What We Nurture

COMMITMENT WHAT WE NURTURE

When we transform partnerships, we redefine commitment.

We engage the community to be active agents in building their path to progress. Ayala Foundation empowers future leaders— bridging aspirations toward a productive Filipino society.

THE 2015 ANNUAL REPORT About the report Vision

When we commit to a bright future, we Communities where people are productive, nurture partnerships. At Ayala Foundation, creative, self-reliant, and proud to be Filipino. we collaborate more, so we can inspire the communities we serve. We realize the potential in each Filipino—building a Mission better quality of life in our society. Understanding community realities and engaging people in the change process.

Acting as catalyst for inclusion to bridge community and business aspirations.

Building and nurturing partnerships with public and private groups, civil society, and Ayala to achieve impact, scale, and sustainability for everyone involved.

VALUES

We have a deep love of country.

We believe in shared prosperity.

We are creative and innovative.

We act with integrity.

We strive for excellence.

We collaborate and work as a team. 4 44 MESSAGE FROM REACHING OUT THE CO-CHAIRMEN TO THE FILIPINO Our commitment to growth 6 MESSAGE FROM 54 THE PRESIDENT LEAVING A LEGACY How we make an impact 8 THE FOUNDATION 60 OF OUR FUTURE BOARD OF TRUSTEES Our programs AND MANAGEMENT COMMITTEE 36 partnerships 63 for progress REPORT OF Working together INDEPENDENT with the Ayala group AUDITORS

Message from the CO-ChairmEN

Jaime Augusto Zobel de Ayala & Fernando Zobel de Ayala

Dear stakeholders,

Our Ayala Foundation has continued to evolve as an leaders from the private, public, and people sectors in institution over the course of fi ve decades and contributed to professionalizing partnership development and management. progressive and purposeful change in our society. In March, we welcomed our new president Ruel T. Maranan. In 2016, we will celebrate our 55th year. From a purely Ruel brings a wealth of experience from his various leadership philanthropic endeavor, the foundation has transformed itself roles across the Ayala group and will help bring greater alignment into a relevant agent of change, contributing its share to shaping and impact to the foundation’s operations, while building on the communities where every citizen is productive, creative, successes of his predecessors. With Ruel at the helm, we have self-reliant, and proud to be a Filipino. every reason to look forward to more collaboration and greater We continue to stretch our reach with our youth programs: stakeholder engagement, both within the Ayala group and with we educate the youth through our Center of Excellence in our external partners. Public Elementary Education (CENTEX) program, and we With a committed leadership and a focused set of programs, develop tomorrow’s trusted leaders through the Ayala Young the foundation is well positioned to remain an agent of Leaders Congress. progressive change in our society. We recognize that none of We celebrate our art, history, and culture through the Ayala these would be possible without the full trust and support of all Museum and the Filipinas Heritage Library. In fact, our eff orts our stakeholders. We thank all our partners, donors, and to champion our heritage have reached other countries. During supporters, who have selfl essly shared their talent, time, and the year, pieces from the museum’s priceless collection of resources with us and with our communities. Th ank you for precolonial gold, showcasing the Philippines’ rich culture and continuing to believe in what Ayala Foundation stands for. history, were featured in a successful exhibition at the Asia We maintain that the Filipino people deserve nothing less Society in New York. than our collective commitment to uphold integrity, responsibility, We remain committed to helping communities through our and accountability in our continuing efforts for more inclusive and various sustainable livelihood programs. Two years after the sustainable growth. Bohol earthquake and super-typhoon Yolanda, we continue to contribute to the rehabilitation of devastated communities, making sure that aside from relief eff orts, we provide support for long-term recovery as well. We carry on building more meaningful linkages between the foundation and the various business units of the Ayala group. In partnership with Globe Telecom, we launched our latest education program, Global Filipino Schools, which provides public elementary schools with an ICT-equipped learning environment and trains teachers in the uses of technology as an educational tool. Th e foundation, through Ayala Corporation and the Singapore Management University, also launched the Ayala Master of Tri-Sector Collaboration scholarship, which trains emerging Jaime Augusto Zobel de Ayala Fernando Zobel de Ayala Message from the president

Ruel T. Maranan

Dear stakeholders,

Ayala Foundation’s priorities can be defi ned by three We have seen promising results in our continuing eff orts words—alignment, focus, and impact. in our four pillars of education, youth leadership, sustainable Filipinos today face problems that are as diverse as they are livelihood, and arts and culture. Our work also continues in connected. Technological advances have created new ways of helping rebuild lives in disaster-stricken areas. doing things such that, what may be perceived as extraordinary I am grateful to Ayala Foundation’s growing number of opportunities are also, in fact, new challenges. stakeholders for this chance to be relevant. I wish to thank the I am honored to help shape the future of Ayala Foundation board of trustees, in particular, for allowing us to innovate and during these exciting times—when there is a need to take stock be fearless for the future of this organization; the Ayala of who we are, to build a better future for ourselves and the Foundation team for embarking on a new journey of discovery communities we serve. and rediscovery; and our partner organizations and individuals My fi rst year with the foundation was a good learning for their enthusiasm and willingness to serve and be part of the experience. I saw many opportunities for greater collaboration. change that our country needs. Th e process of alignment involves continuously appreciating, Th is is only the beginning. We have so much more to do. understanding, and adapting to what is required by the I believe that our commitment to nation-building defi nes who organization and the stakeholders. As we recognize the need to we are. And if we move as one, we can make it work. strike the right balance of the “heart” and the discipline called for by business, so should we be mindful of the needs we can fi ll especially within the Ayala group and with our other key program partners. If we are aligned with the needs of stakeholders as a whole, I believe that we can better focus on creating greater impact in transforming communities where everyone is productive, creative, self-reliant, and proud to be Filipino. Ruel T. Maranan

THE FOUNDATION OF OUR FUTURE Our programs ayala foundation Our Program Map

CAR

I II

III

NCR

IV-A V

IV-B VIII

VII

X IX

ARMM XII

COMMITMENT 10 Aside from Metro Manila, we have reached 52 out of 81 provinces all over the country.

Region Province E YL SL AC DR Region Province E YL SL AC DR

I Ilocos Norte   VIII Eastern Samar   Ilocos Sur   Leyte    Pangasinan  Northern Samar  II Cagayan   Samar  Isabela  Southern Leyte  Nueva Vizcaya  IX Zamboanga del Norte  III Bulacan  Zamboanga del Sur  Nueva Ecija   Zamboanga Sibugay   Pampanga  X Bukidnon    Tarlac  Camiguin  Zambales  Misamis Oriental    IV-A Batangas   XI Davao del Sur  Cavite   Davao Oriental  Laguna    XII Cotabato   Quezon  Sarangani  Rizal  South Cotabato  IV-B Occidental Mindoro  Sultan Kudarat   Oriental Mindoro    ARMM Maguindanao  Palawan   Sulu   V Albay   Basilan  Camarines Sur   CAR Benguet   VI Aklan   Ifugao  Antique  NCR Metro Manila    Capiz  Iloilo    Negros Occidental    VII Bohol  Cebu    Negros Oriental    Siquijor 

E YL SL AC DR

Education Youth Sustainable Arts and Culture Disaster Response Leadership Livelihood and Special Projects

COMMITMENT 11 ayala foundation Operating Expenses

15% 12% 4% 5%

36% 28%

E Education P41.0 million

YL Youth Leadership P14.2 million

SL Sustainable Livelihood P16.1 million

AC Arts and Culture P94.0 million

DR Disaster Response and Special Projects P121.1 million

CE Corporate Support P49.9 million

TOTAL P336.3 million

COMMITMENT 12 AYALA FOUNDATION Program Highlights

COMMITMENT 13 COMMITMENT 14 CENTEX

The Center of Excellence in Public Elementary Education (CENTEX) 1,008 provides holistic, high-quality education Total enrolment for bright children from economically for SY 2015-2016 disadvantaged families.

Started 1998 in Manila, 2000 in Batangas 95% Cohort survival rate (vs. 73.5% national average) Program sites • Tondo, Manila • Bauan, Batangas 38,229.5 Program partners Volunteer hours • Department of Education rendered by parents • City Government of Manila • Provincial Government of Batangas • Private donors

COMMITMENT 15 COMMITMENT 16 TEXT2TEACH

Text2Teach uses mobile technology to help teachers deliver engaging lessons 876 for public school children. Each teacher is Schools reached equipped with a Microsoft phone loaded (out of target 850) with over 360 interactive lessons in Math, for Phase 4 Science, English, and Values Education.

Started 2003

Program sites nationwide

Program partners • Microsoft • Department of Education • Globe Telecom • Local government units

COMMITMENT 17 COMMITMENT 18 TRAINING INSTITUTE

The two-year teacher and principal training program focuses on four essential elements 193 for lifelong learning—classroom pedagogy, Teachers trained development of critical thinking skills, values clariﬁcation, and use of technology in the classroom. It also involves a yearlong mentoring component that allows teachers and principals to apply what they learned. 7,220 Students reached by participating teachers Started 2012

Program sites • Sagay City, Negros Occidental • Silay City, Negros Occidental • Estancia, Iloilo • Carles, Iloilo • Cagayan de Oro City

Program partners • Department of Education • Local government units

COMMITMENT 19 COMMITMENT 20 AYALA YOUNG LEADERS CONGRESS

The Ayala Young Leaders Congress (AYLC), the ﬂagship leadership program of 22 the Ayala group of companies, is an annual Number of student leadership summit for 81 of the most alumni chapters promising student leaders selected from the best colleges and universities in the country. The congress is designed to build the delegates’ conﬁdence and hone their leadership 1,286 skills, to nurture their commitment to Number of AYLC alumni integrity and principled leadership, to foster nationalism and idealism, and to encourage faithful stewardship of their communities and the country’s future. 68 Community projects Started 1999 implemented by 2015 alumni Program sites nationwide

Program partners P14.5M • Ayala Corporation Value of projects • Ayala Land implemented • Bank of the Philippine Islands • Globe Telecom • Manila Water Company • Integrated Micro-Electronics • LiveIT

COMMITMENT 21 COMMITMENT 22 LEADERSHIP COMMUNITIES

Leadership Communities (LeadCom) harnesses the youth’s potential for leadership 2 and community service by helping them Number of ideate and implement projects that address project sites community issues. Started 2011 20 Program sites nationwide Number of projects being implemented

Program partners • Private funders • Local government units 95 • Local colleges and universities Number of • Youth organizations and youth- participants serving organizations • Ayala Young Leaders Alumni Association

COMMITMENT 23 COMMITMENT 24 IRAYA-MANGYAN PROGRAM

Our Iraya-Mangyan Program is committed to the education and skills P4.3M training of the indigenous Iraya-Mangyan Gross income for community of Puerto Galera, Talipanan, weaving enterprise Oriental Mindoro. For sustainable livelihood, Ayala Foundation helps the Iraya-Mangyan community in Talipanan in reviving their tradition of weaving, P2.4M particularly in the creation of beautiful Income distributed and functional nito baskets. With the help of our donors and partners, we also provide training in dressmaking, electrical skills, masonry, 64 and agriculture, among others. Mangyan scholars

Started 2003

Program site • Talipanan, Oriental Mindoro 130 Elementary students Program partners received daily feeding • Ayala group of companies • Sisters of Charity of St. Anne • Private donors

COMMITMENT 25 COMMITMENT 26 EL NIDO PROGRAM

We work with the women weavers of barangay Sibaltan, El Nido, Palawan, and 184 leverage their talents to produce beautiful buri Program participants bags and other buri products. Our goal is to (weaving and scale up their production, improve production cultural tours) processes, and connect weavers to the market. Aside from working with women weavers, we also made initial steps toward supporting 41.28% and scaling up community-based enterprises, Average increase in income focusing on cashew production and local “way of life” tourism, in partnership with the Sibaltan Heritage Council.

Started 2013

Program site • Sibaltan, El Nido, Palawan

Program partners • Department of Social Welfare and Development • Local government of El Nido • Barangay council of Sibaltan • Sibaltan Women Weavers Association • Sibaltan Heritage Council • The Leather Collection

COMMITMENT 27 COMMITMENT 28 CALAUAN PROGRAM

Southville 7 in Calauan, Laguna is a 107-hectare relocation site for families 111 displaced by Typhoon Ondoy and the Pasig Individuals employed River rehabilitation. Owned by the National Housing Authority, the property is home to roughly 4,500 families. Together with our partners, we are implementing sustainable livelihood projects (through employment 20 or enterprise) for families in the area. Individuals engaged in AFI-established enterprises Started 2012

Program site 108.56% • Calauan, Laguna Average increase in household income Program partners • Municipal government of Calauan • Salesians of Don Bosco • Franciscan Sisters of the Sacred Heart • Ayala Corporation • Makati Development Corporation • Manila Water Company • Kapwa Greens

COMMITMENT 29 COMMITMENT 30 AYALA MUSEUM

As one of the leading private museums in the country, the Ayala Museum makes 82,894 Philippine history, art, and culture accessible Museum visitorship to the public through engaging exhibitions and exciting cultural programs. The Ayala Museum uses traditional and nontraditional platforms to present our country’s rich heritage in fresh, engaging, and innovative ways. 56,032 Reach of traveling exhibitions Started 1967

Program sites • Makati City 6,620 • Nationwide Reach of Gold Exhibition (through traveling exhibits) in New York City • Global (through items on loan)

Program partners 3,508,304 • Private collectors Social media reach • Ayala group • Local government units (for traveling exhibits)

COMMITMENT 31 COMMITMENT 32 FILIPINAS HERITAGE LIBRARY

The Filipinas Heritage Library (FHL) houses contemporary and rare volumes on 3,503 Philippine art, history, and culture; vintage Library visitorship recordings of Philippine music; vintage photographs; and maps, periodicals, and multimedia materials. The library has also embarked on a massive digitization project to make a signiﬁcant part of its collection 27,527 available online. In addition, FHL partners Guests to FHL exhibits with government and private groups to develop community libraries, through the OurLibrary program.

Started 1996

Program sites • Makati City • Nationwide • Global

Program partners • Local government units • BPI Foundation • Ayala Land • Globe Telecom • Private organizations

COMMITMENT 33 COMMITMENT 34 TYPHOON YOLANDA DISASTER RESPONSE

We are helping communities severely damaged by Yolanda as they work toward 33 complete recovery. Our interventions in New classrooms these areas take the form of educational and constructed for affected sustainable livelihood support. communities since 2014 Started 2013 191 Program sites New fishing boats provided since 2014 • Estancia, Iloilo • Carles, Iloilo

Program partners • Ayala group of companies • Department of Education • Local government units • Private funders (corporate and individual)

COMMITMENT 35

PARTNERSHIPS FOR PROGRESS Working together with the Ayala group STRENGTHENING OUR TIES Working together toward a common goal

Above Acclaimed violinist Coke Bolipata serves as a mentor to scholars of the CENTEX After-Hours Music Program. Previous Ayala Foundation has partnered with the Makati Development Corporation (the construction arm of Ayala Land) for MDC Greens, which employs farmers from our Calauan community to cultivate ornamental plants.

nrico Louise Tobias is a nine-year-old living in and for education. From Manila to Mindoro to Mindanao, Tondo, Manila. He's bright and talented. He's also we remain committed to molding young minds and training E a gifted violinist. them to become leaders and productive members of their At age five, he began learning to play the instrument respective communities. under the mentorship of internationally acclaimed violinist Alfonso "Coke" Bolipata. In these after-school music lessons, Partnerships for Music and for Technology he sharpens not only his technique, but also deepens his This year, we further strengthened our commitment to our appreciation for some of the best-known pieces of classical programs by aligning these more closely with our stakeholders music. He continues to hone his craft at home; during the and working more collaboratively with other business units of summer break, he plays up to five hours daily. His hard work the Ayala group. It is our hope that this close partnership will has paid off so far because when he plays the violin, the crowd result in programs that are more focused, and as a consequence listens. And when the performance is over, they erupt in a deliver enormous impact on the lives we help change. round of applause. The Center of Excellence in Public Elementary Education Enrico’s life is one of those that Ayala Foundation has (CENTEX)—where Enrico is one of the students—is where helped change through our different programs for the youth we provide bright students from economically disadvantaged

COMMITMENT 38 families with education that's on a par with the top private schools in the country. But more than just classroom instruction, CENTEX also provides enhancement programs that boost students' confidence and self-esteem. This includes the After Hours Music School Program where Enrico studies violin, taking music lessons along with 23 other CENTEX students. The school has received considerable support from our partners over the years. In May, Volkswagen Philippines has partnered with us and turned over 22 violins and two cellos for the CENTEX After Hours Music Program. Aside from CENTEX, we also pursue other initiatives in education. In 2015, we began a new project in partnership with Ayala Corporation, through Ayala Foundation, supported the transport and installation of solar Globe Telecom called Global Filipino Schools (GFS). This panels for the Philippine Science High School, the leading institution for secondary science program, which is aligned with Globe’s goal of enhancing ICT education in the country. education in the country, trains teachers in using technology as a teaching tool and at the same time provides public elementary schools with an information and communications technology (ICT) laboratory that follows UNESCO standards. So far we have identified eight schools where the program will be implemented in the coming years. Ayala Foundation champions innovation among the youth. And when it comes to innovation, the Philippine Science High School (PSHS) has been at its forefront by providing science- driven education for secondary students. In 2015, the PSHS Alumni Batch 1985 and the PSHS From Manila to Mindoro Foundation facilitated the donation of solar panels to the PSHS main campus in Quezon City. These were donated by the Renewable Energy Test Center in California, and to Mindanao, we remain installed on the rooftop of the campus' Advanced Science and Technology Building. Ayala Corporation, through Ayala Foundation, supported this initiative by donating P1.5 million committed to molding young to transport and install these solar panels. The installation of the panels aims to reduce energy consumption and promote the use of clean energy in the minds and training them to campus. Meanwhile, any savings brought by this project will go to the PSHS Research Fund, which supports promising student research projects. become leaders and productive

Nurturing Leaders Our passion also lies in training the country's future leaders. members of their respective We make this possible through a combination of our leadership programs and our partnerships with organizations who share our passion for nurturing leaders. communities.

