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SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE

AND SECTION 141 OF THE CORPORATION CODE 1. For the fiscal year ended 31 December 2013 2. SEC Identification Number: 10683 3. BIR Tax Identification No.: 000-141-166-000 4. SUNTRUST HOME DEVELOPERS, INC. Exact name of issuer as specified in its charter 5. Metro Manila Province, Country or other jurisdiction of incorporation or organization 6. (SEC Use Only) Industry Classification Code 7. 6th Floor The World Center Bldg. 330 Sen. Gil J. Puyat Avenue Makati City, Philippines 1227 Address of principal office 8. (632) 867-8826 to 40 Issuer’s telephone number, including area code 9. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA Title of Each Number of Shares of Common Class Stock Outstanding Common 2,250,000,000 10. Are any or all of these securities listed on a Stock Exchange? Yes [x] No [ ] Philippine Stock Exchange Common Shares 11. Check whether the issuer:

(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding twelve (12) months. Yes [x] No [ ]

(b) has been subject to such filing requirements for the past ninety (90) days.

Yes [x] No [ ]

12. Aggregate Market Value of Voting Stock held by Non-Affiliates as of close of first quarter of 2014: Php862,934,921.00

ANNUAL REPORT/SUNTRUST HOME DEVELOPERS, INC. of 24

PART I - BUSINESS AND GENERAL INFORMATION Item 1. Business (1) Business Development Suntrust Home Developers, Inc. (“the Company”) was incorporated under Philippine laws and registered with the Securities and Exchange Commission (“SEC”) on 18 January 1956 under the name Ramie Textiles, Inc. It was originally authorized to engage in the manufacturing and sale of all types of ramie products. The Company has since amended its Articles of Incorporation, with the principal changes being highlighted below, as it sought to identify investment opportunities that will yield attractive returns. On 29 June 2002, the Board of Directors of the Company approved the amendment of its Articles of Incorporation resulting in a change in name from Fairmont Holdings, Inc. to its present name of Suntrust Home Developers, Inc. The change in name came hand in hand with a corresponding amendment of the Articles of Incorporation and change in the Company’s primary purpose or nature of business, from a holding company to a real estate company authorized to engage in real estate development, mass community housing, townhouses and rowhouses development, residential subdivision and other massive horizontal land development. This change in the nature of business was prompted by the perception that being a holding company no longer appeared to be viable, at least in the next few years, considering the slump in the equities market. Moreover, it was also an opportune time for the Company to re-strategize and take advantage of the huge but untapped potential that the low-cost mass housing sector had to offer. Furthermore, a new secondary purpose was also approved authorizing the Company to acquire interests in tourism and leisure-related enterprises, projects or ventures. On the same date, the Board of Directors of the Company likewise approved an increase in the Company’s authorized capital stock from Php2 Billion to Php3 Billion for the purpose of enabling the Company to finance any acquisitions or projects that it may undertake in the future in line with its new corporate purpose. Out of the Php1 Billion increase, Php250 Million has been actually subscribed while Php62,500,000 out of the amount subscribed has been actually paid-up in cash by Megaworld Corporation, an existing stockholder of the Company. On 18 July 2002, the Company acquired from an affiliate, Empire East Land Holdings, Inc. (“EELHI”), all of the latter’s shareholdings in Empire East Properties, Inc. (“EEPI”). Prior to such acquisition, EEPI was incorporated on 14 November 1997 as a wholly-owned subsidiary of EELHI to engage in the development of socialized or low-cost housing projects. In March 2004, the Company’s percentage of ownership in EEPI was reduced from 100% to 60% upon the subscription by EELHI to the shares of stock of EEPI.

On 30 August 2005, the Board of Directors of the Company approved the decrease in the number of members of the Board of Directors from eleven to seven directors and the extension of its corporate term for another fifty (50) years from 18 January 2006. Likewise, the Board of Directors approved the addition of separate sections in the Company’s By-Laws providing for the creation of Committees such as a Nomination Committee as well as the election of Independent Directors of the Company. These changes to the Articles of Incorporation were ratified by the stockholders of the Company on 11 November 2005 and were approved by the SEC on 10 May 2006. On 8 July 2008, the SEC approved the change in name of EEPI to Suntrust Properties, Inc. (“SPI”) and an increase in its authorized capital stock. EELHI subscribed to such increase in authorized capital stock of SPI and, as a result thereof, the Company’s ownership interest in SPI decreased from 60% to 20% Consequently, the Company’s control over SPI ceased and, as such, SPI was no longer a subsidiary but is now considered an associate of the Company. On March 25, 2011, the SEC approved SPI’s application for the increase in its capital stock, in which Megaworld Corporation was the only subscriber to the new SPI shares. As a result of the SPI’s issuance of additional common shares, the Company’s ownership in SPI decreased from 20% to 8% and is no longer considered an associate of the Company. In June 2013, the Company has sold these remaining shares in SPI.


In September 2011, the Company acquired 100% of the outstanding shares of stock of First Oceanic Property Management, Inc. (FOPMI). Consequently, FOPMI became the Company’s wholly owned subsidiary and its financial statements were consolidated with the Company’s financial statements starting 2011. First Oceanic Property Management Inc. (FOPMI) was incorporated and registered with the Philippine Securities and Exchange Commission on January 31, 1990. FOPMI is engaged primarily in the management of real estate properties consisting of residential and office condominiums and private estates. FOPMI’s services are covered by management contracts covering the different properties it manages and these contracts assure it of relatively fixed monthly revenues in the form of administrative/management fees. The acquisition of FOPMI is intended to create a new revenue stream for the Company which would complement its existing investments in real estate. FOPMI also holds 100% of the outstanding shares of stock of CityLink Coach Services, Inc. (CityLink), which was incorporated and registered with the Philippine Securities and Exchange Commission on November 7, 2006. CityLink is a domestic company engaged in overland transport, carriage, moving or haulage of passengers, fares, customers and commuters as well as freight, cargo, articles, items, parcels, commodities, goods or merchandise by means of coaches, buses, coasters, jeeps, cars and other similar means of transport. (2) Business of Issuer The Company, currently, does not have any business operations and is not offering any product or service. However, its subsidiary FOPMI is engaged in property management of residential and office buildings and private estates. Thus, the Company is not prepared at this time to identify and describe what business it proposes to do and what products, goods or services will be produced or rendered; its principal products or services and their markets with the relative contribution to sales or revenues of each product or services or group of related products or services; percentage of sales or revenue and net income contributed by foreign sales; distribution methods of products or services; competition; sources and availability of raw materials and the names of principal suppliers; and the Company’s dependency on its customers. Since the Company has not identified the industry in which it will engage in, it is likewise not in the position to discuss any government approval required for its principal products or services or the effect of existing or probable governmental regulations on its business. FOPMI is engaged in property management and provides vital real estate management services for several residential and office condominium buildings and private estates in Metro Manila. These include basic administrative, housekeeping and security services and special services such as facilities and equipment management, audit and technical support services, finance and account management, and procurement services. FOPMI’s revenue is primarily generated from management fees it charges in connection with its property management services. FOPMI is very competitive and is determined to perform as the best by assigning dedicated teams to manage over property/building. On-site Property Administrator, Property Engineer and Administrative Assistant/s are assigned to look after each individual property. A pool of experienced professionals –architects, engineers, accountants and other personnel with varying expertise – provides back-up support and services for its individual clients and customer. CityLink is engaged in overland transport, carriage, moving or haulage of passengers, fares, customers and commuters as well as freight, cargo, articles, items, parcels, commodities, goods or merchandise by means of coaches, buses, coasters, jeeps, cars and other similar means of transport. The Company or FOPMI is not dependent upon a single or a few customers. No single customer accounts for 20% or more of FOPMI’s sales.


In normal course of business, the Company entered into transactions with related parties, consisting mainly of advances from related parties for working capital purposes and for the settlement of certain liabilities. For more information, please see Note 17 to the Audited Financial Statements. The Company does not hold any patent, trademark, copyright, license, franchise, concession or royalty agreement upon which their operations are dependent. Government Approval of Principal Products; Effect of Government Regulations on the Business

The following is a brief description of the principal laws and regulations affecting the real estate business. Land Title Registration The Philippines uses the Torrens System of land registration, which provides for a certification of title to real property which is binding on all persons. An owner of real property may register title under the Torrens System if, after proper surveying, application, publication, service of notice and hearing, the Regional Trial Court (“RTC”) or, in certain cases, the Municipal Trial Court, the Metropolitan Trial Court or the Municipal Circuit Trial Court (collectively, “MTCs”) within whose jurisdiction the land is situated confirms the owner’s title to the land in a judgment and issues a decree to register the property in the owner’s name. Persons opposing the registration of title may appeal against the judgment of the RTC or MTCs to the Court of Appeals or Supreme Court within 15 days from notice of the RTC’s or MTC’s judgment. After the period for appeal has lapsed and within 15 days from entry of judgment, the appropriate court will order the Administrator of National Land Titles and Deeds Registration Administration (formerly the Land Registration Authority) to issue the corresponding decree of registration and Original Certificate of Title (“OCT”). Notwithstanding the issuance of an OCT, the decree of registration may still be contested within one year from entry of judgment on the grounds of actual fraud. Claims Against Registered Land Once real property has been registered, it may no longer be acquired by prescription. A Certificate of Title is conclusive evidence of ownership binding against all persons, including the government. The title is not subject to collateral attack and it cannot be altered, modified or cancelled, except in a direct proceeding in accordance with law. If registered land is transferred to another person, the Register of Deeds may cancel the OCT and issue a Transfer Certificate of Title (“TCT”) in the name of the new owner, provided that certain required documents are submitted to him and all the necessary taxes are paid. Subsequent transfers are also registered by the cancellation of the latest TCT and the issuance of a new TCT in the name of the latest transferee. “Quieting” of Title Claims which cast doubt over title to real property are relatively common in the Philippines. In particular, the boundaries to a registered title may be disputed, and where there is outstanding litigation against an owner of real property it may be possible for the claim to be annotated on the title to the property. Where a claim against title is unfounded, an action may be brought to remove this claim. Transferees of real property will usually require that all outstanding claims be removed from property before they will accept a transfer of title. Land Title Transfers An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing Philippine laws and may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. However, a deed, mortgage, lease or other voluntary instrument (except a will purporting to convey or affect a registered land) will not take effect as a conveyance or bind the land, but will operate only as contract between the parties and as evidence of authority to the Register of Deeds to effect registration.


The act of registration is the operative act to convey or affect the land insofar as third persons are concerned. Accordingly, as between two transactions over the same parcel of land, a transaction that is registered in good faith prevails over an earlier unregistered right. A sale of property that has been registered under the Torrens system typically requires the registered owner of the land to execute a deed of absolute sale in favor of the purchaser. Within ten (10) days after the close of the month when such deed was executed, a documentary stamp tax shall be paid to the Bureau of Internal Revenue (“BIR”), computed at a rate of 1.5% of the purchase price or zonal value of the land as determined by the BIR, whichever is higher. A final tax of 6% based on the gross selling price or current fair market value of the property, whichever is higher, is imposed upon capital gains presumed to have been realized from the sale of such real property and such tax must be paid to the BIR within thirty (30) days after the execution of the deed of absolute sale. No voluntary instrument can be registered by the Register of Deeds unless the owner’s duplicate certificate is presented with such instrument, except in cases expressly provided for in the Property Registration Decree upon lawful order of a court. The production of the owner’s duplicate certificate, whenever any voluntary instrument is presented for registration, is conclusive authority from the registered owner to the Register of Deeds to enter a new certificate or to make a memorandum of registration in accordance with such instrument, and the new certificate or memorandum is binding upon the registered owner and upon all persons claiming under him, in favor of every purchaser for value and in good faith. Nuisance Laws Under the Philippine nuisance laws, property owners may be liable for acts, omissions or the condition of property when it endangers the health or safety of others, injures or offends the senses, interferes with free passage of any public highway, street or body of water, or hinders the use of property. If a nuisance has been created by a previous landowner, the current landowner will be liable for such nuisance if such landowner knowingly continues the nuisance. Taxes Real property taxes are payable annually on the property’s assessed value. The assessed value of property and improvements depends on the nature of the property. Land is ordinarily assessed at 20% to 50% of its fair market value; buildings may be assessed at 0% to 80% of their fair market value; and machinery may be assessed at 40% to 80% of its fair market value. Currently, real property taxes vary by location but do not exceed 2% of the assessed value in the province and 3% of the assessed value in municipalities within Metro Manila and in cities. An additional Special Education Fund Tax of 1% of the assessed value of the property is also levied annually by provinces and by the cities and municipalities within Metro Manila. Idle lands are taxed at 5% of the assessed value of the property. Idle lands include any land, other than agricultural land, that is more than 1,000 square meters in area and one-half of which remains unutilized or unimproved by the owner. Number of employees As of 31 December 2013, the Group has a total of four hundred forty one (441) employees. None of the Group’s employees are represented by a labor union or are subject to collective bargaining agreements. The Group intends to hire additional employees if the present workforce becomes inadequate to handle operations but the exact number of additional employees will depend on the needs of the business. Below is the breakdown of the Group’s employees as of December 31, 2013: Operations – 309 Administrative – 130 Others – 2


FOPMI maintains a non-contributory post-employment benefit plan that is being administered by a trustee covering substantially all regular full-time employees. Actuarial valuations are made on a regular basis to update the retirement benefit costs and the amount of contributions. Major Business Risks The Group is exposed to a variety of financial risks in relation to financial instruments. The Group’s risk management is coordinated with the Board of Directors and focuses on actively securing the Group’s short-to-medium term cash flows by minimizing the exposure to financial markets. The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. A further discussion on financial risk management objectives and policies is presented in the notes to the financial statements. Political stability is a major factor which directly correlates to the general performance of the real estate industry. The Group’s results of operations are expected to vary from period to period in accordance with fluctuations in the Philippine economy which is in turn influenced by a variety of factors, including political developments among others. Political instability could negatively affect the general economic conditions and operating environment in the Philippines, which could have a material impact on the Group’s business, financial condition and results of operation. The business operations of FOPMI is subject to competition. Some competitors may have substantially greater financial and other resources than FOPMI which may allow them to undertake more aggressive marketing and to react more quickly and effectively to changes in the markets and in consumer preferences. In addition, the entry of new competitors into FOPMI’s business segments may reduce their respective sales and profit margins. The Group has adopted a policy whereby risks are identified before they cause significant trouble for the respective business. The Group carefully prepares structured/strategic plans to anticipate the inherent risks in their activities and set up methods to mitigate the effects of these risks. Risks are prioritized based on their impact to business, and probability of occurrence. There is a monitoring system that keeps track of the indicators and the actions/corrections undertaken. Feedbacks, both internal and external, are important for current and emerging risks. Item 2. Properties The Company has six condominium units at Sheraton Marina Square located in Malate, Manila with a total area of 496.00 square meters. The Company is currently leasing out these units and generating income from the rental thereof. The Company does not intend to acquire any real property within the next 12 months. FOPMI is a lessee under operating lease covering its office space. The lease has a term of one year and renewable upon terms and conditions as may be agreed by the parties. The future minimum rentals payable under this operating lease as of December 31, 2013 amounted to P971,664 while total rental expense in 2013 from this operating lease amounted to P1,023,762. Item 3. Legal Proceedings The Company is not a party to, and none of its properties is the subject of, any material pending litigation or legal proceeding. Item 4. Submission of Matters to a Vote of Security Holders In November 2011, the Company submitted for the approval by written assent, in accordance with Section 16 of the Corporation Code, of its stockholders of record as of 15 November 2011 the amendment to its Articles of Incorporation and By-Laws to change its corporate name from “Suntrust Home Developers, Inc.” to “First Oceanic Property Management Group, Inc.”. No meeting of


stockholders will be held for purposes of approving said amendment. In this connection, on 25 October 2011, the Board of Directors approved the change of the Company’s corporate name to “First Oceanic Property Management Group, Inc.” and the corresponding amendment to the Company’s Articles of Incorporation and By-Laws. The change in corporate name is in line with the Company’s move towards a broader range of real estate activities as shown by its recent acquisition of First Oceanic Property Management, Inc., a property management company engaged in the management of residential and office condominiums and private estates. The proposed amendment to the Company’s Articles of Incorporation and By-Laws will have no effect on the rights of existing stockholders. No stockholder approval is being sought for the issuance of shares, or a modification of any outstanding shares of the Company, or the issuance or authorization for issuance of one class of shares of the Company in exchange for outstanding shares of another class. The vote of shareholders representing at least two-thirds (2/3) of the outstanding capital stock of the Company shall be required for the approval of the amendments to the Articles of Incorporation and By-Laws. Stockholders on record as of 15 November 2011 shall be entitled to one (1) vote for each share of stock recorded in their names in the books of the Company. In accordance with Section 16 of the Corporation Code, votes shall be taken by means of written assent and shall be evidenced by the Written Assent Form attached to this Information Statement prepared and completed in all parts and duly received by the Corporate Secretary of Suntrust Home Developers, Inc., c/o 28/F The World Centre, 330 Sen. Gil Puyat Avenue, Makati City, Metro Manila, Philippines. The Written Assent Form must be signed by the holder recorded in the books of the Company or by his authorized representative or proxy. When voting by proxy, the Written Assent Form must be submitted together with a proxy instrument duly executed by the holder on record in favor of his proxy. The votes shall be counted based on the filled-up Written Assent Forms received from stockholders and as soon as the affirmative votes reach at least two-thirds (2/3) of the outstanding capital stock of the Company, the amendments shall be considered approved. In August 14, 2013, the Board of Directors approved a pre-emptive rights offer to holders of its common shares which will entitle them to subscribe to 2.5 new shares for every common share held as of record date, to be set by the Company after approval by the Philippine Stock Exchange of the listing of the rights shares. The rights shares will be issued from a Php20 billion increase in the Company’s authorized capital consisting of 20 billion common shares each with a par value of One Peso (Php1.00), to be submitted to stockholders of the Company for approval. The rights shares will be offered at the price of One Peso (Php1.00) per share, equivalent to the par value of the Company’s common shares. 25% of the subscription price shall be payable upon submission of the application for subscription and the balance of 75% shall be payable upon call by the Board of Directors to be made not later than three (3) years from the approval by the stockholders of the increase in capital stock. Subscribers shall have the option of paying 100% of the subscription price upon application for subscription.

PART II – OPERATIONAL AND FINANCIAL INFORMATION Item 5. Market for Issuer’s Common Equity and Related Stockholder Matters Market Information The Company’s shares of common stock are traded on the Philippine Stock Exchange. Below is a history of the trading prices of said shares.


