2013 final prospectus

COVER SHEET

1 5 2 6 6 1SEC Registration Number

C I T Y & L A N D D E V E L O P E R S , I N C .

(Company’s Full Name)

1 5 6 H . V . D E L A C O S T A S T . ,,

S A L C E D O V I L L A G E , M A K A T I C I T Y (Business Address: No. Street City/Town/Province)

Rufina C. Buensuceso 893 – 6060 Contact Person Company Telephone Number

1 2 3 1 1 2 - 1 (A)Month Day FORM TYPE Month Day Fiscal Year Annual Meeting

(Secondary License Type, If Applicable)

C F DDept. Requiring this Doc. Amended Articles Number / Section

Total Amount of Borrowings

Total No. of Stockholders Domestic Foreign

-----------------------------------------------------------------------------------------------------------------------To be accomplished by SEC Personnel concerned

File Number LCU

Document ID Cashier

S T A M P S

Remarks = pls. use black ink for scanning purposes

SECI]RITIES AIID EXCHANGE COMMISSION

sEcFoRM 12-l(A)

REGISTRATION STATEMENT I]NDER TIIE SBflruTIES REGIJLATION CODE

l. SEC Identification Number 152661

2. CITY & LAND DEVELOPERS. INCORPORATED

Exact name ofregistrant as specified in its character

3. MAKATI CITY. PHILIPPINES 4. 000-44+u0

Province, country or otherjurisdiction ofincorporation or organization

5. REALESTATEDEVELOPER

General character ofbusiness of reeistrant

BIR Tax Identification Number

6. Industry Classification Code: I II, IlSeCUseonly)

7. 3F Cityland Condominium 10 Tower 1, 156 H.V. Dela Costa Stree! Salcedo Village, Makari City1226Telephone No.: (632) 893-6060 FAxNo.: (632) 892-86s6

Address, including postal code, telephone number, FAX number including area code ofregisfaot's principal office

If registrant is not resident in the Philippines, or its principal business is outside the Philippines,state name and address including postal code, telephone number and FAX number, includingarea code and email address of resident agent in the Philippines.

9. Fiscal Year Ending Date (Month and Day) : December 31

COMPI'TATION OF REGISTRATION FEE

Title of each class.of securities to be Amormt to be resistered Amount ofregistered registation feo

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Short Term Comrnercial Papersl% Legal Research FeeTotal

Php 200,000,000 Php200,0002.000

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NNALPROSPECTUS

CITY & TAITD DEVELOPERS, INCO(A corporation organized under Philippine laws)

Registration of Philippine Peso Php 200,0Q0,000 Short-Term Commercial Papers

CW A, Land Developers, lncorporated(hereinafter referred to as "CLDI", the"Company" or "Issuet') is offering forpublic sale at face value, up toPhp200,000,000 worth of its Short-TermCommercial Papen (hereinafter r€ferred to as"STCPs" or the "Ofiered STCPsl to betraded over-the-counter

The date of this Prospectus is September 2, 2013

..ALL REGISTRAflON REQT]IREMENTS IIAVE BEEN METAND ALL INFORMAIION CONTTiUI\IED HT]RENY ARD TRUEAI\[DCI'RRENT'

CITY & LAND DEVELOPERS, INCORPORATEDRegistrantBy:

SLJBSCRIBED.AND SWORN to before me irl\l,Wti/tity onsEP 0 2 20tt

affiant personally appeared and orhibited his SSS ID with No. 3competent evidence of identification.

Doc. No. os :Page No. _..r09_;BookNo, f :Series of 2013.

44239

lBP No, 07884/Lifetirnerl-eguna5'17-519 QLrintin Parectes Sf

Binondo, Maniia

: FOR MANILAI/BER 31. 2014

PTR No. 1401379/1-3-13/Manila

Republic of the PhilippinesDeparment of Finance

Securities and Exchange CommissionSEC Building, EDSA, Greenhills, lrandaluyong City

@RrcRATION FWENCE DEPARTMENT

IN THE MATTER OF

CITY & tAND DEVEI.OPERS. INCORPORATED

- Registroni -

SEC-C|D ORDER NO. ts(5 . ̂ ' ' c oF Joto

Registrotion of Securif ies

O R D E R

Upon considerotion of the Registroiion Slotemenl ond olher popers ond documentsoiiqched ihereto which were filed on beholf of CITY & LAND DEVEIOPERS, |NCORPORATED,lhe Commission resolved to render effeclive ihe some for the regisirolion of Two HundredMllllon Pesos (P 200,000,000.00) worlh of shod-ferm commerciol popers, in occordonce withSeciion l2 of the Securities Regulolion Code ond ils lmplemenling Rules ond Regulotions.

Let o Ceriificole of Permil to Offer Securities for Sole be issued in fovor of lhe subjecicompony ouihorizing the sole ond dislribution of lhe oforemenfioned securilies.

SO ORDERED.

EDSA, Mondoluyong City, Philippines, September 2. 2013.

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RISK DISCLOSURE STATEMENT

General Risk Warning

The price of securities can and does fluctuate, and any individual security may experience upward or downward movements, and may even become valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling securities.

Past performance is not a guide to future performance.

There is an extra risk of losing money when securities are bought from smaller companies. There may be a big difference between the buying price and the selling price of these securities.

An investor deals in a range of investments each of which may carry a different level of risk.

Prudence Required

This risk disclosure does not purport to disclose all the risks and other significant aspects of investing in these securities. An investor should undertake his or her own research and study on the trading of securities before commencing any trading activity. He / she may request information on the securities and the issuer thereof from the Commission which are available to the public.

Professional Advice

An investor should seek professional advice if he or she is uncertain of, or has not understood any aspect of the securities to invest in or the nature of risks involved in trading of securities specially those high risk securities.

CITY & LAND DEVELOPERS, INCORPORATED(A corporation organized under Philippine laws)

Registration of Php 200,000,000 worth of Short-Term Commercial Papers for public sale at face value.

The Company is registering Php 200,000,000 worth of Short-Term Commercial Papers which it is offering for public sale at face value. The gross proceeds that will be raised from the offering is Php200,000,000 less registration fees, taxes, professional fees and other related expenses.

The net proceeds from the offering of the Short-Term Commercial Papers is Php 198,728,000 which is intended to be used as follows (in order of priority):

1) Project – Related Costs 100,000,0002) Payment of Maturing Loans / Notes 94,788,0003) Interest Expense 3,940,000

Net Proceeds Php 198,728,000

The Company is organized under the laws of the Republic of the Philippines. Its principal office is located at 3rd Floor Cityland Condominium 10 Tower 1, 156 H.V. Dela Costa Street, Salcedo Village, Makati City. Its telephone number is (632) 893-60-60.

Unless otherwise stated, the information contained in this document have been supplied by the Company which accepts full responsibility for the accuracy of the information and confirms, after having made all reasonable inquiries, that to the best of its knowledge and belief, there are no material facts, the omission of which would make any statement in this document misleading in any material respect. Neither the delivery of this document nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the date hereof.

No dealer, salesman or any other person has been authorized by the Company to issue any advertisement or to give any information or make any representation in connection with the sale of the Short-Term Commercial Papers other than those contained in this document and, if issued, given or made, such advertisement, information or representation must not be relied upon as having been authorized by the Company.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE AND SHOULD BE REPORTED IMMEDIATELY TO THE SECURITIES AND EXCHANGE COMMISSION.

TABLE OF CONTENTS

PageGlossary…………………………………………………………………………………….. 1Summary Information ……………………………………………………………………… 2Risks Factors ……………………………………………………………………………….. 4Use of Proceeds …………………………………………………………………………….. 7Determination of the Offering Price ……………………………………………………….. 9Offering Period……………………………………………………………………………... 10Plan of Distribution ……………….……….……….……….……….……….…………….. 11Description of Registrant’s Securities ……….……….……….……….……….…………... 12Market Information For Securities Other Than Common Equity ……….……….………… 15

Market For Issuer’s Common Equity and Related Stockholders’ Matters ……….………... 16Interests of Named Experts and Independent Counsels ……….……….……….………….. 18Information With Respect to the Registrant

Business ……….……….……….……….……….……….……….……….…………... 19Properties ……….……….……….……….……….……….……….……….…………. 26Legal Proceedings……….……….……….……….……….……….……….…………. 27Management’s Discussion and Analysis or Plan of Operation ……….……….………. 30Changes in and Disagreements With Accountants On Accounting and Financial Disclosure ……….……….……….……….……….……….……….……….………… 41Directors and Executive Officers……….……….……….……….……….…………… 41Executive Compensation ……….……….……….……….……….……….…………... 47Security Ownership of Certain Record and Beneficial Owners and Management ……. 48Certain Relationships and Related Transactions ……….……….……….…………….. 49Corporate Governance …………………………………………………………………. 49

Other Expenses Of Issuance and Distribution ……….……….……….……….…………... 51Financial Information ……….……….……….……….……….……….……….…………. 52Exhibits ……….……….……….……….……….……….……….……….……….………. **Signatures ……….……….……….……….……….……….……….……….……………... **

GLOSSARY

In this prospectus, unless the context otherwise requires, the following words or expressions shall have the following corresponding meanings:

“Articles” The Articles of Incorporation of the Company

“Board” The Incumbent Members of the Board of Directors of the Company

“CLDI” or “City & Land” or “Company” or “Issuer” or “Registrant”

City & Land Developers, Incorporated

“HLURB” Housing and Land Use Regulatory Board

“IAS” International Accounting Standards

“IFRS” International Financial Reporting Standards

“Offer” The offering for public sale of Php 200,000,000 worth of STCPs.

“Offering Period” The offering period shall commence upon the approval of the SEC permit to sell the STCPs and shall end upon the expiry of the permit to sell the STCPs.

“Offering Price” The offering price is 100% of the face value of the STCPs.

“PAS” Philippine Accounting Standards

“PFRS” Philippine Financial Reporting Standards

“Php”, “Pesos” The Philippine currency

“SEC” Securities and Exchange Commission

“SGV” SyCip, Gorres, Velayo and Co.

“SRC” Securities Regulations Code

“STCPs”, Offered “STCPs” Short-Term Commercial Papers

1

SUMMARY INFORMATION

THE COMPANY

City & Land Developers, Incorporated (CLDI or the “Company”) is a domestic public corporation registered with the Securities and Exchange Commission (“SEC”) on June 28, 1988 with the primary purpose of engaging in real estate development. CLDI was listed with the Philippine Stock Exchange on December 1999. The Company has developed residential subdivisions in Parañaque City and condominium projects in the cities of Manila and Pasig.

The condominium projects of CLDI which are fully completed and operational include Manila Residences Bocobo, a 34-storey commercial, office and residential condominium project located at 1160 Jorge Bocobo St., Ermita, Manila City; Grand Emerald Tower, a commercial, office and residential condominium located along Emerald Avenue, Ortigas Center, Pasig City; and Pacific Regency and Vito Cruz Towers , both commercial, office and residential condominium projects located along Pablo Ocampo Sr. Avenue (formerly Vito Cruz), City of Manila.

The Company maintains four prime lots for future development. The latest acquisition is located at 1939 Taft Avenue, Malate, Manila. The other lots are located along Roxas Boulevard, Paranaque City, Samar Ave., Quezon City and EDSA, Quezon City.

CLDI is a member of Cityland Group, a trusted name in real estate industry with a track record of developing prestigious condominiums in cities of Makati, Mandaluyong, Pasig, Manila and Tagaytay; affordable houses in Pasig City, Tagaytay City and Parañaque City; and residential subdivisions and farmlots in Bulacan, Cavite and Tagaytay City. The Group has been in property development business for more than thirty (30) years.

These are discussed in detail under “Information with Respect to the Registrant”.

RISKS OF INVESTING

Investors should prudently assess all attendant risks, as well as other considerations associated with an investment in this Offer. Such risks include the internal risks such as refinancing risk, credit risk, interest rate risk, market risk and liquidity risk; and external ones arising from the political and economic situation, real estate industry outlook and market competition. These are discussed more extensively under “Risks Factors”.

SUMMARY FINANCIAL INFORMATION

The following selected financial information were derived from the audited financial statements as of and for the years ended December 31, 2012, 2011 and 2010 and unaudited financial statements as of and for the three months ended March 31, 2013. The financial statements were audited by SyCip, Gorres, Velayo & Co., in accordance with the Generally Accepted Accounting Principles in the Philippines. The information should be read in conjunction with, and is qualified in its entirety by reference to such financial statements and related notes thereto and "Management's Discussion and Analysis or Plan of Operation".

2

As of and for the years ended December 31

(Audited)

June 30(Unaudited)

2011 2012 2013INCOME STATEMENT

Revenues Php 1,115,696,076 Php 676,140,702 Php 174,539,990Expenses 740,957,878 369,665,260 93,916,300Income before tax 374,738,198 306,475,442 80,623,690Net Income 316,984,047 255,986,579 64,673,616

BALANCE SHEETTotal Assets Php 2,221,425,308 Php 2,185,796,542 Php 2,269,659,535Total Liabilities 777,444,193 586,639,445 695,058,503Stockholders’ Equity 1,443,981,115 1,599,157,097 1,574,601,032

PER SHARE (Php)Earnings per share* Php0.47 Php0.32 Php0.16*

* After retroactive effect of 20% stock dividends distributed on October 04, 2012. (Annualized)

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RISK FACTORS

The risk factors in the order of importance are as follows:

REFINANCING RISKS

The Company is primarily engaged in real estate development. Risk Factors are: the moderately aggressive debt level of the Company's borrowings being short-term in nature increase the possibility of refinancing risks. This debt mix in favor of short-term borrowings is a strategy which the Company adopted to take advantage of lower cost of money for short-term loans versus long-term loans. Because the Company has the flexibility to convert its short-term loans to a long-term position by drawing down its credit lines with several banks or sell its receivables, refinancing risk is greatly reduced.

The Company manages such refinancing risks by improving the current and acid-test ratios at 3.02:1 and 2.64:1 as of March 31, 2013 from 2.77:1 and 2.32:1 as of December 31, 2012.

CREDIT RISK

This is defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

The financial instruments which may be the subject of credit risk are the installment contracts receivables and other financial assets of the Company. The corresponding management strategies for the aforementioned risks are as follows:

1. The credit risk on the installment contracts receivables may arise from the buyers who may default on the payment of their amortizations. The Company manages this risk by dealing only with recognized, credit worthy third parties. Moreover, it is the Company's policy to subject customers who buy on financing to credit verification procedures. Also, receivable balances are monitored on an on-going basis with the result that the Company's exposure to bad debts is insignificant.

2. The credit risk on the financial assets of the Company such as cash and cash equivalents, short-term cash investments, financial assets at fair value through profit or loss and available for sale investments may arise from default of the counterparty. The Company manages such risks by its policy to enter into transactions with a diversity of creditworthy parties to mitigate any significant concentration of credit risks. As such, there are no significant concentrations of credit risks in the Company.

INTEREST RATE RISK

This is the risk arising from uncertain future interest rates.

The Company's financial instruments are:

1. The Company's financial assets mainly consist of installment contract receivables, cash and cash equivalents and short-term investments. Interest rates on these assets are fixed at their inception and are therefore not subject to fluctuations in interest rates.

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2. For the financial liabilities, the Company only has short-term commercial papers and notes which bear fixed interest rates, thus are not exposed to fluctuations in interest rates.

MARKET RISK

This is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Financial instruments which rely their value on market factors are subject to market risk.

The available-for-sale investments are exposed to market risk. There is a risk for a decline in the value due to changes in the market. The exposure, however, is negligible because the amount of the said investment is insignificant as compared to the financial assets of the Company.

LIQUIDITY RISK

This is the current and prospective risk to earnings or capital from a company's inability to meet its obligations when they come due without incurring unacceptable losses.

The Company's treasury has a well-monitored funding and settlement management plan. The following is the liquidity risk management framework maintained by the Company:

a) Asset- Liability Management: Funding sources are combination of short and long-term. Funding sources are abundant and provide a competitive cost advantage. The Company also holds financial assets for which there is a liquid market and are, therefore, readily saleable to meet liquidity needs.

b) Conservative/ Liability Structure: Funding is widely diversified. There is little reliance on wholesale funding services or other credit-sensitive fund providers. The company accesses funding across a diverse range of markets and counter parties.

c) Excess Liquidity: The Company maintains considerable excess liquidity to meet a broad range of potential cash outflows from business needs including financial obligations.

d) Funding Flexibility: The Company has an objective to maintain a balance between continuity of funding and flexibility through the use of loans from banks and STCPs. As such, the Company already has committed borrowing facilities in the form of bank lines and an established record in accessing these markets.

As such, the Company addresses risk on liquidity by maintaining committed borrowing facilities in the form of bank lines and a established record in accessing these markets.

ECONOMIC FACTORS

The Company’s business consists mainly of providing office and housing units in the Philippines and the results of the operations will be influenced by the general conditions of the Philippine economy. Any economic instability or failure to register improved economic performance in the future may adversely affect the Company’s operations and eventually its financial performance.

5

POLITICAL STABILITY

The Company’s business like all other businesses may be influenced by the political situation in the country. Any political instability in the future could have a material adverse effect in the Company’s business and results of operations.

INDUSTRY OUTLOOK

The industry is characterized by boom-bust cyclical pattern exhibited in the past couple of decades where the industry normally goes through years of robust growth following years of slowdown. The industry is in the recovery stage from the economic slowdown brought about by Asian crisis.

COMPETITION

The demand for housing especially in the medium-cost category has increased. The situations has attracted both old and new players to develop projects that cater to this rising demand. Given the number of projects available in the market, some competition is expected. The Company believes that it is in a better position to cope with the competition because of the affordability of the projects it offers in the market.

The following preventive measures are being undertaken by the Registrant to manage the aforementioned risks:

a) Conducting assessments of the economic and political situations of the country as well as new developments in the industry. The procedures involved in gathering of information of economic indicators and political events as well as being aware of the new developments in the industry is through media, business conferences, economic briefings and other sources.

b) Maintaining our competitive edge by keeping up to date with the technological advances in the construction industry, improving our marketing strategies and continuously updating the skills of our personnel.

Note: STCPs are not insured with the Philippine Deposit Insurance Corporation (PDIC).

6

USE OF PROCEEDS

The gross proceeds that will be derived from the offering is Php 200,000,000 less registration fees, taxes, professional fees and other related expenses.

The net proceeds from the offering of the Short-Term Commercial Papers is Php 198,728,000 which is intended to be used as follows (in order of priority):

1) Project – Related Costs 100,000,000 2) Payment of Maturing Loans / Notes 94,788,000 3) Interest Expense 3,940,000

Net Proceeds Php 198,728,000

The total actual and estimated expenses amounting to Php 1,272,000 is shown under “Other Expenses of Issuance and Distribution on page 51.

1) Project-related costs

The proceeds from the offering will be used to partially finance the construction of One Taft Residences, a future project of City and Land.

One Taft Residences is a 40-storey commercial and residential condominium located at 1939 Taft Avenue, Malate, Manila. Its amenities include multi-purpose room with children's playset, adult / kiddie pool, gym and viewing deck. It is scheduled to be launched in the first (1st ) quarter of 2014.

The utilization of the Php 100M project-related cost of One Taft Residences is as follows:

Period Amount

1st Qtr 2013 (Jan-Mar. 2014) Php 30,000,000

2nd Qtr 2013 (Apr.-June 2014) 30,000,000

3rd Qtr 2013 (July-Sept. 2014) 40,000,000

Total Php 100,000,000

The P 100M project-cost of One Taft Residences represents the costs and expenses for the permits, licenses and other pre-operating and pre-development costs and expenses.

Extent of financial commitment to complete the projects: The total credit line available for the Company from banks is P 1.95B all of which is unavailed.

2) Payment of Maturing Loans/ Notes

The Php 94,788,000 proceeds for the payment of loans/ notes are all estimated to be allocated for the payment of maturing STCPs and Home Guaranty Corporation (HGC) Promissory Notes.

Breakdown of Outstanding Loans and Notes as of May 31, 2013:

Financial Institution Amount Interest Rate Maturity Date

Short-Term Commercial Papers* 140,700,000 -various- -various-Short-Term Promissory Notes** 166,992,479 -various- -various-

Php 307,692,479

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* Short-term Commercial Papers amounting to Php 140,700,000 as of May 31, 2013 is covered by the following permits to offer securities for sale:

Dated September 07, 2012: P 140,700,000

** Short-term Promissory Notes are covered by a contract of guaranty with Home Guaranty Corporation. The guaranty covers the unpaid principal due on the outstanding promissory notes and unpaid interest thereon up to 10% per annum.

3) Interest expense

Interest expense pertains to this P200 million STCP issue computed on the average STCP rate as of May 31, 2013 as shown below:

Lender Principal Rate Term InterestNew STCP P200,000,000 1.97% One year P 3,940,000

In the event of any deviation/ adjustment in the planned uses of proceeds, the Company shall inform the Commission and STCP investors within thirty (30) days prior to its implementation.

If proceeds are substantially less than maximum proceeds, the Company will just opt to renew the maturing obligations from the existing financial institutions which extended the loans.

If material amount of other funds are necessary to accomplish purpose(s), the Company will avail from its existing lines with banks. The total credit line available for the Company from banks is P1.95B, all of which is unavailed.

The total Php 1.95B credit line were all made available to the Company by the ff. banks: Security Bank, Metrobank and United Coconut Planters Bank.

Proceeds from the offering will not be used to reimburse any officer, director, employee or any shareholder.

Proceeds from the offering is not intended to acquire properties within the next twelve months.

8

DETERMINATION OF THE OFFERING PRICE

The Offering Price is One Hundred Percent (100%) of the face value.

The interest rates are fixed and are determinable at the time of issuances of the STCPs. The interest rates are based on the prevailing market rates at the time of issue.

9

OFFERING PERIOD

The offering period will commence upon approval of the SEC of the STCPs and will end upon the expiry of the Permit to Sell of the STCPs.

10

PLAN OF DISTRIBUTION

The Short-Term Commercial Papers will be offered by the Company to local small investors, institutional buyers and general public as follows:

% to Total AmountInstitutional Buyers 30% 60,000,000General Public 70% 140,000,000

Php 200,000,000

The projected STCPs to be offered within the offering period mentioned above is as follows:

AmountWithin the First Quarter Php 50,000,000Within the Second Quarter 50,000,000Within the Third Quarter 50,000,000Within the Fourth Quarter 50,000,000

Php 200,000,000

The securities to be registered are to be offered through the Company's salesmen duly licensed by the Commission. The Company's salesmen are registered and authorized to act as Fixed Income Market Salesman with a Certificate of Registration issued by the SEC- Company Registration and Monitoring Department (CRMD). Please see Exhibit 17 for the Certificate of Registration of Salesmen.

The monthly compensation of these salesmen ranges from Php18,000.00 to Php65,000.00. They are also entitled to mandatory benefits and bonuses such as the 13 th month pay; and bonuses and incentives which are dependent on the Company's earnings as well as the salesman's performance.

As in the previously approved issues, the Company requested for exemption from the underwriting agreement as it has demonstrated its capability to sell the STCPs through its own selling efforts as mentioned in the foregoing paragraph.

Upon approval of the Registration Statement and the request for exemptive relief, the Company will provide a statement that its request for exemption from the submission of underwriting agreement has been granted.

11

DESCRIPTION OF REGISTRANT'S SECURITIES

1. Total Issue Amount

The issue amount is TWO HUNDRED MILLION PESOS (200,000,000) outstanding STCPs at any given time within the validity period granted by the SEC.

2. Provisions:

a) Instrument

The instrument is Short-Term Commercial Papers (STCPs). STCPs constitute direct, unconditional and general obligations of the Issuer. The STCPs maybe in registered or bearer form.

b) Issue Date

The issue dates can be one or more dates to commence within the validity period granted by the Securities and Exchange Commission.

c) Term/ Maturity

The STCPs shall have a term not exceeding 365 days from issue date. d) Interest Rates

The interest rate(s) will be fixed and payable in arrears either monthly, quarterly, semi-annually or annually or at the end of the term based on the prevailing market interest rates at the time of issuances. The average interest rate as of May 31, 2013 is 1.97%.

e) Redemption

Redemption shall be on a one-time payment at the end of each term.

f) Minimum Denomination Purchase

The minimum amount of STCP instruments shall not be lower than Php 300,000. The Issuer shall cause the STCP certificates to be made available to the purchaser upon full payment of the offering price.

g) Tax on the Interest on the STCPs

Interest income on the STCPs shall be subject to a twenty percent (20%) final withholding tax or such rate that maybe provided by law or regulation. The tax shall be for the account of the holder of the STCPs. Corporate and institutional purchasers who are exempt from or are not subject to the said tax shall submit pertinent documents evidencing their tax - exempt status.

h) Penalty Interest

Should any amount payable by the Issuer under the STCPs, whether for principal, interest or otherwise, be not paid on due date, the Issuer shall pay in addition to the computed interest, liquidated damages equivalent to one percent (1%) of the outstanding amount of the note, plus attorney’s fees and cost of collection in case of suit, an amount equal to Php 2,000 or 5% of the principal or interest whichever is higher. The Issuer further agrees

12

that any action for the STCPs shall be instituted in the proper court of Makati City or the proper Regional Trial Court (RTC) of Metro Manila or the case maybe.

i) Documentary Stamps on Original Issuance

The cost of documentary stamps on the original issues shall be for the account of the Issuer. The documentary stamps by reason of the secondary sales/transfers involving the change of the registered holdings shall be for the account of the secondary buyers.

j) Conversion, amortization, sinking fund, retirement

Conversion, amortization, sinking fund and retirement are not applicable in this STCP issue.

3. Substitution

Substitution is not permitted with or without notice.

4. Material Provisions Giving or Limiting Rights of Debt Holders

a) STCPs are unsecured obligations; as such, STCP debt holders are subordinate to secure creditors.

b) There is no limitation on the declaration of dividends; no restrictions on issuance of additional debt; no maintenance of asset ratios; and no provisions on security (collateral).

5. Financial Ratios

2010 2011 2012 Average As of June 30, 2013

Current Ratio 2.10 2.00 2.77 2.23 1.97

Acid Test Ratio 1.20 1.26 2.32 1.50 1.78

Total Assets to Total Liabilities 2.71 2.86 3.73 3.05 3.27

Net Profit Margin 34.64% 33.66% 50.35% 37.83% 61.03%

Return on Equity 22.02% 21.95% 16.01% 19.74% 8.21%*

Debt – Equity Ratio 0.29 0.22 0.16 0.22 0.20

* Annualized Manner of Calculation:

Current Ratio = Current Assets / Current Liabilities

Acid- Test Ratio = Cash & Cash Equivalents + Short-Term Investments + Available-for-sale Investments + current portion of Installment Contracts Receivables + current portion of Other Receivables

Total Current Liabilities

Total Assets to Total = Total Assets / Total Liabilities LiabilitiesNet Profit Margin = Net Income / Net Sales

Return on Equity = Net Income / Total Stockholders' Equity

Debt-Equity Ratio = Loans & Notes Payable Total Stockholders' Equity (net of Net Changes in FV of Investments)

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6. Track Record of Securities Registered under SRC

SEC Order No. Date Issued Nature ofSecurities

Amount Registered

Amount Outstanding as of May 31, 2013

1. 144 Series of 2012 September 07, 2012 STCP P 200,000,000 P 140,700,000

2. 255 Series of 2011 September 12, 2011 STCP P 200,000,000 ---



5. 091 Series of 2008 August 28, 2008 STCP P 200,000,000 ---



8. 150 Series of 2005 December 28, 2005 STCP P 127,000,000 ---

9. 180 Series of 2004 December 29, 2004 STCP P 115,000,000 ---

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MARKET INFORMATION FOR SECURITIES OTHER THAN COMMON EQUITY

STCPs has no established public trading market from which market information for STCPs can be obtained.

15

MARKET FOR ISSUER'S COMMON EQUITY AND RELATED STOCKHOLDERS' MATTERS

1) Trading Market

The Company’s common equity is traded in the Philippine Stock Exchange.

2) Stock PricesHigh Low

2013

2012

2011

First Quarter

First QuarterSecond QuarterThird QuarterFourth Quarter

First QuarterSecond QuarterThird QuarterFourth Quarter

2.60

1.882.383.002.84

1.231.781.781.80

2.10

1.251.511.962.00

1.081.171.501.20

Note: Prices in 2012 took into account the 20% stock dividends declared to the stockholders of record as of September 10, 2012.

3) Price Information on the Latest Practicable Date

The Company’s shares were last traded on June 20, 2013 at P 2.41 per share.

4) Dividends Policy

Dividends declared by the Company on its shares of stocks are payable in cash or in additional shares of stock. The payment of dividends in the future will depend upon the earnings, cash flow and financial condition of the Corporation and other factors.

5) Dividends

2013 2012 2011 2010Cash Php 0.11 / share Php 0.15 / share Php 0.14 / share Php 0.05/ shareStock 20.00% 20.00% 20.00% 20.00%

The Company declared Php 0.11 per share cash dividends on June 11, 2013. Record date of the cash dividends is on June 26, 2013 and to be paid on July 22, 2013.

6) Holders

a. The number of shareholders of record as of March 31, 2013 was 802.

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b. Top 20 Stockholders of record as of March 31, 2013Name No. of Shares % (Percent)

1. Cityland Development Corporation 403,436,321 49.73%2. Cityland, Inc. 239,625,410 29.54%3. PCD Nominee Corp.- Filipino 41,088,482 5.06%4. William T. Chua 16,997,713 2.10%5. Stephen C. Roxas 11,057,961 1.36%6. Cityplans, Incorporated 7,052,900 0.87%7. Henry Shao 6,286,062 0.77%8. Andrew I. Liuson 4,360,084 0.54%9. Credit and Land Holdings, Incorporated 4,177,952 0.52%10. Grace C. Liuson 3,817,243 0.47%11. Sharon Valerie Co 3,245,016 0.40%12. Stephanie Vanessa Co 3,245,016 0.40%13. Stephen Vincent Co 3,245,016 0.40%14. Josephine Lim 2,317,869 0.29%15. Ecclesiastes, Inc. 2,092,126 0.26%16. Josef C. Gohoc 1,652,171 0.20%17. Alice C. Gohoc 1,622,500 0.20%18. John Gohoc 1,622,500 0.20%19. Obadiah Incorporated 1,421,755 0.18%20. Jefferson C. Roxas 1,359,766 0.17%

7) Any Restrictions that may Limit Ability to Pay Dividends or that are Likely to Do so in the Future

Dividends declared on shares of stocks are payable in cash or in additional shares of stocks. Future dividend payments, if any, will depend on the earnings, cash flow and financial condition of the Corporation and other factors.

8) Recent Sales of Unregistered Securities or Exempt Securities (Including Recent Issuance of Securities Constituting an Exempt Transaction)

The total number of shares issued and outstanding of the Company increased for the past three (3) years as a result of stock dividends as follows:

Stock Dividend

Outstanding Shares Date Distributed

From To

2010 20% 469,474,212 563,368,825 July 14, 2010

2011 20% 563,368,825 676,042,298 September 09, 2011

2012 20% 676,042,298 811,250,476 October 04, 2012

Stock dividends are exempted from registration under Section 10.1 (d) of the Securities Regulation Code (SRC).

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INTERESTS OF NAMED EXPERTS AND COUNSELS

The validity of the STCP offer and other matters concerning the registration and offering of the STCPs was passed upon for the Company by Abaya Elias Law Firm.

The audited financial statements of the Company as of and for the years ended December 31, 2012, 2011 and 2010, together with the notes thereto, were audited by SyCip, Gorres, Velayo & Co., independent public accountants, as indicated in their reports which are included herein, in recognition of the authority of SGV as experts in accounting and auditing in giving such reports.

The above-named experts and counsels will not receive a direct or indirect interest in the registrant nor was such expert and counsels is a promoter, underwriter, voting trustee, director, officer or employee of the registrant.

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INFORMATION WITH RESPECT TO THE REGISTRANT

Business

A. Background Information

1. Brief Company History

City and Land Developers, Inc. is a domestic public corporation registered with the Securities and Exchange Commission on June 28, 1988 and started commercial operations on August 1, 1992.

The Company is 49.73% owned by Cityland Development Corporation while the remaining 50.27% is owned by 801 various stockholders.

On December 13, 1999, the issued and outstanding capital stock of the Company were listed in the Philippine Stock Exchange after the initial public offering on November 29,1999.

2. Nature of Operations

The Company's primary purpose is to acquire and develop suitable land sites for residential, office, commercial, institutional, and industrial uses.

The Company developed residential units in Parañaque, Metro Manila, which include single-detached, duplex, townhouse units and lots only as well as condominium projects in the cities of Manila and Pasig. It recently completed the construction Manila Residences Bocobo in June 2012 and Grand Emerald Tower in February 2011.

B. Development of Business for the past three (3) years (2010-2012)

1. We present herewith the status of sales and construction of our projects as of the end of the following years:

PERCENTAGE SOLD 2010 2011 2012 March 31, 2013

Pacific Regency 99.67% 99.79% 99.89% 99.78%* Launched in 2004Grand Emerald Tower 68.24 86.50 95.22 97.09 Launched in 2006Manila Residences Bocobo 58.61 72.52 90.85 91.76 Launched in 2009

• The decrease in percentage sold as of March 31, 2013 as compared with the previous year 2012 was due to cancellation of contracts to sell due to non-payment.

PERCENTAGE OF COMPLETION 2010 2011 2012 March 31, 2013

Pacific Regency 100.00% 100.00% 100.00% 100.00%Grand Emerald Tower 97.52 100.00 100.00 100.00Manila Residences Bocobo 38.10 96.36 100.00 100.00

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The details of the above projects are as follows:

Pacific Regency

Pacific Regency is a 38-storey commercial, office, and residential condominium located at Pablo Ocampo Sr. Ave. (formerly Vito Cruz Street) in front of Rizal Memorial Sports Complex in Manila. Amenities and facilities include swimming pool, gymnasium, separate sauna for male and female, function room, children’s playground, 24-hour association security, viewing area, and jogging areas at the roof deck.

Grand Emerald Tower

Grand Emerald Tower , a 39-storey commercial, office and residential condominium located along Emerald corner Ruby and Garnet Streets, Ortigas Center, Pasig City. Its amenities and facilities include swimming pool, gymnasium, viewing deck, sauna, children’s playground, multi purpose function room, and 24-hour association security. It is proximate to schools, hospitals, shopping malls, banks, restaurants, hotels , churches and other leisure and business establishments.

Date Completed: February 2011 (completed 4 months in advance)

Manila Residences Bocobo

Manila Residences Bocobo is a 34-storey commercial, office and residential building located at 1160 Jorge Bocobo St., Ermita, Manila City. Its amenities and features include swimming pool, gymnasium, function room, multi-purpose deck, children's play area and 24-hour association security.

Date Completed: June 2012 (completed 1 year in advance)

The future project of the Company is as follows:

One Taft Residences (scheduled to be launched in the first quarter of 2014)

One Taft Residences is a 40-storey commercial and residential condominium located at 1939 Taft Avenue, Malate, Manila. Its amenities include multi-purpose room with children's playset, adult / kiddie pool, gym and viewing deck.

a) Any Material Reclassification, Merger, Consolidation, or Purchase of Sale of a Significant Amount of Assets

There are no material reclassification, merger, consolidation, purchase, or sale of a significant amount of asset not in the ordinary course of business.

b) Marketing

All projects are sold by direct company salesmen and independent brokers.

c) Revenue Contribution of Projects to Total Revenues on Sales of Real Estate

P E R C E N T A G E %

2010 2011 2012 As of March 31, 2013

a. City & Land Mega Plaza 0.42% 0.04% 0.00% 0.00%b. Pacific Regency 0.08 1.04 0.76 --

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2010 2011 2012 As of March 31, 2013

c. Grand Emerald Tower 71.72 39.05 39.95 67.55d. Manila Residences Bocobo 27.78 59.42 59.23 32.45e. Others -- 0.45 0.06 --

100.00% 100.00% 100.00% 100.00%

d) Domestic and Foreign Sales Contribution to Total Sales

2010 2011 2012 As of March 31, 2013

Sales Filipino Citizens 81.27% 86.55% 85.14% 72.67% Foreign Citizens 18.73 13.45 14.86 27.33Total Sales 100.00% 100.00% 100.00% 100.00%

e) Competition

The property development industry in the Philippines where the Registrant is selling its products and services is characterized by boom-bust cyclical pattern exhibited in the past couple of decades where the industry normally goes through years of robust growth following years of slowdown. Currently, the industry is in the middle of this cycle.

The geographical area/ location of the Company's projects are in Manila, Pasig and Parañaque cities. The Company builds high-rise condominium projects catering to middle and high- income groups.

Cityland's projects are offered at affordable prices and affordable payment schemes. The Company has proven its track record in the timely turn-over or even advanced turn-over of its projects in line with its, “We commit, we deliver” slogan.

In the property development industry, the principal methods of competition among the developers are as follows:

a. price;b. product or the type of development, i.e. high, middle or low-end; andc. service or property management after the project is turned over to the buyers.

City & Land Developers, Inc. sells it products which consists of condominium projects, to both end-users and investors. City & Land projects are offered at affordable prices. It foresees that the demand for real estate products such as residential units will remain underserved due to: i) continued shift from rural to urban areas; ii) continued increase in the number of Overseas Filipino Workers (OFW) who have shown growing propensity for home purchase; and iii) population growth.

Grand Emerald Tower, a commercial, office and residential condominium is located along Emerald corner Ruby and Garnet Streets, Ortigas Center, Pasig City.