COMMITMENT 39 The Ayala Master of Tri-Sector Collaboration Scholarship supports leaders from the private, public, or people sectors who would like to pursue postgraduate studies in partnership development and management at the Singapore Management University. The launch of the scholarship drew the support of top officials from the business, diplomatic, and civil society sectors, including (from left) Ambassador Roland van Remoortele of Belgium, Washington Sycip, Jaime Augusto Zobel de Ayala, and Professor Arnoud de Meyer of the Singapore Management University.

Enrico Louise Tobias (center) is one of CENTEX’s promising violinists under the mentorship of Coke Bolipata. Here, Enrico performs with other members of the CENTEX String Ensemble as their way of thanking Volkswagen Philippines for their donation.

COMMITMENT 40 One such high-potential area is Basilan. Through our We strengthened our programs Leadership Communities (LeadCom) program, we partnered with the Office of the Regional Governor of the Autonomous Region in Muslim Mindanao (ORG-ARMM) and the by aligning them with our Eisenhower Fellows Association of the Philippines (EFAP) for the Basilan Young Leaders Program (BYLP). It was a 28-day program that taught 50 youth leaders from 11 municipalities stakeholders and working and two cities in Basilan how to become effective leaders. This was done by exposing them to issues that communities face and equipping them with insight and other tools to help collaboratively with address problems within their community. So far, participants of the BYLP have identified 10 projects for implementation. These projects have received a 100,000P the Ayala group. seed fund from Ayala Foundation, while the ORG-ARMM provided an additional P5 million. The program has also received considerable support from various government agencies. The local office of the Department of Interior and Local Government (DILG) in Basilan will provide administrative and logistical support to the youth leaders, while the Technical Education and Skills In September, we partnered with the Ayala Corporation to Development Authority in the ARMM (TESDA-ARMM) launch the Ayala Master of Tri-Sector Collaboration (MTSC) will handle the skills and livelihood training requirements of Scholarship. Our goal is to promote greater collaboration between the government, business, and nonprofit sectors, by honing the knowledge and skills of leaders from civil society and government. Through the scholarship, we also aim to support the global Filipino, one who is committed to national development, but is highly attuned to what goes on in the rest of the world, and can harness these to benefit everyone. The MTSC at the Singapore Management University is the first advanced degree program in the world that professionalizes partnership development and management. It means that students will come equipped with collaborative and management skills needed to work with leaders in the private, public, and people sectors. This way, they can contribute to the development of sustainable solutions to the world's big problems. This year, we also worked hard in making our youth leadership programs more inclusive and diverse, and reached out to the youth of Mindanao. Over the years Mindanao has been unfairly tagged as a conflict area, but the fact is, communities in Mindanao have a lot to contribute to national development. Young Filipino-American leaders interacted with members of our Calauan community as part of the Third Filipino American Youth Leadership Program (FYLPro).

COMMITMENT 41 partnership with the Department of Foreign Affairs, and It is proof that if done right, counts Ayala Corporation as one of its key proponents. This year's FYLPro was held in July in Manila, and gave 10 delegates invaluable insight into the business, government, and done often enough, deeds nonprofit, and cultural sectors of the country. Our goal is for these youth leaders to have greater empathy toward Filipino communities in the Philippines and the United States. both great and small can create The Iraya-Mangyan Program, which counts Doña Bea Zobel as one of its top advocates, is another project that’s close to the heart of Ayala Foundation. In 2015, we continued an immense impact on people’s our partnership with the local Iraya-Mangyan community in Talipanan, Oriental Mindoro, through the support we provide for the members of the Talipanan Iraya-Mangyan lives, much like the work that community. With the help of our donors and partners, we provide daily feeding, medical assistance, day care, and youth development programs. we do at Ayala Foundation. The educational support for Iraya-Mangyan students has also produced a good number of professionals, including Ronnel Arma, one of our Iraya-Mangyan students who passed the Licensure Exam for Teachers in October. In addition, we completed the library in Talipanan with the assistance of the Filipinas Heritage Library. We hope that this will further their projects. Moreover, the Armed Forces of the Philippines, equip our scholars and the local community with the skills and along with our partners ORG-ARMM and EFAP, are knowledge they need in school, at work, and at home. discussing the potential of expanding LeadCom to three more areas in the ARMM. • • • The National Youth Commission (NYC) has also partnered with us to pilot LeadCom in three areas in the country. That n Volkswagen Philippines' turnover of instruments is just the beginning, however, as the long-term goal is to turn to CENTEX's After Hours Music School LeadCom into the NYC's training arm for youth leaders all I Program, Enrico and the rest of the ensemble over the country. Partnerships like these not only stand as played three minuets by Johann Sebastian Bach, and Ludwig proof of the program’s effectiveness, but also enable us to reach van Beethoven's Ninth Symphony to thank the sponsors for out to more young Filipinos who can help change the country their donation. for the better, one community at a time. The Ninth Symphony is Beethoven's last symphony, and is Apart from the local youth, we reached out to young also considered one of his greatest. It premiered in Vienna in Filipino-Americans through the Filipino-American Youth 1824 to a packed theater. So ecstatic was the reception that the Leadership Program (FYLPro). The program identifies audience gave the composer five standing ovations, throwing young Filipino-American professionals aged 18 to 40 who their hats, handkerchiefs, and hands to the air. are emerging leaders in their respective communities and Enrico and his peers' performance might not have had the are committed to promoting the Philippines’ continued intense drama that characterized Beethoven's 1824 performance, development, even as they continue to grow professionally in but the effect on their young minds would have been profound the United States. Launched in 2012, FYLPro is the brainchild nonetheless. It is proof that if done right, and done often of Ambassador Jose Cuisia, Jr. and Mrs. Victoria Cuisia, in enough, deeds both great and small can create an immense impact on people's lives, much like the work that we do.

COMMITMENT 42 Young LeadCom participants are empowered to develop solutions for some of the problems they see in their communities.

A young leader from Basilan learned the value of helping find solutions for community issues, as she participated in the Basilan Young Leaders Program (BYLP).

Ayala Automotive President John Philip Orbeta (left) and Ayala Foundation President Ruel Maranan (right) with CENTEX scholars during the official turnover of violins from Volkswagen Philippines.

COMMITMENT 43

REACHING OUT TO THE FILIPINO Our commitment to growth TRANSFORMING OUR COMMUNITIES Championing Filipino culture and spirit

Above Some of our bright students from CENTEX Batangas. Previous Students from one of the Text2Teach schools.

he Philippines is home to a rich tapestry of cultures more impactful ones in the future. From reviewing our and history that dates back to the pre-Hispanic era. 17-year-old Center of Excellence in Public Elementary T It is where Malay, Chinese, Spanish, American, Education (CENTEX) program to providing greater and various indigenous cultures converge to create an identity visibility for the work of our Iraya-Mangyan community, that is unmistakably Filipino. Today, a population of over 100 we hope that by taking steps like these, our programs will million spread across more than 7,000 islands continues to benefit even more Filipinos. enrich the country's culture and heritage. For 54 years, Ayala Foundation has championed Filipino A Stronger Commitment to Education culture and its indomitable spirit through various programs Public education in the country has constantly faced across the country. These are programs that fall under our four difficulties ranging from the lack of sufficient facilities and pillars of education, youth leadership, sustainable livelihood, limited access to modern teaching methods. and arts and culture. High dropout rates of elementary students transitioning We further strengthened our commitment to these to secondary school are also a problem, often caused by pillars this year by taking on a more focused approach to families' lack of sufficient funds for further education. our programs, and by building the foundation for even CENTEX was established in 1998 to address this issue by

COMMITMENT 46 giving bright children a chance for a better future through Text2Teach is another education program implemented high-quality education. with the help of fellow education advocates. It is a public- A total of 1,375 students have already graduated from private partnership program of Ayala Foundation, Microsoft CENTEX's Manila and Batangas campuses since the program Philippines, Globe Telecom, the Department of Education started 17 years ago. In CENTEX Manila, 80 percent of its (DepEd), the Department of Interior and Local Government, first batch of graduates have either finished or are about to and the Union of Local Authorities of the Philippines. finish their college education. The program was geared for its mainstreaming phase this However, we also recognize that it is also time to look closely year, but faced a few challenges along the way, particularly on at the program, and see whether it has remained responsive to how it would transition from phase 4, which aimed to provide the changing needs of public education and students. 850 public elementary schools access to educational videos This year, we worked with a third-party education in English, Mathematics, Science, and Values Education. consultant who studied the program's strengths and weaknesses. Nevertheless, Text2Teach exceeded its phase 4 targets, The study found that the quality of instruction at CENTEX reaching a total of 876 schools. sets it apart from other public elementary schools. Thus we Since its launch in 2003, the program has reached over began to plan turning CENTEX into a "hands-on training 300,000 students from 1,433 schools in 143 cities and laboratory" designed for excellent elementary teachers. To municipalities throughout the Philippines. achieve this, the program will standardize components across the two campuses in Manila and Batangas, and then document the results. The results will then enable us to create long-term plans for the program. The result of the review has also reinforced our latest education program, the Training Institute. It is a two-year teacher training program that focuses on four essential elements of lifelong learning—classroom pedagogy, development of critical thinking skills, values clarification, and use of technology in the classroom. In 2015, we expanded the Training Institute to six new schools in the Visayas and Mindanao, training and mentoring For 54 years, 172 teachers, principals, and district supervisors from Sagay, Negros Occidental; Cagayan de Oro City; and Iloilo City. To date, the Training Institute has reached over 500 Ayala Foundation has teachers and principals, including Mabel Magallon, principal of the Father William F. Masterson Elementary School in Cagayan de Oro City. According to her, the trainings championed Filipino culture conducted reminded her that, "I will always be a teacher and not only a principal. I am a servant leader. I am a mentor and a coach too. As educators, we play a big role in breaking the and its indomitable spirit chain of poverty by molding future learners." We were also able to demonstrate the program's pedagogy at the United Nations Educational, Scientific, and Cultural through various programs Organization (UNESCO) Conference on Cultural Concerns in Teaching Philosophy for Children and Youth in the Asia Pacific Region, helping us create more awareness for the across the country. different level of training that we provide at the institute.

COMMITMENT 47 Professor Zosimo Lee (second from left) of the University of the Philippines provides our Training Institute participants a greater appreciation of philosophy for children.

Some of the top student leaders in the country take to heart the value of servant leadership, championed by the Ayala Young Leaders Congress.

A total of 1,375 students have graduated from CENTEX Manila and Batangas since the start of the program in 1998.

COMMITMENT 48 Teaching the Youth Authentic Leadership "Be leaders for change," was Jaime Florcruz's challenge to the participants of the 17th Ayala Young Leaders Congress (AYLC), held from February 10 to 13. Florcruz, a former bureau chief of CNN in Beijing, was the event's keynote speaker. He said while critics of the current generation think that the youth are "a bunch of egotistic, narcissistic, selfish 'me, me, me' brats," he didn't believe them. "But you need to help me prove your critics wrong." He joined three other speakers—Reese Fernandez-Ruiz of Rags2Riches, Magsaysay Award-winning teacher Randy Halasan, and filmmaker and writer Pepe Diokno—in sharing their own journeys through leadership with 81 of the country's top youth leaders. They also related to participants how their Members of the Sibaltan Women Weavers Association produce buri bags that serve as a source passion—or "#hugot" in colloquial terms—could bring about of livelihood for their families, and to preserve the weaving tradition in El Nido, Palawan. personal and community transformation. This year's theme for AYLC was "Being True, Leading We also work with our Iraya-Mangyan community in True." The event's participants came from the country's Talipanan, Oriental Mindoro, as they work toward preserving top colleges and universities, as well as representatives from their tradition of weaving, while at the same time earning from military and police academies, and seminaries. their efforts to produce beautifully woven items. Sales for the Iraya-Mangyan's unique woven products, available in retail Changing Lives in More Communities stores in three Ayala Malls (Glorietta, Greenbelt, and Alabang Our sustainable livelihood pillar, meanwhile, has seen a Town Center), have reached P4.3 million. These products were number of positive changes in 2015. also featured in the Department of Tourism's "Countdown First, we created a business development team to develop to Christmas: Celebrating the Regions," a products fair that end markets for our community-made products. By the end ran from September 21 to December 18. On top of that, we of the year, these products made P1,138,835 in sales, with continue to document the mini-tour of the Iraya-Mangyan business units of the Ayala group contributing 67 percent to village and have come up with more plans to make it a tourist this figure. hotspot, as Mindoro's popularity as a tourist destination grows. We continued to support the livelihood of local families in the village of Sibaltan in El Nido, Palawan, particularly Championing Filipino Heritage and Creativity members of the Sibaltan Women Weavers Association This year was a year of growth for both the Ayala Museum and (SWWA), which weaves buri bayongs for local resorts in the the Filipinas Heritage Library (FHL). Overall, our arts and area. The group took steps toward mainstreaming its culture pillar reached over 4.6 million individuals worldwide, operations, having completed their registration with the through visitorship, participation in our educational and Securities and Exchange Commission, and sought the cultural programs, or through our social media presence. necessary permits from the Bureau of Internal Revenue We branched outside the Ayala Museum’s walls through and the municipality. our traveling exhibitions, which enabled us to bring Kisame, Meanwhile, we organized several job fairs in the the Ayala Doll Collection, and works of Botong Francisco to community of Southville 7 in Calauan, Laguna, which helped more communities around the country. Overall, we reached generate employment for 111 relocatees. Our partnership with an estimated 56,000 individuals in our exhibits at festivals MDC Greens generated 10 additional jobs as they hired locals and local museums in various parts of the Philippines. to help grow ornamentals in a 2-hectare farm in the area.

COMMITMENT 49 series featuring historian and award-winning writer Ambeth The entire year has presented Ocampo, as well as the Manila Symphony Orchestra's Rush Hour Concerts. As a result, the museum is increasingly popular as a hub for cultural experiences that span classical and us with opportunities to change contemporary art. Our Dioramas of Philippine History are one of the longest- running—and most beloved—exhibits at the museum. This even more lives for the better, year we brought it to a new generation of digital natives with our augmented reality app, which we developed in partnership with Globe and the Harish and Johnsen Group. The app is and bring Filipino heritage designed to give visitors a more immersive and enlightening experience of our dioramas. To encourage even more art enthusiasts to visit the and culture to a bigger part museum, we re-launched the Ayala Museum Membership program in time for the Christmas holiday. The membership package includes a special edition membership card and a copy of the world. of the maiden issue of the Ayala Museum Magazine, dubbed the "gift of inspiration for every occasion." Cardholders are treated to different perks, such as unlimited museum access for an entire year, discounts at the museum shop and café, invitations to events, and special benefits with our partner establishments.

