements; involvement environmental laws. and environmental report COMMISSION / in SEC/ICD programs and regulations. • Prompt submission of PHILIPPINE STOCK initiatives; transparency requirements EXCHANGE and adequacy of • Review of reports prior to disclosure submission Compliance of regulatory requirements to assure shareholders of good corporate governance LOCAL COMMUNITIES Implementation of • Local employment • Stringent • Partnerships with LGU or the development programs on • Livelihood assistance selection process/ local communities for Solid BARANGAY ALLIANCE education, employment, • Environmental implementation Waste Management (SWM) environment, peace and program of policy for programs Neighbors beyond the order, livelihood, and • Scholarship program subcontractors • Strengthening of the alliance company’s fence lines alliance strengthening • Encouraging small • Traffic congestion • Implementation of programs initiatives, and conduct of entrepreneurs by • Sidewalk vendors and aligned to the needs of the stakeholder engagement supporting their fragmented access • community sessions products roads • Local employment prioritization • Increase in barangay • Suspected illegal • Conduct of sustainability income through drug use by BPO learning sessions barangay permits employees from mall merchants • High fuel and locators consumption used in • Inclusive growth waste collection • Child-friendly Cebu • Reporting of the number of employees per barangay • Drainage systems repairs • Solid waste management

106 Building more sustainable communities STAKEHOLDER HOW WE ENGAGE ISSUES RAISED INTEREST AREAS OUR STRATEGIC RESPONSE

EMPLOYEES Townhall meetings, • Proper training, • Wellness and work- • Benefits upgrade; merit climate survey, volunteer adequate life balance increases ORGANIC AND programs, and conduct of compensation and • General contractor: • Wellness program (CHI P.L.U.S.) GENERAL stakeholder engagement benefits, health and Data Management • Competency development CONTRACTORS session safety, and employee System programs development • Property • Health and safety programs Our important Management: • Conduct of sustainability resource to achieve the Uniformity in learning sessions company’s goals. data gathering, monitoring, reporting, and presentation EXTERNAL Accreditation, bidding, • Continuing • Equal opportunities • Establishment of and payment conformity with employment> Training for local contractors compliance to PCT standards> EMPLOYEES OF Process Cycle Time (PCT) and development> • Identify and develop Implement programs to MERCHANTS, standards, programs Work tools to enable sustainable water educate and orient contractors CONTRACTORS, PARK to educate and orient effective work sources (finite ground and ASSOCIATIONS AND contractors and suppliers • Health and safety water resource) • suppliers on QEHS best SUPPLIERS on QEHS best practices • Solid Waste practices and benefits and benefits, and Management • Conduct of sustainability Provide products conduct of stakeholder Program learning and work sessions and services for the engagement sessions. • Traffic improvement company; implement projects, programs and initiatives.

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

APPENDIX 13. MECHANISMS FOR ENFORCEMENT AND COMPLIANCE AREA PRACTICE PERFORMANCE Labor practices HR-Admin Department ensures the full implementation of all policies and procedures related No cases filed against CHI 102-41, 406-1, 408- to employee hiring, development, and retention for discrimination and 1, 409-1 non-observance of labor In lieu of a formal employee union, an HR Committee is organized among employee standards and employment representatives from all levels. The group acts as an alternative vehicle for employee contract clauses participation in management

Human rights HR Officer orients all employees on policies, processes and procedures related to human None to report 412-3, 411-1 rights provisions

Compliance is extended to general contractors, suppliers, and service providers

A stringent supplier accreditation process is in place to ensure all investment agreements and contracts do not violate human rights

Environmental Business Development Group coordinates closely with APMC and MDC to ensure compliance No reported incident of 307-1 to pertinent environmental laws violation CHI leverages on the comprehensive monitoring system of both companies to identify and record incidents of violation Pollution Control Officers submit a quarterly Self-Monitoring Report to the Environmental Management Bureau of the Department of Environment and Natural Resources. Consolidated results are submitted to the management committee at least twice a year Product Retail Business Group champions customer programs for merchants and shoppers No reported incidents of responsibility violation to marketing, The Information Systems Department manages our existing customer complaints handling 417-2, 417-3, 418-1, information and labeling, system APMC directly handles concerns from unit owners and office building occupants 419-1 and other products and services regulations including customers privacy Community The Community Relations/Sustainability Department, through the employee volunteer None to report Engagement program, executes the Company’s community development programs 419-1

Building more sustainable communities 107 APPENDIX 14. ACTIVITIES OF THE BOARD COMMITTEES AND MEMBERS RESPONSIBILITIES ACCOMPLISHMENTS Executive Committee

Chairman: -Exercises the power and attributes of the Board of -Developed resolutions on the strategic and tactical objectives of the Anna Ma. Margarita B. Dy Directors during the intervening period between the Company President and CEO: Board’s meetings, and shall report all resolutions Aniceto V. Bisnar, Jr. adopted by it to the Board of Directors at the first Members: meeting that the latter may subsequently hold. Bernard Vincent O. Dy Pampio A. Abarintos (Independent)

Audit Committee

Chairman: -Provides checks and balances; reviews financial -Discussed and approved the overall scope and the respective audit plans Fr. Roderick C. Salazar, Jr., SVD statements and related disclosures; ensures of the Company’s Internal Auditors and SGV & Co. (Independent) transparency in the Company’s financial -Discussed the results of their audits and their assessment of the Members: management system; and elevates the Company’s Company’s internal controls and the overall quality of the financial Enrique L. Benedicto accounting and auditing process reporting process (Independent) -Oversees the efficient implementation of internal -Reviewed the reports of the Internal Auditors, ensuring that management Pampio A. Abarintos control mechanisms and processes is taking appropriate corrective actions in a timely manner, including (Independent) -Ensures efficiency of the Company’s overall internal addressing internal controls and compliance issues audit system -Recommended to the Board of Directors the re-appointment of SGV -Recommends the appointment of external auditors, & Co., as independent external auditors for 2020, based on the review their remuneration, and performance of functions of their performance and qualifications, including consideration of -Ensures that the Company complies with rules and management’s recommendation regulations, monitors compliance, and acts on non- -Reviewed and approved all audit services provided by SGV & Co. to CHI compliance and related fees for such services

Risk Oversight Committee

Chairman: -Enforces the required qualifications and -Ensured that an overall set of risk management policies and procedures Enrique L. Benedicto recommends policies for considering nominees for exist for the Corporation. (Independent) positions requiring Board approval -Reviewed the results of the annual assessment done by the Chief Risk Member: -Encourages the selection of a mix of competent Officer (CRO), including the risks identified, their impact or potential Pampio A. Abarintos directors, and ensures adequate representation of impact on the Corporation’s business, and the corresponding measures (Independent) women in the Board to address such risks. Fr. Roderick C. Salazar, Jr., SVD -Reviews and discloses succession plans for members -Evaluated the CRO’s periodic risk assessment reports that may cover (Independent) of the Board and key officers existing and emerging risks faced by the Corporation and/or its subsidiaries as well as the risk mitigation strategies and action plans adopted by Management. -Monitored the risk management activities of the Corporation and evaluated the effectiveness of the risk mitigation strategies and action plans, with the assistance of the internal auditors. -Met periodically with Management to discuss the Committee’s observations and evaluation on its risk management activities. Corporate Governance and Nomination Committee

Chairman: -Enforces the required qualifications and -Considered and approved the final list of nominees for directors for the Pampio A. Abarintos recommends policies for considering nominees for year 2020 to 2021 (Independent) positions requiring Board approval - Endorsed to the Board the the election of key officers Members: -Encourages the selection of a mix of competent - Considered and endorsed the amendments to the Corporation’s By- Enrique L. Benedicto directors, and ensures adequate representation of Laws and Corprate Governance Manual (Independent) women in the Board Fr. Roderick C. Salazar, Jr., SVD -Reviews and discloses succession plans for members (Independent) of the Board and key officers Personnel and Compensation Committee

Chairman: -Designates remuneration packages and provides - None to report Pampio A. Abarintos oversight over remuneration of senior management (Independent) and other key personnel Members: -Establishes a transparent procedure for developing Bernard Vincent O. Dy remuneration packages Aniceto V. Bisnar, Jr. -Reviews and recommends changes to the Personnel Handbook Related Party Transaction Review Committee

Chairman: -The formulation, revision and approval of policies on -Discussed RPT transactions (pre-approved RPTs) reported in the Pampio A. Abarintos RPT, and Financial Statements covering YTD 1Q 2020. The discussions (Independent) -Conduct of any investigation required to fulfil its were undertaken in the context that management has the primary Members: responsibilities on RPTs. responsibility for the financial statements and the reporting process, Enrique L. Benedicto including the system of internal control. (Independent) Fr. Roderick C. Salazar, Jr., SVD (Independent) Sustainability Committee

Chairman: -Provides oversight, identifies and assesses significant -Published the Company’s third Integrated Report (CHI 2019) Aniceto V. Bisnar, Jr. social, ethical and environmental interdependencies adopting the International Integrated Reporting Framework. Members: that impact the Company’s long term business applies principles and concepts that are focused on bringing greater Emilio Lolito J. Tumbocon objectives. cohesion and efficiency to the reporting process. Its focus on value Fr. Roderick C. Salazar, Jr., SVD -Evaluates the initiatives and recommendations of creation, and the ‘capitals’ used by the business to create value over (Independent) the Sustainability Council, stakeholder engagement time, contributes towards a more financially stable economy. processes and partnerships, communication -The committee crafted the company’s Framework and reviewed strategies relating to sustainability goals, and the the Company’s sustainability framework and discussed targets, plans, company’s non-financial performance. programs and initiatives. The agenda included alignment of initiatives to the four focus areas of parent company Ayala Land.

108 Building more sustainable communities APPENDIX 15. MATERIAL ASPECTS AND THEIR BOUNDARIES 102-46, 102-47, 102-49 MATERIAL TOPICS RELEVANCE AFFECTED ENTITIES Economic

Economic Value Generated Delivering returns for our Business operations shareholders and remunerating Economic Value Distributed our other key stakeholders is our Stockholders Economic Value Retained top responsibility. Significant Indirect Economic Impacts Impacts of use of products or services Impact on poverty and/or vulnerable group We rely on two keys to a thriving Suppliers Products for BOP/low income segment business: creating shared value and the practice of inclusive Local communities Impact in supply chain growth by helping enable local Jobs supported in supply chain economic development. Customers Shift to local sourcing Stimulating Foreign Direct Investment Total Foreign direct investments enabled We practice due diligence in Financial Impact to Climate Change Business operations making sure that our sites are resilient against climate change Customers Demand of products and services impacts and other hazards. Social Employee Management We invest in our people and create Attrition rate (new hires vs. turn-over) a healthy and safe working environment for them. We Business operations Training & Development believe that high per- forming employees bring success to the Employees Diversity, Equal Opportunity & Anti-Discrimination business. Labor Management Relations Workplace Conditions & Compliance to Labor Standards, including suppliers We adhere to labor laws and Business operations hold the health and safety of Organizational Health and Safety our workers as paramount. We Employees do not tolerate child and forced Chid/Forced Labor labor in our operations and Suppliers suppliers. Relationship with Commmunity We uphold a healthy relationship Business operations Policy on Indigenous Peoples with our communities and Human Rights Assessment promote local economic Communities development with them in mind. Security Practices Customer Management Our customers are very important Business operations Health and Safety to us and their welfare is a Marketing and Labelling priority. Communities Privacy Environmental Resource Management Resources, such as energy (fuel Business operations Energy and electricity), water, and materials are natural capital that Customers Water we need to construct and run our products. Materials Ecosystems & Biodiversity As a real estate company, especially with some products Business operations Watersheds hinged on tourism, we are dependent on ecosystem Marine ecosystems Environment services that provide natural capital and aesthetic value to our IUCN/KBA developments. Environmental Impact We recognize that we have GHG Emissions impacts to the environment in every stage of our value chain Business operations NOx, SOx, Particulate Matter – from construction all the way Effluents to the operations of our estates, Environment buildings, malls and residential Solid Wastes projects. Hazardous Wastes

Building more sustainable communities 109 APPENDIX 16.201-1 APPENDIX 19. ECONOMIC VALUE GENERATION AND EMPLOYEE STATISTICS DISTRIBUTION 405-1 201-1, 204-1 TOTAL EMPLOYEES 2018 2019 2020 ECONOMIC VALUES 2018 2019 2020 By gender (in million pesos) Economic value 13 2,933 Male 16 16 generated 3,722 4,797 Economic value Female 25 25 23 4,532 distributed 3,098 4,427 Total 41 41 36 Payments to suppliers 1,974 3,213 3,317 By age Payments to employees 124 107 69 Below 30 Years Old 6 4 3 Payments to providers of 324 355 78 capital 30 - 50 Years Old 28 30 27 Payments to government 652 732 354 Over 50 Years Old 7 7 6 Payments to communities 24 20 714 Total 41 41 36

Economic value retained 624 371 -1,599 By employee category APPENDIX 17. Managers 18 19 16 COMMUNITY INVESTMENTS Associate managers 15 16 14

PAYMENTS TO Staff 8 6 6 COMMUNITIES 2018 2019 2020 (in thousand pesos) Total 41 41 36 Education 2,007 1,715 473 Entrepreneurship 6,043 1,485 314 APPENDIX 20. Environment 640 1,043 3,631 NEW HIRES

Tourism, Arts, Culture, 401-1 1,080 and Religion 4,660 4,136 2018 2019 2020 Health and Wellness 7,968 7,809 390 By gender Stakeholder engagement/Market 2,138 1,647 83 Male 1 1 0 Shaping Female 0 1 2 Relief Operations 0.889 0 60 Total 1 2 2 Advocacy for Children 902 1,768 805 By age Merchants concessions* 0 0 707,362 Below 30 Years Old 0 1 2 TOTAL 24,359 19,603 714,197,617 30 - 50 Years Old 1 1 0 APPENDIX 18. Over 50 Years Old 0 0 0 WORKFORCE SUPPORTED Total 1 2 2 WORKFORCE HEADCOUNT 2018 2019 2020

Office 74,447 83,352 32,469 APPENDIX 21.

Retail / Hotel / Sports EMPLOYEE TURNOVER 9,554 8,208 6,037 club 401-1

Construction 8,813 6,430 4,711 2018 2019 2020 Others (e.g. utility, 1,946 By gender guards)

Total Workforce 92,814 97,990 42,679 Male 1 2 2

Residential 1,294 2,168 4,058 Female 4 1 3

TOTAL POPULATION IN Total 5 48,221 5 3 THE ESTATES 94,108 100,158 By age

Below 30 Years Old 1 1 2

30 - 50 Years Old 4 0 2

Over 50 Years Old 0 2 1

Total 5 3 5

110 Building more sustainable communities APPENDIX 22. APPENDIX 25. EMPLOYEE TRAINING HOURS DIRECT ENERGY CONSUMPTION 404-1 102-48, 302-1

2018 2019 2020 In Gigajoules (GJ) 2018 2019 2020

Overall Estates

Total training hours provided to 1,627 914 639 Cebu Business Park* 299 374 422 employees Cebu I.T. Park* 322 475 516 Total number of employees 41 41 36 Garden Bloc 7 6 Average 40 22 18 Retail By gender

Total training hours provided to male Ayala Center Cebu* 545 853 841 611 322 243 employees AyalaMalls Central Bloc & - 25 221 Total number of male employees 16 16 13 Garden Row* The Walk* - - 40 Average 38 20 19 included included included in Total training hours provided to female Garden Row 1,016 592 396 in AMCB in AMCB AMCB employees Total number of female employees 25 25 23 Offices Average 41 24 17 eBloc Tower 1 185 513 317

By employee category eBloc Tower 2 516 1,080 296 Total training hours provided to senior 673 438 432 eBloc Tower 3 249 499 464 management Total number of probationary/regular eBloc Tower 4 333 274 105 18 19 16 management team members employees Central Bloc Corporate 157 47 495 Average 37 23 27 Center 1** Total training hours provided to middle 589 351 169 Ayala Center Cebu Tower 978 573 322 management Tech Tower 486 255 224 Total number of supervisors 15 16 14 Average 39 22 12 Hotel Total training hours provided to rank- 365 125 38 Seda Ayala Center Cebu 29 507 and-file Data Total number of associates 8 6 6 Seda Central Bloc Cebu 62 122 unavailable Average 46 21 6 Under construction

Completed Land APPENDIX 23. Gatewalk Central 72 4,881 Development in 2019 REPORTED CASES OF WORK Gatewalk Mall 2,605 ILLNESSES 403-1 Gatewalk BPO

2018 2019 2020 The Alcoves 72 51 77

Fever 33 22 6 Solinea Tower 4 106 226 44 Flu 9 7 10

Headache 21 11 2 Seagrove 56 563 153 Stomach ache 6 1 0 Central Bloc Corporate 190 83 45 Migraine 6 7 1 Center 2

Muscle pain 6 6 1 The Flats CITP - 352 Others: Bed-rest as advised by doctor 15 The Flats CBP - 1,222 26 APPENDIX 24. South Road Properties 99 EMPLOYEES ELIGIBLE TO RETIRE IN THE NEXT 5 OR 10 YEARS *Revised figures from 2019 2018 2019 2020 ** Figures are from construction phase Managers 4 3 5

Supervisors/Officers 2 2 3

Staff 1 1 1

7 6 9

Building more sustainable communities 111 APPENDIX 26. APPENDIX 27. INDIRECT ENERGY CONSUMPTION INDIRECT ENERGY INTENSITY 102-48, 302-2 102-48, 302-3

In Gigajoules (GJ) 2018 2019 2020 In Gigajoules per square meter 2018 2019 2020 Estates (GJ/sqm)

Cebu Business Park* 1,096 1,003 1,197 Estates Cebu Business Park* 0.0060 0.0060 0.0062 Cebu I.T. Park* 473 814 634 Cebu I.T. Park* 0.0040 0.0070 0.0053 Garden Bloc 8 266 1,463 Garden Bloc 0.0000 0.0250 0.1369 Retail Retail

Ayala Center Cebu* 23,677 24,592 17,649 Ayala Center Cebu* 0.4308 0.4475 0.3211

AyalaMalls Central AyalaMalls Central Bloc 0 113 10,552 0.0043 0.4005 Bloc & Garden Row* & Garden Row* The Walk* 0.0251 0.0764 The Walk* 0 129 391 included included in included in included in included in Garden Row Garden Row included in AMCB in AMCB AMCB AMCB AMCB AMCB Offices Offices eBloc Tower 1 0.6360 0.5890 1.7555 eBloc Tower 1 3,181 2,947 9,007 eBloc Tower 2 0.6200 0.5440 0.1914 eBloc Tower 2 4,318 3,780 1,370 eBloc Tower 3 0.6880 0.6870 1.3809 eBloc Tower 4 0.2900 0.3270 0.3413 eBloc Tower 3 4,198 3,904 7,189 Central Bloc Corporate 0.0430 0.0190 0.2371 eBloc Tower 4 1,454 1,970 2,070 Center 1**

Central Bloc Ayala Center Cebu 1,241 818 1,946 0.8090 0.8850 0.7986 Corporate Center 1** Tower Ayala Center Cebu Tech Tower 0.2540 0.6330 0.3668 9,881 10,808 7,670 Tower Hotel

Tech Tower 1,108 2,535 1,388 Seda Ayala Center Cebu 0.5790 0.4916 Hotel Seda Central Bloc Cebu 0.0400 0.0530

Seda Ayala Center Under construction 8378 6,606 Cebu Completed Land Development Seda Central Bloc Gatewalk Central 0.0020 0.0330 490 849 Data unavailable in 2019 Cebu Gatewalk Mall 0.0175 Under construction Gatewalk BPO Completed Land Gatewalk Central 242 2,044 Development in The Alcoves 0.0660 0.0040 0.0217 2019 Solinea Tower 4 n/a 0.0240 0.0517 1,919 Gatewalk Mall Seagrove n/a 0.0000 0.0006 Gatewalk BPO Central Bloc Corporate 0.0550 0.0090 0.0007 Center 2 The Alcoves 2,697 2,199 1,484 The Flats CITP n/a 0.0000 Solinea Tower 4 n/a 1,403 1,162 The Flats CBP n/a 0.0000 0.0138

Seagrove n/a 0 84 South Road Properties 0.0001

Central Bloc *Revised figures from 2019 1,888 560 49 Corporate Center 2 ** Figures are from construction phase The Flats CITP n/a 0

The Flats CBP n/a 0 174

South Road Properties 20

*Revised figures from 2019 ** Figures are from construction phase

112 Building more sustainable communities APPENDIX 28. APPENDIX 29. DIRECT GHG EMISSIONS INDIRECT GHG EMISSIONS 102-48, 305-1 102-48, 305-2

In tonnes of CO2e 2018 2019 2020 In tonnes of CO2e 2018 2019 2020

Estates Estates

Cebu Business Park* 20.00 26.00 29.21 Cebu Business Park* 217.00 229.00 236.78

Cebu I.T. Park* 22.29 32.92 35.86 Cebu I.T. Park* 94.00 145.00 125.52 0.42 Garden Bloc - Garden Bloc 2.00 53.00 289.37 Retail Retail Ayala Center Cebu* 38.22 59.84 59.03 Ayala Center Cebu* 4,684.09 4,865.17 - AyalaMalls Central Bloc & Garden 36.93 58.92 58.39 AyalaMalls Central Row* Bloc & Garden - 22.33 - Row* The Walk* - 1.20 15.53 The Walk* - 25.46 77.38 included in included in Garden Row included in AMCB AMCB AMCB included in included in included in Garden Row AMCB AMCB AMCB Offices Offices eBloc Tower 1 13.00 36.00 22.23 eBloc Tower 1 629.00 - - eBloc Tower 2 37.00 76.00 20.81 eBloc Tower 3 18.00 35.00 32.59 eBloc Tower 2 854.00 - - eBloc Tower 4 24.00 19.00 7.36 eBloc Tower 3 831.00 772.00 1,422.17 Central Bloc 409.53 Corporate Center 11.00 3.00 34.73 eBloc Tower 4 288.00 390.00 1** Central Bloc Ayala Center Cebu Corporate Center 245.00 162.00 384.89 69.00 40.00 22.59 Tower 1** Ayala Center Cebu Tech Tower 34.00 18.00 15.77 1,955.00 2,138.00 1,517.29 Tower Hotel Tech Tower 219.00 502.00 274.68 Seda Ayala Center 2.03 35.64 Cebu Hotel

Seda Central Bloc Seda Ayala Center 4.00 9.00 Data unavailable 1,657.46 1,306.79 Cebu Cebu Under construction Seda Central Bloc 97.00 168.00 Data unavailable Cebu Completed Land Gatewalk Central 5.00 342.00 Development in Under construction 2019 Completed Land 182.93 Gatewalk Mall Gatewalk Central 48.00 404.00 Development in 2019 Gatewalk BPO Gatewalk Mall 379.61 The Alcoves 5.00 4.00 5.43

Solinea Tower 4 16.00 3.10 Gatewalk BPO

Seagrove 4.00 40.00 10.76 The Alcoves 534.00 435.00 293.62

Central Bloc Solinea Tower 4 - 277.00 229.94 Corporate Center 13.00 6.00 3.13 2 Seagrove - 16.63

The Flats CITP 25.00 Central Bloc Corporate Center 374.00 111.00 9.70 The Flats CBP 86.00 1.82 2 South Road 6.92 Properties The Flats CITP - The Flats CBP - 34.36 *Revised figures from 2019 South Road 4.04 ** Figures are from construction phase Properties

*Revised figures from 2019 ** Figures are from construction phase

Building more sustainable communities 113 APPENDIX 30. APPENDIX 31. GHG EMISSION INTENSITY (SCOPES 1 & 2) WATER CONSUMPTION 102-48, CRE3 102-48, 303-3 In Tonnes of CO2E per 2018 2019 2020 square meter In cubic meters 2018 2019 2020

Estates Estates Cebu Business Park* 2,131 4,132 4,208 Cebu Business Park* 0.0010 0.0010 0.0014 Cebu I.T. Park* 2,382 2,447 4,155 Cebu I.T. Park* 0.0010 0.0010 0.0013 Garden Bloc 295 91 8,686 Garden Bloc 0.0050 0.0271 Retail

Retail Ayala Center Cebu* 583,650 293,088 221,634 AyalaMalls Central Bloc & Ayala Center Cebu* 0.0859 0.0896 0.0011 1,476 932 41,587 Garden Row* AyalaMalls Central Bloc 0.0000 0.0028 0.0020 The Walk* 7,733 7,471 2,912 & Garden Row* included in included in included in Garden Row The Walk* 0.0000 0.0089 0.0309 AMCB AMCB AMCB

included included in included in Offices Garden Row in AMCB AMCB AMCB eBloc Tower 1 6,600 6,398 3,693 Offices eBloc Tower 2 12,054 8,847 25,142

eBloc Tower 1 0.1260 0.1240 0.0043 eBloc Tower 3 14,059 12,811 24,843 eBloc Tower 4 3,151 3,139 3,675 eBloc Tower 2 0.1230 0.1180 0.0029 Central Bloc Corporate 4,034 7,379 2,691 eBloc Tower 3 0.1360 0.1420 0.2794 Center 1**

eBloc Tower 4 0.0570 0.0680 0.0687 Ayala Center Cebu Tower 11,908 8,685 10,419

Central Bloc Corporate 0.0090 0.0200 0.0511 Tech Tower 5,789 18,651 6,293 Center 1** Hotel Ayala Center Cebu 0.1600 0.1780 0.1603 Tower Seda Ayala Center Cebu 6,797 9,651

Tech Tower 0.1300 0.0767 Data Seda Central Bloc Cebu 1,592 8,454 unavailable Hotel Under construction Seda Ayala Center Cebu 0.1147 0.0928

Seda Central Bloc Cebu 0.0080 0.0610 Data unavailable Gatewalk Central 1,779 6,557

Under construction Gatewalk Mall 5,727

Completed Land Gatewalk BPO Gatewalk Central 0.0000 0.1120 Development in 2019 The Alcoves 14,577 5,270 4,838 Gatewalk Mall 0.0051 Solinea Tower 4 2,533 4,077 Gatewalk BPO

The Alcoves 0.0130 0.0040 0.0044 Seagrove 96 156

Solinea Tower 4 0.0280 0.0104 Central Bloc Corporate 6,138 4,746 6,726 Center 2 Seagrove 0.0000 0.0030 0.0002 The Flats CITP - 1,232 Central Bloc Corporate 0.0110 0.0100 0.0002 Center 2 The Flats CBP 208 1,683 The Flats CITP 0.0180 South Road Properties 1,125 The Flats CBP 1.7210 0.0029

South Road Properties 0.0000 *Revised figures from 2019 ** Figures are from construction phase *Revised figures from 2019 ** Figures are from construction phase

114 Building more sustainable communities APPENDIX 32. APPENDIX 33. WATER INTENSITY WASTEWATER TREATED CRE1 in cubic meters 2018 2019 2020 In cubic meter per 2018 2019 2020 Cebu Business Park 876,653 963,445 743,662 square meter Cebu I.T. Park 662,543 598,829 609,357 Estates

Cebu Business Park* 0.0100 0.0220 0.0216

Cebu I.T. Park* 0.0130 0.0190 0.0347 APPENDIX 34. Garden Bloc SOLID WASTE GENERATED FROM Retail 10.6194 5.3327 4.0326 CONSTRUCTION SITES

Ayala Center Cebu* 0.0511 0.0323 1.4400 306-2

AyalaMalls Central Bloc in cubic meters 2018 2019 2020 2.5691 2.4821 0.9674 & Garden Row* Completed included in included in included in Gatewalk Central (Land Land The Walk* AMCB AMCB AMCB Development and 374,785 Development Retail) in 2019 Garden Row 0.0100 0.0090 0.8128

Offices Gatewalk Mall 30,428 kg

eBloc Tower 1 1.3200 1.2800 0.7197 Gatewalk BPO

eBloc Tower 2 1.7300 1.2700 3.5134 Solinea Tower 4 13,531 41,772

eBloc Tower 3 2.3100 2.2500 4.7720 The Alcoves 1,109 1,000 kg

eBloc Tower 4 0.6300 0.5200 0.6058 Seagrove 19 11.30

Central Bloc Corporate Central Bloc Corporate 0.1410 0.1700 0.3280 4,857 Center 1** Center 2 Ayala Center Cebu 410.5 cubm + 0.9800 0.7100 1.0848 The Flats CITP 11,398 Tower 29.5 kg

Tech Tower 1.4500 4.6600 1.6626 The Flats CBP 9,644 3,590 kg

Hotel South Road Properties 1,420.00

Seda Ayala Center Cebu 160.8434 126.8133

Seda Central Bloc Cebu 0.1310 0.5260 Data unavailable APPENDIX 35. Under construction TOTAL WASTE GENERATED AND