Year First Quarter Second Quarter Third Quarter Fourth Quarter2012 High 0.63 0.62 0.57 0.64 Low 0.51 0.51 0.50 0.49 2013 High 0.66 1.00 2.40 1.33 Low 0.54 0.58 0.57 0.87 2014 High 1.15 Low 0.89 3/31/14 Close 1.00

Holders There are 1,621 holders of the Company’s 2,250,000,000 outstanding shares of common stock. However, 250,000,000 of these outstanding shares are not yet listed with the Philippine Stock Exchange as the subscription price for these have not been fully paid. Below is a list of the top twenty holders of the Company’s shares of common stock as of 31 March 2014:

Rank Name No. of Shares Percentage

of Ownership

1 PCD Nominee Corporation (Filipino) 717,894,0651 31.91%2 Megaworld Properties and Holdings, Inc. 503,999,991 22.40%3 Megaworld Corporation 451,835,001 20.08%4 Emerging Market Assets Limited 235,000,000 10.44%5 Stanley Ho Hung-Sun 116,100,000 5.16%6 First Centro, Inc. 102,987,000 4.57%7 The Andresons Group, Inc. 93,239,000 4.14%8 PCD Nominee Corporation (Non-Filipino) 17,243,400 0.77%9 EBC PCI TA No. 203-53106-5 17,000,000 0.76%10 Lucio L. Co 4,082,563 0.18%11 Genevieve Go 1,300,000 0.06%12 PCCI Securities Brokers Corp. 1,000,000 0.04%13 Romulo P. Ney 555,000 0.02%14 Larcy Marichi Y. So &/or Hanson G. So 513,700 0.02%15 Sik Keong Yap 500,000 0.02%16 Luciano H. Tan 450,000 0.02%17 Pablo M. Silva 437,499 0.01%18 Hanson G. So 400,000 0.01%19 Jaime Dy &/or Juliet Dy 399,000 0.01%20 Francis L. Dy &/or Ingred S. 385,500 0.01%

Dividends The deficit of the Company and its cash position did not merit any declaration of dividends for the last two fiscal years. The payment of dividends in the future will depend upon the Company's earnings, cash flow and financial condition, among other factors. The Company may declare dividends only out of its unrestricted retained earnings. These represent the net accumulated earnings of the Company, with its capital unimpaired, which are not appropriated for any other purpose. The Company may pay dividends in cash, by the distribution of property, or by the issue of shares of stock. Dividends paid in cash are subject to the approval by the Board of Directors. Dividends paid in

1 This includes 32,393,000 shares beneficially owned by The Andreson’s Group, Inc.


the form of additional shares are subject to approval by both the Board of Directors and at least two-thirds (2/3) of the outstanding capital stock of the shareholders at a shareholders' meeting called for such purpose. The Corporation Code prohibits stock corporations from retaining surplus profits in excess of one hundred per cent (100%) of their paid-in capital stock, except when justified by definite corporate expansion projects or programs approved by the Board of Directors, or when the corporation is prohibited under any loan agreement with any financial institution or creditor from declaring dividends without its consent, and such consent has not yet been secured, or when it can be clearly shown that such retention is necessary under special circumstances obtaining in the corporation. Recent Sales of Unregistered Securities In the past three (3) years, the Company has not undertaken any sale of unregistered or exempt securities, or issued securities constituting an exempt transaction. Item 6. Management Discussion and Analysis of Financial Condition and Results of Operations (for 2013 vs. 2012) 2013 vs. 2012 RESULTS OF OPERATIONS Twelve months ended December 31, 2013 compared to Twelve months ended December 31, 2012 The Group's total revenues exhibited an increase of 73.85 million or 35.33% from 209.04 million in 2012 to 282.89 million in 2013 of the same period. Total revenues mostly came from management fees, service income, rental income and non-recurring gain on sale of available-for-sale- financial asset. Costs and expenses exhibited an increase of 60.57 million or 29.88% from 202.74 million in 2012 to 263.31 million in 2013. Increase in cost and expenses were mainly due to cost of services and operating expenses. The Group’s net profit showed an increase of 13.28 million or 210.86% from 6.30 million in 2012 to 19.58 million in 2013. FINANCIAL CONDITION As of December 31, 2013 and December 31, 2012 The Group’s total resources amounted to 400.88 million in 2013 from 364.84 million in 2012. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business. Current assets increased by 122.38 million or 69.39% from 176.36 million in 2012 to 298.74 million in 2013. Cash and cash equivalents increased by 111.69 million or 184.51% from 60.54 million in 2012 to 172.23 million in 2013 due to proceeds from the sale of the parent company’s investment in available-for-sale financial asset. Due from related parties increased by 8.10 million or 28.37% from 28.55 million in 2012 to 36.65 million in 2013. Non-current assets decreased by 86.34 million or 45.81% from 188.48 million in 2012 to 102.14 million in 2013 mostly due to sale of available-for-sale financial asset which resulted to its decreased by 97.18 million or 100%. Investment property decreased by 1.24 million from 32.22 million in 2012 to


30.99 million in 2013. Property and equipment increased by 8.53 million or 76.03% from 11.21 million in 2012 to 19.74 million in 2013. Trade and other receivables increased by 3.19 million or 3.72% from 85.73 million in 2012 to 88.92 million in 2013. Other Assets increased by 1.35 million or 11.84% from 11.38 million in 2012 to 12.72 million in 2013. Current liabilities decreased by 11.69 million or 7.26% from 160.98 million in 2012 to 149.29 million in 2013. Trade and other payables exhibited an increase of 8.71 million or 13.79% from 63.12 million in 2012 to 71.82 million in 2013. Due to related parties decreased by 17.23 million or 18.22% from 94.53 million in 2012 to 77.31 million in 2013. Income tax payable decreased by 3.17 million or 95.18% from 3.33 million in 2012 to 0.16 million in 2013. Retirement benefit obligation increased by 5.35 million or 4.51% from 118.69 million in 2012 to 124.04 million in 2013. Material Changes in the Financial Statements Items: Increase/(Decrease) of 5% or more versus 2012 Statements of Financial Position Cash and Cash Equivalents 184.51% Increase is due to proceeds from sale of the parent company’s investment in available-for-sale financial asset. Due from Related Parties 28.37% Increase is due to additional advances to related parties. Other Assets 11.84% Due to increase in security deposits as of the current period. Available for Sale Financial Asset (100.00%) Due to sale of the parent company’s investment in available-for-sale financial asset. Property and Equipment 76.03% Increase was mainly due to additional acquisition of equipment by the subsidiaries. Trade and Other Payables 13.79% Due to increase in accrued expenses as of the current period. Due to Related Parties (18.22%) Due to payment of advances by the parent company. Income Tax Payable (95.18%) Decrease is due to higher prepaid taxes offset with gross income tax for the current period.


Statements of Income Management Fees 28.21% Increase due to additional properties managed by the subsidiary. Gain on Sale of AFS 100% Due to non-recurring gain on sale of the parent company’s investment in available-for-sale financial asset. Service Income 30.62% Increase due to higher service income generated by the subsidiary. Rental Income 11.74% Increase due to higher rental income generated by the subsidiary. Finance Income (28.32%) Decrease due to lower interest income generated by the subsidiary. Cost of Services 25.71% Higher cost of services due to increase in properties managed by the subsidiary. Operating Expenses 85.25% Increase due to higher administrative and overhead expenses for the current period. Finance Cost (18.58%) Decrease due to lower interest expense incurred by the subsidiary. Tax Expense 101.08% Increase due to higher taxable income for the current period. KEY PERFORMANCE INDICATORS Presented below are the top five (5) key performance indicators of the Group:

o Revenue Growth – The Group generated its revenue mostly from management fees, rental income, service income and non-recurring gain from sale of available-for-sale financial asset. The group’s revenues showed an increase of 73.85 million or 35.33% from 209.04 million to 282.89 million year-on-year.

o Net Profit Growth – measures the percentage change in net profit over a designated period of time. The group’s net profit increase by 13.28 million or 210.86% from 6.30 million in 2012 to 19.58 million in 2013.

o Increase in Cash and Cash Equivalents – Cash and cash equivalents increased by 111.69 million or 184.51% from 60.54 million in 2012 to 172.23 million in 2013.

o Increase in Total Assets – Total assets increased by 36.04 million or 9.88% from 364.84 million in 2012 to 400.88 million in 2013.


o Decrease in Current Liabilities – Total current liabilities decreased by 11.69 million or 7.26% from 160.98 million in 2012 to 149.29 million in 2013.

There are no other significant changes in the Group's financial position (5% or more) and condition that will warrant a more detailed discussion. Further, there are no material events and uncertainties known to management that would impact or change reported financial information and condition on the Group. There are no known trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in increasing or decreasing the Group's liquidity in any material way. There are no other known events that will trigger direct or contingent financial obligation that is currently considered material to the Group, including any default or acceleration of an obligation. The Group does not anticipate having any cash flow or liquidity problems. The Group is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments. The Group has no material commitments for capital expenditures. There are no material off-balance sheet transactions, arrangements, obligations, and other relationships of the Group with unconsolidated entities or other persons created during the reporting period. The Group has no unusual nature of transactions or events that affects assets, liabilities, equity, net income or cash flows. There are no other material issuances, repurchases or repayments of debt and equity securities. There are no seasonal aspects that had a material effect on the financial condition or results of operations of the group. There are no material events subsequent to the end of the period that have not been reflected in the financial statements for the period. There are no changes in estimates of amount reported in periods of the current financial year or changes in estimates of amounts reported in prior financial years. 2012 vs. 2011 RESULTS OF OPERATION Twelve months ended December 31, 2012 compared to Twelve months ended December 31, 2011 The Group's total revenues exhibited an increase of 32.25 million or 18.25% from 176.78 million in 2011 to 209.04 million in 2012 of the same period. Total revenues mostly came from management fees, service income and rental income. Cost and expenses exhibited an increase of 31.87 million or 18.65% from 170.87 million in 2011 to 202.74 million in 2012. Increase in cost and expenses were mainly due to cost of services. The Group’s net profit as of December 31, 2012 amounted to 6.30 million while for the same period of 2011, net profit amounted to 0.81 million net of the 5.94 million non-recurring income from acquisition of a subsidiary, 5.49 million increase or 680.10%.


FINANCIAL CONDITION As of December 31, 2012 and December 31, 2011 The Group’s total resources amounted to 364.84 million in 2012 from 346.57 million in 2011. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business. Current assets increased by 14.07 million or 8.67% from 162.29 million in 2011 to 176.36 million in 2012. Cash & cash equivalents increased by 15.83 million or 35.41% from 44.71 million in 2011 to 60.54 million in 2012. Due from related parties decreased by 4.30 million or 13.09% from 32.85 million in 2011 to 28.55 million in 2012. Non-current assets increased from 172.18 million in 2011 to 172.38 million in 2012. Investment property decreased by 1.24 million or 3.70% from 33.46 million in 2011 to 32.22 million in 2012. Property & equipment decreased by 2.43 million or 17.83% from 13.65 million in 2011 to 11.21 million in 2012. Deferred Tax Assets increased by 5.97 million or 37.40% from 15.96 million in 2011 to 21.93 in 2012. Trade & other receivables increased by 3.26 million or 3.96% from 82.47 million in 2011 to 85.73 million in 2012. Other Assets decreased by 2.82 million or 19.86% from 14.20 million in 2011 to 11.38 million in 2012. Current liabilities decreased by 10.01 million or 5.85% from 170.98 million in 2011 to 160.98 million in 2012. Trade & other payables exhibited an increase of 8.73 million or 16.05% from 54.39 million in 2011 to 63.12 million in 2012. Due to Related Parties decreased by 20.50 million or 17.82% from 115.03 million in 2011 to 94.53 million in 2012. Income tax payable increased by 2.76 million or 483.23% from 570.32 thousand in 2011 to 3.33 million in 2012. Non-current liabilities increased by 32.25 million or 37.30% from 86.44 million in 2011 to 118.69 million in 2012. Retirement benefit obligation increased by 33.24 million or 38.90% from 86.45 million in 2011 to 118.69 million in 2012. Interest-bearing loans decreased by 1.98 million or 100% from 2011. Material Changes in the Financial Statement Items: Increase/(Decrease) of 5% or more versus 2011 Statement of Financial Position Cash & Cash Equivalents 35.41% Increase in cash is due to timely collection of receivables as of the current period. Due from Related Parties (13.09%) Decrease is due to collection of advances from related parties. Other Assets (19.86%) Due to decrease in prepayments as of the current period. Property and Equipment (17.83%) Decrease was mainly due to depreciation for the current period.


Deferred Tax Assets 35.54% Pertains to tax effects of taxable and deductible temporary differences. Interest-Bearing Loans (100.00%) Due to full settlement of loan obligation as of the current period. Trade and Other Payables 16.05% Due to increase in accrued expenses as of the current period. Due to Related Parties (17.82%) Decrease is due to payment of advances to related parties. Income Tax Payable 483.23% Increase is due to higher taxable income for the current period. Retirement Benefit Obligation 38.90% Due to additional accrual of employee retirement benefits for the current period. Statement of Income Management Fees 19.56% Increase due to additional properties managed by the subsidiary. Service Income 118.81% Increase due to higher service income generated by the subsidiary. Rental Income 8.90% Increase due to higher rental income generated by the subsidiary. Finance Income 8.63% Increase due to higher interest rate. Income from Acquisition of a Subsidiary (100.00%) Decrease due to effect of non-recurring income from acquisition of a subsidiary. Equity Share in Net Earnings of an Associate (100.00%) Decrease due to discontinued recognition of equity share in net earnings which resulted from the decrease in ownership in an associate. Cost of Services 23.88% Higher cost of services due to increase in properties managed by the subsidiary.


Operating Expenses (18.45%) Decrease due to lower administrative and overhead expenses for the current period. Finance Cost 32.67% Increase due to higher interest expense on advances from a related party. Tax Expense 25.75% Increase due to higher taxable income for the current period. Other Expenses (29.54%) There was an impairment loss in intangible assets in 2011. KEY PERFORMANCE INDICATORS Presented below are the top five (5) key performance indicators of the Group:

o Revenue Growth – The Group generated its revenue mostly from management fees, rental income & service income. The group’s revenues showed an increase of 32.25 million or 18.25% from 176.78 million to 209.04 million of the same period.

o Net Profit Growth – measures the percentage change in net profit over a designated period of time. The group’s net profit net of the 5.94 million non-recurring income from acquisition of a subsidiary recorded a 5.49 million or 680.10% increase from 0.81 million in 2011 to 6.30 million in 2012.

o Increase in Cash and Cash Equivalents – cash and cash equivalents increased by 15.83 million or 35.41% from 44.71 million in 2011 to 60.54 million in 2012. This is attributable to timely collection of receivable.

o Increase in Trade Receivables – Total trade receivables increased by 3.26 million from 82.47 million in 2011 to 85.73 million in 2012. Increase is due continuous flows of revenues in the form of administrative fees.

o Decrease in Interest-bearing Loans – 100% decreased from 1.98 million due to full settlement of obligation. The Group retains commendable credit status.

There are no other significant changes in the Group's financial position (5% or more) and condition that will warrant a more detailed discussion. Further, there are no material events and uncertainties known to management that would impact or change reported financial information and condition on the Group. There are no known trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in increasing or decreasing the Group's liquidity in any material way. There are no other known events that will trigger direct or contingent financial obligation that is currently considered material to the Group, including any default or acceleration of an obligation. The Group does not anticipate having any cash flow or liquidity problems. The Group is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments. The Group has no material commitments for capital expenditures. There are no material off-balance sheet transactions, arrangements, obligations, and other relationships of the Group with unconsolidated entities or other persons created during the reporting period.


The Group has no unusual nature of transactions or events that affects assets, liabilities, equity, net income or cash flows. There are no other material issuances, repurchases or repayments of debt and equity securities. There are no seasonal aspects that had a material effect on the financial condition or results of operations of the group. There are no material events subsequent to the end of the period that have not been reflected in the financial statements for the period. There are no changes in estimates of amount reported in periods of the current financial year or changes in estimates of amounts reported in prior financial years. 2011 vs. 2010 On September 2011, the Company acquired 100% ownership interest in First Oceanic Property Management, Inc. (“FOPMI” or the “Subsidiary”). The Subsidiary is engaged in the management of residential and office condominiums and private estates. Acquisition of the Subsidiary resulted to major increases on the Group’s consolidated results of operation and financial condition as follows: RESULTS OF OPERATION Twelve months ended December 31, 2011 compared to Twelve months ended December 31, 2010 The Group's total revenues exhibited an increase of 165.52 million or 1,995.97% from 8.29 million in 2010 to 173.81 million in 2011 of the same period. Total revenues mostly came from management fees, rental income and service income. Cost of services exhibited an increase of 145.25 million or 11,719.15% from 1.24 million in 2010 to 146.49 million in 2011. Operating expenses increased by 17.03 million or 742.81% from 2.29 million in 2010 to 19.32 million in 2011. Increase in cost of services & operating expenses were mainly due to depreciation & service cost. Other income (charges)-net decreased by 575.41 thousand or 30,721.46% from 1.87 thousand in 2010 to (573.54) thousand in 2011. Tax expense increased by 1.81 million or 13,991.42% from 12.95 thousand to 1.83 million in 2011. The Group’s net profit shows an increase of 1.69 million or 35.53% from 4.75 million in 2010 to 6.44 million in 2011. FINANCIAL CONDITION As of December 31, 2011 and December 31, 2010 The Group’s total resources including its newly acquired subsidiary amounted to 334.48 million in 2011 from 574.76 million in 2010. The Group manages its liquidity needs by carefully monitoring scheduled payments for financial liabilities as well as its cash outflows due in a day-to-day business. Current assets increased by 154.59 million or 2,007.24% from 7.70 million in 2010 to 162.29 million in 2011. Cash & cash equivalents increased by 42.18 million or 1,671.61% from 2.52 million in 2010 to 44.71 million in 2011. Due from related parties increased by 32.85 million or 100.00% in 2011.


Non-current assets decreased by 394.88 million or 69.64% from 567.06 million in 2010 to 172.18 million in 2011. Available for sale financial asset increased by 97.18 million or 100% in 2011 while Investment in an associate decreased by 95.51 million or 100% due to dilution of ownership with an associate from 20% to 8% that resulted to reclassification of these accounts. . Investment property decreased by 438.09 million or 92.90% from 471.55 million in 2010 to 33.46 million in 2011. Property & equipment increased by 13.65 million or 100% in 2011. Deferred Tax Assets increased by 15.96 million or 100% in 2011. Trade & other receivables increased by 82.47 million or 100% in 2011. Other Assets increased by 9.02 million or 174.14% from 5.18 million in 2010 to 14.20 million in 2011. Current liabilities decreased by 292.85 million or 63.14% from 463.83 million in 2010 to 170.98 million in 2011. Trade & other payables exhibited an increase of 27.75 million or 104.19% from 26.64 million in 2010 to 54.39 million in 2011. Due to Related Parties increased by 114.69 million or 33,873.07% from 338.60 thousand in 2010 to 115.03 million in 2011. Income tax payable increased by 559.56 thousand or 5,200.87% from 10.76 thousand in 2010 to 570.32 thousand in 2011. Provision decreased by 436.85 million or 100% from 2010. Non-current liabilities increased to 46.13 million or 100% in 2011. Retirement benefit obligation increased by 45.13 million or 100% in 2011. Interest-bearing loans increased by 1.98 million or 100% from 2010. Material Changes in the Financial Statement Items: Increase/(Decrease) of 5% or more versus 2010 As discussed earlier, as of September 9, 2011, the Company had acquired 100% ownership interest in a Subsidiary which resulted to major increases on the Group’s consolidated results of operation and financial condition except for the following: Balance Sheet Available for Sale Financial Assets 100% and Investment in an Associate (100%) Increase/Decrease was due to decreased in ownership in an associate which resulted to reclassification from Investment in an Associate to Available for Sale Financial Asset. Investment Property (92.90%) and Provision (100%) Decrease was due to foreclosure of the land. Income Statement Equity Share in Net Earnings of an Associate (73.99%) Decrease due to discontinued recognition of equity share in net earnings which resulted from the decrease in ownership in an associate. KEY PERFORMANCE INDICATORS Presented below are the top five (5) key performance indicators of the Group: o Revenue Growth – The Group generated its revenue mostly from management fees, rental

income & service income. The group’s revenues showed an increase of P165.52 million or 1,995.97% from P8.29 million to P173.81 million of the same period.


o Net Profit Growth – measures the percentage change in net profit over a designated period of time. The group’s net profit recorded a 35.53% increase from P4.75 million in 2010 to P6.44 million in 2011.

o Increase in Cash and Cash Equivalents – cash and cash equivalents increased by 42.18 million or 1,671.61% from 2.52 million in 2010 to 44.71 million in 2011. This is attributable to timely collection of receivable.

o Increase in Trade Receivables – Total trade receivables increased by 82.47 million or 100% from 2010. Increase is due to consolidation of recently acquired subsidiary that has continuous flows of revenues in the form of administrative fees.

o Decrease in Total Liabilities – Total liabilities decreased by 246.72 million or 53.19% from 463.83 million in 2010 to 217.11 million in 2011.

There are no other significant changes in the Group's financial position (5% or more) and condition that will warrant a more detailed discussion. Further, there are no material events and uncertainties known to management that would impact or change reported financial information and condition on the Group. There are no known trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in increasing or decreasing the Group's liquidity in any material way. The Group does not anticipate having any cash flow or liquidity problems. The Group is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring it to make payments. There are no material off-balance sheet transactions, arrangements, obligations, and other relationships of the Group with unconsolidated entities or other persons created during the reporting period. There are no other known events that will trigger direct or contingent financial obligation that is currently considered material to the Group, including any default or acceleration of an obligation. The Group has no unusual nature of transactions or events that affects assets, liabilities, equity, net income or cash flows. There are no seasonal aspects that had a material effect on the financial condition or results of operations of the Group. There are no material events subsequent to the end of the period that have not been reflected in the financial statements for the period. There are no changes in estimates of amount reported in periods of the current financial year or changes in estimates of amounts reported in prior financial years. Item 7. Financial Statements The Company’s Audited Financial Statements for the three years ended 31 December 2013, 2012, and 2011 are attached as exhibits to this report. Item 8. Information on Independent Accountant and other Related Matters The present auditor of the Company, Punongbayan & Araullo, was also the auditor of the Company for the years 2011, 2012 and 2013. There have been no disagreements with said auditor on any matter of accounting principles or practices, financial statement disclosures, auditing scope or procedure, which disagreements, if not resolved to their satisfaction, would have caused the auditor to make reference thereto in its respective reports on the Company’s financial statements for aforementioned years.