Other condominium project that is quite similar in terms and classifications is Eton Emerald Lofts located at Emerald, Sapphire & Garnet Streets, Ortigas Center, Pasig City. It is a project of Eton Properties Philippines, Inc. In terms of size, financial and market strengths, Eton Properties Philippines, Inc. is one of the major developers in the country having launched several projects. It is also part of the business conglomerate of Lucio Tan Group of Companies.

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Manila Residences Bocobo is a 34-storey commercial, office and residential building located at 1160 Jorge Bocobo St., Ermita, Manila City.

Other condominium project that is quite similar in terms and classifications is 8 Adriatico developed by Eton Properties Philippines, Inc. and located along Padre Faura corner Adriatico St., Malate, Manila City. In terms of size, financial and market strengths, Eton Properties Philippines, Inc. is one of the major developers in the country having launched several projects. It is also part of the business conglomerate of Lucio Tan Group of Companies.

However, City and Land Developers, Inc. believes that it can effectively compete with other companies with its competitive projects: Grand Emerald Tower and Manila Residences Bocobo because of good location, affordable pricing and quality development.

f) Principal Terms and Expiration Dates of All Patents, Trademarks, Copyrights, Licenses, Franchises, Concessions, and Royalty Agreements Held

The following table summarizes the registered trademarks of the Company:

TRADEMARK REGISTRATION No. Expiry DateParkview 4-1999-007576 June 26, 2013CLDI 4-2008-002313 July 14, 2018City and Land Developer’s, Inc. 4-2008-000848 September 8, 2018

g) Customers

City and Land Developers, Inc. has a broad market base and is not dependent upon a single or few customers. It has no single customer that accounts for 20% or more of its sales. Likewise, there are no major existing sales contracts.

h) Purchase of Raw Materials and Supplies

City & Land Developers, Inc. engaged the services of Millennium Erectors Corporation for the civil and architectural works in the development of its on-going projects.

As to the construction materials, City and Land had no major existing supply contracts for its projects. The major construction materials like steel bars, cement, etc. are sourced through canvassing and bidding from its list of accredited suppliers. City and Land then bought the materials from the lowest bidder.

i) Number of Employees

City & Land Developers, Inc. has a total of 73 employees as of March 31, 2013 classified as follows:

Managerial 2 Administrative 37

Rank & file 71 Operations 36

Total 73 Total 73

The number of employees is expected to increase by 15% within the next twelve (12) months. The company maintains an organizational framework whereby important management functions as well as administrative tasks are shared within the Cityland group. CLDI compensates the group for the actual costs of these services. The Company gives incentives and bonuses such as mid-year and year-end bonuses, as well as sick and vacation leaves.

All employees are not subject to collective bargaining agreement. There are no existing disputes with the registrant's employees. The Company's employees are not on strike or are threatening to strike nor they have been on strike in the past three (3) years.

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j) Government Approval of Projects

Status of Approval of On-going Projects

Government Agency: Grand Emerald Tower

Manila Residences Bocobo

a. Housing and Land Use Regulatory Board - Certificate of Registration / License to Sell

Approval Granted Approval Granted

b. City / Municipal Building Official / Department of Public Works and Highways

1. Development Permit by HLRB / Location Approval Granted Approval Granted

2. Building Permit

- Excavation, Civil Works Approval Granted Approval Granted

- Electrical, Sanitary, Fire, Sidewalk Approval Granted Approval Granted

- Mechanical Approval Granted Approval Granted

3. Occupancy Permit (Electrical, Fire, Mechanical, Civil, Sanitary)


c. Department of Environment and Natural Resources - Environmental Compliance Certificate


d. Laguna Lake Development Authority

- Permit to Construct Sewage Treatment Plant (STP) Approval Granted On-going Application

- Permit to Operate STP Approval Granted On-going Application

k) Effect of Existing Government Regulations on the Business

The Company has complied with all the appropriate government regulations prior to the development and marketing of its Grand Emerald Tower and Manila Residences Bocobo projects.

The effect of the various regulations on the business of the issuer are projects developed in accordance with the high quality standards required by the various regulatory agencies of the government.

l) Amount Spent for Research/Development Activities

There is no amount spent for research and development activities.

m) Cost and Effect of Compliance with Environmental Laws

2012 No payments were made.

2011 No payments were made.

2010 Partial payment of 17,000 to LAQ Consulting for ECC of North Residences.

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n) Transactions with and /or Dependence on Related Parties

Nature of transaction:

Significant transactions with related parties consist of interest bearing cash advances from/to its affiliates.

The Registrant's affiliates are Cityland Development Corporation (CDC), its parent company, Cityland, Inc. (CI), parent company of CDC and Cityplans, Inc., a subsidiary of CDC.

o) Major Risks Involved in Each of the Businesses of the Company

The Company is primarily engaged in real estate development. Risk factors are:

Refinancing Risk: The Company is primarily engaged in real estate development. Risk Factors are: the moderately aggressive debt level of the Company's borrowings being short-term in nature increase the possibility of refinancing risks. This debt mix in favor of short-term borrowings is a strategy which the Company adopted to take advantage of lower cost of money for short-term loans versus long-term loans. Because the Company has the flexibility to convert its short-term loans to a long-term position by drawing down its credit lines with several banks or sell its receivables, refinancing risk is greatly reduced.

The Company manages such refinancing risks by improving the current and acid-test ratios at 3.02:1 and 2.64:1 as of March 31, 2013 from 2.77:1 and 2.32:1 as of December 31, 2012.

Credit Risk: This is defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

The financial instruments which may be the subject of credit risk are the installment contracts receivables and other financial assets of the Company. The corresponding management strategies for the aforementioned risks are as follows:

1. The credit risk on the installment contracts receivables may arise from the buyers who may default on the payment of their amortizations. The Company manages this risk by dealing only with recognized, credit worthy third parties. Moreover, it is the Company's policy to subject customers who buy on financing to credit verification procedures. Also, receivable balances are monitored on an on-going basis with the result that the Company's exposure to bad debts is insignificant.

2. The credit risk on the financial assets of the Company such as cash and cash equivalents, short-term cash investments, financial assets at fair value through profit or loss and available for sale investments may arise from default of the counterparty. The Company manages such risks by its policy to enter into transactions with a diversity of creditworthy parties to mitigate any significant concentration of credit risks. As such, there are no significant concentrations of credit risks in the Company.

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Interest Rate Risk: This is the risk arising from uncertain future interest rates.

The Company's financial instruments are:

1. The Company's financial assets mainly consist of installment contract receivables, cash and cash equivalents and short-term investments. Interest rates on these assets are fixed at their inception and are therefore not subject to fluctuations in interest rates.

2. For the financial liabilities, the Company only has short-term commercial papers and notes which bear fixed interest rates, thus are not exposed to fluctuations in interest rates.

Market Risk: This is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Financial instruments which rely their value on market factors are subject to market risk.

The available-for-sale investments are exposed to market risk. There is a risk for a decline in the value due to changes in the market. The exposure, however, is negligible because the amount of the said investment is insignificant as compared to the financial assets of the Company.

Liquidity Risk: This is the current and prospective risk to earnings or capital from a company's inability to meet its obligations when they come due without incurring unacceptable losses.

The Company's treasury has a well-monitored funding and settlement management plan. The following is the liquidity risk management framework maintained by the Company:

1. Asset- Liability Management: Funding sources are combination of short and long-term. Funding sources are abundant and provide a competitive cost advantage. The Company also holds financial assets for which there is a liquid market and are, therefore, readily saleable to meet liquidity needs.

2. Conservative/ Liability Structure: Funding is widely diversified. There is little reliance on wholesale funding services or other credit-sensitive fund providers. The company accesses funding across a diverse range of markets and counter parties.

3. Excess Liquidity: The Company maintains considerable excess liquidity to meet a broad range of potential cash outflows from business needs including financial obligations.

4. Funding Flexibility: The Company has an objective to maintain a balance between continuity of funding and flexibility through the use of loans from banks and STCPs. As such, the Company already has committed borrowing facilities in the form of bank lines and an established record in accessing these markets.

As such, the Company addresses risk on liquidity by maintaining committed borrowing facilities in the form of bank lines and a established record in accessing these markets.

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Economic: The Company’s business consists mainly of providing office and housing units in the Philippines and the results of the operations will be influenced by the general conditions of the Philippine economy. Any economic instability or failure to register improved economic performance in the future may adversely affect the Company’s operations and eventually its financial performance.

Political: The Company’s business like all other businesses may be influenced by the political situation in the country. Any political instability in the future could have a material adverse effect in the Company’s business and results of operations.

Industry: The industry is characterized by boom-bust cyclical pattern exhibited in the past couple of decades where the industry normally goes through years of robust growth following years of slowdown. The industry is in the recovery stage from the economic slowdown brought about by Asian crisis.

The management manages the above risks by:

Conducting assessments of the economic and political situations of the country as well as new developments in the industry. The procedures involved in gathering of information of economic indicators and political events as well as being aware of the new developments in the industry is through media, business conferences, economic briefings and other sources.

With this information, the Company is able to assess and manage the risks mentioned above.

Debt Issues

The registrant's net worth exceeds P 25 million and the registrant has been in business for more than four (4) years.

Properties

Investments in real estate properties as of March 31, 2013 are as follows:Type Location Area Description Mortgagee /

Limitation1. Land Roxas Blvd. Cor. Seaside

Drive, Brgy. Tambo, Parañaque City

3,154 Lot is located along Roxas Blvd. ---

2. Land Samar Ave., cor Eugenio Lopez Ave., Quezon City

3,096 Lot is located along Samar Ave. ---

3. Land EDSA cor. Lanutan Alley, Quezon City

1,661 Lot is located along EDSA, Brgy. Veterans Village.

---

4. Land Taft Ave., Malate, City of Manila

2,038.10 Lot is located along Taft Avenue. ---

Ownership

The Company has complete ownership of the above-mentioned property.

Plan to Purchase

The Company has intentions to acquire property(ies) in the next twelve (12) months within the vicinity of Metro Manila. Actual acquisition is dependent on the outcome of negotiation with prospective seller(s). The source of financing the Company expects to use is the unavailed credit line of the Company amounting to P 1.95B.

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Lease Contracts

Leased properties as of March 31, 2013 (1st Quarter 2013) are as follows:Projects Rental Income Grand Emerald Tower- Units 707,996 Roxas Boulevard Property 25,222 Vito Cruz Properties 16,188 Ortigas Property 13,393Total 762,799

Note: Term of lease contracts ranges from 1 month to 1 year.

Renewal Options

Lease contracts are renewable upon written agreement of the parties.

Legal Proceeding

The material legal proceeding/s to which the registrant is a party or of which any of its property is the subject as of March 31, 2013 are as follows:

1. Registrant

Sta. Ana Village Homeowners’ Assoc. Inc. (SAVHA) vs. CLDICivil Case No. 12-009Parañaque Regional Trial Court – Branch 274Date Instituted: January 16, 2012

SAVHA filed a complaint dated January 16, 2012 which was received by CLDI on March 3, 2012, to enjoin defendant and all persons allowed by said defendant CLDI from using Benedictine Street in Sta. Ana Village, Barangay Sun Valley, Parañaque City; and to order the defendant by way of a writ of mandatory injunction to open another outlet to the main road without cost or liability to plaintiff. CLDI stated in its answer that plaintiff has not proven its claim over Benedictine Street because the Deed of Donation used by the plaintiff is a falsified and/or spurious document. Trial of the case is on going.

2. Affiliates

a.) Cityland Inc.

Tagaytay Executive Village Homeowners’ Association, Inc. vs Cityland, Inc.Case No. REM-A-11-01574Housing and Land Use Regulatory Board – Board of Commissioners Date Instituted: November 22, 2010

The case involves a petition to revoke the certificate of completion (“COC”) dated March 10, 2010 issued by the Regional Office, HLURB, Southern Tagalog Region, in favor of Cityland, Inc., owner and developer of Tagaytay Executive Village located at Brgy. San Jose, Tagaytay City. TEVHAI wants the Court to recall/cancel the COC and that Cityland be ordered to fully complete the alleged deficiencies in the amenities. The case was dismissed by the HLURB Region IV office. Consequently, the TEVHAI filed an appeal with the HLURB Board of Commissioners (which was dismissed in a Decision dated February 2, 2012). The TEVHAI appealed this case before the Office of the President.

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Sps. Banson & Electra Cheng vs Cityland, Inc.Case No. RIV-032013-3777Housing and Land Use Regulatory BoardSouthern Tagalog Region (Region IV)Date Instituted: March 20, 2013

Spouses Cheng filed a complaint for Specific Performance with damages praying that Cityland comply and continue with the sale of condominium unit no. 6017 and parking slot no. B-104 and B-105 of Tagaytay Prime Residences. Cityland stated in its Answer that no Deed of Absolute Sale or Contract to Sale was entered into by the parties. There were no meeting of minds to consummate a contract because there was no consent made by the seller (Cityland). Trial of the case is on going.

b.) Cityland Development Corporation

Esmeraldo Balosa vs. Cityland Development Corporation(Civil Case No. MC08 – 3563)Mandaluyong Regional Trial Court – Branch 208Date Instituted: April 11, 2008

Esmeraldo Balosa filed a case for preliminary Mandatory Injunction with damages against Cityland after the Business and License Department of Mandaluyong City closed his stalls due to Balosa’s failure to secure the necessary permits. He alleged that he has not been paying the lease because another entity is also claiming ownership of the leased property and that property cannot be used for his business. Balosa claims Cityland illegally ejected him. Trial of the case is on going.

Arthur M. Litonjua vs. Cityland Development Corporation(LRC Case No. R-7442)Pasig Regional Trial Court – Branch 161Date Instituted: October 29, 2010

Arthur M. Litonjua filed a Petition dated October 29, 2010 and received by Cityland last February 1, 2011, seeking an order to compel Cityland or any person in possession of the owner’s duplicate copy of TCT No. 38762, to surrender the same to the Register of Deeds of Pasig City. In the alternative, Litonjua prayed for the annulment of said owner’s duplicate copy should the person holding the same refuses to surrender the same, and for the Register of Deeds of Pasig City to issue a new certificate of title in the name of Litonjua and possession of the subject property. Cityland commented that it had previously sold the property to Roy L. Borbon way back in March 28, 1995 but Borbon never claimed the title from Cityland to undertake the registration of the same. The case is still pending with the admission of the Amended Petition of Litonjua.

Cristy Katsui vs. Cityland Development Corporation(Case No. NCR REM-062612-14812)HLURB – Expanded National Capital Region Field Office Date Instituted: June 26, 2012

Cristy Katsui filed a complaint dated June 20, 2012 which was received by Cityland on July 20, 2012, seeking an order for the rescission of the Contract to Sell over a commercial unit no. G-11 in Makati Executive Tower IV and for the return of all the amortizations paid by her in the total amount of P 1,634,000.00. Cityland stated in its answer that it cancelled the above-mentioned Contract to Sell in compliance with the instruction of Katsui in her letter, in behalf of all the buyers, dated June 21, 2011. She was informed that she is not entitled to any cash surrender value under R.A. No. 6552 that requires a minimum payment of 24 monthly installments. Katsui paid only 14 installments. Besides, the unit is a

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commercial unit which is not covered by the law which only covers residential units. The case is still pending with the HLURB.

3. Property

There was no case filed wherein any of the registrant's property/ies is the subject.

There are no cases involving unpaid real estate taxes which are material in amount.

The Company does not expect that the outcome of the above material legal proceeding involving the registrant will have a material adverse effect on the financial condition of the Company.

During the past five years up to present, there is no bankruptcy petition filed by or against any business of which such person was a general partner or executive officer of the Registrant either at a time of the bankruptcy or within two years prior to that time.

During the past five years up to present, the Registrant, any of its directors or executive officers has no conviction by final judgment, domestic or foreign, or is not subject to a pending criminal proceeding, domestic or foreign.

During the past five years up to present, the Registrant, any of its directors or executive officers is not 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.

During the past five years up to present, the Registrant, any of its directors or executive officers has not been found by a domestic or foreign court of competent jurisdiction (in 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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Financial Performance

For the six months ended June 30, 2013 The Manila Residences Bocobo, a 34-storey office, commercial and residential condominium located in Jorge Bocobo St., Ermita, Manila City is ready for occupancy by June 2012, a year in advance from its promised date of turnover to clients.

Internal sources of liquidity come from sales of condominiums and real estate projects, collection of installment receivables, maturing short-term investments while external sources come from SEC-registered commercial papers and Home Guaranty Corporation’s guaranteed promissory notes.

The Company has four prime lots for future development. The latest acquisition is located along Taft Avenue, Malate, Manila, and EDSA corner Lanutan Alley, Brgy. Veterans Village, Quezon City. The other lots are located along Roxas Boulevard and Samar Avenue, Quezon City.

For the year ended December 31, 2012

The Philippine economy as measured by the gross domestic product (GDP) grew dramatically in 2012 by 6.6% from last year’s 3.7%. Economic recovery was evidenced by higher international credit ratings as well as the continued appreciation of peso. The increase was largely due to the government’s disbursement acceleration program as well as the continuous speeding up for the implementation of various programs and projects. In addition, overseas remittances of Filipinos continued to increase resulting to the appreciation of the peso. Amidst the positive economic environment, sales of the Company for 2012 continued to remain stable indicating a sustained demand for condominium projects. The surge in vertical developments over the year was due to the expansion of the business outsourcing sector. Since Filipinos are increasingly adopting to condominium living, the Company is optimistic that demand for condominium projects will continue in the coming years.

On June 2012, the Company turned over, one year ahead of schedule, Manila Residences Bocobo, a 34-storey office, commercial and residential condominium located in Jorge Bocobo St., Ermita, Manila City. The Company is now selling its remaining unsold units.


The Company has four prime lots for future development. The latest acquisition is located at 1939 Taft Avenue, Malate, Manila. The other three lots are located along Roxas Boulevard, Samar Avenue, Quezon City and EDSA corner Lanutan Alley, Brgy. Veterans Village, Quezon City.


The Philippine economy as measured by the gross domestic product (GDP) posted a modest 3.7 percent growth in 2011. The slowdown can be attributed to the typhoons and the decline in foreign trade due to the poorly performing U.S economy, the European debt crisis and the Japan earthquake. In addition, political tensions in the Middle East resulted to high oil prices. The government is now pushing for a more robust growth rate in 2012 by increasing tax collection, implementing sound monetary policies and pledging to boost public spending on infrastructure

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development through public-private partnership. Amidst the economic slowdown, the Company’s sales remained stable indicating a sustained demand for condominium projects. At present, low interest rates encouraged availment of loans resulting to investments in real estate properties. The Company projects that sales will further increase with the stable macroeconomic environment and the gradual recovery of the world economy.

On February 2011, the Company completed four months ahead of schedule, Grand Emerald Tower, a 39-storey office, residential and commercial condominium located along Emerald Avenue corner Garnet and Ruby Roads, Ortigas Center, Pasig City. The Company is now selling its remaining unsold units.

The Manila Residences Bocobo, a 34-storey office, commercial and residential condominium located in Jorge Bocobo St., Ermita City is nearing completion and is expected to be completed on June 2013.


The Company has three prime lots for future development. The latest acquisition is located at EDSA corner Lanutan Alley, Brgy. Veterans Village, Quezon City. The other lots are located along Roxas Boulevard and Samar Ave, Quezon City.


The country’s economy grew dramatically from 0.9% in 2009 to 7.3 % in 2010, the highest in more than two decades. The high gross domestic product (GDP) rate came during a peaceful political transition of a new administration. The strong growth can be attributed to improved investor’s confidence, government and election expenditures, continued inflow of overseas remittances, growth of the business outsourcing sector and the high rate of foreign trade due to the improving global economy. At present, real estate sales remained strong as bank interest rates remained low while inflation rate remained manageable at below 5%. The Company is optimistic that the favorable political and business environment combined with the recovery of the world economy will bring more investments in the real estate industry. The Company launched last year, Manila Residences Bocobo, a 34-storey office, commercial and residential condominium located in Jorge Bocobo St., Ermita City. This project was well received and is currently under construction. Its other on-going condominium project, Grand Emerald Tower located along Emerald Ave., Ortigas Center, Pasig City is nearing completion as of December 31, 2010 and was turned over to the unit owners in February 2011.

Internal sources of liquidity come from sales of condominiums and real estate projects, collection of installment receivables, maturing short-term investments while external sources come from loans obtained from financial institutions.

The Company has two prime lots for future development. The latest acquisition is located at Samar Avenue Corner Eugenio Lopez Avenue, Quezon City. The second lot is located at the corner of Roxas Boulevard and Seaside Drive.

Financial Condition

June 30, 2013 vs. December 2012

Total assets amounted to 2.270B as of the first semester of 2013, as compared with the previous year’s ending balance of 2.186B. Collections decreased installment contracts receivable account while sales decreased real estate properties for sale-net. Excess funds from operations were

31

shifted to short-term cash investments resulting to the increase of the account.

Total liabilities increased by 18.48% due to accrual of dividends payable, higher notes and contracts payable and accounts payable and accrued expenses.

Total stockholders’ equity stood at 1.574B as of June 2013, lower by 1.54% from 2012 year end balance of 1.599B due to net income 64.67M less cash dividends of 89.23M.

As a result of the foregoing, the Company’s liquidity position registered an acid-test and current ratio of 1.78 and 1.97 in June 2013 as compared to 2.32 and 2.77 in December 2012. Debt-equity ratio was registered at 0.20 as of June 2013 as compared to 0.16 as of December 2012.

December 2012 vs December 2011

The Company’s balance sheet remained solid with total assets of 2.186 in 2012 as compared to the previous level of 2.221B. The slight decrease can be attributed to the decrease in real estate properties for sale by 61.18%. Sales, collection of receivables and re-investment of maturing placements to shorter period increased cash and cash equivalents account by 93.33%. The healthy cash position of the Company has allowed the purchase of lot increasing real estate properties for future development by 52.97%. Moreover, it has allowed the payment of cash dividends and reduction of accounts payable and accrued expenses and notes and contracts payable.

Total stockholders’ equity stood at 1.599B, higher by 10.75% as compared 2011 of 1.444B. The increase was due to net income of 256M less cash dividends of 101M.

As a result of the foregoing, the Company strengthened its liquidity position with current and acid-test ratio of 2.77:1 and 2.32:1, as compared with 2011 of 2.00:1 and 1.26:1, respectively. Asset-to-liability and debt-to-equity likewise improved to 3.73:1 and 0.16:1, from the previous year of 2.86:1 and 0.22:1, respectively.


In 2011, total assets expanded by 16.24% to 2.221B, higher by 310.40M from the previous year’s 1.911B. This can be attributed to increase in cash and cash equivalents, installment contracts receivable and real estate property held for future development. Majority of the Company’s funds were used for project development resulting to the high completion rates of Manila Residences Bocobo and Grand Emerald Tower. This resulted to the reduction of estimated development cost, consequently increasing installment contracts receivable (net of estimated development cost). The stable cash flow has also enabled the Company to purchase a prime lot and pay cash dividends. Excess funds were shifted to shorter period investments resulting to a reclassification of account. Total liabilities, on the other hand, increased by 10.25% due to increase in accounts payable and accrued expenses.

Total stockholders' equity stood at 1.444B, 19.74% higher as compared with 2010 of 1.206B. The increase was due to net income of 316.98M less cash dividends of 78.87.

As a result of the foregoing, the Company’s liquidity position remained stable with current and acid test ratio of 2.00:1 and 1.26:1 as compared to 2010 of 2.10:1 and 1.20:1, respectively. Asset and debt ratio improved to 2.86:1 and 0.22:1 as compared with the previous year of 2.71:1 and 0.29:1, respectively.


In 2010, total assets expanded by 26.61% to 1.911B, higher by 401.65M from the previous year’s 1.509B. This can be attributed to increase in short term cash investments, installment contracts receivable and real estate property held for future development. Majority of the

32

Company’s funds were used for project development resulting to high completion rates of Grand Emerald Tower and Manila Residences Bocobo. This resulted to the reduction of estimated development cost consequently increasing installment contracts receivable (net of estimated development cost). The stable cash flow has also enabled the Company to purchase a prime lot and pay cash dividends. Excess funds were channeled to short-term cash investments increasing the account by 289.50M.

Total liabilities, on the other hand, increased by 30.14% due to increase in accounts payable and accrued expenses and issuances of commercial paper. As a result of the foregoing, the Company’s liquidity position remained stable with current and acid test ratio of 2.10:1 and 1.20:1 as compared to 2009 of 2.23:1 and 0.88:1, respectively. Asset and debt ratio were recorded at 2.71:1 and 0.29:1 as compared with the previous year of 2.79:1 and 0.30:1, respectively.

Total stockholders' equity stood at 1.206B, 24.64% higher as compared with 2009 of 967.54M. The increase was due to net income of 265.60M less cash dividends of 28.17M plus 0.93M adjustment in net changes in fair values of available-for-sale investments.

Results of Operation June 30, 2013 vs. June 30, 2012

Net income for the first semester amounted to 64.67M, as compared to the same period last year of 149.73M. The Company’s current projects, Manila Residences Bocobo and Grand Emerald Tower were already sold at 90.85% and 95.22%, respectively as of December 31, 2012, resulting to the limited available units for sale which accounted for the decrease in revenues. With the latest acquisition of prime lots, the Company plans to launch new projects in the future to increase inventory and consequently generate more sales.

On the cost side, cost of sale and operating expenses decreased by 68.25% and 44.19% as these move in tandem with sales. Financial expenses decreased due to lower interest rates. On the other hand, provision for income tax also decreased due to lower revenues. Altogether, net income stood at 64.67M and translated to earnings per share and return on equity (both annualized) of 0.16 and 8.21% as compared to the same period of the previous year of 0.37 and 20.06%.

December 2012 vs December 2011Total sales from real estate properties reached 508.38M from the previous year of 941.78M. The decrease in sales is due to lower inventory level in 2012. The two condominium projects, Grand Emerald Tower and Manila Residences Bocobo were already sold at 86.50% and 72.52% at the beginning of the year. Sales of the remaining inventory resulted to a sell out rate of Grand Emerald Tower and Manila Residences Bocobo at 95.22% and 90.85%, respectively. Revenue on sales of Grand Emerald Tower, which was completed in 2011, contributed 39.95% to sales, while Manila Residences Bocobo accounted for 59.23% of sales.

On the cost side lower revenues decrease cost of sales and provision for income tax. Operating expenses likewise decrease due to lower personnel and professional fees. Interest expense remained fairly manageable at 11.06M as compared to the previous year at 11.25M.

Altogether, net income after tax stood at 255.99M and translated to earnings per share and return on equity of 0.32 and 16.01% as compared with last year’s 0.39 and 21.95%.


The Company posted an increase of 19.35% in net income amounting to 316.98M in 2011, from last year's figure of 265.60M, despite the economic slowdown during the year. Grand Emerald Tower which was completed in the first quarter of 2011, generated sales of 366.55M, while the fast construction of Manila Residences Bocobo at 96.36%, registered sales of 557.80M. In addition, financial income derived from interest from sales of real estate properties

33

reached 167.26M, increasing total revenues by 18.60%.

The Company remained prudent in managing costs and other disbursements during the year. Cost of sales sales remained manageable at 595.38M in 2011, as compared to the previous year of 513.31M. Operating expenses on the other hand, moved in tandem with sales, which increased due to higher personnel and professional fees. Interest expense on the other hand, increased due to lower capitalized interest resulting from the completion of a project. As a result of the foregoing, the Company ended the year with a higher net income translating to an earnings per share and return on equity of 0.47 and 21.95% in 2011, as compared to 0.39 and 22.02% last year.


Total revenues reached 940.72M exceeding last years’ figure of 714.45M. Revenue on sales of real estate properties grew by 33.07 % from 576.19M in 2009 to 766.76M in 2010. Revenue growth was driven by sales and high project completion rate of Grand Emerald Tower reaching 97.52%, while Manila Residences Bocobo, launched last year reached 38.10%. Revenue on sales of Grand Emerald Tower continued to contribute a significant 71.72% to annual sales since its launching in 2006. While Manila Residences Bocobo accounted for a bigger share of 27.78% as compared to the previous year of 5.99%. In addition, financial income which is substantially composed of interest income from sale of real estate properties increased by 25.60% accounting for 17.76% of total revenues.

On the cost side, higher revenues increased cost of sales and provision for income tax. Operating expenses on the other hand decreased due to lower personnel expenses. Altogether net income for the year showed a significant improvement from 129.50M to 265.60M, translating to a 105.09% increase. With a better net income reported, earnings per share and return on equity improved dramatically from 0.23 and 13.38% in 2009 to 0.47 and 22.02% in 2010.

Top Five (5) Key Performance Indicators

2010 2011 2012As of

June 30, 2013Earnings per Share * 0.33 0.39 0.32 0.16Return on Equity * 22.02% 21.95% 16.01% 8.21%Debt-to-Equity Ratio 0.29 0.22 0.16 0.20Current Ratio 2.10 2.00 2.77 1.97Acid-Test Ratio 1.20 1.26 2.32 1.78

* annualized

Manner of Calculation

Earnings per Share = Net Income / Average Number of Shares Issued and Outstanding Return on Equity = Net Income / Total Stockholders’ EquityDebt-to-Equity Ratio = Loans and Notes Payable

Total Stockholders’ Equity (net of Net Changes in Fair Value of Investments)Current Ratio = Total Current Assets / Total Current LiabilitiesAcid-Test Ratio = Cash & Cash Equivalents + Short-term Investments + Available for Sale Investment

+ current portion of Installment Contract Receivable + current portion of Other Receivables Total Current Liabilities

1. Items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size or incidents

There are no unusual items affecting assets, liabilities, equity, net income or cash flows.

2. Any changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years that have

34

a material effect in the current interim period

There are no changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years that have a material effect in the current interim period.

3. Any issuances, repurchases, and repayments of debt and equity securities

The Company issued SEC-Registered Short-Term Commercial Papers during the period. The outstanding balance is Php140.7M as of May 31, 2013.

4. Any material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period

There are no material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period.

5. Effect of changes in the composition of the issuer during the interim period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructuring, and discontinuing operations.

There are no changes in the composition of the issuer during the interim period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructuring, and discontinuing operations.

6. Any changes in contingent liabilities or contingent assets since the last annual balance sheet date

There are no changes in the contingent liabilities or contingent assets since the last annual balance sheet date.

7. Any Known Trends, Events or Uncertainties (Material impact on liquidity)

There is no known trends, events or uncertainties that has a material effect on liquidity.

8. Internal and External Sources of Liquidity

Internal sources come from sales of condominium and real estate projects, collection of installment receivables and maturing short-term investments. External sources come from bank loans.

9. Any Material Commitments for Capital Expenditures and Expected Sources of Funds of such Expenditures

The estimated development costs representing the cost to complete the real estate projects will be sourced through:

a. Sales of condominium and real estate projectsb. Collection of installment receivables c. Maturing short-term investmentsd. Proceeds from the sale of commercial papers

10. Any Known Trend or Events or Uncertainties (Material Impact on Net Sales or Revenues or Income from Continuing Operations)

There is no known trend, event or uncertainties that has a material effect on the net sales, revenues or income from continuing operations.

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11. Any Significant Elements of Income or Loss that did not arise from Registrant’s Continuing Operations

There are no significant elements of income or loss that did not arise from registrant’s continuing operations.

12. Any Known Trends or Events or Uncertainties (Direct or Contingent Financial Obligation)

There are no events that will trigger direct or contingent financial obligation, including any default or acceleration of an obligation that is material to the Company.

13. Any Known Trends or Events or Uncertainties (Material off-balance sheet transactions, arrangements, obligations and other relationships)

There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities created during the reporting period.

14. Any Seasonal aspects that had a material effect on the financial condition or results of operations.

There is no seasonal aspects that had a material effect on the financial condition or results ofoperations.

Causes for any Material Changes from Period to Period in One or More Lines of the Registrant's Financial Statements

Interim Periods:

June 30, 2013 vs. December 31, 2012

a) Decrease in Cash and Cash Equivalents was due to the shift of funds to short-term cash investments.

b) Increase in Short-term Cash Investments was due to placements. c) Increase in Available for Sale Financial Assets was due to increase in market value of

stocks.d) Decrease in Installment Contracts Receivable was due to collection. e) Increase in Other Receivables was due to increase in due from affiliates. f) Decrease in Real Estate Properties for Sale (net) was due to sales of real estate properties. g) Increase in Real Estate Properties for Future Development was due to development costs. h) Decrease in Other Assets was due to input VAT and Meralco meter deposits. i) Increase in Accounts Payable and Accrued Expenses was due to accrual of dividends

payable.j) Decrease in Income Tax Payable was due to payment. k) Decrease in Deferred Tax Liabilities was due to decrease in accounting income. l) Increase in Net Changes in Fair Value of Available-for-sale Financial Assets was due to

increase in value of stocks.m) Decrease in Retained Earnings was due to net income less cash dividends.

June 30, 2013 vs. June 30, 2012

a) Decrease in Sales of Real Estate was due to decrease in inventory available for sale. b) Decrease in Financial Income was substantially due to lower interest income from sales of

real estate properties.c) Decrease in Rent Income was due to decrease in real estate properties for lease. d) Decrease in Other Revenues was due to lower miscellaneous income. e) Decrease in Cost of Sales was due to lower sales. f) Decrease in Operating Expenses was due to lower sales. g) Decrease in Financial Expenses was due to decrease in interest rates.

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h) Decrease in Provision for Income Tax was due to lower revenues. i) Decrease in Net Income was due to lower revenues.

Full Fiscal Years:

December 31, 2012 vs. December 31, 2011

a) Increase in Cash and Cash Equivalents was due to sales, collection of receivables and re-investment of maturing placements to shorter period of investments.

b) Decrease in Short-term Cash Investments was due to maturity.c) Increase in Available-for-sale Investments was due to increase in value of stocks.d) Decrease in Installment Contracts Receivable was due to collection.e) Increase in Other Receivables was due to advances to customers for real estate tax.f) Decrease in Real Estate Properties for Sale was due to sales.g) Increase in Real Estate Properties Held for Future Development was due to purchase of a

lot.h) Increase in Other Assets was due to input tax of the new property purchased.i) Increase in Other Assets was due to input tax of the new property purchased.j) Decrease in Accounts Payable and Accrued Expenses was due to payment of development

costs, director’s fees and refund of deposits.k) Decrease in Notes and Contracts Payable was due to payment.l) Increase in Income Tax Payable was due to higher taxable income.m) Decrease in Deferred Tax Liabilities was due to lower financial income as compared to

taxable income.n) Increase in Capital Stock was due to 20% stock dividends.o) Increase in Net Changes in Fair Values of Available-for-sale Financial Assets was due to

increase in value of stocks.p) Decrease in Appropriated Retained Earnings was due to reversal of appropriation for

Manila Residences Bocobo since it is 100% completed.q) Increase in Unappropriated Retained Earnings was due to net income less cash and stock

dividends.r) Decrease in Financial Income was due to decrease in interest income from sale of real

estate properties for sale.s) Increase in Rent Income was due to increase in available units for lease.t) Decrease in Cost of Sales was due to decrease in sales.u) Decrease in Operating Expenses was due to lower personnel and professional fees.v) Decrease in Provision for Income Tax was due to lower deferred income tax.w) Decrease in Net Income was due to lower revenues.


a) Increase in Cash and Cash Equivalents was due increase in net cash flows from operating activities and re-investment of funds to shorter period.

b) Decrease in Short-term Cash Investments was due to maturity.c) Increase in Installment Contracts Receivable (net) was due to lower estimated development

cost and unrealized gross profit of uncompleted units, which were deducted from this account.

d) Increase in Other Receivables was due to real estate taxes and other expenses chargeable to clients.

e) Decrease in Real Estate Properties for sale was due to sales.f) Increase in Real Estate Properties held for future development was due to purchase of a lot. g) Decrease in Other Assets was due to refund of electric meter deposits.h) Increase in Accounts Payable and Accrued Expenses was due to accrual of development

costs and registration expenses.i) Decrease in Notes and Loans Payable was due to maturity of commercial papers.j) Decrease in Income Tax Payable was due to decrease in taxable income.

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k) Increase in Deferred Tax Liabilities was due to higher accounting income as compared with taxable income.

l) Increase in Capital Stock was due to 20% stock dividends.m) Increase in Retained Earnings was due to net income net of dividends.n) Increase in Sales of Real Estate was due to sales and high completion rate of the projects.o) Increase in Rent Income was due to increase in available units for lease.p) Decrease in Other Income was due to decrease in miscellaneous income.q) Increase in Cost of Sales was due to increase in sales.r) Increase in Operating Expenses was due to higher personnel expenses and professional

fees.s) Increase in Financial Expenses was due to lower capitalized interest.t) Decrease in Provision for tax was due to lower deferred income tax.


a) Decrease in Cash and Cash Equivalents was due to purchase of property and investment in short term cash investments.

b) Increase in Short-term Cash Investments was due to sales and collection of installment contract receivables.

c) Increase in Available-for-sale Investments was due to increase in market value of stocks.d) Increase in Installment Contracts Receivable (net) was due to lower estimated development

cost and unrealized gross profit of uncompleted units, which were deducted from this account.

e) Increase in Other Receivables was due to higher accrued interest and retention from cash sales.

f) Increase in Real Estate Properties held for future development was due to purchase of a lot.g) Increase in Other Assets was due to increase in electric meter deposits.h) Increase in Accounts Payable and Accrued Expenses was due to accrual of development

costs.i) Increase in Notes and Loans Payable was due to issuance of commercial papers.j) Increase in Income Tax Payable was due to increase in taxable income.k) Increase in Deferred Tax Liabilities was due to higher accounting income as compared with

taxable income. l) Increase in Capital Stock was due to 20% stock dividends.m) Increase in Net Changes in Fair Value of Investments was due to recognition of impairment

loss on market value of stocks.n) Increase in Retained Earnings was due to net income net of dividends.o) Increase in Sales of Real Estate was due to the sales and high completion rate of the

projects.p) Increase in Financial Income was due to increase in interest income from sale of real estate

properties.q) Increase in Other Income was due to increase in other income from scrap and other

miscellaneous income.r) Increase in Cost of Sales was due to increase in sales.s) Decrease in Operating Expenses was due to lower personnel expenses.t) Increase in Financial Expenses was due to higher loan balance.u) Increase in Provision for Income Tax was due to higher revenues.