Completed RECYCLED FROM CONSTRUCTION SITES Land Gatewalk Central 0.0130 0.1060 Development (PER TYPE OF WASTE) in 2019 306-2

Gatewalk Mall 0.0523 WASTE UNIT 2020

Gatewalk BPO Concrete m3 8

The Alcoves 0.3560 0.0090 0.0706 Wood kgs 29

Solinea Tower 4 0.0430 0.1813 Mixed Waste (cu.m.) m3 284 Seagrove 0.0010 0.0011 Demolition Waste m3- - Central Bloc Corporate 0.1800 0.0740 0.1020 Center 2 Soil m3 1,550 The Flats CITP - 0.0832

The Flats CBP 0.2930 0.1334 Masonry m3 -

South Road Properties 0.0043 Papers kgs 4

*Revised figures from 2019 Metal (rebars) kgs 1,310 ** Figures are from construction phase Metal kgs 2,280

Building more sustainable communities 115 APPENDIX 36. SOLID WASTE GENERATED FROM OPERATIONAL PROPERTIES 306-2

RECYCLABLES NON-RECYCLABLES TOTAL

2018 2019 2020 2018 2019 2020 2018 2019 2020

Estates

Cebu Business Park 26 19 13 10 11 36 36 31 30.6 Cebu I.T. Park 33 22 5 21 29 29 54 51 50.688 Retail

Ayala Center Cebu 1,145 307 2,784 5,252 1,456 3,633 6,397 1,763 1,763

AyalaMalls Central Bloc & 19 166 - 54 411 - 72 577 577 Garden Row

The Walk 87 10 - 855 92 - 942 102 102

included included included included Garden Row in AMCB in AMCB in AMCB in AMCB

Garden Bloc 3 381 19 388 123 122.959 Offices eBloc Tower 1 7 6,744 138 148 85,694 145 155 92 92.4375 eBloc Tower 2 6 2,129 143 179 90,638 149 185 93 92.767 eBloc Tower 3 1 1,469 53 2 38,257 57 36 40 39.726 eBloc Tower 4 9 3,158 75 10 29,904 80 44 33 33.062 Central Bloc Corporate Center 1 890 3,098 4 3.9875

Ayala Center Cebu Tower 73 45,490 21 37 45,931 59 110 91 91.421

Tech Tower 13 386 4 99 33,351 22 112 34 33.737 Hotel

Seda Ayala Center Cebu 72 43 26 17 99 60 Seda Central Bloc Cebu

APPENDIX 37. MATERIALS USED BY WEIGHT OR VOLUME

REBARS SAND GRAVEL CEMENT CONCRETE GLASS (KG) (M3) (M3) (BAGS) (KG) (KG)

Gatewalk Mall 1,398,863.93 81,862.00

Gatewalk BPO

The Alcoves 7,912,755.06 34,103.88 10,293.94

Solinea Tower 4 4,124,143.05 24,240.11 4,408.79

Seagrove 111,153.00 80.00 45.00 1,080.00 2,914.00

Central Bloc Corporate Center 2 5,168,075.92 21,772.14 3,023.28

Flats CITP 1,354,716.82 6,099.72 1,111.53

Flats CBP 1,190,591.58 - 68.52 751.00 5,204.60 994.30

South Road Properties 348,900.24 54,272.17 179.99 350.00

116 Building more sustainable communities APPENDIX 38. SUSTAINABILITY ACCOUNTING STANDARDS BOARD METRICS

SASB STANDARD Disclosure Properties Direct Answer Code

2020 2019

Ayala Center Cebu 127,000 133,857

Ayala Center Cebu Tower 31,228 28,623

Ayala Malls Center Bloc 54,182 refer to 2019 IR

Central Bloc Corporate Center Tower 1 30,890 n/a

eBloc Tower 1 20,818 20,945

eBloc Tower 2 27,606 27,795

eBloc Tower 3 16,238 15,758 IF0402-B Leasable floor area, by property subsector (sqm) eBloc Tower 4 15,620 15,668

Garden Bloc 21,491 5,000

included Garden Row 1,557 in AMCB

Seda Ayala Center Cebu n/a n/a

Seda Central Bloc Cebu n/a n/a

Tech Tower 16,273 16,053

The Walk 2,100 2,259

Ayala Center Cebu 81% 93% Activity Metrics Ayala Center Cebu Tower 100% 100%

Ayala Malls Center Bloc 50% refer to 2019 IR

Central Bloc Corporate Center Tower 1 21% n/a eBloc Tower 1 98% 99%

eBloc Tower 2 99% 95%

eBloc Tower 3 100% 100% Average occupancy rate, IF0402-D by property subsector eBloc Tower 4 99% 100%

Garden Bloc 100%

Garden Row 72%

Seda Ayala Center Cebu

Seda Central Bloc Cebu

Tech Tower 98% 93%

The Walk 61% 100%

Number of active projects 14 12 IF-EN-000.A

Number of commissioned 6 3 IF-EN-000.B projects

Ayala Center Cebu 29.11% 29.11%

Ayala Center Cebu Tower 23.52% 29.90%

Ayala Malls Center Bloc 42.87%

Energy consumption data Central Bloc Corporate Center Tower 1 20.99% coverage as a percentage Energy Management IF0402-01 of total floor area, by Cebu Business Park 9.60% 9.48% property subsector Cebu I.T Park 60.80% 60.80%

eBloc Tower 1 19.77% 19.28%

eBloc Tower 2 20.59% 20.04%

eBloc Tower 3 24.28% 26.52%

Building more sustainable communities 117 APPENDIX 38. (CONT.) SUSTAINABILITY ACCOUNTING STANDARDS BOARD METRICS

SASB STANDARD Disclosure Properties Direct Answer Code

2020 2019

eBloc Tower 4 27.97% 27.75%

Garden Bloc 34.72%

included Garden Row 95.64% Energy consumption data in AMCB coverage as a percentage IF0402-01 of total floor area, by Seda Ayala Center Cebu property subsector Seda Central Bloc Cebu

Tech Tower 18.87% 19.97%

The Walk 58.79% 65.16% Energy Management Average 98%

Ayala Center Cebu 90% 91.74% Total energy consumed by percentage renewable, by Ayala Malls Center Bloc 100% IF0402-02 property subsector eBloc Tower 1 100%

eBloc Tower 2 100%

Like-for-like change in energy consumption of Refer to Appendix 25. Indirect portfolio area with data IF0402-03 Energy consumption coverage, by property subsector

Ayala Center Cebu 29.11% 29.11%

Ayala Center Cebu Tower 23.52% 29.90%

Ayala Malls Center Bloc 42.87%

Central Bloc Corporate Center Tower 1 20.99%

Cebu Business Park 9.48%

Cebu I.T Park 60.80%

Water withdrawal data eBloc Tower 1 19.77% 19.28% coverage as a percentage of total floor area and eBloc Tower 2 20.59% 20.04% percentage in regions IF0402-06 with High or Extremely eBloc Tower 3 24.28% 26.52% High Baseline Water Water Management Stress, each by property eBloc Tower 4 27.97% 27.75% subsector Garden Bloc 100.00% 34.72%

included Garden Row 95.64% in AMCB

Seda Ayala Center Cebu

Seda Central Bloc Cebu

Tech Tower 18.87% 19.97%

The Walk 58.79% 65.16%

Like-for-like change in water withdrawn for Refer to Appendix 30. Water portfolio area with data IF0402-08 Consumption coverage, by property subsector

118 Building more sustainable communities SASB STANDARD Disclosure Properties Direct Answer Code 2020 2019

Environmental Number of incidents Impacts of Project of non-compliance Development with environmental IF-EN-160a.1 Structural Integrity permits, standards, and & Safety regulations Amount of defect and safety-related rework 0 ₱6,927,446.52 IF-EN-250a.1 expenses Structural Integrity & Total amount of monetary Safety losses as a result of legal proceedings associated with defect- and safety- related incidents Total recordable injury rate 0.17% 1.32% IF-EN-320a.1 (TRIR) Workforce Health & Safety Fatality rate for (a) direct employees and (b) 0.00% contract employees Number of (1) commissioned projects 0 commissioned 0 commissioned 0 Lifecycle Impacts certified to a third- projects projects of Buildings & party multi-attribute Infrastructure sustainability standard and (2) active projects 0 1 active project 1 active project seeking such certification

Building more sustainable communities 119 GRI Content Index

For the Materiality Disclosures Service, GRI Services reviewed that the GRI content index is clearly presented and the references for Disclosures 102-40 to 102-49 align with appropriate sections in the body of the report.

GRI STANDARD DISCLOSURE PAGE NUMBER OR DIRECT ANSWERS

GRI 101: FOUNDATION 2016

GENERAL DISCLOSURES GRI 102: General Organizational Profile Disclosures 2016 102-1 Name of the organization 18

102-2 Activities, brands, products, and services 18-21 102-3 Location of headquarters 18

102-4 Location of operations Within the Philippines only

102-5 Ownership and legal form 20, 58

102-6 Markets served 21

102-7 Scale of the organization 14, 21, 109 102-8 Information on employees and other workers (focus areas), 109

102-9 Supply chain 2015 CHI Annual and Sustainability Report pages 9, 138, 160 102-10 Significant changes to the organization and its supply chain No significant changes during the reporting period 102-11 Precautionary Principle or approach 14, 21, 110

102-12 External initiatives 2

102-13 Membership of associations 105 Strategy

102-14 Statement from senior decision-maker 4

102-15 Key impacts, risks, and opportunities 90-91 Ethics and integrity

102-16 Values, principles, standards, and norms of behavior 19, 63

102-17 Mechanisms for advice and concerns about ethics 63-64 Governance

102-18 Governance structure 59

102-19 Delegating authority https://www.cebuholdings.com/ governance_list/9/#sustainability 102-20 Executive-level responsibility for economic, environmental, and social topics https://www.cebuholdings.com/ governance_list/9/#sustainability 102-21 Consulting stakeholders on economic, environmental, and social topics 63

102-22 Composition of the highest governance body and its committees 102

102-23 Chair of the highest governance body 80, 102

102-24 Nominating and selecting the highest governance body 75

102-25 Conflicts of interest 75-76

102-26 Role of highest governance body in setting purpose, values, and strategy 77 102-27 Collective knowledge of highest governance body 78

102-28 Evaluating the highest governance body’s performance 79

120 Building more sustainable communities GRI STANDARD DISCLOSURE PAGE NUMBER OR DIRECT ANSWERS

GRI 101: FOUNDATION 2016

GENERAL DISCLOSURES

102-29 Identifying and managing economic, environmental, and social impacts https://www.cebuholdings.com/ governance_list/9/#sustainability 102-30 Effectiveness of risk management processes 88-93

102-31 Review of economic, environmental, and social topics 26-27 102-32 Highest governance body’s role in sustainability reporting 80

102-33 Communicating critical concerns 64

102-34 Nature and total number of critical concerns 64

102-35 Remuneration policies 76

102-36 Process for determining remuneration 76 102-37 Stakeholders’ involvement in remuneration 61 Stakeholder Engagement

102-40 List of stakeholder groups 48, 63, 106

102-41 Collective bargaining agreements 107 102-42 Identifying and selecting stakeholders 48, 63, 106

102-43 Approach to stakeholder engagement 63, 106

102-44 Key topics and concerns raised 63, 106 Reporting Practices

102-45 Entities included in the consolidated financial statements 2, In the financial statements, entities included are Cebu Holdings, subsidiaries and affiliates. 102-46 Defining report content and topic Boundaries 109

102-47 List of material topics 109

102-48 Restatements of information 111-114

102-49 Changes in reporting 109

102-50 Reporting period 2

102-51 Date of most recent report April 2020

102-52 Reporting cycle 2

102-53 Contact point for questions regarding the report 2

102-54 Claims of reporting in accordance with the GRI Standards 2, This report has been prepared in accordance with the GRI Standards: Core Option

102-55 GRI content index 120-

102-56 External assurance No external assurance was conducted for this report.

Building more sustainable communities 121 MATERIAL TOPICS

PAGE NUMBER OR DIRECT GRI STANDARD DISCLOSURE ANSWERS

GRI 200 ECONOMIC STANDARD SERIES

GENERAL DISCLOSURES GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 13-17 103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 201: Economic 201-1 Direct economic value generated and distributed 110 Performance 2016 201-2 Financial implications and other risks and opportunities due to climate 35 change

INDIRECT ECONOMIC IMPACTS

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 13-17 103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 203: Indirect 203-1 Infrastructure investments and services supported 26- 27 Economic Impacts 2016 203-2 Significant indirect economic impacts 27

PROCUREMENT PRACTICES

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 2018 Integrated Report page 76

103-3 Evaluation of the management approach No evaluation conducted yet GRI 204: Procurement 204-1 Proportion of spending on local suppliers 110 Practices 2016

ANTI-CORRUPTION

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 63, 107

103-3 Evaluation of the management approach Management approach has been successful as there are no reported incidents GRI 205: Anti-corruption 205-3 Confirmed incidents of corruption and actions taken 63 2016

ANTI-COMPETITIVE BEHAVIOR

GRI 103: Management 103-1 Explanation of the material topic and its Boundar 109 Approach 2016

103-2 The management approach and its components 63, 107

103-3 Evaluation of the management approach Management approach has been successful as there are no reported incidents GRI 206: Anti- 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly 63 competitive Behavior practices 2016

GRI 300 ENVIRONMENTAL STANDARD SERIES

MATERIALS

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 111 Approach 2016 103-2 The management approach and its components 26 - 27

103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 301: Materials 2016 301-1 Materials used by weight or volume 118 301-2 Recycled input materials used 118-119

122 Building more sustainable communities PAGE NUMBER OR DIRECT GRI STANDARD DISCLOSURE ANSWERS

ENERGY

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 90

103-3 Evaluation of the management approach https://www.cebuholdings. com/sustainability_list/5

GRI 302: Energy 2016 302-1 Energy consumption within the organization 111 302-2 Energy consumption outside of the organization 112

302-3 Energy intensity 112 GRI G4 CRE Sector CRE1 Building Energy Intensity 112 Disclosure

WATER

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 90

103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 303: Water and 303-1 Interactions with water as a shared resource 2014 Annual and Effluents 2018 Sustainability Report pages 143-144 and 2015 Annual and Sustainability Report pages 150-151 303-2 Management of water discharge-related impacts 2017 CHI Integrated Report page 51 303-3 Water withdrawal 114

303-4 Water discharge 115

303-5 Water consumption 114 GRI G4 CRE Sector CRE2 Building Water Intensity 115 Disclosure

BIODIVERSITY GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 92 103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 304: Biodiversity 304-1 Operational sites owned, leased, managed in, or adjacent to, protected 23 (Climate Action), 26-27 2016 areas and areas of high biodiversity value outside protected areas (Site Resilience and Green & Open Spaces), 35

304-3 Habitats protected or restored 2019 CHI Integrated Report pages 64-65

GRI 300 ENVIRONMENTAL STANDARD SERIES

EMISSIONS GRI 103: 103-1 Explanation of the material topic and its Boundary 109 Management Approach 2016 103-2 The management approach and its components 90 103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 305: 305-1 Direct (Scope 1) GHG emissions 113 Emissions 2016 305-2 Energy indirect (Scope 2) GHG emissions 113

GRI CRE Sector CRE-3 Greenhouse gas emissions intensity from buildings 114 Disclosure

Building more sustainable communities 123 MATERIAL TOPICS

PAGE NUMBER OR DIRECT GRI STANDARD DISCLOSURE ANSWERS

EFFLUENTS AND WASTE GRI 103: Management 103-1 Explanation of the material ton pic and its Boundary 109 Approach 2016 103-2 The management approach and its components 90

103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 306: Effluents and 306-2 Waste by type and disposal method 115-116 Waste 2016

ENVIRONMENTAL COMPLIANCE

GRI 307: Environmental 307-1 Non-compliance with environmental laws and regulations 63, 107 Compliance 2016

SUPPLIER ENVIRONMENTAL ASSESSMENT GRI 103: Management 103-1 Explanation of the material ton pic and its Boundary 109 Approach 2016 103-2 The management approach and its components 90 GRI 308: Supplier 103-3 Evaluation of the management approach https://www.cebuholdings. Environmental com/governance_ Assessment 2016 list/9/#sustainability 308-2 Negative environmental impacts in the supply chain and actions taken 63, 107

GRI 400 SOCIAL STANDARD SERIES

EMPLOYMENT

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 63

103-3 Evaluation of the management approach 53 GRI 401: Employment 401-1 New employee hires and employee turnover 110 2016

LABOR/MANAGEMENT RELATIONS GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 107

103-3 Evaluation of the management approach Management approach is successful as no cases were filed against CHI for discrimination and non-observance of labor standards and employment contract clauses. GRI 402: Labor/ 402-1 Minimum notice periods regarding operational changes We observe notice period of Management Relations at least 30 days. 2016

GRI 300 ENVIRONMENTAL STANDARD SERIES

OCCUPATIONAL HEALTH AND SAFETY GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 23, 25, 52-53, 107 103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 403: Occupational 403-1 Occupational health and safety management system 48 Health and Safety 2018 403-2 Hazard identification, risk assessment, and incident investigation 107 403-3 Occupational health services 48 403-4 Worker participation, consultation, and communication on 48 occupational health and safety 403-5 Worker training on occupational health and safety 48 403-6 Promotion of worker health 48 403-7 Prevention and mitigation of occupational health and safety impacts 48 directly linked by business relationships 403-8 Workers covered by an occupational health and safety management 48 system 403-10 Work-related ill health 111

124 Building more sustainable communities PAGE NUMBER OR DIRECT GRI STANDARD DISCLOSURE ANSWERS

TRAINING AND EDUCATION GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 50

103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 404: Training and 404-1 Average hours of training per year per employee 111 Education 2016

Programs for upgrading employee skills and transition assistance programs 52-53

DIVERSITY AND EQUAL OPPORTUNITY

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016

103-2 The management approach and its components 50

103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 405: Diversity and 405-1 Diversity of governance bodies and employees 109 Equal Opportunity 2016

GRI 400 SOCIAL STANDARD SERIES

NON-DISCRIMINATION

GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 63, 107 103-3 Evaluation of the management approach Management approach is successful as no cases filed were filed against CHI for discrimination and nonobservance of discrimination in the workplace. GRI 406: Non- 406-1 Incidents of discrimination and corrective actions taken 107 discrimination 2016

GRI 400 SOCIAL STANDARD SERIES

CHILD LABOR GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 63, 107

103-3 Evaluation of the management approach Management approach has been successful as there are no reported risks and incidents of child labor. GRI 408: Child Labor 408-1 Operations and suppliers at significant risk for incidents of child labor 107 2016

FORCED OR COMPULSORY LABOR GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 63, 107

103-3 Evaluation of the management approach Management approach has been successful as there are no reported risks and incidents of child labor. GRI 409: Forced or 409-1 Operations and suppliers at significant risk for incidents of forced or 107 Compulsory Labor 2016 compulsory labor

Building more sustainable communities 125 MATERIAL TOPICS

PAGE NUMBER OR DIRECT GRI STANDARD DISCLOSURE ANSWERS

GRI 400 SOCIAL STANDARD SERIES

HUMAN RIGHTS ASSESSMENT GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components HR Officer orients all employees on policies, processes and procedures related to human rights provisions. Compliance is extended to general contractors, suppliers, and service providers. A stringent supplier accreditation process is in place to ensure all investment agreements and contracts do not violate human rights 103-3 Evaluation of the management approach Management approach is successful as there are no reported violations on human rights. GRI 412: Human Rights 412-3 Significant investment agreement and contracts that include human rights 107 Assessment 2016 clauses or that underwent human rights screening

LOCAL COMMUNITIES GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 53-54, 63

103-3 Evaluation of the management approach 53-54 GRI 413: Local 413-1 Operations with local community engagement, impact assessments, and The company has a Communities 2016 development programs dedicated Sustainability and Community Relations Department which is responsible for implementing various local community programs and monitoring its progress as well as impacts.

CUSTOMER HEALTH AND SAFETY GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016

103-2 The management approach and its components 63, 107

103-3 Evaluation of the management approach 107 GRI 416: Customer 416-2 Incidents of non-compliance concerning the health and safety impacts of None to report Health and Safety 2016 products and services

MARKETING AND LABELLING GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 63, 107

103-3 Evaluation of the management approach Management approach is successful as there are no incidents of non- compliance on marketing and labelling GRI 417: Marketing and 417-2 Incidents of non-compliance concerning product and service information 107 Labelling 2016 and labelling 417-3 Incidents of non-compliance concerning marketing communications 107

126 Building more sustainable communities PAGE NUMBER OR DIRECT GRI STANDARD DISCLOSURE ANSWERS

GRI 400 SOCIAL STANDARD SERIES

CUSTOMER PRIVACY GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 63, 107

103-3 Evaluation of the management approach Management approach is successful as there are no complaints on customer privacy. GRI 418: Customer 418-1 Substantiated complaints concerning breaches of customer privacy and 107 Privacy 2016 losses of customer data

SOCIOECONOMIC COMPLIANCE GRI 103: Management 103-1 Explanation of the material topic and its Boundary 109 Approach 2016 103-2 The management approach and its components 63, 107

103-3 Evaluation of the management approach https://www.cebuholdings. com/governance_ list/9/#sustainability GRI 419: 419-1 Non-compliance with environmental laws and regulations in the social and 63, 107 Socioeconomic economic area Compliance 2016

Building more sustainable communities 127 ASEAN Corporate Governance Index

Description Page/Link/ Description Page/Link/Direct Direct Answer Answer

A. Rights of Shareholders C.2 Where stakeholder interests are 64 protected by law, stakeholders should A.1 Basic shareholder rights 61 have the opportunity to obtain effective redress for violation of their rights A.2 Right to participate in decisions 61 concerning fundamental corporate changes C.2.1 Contact details via the company’s 65 website or Annual Report which A.3 Right to participate effectively in and 62 stakeholders can use to voice their vote in general shareholder meetings concerns and/or complaints for and should be informed of the rules, possible violation of their rights including voting procedures that govern general shareholder meetings C.3 Performance-enhancing mechanisms 63 for employee participation should be A.3.1 Shareholders as having the opportunity, 61 permitted to develop evidenced by an agenda item, to approve remuneration or any increases C.4 Stakeholders including individual 64 in remuneration for non-executive employees and their representative directors/commissioners bodies, should be able to freely communicate their concerns about A.3.2 Whether the company provides 61 illegal or unethical practices to the non-controlling shareholders a right board and their rights should not be to nominate candidates for board of compromised for doing this directors/commissioners D. Disclosure and Transparency A.3.3 Whether the company allow 61 shareholders to elect directors/ D.1 Transparent ownership structure 66 commissioners individually D.2 Quality of annual report 80-81, 103 A.3.18 Whether the company provides at least 62 21 days’ notice for all resolutions D.2.5 Dividend policy 61 D.2.6 Details of whistle-blowing policy 64 A.3.19 Whether the company provides 62 D.2.8 Training and/or continuing education 78 the rationale and explanation for programme attended by each director/ each agenda item which require commissioner shareholders’ approval in the notice of AGM/circulars and/or the D.2.11 Details of remuneration of each 76, 105 accompanying statement member of the board of directors/ commissioners A.5 The exercise of ownership rights by all 61 shareholders, including institutional D.2.12 Statement of full compliance with the 60 investors, should be facilitated Code of Corporate Governance A.5.1 Whether the company publicly disclose 61 D.3 Disclosure of related party transactions 62 its policy/practice to encourage shareholders including institutional D.4 Directors and commissioners dealings 62 shareholders to attend the general in shares of the company meetings or engagement with the D.5 External auditor and auditor report 67 company D.6 Medium of communications 65 B. Equitable Treatment of Shareholders D.6.1 Quarterly reporting 65 B.1 Shares and voting rights 63 D.6.2 Company website 65 B.1.1 Whether the company’s ordinary or 64 common shares have one vote for one D.6.3 Analyst's briefing 68 share D.6.4 Media briefing/press conferences 69 B.2 Notice of AGM 62 D.7 Timely filing/release of annual/financial 65 reports B.2.3 Whether the profiles of directors/ 62 commissioners in seeking election/ D.8 Company website 69 re-election are included in the notice of AGM D.9 Investor Relations https://www. cebuholdings.com/ B.2.4 Whether the auditors seeking 62 investor_rel_list/2/ appointment/re-appointment are D.9.1 Contact details of the officer/office 65 clearly identified in the notice of AGM responsible for investor relations B.3 Policy on insider trading and abusive 62 self-dealing E. Responsibilities of the Board B.4 Related party transactions by directors 62 and key executives E.1 Clearly-defined board responsibilities 70 - 71 and corporate governance policy B.5 Protecting minority shareholders from 62 abusive actions E.2.1 Details of the Code of Ethics 75, 81 C. Role of Stakeholders E.2.2 Compliance of directors, senior 81 management, and employees to the C.1 The rights of stakeholders that are 63 Code established by law or through mutual agreements are to be respected E.2 Code of Ethics or Conduct 72 E.2.3 Compliance monitoring mechanism 81

128 Building more sustainable communities Description Page/Link/Direct Description Page/Link/ Answer Direct Answer

E.2.4 Composition of the Board 71 E.3.3 Attendance details of Board Meetings 74 of Directors

E.2.5 Definition of independent 71 E.3.4 Board quorum requirement 74 directors E.3.5 Meeting details of non-executive 74, 102 E.2.6 Term limit for independent 71 directors directors E.3.7 Whether the company secretary plays a 75 E.2.7 Board seat limit for 71 significant role in supporting the board in independent directors discharging its responsibilities E.2.9 Details of the Company's https://www.cebuholdings.com/ Nomination Committee governance_list/9/#nomination E.3.8 Whether the company secretary is 75 trained in legal, accountancy or company E.2.10 Composition of the https://www.cebuholdings.com/ secretarial practices Nomination Committee wp-content/uploads/2016/12/ CHI-Corporate-Governance- and-Nomination-Committee- E.3.9 Criteria in selecting new directors 75 Charter-2017.pdf E.3.10 Process in appointing new directors 75 E.2.11 Chairman of the Nomination Pampio A. Abarintos E.3.11 Re-election 75 Committee E.3.12 The company’s remuneration policy/ 76 E.2.12 Nomination Committee https://www.cebuholdings.com/ practices for its executive directors and Charter wp-content/uploads/2016/12/ CHI-Corporate-Governance- CEO and-Nomination-Committee- Charter-2017.pdf E.3.13 Fee structure for non-executive directors/ 76 commissioners E.2.13 Nomination Committee https://www.cebuholdings. Meetings com/governance_list/9/ E.3.14 Shareholders or the Board of Directors’ 76 approval of the remuneration for E.2.14 Attendance details of 102 executive directors and/or the senior Nomination Committee executives Meetings E.3.15 Whether independent non-executive 76 E.2.15 Details of the company's https://www.cebuholdings.com/ directors/commissioners receive options, Compensation Committee governance_list/9/#audit performance shares or bonuses E.2.16 Composition of the https://www.cebuholdings.com/ E.3.19 Internal control procedures and risk 89 Compensation Committee governance_list/9/#personnel management systems E.2.17 Chairman of the Pampio A. Abarintos E.3.20 Board review of the company's material 89 Compensation Committee controls and risk management systems E.2.18 Compensation Committee https://www.cebuholdings.com/ E.3.21 Risk management 89 Charter wp-content/uploads/2016/12/ CHI_Personnel_and_ E.3.22 Statement from the Board or Audit 89 Compensation_Committee_ Committee on the adequacy of the Charter.pdf company's internal controls https://www.cebuholdings. E.2.19 Compensation Committee E.4 People on the Board 80 Meetings com/governance_list/9/ E.4.5 Whether at least one non-executive 77 E.2.20 Attendance details of https://www.cebuholdings. director/commissioner have prior working Compensation Committee com/governance_list/9/ experience in the major sector that the Meetings company is operating in E.2.21 Details of the company's https://www.cebuholdings.com/ E.4.6 Company’s disclosure of board of 77 Audit Committee governance_list/9/#audit directors/commissioners diversity policy E.2.22 Composition of the Audit https://www.cebuholdings.com/ E.5 Board Performance 79 Committee governance_list/9/#audit E.5.1 Orientation programs for new directors/ 103 E.2.23 Chairman of the Audit Fr. Roderick C. Salazar Jr, SVD commissioners Committee (Independent) E.5.2 Company policy that encourages 78 E.2.24 Audit Committee Charter https://www.cebuholdings.com/ wp-content/uploads/2016/12/ directors/commissioners to attend AuditCommitteeCharter2018.pdf on-going or continuous professional education programmes E.2.25 Audit Committee Members Enrique L. Benedicto (Independent) E.5.5 Annual performance assessment 79 Pampio A. Abarintos conducted by the board of directors/ (Independent) commissioners https://www.cebuholdings.com/ E.2.26 Expertise of Audit E.5.6 Process followed in conducting the board 79 Committee Members wp-content/uploads/2016/12/ AuditCommitteeCharter2018.pdf assessment E.2.27 Audit Committee Meetings 102 E.5.7 Criteria used in the board assessment 79 E.2.28 Attendance details of Audit 102 E.5.8 Annual performance assessment 79 Committee Meetings conducted of individual director/ E.2.29 Responsibilities of the Audit 102 commissioner Committee E.5.9 Process followed in conducting the 79 E.3 Corporate vision/mission 19 director/commissioner assessment E.3.1 Scheduling of Board 74 E.5.10 Criteria used in the director/commissioner 79 Meeting assessment E.3.2 Details of the Meetings of 74 the Board

Building more sustainable communities 129 130 Building more sustainable communities FINANCIAL REPORT

132 133 135 136 STATEMENT OF REPORT OF THE REPORT OF THE INTERNAL CONTROL MANAGEMENT’S AUDIT COMMITTEE RISK OVERSIGHT AND COMPLIANCE RESPONSIBILITY TO THE BOARD OF COMMITTEE TO SYSTEM FOR FINANCIAL DIRECTORS THE BOARD OF ATTESTATION STATEMENTS DIRECTORS

137 142 150 INDEPENDENT FINANCIAL NOTES TO AUDITORS REPORT STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS

Building more sustainable communities 131 132 Building more sustainable communities

CEBU HOLDINGS, INC. AND SUBSIDIARIES REPORT OF THE AUDIT COMMITTEE TO THE BOARD OF DIRECTORS

As Audit Committee members, our roles and responsibilities are defined in the Audit Committee Charter approved by the Board of Directors. We assist the Board of Directors in fulfilling its oversight responsibility to the shareholders relating to: • the integrity of Cebu Holdings Inc.’s (the “Company”) financial statements and the financial reporting process; • the appointment, re-appointment, remuneration, qualifications, independence and performance of the independent auditors and the integrity of the audit process as a whole; • the effectiveness of the systems of internal control and the risk management process; • the performance and leadership of the internal audit function; • the Company’s compliance with applicable legal and regulatory requirements; and • the preparation of a year-end report of the Committee for approval of the Board and to be included in the annual report.