We also presented changing exhibitions throughout the year, including sculptures by Eduardo Olbes; the early works of regionally acclaimed Filipino painter Ronald Ventura; and works of Filipino masters Juan Luna and Fernando Amorsolo. We launched OpenSpace, a new program for outdoor exhibitions held at the Ayala Museum Plaza, with works by Toym Imao and Leeroy New catching the attention of art enthusiasts and casual observers alike. These exhibitions were made possible with the support of private collectors who entrusted part of their art collection with us. Privately owned artworks that appeared in some of our major exhibitions for the year were valued at P575.7 million. In May, we joined the rest of the world in celebrating International Museum Day, during which visitors could enter the museum for free. This year's activities kept with the International Council of Museums' theme of Museums for a Sustainable Society. A total of 2,218 visitors flocked to the museum where we featured the culture of Philippine indigenous groups, and businesses that promote the use of local materials and preservation of traditional practices. The Ayala Museum also reached out to history and The Ayala Museum presented the works of National Artist Cesar Legaspi in the exhibit music enthusiasts through History Comes Alive, a lecture “Cesar Legaspi: The Brave Modern.”

COMMITMENT 50 As part of its partnership with the Prince’s School of Traditional Arts, the Ayala Museum held a workshop on geometry and biomorphic design found in nature. This is in line with the “Art and the Order of Nature” exhibition.

National Artist BenCab at the opening of the show “BenCab Portraits.”

Col. Emmanuel de Ocampo, a veteran of the Second World War, shares some of his experiences during the commemoration of the 70th anniversary of the Battle for Manila, organized by the Filipinas Heritage Library.

COMMITMENT 51 Guests view a map of the walled city of Intramuros, before it was severely damaged by the Battle for Manila in 1945. This was part of the “Manila, My City at War” exhibit organized by the Filipinas Heritage Library.

The works of the abstract artist Fernando Zobel, as well as some elements from his studio, are featured at the Ayala Museum’s Third Floor Galleries.

COMMITMENT 52 These events and initiatives at the museum have helped to a younger audience, and maintain FHL's stature as a leading it gain international media attention from the likes of the digital resource for Filipino history and culture. Asian Financial Times and the New York Times. It has also Taken together, the entire year has presented us with received top positive reviews from the popular travel review opportunities to change even more lives for the better, and website TripAdvisor, helping increase our foreign visitorship bring Filipino heritage and culture to a bigger part of the by 12.32 percent compared with the previous year. world. We grabbed those opportunities, and by doing so, we Social media also helped turn the spotlight on the museum, learned a lot of things. These are lessons that will guide us with recommendations coming from sources as varied as local moving forward, and inspire us to continue with all the good airline Cebu Pacific and millennials. To date, we have reached work done by everyone at the foundation, our partners, and over 3.5 million people on different social media platforms. stakeholders. For its part, the Filipinas Heritage Library (FHL) continued its advocacy in preserving Filipino history and culture with a series of events that commemorated the past, and by building a bridge that connects the past with the future. In February, we commemorated the 70th anniversary of the Battle for Manila through Manila, My City at War. The month-long commemoration featured carefully curated pocket These are lessons that will events and emotional testimonials from survivors of the battle that finally ended Japanese military rule of the Philippines in World War II. This proved to be one of the best-received guide us moving forward, events in Metro Manila during the month, as it attracted 11,371 visitors. Also remarkable was the reception for our signature lecture- and inspire us to continue exhibit combination that featured photographs of the Filipino photographer Felix Laureano, images of Batanes, and the 125th birth anniversary of former Philippine President Elpidio with all the good work done Quirino. A combined total of 13,853 attended these events, with 88 percent of our guests being converted into paying patrons in August, compared with 47 percent in February. by everyone at the foundation, We also began to work on digitizing the Ulahingan, an epic of the indigenous Manobo group in Mindanao. It is an oral tradition passed from generation to generation, and has 79 our partners, and stakeholders. episodes with each episode having 4,000 to 6,000 lines. This project recently placed third in EMC Corporation's Heritage Trust contest, providing it with a grant worth US$5,000 that can help in preserving and enabling access to this epic. A multinational IT company, EMC runs the competition to support cultural initiatives with an emphasis on digital preservation. We were the first Filipino entry that reached the competition's finals round. Acting as a bridge between the past and the future, we also revamped our content strategy and improved our online presence. These help us bring the country's rich history closer

COMMITMENT 53

LEAVING A LEGACY How we make an impact RAISING OUR FLAG Cultivating Filipino pride with culture, compassion, and kindness

Above Our donors and partners helped us build a disaster-resilient, two-story school building for the teachers and students of Carles Central School in Carles, Iloilo—one of the areas severely affected by Typhoon Yolanda. Previous A gold object in the shape of a kinnari, which dates between the 10th to 13th century, found in Surigao. This is part of the Ayala Museum’s precolonial gold collection, which wowed audiences when it was displayed at the Asia Society in New York.

t Ayala Foundation, we are passionate about making left little evidence of their existence, those that survived a difference in people's lives. Whether it is making continue to astonish to this day. A fellow Filipinos proud of their heritage, helping Their gold ornaments endure—proof of the country's vast them rebuild after a disaster, or inspiring people everyday with resources of gold, and of our ancestors' artful transformation of art, we do all these and more in pursuit of that passion. this element into a thing of beauty. Many of these eventually This year, we went beyond the walls of the Ayala Museum, fell into the hands of private collectors, not to be appreciated in built new structures in the Visayas, and tore down barriers all their glory until recently. with kindness and creativity. This is the story of how we made In September, we exhibited some of the Ayala Museum's our mark in people's minds in 2015. finest examples of Philippine goldwork in Philippine Gold: Treasures of Forgotten Kingdoms at the Asia Society in New Showcasing the Philippines’ Finest Treasures York. Displayed alongside items from the precolonial gold Several hundreds of years before the Spanish Empire collection of the Bangko Sentral ng Pilipinas, some items from colonized the Philippines, civilized societies already the Ayala Museum’s gold collection were put on view outside flourished in different parts of the archipelago. While they of the Philippines for the first time. The landmark event ran

COMMITMENT 56 from September 11 to January 3 the following year, and was made possible with our partnership with the Asia Society. The New York Times called it "a gorgeous and historically intriguing exhibition." It received an exceptionally warm reception during its run, with 6,620 visitors seeing it as of October 31.

Rising from the Rubble We also continued to preserve our heritage at home. We helped in the reconstruction of a historic structure destroyed during the 7.2-magnitude earthquake that hit central Visayas in 2013. In April, we officially turned over the Dauis Church Watchtower to the parish of Our Lady of Assumption in Dauis, Bohol. A team of 29 Boholanos played a key role in the historic watchtower's restoration. They received training in heritage reconstruction through Ayala Foundation's partnership with Escuela Taller de Filipinas Foundation, the Diocese of Tagbilaran, the provincial government of Bohol, and the municipal government of Dauis. Each scholar underwent rigorous training in traditional masonry for 12 months, including hands-on training in the restoration of the watchtower. After this project, the team is expected to contribute in the restoration of other damaged churches in Bohol and other heritage structures in central Visayas. Our work in helping in the recovery of victims of typhoon

Haiyan in 2013 also continued this year, even after much of One of the families from northern Iloilo who received a fishing boat, as part of our the local and international support for these communities post-Yolanda rehabilitation initiatives. had tapered off one year after the tragedy. In Carles, Iloilo, we turned over two disaster-resilient school buildings with a combined total of 12 classrooms to Carles Central School and Cawayan Elementary School. These buildings can withstand 250-kph winds, and are equipped with emergency alarm systems and shower areas in order to accommodate evacuees in times of disaster. In addition, we began a feeding program in Carles that will run until school year 2016–2017. Teachers will also receive skills enhancement through our Training Institute program. This is the story of how we Meanwhile, we handed over 66 fishing boats to affected families in barangay Poblacion and Cawayan. The Negrense Volunteers for Change Foundation's Peter Project oversaw the made our mark in people’s construction of these boats. They also helped identify and monitor the progress of the recipient families. To date, we have handed over 191 boats in Negros Occidental, Capiz, Leyte, and Iloilo. minds in 2015.

COMMITMENT 57 Moreover, we constructed eight additional disaster- resilient classrooms in Cano-An Elementary School in Making a difference Estancia, Iloilo. The school will also be a part of our feeding program, while its teachers will participate in the Training Institute program. Select families of the municipality were in people’s lives has been provided with seeds and fertilizers to help rehabilitate 63 hectares of farmlands there. Our partnerships helped make providing aid in the Central Ayala Foundation’s passion Visayas possible. For the construction of the classrooms, we partnered with the Makati Development Corporation, with additional support from Globe and Ayala Land. Meanwhile, for 54 years. our private donors will continue to help us with our feeding programs until the end of the 2017 school year. Overall, our rehabilitation work covers 300 hectares of farmlands in Iloilo, Leyte, and Negros Occidental. We also artists also shared their time and talent for free in this year's provided sari-sari stores, pedicabs, and fishing boats for select event, including Leeroy New and his Bangaw installation, families in various areas, to aid in their continued recovery Valerie Chua's ethereal illustrations, and performances by the from the onslaught of typhoon Haiyan. Manila Symphony Orchestra and TAGO Jazz Artists. Our work will continue in the foreseeable future as several In just two years, Inspire Every Day! has become one of the communities in Iloilo still require assistance. In 2016, we will most awaited events at the Ayala Museum. This year, 4,400 provide additional boats for fishing families in Binuluangan visitors participated in our different activities throughout the day. Island, Carles, and start constructing five classrooms for Making a difference in people's lives has been Ayala Dayhagan Elementary School, also in Carles. These will Foundation’s passion for 54 years. This will remain, as long as replace the current set of severely damaged and makeshift there are promising youth who wish to change the country for classrooms, and provide an extra one for the school's incoming the better, families who strive to rise again even after a disaster, Grade 7 students. and creative people who want to build a more beautiful world with their art. We will always be there to give them our support Spreading the Gift of Inspiration and inspiration. And we will do all these while proudly raising Aside from preserving our heritage and helping in the recovery the flag of this archipelago that we call home, the Philippines. of families in disaster-stricken areas, we also make a difference by inspiring people through art. In July, the Ayala Museum ushered the return of its Inspire Every Day! campaign. It is a free admissions day that encourages people to explore Philippine culture and history through the museum’s various exhibitions, musical performances, and conversations with the country's top artists. This year's event revolved around the concept of kindness. In exchange for viewing the exhibitions and joining other pocket events of the day for free, visitors were challenged to explore volunteer opportunities with Ayala Foundation. They could volunteer as storytellers or as futsal and ping-pong coaches at CENTEX, as photographers in our various events, or as graphic artists, video editors, or photo editors of some of our marketing collaterals. Some of the country’s well-known

COMMITMENT 58 We partnered with the Negrense Volunteers for Change Foundation to provide fishing boats for Yolanda-affected communities in Negros Occidental, Leyte, Iloilo, and Capiz.

The “Bangaw” installation from acclaimed young artist Leeroy New at the Ayala Museum fountain area welcomed guests who participated in its “Inspire Every Day!” campaign.

When the Ayala Museum opened its gates for free to kick off “Inspire Every Day!”, over 4,400 guests came—many of whom even signed up for possible volunteerism activities.

COMMITMENT 59 ayala foundation BOARD OF TRUSTEES

Jaime Augusto Zobel de Ayala Co-Chairman

Gerardo Ablaza, Jr. Alfredo Ayala Trustee Trustee

Victoria Garchitorena Jaime Laya Trustee Trustee Fernando Zobel de Ayala Ruel Maranan Co-Chairman President

Ernest Lawrence Cu Bernard Vincent Dy Trustee Trustee

Mercedita Nolledo John Philip Orbeta Trustee Trustee ayala foundation MANAGEMENT COMMITTEE

Ruel T. Maranan President

Romualdo L. Katigbak Senior Director for Finance and Chief Financial Officer

Maria Elizabeth L. Gustilo Senior Director, Arts and Culture

Ma. Fatima C. Mijares Senior Director, Human Resources and Corporate Services

Erwin P. Locsin Senior Director and Chief Information Officer

Celerina R. Amores Senior Director, Corporate Communications

STATEMENTSTATEMENT OF MANAGEMENT’SOF MANAGEMEN RESPONSIBILITYT’S RESPONSIBILITY FOR FINANCIAL STATEMENTSSTATEMENTS

The management of Ayala Foundation Inc. is responsible for the preparation and fair presentation of the financial statements for the years ended December 31, 2015 and 2014, including the additional components attached therein, in accordance with Philippine Financial Reporting Standards. This responsibility includes designing and implementing internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

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

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

JAIME AUGUSTO ZOBEL DE AYALA Co-Chairman

FERNANDO ZOBEL DE AYALA Co-Chairman

RUEL T. MARANAN President

ROMUALDO L. KATIGBAK Chief Finance Officer

Signed this 30th day of March, 2016

COMMITMENT 63

SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001, 6760 Ayala Avenue Fax: (632) 819 0872 December 14, 2015, valid until December 31, 2018 1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-4 (Group A), Philippines November 10, 2015, valid until November 9, 2018

INDEPENDENT AUDITORS’ REPORT

The Board of Trustees Ayala Foundation, Inc. 8th Floor, 111 Paseo de Roxas Building Paseo de Roxas corner Legaspi Street Legaspi Village, Makati City

Report on the Financial Statements

We have audited the accompanying financial statements of Ayala Foundation, Inc. (a non-stock, non-profit corporation), which comprise the statements of financial position as at December 31, 2015 and 2014, and the statements of activities, statements of changes in fund balances and statements of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

A member firm of Ernst & Young Global Limited

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Ayala Foundation, Inc. as at December 31, 2015 and 2014, and the statements of activities and its cash flows for the years then ended in accordance with Philippine Financial Reporting Standards.

Report on the Supplementary Information Required Under Revenue Regulations 15-2010

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information required under Revenue Regulations 15-2010 in Note 16 to the financial statements is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such information is the responsibility of the management of Ayala Foundation, Inc. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Jessie D. Cabaluna Partner CPA Certificate No. 36317 SEC Accreditation No. 0069-AR-3 (Group A), February 14, 2013, valid until April 30, 2016 Tax Identification No. 102-082-365 BIR Accreditation No. 08-001998-10-2015, March 4, 2015, valid until March 23, 2018 PTR No. 5321616, January 4, 2016, Makati City

March 30, 2016

A member firm of Ernst & Young Global Limited

INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY SCHEDULE

The Board of Trustees Ayala Foundation, Inc. 8th Floor, 111 Paseo de Roxas Building Paseo de Roxas corner Legaspi Street Legaspi Village, Makati City

We have audited in accordance with Philippine Standards on Auditing, the financial statements of Ayala Foundation, Inc. (a non-stock, non-profit corporation) (the Foundation), as at and for the years ended December 31, 2015 and 2014, and have issued our report thereon dated March 30, 2016. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of all the effective standards and interpretations as of December 31, 2015 is the responsibility of the Foundation’s management. This schedule is presented for purposes of complying with Securities Regulation Code Rule 68, As Amended (2011) and is not part of the basic financial statements. This schedule have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state, in all material respects, the information required to be set forth therein in relation to the basic financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

March 30, 2016

A member firm of Ernst & Young Global Limited AYALA FOUNDATION, INC. (A Non-Stock, Non-Profit Corporation) STATEMENTS OF FINANCIAL POSITION

December 31 2015 2014

ASSETS

Current Assets Cash and cash equivalents (Notes 4 and 14) P=125,065,263 P=114,193,521 Receivables - net (Notes 5 and 14) 6,655,133 12,773,842 Merchandise inventories - net (Note 6) 14,989,308 15,370,483 Other current assets (Note 7) 10,976,697 14,354,232 Total Current Assets 157,686,401 156,692,078

Noncurrent Assets Property and equipment (Note 8) 193,053,397 191,518,970 Software cost (Note 9) 1,335,312 1,894,895 Available-for-sale financial assets (Notes 10 and 14) 2,374,047,659 2,410,772,645 Pension asset - net (Note 12) 6,236,931 7,333,916 Total Noncurrent Assets 2,574,673,299 2,611,520,426 P=2,732,359,700 P=2,768,212,504

LIABILITIES AND NET ASSETS

Current Liability Accounts and other payables (Notes 11 and 14) P=83,633,730 P=84,366,695

Net Assets (Note 13) Unrestricted 19,418,454 19,768,030 Temporarily restricted 317,090,206 304,980,860 Permanently restricted 2,187,714,273 2,187,714,273 Net unrealized gain on available-for-sale financial assets (Note 10) 117,971,385 164,060,597 Remeasurement gain on defined benefit obligation (Note 12) 6,531,652 7,322,049 Total Net Assets 2,648,725,970 2,683,845,809 P=2,732,359,700 P=2,768,212,504

See accompanying Notes to Financial Statements.