The external auditor of the Company billed the amounts of Php725,000 in 2013, Php696,000 in 2012, and Php632,500 in 2011 in fees for professional services rendered for the audit of the Company’s annual financial statements and services that are normally provided by the external auditor in connection with statutory and regulatory filings or engagements for 2013, 2012 and 2011. Except as disclosed above, no other services were rendered or fees billed by the external auditor of the Company for 2013, 2012 and 2011. All the above services have been approved by the Audit Committee through its internal policies and procedures of approval. The Board of Directors, after consultation with the Audit Committee, recommends to the stockholders the engagement of the external auditors of the Company. The selection of external auditors is made on the basis of credibility, professional reputation, accreditation with the Philippine Securities and Exchange Commission, and affiliation with a reputable foreign partner. The professional fees of the external auditors of the Company are approved by the Company’s Audit Committee after approval by the stockholders of the engagement and prior to the commencement of each audit season.

PART III – CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers2

Following is the list of incumbent directors and executive officers of the Company. The members of the Company’s Board of Directors shall hold office for one (1) year from election and until their successors are elected and qualified. Any director elected to fill a vacancy shall serve only for the unexpired term of his predecessor in office. Ferdinand B. Masi. Mr. Masi, 52 years old, Filipino, is currently the Chairman and the President of the Company. He was appointed as Chairman of the Board on 09 November 2007 and has served as President since 09 February 2001. Mr. Masi is currently with Consolidated Distillers of the Far East, Inc., a position he has held since 1983 as Accounting Staff, Plant Accountant/Auditor, Chief Accountant, Finance & Administrative Manager and as General Manager. He is concurrently the Chairman and President of Good Earth Technologies International, Inc. and Corporate Secretary of First Centro, Inc. He is a Certified Public Accountant and member of the Philippine Institute of Certified Public Accountants. He also finished his MBA from Ateneo Graduate School of Business. Evelyn G. Cacho. Ms. Cacho, 52 years old, Filipino, is currently the Treasurer and a member of the Board of Directors of the Company since 29 August 2005. Ms. Cacho is concurrently a director of Empire East Land Holdings, Inc. (“EELHI”), a position she has occupied since February 2009. She joined EELHI in February 1995 and has served as its Vice President for Finance since February 2001. She also currently serves as director of Empire East Communities, Inc., Laguna Bel Air School, Inc., Sonoma Premier Land, Inc., Valle Verde Properties, Inc. and Sherman Oak Holdings, Inc. She holds the position of Treasurer of Megaworld Central Properties, Inc., and Megaworld Newport Property Holdings, Inc. and Assistant Corporate Secretary of Gilmore Property Marketing Associates, Inc. Prior to joining EELHI, she had extensive experience in the fields of financial/operations audit, treasury, and general accounting from banks, manufacturing and trading companies. Ms. Cacho has a bachelor’s degree in Business Administration major in Accounting. Giancarlo C. Ng. Mr. Ng, 36 years old, Filipino, has served in the Company’s Board of Directors since 23 October 2007. He is currently the Finance and Office Manager of Consolidated Distillers of the Far East, Inc. (“Condis”). He is a graduate of the University of Asia and the Pacific with a degree in Bachelor of Arts in Liberal Arts and Humanities, graduating Magna Cum Laude and Valedictorian of his batch. He also obtained his Masters of Science in Information Technology from the same university. Mr. Ng was at various times from 2003 to 2006 an account officer, sales manager, and inter-team coordinator of Condis. Mr. Ng has handled Customer Relations Management, Sales and Delivery Logistics, and Information Technology Planning and Tactical Coordination for Condis and has extensive experience in work involving business processes and information technology solutions.

2 As of March 31, 2014


He was the project manager for the email and internet connectivity infrastructure project and inventory system database of Condis. Prior to joining Consolidated Distillers of the Far East, Inc., he was a member of the Systems Technology Support of Meralco MTP-CSPT from 1998-1999, where he participated in the company’s Y2K compliance project. Mr. Ng then joined the Software Services Department of the Orient Overseas Container Line Phils, Inc. as a software programmer from 2000-2003, where he developed web applications and also served as customer EDI programmer and trainer of new recruits. Mr. Ng has attended trainings and seminars on several software languages, Customer Relations Management, Business Orientation for Marketing and Sales, Business Writing, Information Strategy Planning, and on the New Digital Economy and Emerging Technologies for the Philippines in 2020. Elmer P. Pineda. Mr. Pineda, 56 years old, Filipino, was elected to the Board on 03 February 2012 to serve the unexpired term of Ms. Ma. Vicenta S. Jalandoni. Mr. Pineda was likewise appointed Assistant Corporate Secretary and Assistant Corporate Information Officer of the Corporation. He is currently the vice president of the Corporation’s property management subsidiary, First Oceanic Property Management, Inc. Mr. Pineda has been with the property management firm since 1998 and was responsible for the management of a number of real estate developments. A licensed civil engineer, Mr. Pineda has over a decade of experience in project and construction management with various companies and firms such as Farm System Development Corporation and Megaworld Corporation. Felizardo T. Sapno. Mr. Sapno, 56 years old, Filipino, has served as Director of the Company since 03 July 2006. He is currently the Plant Manager of the Consolidated Distillers of the Far East, Inc. since August 1990. Mr. Sapno is a licensed Chemical Engineer and a graduate of the Mapua Institute of Technology with a degree in BS Chemical Engineering. He was previously employed with the Philippine Allied Leatherette, Inc. as Production Supervisor from October 1981 to October 1982 and the Central Azucarera de Tarlac as Shift Supervisor from November 1982 to November 1985. He is a member of various professional and socio-civic associations such as the Philippine Institute of Chemical Engineers, Center for Alcohol and Research Development Foundation, Inc., Philippine Association of Alcohol and Fermentation Technologies, Inc., Kiwanis International, Philippine Luzon District and the Knights of Columbus, Council 4668. Alejo L. Villanueva, Jr.. Mr. Villanueva, 72 years old, Filipino was elected as Independent Director on 29 October 2012. He currently serves as Independent Director of Alliance Global Group, Inc. and Empire East Land Holdings, Inc. He is also Chairman of Ruru Courier Systems, Inc. and Vice Chairman of Public Relations Counselors Foundations of the Philippines, Inc. He is a professional consultant who has more than twenty years of experience in the fields of training and development, public relations, community relations, institutional communication, and policy advocacy, among others. He has done consulting work with the Office of the Vice President, the Office of the Senate President, the Commission on Appointments, the Securities and Exchange Commission, the Home Development Mutual Fund, the Home Insurance Guaranty Corporation, Department of Agriculture, Philippine National Railways, International Rice Research Institute, Rustan’s Supermarkets, Louis Berger International (USAID-funded projects on Mindanao growth), World Bank (Subic Conversion Program), Ernst & Young (an agricultural productivity project), Chemonics (an agribusiness project of USAID), Price Waterhouse (BOT program, a USAID project), Andersen Consulting (Mindanao 2000, a USAID project), Renardet S.A. (a project on the Privatization of MWSS, with World Bank funding support), Western Mining Corporation, Phelps Dodge Exploration, and Marubeni Corporation. Mr. Villanueva obtained his bachelor’s degree in Philosophy from San Beda College, summa cum laude. He has a master’s degree in Philosophy from the University of Hawaii under an East-West Center Fellowship. He also took up special studies in the Humanities at Harvard University. He studied Organizational Behavior at INSEAD in Fontainebleau, France. He taught at the Ateneo Graduate School of Business, the UST Graduate School, and the Asian Institute of Journalism. Amelia A. Austria. Ms. Austria, 60 years old, Filipino, was elected an Independent Director on 09 November 2007. She is the Plant Administrator of Emperador Distillers, Inc. She is currently the Corporate Secretary and a member of the Board of Directors of Zenith Synergy Realty and


Development Corporation. She is a licensed Chemist and placed second in the Chemistry Licensure Examination in 1976. Ms. Austria is a graduate of the University of Santo Tomas with a Degree in BS Chemistry and is an undergraduate of the Masteral Program-MS Chemistry from the same university. Prior to joining Good Earth Technologies, Ms. Austria had extensive experience in work involving research and development and quality control. Rolando D. Siatela. Mr. Siatela, 53 years old, Filipino, has served as Corporate Secretary and Corporate Information Officer of the Company since 23 May 2006. He concurrently serves in PSE-listed companies, Alliance Global Group, Inc., Megaworld Corporation, and Global-Estate Resorts, Inc. (formerly Fil-Estate Land, Inc.) as Assistant Corporate Secretary. He is also the Assistant Vice President for Corporate Management of Megaworld Corporation. Prior to joining Megaworld Corporation, he was employed as Administrative and Personnel Officer with Batarasa Consolidated, Inc. He is a member of the board of Asia Finest Cuisine, Inc. and the Corporate Secretary of ERA Real Estate Exchange, Inc., Oceanic Realty Group International, Inc. and Documentation Officer of Megaworld Foundation. Directors are elected annually by the stockholders to serve until the election and qualification of their successors. Ms. Amelia A. Austria, independent director, and the other members of the Board were elected in the last annual stockholders’ meeting on 25 October 2011. Mr. Elmer Pineda was elected in February 2012 to replace Ms. Ma. Vicenta S. Jalandoni while Mr. Alejo L. Villanueva, Jr. was elected in 29 October 2012 to replace Mr. Cresencio P. Aquino. Significant Employees The Company does not have significant employees, i.e., persons who are not executive officers but expected to make significant contribution to the business. Family Relationships No director or executive officer is related to each other up to the fourth civil degree whether by consanguinity or affinity. Involvement in Legal Proceedings The Company has no knowledge of any of the following events that occurred during the past five (5) years up the date of this report that are material to an evaluation of the ability or integrity of any director, nominee for election as director, or executive officer:

o Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

o Any conviction by final judgment in a criminal proceeding, domestic or foreign, or being

subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses;

o Being subject to any order, judgment, or decree, not subsequently reversed, suspended or

vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; and

o Being found by a domestic or foreign court of competent jurisdiction (in a civil action), the

Commission or comparable foreign body, or a domestic or foreign Exchange or other organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation, and the judgment has not been reversed, suspended, or vacated.


Item 10. Executive Compensation The principal executive officers of the Company are: Name Position Ferdinand B. Masi Chairman & President (CEO) Evelyn G. Cacho Treasurer Rolando D. Siatela Corporate Secretary Elmer P. Pineda Asst. Corporate Secretary The principal executive officers of the Company and members of the Company’s Board of Directors did not receive any compensation from the Company for years 2011, 2012 and 2013 and neither will there be any compensation for the ensuing year. There are no arrangements in force pursuant to which the officers and directors of the Company are compensated, or are to be compensated, directly or indirectly, for any services provided as such officer or director. There are no standard arrangements pursuant to which directors of the Company are compensated, or are to be compensated, directly or indirectly, for any services provided as a director, including any additional amounts payable for committee participation or special assignments, for the years 2011, 2012 and 2013 and for the ensuing year. There are no other arrangements, including consulting contracts, pursuant to which any director of the Company was compensated, or is to be compensated, directly or indirectly, for the years 2011, 2012 and 2013 and for the ensuing year, for any service provided as a director. No employment contracts, termination of employment, or change in control arrangements, were effected for the applicable fiscal year. No warrants or stock options are held by the Company’s CEO, its named executive officers or directors for years 2011, 2012 and 2013 nor are there plans for extending warrants or options for the ensuing year. Item 11. Security Ownership of Certain Record and Beneficial Owners and Management3 Security Ownership of Owners Holding More than Five Percent (5%) of Voting Securities TITLE OF CLASS

NAME, ADDRESS OF RECORD OWNER AND RELATIONSHIP WITH ISSUER

NAME OF BENEFICIAL OWNER AND RELATIONSHIP WITH RECORD OWNER

CITIZENSHIP NO. OF SHARES HELD

PERCENT

Common Megaworld Corporation 28/F The World Centre 330 Sen. Gil J. Puyat Avenue Makati City

Megaworld Corporation4 (also the record owner)

Filipino 995,834,992 42.48%

3 As of 31 March 2014 4 Mr. Andrew L. Tan has the power to direct the voting and disposition of the shares held by Megaworld Corporation in the Company.


Common PCD NOMINEE CORPORA-TION G/F Makati Stock Exchange Building 6767 Ayala Avenue, Makati City5

PCIB Securities, Corporation 8/F PCI Tower 2, Dela Costa St., Makati City

Filipino 717,894,065

31.91%

Common Emerging Market Assets Limited (“EMAL”), Rm. 1028, 12/F The Centre Mark, 287-299 Queen’s Road, Central Hong Kong6

Emerging Market Assets Limited (also the record owner)

Filipino 235,000,000 10.44%

Common Stanley Ho Hung-Sun c/o Atty. Danilo V. Roleda – Unit 808 Raffles, Corporate Center, Emerald Avenue, Ortigas Center, Pasig City

Stanley Ho Hung-Sun (also the record owner)

Non-Filipino 116,100,000 5.16%

Security Ownership of Management

Title of Class Name of Owner Amount and Nature of Beneficial Ownership

Citizenship Percent of Class

Common Ferdinand B. Masi 1 (direct) Filipino 0.00% Common Amelia A. Austria 1 (direct) Filipino 0.00% Common Evelyn G. Cacho 1 (direct) Filipino 0.00% Common Alejo L. Villanueva, Jr. 1 (direct) Filipino 0.00% Common Elmer P. Pineda 1 (direct) Filipino 0.00% Common Giancarlo C. Ng 1 (direct) Filipino 0.00% Common Felizardo T. Sapno 1 (direct) Filipino 0.00% Common Rolando D. Siatela

0 Filipino N/A

Common All directors and executive officers

7 (direct) 0.00%

5 PCIB Securities Corporation is a participant of the PCD Nominee Corporation. The beneficial owners of the shares held by PCIB Securities, Inc are not known to the Company. 6 Messrs. Yip Chu Kwong, Yuen Siu, Yip Kwok Cheong, Yip Kwok Wai, Tse Yuen Yuen and Poon Kwok Kuen, all stockholders of EMAL, have the power to direct the voting and disposition of the shares held by EMAL in the Company. They are businessmen who are based in Hong Kong and China and who have substantial investments in the manufacturing and real estate industries in Guangzhou, China and Hong Kong.


Voting Trust Holders of 5% or More The Company has no knowledge of persons holding more than 5% of its voting securities under a voting trust or similar agreement. Change in Control The Company has no knowledge of any arrangements among stockholders that may result in a change in control of the Company. Item 12. Certain Relationships and Related Transactions Except for the material related party transactions described in the notes to the financial statements of the Company for the years 2013, 2012 and 2011 (please see elsewhere in here), there has been no material transaction during the last two years, nor is there any material transaction currently proposed, to which the Company was or is to be a party, in which any director or executive officer, any nominee for election as director, stockholder of more than ten percent (10%) of the Company’s voting shares, and any member of the immediate family (including spouse, parents, children, siblings, and in-laws) of any such director or officer or stockholder of more than ten percent (10%) of the Company’s voting shares had or is to have a direct or indirect material interest.

PART IV – EXHIBITS AND SCHEDULES Item 14. (a) Exhibits and Reports on SEC Form 17-C

Exhibit No. Description of Exhibit 1 Statement of Management Responsibility for Financial Statement 2 Audited Financial Statements 3 SEC Supplementary Schedules

(b) Reports on SEC Form 17-C Filed During the Last Six Months of the Report Period (July 1 to December 31, 2013) Date Disclosures 14 August 2013 Board approval of rights offer of 2.5 new shares for every common

share held 04 September 2013 Engagement of new stock transfer agent

SIGNATURES

Pursuant to the requirements of Section 17 of the Securities Regulation Code and Section 141 of the Corporation Code, this report is signed on behalf of the issuer by the undersigned, thereunto duly authorized, in the City of Makati, on this 151

h day of April 2014.

SUNTRUST HOME DEVELOPERS, INC. Company

By:

FERDINAND B. MASI Chairman and President (Principal Executive and Operating Officer)

EVEff!=L~ Treasurer /-y-(Principal Financial Officer)

\.

SUBSCRIBED AND SWORN to before me this 151h day of April 2014, affiants exhibiting

to me their Social Security System I.D.s and Tax Identification Numbers, as follows:

NAMES

Ferdinand B. Masi

Evelyn G. Cacho

Rolando D. Siatela

Lailani G. Lagrosa

Doc. No. 33.~ ; PageNo.-w: Book No. ~; Series of 2014.

SSS/TIN NO.

SSS NO. 03-76383529 TIN NO. 125-960-157

SSS NO. 03-7189287-9 TIN NO. 127-326-686

SSS NO. 33-0536180-7 TIN NO. 121-475-619

TIN NO. 213-909-648 SSS NO. 3375355759

ATTY.

u ~ ~~a.~~ Awl. No. M-44, Mt~k;ati City

119P ~2830, Nov. 12, 2013-RSM PTR #4&!15!~;;~, Jan. 02, 2014-Makati

~.c. tRoll No. 09!597 MCL£. ,;om~9iance No. IV-0011330

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December 31, January 1,

2012 2012

December 31 (As Restated – (As Restated –

Notes 2013 see Note 2) see Note 2)

CURRENT ASSETS

Cash and cash equivalents 5 172,226,157 P 60,535,026 P 44,705,688 P

Trade and other receivables - net 6 82,398,715 79,206,068 74,214,856

Due from related parties - net 15 36,649,714 28,550,950 32,852,266

Other current assets 7 7,465,904 8,072,288 10,521,923

Total Current Assets 298,740,490 176,364,332 162,294,733

NON-CURRENT ASSETS

Trade and other receivables 6 6,525,815 6,525,815 8,253,264

Available-for-sale financial asset 8 - 97,181,433 97,181,433

Investment property - net 10 30,985,048 32,224,450 33,463,852

Property and equipment - net 9 19,740,172 11,214,196 13,647,022

Deferred tax assets 14 39,634,765 38,029,537 28,057,427

Other non-current assets - net 7 5,258,497 3,304,594 3,674,094

Total Non-current Assets 102,144,297 188,480,025 184,277,092

TOTAL ASSETS 400,884,787 P 364,844,357 P 346,571,825 P

CURRENT LIABILITIES

Interest-bearing loans - - 990,466 P

Trade and other payables 11 71,823,167 63,116,586 54,389,661

Due to related parties 15 77,307,502 94,534,592 115,032,120

Income tax payable 160,386 3,326,267 570,321

Total Current Liabilities 149,291,055 160,977,445 170,982,568

NON-CURRENT LIABILITIES

Interest-bearing loans - - 994,506

Retirement benefit obligation 13 124,037,904 118,687,143 85,446,775

Total Non-current Liabilities 124,037,904 118,687,143 86,441,281

Total Liabilities 273,328,959 279,664,588 257,423,849

EQUITY 17 127,555,828 85,179,769 89,147,976

TOTAL LIABILITIES AND EQUITY 400,884,787 P 364,844,357 P 346,571,825 P

SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES

(Amounts in Philippine Pesos)

LIABILITIES AND EQUITY

See Notes to Financial Statements.