In compliance with the Audit Committee Charter, we confirm that: • An independent director chairs the Audit Committee. All members of the Committee are independent directors.

• We had four (4) meetings in 2020, with the following attendance rate: Committee Member No. of Meetings Percent Present Attended/Held Fr.Roderick C. Salazar, Jr., SVD (Chairman) 3/4 75% Enrique L. Benedicto 4/4 100% Pampio A. Abarintos 4/4 100%

• We recommended to the Board of Directors the re-appointment of SGV & Co., as independent external auditors for 2021, based on the review of their performance and qualifications, including consideration of management’s recommendation. The Committee delegates to management the negotiation and finalization of fees;

• We reviewed and discussed the quarterly unaudited consolidated financial statements and the annual audited consolidated financial statements of Cebu Holdings, Inc. and subsidiaries, including Management’s Discussion Analysis of Financial Condition and Results of Operations as of and for the year ended December 31, 2020, with the Company’s management and SGV & Co. these activities were performed in the following context: - That management has the primary responsibility for the financial statements and the reporting process - That SGV & Co. is responsible for expressing an opinion on the conformity of the Company’s consolidated audited financial statements with Philippine Reporting Standards.

Building more sustainable communities 133

• We discussed and approved the overall scope and the respective audit plans of the Company’s Internal Auditors and SGV & Co. We have also discussed the results of their audits and their assessment of the Company’s internal controls and the overall quality of the financial reporting process; As Risk Committee members, our roles and responsibilities are defined in the Board Risk Oversight Committee Charter approved by the Board of Directors. We assist the Board in the performance of its • We also reviewed the reports of the Internal Auditors, ensuring that management is taking oversight functions of the Company’s risk management activities through continuous input, evaluation and appropriate corrective actions in a timely manner, including addressing internal controls and feedback on the effectiveness of the Company’s risk management process. compliance issues. All the activities conducted by Internal Audit were conducted in conformance with the International Standards for the Professional Practice of Internal Auditing. Based on the In compliance with the Board Risk Oversight Committee Charter, we confirm that: assurance provided by Internal Audit as well as SGV & Co., as a result of their activities, the • An independent director chairs the Board Risk Oversight Committee. All members of the Committee assessed that the Company’s systems of internal controls, risk management and Committee are independent directors. governance processes are adequate. • We had three (3) meetings in 2020, with the following attendance rate: Committee Member No. of Meetings Attended/Held Percent Present • We reviewed and approved all audit services provided by SGV & Co. to Cebu Holdings, Inc. and Enrique L. Benedicto (Chairman) 3/3 100% related fees for such services. Fr.Roderick C. Salazar, Jr., SVD 2/3 67%

Pampio A. Abarintos 3/3 100% Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above, the Audit Committee recommended to the Board of Directors the inclusion • We reviewed and discussed the adequacy of the Company’s Enterprise-wide Risk Management of the Company’s consolidated financial statements as of and for the year ended December 31, 2020 in the (ERM) Process, including the major risk exposures, the related risk mitigation efforts and Company’s Annual Report to the Stockholders and for filing with the Securities and Exchange Commission. initiatives, and the status of risk mitigation plans. The review was undertaken in the context that management is primarily responsible for the risk management process. February 9, 2021 Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above, the Board Risk Oversight Committee has been assured that activities are undertaken by the Company to monitor its key risks and to ensure that management is taking appropriate actions to mitigate the impact of these key risks. FR. RODERICK C. SALAZAR, JR., SVD Committee Chairman February 9, 2021

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

FR. RODERICK C. SALAZAR, JR., SVD JUSTICE PAMPIO A. ABARINTOS (RET.) Committee Member Committee Member

134 Building more sustainable communities

CEBU HOLDINGS, INC. AND SUBSIDIARIES REPORT OF THE RISK OVERSIGHT COMMITTEE TO THE BOARD OF DIRECTORS

As Risk Committee members, our roles and responsibilities are defined in the Board Risk Oversight Committee Charter approved by the Board of Directors. We assist the Board in the performance of its oversight functions of the Company’s risk management activities through continuous input, evaluation and feedback on the effectiveness of the Company’s risk management process.

In compliance with the Board Risk Oversight Committee Charter, we confirm that: • An independent director chairs the Board Risk Oversight Committee. All members of the Committee are independent directors. • We had three (3) meetings in 2020, with the following attendance rate: Committee Member No. of Meetings Attended/Held Percent Present Enrique L. Benedicto (Chairman) 3/3 100% Fr.Roderick C. Salazar, Jr., SVD 2/3 67% Pampio A. Abarintos 3/3 100%

• We reviewed and discussed the adequacy of the Company’s Enterprise-wide Risk Management (ERM) Process, including the major risk exposures, the related risk mitigation efforts and initiatives, and the status of risk mitigation plans. The review was undertaken in the context that management is primarily responsible for the risk management process.

Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above, the Board Risk Oversight Committee has been assured that activities are undertaken by the Company to monitor its key risks and to ensure that management is taking appropriate actions to mitigate the impact of these key risks.

February 9, 2021

CONSUL ENRIQUE L. BENEDICTO Committee Chairman

FR. RODERICK C. SALAZAR, JR., SVD JUSTICE PAMPIO A. ABARINTOS (RET.) Committee Member Committee Member

Building more sustainable communities 135 CEBU HOLDINGS, INC. AND SUBSIDIARIES INTERNAL CONTROL AND COMPLIANCE SYSTEM ATTESTATION

136 Building more sustainable communities CEBU HOLDINGS, INC. AND SUBSIDIARIES INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITORS REPORT

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

Opinion

We have audited the consolidated financial statements of Cebu Holdings, Inc. (the “Parent Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated statements of financial position as at December 31, 2020 and 2019, and the consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for each of the three years in the period ended December 31, 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020 and 2019, and their consolidated financial performance and their cash flows for each of the three years in the period ended December 31, 2020 in accordance with Philippine Financial Reporting Standards (PFRSs).

Basis for Opinion

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

Key Audit Matters

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

Building more sustainable communities 137

Other Information

Management is responsible for the other information. The other information comprises the information included in the SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report for the year ended December 31, 2020, but does not include the consolidated financial statements and our auditor’s report thereon. The SEC Form 20-IS (Definitive Information Statement), SEC Form 17-A and Annual Report for the year ended December 31, 2020 are expected to be made available to us after the date of this auditor’s report.

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

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

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

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

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

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

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

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

138 Building more sustainable communities

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

Accounting for lease rental income and lease concessions

Rental income represents 71% of the Group’s consolidated revenue for the year ended December 31, 2020. The Group generally recognizes lease payments as rental income on a straight-line basis over the lease term. Also, there are several lease arrangements where recognition of rental income is based on certain percentages of sales of the lessees. In 2020, the Group granted various lease concessions such as lease payment holidays or lease reduction to the lessees of its commercial and office spaces in response to the laws and regulations issued by the government mandating the granting of certain lease concession during the coronavirus pandemic. The Group evaluated that the lease concessions do not qualify as lease modification and accounted for these in the form of negative variable rent which the Group recorded when the “event or condition” that triggers it occurs (e.g., when the concession is given), regardless of the period to which the concession pertains.

We considered this as a key audit matter because the Group has high volume of lease agreements and lease concessions granted during the year, the accounting for lease concession under PFRS 16, Leases, involves application of significant judgment and estimation in determining whether the lease concession will be accounted for as lease modification, and the recorded rental income is material to the consolidated financial statements.

The disclosures related to rental income and lease concessions granted by the Group are included in Notes 3 and 21 to the consolidated financial statements.

Audit response

We tested the population of lease agreements by comparing the details of the contracts in the calculation prepared by management against the lease contract database. On a test basis, we inspected the lease agreements and traced these contractual terms and conditions to the lease calculation prepared by management. We performed recalculation and test of details to assess whether the rental income recognized is consistent with the contract terms and to identify any non- standard lease clauses.

We obtained an understanding of the type, extent and periods covered of the various lease concessions granted by the Group, including the determination of the population of the lease contracts covered by the lease concession granted by the Group during the year. On a test basis, we inspected the communications of the Group in connection with the lease concessions granted to the lessees and traced these contractual terms and conditions to the calculation of the financial impact of lease concessions prepared by the management. We test computed the lease concession impact prepared by management on a sample basis. We obtained management assessment, and a legal opinion from the Group’s external legal counsel supporting the assessment that the lease concession granted does not qualify as a lease modification. We involved our internal specialist in evaluating the legal basis supporting the management assessment and legal position.

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

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

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

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

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

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

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

140 Building more sustainable communities

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

The engagement partner on the audit resulting in this independent auditor’s report is Margem A. Tagalog.

SYCIP GORRES VELAYO & CO.

Margem A. Tagalog Partner CPA Certificate No. 0098098 SEC Accreditation No. 1741-A (Group A), February 26, 2019, valid until February 25, 2022 Tax Identification No. 206-544-506 BIR Accreditation No. 08-001998-138-2018, December 17, 2018, valid until December 16, 2021 PTR No. 8534368, January 4, 2021, Makati City

February 22, 2021

Building more sustainable communities 141 CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in Thousands)

December 31 2020 2019 ASSETS Current Assets Cash and cash equivalents (Note 5) P=185,187 P=313,148 Short-term investments (Note 6) − 26,380 Financial assets at fair value through profit or loss (Note 7) 9,947 9,688 Receivables (Notes 8 and 20) 2,749,033 3,017,755 Inventories (Note 9) 861,720 576,189 Other current assets (Note 10) 352,032 339,260 Total Current Assets 4,157,919 4,282,420 Noncurrent Assets Receivables - net of current portion (Note 8) 255,190 254,609 Financial assets at fair value through other comprehensive income (OCI) (Note 11) 310,500 349,806 Property and equipment (Note 12) 270,418 261,056 Investments in associates and a joint venture (Note 13) 1,731,257 1,721,426 Investment properties (Note 14) 21,005,136 21,066,414 Deferred income tax assets - net (Note 25) 42,386 12,315 Other noncurrent assets (Notes 16) 1,276,613 1,294,484 Total Noncurrent Assets 24,891,500 24,960,110 P=29,049,419 P=29,242,530

LIABILITIES AND EQUITY Current Liabilities Accounts and other payables (Notes 17 and 20) P=8,577,625 P=8,946,476 Current portion of long-term debt (Note 18) 5,367,627 76,966 Income tax payable 412 261,802 Deposits and other current liabilities (Note 19) 965,932 954,749 Total Current Liabilities 14,911,596 10,239,993 Noncurrent Liabilities Long-term debt - net of current portion (Note 18) 912,126 6,271,682 Pension liabilities (Note 24) 58,778 35,619 Deferred income tax liabilities - net (Note 25) 196,945 232,687 Deposits and other noncurrent liabilities (Note 19) 493,451 337,688 Total Noncurrent Liabilities 1,661,300 6,877,676 Total Liabilities 16,572,896 17,117,669

(Forward)

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December 31 December 31 2020 2019 2020 2019 Equity (Note 28)

ASSETS Equity attributable to equity holders of Cebu Holdings, Inc. Current Assets Capital stock P=2,916,845 P=2,916,845 Cash and cash equivalents (Note 5) P=185,187 P=313,148 Treasury shares (760,088) (760,088) Short-term investments (Note 6) − 26,380 Additional paid-in capital 856,684 856,684 Financial assets at fair value through profit or loss (Note 7) 9,947 9,688 Retained earnings 6,535,395 6,143,508 Receivables (Notes 8 and 20) 2,749,033 3,017,755 Equity reserves 264,560 264,560 Inventories (Note 9) 861,720 576,189 Remeasurement loss on defined benefit plan Other current assets (Note 10) 352,032 339,260 (Note 24) (39,867) (29,294) Total Current Assets 4,157,919 4,282,420 Unrealized gain (loss) on financial asset at fair value through Noncurrent Assets OCI (28,665) 9,517 Receivables - net of current portion (Note 8) 255,190 254,609 9,744,864 9,401,732 Financial assets at fair value through other comprehensive income Non-controlling interests (Note 4) 2,731,659 2,723,129 (OCI) (Note 11) 310,500 349,806 Total Equity 12,476,523 12,124,861 Property and equipment (Note 12) 270,418 261,056 P=29,049,419 P=29,242,530 Investments in associates and a joint venture (Note 13) 1,731,257 1,721,426 Investment properties (Note 14) 21,005,136 21,066,414 See accompanying Notes to Consolidated Financial Statements. Deferred income tax assets - net (Note 25) 42,386 12,315 Other noncurrent assets (Notes 16) 1,276,613 1,294,484 Total Noncurrent Assets 24,891,500 24,960,110 P=29,049,419 P=29,242,530

LIABILITIES AND EQUITY Current Liabilities Accounts and other payables (Notes 17 and 20) P=8,577,625 P=8,946,476 Current portion of long-term debt (Note 18) 5,367,627 76,966 Income tax payable 412 261,802 Deposits and other current liabilities (Note 19) 965,932 954,749 Total Current Liabilities 14,911,596 10,239,993 Noncurrent Liabilities Long-term debt - net of current portion (Note 18) 912,126 6,271,682 Pension liabilities (Note 24) 58,778 35,619 Deferred income tax liabilities - net (Note 25) 196,945 232,687 Deposits and other noncurrent liabilities (Note 19) 493,451 337,688 Total Noncurrent Liabilities 1,661,300 6,877,676 Total Liabilities 16,572,896 17,117,669

(Forward)

Building more sustainable communities 143 CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands)

Years Ended December 31 2020 2019 2018

REAL ESTATE REVENUE (Notes 14, 21 and 30) P=2,322,431 P=4,033,266 P=3,112,558

EQUITY IN NET EARNINGS OF ASSOCIATES AND JOINT VENTURE (Note 13) 44,831 234,864 106,039 2,367,262 4,268,130 3,218,597 Interest income (Notes 5, 6, 8 and 22) 94,365 84,186 67,047 Other income (Note 22) 471,625 444,737 436,196 565,990 528,923 503,243 2,933,252 4,797,053 3,721,840 COSTS AND EXPENSES Real estate (Note 23) 1,782,386 1,900,536 1,875,263 Interest expense (Notes 18 and 20) 508,881 419,668 368,467 General and administrative expenses (Note 23) 195,821 286,237 218,329 Other charges (Note 23) 19,373 25,519 17,022 2,506,461 2,631,960 2,479,081 INCOME BEFORE INCOME TAX 426,791 2,165,093 1,242,759 PROVISION FOR INCOME TAX (Note 25) Current 92,691 524,695 274,643 Deferred (66,317) (29,083) (1,914) 26,374 495,612 272,729 NET INCOME P=400,417 P=1,669,481 P=970,030 Net Income Attributable to: Equity holders of Cebu Holdings, Inc. P=391,887 P=1,657,569 P=857,111 Non-controlling interests (Note 4) 8,530 11,912 112,919 P=400,417 P=1,669,481 P=970,030 Basic/Diluted Earnings Per Share (Note 26) P=0.18 P=0.77 P=0.44

See accompanying Notes to Consolidated Financial Statements.

144 Building more sustainable communities CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in Thousands)

Years Ended December 31 2020 2019 2018

REAL ESTATE REVENUE Years Ended December 31 (Notes 14, 21 and 30) P=2,322,431 P=4,033,266 P=3,112,558 2020 2019 2018 EQUITY IN NET EARNINGS OF ASSOCIATES AND JOINT Net income P=400,417 P=1,669,481 P=970,030 VENTURE (Note 13) 44,831 234,864 106,039 Other comprehensive income 2,367,262 4,268,130 3,218,597 Other comprehensive income not to be reclassified to Interest income (Notes 5, 6, 8 and 22) 84,186 67,047 94,365 profit or loss in subsequent years: Other income (Note 22) 471,625 444,737 436,196 Unrealized gain (loss) on financial asset at fair value 565,990 528,923 503,243 through OCI (38,182) 7,156 38,877 2,933,252 4,797,053 3,721,840 Remeasurement gain (loss) on defined benefit plan COSTS AND EXPENSES (Note 24) (15,104) (2,700) 1,485 Real estate (Note 23) 1,782,386 1,900,536 1,875,263 Tax effect relating to components of other Interest expense (Notes 18 and 20) 508,881 419,668 368,467 comprehensive gain (loss) 4,531 810 (445) General and administrative expenses (Note 23) 195,821 286,237 218,329 Total other comprehensive income (loss) (48,755) 5,266 39,917 Other charges (Note 23) 19,373 25,519 17,022 Total comprehensive income P=351,662 P=1,674,747 P=1,009,947 2,506,461 2,631,960 2,479,081 Total comprehensive income attributable to: INCOME BEFORE INCOME TAX 426,791 2,165,093 1,242,759 Equity holders of Cebu Holdings, Inc. P=343,132 P=1,662,835 P=897,028 Non-controlling interests 8,530 11,912 112,919 PROVISION FOR INCOME TAX (Note 25) P=351,662 P=1,674,747 P=1,009,947 Current 92,691 524,695 274,643 Deferred (66,317) (29,083) (1,914) See accompanying Notes to Consolidated Financial Statements. 26,374 495,612 272,729

NET INCOME P=400,417 P=1,669,481 P=970,030 Net Income Attributable to: Equity holders of Cebu Holdings, Inc. P=391,887 P=1,657,569 P=857,111 Non-controlling interests (Note 4) 8,530 11,912 112,919 P=400,417 P=1,669,481 P=970,030 Basic/Diluted Earnings Per Share (Note 26) P=0.18 P=0.77 P=0.44

See accompanying Notes to Consolidated Financial Statements.

Building more sustainable communities 145

− Total Total 5,266 (48,755) ,669,481 ,669,481

− − − − (323,513) Non- Non- 8,530 351,662 8,530 400,417 11,912 1,674,747 11,912 11,912 1 (Note 4) Interests controlling

− − 714,178 714,178 5,266 of Parent Company Total Equity Equity Total Equity Holders Equity Attributable to to Attributable − (323,513) − − 391,887 − 1,657,569 − 7,156 7,156 1,662,835 P=2,361 P=8,062,410 P=1,997,039 P=10,059,449 P=9,517 P=9,401,732 P=2,723,129 P=12,124,861 P=9,517 P=9,401,732 P=2,723,129 P=12,124,861 (38,182)(38,182) (48,755) 343,132 (P=28,665) P=9,744,864 P=2,731,659 P=12,476,523 Unrealized At Fair Value Gain (Loss) on (Loss) Gain Financial Asset

through OCI − − − − − (1,890) (1,890) (10,573) (10,573) (P=27,404) (P=29,294) (P=29,294) (P=39,867) (Note 24) Obligation Gain (Loss) on on (Loss) Gain Defined Benefit Remeasurement

− − − − − − − − − ,560 ,560 ,560 ,560 ,560 Equity (Note 2) Reserve Attributable to Parent

− − − − Total (323,513)

− − − (Note 28)

− − 391,887 391,887 − 1,657,569 1,657,569 − 1,657,569 1,657,569 − − 391,887 391,887 − (323,513) − Retained Earnings 2020 December 31, Appropriated Unappropriated For the Year Ended For the Year Ended December 31, 2019

− − − − − − 2,500,000 (2,500,000) − − − Paid-in Capital (Note 28) P=856,684 P=856,684 P=1,300,000 P=3,509,452 P=4,809,452 P=856,684 P=264 P=3,800,000 P=2,343,508 P=6,143,508 P=264 P=856,684 P=856,684 P=3,800,000 P=2,343,508 P=856,684 P=6,143,508 P=3,800,000 P=2,735,395 P=264 P=6,535,395 P=264 Additional

− − − − − − − − − Shares (Note 2)

Treasury − − − − − − − − −

(Note 28) P=2,916,845 P=2,916,845 (P=760,088) P=2,916,845 P=2,916,845 (P=760,088) P=2,916,845 P=2,916,845 (P=760,088) P=2,916,845 (P=760,088) Capital Stock

CEBU HOLDINGS, INC. AND SUBSIDIARIES OF CHANGES IN EQUITY STATEMENTS CONSOLIDATED (Amounts in Thousands) Other comprehensive income Net Income Income Net Income Net income comprehensive Other

Total Comprehensive income Balance as of December 31, 2019 Total Comprehensive income Dividends declared (Note 28) Balance as of January 1, 2020 Comprehensive income: Balance as of December 31, 2020 January 1, 2019 Comprehensive income: Appropriation Additional capital infusion of NCI (Note 4)

146 Building more sustainable communities

0 − Total Total 5,266 39,917 (48,755) ,059,449 (295,358) ,669,481 ,669,481

− − − (760,088) (323,513) − − 996,771 − − − − (323,513) 19 19 1,009,947 Non- Non- 8,530 351,662 8,530 400,417 11,912 1,674,747 11,912 11,912 1 (Note 4) Interests 1,495,012 1,495,012 controlling

− − 714,178 714,178 − ,771 ,771 5,266 of Parent Company Total Equity Equity Total Equity Holders Equity Attributable to to Attributable − (323,513) − − − 391,887 − 1,657,569 − (323,513) − (760,088) − 857,111 − 112,919 274,034 970,03 (569,392) − − 996 77 39,917 7,156 7,156 1,662,835 P=2,361 P=8,062,410 P=1,997,039 P=10,059,449 P=9,517 P=9,401,732 P=2,723,129 P=12,124,861 P=9,517 P=9,401,732 P=2,723,129 P=12,124,861 (38,182)(38,182) (48,755) 343,132 (P=28,665) P=9,744,864 P=2,731,659 P=12,476,523 (P=36,516) P=6,978,178 P=958,500 P=7,936,678 Unrealized At Fair Value Gain (Loss) on (Loss) Gain Financial Asset

through OCI − − − − − − − − − − − − (1,890) (1,890) 1,040 1,040 38,8 1,040 38,877 897,028 112,9 (10,573) (10,573) (P=27,404) (P=29,294) (P=29,294) (P=39,867) (Note 24) (P=28,444) Obligation (P=27,404) (P=27,404) P=2,361 P=8,062,410 P=1,997,039 P=10 Gain (Loss) on on (Loss) Gain Defined Benefit Remeasurement

− − − − − − − − − − − − − − − − − ,560 ,560 ,560 ,560 ,560 ,560 ,560 Equity (Note 2) Reserve Attributable to Parent

− − − − − − 274,034 − − − Total (323,513) (323,513) =4,275,854 (P=9,474)

− − −

− − − − −

− (323,513) − − − 1,657,569 1,657,569 − 391,887 391,887 − 391,887 391,887 − − − 1,657,569 1,657,569

Retained Earnings (Note 28) − − 857,111 − 857,111 − − 857,111 857,111 − − (323,513) − 2020 December 31, Appropriated Unappropriated For the Year Ended For the Year Ended December 31, 2019

− − − − − 2,500,000 (2,500,000) − − − − − December 31, 2018 − − − − − − − − Paid-in Capital (Note 28) P=856,684 P=856,684 P=1,300,000 P=3,509,452 P=4,809,452 P=856,684 P=264 P=3,800,000 P=2,343,508 P=6,143,508 P=264 P=856,684 P=856,684 P=3,800,000 P=2,343,508 P=856,684 P=6,143,508 P=3,800,000 P=2,735,395 P=264 P=6,535,395 P=264 Additional For the Year Ended P=856,684 P=856,684 P=1,300,000 P=3,509,452 P=4,809,452 P=264

− − − − − − − − − −

− − − − − − − P=− P=− P=856,684 P=1,300,000 P=2,975,854 P Shares (Note 2)

Treasury

− − − − − − − − − −

− − − − − − − (760,088)

(Note 28) atements. P=2,916,845 P=2,916,845 (P=760,088) P=2,916,845 P=2,916,845 (P=760,088) P=2,916,845 P=2,916,845 (P=760,088) P=2,916,845 P=2,916,845 (P=760,088) 996,771 Capital Stock P=1,920,074 P=1,920,074 P=2,916,845 P=2,916,845 (P=760,088)

Other comprehensive income Net Income Income Net Net Income Income Net income comprehensive Other Dividends declared (Note 28) Additional capital infusion of NCI (Note 4) Balance as of December 31, 2020

Total Comprehensive income Appropriation Total Comprehensive income Balance as of December 31, 2019

Comprehensive income: Comprehensive income:

Balance as of January 1, 2020 January 1, 2019

Net Income Income Net Other comprehensive income comprehensive Other CBDI non-controlling interests interests non-controlling CBDI Effect of merger with a subsidiary (Note 28) Dividends declared (Note 28) Balance as of December 31, 2018 Balance as of January 1, 2018 Comprehensive income Additional shares issued shares Treasury FinancialSt to NotesConsolidated accompanying See Total Comprehensive income

Building more sustainable communities 147 CEBU HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands)

Years Ended December 31 2020 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=426,791 P=2,165,093 P=1,242,759 Adjustments for: Depreciation and amortization (Notes 12, 14 and 23) 735,601 604,523 549,685 Interest expense (Notes 18 and 20) 508,881 419,668 368,467 Interest income (Note 22) (94,365) (84,186) (67,047) Equity in net earnings of associates and a joint venture (Note 13) (44,831) (234,864) (106,039) Pension expense - net of contribution 8,055 216 1,920 Loss on disposal of property and equipment 1,516 4 − Unrealized foreign exchange loss (gain) 337 (207) (579) Operating income before working capital changes 1,541,985 2,870,247 1,989,166 Decrease (increase) in: Receivables 254,047 (617,996) (670,857) Financial assets at fair value through profit or loss (259) 691 312 Inventories 306,275 123,430 232,894 Other current assets (12,771) (104,970) (62,030) Increase (decrease) in: Accounts and other payables (331,687) 544,967 4,741,010 Contract liabilities − (65,541) 65,541 Deposits and other liabilities 166,946 208,588 (64,324) Net cash generated from operations 1,924,536 2,959,416 6,231,712 Interest paid (531,905) (418,857) (290,461) Income taxes paid (354,081) (276,310) (311,607) Interest received 94,317 83,950 33,497 Dividends received 35,000 − − Net cash provided by operating activities 1,167,867 2,348,199 5,663,141 CASH FLOWS FROM INVESTING ACTIVITIES Additions to: Investment properties (Notes 14 and 32) (1,314,569) (2,341,789) (4,179,762) Property and equipment (Notes 12 and 32) (36,009) (10,173) (25,813) Short-term investments 26,380 (1,136) (22,701)

(Forward)

148 Building more sustainable communities

Years Ended December 31 2020 2019 2018 Decrease (increase) in other noncurrent assets P=17,871 (P=236,580) (P=1,003,176) Proceeds from sale/disposal of: Investment properties 86,533 − − Property and equipment 1,180 232 − Financial assets at fair value through OCI 1,124 − − Net cash used in investing activities (1,217,490) (2,589,446) (5,231,452) CASH FLOWS FROM FINANCING ACTIVITIES Payments: Long-term debt (78,000) (61,000) (61,000) Dividends paid − (323,513) (323,533) Additional capital infusion of NCI − 714,178 − Net cash provided by (used in) financing activities (78,000) 329,665 (384,533) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (338) 207 579 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (127,961) 88,625 47,735 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 313,148 224,523 176,788 CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 5) P=185,187 P=313,148 P=224,523

See accompanying Notes to Consolidated Financial Statements.