COMMITMENT 67 AYALA FOUNDATION, INC. (A Non-Stock, Non-Profit Corporation) STATEMENTS OF ACTIVITIES

December 31, 2015 Unrealized Remeasurement Gain (Loss) on Gain (Loss) on Temporarily Permanently AFS Financial Defined Benefit Unrestricted Restricted Restricted Assets Obligation (Note 13) (Note 13) (Note 13) (Note 10) (Note 12) Total Revenue, gains and other supports: Public support P=–P=212,373,634 P=–P=–P=–P=212,373,634 Investment and interest (Notes 4 and 10) 90,000,000 7,684,500 – – – 97,684,500 Net assets released from restrictions 197,277,160 (197,277,160) – – – – Others – 3,869,547 – – – 3,869,547 287,277,160 26,650,521 – – – 313,927,681 Expenses and losses: Project (Note 13) 237,748,950 – – – – 237,748,950 General and administrative (Note 13) 49,877,786 – – – – 49,877,786 Net loss from other activities (Note 15) – 14,541,175 – – – 14,541,175 287,626,736 14,541,175 – – – 302,167,911 Excess (deficit) of revenue, gains and other supports over expenses and losses (349,576) 12,109,346 – – – 11,759,770 Net unrealized gain (loss) on available-for-sale financial assets – – – (46,089,212) – (46,089,212) Remeasurement gain (loss) on defined benefit obligation – – – – (790,397) (790,397) CHANGES IN NET ASSETS (349,576) 12,109,346 – (46,089,212) (790,397) (35,119,839) NET ASSETS AT BEGINNING OF YEAR 19,768,030 304,980,860 2,187,714,273 164,060,597 7,322,049 2,683,845,809 NET ASSETS AT END OF YEAR P=19,418,454 P=317,090,206 P=2,187,714,273 P=117,971,385 P=6,531,652 P= 2,648,725,970

- 2-

December 31, 2014 Remeasurement Unrealized Gain (Loss) on Temporarily Permanently Gain on AFS Defined Unrestricted Restricted Restricted Financial Assets Benefit Obligation (Note 13) (Note 13) (Note 13) (Note 10) (Note 12) Total Revenue, gains and other supports: Public support =–PP =328,447,711 P=–P=–P=–P=328,447,711 Investment and interest (Notes 4 and 10) 60,000,000 5,183,231 – – – 65,183,231 Net assets released from restrictions 304,862,113 (304,862,113)–––– Others – 284,033 – – – 284,033 364,862,113 29,052,862 – – – 393,914,975 Expenses and losses: Project (Note 13) 330,404,307 – – – – 330,404,307 General and administrative (Note 13) 44,010,816 – – – – 44,010,816 Net loss from other activities (Note 15) – 12,389,352 – – – 12,389,352 374,415,123 12,389,352 – – – 386,804,475 Excess (deficit) of revenue, gains and other supports over expenses and losses (9,553,010) 16,663,510 – – – 7,110,500 Net unrealized (gain) loss on available-for-sale financial assets – – – 117,542,776 – 117,542,776 Remeasurement gain on defined benefit obligation – – – – 27,875,324 27,875,324 CHANGES IN NET ASSETS (9,553,010) 16,663,510 – 117,542,776 27,875,324 152,528,600 NET ASSETS AT BEGINNING OF YEAR 29,321,040 288,317,350 2,187,714,273 46,517,821 (20,553,275) 2,531,317,209 NET ASSETS AT END OF YEAR P=19,768,030=304,980,860 P P=2,187,714,273 P=164,060,597 P=7,322,049=2,683,845,809 P

See accompanying Notes to Financial Statements.

AYALA FOUNDATION, INC. (A Non-Stock, Non-Profit Corporation) STATEMENTS OF CHANGES IN FUND BALANCES

Year Ended December 31, 2015 Unrealized Remeasurement Gain (Loss) on Gain (Loss) on Temporarily Permanently AFS Defined Benefit Unrestricted Restricted Restricted Financial Assets Obligation Total FUND BALANCES Net assets at beginning of year P=19,768,030 P=304,980,860 P=2,187,714,273 P=164,060,597 P=7,322,049 P=2,683,845,809 Excess (deficit) of revenue, gains and other supports over expenses and losses (349,576) 12,109,346 – – – 11,759,770 Net unrealized gain (loss) on available-for-sale financial assets – – – (46,089,212) – (46,089,212) Remeasurement gain (loss) on defined benefit obligation – – – – (790,397) (790,397) Net assets at end of year P= 19,418,454 P=317,090,206 P=2,187,714,273 P=117,971,385 P=6,531,652 P=2,648,725,970

Year Ended December 31, 2014 Remeasurement Unrealized Gain (Loss) on Temporarily Permanently Gain on AFS Defined Unrestricted Restricted Restricted Financial Assets Benefit Obligation Total FUND BALANCES Net assets at beginning of year P=29,321,040 =288,317,350 P P=2,187,714,273 P=46,517,821 (P=20,553,275)=2,531,317,209 P Excess (deficit) of revenue, gains and other supports over expenses and losses (9,553,010) 16,663,510 – – – 7,110,500 Net unrealized gain (loss) on available-for-sale financial assets – – – 117,542,776 – 117,542,776 Remeasurement gain (loss) on defined benefit obligation – – – – 27,875,324 27,875,324 Net assets at end of year =19,768,030P =304,980,860 P P=2,187,714,273 P=164,060,597 P=7,322,049 P=2,683,845,809

See accompanying Notes to Financial Statements. AYALA FOUNDATION, INC. (A Non-Stock, Non-Profit Corporation) STATEMENTS OF CASH FLOWS

Years Ended December 31 2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES Changes in net assets (P=35,119,839) P=152,528,600 Adjustments for: Net unrealized loss (gain) on AFS financial assets (Note 10) 46,089,212 (117,542,776) Investment and interest income (Notes 4 and 10) (97,684,500) (65,183,231) Remeasurement loss (gain) on defined benefit obligation (Note 12) 790,397 (27,875,324) Depreciation and amortization (Note 8 and 9) 11,099,962 9,387,299 Pension expense (Note 12) 5,706,971 9,097,394 Provision for doubtful accounts (Notes 5 and 13) − 1,393,553 Provision for inventory loss (Note 6) 37,991 − Gain on disposal of property and equipment (603,999) (203,097) Changes in net assets before changes in working capital (69,683,805) (38,397,582) Decrease (increase) in: Receivables 6,118,709 411,794 Merchandise inventories 343,184 970,792 Other current assets 3,377,535 (4,154,912) Pension asset (Note 12) (5,400,383) (9,111,773) Increase (decrease) in accounts and other payables (732,965) 9,240,112 Net cash used in operating activities (65,977,725) (41,041,569)

CASH FLOWS FROM INVESTING ACTIVITIES Net disposals (additions) to: Property and equipment (Note 8) (11,894,730) (39,454,646) Software cost (Note 9) (225,000) (1,835,000) AFS financial assets (Note 10) 21,069,444 (708,658) Proceeds on disposal of property and equipment 648,923 505,002 Investment and interest income received 67,250,830 63,658,985 Net cash provided by investing activities 76,849,467 22,165,683

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 10,871,742 (18,875,886)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 114,193,521 133,069,407

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) P=125,065,263 P=114,193,521

See accompanying Notes to Financial Statements.

COMMITMENT 71 AYALA FOUNDATION, INC. (A Non-Stock, Non-Profit Corporation) NOTES TO FINANCIAL STATEMENTS

1. Organization and Tax Exemption

Ayala Foundation, Inc. (the Foundation) was registered with the Securities and Exchange Commission (SEC) on December 28, 1961 as a non-stock, non-profit corporation primarily for the following purposes:

a. To provide financial support, within the Philippines and abroad, for the studies of selected students and for the attendance at scientific conferences by qualified and competent scholars;

b. To undertake community development and livelihood projects designed to improve the quality of life of disadvantaged Filipinos;

c. To undertake ventures that will transfer appropriate technology to urban and rural groups that will give them additional income and allow them to put up profitable enterprises that will benefit themselves and the community;

d. To provide scholarships to poor but deserving urban and rural youth in vocational, technical, livelihood and entrepreneurial courses;

e. To preserve and enhance Philippine Art and Culture by, among other things, establishing and maintaining museums, supporting ethnic artisans and craftsmen, and undertaking related activities that will encourage Filipinos, especially our youth, to appreciate their heritage;

f. To organize, staff and finance research projects which may be established in furtherance of the purposes and objectives of the Foundation; and

g. To promote, support, and finance the publication of reports prepared under the auspices of the Foundation.

On February 15, 2010, the Foundation amended its Articles of Incorporation: (a) extending the term for which the Foundation is to exist for another fifty (50) years from December 28, 2011 and (b) to declassify the Foundation as a science and research foundation.

As a non-stock, non-profit corporation, the Foundation falls under Section 30 (E) of the Republic Act No. 8424 entitled, “An Act Amending the National Internal Revenue Code, as Amended, and for Other Purposes”. The receipts from activities conducted in pursuit of the objectives for which the Foundation was established are exempt from income tax. However, any income arising from its real or personal properties, or from activities conducted for profit, regardless of the disposition made of such income, is subject to income tax.

The Foundation is duly accredited by the Philippine Council for Non-Government Organization Certification (PCNC) and renewed its registration as a donee institution on August 10, 2015 in accordance with the provisions of Revenue Regulations No. 13-98. Donations received shall entitle the donors to full or limited deduction pursuant to Section 34 (H) (paragraphs 1 or 2) and exemption from donor’s tax pursuant to Section 101 (A) (3) of the National Internal Revenue Code of 1997. The Certificate of Registration shall be valid until February 17, 2018 unless sooner revoked by the Bureau of Internal Revenue (BIR) or upon withdrawal of the Certificate of Accreditation by PCNC.

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The Foundation’s registered office address is at 8th Floor, 111 Paseo de Roxas Building, Paseo de Roxas corner Legaspi Street, Legaspi Village, Makati City.

The accompanying financial statements were approved and authorized for issue by the Board of Trustees on March 30, 2016.

2. Summary of Significant Accounting Policies

Basis of Preparation The financial statements of the Foundation have been prepared using the historical cost basis, except for available-for-sale (AFS) financial assets that have been measured at fair value. The accompanying financial statements are presented in Philippine Peso (P=) which is the Foundation’s presentation and functional currency. All amounts are rounded off to the nearest peso unit unless otherwise indicated.

Consistent with the requirement of Philippine Accounting Standard (PAS) 8, Accounting Policies, Changes in Accounting Estimates and Errors, the Foundation applied Statement of Financial Accounting Standards No. 117, Financial Statements of Not-for-Profit Organizations. This Statement establishes standards for general-purpose external financial statements provided by a not-for-profit organization. It specifies that those statements include a statement of financial position, a statement of activities, statement of changes in fund balances and a statement of cash flows.

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

Adoption of New and Amended Accounting Standards and Interpretations The accounting policies adopted in the preparation of the financial statements are consistent with those of the previous financial years except for the new and amended PFRS, PAS and Philippine Interpretations which became effective January 1, 2015. Unless otherwise indicated, the adoption of the following new and amended standards and interpretations did not have any significant impact on the Foundation’s financial statements.

 PAS 19, Employee Benefits – Defined Benefit Plans: Employee Contributions (Amendments)

Annual Improvements to PFRSs (2010-2012 cycle) The Annual Improvements to PFRSs (2010-2012 cycle) are effective for annual periods beginning on or after January 1, 2015 and did not have a material impact on the Foundation. They include:

 PFRS 2, Share-based Payment – Definition of Vesting Condition  PFRS 3, Business Combinations – Accounting for Contingent Consideration in a Business Combination  PFRS 8, Operating Segments – Aggregation of Operating Segments and Reconciliation of the Total of the Reportable Segments’ Assets to the Entity’s Assets  PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets – Revaluation Method – Proportionate Restatement of Accumulated Depreciation and Amortization  PAS 24, Related Party Disclosures – Key Management Personnel

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Annual Improvements to PFRSs (2011-2013 cycle) The Annual Improvements to PFRSs (2011-2013 cycle) are effective for annual periods beginning on or after July 1, 2014 and did not have a material impact on the Foundation. They include:

 PFRS 3, Business Combinations – Scope Exceptions for Joint Arrangements  PFRS 13, Fair Value Measurement – Portfolio Exception  PAS 40, Investment Property

Standards and Interpretation issued but not yet effective The Foundation will adopt the following new and amended Standards and Philippine Interpretations of International Financial Reporting Interpretations Committee (IFRIC) enumerated below when these become effective. Except as otherwise indicated, the Foundation does not expect the adoption of these new and amended standards and Philippine Interpretations to have significant impact on the financial statements.

 IFRS 15 Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognizing revenue.

The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after January 1, 2018 with early adoption permitted. The Foundation is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date once adopted locally.

Effective January 1, 2016

 PAS 1, Presentation of Financial Statements – disclosure initiative  PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortization (Amendments)  PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture – Bearer Plants (Amendments)  PAS 27, Separate Financial Statements – Equity Method in Separate Financial Statements (Amendments)  PFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations (Amendments)  PFRS 10, PFRS 12 and PAS 28, Investment Entities: Applying the Consolidation Exception  PFRS 14, Regulatory Deferral Accounts

Annual Improvements to PFRSs (2012-2014 cycle) The Annual Improvements to PFRSs (2012-2014 cycle) are effective for annual periods beginning on or after January 1, 2016 and are not expected to have a material impact on the Foundation. They include:

 PFRS 5, Non-current Assets Held for Sale and Discontinued Operations – Changes in Methods of Disposal  PFRS 7, Financial Instruments: Disclosures – Servicing Contracts

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 Applicability of the Amendments to PFRS 7 to Condensed Interim Financial Statements  PAS 19, Employee Benefits – regional market issue regarding discount rate  PAS 34, Interim Financial Reporting – disclosure of information ‘elsewhere in the interim financial report’

Effective January 1, 2018

 PFRS 9, Financial Instrument In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments, the new standard (renamed as PFRS 9) reflects all phases of the financial instruments project and replaces PAS 39, Financial Instruments: Recognition and Measurement, and all previous versions of PFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. PFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. Early application of previous versions of PFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before February 1, 2015. The Foundation did not early adopt PFRS 9.

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

The following standard issued by the IASB has not yet been adopted by the FRSC

 IFRS 16 Leases On January 13, 2016, the IASB issued its new standard, IFRS 16, Leases, which replaces IAS 17, the current lease standard, and related Interpretations.

Under the new lease standard, lessees will no longer classify their leases as either operating or finance leases in accordance with IAS 17. Rather, lessees will apply the single-asset model. Under this model, lessees will recognize the asset and related liabilities for most of leases on their balance sheets, and subsequently, will depreciate the lease assets and recognize interest on the lease liabilities in their profit or loss. Lease with a term of 12 months or less or for which the underlying asset is of low value are exempted from these requirements.

The accounting by lessors is substantially unchanged as the new standard carries forward the principles of lessor accounting under IAS 17. Lessors, however, will be required to disclose more information in their financial statements, particularly on the risk exposure to residual value.

The new standard is effective for annual period beginning on or after January 1, 2019. Entities may early adopt IFRS 16 but only if they have also adopted IFRS 15. When adopting IFRS 16, an entity is permitted to use either the full retrospective approach or a modified retrospective approach, with options to use certain transition reliefs. The Foundation is currently assessing the impact of IFRS 16 and plans to adapt the new standard on the required effective date once adopted locally.

Cash and Cash Equivalents Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three

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months from dates of acquisitions or less and that are subject to an insignificant risk of changes in value.

Financial Instruments Date of recognition The Foundation recognizes a financial asset or a financial liability in the statement of financial position when it becomes a party to the contractual provisions of the instrument. Purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace are recognized on the trade date.

Initial recognition of financial instruments All financial assets and financial liabilities are initially recognized at fair value. Except for financial assets and financial liabilities at fair value through profit or loss (FVPL), the initial measurement of financial assets and liabilities includes transaction costs. The Foundation classifies its financial assets in the following categories: financial assets at FVPL, held-to-maturity (HTM) financial assets, available-for-sale (AFS) financial assets, and loans and receivables. The Foundation classifies its financial liabilities into financial liabilities at FVPL and other financial liabilities. The classification depends on the purpose for which the investments were acquired or liabilities incurred and whether they are quoted in an active market. The Foundation determines the classification of its investments at initial recognition and, where allowed and appropriate, re- evaluates such designation at every reporting date.

The financial assets of the Foundation are of the nature of loans and receivables and AFS financial assets, while its financial liabilities are of the nature of other financial liabilities (other than liabilities covered by other accounting standards such as pension liability).