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Required information by SEC-OGA on City & Land Developers, Inc.'s Audited Financial Statements As of the Year Ended December 31, 2012 and Unaudited Interim Financial Statements as of March 31, 2013

1. Audited Financial Statements as of December 31, 2012:

Real Estate Properties for Sale

Reference Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011

(In absolute amount; in Php) (Amount in millions as disclosed in Note 8; in Php)

Opening balance Note 8 391,691,341 558,463,258 391.69 558.46

Land transferred from real estate properties for future development

-- -- -- --

Construction/development costs

Note 8 26,868,357 426,498,420 26.87 426.50

Borrowing costs capitalized Note 8 -- 2,108,403 -- 2.11

Disposal (recognized as cost of sales in the income statement)

Note 8 (246,531,779) (595,378,740) (246.53) (595.38)

Write down of inventories -- -- -- --

Transfer to investment properties

-- -- -- --

Other adjustments:

Excess of estimate over actual development cost

(19,969,864) -- (19.97) --

Ending balance Note 8 152,058,055 391,691,341 152.06 391.69

Real Estate Properties Held for Future Development

Reference Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011

(In absolute amount; in Php) (Amount in millions as disclosed in Note 8; in Php)


Land acquisition during the year

Note 8 123,130,000 109,810,000 123.13 109.81


-- -- -- --

Others:

Capitalizable costs 2,294,671 1,259,253 2.30 1.26


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2. Unaudited Financial Statements as of March 31, 2013:

Real Estate Properties for Sale

Reference Mar. 31, 2013 Dec. 31, 2012 Mar. 31, 2013 Dec. 31, 2012

(In absolute amount; in Php) (Amount in millions; in Php)



-- -- -- --

Construction/development costs

Note 8 -- 26,868,357 -- 26.87

Borrowing costs capitalized -- --

Disposal (recognized as cost of sales in the income statement)

Note 8 (21,299,652) (246,531,779) (21.30) (246.53)

Write down of inventories -- -- -- --

Transfer to investment properties

-- -- -- --

Other adjustments:

Excess of estimate over actual development cost

8,013,755 (19,969,864) 8.01 (19.97)


Real Estate Properties Held for Future Development

Reference Mar. 31, 2013 Dec. 31, 2012 Mar. 31, 2013 Dec. 31, 2012

(In absolute amount; in Php) (Amount in millions; in Php)


Land acquisition during the year

Note 8 -- 123,130,000 -- 123.13


-- -- -- --

Others:

Capitalizable costs 1,787,839 2,294,671 1.79 2.30


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13. Information On Independent Accountants

2012 2011Audit and audit-related Fees 280,000 264,000Tax Fees -- --All other fees -- --Total 280,000 264,000

SyCip, Gorres, Velayo & Co. is the Registrant's external auditor for the calendar year 2012 & 2011.

The Audit Committee’s approval policies and procedures consist of:

a) Discussion with the external auditors of the Audited Financial Statements.b) Recommendation to the Board of Directors for the approval and release of the

Audited Financial Statements.c) Recommendation to the Board of Directors of the appointment of external

auditor.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There is no change in and disagreements with accountants on accounting and financial disclosures.

Directors and Executive Officers

1. Identify Directors and Executive Officers:

Names Citizenship Position Period of Service Term of Office

Age Family Relationship

Sabino R. Padilla, Jr. Filipino Director / Chairman of the Board July 1990 to Present 1 77 -Stephen C. Roxas Filipino Director / Chairman of the

ExCom06/28/88 to Present / 07/01/97 to Present

1 71 Husband of Helen Roxas, brother of Grace Liuson & Alice Gohoc

Andrew I. Liuson Filipino Director / Vice-Chairman of the Board

June 1988 to Present / 01/16/08 to Present

1 68 Husband of Grace Liuson

Grace C. Liuson Filipino Director / Deputy Vice-Chairman of the Board

06/28/88 to Present / 02/01/11 to Present

1 67 Wife of Andrew Liuson and sister of Stephen Roxas & Alice Gohoc

Josef C. Gohoc Filipino Director / President 01/04/11 to Present / 02/01/11 to Present

1 43 Nephew of Stephen Roxas & Grace Liuson and son of Alice Gohoc

Cesar E.A. Virata Filipino Independent Director 06/09/09 to Present 1 82 -Peter S. Dee Filipino Independent Director 11/22/04 to Present 1 71 -Alice C. Gohoc Filipino Director 07/31/91 to Present 1 70 Sister of Stephen Roxas &

Grace LiusonHelen C. Roxas Filipino Director 06/28/88 to Present 1 63 Wife of Stephen RoxasRufina C. Buensuceso Filipino Executive Vice President 02/01/11 to Present 1 63 -Emma A. Choa Filipino Senior Vice President/ Treasurer 02/01/11 to Present 1 52 -Eden F. Go Filipino Vice President 01/16/08 to Present 1 60 -Rudy Go Filipino Vice President 08/16/07 to Present 1 53 -Melita M. Revuelta Filipino Vice President 01/16/08 to Present 1 54 -Romeo E. Ng Filipino Vice President 01/10/05 to Present 1 51 -Josie T. Uy Filipino Vice President 02/16/04 to Present 1 58 -Melita L. Tan Filipino Vice President 02/21/04 to Present 1 53 -Emma G. Jularbal Filipino Vice President – Legal Affairs

& Corporate Secretary01/01/13 to Present 1 57 -

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1. Sabino R. Padilla, Jr.Name of Office Position Date Assumed

Padilla Law Office Partner Past 5 years up to Present Apostolic Nunciature to the Phils. Legal Counsel -do-Catholic Bishops’ Conference of the Phils. (CBCP) and various archdioceses, dioceses and prelatures

Legal Counsel -do-

Association of Major Religious Superiors of the Phils.

Legal Counsel

Philippine Association of Religious Treasurers Legal CounselGrace Christian College Legal Counsel -do-Various Catholic religious congregations,

orders and societies for men and women (Dominicans, Augustinians, Franciscans, Columbans, Religious of the Virgin Mary, Daughters of Charity, Sisters of St. Paul of Chartres, Carmelite Sisters, Holy Spirit Sisters, etc.)

Legal Counsel -do-

Bank of the Philippine Islands and its subsidiaries

Legal Counsel -do-

Ayala Land, Inc. Legal Counsel -do-Cityland Development Corporation Director -do-State Investment Trust, Inc Legal Counsel -do-Stateland Investment, Inc. Chairman of the Board /

Legal Cousel-do-

Mother Seton Hospital Legal Counsel -do-Our Lady of Lourdes Hospital Legal Counsel -do-St. Paul Hospital, Cavite Legal Counsel / Trustee -do-Various Catholic universities, colleges,

schools and foundationsTrustee

2. Stephen C. Roxas Present positions in other private institutions:

Name of Office Position Date AssumedCityland Development Corporation Director / Chairman of the

ExComJuly 1997

Cityland, Inc. Director / Chairman of the Board July 1997Cityplans, Incorporated Director / President October 1988Cityland Asset-Backed Securities (SPC) Inc. Director / Chairman December 2005MGC New Life Christian Academy ChairmanCenter for Community Transformation Vice Chairman

3. Andrew I. LiusonPresent positions in other private institutions:

Name of Office Position Date AssumedCityland Development Corporation Director / Vice-Chairman of the

BoardJanuary 16, 2008

Cityland, Inc. Director / Vice-Chairman of the Board

January 16, 2008

Cityplans, Incorporated Director / Chairman of the Board September 2006Cityland Asset-Backed Securities (SPC) Inc. Director / President December 2005Febias College of Bible Chairman

42

International Graduate School of Leadership ChairmanGrace Christian College ChairmanPhilippine Council of Evangelical Churches Chairman

Past positions in other private institutions:Cityland Development Corporation Director / President 1997 to January 2008Cityland, Inc. Director / President 1997 to January 2008Cityplans, Incorporated Executive Vice President 1988 to Sept. 24, 2006

4. Grace C. Liuson Present positions in other private institutions:

Name of Office Position Date AssumedCityland Development Corporation Director / Deputy Vice-Chairman

of the BoardFebruary 1, 2011

Cityland, Inc. Director / Deputy Vice-Chairman of the Board

February 1, 2011

Cityplans, Incorporated Director / Executive Vice President / Treasurer

September 2006

Cityland Asset-Backed Securities (SPC) Inc. Director / Executive Vice President/ Treasurer

December 2005

Youth Gospel Church Treasurer / TrusteeMakati Gospel Church Treasurer

Past positions in other private institutions:Cityland Development Corporation President / Executive Vice

President / TreasurerFeb. 14, 2008 to Jan. 31, 2011 / 1997 to Feb. 13, 2008

Cityland, Inc. President / Executive Vice President / Treasurer

Feb. 14, 2008 to Jan. 31, 2011 / 1997 to Feb. 13, 2008

Cityplans, Incorporated Senior Vice President 1988 to Sept. 24, 2006

5. Josef C. GohocPresent positions in other private institutions:

Name of Office Position Date AssumedCityland Development Corporation Director / President February 1, 2011Cityland, Inc. Director / President February 1, 2011Cityland Asset-Backed Securities (SPC) Inc. Director December 2005Cityland Foundation Inc. Director 2002Asian Business Solutions, Inc. Director 1996

1997Philippine Trading & Investment Corporation Director Atlas Agricultural & Mercantile Development

Corp.Director 1997

Past positions in other private institutions:Cityland Development Corporation Senior Vice President /

Treasurer / First Vice President

Jan. 16, 2008 to Jan. 31, 2011 /June 11, 2008 to Jan. 31, 2011 /Sept. 2006 to Jan. 2008

Cityland, Inc. Senior Vice President / Treasurer /First Vice President

Jan. 16, 2008 to Jan. 31, 2011 /June 11, 2008 to Jan. 31, 2011 /Sept. 2006 to Jan. 2008

43

6. Cesar E.A. Virata Present positions in other private institutions:

Name of Office Position Date AssumedC. Virata & Associates, Inc. Chairman & President May 1986Rizal Commercial Banking Corp. Director & Corporate Vice

ChairmanOctober 1995

Malayan Insurance Co., Inc. Director August 2005RCBC Realty Corporation Director February 1997RCBC Forex Broker Corp. Chairman & Director May 1998Luisita Industrial Park Director March 1999Business World Publishing Corp. Director (Independent) October 1999Belle Corporation Director (Independent)Malayan Colleges ( operating under the name of

Mapua Institute of Technology)Director May 1996

YGC Corporate Services, Inc. Director December 1999Pacific Fund, Inc. Chairman & Director May 2004RCBC Land, Inc. President & Director June 2001RCBC Savings Bank Director September 1999Bankard, Inc. Vice Chairman & Director July 1999AY Foundation, Inc. Director May 1999RCBC International Finance, Ltd. Hongkong Director May 2001Niyog Property Holdings, Inc. Director June 1997UEM- Mara Philippines Corp. Director June 2000Benpres Holdings Corporation Director October 2002Great Life Financial Assurance (ex Nippon Life

Insurance)Director September 2005

Past positions in other private institutions:JF Indonesia Fund, Inc. Chairman & Director 1996 to 2000JF Philippine Fund, Inc. Chairman & Director 1996 to 2002Power & Renewable Energy Corp. Director 1999 to 2001Manila Electric Company Director 2000 to 2001

2004 to 2009Pacific Plans, Inc. Director 2001 to 2003 LGU Guarantee Corporation Chairman & Director 1998 to 2006Phil. Dealing System Holding Corp. Director Up to 2006Phil. Dealing & Exchange Corp. Director Up to 2006Phil. Depository & Trust Corp. Director Up to 2006Phil. Securities Settlement Corp. Director Up to 2006Bankers Association of the Phils. President / Director 2002 to 2006Rizal Equities, Inc. Director 1998 to 2009RCBC Capital Corporation Director 1995 to April 2010Coastal Road Corporation Director 2004 to February 2009

7. Peter S. DeePresent positions in other private institutions:

Name of Office Position Date AssumedAsean Finance Corporation Limited Director 1991Alpolac, Inc. Director 1994Bankers Association of the Philippines Director 2010China Banking Corp. Director / President & CEO 1977 / 1985CBC Forex Corp. Director / Chairman of the

Board1997

CBC Insurance Brokers, Inc Chairman of the Board 1998CBC Properties & Computer Center, Inc. Director / President 1984Cityland, Inc. Independent Director /

Chairman Compensation & Audit Committee / Member-Nomination

2006

44

Committee Cityplans, Incorporated Independent Director /

Chairman Compensation & Audit Committee / Member-Nomination Committee

19912002

Cityland Development Corp. Independent Director / Chairman- Audit Committee

19822002

GDSK Development Corp. Director 1990Hydee Management & Resources Corporation Director 1991Kemwerke, Inc. Director 1994Silver Falcon Insurance Agency Director 1995Makati Curbs Holdings Corporation Director 2012 to presentGreat Expectation Holdings, Inc. Director / Chairman /

PresidentOctober 2012 to present

Commonwealth Foods, Inc. Director May 2013 to presentThe Big D Holdings Corp. Director / Chairman /

PresidentApril 2013 to present

Past positions in other private institutions:Can Lacquer, Inc. * Director GPL Holdings, Inc. * DirectorKK Converters Co. Ltd. DirectorMSD Company Inc. * Director Prochem, Inc. Director Sinclair (Phils.) Inc. * Director Sol Mar Y Tierra Resources * Director

* ceased operations

8. Alice C. Gohoc Present positions in other private institutions:

Name of Office Position Date AssumedCityland Development Corporation Director September 6, 1996Cityland, Inc. Director September 2001Philippine Trading & Investment Corp. Director 1997Atlas Agricultural & Mercantile Development Corp.

Director 1997

Asian Business Solutions, Inc. Director 1996

Past positions in other private institutions:Cityland Development Corporation Vice President June 11, 2008 to Jan. 31, 2011Cityland, Inc. Vice President June 11, 2008 to Jan. 31, 2011

9. Helen C. RoxasPresent positions in other private institutions:

Name of Office Position Date AssumedCityland Development Corporation Director 1978Cityland, Inc. Director 1997Cityplans, Incorporated Director October 1988Cityland Asset- Backed Securities (SPC), Inc. Director December 2005Good Tidings Foundation, Inc. Treasurer 1992MGC New Life Christian Academy Board of Trustee 1992

45

10. Rufina C. Buensuceso

Present positions in other private institutions:Name of Office Position Date Assumed

Cityland Development Corporation Executive Vice President February 1, 2011Cityland, Inc. Executive Vice President February 1, 2011Cityplans, Incorporated Comptroller September 12, 1990

Past positions in other private institutions:Cityland Development Corporation Senior Vice President June 1997 to January 2011Cityland, Inc. Senior Vice President June 1997 to January 2011

11. Emma A. Choa


Cityland Development Corporation Senior Vice President / Treasurer February 1, 2011Cityland, Inc. Senior Vice President / Treasurer February 1, 2011

12. Eden F. Go


Cityland Development Corporation Vice President January 16, 2008Cityland, Inc. Vice President January 16, 200813. Rudy Go


Cityland Development Corporation Vice President August 16, 2007Cityland, Inc Vice President August 16, 2007

14. Melita M. Revuelta


Cityland Development Corporation Vice President January 16, 2008Cityland, Inc. Vice President January 16, 2008

15. Romeo E. Ng


Cityland Development Corporation Vice President January 10, 2005Cityland, Inc. Vice President January 10, 2005

16. Josie T. Uy


Cityland Development Corporation Vice President – Manila Branch February 2004Cityland, Inc. Vice President – Manila Branch February 2004

46

17. Melita L. Tan


Cityland Development Corporation Vice President February 2004Cityland, Inc. Vice President February 2004

18. Emma G. Jularbal Present positions in other private institutions:

Name of Office Position Date AssumedCityland Development Corporation Vice President- Legal Affairs /

Corporate SecretaryJuly 2011 / July 1997

Cityland, Inc. Vice President- Legal Affairs / Corporate Secretary

July 1997

Cityland Asset-Backed Securities (SPC), Inc.

Corporate Secretary December 2005

2. Identify Significant Employees

There is no identifiable significant employee because the Company expect each employee to do his/her share in achieving the corporation’s set goal.

3. Involvement in Certain Legal Proceedings of Any of the Directors, Any Nominee for Election as Director and Executive Officers, during the past five years up to the latest date

For the past five years up to the latest date, no order, judgment, or decree has been rendered against the Company, its directors, any nominee for election as director, and executive officers by any court or tribunal of competent jurisdiction, domestic or foreign.

4. Independent DirectorsCesar E.A. Virata and Peter S. Dee are the independent directors of the Company.

Executive CompensationEXECUTIVE COMPENSATION SUMMARY TABLE

Name Position 2013 (estimate) 2012 2011Josef C. Gohoc President x x x Winefreda R. Go AVP – Purchasing x x xJocelyn F. Kwong Senior Manager x x xIreneo F. Javalera Manager x x xAlrolnik M. Fernando Manager - x x

Salaries 3,972,192 3,801,944 4,301,000Bonus 993,048 13,187,546 8,536,716Others 91,400 1,201,777 458,042Total (Top 5) 5,056,640 18,191,267 13,295,758Salaries 5,826,066 5,595,439 4,365,419Bonus 1,625,327 3,607,974 2,835,828Others 62,852 11,815,975 12,284,156Total all officers & directors as a group unnamed 7,514,245 21,019,388 19,485,403

X= represents the top five (5) officers for the specific or given year

The Company has no standard arrangement with regards to the remuneration of its directors. In 2012 and 2011, the Board of Directors received a total of 10,861,612 and 10,945,379 respectively, including a 14,400.00 per annum for each director for the board meetings attended as part of the compensation under all officers and directors as a group unnamed. Moreover, the Company has no standard arrangement with regards to the remuneration of its existing officers aside from the compensation received nor any other arrangement with employment contracts, compensatory plan and stock warrants or options.

47

Security Ownership Of Certain Beneficial Owners and Management

a. Security Ownership of Record and Beneficial Owners owning more than 5% of the outstanding capital stock of the Registrant as of March 31, 2013:

Title of ClassName, Address of Record

Owner & Relationship with Issuer

Name of Beneficial Owner & Relationship

with Record OwnerCitizenship

No. of Shares Held

Percent

Unclassified Common Shares

Cityland Development Corp.2F Cityland Condo 10 Tower 1156 HV Dela Costa St., Makati City - Principal Stockholder-

Cityland Development Corporation

Filipino 403,436,321 49.73%


Cityland, Inc.2F Cityland Condo 10 Tower 1, 156 H.V. Dela Costa St., Makati City - Principal Stockholder -

Cityland, Inc. Filipino 239,625,410 29.54%


PCD Nominee Corp.- Filipino **37F Tower 1, The Enterprise Centre, 6766 Ayala Ave., cor. Paseo de Roxas, Makati City- Stockholder

-Various- * Filipino 41,088,482 5.06%

* PCD Nominee Corp.- Filipino is a wholly-owned subsidiary of the Philippine Central Depository. It is the registered owner of the shares in the books of the Company's transfer agent and holds such shares in behalf of the beneficial owners.

b. No change of control in the corporation has occurred since the beginning of its last fiscal year.

c. Security Ownership of Management as of March 31, 2013

Title of Class Name Amount and Nature of Ownership

Citizenship Percent of Class


Sabino R. Padilla, Jr.Director / Chairman of the Board

405,622direct

Filipino 0.050%


Stephen C. RoxasDirector / Chairman of Executive Committee

13,289,915direct/ indirect

Filipino 1.638%


Andrew I. LiusonDirector / Vice- Chairman of the Board


Filipino 1.265%


Grace C. LiusonDirector / Deputy Vice-Chairman of the Board

3,817,243direct

Filipino 0.471%


Josef C. GohocDirector / President

1,652,171direct

Filipino 0.204%


Cesar E.A. VirataIndependent Director

55,835direct

Filipino 0.007%


Peter S. DeeIndependent Director

1,196,012direct

Filipino 0.147%


Alice C. GohocDirector


Filipino 0.400%


Helen C. RoxasDirector

81,120direct

Filipino 0.010%


Rufina C. BuensucesoExecutive Vice President

27,226direct

Filipino 0.003%


Emma A. ChoaSenior Vice President / Treasurer

333,480direct/ indirect

Filipino 0.041%


Eden F. GoVice President

166,600direct

Filipino 0.021%

48

Title of Class Name Amount and Nature of Ownership

Citizenship Percent of Class


Rudy GoVice President

166,599direct

Filipino 0.021%


Melita M. RevueltaVice President


Filipino 0.019%


Romeo E. NgVice President


Filipino 0.043%


Josie T. UyVice President – Manila Branch

69,251direct

Filipino 0.009%


Melita L. TanVice President

36,816direct

Filipino 0.005%


Emma G. JularbalCorporate Secretary

46,167direct

Filipino 0.006%

Note: The above security ownership of management consists of Unclassified Common Shares amounting to P 35,356,606 which is equivalent to 4.36%.

d. The Corporation knows no person holding more than 5% of common shares under a voting trust or similar agreement.

Certain Relationships and Related Transactions (See Note 19 of Notes to Financial Statements)

1. Significant transactions with related parties consist of interest-bearing cash advances and non- interest bearing advances for reimbursable expenses from and to the registrant which the Company enters into with its affiliates in the regular course of its business.

The Registrant's affiliates are its parent company, Cityland Development Corporation (CDC), and its subsidiary, Cityplans, Inc. (CPI) and Cityland, Inc. (CI), parent company of CDC.

Interest rates used by the parties for the interest- bearing cash advances were the prevailing market interest rates for loans averaged by the parties.

2. Parent of the Registrant

Cityland Development Corporation owns 49.73% of the outstanding capital of the Registrant.

Corporate Governance

The evaluation system employed by the Corporation is thru a periodic self-rating system based on the criteria on the leading practices and principles on good governance.

1. Measures Being Undertaken by the Company to fully comply with the adopted Leading Practices on Good Corporate Governance.

We have started implementing the periodic self-rating system.

2. Any Deviation from the Company’s Manual of Corporate Governance (including a disclosure of the name and position of the persons involved and sanctions imposed on said individual).

There were no major deviations that require sanctions.

49

3. Any Plan to Improve Corporate Governance of the Company.

Based on the outcome of the periodic self-rating, we will come up with necessary actions / procedures to improve the corporate governance of the Company.

In compliance with SEC Memorandum Circular No. 6, Series of 2009, the Company has started implementing the applicable rules of the Revised Code of Corporate Governance in its aim to continually improve its corporate governance system.

50

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Actual Fees and Expenses:

Registration Fee:Filing Fee Php 200,000Legal Research Fee 2,000 Php 202,000

Legal and Accounting Fees 30,000Publication Fee 30,000

Estimated Fees and Expenses:

Printing Costs of STCPs (estimate) 10,000Documentary Stamps (estimate) 1,000,000

Total Php 1,272,000

There is no insurance premium paid by the Registrant in connection with this offering.

51

CITY & LAND DEVELOPERS, INCORPORATED

INDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

Audited For Year 2012, 2011 and 2010 and Unaudited As of the Six Months Ended June 30, 2013

Financial StatementsStatement of Management’s Responsibility for Financial StatementsReport of Independent Public AccountantBalance Sheets as of December 31, 2012 and 2011Statements of Income for the Years Ended December 31, 2012, 2011 and 2010Statements of Changes in Stockholders’ Equity for the Years Ended

December 31, 2012, 2011 and 2010Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010Notes to Financial StatementsBalance Sheets as of June 30, 2013 and December 31, 2012Statements of Income for the Six Months Ended June 30, 2013 and June 30, 2012Statements of Comprehensive Income for the Six Months Ended June 30, 2013 and June 30, 2012Statements of Changes in Stockholders’ Equity as of June 30, 2013 and June 30, 2012Statements of Cash Flows as of June 30, 2013 and June 30, 2012Notes to Financial Statements

Index to the Audited Financial Statements and Supplementary SchedulesSchedule I: Schedule of all the effective standards and interpretations (Part 1, 4J)

Schedule II: Reconciliation of Retained Earnings Available for Dividend Declaration (Part 1, 4C; Annex 68-C)

Schedule III: Supplementary schedule of financial soundness indicators

Schedule IV: Supplementary schedule required by Annex 68-E

Schedule V: Schedule of Gross and Net Proceeds of Short-term Commercial Papers ( STCPs) Issued

52

CITY & LANDDEVELOPERS. INC.

STATEMEN'IOF MAI\IAGEMENT5 RESPONgIBILITYFORFINANCIALSTATEMENIS

The d3i6c€mtrr ol city a &nd B€rerop€Bi In4 js Esponsible r.r lho pEparalion and ranpEsenrdjon orth6nnancialnaGmentsforth€ yeaE ended Decembe.31, 2012 and 2011, hcludingth8 €ddrfonar mmponedls araoh€d thercin in acedane wirh Philippine Ftianciat ReponinaSlandalds. Thls Bsponsrbiliry includes desiqninq and tmpt€ment nq i emat @nrob €teva lo lhepGpaElion and tslr prcsarnafion of rhe fnanciat sratemenrs lhai arc r€e frch materiat missrai€nefl.

.coununo osllmales liat aF easonable in the ctrcumsrances.

Tha Boad of Dieclo6 EVM.nd spprcves lhe fnan.ial $alemenls €nd submtts the efre lo the

sycip Gdtr6 v€l€yo & c!., the lndepended audno€, appoirred by rhe sto*notdeB has qamtn€dlhe rinancr.r srar6m6nt3 ot the Empany in acmdan@ wi$ phiLippine Slandads on Auditm, snd ln[5 ep.n ro $€ srockhord6ts, has *presed hs opnton on rhe fa]mes df lE€nra|on lDoi@nd€ton of sucn €efr lnalion.

Signed rhis 20' d.y or Mamh, 2013

RI'FINA C.BUENSUCESO IEieonive vi@ Prcsident / chr€r Finand

No.

sUBscRIBED AND sWoRN to berore me lhis day or APR 0 2 201Lria' (s) ernibidno to me rheirsoolal socudy Numb€6, as tolrM:

N3oe. afty. s€bino R. P€diti., Jr

Rufin. C. Buoreu6o

DocNo. j.lg

Socrar Seturitv Number

1401n79/f 3-li/Mania

! c0 Box 5ooooqliSd$Rt{te8o 8tu'dG fr

*SGVMG300370*

INDEPENDENT AUDITORS’ REPORT The Stockholders and the Board of Directors City & Land Developers, Incorporated Report on the Financial Statements We have audited the accompanying financial statements of City & Land Developers, Incorporated, which comprise the balance sheets as at December 31, 2012 and 2011, and the statements of income, statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31, 2012, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

SyCip Gorres Velayo & Co. 6760 Ayala Avenue 1226 Makati City Philippines

Phone: (632) 891 0307 Fax: (632) 819 0872 www.sgv.com.ph BOA/PRC Reg. No. 0001, December 28, 2012, valid until December 31, 2015 SEC Accreditation No. 0012-FR-3 (Group A), November 15, 2012, valid until November 16, 2015

A member firm of Ernst & Young Global Limited

*SGVMG300370*

- 2 -

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of City & Land Developers, Incorporated as at December 31, 2012 and 2011, and its financial performance and its cash flows for each of the three years in the period ended December 31, 2012 in accordance with Philippine Financial Reporting Standards. Report on the Supplementary Information Required Under Revenue Regulations 19-2011 and 15-2010 Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information required under Revenue Regulations 19-2011 and 15-2010 in Notes 26 and 27 to the financial statements, respectively, is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such information is the responsibility of the management of City & Land Developers, Incorporated. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. SYCIP GORRES VELAYO & CO. Aileen L. Saringan Partner CPA Certificate No. 72557 SEC Accreditation No. 0096-AR-3 (Group A), January 18, 2013, valid until January 17, 2016 Tax Identification No. 102-089-397 BIR Accreditation No. 08-001998-58-2012, April 11, 2012, valid until April 10, 2015 PTR No. 3670024, January 2, 2013, Makati City March 20, 2013

CITY & LAND DEVELOPIRS INCORPORATEBALANCE SMETS

,0t2

183,r60,6825,t74:222

2At1

ASSETScash ard Casn Eqdvlhnll 0lote 4)short-t rb clsh Invcstnent (Not 4)Avauable-for-s'1e rirrb.ial A$cb (Nore 5)Insrarlncnt contactr Receturbte (Notc 6)oin.. R€celvables 0,{o1$ ? dd 19)Rerl *tate Properti6 lo. Sale (Nole 3)Re'l Erbr € Propdies B.ld for Futore Dselopm?trr aJok 3InYsrrDent Properdes (Nole e)

!I.r35.796.s42 P2 221,j25 303

LIABILITIES AND EQIJTI Y

accounG Palcbt. td Acmed ErPone€s

Not6 rnd ConE ct ?syrbL (Nore l1)20335,173 7,952,956

Del€ded Td Lilbild6 - net

celt l *fk-Pl pd value O{ok I2lAuthodln. 1.200,000,000sh46 in ?012 ud

?00,000,000 slm it 20r llssued - 311J5O3?6 sh&s neld bv 3l0 equ'tv holdea iid

2ot2 ;d 6?6,042,298 shda held bt 769 .quitv ioldd3in2oll 81r,x0'4?6

Additional paid-i! capnal 105,136 105,136Net ches6 ir fan vab€ of availablefoHale

6ndcialsetso{otct \ra6'739 690'?10Rebined eanines (Nols 9 md 12):

Appropnakd - 100 000,000u;ppopnated ?36.sr1,746 66?,142,e71

[mil|trllllililll|llllllillilillll

*SGVMG300370*

CITY & LAND DEVELOPERS, INCORPORATED STATEMENTS OF INCOME Years Ended December 31 2012 2011 2010

REVENUE Sales of real estate properties P=508,378,077 P=941,779,900 P=766,761,471 Financial income (Notes 15 and 19) 158,579,078 167,256,666 167,054,747 Rent income (Note 9) 3,758,583 1,116,231 746,874 Other income 5,424,964 5,543,279 6,156,566 676,140,702 1,115,696,076 940,719,658

EXPENSES Cost of real estate sales 246,531,779 595,378,740 513,310,116 Operating expenses (Notes 13 and 19) 112,070,421 134,327,786 93,306,413 Financial expenses (Notes 16 and 19) 11,063,060 11,251,352 1,966,856 369,665,260 740,957,878 608,583,385

INCOME BEFORE INCOME TAX 306,475,442 374,738,198 332,136,273 PROVISION FOR INCOME TAX (Note 18) 50,488,863 57,754,151 66,540,046

NET INCOME P=255,986,579 P=316,984,047 P=265,596,227

BASIC/DILUTED EARNINGS PER SHARE (Note 23) P=0.32 P=0.39 P=0.33 See accompanying Notes to Financial Statements.

*SGVMG300370*

CITY & LAND DEVELOPERS, INCORPORATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 2012 2011 2010

NET INCOME P=255,986,579 P=316,984,047 P=265,596,227

OTHER COMPREHENSIVE INCOME (LOSS) Changes in fair value of available-for-sale

financial assets (Note 5) 596,029 (21,248) 244,357 Loss on impairment of available-for-sale financial

assets recognized in the statements of income (Note 16) – – 682,118

596,029 (21,248) 926,475

TOTAL COMPREHENSIVE INCOME P=256,582,608 P=316,962,799 P=266,522,702 See accompanying Notes to Financial Statements.

*SGVMG300370*

CITY & LAND DEVELOPERS, INCORPORATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

Capital Stock

(Note 12)

Additional Paid-in Capital

Net Changes in Fair Values of Available-

for-Sale Financial Assets

(Note 5)

Total

Retained Earnings (Notes 9 and 12)

Appropriated Unappropriated

BALANCES AT DECEMBER 31, 2009 P=469,474,212 P=105,136 (P=214,517) P=100,000,000 P=398,171,380 P=967,536,211 Net income – – – – 265,596,227 265,596,227 Other comprehensive income – – 926,475 – – 926,475 Total comprehensive income – – 926,475 – 265,596,227 266,522,702 Stock dividends - 20% 93,894,613 – – – (93,894,613) – Fractional shares of stock dividends – – – – (229) (229) Cash dividends - P=0.050 per share – – – – (28,168,441) (28,168,441)

BALANCES AT DECEMBER 31, 2010 563,368,825 105,136 711,958 100,000,000 541,704,324 1,205,890,243 Net income – – – – 316,984,047 316,984,047 Other comprehensive loss – – (21,248) – – (21,248) Total comprehensive income – – (21,248) – 316,984,047 316,962,799 Stock dividends - 20% 112,673,473 – – – (112,673,473) – Fractional shares of stock dividends – – – – (292) (292) Cash dividends - P=0.140 per share – – – – (78,871,635) (78,871,635)

BALANCES AT DECEMBER 31, 2011 676,042,298 105,136 690,710 100,000,000 667,142,971 1,443,981,115 Net income – – – – 255,986,579 255,986,579 Other comprehensive income – – 596,029 – – 596,029 Total comprehensive income – – 596,029 – 255,986,579 256,582,608 Stock dividends - 20% 135,208,178 – – – (135,208,178) – Fractional shares of stock dividends – – – – (282) (282) Cash dividends - P=0.150 per share – – – – (101,406,344) (101,406,344) Reversal of appropriation – – – (100,000,000) 100,000,000 –

BALANCES AT DECEMBER 31, 2012 P=811,250,476 P=105,136 P=1,286,739 P=– P=786,514,746 P=1,599,157,097 See accompanying Notes to Financial Statements

*SGVMG300370*

CITY & LAND DEVELOPERS, INCORPORATED STATEMENTS OF CASH FLOWS Years Ended December 31 2012 2011 2010

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=306,475,442 P=374,738,198 P=332,136,273 Adjustments for: Interest income (Note 15) (158,562,451) (167,240,788) (167,035,773) Interest expense - net of amounts capitalized (Note 16) 10,583,460 10,499,479 679,492 Depreciation (Notes 9 and 13) 2,714,862 2,714,864 2,714,864 Retirement benefits cost (income) (Note 17) 699,272 (83,184) 136,892 Dividend income (Note 15) (16,627) (15,878) (18,974) Loss on impairment of available-for-sale financial assets (Notes 5 and 16) – – 682,118 Operating income before working capital changes 161,893,958 220,612,691 169,294,892 Decrease (increase) in: Installment contracts receivable 68,274,114 (302,196,399) (143,658,031) Other receivables (5,048,405) (1,124,075) (1,403,743) Real estate properties for sale 239,633,286 166,771,917 20,708,839 Real estate properties held for future development (108,043,421) (111,069,253) (125,711,244) Deposits and others (13,643,157) 473,733 (3,137,852) Increase (decrease) in accounts payable and accrued expenses (124,522,932) 103,361,662 82,259,200 Cash generated from (used in) operations 218,543,443 76,830,276 (1,647,939) Interest received 158,656,415 167,902,948 165,098,510 Income taxes paid, including creditable and final

withholding taxes (47,212,774) (60,190,861) (44,865,147) Contributions to the retirement fund (Note 17) (646,921) (118,683) (128,669) Net cash flows from operating activities 329,340,163 184,423,680 118,456,755

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from matured short-term cash investments 160,500,000 151,500,000 − Additions to investment properties (Note 9) (157,865) – (114,956) Dividends received 16,627 15,878 18,974 Purchases of short-term cash investments (Note 4) – – (289,500,000) Purchases of available-for-sale investments – – (227) Net cash flows from (used in) investing activities 160,358,762 151,515,878 (289,596,209)

CASH FLOWS FROM FINANCING ACTIVITIES Payments of short-term notes (1,103,339,685) (1,288,753,467) (1,192,652,273) Availment of short-term notes 1,016,257,319 1,265,689,640 1,305,965,151 Dividends paid (101,159,825) (78,778,036) (28,099,325) Interest paid (10,687,050) (11,147,084) (751,093) Payment of long-term loans – (5,000,000) (58,949,203) Availments of long-term loans – – 5,000,000 Net cash flows from (used in) financing activities (198,929,241) (117,988,947) 30,513,256

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 290,769,684 217,950,611 (140,626,198)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 4) 311,540,443 93,589,832 234,216,030

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) P=602,310,127 P=311,540,443 P=93,589,832 See accompanying Notes to Financial Statements.

*SGVMG300370*

CITY & LAND DEVELOPERS, INCORPORATED NOTES TO FINANCIAL STATEMENTS 1. Corporate Information

City & Land Developers, Incorporated (the Company) was incorporated in the Philippines on June 28, 1988. Its primary purpose is to establish an effective institutional medium for acquiring and developing suitable land sites for residential, office, commercial, institutional and industrial uses primarily, but not exclusively, in accordance with the subdivision, condominium, and cooperative concepts of land-utilization and land-ownership. The Company’s registered office and principal place of business is 3rd Floor, Cityland Condominium 10, Tower I, 156 H. V. de la Costa Street, Ayala North, Makati City.