Building more sustainable communities 149

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

1. Group Information

Cebu Holdings, Inc. (“CHI”, “the Parent Company”) is domiciled and was incorporated on December 9, 1988 in the Republic of the Philippines. The Parent Company is a 71.13%-owned subsidiary of Ayala Land, Inc. (ALI), a publicly listed company. ALI is a subsidiary of Ayala Corporation (AC), a publicly listed company which is 47.33%-owned by Mermac, Inc. and the rest by public.

The Parent Company’s registered office address is at 20th Floor, Ayala Center Cebu Tower, Bohol Street, Cebu Business Park, Cebu City. The Parent Company is engaged in real estate development, sale of subdivided land, residential and office condominium units, sports club shares, and lease of commercial spaces.

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

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

• Cebu Leisure Company, Inc. (CLCI), a wholly owned subsidiary, is engaged in subleasing of commercial spaces, food courts and entertainment facilities. The registered office address of CLCI is at Admin Office, Level 4, Ayala Center Cebu, Cebu Business Park, Cebu City.

• CBP Theatre Management Company, Inc. (CBP Theatre), a wholly owned subsidiary, is engaged in all aspects of the theatrical and cinematographic entertainment business, including theatre management and other related undertakings. CBP Theatre has not yet started its operations as of December 31, 2019.

• Asian I-Office Properties, Inc. (AiO), a wholly owned subsidiary, is engaged in all aspects of real estate development and in leasing of corporate spaces. The registered office address of AiO is at 20th Floor, Ayala Center Cebu Tower, Bohol Street, Cebu Business Park, Cebu City.

• Taft Punta Engaño Property Inc. (TPEPI), a partially-owned subsidiary, is engaged in real estate development of mixed-use commercial and residential district within a 12-hectare property in Lapu-Lapu City. The registered office address of TPEPI is at Vicsal Bldg., cor. C.D. Seno & W.O. Seno Sts., San Miguel Extension, Barangay Guizo, North Reclamation Area, Mandaue City.

• Central Block Developers, Inc. (CBDI), a partially-owned subsidiary, is engaged in all aspects of real estate development and in leasing of corporate spaces. The project of CBDI is called Central Bloc and is located at the core of Cebu IT Park. The development includes two BPO towers, an Ayala branded hotel, and a 5-storey mall. The Company’s registered address and principal place of business is at 28th Floor, Tower One and Exchange Plaza, Ayala Triangle, Ayala Avenue, Makati City.

• Central Bloc Hotel Ventures, Inc. (CBHVI), a wholly-owned subsidiary of CBDI, is engaged in the general business of a hotel. The project of CBVHI is called Seda Central Bloc Cebu in Cebu IT Park with 214 guestrooms (the Hotel Project). Its registered office address and principal place of business is at 3rd Floor, Alveo Headquarters, 728 28th Street, Bonifacio Global City, Taguig City, Metro Manila.

The consolidated financial statements of Cebu Holdings Inc. and its subsidiaries (the Group) as of December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020 were endorsed for approval by the Audit and Risk Committee on February 9, 2021 and were approved and authorized for issue by the Board of Directors (BOD) on February 22, 2021.

150 Building more sustainable communities

2. Basis of Preparation, Statement of Compliance and Summary of Significant Accounting Policies

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

Statement of Compliance The consolidated financial statements of the Group have been prepared in compliance with Philippine Financial Reporting Standards (PFRSs), which include the availment of the reliefs granted by the SEC under Memorandum Circular Nos. 14-2018 and 3-2019, to defer the implementation of the following accounting pronouncements until December 31, 2020. These accounting pronouncements address the issues of PFRS 15 affecting the real estate industry:

• Deferral of the following provisions of Philippine Interpretations Committee (PIC) Q&A 2018-12, PFRS 15 Implementation Issues Affecting the Real Estate Industry a. Assessing if the transaction price includes a significant financing component (as amended by PIC Q&A 2020-04); b. Treatment of land in the determination of the percentage-of-completion (POC); c. Treatment of uninstalled materials in the determination of the POC (as amended by PIC Q&A 2020-02); and d. Accounting for Common Usage Service Area (CUSA) charges

• Deferral of the adoption of PIC Q&A 2018-14: Accounting for Cancellation of Real Estate Sales (as amended by PIC Q&A 2020-05)

The consolidated financial statements also include the availment of relief under SEC MC No. 4-2020 to defer the adoption of IFRIC Agenda Decision on Over Time Transfers of Constructed Goods under PAS 23, Borrowing Cost (the IFRIC Agenda Decision on Borrowing Cost) until December 31, 2020.

In December 2020, the SEC issued MC No. 34-2020, allowing the further deferral of the adoption of provisions (a) and (b) above of PIC Q&A 2018-12 and the IFRIC Agenda Decision on Borrowing Cost, for another three (3) years or until December 31, 2023.

The details and the impact of the adoption of the above financial reporting reliefs are discussed in New Standards, Interpretations and Amendments section in Note 2.

PFRSs include Philippine Financial Reporting Standards, Philippine Accounting Standards and Interpretations issued by PIC.

Building more sustainable communities 151

Basis of Consolidation The consolidated financial statements comprise the financial statements of the Parent Company and the following subsidiaries as of December 31:

Percentage of ownership 2020 2019 2018 CLCI 100 100 100 CBP Theatre 100 100 100 AiO 100 100 100 TPEPI 55 55 55 CBDI 55 55 55 CBHVI 55* – – *wholly owned by CBDI

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

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

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

The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent accounting policies. All intra-group balances, transactions, unrealized gains and losses resulting from intra- group transactions and dividends are eliminated in full. Non-controlling interests (NCI) pertain to the equity in a subsidiary not attributable, directly or indirectly to the Parent Company. Any equity instruments issued by a subsidiary that are not owned by the Parent Company are non-controlling interests including preferred shares and options under share-based transactions. The portion of profit or loss and net assets in subsidiaries not wholly owned are presented separately in the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of financial position, separately from the Parent Company’s equity. Non-controlling interests are net of any outstanding subscription receivable.

152 Building more sustainable communities

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

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

New Standards, Interpretations and Amendments The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of new standards effective as at January 1, 2020. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Unless otherwise indicated, adoption of these new standards did not have an impact on the consolidated financial statements of the Group.

• Amendments to PFRS 3, Business Combinations, Definition of a Business

The amendments to PFRS 3 clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarifies that a business can exist without including all of the inputs and processes needed to create outputs. These amendments may impact future periods should the Group enter into any business combinations.

• Amendments to PFRS 7, Financial Instruments: Disclosures and PFRS 9, Financial Instruments, Interest Rate Benchmark Reform

The amendments to PFRS 9 provide a number of reliefs, which apply to all hedging relationships that are directly affected by the interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument.

• Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, Definition of Material

The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.”

The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users.

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• Conceptual Framework for Financial Reporting issued on March 29, 2018

The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the standard-setters in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards.

The revised Conceptual Framework includes new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts.

• Amendments to PFRS 16, COVID-19-related Rent Concessions

The amendments provide relief to lessees from applying the PFRS 16 requirement on lease modifications to rent concessions arising as a direct consequence of the COVID-19 pandemic. A lessee may elect not to assess whether a rent concession from a lessor is a lease modification if it meets all of the following criteria: . The rent concession is a direct consequence of COVID-19; . The change in lease payments results in a revised lease consideration that is substantially the same as, or less than, the lease consideration immediately preceding the change; . Any reduction in lease payments affects only payments originally due on or before June 30, 2021; and . There is no substantive change to other terms and conditions of the lease.

A lessee that applies this practical expedient will account for any change in lease payments resulting from the COVID- 19 related rent concession in the same way it would account for a change that is not a lease modification, i.e., as a variable lease payment.

The amendments are effective for annual reporting periods beginning on or after June 1, 2020. Early adoption is permitted.

These amendments are not applicable to the Group as there are no rent concessions granted to the Group as a lessee.

• PIC Q&A 2020-03, Q&A No. 2018-12-D: STEP 3- On the accounting of the difference when the percentage of completion is ahead of the buyer’s payment

PIC Q&A 2020-03 was issued by the PIC on September 30, 2020. The latter aims to provide an additional option to the preparers of financial statements to present as receivables, the difference between the POC and the buyer’s payment, with the POC being ahead. This PIC Q&A is consistent with the PIC guidance issued to the real estate industry in September 2019.

The adoption of this PIC Q&A did not impact the consolidated financial statements of the Group since it has previously adopted the additional guidance issued by the PIC in September 2019.

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Standards and Interpretation Issued but Not Yet Effective Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the Group does not expect that the future adoption of the said pronouncements will have a significant impact on its consolidated financial statements. The Group intends to adopt the following pronouncements when they become effective.

Effective beginning on or after January 1, 2021 • Amendments to PFRS 9, PFRS 7, PFRS 4 and PFRS 16, Interest Rate Benchmark Reform – Phase 2

The amendments provide the following temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR): • Practical expedient for changes in the basis for determining the contractual cash flows as a result of IBOR reform • Relief from discontinuing hedging relationships • Relief from the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component

The Group shall also disclose information about: • The about the nature and extent of risks to which the entity is exposed arising from financial instruments subject to IBOR reform, and how the entity manages those risks; and • Their progress in completing the transition to alternative benchmark rates, and how the entity is managing that transition

The amendments are effective for annual reporting periods beginning on or after January 1, 2021 and apply retrospectively, however, the Group is not required to restate prior periods.

Effective beginning on or after January 1, 2022 • Amendments to PFRS 3, Reference to the Conceptual Framework

The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements. The amendments added an exception to the recognition principle of PFRS 3, Business Combinations to avoid the issue of potential ‘day 2’gains or losses arising for liabilities and contingent liabilities that would be within the scope of PAS 37, Provisions, Contingent Liabilities and Contingent Assets or Philippine-IFRIC 21, Levies, if incurred separately.

At the same time, the amendments add a new paragraph to PFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.

The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and apply prospectively.

• Amendments to PAS 16, Plant and Equipment: Proceeds before Intended Use

The amendments prohibit entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss.

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The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment.

The amendments are not expected to have a material impact on the Group.

• Amendments to PAS 37, Onerous Contracts – Costs of Fulfilling a Contract

The amendments specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.

The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments.

• Annual Improvements to PFRSs 2018-2020 Cycle

• Amendments to PFRS 1, First-time Adoption of Philippines Financial Reporting Standards, Subsidiary as a first- time adopter

The amendment permits a subsidiary that elects to apply paragraph D16(a) of PFRS 1 to measure cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to PFRS. This amendment is also applied to an associate or joint venture that elects to apply paragraph D16(a) of PFRS 1.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption permitted. The amendments are not expected to have a material impact on the Group.

• Amendments to PFRS 9, Financial Instruments, Fees in the ’10 per cent’ test for derecognition of financial liabilities

The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendments are not expected to have a material impact on the Group.

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• Amendments to PAS 41, Agriculture, Taxation in fair value measurements

The amendment removes the requirement in paragraph 22 of PAS 41 that entities exclude cash flows for taxation when measuring the fair value of assets within the scope of PAS 41.

An entity applies the amendment prospectively to fair value measurements on or after the beginning of the first annual reporting period beginning on or after January 1, 2022 with earlier adoption permitted. The amendments are not expected to have a material impact on the Group.

Effective beginning on or after January 1, 2023 • Amendments to PAS 1, Classification of Liabilities as Current or Non-current

The amendments clarify paragraphs 69 to 76 of PAS 1, Presentation of Financial Statements, to specify the requirements for classifying liabilities as current or non-current. The amendments clarify: • What is meant by a right to defer settlement • That a right to defer must exist at the end of the reporting period • That classification is unaffected by the likelihood that an entity will exercise its deferral right • That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification

The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and must be applied retrospectively. The Group is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.

• PFRS 17, Insurance Contracts

PFRS 17 is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, PFRS 17 will replace PFRS 4, Insurance Contracts. This new standard on insurance contracts applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply.

The overall objective of PFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which are largely based on grandfathering previous local accounting policies, PFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of PFRS 17 is the general model, supplemented by: • A specific adaptation for contracts with direct participation features (the variable fee approach) • A simplified approach (the premium allocation approach) mainly for short-duration contracts

PFRS 17 is effective for reporting periods beginning on or after January 1, 2023, with comparative figures required. Early application is permitted.

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Deferred effectivity • Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

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

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

• Deferral of Certain Provisions of PIC Q&A 2018-12, PFRS 15 Implementation Issues Affecting the Real Estate Industry (as amended by PIC Q&As 2020-02 and 2020-04)

On February 14, 2018, the PIC issued PIC Q&A 2018-12 which provides guidance on some PFRS 15 implementation issues affecting the real estate industry. On October 25, 2018 and February 08, 2019, the Philippine Securities and Exchange Commission (SEC) issued SEC MC No. 14-2018 and SEC MC No. 3-2019, respectively, providing relief to the real estate industry by deferring the application of certain provisions of this PIC Q&A for a period of three years until December 31, 2020. On December 15, 2020, the Philippine SEC issued SEC MC No. 34-2020 which further extended the deferral of certain provisions of this PIC Q&A until December 31, 2023. A summary of the PIC Q&A provisions covered by the SEC deferral and the related deferral period follows:

Deferral Period a. Assessing if the transaction price includes a significant financing component as discussed in PIC Q&A 2018-12-D (as Until amended by PIC Q&A 2020-04) December 31, 2023 b. Treatment of land in the determination of the POC discussed Until in PIC Q&A 2018-12-E December 31, 2023 c. Treatment of uninstalled materials in the determination of the POC discussed in PIC Q&A 2018-12-E (as amended by PIC Q&A Until 2020-02) December 31, 2020 d. Accounting for CUSA Charges discussed in PIC Q&A No. 2018- Until 12-H December 31, 2020

The Group availed of the SEC reliefs to defer the above specific provisions of PIC Q&A No. 2018-12. Had these provisions been adopted, the Group assessed that the impact would have been as follows:

a. The mismatch between the POC of the real estate projects and right to an amount of consideration based on the schedule of payments provided for in the contract to sell might constitute a significant financing component. In case of the presence of significant financing component, the guidance should have been applied retrospectively and would have resulted in restatement of prior year financial statements. Adoption of this guidance would have impacted interest income, interest expense, revenue from real estate sales, installment contracts receivable, provision for deferred income tax, deferred income tax asset or liability for all years presented, and the opening balance of retained earnings. The Group has yet to assess if the mismatch constitutes a significant financing component for its contracts to sell.

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b. The exclusion of land and uninstalled materials in the determination of POC would have reduced the percentage of completion of real estate projects. Adoption of this guidance would have reduced revenue from real estate sales, cost of sales and installment contracts receivable; increased real estate inventories and would have impacted deferred income tax asset or liability and provision for deferred income tax for all years presented, and the opening balance of retained earnings.

c. Had the Group accounted for the revenue from air-conditioning services, CUSA and handling services as principal, this would have resulted in the gross presentation of the related revenue, costs and expenses. Currently, the related revenue is presented net of costs and expenses. There is no impact on opening retained earnings, income and expense and the related statement of financial position accounts.

The above would have impacted the cash flows from operations and cash flows from financing activities for all years presented.

• IFRIC Agenda Decision on Over Time Transfer of Constructed Goods (PAS 23, Borrowing Cost)

In March 2019, IFRIC published an Agenda Decision on whether borrowing costs can be capitalized on real estate inventories that are under construction and for which the related revenue is/will be recognized over time under paragraph 35(c) of PFRS 15, Revenue from Contracts with Customers. IFRIC concluded that borrowing costs cannot be capitalized for such real estate inventories as they do not meet the definition of a qualifying asset under Philippine Accounting Standards (PAS) 23, Borrowing Costs, considering that these inventories are ready for their intended sale in their current condition.

On February 11, 2020, the Philippine SEC issued Memorandum Circular No. 4-2020, providing relief to the Real Estate Industry by deferring the mandatory implementation of the above IFRIC Agenda Decision until December 31, 2020. Further, on December 15, 2020, the Philippine SEC issued SEC MC No. 34-2020, which extends the relief on the application of the IFRIC Agenda Decision provided to the Real Estate Industry until December 31, 2023. Effective January 1, 2024, the Real Estate Industry will adopt the IFRIC agenda decision and any subsequent amendments thereto retrospectively or as the SEC will later prescribe. A real estate company may opt not to avail of the deferral and instead comply in full with the requirements of the IFRIC Agenda Decision.

The Group opted to avail of the relief as provided by the SEC. Had the Group adopted the IFRIC agenda decision, this would have no impact to the consolidated balances since it is the Group’s practice to expense out borrowing costs related to projects with pre-selling activities in the period incurred.

• Adoption of PIC Q&A 2020-05, Accounting for Cancellation of Real Estate Sales (Supersedes PIC Q&A 2018-14)

On June 27, 2018, PIC Q&A 2018-14 was issued providing guidance on accounting for cancellation of real estate sales. Under SEC MC No. 3-2019, the adoption of PIC Q&A No. 2018-14 was deferred until December 31, 2020. After the deferral period, real estate companies will adopt PIC Q&A No. 2018-14 and any subsequent amendments thereof retrospectively or as the SEC will later prescribe.

On November 11, 2020, PIC Q&A 2020-05 was issued which supersedes PIC Q&A 2018-14. This PIC Q&A adds a new approach (Approach 3) where the cancellation is accounted for as a modification of the contract (i.e., from non- cancellable to being cancellable). Under this approach, revenues and related costs previously recognized shall be reversed in the period of cancellation and the inventory shall be reinstated at cost. PIC Q&A 2020-05 will have to be applied prospectively upon approval of the FRSC.

The Group availed of the SEC relief to defer the adoption of this PIC Q&A until December 31, 2020. Currently, the Group records the repossessed inventory at cost. The Group is still evaluating the approach to be availed among the existing options. Had the relief not been adopted and the current practice would be different from the approach to be

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implemented, this could have impacted the recording of real estate revenue, cost of sales, valuation of repossessed inventory and gain or loss from repossession in 2020.

Current and Noncurrent Classification The Group presents assets and liabilities in the consolidated statement of financial position based on current/noncurrent classification. An asset is current when it is: • Expected to be realized or intended to be sold or consumed in the normal operating cycle; • Held primarily for the purpose of trading; • Expected to be realized within twelve months after the reporting period; or, • Cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as noncurrent.

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

The Group classifies all other liabilities as noncurrent.

Deferred income tax assets and liabilities are classified as noncurrent assets and liabilities, respectively.

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

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

• In the principal market for the asset or liability, or • In the absence of a principal market, in the most advantageous market for the asset or liability.

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

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

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

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

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

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

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

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

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

At each reporting date, the Group analyzes the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies.

For this analysis, the Group verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

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

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

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Financial Assets and Financial Liabilities A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement Financial assets are classified, at initial recognition and subsequently measured at amortized cost, FVOCI, and FVPL.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs. Trade receivables are measured at the transaction price determined under PFRS 15. Refer to the accounting policies in section Revenue from contracts with customers.

In order for a financial asset to be classified and measured at amortized cost or FVOCI, it needs to give rise to cash flows that are SPPI on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • Financial assets at amortized cost (debt instruments) • Financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments) • Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) • Financial assets at FVPL

Financial assets at amortized cost (debt instruments). A financial asset is measured at amortized cost if (a) it is held within a business model for which the objective is to hold financial assets in order to collect contractual cash flows and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These financial assets are initially recognized at fair value plus directly attributable transaction costs and subsequently measured at amortized cost using the effective interest rate (EIR) method, less any impairment in value. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the EIR. The amortization is included in “Interest income” in the consolidated statement of income and is calculated by applying the EIR to the gross carrying amount of the financial asset, except for (a) purchased or originated credit- impaired financial assets and (b) financial assets that have subsequently become credit-impaired, where, in both cases, the EIR is applied to the amortized cost of the financial asset. Losses arising from impairment are recognized in “Provision for impairment loss” in the consolidated statement of income.

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For trade receivables, these are measured at the transaction price determined under PFRS 15. Refer to the accounting policies in Revenue from contracts with customers.

The Group’s financial assets at amortized cost include cash and cash equivalents, short-term investments, trade receivables, receivables from related parties, other nontrade receivables and refundable deposits (under “Other current” and “Other noncurrent” assets).

Financial assets designated at FVOCI (equity instruments). Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under PAS 32, Financial Instruments: Presentation, and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as other income in the profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

The Group elected to classify irrevocably its investments in unquoted club shares under this category.

Financial assets at FVPL. Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the consolidated statement of financial position at fair value with net changes in fair value recognized in the profit or loss.

This category includes derivative instruments and listed equity investments which the Group had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are also recognized as other income in the profit or loss when the right of payment has been established.

The Group’s financial assets at FVPL include short-term money market placements.

Impairment of Financial Assets

The Group recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

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ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For cash in banks and short-term investments, the Group applies the low credit risk simplification. Loss allowances are recognized based on 12-month ECL for debt instrument that are assessed to have low credit risk at the reporting date. A financial asset is considered to have low credit risk if:

• the financial instrument has a low risk of default; • the borrower has a strong capacity to meet its contractual cash flow obligations in the near term; or, • adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Group considers a debt instrument to have low credit risk when its credit risk rating is equivalent to the globally understood definition of “investment grade”, or when the exposure is less than 30 days past due.

At every reporting date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the internal credit rating of the debt instrument. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 90 days past due.

At each reporting date, the Group assesses whether there has been a significant increase in credit risk for financial assets since initial recognition by comparing the risk of default occurring over the expected life between the reporting date and the date of initial recognition. The Group considers reasonable and supportable information that is relevant and available without undue cost or effort for this purpose. This includes quantitative and qualitative information and forward-looking analysis.

An exposure will migrate through the ECL stages as asset quality deteriorates. If, in a subsequent period, asset quality improves and also reverses any previously assessed significant increase in credit risk since origination, then the loss allowance measurement reverts from lifetime ECL to 12-month ECL.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

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Financial liabilities

Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include accounts and other payables, long-term debt, deposits and other liabilities, and excluding statutory liabilities and other obligations that meet the above definition (other than liabilities covered by other accounting standards such as income tax payable).

Subsequent measurement The measurement of financial liabilities depends on their classification, as described below:

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

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by PFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognized in the profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in PFRS 9 are satisfied. The Group has not designated any financial liability as at FVPL.

Loans and borrowings. This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the of profit or loss.

This category generally applies to interest-bearing loans and borrowings.

Reclassifications of financial instruments The Group reclassifies its financial assets when, and only when, there is a change in the business model for managing the financial assets.

Reclassifications shall be applied prospectively by the Group and any previously recognized gains, losses or interest shall not be restated. The Group does not reclassify its financial liabilities.

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The Group does not reclassify its financial assets when:

• A financial asset that was previously a designated and effective hedging instrument in a cash flow hedge or net investment hedge no longer qualifies as such; • A financial asset becomes a designated and effective hedging instrument in a cash flow hedge or net investment hedge; and, • There is a change in measurement on credit exposures measured at fair value through profit or loss.

Derecognition of financial instruments

Financial assets. A financial asset (or, where applicable a part of a financial asset or part of a group of financial assets) is derecognized when:

• the contractual rights to the cash flows from the financial asset expire; or, • the Group transfers the contractual rights to receive the cash flows of the financial asset in a transaction in which it either (a) transfers substantially all the risks and rewards of ownership of the financial asset, or (b) it neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and the Group has not retained control.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognize the transferred asset to the extent of its continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has expired.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability or a part of it are substantially modified, such an exchange or modification is treated as a derecognition of the original financial liability and the recognition of a new financial liability, and the difference in the respective carrying amounts is recognized in the statement of income. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortized over the remaining term of the modified liability.

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

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

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

Cost includes: • Land cost • Land improvement cost • Amount paid to contractors for construction and development of the properties (i.e. planning and design costs, cost of site preparation, professional fees, property transfer taxes, construction overheads and other related costs)

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

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

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

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

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

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

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

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

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

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

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

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

Intangible Assets The Group’s development rights included under “Other noncurrent assets” pertain to the unsold cost of development rights purchased by the Group allocated based on the revised gross floor area of a structure in a particular lot.

These are measured on initial recognition at cost. After initial recognition, these are carried at cost less any accumulated impairment losses. The development rights are capitalized as additional cost of the structure once the development commences.

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

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

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

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

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Under the equity method, the investment in an associate or a joint venture is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the associate or joint venture since the acquisition date.

Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment individually.

The consolidated statement of comprehensive income reflects the Group’s share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognized directly in the equity of the associate or joint venture, the Group recognizes its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture. The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face of the consolidated statement of income and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate or joint venture.

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

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

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

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

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

Years Land improvements Up to 25 Buildings and improvements Up to 40

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

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

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

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

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

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in prior years.

Such reversal is recognized in the consolidated statement of income unless the asset is carried at revalued amount, in which case, the reversal is treated as a revaluation increase. After such reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

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

Equity

Capital stock, additional paid-in capital and treasury shares Capital stock is measured at par value for all shares issued. When the shares are sold at a premium, the difference between the proceeds and the par value is credited to “Additional paid-in capital” account. Direct costs incurred related to equity issuance are chargeable to “Additional paid-in capital” account. If additional paid-in capital is not sufficient, the excess is charged against retained earnings. When the Group issues more than one class of stock, a separate account is maintained for each class of stock and the number of shares issued. Treasury share is the Parent Company’s own equity instruments that is not recognized as a financial asset regardless of the reason for which it is reacquired. When the Parent Company reacquires its own equity instruments, the cost of the treasury stock is deducted from total equity.

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

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

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

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

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

Revenue from contract with customers Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has generally concluded that it is the principal in its revenue arrangements, except for the provisioning of water and electricity in its mall retail spaces and office leasing activities, wherein it is acting as agent.

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The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers are provided in Note 3.

Real estate sales The Group derives its real estate revenue from sale of lots and condominium units. Revenue from the sale of these real estate projects under pre-completion stage are recognized over time during the construction period (or percentage of completion) since based on the terms and conditions of its contract with the buyers, the Group’s performance does not create an asset with an alternative use and the Group has an enforceable right to payment for performance completed to date.

In measuring the progress of its performance obligation over time, the Group uses output method. The Group recognizes revenue on the basis of direct measurements of the value to customers of the goods or services transferred to date, relative to the remaining goods or services promised under the contract. Progress is measured using survey of performance completed to date. This is based on the monthly project accomplishment report prepared by the third party surveyor as approved by the construction manager which integrates the surveys of performance to date of the construction activities for both sub-contracted and those that are fulfilled by the developer itself.

Any excess of progress of work over the right to an amount of consideration that is unconditional, is recognized as trade receivables under the residential and commercial development receivables account. Any excess of collections over the total of recognized installment contract receivables is included in the “Customers’ deposit” account in the liabilities section of the consolidated statements of financial position. The impact of the significant financing component on the transaction price has not been considered since the Group availed the relief granted by SEC under Memorandum Circular Nos. 14-2018 and 34-2020 for the implementation issues of PFRS 15 affecting the real estate industry.

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

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

Cost recognition The Group recognizes costs relating to satisfied performance obligations as these are incurred taking into consideration the contract fulfillment assets such as land and connection fees. These include costs of land, land development costs, building costs, professional fees, depreciation, permits and licenses and capitalized borrowing costs. These costs are allocated to the saleable area, with the portion allocable to the sold area being recognized as costs of sales while the portion allocable to the unsold area being recognized as part of real estate inventories.

In addition, the Group recognizes as an asset only costs that give rise to resources that will be used in satisfying performance obligations in the future and that are expected to be recovered.

Hotel and resorts revenue The Group recognizes room accommodation services over time since the guest simultaneously receives and consumes the services provided by the Group. The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. Revenue from banquets and other special events are recognized when the events take place.