Determination of fair value The Foundation measures financial instruments at each statement of financial position date. Also, fair values of financial instruments measured at amortized cost are disclosed in Note 14.

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 by the Foundation.

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.

The Foundation 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 financial statements are categorized within the fair value hierarchy, as described in Note 14.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Foundation determines whether transfers have occurred between Levels in the hierarchy by

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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.

A committee usually composed of members of the Board of Trustees and officers of the Foundation determines the policies and procedures for the valuation of financial assets as well as the allocation of the Foundation’s asset portfolio.

For the purpose of fair value disclosures, the Foundation 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 in Note 14.

“Day 1” difference Where the transaction price in a non-active market is different to the fair value from other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Foundation recognizes the difference between the transaction price and fair value (a “Day 1” difference) in the statement of activities under the “Investment and interest” account. In cases where use is made of data which is not observable, the difference between the transaction price and model value is only recognized in the statement of activities when the inputs become observable or when the instrument is derecognized. For each transaction, the Foundation determines the appropriate method of recognizing the “Day 1” difference amount.

Loans and receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments and fixed maturities that are not quoted in an active market. They are not entered into with the intention of immediate or short-term resale and are not designated as AFS financial assets or financial assets at FVPL. This accounting policy relates to the statement of financial position captions “Cash and cash equivalents” and “Receivables.”

After initial measurement, the loans and receivables are subsequently measured at amortized cost using the effective interest rate (EIR) method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the EIR. The amortization is included in the “Investment and interest” account in the statement of activities. The losses arising from impairment of such loans and receivables are recognized in the statement of activities.

Loans and receivables are included in current assets if maturity is within twelve (12) months from the reporting date, otherwise these are classified as noncurrent assets.

AFS financial assets AFS financial assets are those nonderivative financial assets which are designated as such or do not qualify to be classified in any of the other three categories. They are purchased and held indefinitely, and may be sold in response to liquidity requirements or changes in market conditions. AFS financial assets include equity investments.

After initial measurement, AFS financial assets are measured at fair value. The unrealized gains and losses arising from the fair valuation of AFS financial assets are excluded from reported earnings and are reported as “Net unrealized gain (loss) on AFS financial assets” account in the statement of activities.

When the security is disposed of, the cumulative gain or loss previously recognized in the statement of activities are then included under the “Revenue, gains and other supports” account.

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Where the Foundation holds more than one investment in the same security these are deemed to be disposed of on a first-in first-out basis. Interest earned on holding AFS financial assets are reported as investment income using the EIR. Dividends earned on holding AFS financial assets are recognized in the statement of activities when the right to receive payment is established. The losses arising from impairment of such investments are recognized under “Net unrealized gain (loss) on AFS financial asset” account in the statement of activities.

When the fair value of AFS financial assets cannot be measured reliably because of lack of reliable estimates of future cash flows and discount rates necessary to calculate the fair value of unquoted equity instruments, these investments are carried at cost, less any allowance for impairment losses.

AFS financial assets are classified as noncurrent assets unless the intention is to dispose such assets within 12 months from reporting date.

Other financial liabilities Other financial liabilities pertain to issued financial instruments that are not classified or designated at FVPL and contain contractual obligations to deliver cash or other financial assets to the holder or to settle the obligation other than the exchange of a fixed amount of cash or another financial asset for a fixed number of own equity shares. After initial measurement, other financial liabilities are subsequently measured at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on the issue and fees that are an integral part of the EIR.

This accounting policy applies primarily to the Foundation’s “Accounts and other payables” (except statutory payables as these are not financial liabilities covered by any PFRS) and other obligations that meet the above definition.

Derecognition of Financial Assets and Liabilities Financial asset A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when: a. the rights to receive cash flows from the asset has expired; b. the Foundation retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or c. the Foundation has transferred its rights to receive cash flows from the asset and either (i) has transferred substantially all the risks and rewards of the asset, or (ii) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Foundation has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Foundation’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of original carrying amount of the asset and the maximum amount of consideration that the Foundation could be required to repay.

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Financial liability A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the statement of activities.

Impairment of Financial Assets The Foundation assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Loans and receivables For loans and receivables carried at amortized cost, the Foundation first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Foundation determines that no objective evidence of impairment exists for individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses for impairment. Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognized are not included in a collective assessment for impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred). The carrying amount of the asset is reduced through use of an allowance account and the amount of loss is charged to the statement of activities. Interest income continues to be recognized based on the original EIR of the asset. Loans and receivables, together with the associated allowance accounts, are written off when there is no realistic prospect of future recovery and all collateral has been realized. If, in a subsequent year, the amount of the estimated impairment loss decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in statement of activities, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.

For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of such credit risk characteristics as industry, past-due status and term.

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar

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to those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Foundation to reduce any differences between loss estimates and actual loss experience.

AFS financial assets For AFS financial assets, the Foundation assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In case of equity investments classified as AFS financial assets, this would include a significant or prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in the statement of activities - is removed from the “Net unrealized gain (loss) on AFS financial assets” account and recognized as an expense. Impairment losses on equity investments are not reversed through revenue. Increases in fair value after impairment are recognized directly under “Net unrealized gain (loss) on AFS financial assets” account in the statement of activities.

In the case of debt instruments classified as AFS financial assets, impairment is assessed based on the same criteria as financial assets carried at amortized cost. Future interest income is based on the reduced carrying amount and is accrued using the rate of interest used to discount future cash flows for the purpose of measuring impairment loss and is recorded as part of “Investment and interest” account in the statement of activities. If, in subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in the statements of activities, the impairment loss is reversed through the statement of activities.

Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount reported in the 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.

Merchandise Inventories Merchandise inventories consist of books and other items held for sale. Merchandise inventories are valued at the lower of cost or net realizable value (NRV). Cost is determined using the first-in, first-out method. NRV is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale.

Input Value-Added Tax (VAT) Input VAT arises from the purchase of goods and services. These are applied against output VAT. The remaining balance is recoverable in future periods.

Property and Equipment Property and equipment 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 property and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property and equipment have been put into operation, such as repairs and maintenance, are normally charged to expense in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in

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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 an additional cost of property and equipment.

Depreciation and amortization of property and equipment commences once the property and equipment are available for use and is computed using the straight-line method over the following estimated useful lives of the property and equipment:

Years Leasehold and land improvements 5-20 Office furniture and equipment 3-5 Transportation equipment 5

Leasehold improvements are amortized over the estimated useful life (EUL) of the improvements or the terms of the lease, whichever is shorter.

The useful lives and depreciation and amortization method are reviewed annually based on expected asset utilization 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.

Construction in progress is stated at cost. This includes cost of construction of property and equipment and other direct costs. Construction in progress is not depreciated until such time the relevant assets are complete and are put into operational use.

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

Fully depreciated property and equipment are retained in the accounts until they are no longer used and no further depreciation and amortization is charged against current operations.

Intangible Assets The Foundation’s intangible assets include the value of network and software cost.

An intangible asset is recognized only when its cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to it will flow to the Foundation.

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

The useful lives of intangible assets are assessed to be finite. Intangible assets lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset is reviewed at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The amortization expense on intangible assets is recognized in the statement of activities allocated to “Project” and “General and administrative” under expenses and losses.

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Gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of income when the asset is derecognized.

Software cost Costs related to software purchase by the Foundation for use in operations are amortized on a straight line basis over the EUL of 2-5 years. The amortization period and the amortization method for software cost are reviewed periodically to ascertain consistency with the changes in the expected useful life of the expected pattern of consumption of future economic benefits embodied in the asset.

Impairment of Non-financial Assets The Foundation 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 Foundation 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. Impairment losses of continuing operations are recognized in the statement of activities 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 statement of activities unless the asset is carried at revalued amount, in which case, the reversal is treated as a revaluation increase. After such reversal the depreciation and amortization 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 EUL.

Provisions Provisions are recognized when the Foundation has a present obligation (legal or constructive) as a result of a past event, it is probable (i.e., more likely than not) 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 Foundation expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. Provisions, if any, are reviewed at each reporting date and adjusted to reflect the current best estimate.

Restricted Net Assets The Foundation reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily

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restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

Donations consisting of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted net assets.

Revenue Recognition Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Foundation and the amount of the revenue can be reliably measured.

Public support Public support revenue represents contributions received by the Foundation. Unconditional contributions received, including unconditional promises to give cash or other assets, are recognized as revenue in the period received at their fair value. Conditional promises to give are recognized when the conditions are met. Assets received subject to conditions are accounted for as refundable advances until the conditions are met.

Investment and interest income Investment income represents interest income earned on cash and cash equivalents and AFS financial assets and realized gains or losses on sale of investments. Income is recognized on a time proportion basis computed on the outstanding principal using the applicable rate.

Expenses and Losses Expenses arise in the course of the ordinary operations of the Foundation. Expenses constitute costs of administering the Foundation’s activities and are recognized in the statement of activities as incurred. These usually take the form of an outflow of assets.

Museum Collections Artworks, ethnographic, archeological and rare book collections purchased for or donated to the museum are not included in the accompanying financial statements. Gifts of cash or property used for the purchase of the museum collections are classified as public support revenue when acquisitions are made in accordance with the terms of the gifts. The cost of objects purchased or donated is reported as a project expense.

Defined Benefit Plan Pension cost and net defined benefit liability or asset is calculated annually by independent actuaries using the projected unit credit method.

Pension costs comprise the following:

 Service cost  Net interest on the net defined benefit liability or asset  Remeasurements of net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses on non- routine settlements are recognized as expense in profit or loss. Past service costs are recognized when plan amendment or curtailment occurs. These amounts are calculated periodically by independent 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

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applying the discount rate based on the zero-coupon bond yields to the net defined liability or assets. Net interest on the net defined benefit liability or asset is recognized as expense or income in statement of activities.

Remeasurements comprising actuarial gains and losses and return on plan assets are recognized immediately in other comprehensive income in the period in which they arise. Remeasurements are not reclassified to statement of activities in subsequent periods.

Plan assets are assets that are held by a long-term employee benefit fund. Plan assets are not available to the creditors of the Foundation, nor can they be paid directly to the Foundation. Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date of those assets. If the fair value of the plan assets is higher than the present value of the defined benefit obligation, the measurement of the resulting defined benefit asset is limited to the present value of the economic benefits available in form of refunds from the plan or reductions in the future contributions to the plan.

The net defined benefit liability or asset recognized in the Foundation’s statement of financial position in respect of the defined benefit pension plan is the aggregate of the present value of the defined benefit liability at the reporting date less the fair value of the plan assets. The present value of the defined benefit liability is determined by discounting the estimated future cash outflows using risk-free interest rates of government bonds that have terms to maturity approximating to the terms of the related pension liability.

Termination benefits are employee benefits provided in exchange for the termination of an employee’s employment as a result of either an entity’s decision to terminate an employee’s employment before the normal retirement date, an employee’s decision to accept an offer of benefits in exchange for the termination of employment or termination beyond the employee’s control.

A liability or expense for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of those benefits and when the entity recognizes related restructuring costs. Initial recognition and subsequent changes to termination benefits are measured in accordance with the nature of the employee benefit, as either post-employment benefits or short- term employee benefits.

Foreign Currency Transactions Transactions denominated in foreign currencies are recorded using the exchange rate at the date of the transactions. Outstanding foreign currency-denominated monetary assets and liabilities at year- end are translated to Philippine peso at prevailing Philippine Dealing System (PDS) rate at reporting dates. Exchange gains or losses arising from foreign currency transactions are credited to or charged against changes in net assets.

Contingencies Contingent liabilities are not recognized in the 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 financial statements but disclosed when an inflow of economic benefits is probable.

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Events After the Financial Reporting Period Post year-end events that provide additional information about the Foundation’s position at the reporting date (adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes to financial statements when material.

3. Significant Accounting Judgments and Estimates

The preparation of the accompanying financial statements in conformity with PFRS requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The judgments, estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the financial statements. Actual results could differ from such estimates.

Judgments In the process of applying the Foundation’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 financial statements:

Classification of financial instruments The Foundation exercise judgment in classifying a financial instrument, or its component parts, on initial recognition as a financial asset, financial liability or an equity instrument in accordance with the substance of the contractual agreement and the definitions of a financial asset, financial liability or an equity instrument. The substance of a financial instrument, rather than its legal form, governs its classification in the statement of financial position.

Financial assets not quoted in an active market The Foundation classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. Included in the evaluation on whether a financial asset is quoted in an active market is the determination on whether quoted prices are readily and regularly available, and whether these prices represent actual and regularly occurring market transaction on an arm’s length basis.

Impairment of AFS financial assets The Foundation treats AFS financial assets as impaired when there has been a significant or prolonged decline in the fair value below its cost or where other objective evidence of impairment exists. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. The Foundation treats ‘significant’ generally as 20% or more and ‘prolonged’ as greater than 6 months for quoted equity securities. In addition, the Foundation evaluates other factors, including normal volatility in share price for quoted equities and the future cash flows and the discount factors for unquoted equities.

If there is an objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, the amount of the loss is measured as the difference between the carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

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Management’s Use of Estimates The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Estimating allowance for impairment losses The Foundation maintains allowance for impairment losses based on the result of the individual and collective assessment under PAS 39. Under the individual assessment, the Foundation is required to obtain the present value of estimated cash flows using the receivable’s original EIR. Impairment loss is determined as the difference between the receivables’ carrying balance and the computed present value. The collective assessment would require the Foundation to group its receivables based on the credit risk characteristics (industry, past-due status and term) of the customers. Impairment loss is then determined based on historical loss experience of the receivables grouped per credit risk profile. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. The methodology and assumptions used for the individual and collective assessments are based on management's judgment and estimate. Therefore, the amount and timing of recorded expense for any period would differ depending on the judgments and estimates made for the year.

The carrying values of receivables amounted to P=6.66 million and =12.77P million as of December 31, 2015 and 2014, respectively (see Note 5).

Estimating allowance for inventory loss The Foundation estimates its allowance for inventory loss based on periodic specific identification. The Foundation provides inventory loss allowance of 100% for previous year calendars, 10% for slow moving books and catalogs, and 50% for other specifically identified as obsolete inventories. Merchandise inventories of the Foundation, net of allowance for inventory loss as of December 31, 2015 and 2014 amounted to P=14.99 million and =15.37P million, respectively. Allowance for inventory loss amounted to P=0.71 million and P=0.67 million as of December 31, 2015 and 2014, respectively (see Note 6).

Estimating useful lives of property and equipment and software costs The Foundation estimates the useful lives of its property and equipment and software cost based on the period over which these assets are expected to be available for use. The estimated useful lives of property and equipment and software costs are reviewed at least annually and are updated if expectations differ from previous estimates due to physical wear and tear and technical or commercial obsolescence on the use of these assets. It is possible that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above.

As of December 31, 2015 and 2014, the carrying values of the Foundation’s property and equipment and software cost follow:

2015 2014 Property and equipment (Note 8) P=193,053,397 P=191,518,970 Software cost (Note 9) 1,335,312 1,894,895

Evaluation of asset impairment The Foundation reviews property and equipment and software cost for impairment. This includes considering certain indications of impairment such as significant changes in asset usage,

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significant decline in assets’ market value, obsolescence or physical damage of an asset, significant underperformance relative to expected historical or projected future operating results and significant negative industry or economic trends. If such indications are present and where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

As described in the accounting policy, the Foundation estimates the recoverable amount as the higher of the net selling price 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 Foundation is required to make estimates and assumptions that may affect property and equipment and software costs. The Foundation believes that the carrying amounts of its assets approximate the recoverable amounts and, as such, no impairment loss was recognized for the years ended December 31, 2015 and 2014.

As of December 31, 2015 and 2014, the carrying values of the Foundation’s property and equipment and software cost follow:

2015 2014 Property and equipment (Note 8) P=193,053,397 P=191,518,970 Software cost (Note 9) 1,335,312 1,894,895

Estimating pension obligation and other retirement benefits The cost of defined benefit pension plans and other retirement benefits as well as the present value of the pension obligation are determined using actuarial valuations. The actuarial valuation involves making various assumptions. Those assumptions are described in Note 12 and include, among others, discount rates, future salary increases, mortality rates and turn-over rates. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, defined benefit liability are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting dates. Net pension asset amounts to =6.24P million and P=7.33 million as of December 31, 2015 and 2014, respectively (see Note 12).

The discount rate used is the single-weighted uniform discount rate using bootstrapped-derived zero rates from PDST-R2 index, which when applied to the same cash flows, results in the same present value as of reporting date. Present values of cash flows as of reporting date was determined using the rates from derived zero yield curve.