The Company is 49.73% owned by Cityland Development Corporation (CDC), a publicly listed company incorporated and domiciled in the Philippines. The Company’s ultimate parent is Cityland, Inc. (CI), a company incorporated and domiciled in the Philippines, which prepares consolidated financial statements and that of its subsidiaries.

The financial statements of the Company were authorized for issuance by the Board of Directors (BOD) on March 20, 2013.

2. Summary of Significant Accounting and Financial Reporting Policies

Basis of Preparation The financial statements of the Company have been prepared using the historical cost basis, except

for available-for-sale financial assets which are carried at fair values. The financial statements are presented in Philippine peso (Peso), which is the Company’s functional currency, and rounded to the nearest Peso except when otherwise indicated.

Statement of Compliance The financial statements have been prepared in compliance with Philippine Financial Reporting

Standards (PFRS).

Changes in Accounting Policies The accounting policies adopted are consistent with those of the previous financial year except for the following amended Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards (PAS) effective as of January 1, 2012. The following amended PAS and PFRS have no significant impact on the Company’s financial statements: • PAS 12, Income Taxes - Recovery of Underlying Assets. The amendment clarified the

determination of deferred tax on investment property measured at fair value and introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in PAS 40, Investment Property, should be determined on the basis that its carrying amount will be recovered through sale. It implies the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in PAS 16, Property, Plant and Equipment, always be measured on a sale basis of the asset. The amendment has no effect on the entity’s performance or in its disclosures because the tax rate for these assets in the jurisdictions in which they are located does not differ if they are recovered by sale or use.

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• PFRS 7, Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements. The amendment requires additional disclosures about financial assets that have been transferred but not derecognized to enable the user of the Company’s financial statements to understand the relationship with those assets that have not been derecognized and their associated liabilities. In addition, the amendment requires disclosures about continuing involvement in derecognized assets to enable the user to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those derecognized assets. The entity did not have any assets with these characteristics, so there has not been any effect in the presentation of its financial statements.

Cash and Cash Equivalents Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less from dates of acquisition, and are subject to an insignificant risk of change in value.

Short-term Cash Investments Short-term cash investments are investments with maturities of more than three months but not exceeding one year from dates of acquisition.

Financial Assets and Financial Liabilities Date of recognition The Company recognizes a financial asset or a financial liability in the balance sheet when it becomes a party to the contractual provisions of the instrument. In the case of a regular way purchase or sale of financial assets, recognition and derecognition, as applicable, is done using settlement date accounting.

Initial recognition of financial instruments Financial instruments are recognized initially at fair value, which is the fair value of the consideration given (in case of an asset) or received (in case of a liability). The initial measurement of financial instruments, except for those designated at fair value through profit or loss, includes directly attributable transaction cost.

Classification of financial instruments Subsequent to initial recognition, the Company classifies its financial instruments in the following categories: financial assets and financial liabilities at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets and other financial liabilities. The classification depends on the purpose for which the instruments are acquired and whether they are quoted in an active market. Management determines the classification at initial recognition and, where allowed and appropriate, re-evaluates this classification at each end of reporting period.

a. Financial Assets or Financial Liabilities at Fair Value through Profit or Loss

A financial asset or financial liability is classified in this category if acquired principally for the purpose of selling or repurchasing in the near term or upon initial recognition, it is designated by the management as at fair value through profit or loss.

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Financial assets or financial liabilities classified in this category are designated as at fair value through profit or loss by management on initial recognition when the following criteria are met:

• The designation eliminates or significantly reduces the inconsistent treatment that would

otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them on a different basis; or

• The assets or liabilities are part of a group of financial assets or financial liabilities, or both financial assets and financial liabilities, which are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy; or

• The financial instrument contains an embedded derivative, unless the embedded derivative does not significantly modify the cash flows or it is clear, with little or no analysis, that it would not be separately recorded.

Financial assets or financial liabilities classified under this category are carried at fair value in the balance sheet. Changes in the fair value of such assets and liabilities are recognized in the statement of income.

The Company has no financial assets and financial liabilities at fair value through profit or loss as of December 31, 2012 and 2011.

b. 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 Company provides money, goods or services directly to a debtor with no intention of trading the receivables. Loans and receivables are carried at amortized cost in the balance sheet. Amortization is determined using the effective interest rate method. Loans and receivables are included in current assets if maturity is within 12 months from the end of reporting period. Otherwise, these are classified as non-current assets.

The Company’s loans and receivables consist of cash in banks and cash equivalents, short-term cash investments, installment contracts receivable and other receivables.

c. Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities wherein the Company has the positive intention and ability to hold to maturity. Held-to-maturity investments are carried at amortized cost in the balance sheet. Amortization is determined using the effective interest rate method. Assets under this category are classified as current assets if maturity is within 12 months from the end of the reporting period and noncurrent if maturity is more than a year.

The Company has no held-to-maturity investments as of December 31, 2012 and 2011.

d. Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. Available-for-sale financial assets are carried at fair value in the balance sheet. Changes in the fair value of such assets are accounted in the statement of comprehensive income and in equity. These financial assets are

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classified as noncurrent assets unless the intention is to dispose such assets within 12 months from the end of reporting period.

The Company’s available-for-sale financial assets consist of investments in quoted equity securities that are traded in liquid markets, held for the purpose of investing in liquid funds and not generally intended to be retained on a long-term basis.

e. Other Financial Liabilities

Other financial liabilities are non-derivative financial liabilities with fixed or determinable

payments that are not quoted in an active market. They arise when the Company owes money, goods or services directly to a creditor with no intention of trading the payables. Other financial liabilities are carried at cost or amortized cost in the balance sheet. Amortization is determined using the effective interest rate method. Other financial liabilities are included in current liabilities if maturity is within 12 months from the end of the reporting period, otherwise, these are classified as non-current.

The Company’s other financial liabilities consist of accounts payable and accrued expenses

and notes and contracts payable.

Determination of fair value The fair value of financial instruments traded in active markets at the end of reporting period is based on their quoted market price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. When current bid and asking prices are not available, the price of the most recent transaction provides evidence of the current fair value as long as there has not been a significant change in economic circumstances since the time of the transaction.

For all other financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Valuation techniques include net present value techniques, comparison to similar instruments for which market observable prices exist, option pricing models and other relevant valuation models.

“Day 1” difference Where the transaction price in a non-active market is different from the fair value of other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Company recognizes the difference between the transaction price and fair value (a “Day 1” difference) in the statement of income unless it qualifies for recognition as some other type of asset. In cases where inputs are made of data which are not observable, the difference between the transaction price and model value is only recognized in the statement of income when the inputs become observable or when the instrument is derecognized. For each transaction, the Company determines the appropriate method of recognizing the “Day 1” difference.

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

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Derecognition of Financial Assets and Financial Liabilities Financial assets

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

• the rights to receive cash flows from the asset have expired; or • the Company retains the right to receive cash flows from the asset, but has assumed an

obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or

• the Company has transferred its right to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Company has transferred its right to receive cash flows from a financial asset and has neither transferred nor retained substantially all the risks and rewards of the financial asset nor transferred control of the financial asset, the asset is recognized to the extent of the Company’s continuing involvement in the financial asset. Continuing involvement that takes the form of a guarantee over the transferred financial asset is measured at the lower of the original carrying amount of the financial asset and the maximum amount of consideration that the Company could be required to repay.

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

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the statement of income.

Impairment of Financial Assets The Company assesses at each end of the reporting period whether a financial asset or a group of financial assets is impaired.

Assets carried at amortized cost The Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. Objective evidence includes observable data that comes to the attention of the Company about loss events such as, but not limited to significant financial difficulty of the counterparty, a breach of contract, such as default or delinquency in interest or principal payments, probability that the borrower will enter bankruptcy or other financial reorganization. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in the group of financial assets with similar credit risk and characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is recognized are not included in a collective assessment of impairment.

The impairment assessment is performed at each end of reporting period. For the purpose of collective evaluation of impairment, financial assets are grouped on the basis of such credit risk characteristics such as customer type, payment history, past-due status and term.

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If there is an objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of loss is measured as the difference between the asset’s 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 rates (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset shall be reduced either directly or through the use of an allowance account. The amount of loss, if any, is recognized in the statement of income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized in the statement of income. Interest income continues to be accrued on the reduced carrying amount based on the original effective interest rate of the asset. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral, if any, has been realized or has been transferred to the Company. If in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance for impairment losses account. If a future write off is later recovered, the recovery is recognized in the statement of income under “Other income” account. Any subsequent reversal of an impairment loss is recognized in the statement of income to the extent that the carrying value of the asset does not exceed its amortized cost at reversal date.

Assets carried at cost If there is an objective evidence that an impairment loss of an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

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

In case of equity investments classified as available-for-sale financial asset, this would include a significant or prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in the statement of income - is removed from equity and recognized in the statement of income. Increases in fair value after impairment are recognized in the statement of comprehensive income and directly in the statement of changes in equity.

Real Estate Properties for Sale and Real Estate Properties Held for Future Development Property acquired or being constructed for sale in the ordinary course of business and held for future development, rather than to be held for rental or capital appreciation, is classified as real

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*SGVMG300370*

estate properties for sale and real estate properties held for future development and are measured at the lower of cost and net realizable value (NRV).

Cost includes: • Land cost • Amounts paid to contractors for construction • Borrowing costs, planning and design costs, costs of site preparation, professional fees,

property transfer taxes, construction overheads and other related costs of sale

NRV is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date, less estimated costs of completion and the estimated costs of sale.

Upon commencement of development, the real estate properties held for future development is transferred to real estate properties for sale. Investment Properties

Investment properties which represent real estate properties for lease are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing real estate property for lease at the time that cost is incurred if the recognition criteria are met, and excludes the costs of day-to-day servicing of the property. The carrying values of revalued properties transferred to real estate properties for lease on January 1, 2004 were considered as the assets’ deemed cost as of said date.

Subsequent to initial measurement, real estate properties for lease, except land, are carried at cost less accumulated depreciation and amortization and any impairment in value. Land is carried at cost less any impairment in value. Buildings for lease are depreciated over their useful life of 25 years using the straight-line method.

Investment properties are derecognized when either they have been disposed of or when the

property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of investment properties are recognized in the statement of income in the year of retirement or disposal.

Transfers are made to investment properties when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party, or ending of construction or development. Transfers are made from investment properties when, and only when, there is a change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale.

Transfers between investment properties, owner-occupied property and inventories do not change the carrying amount of the property transferred and they do not change the cost of that property for measurement or disclosure purposes.

Impairment of Nonfinancial Assets

The carrying values of investment properties are reviewed for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the assets are either written down to their recoverable amount or provided with valuation allowance. The recoverable amount of the assets is the greater of fair value less costs to sell and value-in-use. Valuation allowance is provided for the carrying amount of assets which is not expected to be recovered. Impairment losses, if any, are recognized in the statement of income.

The Company assesses at each reporting period whether there is an indication that previously recognized impairment losses may no longer exist or may have decreased. The Company

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considers external and internal sources of information in its assessment of the reversal of previously recognized impairment losses. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of income. After such a reversal, the depreciation is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

Value-added Tax (VAT) Revenue, expenses, assets and liabilities are recognized net of the amount of VAT, except where the VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the VAT is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable.

The net amount of VAT recoverable from or payable to, the taxation authority is included as part of “Other assets” or “Accounts payable and accrued expenses,” respectively, in the balance sheet.

Capital Stock Capital stock is measured at par value for all shares issued and outstanding. When the Company issues more than one class of stock, a separate account is maintained for each class of stock and the number of shares issued. Incremental costs incurred directly attributable to the issuance of new shares are shown in equity as a deduction from proceeds, net of tax.

The Company’s shares which are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued is recognized as additional paid-in capital.

Retained Earnings Retained earnings represent the cumulative balance of net income or loss, dividend distributions, effects of the changes in accounting policy and other capital adjustments.

Unappropriated retained earnings represent that portion of retained earnings which is free and can be declared as dividends to stockholders. Appropriated retained earnings represent that portion of retained earnings which has been restricted and therefore is not available for any dividend declaration.

Dividend Distributions Dividends on common shares are deducted from retained earnings when declared. Dividends for the year that are declared after the end of the reporting period but before the approval for issuance of financial statements are dealt with as an event after the reporting period.

Revenue and Costs Recognition Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company and the amount of revenue can be reliably measured. Revenue is measured at the fair value of the consideration received excluding VAT. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company has concluded that it is acting as a principal in all of its revenue arrangements.

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The following specific recognition criteria must also be met before revenue is recognized:

Sales of real estate properties Sales of condominium units and residential houses where the Company has material obligations under the sales contract to provide improvements after the property is sold are accounted for under the percentage of completion method. Under this method, revenue on sale is recognized as the related obligations are fulfilled. Revenue from sales of completed residential lots and housing units, where a sufficient down payment has been received, the collectability of the sales price is reasonably assured, the refund period has expired, the receivables are not subordinated and the seller is not obliged to complete improvements, is accounted for under the full accrual method. If the criterion of full accrual method was not satisfied, any cash received by the Company is included in “Accounts payable and accrued expenses” in the balance sheet until all the conditions for recording a sale are met.

Cost of real estate sales Cost of real estate sales is recognized consistent with the revenue recognition method applied. Cost of subdivision land and condominium units sold before the completion of the development is determined on the basis of the acquisition cost of the land plus its full development costs, which include estimated costs for future development works, as determined by the Company’s in-house technical staff.

The cost of inventory recognized in profit or loss on disposal is determined with reference to the specific costs incurred on the property, allocated to saleable area based on relative size and takes into account the percentage of completion used for revenue recognition purposes.

Interest income Interest income from cash in banks, cash equivalents, short-term cash investments and installment contracts receivable is recognized as the interest accrues taking into account the effective yield on interest.

Dividend income Dividend income is recognized when the Company’s right to receive the payment is established.

Operating Leases Operating leases represent those leases under which substantially all the risks and rewards of ownership of the leased assets remain with the lessors. Rent income from operating leases is recognized as income when earned on a straight-line basis over the term of the lease agreement. Initial direct costs incurred specifically to earn revenue from an operating lease are recognized as an expense in the statement of income in the period in which they are incurred.

Operating expenses Operating expenses constitute costs of administering the business. These costs are expensed as incurred.

Financial expenses Financial expenses consist of interest incurred from notes and contracts payable. Interest attributable to a qualifying asset is capitalized as part of the cost of the property while others are expensed as incurred.

Interest costs are capitalized if they are directly attributable to the acquisition, development and construction of real estate projects as part of the cost of such projects. Capitalization of interest cost (1) commences when the activities to prepare the assets for their intended use are in progress

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and expenditures and interest costs are being incurred, (2) is suspended during extended periods in which active development is interrupted, and (3) ceases when substantially all the activities necessary to prepare the assets for their intended use are complete. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

Other Comprehensive Income Other comprehensive income comprises items of income and expense that are not recognized in the statement of income for the year in accordance with PFRS. Other comprehensive income of the Company includes gains and losses on remeasuring available-for-sale financial assets.

Retirement Benefits Cost Retirement benefits cost is actuarially determined using the projected unit credit method. Actuarial gains and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses for the plan at the end of the previous reporting year exceeded 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognized over the expected average remaining working lives of the employees participating in the plan.

Past service cost is recognized as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits are already vested immediately following the introduction of, or changes to, a retirement plan, past service cost is recognized immediately.

The retirement plan liability is the aggregate of the present value of the defined benefit obligation and actuarial gains and losses not recognized, reduced by past service cost not yet recognized, and the fair value of plan assets out of which the obligations are to be settled directly. If such aggregate is negative, the asset is measured at the lower of such aggregate or the aggregate of cumulative unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plans or reductions in the future contributions to the plan.

If the asset is measured at the aggregate of cumulative unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan, net actuarial losses of the current period and past service cost of the current period are recognized immediately to the extent that they exceed any reduction in the present value of those economic benefits. If there is no change or increase in the present value of economic benefits, the entire net actuarial losses of the current period and past service cost of the current period are recognized immediately. Similarly, net actuarial gains of the current period after the deduction of past service cost of the current period exceeding any increase in the present value of the economic benefits stated above are recognized immediately if the asset is measured at the aggregate of cumulative unrecognized net actuarial losses and past service cost at the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan. If there is no change or decrease in the present value of the economic benefits, the entire net actuarial gains of the current period after the deduction of past service cost of the current period are recognized immediately.

Provisions and Contingencies Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the effective future cash flows at a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the risks specific to the liability. Where

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discounting is used, the increase in the provisions due to the passage of time is recognized as an interest expense. Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but disclosed in the notes to financial statements when an inflow of economic benefits is probable.

Income Taxes Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of reporting period.

Current income tax for current and prior periods shall, to the extent unpaid, be recognized as a liability under “Income tax payable” account in the balance sheet. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess shall be recognized as an asset under “Other assets” account in the balance sheet.

Deferred income tax Deferred income tax is recognized on all temporary differences at the end of reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that sufficient future taxable profits will be available against which the deductible temporary differences can be utilized. Deferred income tax assets and deferred income tax liabilities are not recognized when it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each end of reporting period and

reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred income tax assets to be utilized. Unrecognized deferred income tax assets are reassessed at each end of reporting period and are recognized to the extent that it has become probable that sufficient future taxable profit will allow the deferred income tax asset to be recovered.

Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period.

Income tax relating to items recognized directly in equity is recognized in the statement of comprehensive income and in the statement of changes in equity and not in the statement of income.

Earnings Per Share Basic earnings per share is computed by dividing the net income for the year by the weighted average number of ordinary shares issued and outstanding after considering the retrospective effect, if any, of stock dividends declared during the year.

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Diluted earnings per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares outstanding during the year, excluding treasury shares, and adjusted for the effects of all dilutive potential common shares, if any. In determining both the basic and diluted earnings per share, the effect of stock dividends, if any, is accounted for retrospectively.

Segment Reporting The Company’s operating businesses are organized and managed separately according to the

nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Financial information on business segments is presented in Note 24 in the financial statements. The Company’s asset-producing revenues are located in the Philippines (i.e., one geographical location). Therefore, geographical segment information is no longer presented.

Events After the Reporting Period

Post year-end events that provide additional information about the Company’s position at the end of reporting period (adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the financial statements when material. New Accounting Standards, Interpretations and Amendments to Existing Standards Effective Subsequent to December 31, 2012 The Company will adopt the standards and interpretations enumerated below when these become effective. Except as otherwise indicated, the Company does not expect the adoption of these new changes in PFRS to have a significant impact on the financial statements. The relevant disclosures will be included in the notes to the financial statements when these become effective.

Effective in 2013 • PAS 1, Financial Statement Presentation - Presentation of Items of Other Comprehensive

Income. The amendments to PAS 1 change the grouping of items presented in other comprehensive income. Items that could be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment becomes effective for annual periods beginning on or after July 1, 2012. The amendment affects presentation only and has therefore no impact on the Company’s financial position and performance.

• Amendments to PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities, require an entity to disclose information about rights of offset and related arrangements (such as collateral agreements).

The new disclosures are required for all recognized financial instruments that are offset in accordance with PAS 32. These disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or ‘similar agreement’, irrespective of whether they are offset in accordance with PAS 32. The amendments require entities to disclose, in a tabular format unless another format is more appropriate, the following minimum quantitative information.

This is presented separately for financial assets and financial liabilities recognized at the end of the reporting period: a) The gross amounts of those recognized financial assets and recognized financial liabilities; b) The amounts that are offset in accordance with the criteria in PAS 32 when determining the net amounts presented in the balance sheet;

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c) The net amounts presented in the balance sheet; d) The amounts subject to an enforceable master netting arrangement or similar agreement that are not otherwise included in (b) above, including:

i. Amounts related to recognized financial instruments that do not meet some or all of the offsetting criteria in PAS 32; and

ii. Amounts related to financial collateral (including cash collateral); and e) The net amount after deducting the amounts in (d) from the amounts in (i) above.

The amendments to PFRS 7 are to be applied retrospectively for annual periods beginning on or after January 1, 2013. The amendment affects disclosures only and will have no impact on the Company’s financial position and performance.

• PFRS 10, Consolidated Financial Statements, replaces the portion of PAS 27, Consolidated

and Separate Financial Statements, that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12, Consolidation - Special Purpose Entities. PFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by PFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS 27. This standard becomes effective for annual periods beginning on or after January 1, 2013. This standard will not impact the Company’s financial position and performance.

• PFRS 11, Joint Arrangements, replaces PAS 31, Interests in Joint Ventures and SIC-13,

Jointly-controlled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. This standard becomes effective for annual periods beginning on or after January 1, 2013. This standard will not impact the Company’s financial position and performance.

• PFRS 12, Disclosure of Interests with Other Entities, includes all of the disclosures that were

previously included in PAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This standard becomes effective for annual periods beginning on or after January 1, 2013. This standard will not impact the Company’s financial position and performance.

• PFRS 13, Fair Value Measurement, establishes a single source of guidance under PFRS for all fair value measurements. PFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under PFRS when fair value is required or permitted. This standard becomes effective for annual periods beginning on or after January 1, 2013. The Company is currently assessing the impact that this standard will have on the financial position and performance.

• Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface

Mine, applies to waste removal costs that are incurred in surface mining activity during the production phase of the mine (“production stripping costs”) and provides guidance on the recognition of production stripping costs as an asset and measurement of the stripping activity asset. This interpretation becomes effective for annual periods beginning on or after January 1, 2013. This interpretation will not impact the Company’s financial position and performance.

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• Amendments to PAS 19, Employee Benefits, range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and rewording. The revised standard also requires new disclosures such as, among others, a sensitivity analysis for each significant actuarial assumption, information on asset-liability matching strategies, duration of the defined benefit obligation, and disaggregation of plan assets by nature and risk. The amendment becomes effective for annual periods beginning on or after January 1, 2013. Once effective, the Company has to apply the amendments retroactively to the earliest period presented.

The Company obtained the services of an external actuary to compute the retirement benefits cost and liability based on the amended PAS 19. The impact to the financial statements upon adoption of the standard are detailed below:

As of December 31,

2012

As of December 31,

2011

As of January 1,

2011Increase (decrease) in: Balance sheet Net retirement plan asset (P=1,649,202) (P=2,568,386) (P=320,633) Deferred tax liability (494,761) (770,516) (96,190) Other comprehensive income (1,150,115) (1,734,982) (269,866) Retained earnings (4,326) (62,888) 45,423

2012 2011 2010 Statement of Income Net retirement benefits cost P=83,660 (P=154,730) 64,890 Income tax expense (25,098) 46,419 (19,467) Profit for the year 58,562 (108,311) 45,423 Statement of comprehensive income Other comprehensive income,

net of deferred income tax

584,867 (1,465,116)

(39,667)

• PAS 27, Separate Financial Statements (as revised in 2011). As a consequence of the new PFRS 10 and PFRS 12, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. The Company does not present separate financial statements. The amendment becomes effective for annual periods beginning on or after January 1, 2013.

• PAS 28, Investments in Associates and Joint Ventures (as revised in 2011). As a consequence

of the new PFRS 11 and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The amendment becomes effective for annual periods beginning on or after January 1, 2013. The Company expects that this amendment will not have any impact on the Company’s financial position and performance.

Annual Improvements to PFRSs (2009-2011 cycle) The Annual Improvements to PFRSs (2009-2011 cycle) contain non-urgent but necessary amendments to PFRS. The amendments are effective for annual periods beginning on or after January 1, 2013 and are applied retrospectively. Earlier application is permitted.

• PFRS 1, First-time Adoption of PFRS - Borrowing Costs, clarifies that, upon adoption of

PFRS, an entity that capitalized borrowing costs in accordance with its previous generally

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accepted accounting principles, may carry forward, without any adjustment, the amount previously capitalized in its opening statement of financial position at the date of transition. Subsequent to the adoption of PFRS, borrowing costs are recognized in accordance with PAS 23, Borrowing Costs. The amendment does not apply to the Company as it is not a first-time adopter.

• PAS 1, Presentation of Financial Statements - Clarification of the Requirements for Comparative Information, clarify the requirements for comparative information that are disclosed voluntarily and those that are mandatory due to retrospective application of an accounting policy, or retrospective restatement or reclassification of items in the financial statements. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The additional comparative period does not need to contain a complete set of financial statements. On the other hand, supporting notes for the third balance sheet (mandatory when there is a retrospective application of an accounting policy, or retrospective restatement or reclassification of items in the financial statements) are not required. The amendments affect disclosures only and have no impact on the Company’s financial position or performance.

• PAS 16, Property, Plant and Equipment - Classification of Servicing Equipment, clarifies that

spare parts, stand-by equipment and servicing equipment should be recognized as property, plant and equipment when they meet the definition of property, plant and equipment and should be recognized as inventory if otherwise. The Company is currently assessing impact of the amendments to PAS 16.

• PAS 32, Financial Instruments: Presentation - Tax Effect of Distribution to Holders of Equity

Instruments, clarifies that income taxes relating to distributions to equity holders and to transaction costs of an equity transaction are accounted for in accordance with PAS 12, Income Taxes. The Company expects that this amendment will not have any impact on its financial position and performance.

• PAS 34, Interim Financial Reporting - Interim Financial Reporting and Segment Information

for Total Assets and Liabilities, clarifies that the total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change from the amount disclosed in the entity’s previous annual financial statements for that reportable segment. The amendment affects disclosures only and has no impact on the Company’s financial position and performance.

Effective in 2014 • PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial

Liabilities, clarifies the meaning of “currently has a legally enforceable right to offset” and also the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The amendments to PAS 32 are to be retrospectively applied for annual periods beginning on or after January 1, 2014.

Effective in 2015 • PFRS 9, Financial Instruments - Classification and Measurement, as issued, reflects the first

phase on the replacement of PAS 39 and applies to the classification and measurement of financial assets and liabilities as defined in PAS 39, Financial Instruments: Recognition and Measurement. Work on impairment of financial instruments and hedge accounting is still ongoing, with a view to replacing PAS 39 in its entirety. PFRS 9 requires all financial assets

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to be measured at fair value at initial recognition. A debt financial asset may, if the fair value option (FVO) is not invoked, be subsequently measured at amortized cost if it is held within a business model that has the objective to hold the assets to collect the contractual cash flows and its contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal outstanding. All other debt instruments are subsequently measured at fair value through profit or loss. All equity financial assets are measured at fair value either through other comprehensive income or profit or loss. Equity financial assets held for trading must be measured at fair value through profit or loss. For FVO liabilities, the amount of change in the fair value of a liability that is attributable to changes in credit risk must be presented in other comprehensive income. The remainder of the change in fair value is presented in profit or loss, unless presentation of the fair value change in respect of the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. All other PAS 39 classification and measurement requirements for financial liabilities have been carried forward into PFRS 9, including the embedded derivative separation rules and the criteria for using the FVO.

The Company has made an evaluation of the impact of the adoption of this standard. The Company decided not to early adopt PFRS 9 for its 2012 reporting ahead of its effectivity date on January 1, 2015 and therefore the financial statements and as of December 31, 2012 and 2011 do not reflect the impact of the said standard. Based on this evaluation, loans and receivables and other financial liabilities, both carried at amortized cost, will not be significantly affected.

The Company shall conduct another impact assessment at the end of the 2013 reporting period using the financial statements as of and for the year ended December 31, 2012. Given the amendments on PFRS 9, the Company at present, does not plan to early adopt in 2013 financial reporting. It plans to reassess its current position once the phases of PFRS 9 on impairment and hedge accounting become effective.

Deferred Effectivity • Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate, covers

accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. This Interpretation requires that revenue on construction of real estate be recognized only upon completion, except when such contract qualifies as construction contract to be accounted for under PAS 11, Construction Contracts, or involves rendering of services in which case revenue is recognized based on stage of completion. Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will also be accounted for based on stage of completion. The SEC and the Financial Reporting Standards Council have deferred the effectivity of this interpretation until the final Revenue standard is issued by the International Accounting Standards Board and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed. The Company will quantify the effect when the final Revenue standard is issued.

3. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. In the opinion of management, these financial statements reflect all adjustments necessary to present fairly the results for the periods presented. Actual results could differ from such estimates.

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Judgments In the process of applying the Company’s accounting policies, management has made the

following judgments, apart from those involving estimations, which has the most significant effect on the amounts recognized in the financial statements:

Determination of the Company’s functional currency The Company, based on the relevant economic substance of the underlying circumstances, has

determined its functional currency to be Peso. It is the currency that influences the sale of real estate properties and services and the costs of selling the same.

Classification of financial instruments The Company classifies a financial instrument, or its component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial asset, a financial liability or an equity instrument. The substance of a financial instrument, rather than its legal form, governs its classification in the Company’s balance sheet (see Note 20).

The Company determines the classification at initial recognition and, where allowed and appropriate, re-evaluates this designation at every reporting date.

Classification of leases - Company as lessor The Company has entered into the property leases of its investment properties where it has determined that the risks and rewards of ownership are retained with the Company. As such, these lease agreements are accounted for as operating leases.

Classification of real estate properties The Company determines whether a property is classified as for lease or for sale or for future development and for capital appreciation.

Real estate properties which are not occupied substantially for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation are classified as investment properties. Investment properties amounted to P=180.60 million and P=183.16 million as of December 31, 2012 and 2011, respectively (see Note 9).

Real estate properties which the Company develops and intends to sell before or on completion of construction are classified as real estate properties for sale and for future development. Real estate properties for sale and for future development amounted to P=514.26 million and P=628.47 million as of December 31, 2012 and 2011, respectively (see Note 8).

Estimates The key assumptions concerning the future and other key sources of estimation uncertainty at the end of 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 are discussed below:

Determination of fair value of financial instruments

Financial assets and financial liabilities, on initial recognition, are accounted for at fair value. The fair values of financial assets and financial liabilities, on initial recognition, are normally the transaction prices. In the case of those financial assets and financial liabilities that have no active markets, fair values are determined using an appropriate valuation technique.

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As of December 31, 2012 and 2011, the total carrying value of financial assets amounted to P=1,471.85 million and P=1,404.23 million, respectively, while the total fair values of financial liabilities amounted to P=500.24 million and P=693.88 million, respectively (see Note 20). The carrying values of financial assets and liabilities are equal to fair values.

Estimation of allowance for impairment of receivables The level of this allowance is evaluated by management based on past collection history and other factors which include, but are not limited to the length of the Group’s relationship with the customer, the customer’s payment behavior and known market factors that affect the collectability of the accounts. As of December 31, 2012 and 2011, installment contracts receivable and other receivables aggregated to P=817.30 million and P=880.62 million, respectively. There was no impairment of receivables in 2012 and 2011 (see Notes 6 and 7).

Impairment of available-for-sale financial assets An impairment issue arises when there is an objective evidence of impairment, which involves significant judgment. In making this judgment, the Company evaluates the financial health of the issuer, among others. The Company treats available-for-sale equity investments as impaired when there has been a significant or prolonged decline in the fair value below its cost or where other objective evidence of impairment exists. The Company treats “significant” generally as 20% or more of cost and “prolonged” as greater than 12 months for quoted equity securities. In addition, the Company evaluates other factors, including normal volatility in share price for quoted equities and the future cash flows and the discount factors for unquoted equities.

In 2010, the Company recognized impairment loss amounting to P=0.68 million on available-for-sale financial assets. No impairment loss was recognized in 2012 and 2011 (see Notes 5 and 16).

Available-for-sale financial assets amounted to P=1.56 million and P=0.96 million as of December 31, 2012 and 2011, respectively (see Note 5).

Estimation of percentage of completion of projects The Company estimates the percentage of completion of ongoing projects for purposes of accounting for the estimated costs of development as well as revenue to be recognized. The percentage of completion is based on the technical evaluation of the independent project engineers as well as management’s monitoring of the costs, progress and improvements of the projects. Gross profit on sales of real estate properties amounted to P=261.85 million, P=346.40 million and P=253.45 million in 2012, 2011 and 2010, respectively.

Determination of net realizable value of real estate properties for sale and held for future development The Company’s estimates of the net realizable value of real estate properties are based on the most reliable evidence available at the time the estimates are made, or the amount that the inventories are expected to be realized. These estimates consider the fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period. A new assessment is made of net realizable value in each subsequent period. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is a clear evidence of an increase in net realizable value because of changes in economic circumstances, the amount of the write-down is reversed so that the new carrying amount is the lower of the cost and the revised net realizable value. The Company’s real estate properties for sale and held for future development as of December 31, 2012 and 2011 amounted to P=514.26 million and P=628.47 million, respectively (see Note 8).

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Estimation of useful lives of investment properties The Company estimates the useful lives of investment properties based on the internal technical

evaluation and experience with similar assets. Estimated lives of investment properties are reviewed periodically and updated if expectations differ from previous estimates due to wear and tear, technical and commercial obsolescence and other limits on the use of the assets. As of December 31, 2012 and 2011, net book value of depreciable investment properties amounted to nil and P=2.71 million, respectively (see Note 9).

Impairment of investment properties

The Company determines whether its investment properties are impaired when impairment indicators exist such as significant underperformance relative to expected historical or projected future operating results and significant negative industry or economic trends. When an impairment indicator is noted, the Company makes an estimation of the value-in-use of the cash-generating units to which the assets belong. Estimating the value-in-use requires the Company to make an estimate of the expected future cash flows from the cash-generating unit and also to choose an appropriate discount rate in order to calculate the present value of those cash flows. No impairment indicator was noted as of December 31, 2012 and 2011. Net book values of investment properties as of December 31, 2012 and 2011 amounted to P=180.60 million and P=183.16 million, respectively (see Note 9).

Estimation of retirement benefits cost

The determination of the Company’s obligation and costs for retirement benefits depends on management’s selection of certain assumptions used by actuaries in calculating such amounts. The assumptions for retirement benefits cost include, among others, discount rates, expected annual rates of return on plan assets and rates of salary increase. Actual results that differ from assumptions are accumulated and amortized over future periods and therefore, generally affect the Company’s recognized expenses and recorded obligation in such future periods. While management believes that the assumptions are reasonable and appropriate, significant differences in actual experience or significant changes in management assumptions may materially affect the Company’s retirement obligations.

Net retirement benefits cost amounted to P=0.70 million and P=0.14 million in 2012 and 2010, respectively, while net retirement benefits income amounted to P=0.08 million in 2011. Retirement plan assets amounted to P=0.67 million and P=0.72 million as of December 31, 2012 and 2011, respectively (see Note 17).

Recognition of deferred income tax assets The Company reviews the carrying amounts of deferred income tax assets at the end of each reporting period and reduces deferred income tax assets to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred income tax assets to be utilized.

As of December 31, 2012 and 2011, deferred income tax assets amounted to P=3.24 million and P=4.54 million, respectively (see Note 18).

4. Cash and Cash Equivalents and Short-term Cash Investments

Cash and cash equivalents consist of:

2012 2011 Cash on hand and in banks P=3,210,127 P=6,040,443 Cash equivalents 599,100,000 305,500,000 P=602,310,127 P=311,540,443

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Cash in banks earn interest at the respective bank deposit rates. Cash equivalents are made for varying periods of up to three months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term investment rates.

Short-term cash investments amounting to P=51.00 million and P=211.50 million as of December 31, 2012 and 2011, respectively, are placed with banks with maturities of more than three months to one year from the dates of acquisition and earn interest at the prevailing market rates.

Interest income earned from cash and cash equivalents and short-term cash investments amounted to P=29.78 million, P=26.45 million and P=18.23 million in 2012, 2011 and 2010, respectively (see Note 15).

5. Available-for-sale Financial Assets Available-for-sale financial assets consist of investments in quoted equity securities amounting to

P=1.56 million and P=0.96 million as of December 31, 2012 and 2011, respectively. The fair values of available-for-sale financial assets were determined based on published prices in the active market.

The movements in “Net changes in fair values of available-for-sale financial assets” presented in

the equity section of the balance sheets are as follows:

2012 2011 Balances at beginning of year P=690,710 P=711,958 Changes in fair value 596,029 (21,248) Balances at end of year P=1,286,739 P=690,710

6. Installment Contracts Receivable

Installment contracts receivable arise from sale of real estate properties.

The installment contracts receivable on sale of real estate properties are collectible in monthly installments for periods ranging from one to 10 years and bear monthly interest rates of 0.67% to 2.00% in 2012, 2011 and 2010 computed on the diminishing balance.

Interest income earned from an installment contracts receivable amounted to P=128.71 million, P=140.63 million and P=148.71 million in 2012, 2011 and 2010, respectively (see Note 15).

The portion due within one year amounted to P=232.07 million and P=150.22 million as of December 31, 2012 and 2011, respectively (see Note 21).

The Company, CDC, and CI entered into a contract of guaranty under Retail Guaranty Line in the amount of P=1.00 billion with Home Guaranty Corporation (HGC) in 2012. The contract entered into by the Company, CDC, CI and CPI (collectively referred as the Group) amounted to P=2.00 billion in 2010. The amount of installment contracts receivable enrolled by the Company amounted to P=556.0 million and P=651.00 million in 2012 and 2011, respectively. The Company paid a guarantee premium of 1.00% based on the outstanding principal balance of the installment contract receivable enrolled in 2012 and 2011 (see Note 13).

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7. Other Receivables

Other receivables consist of:

2012 2011 Advances to customers P=8,664,698 P=3,821,367 Accrued interest 2,007,615 2,101,579 Retention 150,200 920,200 Others (Note 19) 3,394,778 2,419,704 P=14,217,291 P=9,262,850

Advances to customers are receivables of the Company for the real estate property taxes of sold units. Other receivables include receivables from customers relating to registration initially paid by the Group and employees’ advances. Other receivables due within one year amounted to P=13.90 million and P=8.07 million as of December 31, 2012 and 2011, respectively (see Note 21).