Cost of hotel operations Cost of hotel operations pertains to expenses incurred in relation to sale of goods and rendering of services. These are recognized when a decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen can be measured reliably. These are recognized when incurred and measured at the amount paid or payable.

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Customers’ deposit Customers’ deposit is a contract liability which is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a customers’ deposit is recognized when the payment is made or the payment is due, (whichever is earlier). Customers’ deposits are recognized as revenue when the Group performs under the contract.

Customers’ deposits also include payments received by the Group from the customers for which revenue recognition has not yet commenced.

Costs to obtain contract The incremental costs of obtaining a contract with a customer are recognized as an asset if the Group expects to recover them. The Group has determined that commissions paid to brokers and marketing agents on the sale of pre-completed real estate units are deferred when recovery is reasonably expected and are charged to expense in the period in which the related revenue is recognized as earned. Commission expense is included in the “Real estate costs and expenses” account in the consolidated statement of income.

Costs incurred prior to obtaining contract with customer are not capitalized but are expensed as incurred.

Theater income Theater income is recognized when earned.

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

Other income Dues are recognized as they accrue.

Insurance claim is recognized when the realization of income is virtually certain.

Net gain or loss from the sale of development rights is recognized when risk and reward are transferred to the buyer.

Others are recognized when earned.

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

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The interest capitalized is calculated using the Group’s weighted average cost of borrowings after adjusting for borrowings associated with specific developments. Where borrowings are associated with specific developments, the amounts capitalized is the gross interest incurred on those borrowings less any investment income arising on their temporary investment. Interest is capitalized from the commencement of the development work until the date of practical completion. The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is interrupted. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

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

Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. A reassessment is made after inception of the lease only if one of the following applies: (a) There is a change in contractual terms, other than a renewal or extension of the arrangement; (b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term; (c) There is a change in the determination of whether fulfillment is dependent on a specified asset; or (d) There is substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios (a), (c), or (d) and at the date of renewal or extension period for scenario (b).

Group as lessor Leases where the Group retains substantially all the risk and benefits of ownership of the assets are classified as operating leases. Lease payments received are recognized as an income in the consolidated statement of income on a straight-line basis over the lease term.

Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as the rental income. Contingent rents are recognized as revenue in the period in which they are earned.

Group as lessee

Right-of-use assets The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

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Lease liabilities At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.

Pension Cost The Group maintains a defined contribution (DC) plan that covers all regular full-time employees. Under its DC plan, the Group pays fixed contributions based on the employees’ monthly salaries. The Group, however, is covered under Republic Act (RA) No. 7641, The Philippine Retirement Law, which provides for its qualified employees a defined benefit (DB) minimum guarantee. The DB minimum guarantee is equivalent to a certain percentage of the monthly salary payable to an employee at normal retirement age with the required credited years of service based on the provisions of RA No. 7641.

In accordance with PIC Q&A No. 2013-03, the obligation for post-employment benefits of an entity that provides a DC plan as its only post-employment benefit plan, is not limited to the amount it agrees to contribute to the fund, if any. In this case, therefore, the Group’s retirement plan shall be accounted for as a defined benefit plan. Accordingly, the Group accounts for its retirement obligation under the higher of the DB obligation relating to the minimum guarantee and the obligation arising from the DC plan.

The DC liability is measured at the fair value of the DC assets upon which the DC benefits depend, with an adjustment for margin on asset returns, if any, where this is reflected in the DC benefits.

For the DB minimum guarantee plan, the liability is determined based on the present value of the excess of the projected DB obligation over the projected DC obligation at the end of the reporting period. The DB obligation is calculated annually by a qualified independent actuary using the projected unit credit method.

Pension costs comprise: • Service cost; • Net interest on the net defined benefit liability or asset; and, • Remeasurements of net defined benefit liability or asset.

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognized as expense in the consolidated statement of income. Past service costs are recognized when plan amendment or curtailment occurs. These amounts are calculated periodically by independent qualified actuaries.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on government bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognized as an expense or income in the consolidated statement of income.

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Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately in other comprehensive income in the period in which they arise. Remeasurements are not reclassified to profit or loss in subsequent periods.

The liability recognized in the consolidated statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the reporting date less fair value of the plan assets. The present value of the defined benefit obligation is determined by using risk-free interest rates of long-term government bonds that have terms to maturity approximating the terms of the related pension liabilities or applying a single weighted average discount rate that reflects the estimated timing and amount of benefit payments.

Income Tax

Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Deferred income tax Deferred income tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and its carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences with certain exceptions. Deferred income tax assets are recognized for all deductible temporary differences with certain exceptions, and carryforward benefits of unused tax credits from excess of minimum corporate income tax (MCIT) over the regular corporate income tax (RCIT) and unused net operating loss carryover (NOLCO), to the extent that it is probable that taxable income will be available against which the deductible temporary differences and carryforward benefits of unused MCIT and NOLCO can be utilized.

Deferred income tax liabilities are not provided on nontaxable temporary differences associated with investments in associates and a joint venture.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable income will allow the deferred income tax asset to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted as of reporting date. Movements in the deferred income tax assets and liabilities arising from changes in tax rates are charged against or credited to income for the period.

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Deferred income tax relating to items recognized outside profit or loss is recognized in OCI. Deferred income tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Deferred income tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Foreign-currency-denominated Transactions The consolidated financial statements are presented in Philippine Peso, which is the Parent Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded using the exchange rate at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are restated using the closing exchange rate prevailing at reporting dates. Exchange gains or losses arising from foreign exchange transactions are credited to or charged against operations for the year.

Earnings Per Share (EPS) Basic EPS is computed by dividing net income for the year attributable to common stockholders of the Parent Company by the weighted average number of common shares issued and outstanding during the year adjusted for any subsequent stock dividends declared. Diluted EPS is computed by dividing net income for the year attributable to common stockholders of the Parent Company by the weighted average number of common shares issued and outstanding during the year after giving effect to assumed conversion of potential common shares, if any.

Segment Reporting The Group’s operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Financial information on business segments is presented in Note 29 of the consolidated financial statements.

Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of the provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the consolidated statement of income, net of any reimbursement. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingencies Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the consolidated financial statements but disclosed when an inflow of economic benefits is probable.

Events after the Reporting Date Post year-end events up to the date of the consolidated financial statements were authorized for issue that provide additional information about the Group’s position at the reporting date (adjusting events) are reflected in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the consolidated financial statements when material.

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3. Significant Accounting Judgments and Estimates

The preparation of the consolidated financial statements of the Group in conformity with PFRSs requires management to make judgments and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. The judgments and estimates used in the consolidated financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the consolidated financial statements. Actual results could differ from such estimates.

Management believes the following represent a summary of these significant judgments, estimates and assumptions:

Judgments In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognized in the consolidated financial statements:

Evaluating impairment of nonfinancial assets The Group reviews its investment properties and investments in associates and a joint venture for impairment of value. This includes considering certain indications of impairment such as significant changes in asset usage, obsolescence or physical damage of an asset, significant underperformance relative to expected historical or projected future operating results of the investees and significant negative industry or economic trends.

The Group estimates the recoverable amount as the higher of the fair value less costs to sell and value in use. In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets, the Group is required to make estimates and assumptions that may affect its nonfinancial assets.

The Group’s nonfinancial assets are not impaired as of December 31, 2020 and 2019. The carrying values of the Group’s nonfinancial assets are disclosed in Notes 13,14 and 16.

Assessment of joint control of an arrangement and the type of arrangement Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Management assessed that the Group has joint control over Cebu District Property Enterprise, Inc. (CDPEI) by virtue of a contractual agreement with other shareholders.

The Group applies judgment when assessing whether a joint arrangement is a joint operation or a joint venture.

In making this judgment, the Group determines the type of joint arrangement in which it is involved by considering its rights and obligations arising from the arrangement. The Group assesses its rights and obligations by considering the structure and legal form of the arrangement, the terms agreed by the parties in the contractual arrangement and, when relevant, other facts and circumstances. Management assessed that CDPEI is a joint venture arrangement as it is a separate legal entity and its stockholders have rights to its net assets.

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Assessment on whether lease concessions granted constitute a lease modification In line with the rental relief framework implemented by the government to support businesses and the broader economy due to the impact of COVID-19, the Group waived its right to collect rent and other charges as part of various lease concessions it granted to lessees such as lease payment holidays or lease payment reductions.

The Group applies judgment when assessing whether the rent concessions granted are considered lease modifications under PFRS 16.

In making this judgment, the Group determines the rent concessions granted have changed the scope of the lease, or the consideration thereof, that was not part of the original terms and conditions of the lease. The Group assessed that the lease concessions it granted to lessees do not qualify as lease modifications since the terms and conditions under the corresponding lease contracts have not been modified by the waiver and therefore, is not a lease modification under the PFRS 16.

The rent concessions granted by the Group for the year ended December 31, 2020 amounted to P=699.9 million.

Real estate revenue recognition

Existence of a contract The Group’s primary document for a contract with a customer is a signed contract to sell. It has determined however, that in cases wherein contract to sell are not signed by both parties, the combination of its other signed documentation such as reservation agreement, official receipts, quotation sheets and other documents contain all the criteria to qualify as contract with the customer under PFRS 15.

In addition, part of the assessment process of the Group before revenue recognition is to assess the probability that the Group will collect the consideration to which it will be entitled in exchange for the real estate property that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity considers the significance of the customer’s initial payments in relation to the total contract price. Collectability is also assessed by considering factors such as past history customer, age and pricing of the property. Management regularly evaluates the historical cancellations and back-outs if it would still support its current threshold of customers’ equity before commencing revenue recognition.

Revenue recognition method and measure of progress The Group concluded that revenue for real estate sales is to be recognized over time because (a) the Group’s performance does not create an asset with an alternative use and; (b) the Group has an enforceable right for performance completed to date. The promised property is specifically identified in the contract and the contractual restriction on the Group’s ability to direct the promised property for another use is substantive. This is because the property promised to the customer is not interchangeable with other properties without breaching the contract and without incurring significant costs that otherwise would not have been incurred in relation to that contract. In addition, under the current legal framework, the customer is contractually obliged to make payments to the developer up to the performance completed to date.

The Group has determined that output method is used in measuring the progress of the performance obligation faithfully depicts the Group’s performance in transferring control of real estate development to the customers.

Identifying performance obligation The Group has various contracts to sell covering (a) serviced lot; and, (b) condominium unit. The Group concluded that there is one performance obligation in each of these contracts because, for serviced lot, the developer integrates the plots it sells with the associated infrastructure to be able to transfer the serviced land promised in the contract. For the contract covering condominium unit, the developer has the obligation to deliver the house or condominium unit duly

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constructed in a specific lot and fully integrated into the serviced land in accordance with the approved plan. Included also in this performance obligation is the Group’s service is to transfer the title of the real estate unit to the customer.

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

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

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

Provisions and contingencies The Group is involved in a legal proceeding and contingently liable for various claims. The estimate of the probable costs for the resolution of these legal proceeding and claims has been developed in consultation with the legal counsels and based upon an analysis of potential results. The Group currently does not believe these proceedings will have a material adverse effect on the Group’s financial position (see Note 33).

Estimates and Assumptions The key assumptions concerning the future and other key sources of estimation and uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are as follows:

Estimating the NRV of inventories Inventories are valued at the lower of cost or NRV. To determine the NRV, the Group is required to make an estimate of the inventories’ estimated selling price in the ordinary course of business, costs of completion and costs necessary to make a sale. NRV for completed real estate inventories is assessed with reference to market conditions and prices existing at the reporting date and is determined by the Group in light of recent market transactions. NRV, in respect of real estate inventories under construction, is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and less estimated costs to sell. In the event that NRV is lower than the cost, the decline is recognized as an expense. The amount and timing of recorded expenses for any period would differ if different judgments were made or different estimates were utilized.

No provision for inventory obsolescence was recognized in 2020 and 2019. The Group’s inventories carried at cost are disclosed in Note 9.

Fair value of financial instruments PFRS requires certain financial assets and liabilities to be carried at fair value or have the fair values disclosed in the notes, which requires the use of extensive accounting estimates and judgments.

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While significant components of fair value measurement were determined using verifiable objective evidence (i.e., foreign exchange rates and interest rates), the amount of changes in fair value would differ if the Group utilized a different valuation methodology. Any changes in fair value of these financial assets and liabilities would affect directly the consolidated statement of income and consolidated statement of changes in equity.

Certain financial assets and liabilities of the Group were initially recorded at its fair value by using the discounted cash flow methodology. See Note 27 for the related balances.

4. Non-controlling Interests

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

Accumulated balances Share of NCI in net income (loss) NCI % 2020 2019 2020 2019 2018 (In Thousands) (In Thousands) CBDI 45% P=2,113,133 P=2,200,795 (P=87,662) (P=11,701) P=3,307 TPEPI 45% 618,526 522,334 96,192 23,613 51,839 CPVDC* 24% − − − − 57,773 P=2,731,659 P=2,723,129 P=8,530 P=11,912 P=112,919 *Merged to the Parent Company effective November 6, 2018

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

2020 2019 CBDI TPEPI CBDI TPEPI (In Thousands) (In Thousands) Statements of financial position Current assets P=402,686 P=1,014,872 P=365,601 P=835,462 Noncurrent assets 9,614,634 616,264 8,942,582 594,563 Current liabilities 5,123,578 226,340 4,249,701 240,193 Noncurrent liabilities 197,890 30,294 167,237 29,091

Statements of comprehensive income Revenue P=306,394 P=641,559 P=43,409 P=217,128 Net income(loss)/Total comprehensive income (loss) attributable to: Equity of holders of the parent company (107,142) 117,568 (14,031) 28,861 Non-controlling interests (87,662) 96,192 (11,701) 23,613

Statements of cash flows Cash provided by (used in): Operating activities P=808,317 P=68,542 (P=2,036,708) P=1,469 Investing activities (855,370) (7,445) (460,280) (3,948) Financing activities − − 2,592,614 − Net increase (decrease) in cash and cash equivalents (P=47,053) P=61,097 P=95,626 (P=2,479)

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Additional Capital Infusion In 2019, ALI invested additional capital infusion to CBDI amounting to P=714.2 million.

5. Cash and Cash Equivalents

2020 2019 (In Thousands) Cash on hand and in banks P=185,187 P=259,429 Cash equivalents − 53,719 P=185,187 P=313,148

Cash in banks earn interest at the prevailing bank deposit rates. Cash equivalents are short-term, highly liquid investments that are made for varying periods of up to three (3) months depending on the immediate cash requirements of the Group and earn interest at the respective short-term rates.

Total interest income earned from cash and cash equivalents amounted to P=1.6 million, P=2.7 million and P=2.0 million in 2020, 2019 and 2018, respectively (see Note 22).

6. Short-term Investments

Short-term investments consist of money market placements with maturity date of more than 90 days and up to one (1) year and earn at the respective short-term investment rates.

In 2020 and 2019, the Group entered into a short-term investment with BPI to be used for short-term cash requirements. These investments earn an annual interest ranging from 2.62% in 2020 and 2019 and 2.96% in 2018.

As of December 31, 2020 and 2019, the Group’s short term investments amounted to nil and P=26.4 million, respectively.

Interest income earned from short-term investments amounted to P=5.0 thousand in 2020 and P=0.2 million in 2019 and 2018 (see Note 22).

7. Financial Assets at Fair Value through Profit or Loss

This account pertains to investments in BPI Short Term Fund (the Fund), a money market unit investment trust fund (UITF) which the Group holds for trading and is a portfolio of funds invested and managed by professional managers. The Fund aims to generate liquidity and stable income by investing in a diversified portfolio of primarily short-term fixed income instruments. This is measured at fair value with gains or losses arising from changes in fair value recognized in the consolidated statements of income under “Other income”.

As of December 31, 2020 and 2019, the Group’s financial assets at FVPL amounted to P=9.9 million and P=9.7 million, respectively.

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Realized gain from redemption and unrealized gains recognized from changes in fair value through profit or loss amounted to P=0.3 million, P=0.6 million and P=0.4 million in 2020, 2019 and 2018, respectively (see Note 22).

8. Receivables

2020 2019 (In Thousands) Receivables from related parties (Note 20) P=1,221,773 P=2,103,364 Trade (Note 27): Commercial development 794,573 123,789 Residential development 180,751 270,023 Shopping centers 173,257 162,437 Corporate business 42,227 76,230 Accrued receivable 545,671 472,958 Receivable from insurance – 21,267 Receivables from employees 18,798 19,887 Others 60,546 57,897 3,037,596 3,307,852 Less allowance for impairment losses 33,373 35,488 3,004,223 3,272,364 Less noncurrent portion 255,190 254,609 P=2,749,033 P=3,017,755

The nature of trade receivables of the Group follows:

• Commercial development pertains to receivables arising from the sale of commercial lots and development rights. • Residential development pertains to receivables arising from the sale of residential lots and condominium units. • Shopping center pertains to receivables arising from the lease of retail space and land therein, movie theaters, food courts, entertainment facilities and carparks. • Corporate business pertains to receivables arising from the lease of office buildings and accrued rent receivable. • Receivable from insurance pertains to claim from insurer which encompasses business interruption and material damage. • Other receivables pertain to receivable related to interests.

Terms and conditions of receivables are as follows:

• Sales contract receivables, included under residential development trade receivables, are noninterest-bearing and are collectible in monthly installments over a period of one (1) to two (2) years. Titles to real estate properties are transferred to the buyers once full payment has been made. • Leases of retail space and land therein, included under shopping centers, are noninterest-bearing and are collectible monthly based on the terms of the lease contracts. These are unpaid billed receivables as of reporting date. • Leases of office spaces, included under corporate business, are noninterest-bearing and are collectible monthly based on the terms of the lease contracts. These are unpaid billed receivables as of reporting date.

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• Receivables from the sale of commercial lots and development rights, included under commercial development are noninterest-bearing and are collectible in monthly or quarterly installments over a period ranging from two (2) to four (4) years. Titles to real estate properties and development rights are not transferred to buyers until full payment has been made. • Receivables from related parties are both interest and noninterest-bearing, and are due for collection within one year. • Receivables from employees are composed of both interest and noninterest-bearing advances and are collectible over a period of one year through salary deduction. • Accrued receivable consists of receivables from rental income arising from operating lease on investment properties which is accounted for on a straight-line basis over the lease term and accrual of interest income. • Other receivables are due and demandable.

“Sales contract receivables” under residential development trade receivables has a nominal amount of P=180.8 million and P=270.0 million as of December 31, 2020 and 2019, respectively. “Receivables from the sale of development rights” under commercial development trade receivables were initially recorded at fair value. The fair value of the receivables was obtained by discounting future cash flows using the applicable rates of similar types of instruments.

Movements in the unamortized discount on trade receivables in 2020 and 2019 are as follows:

2020 Residential Commercial development development Total (In Thousands) At January 1 P=20,385 P=389 P=20,774 Additions (reversals) (1,228) 76,112 74,884 Accretion (Note 22) (13,570) (46,031) (59,601) At December 31 P=5,587 P=30,470 P=36,057

2019 Residential Commercial development development Total (In Thousands) At January 1 P=29,906 P=5,961 P=35,867 Additions 11,954 7,127 19,081 Accretion (Note 22) (21,475) (12,699) (34,174) At December 31 P=20,385 P=389 P=20,774

Allowance for impairment Set out below is the movement in allowance for expected credit losses of trade receivables:

2020 2019 (In Thousands) At January 1 P=35,488 P=30,715 Provision for the year (Note 23) 9,018 4,773 Written off during the year (11,133) – At December 31 P=33,373 P=35,488

The impairment losses above pertain to individually impaired accounts.

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9. Inventories

2020 2019 (In Thousands) Lots for sale and development Commercial lots P=577,664 P=267,063 Subdivision lots 241,865 267,424 819,529 534,487 Condominium units for sale 42,191 41,702 P=861,720 P=576,189

The lots and condominium units are carried at cost.

A summary of the movements in inventories is set out below: 2020 Lot for sale and Condominium development units for sale Total (In Thousands) At January 1 P=534,487 P=41,702 P=576,189 Transfers from investment properties (Note 14) 577,664 – 577,664 Disposals (recognized as cost of real estate sales) (Note 23) (307,598) – (307,598) Construction/development costs incurred 1,323 – 1,323 Other adjustments 13,653 489 14,142 At December 31 P=819,529 P=42,191 P=861,720

2019 Lot for sale and Condominium development units for sale Total (In Thousands) At January 1 P=668,400 P=143,892 P=812,292 Transfers from investment properties (Note 14) 95,882 – 95,882 Transfers to investment properties (Note 14) (175,064) (33,491) (208,555) Disposals (recognized as cost of real estate sales) (Note 23) (337,692) (68,699) (406,391) Construction/development costs incurred 282,961 – 282,961 At December 31 P=534,487 P=41,702 P=576,189

The amount of inventories recognized as cost of real estate sales in the consolidated statements of income amounted to P=307.6 million, P=406.4 million and P=523.0 million in 2020, 2019 and 2018, respectively (see Note 23).

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There are no inventories as of December 31, 2020 and 2019 that are pledged as securities to liabilities.

10. Other Current Assets

2020 2019 (In Thousands) Input VAT P=148,444 P=196,598 CWT 80,862 17,554 Advances to contractors 55,180 54,368 Prepaid expenses 44,954 48,294 Others 22,592 22,446 P=352,032 P=339,260

Input VAT is applied against output VAT. The remaining balance is expected to be applied within the next twelve months. This also includes input VAT deferred pertaining to unpaid services which are incurred and billings which had been received but not yet paid as of date.

Prepaid expenses consist of advance payments for project management fees, business taxes, office supplies, commissions, energy supply paid to a local utility provider and other expenses.

CWTs are applied against income tax payable and are expected to be applied within the next twelve months.

Advances to contractors are recouped every progress billing payment depending on the percentage of accomplishment.

Others pertains to deposits for a utility company.

11. Financial Assets at Fair Value through OCI

The carrying value of the financial assets at fair value through OCI is as follows:

2020 2019 (In Thousands) Financial assets at fair value through OCI P=349,806 P=342,650 Unrealized gain (loss) on fair value changes (Note 27) (38,182) 7,156 Disposal (1,124) – P=310,500 P=349,806

Fair value hierarchy disclosures for the Group’s financial assets at fair value through OCI are provided in Note 27.

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12. Property and Equipment

2020 Buildings Furniture, and Fixtures and Transportation Improvements Equipment Equipment Total (In Thousands) Cost At January 1 P=372,869 P=146,645 P=39,390 P=558,904 Additions 12,506 2,130 21,373 36,009 Disposals (4,373) (355) (27,621) (32,349) At December 31 381,002 148,420 33,142 562,564 Accumulated Depreciation At January 1 131,304 134,959 31,585 297,848 Depreciation and amortization (Note 23) 14,052 5,134 4,765 23,951 Disposals (3,469) (355) (25,829) (29,653) At December 31 141,887 139,738 10,521 292,146 Net Book Value P=239,115 P=8,682 P=22,621 P=270,418

2019 Buildings Furniture, and Fixtures and Transportation Improvements Equipment Equipment Total (In Thousands) Cost At January 1 P=368,366 P=148,440 P=36,415 P=553,221 Additions 4,503 2,370 3,300 10,173 Disposals − (4,165) (325) (4,490) At December 31 372,869 146,645 39,390 558,904 Accumulated Depreciation At January 1 116,358 128,430 27,785 272,573 Depreciation and amortization (Note 23) 14,946 10,458 4,125 29,529 Disposals − (3,929) (325) (4,254) At December 31 131,304 134,959 31,585 297,848 Net Book Value P=241,565 P=11,686 P=7,805 P=261,056

As at December 31, 2020 and 2019, there are no property and equipment items that are pledged as security to liabilities.

As at December 31, 2020 and 2019, there are no contractual purchase commitments for property and equipment.

13. Investments in Associates and a Joint Venture

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

2020 2019 (In Thousands) Cost At January 1 P=1,008,154 P=1,008,927 Others − (773) At December 31 1,008,154 1,008,154 Accumulated equity in net income At January 1 P=714,350 P=479,486 Equity in net income for the year 44,831 234,864

(Forward)

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2020 2019 Dividends received (35,000) − At December 31 724,181 714,350 Accumulated equity in other comprehensive loss At January 1 and December 31 (1,078) (1,078) P=1,731,257 P=1,721,426

The details of the Group’s investment in associates and a joint venture and the related percentages of ownership are shown below: Percentages of Ownership Carrying Amounts December 31 December 31 2020 2019 2020 2019 (In Thousands) Associates: Solinea, Inc. (Solinea) 35% 35% P=535,473 P=511,262 Cebu Insular Hotels Company, Inc. (CIHCI) 37 37 297,149 296,447 Southportal Properties, Inc. (SPI) 35 35 310,111 331,426 Amaia Southern Properties, Inc. (ASPI) 35 35 160,621 149,324 Joint Venture: CDPEI 15 15 427,903 432,967 P=1,731,257 P=1,721,426

As of December 31, 2020 and 2019, the statements of financial position of these investments in associates and a joint venture are as follows:

2020 Solinea CIHCI SPI ASPI CDPEI (In Thousands) Current assets P=2,222,980 P=94,264 P=1,936,316 P=970,838 P=771,183 Noncurrent assets 1,134,214 769,948 − 14,750 6,836,324 Total assets P=3,357,194 P=864,212 P=1,936,316 P=985,588 P=7,607,507

Current liabilities P=1,870,036 P=63,680 P=789,318 P=470,643 P=377,391 Noncurrent liabilities 293,803 2,347 344,302 56,025 4,377,459 Equity 1,193,355 798,185 802,696 458,920 2,852,657 Total liabilities and equity P=3,357,194 P=864,212 P=1,936,316 P=985,588 P=7,607,507

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2019 Solinea CIHCI SPI ASPI CDPEI (In Thousands) Current assets P=2,273,928 P=126,593 P=2,386,091 P=884,744 P=270,626 Noncurrent assets 984,309 791,844 477,897 18,967 6,406,935 Total assets P=3,258,237 P=918,437 P=2,863,988 P=903,711 P=6,677,561

Current liabilities P=1,806,700 P=118,249 P=1,632,743 P=478,700 P=311,601 Noncurrent liabilities 327,357 1,149 371,517 − 3,479,541 Equity 1,124,180 799,039 859,728 425,011 2,886,419 Total liabilities and equity P=3,258,237 P=918,437 P=2,863,988 P=903,711 P=6,677,561

The statements of comprehensive income of these investments for the years ended December 31, 2020, 2019 and 2018 are as follows:

For the year ended December 31, 2020 Solinea CIHCI SPI ASPI CDPEI (In Thousands) Revenue P=798,109 P=149,795 P=446,022 P=140,356 P=1,871 Costs and expenses 728,934 147,897 406,921 106,447 35,633 Other income − − − − − Net income (loss) 69,175 1,898 39,101 33,909 (33,762) Other comprehensive loss − − − − − Total comprehensive income (loss) P=69,175 P=1,898 P=39,101 P=33,909 (P=33,762)

For the year ended December 31, 2019 Solinea CIHCI SPI ASPI CDPEI (In Thousands) Revenue P=756,389 P=448,699 P=2,566,466 P=569,467 =2,759 P Costs and expenses 654,322 349,755 2,238,044 487,634 45,761 Other income 15,233 − − − 1,200 Net income (loss) 117,300 98,944 328,422 81,833 (41,802) Other comprehensive loss − − − − − Total comprehensive income (loss) P=117,300 P=98,944 P=328,422 P=81,833 (P=41,802)

For the year ended December 31, 2018 Solinea CIHCI CBDI ASPI CDPEI (In Thousands) Revenue P=1,303,247 P=85,237 P=1,801,616 P=281,459 P=2,802 Costs and expenses 1,145,977 101,126 1,611,450 283,472 26,658 Net income (loss) 157,270 (15,889) 190,166 (2,013) (23,856) Other comprehensive loss − − − − − Total comprehensive income (loss) P=157,270 (P=15,889) P=190,166 (P=2,013) (P=23,856)

The difference between the carrying amount of the Group’s investment in Solinea as of December 31, 2020 and 2019 and its share in the total equity of Solinea is attributable to implied goodwill.

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The Group’s total equity in net earnings of associates and a joint venture amounted to P=44.8 million, P=234.9 million and P=106.0 million in 2020, 2019 and 2018, respectively.