The mortality rate is based on unisex annuity table and is modified accordingly with estimates of mortality improvements (if any). The turn-over rates used are based on actual data on employee turn-over for the prior year. Future salary increases are derived from the Foundation’s estimated salary expenses for the next period. Further details about the assumptions used are provided in Note 12.

Fair value of financial instruments Where the fair values of financial assets and financial liabilities recorded and disclosed in the statement of financial position cannot be derived from active markets, they are determined using internal valuation techniques using generally accepted market valuation models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimates are used in establishing fair values. These estimates may include considerations of liquidity, volatility, and correlation. See Note 14 for the related balances.

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4. Cash and Cash Equivalents

This account consists of:

2015 2014 Cash on hand and in banks P=53,175,207 P=89,052,965 Cash equivalents 71,890,056 25,140,556 P=125,065,263 P=114,193,521

Cash in banks earn interests at the respective bank deposit rates. Cash equivalents are made for varying periods of up to three months depending on the immediate cash requirements of the Foundation and earn interest at the respective short-term investment rates 0.875% to 4.40% and 0.625% to 4.40% in 2015 and 2014, respectively.

As of December 31, 2015 and 2014, interest income earned on cash in banks and cash equivalents amounted to =2.68P million and =2.39P million, respectively.

5. Receivables

This account consists of the following:

2015 2014 Trade: Services P=2,623,164 P=4,375,841 Products 1,280,951 1,909,444 Nontrade 2,852,462 3,048,119 Advances to cooperative 1,328,820 5,928,981 Advances to officers and employees 1,293,909 3,114,233 Accrued interest 314,512 599,186 Others 2,259,757 1,809,292 11,953,575 20,785,096 Less allowance for impairment losses 5,298,442 8,011,254 P=6,655,133 P=12,773,842

Trade receivables are collectibles from various entities arising from purchase of products and availment of program services provided by the Foundation. These are collectible within one year.

Nontrade receivables pertain to collectibles for activities outside the main revenue-generating projects of the Foundation which are noninterest bearing and are due and demandable.

Advances to cooperative pertain to cash advance for social credits which are collectible within one year.

Advances to officers and employees pertain to salary loans and advances made by regular employees of the Foundation for business related expenses and are subject for liquidation. This amount is collectible within one year.

Others receivables are non-interest bearing and are due and demandable.

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Receivables amounting to P=5.30 million and P=8.01 million as of December 31, 2015 and 2014, respectively, were individually impaired and fully provided for (see Note 14). Movements in the allowance for impairment losses follow:

2015 2014 Balance at beginning of year P=8,011,254 P=10,275,410 Provisions during the year (Note 13) − 1,393,553 Reversals during the year (2,438,996) − Written off during the year (273,816) (3,657,709) Balance at end of year P=5,298,442 P=8,011,254

6. Merchandise Inventories

Merchandise inventories consist of books, catalogs and other merchandise.

Movements in the inventories account are as follows:

2015 2014 Inventories at beginning of year P=16,039,709 P=17,098,226 Add net cost of purchases 1,660,034 1,049,554 Total goods available for sale 17,699,743 18,147,780 Less cost of sales 2,003,218 2,108,071 15,696,525 16,039,709 Less allowance for inventory loss 707,217 669,226 P=14,989,308 P=15,370,483

7. Other Current Assets

This account consists of:

2015 2014 Input VAT P=6,186,823 P=6,344,943 Creditable withholding tax 3,023,625 2,830,882 Deposits 950,220 2,533,093 Prepaid expenses 794,899 1,907,594 Others 21,130 737,720 P=10,976,697 P=14,354,232

Input VAT is applied against output VAT. The input VAT is recoverable in future periods.

Creditable withholding tax consists of tax withheld by customers and is creditable against any future income tax due from the Foundation.

Deposits pertain to advance payments made by the Foundation to suppliers and other entities.

Prepaid expenses include prepayments for insurance, rent, subscription fees, repairs and maintenance and others.

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8. Property and Equipment

The rollforward analysis of this account follows:

December 31, 2015 Leasehold and Office Land Furniture and Transportation Construction- Land Improvements Equipment Equipment in-Progress Total Cost At January 1 P=102,869,175 P=59,400,655 P=82,184,453 P=4,818,000 P=29,090,710 P=278,362,993 Additions – 2,864,027 4,045,594 – 4,985,109 11,894,730 Disposals – (317,273) (3,405,588) (1,828,000) – (5,550,861) Transfers (Note 9) – 27,378,740 212,500 – (27,378,740) 212,500 At December 31 102,869,175 89,326,149 83,036,959 2,990,000 6,697,079 284,919,362 Accumulated Depreciation and Amortization At January 1 − 14,557,203 70,073,203 2,213,617 – 86,844,023 Depreciation and amortization – 5,217,890 4,640,489 669,500 – 10,527,879 Disposals – (317,273) (3,360,664) (1,828,000) – (5,505,937) At December 31 – 19,457,820 71,353,028 1,055,117 – 91,865,965 Net Book Value P=102,869,175 P=69,868,329 P=11,683,931 P=1,934,883 P=6,697,079 P=193,053,397

December 31, 2014 Leasehold and Office Land Furniture and Transportation Construction- Land Improvements Equipment Equipment in-Progress Total Cost At January 1 =99,421,175P P=63,149,931 P=87,112,855 P=3,707,000 P=61,528 P=253,452,489 Additions 3,448,000 2,414,936 3,451,528 1,111,000 29,029,182 39,454,646 Disposals – (6,164,212) (8,379,930) – – (14,544,142) At December 31 102,869,175 59,400,655 82,184,453 4,818,000 29,090,710 278,362,993 Accumulated Depreciation and Amortization At January 1 – 15,747,983 74,316,011 1,666,217 – 91,730,211 Depreciation and 9,356,049 amortization – 4,671,527 4,137,122 547,400 – Disposals – (5,862,307) (8,379,930) – – (14,242,237) At December 31 – 14,557,203 70,073,203 2,213,617 – 86,844,023 Net Book Value P=102,869,175 P=44,843,452 P=12,111,250 P=2,604,383 P=29,090,710 P=191,518,970

Depreciation and amortization charged against unrestricted net assets amounted to =10.53P million and P=9.36 million in 2015 and 2014, respectively.

Construction-in-progress includes the construction of road network, drainage system and water service line as part of livelihood projects in Laguna.

Land amounting to P=92.65 million, which was donated in 2003, is subject to a leasehold right existing thereon with a third party.

Fully depreciated property and equipment still being used by the Foundation amounted to P=69.01 million and =63.11P million as of December 31, 2015 and 2014, respectively.

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9. Software Cost

The rollforward analysis of this account follows:

2015 2014 Cost At January 1 P=8,812,144 =6,977,144P Additions 225,000 1,835,000 Transfers (212,500) – Disposals (536,965) – At December 31 8,287,679 8,812,144 Accumulated Amortization At January 1 6,917,249 6,885,999 Amortization 572,083 31,250 Disposals (536,965) − At December 31 6,952,367 6,917,249 Net Book Value P=1,335,312 =1,894,895P

Depreciation and amortization charged against unrestricted net assets amounted to =0.57P million and P=0.03 million in 2015 and 2014, respectively.

10. Available-for-sale Financial Assets

This account consists of investments in:

2015 2014 Common trust fund P=1,461,597,010 =1,575,841,562P Shares of stock: Quoted securities 909,800,206 832,267,539 Unquoted securities 2,650,443 2,663,544 P=2,374,047,659 =2,410,772,645P

AFS financial assets consist of shares in various listed and unlisted companies held under a trust fund and are carried at market value.

The rollforward of unrealized gain on AFS financial assets are as follows:

2015 2014 Balance at beginning of year P=164,060,597 P=46,517,821 Unrealized gain (loss) recognized directly in net assets (15,655,542) 119,067,022 Realized gain transferred to income (30,433,670) (1,524,246) Balance at end of year P=117,971,385 P=164,060,597

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The breakdown of investment income is as follow: 2015 2014 Debt instruments P=36,420,501 P=36,588,650 Realized gain from AFS 30,433,670 1,524,246 Dividends 18,568,955 14,790,857 Government securities 5,671,604 5,825,840 Loans 2,507,973 2,434,079 Others 1,401,701 1,626,830 P=95,004,404 P=62,790,502

11. Accounts and Other Payables

This account consists of:

2015 2014 Trade P=39,120,298 P=25,276,912 Accrued expenses 34,113,929 49,215,430 Payable to consignors 7,571,461 7,452,332 Others 2,828,042 2,422,021 P=83,633,730 P=84,366,695

Trade payables include payables to suppliers that are noninterest-bearing and are normally settled on 30- to 60-day terms.

Accrued expenses pertain to the unbilled balances for charges associated with the renovations and maintenance of the Ayala Museum building and other expenses incurred by the Foundation for its activities.

Payable to consignors pertain to proceeds on sale of goods consigned to the Foundation.

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

12. Defined Benefit Plan

The Foundation has funded, noncontributory defined benefit retirement plan covering substantially all of its regular permanent employees. The benefits are generally based on defined contribution formula with minimum lump-sum guarantee of 1.5 months’ basic salary per year of service.

The Foundation’s annual contributions to the plan consist principally of payments which covers the current service cost for the year and the required funding relative to the guaranteed minimum benefits as applicable. The funds are administered by a trustee bank of the Foundation and subject to the investment objectives and guidelines established by the Foundation’s Employee Welfare and Retirement Fund Investment Committee (the Committee) and rules and regulations issued by Bangko Sentral ng Pilipinas (BSP) covering assets under trust and fiduciary agreements. The Committee is responsible for the investment strategy of the plan.

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Republic Act 7641, The New Retirement Law, requires a provision for retirement pay to qualified private sector employees in the absence of any retirement plan in the entity, provided however that the employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided under the law. The law does not require minimum funding of the plan.

The components of pension expense included in salaries, wages and employee benefits under “General and administrative” in the statements of activities are as follows (see Note 13):

2015 2014 Current service cost P=6,044,331 P=7,987,382 Net interest expense (income) (337,360) 1,110,012 Total pension expense P=5,706,971 P=9,097,394

The amounts recognized under pension asset - net in the statements of financial position are as follows:

2015 2014 Plan assets P=52,453,470 P=49,733,019 Benefit obligations (46,216,539) (42,399,103) Asset to be recognized P=6,236,931 P=7,333,916

Changes in the present value of the defined benefit obligation are as follows:

2015 2014 Balance at January 1 P=42,399,103 P=67,201,834 Current service cost 6,044,331 7,987,382 Interest expense 1,950,359 3,628,899 Benefits paid (4,928,092) (8,936,927) Transferred-out liabilities (3,804,609) − Remeasurement loss (gain) arising from changes in financial assumptions 4,555,447 (27,482,085) Balance at December 31 P=46,216,539 P=42,399,103

Changes in the fair value of plan assets are as follows:

2015 2014 Balance at January 1 P=49,733,019 P=46,646,047 Contributions 5,400,383 9,111,773 Interest income on plan assets 2,287,719 2,518,887 Remeasurement gain on plan assets 3,765,050 393,239 Benefits paid (4,928,092) (8,936,927) Transferred-out assets (3,804,609) − Balance at December 31 P=52,453,470 P=49,733,019

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The fair value of plan assets by each classes as at the end of the reporting period are as follows:

2015 2014 Debt instruments P=34,587,818 P=32,795,807 Equity instruments 12,400,000 11,757,904 Cash 5,465,652 5,179,308 P=52,453,470 P=49,733,019

All equity instruments held have quoted prices in active market while debt instruments do not have quoted market prices in active market. The plan assets do not have any concentration on risk.

The assumptions used to determine pension benefits for the Foundation for the years ended December 31, 2015 and 2014 are as follows:

2015 2014 Discount rate 4.90% 4.60% Salary increase rate 5.00% 5.00% Turn-over rate nil to 100.00% nil to 100.00% Mortality rate 0.05 to 0.74% 0.05 to 0.74%

There were no changes from the previous period in the methods and assumptions used in preparing sensitivity analysis.

Below shows the sensitivity analysis determined based on reasonably possible changes of each significant assumptions stated above, assuming all other assumptions were held constant:

2015 Discount Rate Salary Increase Rate +.50% (.50%) +.50% (.50%) Accrued liability P=43,883,144 P=48,742,050 P=48,529,775 P=44,056,232 Current fund assets (52,453,470) (52,453,470) (52,453,470) (52,453,470) Unfunded accrued liability (P=8,570,326) (P=3,711,420) (P=3,923,695) (P=8,397,238)

2014 Discount Rate Discount Rate +.50% +.50% +.50% +.50% Accrued liability =40,195,393P =44,791,528 P =44,587,462 P =40,361,381 P Current fund assets (49,733,019) (49,733,019) (49,733,019) (49,733,019) Unfunded accrued liability (P=9,537,626) (P=4,941,491) (P=5,145,557) (P=9,371,638)

The Foundation does not perform any Asset-Liability Matching Study. The overall investment policy and strategy of the retirement plan is based on the suitability assessment, as provided by its trust bank, in compliance with the BSP requirements. It does not, however, ensure that there will be sufficient assets to pay the retirement benefits as they fall due while attempting to mitigate the various risks of the plan. For the current year, the plan assets consist of 26.70% of equity instruments, 64.70% of debt instruments and 8.60% of cash.

The Foundation expects to make additional contributions of =4.60P million to its retirement fund in 2016.

The average duration of the defined benefit liability at the end of the reporting period is 13 years. Amounts for the current and the previous periods follow:

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2015 2014 2013 2012 2011 Benefit obligation P=46,216,539 P=42,399,103 P=67,201,834 P=79,723,128 P=41,697,676 Plan assets (52,453,470) (49,733,019) (46,646,047) (47,608,729) (34,253,108) Deficit (excess) (P=6,236,931) (P=7,333,916)=20,555,787 P P=32,114,399 =7,444,568 P

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

2015 2014 More than 1 year to 5 years P=16,274,685 P=13,057,949 More than 5 years to 10 years 39,647,519 16,379,779 P=55,922,204 P=29,437,728

Experience adjustments on plan assets and obligation are as follows:

2015 2014 2013 2012 Gain (loss) on experience adjustments on defined benefit obligation (P=6,046,450) P=22,320,772 P=15,470,398 (P=24,665,252) Gain (loss) on experience adjustments on plan assets 1,491,003 5,161,313 (1,703,992) (10,305,200)

13. Net Assets

Unrestricted net assets are those net assets that are neither temporarily restricted nor permanently restricted. It includes all net assets with uses not restricted by donors, by Board of Trustees or by law.

Temporarily restricted net assets refer to those net assets whose use by the Foundation is limited by donors to later periods of time or after specified dates or specified purposes.

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors.

Permanently restricted net assets are those assets that the donor stipulates must be maintained by the Foundation in perpetuity. Permanently restricted net assets increase when Foundation receives contributions for which donor-imposed restrictions limiting the Foundation’s use of an asset or its economic benefits neither expire with the passage of time nor can be removed by the Foundation’s meeting certain requirements. Permanently restricted net assets generally come from: (1) contributions, with donor-imposed permanent restrictions; (2) increase or decrease in existing assets that are subject to permanent restrictions by donor or by law (such as unrealized gains, interest income); and (3) reclassification from another net asset class as a result of donor stipulation or by law.

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Details of the Foundation’s net assets as of December 31 are as follows:

2015 2014 Unrestricted P=19,418,454 P=19,768,030 Temporarily restricted: Property and equipment 194,388,707 193,413,865 Livelihood and other community development programs 102,511,397 86,375,855 Education and youth leadership programs 20,190,102 25,191,140 317,090,206 304,980,860 Permanently restricted: Investment in perpetuity, the income of which is expendable to support education and other programs 2,187,714,273 2,187,714,273 Unrealized gain on AFS financial assets 117,971,385 164,060,597 Remeasurement gain (loss) on defined benefit obligation 6,531,652 7,322,049 P=2,648,725,970 P=2,683,845,809

Details of the Foundation’s expenses follow:

Project Expenses

2015 2014 Project implementation: Disaster relief and other special projects P=116,535,437 P=156,640,047 Education 24,573,789 62,948,190 Arts and Culture 11,232,498 9,666,205 Youth Leadership 8,401,628 12,334,288 Sustainable Livelihood 5,578,807 5,727,442 Project management: Salaries, wages and employee benefits 41,073,378 49,498,085 Monitoring and administrative 5,663,429 4,568,025 Building overhead 24,689,984 29,022,025 P=237,748,950 P=330,404,307

General and Administrative Expenses

2015 2014 Salaries, wages and employee benefits (Note 12) P=28,883,087 P=24,968,485 Professional and service fees 9,390,521 7,057,893 Premises, utilities and maintenance 3,603,324 2,908,755 Depreciation and amortization 1,797,431 1,133,078 Advocacy and public information services 1,579,691 2,551,161 Communication and postage 1,241,403 1,138,576 Transportation and travel 775,736 312,508 Supplies 406,501 672,710 Taxes and licenses 196,270 25,533 Trainings and seminars 177,851 74,179 Provision for doubtful accounts (Note 5) − 1,393,553 Others 1,825,971 1,774,385 P=49,877,786 P=44,010,816

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Capital management The primary objectives of the Foundation’s capital management policies are to devote its funds to charitable projects, scholarship grants and cultural activities, to afford the financial flexibility to support its operations and to protect and preserve capital to ensure financial sustainability of the Foundation.