8. Real Estate Properties for Sale and Real Estate Properties Held for Future Development

Real estate properties for sale consist of cost incurred in the development of condominium units and residential houses for sale amounting to P=152.06 million and P=391.69 million as of December 31, 2012 and 2011, respectively. Construction and development costs incurred amounted to P=26.87 million and P=426.50 million while cost of disposal of real estate properties charged to cost of real estate sales amounted to P=246.53 million and P=595.38 million in 2012 and 2011, respectively. Real estate properties for sale account includes capitalized interest costs incurred during each year in connection with the development of the properties amounting to nil in 2012, P=2.11 million in 2011 and P=12.60 million in 2010 (see Notes 11 and 16). The average capitalization rate used to determine the amount of borrowing costs eligible for capitalization were nil in 2012, 3.86% in 2011 and 4.07% in 2010.

In 2012 and 2011, the Company acquired a parcel of land amounting to P=123.13 million and P=109.81 million, respectively, for future development. Real estate properties held for future development amounted to P=362.21 million and P=236.78 million as of December 31, 2012 and 2011, respectively.

9. Investment Properties

Investment properties represent real estate properties for lease which consist of:

2012 2011 Land - at cost Balances at beginning of year P=180,445,820 P=180,445,820 Additions during the year 157,865 – 180,603,685 180,445,820 Building - at cost Balances at beginning and end of year 13,574,318 13,574,318

(Forward)

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2012 2011 Accumulated Depreciation Balances at beginning of year P=10,859,456 P=8,144,592 Depreciation (Note 13) 2,714,862 2,714,864 Balances at end of year 13,574,318 10,859,456 − 2,714,862 Net Book Values P=180,603,685 P=183,160,682

Investment properties include deemed cost adjustment amounting to P=16.90 million as of December 31, 2012 and 2011 (see Notes 12 and 18). The deemed cost adjustment arose when the Company transitioned to PFRS in 2005.

Investment properties are rented out at different rates generally for a one-year term renewable every year. Rent income from real estate properties for lease amounted to P=3.76 million, P=1.12 million and P=0.75 million in 2012, 2011 and 2010, respectively.

Based on the appraisal reports by independent firms of appraisers using market data approach at various dates in 2012 and 2011, the appraised values of these investment properties amounted to P=282.91 million and P=280.71 million as of dates of appraisal.

Direct operating expenses on investment properties amounted to P=3.48 million, P=3.72 million and P=4.11 million pertaining to real estate taxes, depreciation and other expenses in 2012, 2011 and 2010, respectively.

10. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of:

2012 2011 Trade payables P=34,657,142 P=28,764,654 Deposits 2,714,128 10,062,434 Accrued expenses:

Development costs 195,675,109 311,228,188 Director’s fee (Note 19) 10,405,196 14,841,537 Interest 1,240,098 1,343,688 Taxes, premiums, others 464,915 769,561

Withholding taxes payable 1,826,338 2,279,132 Dividends payable 1,307,578 1,060,777 Others (Note 19) 1,528,053 3,848,307 P=249,818,557 P=374,198,278

Trade payables consist of payables to contractors and other counterparties, whereas deposits consist of rental deposits and collected deposits for water and electric meters of the sold units. Accrued expenses represent various accruals of the Company for its expenses and real estate projects. Accrued development costs represent the corresponding accrued expenses for the sold and completed real estate projects of the Company. Other payables consist of customers’ reservation and employees’ payable.

Accounts payable and accrued expenses due within one year amounted to P=114.59 million and P=209.90 million as of December 31, 2012 and 2011, respectively (see Note 21).

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11. Notes and Contracts Payable The details of notes and contracts payable are as follows:

2012 2011 Notes payable:

Short-term promissory notes with varying maturities and annual interest rates ranging from 2.37% to 4.61% in 2012 and 3.5% to 4.77% in 2011 P=83,650,000 P=139,450,000

Short-term promissory notes enrolled with HGC with varying maturities and annual interest rates ranging from 1.85% to 2.75% in 2012 and 1.70% to 3.40% in 2011 151,288,195 182,570,561

234,938,195 322,020,561 Contracts payable 17,381,250 – P=252,319,445 P=322,020,561

On September 7, 2012 and September 12, 2011, the Philippine Securities and Exchange

Commission (SEC) authorized the Company to issue P=200.00 million worth of short-term commercial papers (STCP) registered with the SEC in both years, in accordance with the provision of the Securities Regulation Code and its implementing rules and regulations, the Code of Corporate Governance and other applicable laws and orders. Outstanding STCP issued by the Company as of December 31, 2012 and 2011 aggregated to P=83.65 million and P=139.45 million, respectively.

In 2012 and 2011, the Company entered into a contract of guaranty under a Revolving Cash Guaranty Line with HGC in the amount of P=200.00 million coverage on the Company’s STCP. The guaranty covers the unpaid principal due on the outstanding STCP and unpaid interest thereon of 10% per annum. The guaranty premium paid was 0.90% per annum based on enrolled commercial papers in 2012 and 2011. Outstanding STCP covered by the guaranty amounted to P=151.29 million and P=182.57 million as of December 31, 2012 and 2011, respectively.

Interest expense related to short-term notes amounted to P=10.55 million, P=12.17 million and P=12.31 million in 2012, 2011 and 2010, respectively, while interest expense related to long-term loans amounted to P=0.08 million and P=0.79 million in 2011 and 2010, respectively (see Note 16). Capitalized interest in 2011 and 2010 amounted to P=2.11 million and P=12.60 million, respectively (see Notes 8 and 16). No interest expense related to long-term loans and capitalized interest were incurred in 2012.

The Group has omnibus credit line with financial institutions aggregating to about P=2,515.00 million as of December 31, 2012 and 2011, respectively, which is available for drawing by any of the companies of the Group. The Company has no specific credit lines with financial institutions as of December 31, 2012 and 2011.

Carrying values of collaterals for omnibus credit line as of December 31 follow (amounts in millions):

2012 2011 Real estate properties for sale and lease: Group P=316.24 P=418.39 Company – – P=316.24 P=418.39

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No loans were availed from omnibus credit line in 2012 and 2011. Contracts payable represent liabilities arising from contracts to purchase land for future development. Notes and contracts payable due within one year amounted to P=252.32 million and P=322.02 million as of December 31, 2012 and 2011, respectively (see Note 21).

12. Equity

Capital stock consists of:

Shares Amount 2012 2011 2012 2011 Common stock - P=1 par value: Authorized Beginning of year 700,000,000 700,000,000 P=700,000,000 P=700,000,000 Increase during the year 500,000,000 – 500,000,000 – End of year 1,200,000,000 700,000,000 P=1,200,000,00 P=700,000,000 Issued and outstanding: Beginning of year 676,042,298 563,368,825 676,042,298 563,368,825 Stock dividends 135,208,178 112,673,473 135,208,178 112,673,473 End of year 811,250,476 676,042,298 P=811,250,476 P=676,042,298

The Company registered 175,000,000 shares with SEC on April 21, 1989 with an initial offer price of P=1.00.

On August 10, 2012, the SEC approved the increase in authorized capital stock from 700,000,000 shares to 1,200,000,000 shares. As of December 31, 2012 and 2011, the Company has 811,250,476 shares held by 810 equity holders and 676,042,298 shares held by 769 equity holders, respectively.

Dividends declared and issued/paid by the Company in 2012, 2011 and 2010 follow:

Dividends Date Approved Per Share Stockholders of Record Date Date Issued/Paid

Cash May 25, 2012 P=0.150 June 22, 2012 July 18, 2012 June 3, 2011 0.140 June 17, 2011 July 13, 2011 June 7, 2010 0.050 July 7, 2010 August 2, 2010 Stock May 15, 2012 20.0% September 10, 2012 October 4, 2012 May 2, 2011 20.0% July 14, 2011 September 9, 2011 April 30, 2010 20.0% June 18, 2010 July 14, 2010

Fractional shares of stock dividends were paid in cash based on the par value.

On August 9, 2012, the Board of Directors authorized the reversal of appropriated retained earnings amounting to P=100.00 million for the development cost of Manila Residences Bocobo to unappropriated retained earnings because the said project was already completed.

As of December 31, 2012 and 2011, the unappropriated retained earnings include the impact of the remaining balance of deemed cost adjustment of investment properties amounting to P=11.83 million, net of related deferred tax of P=5.07 million, which arose when the Company transitioned to PFRS in 2005 (see Notes 9 and 18). This amount has yet to be realized through sales. The balance of unappropriated retained earnings is restricted for the payment of dividends to the extent of the balance of the deemed cost adjustment.

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*SGVMG300370*

13. Operating Expenses

Operating expenses consist of:

2012 2011 2010 Personnel (Note 14) P=59,346,148 P=67,519,545 P=48,766,555 Taxes and licenses 17,609,047 15,109,116 13,951,939 Professional fees 9,919,994 21,401,583 8,630,480 Insurance (Notes 6 and 11) 5,519,104 6,416,956 7,433,276 Membership dues 4,666,711 5,147,677 477,270 Depreciation (Note 9) 2,714,862 2,714,864 2,714,864 Brokers’ commission 2,168,855 3,103,102 3,535,183 Advertising and promotions 2,049,413 2,257,001 1,758,751 Outside services 1,878,579 1,867,395 1,276,912 Rent 1,400,935 1,755,859 877,552 Postage, telephone and telegraph 766,631 806,773 606,063 Repairs and maintenance 416,084 518,324 304,073 Power, light and water 195,307 274,479 92,921 Others 3,418,751 5,435,112 2,880,574 P=112,070,421 P=134,327,786 P=93,306,413

14. Personnel Expenses

Personnel expenses consist of:

2012 2011 2010 Salaries and wages P=24,013,291 P=27,539,074 P=17,737,537 Bonuses and other employee

benefits (Note 17) 21,197,940 23,702,057 15,481,364 Commissions 14,134,917 16,278,414 15,547,654 P=59,346,148 P=67,519,545 P=48,766,555

15. Financial Income

Financial income consists of:

2012 2011 2010 Interest income from:

Installment contracts receivable relating to sales of real estate (Note 6) P=128,710,733 P=140,629,814 P=148,713,513

Cash equivalents and short-term investments (Note 4) 29,754,575 26,414,581 18,171,305

Cash in bank (Note 4) 28,291 38,064 55,472 Others (Note 19) 68,852 158,329 95,483

Dividend income 16,627 15,878 18,974 P=158,579,078 P=167,256,666 P=167,054,747

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*SGVMG300370*

16. Financial Expense Financial expense consists of:

2012 2011 2010 Interest expense on: Notes payable (Note 11) P=10,553,181 P=12,169,937 P=12,313,740 Loans payable (Notes 8 and 11) − 83,488 793,350 10,553,181 12,253,425 13,107,090 Capitalized interest (Notes 8 and 11) − (2,108,403) (12,598,616) 10,553,181 10,145,022 508,474 Others (Note 19) 30,279 354,457 171,018 Finance charges and others 479,600 751,873 605,246 Impairment loss on available-for- sale financial assets − − 682,118 P=11,063,060 P=11,251,352 P=1,966,856

17. Retirement Benefits Cost

The Company, jointly with affiliated companies, has a funded, noncontributory defined benefit retirement plan, administered by a trustee, covering all of its permanent employees. The latest actuarial valuation report is as of December 31, 2012. The following tables summarize the components of the net retirement benefits cost (income) from retirement plan assets recognized in the statements of income and the funded status and amounts recognized in the balance sheets.

The details of net retirement benefits cost (income), which is included in “Personnel expense” account (see Note 14), are as follows:

2012 2011 2010 Current service cost P=504,051 P=93,875 P=94,331 Interest cost on defined benefit obligation 199,091 104,385 84,596 Expected return on plan assets (86,807) (130,381) (106,831) Net actuarial loss 82,937 7,046 8,223 Effect of asset limit – (158,109) 56,573 Net retirement benefits cost (income ) P=699,272 (P=83,184) P=136,892

Actual return on plan assets P=93,083 P=24,285 P=106,831

The details of the retirement plan assets, which are included in “Other Assets” account in the balance sheets, are as follows:

2012 2011 Defined benefit obligation P=3,163,939 P=3,290,768 Fair value of plan assets 2,186,780 1,446,776 Unfunded obligation 977,159 1,843,992 Unrecognized net actuarial losses (1,649,202) (2,568,386) Retirement plan assets (P=672,043) (P=724,394)

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*SGVMG300370*

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

2012 2011 Defined benefit obligation, January 1 P=3,290,768 P=943,805 Current service cost 504,051 93,875 Interest cost on defined benefit obligation 199,091 104,385 Actuarial loss (gain) on obligation (829,971) 2,148,703 Defined benefit obligation, December 31 P=3,163,939 P=3,290,768

Changes in fair value of plan assets are as follows:

2012 2011 Fair value of plan assets, January 1 P=1,446,776 P=1,303,808 Expected return on plan assets 86,807 130,381 Contributions to the plan 646,921 118,683 Actuarial gain (loss) on plan assets 6,276 (106,096) Fair value of plan assets, December 31 P=2,186,780 P=1,446,776

The major categories of plan assets of the Company with its affiliated companies as a percentage of the fair value of net plan assets are as follows:

2012 2011 Cash and cash equivalents 83.95% 81.94% Investments in securities 10.01% 8.35% Receivables 6.04% 9.71% 100.00% 100.00%

Cash and cash equivalents consists of saving deposits and short-term time deposits with maturities of less than 3 months. Investment in securities consists of investment in shares of stocks of private corporations. Loans and receivables include loans to individuals and accrued interest income.

The overall expected return on the plan assets is determined based on the market prices prevailing on the date applicable to the period over which the obligation is to be settled.

The principal assumptions used in determining retirement benefits cost for the Company’s plan as of January 1 are as follows:

2012 2011 2010 Discount rate per annum 6.05% 11.06% 11.06% Expected annual rate of return on plan assets 6.00% 10.00% 10.00% Future annual increase in salary 6.00% 6.00% 6.00%

As of December 31, 2012, the discount rate is 5.32%, the future increase in salary is 4.50% and expected return on plan assets in 2012 is 6.00%. There are 72, 68 and 65 employees covered by the plan as of December 31, 2012, 2011 and 2010, respectively.

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*SGVMG300370*

Amounts for the current and previous four years are as follows:

2012 2011 2010 2009 2008 Defined benefit obligation P=3,163,939 P=3,290,768 P=943,805 P=764,878 P=10,858 Fair value of plan assets 2,186,780 1,446,776 1,303,808 1,068,308 749,956 Surplus (deficit) (977,159) (1,843,992) 360,003 303,430 739,098 Experience adjustment on plan liabilities - loss 193,317 − − 255 11,516 Experience adjustment on plan assets - gain (loss) 6,276 (106,096) − 4,836 (421,925)

The Company expects to contribute P=0.65 million to the retirement fund in 2013.

18. Income Taxes a. Provision for income tax consists of:

2012 2011 2010 Current P=53,588,418 P=48,401,096 P=49,740,274 Deferred (9,056,128) 4,062,526 13,154,417 44,532,290 52,463,622 62,894,691 Final tax on interest income 5,956,573 5,290,529 3,645,355 P=50,488,863 P=57,754,151 P=66,540,046

b. The components of the net deferred tax liabilities are as follows:

2012 2011 Deferred tax assets:

Accrued expenses P=3,121,559 P=4,452,461 Unamortized past service cost 114,090 89,929

3,235,649 4,542,390 Deferred tax liabilities:

Unrealized gain on real estate transactions 60,422,079 66,603,598 Deemed cost adjustment in real estate properties

(Notes 9 and 12) 5,068,019 5,068,019 Capitalized interest 1,760,208 5,925,853 Retirement plan assets 201,613 217,318

67,451,919 77,814,788 Net deferred tax liabilities P=64,216,270 P=73,272,398

c. The reconciliation of income tax computed at the statutory tax rates to the provision for

income tax follows:

2012 2011 2010 Income tax at statutory tax rates P=91,942,633 P=112,421,460 P=99,640,882 Additions to (reductions in) income tax resulting from: Income entitled to tax holiday (Note 25) (28,536,092) (39,598,044) (16,414,077) Tax-exempt interest income (12,882,906) (15,039,060) (16,884,176) Interest income subjected to final tax (8,934,859) (7,935,794) (5,468,033) (Forward)

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*SGVMG300370*

2012 2011 2010 Final tax on interest income P=5,956,573 P=5,290,529 P=3,645,355 Nondeductible interest expense 2,948,503 2,618,812 1,804,451 Others (4,989) (3,752) 215,644 Provision for income tax P=50,488,863 P=57,754,151 P=66,540,046

19. Related Party Transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are controlled by or under common control with the Company, including holding companies, subsidiaries and fellow subsidiaries, are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals, and companies associated with these individuals also constitute related parties. In considering each possible related entity relationship, attention is directed to the substance of the relationship and not merely the legal form.

The Company discloses the nature of the related party relationship and information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements, including, as a minimum, the amount of outstanding balances and its terms and conditions including whether they are secured, and the nature of the consideration to be provided in settlement. Refer to page 30 for the transactions and account balances with related parties.

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*SGVMG300370*

The Company, in the normal course of business, has transactions and account balances with related parties consisting mainly of the following:

Outstanding Balances Amount of transactions Receivable (Note 6) Payable (Note 10)

Nature of Transaction 2012 2011 2010 2012 2011 2012 2011 Ultimate parent (CI) Sharing of expenses charged by (to) the Company

P=954,663

(P=954,663)

P=3,025,109

P=– P=– P=– P=954,663

30-day, unsecured, non-interest bearing to be settled in cash;

Interest income 23,345 60,112 50,674 23,345 60,112 – –

Due and demandable; non-interest bearing;

to be received in cash; no impairment

Interest expense (1,202) (29,551) (36,371) – – 1,202 29,551

Due and demandable; non-interest bearing; to be settled in cash

Parent Company (CDC) Sharing of expenses charged by (to) the Company 2,680,517 (316,564)

4,164,324 1,620,482 – – 1,060,034


Interest income 45,507 98,217 42,191 45,507 98,217 – –


to be received in cash;

Interest expense (29,077) (72,204) (122,320) – – 29,077 72,204


Affiliate (CPI) Sharing of expenses charged by (to) the Company

403,737 (26,366)

5,611

426,919 23,182 –

–


Total P=2,116,253 P=181,511 P=30,279 P=2,116,452

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*SGVMG300370*

a. Shares of stock of the Company held by members of the BOD aggregated to P=34.00 million and P=28.33 million as of December 31, 2012 and 2011, respectively.

b. The Company, jointly with affiliated companies under common control, has a trust fund for the retirement plan of their employees. The trust fund is being maintained by a trustee bank. The Company’s share on the fair value of plan assets amounted to P=2.19 million and P=1.45 million as of December 31, 2012 and 2011, respectively. The Company’s share on the carrying value of plan assets amounted to P=2.13 million and P=2.36 million as of December 31, 2012 and 2011, respectively.

The major categories of plan assets are cash and cash equivalents, investments in securities and loans and receivables (see Note 17). Loans and receivables of plan assets include installment contracts receivable purchased from the Company amounting to P=0.54 million.

Contributions to the fund amounted to P=0.65 million and P=0.12 million in 2012 and 2011, respectively (see Note 17).

d. Compensation of key management personnel are as follows:

2012 2011 2010 Salaries P=9,397,383 P=8,666,419 P=8,016,434 Bonuses 16,795,520 11,372,544 7,485,786 Other benefits 13,017,752 12,742,198 6,256,425 P=39,210,655 P=32,781,161 P=21,758,645

The Company has no standard arrangements with regards to remuneration of its directors. In 2012, 2011 and 2010, the BOD received as remuneration a total of P=10.86 million, P=10.95 million and P=4.16 million, respectively. Moreover, the Company has no standard arrangement with regards to the remuneration of its existing officers aside from the compensation received or any other arrangements in the employment contracts and compensatory plan. The Company does not have any arrangements for stock warrants or options offered to its employees.

20. Financial Instruments

Financial Risk Management Objectives and Policies The Company’s principal financial instruments comprise of cash and cash equivalents, short-term cash investments and notes and loans payable. The main purpose of these financial instruments is to finance the Company’s operations. The Company’s other financial instruments consist of available-for-sale financial assets, which are held for investing purposes. The Company has various other financial instruments such as installment contracts receivable, other receivables and accounts payable and accrued expenses, which arise directly from its operations.

It is, and has been throughout the year under review, the Company’s policy that no trading in financial instruments shall be undertaken.

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*SGVMG300370*

The main risks arising from the Company’s financial instruments are market risk (i.e., cash flow interest rate risk and equity risk), credit risk and liquidity risk. The BOD reviews and approves policies for managing these risks and they are summarized as follows:

Market risk Cash flow interest rate risk Cash flow interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s notes payable, with repriced interest rates.

The Company’s policy in addressing volatility in interest rates includes maximizing the use of operating cash flows to be able to fulfill principal and interest obligations even in periods of rising interest rates.

The following table demonstrates the sensitivity of the Company’s income before income tax to a reasonable change in interest rates (with all other variables held constant):

Change in

Basis Points (bps) Effect on Income

before Income Tax 2012 -/+ 11 bps +/- P=277,551 2011 -/+ 6 bps +/- P=193,212

There is no impact on the Company’s equity other than those already affecting income before income tax.

Equity price risk Equity price risk is the risk that the fair values of investments in equity securities will decrease as a result of changes in the market values of individual shares of stock. The Company is exposed to equity price risk because of investments held by the Company classified as available-for-sale financial assets in the balance sheets. The Company employs the service of a third-party stockbroker to manage its investments in shares of stock.

The following table demonstrates the sensitivity analysis of the Company’s equity to a reasonably possible change in equity price based on forecasted and average movements of the equity prices (with all other variables held constant):

Change in

Equity Price Effect on Equity 2012 +/-0.24 +/-P=375,429 2011 +/-0.04 +/-P=41,052

Credit risk The Company trades only with recognized, creditworthy third parties. Credit risk arises when the Company will incur a loss because its customers, clients or counterparties fail to discharge their obligations. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis with the objective that the Company’s exposure to bad debts is not significant. The Company’s policy is to enter into transactions with a diversity of credit-worthy parties to mitigate any significant concentration of credit risk. There are no significant concentrations of credit risk within the Company.

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*SGVMG300370*

The tables below show the Company’s exposure to credit risk for the components of the balance sheet. The exposure as of December 31, 2012 and 2011 is shown at gross, before taking the effect of mitigation through the use of collateral agreements and credit enhancements, and at net, after taking the effect of mitigation through the use of collateral agreements and other credit enhancements.

December 31, 2012:

Fair value of Financial effect of Gross maximum collaterals/credit collaterals/credit exposure enhancements Net exposure enhancementsLoans and receivables: Cash and cash equivalents, excluding

cash on hand P=602,289,127 P=– P=602,289,127 P=– Short-term cash investments 51,000,000 51,000,000 – Installment contracts receivable 803,080,536 1,674,773,359 – 803,080,536 Other receivables: Accrued interest 2,007,615 – 2,007,615 – Retention 150,200 – 150,200 – Advances to customers 8,664,698 – 8,664,698 – Others 3,078,924 – 3,078,924 – Total credit risk exposure P=1,470,271,100 P=1,674,773,359 P=667,190,564 P=803,080,536

December 31, 2011:

Fair value of Financial effect of Gross maximum collaterals/credit collaterals/credit exposure enhancements Net exposure enhancementsLoans and receivables: Cash and cash equivalents, excluding

cash on hand P=311,519,443 P=– P=311,519,443 P=– Short-term cash investments 211,500,000 – 211,500,000 – Installment contracts receivable 871,354,650 1,941,897,070 – 871,354,650 Other receivables: Accrued interest 2,101,579 – 2,101,579 – Retention 920,200 – 920,200 – Advances to customers 3,821,367 – 3,821,367 – Others 2,030,722 – 2,030,722 – Total credit risk exposure P=1,403,247,961 P=1,941,897,070 P=531,893,311 P=871,354,650

The Company holds the title to the real estate properties with outstanding installment contracts receivable balance and the Company can repossess such real estate properties upon default of the customer in paying the outstanding balance. The following tables summarize the aging analysis of receivables:

December 31, 2012: Past Due But Not Impaired Over Current < 30 days 31- 60 days 61- 90 days 90 days > One Year* Total Installment contracts receivable P=225,228,768

P=3,373,406 P=781,391 P=673,021 P=2,016,515 P=571,007,435 P=803,080,536

Other receivables: Accrued interest 2,007,615 − − − − − 2,007,615 Advances to customers 6,738,538 − 2,316 196,953 1,726,891 − 8,664,698 Retention 50,000 100,200 − − − − 150,200 Others** 2,970,073 108,851 − − − − 3,078,924

P=236,994,994 P=3,582,457 P=783,707 P=869,974 P=3,743,406 P=571,007,435 P=816,981,973 * Classified as neither past due nor impaired. ** Excludes nonfinancial assets amounting to P=315,854.

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*SGVMG300370*

December 31, 2011:

Past Due But Not Impaired Over Current < 30 days 31- 60 days 61- 90 days 90 days > One Year* Total Installment contracts receivable P=143,690,415

P=2,694,780 P=547,838 P=449,406 P=2,839,685 P=721,132,526 P=871,354,650

Other receivables: Accrued interest 2,101,579 – – – – – 2,101,579 Advances to customers 1,793,873 – 4,692 197,299 1,825,503 – 3,821,367 Retention – 120,200 – – – 800,000 920,200 Others** 1,942,770 87,952 – – – – 2,030,722

P=149,528,637 P=2,902,932 P=552,530 P=646,705 P=4,665,188 P=721,932,526 P=880,228,518 * Classified as neither past due nor impaired. ** Excludes nonfinancial assets amounting to P=388,982.

The tables below show the credit quality by class of asset for loan-related balance sheet lines based on the Company’s credit rating system:

December 31, 2012:

Medium Past due But High Grade* Grade** Not Impaired Total Loans and receivables: Cash and cash equivalents, excluding cash on hand P=602,289,127 P=– P=– P=602,289,127

Short-term cash investments 51,000,000 – – 51,000,000 Installment contracts receivable 796,236,203 – 6,844,333 803,080,536 Other receivables: Advances to customers 6,738,538 – 1,926,160 8,664,698 Accrued interest 2,007,615 – – 2,007,615 Retention 50,000 – 100,200 150,200 Others 2,900,661 69,412 108,851 3,078,924 P=1,461,222,144 P=69,412 P=8,979,544 P=1,470,271,100 * High Grade - financial assets with reputable counterparties and which management believes to be reasonably

assured to be recoverable. ** Medium Grade - financial assets for which there is low risk of default of counterparties.

December 31, 2011:

Medium Past due But High Grade* Grade** Not Impaired Total Loans and receivables: Cash and cash equivalents, excluding cash on hand P=311,519,443 P=– P=– P=311,519,443

Short-term cash investments 211,500,000 – – 211,500,000 Installment contracts receivable 864,822,941 – 6,531,709 871,354,650 Other receivables: Accrued interest 2,101,579 – – 2,101,579 Advances to customers 1,793,873 – 2,027,494 3,821,367 Retention 800,000 – 120,200 920,200 Others 1,898,318 44,452 87,952 2,030,722 P=1,394,436,154 P=44,452 P=8,767,355 P=1,403,247,961 * High Grade - financial assets with reputable counterparties and which management believes to be reasonably

assured to be recoverable. ** Medium Grade - financial assets for which there is low risk of default of counterparties.

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*SGVMG300370*

The main considerations for impairment assessment include whether any payments are overdue or if there are any known difficulties in the cash flows of the counterparties. The Company assesses impairment into two areas: individually assessed allowances and collectively assessed allowances.

The Company determines allowance for each significant receivable on an individual basis. Among the factors that the Company considers in assessing impairment is the inability to collect from the counterparty based on the contractual terms of the receivables. The Company also considers the fair value of the real estate collateralized in computing the impairment of the receivables. Receivables included in the specific assessment are those receivables under the installment contracts receivable accounts.

For collective assessment, allowances are assessed for receivables that are not individually significant and for individually significant receivables where there is no objective evidence of individual impairment. Impairment losses are estimated by taking into consideration the age of the receivables, past collection experience and other factors that may affect collectability.

No impairment has been recognized because the Company holds the title to the real estate properties with outstanding installment contracts receivable balance and the Company can repossess such real estate properties upon default of the customer in paying the outstanding balance.

Liquidity risk Liquidity risk is defined as the risk that the Company would not be able to settle or meet its obligations on time or at a reasonable price.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of STCPs and bank loans.

The tables below summarize the maturity analysis of the Company’s financial assets and financial liabilities:

December 31, 2012:

30 days 31-90 days 91-180 days 181-360 days Above 1 year Total Financial Assets Cash and cash equivalents P=3,210,127 P=599,100,000 P=– P=– P=– P=602,310,127 Short-term cash investments – 51,000,000 – – – 51,000,000 Installment contracts receivable 25,024,054 40,272,053 55,299,104 111,477,891 571,007,434 803,080,536 28,234,181 690,372,053 55,299,104 111,477,891 571,007,434 1,456,390,663 Financial Liabilities Accounts payable and accrued expenses * 32,129,961 182,799 16,608,963 65,078,224 133,925,098 247,925,045 Notes payable** 117,966,153 52,929,873 72,972,874 – – 243,868,900 Contracts payable – – 17,381,250 – – 17,381,250 150,096,114 53,112,672 106,963,087 65,078,224 133,925,098 509,175,195 (P=121,861,933) P=637,259,381 (P=51,663,983) P=46,399,667 P=437,082,336 P=947,215,468

* Excludes statutory liabilities amounting to P=1,893,512. ** Includes interest expense to maturity amounting to P=8,930,705.

December 31, 2011:

30 days 31-90 days 91-180 days 181-360 days Above 1 year Total Financial Assets Cash and cash equivalents P=203,040,443 P=108,500,000 P=– P=– P=– P=311,540,443 Short-term cash investments 55,000,000 156,500,000 – – – 211,500,000 Installment contracts receivable 22,552,671 32,524,848 15,713,412 86,452,264 724,643,061 881,886,256 P=280,593,114 P=297,524,848 P=15,713,412 P=86,452,264 P=724,643,061 P=1,404,926,699 (Forward)

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*SGVMG300370*

30 days 31-90 days 91-180 days 181-360 days Above 1 year Total Financial Liabilities Accounts payable and accrued expenses * P=42,251,916 P=26,127,606 P=61,302,283 P=77,878,845 P=164,294,523 P=371,855,173 Notes payable** 90,633,123 153,263,631 90,553,800 – – 334,450,554 132,885,039 179,391,237 151,856,083 77,878,845 164,294,523 706,305,727 P=147,708,075 P=118,133,611 (P=136,142,671) P=8,573,419 P=560,348,538 P=698,620,972

* Excludes statutory liabilities amounting to P=2,343,105. ** Includes interest expense to maturity amounting to P=12,429,993.

Fair Values The carrying amounts of recorded financial assets and financial liabilities as of December 31, 2012 and 2011 are as follows:

2012 2011 Carrying Fair Carrying Fair Value Value Value Value

Financial Assets Cash on hand P=21,000 P=21,000 P=21,000 P=21,000 Loans and receivables: Cash in banks and cash equivalents 602,289,127 602,289,127 311,519,443 311,519,443 Short-term cash investments 51,000,000 51,000,000 211,500,000 211,500,000 Installment contracts receivable 803,080,536 803,080,536 871,354,650 871,354,650 Other receivables: Customers 8,664,698 8,664,698 3,821,367 3,821,367 Accrued interest 2,007,615 2,007,615 2,101,579 2,101,579 Retention 150,200 150,200 920,200 920,200 Others* 3,078,924 3,078,924 2,030,722 2,030,722 1,470,271,100 1,470,271,100 1,403,247,961 1,403,247,961 Available-for-sale financial assets 1,556,652 1,556,652 960,623 960,623 P=1,471,848,752 P=1,471,848,752 P=1,404,229,584 P=1,404,229,584

Financial Liabilities Other financial liabilities: Accounts payable and accrued expenses** P=247,925,045 P=247,925,045 P=371,855,173 P=371,855,173 Notes and contracts payable 252,319,445 252,319,445 322,020,561 322,020,561 P=500,244,490 P=500,244,490 P=693,875,734 P=693,875,734 *Excludes non financial assets amounting to P=315,854 and P=388,982 as of December 31, 2012 and 2011, respectively. **Excludes statutory liabilities amounting to P=1,893,512 and P=2,343,105 as of December 31, 2012 and 2011, respectively.

Cash and cash equivalents, short-term cash investments, other receivables,

accounts payable and accrued expenses and contracts payable Due to the short-term nature of the transactions, the fair values of cash and cash equivalents, short-term cash investments, other receivables and accounts payable and accrued expenses approximate their carrying amounts.

Available-for-sale financial assets Available-for-sale financial assets are stated at fair value based on quoted market prices.

Installment contracts receivable The fair value of installment contracts receivable cannot be reasonably estimated due to the significant volume of transactions and the varied terms and maturities.

- 37 -

*SGVMG300370*

Notes payable The fair value of floating rate borrowings is estimated by discounting future cash flows using rates currently available for debt or similar terms and remaining maturities. The fair values approximate their carrying values gross of unamortized transaction costs.

Fair Value Hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: • Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities; • Level 2 - other techniques for which all inputs which have a significant effect on the recorded

fair value are observable, either directly or indirectly; and • Level 3 - techniques which use inputs which have a significant effect on the recorded fair

value that are not based on observable market data.

As of December 31, 2012 and 2011, the Company’s financial assets measured at fair value under the Level 1, which consists of available-for-sale financial assets amounted to P=1.56 million and P=0.96 million, respectively. There are no available-for-sale financial assets that are measured at Level 2 and 3. The Company does not have transfers of financial instruments from Level 1 to Level 2 and Level 2 to Level 3 in 2012 and 2011.

21. Current Assets and Current Liabilities

The Company’s current assets and current liabilities are as follows:

2012 2011 Current Assets Cash and cash equivalents (Note 4) P=602,310,127 P=311,540,443 Short-term cash investments (Note 4) 51,000,000 211,500,000 Available-for-sale financial assets (Note 5) 1,556,652 960,623 Installment contracts receivable (Note 6) 232,073,101 150,222,124 Other receivables (Note 7) 13,901,437 8,073,868 Real estate properties for sale (Note 8) 152,058,055 391,691,341 Other assets 18,089,485 4,163,768 P=1,070,988,857 P=1,078,152,167 Current Liabilities Accounts payable and accrued expenses (Note 10) P=114,586,856 P=209,903,755 Notes and contracts payable (Note 11) 252,319,445 322,020,561 Income tax payable 20,285,173 7,952,956 P=387,191,474 P=539,877,272

22. Capital Management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit and healthy capital ratios in order to support its business and maximize shareholder value.

The Company manages its capital structure and makes adjustments to it, in the light of changes in economic conditions. It monitors its use of capital using leverage ratios on both gross debt and net debt basis. Debt consists of short-term and long-term debt. Net debt includes short-term and long-term debt less cash and cash equivalents and short-term cash investments.

- 38 -

*SGVMG300370*

The Company considers as capital the total equity less net changes in fair values of available-for-sale financial assets. As of December 31, 2012 and 2011, the Company had the following ratios:

2012 2011 Notes and contracts payable P=252,319,445 P=322,020,561

Total equity P=1,599,157,097 P=1,443,981,115 Less: net changes in fair values of available-

for-sale financial assets 1,286,739 690,710 P=1,597,870,358 P=1,443,290,405 Debt to equity ratio 0.16 0.22 Notes and contracts payable P=252,319,445 P=322,020,561 Less: Cash and cash equivalents 602,310,127 311,540,443 Short-term cash investments 51,000,000 211,500,000 (P=400,990,682) (P=201,019,882) Total equity P=1,599,157,097 P=1,443,981,115 Less: net changes in fair values of available-

for-sale financial assets 1,286,739 690,710 P=1,597,870,358 P=1,443,290,405

Net debt to equity ratio (0.25) (0.14) As of December 31, 2012 and 2011, the Company has no externally-imposed capital requirements.

23. Basic/Diluted Earnings Per Share

Basic/diluted earnings per share amounts were computed as follows:

2012 2011 2010 Net income P=255,986,579 P=316,984,047 P=265,596,227 Weighted average number of shares

811,250,476

811,250,476

811,250,476

Basic/diluted earnings per share P=0.32 P=0.39* P=0.33* *After retroactive effect of 20% stock dividends in 2012.

The Company has no dilutive common shares as of December 31, 2012, 2011 and 2010. Thus, the basic and diluted earnings per share are the same as of those dates.

- 39 -

*SGVMG300370*

24. Business Segments

The Company derives its revenues primarily from the sale and lease of real estate properties.

The Company does not have any major customers and all sales and leases of real estate properties are made to external customers.