A S S E T S

(With Corresponding Figures as of January 1, 2012)

DECEMBER 31, 2013 AND 2012

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

P P

2012 2011

(As Restated – (As Restated –


REVENUES

Management fees 232,055,178 P 180,998,803 P 151,381,746 P

Gain on sale of available-for-sale financial asset 8 20,627,768 - -

Service income 2 15,556,533 11,909,881 5,442,997

Rental income 18 9,364,826 8,380,582 7,695,558

Finance income 5 2,311,440 3,224,759 2,968,682

Income from acquisition of a subsidiary - - 5,936,591

Equity in net earnings of an associate - - 1,670,960

Others 2,972,172 4,524,096 1,687,087

282,887,917 209,038,121 176,783,621

COSTS AND EXPENSES

Cost of services 12 218,800,469 174,048,109 140,492,965

Operating expenses 12 32,879,410 17,347,795 21,273,252

Finance costs 13 6,684,336 8,209,242 6,187,896

Tax expense 14 4,947,678 2,460,553 1,956,661

Others - 675,021 958,000

263,311,893 202,740,720 170,868,774

PROFIT BEFORE

PREACQUISITION LOSS 19,576,024 6,297,401 5,914,847

PREACQUISITION LOSS

OF A SUBSIDIARY - - 828,999

NET PROFIT 19,576,024 P 6,297,401 P 6,743,846 P

Earnings Per Share -

Basic and Diluted 16 0.009 P 0.003 P 0.003 P


STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011



2012 2011



NET PROFIT 19,576,024 P 6,297,401 P 6,743,846 P

OTHER COMPREHENSIVE INCOME (LOSS)

Items that will not be reclassified

subsequently to profit or loss

Remeasurements of retirement

benefit obligation 13 32,571,479 14,665,154 )( 25,722,624 )(

Tax income (expense) 14 9,771,444 )( 4,399,546 7,716,787

22,800,035 10,265,608 )( 18,005,837 )(

TOTAL COMPREHENSIVE

INCOME (LOSS) 42,376,059 P 3,968,207 )( P 11,261,991 )( P




STATEMENTS OF COMPREHENSIVE INCOME


2012 2011



CAPITAL STOCK - P1 par value 17

Authorized - 3 billion shares

Issued and outstanding - 2 billion shares 2,000,000,000 P 2,000,000,000 P 2,000,000,000 P

Subscribed capital - 250 million shares 250,000,000 250,000,000 250,000,000

Subscription receivable 187,500,000 )( 187,500,000 )( 187,500,000 )(

62,500,000 62,500,000 62,500,000

2,062,500,000 2,062,500,000 2,062,500,000

REVALUATION RESERVES

Balance at beginning of year

As previously reported - - -

Effect of adoption of PAS 19 2 38,882,071 )( 28,616,463 )( 10,610,626 )(

As restated 38,882,071 )( 28,616,463 )( 10,610,626 )(

Other comprehensive income (loss)

for the year 22,800,035 10,265,608 )( 18,005,837 )(

Balance at end of year 16,082,036 )( 38,882,071 )( 28,616,463 )(

DEFICIT

Balance at beginning of year

As previously reported 1,939,762,151 )( 1,945,132,978 )( 1,951,570,557 )(

Prior period adjustments 2 1,323,991 397,417 91,150

As restated 1,938,438,160 )( 1,944,735,561 )( 1,951,479,407 )(

Net profit for the year 19,576,024 6,297,401 6,743,846

Balance at end of year 1,918,862,136 )( 1,938,438,160 )( 1,944,735,561 )(

TOTAL EQUITY 127,555,828 P 85,179,769 P 89,147,976 P



STATEMENTS OF CHANGES IN EQUITY



2012 2011

(As Restated – (As Restated –Notes 2013 see Note 2) see Note 2)

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 24,523,702 P 8,757,954 P 8,700,507 P

Adjustments for:

Gain on sale of available-for-sale financial asset 8 20,627,768 )( -

Depreciation and amortization 12 10,093,754 9,756,269 11,344,420

Interest income 5 2,311,440 )( 3,224,759 )( 2,968,682 )(

Impairment losses 7 - - 958,000

Interest expense 6,682,086 8,209,242 2,532,259

Income from acquisition of a subsidiary - - 5,936,591 )(

Equity in net earnings of an associate - - 1,670,960 )(

Operating profit before working capital changes 18,360,334 23,498,706 12,958,953

Decrease (increase) in trade and other receivables 3,192,647 )( 3,263,763 )( 5,809,879

Decrease (increase) in other current assets 12,091,772 )( 2,015,150 1,464,008 )(

Increase (decrease) in trade and other payables 8,706,581 8,726,925 18,139,872 )(

Increase in retirement benefit obligation 31,240,154 13,234,791 8,451,863

Cash generated from operations 43,022,650 44,211,809 7,616,815

Cash paid for taxes 6,792,075 )( 4,842,686 )( 927,632 )(

Net Cash From Operating Activities 36,230,575 39,369,123 6,689,183

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of available-for-sale financial assets 8 117,809,201 - -

Acquisition of property and equipment 9 14,258,576 )( 4,737,426 )( 7,682,718 )(

Decrease (increase) in other non-current assets 5,075,655 )( 977,115 )( 46,700

Decrease in due from related parties 15 8,098,764 )( 13,647,708 )( 14,996,758 )(

Interest received 2,311,440 1,909,477 1,886,542

Acquisition of a subsidiary - - 18,062,500 )(

Net Cash From (Used In) Investing Activities 92,687,646 17,452,772 )( 38,808,734 )(

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in due to related parties 17,227,090 )( 3,963,321 )( 18,418,667

Repayments of interest-bearing loans - 1,984,972 )( 930,854 )(

Interest paid - 138,720 )( 286,087 )(

Net Cash From (Used In) Financing Activities 17,227,090 )( 6,087,013 )( 17,201,726

NET INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS 111,691,131 15,829,338 14,917,825 )(

BEGINNING BALANCE OF CASH AND CASH

EQUIVALENTS OF ACQUIRED SUBSIDIARY - - 34,830,791

PREACQUISITION CHANGES IN CASH AND CASH

EQUIVALENTS OF ACQUIRED SUBSIDIARY - - 22,269,266

CASH AND CASH EQUIVALENTS

AT BEGINNING OF YEAR 60,535,026 44,705,688 2,523,456

CASH AND CASH EQUIVALENTS

AT END OF YEAR 172,226,157 P 60,535,026 P 44,705,688 P

Supplemental Information:


STATEMENTS OF CASH FLOWS




Non- cash transactions include the transfer of portion of advances to a related party by offsetting it against the portion of the advances from a related party in 2012 (see Note 15.1) and decrease of the Group's ownership in Suntrust Properties, Inc. from 20% to 8% in 2012. These noncash activities are not reflected in the statements of cash flows (see Notes 8).

SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013, 2012 AND 2011 (Amounts in Philippine Pesos)

1. CORPORATE INFORMATION

1.1 Company Background

Suntrust Home Developers, Inc. (the Company or Parent Company) was incorporated in the Philippines on January 18, 1956 to primarily engage in real estate development. The Parent Company’s corporate life was extended for another 50 years starting January 18, 2006. The Parent Company is presently engaged in leasing activity and is a publicly listed entity in the Philippines. Megaworld Corporation (Megaworld), also a publicly listed company in the Philippines, is the major stockholder with 42.48% ownership interest in the Parent Company. The registered office of the Parent Company, which is also its principal place of business, is located at the 6th Floor, The World Centre Building, 330 Sen. Gil Puyat Avenue, Makati City. The Parent Company’s administrative functions are being handled by Megaworld. The financial statements have been prepared on a going concern basis since Megaworld commits to provide continuing financial support for its operating expenses until such time that the Parent Company is able to successfully re-start its commercial operations as a real estate developer.

1.2 Subsidiary, Associate, and their Operations

Prior to March 2011, the Parent Company held 20% ownership interest in Suntrust Properties, Inc. (SPI). In March 2011, SPI issued additional 562.1 million shares where Megaworld is the lone subscriber. As a result, the Parent Company’s ownership interest in SPI decreased from 20% to 8%. Consequently, the Parent Company lost its significant influence over SPI and as such, discontinued to present the investment as investment in an associate and instead accounted its ownership interest as available-for-sale (AFS) financial asset in 2012 and 2011. In June 2013, the Parent Company’s remaining ownership interest in SPI was sold to Megaworld (see Note 8). In September 2011, the Parent Company acquired the 100% shares of stock of First Oceanic Property Management, Inc. (FOPMI). Consequently, FOPMI became the Parent Company’s wholly owned subsidiary and its financial statements were consolidated with the Parent Company’s financial statements starting 2011. FOPMI, which is incorporated in the Philippines, is engaged primarily in the management of real estate properties.

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On the other hand, FOPMI holds 100% ownership interest in the shares of stock of Citylink Coach Services Inc. (Citylink), a domestic company engaged in overland transport, carriage, moving or haulage of passengers, fares, customers and commuters as well as freight, cargo, articles, items, parcels, commodities, goods or merchandise by means of coaches, buses, coasters, jeeps, cars and other similar means of transport. The registered and principal place of business of FOPMI is located at the 7th Floor Paseo Center, 8757 Paseo de Roxas corner Sedeño Street, Makati City. The registered and principal place of business of Citylink is located at G/F Parking Building, Service Road 2, McKinley Town Center, Bonifacio, Taguig City. 1.3 Approval of the Consolidated Financial Statements

The consolidated financial statements of Suntrust Home Developers, Inc. and Subsidiaries (the Group) for the year ended December 31, 2013 (including the comparatives of the Group’s consolidated financial statements for the years ended December 31, 2012 and 2011) were authorized for issue by the Company’s Board of Directors on March 10, 2014.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarized below and in the succeeding pages. The policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of Preparation of Consolidated Financial Statements

(a) Statement of Compliance with Philippine Financial Reporting Standards

The consolidated financial statements of the Group have been prepared in accordance with Philippine Financial Reporting Standards (PFRS). PFRS are adopted by the Financial Reporting Standards Council from the pronouncements issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been prepared using the measurement bases specified by PFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies that follow.

(b) Presentation of Consolidated Financial Statements

The consolidated financial statements are presented in accordance with Philippine Accounting Standard (PAS) 1, Presentation of Financial Statements. The Group presents consolidated statements of comprehensive income separate from the consolidated statements of income.

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The Group presents a third consolidated statement of financial position as at the beginning of the preceding period when it applies an accounting policy retrospectively, or makes a retrospective restatement or reclassification of items that has a material effect on the information in the consolidated statement of financial position at the beginning of the preceding period. The related notes to the third consolidated statement of financial position are not required to be disclosed. The Group’s adoption of PAS 19 (Revised), Employee Benefits, resulted in material retrospective restatements on certain accounts in the comparative financial statements for the year ended December 31, 2012 and in the corresponding figures as at January 1, 2012 [see Note 2.2(a)(ii)]. Accordingly, the Group presents a third consolidated statement of financial position as at January 1, 2012 without the related notes, except for the disclosures required under PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors.

(c) Functional and Presentation Currency

These consolidated financial statements are presented in Philippine pesos, the functional and presentation currency of the Group, and all values represent absolute amounts except when otherwise indicated. Items included in the consolidated financial statements of the Group are measured using its functional currency, the currency of the primary economic environment in which the Group operates.

2.2 Adoption of New and Amended PFRS

(a) Effective in 2013 that are Relevant to the Group

In 2013, the Group adopted for the first time the following new PFRS, revisions, amendments and improvements thereto that are relevant to the Group and effective for consolidated financial statements for the annual period beginning on or after July 1, 2012 or January 1, 2013: PAS 1 (Amendment) : Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income PAS 19 (Revised) : Employee Benefits

Consolidation Standards PAS 27 (Revised) : Separate Financial Statements PFRS 10 : Consolidated Financial Statements PFRS 12 : Disclosure of Interests in Other Entities PFRS 10 and 12

(Amendments) : Amendments to PFRS 10 and 12 – Transition Guidance to PFRS 10, and 12 PFRS 7 (Amendment) : Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities PFRS 13 : Fair Value Measurement

Annual Improvements : Annual Improvements to PFRS (2009-2011 Cycle)

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Discussed below and the succeeding pages are the relevant information about these new and amended standards. (i) PAS 1 (Amendment), Presentation of Financial Statements – Presentation of Items of

Other Comprehensive Income (effective from July 1, 2012). The amendment requires an entity to group items presented in other comprehensive income into those that, in accordance with other PFRS: (a) will not be reclassified subsequently to profit or loss; and, (b) will be reclassified subsequently to profit or loss when specific conditions are met. The amendment did not have significant impact on the Group’s consolidated financial statements as it has no transactions recognized in other comprehensive income other than the remeasurements of retirement benefit obligation during the year.

(ii) PAS 19 (Revised 2011), Employee Benefits (effective from January 1, 2013). This revised standard made a number of changes to the accounting for employee benefits. The most significant changes relate to defined benefit plans as follows:

eliminates the corridor approach and requires the recognition of remeasurements (including actuarial gains and losses) arising in the reporting period in other comprehensive income;

changes the measurement and presentation of certain components of the defined benefit cost. The net amount in profit or loss is affected by the removal of the expected return on plan assets and interest cost components and their replacement by a net interest expense or income based on the net defined benefit liability or asset; and,

enhances disclosure requirements, including information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans.

The Group has applied PAS 19 (Revised) retrospectively in accordance with its transitional provisions. Consequently, it restated the comparative consolidated financial statements for December 31, 2012 and the corresponding figures as of January 1, 2012. The effect of the restatement on the affected assets, liabilities, and equity components is shown below.

December 31, 2012 Effect of As Previously Adoption of Reported PAS 19 (Revised) As Restated

Changes in consolidated asset and liability:

Deferred tax assets P 21,933,217 P 16,096,320 P 38,029,537 Retirement benefit obligation ( 65,032,743) ( 53,654,400 )( 118,687,143 )

Net increase in liability (P 37,558,080 )

Changes in consolidated components of equity:

Revaluation reserve P - P 38,882,071 P 38,882,071 Deficit 1,939,762,151 ( 1,323,991 ) 1,938,438,160

Net decrease in equity P 37,558,080

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January 1, 2012 Effect of As Previously Adoption of Reported PAS 19 (Revised) As Restated

Changes in consolidated asset and liability:

Deferred tax assets P 15,963,550 P 12,093,877 P 28,057,427 Retirement benefit obligation ( 45,133,852) ( 40,312,923) ( 85,446,775 )

Net increase in liability ( P 28,219,046)

Changes in consolidated components of equity:

Revaluation reserve P - P 28,616,463 P 28,616,463 Deficit 1,945,132,978 ( 397,417 ) 1,944,735,561 Net decrease in equity P 28,219,046

The effects of the adoption of PAS 19 (Revised) on the consolidated statements of income and consolidated statements of comprehensive income for the years ended December 31, 2012 and 2011 are shown below.

2012 Effect of As Previously Adoption of Reported PAS 19 (Revised) As Restated

Changes in consolidated profit or loss: Cost of services (P 179,512,671 ) P 5,464,562 (P 174,048,109 ) Operating expenses ( 18,547,333 ) 1,199,538 ( 17,347,795 ) Finance costs ( 2,868,819 ) ( 5,340,423 ) ( 8,209,242 ) Tax expense ( 2,063,450 ) ( 397,103 ) ( 2,460,553 ) Net increase in net profit P 926,574

Changes in consolidated other comprehensive income:

Remeasurements of retirement benefit obligation obligation – net of tax P - (P 10,265,608) (P 10,265,608)

2011 Effect of As Previously Adoption of Reported PAS 19 (Revised) As Restated

Changes in consolidated profit or loss: Cost of services (P 143,806,748 ) P 3,313,783 (P 140,492,965 ) Operating expenses ( 22,000,668 ) 727,416 ( 21,273,252 ) Finance costs ( 2,584,222 ) ( 3,603,674 ) ( 6,187,896 ) Tax expense ( 1,825,403 ) ( 131,258 ) ( 1,956,661 ) Net increase in net profit P 306,267

Changes in other consolidated comprehensive income:

Remeasurements of retirement benefit obligation obligation – net of tax P - (P 18,005,837) (P 18,005,807)

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The adoption of PAS 19 (Revised) did not have a material impact on Group’s consolidated statement of cash flows for the years ended December 31, 2012 and 2011.

(iii) Consolidation and Disclosures

This package of consolidation, joint arrangements, associates and disclosures standards comprise of PFRS 10, Consolidated Financial Statements, PFRS 11, Joint Arrangements, PFRS 12, Disclosure of Interests in Other Entities, PAS 27 (Revised 2011), Separate Financial Statements and PAS 28 (Revised 2011), Investments in Associates and Joint Ventures. In 2013, the Group has adopted the following consolidation standards that are relevant to the Group and effective as of January 1, 2013.

PAS 27 (revised) deals with the requirements pertaining solely to separate

financial statements after the relevant discussion on control and consolidated financial statements have been transferred and included in PFRS 10.

PFRS 10 changes the definition of control focusing on three elements

which determines whether the investor has control over the investee such as the (a) power over the investee, (b) exposure or rights to variable returns from involvement with the investee, and, (c) ability to use such power to affect the returns. This standard also provides additional guidance to assist in determining controls when this is difficult to assess, particularly in situation where an investor that owns less than 50% of the voting rights in an investee may demonstrate control to the latter.

PFRS 12 integrates and makes consistent the disclosure requirements for

entities that have interest in subsidiaries, joint arrangements, associates, special purpose entities and unconsolidated structured entities. In general, this requires more extensive disclosures about the risks to which an entity is exposed from its involvement with structured entities.

Subsequent to the issuance of these standards, amendments to PFRS 10 and PFRS 12 were issued to clarify certain transitional guidance for the first-time application of the standards. The guidance clarifies that an entity is not required to apply PFRS 10 retrospectively in certain circumstances and clarifies the requirements to present adjusted comparatives. The guidance also made changes to PFRS 10 and 12 which provide similar relief from the presentation or adjustment of comparative information for periods prior to the immediately preceding period. Further, it provides relief by removing the requirement to present comparatives for disclosures relating to unconsolidated structured entities for any period before the first annual period for which PFRS 12 is applied.

The Group has evaluated the various facts and circumstances related to its interests in other entities and has determined that the adoption of the foregoing standards had no material impact on the amounts recognized in the consolidated financial statements.

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(iv) PFRS 7 (Amendment), Financial Instruments: Disclosures – Offsetting of Financial Assets and Financial Liabilities (effective from January 1, 2013). The amendment requires qualitative and quantitative disclosures relating to gross and net amounts of recognized financial instruments that are set-off in accordance with PAS 32, Financial Instruments: Presentation. The amendment also requires disclosure of information about recognized financial instruments which are subject to enforceable master netting arrangements or similar agreements, even if they are not set-off in the statement of financial position, including those which do not meet some or all of the offsetting criteria under PAS 32 and amounts related to a financial collateral. These disclosures allow financial statement users to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with recognized financial assets and financial liabilities on the entity’s statement of financial position. These disclosures allow financial statement users to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with recognized financial assets and financial liabilities on the entity’s statement of financial position. The adoption of this amendment did not result in any significant changes in the Group’s disclosures on its consolidated financial statements as it has no master netting arrangements; however, potential offsetting arrangements are disclosed in Note 20.2.

(v) PFRS 13, Fair Value Measurement (effective from January 1, 2013). This new

standard clarifies the definition of fair value and provides guidance and enhanced disclosures about fair value measurements. The requirements under this standard do not extend the use of fair value accounting but provide guidance on how it should be applied to both financial instrument items and non-financial items for which other PFRSs require or permit fair value measurements or disclosures about fair value measurements, except in certain circumstances. The amendment applies prospectively from annual period beginning January 1, 2013; hence, disclosure requirements need not be presented in the comparative information in the first year of application. Other than the additional disclosures presented in Note 21, the application of this new standard had no significant impact on the amounts recognized in the consolidated financial statements.

(vi) 2009 – 2011 Annual Improvements to PFRS. Annual Improvement to

PFRS (2009-2011 Cycle) made minor amendments to a number of PFRS. Among those improvements, the following are relevant to the Group:

(a) PAS 1 (Amendment), Presentation of Financial Statements – Clarification of

the Requirements for Comparative Information. The amendment clarifies that a statement of financial position as at the beginning of the preceding period (third statement of financial position) is required when an entity applies an accounting policy retrospectively, or makes a retrospective restatement or reclassification of items that has a material effect on the information in the third statement of financial position. The amendment specifies that other than disclosure of certain specified information in accordance with PAS 8, related notes to the third statement of financial position are not required to be presented. This amendment has no significant impact on the Group’s consolidated financial statements.

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(b) PAS 16 (Amendment), Property, Plant and Equipment – Classification of Servicing Equipment. The amendment addresses a perceived inconsistency in the classification requirements for servicing equipment which resulted in classifying servicing equipment as part of inventory when it is used for more than one period. It clarifies that items such as spare parts, stand-by equipment and servicing equipment shall be recognized as property, plant and equipment when they meet the definition of property, plant and equipment, otherwise, these are classified as inventory. This amendment had no impact on the Group’s consolidated financial statements since it has been recognizing those servicing equipment in accordance with the recognition criteria under PAS 16.

(c) PAS 32 (Amendment), Financial Instruments – Presentation – Tax Effect of

Distributions to Holders of Equity Instruments. The amendment clarifies that the consequences of income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction shall be accounted for in accordance with PAS 12 (Income taxes). Accordingly, income tax relating to distributions to holders of an equity instrument is recognized in profit or loss while income tax related to the transaction costs of an equity transaction is recognized in equity. This amendment has no effect on the Group’s consolidated financial statements, since it does not have distributions to holders of equity instruments and has been recognizing transaction costs of an equity transaction in accordance with PAS 12.

(d) PAS 34 (Amendment), Interim Financial Reporting and Segment Information

for Total Assets and Liabilities (effective from January 1, 2013). This standard clarifies the requirements on segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in paragraph 23 of International Financial Reporting Standards (IFRS) 8, Operating Segments. It also clarifies that the total assets and liabilities for a particular reportable segment are required to be disclosed if, and only if: (a) a measure of total assets or of total liabilities (or both) is regularly provided to the chief operating decision maker; and, (b) there has been a material change from those measures disclosed in the last annual financial statements for that reportable segment. The amendment has no significant impact on the Group’s consolidated financial statements as financial information regarding reportable segments are regularly provided to the Group and that there was no material change of disclosure made pertaining to these consolidated financial information from the last annual consolidated financial statements for the reportable segments.