14. Investment Properties

2020 Land Buildings and Construction-in- Land Improvements Improvements Progress Total (In Thousands) Cost At January 1 P=4,880,930 P=14,401 P=13,929,180 P=6,424,863 P=25,249,374 Additions 272,553 − 54,154 987,862 1,314,569 Transfers to inventories (Note 9) (577,664) − − − (577,664) Disposal (86,533) − − − (86,533) At December 31 4,489,286 14,401 13,983,334 7,412,725 25,899,746 Accumulated Depreciation At January 1 − 10,749 4,172,211 − 4,182,960 Depreciation and amortization (Note 23) − 2,921 708,729 − 711,650 At December 31 − 13,670 4,880,940 − 4,894,610 Net Book Value P=4,489,286 P=731 P=9,102,394 P=7,412,725 P=21,005,136

2019 Land Buildings and Construction-in- Land Improvements Improvements Progress Total (In Thousands) Cost At January 1 P=4,720,734 P=14,401 P=13,494,987 P=4,564,790 P=22,794,912 Additions 81,014 − 92,613 2,168,162 2,341,789 Transfers from inventories (Note 9) 175,064 − 33,491 − 208,555 Transfers to inventories (Note 9) (95,882) − − − (95,882) Reclassification − − 308,089 (308,089) − At December 31 4,880,930 14,401 13,929,180 6,424,863 25,249,374 Accumulated Depreciation At January 1 − 7,828 3,600,138 − 3,607,966 Depreciation and amortization (Note 23) − 2,921 572,073 − 574,994 At December 31 − 10,749 4,172,211 − 4,182,960 Net Book Value P=4,880,930 P=3,652 P=9,756,969 P=6,424,863 P=21,066,414

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

In 2019, the Group transferred P=95.9 million worth of land from investment properties to inventories for lot intended for sale and TPEPI’s Mactan Seagrove project (see Note 9).

Total rental income from investment properties amounted to P=1,660.4 million, P=2,446.2 million andP=2,191.2 million in 2020, 2019 and 2018, respectively (see Note 21). Total direct operating expenses related to investment properties that generated rental income amounted to P=1,031.7 million, P=1,055.7 million and P=938.7 million in 2020, 2019 and 2018, respectively. Total direct operating expenses related to investment properties that did not generate income amounted to P=75.6 million,P=34.3 million and P=41.2 million in 2020, 2019 and 2018, respectively.

As of December 31, 2020 and 2019, there are no investment properties that are pledged as security to liabilities.

The aggregate fair value of the Group’s investment properties amounted to P=101,255.0 million and P=74,077.0 million as of December 31, 2020 and 2019, respectively, which is based on the latest appraisal report. The fair values were classified under Level 3 of the fair value hierarchy (see Note 27).

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The fair values of the investment properties were determined by independent professionally qualified SEC accredited appraisers. The fair values of the land and buildings were arrived at using the sales comparison approach and income approach, respectively.

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

Income approach is a method in which the appraiser derives an indication of value for income producing property by converting anticipated future benefits into current property value.

Description of valuation techniques used and key inputs to valuation on land and buildings included under investment properties as of December 31, 2020 and 2019 follows:

Significant Valuation unobservable Property technique inputs Range 2020 2019 Land Sales Price per square P=36,000−P=365,900 P=14,400−P=237,000 comparison meter approach Buildings Income Income produced Prospective economic benefits of approach by property ownership into the future and these benefits are capitalized into an indication of value

The Group has no restrictions on the realizability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.

15. Performance Obligation

Real estate sales The Group entered into contracts to sell with one identified performance obligation which is the sale of the real estate unit together with the services to transfer the title to the buyer upon full payment of contract price. The amount of consideration indicated in the contract to sell is fixed and has no variable consideration.

The sale of real estate unit may cover the contract for either the (i) serviced lot and (ii) condominium unit and the Group concluded that there is one performance obligation in each of these contracts. In accordance with Philippines Interpretation Committee Q&A 2016-04, the Group recognizes revenue from the sale of these real estate projects under pre-completed contract over time during the course of the construction. Sale of lot is recognized at point in time upon execution of deed of absolute sale which typically evidence the transfer of control of the lot together with other evidences.

Payment commences upon signing of the contract to sell and the consideration is payable in cash or under various financing schemes entered with the customer. The financing scheme would include payment of 10% of the contract price spread over a certain period (e.g., one to three years) at a fixed monthly payment with the remaining balance payable in full at the end of the period.

After the delivery of the completed real estate unit, the Group provides one-year warranty to repair minor defects on the delivered real estate unit. This is assessed by the Group as a quality assurance warranty and not treated as a separate performance obligation.

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Hotel and resorts Rooms revenue from hotel and resort operations is recognized when the services are rendered. Revenue from banquets and other special events are recognized when the events take place.

Theater operations Revenue from theater operations is recognized as the services are rendered, based on a fixed price, since the customers simultaneously receive and consume the benefits provided to them.

The transaction price allocated to the remaining performance obligations (unsatisfied or partially satisfied) amounted to nil as at December 31, 2020 and 2019.

Contract liabilities consist of collections from real estate customers which have not reached the 10% threshold to qualify for revenue recognition and excess of collections over the recognized receivables based on percentage of completion amounting to nil as of December 31, 2020 and 2019.

Amount of revenue recognized from amounts included in contract liabilities at the beginning of the year amounted to nil and P=65.5 million in 2020 and 2019, respectively.

16. Other Noncurrent Assets

2020 2019 (In Thousands) Input VAT P=1,091,243 P=896,318 Advances to contractors 134,521 325,435 Development rights 43,984 63,314 Prepaid commission 5,805 8,052 Deposits 1,060 1,365 P=1,276,613 P=1,294,484

Input VAT arises from the purchase of goods and services but are expected to be applied against output VAT in future periods. This includes deferred input VAT which arises from the purchase of capital goods and is amortized over five (5) years or the assets’ useful life, whichever is lower, and is applied against output VAT.

Advances to contractors pertain to advances made for the construction of investment properties.

Development rights pertain to the unsold cost of development rights acquired by the Parent Company allocated based on the revised gross floor area of a structure in a particular lot.

Prepaid commission pertains to costs to obtain a contract from its leasing operation and amortized over the lease term.

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

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17. Accounts and Other Payables

2020 2019 (In Thousands) Payable to related parties (Note 20) P=6,485,551 P=6,431,049 Accrued expenses Utilities 155,072 191,220 Repairs and maintenance 106,953 111,856 Marketing and management fees 50,169 101,112 Advertising 27,275 79,272 Others 373,921 413,058 Accrued project costs (Note 20) 765,112 845,449 Retentions payable 203,777 189,389 Taxes payable 200,220 363,744 Dividends payable (Note 28) 1,731 1,731 Interest payable 8,052 31,076 Others 199,792 187,520 P=8,577,625 P=8,946,476

Accrued expenses others consist mainly of professional fees, commissions and salaries. These are noninterest-bearing and are normally settled within a year.

Accrued project costs arise from unbilled completed work on the development of residential and commercial projects.

Retentions payable pertains to the portion of the progress billings of constructions retained by the Group which will be released after the completion of the contractor’s projects. The retention serves as a security from the contractor in case of defects in the project.

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

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

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

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18. Long-term Debt

2020 2019 (In Thousands) Bonds - due 2021 P=5,000,000 P=5,000,000 Bank loans with corresponding interest rate: Fixed rate corporate notes with interest rate of 4.50% per annum 341,250 362,250 Fixed rate corporate notes with interest rate of 4.75% per annum 315,000 336,000 Fixed rate corporate notes with interest rate of 4.50% per annum 306,875 325,875 At 0.70% per annum spread over the 90-day DST-R2 323,000 340,000 6,286,125 6,364,125 Less unamortized debt issue cost 6,372 15,477 6,279,753 6,348,648 Less current portion 5,367,627 76,966 P=912,126 P=6,271,682

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

The rollforward analysis of the unamortized debt issue cost follows:

2020 2019 (In Thousands) At January 1 P=15,477 P=24,150 Amortization (Note 23) (9,105) (8,673) At December 31 P=6,372 P=15,477

a. On June 6, 2014, the Parent Company issued P=5.0 billion fixed rate bonds. These bonds have a term of 7 years, payable in 2021, with a fixed rate of 5.32% per annum. The proceeds were used to fund the Group’s projects.

b. In March 2017, the Group availed the second drawdown from the P=800.0 million credit facility amounting to P=420.0 million which will mature in 2023.

The loan bears a floating interest rate based on the average yield for the 91-day treasury bills on PDST-R2 plus a spread of 70 basis points per annum or 95% of the BSP Overnight Reverse Repurchase Agreement rate, inclusive of gross receipts tax, whichever is higher. Starting 2018, the interest rate has been fixed at 4.5%. The related outstanding balance amounted to P=341.3 million and P=362.3 million as of December 31, 2020 and 2019, respectively.

c. In December 2013, the Group obtained a loan with a principal amount of P=420.0 million which are due in 2021. The loan is subject to a fixed interest rate of 4.75% per annum. This loan was used to finance the construction of eBloc 3 and eBloc 4 commercial buildings which were completed in 2016 included under “Investment properties” (see Note 14).

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The related outstanding balance amounted to P=315.0 million and P=336.0 million as of December 31, 2020 and 2019, respectively.

d. In March 2016, the Group obtained a credit facility amounting to P=800.0 million. In 2016, the Group made the first drawdown amounting to P=380.0 million which will mature in 2023 and was used to finance the construction of eBloc 3. The loan bears a floating interest rate based on the average yield for the 91-day treasury bills on PDST-R2 plus a spread of 70 basis points per annum or 95% of the BSP Overnight Reverse Repurchase Agreement rate, inclusive of gross receipts tax, whichever is higher. Starting 2018, the interest rate has been fixed at 4.5%. The related outstanding balance amounted to P=306.9 million and P=325.9 million as of December 31, 2020 and 2019, respectively.

e. In September 2017, the Group obtained a credit facility amounting to P=375.0 million. In October 2017, the Group made the first drawdown amounting to P=340.0 million which is due in installments until 2027. Proceeds were used to refinance existing loans and for general corporate purposes. The loan is subject to floating interest rate of 90-day PDST-R2 plus 0.70% per annum spread, or a floor rate of equivalent to the average of the BSP Overnight Deposit Facility Rate and Term Deposit Facility Rate of the tenor nearest to the interest period. The related outstanding balance amounted to P=323.0 million and P=340.0 million as of December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, the undrawn amount amounted to P=35.0 million.

Interest on long-term debt recognized in the consolidated statements of income amounted to P=323.3 million, P=335.4 million and P=336.3 million in 2020, 2019 and 2018, respectively.

For the years ended December 31, 2020 and 2019, the Group has not capitalized any interest from borrowed funds because all of the Group’s projects funded by these specific borrowings were completed in 2016 (see Note 14).

Debt covenant The loan agreements provide for certain restrictions and requirements with respect to, among others, major disposal of property, pledge of assets, liquidation, merger or consolidation and maintenance of ratio between debt and the tangible net worth not to exceed 3:1. As of December 31, 2020 and 2019, the Group is in compliance with these restrictions and requirements.

19. Deposits and Other Liabilities

2020 2019 (In Thousands) Tenants’ deposits P=1,255,934 P=1,071,573 Construction bond 131,792 122,075 Advance rent 71,657 97,725 Contract liabilities − 1,064 1,459,383 1,292,437 Less noncurrent portion 493,451 337,688 P=965,932 P=954,749

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

2020 2019 (In Thousands) At January 1 P=22,600 P=22,807 Additions 4,538 8,373 Amortization (Note 23) (7,179) (8,580) At December 31 P=19,959 P=22,600

Tenants’ deposits consist of rental security deposits to be refunded by the Group at the end of the lease contracts. These are initially recorded at fair value, which was obtained by discounting its future cash flows using the applicable rates for similar types of instruments.

Construction bond pertains to deposits made by tenants as security for the construction and design of the leased premises, to be refunded upon completion, which usually takes less than a year.

Advance rentals from lessees represent cash received in advance representing three (3) months rent which will be applied to the last three (3) months rental on the related lease contract.

20. Related Party Transactions

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

Terms and Conditions of Transactions with Related Parties Except as otherwise indicated, the outstanding accounts with related parties shall be settled in cash. The transactions are made at terms and prices agreed upon by the parties.

There have been no guarantees provided or received for any related party receivables or payables and are generally unsecured. Furthermore, these accounts are noninterest-bearing except for intercompany loans.

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

Amounts owed by Amounts owed to related parties related parties 2020 2019 2020 2019 (In Thousands) Subsidiaries of ALI P=710,188 P=1,489,429 P=3,142,190 P=5,392,103 Associates: Solinea 251,743 252,579 20,016 7,258 SPI 258 92,651 30,050 39,028 CIHCI − − − 5,099 Parent Company - ALI 247,213 263,608 3,288,292 987,561 Joint venture - CDPEI 2,022 2,005 − − Others 10,349 3,092 5,003 − P=1,221,773 P=2,103,364 P=6,485,551 P=6,431,049

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Revenue Costs/Expenses 2020 2019 2018 2020 2019 2018 (In Thousands) (In Thousands) Subsidiaries of ALI P=100,759 P=1,189,877 P=52,956 P=541,743 P=637,823 P=443,326 Parent Company - ALI 13,295 14,193 3,077 162,162 161,728 346,317 P=114,054 P=1,204,070 P=56,033 P=703,905 P=799,551 P=789,643

Receivables from/payables to Solinea, Avida and Alveo pertain mostly to advances for and reimbursements of operating expenses, development costs and land acquisitions. Other related party receivables and payables pertain to advances and reimbursements arising from the Group’s ordinary course of business. These are generally trade-related, unsecured with no impairment, noninterest-bearing and payable within one year.

The loans from related parties also included under “Payables to related parties” account bear interest ranging from 2.58% to 3.32%, are due and demandable as of December 31, 2020 and 2019. Interest on these intercompany loans recognized in the consolidated statements of income amounted to P=185.6 million, P=84.3 million and P=32.2 million in 2020, 2019 and 2018, respectively.

The nature and amounts of material transactions with related parties as of December 31, 2020 and 2019 are as follows:

• In December 2019, the Group sold land to ALC amounting to P=1,110.6 million which is payable in three tranches until December 2020. In December 2015, the Group sold land to ALC amounting to P=633.6 million which is payable in installment basis for twenty (20) years starting 2015. The related receivable is interest-bearing.

• Included under the accrued project costs in “Accounts and other payables” are construction costs payable to MDC amounting to P=765.1 million and P=845.4 million as of December 31, 2020 and 2019, respectively. Advances to MDC amounted to P=432.5 million and P=2.6 million as of December 31, 2020 and 2019, respectively.

• Expenses to ALI pertain to management fees, professional fees and systems costs. . Management and service fees charged by ALI amounted to P=126.9 million, P=161.8 million and P=132.6 million in 2020, 2019 and 2018, respectively. . Systems costs which were included in the Group’s manpower costs amounted to P=17.7 million in 2020 and 2019 and P=19.0 million 2018.

• In December 2017, the Parent Company purchased commercial units with a floor area of 11,478.52 sq. m. from SPI’s The Alcoves project amounting to P=125.9 million, which is noninterest-bearing and subsequently paid in 2018.

• As of December 31, 2020 and 2019, the Group has entered into transactions with BPI, an affiliate, consisting of cash and cash equivalents, financial assets at FVPL, plan assets and long-term debt with carrying amounts as follows:

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Revenue Costs/Expenses 2020 2019 2018 2020 2019 2018 (In Thousands) (In Thousands) Subsidiaries of ALI P=100,759 P=1,189,877 P=52,956 P=541,743 P=637,823 P=443,326 Parent Company - ALI 13,295 14,193 3,077 162,162 161,728 346,317 P=114,054 P=1,204,070 P=56,033 P=703,905 P=799,551 P=789,643

Receivables from/payables to Solinea, Avida and Alveo pertain mostly to advances for and reimbursements of operating expenses, development costs and land acquisitions. Other related party receivables and payables pertain to advances and reimbursements arising from the Group’s ordinary course of business. These are generally trade-related, unsecured with no impairment, noninterest-bearing and payable within one year.

The loans from related parties also included under “Payables to related parties” account bear interest ranging from 2.58% to 3.32%, are due and demandable as of December 31, 2020 and 2019. Interest on these intercompany loans recognized in the consolidated statements of income amounted to P=185.6 million, P=84.3 million and P=32.2 million in 2020, 2019 and 2018, respectively.

The nature and amounts of material transactions with related parties as of December 31, 2020 and 2019 are as follows:

• In December 2019, the Group sold land to ALC amounting to P=1,110.6 million which is payable in three tranches until December 2020. In December 2015, the Group sold land to ALC amounting to P=633.6 million which is payable in installment basis for twenty (20) years starting 2015. The related receivable is interest-bearing.

• Included under the accrued project costs in “Accounts and other payables” are construction costs payable to MDC amounting to P=765.1 million and P=845.4 million as of December 31, 2020 and 2019, respectively. Advances to MDC amounted to P=432.5 million and P=2.6 million as of December 31, 2020 and 2019, respectively.

• Expenses to ALI pertain to management fees, professional fees and systems costs. . Management and service fees charged by ALI amounted to P=126.9 million, P=161.8 million and P=132.6 million in 2020, 2019 and 2018, respectively. . Systems costs which were included in the Group’s manpower costs amounted to P=17.7 million in 2020 and 2019 and P=19.0 million 2018.

• In December 2017, the Parent Company purchased commercial units with a floor area of 11,478.52 sq. m. from SPI’s The Alcoves project amounting to P=125.9 million, which is noninterest-bearing and subsequently paid in 2018.

• As of December 31, 2020 and 2019, the Group has entered into transactions with BPI, an affiliate, consisting of cash and cash equivalents, financial assets at FVPL, plan assets and long-term debt with carrying amounts as follows:

2020 2019 (In Thousands) Cash and cash equivalents (Note 5) P=72,903 P=98,386 Financial assets at FVPL (Note 7) 9,947 9,688 Long-term debt (Note 18) 1,283,345 1,360,311 Plan assets (Note 24) 28,606 35,889

Compensation of key management personnel by benefit type follows:

2020 2019 2018

(In Thousands) Short-term employee benefits P=19,155 P=19,097 P=14,165 Post-employment pension and other benefits 2,548 1,810 1,273 P=21,703 P=20,907 P=15,438

21. Revenues

This account consists of:

2020 2019 2018 (In Thousands) Rental income (Notes 14 and 30) P=1,660,396 P=2,446,176 P=2,191,231 Revenue from contracts with customers Lot and residential development 576,289 1,453,084 800,852 Hotel and resorts 75,718 – – Theater income 10,028 134,006 120,475 P=2,322,431 P=4,033,266 P=3,112,558

The Group derives revenue from the transfer of goods and services over time and at a point in time, in different product types. The Group’s disaggregation of each source of revenue from contracts with customers are presented below:

Lot and residential development

2020 2019 2018 (In Thousands) Type of Product Lot only P=576,289 P=1,344,345 P=712,144 Condominium – 108,739 88,708 P=576,289 P=1,453,084 P=800,852

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Hotel and resorts

In 2020, the Group started to operate its hotel operations with sources of revenue as follows (in thousands): 2020 2019 Type of Product (In Thousands) Rooms P=65,800 Cash and cash equivalents (Note 5) P=72,903 P=98,386 Food and beverage 7,533 Financial assets at FVPL (Note 7) 9,688 9,947 Others 2,385 Long-term debt (Note 18) 1,283,345 1,360,311 P=75,718 Plan assets (Note 24) 28,606 35,889

The Group’s revenue from hotels and resorts is attributed to the operations from the development and management of Compensation of key management personnel by benefit type follows: hotels and resorts. In view of the continuing community quarantines and restricted travel, the Group’s hotels and resorts segment continues to be adversely affected by the lower number of guests and reduced room rates, both of 2020 2019 2018 which have significantly impacted the revenues reported under this segment. Also, many restaurants remain closed or (In Thousands) allowed limited operations which impacted the food and beverage revenues if the segment. Short-term employee benefits P=19,155 P=19,097 P=14,165 Post-employment pension and In line with the rental relief framework implemented by the government to support businesses and the broader other benefits 2,548 1,810 1,273 economy due to the impact of COVID-19, the Group waived its right to collect rent and other charges as part of various P=21,703 P=20,907 P=15,438 lease concessions it granted to lessees such as lease payment holidays or lease payment reductions. Rent discounts and concessions given vary for merchants that are (1) forced to close and those that are still (2) operational. Rental fees and common charges of merchants who were forced to close during the quarantine period were waived with 50% discount in 21. Revenues their common area usage expenses.

This account consists of: 22. Interest and Other Income 2020 2019 2018 (In Thousands) Interest income consists of: Rental income (Notes 14 and 30) P=1,660,396 P=2,446,176 P=2,191,231 Revenue from contracts with 2020 2019 2018 customers (In Thousands) Lot and residential Interest income derived from: development 576,289 1,453,084 800,852 Accretion of receivables (Note 8) P=59,601 P=34,174 P=33,254 Hotel and resorts 75,718 – – Intercompany loans 31,899 44,220 28,876 Theater income 10,028 134,006 120,475 Cash and cash equivalents (Note 5) 1,562 2,683 2,020 P=2,322,431 P=4,033,266 P=3,112,558 Short-term investments (Note 6) 5 159 236 Others 1,298 2,950 2,661 The Group derives revenue from the transfer of goods and services over time and at a point in time, in different product P=94,365 P=84,186 P=67,047 types. The Group’s disaggregation of each source of revenue from contracts with customers are presented below: Accretion of receivables includes interest accretion from the sale of land and condominium units. Lot and residential development Others includes interest earned from intercompany and employee loans and interest and penalty charges on real estate 2020 2019 2018 sales. (In Thousands) Type of Product Lot only P=576,289 P=1,344,345 P=712,144 Condominium – 108,739 88,708 P=576,289 P=1,453,084 P=800,852

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Other income consists of:

2020 2019 2018 (In Thousands) Dues P=287,808 P=223,013 P=221,969 Net gain on sale of development rights (Notes 8 and 16) 93,426 179,330 151,495 Insurance claim 44,915 − 27,503 Service income 14,897 14,334 13,823 Forfeited deposits 9,214 3,184 2,388 Beverage 5,428 5,643 2,841 Net realized and unrealized gain on financial assets at FVPL (Note 7) 259 638 444 Others 15,678 18,595 15,733 P=471,625 P=444,737 P=436,196

Dues pertain to net recoveries from sewer, light and power and water charges from its rental operations. These are recognized when earned.

Gain on sale of development rights pertains to the net gain earned by the Parent Company from selling the development rights, which represents a portion of the gross floor area of a structure in a particular lot that is allowed to be developed by the buyers in the future (see Notes 8 and 16).

Service income pertains to the various management fees charged by the Group to various parties.

Insurance claim pertains to claim against insurer for damage due to fire which include business interruption and material damage (see Note 8).

23. Costs and Expenses

Real estate, rental and theater expenses consist of:

2020 2019 2018 (In Thousands) Depreciation and amortization (Note 14) P=711,650 P=574,994 P=517,096 Cost of real estate sales (Note 9) 307,598 406,391 522,956 Marketing and management fees (Note 20) 244,943 285,881 272,801 Hotel and resort 32,276 − − Manpower cost 29,114 43,188 32,125 Producers’ film share 5,445 75,054 67,501 Rental 249 4,639 1,798 Direct operating expenses: Taxes and licenses 154,450 120,782 106,922 Security and janitorial 143,982 219,097 163,693 Repairs and maintenance 93,042 101,191 119,192

(Forward)

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2020 2019 2018 (In Thousands) Insurance 15,355 7,274 6,268 Commission 14,510 14,928 24,705 Dues and fees 13,845 7,031 8,855 Professional fees 5,549 14,117 4,599 Transportation and travel 80 110 232 Representation 39 2,103 146 Others 10,259 23,756 26,374 P=1,782,386 P=1,900,536 P=1,875,263

General and administrative expenses consist of:

2020 2019 2018 (In Thousands) Manpower cost (Note 24) P=82,080 P=124,420 P=91,647 Taxes and licenses 40,280 30,811 19,913 Depreciation and amortization (Note 12) 23,951 29,529 32,589 Provision for impairment loss (Note 8) 9,018 4,773 14,032 Professional fees 8,826 5,365 10,010 Stockholders' meeting 7,937 8,531 7,188 Repairs and maintenance 5,523 6,542 7,170 Postal and communication 5,185 3,899 3,935 Security and janitorial 1,952 2,181 2,556 Supplies 1,859 2,545 2,738 Utilities 948 2,993 5,159 Transportation and travel 944 4,793 4,834 Trainings 630 2,967 3,364 Dues and fees 626 4,685 1,106 Others 6,062 52,203 12,088 P=195,821 P=286,237 P=218,329

Others pertain to miscellaneous expenses such as advertising, representation, sponsorship, insurance, rental, provisions and other expenses.

Other charges consist of:

2020 2019 2018 (In Thousands) Amortization of discount on long- term debt (Note 18) P=9,105 P=8,673 P=8,399 Amortization of deferred credits (Note 19) 7,179 8,580 7,909 Financing charges and other expenses 3,089 8,266 714 P=19,373 P=25,519 P=17,022

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24. Pension Plan

As discussed in Note 2, the Group maintains a DC plan which is accounted for as a defined benefit (DB) plan with minimum guarantee due to the requirements of RA No. 7641, The Retirement Pay Law, covering all regular and permanent employees.

The plan assets are being managed by BPI. The asset allocation of the plan is set and reviewed from time to time by the Plan Trustees taking into account the membership profile, the liquidity requirements of the Plan and the risk appetite of the Plan sponsor.

The Group contributes to the fund based on the provision of the DC Plan. The Group updates the actuarial valuation every year by hiring the services of a third party professional qualified actuary. The latest actuarial valuation report was as of reporting date.

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2020 2019 (35,889) (28,605) December 31, December December 31,

(521) (493) P=3,221 P=3,221 P=2,700 P=71,508 P=35,619

– – P=339 P=339 P=15,104 P=58,778 P=339 P=339 P=15,597 P=87,383 Experience Experience adjustments Subtotal adjustments Subtotal

– – P=5,582 P=5,582 (P=2,361) changes P=15,258 P=15,258 changes changes changes Actuarial Actuarial in financial in financialin arising from arising from arising assumptions assumptions

P=– P=5,582 (P=2,361) P=– P=– P=15,258 (521) (493) P=493) Remeasurement in other comprehensive income Remeasurement in other comprehensive income Return on Return on plan assets plan assets

– – P= – P=– (P=521) and P=– P=– P=– P=– ( and

Settlement Settlement Curtailment Curtailment

– P= – P= – P=– P=– 2020 2019

P=– P=– (P=6,990) P=– P=– 9,579 =13,777) P=13,777 P=13,777 (6,990) Benefits Benefits

paid from paid from plan assets Contributions plan assets Contributions

(42,155) (37,691)

– (1,802) – (3,101) P=– P=– P=2,597 P=39,909 P=– P=– P=5,698 P=82,064 (P P=– P=– P=1,788 P=43,674 P=– P=– P=3,590 P=81,365 (P=9,579) Past Past re as follows: follows: as re service cost service interest Net Subtotal of comprehensive income service cost Net interest Subtotal of comprehensiveof income

– – Net benefit cost in consolidated statements Net Net benefit cost consolidatedin statements 609 609 Current Current service cost service cost cost service

2020 2019 (39,054) (35,889) P=71,757 P=71,757 P=4,609 P=35,619 P=35,619 P=6,267 P=71,508 P=71,508 P=6,267 January 1, January 1, January

Changes in net defined liability in 2020 and 2019 a 2019 and 2020 in liability in netChanges defined obligation obligation obligation Present value of defined benefit Fair value of plan assets Net defined benefit liability (asset) Present value of defined benefit Fair value of plan assets Net defined benefit liability (asset) P=32,703 P=4,

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The Group’s fund is in the form of a trust fund being maintained by BPI Asset Management. The primary objective of the Retirement Fund is to achieve the highest total rate of return possible, consistent with a prudent level of risk. The investment strategy articulated in the asset allocation policy has been developed in the context of long-term capital market expectations, as well as multi-year projections of actuarial liabilities. Accordingly, the investment objectives and strategies emphasize a long-term outlook, and interim performance fluctuations will be viewed with the corresponding perspective.

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

2020 2019 Government securities 63.62% 90.38% Equities 13.58 − Unit investments trust fund 12.17 1.78 Corporate Bonds 10.63 7.84 100.00% 100.00%

All debt instruments held have quoted prices in an active market.

The cost of defined benefit pension plans and other post-employment medical benefits as well as the present value of the pension obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. The principal assumptions used in determining pension and post- employment medical benefit obligations for the defined benefit plans are shown below:

2020 2019 2018 Discount rate 3.44 to 3.83% 5.02% 7.94% Salary increase rate 4.00 to 7.00% 7.00% 7.00%

The sensitivity analyses below has been determined based on reasonable possible changes of each significant assumption on the defined benefit obligation as of the end of the reporting period, assuming all other assumptions were held constant, as of December 31:

Effect on DBO 2020 2019 Discount rate 1.0% increase (12.04%) (4.67%) Discount rate 1.0% decrease 14.22% 12.59% Rate of salary increase 1.0% increase 13.09% 11.76% Rate of salary increase 1.0% decrease (11.40%) (4.58%)

The weighted average duration of the defined benefit obligation at the end of the reporting period is 16 to 22 years and 17 years as of December 31, 2020 and 2019, respectively.