Segment Revenue and Expenses

2012 Sales of Real Estate

Properties Lease of Real Estate

Properties Total Revenue: Sales of real estate P=508,378,077 P=– P=508,378,077 Financial income 158,579,078 – 158,579,078 Rent income – 3,758,583 3,758,583 Other income 5,424,964 – 5,424,964 Cost of real estate sales 246,531,779 – 246,531,779 Operating expenses: Personnel 59,346,148 – 59,346,148 Professional fees 9,919,994 – 9,919,994 Taxes and licenses 17,025,060 583,987 17,609,047 Insurance 5,519,104 – 5,519,104 Depreciation – 2,714,863 2,714,863 Others 16,607,722 353,543 16,961,265 Financial expenses 11,063,060 – 11,063,060 Provision for income tax 50,457,006 31,857 50,488,863 Net income 255,912,246 74,333 255,986,579

2011

Sales of Real Estate Properties

Lease of Real Estate Properties Total

Revenue: Sales of real estate P=941,779,900 P=– P=941,779,900 Financial income 167,256,666 – 167,256,666 Rent income – 1,116,231 1,116,231 Other income 5,543,279 – 5,543,279 Cost of real estate sales 595,378,740 – 595,378,740 Operating expenses: Personnel 67,519,545 – 67,519,545 Professional fees 21,401,583 – 21,401,583 Taxes and licenses 15,018,400 90,716 15,109,116 Insurance 6,416,956 – 6,416,956 Depreciation – 2,714,864 2,714,864 Others 21,141,282 24,440 21,165,722 Financial expenses 11,251,352 – 11,251,352 Provision for (benefit from) income tax 58,268,288 (514,137) 57,754,151 Net income (loss) 318,183,699 (1,199,652) 316,984,047



Properties Total Revenue: Sales of real estate P=766,761,471 P=− P=766,761,471 Financial income 167,054,747 − 167,054,747 Rent income − 746,874 746,874 Other income 6,156,566 − 6,156,566 Cost of real estate sales 513,310,116 – 513,310,116

(Forward)

- 40 -

*SGVMG300370*



Properties Total Operating expenses: Personnel P=48,766,555 P=− P=48,766,555 Taxes and licenses 13,951,939 − 13,951,939 Professional fees 8,630,480 − 8,630,480 Insurance 7,433,276 − 7,433,276 Depreciation − 2,714,864 2,714,864 Others 11,595,933 213,366 11,809,299 Financial expenses 1,966,856 − 1,966,856 Provision for (benefit from) income tax 67,194,452 (654,406) 66,540,046 Net income (loss) 267,123,177 (1,526,950) 265,596,227

Segment Assets and Liabilities

December 31, 2012:

Sales of Real

Estate Properties Lease of Real

Estate Properties Total Total assets P=2,005,192,857 P=180,603,685 P=2,185,796,542 Total liabilities 585,696,611 942,834 586,639,445

December 31, 2011:

Sales of Real

Estate Properties Lease of Real

Estate Properties Total Total assets P=2,038,264,626 P=183,160,682 P=2,221,425,308 Total liabilities 776,730,604 713,589 777,444,193

25. Income Subject to Income Tax Holiday

The Company has been duly registered by the Board of Investments (BOI) as a New Developer of Low-Cost Mass Housing Project (Manila Residences Bocobo - 1160 Jorge Bocobo St., Ermita, Manila) on a Non-Pioneer Status under the Omnibus Investments Code of 1987 (Executive Order No. 226) with Registration No. 2008-246 dated August 26, 2008. The Company shall be entitled to Income Tax Holiday (ITH) for a period of four (4) years from August 2008 or actual start of commercial operations, whichever is earlier. The ITH shall be limited only to revenue generated from this registered project. Revenue from units with selling price exceeding P=3.00 million shall not be covered by ITH.

The income of Manila Residences Bocobo in 2012 which is entitled to the ITH is presented as follows:

BOI Registered Activities

Income Subject to

Tax Holiday

Adjustment due to

Percentage of Completion

Income based on


Non-BOI Registered Activities

Amounts as Shown in

Statement of Income

Revenues from sale of condominium units P=164,147,803 P=17,154,200 P=181,302,003 P=327,076,074 P=508,378,077

Cost of sales (52,447,081) (10,724,442) (63,171,523) (183,360,256) (246,531,779) Gross profit 111,700,722 6,429,758 118,130,480 143,715,818 261,846,298

(Forward)

- 41 -

*SGVMG300370*

BOI Registered Activities

Income Subject to

Tax Holiday

Adjustment due to


Income based on


Non-BOI Registered Activities

Amounts as Shown in

Statement of Income

Other income: Interest income P=– P=– P=– P=158,562,451 P=158,562,451 Rent income – – – 3,758,583 3,758,583 Dividend income – – – 16,627 16,627 Others – – – 5,424,964 5,424,964

– – – 167,762,625 167,762,625 Expenses:

Operating expenses 22,954,083 – 22,954,083 89,116,338 112,070,421 Financial expenses 56,092 – 56,092 11,006,968 11,063,060

23,010,175 – 23,010,175 100,123,306 123,133,481 Income before income tax 88,690,547 6,429,758 95,120,305 211,355,137 306,475,442 Provision for income tax – – – 50,488,863 50,488,863 Net income P=88,690,547 P=6,429,758 P=95,120,305 P=160,866,274 P=255,986,579

All common operating expenses not specifically identifiable to the project, except for brokers’ commission, depreciation and advertising, are shared based on sales.

26. Supplementary Information Required Under Revenue Regulations (RR) 19-2011

RR 19-2011 prescribes the new income tax forms to be used effective calendar year 2011. In the case of corporations using BIR Form 1702, the taxpayer is now required to include as part of its Notes to the Audited Financial Statements, which will be attached to the income tax return (ITR), the schedules and information on taxable income and deductions to be taken.

Below is the additional information required by RR No. 19-2011. This information is presented for purposes of filing with the BIR and is not a required part of the basic financial statements.

a. The Company’s revenue reflected in 2012 ITR consists of:

Regular rate Exempt Sales of properties P=178,262,453 P=111,700,722 Lease of properties 3,758,583 – P=182,021,036 P=111,700,722

b. The details of deductible cost of service in 2012 in ITR are as follows:

Regular rate Exempt Salaries, wages and benefits P=5,517,602 P=2,667,537 Outside services 379,423 – Others 732,727 282,616 P=6,629,752 P=2,950,153

c. The Company has the following other non-operating and taxable other income in 2012 ITR:

Regular rate Exempt Interest income P=85,836,566 P=– Others 5,424,964 – P=91,261,530 P=–

- 42 -

*SGVMG300370*

d. The details of deductible of itemized deduction under regular rate in 2012 in ITR is as follows:

Regular rate Exempt Salaries and allowances P=34,357,956 P=15,389,224 Taxes and licenses 15,508,573 1,073,521 Professional fees 9,281,149 638,845 Insurance 5,514,387 4,718 Director’s Fees 4,436,341 – Depreciation 2,714,863 – Commissions 2,129,978 38,877 Miscellaneous 1,915,498 237,707 Advertising and promotions 1,484,317 565,096 Interest 1,234,715 56,092 Janitorial and Messengerial services 1,010,581 488,575 Rental 848,100 552,835 SSS, GSIS, Philhealth, HDMF and other contributions 863,483 417,459 Charitable contributions 710,000 – Communication, light and water 669,572 292,366 Repairs and maintenance-materials/supplies 289,488 138,206 Transportation and travel 226,962 109,727 Office supplies 120,274 10,399 Representation and entertainment 59,444 28,739 Others: Membership and subscription dues 15,488 7,488 Association dues 4,633,586 10,148 P=88,024,755 P=20,060,022

27. Supplementary Information under RR 15-2010

On November 25, 2010, the BIR issued RR 15-2010 amending certain provisions of RR 21-2002, as amended and implementing Section 6 (H) of the Tax Code of 1997, which authorizes the Commissioner of Internal Revenue to prescribe additional procedural and/or documentary requirements in connection with the preparation and submission of financial statements accompanying the tax returns. The following information reflects the taxes, duties and license fees paid or accrued by the Company during 2012. a. Net sales/receipts and output VAT declared in the Company’s VAT returns filed in 2012:

Net sales/receipt Output VAT

Vatable sales P=283,377,383 P=34,005,286 Exempt 265,572,773 − P=548,950,156 P=34,005,286

The Company does not have zero-rated sales/receipts in 2012. The Company’s net sales/receipts are based on actual collections received, hence, may not be the same as the amounts accrued/reflected in the “Sales of real estate properties” account in the Company’s statement of income.

There is no outstanding output VAT as of December 31, 2012.

- 43 -

*SGVMG300370*

b. Input VAT

The following table shows the sources of input VAT claimed:

Purchases of: Goods for resale P=399,231 Goods other than for resale 4,176,198 Services lodged under other accounts 5,316,638 Total available input VAT during the period 9,892,067 Less input VAT applied against output VAT

and other adjustments (9,540,146)Balance at end of the year P=351,921

c. There are no importations during the year 2012.

d. Details of taxes and licenses are shown below:

Under Real Estate for Future

Development

Under Cost of Real Estate Sales

Under Operating Expenses

Business permit and registration P=− P=− P=13,093,302 Documentary stamps 1,706,010 − 2,072,854 Real estate taxes − 256,017 1,026,954 Premium on HGC − – 1,396,328 Other taxes − 1,519,895 19,609 P=1,706,010 P=1,775,912 P=17,609,047

In 2012, the Company incurred documentary stamp taxes amounting to P=1.71 million for the purchase of land property, P=1.40 million for loan instruments and P=0.68 million for shares of stock.

e. Withholding taxes

The following are the categories of the Company’s withholding taxes in 2012:

Compensation and benefits P=12,896,172 Expanded taxes 4,598,250 Final taxes: Interest expense 1,037,548 Cash dividends 1,873,451 P=20,405,421

The outstanding balance of withholding taxes as of December 31, 2012, which amounted to P=1.83 million, is recorded under “Accounts payable and accrued expenses” account in the balance sheet.

f. Tax contingencies:

i. The Company has no deficiency tax assessments as of December 31, 2012.

ii. The Company has no tax cases, litigation and/or prosecution in courts or bodies outside the BIR.

l l l l i l l l l l l t r t" , ' " '

tX"4;

SEC Acft{tit lion No. 0O96,AR-3 (C6up A),Judy 18, 2013, valid util Jduary I7, 2016

Tu Iddlifiation No. 102-039-397BIR Aoc€dittion No. 08-001993,53-2012,

Apnl I l, 2012, valid util April 10, 2015PTR No, 367002.4, JN.ry 2, 2011, Malati City

SGVgCoZflrAsr.rYoL^a;

I\IDEPENDENT AI'DITORS' REPORTON SI'PPLEMENTARY SCMDI'LES

The SllcLlold4 od rh. Bodd ofDirccronClq & I,sd Daelope6, Incdloated3rd Fl@!, Ci9md Cdnrioniniu t0. Tows I156 H.V. de la Cost Srd

w. nave audi&d i! acodmce witn Phnippine sldlddds oD Alditins, the fhdcid dtu4ls ofciq & I,bd Ddelopes, lncorloated 6 ot De.dbd I, zO 12 bd 2011 &d fn @h ot tnc tkeeyd i! lle perioi md.d D*nb6 31, 2012, included in tnis Fom I7 A. ud hav. isen ou EDon$lmn d.lcd Va"h )0, 20ll. Ou do6*ffidad.foJ lhr DUJp6. or r*c - op,n,oo o. d"baic 6@oial slstdhb bker 6 a whole. Tbe scidula lisrn i! lne ]!d* to rh.lituialSlatedor, dd Supplemdtary Schedulg e lh! respoDibilit ot rle Conpay s nmgddr. Th6escb.dJs @ prutur.d for plrposd ofmno.yrs wrrh S€s 6 Fesl&o! Cod. RLI;63, AjAr6d.d(20lllDduenorpdoflheo&i, hMcrolsffimb. ftH*bcduleba.ebeo$bjeld b rhe auditilg pbcedls rpptied in th. audir of rhe b6ic f'ftciat shats md, in ouopinion, fairly 3b1., in all @terial reDe6, rhe i.fomatiob €qliied ro te set fonh $d€id il Etatio;to th. bsic fitucisl sllrdmb bt 4 6 avhot .

SYCIP GOIRES \IEIAYO & CO.

mfiillilriltuilltilil[

CITY & LAND DEVELOPERS, INCORPORATEDINDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

Schedule I: Schedule of all the effective standards and interpretations (Part 1, 4J)

Schedule II: Reconciliation of Retained Earnings Available for Dividend Declaration (Part 1, 4C; Annex 68-C)

Schedule III: Supplementary schedule of financial soundness indicators

Schedule IV: Supplementary schedules required by Annex 68-E

Schedule V: Schedule of Gross and Net Proceeds of Short-Term Commercial Papers(STCPs) Issued

*SGVMG300370*

SCHEDULE I

CITY & LAND DEVELOPERS, INCORPORATED SUPPLEMENTARY SCHEDULE OF ALL EFFECTIVE STANDARDS AND INTERPRETATIONS (PART 1, 4J) List of Philippine Financial Reporting Standards (PFRSs) [which consist of PFRSs, Philippine Accounting Standards (PASs) and Philippine Interpretations] and Philippine Interpretations Committee (PIC) Q&As effective as of December 31, 2012: PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as of December 31, 2012

Adopted Not Early Adopted

Not Applicable

Framework for the Preparation and Presentation of Financial Statements Conceptual Framework Phase A: Objectives and qualitative characteristics

ü

PFRSs Practice Statement Management Commentary ü

Philippine Financial Reporting Standards

PFRS 1 (Revised)

First-time Adoption of Philippine Financial Reporting Standards

ü

Amendments to PFRS 1 and PAS 27: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

ü

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

ü

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

ü

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

ü

Amendments to PFRS 1: Government Loans ü

PFRS 2 Share-based Payment ü

Amendments to PFRS 2: Vesting Conditions and Cancellations

ü

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

ü

PFRS 3 (Revised)

Business Combinations

ü

PFRS 4 Insurance Contracts ü

Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts

ü

- 2 -

*SGVMG300370*

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as of December 31, 2012


Not Applicable

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

ü

PFRS 6 Exploration for and Evaluation of Mineral Resources

ü

PFRS 7 Financial Instruments: Disclosures ü

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

ü

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

ü

Amendments to PFRS 7: Improving Disclosures about Financial Instruments

ü

Amendments to PFRS 7: Disclosures - Transfers of Financial Assets

ü

Amendments to PFRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities

ü

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

ü

PFRS 8 Operating Segments ü

PFRS 9 Financial Instruments ü

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

ü

PFRS 10 Consolidated Financial Statements ü

PFRS 11 Joint Arrangements ü

PFRS 12 Disclosure of Interests in Other Entities ü

PFRS 13 Fair Value Measurement ü

Philippine Accounting Standards

PAS 1 (Revised)

Presentation of Financial Statements ü

Amendment to PAS 1: Capital Disclosures ü

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

ü

Amendments to PAS 1: Presentation of Items of Other Comprehensive Income

ü

PAS 2 Inventories ü

- 3 -

*SGVMG300370*



Not Applicable

PAS 7 Statement of Cash Flows ü

PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

ü

PAS 10 Events after the Reporting Date ü

PAS 11 Construction Contracts ü

PAS 12 Income Taxes ü

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

ü

PAS 16 Property, Plant and Equipment ü

PAS 17 Leases ü

PAS 18 Revenue ü

PAS 19 Employee Benefits ü

Amendments to PAS 19: Actuarial Gains and Losses, Group Plans and Disclosures

ü

PAS 19 (Amended)

Employee Benefits

ü

PAS 20 Accounting for Government Grants and Disclosure of Government Assistance

ü

PAS 21 The Effects of Changes in Foreign Exchange Rates

ü

Amendment: Net Investment in a Foreign Operation

ü

PAS 23 (Revised)

Borrowing Costs

ü

PAS 24 (Revised)

Related Party Disclosures

ü

PAS 26 Accounting and Reporting by Retirement Benefit Plans

ü

PAS 27 Consolidated and Separate Financial Statements

ü

PAS 27 (Amended)

Separate Financial Statements

ü

PAS 28 Investment in Associates ü

PAS 28 (Amended)

Investments in Associates and Joint Ventures

ü

PAS 29 Financial Reporting in Hyperinflationary Economies

ü

- 4 -

*SGVMG300370*



Not Applicable

PAS 31 Interests in Joint Ventures ü

PAS 32 Financial Instruments: Disclosure and Presentation

ü

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

ü

Amendment to PAS 32: Classification of Rights Issues

ü

Amendments to PAS 32: Offsetting Financial Assets and Financial Liabilities

ü

PAS 33 Earnings per Share ü

PAS 34 Interim Financial Reporting ü

PAS 36 Impairment of Assets ü

PAS 37 Provisions, Contingent Liabilities and Contingent Assets

ü

PAS 38 Intangible Assets ü

PAS 39 Financial Instruments: Recognition and Measurement

ü

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

ü

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

ü

Amendments to PAS 39: The Fair Value Option ü

Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts

ü

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

ü

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

ü

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

ü

Amendment to PAS 39: Eligible Hedged Items ü

PAS 40 Investment Property ü

PAS 41 Agriculture ü

Philippine Interpretations

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

ü

- 5 -

*SGVMG300370*



Not Applicable

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

ü

IFRIC 4 Determining Whether an Arrangement Contains a Lease

ü

IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

ü

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

ü

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

ü

IFRIC 8 Scope of PFRS 2 ü

IFRIC 9 Reassessment of Embedded Derivatives ü

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

ü

IFRIC 10 Interim Financial Reporting and Impairment ü

IFRIC 11 PFRS 2- Group and Treasury Share Transactions ü

IFRIC 12 Service Concession Arrangements ü

IFRIC 13 Customer Loyalty Programmes ü

IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

ü

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

ü

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

ü

IFRIC 17 Distributions of Non-cash Assets to Owners ü

IFRIC 18 Transfers of Assets from Customers ü

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

ü

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

ü

SIC-7 Introduction of the Euro ü

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

ü

SIC-12 Consolidation - Special Purpose Entities ü

Amendment to SIC - 12: Scope of SIC 12 ü

- 6 -

*SGVMG300370*



Not Applicable

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

ü

SIC-15 Operating Leases - Incentives ü

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

ü

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

ü

SIC-29 Service Concession Arrangements: Disclosures. ü

SIC-31 Revenue - Barter Transactions Involving Advertising Services

ü

SIC-32 Intangible Assets - Web Site Costs ü

*SGVMG300370*

SCHEDULE II

CITY & LAND DEVELOPERS, INCORPORATED SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION DECEMBER 31, 2012 Unappropriated retained earnings, beginning P=667,142,971 Deemed cost adjustment on real estate properties, net of tax (11,825,377) Deferred income tax asset, beginning (4,542,390) Unappropriated retained earnings, as adjusted to

available for dividend declaration, beginning 650,775,204 Add: Net income actually earned/realized during the year Net income during the year closed to retained earnings 255,986,579 Movement in deferred income tax assets 1,306,741 908,068,524 Less: Dividends declared during the year Stock dividends - 20% 135,208,178 Cash dividends 101,406,344 Fractional shares of stock dividends 282 236,614,804 Reversal of unappropriated retained earnings 100,000,000 Total retained earnings available for dividend declaration, end P=771,453,720

*SGVMG300370*

SCHEDULE III

CITY & LAND DEVELOPERS, INCORPORATED SUPPLEMENTARY SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS Ratio December 31

2012 2011 2010 Current 2.77 2.00 2.10 Asset-to-equity 1.37 1.54 1.58 Debt-to-equity 0.16 0.22 0.29 Asset-to-liability 3.73 2.86 2.71 Solvency 0.44 0.41 0.38 Interest rate coverage 30.21 36.95 493.80 Acid-test ratio 2.32 1.26 1.20 Return on equity (%) 16.01% 21.95% 22.02%

SCHEDULE IV

CITY & LAND DEVELOPERS, INC.DECEMBER 31, 2012

Schedule A. FINANCIAL ASSETS

Name of Issuing Entity and Description of Each Issue Number of Shares or Principal Amount of Bonds and Notes

Amount Shown in the Balance Sheet

Value Based on Market Quotations at Balance

Sheet Date

Income Received and Accrued

CASH AND CASH EQUIVALENTSCash on hand and in banks 3,210,127 28,291Temporary Investments

Rizal Commercial Banking Corporation 177,600,000 3,818,043Banco De Oro 164,500,000 3,737,846UCPB Savings Bank 78,500,000 3,174,700Philippine Savings Bank 53,500,000 2,023,205Amalgamated Bancorporation 44,500,000 2,947,286China Bank Corporation 20,000,000 1,075,598Philippine National Bank 19,000,000 400,094Philippine Commercial Capital Inc. 16,500,000 820,116Planters Development Bank 16,000,000 1,499,462Security Bank 9,000,000 3,184,945From maturities during the year -- 4,320,527

602,310,127 27,030,113




Sheet Date


SHORT-TERM CASH INVESTMENTSMaybank 25,000,000 227,778Philippine Savings Bank 15,000,000 384,274Bank of Commerce 9,500,000 61,304UCPB Savings Bank 1,500,000 137,996From maturities during the year -- 1,941,401

51,000,000 2,752,753




Sheet Date


AVAILABLE FOR SALE INVESTMENTSFirst Holding “B” 5,126 461,340 461,340Ayala Land “B” Common 16,875 446,344 446,344Ayala Corporation “B” Common 676 349,492 349,492Empire East 300,301 297,298 297,298Ayala Land “B” Preferred 16,875 1,687 1,687Swift 1,866 263 263Ayala Corporation “B” Preferred 227 227 227

341,946 1,556,652 1,556,652

Schedule H. CAPITAL STOCK

Title of Issue Number of shares

Authorized

Number of Shares Issued

and Outstanding

Number of Shares Reserved for Options, Warrants, conversion

and Other Rights

Number Shares Held By

Affiliates Directors, Officers and Employees

Others

Common Stock – P1 par value 1,200,000,000 811,250,476 -- 654,292,583 43,559,043 113,398,850

SCHEDULE V

CITY & LAND DEVELOPERS, INCORPORATEDSCHEDULE OF GROSS AND NET PROCEEDS OF SHORT-TERM COMMERCIAL PAPERS ISSUEDAs of December 31, 2012

Description As disclosed in the Final Prospectus*

ActualAs of December 31, 2012**

Total Issued Notes within the period Php 104,500,000Less: Total Terminated Notes within the period 24,950,000

(i) Total Outstanding Notes / Gross Proceeds Php 200,000,000 79,550,000Less: Expenses

Registration Fees 202,000 202,000

Legal and Accounting Fees 30,000 30,000

Publication Fees 30,000 29,792

Documentary Stamps Tax 1,000,000 146,845

Printing costs 10,000 2,050(ii) Total Net Proceeds 198,728,000 79,139,313(iii) Use of Proceeds

Project-related Costs 100,000,000 22,270,993

Payment of maturing loans/ notes 90,768,000 56,808,431

Interest expense 7,960,000 59,889

Total 198,728,000 79,139,313(iv) Balance of proceeds as of December 31, 2012 Php -- Php --

* SEC-CFD Order No. 144, Series of 2012 dated September 07, 2012. Use of Proceeds as disclosed in the Final Prospectus is estimated for the Twelve (12)-month Period

September 2012 to August 2013.** For the Four (4)-month Period September 1, 2012 to December 31, 2012.

ANNEX “A”

CITY AND LAND DEVELOPER’S, INCORPORATEDMAP OF THE RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP

50.42%

29.54% 9.18%

49.73% 90.81%

CITYLAND, INC. (CI) (ultimate parent)

CITY & LAND DEVELOPERS, INCORPORATED (CLDI)

(subsidiary of CDC)

CITYPLANS, INCORPORATED (CPI) (subsidiary of CDC)

CREDIT & LAND HOLDINGS, INCORPORATED (CLHI)

(subsidiary of CI)

CITYADS, INC. (CAI) (subsidiary of CI)

CITYLAND DEVELOPMENT CORPORATION (CDC) (subsidiary of CI)

100.00% ↓

100.00% ↓

INDEX TO EXHIBITS

FORM 17-A

No. Page No.

(3) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession *

(5) Instrument Defining the Rights of Security Holders, Including Indentures

ARTICLE IV Certificate of StockARTICLE V Transfer of Shares of StockARTICLE VII Stockholders MeetingARTICLE VIII Amendments

(8) Voting Trust Agreement *

(9) Material Contracts *

(10) Annual Report to Security Holders, Form 11-Q or Quarterly Report to Security Holders *

(13) Letters re Change in Certifying Accountant *

(16) Report Furnished to Security Holders *

(18) Subsidiaries of the Registrant *

(19) Published Report Regarding Matters Submitted to Vote of Security Holders *

(20) Consent of Experts and Independent Counsel *

(21) Power of Attorney *

(29) Additional Exhibits *

_______________* These exhibits are either not applicable to the Company or require no answer.

ARTICLE IVCERTIFICATE OF STOCK

Each stockholder whose share of stock has been paid in full shall be entitled to a stock certificate or certificates for such shares of stock.

The certificate of stock shall be in such form and design as may be determined by the Board of Directors. Every certificate shall be signed by the President and countersigned by the Secretary and shall be sealed with the Corporate seal and shall state on its face its number, the date of issue, the number of shares for which it was issued, and the name of the person in whose favor it was issued.

Each share of stock will represent a pro-rate equity in the assets of the Corporation and the rights represented in each and every share of stock shall be identical in all respects and shall be stated herein.

The stockholders shall have no pre-emptive right to subscribe to any issue or disposition of shares of any class and all the stockholders, their transferees and/or assignees take the shares subject to this condition.

ARTICLE VTRANSFER OF SHARES OF STOCK

Shares of stock shall be transferred by delivery of the certificate endorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer, but no transfer shall be valid except as between the parties until the transfer is annotated in the books of the Corporation.

No surrendered certificate shall be cancelled by the Secretary before a new certificate in lieu thereof is issued, and the Secretary shall keep the cancelled certificate as a proof of substitution. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit of that fact and shall advertise the same in such manner as the Board may require, and shall give the Corporation a bond of indemnity, in the form and with the sureties satisfactory to the Board, in the sum at least double the par value of such certificate in lieu of the one alleged to be lost or destroyed, always subject to the approval of the Board, and provided further that the requirements of Republic Act No. 201 are first complied with.

ARTICLE VIISTOCKHOLDERS’ MEETING

1. Place – All meetings of the stockholders shall be held at the principal office of the Corporation, unless written notices of such meetings should fix another place within the City of Manila.

2. Proxy – Stockholders may vote at all meetings either in person or by proxy. All proxies, voting trusts, and other voting arrangements must be received by the Corporate Secretary or the Assistant Corporate Secretary at the corporation's head office not later than five (5) working days before the date of the meeting. Before the deadline such proxies, voting trusts and other voting arrangements may be accepted or rejected by a special committee of inspectors if they do not have the appearance of prima facie authenticity.

3. Quorum – No stockholders’ meeting shall be competent to decide any matter or to transact any business unless a majority of the subscribed capital stock is present or represented thereat, except in those cases in which the Corporation law requires the affirmative vote of a greater proportion.

4. Vote – Voting upon all questions at all meetings of the stockholders shall be by shares of stock and not per capital.

5. Annual Meeting – The annual meeting of the stockholders shall be held on the first Tuesday of June of each calendar year, when the Board of Directors shall be elected by plurality of votes by ballot system or viva voce.

Written notice of the annual meeting of the Corporation shall be sent to each registered stockholder at least

fifteen (15) working days prior to the date of such meeting. Waiver of such notice may only be made in writing.

Only stockholders of record at the close of business hours thirty (30) calendar days prior to the date of such meeting shall be entitled to receive the notice of said meeting and to vote and be voted thereat.

6. Special Meeting – Special meetings of the stockholders may be called by the President at his discretion, or on demand of stockholders holding the majority of the subscribed capital stock of the Corporation.

A written notice stating the day and place of the meeting and the general nature of the business to be transacted shall be sent to each stockholder at least fifteen (15) working days before the date of such special meeting; provided, that this requisite may be waived in writing by the stockholders.

Only stockholders of record at the close of business hours thirty (30) calendar days prior to the date of such meeting shall be entitled to receive the notice of said meeting and to vote and be voted thereat.

7. Minutes – Minutes of all meeting of the stockholders shall be kept and carefully preserved as a record of the business transacted at such meetings. The minutes shall contain such entries as may be required by law.

ARTICLE VIIIAMENDMENTS

The provisions of these By-Laws may be amended or repealed by a majority vote of the Board of Directors and the owners of at least a majority of the outstanding capital stock at a regular or special meeting called for the purpose.

The power to amend or repeal these By-Laws may be delegated to the Board of Directors in the manner provided by law.

COVER SHEET

1 5 2 6 6 1 SEC Registration Number

C I T Y & L A N D D E V E L O P E R S , I N C .

(Company’s Full Name)

1 5 6 H . V . D E L A C O S T A S T . , ,

S A L C E D O V I L L A G E , M A K A T I C I T Y (Business Address: No. Street City/Town/Province)

Rufina C. Buensuceso 893 – 6060 Contact Person Company Telephone Number

1 2 3 1 1 7 - Q 0 6 1 1 Month Day FORM TYPE Month Day

Fiscal Year Annual Meeting

(Secondary License Type, If Applicable)

C F D Dept. Requiring this Doc. Amended Articles Number / Section

Total Amount of Borrowings

Total No. of Stockholders Domestic Foreign

----------------------------------------------------------------------------------------------------------------------- To be accomplished by SEC Personnel concerned

File Number LCU

Document ID Cashier

S T A M P S

Remarks = pls. use black ink for scanning purposes

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17- Q

QUARTERLY REPORT PURSUANT TO SECTION 17

OF THE SECURITIES REGULATION CODE AND SECTION 141

OF THE CORPORATION CODE OF THE PHILIPPINES

1. For the fiscal year ended June 30, 2013

2. SEC Identification Number 152661 3. BIR Tax Identification No. 000-444-840

4. Exact name of issuer as specified in its charter CITY & LAND DEVELOPERS, INC.

5. Makati City, Philippines 6. (SEC Use Only)

Province, country or other jurisdiction Industry Classification Code of incorporation

7. 3/F Cityland Condominium 10 Tower 1,

#156 H.V. Dela Costa St., Salcedo Village, Makati City 1226

Address of Principal Office Postal Code

8. 632-893-6060

Issuer's telephone number, including area code

9. Former name, former address and former fiscal year, if changed since last report N/A

10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA

Title of Each Class Number of shares of

common stock outstanding

Unclassified Common Shares 811,250,476

11. Are any or all of these securities listed on a Stock Exchange.

Yes [ x ] No [ ]

If yes, state the name of such stock exchange and the classes of securities listed therein:

Stock Exchange Title of Each Class

Philippine Stock Exchange Unclassified Common Shares

12. Check whether the issuer:

(a) Has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or

Sections 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 (or for such shorter

period that the registrant was required to file such reports):

Yes [ x ] No [ ]

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

Yes [ x ] No [ ]

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The financial statements and accompanying notes are filed as part of this form (pages 7 to 36).

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation

The Manila Residences Bocobo, a 34-storey office, commercial and residential condominium located in Jorge Bocobo St., Ermita, Manila City is ready for occupancy by June 2012, a year in advance from its

promised date of turnover to clients.

Internal sources of liquidity come from sales of condominiums and real estate projects, collection of

installment receivables, maturing short-term investments while external sources come from SEC-registered commercial papers and Home Guaranty Corporation’s guaranteed promissory notes.

The Company has four prime lots for future development. The latest acquisition is located along Taft

Avenue, Malate, Manila, and EDSA corner Lanutan Alley, Brgy. Veterans Village, Quezon City. The

other lots are located along Roxas Boulevard and Samar Avenue, Quezon City.

Financial Condition (June 30, 2013 vs. December 31, 2012)

Total assets amounted to P=2.270B as of the first semester of 2013, as compared with the previous year’s

ending balance of P=2.186B. Collections decreased installment contracts receivable account while sales decreased real estate properties for sale-net. Excess funds from operations were shifted to short-term cash

investments resulting to the increase of the account.

Total liabilities increased by 18.48% due to accrual of dividends payable, higher notes and contracts payable and accounts payable and accrued expenses.

Total stockholders’ equity stood at P=1.574B as of June 2013, lower by 1.54% from 2012 year end balance of P=1.599B due to net income P=64.67M less cash dividends of P=89.23M.

As a result of the foregoing, the Company’s liquidity position registered an acid-test and current ratio of

1.78 and 1.97 in June 2013 as compared to 2.32 and 2.77 in December 2012. Debt-equity ratio was registered at 0.20 as of June 2013 as compared to 0.16 as of December 2012.

Results of Operation (June 30, 2013 vs. June 30, 2012)

Net income for the first semester amounted to P=64.67M, as compared to the same period last year of P=

149.73M. The Company’s current projects, Manila Residences Bocobo and Grand Emerald Tower were already sold at 90.85% and 95.22%, respectively as of December 31, 2012, resulting to the limited

available units for sale which accounted for the decrease in revenues. With the latest acquisition of prime

lots, the Company plans to launch new projects in the future to increase inventory and consequently

generate more sales.

On the cost side, cost of sale and operating expenses decreased by 68.25% and 44.19% as these move in

tandem with sales. Financial expenses decreased due to lower interest rates. On the other hand, provision for income tax also decreased due to lower revenues. Altogether, net income stood at P=64.67M and

translated to earnings per share and return on equity (both annualized) of P=0.16 and 8.21% as compared to

the same period of the previous year of P=0.37 and 20.06%.

2

Key Performance Indicators

June 2013 December 2012 June 2012

Earnings per share * P=0.16 P=0.32 P=0.37

Return on equity * 8.21% 16.01% 20.06%

Current ratio 1.97 2.77 1.68

Interest rate coverage ratio 28.52 30.21 31.39

Asset to equity ratio 1.44 1.37 1.54 Acid-test ratio 1.78 2.32 1.38

Debt-equity ratio 0.20 0.16 0.21

*annualized

Note: Earnings per share is after retroactive effect of 20% stock dividends in 2012.

Manner of calculations:

Earnings per share = Net Income/ Average Number of Shares Issued and Outstanding

Return on equity = Net Income/ Total Stockholders' Equity Current ratio = Total Current Assets / Total Current Liabilities Interest rate coverage ratio = Net Income before tax + Interest Expense + Depreciation Expense

Interest Expense Asset to equity ratio = Total Assets Stockholder’s Equity (net of Net Changes in Fair Value of AFS Investment)

Acid – test ratio = Cash and cash equivalents + Short-term Cash Investments + Available-for- Sale Investments +Installment Contracts Receivable + Other Receivables


Debt- Equity ratio = Notes and Contracts Payable Total Stockholders' Equity (net of Net Changes in FV of Investments)

1. Any known trends or any known demands, commitments, events, or uncertainties that will

result in or that are reasonably likely to result in the registrant’s liquidity increasing or

decreasing in any material way.

There are no trends or any demands, commitments, events, or uncertainties that will result in or

that are reasonably likely to result in the registrant’s liquidity increasing or decreasing in any

material way.

1.1 Internal and External Sources of Liquidity

Internal sources come from sales of condominiums and real estate projects, collection of installment

receivables, maturing short-term investments and other sources such as rental income, interest income and dividend income. External sources come from SEC-registered commercial papers and Home

Guaranty Corporation’s promissory notes.

2. Any events that will trigger direct or contingent financial obligation that is material to

the company, including any default or acceleration of an obligation. There are no any events that will trigger direct or contingent financial obligation that is

material to the company, including any default or acceleration of an obligation.

3. All material off-balance sheet transactions, arrangements, obligations (including

contingent obligations), and other relationships of the company with unconsolidated

entities or other persons created during the reporting period. There are no material off-balance sheet transactions, arrangements, obligations (including

contingent obligations), and other relationships of the company with unconsolidated entities or

other persons created during the reporting period.

3

4. Any material commitments for capital expenditures and the expected sources of funds for

such expenditures.

The eaccrued development cost of P=174.47 million as of June 30, 2013 be sourced through:

a. Sales of condominium and real estate projects b. Collection of installment receivables

c. Maturing short-term investments

d. Issuance of commercial papers

5. Any known trends, events or uncertainties that have had or reasonably expected to have

a material favourable or unfavourable impact on net sales or revenues or income from

continuing operations.

The Company projects that sales of real estate properties and net income for this year will

experience a lull due to the limited available condominium units for sale since Manila Residences Bocobo and Grand Emerald Tower were already sold last year at 90.85% and

95.22%, respectively. However, with the latest acquisition of attractive prime lots, the

Company plans to launch new projects soon to increase inventory and consequently generate more sales.

6. Any significant elements of income or loss that did not arise from registrant’s Continuing

operations.

There are no significant elements of income or loss that did not arise from registrant’s

continuing operations.

7. Causes for any Material Changes from Period to Period in One or More Line of the

Registrants Financial Statements.

FINANCIAL CONDITION (June 30, 2013 vs. December 31, 2012)

a. Decrease in Cash and Cash Equivalents was due to the shift of funds to short-term cash investments.

b. Increase in Short-term Cash Investments was due to placements.

c. Increase in Available for Sale Financial Assets was due to increase in market value of stocks.

d. Decrease in Installment Contracts Receivable was due to collection.

e. Increase in Other Receivables was due to increase in due from affiliates. f. Decrease in Real Estate Properties for Sale (net) was due to sales of real estate properties.

g. Increase in Real Estate Properties for Future Development was due to development costs.

h. Decrease in Other Assets was due to input VAT and Meralco meter deposits.

i. Increase in Accounts Payable and Accrued Expenses was due to accrual of dividends payable.

j. Decrease in Income Tax Payable was due to payment.

k. Decrease in Deferred Tax Liabilities was due to decrease in accounting income. l. Increase in Net Changes in Fair Value of Available-for-sale Financial Assets was due to

increase in value of stocks.

m. Decrease in Retained Earnings was due to net income less cash dividends.