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(b) Effective in 2013 that are not Relevant to the Group The following amendments, revisions and interpretation to PFRS are mandatory for accounting periods beginning on or after January 1, 2013 but are not relevant to the Group’s consolidated financial statements: PFRS 1 (Amendments) : First-time Adoption of PFRS – Government Loans

Consolidation Standards PAS 28 (Revised) : Investments in Associate and Joint Venture PFRS 11 : Joint Arrangements PFRS 11 (Amendment) : Amendments to PFRS 11 and Transition Guidance to PFRS 11

Annual Improvements PFRS 1 (Amendment) : First-time Adoption of PFRS –

Repeated Application of PFRS 1 and Borrowing Cost

Philippine Interpretation International Financial Reporting Interpretations Committee 20 : Stripping Costs in the Production Phase of A Surface Mine

(c) Effective Subsequent to 2013 but not Adopted Early

There are new PFRS, amendments and annual improvements to existing standards that are effective for periods subsequent to 2013. Management has initially determined the following pronouncements, which the Group will apply in accordance with their transitional provisions, to be relevant to its consolidated financial statements: (i) PAS 19 (Amendment), Employee Benefits: Defined Benefit Plans – Employee

Contributions (effective from January 1, 2014). The amendment clarifies that if the amount of the contributions from employees or third parties is dependent on the number of years of service, an entity shall attribute the contributions to periods of service using the same attribution method (i.e., either using the plan’s contribution formula or on a straight-line basis) for the gross benefit. Management has initially determined that this amendment will have no impact on the Group’s consolidated financial statements.

(ii) PAS 32 (Amendment), Financial Instruments: Presentation – Offsetting Financial

Assets and Financial Liabilities (effective from January 1, 2014). The amendment provides guidance to address inconsistencies in applying the criteria for offsetting financial assets and financial liabilities. It clarifies that a right of set-off is required to be legally enforceable, in the normal course of business; in the event of default; and in the event of insolvency or bankruptcy of the entity and all of the counterparties. The amendment also clarifies the principle behind net settlement and provided characteristics of a gross settlement system that would satisfy the criterion for net settlement. The Group does not expect this amendment to have a significant impact on its consolidated financial statements.

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(iii) PAS 36 (Amendment), Impairment of Assets – Recoverable Amount Disclosures for Non-financial Assets (effective from January 1, 2014). The amendment clarifies that the requirements for the disclosure of information about the recoverable amount of assets or cash-generating units is limited only to the recoverable amount of impaired assets that is based on fair value less cost of disposal. It also introduces an explicit requirement to disclose the discount rate used in determining impairment (or reversals) where recoverable amount based on fair value less cost of disposal is determined using a present value technique. Management will reflect in its subsequent years’ consolidated financial statements the changes arising from this relief on disclosure requirements, if the impact of the amendment will be applicable.

(iv) PAS 39 (Amendment), Financial Instruments: Recognition and Measurement –

Novation of Derivatives and Continuation of Hedge Accounting (effective January 1, 2014). The amendment provides some relief from the requirements on hedge accounting by allowing entities to continue the use of hedge accounting when a derivative is novated to a clearing counterparty resulting in termination or expiration of the original hedging instrument as a consequence of laws and regulations, or the introduction thereof. As the Group neither enters into transactions involving derivative instruments nor it applies hedge accounting, the amendment will not have impact on the consolidated financial statements.

(v) PFRS 9, Financial Instruments: Classification and Measurement. This is the first

part of a new standard on financial instruments that will replace PAS 39, Financial Instruments: Recognition and Measurement, in its entirety. The first phase of the standard was issued in November 2009 and October 2010 and contains new requirements and guidance for the classification, measurement and recognition of financial assets and financial liabilities. It requires financial assets to be classified into two measurement categories: amortized cost or fair value. Debt instruments that are held within a business model whose objective is to collect the contractual cash flows that represent solely payments of principal and interest on the principal outstanding are generally measured at amortized cost. All other debt instruments and equity instruments are measured at fair value. In addition, PFRS 9 allows entities to make an irrevocable election to present subsequent changes in the fair value of an equity instrument that is not held for trading in other comprehensive income.

The accounting for embedded derivatives in host contracts that are financial assets is simplified by removing the requirement to consider whether or not they are closely related, and, in most arrangements, does not require separation from the host contract.

For liabilities, the standard retains most of the PAS 39 requirements which include amortized cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in case where the fair value option is taken for financial liabilities, the part of a fair value change due to the liability’s credit risk is recognized in other comprehensive income rather than in profit or loss, unless this creates an accounting mismatch.

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In November 2013, the IASB has published amendments to IFRS 9 that contain new chapter and model on hedge accounting that provides significant improvements principally by aligning hedge accounting more closely with the risk management activities undertaken by entities when hedging their financial and non-financial risk exposures. The amendment also now requires changes in the fair value of an entity’s own debt instruments caused by changes in its own credit quality to be recognized in other comprehensive income rather in profit or loss. It also includes the removal of the January 1, 2015 mandatory effective date of IFRS 9.

To date, the remaining chapter of IFRS 9/PFRS 9 dealing with impairment methodology is still being completed. Further, the IASB is currently discussing some limited modifications to address certain application issues regarding classification of financial assets and to provide other considerations in determining business model.

The Group does not expect to implement and adopt PFRS 9 until its effective date. In addition, management is currently assessing the impact of PFRS 9 on the consolidated financial statements of the Group and it plans to conduct a comprehensive study of the potential impact of this standard prior to its mandatory adoption date to assess the impact of all changes.

(vi) PFRS 10, 12 and PAS 27 (Amendments) – Investment Entities (effective from

January 1, 2014). The amendments define the term “investment entities,” provide supporting guidance, and require investment entities to measure investments in the form of controlling interest in another entity, at fair value through profit or loss. Management does not anticipate this amendment to have a material impact on the Group’s consolidated financial statements.

(vii) Annual Improvements to PFRS. Annual Improvements to PFRS (2010-2012 Cycle) and PFRS (2011-2013 Cycle) made minor amendments to a number of PFRS, which are effective for annual period beginning on or after July 1, 2014. Among those improvements, the following amendments are relevant to the Group but management does not expect a material impact on the Group’s consolidated financial statements:

Annual Improvements to PFRS (2010-2012 Cycle)

(a) PAS 16 (Amendment), Property, Plant and Equipment and PAS 38 (Amendment), Intangible Assets. The amendments clarify that when an item of property, plant and equipment, and intangible assets is revalued, the gross carrying amount is adjusted in a manner that is consistent with a revaluation of the carrying amount of the asset.

(b) PAS 24 (Amendment), Related Party Disclosures. The amendment clarifies that an entity providing key management services to a reporting entity is deemed to be a related party of the latter. It also requires and clarifies that the amounts incurred by the reporting entity for key management personnel services that are provided by a separate management entity should be disclosed in the financial statements, and not the amounts of compensation paid or payable by the key management entity to its employees or directors.

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(c) PFRS 3 (Amendment), Business Combinations (effective July 1, 2014). Requires contingent consideration that is classified as an asset or a liability to be measured at fair value at each reporting date.

(d) PFRS 13 (Amendment), Fair Value Measurement. The amendment,

through a revision only in the basis of conclusion of PFRS 13, clarifies that issuing PFRS 13 and amending certain provisions of PFRS 9 and PAS 39 related to discounting of financial instruments, did not remove the ability to measure short-term receivables and payables with no stated interest rate on an undiscounted basis, when the effect of not discounting is immaterial.

Annual Improvements to PFRS (2011-2013 Cycle)

(a) PFRS 3 (Amendment), Business Combinations (effective July 1, 2014).

Clarifies that PFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself.

(b) PFRS 13 (Amendment), Fair Value Measurement. The amendment clarifies that the scope of the exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis (the portfolio exception) applies to all contracts within the scope of, and accounted for in accordance with, PAS 39 or PFRS 9, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in PAS 32.

(c) PAS 40 (Amendment), Investment Property. The amendment clarifies the

interrelationship of PFRS 3 and PAS 40 in determining the classification of property as an investment property or owner-occupied property, and explicitly requires entity to use judgment in determining whether the acquisition of an investment property is an acquisition of an asset or a group of asset, or a business combination in reference to PFRS 3.

2.3 Basis of Consolidation

The Parent Company obtains and exercises control through voting rights. The Group’s consolidated financial statements comprise the accounts of the Parent Company and its subsidiaries, after the elimination of material intercompany transactions. All intercompany assets and liabilities, equity, income, expenses and cash flows relating to transaction between entities under the Group, are eliminated in full on consolidation. Unrealized profits and losses from intercompany transactions that are recognized in assets are also eliminated in full. Intercompany losses that indicate impairment are recognized in the consolidated financial statements.

The financial statements of the subsidiary are prepared for the same reporting period as the Parent Company, using consistent accounting principles. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

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Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when it is has the power over the investee, it is exposed, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date the Company obtains control. The Company reassesess whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of controls indicated above. Accordingly, entities are deconsolidated from the date that control ceases.

The acquisition method is applied to account for acquired subsidiaries. This requires recognizing and measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Company, if any. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred and subsequent change in the fair value of contingent consideration is recognized directly in profit or loss.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any existing equity interest in the acquiree over the acquisition-date fair value of the identifiable net assets acquired is recognized as goodwill. If the consideration transferred is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly gain in profit or loss (see Note 2.11).

2.4 Financial Assets

Financial assets are recognized when the Group becomes a party to the contractual terms of the financial instrument. Financial assets other than those designated and effective as hedging instruments are classified into the following categories: fair value through profit or loss (FVTPL), held-to-maturity investments, loans and receivables and AFS financial assets. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the investments were acquired. Regular purchases and sales of financial assets are recognized on their trade date. All financial assets that are not classified as FVTPL are initially recognized at fair value plus any directly attributable transaction costs.

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The Group’s financial assets are currently classified as loans and receivables and AFS financial asset. A more detailed description of these categories is as follows: (a) Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money or services directly to a debtor with no intention of trading the receivables. They are included in current assets, except for maturities greater than 12 months after the reporting period which are classified as non-current assets. The Group’s financial assets categorized as loans and receivables are presented as Cash and Cash Equivalents, Trade and Other Receivables (except Advances to employees) and Due from Related Parties in the consolidated statement of financial position. Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments with original maturities of three months or less, readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Loans and receivables are subsequently measured at amortized cost using the effective interest method, less impairment loss, if any. Impairment loss is provided when there is objective evidence that the Company will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the impairment loss is determined as the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset’s original effective interest rate or current effective interest rate determined under the contract if the loan has a variable interest rate.

(b) AFS Financial Asset

This category includes non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. They are included in non-current assets in the consolidated statement of financial position unless management intends to dispose of the investment within 12 months from the reporting period. The AFS financial asset of the Group pertains to unquoted equity security. The Group assesses at the end of each reporting period whether there is an objective evidence that the unquoted equity security, which are carried at cost, may be impaired. The amount of impairment loss is the difference between the carrying amount of the equity security and the present value of the estimated future cash flows discounted at the current market rate of return of a similar asset. Impairment losses on assets carried at cost cannot be reversed.

All income and expenses, including impairment losses, relating to financial assets that are recognized in profit or loss are presented as part of Finance Income or Finance Cost in the consolidated statements of income.

Non-compounding interest, dividend income and other cash flows resulting from holding financial assets are recognized in profit or loss when earned, regardless of how the related carrying amount of financial assets is measured.

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The financial assets are derecognized when the contractual rights to receive cash flows from the financial instruments expire, or when the financial assets and all substantial risk and rewards of ownership have been transferred to another entity.

2.5 Other Assets

Other assets pertain to other resources controlled by the Group as a result of past events. They are recognized in the consolidated financial statements when it is probable that the future economic benefits will flow to the entity and the asset has a cost or value that can be measured reliably. Other recognized assets of similar nature, where future economic benefits are expected to flow to the Group beyond one year after the end of the reporting period are classified as non-current assets. 2.6 Investment Property

Investment property pertains to condominium units held for capital appreciation. Condominium units are stated at cost, less accumulated depreciation and any accumulated impairment losses, if any. The cost of investment property comprises the acquisition cost or construction cost and other directly attributable costs for bringing the asset to working condition for its intended use. Expenditures for additions and major improvements are capitalized while expenditures for repairs and maintenance are charged to expense when incurred. Depreciation of condominium units is computed on a straight-line basis over its estimated useful life of 30 years [see Note 3.2(a)]. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see Note 2.16). Any gain or loss on the retirement or disposal of an investment property is recognized in profit or loss in the year of retirement disposal. Investment property is derecognized upon disposal or when permanently withdrawn from use and no future economic benefit is expected from its disposal.

2.7 Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization and any impairment in value.

The cost of an asset comprises its purchase price and directly attributable costs of bringing the asset to working condition for its intended use. Expenditures for additions, major improvements and renewals are capitalized; expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets as follows:

Transportation equipment 5 years Office and communication equipment 3-5 years Furniture and fixtures 3-5 years

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Leasehold improvements are amortized over their estimated useful life of three years or the term of the lease, whichever is shorter. Fully depreciated and amortized assets are retained in the accounts until they are no longer in use and no further change for depreciation and amortization is made in respect of these assets.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see Note 2.16). The estimated useful lives and methods of depreciation of property and equipment are reviewed, and adjusted if appropriate, at the end of each reporting period. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the year the item is derecognized.

2.8 Intangible Assets

Intangible assets, presented as part of other Other Non-current Assets account in the consolidated statements of financial position, include acquired computer software applications used in operation and administration which are accounted for under the cost model. The cost of the asset is the amount of cash or cash equivalents paid or the fair value of the other considerations given to acquire an asset at the time of its acquisition. Capitalized costs are amortized on a straight-line basis over an estimated useful life of five years as these intangible assets are considered finite. In addition, intangible assets are subject to impairment testing as described in Note 2.16. Amortization commences upon completion of the asset. Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and install the specific software for its intended use. Costs associated with maintaining computer software are expensed as incurred.

2.9 Financial Liabilities

Financial liabilities of the Group include Interest-bearing Loans, Trade and Other Payables (excluding tax-related payables) and Due to Related Parties. Financial liabilities are recognized when the Group becomes a party to the contractual terms of the instrument. All interest-related charges are recognized as an expense under the caption Finance Costs in the consolidated statement of income. Interest-bearing loans are raised for support of long-term funding of operations. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to profit or loss on an accrual basis using the effective interest method and are added to the carrying amount of the instrument to the extent that these are not settled in the period in which they arise. Trade and other payables and due to related parties are recognized initially at their fair value and subsequently measured at amortized cost, using the effective interest method for maturities beyond one year, less settlement payments.

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Financial liabilities are classified as current liabilities if payment is due to be settled within one year or less after the reporting period, or the Group does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Otherwise, these are presented as non-current liabilities. Financial liabilities are derecognized from the consolidated statement of financial position only when the obligations are extinguished either through discharge, cancellation or expiration. The difference between the carrying amount of the financial liability derecognized and the consideration paid or payable is recognized in profit or loss.

2.10 Offsetting Financial Instruments

Financial assets and liabilities are offset and the resulting net amount is reported in the consolidated statement of financial position when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

2.11 Business Combinations

Business acquisitions are accounted for using the acquisition method of accounting.

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.

Negative goodwill, if any, which is the excess of the Group’s interest in the net fair value of acquired identifiable assets, liabilities, and contingent liabilities over cost, is charged directly to income.

For the purpose of impairment testing, goodwill is allocated to cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The cash-generating units or groups of cash-generating units are identified according to operating segment.

Gains and losses on the disposal of an interest in a subsidiary include the carrying amount of goodwill relating to it.

If the business combination is achieved in stages, the acquirer is required to remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in the profit or loss or other comprehensive income, as appropriate.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with PAS 37, Provisions, Contingent Liabilities and Contingent Assets, either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

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2.12 Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s strategic steering committee; its chief operating decision-maker. The strategic steering committee is responsible for allocating resources and assessing performance of the operating segments.

In identifying its operating segments, management generally follows the Group’s service lines as disclosed in Note 4, which represent the main services provided by the Group.

Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources as well as marketing approaches. All inter-segment transfers are carried out at arm’s length prices.

The measurement policies the Group uses for segment reporting under PFRS 8, Operating Segment, is the same as those used in its consolidated financial statements. In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment.

2.13 Provisions and Contingencies Provisions are recognized when present obligations will probably lead to an outflow of economic resources and they can be estimated reliably even if the timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the end of the reporting period, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. When time value of money is material, long-term provisions are discounted to their present values using a pretax rate that reflects market assessments and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resource as a result of present obligations is considered improbable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognized in the consolidated financial statements. Similarly, possible inflows of economic benefits to the Group that do not yet meet the recognition criteria of an asset are considered contingent assets, hence, are not recognized in the consolidated financial statements. On the other hand, any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset not exceeding the amount of the related provision.

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2.14 Revenue and Expense Recognition Revenue comprises of income from rental and the rendering of services measured by reference to the fair value of consideration received or receivable by the Group for services rendered excluding value added tax (VAT). Revenue is recognized to the extent that the revenue can be reliably measured; it is probable that the economic benefits will flow to the Group; and the costs incurred or to be incurred can be measured reliably. In addition, the following specific recognition criteria must also be met before revenue is recognized: (a) Management fees – Revenue is recognized when the performance of contractually

agreed tasks have been substantially rendered.

(b) Rental income – Revenue is recognized on a straight-line basis over the duration of the lease term (see Note 2.15). For tax purposes, rental income is recognized based on the contractual terms of the lease.

(c) Service income – Revenue is recognized when the services related to technical projects, telephone services and transport of passengers have been substantially rendered.

(d) Interest Income – Revenue is recognized as the interest accrues taking into account

the effective yield on the asset.

Costs and expenses are recognized in profit or loss upon utilization of goods or services or at the date they are incurred. Finance costs are reported in profit or loss on accrual basis.

2.15 Leases The Company accounts for its leases as follows: (a) Group as Lessee

Leases which do not transfer to the Group substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as expense in the consolidated statements of income on a straight-line basis over the lease term. Associated costs, such as repairs and maintenance and insurance, are expensed as incurred.

(b) Group as Lessor

Leases which do not transfer to the lessee substantially all the risks and benefits of ownership of the asset are classified as operating leases. Lease income from operating leases is recognized in profit or loss on a straight-line basis over the lease term.

The Group determines whether an arrangement is, or contains, a lease based on the substance of the arrangement. It makes an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

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2.16 Impairment of Non-financial Assets The Group’s property and equipment, investment property and other non-financial assets are subject to impairment testing. All other individual assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, assets are tested for impairment as individually or at the cash-generating unit level. Impairment loss is recognized for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amounts which is the higher of its fair value less costs to sell and its value in use. In determining value in use, management estimates the expected future cash flows from each cash-generating unit and determines the suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risk factors. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment loss is reversed if the asset’s or cash generating unit’s recoverable amount exceeds its carrying amount.

2.17 Employee Benefits

The Company’s employee benefits are recognized and measured as follows:

(a) Defined Benefit Plan Post-employment benefits are provided to employees through a defined benefit plan.

A defined benefit plan is a post-employment plan that defines an amount of post-employment benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and salary. The legal obligation for any benefits from this kind of post-employment benefit plan remains with the Group, even if plan assets for funding the defined benefit plan have been acquired. Plan assets may include assets specifically designated to a long-term benefit fund, as well as qualifying insurance policies. The Group’s post-employment defined benefit plan covers all regular full-time employees.

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The liability recognized in the consolidated statement of financial position for post-employment benefit plans is the present value of the defined benefit obligation (DBO) at the end of the reporting period together with adjustments for unrecognized actuarial gains or losses. The DBO is calculated annually by independent actuaries using the projected unit credit method. The present value of the DBO is determined by discounting the estimated future cash outflows using a discount rate derived from the interest rates of a zero coupon government bonds as published by the Philippine Dealing & Exchange Corporation, that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related post-employment liability. Remeasurements, comprising of actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions and the return on plan assets (excluding amount included in net interest) are reflected immediately in the consolidated statement of financial position with a charge or credit recognized in other comprehensive income in the period in which they arise. Net interest is calculated by applying the discount rate at the beginning of the period, taking account of any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments. Net interest is reported as part of Finance Costs or Finance Income account in the statement of profit or loss.

Past-service costs are recognized immediately in profit or loss in the period of a plan amendment.

(b) Defined Contribution Plans

A defined contribution plan is a post-employment plan under which the Group pays fixed contributions into an independent entity. The Group has no legal or constructive obligations to pay further contributions after payment of the fixed contribution. The contributions recognized in respect of defined contribution plans are expensed as they fall due. Liabilities and assets may be recognized if underpayment or prepayment has occurred and are included in current liabilities or current assets as they are normally of a short-term nature.

(c) Compensated Absences

Compensated absences are recognized for the number of paid leave days (including holiday entitlement) remaining at the end of the reporting period. They are included in Trade and Other Payables account in the consolidated statement of financial position at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.

