Contents 2 Financial Highlights 3 Our Businesses at a Glance The LT Group Logo 4 Our Partnerships Strength and solidarity. This is the essence of the LT Group (LTG) 6 Chairman’s Message logo. The clean balance lines and curves are the central elements -- a mystical symmetrical tree. Drawn in an Eastern-Oriental style, 8 President’s Message it gives hint to the Company’s Chinese heritage. 12 CFO’s Message Tree is life. Life is growth. Like a tree, a company with rm roots, properly nurtured, will continuously grow and give value. 14 Asia Brewery, Inc. 16 Eton Properties Philippines, Inc. The tree’s trunk is upright, and the branches spread out -- a symbolic consolidation of the subsidiaries and stakeholders within 18 PMFTC Inc. two circles, one for continuity, the outer one for solidarity. 22 Philippine National Bank 24 Tanduay Distillers, Inc. 26 Corporate Governance Report VISION 36 Corporate Social Responsibility To be a world-class conglomerate at the forefront of Philippine economic growth, successfully maintaining a strong presence Tan Yan Kee Foundation, Inc. and dominant position in key Philippine industries while ensuring continuous bene ts to its consumers, communities, employees, Our Presence in Marawi business partners, and shareholders. Asia Brewery, Inc. MISSION Eton Properties Philippines, Inc. Anchored to its Vision, the LT Group commits: PMFTC Inc. To increase stockholder values through long-term growth Philippine National Bank in its major business groups. Tanduay Distillers, Inc. To continuously improve the value of its products and services and to provide consumers with more and better choices. 46 Sustainability To build the largest, most effective distribution network Asia Brewery, Inc. and widest customer reach in the Philippines. PMFTC Inc. To leverage on synergies between its various businesses Philippine National Bank to continuously improve revenues and cost structure. Tanduay Distillers, Inc. To enhance the welfare of its employees and the communities where it lives and works. 50 Statement of Management’s Responsibility for Financial Statements (The Vision and Mission Statements are reviewed and approved annually by the Board of Directors. The latest reviews were on 51 Independent Auditor’s Report March 14, 2017 and January 16, 2018.) 54 Consolidated Financial Statements and Notes 126 Board of Directors 128 Investor Information OUR COVER 2017 ANNUAL REPORT THE LT Group Inc. is on track toward its overall goal of becoming a leading and innovative player in all the businesses it is engaged in. For years, it has laid the groundwork for future growth through organic expansion and strategic partnerships. And today, the conglomerate is reaping the bene ts of such investments although the work isn’t nished yet. LT Group continues to work toward achieving a better and brighter future. Its journey to become bigger and better is best captured by the cranes that continuously migrate to better places, ying in formation to conserve energy over long distances and taking advantage of the swirl of air created by each and everyone in the ock starting with the lead bird. TOWARD With the apping of its wings, each bird in the group creates a free lift for every bird down the line. When A STRONGER the lead crane gets tired, another takes its place to lead the ock and continue the journey. These traits TOMORROW epitomize the synergies that the businesses within the group expect to achieve. The crane is a symbol of prosperity and longevity. The use of the crane, which in Chinese culture is venerated as the prince of all feathered creatures, also gives hint to LT Group’s Chinese heritage. PAGE 1 The LT Group ASIA BREWERY, INC. ETON PROPERTIES PHILIPPINES, INC. PMFTC INC. PHILIPPINE NATIONAL BANK TANDUAY DISTILLERS, INC. FINANCIAL SUMMARY REVENUES Total Assets (In Php Millions) (In Php Millions) 2017 63,780 2017 917,096 2016 57,800 2016 829,091 2015 51,473 2015 749,553 Note: Revenues were restated to exclude ABI's alcoholic beverages, which were spun off into AB Heineken Philippines Inc. in November 2016 Net Income Attributable to Equity HoldersHolders Total Liabilities of LTGLTG (In Php Millions) (In(In PhpPhp Millions)Millions) 2017 721,780 20172017 10,83110,831 2016 650,486 20162016 9,390 2015 579,794 2015 6,5996,5965999 EBITDAEBITDA TotalTotal EquityEquity (In(In Php Millions)Millions) (In(In PhpPhp Millions)Millions) 2017 21,942 20172017 195,315195,315 2016 18,122 20162016 178,605 2015 15,731 2015 169,758161699,75 7588 Ratios and PercentagesPercentages 20172017 20 201616 20 201515 Per Share DataData Current (x) 0.630.63 0.700.70 0.75070.755 (In Php, except Pay-out rate)rate) 20172017 20162016 20152015 Current w/out PNBB (x((x)x) 4.394.39 4.204.20 4.294 29 Earnings per Sharee 1.001.00 0.870.87 0.610.61 Debt to Equity (x) 3.703.70 3.643.64 3.423.42 Book Value (at yeararar end)end) 13.7113. 