4

RESULTS OF OPERATIONS (June 30, 2013 vs. June 30, 2012)

a. Decrease in Sales of Real Estate was due to decrease in inventory available for sale. b. Decrease in Financial Income was substantially due to lower interest income from sales of

real estate properties.

c. Decrease in Rent Income was due to decrease in real estate properties for lease. d. Decrease in Other Revenues was due to lower miscellaneous income.

e. Decrease in Cost of Sales was due to lower sales.

f. Decrease in Operating Expenses was due to lower sales. g. Decrease in Financial Expenses was due to decrease in interest rates.

h. Decrease in Provision for Income Tax was due to lower revenues.

i. Decrease in Net Income was due to lower revenues.

8. Any seasonal aspects that had a material effect on the financial condition or results of

operations.

There are no seasonal aspects that had a material effect on the financial condition or results of

operations.

9. Items affecting assets, liabilities, equity, net income, or cash flows that are unusual

because of their nature, size or incidents

There are no unusual items affecting assets, liabilities, equity, net income or cash flows.

10. Any changes in estimates of amounts reported in prior interim periods of the current

financial year or changes in estimates of amounts reported in prior financial years that

have a material effect in the current interim period

There are no changes in estimates of amounts reported in prior interim periods of the current

financial year or changes in estimates of amounts reported in prior financial years that have a material effect in the current interim period.

11. Any issuances, repurchases, and repayments of debt and equity securities

The Company issued SEC-Registered Short-Term Commercial Papers during the period. The

outstanding balance is P=178.05 million as of June 30, 2013.

12. Any material events subsequent to the end of the interim period that have not been

reflected in the financial statements for the interim period

There are no material events subsequent to the end of the interim period that have not been

reflected in the financial statements for the interim period.

13. Effect of changes in the composition of the issuer during the interim period, including

business combinations, acquisition or disposal of subsidiaries and long-term investments,

restructuring, and discontinuing operations.

There are no changes in the composition of the issuer during the interim period, including

business combinations, acquisition or disposal of subsidiaries and long-term investments,

restructuring, and discontinuing operations.

6

CITY & LAND DEVELOPERS, INC.

BALANCE SHEETS

UNAUDITED

June 2013 December 2012

ASSETS

Cash and Cash Equivalents (Note 4) P=219,917,750 P=602,310,127

Short-term Cash Investments 680,500,000 51,000,000 Available-for-sale Financial Assets (Note 5) 1,564,523 1,556,652

Installment Contracts Receivable (Note 6) 678,733,755 803,080,536

Other Receivables (Note 7) 17,550,683 14,217,291

Real Estate Properties for Sale (Note 8) 105,268,008 152,058,055 Real Estate Properties for Future Development (Note 8) 367,318,157 362,205,168

Investment Properties (Note 9) 180,603,685 180,603,685

Other Assets 18,202,974 18,765,028

TOTAL ASSETS P=2,269,659,535 P=2,185,796,542

LIABILITIES AND EQUITY

Liabilities Accounts Payable and Accrued Expenses (Note 10) P=312,148,186 P=249,818,557

Notes and Contracts Payable (Note 11) 315,814,677 252,319,445

Income Tax Payable 11,021,498 20,285,173

Deferred Tax Liabilities 56,074,142 64,216,270

Total Liabilities 695,058,503 586,639,445

Equity Capital stock – 1 par value

Authorized – 1,200,000,000 shares

Issued – 811,250,476 shares 811,250,476 811,250,476

Additional paid-in capital 105,136 105,136 Net changes in fair value of available-for-sale

financial assets 1,294,610 1,286,739

Retained earnings (Note 13) 761,950,810 786,514,746

Total Equity 1,574,601,032 1,599,157,097

TOTAL LIABILITIES & EQUITY P=2,269,659,535 P=2,185,796,542

See accompanying Notes to Financial Statements.

7


STATEMENTS OF INCOME

2nd

Qtr 2013

2nd

Qtr 2012

UNAUDITED

For the 6-month

ending June ‘13

For the 6-month ending June ‘12

REVENUES

Sales of real estate P=59,700,438 P=159,743,024 P=105,970,648 P=322,214,155 Financial income (Note 14) 31,799,745 39,944,501 66,168,591 81,431,476

Rent income 760,584 1,056,332 1,523,383 2,209,625

Other income 607,009 700,023 877,368 2,030,131

92,867,776 201,443,880 174,539,990 407,885,387

EXPENSES

Cost of real estate sales 30,181,119 63,772,154 51,480,771 162,132,414

Operating expenses (Note 15) 11,990,432 30,667,644 39,398,485 70,593,906 Financial expenses (Note 17) 1,393,389 3,482,322 3,037,044 5,796,927

43,564,940 97,922,120 93,916,300 238,523,247

INCOME BEFORE INCOME TAX 49,302,836 103,521,760 80,623,690 169,362,140

PROVISION FOR INCOME TAX

(Note 19)

10,852,721

12,183,369

15,950,074

19,630,882

NET INCOME P=38,450,115 P=91,338,391 P=64,673,616 P=149,731,258

BASIC/DILUTED EARNINGS PER

SHARE

P=0.080

P=0.185*

* After retroactive effect of 20% stock dividends in 2012.

8


STATEMENT OF COMPREHENSIVE INCOME

2nd

Qtr

2013

2nd

Qtr

2012

For the 6-month

ending June 2013

For the 6-month

ending June 2012

Net Income P=38,450,115 P=91,338,391 P=64,673,616 P=149,731,258 Other comprehensive income

Recovery (decline) on market

value of stocks

(231,633) 147,768 7,871 338,964

Total other comprehensive income (231,633) 147,768 7,871 338,964

Total Comprehensive Income – net P=38,218,482 P=91,486,159 P=64,681,487 P=150,070,222

Basic/Diluted Earnings per share

P=0.080

P=0.185

* After retroactive effect of 20% stock dividends in 2012.

9

CITY & LAND DEVELOPERS, INC

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Capital Stock

Additional Paid-in

Capital

Net Changes in

Fair Values of Available-for-Sale

Financial Assets

Retained earnings

Total Unappropriated Appropriated

Beginning balance, January 1, 2013 P=811,250,476 P=105,136 P=1,286,739 P=786,514,746 P=– P=1,599,157,097

Cash dividends – – – (89,237,552) – (89,237,552) Total comprehensive income – – 7,871 64,673,616 – 64,681,487

Ending balance, June 30, 2013 P=811,250,476 P=105,136 P=1,294,610 P=761,950,810 P=– P=1,574,601,032

Capital Stock

Additional

Paid-in

Capital

Net Changes in Fair Values of

Available-for-Sale

Financial Assets

Retained earnings

Total Unappropriated Appropriated

Beginning balance, January 1, 2012 P=676,042,298 P=105,136 P=670,710 P=667,142,971 P=100,000,000 P=1,443,981,115

Cash dividends – – – (101,406,344) – (101,406,344)

Total comprehensive income – – 338,964 149,731,258 – 150,070,222

Ending balance, June 30, 2012 P=676,042,298 P=105,136 P=1,029,674 P=715,467,885 P=100,000,000 P=1,492,644,993

10


STATEMENTS OF CASH FLOWS

Unaudited

2nd Qtr 2013

2nd Qtr 2012

As of

June 2013

As of June 2012

CASH FLOW FROM OPERATING ACTIVITIES Income before income tax P=49,302,836 P=103,521,760 P=80,623,690 P=169,362,140 Adjustments for:

Interest expense – net of amounts capitalized 1,355,139 3,328,672 2,930,043 5,618,377 Interest income (31,789,481) (39,939,362) (66,154,480) (81,423,138) Dividend income (10,264) (5,139) (14,111) (8,338)

Depreciation – 678,715 – 1,357,431 Changes in operating assets and liabilities

Decrease (increase) in: Installment contracts receivable 58,505,051 (30,314,869) 124,346,781 (15,219,830) Other receivables 2,682,369 109,412 (2,291,459) (373,930) Real estate properties for sale 17,476,640 100,111,024 46,790,047 177,026,685 Real estate properties for future development (3,325,150) (356,598) (5,112,989) (1,861,876) Other assets 167,539 (466,125) 562,054 (1,747,782)

Increase (decrease) in accounts payable and accrued expenses

(9,714,839)

(55,319,892)

(26,750,388)

(67,033,818)

Cash from (used in) operations 84,649,840 81,347,598 154,929,188 185,695,921 Interest received 30,906,312 39,480,578 65,112,547 81,932,128 Income taxes paid (29,403,592) (16,856,572) (33,355,878) (23,221,828)

Net cash flows from operating activities 86,152,560 103,971,604 186,685,857 244,406,221

CASH FLOWS FROM INVESTING ACTIVITIES Dividends received 10,264 5,139 14,111 8,338 Proceeds from (purchase of) available-for-sale inv. – (1,687) – (1,687) Proceeds from (purchase of) short-term cash investment (325,500,000) – (629,500,000) 211,500,000 Decrease (increase) in real estate properties for lease – (11,082) – (11,082)

Net cash from (used in) investing activities (325,489,736) (7,630) (629,485,889) 211,495,569

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid (1,311,867) (3,690,966) (3,422,293) (5,675,691) Cash dividends and fractional shares paid (1,880) – 334,716 262,555 Net proceeds from (payments of) notes payable 80,960,610 505,099 63,495,232 (2,412,265)

Net cash flows from financing activities 79,646,863 (3,185,867) 60,407,655 (7,825,401)

NET INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS (159,690,313) 100,778,107 (382,392,377) 448,076,389

CASH AND CASH EQUIVALENTS AT

BEGINNING OF PERIOD 379,608,063 658,838,725 602,310,127 311,540,443

CASH AND CASH EQUIVALENTS

AT END OF THE PERIOD P=219,917,750 P=759,616,832 P=219,917,750 P=759,616,832

11


NOTES TO FINANCIAL STATEMENTS

1. Corporate Information

City & Land Developers, Incorporated (the Company) was incorporated in the Philippines on June 28, 1988.

Its primary purpose is to establish an effective institutional medium for acquiring and developing suitable

land sites for residential, office, commercial, institutional and industrial uses primarily, but not exclusively, in accordance with the subdivision, condominium, and cooperative concepts of land-utilization and land-

ownership. The average number of employees was 79 as of June 30, 2013 and 72 as of December 31,

2012. The Company’s registered office and principal place of business is 3rd Floor, Cityland Condominium

10, Tower I, 156 H. V. de la Costa Street, Ayala North, Makati City.

The Company is 49.73% owned by Cityland Development Corporation (CDC), a publicly listed company

incorporated and domiciled in the Philippines. The Company’s ultimate parent is Cityland, Inc. (CI), a

company incorporated and domiciled in the Philippines, which prepares consolidated financial statements

and that of its subsidiaries.

2. Summary of Significant Accounting and Financial Reporting Policies

Basis of Preparation

The financial statements of the Company have been prepared using the historical cost basis, except for

available-for-sale financial assets which are carried at fair values. The financial statements are presented in Philippine peso (Peso), which is the Company’s functional currency, and rounded to the nearest Peso except

when otherwise indicated.

Statement of Compliance

The financial statements have been prepared in compliance with Philippine Financial Reporting Standards

(PFRS).

Changes in Accounting Policies

The accounting policies adopted are consistent with those of the previous financial year except for the

following amended Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards (PAS) effective as of January 1, 2012. The following amended PAS and PFRS have no significant impact

on the Company’s financial statements:

PAS 12, Income Taxes - Recovery of Underlying Assets. The amendment clarified the determination of

deferred tax on investment property measured at fair value and introduces a rebuttable presumption that

deferred tax on investment property measured using the fair value model in PAS 40, Investment

Property, should be determined on the basis that its carrying amount will be recovered through sale. It

implies the requirement that deferred tax on non-depreciable assets that are measured using the

revaluation model in PAS 16, Property, Plant and Equipment, always be measured on a sale basis of

the asset. The amendment has no effect on the entity’s performance or in its disclosures because the tax

rate for these assets in the jurisdictions in which they are located does not differ if they are recovered by sale or use.

PFRS 7, Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements. The

amendment requires additional disclosures about financial assets that have been transferred but not

derecognized to enable the user of the Company’s financial statements to understand the relationship

with those assets that have not been derecognized and their associated liabilities. In addition, the

amendment requires disclosures about continuing involvement in derecognized assets to enable the user

to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those

derecognized assets. The entity did not have any assets with these characteristics, so there has not been

any effect in the presentation of its financial statements.

12

Cash and Cash Equivalents

Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that

are readily convertible to known amounts of cash with original maturities of three months or less from dates

of acquisition, and are subject to an insignificant risk of change in value.

Short-term Cash Investments

Short-term cash investments are investments with maturities of more than three months but not exceeding

one year from dates of acquisition.

Financial Assets and Financial Liabilities Date of recognition

The Company recognizes a financial asset or a financial liability in the balance sheet when it becomes a

party to the contractual provisions of the instrument. In the case of a regular way purchase or sale of

financial assets, recognition and derecognition, as applicable, is done using settlement date accounting.

Initial recognition of financial instruments

Financial instruments are recognized initially at fair value, which is the fair value of the consideration given

(in case of an asset) or received (in case of a liability). The initial measurement of financial instruments,

except for those designated at fair value through profit or loss, includes directly attributable transaction

cost.

Classification of financial instruments Subsequent to initial recognition, the Company classifies its financial instruments in the following

categories: financial assets and financial liabilities at fair value through profit or loss, loans and

receivables, held-to-maturity investments, available-for-sale financial assets and other financial liabilities.

The classification depends on the purpose for which the instruments are acquired and whether they are

quoted in an active market. Management determines the classification at initial recognition and, where

allowed and appropriate, re-evaluates this classification at each end of reporting period.

a. Financial Assets or Financial Liabilities at Fair Value through Profit or Loss

A financial asset or financial liability is classified in this category if acquired principally for the

purpose of selling or repurchasing in the near term or upon initial recognition, it is designated by the

management as at fair value through profit or loss.

Financial assets or financial liabilities classified in this category are designated as at fair value through

profit or loss by management on initial recognition when the following criteria are met:

The designation eliminates or significantly reduces the inconsistent treatment that would

otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them on a

different basis; or

The assets or liabilities are part of a group of financial assets or financial liabilities, or both financial assets and financial liabilities, which are managed and their performance is evaluated on

a fair value basis, in accordance with a documented risk management or investment strategy; or

The financial instrument contains an embedded derivative, unless the embedded derivative does

not significantly modify the cash flows or it is clear, with little or no analysis, that it would not be

separately recorded.

Financial assets or financial liabilities classified under this category are carried at fair value in the

balance sheet. Changes in the fair value of such assets and liabilities are recognized in the statement of

income.

The Company has no financial assets and financial liabilities at fair value through profit or loss as of

June 30, 2013 and December 31, 2012.

13

b. 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 Company provides money, goods or services

directly to a debtor with no intention of trading the receivables. Loans and receivables are carried at

amortized cost in the balance sheet. Amortization is determined using the effective interest rate method. Loans and receivables are included in current assets if maturity is within 12 months from the

end of reporting period. Otherwise, these are classified as non-current assets.

The Company’s loans and receivables consist of cash in banks and cash equivalents, short-term cash

investments, installment contracts receivable and other receivables.

c. Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments

and fixed maturities wherein the Company has the positive intention and ability to hold to maturity.

Held-to-maturity investments are carried at amortized cost in the balance sheet. Amortization is

determined using the effective interest rate method. Assets under this category are classified as current assets if maturity is within 12 months from the end of the reporting period and noncurrent if maturity is

more than a year.

The Company has no held-to-maturity investments as of June 30, 2013 and December 31, 2012.

d. Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not

classified in any of the other categories. Available-for-sale financial assets are carried at fair value in

the balance sheet. Changes in the fair value of such assets are accounted in the statement of

comprehensive income and in equity. These financial assets are classified as noncurrent assets unless the intention is to dispose such assets within 12 months from the end of reporting period.

The Company’s available-for-sale financial assets consist of investments in quoted equity securities

that are traded in liquid markets, held for the purpose of investing in liquid funds and not generally

intended to be retained on a long-term basis.

e. Other Financial Liabilities

Other financial liabilities are non-derivative financial liabilities with fixed or determinable payments

that are not quoted in an active market. They arise when the Company owes money, goods or services

directly to a creditor with no intention of trading the payables. Other financial liabilities are carried at

cost or amortized cost in the balance sheet. Amortization is determined using the effective interest rate

method. Other financial liabilities are included in current liabilities if maturity is within 12 months

from the end of the reporting period, otherwise, these are classified as non-current.

The Company’s other financial liabilities consist of accounts payable and accrued expenses and notes

and contracts payable.

Determination of fair value

The fair value of financial instruments traded in active markets at the end of reporting period is based on

their quoted market price or dealer price quotations (bid price for long positions and ask price for short

positions), without any deduction for transaction costs. When current bid and asking prices are not

available, the price of the most recent transaction provides evidence of the current fair value as long as there

has not been a significant change in economic circumstances since the time of the transaction.

For all other financial instruments not traded in an active market, the fair value is determined using

appropriate valuation techniques. Valuation techniques include net present value techniques, comparison to

similar instruments for which market observable prices exist, option pricing models and other relevant

valuation models.

14

“Day 1” difference

Where the transaction price in a non-active market is different from the fair value of other observable

current market transactions in the same instrument or based on a valuation technique whose variables

include only data from observable market, the Company recognizes the difference between the transaction

price and fair value (a “Day 1” difference) in the statement of income unless it qualifies for recognition as

some other type of asset. In cases where inputs are made of data which are not observable, the difference between the transaction price and model value is only recognized in the statement of income when the

inputs become observable or when the instrument is derecognized. For each transaction, the Company

determines the appropriate method of recognizing the “Day 1” difference.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if, and

only if, there is currently enforceable legal right to offset the recognized amounts and there is an intention

to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Derecognition of Financial Assets and Financial Liabilities

Financial assets

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

the rights to receive cash flows from the asset have expired; or

the Company retains the right to receive cash flows from the asset, but has assumed an obligation to

pay them in full without material delay to a third party under a “pass-through” arrangement; or

the Company has transferred its right to receive cash flows from the asset and either (a) has transferred

substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained

substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Company has transferred its right to receive cash flows from a financial asset and has neither

transferred nor retained substantially all the risks and rewards of the financial asset nor transferred control of the financial asset, the asset is recognized to the extent of the Company’s continuing involvement in the

financial asset. Continuing involvement that takes the form of a guarantee over the transferred financial

asset is measured at the lower of the original carrying amount of the financial asset and the maximum

amount of consideration that the Company could be required to repay.

Financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has

expired.

Where an existing financial liability is replaced by another from the same lender on substantially different

terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in

the respective carrying amounts is recognized in the statement of income.

Impairment of Financial Assets

The Company assesses at each end of the reporting period whether a financial asset or a group of financial

assets is impaired.

Assets carried at amortized cost

The Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not

individually significant. Objective evidence includes observable data that comes to the attention of the

Company about loss events such as, but not limited to significant financial difficulty of the counterparty, a

breach of contract, such as default or delinquency in interest or principal payments, probability that the

borrower will enter bankruptcy or other financial reorganization. If it is determined that no objective

evidence of impairment exists for an individually assessed financial asset, whether significant or not, the

asset is included in the group of financial assets with similar credit risk and characteristics and that group of

financial assets is collectively assessed for impairment. Assets that are individually assessed for

impairment and for which an impairment loss is recognized are not included in a collective assessment of

impairment.

15

The impairment assessment is performed at each end of reporting period. For the purpose of collective

evaluation of impairment, financial assets are grouped on the basis of such credit risk characteristics such as

customer type, payment history, past-due status and term.

If there is an objective evidence that an impairment loss on loans and receivables carried at amortized cost

has been incurred, the amount of loss is measured as the difference between the asset’s 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 rates (i.e., the effective interest rate computed at

initial recognition). The carrying amount of the asset shall be reduced either directly or through the use of

an allowance account. The amount of loss, if any, is recognized in the statement of income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment was recognized, the previously recognized

impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized

in the statement of income. Interest income continues to be accrued on the reduced carrying amount based

on the original effective interest rate of the asset. Loans together with the associated allowance are written

off when there is no realistic prospect of future recovery and all collateral, if any, has been realized or has

been transferred to the Company. If in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously

recognized impairment loss is increased or reduced by adjusting the allowance for impairment losses

account If a future write off is later recovered, the recovery is recognized in the statement of income under

“Other income” account. Any subsequent reversal of an impairment loss is recognized in the statement of

income to the extent that the carrying value of the asset does not exceed its amortized cost at reversal date.

Assets carried at cost

If there is an objective evidence that an impairment loss of an unquoted equity instrument that is not carried

at fair value because its fair value cannot be reliably measured, or a derivative asset that is linked to and

must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of loss is

measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Available-for-sale financial assets

In the case of debt instruments classified as available-for-sale financial assets, impairment is assessed based

on the same criteria as financial assets carried at amortized cost. Future interest income is based on the

reduced carrying amount and is accrued based on the rate of interest used to discount future cash flows for

the purpose of measuring impairment loss. Such accrual is recorded as part of “Financial income” account

in the statement of income. If, in subsequent year, the fair value of a debt instrument increases and the

increase can be objectively related to an event occurring after the impairment loss was recognized in the

statement of income, the impairment loss is reversed through the statement of income.

In case of equity investments classified as available-for-sale financial asset, this would include a significant

or prolonged decline in the fair value of the investments below its cost. Where there is evidence of

impairment, the cumulative loss - measured as the difference between the acquisition cost and the current

fair value, less any impairment loss on that financial asset previously recognized in the statement of income

- is removed from equity and recognized in the statement of income. Increases in fair value after

impairment are recognized in the statement of comprehensive income and directly in the statement of

changes in equity.

Real Estate Properties for Sale and Real Estate Properties Held for Future Development Property acquired or being constructed for sale in the ordinary course of business and held for future

development, rather than to be held for rental or capital appreciation, is classified as real estate properties

for sale and real estate properties held for future development and are measured at the lower of cost and net

realizable value (NRV).

Cost includes:

Land cost

Amounts paid to contractors for construction

Borrowing costs, planning and design costs, costs of site preparation, professional fees, property

transfer taxes, construction overheads and other related costs of sale

16

NRV is the estimated selling price in the ordinary course of the business, based on market prices

at the reporting date, less estimated costs of completion and the estimated costs of sale.

Upon commencement of development, the real estate properties held for future development is transferred

to real estate properties for sale.

Investment Properties

Investment properties which represent real estate properties for lease are measured initially at cost,

including transaction costs. The carrying amount includes the cost of replacing part of an existing real

estate property for lease at the time that cost is incurred if the recognition criteria are met, and excludes the

costs of day-to-day servicing of the property. The carrying values of revalued properties transferred to real

estate properties for lease on January 1, 2004 were considered as the assets’ deemed cost as of said date.

Subsequent to initial measurement, real estate properties for lease, except land, are carried at cost less

accumulated depreciation and amortization and any impairment in value. Land is carried at cost less any

impairment in value. Buildings for lease are depreciated over their useful life of 25 years using the straight-

line method.

Investment properties are derecognized when either they have been disposed of or when the property is

permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains

or losses on the retirement or disposal of investment properties are recognized in the statement of income in

the year of retirement or disposal.

Transfers are made to investment properties when, and only when, there is a change in use, evidenced by

ending of owner-occupation, commencement of an operating lease to another party, or ending of

construction or development. Transfers are made from investment properties when, and only when, there is

a change in use, evidenced by commencement of owner-occupation or commencement of development with

a view to sale.

Transfers between investment properties, owner-occupied property and inventories do not change the

carrying amount of the property transferred and they do not change the cost of that property for

measurement or disclosure purposes.

Impairment of Nonfinancial Assets

The carrying values of investment properties are reviewed for impairment when events or changes in

circumstances indicate that the carrying values may not be recoverable. If any such indication exists and

where the carrying value exceeds the estimated recoverable amount, the assets are either written down to

their recoverable amount or provided with valuation allowance. The recoverable amount of the assets is the

greater of fair value less costs to sell and value-in-use. Valuation allowance is provided for the carrying

amount of assets which is not expected to be recovered. Impairment losses, if any, are recognized in the

statement of income.

The Company assesses at each reporting period whether there is an indication that previously recognized

impairment losses may no longer exist or may have decreased. The Company considers external and

internal sources of information in its assessment of the reversal of previously recognized impairment losses.

A previously recognized impairment loss is reversed only if there has been a change in the estimates used to

determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case,

the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot

exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss

been recognized for the asset in prior years. Such reversal is recognized in the statement of income. After

such a reversal, the depreciation is adjusted in future periods to allocate the asset’s revised carrying amount,

less any residual value, on a systematic basis over its remaining useful life.

Value-added Tax (VAT)

Revenue, expenses, assets and liabilities are recognized net of the amount of VAT, except where the VAT

incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the

VAT is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable.

The net amount of VAT recoverable from or payable to, the taxation authority is included as part of “Other

assets” or “Accounts payable and accrued expenses,” respectively, in the balance sheet.

17

Capital Stock

Capital stock is measured at par value for all shares issued and outstanding. When the Company issues

more than one class of stock, a separate account is maintained for each class of stock and the number of

shares issued. Incremental costs incurred directly attributable to the issuance of new shares are shown in

equity as a deduction from proceeds, net of tax.

The Company’s shares which are reacquired (treasury shares) are recognized at cost and deducted from

equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the

Company’s own equity instruments. Any difference between the carrying amount and the consideration, if

reissued is recognized as additional paid-in capital.

Retained Earnings

Retained earnings represent the cumulative balance of net income or loss, dividend distributions, effects of

the changes in accounting policy and other capital adjustments.

Unappropriated retained earnings represent that portion of retained earnings which is free and can be

declared as dividends to stockholders. Appropriated retained earnings represent that portion of retained

earnings which has been restricted and therefore is not available for any dividend declaration.

Dividend Distributions

Dividends on common shares are deducted from retained earnings when declared. Dividends for the year

that are declared after the end of the reporting period but before the approval for issuance of financial

statements are dealt with as an event after the reporting period.

Revenue and Costs Recognition

Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company

and the amount of revenue can be reliably measured. Revenue is measured at the fair value of the

consideration received excluding VAT. The Company assesses its revenue arrangements against specific

criteria in order to determine if it is acting as principal or agent. The Company has concluded that it is

acting as a principal in all of its revenue arrangements.

The following specific recognition criteria must also be met before revenue is recognized:

Sales of real estate properties

Sales of condominium units and residential houses where the Company has material obligations under the

sales contract to provide improvements after the property is sold are accounted for under the percentage of

completion method. Under this method, revenue on sale is recognized as the related obligations are

fulfilled.

Revenue from sales of completed residential lots and housing units, where a sufficient down payment has

been received, the collectability of the sales price is reasonably assured, the refund period has expired, the

receivables are not subordinated and the seller is not obliged to complete improvements, is accounted for

under the full accrual method. If the criterion of full accrual method was not satisfied, any cash received by the Company is included in “Accounts payable and accrued expenses” in the balance sheet until all the

conditions for recording a sale are met.

Cost of real estate sales

Cost of real estate sales is recognized consistent with the revenue recognition method applied. Cost of

subdivision land and condominium units sold before the completion of the development is determined on

the basis of the acquisition cost of the land plus its full development costs, which include estimated costs

for future development works, as determined by the Company’s in-house technical staff.

The cost of inventory recognized in profit or loss on disposal is determined with reference to the specific

costs incurred on the property, allocated to saleable area based on relative size and takes into account the

percentage of completion used for revenue recognition purposes.

Interest income

Interest income from cash in banks, cash equivalents, short-term cash investments and installment contracts

receivable is recognized as the interest accrues taking into account the effective yield on interest.

18

Dividend income

Dividend income is recognized when the Company’s right to receive the payment is established.

Operating Leases

Operating leases represent those leases under which substantially all the risks and rewards of ownership of

the leased assets remain with the lessors. Rent income from operating leases is recognized as income when

earned on a straight-line basis over the term of the lease agreement. Initial direct costs incurred specifically

to earn revenue from an operating lease are recognized as an expense in the statement of income in the

period in which they are incurred.

Operating expenses

Operating expenses constitute costs of administering the business. These costs are expensed as incurred.

Financial expenses

Financial expenses consist of interest incurred from notes and contracts payable. Interest attributable to a

qualifying asset is capitalized as part of the cost of the property while others are expensed as incurred.

Interest costs are capitalized if they are directly attributable to the acquisition, development and

construction of real estate projects as part of the cost of such projects. Capitalization of interest cost (1)

commences when the activities to prepare the assets for their intended use are in progress and expenditures

and interest costs are being incurred, (2) is suspended during extended periods in which active development

is interrupted, and (3) ceases when substantially all the activities necessary to prepare the assets for their

intended use are complete. If the carrying amount of the asset exceeds its recoverable amount, an

impairment loss is recorded.

Other Comprehensive Income

Other comprehensive income comprises items of income and expense that are not recognized in the

statement of income for the year in accordance with PFRS. Other comprehensive income of the Company

includes gains and losses on remeasuring available-for-sale financial assets.

Retirement Benefits Cost

Retirement benefits cost is actuarially determined using the projected unit credit method. Actuarial gains

and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and

losses for the plan at the end of the previous reporting year exceeded 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are

recognized over the expected average remaining working lives of the employees participating in the plan.

Past service cost is recognized as an expense on a straight-line basis over the average period until the

benefits become vested. If the benefits are already vested immediately following the introduction of, or

changes to, a retirement plan, past service cost is recognized immediately.

The retirement plan liability is the aggregate of the present value of the defined benefit obligation and

actuarial gains and losses not recognized, reduced by past service cost not yet recognized, and

the fair value of plan assets out of which the obligations are to be settled directly. If such aggregate is

negative, the asset is measured at the lower of such aggregate or the aggregate of cumulative unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the

form of refunds from the plans or reductions in the future contributions to the plan.

If the asset is measured at the aggregate of cumulative unrecognized net actuarial losses and past service

cost and the present value of any economic benefits available in the form of refunds from the plan or

reductions in the future contributions to the plan, net actuarial losses of the current period and past service

cost of the current period are recognized immediately to the extent that they exceed any reduction in the

present value of those economic benefits. If there is no change or increase in the present value of economic

benefits, the entire net actuarial losses of the current period and past service cost of the current period are

recognized immediately. Similarly, net actuarial gains of the current period after the deduction of past

service cost of the current period exceeding any increase in the present value of the economic benefits

stated above are recognized immediately if the asset is measured at the aggregate of cumulative unrecognized net actuarial losses and past service cost at the present value of any economic benefits

available in the form of refunds from the plan or reductions in the future contributions to the plan. If there

19

is no change or decrease in the present value of the economic benefits, the entire net actuarial gains of the

current period after the deduction of past service cost of the current period are recognized immediately.

Provisions and Contingencies

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a

past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the

time value of money is material, provisions are determined by discounting the effective future cash flows at

a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the

risks specific to the liability. Where discounting is used, the increase in the provisions due to the passage of

time is recognized as an interest expense.

Contingent liabilities are not recognized in the financial statements. They are disclosed unless the

possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not

recognized in the financial statements but disclosed in the notes to financial statements when an inflow of

economic benefits is probable.

Income Taxes Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to

compute the amount are those that are enacted or substantively enacted at the end of reporting period.

Current income tax for current and prior periods shall, to the extent unpaid, be recognized as a liability

under “Income tax payable” account in the balance sheet. If the amount already paid in respect of current

and prior periods exceeds the amount due for those periods, the excess shall be recognized as an asset under

“Other assets” account in the balance sheet.

Deferred income tax

Deferred income tax is recognized on all temporary differences at the end of reporting period between the

tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income tax

assets are recognized for all deductible temporary differences to the extent that it is probable that sufficient

future taxable profits will be available against which the deductible temporary differences can be utilized.

Deferred income tax assets and deferred income tax liabilities are not recognized when it arises from the

initial recognition of an asset or liability in a transaction that is not a business combination and, at the time

of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each end of reporting period and reduced

to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or

part of the deferred income tax assets to be utilized. Unrecognized deferred income tax assets are

reassessed at each end of reporting period and are recognized to the extent that it has become probable that sufficient future taxable profit will allow the deferred income tax asset to be recovered.

Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are

expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax

laws that have been enacted or substantively enacted at the end of the reporting period.

Income tax relating to items recognized directly in equity is recognized in the statement of comprehensive

income and in the statement of changes in equity and not in the statement of income.

Earnings Per Share Basic earnings per share is computed by dividing the net income for the year by the weighted average

number of ordinary shares issued and outstanding after considering the retrospective effect, if any, of stock dividends declared during the year.

Diluted earnings per share is calculated by dividing the net income for the year by the weighted average

number of ordinary shares outstanding during the year, excluding treasury shares, and adjusted for the

20

effects of all dilutive potential common shares, if any. In determining both the basic and diluted earnings

per share, the effect of stock dividends, if any, is accounted for retrospectively.

Segment Reporting

The Company’s operating businesses are organized and managed separately according to the nature of the

products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Financial information on business segments is presented in

Note 23 in the financial statements. The Company’s asset-producing revenues are located in the Philippines

(i.e., one geographical location). Therefore, geographical segment information is no longer presented.

Events After the Reporting Period

Post year-end events that provide additional information about the Company’s position at the end of

reporting period (adjusting events) are reflected in the financial statements. Post year-end events that are

not adjusting events are disclosed in the notes to the financial statements when material.

New Accounting Standards, Interpretations and Amendments to

Existing Standards Effective Subsequent to December 31, 2012

The Company will adopt the standards and interpretations enumerated below when these become effective. Except as otherwise indicated, the Company does not expect the adoption of these new changes in PFRS to

have a significant impact on the financial statements. The relevant disclosures will be included in the notes

to the financial statements when these become effective.

Effective in 2013

PAS 1, Financial Statement Presentation - Presentation of Items of Other Comprehensive Income. The

amendments to PAS 1 change the grouping of items presented in other comprehensive income. Items

that could be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon

derecognition or settlement) would be presented separately from items that will never be reclassified.

The amendment becomes effective for annual periods beginning on or after July 1, 2012. The

amendment affects presentation only and has therefore no impact on the Company’s financial position

and performance.

Amendments to PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and

Financial Liabilities, require an entity to disclose information about rights of offset and related

arrangements (such as collateral agreements).

The new disclosures are required for all recognized financial instruments that are offset in accordance

with PAS 32. These disclosures also apply to recognized financial instruments that are subject to an

enforceable master netting arrangement or ‘similar agreement’, irrespective of whether they are offset

in accordance with PAS 32. The amendments require entities to disclose, in a tabular format unless

another format is more appropriate, the following minimum quantitative information.

This is presented separately for financial assets and financial liabilities recognized at the end of the

reporting period:

a) The gross amounts of those recognized financial assets and recognized financial liabilities;

b) The amounts that are offset in accordance with the criteria in PAS 32 when determining the net

amounts presented in the balance sheet;

c) The net amounts presented in the balance sheet;

d) The amounts subject to an enforceable master netting arrangement or similar agreement that are

not otherwise included in (b) above, including:

i. Amounts related to recognized financial instruments that do not meet some or all of the

offsetting criteria in PAS 32; and

ii. Amounts related to financial collateral (including cash collateral); and e) The net amount after deducting the amounts in (d) from the amounts in (i) above.

The amendments to PFRS 7 are to be applied retrospectively for annual periods beginning on or after

January 1, 2013. The amendment affects disclosures only and will have no impact on the Company’s financial position and performance.

21

PFRS 10, Consolidated Financial Statements, replaces the portion of PAS 27, Consolidated and

Separate Financial Statements, that addresses the accounting for consolidated financial statements. It

also includes the issues raised in SIC-12, Consolidation - Special Purpose Entities. PFRS 10

establishes a single control model that applies to all entities including special purpose entities. The

changes introduced by PFRS 10 will require management to exercise significant judgment to determine

which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS 27. This standard becomes effective for annual periods beginning

on or after January 1, 2013. This standard will not impact the Company’s financial position and

performance.

PFRS 11, Joint Arrangements, replaces PAS 31, Interests in Joint Ventures and SIC-13, Jointly-

controlled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the option to

account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet

the definition of a joint venture must be accounted for using the equity method. This standard becomes

effective for annual periods beginning on or after January 1, 2013. This standard will not impact the

Company’s financial position and performance.

PFRS 12, Disclosure of Interests with Other Entities, includes all of the disclosures that were

previously included in PAS 27 related to consolidated financial statements, as well as all of the

disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to an

entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of

new disclosures are also required. This standard becomes effective for annual periods beginning on or

after January 1, 2013. This standard will not impact the Company’s financial position and

performance.

PFRS 13, Fair Value Measurement, establishes a single source of guidance under PFRS for all fair

value measurements. PFRS 13 does not change when an entity is required to use fair value, but rather

provides guidance on how to measure fair value under PFRS when fair value is required or permitted.

This standard becomes effective for annual periods beginning on or after January 1, 2013. The Company is currently assessing the impact that this standard will have on the financial position and

performance.

Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, applies

to waste removal costs that are incurred in surface mining activity during the production phase of the

mine (“production stripping costs”) and provides guidance on the recognition of production stripping

costs as an asset and measurement of the stripping activity asset. This interpretation becomes effective

for annual periods beginning on or after January 1, 2013. This interpretation will not impact the

Company’s financial position and performance.

Amendments to PAS 19, Employee Benefits, range from fundamental changes such as removing the

corridor mechanism and the concept of expected returns on plan assets to simple clarifications and rewording. The revised standard also requires new disclosures such as, among others, a sensitivity

analysis for each significant actuarial assumption, information on asset-liability matching strategies,

duration of the defined benefit obligation, and disaggregation of plan assets by nature and risk. The

amendment becomes effective for annual periods beginning on or after January 1, 2013. Once

effective, the Company has to apply the amendments retroactively to the earliest period presented.