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

2020 2019 (In Thousands) Within 1 year P=1,740 P=− More than 1 year to 5 years 2,991 14,806 More than 5 years to 10 years 75,545 43,272 More than 10 years 367,359 372,569 P=447,635 P=430,647

25. Income Taxes

The provision for current income tax represents 30% RCIT, 2% MCIT and 5% rate on gross income tax (GIT) amounting to P=92.7 million, P=524.7 million and P=274.6 million in 2020, 2019 and 2018, respectively.

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

2020 2019 2018 Statutory income tax rate 30.00% 30.00% 30.00% Tax effects of: Income subjected to lower income tax rates (22.66) (3.80) (6.87) Equity in net earnings of associates and a joint venture (3.15) (3.25) (2.57) Unrecognized deferred income tax assets on MCIT and NOLCO 1.44 0.04 0.61 Interest income and capital gains taxed at lower rates (0.03) (0.01) (0.02) Expired NOLCO and MCIT − 0.38 1.18 Others 0.58 (0.47) (0.39) Effective income tax rate 6.18% 22.89% 21.94%

The components of net deferred income tax assets as of December 31 are as follows:

2020 2019 (In Thousands) Deferred income tax assets on: Accrued expenses P=40,321 P=10,994 NOLCO 16,746 − Advance rent 7,798 3,899 Allowance for impairment losses 642 642 Unamortized discount on customers’ deposits 6 44

(Forward)

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2020 2019 (In Thousands) Difference between tax and book basis of accounting for real estate transactions P= − P=7,282 MCIT − 407 65,513 23,268 Deferred income tax liabilities on: Accrued rental income 23,127 4,352 Unamortized capitalized interest − 6,601 23,127 10,953 P=42,386 P=12,315

The components of net deferred income tax liabilities as of December 31 are as follows:

2020 2019 (In Thousands) Deferred income tax assets on: Accrued expenses P=55,959 P=55,959 Advance rent 19,441 20,604 Retirement benefits 14,677 10,686 Allowance for impairment losses on receivables and other losses 6,664 10,004 Unamortized discount on sale of land - 4,416 Unamortized discount on customers’ deposits 3,389 2,641 MCIT 3,662 − Others 3,140 3,041 106,932 107,351 Deferred income tax liabilities on: Unamortized capitalized interest 95,036 98,753 Accrued rental income 90,610 91,596 Unrealized gross profit on lot sale 60,794 76,672 Difference between tax and book basis of accounting for real estate transactions 38,834 54,878 Others 18,603 18,139 303,877 340,038 P=196,945 P=232,687

On September 30, 2020, the BIR issued Revenue Regulations No. 25-2020 implementing Section 4(bbbb) of “Bayanihan to Recover As One Act” which states that the NOLCO incurred for taxable years 2020 and 2021 can be carried over and claimed as a deduction from gross income for the next five (5) consecutive taxable years immediately following the year of such loss.

As of December 31, 2020, the Group has incurred NOLCO in taxable year 2020 which can be claimed as deduction from the regular taxable income for the next five (5) consecutive taxable years pursuant to the Bayanihan to Recover As One Act, as follows:

Year Availment NOLCO Applied NOLCO NOLCO Applied NOLCO Incurred Period Amount Previous Year Expired Current Year Unapplied 2020 2021-2025 P=55,820,657 P=− P=− P=− P=55,820,657

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As of December 31, 2020 and 2019, the Group has MCIT that are available for offset against future income tax due as follows:

At December Year Expiry At December 31, Incurred Date 31, 2019 Additions Applied Expired 2020 2020 2023 P=− P=3,661,841 P=− P=− P=3,661,841 2019 2022 3,043,105 − (406,705) − 2,636,400 2018 2021 2,330,069 − (2,330,069) – – 2017 2020 1,246,578 – (1,246,578) – – P=6,619,752 P=3,661,841 (P=3,983,352) P=– P=6,298,241

As of December 31, 2020 and 2019, the Group has MCIT amounting to P=2.6 million and P=6.2 million, respectively, for which no deferred income tax asset has not been recognized since management believes that no sufficient taxable income will be available in the year these are expected to be reversed, settled or realized.

Corporate Recovery and Tax Incentives for Enterprises (CREATE) Bill On February 3, 2021, the House of Representatives and the Senate have ratified the Bicameral Committee’s version of the proposed “Corporate Recovery and Tax Incentives for Enterprises Act” or “CREATE Bill”. The same was submitted to the Office of the President on February 24, 2021 for his review and is still pending approval of the President into law.

Provisions under the CREATE Bill include reductions in corporate income tax rate from 30% to 25% for large domestic corporations (i.e., those with total assets of more than P100 Million, excluding the value of the land on which the entity’s office, plant and equipment are situated, and taxable income of more than P5 Million) and 20% for small and medium domestic corporations (i.e., those that do not breach the aforementioned threshold during the particular taxable year) with effectivity date of July 1, 2020. Also, for qualified and registered projects under CREATE, the income tax holiday (ITH) may be given four to seven years, subject to further extension of up to three years upon approval of the application thereof for qualified projects, depending on location and industry priorities of registered projects or activities. It shall be followed by the 5% Special Corporate Income Tax Rate or Enhanced Deductions for five to ten years after meeting certain criteria. However, for existing registered projects or activities, entities may choose to be governed by CREATE and waive their incentives under their previous registrations. Otherwise, the CREATE Bill allows them a certain sunset period and may continue to enjoy their current income tax incentive (i.e., finish the remaining ITH period for those currently under ITH and avail of the 5% Gross Income Tax (GIT) of up to ten more years for projects that are currently subject to 5% GIT or those entitled to 5% GIT after the lapse of the current ITH period) with option to reapply for qualified export enterprises subject to the conditions and qualifications under the Strategic Investment Priorities Plan and performance review by the Fiscal Incentives Review Board before the reduced corporate income tax rate is used.

PAS 12, Income Taxes, requires current and deferred income taxes to be measured with reference to the tax rates and laws, as enacted or substantively enacted by the end of the reporting period. Accordingly, the Group does not reflect in its consolidated financial statements the amounts of income taxes calculated following the provisions of CREATE Bill since the same was not yet enacted or substantively enacted as of December 31, 2020.

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26. Basic/Diluted Earnings Per Share

The following table presents information necessary to compute EPS:

2020 2019 2018 (In Thousands, except EPS) a. Net income attributable to the equity holders of CHI P=391,887 P=1,657,569 P=857,111 b. Weighted average number of outstanding shares 2,156,757 2,156,757 1,959,521 c. Basic/Diluted Earnings per share (a/b) P=0.18 P=0.77 P=0.44

There were no potential dilutive shares in 2020, 2019 and 2018.

27. Financial Information and Financial Instruments

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

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

• Cash and cash equivalents and short-term investments: The fair value of cash and cash equivalents and short-term investment approximate the carrying amounts at initial recognition due to the short-term maturities of these instruments. • Financial assets at FVPL: The fair value estimates are based on net assets value of the reporting date. • Receivables: The fair value of receivables due within one year approximates its carrying amounts. Noncurrent portion of receivables are discounted using the applicable discount rates for similar types of instruments. The discount rates used ranged from 3.7% to 5.0% as of December 31, 2020 and 2019. • Financial assets at FVOCI: The fair value of financial assets at FVOCI is determined based on the available selling price in the market for identical assets. • Accounts and other payables: The fair values of accounts and other payables approximate the carrying amounts due to the short-term nature of these transactions. • Long-term debt and deposits and other liabilities: Current portion of long-term debt and deposits and other liabilities approximates its fair value due to its short-term maturity. The fair value of fixed rate instruments are estimated using the discounted cash flow methodology using the Group’s current incremental borrowing rates for similar borrowings with maturities consistent with those remaining for the liability being value. The discount rates used ranged from 1.8% to 5.0% as of December 31, 2020 and 2019.

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The following tables set forth the carrying values and estimated fair values of the Group’s financial assets and liabilities:

December 31, 2020 December 31, 2019 Carrying Carrying Value Fair Value Value Fair Value (In Thousands) Loans and Receivables Trade residential development P=180,751 P=175,164 P=270,023 P=278,004 Receivable from related parties 1,221,773 1,221,773 2,103,364 2,103,364 Other Financial Liabilities Long-term debt P=6,279,753 P=6,349,078 P=6,348,648 P=6,487,375 Tenants’ deposits under deposits and other liabilities 1,255,934 1,255,934 1,071,573 1,071,573

Fair Value Hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of the assets and liabilities by valuation technique:

Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly or indirectly Level 3: inputs for the asset or liability that are not based on observable market data

The quantitative disclosures on fair value measurement hierarchy for assets and liabilities as of December 31 follow:

2020 Fair value measurements using Quoted prices in active Significant markets for offer Significant identical observable unobservable Carrying assets inputs inputs Date of valuation Values Total (Level 1) (Level 2) (Level 3) Assets measured at fair value Financial assets at FVOCI December 31, 2020 P=310,500 P=310,500 P=– P=310,500 P=– Financial assets at FVPL December 31, 2020 9,947 9,947 – 9,947 – Assets for which fair values are disclosed Trade residential development December 31, 2020 180,751 175,164 – – 175,164 Receivable from related parties December 31, 2020 1,221,773 1,221,773 – – 1,221,773 Investment properties December 31, 2020 21,005,136 101,255,000 – – 101,255,000 Liabilities for which fair values are disclosed Long-term debt December 31, 2020 6,279,753 6,349,078 – – 6,349,078 Tenants’ deposits under deposits and other liabilities December 31, 2020 1,255,934 1,255,934 – – 1,255,934

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2019 Fair value measurements using Quoted prices in active Significant markets for offer Significant identical observable unobservable Carrying assets inputs inputs Date of valuation Values Total (Level 1) (Level 2) (Level 3) Assets measured at fair value Financial assets at FVOCI December 31, 2019 P=349,806 P=349,806 P=– P=349,806 P=– Financial assets at FVPL December 31, 2019 9,688 9,688 – 9,688 – Assets for which fair values are disclosed Trade residential development December 31, 2019 270,023 278,004 – – 278,004 Receivable from related parties December 31, 2019 2,103,364 2,103,364 – – 2,103,364 Investment properties December 31, 2019 21,066,414 74,077,000 – – 74,070,000 Liabilities for which fair values are disclosed Long-term debt December 31, 2019 6,348,648 6,487,375 – – 6,487,375 Tenants’ deposits under deposits and other liabilities December 31, 2019 1,071,573 1,071,573 – – 1,071,573

The Group categorized the fair value of receivables, long-term debt and deposits and other noncurrent liabilities under Level 3 as of December 31, 2020 and 2019. The fair value of these financial instruments was determined by discounting future cash flows using the applicable rates of similar types of instruments plus a certain spread. This spread is the unobservable input and the effect of changes to this is that the higher the spread, the lower the fair value.

For land, significant increases (decreases) in the price per square meter, in isolation, would result in a significantly higher (lower) fair value of the properties.

For buildings, significant increases (decreases) in the anticipated future benefits would result in a significantly higher (lower) fair value of the properties.

The Group categorized the fair value of financial assets at FVOCI and FVPL under Level 2 as of December 31, 2020 and 2019. The fair value of these instruments was determined based on available selling price for identical assets.

Financial Risk Management Objectives and Policies The Group’s principal financial instruments comprise cash and cash equivalents, financial assets at FVPL and FVOCI and long-term debt.

The main purpose of the Group’s financial instruments is to fund its operations, capital expenditures and finance the projects. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

Exposure to credit risk, liquidity risk and market risk (i.e., foreign currency risk and interest rate risk) arises in the normal course of the Group’s business activities. The main objectives of the Group’s financial risk management are as follows: • to identify and monitor such risks on an ongoing basis; • to minimize and mitigate such risks; and • to provide a degree of certainty about costs.

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The Group’s financing and treasury function operates as a centralized service for managing financial risks and activities as well as providing optimum investment yield and cost-efficient funding for the Group. The Group’s BOD reviews and approves policies for managing each of these risks.

Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Group’s credit risks are primarily attributable to financial assets such as cash and cash equivalents, short-term investments and receivables.

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

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

Credit risk arising from rental income from leasing properties is primarily managed through a tenant selection process. Prospective tenants are evaluated on the basis of payment track record and other credit information. In accordance with the provisions of the lease contracts, the lessees are required to deposit with the Group security deposits and advance rentals which helps reduce the Group’s credit risk exposure in case of defaults by the tenants. For existing tenants, the Group has put in place a monitoring and follow-up system. Receivables are aged and analyzed on a continuous basis to minimize credit risk associated with these receivables. Regular meetings with tenants are also undertaken to provide opportunities for counseling and further assessment of paying capacity.

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

As for the receivables from related parties, receivable from employees and other receivables, the maximum exposure to credit risk from these financial assets arise from the default of the counterparty with a maximum exposure equal to their carrying amounts.

The Group writes-off a financial asset, in whole or in part, when the asset is considered uncollectible, it has exhausted all practical recovery efforts and has concluded that it has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof. The Group writes off an account when all of the following conditions are met:

. the asset is in past due for over 90 days, or is already an item-for-forfeit . contract restructuring is no longer possible

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The Group may also write-off financial assets that are still subject to enforcement activity. The Group has not written off outstanding loans and receivables that are still subject to enforcement activity as of December 31, 2020 and 2019.

An analysis of the maximum exposure to credit risk from the Group’s trade receivables and the fair values of the related collaterals are shown below:

December 31, 2020 Financial effect Maximum of collateral exposure to Fair value of or credit credit risk collaterals Net Exposure enhancement (In Thousands) Trade receivables: Commercial P=794,573 P=– P=794,573 P=– Residential development 180,751 175,164 4,587 176,164 Shopping centers 173,257 805,417 – 173,257 Corporate business 42,227 373,078 – 42,227 P=1,190,808 P=1,353,659 P=799,160 P=391,648

December 31, 2019 Financial effect Maximum of collateral exposure to Fair value of Net or credit credit risk collaterals Exposure enhancement (In Thousands) Trade receivables: Commercial development P=123,789 P=– P=123,789 P=– Residential development 270,023 278,004 − 270,023 Shopping centers 162,437 810,166 – 162,437 Corporate business 76,230 261,407 – 76,230 P=632,479 P=1,349,577 P=123,789 P=508,690

The following are the details of the Group’s assessment of credit quality and the related ECLs as at December 31, 2020 and 2019:

General approach . Cash and cash equivalents and short-term investments - As of December 31, 2020 and 2019, the ECL relating to the cash and cash equivalents and short-term investments of the Group is minimal as these are considered with low credit risk.

. Receivables from related parties, commercial development and other receivables - The Group did not recognize any allowance relating to receivable from related parties, commercial development and other receivables in prior years. No ECL is recognized since there were no history of default payments. This assessment is undertaken each financial year through examining the financial position of the related parties and the markets in which the related parties operate.

Simplified approach . Trade receivables (i.e., residential, corporate business, shopping centers, lease receivables, accrued receivables) - The Group applied the simplified approach under PFRS 9, using a ‘provision matrix’. As of December 31, 2020 and 2019, the allowance for impairment losses pertain only to individually impaired accounts. No impairment losses resulted from performing collective impairment test, due to the expected recoveries from security deposits (i.e., stipulated as 3 to 6 months’ worth of rental), advance

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payments/rentals and cash flows from sale of foreclosed properties which help reduce the Group’s credit risk exposure in case of defaults by the customers.

The maximum exposure to credit risk, net of allowance for impairment, amounted to P=3.2 billion and P=3.6 billion as at December 31, 2020 and 2019, respectively.

2020 Stage 1 Stage 2 Stage 3 Lifetime ECL 12-month Lifetime Lifetime Simplified ECL ECL ECL Approach Total Gross carrying amount P=2,280,167 P=− P=− P=941,906 P=3,222,073 Loss allowance − − − (33,373) (33,373) Carrying amount P=2,280,167 P=− P=− P=908,533 P=3,188,700

2019 Stage 1 Stage 2 Stage 3 Lifetime ECL 12-month Lifetime Lifetime Simplified ECL ECL ECL Approach Total Gross carrying amount P=2,665,732 P=− P=− P=981,648 P=3,647,380 Loss allowance − − − (35,488) (35,488) Carrying amount P=2,665,732 P=− P=− P=946,160 P=3,611,892

As of December 31, 2020 and 2019, the aging analysis of receivables presented per class, is as follows:

2020 Neither Past Past Due but not Impaired Due nor 30-60 60-90 90-120 Impaired <30 days days days days >120 days Impaired Total (In Thousands) Trade receivables: Residential development P=128,800 P=− P=528 P=479 P=10,718 P=40,226 P=− P=180,751 Shopping centers 109,882 34 11,289 5,848 26,401 9,074 10,729 173,257 Commercial development 540,540 35,385 − 1,529 37,147 179,972 − 794,573 Corporate business 1,967 − 1,097 2,187 14,332 − 22,644 42,227 Receivable from related parties 1,221,773 − − − − − − 1,221,773 Receivable from insurance − − − − − − − − Receivable from employees 18,798 − − − − − − 18,798 Accrued receivable 545,671 − − − − − − 545,671 Others 60,546 − − − − − − 60,546 P=2,627,977 P=35,419 P=12,914 P=10,043 P=88,598 P=229,272 P=33,373 P=3,037,596

2019 Neither Past Past Due but not Impaired Due nor 30-60 60-90 90-120 Impaired <30 days days days days >120 days Impaired Total (In Thousands) Trade receivables: Residential development P=270,023 P=− P=− P=− P=− =− P P=− P=270,023 Shopping centers 75,240 − 18,229 9,123 17,888 22,914 19,043 162,437 Commercial development 123,789 − − − − − − 123,789 Corporate business 50,211 − 5,566 4,008 − − 16,445 76,230

(Forward)

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2019 Neither Past Past Due but not Impaired Due nor 30-60 60-90 90-120 Impaired <30 days days days days >120 days Impaired Total (In Thousands) Receivable from related parties P=1,848,667 P=− P=− P=− P=− P=254,697 P=− P=2,103,364 Receivable from insurance 21,267 − − − − − − 21,267 Receivable from employees 19,887 − − − − − − 19,887 Accrued receivable 472,958 − − − − − − 472,958 Others 57,897 − − − − − − 57,897 P=2,939,939 P=− P=23,795 P=13,131 P=17,888 P=277,611 P=35,488 P=3,307,852

Others includes nontrade receivables from sewer and management fees, receivable from SSS and accrued interest receivable from money market placements.

As of December 31, 2020 and 2019, the Group does not have restructured financial assets.

The Group has no significant credit risk concentrations on its receivables. Policies are in place to ensure that lease contracts and contracts to sell are made with customers with good credit history.

Given the Group’s diverse base of counterparties, it is not exposed to large concentration of credit risk. For financial assets recognized on the balance sheet, the gross exposure to credit risk equals their carrying amount.

Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from either the inability to sell financial assets quickly at their fair values; or the counterparty failing on repayment of a contractual obligation; or inability to generate cash inflows as anticipated.

The Group monitors its cash flow position, debt maturity profile and overall liquidity position in assessing its exposure to liquidity risk. The Group maintains a level of cash and cash equivalents deemed sufficient to finance operations and to mitigate the effects of fluctuation in cash flows. Accordingly, its loan maturity profile is regularly reviewed to ensure availability of funding through an adequate amount of credit facilities with financial institutions.

As of December 31, 2020 and 2019, current ratio is 0.28:1 and 0.42:1, respectively, with cash and cash equivalents, short-term investments and financial assets at FVPL of P=195.1 million and P=349.2 million, respectively, accounting for 4.7% and 8.2% of the total current assets, respectively, and resulting in a negative net working capital of P=10,670 million and P=5,957.6 million, respectively.

Overall, the Group’s funding arrangements are designed to keep an appropriate balance between equity and debt, to give financing flexibility while continuously enhancing the Group’s businesses.

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

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December 31, 2020

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total Financial assets: (In Thousands) Cash and cash equivalents P=185,187 P= − P= − P= − P=185,187 Financial assets at FVPL 9,947 − − − 9,947 Receivable 2,749,033 205,316 36,596 13,278 3,004,223 Total financial assets 2,944,167 205,316 36,596 13,278 3,199,357 Financial liabilities: Accounts and other payables 8,391,345 − − − 8,391,345 Long-term debt 5,372,000 57,000 585,125 272,000 6,286,125 Interest payable - long-term debt 27,342 39,637 21,887 11,151 100,017 Deposits and other liabilities 965,932 242,725 125,720 125,006 1,459,383 Total financial liabilities 14,756,619 339,362 732,732 408,157 16,236,870 Net financial liabilities (P=11,812,452) (P=134,046) (P=696,136) (P=394,879) (P=13,037,513)

December 31, 2019

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total (In Thousands) Financial assets: Cash and cash equivalents P=313,148 P= − P= − P= − P=313,148 Financial assets at FVPL 9,688 − − − 9,688 Short-term investments 26,380 − − − 26,380 Receivable 3,017,755 195,460 57,568 1,581 3,272,364 Total financial assets 3,366,971 195,460 57,568 1,581 3,621,580 Other financial liabilities: Accounts and other payables 8,582,732 − − − 8,582,732 Long-term debt 78,000 5,372,000 57,000 857,125 6,364,125 Interest payable - long-term debt 106,216 57,366 11,749 20,544 195,875 Deposits and other liabilities 967,395 83,772 65,648 175,622 1,292,437 Total other financial liabilities 9,734,343 5,513,138 134,397 1,053,291 16,435,169 Net financial liabilities (P=6,367,372) (P=5,317,678) (P=76,829) (P=1,051,710) (P=12,813,589)

Cash and cash equivalents, financial assets at FVPL and receivables are used for the Group's liquidity requirements. Please refer to the terms and maturity profile of these financial assets under the maturity profile of the interest-bearing financial assets and liabilities disclosed under interest rate risk section.

Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Majority of the Group’s transactions are denominated in Philippine Peso. There are only minimal placements in foreign currencies and the Group does not have any foreign-currency-denominated debt. As such, the Group’s foreign currency risk is minimal.

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The following table shows the Group’s consolidated foreign-currency-denominated monetary assets and their Peso equivalents as of December 31:

2020 2019 Php Php US Dollar Equivalent US Dollar Equivalent Cash and cash equivalents $22,775 P=1,094,345 $1,645 P=83,471 In translating the foreign-currency-denominated monetary assets into Peso amounts, the exchange rates used were P=48.05 to US$1.00 and P=50.74 to US$1.00, the Philippine Peso-US Dollar exchange rates as of December 31, 2020 and 2019, respectively.

The following table demonstrates the sensitivity to a reasonable possible change in the US dollar rate, with all variables held constant, of the Group’s profit before tax (due to changes in the Peso equivalent of the dollar-denominated cash and cash equivalents and short-term investments). There is no other impact on the Group’s equity other than those already affecting the profit or loss.

Increase (Decrease) Effect on Profit in exchange rate Before Tax (In Thousands) December 31, 2020 P=1.00 P=22,775 (1.00) (22,775) December 31, 2019 P=1.00 P=1,645 (1.00) (1,645)

Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group’s interest rate risk management policy centers on reducing the overall interest expense and exposure to changes in interest rates. Changes in market interest rates relate primarily to the Group’s interest-bearing debt obligations with floating interest rate as it can cause a change in the amount of interest payments.

The Group manages its interest rate risk by leveraging on its premier credit rating and maintaining a debt portfolio mix of both fixed and floating interest rates. The portfolio mix is a function of historical, current trend and outlook of interest rates, volatility of short-term interest rates, the steepness of the yield curve and degree of variability of cash flows. The Group’s ratio of fixed to floating rate debt stood at around 95:5 as of December 31, 2020 and 2019.

The following tables demonstrate the sensitivity of the Group’s income before tax to a reasonable possible change in interest rates on December 31, 2020 and 2019, with all variables held constant, (through the impact on floating rate borrowings):

Effect on income before income tax increase (decrease) Change in basis points + 100 basis points - 100 basis points (In Thousands) 2020 (P=3,219) P=3,219 2019 (P=3,387) P=3,387

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The assumed change in the rate is based on the currently observable market environment. There is no other impact on the Group’s equity other than those already affecting profit or loss.

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

2020 2019 (In Thousands) Due in: 2020 P=− P=78,000 2021 5,372,000 5,372,000 2022 57,000 57,000 2023 585,125 585,125 2024 17,000 17,000 2025 17,000 17,000 2026 17,000 17,000 2027 221,000 221,000 P=6,286,125 P=6,364,125

Equity price risk Financial assets at FVPL are acquired at a certain price in the market. Such investment securities are subject to price risk due to changes in market values of instruments arising either from factors specific to individual instruments or their issuers or factors affecting all instruments traded in the market. Depending on several factors such as interest rate movements, country’s economic performance, political stability, domestic inflation rates, these prices change, reflecting how market participants view the developments.

The Group measures the sensitivity of its investment securities based on the average historical fluctuation of the investment securities’ net asset value per unit (NAVPU). All other variables held constant, with a duration of 0.18 year and 0.36 year for 2020 and 2019, respectively, a 1.0% change in NAVPU will increase/decrease net income, total comprehensive income and equity by P=0.01 million for the years ended December 31, 2020 and 2019.

28. Equity

Capital Stock The details of the Parent Company’s common shares as of December 31, 2020 and 2019 follow:

Authorized shares 3,000,000,000 Par value per share P=1.0 Shares issued and outstanding 2,156,756,631

On November 6, 2018, SEC certified the Plan of Merger between the Parent Company and Cebu Property Ventures and Development Corporation (CPVDC). As a result, the Parent Company issued shares to CPVDC shareholders, including the Parent Company, from its unissued shares with a share swap ratio of 1.06 resulting to an issuance of a total 996,771,000 shares.

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The summary of the Parent Company’s track record of registration of securities as of December 31 is shown below:

2020 2019 Number of Number of Number of shares Date of holders of holders of registered Issue/offer price approval securities securities Common shares 2,916,844,521 P=1.00 par value February 14, 4,374 4,343 P=4.00 issue price 1994

Treasury Shares Prior to merger, the Parent Company owns 717,064,047 shares from CPVDC which were then re-acquired by issuing 760,087,890 shares and classified as treasury shares.

Equity Reserves The equity reserves resulted from the merger between the Parent Company and CPVDC. Under the accounting for legal merger, the Group recognized the difference between the net assets acquired and the total cost of the investments in CPVDC under equity reserve in the consolidated statements of changes in equity amounting to P=274.0 million in 2018.

Appropriated Retained Earnings On November 27, 2019, the Parent Company’s BOD approved and authorized the appropriation of retained earnings amounting to P=2.5 billion which shall be used for future development projects within SRP, Cebu IT Park and Cebu Business Park which are expected to be completed in 2026.

On November 22, 2012, the Parent Company’s BOD approved and authorized the appropriation of retained earnings amounting to P=1.3 billion which shall be used for land acquisition and future development projects within Cebu Business Park. On August 13, 2018, the Parent Company’s BOD approved to continue the appropriation for the expansion projects within Cebu IT Park and Cebu Business Park which are expected to be completed in 2021.

Unappropriated Retained Earnings The retained earnings available for dividend distribution of the Parent Company amounted to P=777.3 million and P=378.8 million as of December 31, 2020 and 2019, respectively.

Retained earnings include undistributed net earnings of subsidiaries, associates and a joint venture amounting P=1,166.0 million and P=1,179.8 million as of December 31, 2020 and 2019, respectively. These amounts are not available for dividend declaration until declared by the subsidiaries and affiliates.

On November 27, 2019, the Parent Company’s BOD declared P=0.15 per share cash dividends totaling to P=323.5 million from unappropriated retained earnings to all its issued and outstanding shares as of record date December 11, 2019, and paid on December 23, 2019.

On November 22, 2018, the Parent Company’s BOD declared P=0.15 per share cash dividends totaling to P=323.5 million from unappropriated retained earnings to all its issued and outstanding shares as of record date December 13, 2018, and paid on December 20, 2018.

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Capital Management The primary objective of the Group’s capital management policy is to ensure that debt and equity capital are mobilized efficiently to support business objectives and maximize shareholder value. The Group establishes the appropriate capital structure for each business line that properly reflects its premier credit rating and allows it the financial flexibility, while providing it sufficient cushion to absorb cyclical industry risks.