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2.18 Borrowing Costs

Borrowing costs are recognized as expenses in the period in which they are incurred, except to the extent that they are capitalized. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (i.e., an asset that takes a substantial period of time to get ready for its intended use or sale) are capitalized as part of cost of such asset. The capitalization of borrowing costs commences when expenditures for the asset and borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalization ceases when substantially all such activities are complete. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

There were no borrowing costs capitalized in 2013, 2012 and 2011 since the Group has no qualifying assets.

2.19 Income Taxes Tax expense recognized in profit or loss comprises current tax not recognized in other comprehensive income or directly in equity. Current tax assets or liabilities comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting period, that are uncollected or unpaid at the end of reporting period. They are calculated using the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognized as a component of tax expense in profit or loss. Deferred tax is accounted for using the liability method on temporary differences at the end of the reporting period between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Under the liability method, with certain exceptions, deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences and the carryforward of unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that future taxable profit will be available to allow such deferred tax assets to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, provided such tax rates have been enacted or substantially enacted at the end of the reporting period. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.

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Most changes in deferred tax assets or liabilities are recognized as a component of tax expense in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Deferred tax assets and deferred tax liabilities are offset if the Group has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same entity and the same taxation authority. 2.20 Related Party Relationship and Transactions Related party transactions are transfers of resources, services or obligations between the Group and its related parties, regardless whether a price is charged.

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. These parties include: (a) individuals owning, directly or indirectly through one or more intermediaries, control or are controlled by, or under common control with the Group; (b) associates; and, (c) individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them significant influence over the Group and close members of the family of any such individual.

In considering each possible related party relationship, attention is directed to the substance of the relationship and not merely on the legal form.

2.21 Equity Capital stock represents the nominal value of shares that have been issued. Subscription receivable represents the unpaid portion of the subscribed capital stock due from stockholders. Revaluation reserves comprise gains and losses due to the revaluation of property, plant and equipment and certain financial assets, and remeasurements of postemployment defined benefit plan. Deficit includes all current and prior period results of operations as disclosed in the consolidated statements of income. 2.22 Earnings Per Share Basic earnings per share (EPS) is computed by dividing net profit by the weighted average number of common shares subscribed and issued during the year adjusted retroactively for any stock dividend, stock split or reverse stock split declared in the current year, if any. Diluted EPS is computed by adjusting the weighted average number of ordinary shares outstanding to assume conversion of dilutive potential shares. The Group does not have dilutive potential shares outstanding, thus, dilutive earnings per share is the same to the basic earnings per share.

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2.23 Events After the End of the Reporting Period

Any post-year-end event that provides additional information about the Group’s consolidated financial position at the end of the reporting period (adjusting event) is reflected in the consolidated financial statements. Post-year-end events that are not adjusting events, if any, are disclosed when material to the consolidated financial statements.

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The Group’s financial statements prepared in accordance with PFRS require management to make judgments and estimates that affect amounts reported in the consolidated financial statements and related notes. Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may ultimately differ from these estimates.

3.1 Critical Management Judgments in Applying Accounting Policies

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimation, which have the most significant effect on the amounts recognized in the consolidated financial statements: (a) Impairment of AFS Financial Asset

The determination when an investment is other-than-temporarily impaired requires significant judgment. In making this judgment, the Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost, and the financial health of and near-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flows. Based on the recent evaluation of information and circumstances affecting the Group’s AFS financial asset, management concluded that the assets are not impaired as of December 31, 2012. The Group has sold all of its investment in AFS financial asset in 2013 as discussed in Notes 1.2 and 8.

(b) Distinction between Investment Properties and Owner-managed Properties

The Group determines whether a property qualifies as investment property. In making its judgment, the entity considers whether the property generates cash flows largely independently of the other assets held by an entity. Owner-managed properties generate cash flows that are attributable not only to property but also to other assets used in the production or supply process.

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(c) Distinction between Operating and Finance Leases

The Group has entered into various lease agreements either as a lessor or as lessee. Critical judgment was exercised by management to distinguish each lease agreement as either an operating or finance lease by looking at the transfer or retention of significant risk and rewards of ownership of the properties covered by the agreements. Failure to make the right judgment will result in either overstatement or understatement of assets and liabilities.

Management has determined that the Group’s current lease agreements are operating leases.

(d) Recognition of Provisions and Contingencies

Judgment is exercised by management to distinguish between provisions and contingencies. Policies on recognition of provisions and contingencies are discussed in Note 2.13 and disclosures on relevant provisions and contingencies are presented in Note 18.

3.2 Key Sources of Estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

(a) Estimating Useful Lives of Condominium Units (presented under Investment Property),

Property and Equipment and Computer Software

The Group estimates the useful lives of property and equipment, condominium units and computer software based on the period over which the assets are expected to be available for use. The estimated useful lives of these assets are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the assets.

The carrying amounts of computer software (under other non-current asset), property and equipment and investment property are analyzed in Notes 7, 9 and 10, respectively. Based on management’s assessment as at December 31, 2013 and 2012, there are no changes in the estimated useful lives of those assets during those years. Actual results, however, may vary due to changes in estimates brought about by changes in factors mentioned above.

(b) Impairment of Trade and Other Receivables

Adequate allowance is provided for specific and groups of accounts, where an objective evidence of impairment exists. The Group evaluates these accounts based on available facts and circumstances, including, but not limited to, the length of the Group’s relationship with the customers, average age of accounts, collection experience and historical loss experience. The carrying value of trade and other receivables and the analysis of allowance for impairment on such financial assets are shown in Note 6.

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(c) Determining Realizable Amount of Deferred Tax Assets

The Group reviews its deferred tax assets at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. Based on management’s assessment, the Group has assessed that the deferred tax assets recognized as at December 31, 2013 and 2012 will be fully utilized in the coming years. The carrying amount of deferred tax assets as of those dates is disclosed in Note 14.

(d) Impairment of Non-financial Assets

In assessing impairment, management estimates the recoverable amount of each asset or a cash-generating unit based on expected future cash flows and uses an interest rate to calculate the present value of those cash flows. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate (see Note 2.16). Though management believes that the assumptions used in the estimation of fair values reflected in the consolidated financial statements are appropriate and reasonable, significant changes in these assumptions may materially affect the assessment of recoverable values and any resulting impairment loss could have a material adverse effect on the results of operations.

(e) Fair Value Measurement of Investment Property

The Group’s condominium units, classified as Investment Property, are carried at cost at the end of the reporting period. The fair value disclosed in Note 21.3 is determined by the Group using the discounted cash flows valuation technique since the information on current or recent prices of investment property is not available. The Group uses assumptions that are mainly based on market conditions existing at each reporting period, such as: the receipt of contractual rentals; expected future market rentals; void periods; maintenance requirements; and appropriate discount rates. These valuations are regularly compared to actual market yield data and actual transactions by the Group and those reported by the market. The expected future market rentals are determined on the basis of current market rentals for similar properties in the same location and condition.

(f) Valuation of Post-employment Defined Benefit

The determination of the Group’s obligation and cost of post-employment defined benefit is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include, among others, discount rates and salary increase rate. A significant change in any of these actuarial assumptions may generally affect the recognized expense and the carrying amount of the post-employment benefit obligation in the next reporting period. The amounts of retirement benefit obligation and expense analysis of the movements in the estimated present value of retirement benefit obligation are presented in Note 13.2.

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(g) Business Combination

On initial recognition, the assets and liabilities of the acquired business and the consideration paid for them are included in the consolidated financial statements at their fair values. In measuring fair value, management uses estimates of future cash flows and discount rates. Any subsequent change in these estimates would affect the amount of goodwill, if any, if the change qualifies as a measurement period adjustment. Any other change would be recognized in profit or loss in the subsequent period.

4. SEGMENT REPORTING

4.1 Business Segments

The Group’s operating businesses are organized and managed separately according to the services provided, with each segment represent unit that offers different services and serves different markets. For management purposes, the Group is organized into two major business segments, namely property management and rental and other activities. These are also the basis of the Group in reporting its primary segment information.

(a) Property Management – is the operation, control of (usually on behalf of an

owner), and oversight of commercial, industrial or residential real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its usable life and condition.

(b) Rental and Others – consists of rental from leasing activity of Parent Company

and transportation services of CityLink.

4.2 Segment Assets and Liabilities

Segment assets include all operating assets used by a segment and consist principally of operating cash, receivables, net of allowances and due from related parties. Segment liabilities include all operating liabilities and consist principally of trade and other payables, due to related parties and retirement benefit obligation.

http://en.wikipedia.org/wiki/Real_estate

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The business segment information of the Group as of and for the year ended December 31, 2013 and 2012 follows:

Property Rental and Management Others Total

2013 Revenues: Management fees P 232,055,178 P - P 232,055,178 Gain on sale of available-for-sale financial assets - 20,627,768 20,627,768 Service income - 15,556,533 15,556,533 Rental income - 9,364,826 9,364,826 Finance income 1,494,155 817,285 2,311,440 Others 2,960,363 11,809 2,972,172 Gross revenues 236,509,696 46,378,221 282,887,917 Expenses 227,873,005 23,806,874 251,679,879 Finance costs 6,682,086 2,250 6,684,336 Profit before tax 1,954,605 22,569,097 24,523,702 Tax expense 497,194 4,450,484 4,947,678 Net profit P 1,457,411 P 18,118,613 P 19,576,024 Segment assets P 216,469,479 P 184,415,308 P 400,884,787 Segment liabilities P 219,990,676 P 53,338,283 P 273,328,959

2012 Revenues: Management fees P 180,998,803 P - P 180,998,803 Service income - 11,909,881 11,909,881 Rental income - 8,380,582 8,380,582 Finance income 2,780,848 443,911 3,224,759 Others 160,043 4,364,053 4,524,096 Gross revenues 183,939,694 25,098,427 209,038,121 Expenses 169,789,595 22,281,330 192,070,925 Finance costs 8,209,242 - 8,209,242 Profit before tax 5,940,857 2,817,097 8,757,954 Tax expense 2,436,458 24,095 2,460,553 Net profit P 3,504,339 P 2,793,002 P 6,297,401 Segment assets P 202,082,675 P 162,801,682 P 364,844,357 Segment liabilities P 211,798,817 P 67,865,771 P 279,664,588

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Property Rental and Management Others Total

2011

Revenues: Management fees P 151,381,746 P - P 151,381,746 Rental income - 7,695,558 7,695,558 Service income - 5,442,997 5,442,997 Finance income 2,554,682 414,000 2,968,682 Equity in net earnings of an associate - 1,670,960 1,670,960 Others 1,625,806 61,281 1,687,087 Gross revenues 155,562,234 15,284,796 170,847,030 Expenses 144,716,729 18,007,488 162,724,217 Finance costs 6,187,896 - 6,187,896 Profit (loss) before tax 4,657,609 ( 2,722,692) 1,934,917 Tax expense 1,928,119 28,542 1,956,661 Operating profit (loss) P 2,729,490 ( P 2,751,234) ( 21,744) Income from acquisition of a subsidiary 5,936,591 Preacquisition loss of a subsidiary 828,999 Net profit P 6,743,846 Segment assets P 182,763,278 P 163,808,547 P 346,571,825 Segment liabilities P 185,718,211 P 71,705,638 P 257,423,849

5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include the following components as of December 31:

2013 2012

Cash on hand and in banks P 14,476,370 P 37,360,304 Short-term placements 157,749,787 23,174,722 P 172,226,157 P 60,535,026

Cash in banks generally earn interest based on daily bank deposit rates. Short-term placements are made for varying periods from 15 to 90 days and earn effective interest ranging from 1.00% to 4.00%, 1.75% to 4.00% and 2.75% to 4.75% in 2013, 2012 and 2011, respectively.

- 30 - 6. TRADE AND OTHER RECEIVABLES

The details of this account as of December 31 are as follows:

2013 2012

Current: Trade receivables P 80,497,779 P 77,303,417 Advances to employees 3,108,269 2,358,006 Car and housing loans receivables 1,482,362 2,632,706 Others 3,989,301 3,590,935 89,077,711 85,885,064 Allowance for impairment ( 6,678,996) ( 6,678,996 ) 82,398,715 79,206,068 Non-current – Car and housing loans receivables 6,525,815 6,525,815 P 88,924,530 P 85,731,883

Trade receivables are usually due within 30 to 60 days and do not bear any interest. All trade receivables are subject to credit risk exposure. However, the Group does not identify specific concentrations of credit risk with regard to trade and other receivables, as the amounts recognized resemble a large number of receivables from various customers. Advances to employees pertain to unliquidated advances to employees for business-related expenditures subject to liquidation.

Car and housing loans receivables pertain to interest-bearing loans granted to employees which have interest rates ranging from 10% to 19% per annum and are payable through salary deduction for a period of 10 years from the date the loan was extended. Related interest income from such transactions is shown as part of Finance Income in the consolidated statements of comprehensive income. All of the Group’s trade and other receivables have been reviewed for indicators of impairment. Based on management’s evaluation, no impairment losses on trade and other receivables need to be recognized in 2013, 2012 and 2011.

- 31 - 7. OTHER ASSETS

The composition of this account is shown below.

2013 2012 Current:

Input VAT - net P 5,366,880 P 5,407,694 Advances to contractors 1,688,455 1,611,868 Tax credits 263,681 257,029 Prepaid expenses 21,505 418,658 Others 125,383 377,039 7,465,904 8,072,288

Non-current: Computer software - net 3,523,896 3,102,071 Security deposits 721,666 131,200 Investments 585,731 - Others 427,204 71,323 5,258,497 3,304,594 P 12,724,401 P 11,376,882

Advances to contractors includes the downpayments made by FOPMI to the contractors for the completion of the contracted projects on properties being managed by FOPMI.

Amortization of computer software amounted to P3.1 million and P1.3 million, while accumulated amortization amounted to P4.5 million and P1.4 million as of December 31, 2013 and 2012, respectively. Intangible assets are subject to impairment testing whenever there is an indication of impairment. Based on management’s evaluation, no impairment loss on intangible assets need to be recognized as of December 31, 2013 and 2012.

8. AVAILABLE-FOR-SALE FINANCIAL ASSET

The carrying amount of the AFS financial asset represents the fair value of the investment of the Parent Company in SPI when the loss of significant influence occurred in 2011. As of December 31, 2012, based on management’s assessment, the carrying value approximates the fair value of the investment. In June 2013, the Parent Company sold its remaining investment in SPI to Megaworld for a consideration of P117.8 million, the related gain on sale of investment amounting to P20.6 million is presented as Gain on Sale of Available-for-Sale Financial Asset in the 2013 consolidated statement of income.

- 32 - 9. PROPERTY AND EQUIPMENT

The gross carrying amounts and accumulated depreciation and amortization of property and equipment at the beginning and end of 2013 and 2012 are shown below.

Office and Transportation Communication Furniture Leasehold Equipment Equipment and Fixtures Improvements Total

December 31, 2013

Cost P 55,541,635 P 16,480,904 P 1,390,367 P 8,601,240 P 82,014,146

Accumulated depreciation

and amortization ( 41,234,701 ) ( 14,182,703 ) ( 1,165,257 ) ( 5,691,313 ) ( 62,273,974 )

Net carrying amount

at December 31, 2013 P 14,306,934 P 2,298,201 P 225,110 P 2,909,927 P 19,740,172

December 31, 2012

Cost P 42,668,885 P 15,264,343 P 1,230,925 P 8,591,417 P 67,755,570


and amortization ( 38,482,351 ) ( 12,426,003 ) ( 1,050,031 ) ( 4,582,989 ) ( 56,541,374 )

Net carrying amount


January 1, 2012

Cost P 42,390,099 P 13,207,823 P 1,125,880 P 6,294,342 P 63,018,144


and amortization ( 33,984,041 ) ( 10,869,782 ) ( 951,398 ) ( 3,565,901 ) ( 49,371,122 )

Net carrying amount


A reconciliation of the carrying amounts of property and equipment at the beginning and end of 2013 and 2012 is shown below.

Office and Transportation Communication Furniture Leasehold Equipment Equipment and Fixtures Improvements Total

Balance at January 1, 2013

net of accumulated

depreciation and

amortization P 4,186,534 P 2,838,340 P 180,894 P 4,008,428 P 11,214,196

Additions 12,872,750 1,216,561 159,442 9,823 14,258,576

Depreciation and

amortization charges

for the year ( 2,752,350 ) ( 1,756,700 ) ( 115,226 ) ( 1,108,324 ) ( 5,732,600 )

Net carrying amount P 14,306,934 P 2,298,201 P 225,110 P 2,909,927 P 19,740,172

Balance at January 1, 2012

net of accumulated

depreciation and

amortization P 8,406,058 P 2,338,041 P 174,482 P 2,728,441 P 13,647,022

Additions 278,786 2,056,520 105,045 2,297,075 4,737,426

Depreciation and

amortization charges

for the year ( 4,498,310 ) ( 1,556,221 ) ( 98,633 ) ( 1,017,088 ) ( 7,170,252 )

Net carrying amount P 4,186,534 P 2,838,340 P 180,894 P 4,008,428 P 11,214,196

The cost of the Group’s fully depreciated property and equipment that are still being used in operations amounted to P21.5 million and P18.7 million as of December 31, 2013 and 2012, respectively.

- 33 - 10. INVESTMENT PROPERTY

The gross carrying amounts and accumulated depreciation of investment property at the beginning and end of 2013 and 2012 are shown below.

December 31, December 31, January 1, 2013 2012 2012

Cost P 1,456,194,860 P 1,456,194,860 P 1,456,194,860

Accumulated amortization ( 1,425,209,812 ) ( 1,423,970,410 ) ( 1,422,731,008 )

Net carrying amount P 30,985,048 P 32,224,450 P 33,463,852

A reconciliation of the carrying amounts of investment property at the beginning and end of 2013 and 2012 is shown below.

2013 2012

Balance at January 1, net of

accumulated amortization P 32,224,450 P 33,463,852 Depreciation charge for the year ( 1,239,402 ) ( 1,239,402 ) Balance at December 31, net of accumulated amortization P 30,985,048 P 32,224,450

Rental income from condominium units under operating lease agreements not exceeding one year, amounted to P1.3 million in 2013 and 2012, and P1.4 million in 2011 and is presented as part of Rental Income in the consolidated statements of income. There was no contingent rent recognized as of those dates. The operating lease commitments of the Group as a lessor are fully disclosed in Note 18.2. There are no direct operating expenses incurred with respect to investment property except for depreciation charges presented as Cost of Services in the consolidated statements of income (see Note 12).

The fair market values of these properties are P35.9 million, and P32.9 million as of December 31, 2013, and 2012, respectively. These are determined by calculating the present value of the cash inflows anticipated until the end of the life of the investment property using a discount rate of 10% in 2013 and 2012. Other information about the fair value measurement and disclosures related to the investment property are presented in Note 21.

- 34 - 11. TRADE AND OTHER PAYABLES

The details of this account are as follows:

Note 2013 2012 Non-trade payable P 25,503,746 P 25,503,746 Accrued expenses 15,398,787 6,428,900 Trade payables 14,147,374 17,665,946 Withholding taxes payable 6,113,284 4,751,620 Output VAT payable 3,520,354 2,853,215 Customers’ deposits 2,510,796 2,395,796 Others 15.3 4,628,826 3,517,363 P 71,823,167 P 63,116,586

Non-trade payable pertains to a liability payable on demand to a third party which was initially payable to Empire East Land Holdings, Inc. (EELHI), a related party under common ownership. Accrued expenses mainly include utilities, professional fees and other accruals. Others include advances from customers and accrued interest.

12. OPERATING EXPENSES BY NATURE

The details of operating expenses by nature are shown below. 2012 2011 (As Restated – (As Restated – Notes 2013 see Note 2.2) see Note 2.2) Salaries and employee benefits 13.1 P 204,126,206 P 155,811,772 P 126,568,949 Service costs 14,213,193 12,829,504 8,579,008 Depreciation and amortization 7, 9, 10 10,093,754 9,756,269 11,344,420 Utilities 7,314,700 2,043,988 5,151,704 Outside services 3,897,682 2,107,967 2,830,931 Taxes and licenses 1,750,816 1,376,470 1,710,528 Professional fees 1,418,550 1,285,696 1,781,832 Others 15.3, 18.1 8,864,978 6,184,238 3,798,845

P 251,679,879 P 191,395,904 P 161,766,217

Others include rentals, office supplies, entertainment costs, repairs and maintenance, dues and charges, insurance, trainings and seminars and printing and photocopying.

These expenses are classified in the consolidated statements of income as follows:

2012 2011 (As Restated – (As Restated – 2013 see Note 2.2) see Note 2.2) Cost of services P 218,800,469 P 174,048,109 P 140,492,965 Operating expenses 32,879,410 17,347,795 21,273,252 P 251,679,879 P 191,395,904 P 161,766,217

- 35 - 13. EMPLOYEE BENEFITS

13.1 Salaries and Employee Benefits

Expenses recognized as employee benefits (see Note 12) are presented below.