The Foundation’s source of capital is its total net assets, which is composed of unrestricted, temporarily restricted and permanently restricted net assets, plus the net unrealized gain on AFS financial assets.

2015 2014 Net Assets Unrestricted P=19,418,454 P=19,768,030 Temporarily restricted 317,090,206 304,980,860 Permanently restricted 2,187,714,273 2,187,714,273 Unrealized gain on AFS financial assets (Note 10) 117,971,385 164,060,597 P=2,642,194,318 P=2,676,523,760

14. Financial Instruments

Fair Value Measurement

The following table shows an analysis of the Foundation’s financial assets and liabilities by level of the fair value hierarchy:

December 31, 2015 Fair value measurement using Quoted prices in Significant active markets observable inputs Total (Level 1) (Level 2) Assets measured at fair value: Available-for-sale financial assets Common trust fund P=1,461,597,010 P=1,461,597,010 P=− Quoted securities 909,800,206 909,800,206 − Unquoted securities 2,650,443 – 2,650,443 P=2,374,047,659 P=2,371,397,216 P=2,650,443

December 31, 2014 Fair value measurement using Quoted prices in Significant active markets observable inputs Total (Level 1) (Level 2) Assets measured at fair value: Available-for-sale financial assets Common trust fund P=1,575,841,562 =1,575,841,562 P P=− Quoted securities 832,267,539 832,267,539 − Unquoted securities 2,663,544 – 2,663,544 P=2,410,772,645 =2,408,109,101 P P=2,663,544

COMMITMENT 97 - 27 -

The Foundation uses the following hierarchy for determining and disclosing the fair value of its assets and liabilities by valuation technique:

Level 1: quoted (unadjusted prices) in active markets for identical assets and liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

AFS financial assets - Fair values are based on quoted prices published in markets.

Management assessed that the fair values of loans and receivables and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

There were no transfers between fair value categories for assets and liabilities measured at fair value in 2015 and 2014.

Financial Risk Management Objectives and Policies

The Foundation has various financial instruments such as cash and cash equivalents, receivables, AFS financial assets, and accounts and other payables which arise directly from its operations.

The main purpose of the Foundation’s financial instruments is to fund its operational and capital expenditures. The main risks arising from the use of financial instruments are liquidity risk, credit risk, market risk and foreign exchange risk.

The Foundation’s risk management policies are summarized below:

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 Foundation maintains a level of cash and cash equivalents deemed sufficient to finance operations. As part of its liquidity risk management, the Foundation regularly evaluates its projected and actual cash flows. It also continuously assesses conditions in the financial markets for opportunities to pursue fund-raising activities. Fund-raising activities include investments in quoted and unquoted securities.

As of December 31, 2015 and 2014, the carrying amounts of accounts and other payables will be settled within one year.

COMMITMENT 98 - 28 -

The following table shows the maturity profile of the Foundation’s financial assets and liabilities based on contractual undiscounted payments:

December 31, 2015 More than Within 1 Year 1-5 Years 5 Years Total Gross Financial Assets Loans and receivables Cash and cash equivalents (excluding cash on hand) P=124,756,763 P=– P=– P=124,756,763 Receivables Trade 1,746,422 − − 1,746,422 Advances to officers and 1,280,788 1,280,788 employees − − Nontrade 1,053,654 − − 1,053,654 Accrued interest 314,512 − − 314,512 Others 2,259,757 – – 2,259,757 131,411,896 – – 131,411,896 AFS financial assets Common trust fund – 1,461,597,010 – 1,461,597,010 Quoted securities – 909,800,206 – 909,800,206 Unquoted securities – – 2,650,443 2,650,443 – 2,371,397,216 2,650,443 2,374,047,659 Total Financial Assets P=131,411,896 P=2,371,397,216 P=2,650,443 P=2,505,459,555 Other Financial Liabilities Accounts and other payables Trade P=39,120,298 P=– P=– P=39,120,298 Accrued expenses 34,113,929 – – 34,113,929 Payable to consignors 7,571,461 – – 7,571,461 Others 225,470 – – 225,470 Total Other Financial Liabilities P=81,031,158 P=– P=– P=81,031,158

December 31, 2014 More than Within 1 Year 1-5 Years 5 Years Total Gross Financial Assets Loans and receivables Cash and cash equivalents (excluding cash on hand) =113,920,480 P P=– P=– P=113,920,480 Receivables Trade 2,897,032 − − 2,897,032 Advances to officers and employees 3,101,112 − − 3,101,112 Nontrade 1,339,903 − − 1,339,903 Accrued interest 599,186 − − 599,186 Advances to cooperative 3,027,317 − − 3,027,317 Others 1,809,292 – – 1,809,292 126,694,322 – – 126,694,322

(Forward)

COMMITMENT 99 - 29 -

December 31, 2014 More than Within 1 Year 1-5 Years 5 Years Total Gross AFS financial assets Common trust fund P=– P=1,575,841,562 P=– P=1,575,841,562 Quoted securities – 832,267,539 – 832,267,539 Unquoted securities – – 2,663,544 2,663,544 – 2,408,109,101 2,663,544 2,410,772,645 Total Financial Assets =126,694,322P =2,408,109,101 P =2,663,544 P =2,537,466,967 P Other Financial Liabilities Accounts and other payables Accrued expenses =49,215,430P P=– P=– P=49,215,430 Trade 25,276,912 – – 25,276,912 Advances 7,452,332 – – 7,452,332 Others 319,065 – – 319,065 Total Other Financial Liabilities P=82,263,739 P=– P=– P=82,263,739

Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Foundation’s holding of cash and cash equivalents exposes the Foundation to credit risk of the counterparty. Credit risk management involves dealing only with institutions for which credit limits have been established. The treasury policy sets credit limits for each counterparty. Given the Foundation’s diverse base of counterparties, it is not exposed to large concentrations of credit risk.

The table below shows the maximum exposure to credit risk for the components of the statements of financial position:

2015 2014 Cash and cash equivalents (excluding cash on hand) P=124,756,763 P=113,920,480 Receivables Trade 1,746,422 2,897,032 Advances to officers and employees 1,280,788 3,101,112 Nontrade 1,053,654 1,339,903 Accrued interest 314,512 599,186 Advances to cooperative – 3,027,317 Others 2,259,757 1,809,292 AFS financial assets: Common trust fund 1,461,597,010 1,575,841,562 Quoted securities 909,800,206 832,267,539 Unquoted securities 2,650,443 2,663,544 P=2,505,459,555 P=2,537,466,967

COMMITMENT 100 - 30 -

The aging analysis of receivables presented per class, are as follows:

December 31, 2015 Neither Past Due nor Past Due but not Impaired Individually Impaired <30 Days 30-60 Days 61-90 Days 91-120 Days >120 Days Total Impaired Total Trade P=1,684,706 P=–P=52,611 P=9,105 P=–P=–P=61,716 P=2,157,693 P=3,904,115 Nontrade 461,048 139,358 121,671 71,340 50,548 209,689 592,606 1,798,808 2,852,462 Advances to cooperative − – – – – – − 1,328,820 1,328,820 Advances to officers and employees 1,266,659 14,129 – – – – 14,129 13,121 1,293,909 Accrued interest 314,512 – – – – – − – 314,512 Others 2,259,757 − − − − − − − 2,259,757 P=5,986,682 P=153,487 P=174,282 P=80,445 P=50,548 P=209,689 P=668,451 P=5,298,442 P=11,953,575

December 31, 2014 Neither Past Due nor Past Due but not Impaired Individually Impaired <30 Days 30-60 Days 61-90 Days 91-120 Days >120 Days Total Impaired Total Trade P=1,274,445 P=1,057,580=42,951 P P=11,500 P=19,679=490,877 P =1,622,587 P =3,388,253 P P=6,285,285 Nontrade 450,465 58,233 121,176 135,215 80,094 494,720 889,438 1,708,216 3,048,119 Advances to cooperative 3,027,317 – – – – – - 2,901,664 5,928,981 Advances to officers and employees 2,261,200 346,276 105,446 320,492 4,368 63,330 839,912 13,121 3,114,233 Accrued interest 599,186 – – – – – - – 599,186 Others 1,809,292 − − − − − - − 1,809,292 P=9,421,905 P=1,462,089=269,573 P P=467,207 P=104,141=1,048,927 P P= 3,351,937=8,011,254 P =20,785,096 P

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The table below shows the credit quality of the Foundation’s financial assets:

December 31, 2015 Neither Past Due nor Impaired Past Due but Individually High Grade Medium Grade Low Grade Total Not Impaired Impaired Total Cash and cash equivalents (excluding cash on hand) P=124,756,763 P=– P=– P=124,756,763 P=– P=– P=124,756,763 Receivables: Trade 1,679,761 4,945 – 1,684,706 61,716 2,157,693 3,904,115 Nontrade 272,213 188,835 − 461,048 592,606 1,798,808 2,852,462 Advances to cooperative – – – – – 1,328,820 1,328,820 Advances to officers and employees 1,266,659 − − 1,266,659 14,129 13,121 1,293,909 Accrued interest 314,512 − – 314,512 − − 314,512 Others 2,259,757 − – 2,259,757 − − 2,259,757 AFS financial assets: Common trust fund 1,461,597,010 – – 1,461,597,010 – – 1,461,597,010 Quoted securities 909,800,206 – – 909,800,206 – – 909,800,206 Unquoted securities 2,650,443 – – 2,650,443 – – 2,650,443 P=2,504,597,324 P=193,780 – P=2,504,791,104 P=668,451 P=5,298,442 P=2,510,757,997

December 31, 2014 Neither Past Due nor Impaired Past Due but Individually High Grade Medium Grade Low Grade Total Not Impaired Impaired Total Cash and cash equivalents (excluding cash on hand) =113,920,480P P=– P=– P=113,920,480 P=– P=– P=113,920,480 Receivables: Trade 409,400 865,045 − 1,274,445 1,622,587 3,388,253 6,285,285 Nontrade 2,865 332,914 114,686 450,465 889,438 1,708,216 3,048,119 Advances to cooperative 3,027,317 – – 3,027,317 – 2,901,664 5,928,981 Advances to officers and employees 2,261,200 − − 2,261,200 839,912 13,121 3,114,233 Accrued interest 599,186 − – 599,186 − − 599,186 Others 1,809,292 − – 1,809,292 − − 1,809,292 AFS financial assets: Common trust fund 1,575,841,562 – – 1,575,841,562 – – 1,575,841,562 Quoted securities 832,267,539 – – 832,267,539 – – 832,267,539 Unquoted securities 2,663,544 – – 2,663,544 – – 2,663,544 =2,532,802,385P P=1,197,959 P=114,686 P=2,534,115,030 P=3,351,937 P=8,011,254 P=2,545,478,221

- 32 -

Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.

The Foundation’s exposure to the risk for change in market value relates primarily to the Foundation’s AFS financial assets. The Foundation’s AFS financial assets are managed by a trustee bank.

The following table demonstrates the sensitivity to a reasonably possible change in the market prices, with all variables held constant, of the Foundation’s net assets on December 31, 2015 and 2014.

Effect on Net Assets Increase (decrease) 2015 2014 5% P=118,702,383 P=120,538,632 (5%) (118,702,383) (120,538,632)

The credit quality of the financial assets was determined as follows:

Cash and cash equivalents - based on the nature of the counterparty and the Foundation’s internal rating system.

Receivables - high grade pertains to receivables from Ayala Group of Companies and debtors without past due accounts; medium grade pertains to receivables with past due accounts not exceeding 12 months; and low grade pertains to receivables with past due accounts exceeding 12 months.

AFS financial assets - the quoted and unquoted financial assets are unrated.

Foreign exchange risk The Foundation’s foreign exchange risk results primarily from movements of the Philippine Peso against the United States Dollar (US$).

The Foundation’s foreign currency-denominated financial instruments included in cash and cash equivalents amount to US$0.12 million in 2015 and US$0.56 million in 2014. The Philippine Peso values of these instruments amounted to =5.58P million and =25.10P million in 2015 and 2014, respectively.

In translating the foreign currency-denominated monetary assets into peso amounts, the exchange rate used was =47.06:$1P and P=44.72:$1, based on the Philippine Peso - US dollar exchange rate as of December 31, 2015 and 2014, respectively.

The following table demonstrates the sensitivity to a reasonably possible change in the US dollar rate, with all variables held constant, of the Foundation’s result of activities (due to changes in the fair value of monetary assets) as of December 31, 2015 and 2014:

Effect on Net Assets US$ depreciates (appreciates) 2015 2014 P=1.0 P=118,618 P=561,343 (1.0) (118,618) (561,343)

COMMITMENT 103 - 33 -

15. Other Activities

Statements of revenue and expenses of the Foundation’s museum, library and other revenue- earning community development projects for the years ended December 31, 2015 and 2014 are as follows:

2015 2014 Revenue P=34,181,318 P=33,902,784 Expenses (48,722,493) (46,292,136) Net loss P=14,541,175 P=12,389,352

16. Supplementary Tax Information Under Revenue Regulations (RR) 15-2010

RR No. 15-2010 are promulgated to amend certain provisions of RR No. 21-2002 prescribing the manner of compliance with any documentary and/or procedural requirements in connection with the preparation and submission of financial statements accompanying tax returns. In addition to the disclosures mandated under PFRS, RR No. 15-2010 requires disclosures regarding information on taxes, duties and license fees paid or accrued during the taxable year.

The Foundation also reported and/or paid the following types of taxes for 2015:

Value-added Tax (VAT) The NIRC of 1997 also provides for the imposition of VAT on sales of goods and services. Accordingly, the Foundation’s sales from other activities are subject to output VAT while its importations and purchases from other VAT-registered individuals or corporations are subject to input VAT. Republic Act No. 9337 increased the value added tax rate from 10.0% to 12.0%, effective February 1, 2006.

a. Output VAT

Net Sales/ Receipts Output VAT Taxable sales Leasing income =14,432,541P P=1,731,904 Sales of services 9,056,231 1,086,748 Sale of goods 9,810,197 1,177,224 =33,298,969P P=3,995,876

The Foundation’s sales of services are based on actual collections received, hence, may not be the same as amounts accrued in the statement of activities.

COMMITMENT 104 - 34 -

b. Input VAT

Balance at January 1 =6,344,943P Current year’s domestic purchases/payments for: Services lodged under other accounts 3,385,453 Goods other than for resale or manufacture 452,303 10,182,699 Claims for tax credit/refund and other adjustments (3,995,876) Balance at December 31 P=6,186,823 c. Importations

Dutiable value P=187,280 Duties and taxes 42,325 Storage and handling fee 12,407 Total landed cost =242,012P d. Excise Tax

The Foundation did not enter into any transaction subject to excise tax. e. Documentary stamp tax

The Foundation paid documentary stamp taxes amounting to P=150. f. All other local and national taxes

This includes all other taxes, local and national, including real estate taxes, licenses and permit fees lodged under the ‘Project’ and ‘General and administrative’ accounts both in the Foundation’s statement of activities:

Details consist of the following:

General and Project Administrative Expenses Expenses Total License and permits fees =243,106P P=54,294 P=297,400 Real estate taxes 271,659 – 271,659 Income taxes – 139,311 139,311 Others – 2,515 2,515 =514,765P P=196,120 P=710,885 g. Withholding Taxes

Withholding taxes on compensation and benefits P=15,944,157 Expanded withholding taxes 6,271,590 Final withholding taxes 229,907 Withholding VAT 91,963 P=22,537,617

COMMITMENT 105 - 35 -

h. Tax assessments

As of December 31, 2015, the Foundation has not received any final assessment notice from the BIR.