The Parent Company is not subject to externally imposed capital requirements. No changes were made in the objectives, policies and processes from the previous years.

The Group monitors its capital structure using leverage ratios on both a gross and net basis, and makes adjustments to it in light of economic conditions. Debt consists of long-term debt. Net debt includes long- term debt less cash and cash equivalents, short-term investments and financial assets at FVPL. The Group considers as capital the equity attributable to equity holders of the Parent Company.

As of December 31, the Group had the following ratios:

2020 2019 (In Thousands) Long-term debt P=6,279,753 P=6,348,648 Less: Cash and cash equivalents 185,187 313,148 Short-term investments − 26,380 Financial assets at fair value through profit or loss 9,947 9,688 Net debt P=6,084,619 P=5,999,432 Equity attributable to equity holders of Cebu Holdings, Inc. P=9,744,864 P=9,401,732 Debt to equity 64.44% 67.53% Net debt to equity 62.44% 63.81%

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Total 29. Segment Information 8,530 44,831 94,365 35,601 35,601 42,386 (26,374) 389,055 471,625 (528,254) (196,945) P=400,417 P=400,417 P=391,887 P=400,417 P=7 2,367,262 1,731,257 P=2,322,431 P=2,322,431 P=1,350,578 P=27,275,776 P=27,275,776 P=29,049,419

The business segments where the Group operates are as follows: the r

– – – – – P= – Core business: P=– and 42,063 (1,978,207) 13,494 • Commercial development - sale of commercial lots, club shares and development rights (13,494) (380,299) (422,362) (395,725) (P=26,637) P=523,622 P=523,622 (P=16,375,951) (P=16,572,896) Eliminations • Residential development - sale of residential lots and condominium units Adjustments • Shopping centers - development of shopping centers and lease to third parties of retail space and land

therein; operation of movie theaters, food courts, entertainment facilities and carparks in these – – – – – – – P= – P=– P=– shopping centers; management and operation of malls P=– 42,386 Others 440,556 440,556 440,556 P=11,891 P=11,891 (P=540,052) (P=11,912) (P=11,912) P=440,556 P=440,556 (P=380,299) P=440,556 (P=380,299) P=440,556 (P=380,299) • Corporate business - development and lease of office buildings 4,623,889 (2,892,632) • Others - other investing activities such as investment in joint ventures and sale of non-core assets

– – – – – No business segments have been aggregated to form the reportable business segments. – (65) 136 Hotel 3,603 1,653 73,535 P=3,674 P=3,674 P=2,021 P=3,674 P=1,897 P=1,897

Management monitors the operating results of its business units separately for the purpose of making (69,932) =89,517 =89,517 P=4,678,166 (P=3,432,684) P=73,535 P=73,535 P=21,743 P=21,743 P P (P=37,984) (P=37,984)

decisions about resource allocation and performance assessment. The accounting and measurement and Resort

policies used are consistent with the policies used in preparing general-purpose financial statements. (In Thousands)

– – Sales, costs and expenses include amounts that are directly attributable to each segment. Items that are not –

directly identified are allocated based on the segment’s proportionate share on the total revenue. 45,540 (22,997) (37,971) 303,792 113,659 975,694 Business (862,035) (533,883) (170,886) (P=93,889) (P=55,918) (P=93,889) 0, 2019 and 2018 revenue and expense information fo information expense and revenue 2018 and 2019 0, P=975,694 P=975,694 P=387,024 P=387,024 Corporate P=1,311,781 P=1,311,781 (P=12,089,585) (P=12,260,471)

– – – P=604 P=604 4,865 (7,869) (3,312) 66,680 49,453 (51,344) (26,059) Centers 696,413 (646,960) P=696,413 P=696,413 P=109,817 P=161,161 P=109,817 P=343,706 P=343,706 Shopping (P=3,711,424) (P=3,737,483)

– – – – – – 4 P= – P=1 P=1 7,727 6,175 (8,734) (46,066) (54,800) (P=8,734) (P=40,894) (P=40,894) (P=40,894) (P=168,211) (P=168,211) Residential Development

– – – – – – – 93,426 51,143 96,192 P=2,973 P=2,973 612,160 216,883 P=16,450 P=16,450 (395,277) P=612,160 P=612,160 P=265,260 P=265,260 P=361,452 P=361,452 P=361,452 P=361,452

(P=880,457) (P=880,457) P=3,516,717 P=3,516,717 P=1,300,844 P=12,419,389 P=10,477,470 P=3,516,717 P=3,516,717 P=1,300,844 P=12,419,389 P=10,477,470 Commercial Development esent assets and liabilities as of December 31, 202 31, December of as liabilities and assets esent estmentproperties nture Information Information

Total revenue Other income Revenue Sales to external customers Deferred income tax assets assets tax income Deferred Investments in associates and ajoint venture Equity in net earnings of associates and ajoint ve Interest income Net income (loss) attributable to: Equity holders of Cebu Holdings, Inc. Non-controlling interests Other Segment assets Interest and other financing charges Operating profit (loss) Provision for income tax Net income (loss) Deferred income tax liabilities Total liabilities Segment additions to property and equipment and inv Operating expenses Segment liabilities Depreciation and amortization

Total assets Business Segments pr segments business regarding tables following The three- year ended December 31, 2020. 2020. 31, December ended year three- 2020

220 Building more sustainable communities

Total 8,530 44,831 94,365 35,601 35,601 42,386 (26,374) 389,055 471,625 (528,254) (196,945) P=400,417 P=400,417 P=391,887 P=400,417 P=7 2,367,262 1,731,257 P=2,322,431 P=2,322,431 P=1,350,578 P=27,275,776 P=27,275,776 P=29,049,419 r the the r

– – – – – P= – P=– P=– and 42,063 (1,978,207) 13,494 (13,494) (380,299) (422,362) (395,725) (P=26,637) P=523,622 P=523,622 P=523,622 (P=16,375,951) (P=16,572,896) Eliminations Adjustments

– – – – – – – P= – P=– P=– P=– P=– 42,386 Others 440,556 440,556 440,556 P=11,891 P=11,891 (P=540,052) (P=11,912) (P=11,912) P=440,556 P=440,556 (P=380,299) P=440,556 P=440,556 (P=380,299) P=440,556 (P=380,299) 4,623,889 (2,892,632)

– – – – – – (65) 136 Hotel 3,603 1,653 73,535 P=3,674 P=3,674 P=2,021 P=3,674 P=1,897 P=1,897 (69,932) =89,517 P=4,678,166 (P=3,432,684) =89,517 P=73,535 P=73,535 P=21,743 P=21,743 P P (P=37,984) (P=37,984) and Resort (In Thousands)

– – – 45,540 (22,997) (37,971) 303,792 113,659 975,694 Business (862,035) (533,883) (170,886) (P=93,889) (P=55,918) (P=93,889) 0, 2019 and 2018 revenue and expense information fo information expense and revenue 2018 and 2019 0, P=975,694 P=975,694 P=387,024 P=387,024 Corporate P=1,311,781 P=1,311,781 (P=12,089,585) (P=12,260,471)

– – – P=604 P=604 4,865 (7,869) (3,312) 66,680 49,453 (51,344) (26,059) Centers 696,413 (646,960) P=696,413 P=696,413 P=109,817 P=161,161 P=109,817 P=343,706 P=343,706 Shopping (P=3,711,424) (P=3,737,483)

– – – – – – 4 P= – P=1 P=1 7,727 6,175 (8,734) (46,066) (54,800) (P=8,734) (P=40,894) (P=40,894) (P=40,894) (P=168,211) (P=168,211) Residential Development

– – – – – – – 93,426 96,192 51,143 P=2,973 P=2,973 612,160 216,883 P=16,450 P=16,450 (395,277) P=265,260 P=265,260 P=612,160 P=612,160 P=361,452 P=361,452 P=361,452 P=361,452

(P=880,457) (P=880,457) P=3,516,717 P=3,516,717 P=1,300,844 P=12,419,389 P=10,477,470 P=3,516,717 P=3,516,717 P=1,300,844 P=12,419,389 P=10,477,470 Commercial Development esent assets and liabilities as of December 31, 202 31, December of as liabilities and assets esent estmentproperties nture Information Information

Total revenue Other income

Equity in net earnings of associates and ajoint ve Non-controlling interests assets tax income Deferred Total assets Investments in associates and a joint venture Revenue Operating expenses Operating profit (loss) Interest income Provision for income tax Net income (loss) Net income (loss) attributable to: Equity holders of Cebu Holdings, Inc. Other Segment assets Segment liabilities Deferred income tax liabilities Total liabilities Segment additions to property and equipment and inv Depreciation and amortization Sales to external customers Interest and other financing charges

2020 2020 three- year ended December 31, 2020. 2020. 31, December ended year three- Business Segments pr segments business regarding tables following The

Building more sustainable communities 221

,612) Total 84,186 84,186 11,912 12,315 12,315 081,357 081,357 232,687 444,737 444,737 234,864 (495 (445,187) P=604,523 P=604,523 4,268,130 1,721,426 2, (2,186,773) (2,186,773) P=2,351,962 P=2,351,962 P=4,033,266 P=4,033,266 P=1,657,569 P=1,657,569 P=1,669,481 P=1,669,481 P=1,669,481

1) – – – – – – P=– P=– P= – and 2,335 2,335 53,595) 5 12,518 (15,367) (12,518) (12,518) (P= (412,566) (466,16 (413,826) (P=413,826) (P=413,826) (P=413,826)

(P=754,377) P=27,508,789 (P=731,675) (P=731,675) (P=747,042) P=16,884,982 P=17,117,669 (P=413,826) (P=413,826) (3,500,766) Eliminations (P=4,255,143) (P=4,255,143) P=29,242,530 Adjustments

– – – – P=– P=– P=– P=– 7,848 7,848 5,544 Others 11,773 11,773 29,181 29,181 P= P= 36,262 36,262 41,806 P=2,966 P=2,966 (23,884) 647,430 647,430 393,639 (P=66,495) (P=66,495) (P=66,495) (P=66,495) (253,791) (457,705) (P=46,996) P=1,1 P=1,1

– – – – – – – − 6,070 (4,458) P=36,389 P=36,389 164,986 164,986 786,104 205,085 Business (581,019) P=385,112 P=385,112 P=385,112 P=385,112 P=234,232 P=234,232 P=365,613 P=365,613 P=786,104 P=786,104 Corporate P=4,498,714 P=4,498,714 P=4,498,714 P=1,585,649 P=1,585,649 P=1,591,719 (In Thousands)

– – – − 9,451 9,451 80,173 80,173 11,227 11,227 (11,701) Centers 896,968 (162,997) (777,966) Shopping P=823,595 P=823,595 P=835,296 P=835,296 P=370,291 P=370,291 P=823,595 P=823,595 1,674,934 P=2,289,888 P=2,289,888 P=1,674,934 P=1,674,934 P=7,411,902 P=7,411,902 P=7,411,902 P=13,394,280 P=13,394,280 P=13,405,507

– – – – − P=– P=– P= –

(6,390) (6,390) (5,524) 22,594 22,594 22,208 P=32,888 P=32,888 P=32,888 P=32,888 201,687 236,440 P=32,888 P=32,888 (179,479) P=201,687 P=201,687 5,222,192 Residential P=3,093,569 P=3,093,569 P=8,315,761 P=6,667,095 P=6,667,095 P=6,903,535 Development

– – – – P=– P=– 1,088 1,088 35,478 35,478 23,613 P=22,719 P=22,719 194,195 194,195 977,283 (446,853) (298,749) P=908,207 P=908,207 P=908,207 P=908,207 P=884,594 P=884,594 P=815,749 P=815,749 1,424,136 P=1,424,136 P=1,424,136 P=7,268,755 P=7,268,755 P=7,269,843 Commercial Development estmentproperties nture Information Information

Net income (loss) Sales to external customers 2019 2019 Revenue Equity in net earnings of associates and ajoint ve Operating expenses Operating profit (loss) Interest income Other income tax income from) (benefit for Provision Net income (loss) attributable to: Equity holders of Cebu Holdings, Inc. Non-controlling interests Other Segment assets Investments in associates and a joint venture Total assets Segment liabilities Deferred tax liabilities Total liabilities Segment additions to property and equipment and inv Depreciation and amortization Total revenue Deferred tax assets assets tax Deferred Interest and other financing charges

222 Building more sustainable communities

5 ,612) 005 005 196 Total ,729) Total 12,315 12,315 11,912 84,186 84,186 67,047 67,047 25,488 25,488 232,687 234,864 081,357 081,357 444,737 444,737 (495 (445,187) 436, 112,919 112,919 106,039 275,753 275,753 P=604,523 P=604,523 1,721,426 4,268,130 2, (385,489) (272 P=549,68 P=970,030 P=970,030 P=970,030 P=970,030 P=857,111 P=857,111 (2,186,773) (2,186,773) 3,218,597 1,125, 1,487,335 P=2,351,962 P=2,351,962 P=4,033,266 P=4,033,266 P=1,657,569 P=1,657,569 P=1,669,481 P=1,669,481 P=1,669,481 (2,093,592) P=3,112,558 P=3,112,558 P=4,205,575 P=4,205,575

– – – – 1)

– – – – – – P=– P=– P= – P=– P=– P=– P=– and 346) and 53,595) 2,335 5 2,335 2,494 12,518 (15,367) (2,494) (2,494) (12,518) (12,518) 31,346 74,693 15,367 15,367 (P= (412,566) (466,16 (413,826) 106,039 106,039 (P=31, (358,609) (P=413,826) (P=413,826) (P=413,826) P=252,570) P=252,570) (P=747,042) (P=747,042) P=17,117,669 (P=754,377) (P=754,377) P=27,508,789 (P=731,675) P=16,884,982

(P=413,826) (P=413,826) (3,500,766) ( (P=252,570) (P=252,570) (P=252,570) (P=252,570) (2,591,574) Eliminations (P=4,255,143) (P=4,255,143) P=29,242,530 Adjustments (P=3,111,897) (P=3,111,897) (P=5,703,471) P=24,829,005 P=26,341,828 (P=1,254,191) (P=1,254,191) P=16,006,626 (P=1,238,824) (P=1,238,824) P=16,282,379 Eliminations Adjustments

– – – – – – – – P=– P=– P=– P=– P=– P=– P=– P=– P=– P=– 7,848 7,848 5,544 (308) (308) Others 9,354 9,354 29,181 29,181 11,773 11,773 P= P= 41,806 41,806 36,262 36,262 P=2,966 P=2,966 (23,884) Others 16,648 16,648 25,488 25,488 647,430 P= 647,430 75,712 75,712 36,098 36,098 393,639 (22,181) (P=66,495) (P=66,495) (P=66,495) (253,791) (457,705) 376,465 260,386 260,386 (P=46,996) (P=36,637) (P=36,637) (P=36,637) (P=36,637) (387,983) (P=17,359) 4,113,751 4,078,909 P=1,1 P=1,1 P= P=1,2 P=1,5

– – – – –

– – − – – – – – – 6,070 (4,458) (7,537) 10,615 10,615 27,230 27,230 P=36,389 P=36,389 786,104 205,085 164,986 164,986 Business (581,019) 169,653 758,146 181,450 P=234,232 P=234,232 P=786,104 P=786,104 P=385,112 P=385,112 P=385,112 P=365,613 P=365,613 Business (576,696) Corporate P=354,181 P=354,181 P=346,229 P=346,229 P=301,902 P=373,459 P=373,459 P=758,146 P=758,146 1,569,546 P=1,591,719 P=1,591,719 P=1,585,649 P=1,585,649 P=4,498,714 P=4,498,714 P=4,498,714 Corporate P=5,794,675 P=5,794,675 P=5,794,675 P=1,432,424 P=1,432,424 P=1,432,424 P=1,432,424 P= (In Thousands) (In Thousands)

– – –

− – – – – – – 9,451 9,451 11,227 11,227 6,424 6,424 80,173 80,173 (11,701) Centers 89,603 52,684 52,684 896,968 (162,997) (777,966) Centers Shopping 599,800 P=370,291 P=370,291 P=835,296 P=835,296 P=823,595 P=823,595 P=823,595 1,674,934 (867,030) (172,856) Shopping P=522,971 P=522,971 P=470,287 P=470,287 P=222,347 P=522,971 P=522,971 1,466,830 P=7,411,902 P=7,411,902 P=7,411,902 P=7,411,902 P=1,674,934 P=1,674,934 P=2,289,888 P=2,289,888 P=6,948,522 P=6,948,522 P=1,466,830 P=1,466,830 P=6,948,522 P=6,948,522 P=2,222,686 P=2,222,686 P=13,394,280 P=13,394,280 P=13,405,507 P=16,196,161 P=16,196,161 P=16,196,161

– – – –

− – – – – – – P=– P=– P= –

(5,524) (6,390) (6,390) 22,208 7,179 22,594 22,594

26,551 26,551 29,425 29,425 236,440 P=32,888 P=32,888 P=32,888 201,687 P=1,768 P=1,768 P=32,888 P=32,888 (54,175) (179,479) P=94,755 P=94,755 P=24,949 819,256 144,625 P=201,687 P=201,687 5,222,192 (674,631) P=124,180 P=124,180 P=819,256 P=819,256 P=124,180 P=124,180 Residential P=6,903,535 P=6,903,535 P=6,667,095 P=6,667,095 P=8,315,761 P=8,315,761 P=3,093,569 P=3,093,569 Residential P=2,628,019 P=2,628,019 P=2,628,019 P=7,294,708 P=7,294,708 P=7,294,708 P=7,294,708 Development Development

– – –

– – – – – – – P=– P=– 1,088 1,088 P=487 P=487 23,613 9,303 9,303 3,580 3,580 35,478 35,478 (6,273) 99,672 93,399 P=22,719 P=22,719 977,283 194,195 194,195 (15,980) (298,749) (446,853) 151,905 P=99,672 P=99,672 P=815,749 P=815,749 P=815,749 P=815,749 P=884,594 P=884,594 P=908,207 P=908,207 P=908,207 1,424,136 P=309,451 P=309,451 P=238,627 P=238,627 P=235,047 P=235,047 P=238,627 P=309,451 P=411,575 P=411,575 P=1,424,136 P=1,424,136 P=7,269,843 P=7,269,843 P=7,268,755 P=7,268,755 Commercial P=3,312,693 P=3,312,693 P=3,312,693 Commercial Development Development estmentproperties estment properties nture nture Information Information

Information Information

Segment additions to property and equipment and inv Investments in associates and a joint venture Deferred tax liabilities Total liabilities Deferred tax assets assets tax Deferred Segment liabilities Depreciation and amortization Revenue Sales to external customers Equity in net earnings of associates and ajoint ve Total assets Segment assets Non-controlling interests Other 2019 2019 tax income from) (benefit for Provision Total revenue Net income (loss) attributable to: Equity holders of Cebu Holdings, Inc. Net income (loss) Operating expenses Operating profit (loss) Interest income Other income Interest and other financing charges

Sales to external customers 2018 2018 Revenue Equity in net earnings of associates and ajoint ve Operating expenses Operating profit (loss) Interest income Other income Interest and other financing charges Net income (loss) attributable to: Equity holders of Cebu Holdings, Inc. Non-controlling interests Other Segment assets Investments in associates and a joint venture Total assets Segment liabilities Deferred tax liabilities Total liabilities Segment additions to property and equipment and inv Depreciation and amortization Total revenue Net income (loss) Provision for (benefit from) income tax tax income from) (benefit for Provision assets tax Deferred

Building more sustainable communities 223

30. Leases

Operating Leases - Group as Lessor The Group enters into lease agreements with third parties covering rentals of commercial and office spaces and land therein: (a) fixed monthly rent, or (b) minimum rent payment or fixed rent plus percentage of gross sales, whichever is higher. All leases include a clause to enable upward revision on its rental charge on annual basis based on prevailing market conditions.

Future minimum rentals receivable under noncancellable operating leases of the Group are as follows:

December 31 2020 2019 (In Thousands) Within one year P=1,044,559 P=987,661 After one year but not more than five years 2,241,891 2,516,088 More than five years 961,787 780,415 P=4,248,237 P=4,284,164

31. Philippine Economic Zone Authority (PEZA) Registration

On December 18, 2007, PEZA approved the registration of AiO, the subsidiary, as an Economic Zone Information Technology (IT) Facility Enterprise. As a registered ecozone facilities enterprise, the subsidiary is entitled to establish, develop, construct, administer, manage and operate a 12-storey building and 17-storey building located at Asia Town IT Park, in accordance with the terms and conditions of the Registration Agreement with PEZA.

On June 22, 2017, PEZA also approved the registration of CBDI as a Developer/Operator of the Central Bloc 1 & 2.

The Group shall pay income tax at the special tax rate of 5% on its gross income earned from sources within the PEZA economic zone in lieu of paying all national and local income taxes.

Gross income earned refers to gross sales or gross revenues derived from any business activity, net of returns and allowances, less cost of sales or direct costs but before any deduction is made for administrative expenses or incidental losses. Income generated from sources outside of the PEZA economic zone shall be subject to regular internal revenue taxes. It is certified by the Bureau of Internal Revenue under Section 4.106-6 and 4 108-6 of Revenue Regulation No. 16-2005 that the enterprise is conducted for purposes of its VAT zero-rating transactions with its local suppliers of goods, properties and services.

224 Building more sustainable communities

32. Supplemental Cash Flow Information

Changes in liabilities arising from financing activities follow:

2020

Non-cash changes Amortization January 1, of discount on December 31, 2020 Cash Flows loans Other 2020 (In Thousands) Current portion of long- P=76,966 (P=78,000) P=8,353 P=5,360,308 P=5,367,627 term debt (see Note 18) Long-term debt - net of current 6,271,682 − 752 (5,360,308) 912,126 portion (see Note 18) Interest payable 31,076 (531,905) − 508,881 8,052 Dividends payable 1,731 − − − 1,731 Total liabilities from financing activities P=6,381,455 (P=609,905) P=9,105 P=508,881 P=6,289,536

2019

Non-cash changes Amortization of discount on December 31, January 1, 2019 Cash Flows loans Other 2019 (In Thousands) Current portion of long- P=59,956 (P=61,000) P=1,044 P=76,966 P=76,966 term debt (see Note 18) Long-term debt - net of current 6,341,019 − 7,629 (76,966) 6,271,682 portion (see Note 18) Interest payable 30,266 (418,857) − 419,667 31,076 Dividends payable 1,731 (323,513) − 323,513 1,731 Total liabilities from financing activities P=6,432,972 (P=803,370) P=8,673 P=743,180 P=6,381,455

2018

Non-cash changes Amortization of discount on December 31, January 1, 2018 Cash Flows loans Other 2018 (In Thousands) Current portion of long- P=59,942 (P=61,000) P=1,058 P=59,956 P=59,956 term debt Long-term debt - net of current 6,393,634 − 7,281 (59,896) 6,341,019 portion Interest payable 4,286 (290,461) − 316,441 30,266 Dividends payable 1,751 (323,533) − 323,513 1,731 Total liabilities from financing activities P=6,459,613 (P=674,994) P=8,339 P=640,014 P=6,432,972

Building more sustainable communities 225

The ‘Other’ column includes the effect of reclassification of non-current portion of interest-bearing loans and borrowings and the effect of accrued but not yet paid interest on interest-bearing loans and borrowings. The Group classifies interest paid as cash flows from operating activities.

The noncash investing and financing activities of the Group pertain to:

• Transfer from inventories to investment properties amounting to P=208.6 million in 2019; and • Transfers from investment properties to inventories amounting to P=577.7 million, P=95.9 million and P=294.1 million in 2020, 2019 and 2018, respectively.

33. Long term Commitments and Contingencies

Commitments a. On June 30, 2015, the Parent Company, through SM-ALI Group Consortium (the Consortium), participated and won in the bidding for Lot No. 8-B-1, containing an area of 263,384 sqm, which is portion of Cebu City-owned lot located at the South Road Properties, Cebu City covered by Transfer Certificate of Title No. 107-2011000963. The Consortium is a consortium among SMPHI, the Parent Company and ALI (together with the Parent Company collectively referred to as the “ALI Group”). Consistent with the agreed payment schedule in the Deed of Absolute Sale, as of August 1, 2018, the Parent Company has fully paid P=2.23 billion, excluding taxes. The SM- ALI Group has finished with the joint masterplan and has secured the development permit last November 2019 from the Cebu City Council.

On January 29, 2020, SM-ALI Group broke ground the 263,384 sqm development and the construction of road networks and underground utilities which commenced on February 18, 2020. Estimated total construction cost to complete of the Parent Company is P=277.5 million, excluding taxes.

As of December 31, 2020, the construction completion is at 47.51% and is forecasted to be completed in May 2022. As of December 31, 2020, the remaining contractual obligations of the Parent Company amounted to P=134.1 million.

b. In 2019, the Group entered into contracts in relation to the development and construction of CBP and CITP Flats which are located at Mactan Road, Cebu Business Par, Cebu City and Jose Maria del Mar St., Barangay Apas, Cebu City, respectively. The contracts entered into include general construction works, sewage treatment, plumbing and sanitary works, bored piling works, fire protection works, and site formation and demolition works. Total remaining commitment from these contracts amounted to P=1,357.5 million and P=1,565.4 million as of December 31, 2020 and 2019, respectively.

226 Building more sustainable communities

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

In the opinion of management and its legal counsel, the eventual liability under this legal proceeding, if any, will not have a material effect on the Group’s financial position and results of operations. As allowed by PAS 37, no further disclosures were provided as this might prejudice the Group’s position on this matter.

34. Events After the Reporting Date

The Board of Directors of the Parent Company at its regular meeting held on February 22, 2021, approved the merger of the Parent Company with ALI, its parent company, as well as the Parent Company’s other subsidiaries, AiO and CBDI, with ALI as the surviving entity.

ALI will issue 0.19 ALI common share for every one (1) share of CHI Common share or a total of four hundred nine million seven hundred eighty three thousand seven hundred sixty (409,783,760) ALI common shares, including two hundred ninety one million four hundred sixty three thousand seven hundred eighty four (291,463,784) ALI common shares which ALI will issue to itself in exchange of its shares held in CHI.

The plan of merger shall be submitted for approval to the stockholders of the companies involved in the merger during their respective stockholder’s meetings. The plan of merger will then be filed with the SEC and expected to be approved within the year.

Building more sustainable communities 227 CEBU HOLDINGS, INC.

PUBLICATION TEAM

EDITORIAL TEAM Ma. Cecilia Crispina T. Urbina Assistant Vice President and Head, HR and Administration Noel F. Alicaya Finance and Control Officer / Chief Risk Officer Vera R. Alejandria Sustainability Officer / Community Relations Manager Maria Jeanette A. Japzon Corporate Communications, Media Relations and Legal Affairs Manager Jennifer G. Sia Audit Manager Archie T. Obeso Control and Analysis Manager Jonjay O. Camson Control and Analysis Officer Andrea Denise H. Chua Corporate Communications Assistant Vanessa A. Doyola Audit Supervisor

CONTRIBUTORS CHI Sustainability Council Makati Development Corporation Ayala Property Management Corporation Ayala Land Malls, Inc. Seda Hotels

PHOTOGRAPHY Portraiture Paul Gotiong Landscape Paul Gotiong Cris Damo COVER Unified Ayala Group Report Wunderman Thompson

DESIGN AND LAYOUT KalibrePH Jonie Bernaldez

SUSTAINABILITY REPORTING CONSULTANT Business for Sustainable Development

228 Building more sustainable communities 2020 INTEGRATED REPORT

SHAREHOLDER INFORMATION

CORPORATE HEADQUARTERS 20F Ayala Center Cebu Tower Bohol St., Cebu Business Park Cebu City, Cebu 6000 Philippines Tel (6332) 888 3700

STAKEHOLDER INFORMATION For inquiries from institutional investors, analysts, the financial and business community on the financial report and feedback from our various stakeholder groups on the integrated report, please write or call:

CEBU HOLDINGS, INC. 20F Ayala Center Cebu Tower Bohol St., Cebu Business Park Cebu City, Cebu 6000 Philippines Tel (6332) 888 3700 www.cebuholdings.com [email protected]

SHAREHOLDER SERVICES AND ASSISTANCE For inquiries regarding dividend payments, change of address and account status, lost or damaged stock certificates, please write or call:

STOCK TRANSFER SERVICE, INC. Unit D, 34/F Rufino Pacific Tower 6784 Ayala Avenue, Makati City Tel (632) 8403 2410 / (632) 8403 2412 Fax (632) 8403 2414 [email protected] [email protected] [email protected]

Building more sustainable communities 229 20F Ayala Center Cebu Tower Bohol St., Cebu Business Park Cebu City, Cebu 6000 Philippines Tel (6332) 888 3700 www.cebuholdings.com