2012 2011 (As Restated – (As Restated – 2013 see Note 2.2) see Note 2.2) Salaries and wages P 110,657,580 P 98,368,187 P 79,718,463

Retirement benefits 31,240,154 13,234,791 10,848,189

Other employment benefits 62,228,472 49,208,794 36,002,297 P 204,126,206 P 155,811,772 P 126,568,949

13.2 Retirement Benefit Obligation

The Parent Company has not yet established a formal post-employment benefit plan and does not accrue post-employment benefits for its two employees due to insignificance of the amount. However, the Parent Company’s subsidiary maintains an unfunded non-contributory post-employment benefit plan covering all its regular full-time employees.

(a) Explanation of Amounts Presented in the Consolidated Financial Statements

Actuarial valuations are made annually to update the retirement benefit costs and the amount of contributions. All amounts presented below are based on the actuarial valuation report obtained from an independent actuary in 2013 including the comparative year which has been restated in line with the adoption of PAS 19 (Revised), [see Note 2.2(a)(ii)].

The movements in present value of the retirement benefit obligation recognized are as follows:

2012 (As Restated – 2013 see Note 2.2) Balance at beginning of year P 118,687,143 P 85,446,775 Current service 31,240,154 13,234,791 Interest costs 6,682,086 5,340,423 Remeasurements: Actuarial losses (gains) arising from: Experience adjustments ( 50,616,217 ) ( 3,169,172 ) Change in financial assumption 18,044,738 17,834,326 Balance at end of year P 124,037,904 P 118,687,143

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The components of amounts recognized in profit or loss and in other comprehensive income in respect of the defined benefit post-employment plan are as follows:

2012 (As Restated – 2013 see Note 2.2) Reported in profit or loss: Current service costs P 31,240,154 P 13,234,791 Interest costs 6,682,086 5,340,423 P 37,922,240 P 18,575,214 Reported in other comprehensive income – Actuarial losses (gains) arising from: Experience adjustments ( 50,616,217 ) ( 3,169,172 ) Change in financial assumption 18,044,738 17,834,326 ( P 32,571,479 ) P 14,665,154

The amounts of post-employment benefit expense are allocated as follows:

2012 (As Restated – Note 2013 see Note 2.2) Cost of services P 25,616,926 P 10,852,529 Operating expenses 5,623,228 2,382,262 13.1 P 31,240,154 P 13,234,791

The net interest expense is included in Finance Costs under Cost and Expenses section in the consolidated statements of income.

Amounts recognized in other comprehensive income were included within items that will not be reclassified subsequently to profit or loss.

In determining the amounts of the defined benefit post-employment obligation, the following significant actuarial assumptions were used:

2013 2012 Discount rates 4.91% 5.63%

Expected rate of salary increases 10.00% 10.00%

Assumptions regarding future mortality are based on published statistics and mortality tables. The average expected remaining working life of employees retiring at 60 is 22 for both male and female. These assumptions were developed by management with the assistance of an independent actuary. Discount factors are determined close to the end of each reporting period by reference to the interest rates of a zero coupon government bonds with terms to maturity approximating to the terms of the post-employment obligation. Other assumptions are based on current actuarial benchmarks and management’s historical experience.

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The Group has yet to determine the amount of contribution to its retirement benefit plan in the future. (b) Risks Associated with the Retirement Plan

The plan exposes the Group to actuarial risks such as interest rate risk, longevity risk and salary risk.

(i) Interest Rate Risks

The present value of the defined benefit obligation is calculated using a discount rate determined by reference to market yields of government bonds. Generally, a decrease in the interest rate of a reference government bonds will increase the plan obligation.

(ii) Longevity and Salary Risks

The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of the plan participants both during and after their employment, and to their future salaries. Consequently, increases in the life expectancy and salary of the plan participants will result in an increase in the plan obligation.

(c) Other Information

The information on the sensitivity analysis for certain significant actuarial assumptions are described in the succeeding pages. (i) Sensitivity Analysis

The following table summarizes the effects of changes in the significant actuarial assumptions used in the determination of the defined benefit obligation as of December 31, 2013:

Impact on Post-employment Benefit Obligation Change in Increase in Decrease in Assumption Assumption Assumption

Discount rate +/- 0.5% ( P 12,865,505 ) P 14,561,115 Salary growth rate +/- 1.0% 28,407,608 ( 22,935,699 )

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. This analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation recognized in the consolidated statements of financial position.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.

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(ii) Funding Arrangements and Expected Contributions

The Group has no formal retirement benefit plan as of December 31, 2013; hence, it does not expect to make any contributions in 2014.

The maturity profile of undiscounted expected benefit payments as of December 31, 2013 are as follows:

Within one year P - More than one year to five years 5,839,156 More than five years to ten years 9,550,108 More than ten years to 15 years 64,028,863 More than 15 years to 20 years 71,470,300 More than 20 years 2,353,982,150

P 2,504,870,577

The weighted average duration of the defined benefit obligation at the end of the reporting period is 20 years.

14. TAXES

The components of tax expense relating to profit or loss and other comprehensive incone follow:

2012 2011 (As Restated – (As Restated – 2013 see Note 2.2) see Note 2.2) Reported in consolidated statement of income: Current tax expense: Regular corporate income tax (RCIT) at 30% P 12,696,824 P 7,873,186 P 6,427,869 Final tax 3,626,194 139,274 141,219 Minimum corporate income tax (MCIT) at 2% 1,332 20,657 2,835 16,324,350 8,033,117 6,571,923

Deferred tax income relating to origination and reversal

of temporary differences ( 11,376,672) ( 5,572,564 ) ( 4,615,262) P 4,947,678 P 2,460,553 P 1,956,661

Reported in consolidated statement of comprehensive income – Deferred tax income (expense) relating to origination and reversal

of temporary differences ( P 9,771,444) P 4,399,546 P 7,716,787

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A reconciliation of tax on pretax profit computed at the applicable statutory rates to tax expense reported in the consolidated statements of income is as follows:

2012 2011 (As Restated – (As Restated – 2013 see Note 2.2) see Note 2.2) Tax on pretax profit at 30% P 7,357,111 P 2,627,386 P 2,610,152 Adjustment for income subjected to lower income tax rates ( 3,117,651 ) ( 84,513 ) ( 70,609) Tax effects of: Deferred tax assets related to valuation allowance 708,218 613,785 763,331 Non-deductible expenses - 736,995 936,052 Non-taxable income - ( 1,433,100 ) ( 2,282,265 ) P 4,947,678 P 2,460,553 P 1,956,661

The Parent Company and CityLink did not recognize deferred tax assets on the following valuation allowance based on management’s evaluation that such deferred tax assets may not be recovered in future years.

2013 2012 Amount Tax Effect Amount Tax Effect Net operating loss carryover (NOLCO) P 6,868,365 P 2,060,510 P 6,175,547 P 1,852,664 MCIT 24,824 24,824 36,071 36,071 P 6,893,189 2,085,334 P 6,211,618 P 1,888,735

The details of NOLCO, which can be claimed as deduction by the Parent Company and CityLink from future taxable income within three years from the year such loss was incurred, are shown below.

Year Original Expired Remaining Valid Incurred Amount Amount Balance Until 2013 P 2,356,287 P - P 2,356,287 2016 2012 1,977,092 - 1,977,092 2015 2011 2,534,986 - 2,534,986 2014 2010 1,663,469 1,663,469 - 2013 P 8,531,834 P 1,663,469 P 6,868,365

The breakdown of MCIT which can be claimed as a credit against the Parent Company’s and Citylink’s RCIT is as follows:

Year Amount Valid Until

2013 P 1,332 2016 2012 20,657 2015 2011 2,835 2014 P 24,824

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The Group is subject to MCIT which is computed at 2% of gross income, as defined under the tax regulations or RCIT, whichever is higher. The Parent Company reported MCIT in 2013, 2012 and 2011 while CityLink reported MCIT in 2012 and 2011, since they are in a tax loss position in those years. MCIT amounting to P12,579 expired in 2013. FOPMI, on the other hand, did not report any MCIT in 2013, 2012 and 2011 as the RCIT is higher than MCIT in both years. The deferred tax assets recognized by FOPMI as of December 31, 2013 and 2012 relate to the following:

2012 (As Restated – 2013 see Note 2.2 ) Deferred tax assets: Retirement benefit obligation P 37,211,371 P 35,606,143 Allowance for impairment of receivables 2,423,394 2,423,394 P 39,634,765 P 38,029,537

The components of deferred tax expense (income) are as follows:

Consolidated Consolidated Statements Statements of Income of Comprehensive Income 2012 2011 2012 2011 (As Restated - (As Restated - (As Restated - (As Restated - 2013 see Note 2.2) see Note 2.2) 2013 see Note 2.2) see Note 2.2 Retirement benefit obligation P 11,376,672 P 5,572,564 4,894,965 (P 9,771,444 ) P 4,399,546 P 7,716,787 Allowance for impairment - - ( 279,703 ) - - - Deferred tax income (expense) ( P 9,771,444 ) P 4,399,546 P 7,716,787 Deferred tax income P 11,376,672 P 5,572,564, P 4,615,262

In 2013, 2012 and 2011, the Group opted to continue claiming itemized deductions in computing for its income tax due.

15. RELATED PARTY TRANSACTIONS

The Group’s transactions with related parties, which include a stockholder, related parties by common ownership and the Group’s key management, are described below.

2013 2012 Related Party Amount of Outstanding Amount of Outstanding Category Notes Transaction Balance Transaction Balance

Stockholder: Payment of advances 15.2 (P 22,552,992) P 6,364,603 (P 241,752) P 28,917,595 Subscription receivable 15.1 - 187,500,000 - 187,500,000 Related Parties Under Common Ownership: Granting (collections) of advances 15.2 8,098,764 36,649,714 ( 4,301,316) 28,550,950 Obtaining (payment) of advances 15.3 5,325,902 70,942,899 ( 20,255,776) 65,616,997 Lease of properties 15.4 1,023,762 75,852 542,869 300,995

- 41 -

15.1 Subscription Receivable On November 11, 2005, the BOD approved the increase in the Company’s authorized capital stock by P1.0 billion divided into 1,000,000,000 shares at P1.0 par value per share. Out of the total increase, 25% was subscribed by one of the investors with a total value of P250.0 million, of which P62.5 million was paid to the Company representing 25% of the subscription. The subscription receivable, which is unsecured and noninterest-bearing, remains outstanding as of December 31, 2013 and 2012.

15.2 Due from Related Parties

The Group grants unsecured and noninterest-bearing cash advances to its related parties for working capital requirements. These advances have no repayment terms and are payable on demand. The details of due from related parties as of December 31, 2013 and 2012 are as follows:

2013 2012 Goldsquare Properties Inc. (Goldsquare) P 28,634,476 P 6,613,205 Georgia Technosystems, Inc. 6,613,205 20,784,771

Others 1,521,642 1,272,583 36,769,323 28,670,559 Allowance for impairment ( 119,609) ( 119,609)

P 36,649,714 P 28,550,950

The movements in due from related parties are as follows: 2013 2012 Balance at beginning of year P 28,550,950 P 32,852,266 Additions 22,270,330 15,195,186 Repayments ( 14,171,566 ) ( 19,496,502 ) Balance at end of year P 36,649,714 P 28,550,950

In 2012, portion of the advances to Goldsquare amounting to P19.3 million was offset against the payable to EELHI, no similar transaction in 2013. Based on management’s assessment, no impairment loss is necessary to be recognized in 2013 and 2012 on these advances.

- 42 -

15.3 Due to Related Parties The Group obtains unsecured, and noninterest-bearing advances from Megaworld and related parties under common ownership for working capital purposes. These advances have no repayment terms and payable on demand.

2013 2012

EELHI P 34,449,016 P 34,449,016 Megaworld 6,364,603 28,917,595 Golden Hands Multipurpose Corporation 5,868,141 5,870,291 Eastwood Cyber One Corporation 3,904,593 4,513,593 Megaworld Land, Inc. 4,000,000 4,000,000 McKinley Town Center Estate Association, Inc. - 450,000 Others 22,721,149 16,334,097

P 77,307,502 P 94,534,592

The movements in due to related parties are as follows: 2013 2012 Balance, beginning of year P 94,534,592 P 115,032,120

Additions 6,387,052 2,731, 928 Repayments ( 23,614,142 ) ( 23,229,456 ) Balance, end of year P 77,307,502 P 94,534,592

In the normal course, the Group obtains noninterest-bearing and unsecured cash advances from other related parties under common ownership. 15.4 Lease of Properties

The subsidiary has existing agreements with related parties under common ownership for the lease of its office facilities for a period of 12 months renewable annually at the subsidiary’s option. Rental charges arising from these transactions are presented as Others under Operating Expenses account in the consolidated statements of income (see Note 12). The unpaid rentals are shown as part of Others under Trade and Other Payables account in the consolidated statements of financial position (see Note 11).

15.5 Key Management Personnel Compensation The compensation of Group’s key management personnel in 2013 and 2012 is broken down as follows:

2013 2012

Salaries and short-term benefits P 6,234,423 P 5,089,646 Retirement benefit 387,114 357,150

P 6,621,537 P 5,446,796

- 43 - 16. EARNINGS PER SHARE

The basic and diluted EPS is computed as follows: 2012 2011 (As Restated - (As Restated - 2013 see Note 2.2) see Note 2.2)

Net profit P 19,576,024 P 6,297,401 P 6,743,846

Divided by the weighted average number of outstanding shares 2,250,000,000 2,250,000,000 2,250,000,000 Basic and diluted EPS P 0.009 P 0.003 P 0.003

The Group has no potentially dilutive shares as of the end of each reporting period.

17. EQUITY

The details of this account as of December 31 are as follows:

2012 2011 (As Restated – (As Restated – 2013 see Note 2.2) see Note 2.2)

Capital stock P 2,062,500,000 P 2,062,500,000 P 2,062,500,000 Revaluation reserve ( 16,082,036 ) ( 38,882,071 ) ( 28,616,463 ) Deficit ( 1,918,862,136 ) ( 1,938,438,160 ) ( 1,944,735,561 )

P 127,555,828 P 85,179,769 P 89,147,976

On June 9, 2006, the SEC approved the listing of the Company’s shares totalling P2.0 billion. The shares were initially issued at an offer price of P1.00 per share. There was no additional listing of shares subsequent to initial listing. As of December 31, 2013 and 2012, there are 1,631 and 1,646 holders of the listed shares, respectively, which closed at P0.89 and P0.54 per share, respectively. On August 14, 2013, the BOD approved a pre-emptive rights offer to holders of its common shares which will entitle them to subscribe to 2.5 new shares for every common share held as of record date, to be set by the Company after approval by the Philippine Stock Exchange (PSE) of the listing of the rights shares.

The rights shares will be offered at the price of one peso per share, equivalent to the par value of the Company’s common shares. 25% of the subscription price shall be payable upon submission of the application for subscription and the balance of 75% shall be payable upon call by the BOD to be made not later than three years from the approval by the stockholders of the increase in capital stock. Subscribers shall have the option of paying 100% of the subscription price upon application for subscription. Proceeds of the rights offer will be used to fund various investment opportunities. As of December 31, 2013, the said issuance of stock rights has not yet been approved by the PSE.

- 44 - 18. COMMITMENTS AND CONTINGENCIES

18.1 Operating Lease Commitment – Group as a Lessee

The Group is a lessee under several operating leases covering its office facilities. The lease agreements have terms ranging from one month to one year and renewable upon the terms and conditions as may be agreed by the parties. The future minimum rentals payable within one year under these operating leases as of December 31, 2013, 2012 and 2011 amounted to P1.0 million, P0.9 million and P0.07 million, respectively. Total rental expense in 2013, 2012 and 2011 from these operating leases shown as part of Others under Operating Expenses account in the consolidated statements of income amounted to P1.0 million, P0.6 million and P0.1 million, respectively (see Note 12).

18.2 Operating Lease Commitment – Group as a Lessor

The Group is a lessor under several operating leases covering its condominium units. The lease agreements have terms ranging from one month to one year and renewable upon the terms and conditions as may be agreed by the parties. The future minimum rentals receivable within one year under these operating leases as of December 31, 2013 and 2012 amounted to P0.8 million and P1.3 million, respectively. Total rental income in 2013 and 2012 from these operating leases shown as part of Rental Income under Revenues account in the consolidated statements of income amounted to P1.3 million in both 2013 and 2012 and P1.4 million in 2011 (see Note 10).

Also, the Group is a lessor under various service transport lease agreements covering its transportation equipment. The lease agreements are short-term in nature but can be renewed upon mutual agreements by the parties and; accordingly, no future minimum rental receivables are disclosed. Total rental from these lease agreements amounted to P8.1 million, P7.1 million and P6.3 million in 2013, 2012 and 2011, respectively, and is presented as part of Rental Income account under Revenues section in the consolidated statements of income.

18.3 Others The Group has other commitments and contingencies that may arise in the normal course of the Group’s operations which have not been reflected in the consolidated financial statements. Management is of the opinion that losses, if any, from these other commitments will not have material effects on the Group’s consolidated financial statements.

19. RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group is exposed to a variety of financial risks in relation to financial instruments. The Group’s risk management is coordinated with the BOD and focuses on actively securing the Group’s short-to medium-term cash flows by minimizing the exposure to financial markets.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The financial risks to which the Group is exposed to are described below.

- 45 -

19.1 Interest Rate Risk As at December 31, 2013 and 2012, the Group is exposed to changes in market interest rates through its cash and cash equivalents which are subject to variable interest rates (see Note 5). The following illustrates the sensitivity of the profit before tax and preacquisition loss in 2013 and 2012 to a reasonably possible change in interest rates of +/- 4.05% and +/- 3.75%, respectively, with effect from the beginning of the year. This percentage has been determined based on the average market volatility in interest rate in the previous 12 months, estimated at 95% level of confidence. The sensitivity analysis is based on the Group’s financial instruments held at December 31, 2013 and 2012 with effect estimated from the beginning of the year. All other variables held constant, if interest rate increased by 4.05% and 3.75% in 2013 and 2012, the profit before tax and preacquisition loss in 2013 and 2012 would have increased by P7.0 million and P2.3 million, respectively. Conversely, if the interest rate decreased by same percentage, profit before tax and preacquisition loss in 2013 and 2012 would have been lowered by the same amount.

19.2 Credit Risk

Credit risk is the risk that a counterparty may fail to discharge an obligation to the Group. Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the consolidated statements of financial position or in the detailed analysis provided in the notes to consolidated financial statements. As of December 31, 2013 and 2012, the Group has the following financial assets:

Notes 2013 2012 Cash and cash equivalents 5 P 172,226,157 P 60,535,026 Trade and other receivables- net 6 85,816,261 83,373,877 Due from related parties – net 15.2 36,649,714 28,550,950 P 294,692,132 P 172,495,853

None of the Group’s financial assets are secured by collateral or other credit enhancements except for cash and cash equivalents as described below.

(a) Cash and Cash Equivalents

The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. Cash in bank, which are insured by the Philippine Deposit Insurance Corporation up to a maximum coverage of P500,000 per depositor per banking unit as provided for under Republic Act 9302, Charter of Philippine Deposit Insurance Corporation, are still subject to credit risk.

- 46 -

(b) Trade and Other Receivables

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counter party or any group of counterparties having similar characteristics. Based on historical default rates, the balance of receivables, which are not impaired relates to reputable companies that have a good track record with the Group.

Some of the unimpaired trade receivables are past due as at the end of the reporting period. No other financial assets are past due at the end of the reporting period. Trade receivables that are past due but not impaired as of December 31, 2013 and 2012 are shown below.

2013 2012 Not more than 3 months P 4,838,388 P 16,629,644 More than 3 months but not more than 6 months 2,544,693 2,810,588 More than 6 months but not more than one year 2,239,018 5,573,443 More than one year 69,575,757 39,911,508 P 79,197,856 P 64,925,183

(c) Due from Related Parties

In respect of due from related parties, the Group is not exposed to any significant credit risk exposure because management considers the credit quality of receivables from related parties to be good.

19.3 Liquidity Risk

The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash outflows due in a day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a six months and one year period are identified monthly. The Group maintains cash to meet its liquidity requirements for up to 60-day periods. Excess cash are invested in time deposits. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities. As at December 31, 2013, the Group’s consolidated financial liabilities have contractual maturities which are presented below.

Current within 6 months 6 - 12 months Trade and other payables P 29,546,160 P 32,643,369 Due to related parties 77,307,502 - P 106,853,662 P 32,643,369

- 47 -

As at December 31, 2012, the Group consolidated financial liabilities have contractual maturities which are presented below.