COMMITMENT 106

AYALA FOUNDATION, INC. SCHEDULE OF ALL THE EFFECTIVE STANDARDS AND INTERPRETATIONS

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 Framework for the Preparation and Presentation of Financial Statements  Conceptual Framework Phase A: Objectives and qualitative characteristics PFRSs Practice Statement Management Commentary  Philippine Financial Reporting Standards PFRS 1 First-time Adoption of Philippine Financial Reporting  (Revised) Standards Amendments to PFRS 1 and PAS 27: Cost of an Investment in a Subsidiary, Jointly Controlled Entity  or Associate Amendments to PFRS 1: Additional Exemptions for  First-time Adopters Amendment to PFRS 1: Limited Exemption from Comparative PFRS 7 Disclosures for First-time  Adopters Amendments to PFRS 1: Severe Hyperinflation and  Removal of Fixed Date for First-time Adopters Amendments to PFRS 1: Government Loans  Amendments to PFRS 1: Borrowing costs  Amendments to PFRS 1: Meaning of ‘Effective Not early adopted PFRSs PFRS 2 Share-based Payment  Amendments to PFRS 2: Vesting Conditions and  Cancellations Amendments to PFRS 2: Group Cash-settled  Share-based Payment Transactions Amendments to PFRS 2: Definition of Vesting  Condition PFRS 3 Business Combinations  (Revised) Amendments to PFRS 3: Accounting for Contingent  Consideration in a Business Combination Amendments to PFRS 3: Scope Exceptions for  Joint Arrangements PFRS 4 Insurance Contracts  Amendments to PAS 39 and PFRS 4: Financial  Guarantee Contracts

COMMITMENT 107 - 2 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PFRS 5 Non-current Assets Held for Sale and Discontinued  Operations Amendments to PFRS 5: Changes in Methods of  Disposal PFRS 6 Exploration for and Evaluation of Mineral  Resources PFRS 7 Financial Instruments: Disclosures  Amendments to PFRS 7: Transition  Amendments to PAS 39 and PFRS 7:  Reclassification of Financial Assets Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets – Effective Date  and Transition Amendments to PFRS 7: Improving Disclosures  about Financial Instruments Amendments to PFRS 7: Disclosures - Transfers of  Financial Assets Amendments to PFRS 7: Disclosures – Offsetting  Financial Assets and Financial Liabilities Amendments to PFRS 7: Mandatory Effective Date  of PFRS 9 and Transition Disclosures Amendments to PFRS 7: Amendments to PFRS 7:  Servicing Contracts Applicability of the Amendments to PFRS 7 to  Condensed Interim Financial Statements PFRS 8 Operating Segments  Amendments to PFRS 8: Aggregation of Operating Segments and Reconciliation of the Total of the  Reportable Segments’ Assets to the Entity’s Assets PFRS 9 Financial Instruments (2010 version)  Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and PAS 39  (2013 version) Financial Instruments Not early adopted Amendments to PFRS 9: Mandatory Effective Date  of PFRS 9 and Transition Disclosures

COMMITMENT 108 - 3 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PFRS 10 Consolidated Financial Statements  Amendments to PFRS 10, PFRS 12 and PAS 27:  Investment Entities Amendment to PFRS 10: Investment Entities:  Applying the Consolidation Exception Amendment to PFRS 10 and PAS 28: Sale or Contribution of Assets between an Investor and its  Associate or Joint Venture* PFRS 11 Joint Arrangements  Amendment to PFRS 11: Accounting for  Acquisitions of Interests in Joint Operations PFRS 12 Disclosure of Interests in Other Entities  Amendments to PFRS 10, PFRS 12 and PAS 27:  Investment Entities PFRS 13 Fair Value Measurement  Amendments to PFRS 13: Short-term receivable  and payables Amendments to PFRS 13: Portfolio Exception  PFRS 14 Regulatory Deferral Accounts Not early adopted IFRS 15 Revenue from Contracts with Customers** Not early adopted IFRS 16 Leases** Not early adopted Philippine Accounting Standards PAS 1 Presentation of Financial Statements  (Revised) Amendment to PAS 1: Capital Disclosures  Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on  Liquidation Amendments to PAS 1: Presentation of Items of Other Comprehensive Income 

Amendments to PAS 1: Clarification of the  requirements for comparative information Amendment to PAS 1: Disclosure Initiative Not early adopted PAS 2 Inventories  PAS 7 Statement of Cash Flows  PAS 8 Accounting Policies, Changes in Accounting  Estimates and Errors PAS 10 Events after the Balance Sheet Date  PAS 11 Construction Contracts 

COMMITMENT 109 - 4 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PAS 12 Income Taxes  Amendment to PAS 12 - Deferred Tax: Recovery of  Underlying Assets PAS 16 Property, Plant and Equipment  Amendment to PAS 16: Classification of servicing  equipment Amendment to PAS 16 and PAS 38: Revaluation Method - Proportionate Restatement of  Accumulated Depreciation Amendment to PAS 16 and PAS 38: Clarification of Acceptable Methods of Depreciation and  Amortization Amendments to PAS 16 and PAS 41: Bearer Plants  PAS 17 Leases  PAS 18 Revenue  PAS 19 Employee Benefits  Amendments to PAS 19: Actuarial Gains and  Losses, Group Plans and Disclosures PAS 19 Employee Benefits  (Amended) Amendments to PAS 19: Defined Benefit Plans -  Employee Contributions Amendments to PAS 19: Regional Market Issue Not early adopted regarding Discount Rate PAS 20 Accounting for Government Grants and Disclosure  of Government Assistance PAS 21 The Effects of Changes in Foreign Exchange Rates  Amendment: Net Investment in a Foreign Operation  PAS 23 Borrowing Costs  (Revised) PAS 24 Related Party Disclosures  (Revised) Amendments to PAS 24: Key Management  Personnel PAS 26 Accounting and Reporting by Retirement Benefit  Plans PAS 27 Separate Financial Statements  (Amended) Amendments to PFRS 10, PFRS 12 and PAS 27:  Investment Entities Amendment to PAS 27: Equity Method in Separate  Financial Statements

COMMITMENT 110 - 5 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PAS 28 Investments in Associates and Joint Ventures  (Amended) Amendment to PFRS 10 and PAS 28: Sale or Contribution of Assets between an Investor and its  Associate or Joint Venture* PAS 29 Financial Reporting in Hyperinflationary Economies  PAS 31 Interests in Joint Ventures  PAS 32 Financial Instruments: Disclosure and Presentation  Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on  Liquidation Amendment to PAS 32: Classification of Rights  Issues Amendment to PAS 32: Presentation – Tax effect of  distribution to holders of equity instrument Amendments to PAS 32: Offsetting Financial Assets  and Financial Liabilities PAS 33 Earnings per Share  PAS 34 Interim Financial Reporting  Amendments to PAS 34: Interim financial reporting and segment information for total assets and  liabilities Amendments to PAS 34: Disclosure of Information  ‘elsewhere in the interim financial report’ PAS 36 Impairment of Assets  Amendments to PAS 36: Recoverable Amount  Disclosures for Non-Financial Assets PAS 37 Provisions, Contingent Liabilities and Contingent  Assets PAS 38 Intangible Assets  Amendments to PAS 16 and PAS 38: Revaluation Method - Proportionate Restatement of  Accumulated Amortization Amendments to PAS 16 and PAS 38: Clarification of Acceptable Methods of Depreciation and  Amortization

C O M M I T M E N T 111 - 6 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 PAS 39 Financial Instruments: Recognition and  Measurement Amendments to PAS 39: Transition and Initial Recognition of Financial Assets and Financial  Liabilities Amendments to PAS 39: Cash Flow Hedge  Accounting of Forecast Intragroup Transactions Amendments to PAS 39: The Fair Value Option  Amendments to PAS 39 and PFRS 4: Financial  Guarantee Contracts Amendments to PAS 39 and PFRS 7:  Reclassification of Financial Assets Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets – Effective Date  and Transition Amendments to Philippine Interpretation IFRIC–9  and PAS 39: Embedded Derivatives Amendment to PAS 39: Eligible Hedged Items  Amendment to PAS 39: Novation of Derivatives and  Continuation of Hedge Accounting PAS 40 Investment Property  Amendment to PAS 40: Interrelationship between  PFRS 3 and PAS 40 PAS 41 Agriculture  Amendment to PAS 16 and PAS 41: Bearer Plants  Philippine Interpretations IFRIC 1 Changes in Existing Decommissioning, Restoration  and Similar Liabilities IFRIC 2 Members' Share in Co-operative Entities and  Similar Instruments IFRIC 4 Determining Whether an Arrangement Contains a  Lease IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation  Funds IFRIC 6 Liabilities arising from Participating in a Specific  Market - Waste Electrical and Electronic Equipment IFRIC 7 Applying the Restatement Approach under PAS 29  Financial Reporting in Hyperinflationary Economies IFRIC 8 Scope of PFRS 2 

COMMITMENT 112 - 7 -

PHILIPPINE FINANCIAL REPORTING STANDARDS AND Not Not INTERPRETATIONS Adopted Adopted Applicable Effective as of December 31, 2015 IFRIC 9 Reassessment of Embedded Derivatives  Amendments to Philippine Interpretation IFRIC–9  and PAS 39: Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment  IFRIC 11 PFRS 2- Group and Treasury Share Transactions  IFRIC 12 Service Concession Arrangements  IFRIC 13 Customer Loyalty Programmes  IFRIC 14 The Limit on a Defined Benefit Asset, Minimum  Funding Requirements and their Interaction Amendments to Philippine Interpretations IFRIC- 14, Prepayments of a Minimum Funding  Requirement IFRIC 15 Agreements for the Construction of Real Estate*  IFRIC 16 Hedges of a Net Investment in a Foreign Operation  IFRIC 17 Distributions of Non-cash Assets to Owners  IFRIC 18 Transfers of Assets from Customers  IFRIC 19 Extinguishing Financial Liabilities with Equity  Instruments IFRIC 20 Stripping Costs in the Production Phase of a  Surface Mine IFRIC 21 Levies  SIC-7 Introduction of the Euro  SIC-10 Government Assistance - No Specific Relation to  Operating Activities SIC-12 Consolidation - Special Purpose Entities  Amendment to SIC - 12: Scope of SIC 12  SIC-13 Jointly Controlled Entities - Non-Monetary  Contributions by Venturers SIC-15 Operating Leases - Incentives  SIC-25 Income Taxes - Changes in the Tax Status of an  Entity or its Shareholders SIC-27 Evaluating the Substance of Transactions Involving  the Legal Form of a Lease SIC-29 Service Concession Arrangements: Disclosures.  SIC-31 Revenue - Barter Transactions Involving Advertising  Services SIC-32 Intangible Assets - Web Site Costs  ** Effectivity has been deferred by the SEC and FRSC ** New standard issued by the IASB has not yet been adopted by the FRSC

COMMITMENT 113 ayala foundation directory

Ayala Foundation, Inc. 8F 111 Paseo Building Paseo de Roxas corner Legaspi Street Legaspi Village 1229 Makati City, Philippines Tel (632) 717 5800 Fax (632) 813 4488 www.ayalafoundation.org

Ayala Museum Makati Avenue corner De la Rosa Street Greenbelt Park Makati City, Philippines Tel (632) 759 8288 Fax (632) 757 2787 www.ayalamuseum.org

Filipinas Heritage Library 6F Ayala Museum Makati Avenue corner De la Rosa Street Greenbelt Park Makati City, Philippines Tel (632) 759-8288 local 36 www.filipinaslibrary.org.ph

Visayas Operations 4F Krizia Building Gorordo Avenue, Lahug Cebu City, Philippines Tel/Fax (6332) 412 2405

Mindanao Operations 2F Climbs Building, Tiano Brothers cor. Cayetano Pacana Street Cagayan de Oro City, Philippines Tel (638822) 729 497

COMMITMENT 114 Corporate Directory

REAL ESTATE INTERNATIONAL Ayala Land Inc. AG Holdings Limited 30F Tower One and Exchange Plaza 250 North Bridge Road Ayala Triangle, Ayala Avenue, #32-03A Raffles City Tower Makati City 1226 Philippines Singapore 179101 Tel (632) 908 3000 Tel (65) 6311 5151 Fax (632) 848 5336 Fax (65) 6311 5160 www.ayalaland.com.ph AUTOMOTIVE FINANCIAL SERVICES Ayala Automotive Holdings Corporation Bank of the Philippine Islands Honda Cars Makati Inc. 6768 Ayala Avenue, 1 Pres. Sergio Osmeña Highway Makati City 1226 Philippines Magallanes, Makati City 1232 Philippines Tel (632) 818 5541 Tel (632) 902 9393 Express Phone Banking (632) 89 100 Fax (632) 852 6593 Fax (632) 845 5267 www.hondamakati.com.ph www.bpiexpressonline.com Isuzu Automotive Dealership Inc. Alabang-Zapote Road corner Acacia Avenue TELECOMMUNICATIONS Ayala Alabang, Muntinlupa City Globe Telecom 1780 Philippines The Globe Tower, 32nd Street corner 7th Avenue Tel (632) 807 1788 Bonifacio Global City 1634 Taguig, Philippines Fax (632) 807 6011 Landline: (632) 730 2000 (Trunk Line) www.isuzuautodealer.com.ph (632) 730 1000 (Customer Care) (632) 730 1010 (Sales) Automobile Central Enterprise Inc. (632) 730 1300 (Loyalty) 11F Bonifacio One Technology Tower Mobile: 211 3030 Rizal Drive West cor. 31st Street www.globe.com.ph Bonifacio Global City, Taguig City 1634 Philippines WATER INFRASTRUCTURE Tel (632) 459 4555 www.volkswagen.com.ph Manila Water Company Inc. MWSS Administration Building 489 Katipunan Road, Balara, ENERGY Quezon City 1105 Philippines AC Energy Holdings Inc. Tel (632) 917 5900 32F Tower One, Ayala Triangle Hotline (632) 1627 Ayala Avenue, Makati City 1226 Philippines Fax (632) 928 2450 Tel (632) 908 3321 www.manilawater.com Fax (632) 751 6511 ELECTRONICS MANUFACTURING INFRASTRUCTURE Integrated Micro-Electronics Inc. AC Infrastructure Holdings Corporation North Science Avenue, Special Export Processing Zone 32F Tower One, Ayala Triangle Laguna Technopark, Biñan, Laguna Ayala Avenue, Makati City 1226 Philippines 4024 Philippines Tel (632) 908 3320 Tel (632) 756 6840 Fax (632) 751 6511 Fax (6349) 544 0311 www.global-imi.com SOCIAL COMMITMENT Ayala Foundation Inc. BPO AND EDUCATION 8F 111 Paseo Building LiveIt Investments Ltd. Paseo de Roxas corner Legaspi Street Ayala Education Inc. Legaspi Village 1229 33F Tower One, Ayala Triangle Makati City, Philippines Ayala Avenue, Makati City Tel (632) 717 5800 1226 Philippines Fax (632) 813 4488 Tel (632) 908 3455 www.ayalafoundation.org Fax (632) 892 5112

COMMITMENT 115 COMMITMENT LIFE Aspirations WHAT WE NURTURE WHAT WE MAKE OF IT WHAT WE MAKE HAPPEN

COMMITMENT Th e front cover of the Ayala every day GROWTH WHAT KEEPS US GOING WHAT WE ACHIEVE TOGETHER Foundation 2015 Annual Report features the works of the artist Fernando Zóbel (1924–1984), from left: Tropical Garden (1953), Boy with Kite (1952), Untitled (Maiden beside Fruitstand) (1953). All from the Ayala Museum collection.

Lifestyle FORWARD HOW WE LIVE FULLY WHERE THE FUTURE TAKES US

COMMITMENT 116 Acknowledgements

Editorial and Design Direction Ayala Foundation, Inc.

Photography

Wig Tysmans (cover, additional management)

Paco Guerrero (management)

Vincent Coscolluela, Peck Imson (operations)

Neal Oshima (photograph of kinnari from the Ayala Museum collection, page 54)

Ayala Foundation (additional)

Concept, Design, Copy, and Layout Medium3

This report cover is printed on FSC®-certiﬁ ed Neenah Classic Crest, which is made with 100% post-consumer waste. The main pages of this report are printed on 9Lives offset, a premium-grade recycled paper that is carbon-neutral, FSC®-certiﬁ ed and made of 100% post-consumer waste. Our commitment to nation-building defines who we are. And if we move as one, we can make it work.

Ruel T. Maranan President, Ayala Foundation

AYALA FOUNDATION, INC. 8F 111 Paseo Building Paseo de Roxas corner Legaspi Street Legaspi Village, Makati City, Philippines 1229 Tel (632) 717 5800 • Fax (632) 813 4488 www.ayalafoundation.org