71 12.5812. 58 11.9111.9911 Debt to Equity w/outoutout PNBPNB (x)(x) 0.15010.155 0.15010.155 0.130.13 Cash Dividend 0.180.18 0.150.15 0.150.15 Return on Averagee AssetsAssets 1.2%1.2% 1.2%1.2% 1.3%1.3% Pay-Out Rate 20.74%20.74% 24.60%24.60% 36.80% Return on Averagee EquityEquity 7.6%7.6% 7.1%7.1% 5.2% 02-03 2017 ANNUAL REPORT OUR BUSINESSES AT A GLANCE Eton Properties Philippines, Inc. 99.9% 99.6% 49.6% 8 0 29 755 Ownership 390 39 Ownership Ownership , 8,298 8,2 1,755 1 48 348 3 Asia Brewery, Inc. started as 1,099 a brewery in 1982. It offers 313 9 non-alcoholic beverages as well as 0 2 packaging materials. It is a market Eton Properties Philippines, Inc. 4,709 4,7 552 55 leader in the energy drinks and is the real estate arm of the group.up. PMFTC Inc. is the business soymilk categories. It is ranked It has a diversied portfolio of 1,414 combination of Philip Morris Philippines Manufacturing Inc. ‘15 ‘16‘16 ‘17‘17 second in the bottled water segment. ‘15 ‘16‘16 ‘17‘17 residential subdivisions, high-risee ‘15 ‘16‘16 ‘17‘17 Its alcoholic beverages, namely beer and mid-rise condominiums, BPOO and Fortune Tobacco Corp. Net Income and alcopop, were spun off into AB Net Income ofce buildings and commercial Net Income It is the leading cigarette (in Php Millions) Heineken Philippines Inc. in 2016. (in Php Millions) centers. (in PhpPhp Millions)Millions) manufacturer in the Philippines. 56.47% 100% 30.17% Ownership 908 Ownership Ownership ,557 1,009 8,557 8 382 1 , Philippine National Bank is one Victorias Milling Company, Inc. is one 7,382 7 of the largest private universal 631 63 of the country’s largest sugar 4 760 6,769 banks in the country. reneries, based in Negros 654 65 422 Occidental. In crop year 2016-2017, Tanduay Distillers, Inc. it milled 3.2 million tons of cane and has a 99% market share of rum produced 4.1 million 50-kilogram in the Philippines and over 20% bags of rened sugar. ‘15 ‘16 ‘17 ‘15 ‘16 ‘17 market share of the distilled spirits ‘15 ‘16 ‘17 Net Income Net Income industry. In 2016, Tanduay started Net Income Note: For the crop years September (in Php Millions) (in Php Millions) selling ethanol to fuel companies. (in Php Millions) to August Attributable Net Income Contribution to LTG (In Php Millions) % to total 2017 BANKINGBA 4,826 45% TOBACCOTO 4,385 40% DISTILLEDDI SPIRITS 631 6% BEBEVERAGE 551 5% PROPERTYPR DEVELOPMENT 348 3% VMVMC 174 2% OTHERSOT (84) -1% TOTALTO 10,831 100% % to total % to total 20061616 BANKINGBANKINGN 44,140,140 444%4% 2015 BANKINGBANKI 3,508 53% TOBACCOTOBAC 2,582 227%7% TOBACCOTOBAC 1,036 16% DIDISTILLEDSTILL SPIRITS 908 110%0% DDISTILLEDISTILL SPIRITS 422 6% BEVERBEVERAGEA 1,753 119%9% BEVERBEVERAGEA 1,098 15% PRPROPERTYOPER DEVELOPMENT 388 44%% PRPROPERTYOPE DEVELOPMENT 312 5% VMVMCC 142 22%% VMVMCC 214 3% OOTHERSTHERS (523) -6-6% OOTHERSTHER 9 0% TTOTALOTAL 9,390 100%00% TTOTALOTAL 6,599 100% OUR PARTNERSHIPS ALI Eton Development Corporation The Company is a 50%-50% in the northeast and east of ABI Pascual Holdings Pte. estimates and internal data. joint venture between Ayala Metro Manila. The ground Ltd. is a 50%-50% joint The aim is to eventually build a Land, Inc. and LT Group, Inc. breaking ceremony was held venture between Asia Brewery, dairy plant in the Philippines. It was formed to develop a in January 2018. Inc. and Calidad Pascual of 35-hectare property along Spain. Pascual Creamy Delight Yogurt the C-5 corridor that spans The rst phase will cover 16 has a long shelf life and does portions of Pasig City and hectares. It will have a mall Currently, the Company not require refrigeration. It is Quezon City into a mixed-use with 58,000 square meters imports yogurt from Spain and made from real fresh milk full estate. which is targeted to open distributes it in the Philippine of calcium, protein and zinc. It in 2021. Five towers of market under the Pascual is a healthy product that is The project, called Parklinks, residential buildings under Creamy Delight brand. There great for the whole family and is envisioned to be the the Ayala Land Premier brand are variants offered to cater gives a natural boost. greenest urban estate in will be launched in the next to a wide array of customers, Metro Manila, with 50% of the ve years, while another ve from the original, non-fat, thick Filipinos lack dairy products in area devoted to open spaces.