Current within 6 months 6 - 12 months Trade and other payables P 45,107,903 P 10,403,848 Due to related parties 49,720,973 44,813,619 P 94,828,876 P 55,217,467

The Group does not have noncurrent financial liabilities as of December 31, 2013.

The above contractual maturities reflect the gross cash flows, which may differ from the carrying values of the liabilities at the end of each reporting periods.

20. CATEGORIES AND FAIR VALUES OF FINANCIAL ASSETS AND

LIABILITIES 20.1 Carrying Amounts and Fair Values by Category

The carrying amounts and fair values of the categories of assets and liabilities presented in the consolidated statements of financial position are shown below.

2013 2012

Notes Carrying Values Fair Values Carrying Values Fair Value

Financial Assets

Loan and receivables:

Cash and cash equivalents 5 P 172,226,157 P 172,226,157 P 60,535,026 P 60,535,026

Trade and other receivables 6 85,816,261 85,816,261 83,373,877 83,373,877

Due from related parties 15.2 36,649,714 36,649,714 28,550,950 28,550,950

294,692,132 294,692,132 172,459,853 172,459,853 AFS financial asset - - 97,181,433 97,181,433 P 294,692,132 P 294,692,132 P 269,641,286 P 269,641,286

Financial liabilities

Financial liabilities at amortized cost:

Trade and other payables 11 P 62,189,529 P 62,189,529 P 55,511,751 P 55,511,751

Due to related parties 15.3 77,307,502 77,307,502 94,534,592 94,534,592

P 139,497,031 P 139,497,031 P 150,046,343 P 150,046,343

See Notes 2.4 and 2.9 for a description of the accounting policies for each category of financial instruments. A description of the Group’s risk management objectives and policies for financial instruments is provided in Note 19.

- 48 -

20.2 Offsetting of Financial Assets and Financial Liabilities

The Group does not have relevant offsetting arrangements, except as disclosed in Notes 15.2 and 15.3. Currently, all other financial assets and financial liabilities are settled on a gross basis; however, each party to the financial instrument (particularly related parties) will have the option to settle all such amounts on a net basis in the event of default of the other party through approval by both parties’ BOD and shareholders. As such, the Group’s outstanding receivables from and payables to the same related parties can be potentially offset to the extent of their corresponding outstanding balances.

21. FAIR VALUE MEASUREMENT AND DISCLOSURES 21.1 Fair Value Hierarchy

In accordance with PFRS 13, the fair value of financial assets and liabilities and non-financial assets which are measured at fair value on a recurring or non-recurring basis and those assets and liabilities not measured at fair value but for which fair value is disclosed in accordance with other relevant PFRS, are categorized into three levels based on the significance of inputs used to measure the fair value. The fair value hierarchy has the following levels:

a) Level 1: quoted prices (unadjusted) in active markets for identical assets or

liabilities that an entity can access at the measurement date; b) Level 2: inputs other than quoted prices included within Level 1 that are

observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and,

c) Level 3: inputs for the asset or liability that are not based on observable market

data (unobservable inputs).

The level within which the asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

For purposes of determining the market value at Level 1, a market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

- 49 - 21.2 Financial Instruments Measured at Amortized Cost for which Fair Value is Disclosed

The Group’s financial assets which are not measured at fair value in the 2013 consolidated statement of financial position but for which fair value is disclosed include cash and cash equivalents, which are categorized as Level 1, and trade and other receivables and due from related parties, which are categorized as Level 3. Financial liabilities which are not measured at fair value but for which fair value is disclosed pertain to trade and other payables and due to related parties which are categorized under Level 3. For financial assets with fair values included in Level 1, management considers that the carrying amounts of these financial instruments approximate their fair values due to their short-term duration. The fair values of the financial assets and financial liabilities included in Level 3, which are not traded in an active market, are determined based on the expected cash flows of the underlying net asset or liability based on the instrument where the significant inputs required to determine the fair value of such instruments are not based on observable market data.

21.3 Fair Value Measurement for Non-financial Assets

Non-financial assets pertains to investment property comprising condominium units which fair value amounted to P35.9 million as of December 31, 2013. The fair value of investment property is determined by calculating the present value of the cash inflows anticipated until the end of the life of the investment property using a discount rate of 10% in 2013.

22. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES

The Group’s capital management objectives are to:

Ensure the Group’s ability to continue as a going concern; and,

Provide an adequate return to shareholders in the future.

The Group also monitors capital on the basis of the carrying amount of equity as presented on the consolidated statements of financial position. It sets the amount of capital in proportion to its overall financing structure, i.e., equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

Statement of Management's Responsibility for Consolidated Financial Statements

Report of Independent Auditors on Supplementary Schedules Filed Separately from the Basic Financial Statements

(1) Supplementary Schedules to Financial Statements

(Annex 68-E, SRC Rule 68)

Schedule Content Page No.

A Financial Assets

Financial Assets at Fair Value Through Profit or Loss N/A

Held-to-maturity Investments N/A

Available-for-sale Financial Assets N/A

B Amounts Receivables/Accounts Payables from/to Directors, Officers, Employees, Related

Parties, and Principal Stockholders (Other than Related Parties)1

C Amounts Receivable from Related Parties which are Eliminated during the Consolidation of

Financial StatementsN/A

D Intangible Assets - Other Assets 2

E Long-term Debt N/A

F Indebtedness to Related Parties 3

G Guarantees of Securities of Other Issuers N/A

H Capital Stock 4

(2) Reconciliation of Deficit 5

(3) 6

(4) Map Showing the Relationship Between the Company and its Related Entities 7

(5) Summary of Application of Initial Public Offering Proceeds N/A

(6) Schedule of Financial Soundness Indicator 8

Schedule of Philippine Financial Reporting Standards and Interpretations Adopted by the Securities and Exchange

Commission and the Financial Reporting Standards Council as of December 31, 2013


INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

December 31, 2013

Name and designation of debtorBalance at

beginning of periodAdditions Amounts collected Amounts written off Current Not current

Balance at end of period

Officers and Employees 11,516,527 P - 400,081 )( P - 4,590,631 P 6,525,815 P 11,116,446

- 1 -

SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARY

SCHEDULE B - Amounts Receivables/Accounts Payables from/to Directors, Officers, Employees, Related Parties, and Principal Stockholders (Other than Related Parties)

DECEMBER 31, 2013


Deductions Ending Balance

Description (i)Beginning

balanceAdditions at cost

(ii)Charged to cost and expenses

Charged to other

accounts

Other changes additions

(deductions)Ending balance

Computer license software 3,102,071 P 3,543,577 P 3,121,752 )( P 3,523,896 P

- 2 -

SUNTRUST HOME DEVELOPERS, INC. AND SUBSIDIARY

Schedule D

Intangible Assets - Other Assets

December 31, 2013

Deduction

Give reasons fo write off.

Name of related partyBalance at beginning of

yearBalance at end of year

Empire East Landholdings, Inc. 34,449,016 P 34,449,016 P

Megaworld Corporation 28,917,595 6,364,603

Golden Hands Multipurpose Corporation 5,870,291 5,868,141

Eastwood Cyber One Corporation 4,513,593 3,904,593

Megaworld Land, Inc. 4,000,000 4,000,000

McKinley Town Center Estate Association, Inc. 450,000 -

Others 16,334,097 22,721,149

Total 94,534,592 P 77,307,502 P


December 31, 2013

Indebtedness to Related Parties

- 3 -

Schedule F

Title of IssueNumber of shares

authorized

Number of shares issued and outstanding

as shown under the related balance sheet

caption

Number of shares reserved for options,

warrants, coversion and other rights

Related partiesDirectors, officers

and employeesOthers

Common 3,000,000,000 2,250,000,000 - 768,334,992 7 1,481,665,001


Number of shares held by

Capital Stock

SUNTRUST HOME DEVELOPERS, INC.

Schedule H

- 4-

Deficit at Beginning of Year 1,954,173,104 )( P

Net Income Realized during the Year

Net income per audited financial statements 15,499,991

Deficit at End of Year 1,938,673,113 )( P

- 5-

SUNTRUST HOME DEVELOPERS, INC.

6th

Floor, The World Centre Building

330 Sen. Gil Puyat Avenue, Makati City

Reconciliation of Retained Earnings Available for Dividend Declaration

For the Year Ended December 31, 2013

AdoptedNot

Adopted

Not

Applicable

a

a

a

First-time Adoption of Philippine Financial Reporting Standards a

a

Amendment to PFRS 1: Limited Exemption from Comparative PFRS 7 Disclosures for First-

time Adopters a

Amendments to PFRS 1: Severe Hyperinflation and Removal of Fixed Date for First-time

Adopters a

Amendment to PFRS 1: Government Loansa

Share-based Payment a

Amendments to PFRS 2: Vesting Conditions and Cancellations a

Amendments to PFRS 2: Group Cash-settled Share-based Payment Transactions a

PFRS 3

(Revised) Business Combinations a

Insurance Contracts a

Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts a

PFRS 5 Non-current Assets Held for Sale and Discontinued Operations a

PFRS 6 Exploration for and Evaluation of Mineral Resources a

Financial Instruments: Disclosures a

Amendments to PFRS 7: Transition a

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets a

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets - Effective Date and

Transitiona

Amendments to PFRS 7: Improving Disclosures about Financial Instruments a

Amendments to PFRS 7: Disclosures - Transfers of Financial Assets a

Amendments to PFRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities a

Amendment to PFRS 7: Mandatory Effective Date of PFRS 9 and Transition Disclosures*

(deferred application)*a

PFRS 8 Operating Segments a

Financial Instruments a

Amendments to PFRS 9: Mandatory Effective Date of PFRS 9 and Transition Disclosures a

PFRS 10 Consolidated Financial Statements** a

Amendment to PFRS 10: Transition Guidance** a

Amendment to PFRS 10: Investment Entities** a

PFRS 11 Joint Arrangements a

Amendment to PFRS 11: Transition Guidance a

PFRS 12 Disclosure of Interests in Other Entities a

Amendment to PFRS 12: Transition Guidance** a

Amendment to PFRS 12: Investment Entities** a

PFRS 13 Fair Value Measurement a

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS


Schedule of Philippine Financial Reporting Standards and Interpretations

Adopted by the Securities and Exchange Commission and the

Financial Reporting Standards Council as of December 31, 2013

Framework for the Preparation and Presentation of Financial Statements

Conceptual Framework Phase A: Objectives and Qualitative Characteristics

Practice Statement Management Commentary

Philippine Financial Reporting Standards (PFRS)

PFRS 1

(Revised)

Amendments to PFRS 1: Additional Exemptions for First-time Adopters

PFRS 2

PFRS 4

PFRS 7

PFRS 9

6

aFramework for the Preparation and Presentation of Financial Statements

Presentation of Financial Statements a

Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising

on Liquidationa

Amendment to PAS 1: Presentation of Items of Other Comprehensive Income a

PAS 2 Inventories a

PAS 7 Statement of Cash Flows a

PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors a

PAS 10 Events after the Reporting Period a

PAS 11 Construction Contracts a

Income Taxes a

Amendment to PAS 12 - Deferred Tax: Recovery of Underlying Assets a

PAS 16 Property, Plant and Equipment a

PAS 17 Leases a

PAS 18 Revenue a

PAS 19

(Revised) Employee Benefits a

PAS 20 Accounting for Government Grants and Disclosure of Government Assistance a

The Effects of Changes in Foreign Exchange Rates a

Amendment: Net Investment in a Foreign Operation a

PAS 23

(Revised) Borrowing Costs a

PAS 24

(Revised) Related Party Disclosures a

PAS 26 Accounting and Reporting by Retirement Benefit Plans a

PAS 27

(Revised) Separate Financial Statements a

Amendment to PAS 27: Investment Entities a

PAS 28

(Revised) Investments in Associates and Joint Ventures a

PAS 29 Financial Reporting in Hyperinflationary Economies a

Financial Instruments: Presentation a

Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising

on Liquidationa

Amendment to PAS 32: Classification of Rights Issues a

Amendments to PAS 32: Offsetting Financial Assets and Financial Liabilities* (effective January

1, 2014)a

PAS 1

(Revised)

Philippine Accounting Standards (PAS)

PAS 12

PAS 21

PAS 32

6


PAS 33 Earnings per Share a

PAS 34 Interim Financial Reporting a

PAS 36 Impairment of Assets a

Amendment to PAS 36: Recoverable Amount Disclosures for Non-financial Assets* (effective

January 1, 2014)a

PAS 37 Provisions, Contingent Liabilities and Contingent Assets a

PAS 38 Intangible Assets a

Financial Instruments: Recognition and Measurement a

Amendments to PAS 39: Transition and Initial Recognition of Financial Assets and Financial

Liabilitiesa

Amendments to PAS 39: Cash Flow Hedge Accounting of Forecast Intragroup Transactions a

Amendments to PAS 39: The Fair Value Option a

Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts a

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets a

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets – Effective Date and

Transitiona

Amendments to Philippine Interpretation IFRIC 9 and PAS 39: Embedded Derivatives a

Amendment to PAS 39: Eligible Hedged Items a

Amendment to PAS 39: Novation of Derivatives and Continuation of Hedge Accounting*

(effective January 1, 2014)a

PAS 40 Investment Property a

PAS 41 Agriculture a

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities a

IFRIC 2 Members' Share in Co-operative Entities and Similar Instruments a

IFRIC 4 Determining Whether an Arrangement Contains a Lease a

IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental

Rehabilitation Fundsa

IFRIC 6 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic

Equipmenta

IFRIC 7 Applying the Restatement Approach under PAS 29, Financial Reporting in Hyperinflationary

Economies a

Reassessment of Embedded Derivatives a

Amendments to Philippine Interpretation IFRIC–9 and PAS 39: Embedded Derivatives a

IFRIC 10 Interim Financial Reporting and Impairment a

IFRIC 12 Service Concession Arrangements a

IFRIC 13 Customer Loyalty Programmes a

PAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their

Interactiona

Amendments to Philippine Interpretations IFRIC - 14, Prepayments of a Minimum Funding

Requirement and their Interactiona

IFRIC 16 Hedges of a Net Investment in a Foreign Operation a

IFRIC 17 Distributions of Non-cash Assets to Owners a

IFRIC 18 Transfers of Assets from Customers a

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments* a

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine a

IFRIC 21 Levies a

IFRIC 14

PAS 39

Philippine Interpretations - International Financial Reporting Interpretations Committee (IFRIC)

IFRIC 9

6


SIC-7 Introduction of the Euro a

SIC-10 Government Assistance - No Specific Relation to Operating Activities a

Consolidation - Special Purpose Entities a

Amendment to SIC - 12: Scope of SIC 12 a

SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers a

SIC-15 Operating Leases - Incentives a

SIC-25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders a

SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease a

SIC-29 Service Concession Arrangements: Disclosures a

SIC-31 Revenue - Barter Transactions Involving Advertising Services a

SIC-32 Intangible Assets - Web Site Costs a

* These standards will be effective for periods subsequent to 2013 and are not early adopted by the Company.

** These standards have been adopted in the preparation of financial statements but the Company has no significant transactions covered

in both years presented.

Philippine Interpretations - Standing Interpretations Committee (SIC)

SIC-12

6


Map of Investment

December 31, 2013

Legend:

A Subsidiary

B Associate

C Jointly controlled entity

First Centro, Inc. (A)

Emperador Distillers, Inc. (A)

Oceanic Realty Group Int'l., Inc.

(A)

Adams Properties, Inc. (A)

Alliance Global Brands , Inc. (A)

Venezia Universal Ltd. (A)

Alliance Global Cayman, Inc.

(A)

Megaworld Corp. (A)

Global-Estate Resorts, Inc. (A)

Golden Arches Development Corp. (A)

McKester Pik-Nik International Ltd.

(A)

ERA Real Estate Exchange, Inc.

(A)

Emperador International, Ltd.

(A)

The Bar Beverage, Inc. (A)

Anglo Watsons Glass, Inc.

(A)

Newtown Land Partners, Inc. (A)

Tradewinds Estates, Inc. (A)

Travellers International Hotel Group, Inc.

(A)

Twin Lakes Corp. (A)

Fil-Estate Golf Development, Inc.

(A)

Fil-Estate Urban Development Corp.

(A)

Fil-Estate Properties, Inc. (A)

Oceanfront Properties, Inc.

(A)

Fil-Estate Network, Inc. (B)

Golforce, Inc. (A)

Fil-Estate Ecocentrum, Inc.

(A)

Novo Sierra Holdings Corp.

(A)

Megaworld Global-Estates, Inc.

(A)

Fil-Estate Sales, Inc. (B)

Fi-Estate Realty and Sales Associates, Inc.

(B)

Fil-Estate Realty Corp. (B)

Philippine Aquatic Leisure Corp. (A)

Nasugbu Properties, Inc. (B)

Fil-Power Construction Equipment Leasing Corp.

(A)

Fil-Estate Subic Development Corp.

(A)

Blu Sky Airways, Inc. (A)

Aklan Holdings, Inc. (A)

Golden Sun Airways, Inc. (A)

La Compaña De Sta. Barbara, Inc.

(A)

MCX Corp. (A)

Pioneer L-5 Realty Corp. (A)

Prime Airways, Inc. (A)

Sto. Domingo Place Development Corp.

(A)

Fil-Power Concrete Blocks Corp. (A)

Fil-Estate Industrial Park, Inc. (A)

Sherwood Hills Development Inc.

(A)

BrightLeisure Management, Inc.

(A)

Grand Integrated Hotels and Recreation, Inc.

(A)

GrandServices, Inc. (A)

APEC Assets Limited (A)

GrandVenture Management Services, Inc.

(A)

Genting-Star Tourism Academy, Inc.

(B)

Manila Bayshore Property Holdings, Inc.

(A)

Eastwood Cyber One Corporation

(A)

Megaworld Cebu Properties, Inc.

(A)

Mactan Oceanview Properties and Holdings, Inc.

(A)

Megaworld Cayman Islands, Inc.

(A)

Suntrust Home Developers, Inc.

(B)

Megaworld Newport Property Holdings, Inc.

(A)

Empire East Land Holdings, Inc.

(A)

Megaworld Globus Asia, Inc.

(A)

Piedmont Property Ventures, Inc.

(A)

Stonehaven Land, Inc. (A)

Streamwood Property, Inc.

(A)

Megaworld Daewoo Corporation

(A)

Megaworld Central Properties, Inc.

(A)

Philippine International Properties, Inc.

(A)

Richmonde Hotel Group International

(A)

Megaworld Resort Estates, Inc. (A)

Empire East Communities, Inc.

(A)

Valle Verde Properties, Inc.

(A)

Sonoma Premier Land, Inc.

(A)

Laguna BelAir School, Inc.

(A)

Estwood Property Holdings, Inc.

(A)

Sherman Oak Holdings, Inc.

(A)

Gilmore Property Marketing Associates, Inc.

(A)

Oceantown Properties, Inc.

(A)

Golden Laoag Foods Corp. (A)

Davao City Food Industries, Inc.

(A)

Clark Mac Enterprises, Inc. (A)

Advance Food Concepts Manufacturing, Inc.

(A)

First Golden Laoag Ventures, Inc. (A)

Retiro Golden Foods, Inc. (A)

Golden Arches Realty Corp. (A)

Great American Foods, Inc.

(A)

McKester America, Inc. (A)

Megaworld Land, Inc. (A)

Palm Tree Holdings and Development Corp.

(B)

Townsquare Development, Inc. (A)

Prestige Hotels and Resorts, Inc.

(A) First Oceanic Property

Management , Inc. (B)

Alliance Global Properties, Inc. (B)

Greenspring Investment Holdings Properties Ltd.

(A)

Golden City Food Industries, Inc.

(C)

Entertainment City Integrated Resorts and

Leisure, Inc. (A)

Net Deals, Inc. (A)

Newport Star Lifestyle, Inc.

(A)

Majestic Sunrise Leisure and Recreation, Inc.

(A)

Deluxe Hotels and Recreation, Inc.

(A)

Royal Bayshore Hotels and Amusement, Inc.

(A)

Alliance Global Group, Inc.

(Parent Company)

Boracay Newcoast Hotel Group, Inc.

(A)

Lucky Star Hotels and Recreation, Inc.

(A)

McDonald's Puregold Taguig

(C)

McDonald's Bench Building

(C)

Citylink Coach Services, Inc.

(B)

Woodside Greentown Properties, Inc

(A)

Suntrust Properties, Inc. (A)

Suntrust Ecotown Developers, Inc

(A)

Lucky Chinatown Cinemas, Inc

(A)

Luxury Global Hotels and Leisure, Inc

(A)

Eastwood Cinema 2000, Inc

(A)

La Fuerza, Inc. (B)

Travellers Group Ltd. (A)

Resorts World Bayshore City, Inc. (RWBCI)

(A)

7

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