PAS 27, Separate Financial Statements (as revised in 2011). As a consequence of the new PFRS 10

and PFRS 12, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled

entities, and associates in separate financial statements. The Company does not present separate

financial statements. The amendment becomes effective for annual periods beginning on or after

January 1, 2013.

PAS 28, Investments in Associates and Joint Ventures (as revised in 2011). As a consequence of the

new PFRS 11 and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and Joint

Ventures, and describes the application of the equity method to investments in joint ventures in addition

to associates. The amendment becomes effective for annual periods beginning on or after January 1,

2013. The Company expects that this amendment will not have any impact on the Company’s financial

position and performance.

22

Annual Improvements to PFRSs (2009-2011 cycle)

The Annual Improvements to PFRSs (2009-2011 cycle) contain non-urgent but necessary amendments to

PFRS. The amendments are effective for annual periods beginning on or after January 1, 2013 and are

applied retrospectively. Earlier application is permitted.

PFRS 1, First-time Adoption of PFRS - Borrowing Costs, clarifies that, upon adoption of PFRS, an entity that capitalized borrowing costs in accordance with its previous generally accepted accounting

principles, may carry forward, without any adjustment, the amount previously capitalized in its opening

statement of financial position at the date of transition. Subsequent to the adoption of PFRS, borrowing

costs are recognized in accordance with PAS 23, Borrowing Costs. The amendment does not apply to

the Company as it is not a first-time adopter.

PAS 1, Presentation of Financial Statements - Clarification of the Requirements for Comparative

Information, clarify the requirements for comparative information that are disclosed voluntarily and

those that are mandatory due to retrospective application of an accounting policy, or retrospective

restatement or reclassification of items in the financial statements. An entity must include comparative

information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The additional comparative period

does not need to contain a complete set of financial statements. On the other hand, supporting notes for

the third balance sheet (mandatory when there is a retrospective application of an accounting policy, or

retrospective restatement or reclassification of items in the financial statements) are not required. The

amendments affect disclosures only and have no impact on the Company’s financial position or

performance.

PAS 16, Property, Plant and Equipment - Classification of Servicing Equipment, clarifies that spare

parts, stand-by equipment and servicing equipment should be recognized as property, plant and

equipment when they meet the definition of property, plant and equipment and should be recognized as

inventory if otherwise. The Company is currently assessing impact of the amendments to PAS 16.

PAS 32, Financial Instruments: Presentation - Tax Effect of Distribution to Holders of Equity

Instruments, clarifies that income taxes relating to distributions to equity holders and to transaction

costs of an equity transaction are accounted for in accordance with PAS 12, Income Taxes. The

Company expects that this amendment will not have any impact on its financial position and

performance.

PAS 34, Interim Financial Reporting - Interim Financial Reporting and Segment Information for Total

Assets and Liabilities, clarifies that the total assets and liabilities for a particular reportable segment

need to be disclosed only when the amounts are regularly provided to the chief operating decision

maker and there has been a material change from the amount disclosed in the entity’s previous annual

financial statements for that reportable segment. The amendment affects disclosures only and has no impact on the Company’s financial position and performance.

Effective in 2014

PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities,

clarifies the meaning of “currently has a legally enforceable right to offset” and also the application of

the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which

apply gross settlement mechanisms that are not simultaneous. The amendments to PAS 32 are to be

retrospectively applied for annual periods beginning on or after January 1, 2014.

Effective in 2015

PFRS 9, Financial Instruments - Classification and Measurement, as issued, reflects the first phase on the replacement of PAS 39 and applies to the classification and measurement of financial assets and

liabilities as defined in PAS 39, Financial Instruments: Recognition and Measurement. Work on

impairment of financial instruments and hedge accounting is still ongoing, with a view to replacing

PAS 39 in its entirety. PFRS 9 requires all financial assets to be measured at fair value at initial

recognition.

The Company has made an evaluation of the impact of the adoption of this standard. The Company

decided not to early adopt PFRS 9 for its 2012 reporting ahead of its effectivity date on January 1, 2015

and therefore the financial statements and as of December 31, 2012 and 2011 do not reflect the impact

23

of the said standard. Based on this evaluation, loans and receivables and other financial liabilities, both

carried at amortized cost, will not be significantly affected.

The Company shall conduct another impact assessment at the end of the 2013 reporting period using

the financial statements as of and for the year ended December 31, 2012. Given the amendments on

PFRS 9, the Company at present, does not plan to early adopt in 2013 financial reporting. It plans to reassess its current position once the phases of PFRS 9 on impairment and hedge accounting become

effective.

Deferred Effectivity

Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate, covers accounting

for revenue and associated expenses by entities that undertake the construction of real estate directly or

through subcontractors. This Interpretation requires that revenue on construction of real estate be

recognized only upon completion, except when such contract qualifies as construction contract to be

accounted for under PAS 11, Construction Contracts, or involves rendering of services in which case

revenue is recognized based on stage of completion. Contracts involving provision of services with the

construction materials and where the risks and reward of ownership are transferred to the buyer on a

continuous basis will also be accounted for based on stage of completion. The SEC and the Financial Reporting Standards Council have deferred the effectivity of this interpretation until the final Revenue

standard is issued by the International Accounting Standards Board and an evaluation of the

requirements of the final Revenue standard against the practices of the Philippine real estate industry is

completed. The Company will quantify the effect when the final Revenue standard is issued.

Additional disclosures required by these amendments will be included in the consolidated financial

statements when these amendments are adopted.

3. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the financial statements requires management to make judgments, estimates and

assumptions that affect the amounts reported in the financial statements and accompanying notes. In

the opinion of management, these financial statements reflect all adjustments necessary to present fairly the results for the periods presented. Actual results could differ from such estimates.

Judgments In the process of applying the Company’s accounting policies, management has made the following

judgments, apart from those involving estimations, which has the most significant effect on the

amounts recognized in the financial statements:

Determination of the Company’s functional currency

The Company, based on the relevant economic substance of the underlying circumstances, has determined its functional currency to be Peso. It is the currency that influences the sale of real estate

properties and services and the costs of selling the same.

Classification of financial instruments

The Company classifies a financial instrument, or its component parts, on initial recognition as a

financial asset, a financial liability or an equity instrument in accordance with the substance of the

contractual arrangement and the definitions of a financial asset, a financial liability or an equity

instrument. The substance of a financial instrument, rather than its legal form, governs its

classification in the Company’s balance sheet.

The Company determines the classification at initial recognition and, where allowed and appropriate, re-evaluates this designation at every reporting date.

Classification of leases - Company as lessor

The Company has entered into the property leases of its investment properties where it has determined

that the risks and rewards of ownership are retained with the Company. As such, these lease

agreements are accounted for as operating leases.

24

Classification of real estate properties

The Company determines whether a property is classified as for lease or for sale or for future

development and for capital appreciation.

Real estate properties which are not occupied substantially for use by, or in the operations of, the

Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation are classified as investment properties. Real estate properties which the

Company develops and intends to sell before or on completion of construction are classified as real

estate properties for sale and for future development.

Estimates

The key assumptions concerning the future and other key sources of estimation uncertainty at the end

of 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 are discussed below:

Determination of fair value of financial instruments

Financial assets and financial liabilities, on initial recognition, are accounted for at fair value. The fair

values of financial assets and financial liabilities, on initial recognition, are normally the transaction

prices. In the case of those financial assets and financial liabilities that have no active markets, fair

values are determined using an appropriate valuation technique.

The carrying values of financial assets and liabilities are equal to fair values.

Estimation of allowance for impairment of receivables

The level of this allowance is evaluated by management based on past collection history and other

factors which include, but are not limited to the length of the Group’s relationship with the customer,

the customer’s payment behavior and known market factors that affect the collectability of the accounts

Impairment of available-for-sale financial assets

An impairment issue arises when there is an objective evidence of impairment, which involves

significant judgment. In making this judgment, the Company evaluates the financial health of the

issuer, among others. The Company treats available-for-sale equity investments as impaired when

there has been a significant or prolonged decline in the fair value below its cost or where other

objective evidence of impairment exists.

Estimation of percentage of completion of projects

The Company estimates the percentage of completion of ongoing projects for purposes of accounting

for the estimated costs of development as well as revenue to be recognized. The percentage of completion is based on the technical evaluation of the independent project engineers as well as

management’s monitoring of the costs, progress and improvements of the projects.

Determination of net realizable value of real estate properties for sale

and held for future development

The Company’s estimates of the net realizable value of real estate properties are based on the most

reliable evidence available at the time the estimates are made, or the amount that the inventories are

expected to be realized. These estimates consider the fluctuations of price or cost directly relating to

events occurring after the end of the period to the extent that such events confirm conditions existing at

the end of the period. A new assessment is made of net realizable value in each subsequent period.

When the circumstances that previously caused inventories to be written down below cost no longer

exist or when there is a clear evidence of an increase in net realizable value because of changes in economic circumstances, the amount of the write-down is reversed so that the new carrying amount is

the lower of the cost and the revised net realizable value.

Estimation of useful lives of investment properties

The Company estimates the useful lives of investment properties based on the internal technical

evaluation and experience with similar assets. Estimated lives of investment properties are reviewed

periodically and updated if expectations differ from previous estimates due to wear and tear, technical

and commercial obsolescence and other limits on the use of the assets.

25

Impairment of investment properties

The Company determines whether its investment properties are impaired when impairment indicators

exist such as significant underperformance relative to expected historical or projected future operating

results and significant negative industry or economic trends. When an impairment indicator is noted,

the Company makes an estimation of the value-in-use of the cash-generating units to which the assets

belong. Estimating the value-in-use requires the Company to make an estimate of the expected future cash flows from the cash-generating unit and also to choose an appropriate discount rate in order to

calculate the present value of those cash flows.

Estimation of retirement benefits cost

The determination of the Company’s obligation and costs for retirement benefits depends on

management’s selection of certain assumptions used by actuaries in calculating such amounts. The

assumptions for retirement benefits cost include, among others, discount rates, expected annual rates of

return on plan assets and rates of salary increase. Actual results that differ from assumptions are

accumulated and amortized over future periods and therefore, generally affect the Company’s

recognized expenses and recorded obligation in such future periods. While management believes that

the assumptions are reasonable and appropriate, significant differences in actual experience or

significant changes in management assumptions may materially affect the Company’s retirement obligations.

Recognition of deferred income tax assets

The Company reviews the carrying amounts of deferred income tax assets at the end of each reporting

period and reduces deferred income tax assets to the extent that it is no longer probable that sufficient

future taxable profits will be available to allow all or part of the deferred income tax assets to be

utilized.

4. Cash and Cash Equivalents and Short-Term Cash Investments

Cash and cash equivalents consist of:

June 2013 Dec. 2012

Cash on hand and in banks P=2,417,750 P=3,210,127

Cash equivalents 217,500,000 599,100,000

P=219,917,750 P=602,310,127

Cash in banks earn interest at the respective bank deposit rates. Short-term investments are made for

varying periods of up to three months depending on the immediate cash requirements of the Company, and

earn interest at the respective short-term investment rates.

Short-term cash investments amounting to P=680.50 million as of June 30, 2013 and P=51.00 million as of

December 31, 2012, respectively, are investments in banks with maturities of more than three months to one year from the dates of acquisition and earn interest at the prevailing market rates.

5. Available-for-sale Financial Assets

Available-for-sale financial assets consist of investments in quoted equity securities amounting to P=1.56

million as of June 30, 2013 and December 31, 2012, respectively.

The movements in “Net changes in fair values of available-for-sale financial assets” presented in equity

section of the balance sheets are as follows:

June 2013 Dec. 2012

Balances at beginning of year P=1,286,739 P=690,710

Changes in fair value 7,871 596,029

Balances at end of the period P=1,294,610 P=1,286,739

26

6. Installment Contracts Receivable

This account consists of installment contracts receivable arising from the sale of real estate properties.

The installment contracts receivable on sales of real estate are collectible in monthly installments for

periods ranging from one (1) to ten (10) years and bear monthly interest rates of 0.67% to 2% computed on

the diminishing balance.

The portion due within one year (net of current portion of unrealized gross profit, estimated development

costs for unsold units, and deferred vat) amounted to P=210.57 million in June 30, 2013 and P=232.07 million

in December 31, 2012.

7. Other Receivables

Other receivables consist of:

June 2013 Dec. 2012

Advances to customers P=3,708,214 P=8,664,698

Accrued interests 3,049,548 2,007,615

Retentions 120,000 150,200

Advances to affiliates 8,942,644 127,857

Others 1,730,277 3,266,921

P=17,550,683 P=14,217,291

Advances to customers are receivables of the Company for the real estate property taxes of sold units.

Accrued interests are receivables arising from interest on cash equivalents and short-term cash investments.

Retentions are receivables from cash sales arising from sale of real estate properties. Advances to affiliates

represent intercompany advances. Other receivables include receivables from customers relating to processing

of titles initially paid by the Company and employees advances.

The portion due within one year amounted to P=17.06 million in June 30, 2013 and P=13.90 million in

December 31, 2012.

8. Real Estate Properties for Sale and Held for Future Development

Real estate properties for sale consist of cost incurred in the development of condominium units and

residential houses for sale amounting to P=105.27 million and P=152.06 million as of June 30, 2013 and

December 30, 2012, respectively.

A summary of the movement in real estate properties for sale is set out below:

June 2013 Dec. 2012

Opening balances, January 1 P=152,058,055 P=391,691,341

Land cost transferred from land for future development – –

Construction/development cost – 26,868,357

Borrowing costs capitalized – –

Disposal (recognized as cost of sales) (51,480,771) (246,531,779

Write-down of inventories/reversals – –

Transfer to investment properties – –

Other adjustments/reclassifications:

Excess of estimate over actual development costs (2,139,766) (19,969,864)

Cancelled contracts to sell 6,830,490 –

Closing balances P=105,268,008 P=152,058,055

27

In 2012, the Company acquired a parcel of land amounting to P=123.13 million for future development.

Real estate properties held for future development amounted to P=367.32 million and P=362.21 million as of

June 30, 2013 December 31, 2012, respectively.

A summary of the movement in real estate properties held for future development is set out below:

June 2013 Dec. 2012

Opening balances, January 1 P=362,205,168 P=236,780,497

Additions 5,112,989 125,424,671

Reclassifications to investment properties – –

Transfers to real estate properties for sale – –

Closing balances P=367,318,157 P=362,205,168

9. Investment Properties

Investment properties represent real estate properties for lease which consists of:

June 2013 Dec. 2012

Land - at cost Balances at beginning of year P=180,603,685 P=180,445,820

Additions during the year – 157,865

180,603,685 180,603,685

Buildings – at cost

Balances at beginning and end of year 13,574,318 13,574,318

Accumulated Depreciation

Balances at beginning of year 13,574,318 10,859,456

Depreciation – 2,714,862

Balances at end of year 13,574,318 13,574,318

– –

Net Book Values P=180,603,685 P=180,603,685

Investment properties include deemed cost adjustment amounting to P=16.90 million

as of June 30, 2013 and December 31, 2012.The deemed cost adjustment arose when the Company

transitioned to PFRS in 2005.

Investment properties are rented out at different rates generally for a one-year term renewable every year.

Based on the appraisal reports by independent firms of appraisers using market data approach at various

dates in 2012 and 2011, the appraised values of these investment properties amounted to P=282.91 million

and P=280.71 million as of dates of appraisal.

10. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of:

June 2013 Dec. 2012

Trade payables P=22,004,423 P=34,657,142

VAT payable 1,495,522 –

Deposits 3,003,566 2,714,128

Accrued expenses:

Development costs 174,471,730 195,675,109

Director’s fee 12,923,865 10,405,196

Interest 747,848 1,240,098

Taxes, premiums, others 2,972,785 464,915

Withholding taxes payable 1,874,422 1,826,338

Dividends payable 90,879,846 1,307,578

Others 1,774,179 1,528,053

P=312,148,186 P=249,818,557

28

Trade payables consist of payables to contractors and other counterparties, whereas deposits consist of

rental deposits and collected deposits for water and electric meters of the sold units. Accrued expenses

represent various accruals of the Company for its expenses and real estate projects. Accrued development

costs represent the corresponding accrued expenses for the sold and completed real estate projects of the

Company. Other payables consist of customers’ reservation and employees’ payable.

Accounts payable and accrued expenses due within one year amounted to P=309.17 million in June 30, 2013

and P=114.59 million in December 31, 2012.

11. Notes and Contracts Payable

The details of notes and contracts payable are as follows:

June 2013 Dec. 2012

Short-term commercial papers (STCP) with various

maturities and interest rate ranging from 1.25% to

3.906% as of June 2013 and 2.37% to 4.61% in

December 2012

P=178,050,000 P=83,650,000

Short-term promissory notes enrolled with HGC with

various maturities and interest rate ranging from

1.20% to 1.65% as of June 2013 and 1.85% to 2.75%

in December 2012

137,764,677 151,288,195

315,814,677 234,938,195

Contracts payable – 17,381,250

P=315,814,677 P=252,319,445

On September 7, 2012 and September 12, 2011, the Philippine Securities and Exchange Commission

(SEC) authorized the Company to issue P=200.00 million worth of STCP registered with the SEC in both

years, in accordance with the provision of the Securities Regulation Code and its implementing rules and

regulations, the Code of Corporate Governance and other applicable laws and orders.

In 2012 and 2011, the Company entered into a contract of guaranty under a Revolving Cash Guaranty Line

with HGC in the amount of P=200.00 million. The guaranty covers the unpaid principal due on the outstanding

promissory notes and unpaid interest thereon of 10% per annum. The guaranty premium paid was 0.90% per

annum based on enrolled commercial papers in 2012 and 2011.

12. Related Party Transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are

controlled by or under common control with the Company, including holding companies, subsidiaries and

fellow subsidiaries, are related parties of the Company. Associates and individuals owning, directly or

indirectly, an interest in the voting power of the Company that gives them significant influence over the

enterprise, key management personnel, including directors and officers of the Company and close members

of the family of these individuals, and companies associated with these individuals also constitute related

parties. In considering each possible related entity relationship, attention is directed to the substance of the

relationship and not merely the legal form.

The Company discloses the nature of the related party relationship and information about the transactions

and outstanding balances necessary for an understanding of the potential effect of the relationship on the

financial statements, including, as a minimum, the amount of outstanding balances and its terms and

conditions including whether they are secured, and the nature of the consideration to be provided in

settlement.

Refer to page 29 for the transactions and account balances with related parties.

29

The Company, in the normal course of business, has transactions and account balances with related parties consisting mainly of the following:

Outstanding Balances

Amount of transactions Receivable (Note 7) Payable (Note 10)

Nature of Transaction June 2013 December 2012

June 2013

December 2012 June 2013

December 2012

Ultimate parent (CI) Sharing of expenses charged by (to) the Company

P=3,383,263

954,663

P=3,384,363 – P=1,100 –


Interest income 50,152 23,345 50,152 23,345 – –

Due and demandable;

non-interest bearing; to be received in cash;

no impairment

Interest expense – (1,202) – – – 1,202


Parent Company (CDC) Sharing of expenses charged by (to) the Company 3,575,047 2,680,517 5,195,529 1,620,482 – –


Interest income 58,667 45,507 58,667 45,507 –


to be received in cash;

Interest expense – (29,077) – – – 29,077


Affiliates

(CPI) Sharing of expenses

charged by (to) the Company 122,273 403,737

304,646 426,919 –

–

30-day, unsecured,

non-interest bearing to be settled in cash;

Total P=8,993,357 P=2,116,253 P=1,100 P=30,279

30

a. The Company, jointly with affiliated companies under common control, has a trust fund for the retirement plan

of their employees. The trust fund is being maintained by a trustee bank.

b. The Company has no standard arrangements with regards to remuneration of its directors. Moreover, the

Company has no standard arrangement with regards to the remuneration of its existing officers aside from the compensation received or any other arrangements in the employment contracts and compensatory plan. The

Company does not have any arrangements for stock warrants or options offered to its employees.

13. Stockholders’ Equity

Capital stock consists of:

Shares Amount

June 2013 Dec 2012 June 2013 Dec 2012

Common stock - P=1 par value:

Authorized Beginning of year 1,200,000,000 700,000,000 P=1,200,000,000 P=700,000,000 Increase during the year – 500,000,000 – 500,000,000

End of year 1,200,000,000 1,200,000,000 P=1,200,000,000 P=1,200,000,00

Issued and outstanding: Beginning of year 811,250,476 676,042,298 811,250,476 676,042,298

Stock dividends – 135,208,178 – 135,208,178

End of year 811,250,476 811,250,476 P=811,250,476 P=811,250,476

The Company registered 175,000,000 shares with SEC on April 21, 1989 with an initial offer price of 1.00.

On August 10, 2012, the SEC approved the increase in authorized capital stock from 700,000,000 shares to

1,200,000,000 shares. As of December 31, 2012 and 2011, the Company has 811,250,476 shares held by 810 equity

holders and 676,042,298 shares held by 769 equity holders, respectively.

Dividends declared and issued/paid by the Company from retained earnings were as follows:

Stockholders of

Dividends Date Approved Per Share Record Date Date Issued/Paid

Cash June 11, 2013 P=0.11 June 26, 2013 July 22, 2013

May 25, 2012 0.15 June 22, 2012 July 18, 2012

June 03, 2011 0.14 June 17, 2011 July 13, 2011

Stock June 11, 2013 20% July 11, 2013 August 6, 2013

May 15, 2012 20% September 10, 2012 October 4, 2012

May 2, 2011 20% July 14, 2011 September 9, 2011

Fractional shares of stock dividends were paid in cash based on the par value.

On August 9, 2012, the Board of Directors authorized the reversal of appropriated retained earnings amounting to

100.00 million for the development cost of Manila Residences Bocobo to unappropriated retained earnings because

the said project was already completed.

As of June 30, 2013, the unappropriated retained earnings include the remaining balance of deemed cost adjustment

amounting to P=11.83 million, net of related deferred tax of P=5.07 million, related to real estate properties for lease

which rose when the Company transitioned to PFRS in 2005. This amount has yet to be absorbed through sales and

is restricted for the payment of dividends.

The Company’s objectives in capital management is to maintain an optimal capital structure by ensuring that debt

and equity capital are mobilized efficiently and to provide returns for stockholders and benefit for other

stakeholders.

31

The Company manages its capital structure and makes adjustments to it, in the light of changes in economic

conditions. It monitors capital using leverage ratios on both gross debt and net debt basis.

14. Financial Income

Financial income consists of:

June 2013 June 2012

Interest income from:

Installment contracts receivable relating to sale of

real estate properties

P=53,975,250

P=69,972,006

Cash equivalents and short-term investments 12,061,125 14,409,923

Cash in bank 9,286 10,458

Others 108,819 30,751

Dividend income 14,111 8,338

P=66,168,591 P=81,431,476

15. Operating Expenses

Operating expenses consist of:

June 2013 June 2012

Taxes and licenses P=13,760,061 P=15,124,503

Personnel (see Note 16) 12,263,344 35,996,326

Insurance Expense 3,875,943 3,461,349 Professional fees 3,340,663 5,815,324

Membership dues 1,732,620 2,302,015

Advertising and promotion 1,060,228 898,268

Repairs and Maintenance 727,401 21,405

Brokers’ commission 509,590 1,537,671

Outside services 474,661 962,827

Rent 316,680 762,834

Office supplies 237,830 –

Postage, telephone and telegraph 153,705 401,461

Transportation 75,502 203,646

Power, light and water 64,594 109,196

Depreciation – 1,357,431 Donations – 710,000

Others 805,663 929,650

P=39,398,485 P=70,593,906

16. Personnel Expenses

Personnel expenses consist of:

June 2013 June 2012

Employee benefits and commissions P=6,906,196 P=21,070,159

Salaries and wages 4,644,336 13,114,208

Benefits and other social expenses 712,812 1,811,959

P=12,263,344 P=35,996,326

32

17. Financial Expense

Financial expense consists of: June 2013 June 2012

Interest expense on:

Notes payable 2,930,043 5,618,377

Finance charge 107,001 178,550

P=3,037,144 P=5,796,927

18. Retirement Plan

The Company, jointly with affiliated companies, has a funded, noncontributory defined benefit retirement plan

covering all of its permanent employees.

19. Income Taxes

Provision for income tax consists of:

June 2013 June 2012

Current P=21,678,121 P=19,483,757

Deferred (8,142,129) (2,736,951)

Final tax on interest income 2,414,082 2,884,076

P=15,950,074 P=19,630,882

20. Basic/Diluted Earnings Per Share

Basic/diluted earnings per share amounts were computed as follows:

June 2013 June 2012

a. Net income P=64,673,616 P=149,731,258 b. Weighted average number of shares 811,250,476 811,250,476

c. Earnings per share (a/b) P=0.080 P=0.185*

*After retroactive effect of 20% stock dividends in 2012.

The Company has no dilutive common shares as of June 30, 2013 and June 30, 2012. Thus, the basic and diluted

earnings per share are the same as of those dates.

21. Financial Instruments

Financial Risk Management Objectives and Policies

The Company’s principal financial instruments comprise of loans and notes payable, cash and cash equivalents, and

short-term cash investments. The main purpose of these financial instruments is to finance the Company’s

operations. The Company’s other financial instruments, which include available-for-sale investments, are held for

investing purposes. The Company has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

It is, and has been throughout the year under review, the Company’s policy that no trading in financial instruments

shall be undertaken. The Company has no investment in foreign securities.

The main risks arising from the Company’s financial instruments are cash flow interest rate risks, credit risk,

foreign currency risks, equity price risk and liquidity risk. The Board of Directors is mainly responsible for the

overall risk management approach and for the approval of risk strategies and principles of the Company and they

are summarized as follows:

33

Cash flow interest rate risk

The Company’s exposure to the risk for changes in market interest rates relates primarily to the Company’s short-

term and long-term loans payable all with floating interest rates. This means that the Company assumes the

concurrent movements in interest rates and parallel shift in the yield curves.

The Company manages its interest rate risk by maintaining credit lines with financial institutions and limiting borrowings to the Company’s cash requirements.

A sensitivity analysis to a reasonable change in the interest rates (with all other variables held constant) of 0.8070%

higher or lower, would increase or decrease the Groups’ income before income tax of P=2,548,730.

Credit risk

The Company trades only with recognized, creditworthy third parties. It is the Company’s policy that all customers

that wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are

monitored on an on-going basis with the result that the Company’s exposure to bad debts is not significant.

The table below shows the Company exposure to credit risk for the components of the balance sheet. The exposure

as of June 30, 2013 is shown at gross, before taking the effect of mitigation through the use of and collateral

agreements and at net, after taking the effect of mitigation through the use of collateral agreements and other credit enhancements.

Gross Exposure

Fair Value of

Collaterals

Net Exposure

Financial effect of

collaterals/credit

enhancements

Loans and receivables:

Cash and cash equivalents,

excluding cash on hand

P=219,897,431

P=–

P=219,897,431

P=–

Short-term cash investments 680,500,000 – 680,500,000 –

Installment contract

receivables

678,733,755

1,512,241,757

–

678,733,755

Other receivables:

Accrued interest 3,049,548 – 3,049,548 –

Customers 3,708,214 – 3,708,214 –

Retention 120,000 – 120,000 –

Others 10,554,545 – 10,554,545 –

Total credit risk exposure P=1,596,563,493 P=1,512,241,757 P=917,829,738 P=678,733,755

The Company holds the title to the real estate properties with outstanding installment contracts receivable balance and the Company can repossess such real estate properties upon default of the customer in paying the outstanding

balance.

The following table summarizes the aging analysis of receivables as of June 30, 2013:

Current

> One Year*

Past Due But Not Impaired

Total < 30days 31 - 60 days 61 – 90 days > 90 days

Installment contracts rec. P=205,234,563 P=468,162,130 P=1,876,068 P=590,380 P=407,456 P=2,463,158 P=678,733,755

Other receivables:

Accrued interest 3,049,548 – – – – – 3,049,548

Customers 1,631,884 – – 4,002 373,346 1,698,982 3,708,214

Retention 30,000 90,000 – – – – 120,000

Others** 10,194,376 286,153 74,016 – – – 10,554,545

P=220,140,371 P=468,538,283 P=1,950,084 P=594,382 P=780,802 P=4,162,140 P=696,166,062

* Classified as neither past due nor impaired.

**Excludes nonfinancial assets amounting to P=118,376.

34

The table below shows the credit quality by class of asset for loan-related balance sheet lines as of June 30, 2013,

based on the Company’s credit rating system.

Medium** Past due but

High Grade* Grade not impaired Total

Cash and cash equivalents

(excluding cash on hand) P=219,897,431 P=– P=– P=219,897,431

Short-term cash investments 680,500,000 – – 680,500,000

Installment contract

receivables

673,396,693 – 5,337,062 678,733,755

Other receivables*** 14,865,088 416,873 2,150,346 17,432,307

P=1,588,659,212 P=416,873 P=7,487,408 P=1,596,563,493 * High Grade - financial assets with reputable counterparties and which management believes to be reasonably assured to be recoverable.

** Medium Grade - financial assets for which there is low risk on default of counterparties.

*** Excludes nonfinancial assets amounting to P=118,376.

The main considerations for impairment assessment include whether any payments are overdue or if there are any

known difficulties in the cash flows of the counterparties. The Company assesses impairment into two areas:

individually assessed allowances and collectively assessed allowances.

The Company determines allowance for each significant receivable on an individual basis. Among the items that

the Company considers in assessing impairment is the inability to collect from the counterparty based on the

contractual terms of the receivables. The Company also considers the fair value of the real estate collateralized in

computing the impairment of the receivables. Receivables included in the specific assessment are those receivables

under the installment contracts receivable accounts.

Because the Company holds the title to the real estate properties with outstanding installment contracts receivable

balance and can repossess such real estate properties upon default of the customer in paying the outstanding

balance, the Company does not provide for allowance for impairment of its installment contracts receivable.

For collective assessment, allowances are assessed for receivables that are not individually significant and for individually significant receivables where there is not yet objective evidence of individual impairment. Impairment

losses are estimated by taking into consideration the age of the receivables, past collection experience and other

factors that may affect collectibility.

Concentration Risk

The Company’s policy is to enter into transactions with a diversity of creditworthy parties to mitigate any

significant concentration of risk.

Foreign currency risk

The Company’s transactional currency exposures arise from purchases in currencies other than its functional

currency. However, the Company’s exposure to foreign currency risk is minimal. There are no outstanding foreign currency-denominated assets and liabilities.

Equity Price Risk

Equity price risk is the risk that the fair values of equities decrease as a result of changes in the market value of

individual stock. The Company is exposed to equity securities price risk because of investments held by the

Company, which are classified on the balance sheets as available-for-sale investments.

A sensitivity analysis to a reasonable change in the equity price (with all other variables held constant) of 0.24

higher or lower, would increase or decrease the equity by P=377,328.

Liquidity risk

Liquidity is defined as the risk that the Company could not be able to settle or meet its obligations on time or at a reasonable price.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of

bank loans.

35

The table below summarizes the maturity analysis of the Company’s financial assets and liabilities as of June 30,

2013:

30 days 31-90 days 91-180 days 181-360 days Above 1 year Total

Financial Assets Cash and cash equivalents P=158,397,431 P=61,500,000 P=– P=– P=– P=219,897,431 Short-term cash investments 77,500,000 161,000,000 442,000,000 – – 680,500,000 Installment contracts

receivable 26,457,612 37,910,955 58,713,398 87,489,659 468,162,131 678,733,755

262,355,043 260,410,955 500,713,398 87,489,659 468,162,131 1,579,131,186

Financial Liabilities Accounts payable and

accrued expenses * 117,925,849 137,243 174,856,485 12,875,840 2,982,825 308,778,242 Notes payable ** 99,687,838 154,800,437 69,846,766 – – 324,335,041

217,613,687 154,937,680 244,703,251 12,875,840 2,982,825 633,113,283

Liquidity Position P=44,741,356 P=105,473,275 P=256,010,147 P=74,613,819 P=465,179,306 P=946,017,903

* Excludes statutory liabilities amounting to P=3,369,944 as of June 2013.

** Includes interest expense to maturity amounting to P=8,520,364.

Fair Values

The carrying amounts of recorded financial assets and liabilities as of June 30, 2013 and December 31, 2012 are as

follows.

June 30, 2013 December 31, 2012

Carrying value Fair value Carrying value Fair value

Financial Assets

Cash on hand P=20,319 P=20,319 P=21,000 P=21,000

Loans and receivables:

Cash and cash equivalents 219,897,431 219,897,431 602,289,127 602,289,127

Short-term cash investments 680,500,000 680,500,000 51,000,000 51,000,000 Installment contracts

receivable 678,733,755 678,733,755 803,080,536 803,080,536

Other receivables

Customers 3,708,214 3,708,214 8,664,698 8,664,698

Accrued interest 3,049,548 3,049,548 2,007,615 2007,615

Retention 120,000 120,000 150,200 150,200

Others* 10,554,545 10,554,545 3,078,924 3,078,924

1,596,563,493 1,596,563,493 1,470,271,100 1,470,271,100

Available-for-sale financial

assets 1,564,523 1,564,523 1,556,652 1,556,652

P=1,598,148,335 P=1,598,148,335 P=1,471,848,752 P=1,471,848,752

Financial liabilities

Other financial liabilities:

Accounts payable & accrued expenses** P=308,778,242 P=308,778,242 P=247,925,045 P=247,925,045

Notes and contracts payable 315,814,677 315,814,677 252,319,445 252,319,445

P=624,592,919 P=624,592,919 P=500,244,490 P=500,244,490 *Excludes non financial assets amounting to P=118,376 and P=315,854 as of June 2013 and December 2012, respectively.

** Excludes statutory liabilities amounting to P=3,369,944 and P=1,893,512 as of June 2013 and December 2012, respectively.

Cash and cash equivalents, short-term cash investments, other receivables, and accounts payable and accrued

expenses

Due to the short-term nature of the transactions the fair value of cash and cash equivalents, short-term cash

investments, other receivables, and accounts payable and accrued expenses, approximate amount of consideration

at the time of initial recognition.

Available-for-sale investments

Available-for-sale investments are stated at fair value based on quoted market prices.

36

Installment contracts receivable

The fair value of installment contracts receivable cannot be reasonably estimated due to the significant volume of

transactions and the varied terms and maturities.

Notes and contracts payable Due to the monthly/quarterly repricing of interest, loans and notes payable are stated at fair value.

22. Current Assets and Current Liabilities

The Company’s current assets and current liabilities are as follows:

June 2013 December 2012

Current Assets

Cash and cash equivalents P=219,917,750 P=602,310,127

Short-term cash investments 680,500,000 51,000,000

Available-for-sale financial assets 1,564,523 1,556,652

Installment contracts receivable 210,571,625 232,073,101

Other receivables 17,056,154 13,901,437

Real estate properties for sale 105,268,008 152,058,055

Other assets 17,530,931 18,089,485

P=1,252,408,991 P=1,070,988,857

Current Liabilities

Accounts payable and accrued expenses P=309,165,362 P=114,586,856

Notes and contracts payable 315,814,677 252,319,445 Income tax payable 11,021,498 20,285,173

P=636,001,537 P=387,191,474

23. Business Segments

The Company derives its revenues primarily from the sale and lease of real estate properties.

The Company does not have any major customers and all sales and leases of real estate properties are made to

external customers.

Segment Revenues:

June 2013 June 2012

Sales of real estate P=159,945,898 91.64% P=389,186,160 95.41%

Rental income 1,523,383 0.87% 2,209,625 0.05%

Others 13,070,709 7.49% 16,489,602 4.54%

P=174,539,990 100.00% P=407,885,387 100.00%

The Company’s real estate projects, investments, and properties under lease are primarily located in Metro Manila.

37

CITY AND LAND DEVELOPER’S, INCORPORATED

SUPPLEMENTARY SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS

June 30, 2013

(Unaudited)

December 31, 2012 June 30, 2012 FINANCIAL RATIOS

Current 1.97 2.77 1.68

Asset-to-equity 1.44 1.37 1.54

Debt-to-equity 0.20 0.16 0.21

Asset-to-liability 3.27 3.73 2.85

Solvency 0.19 0.44 0.37 Interest rate coverage 28.52 30.21 31.39

Acid-test ratio 1.78 2.32 1.38

Return on equity (%) 8.21% 16.01% 20.06%

Manner of calculation:

Current ratio

=

Total Current Assets / Total Current Liabilities

Asset-to-equity ratio = Total Assets

Stockholder's Equity (net of Net Changes in Fair Value of

Investments)

Debt-to-equity ratio = Notes and Contracts Payable

Stockholder's Equity (net of Net Changes in Fair Value of Investments)

Asset-to-liability ratio

=

Total Assets / Total Liabilities

Solvency ratio

=

Net Income after Tax + Depreciation Expense

Total Liabilities

Interest rate coverage ratio

=

Net Income Before Tax + Depreciation Expense + Interest Expense

Interest Expense

Acid-test ratio

=

Cash and Cash Equivalents + Short-term Cash Investments +

Installment Contracts Receivable, current +

Other Receivables, current


Return on equity ratio

=

Net Income after Tax

Stockholder's Equity

38


SCHEDULE OF GROSS AND NET PROCEEDS OF SHORT-TERM

COMMERCIAL PAPERS ISSED

As of June 30, 2013

DESCRIPTION As disclosed in the Actual

Final Prospectus* As of June 30, 2013**

(i) Total Outstanding Notes / Gross Proceeds P=200,000,000 P=178,050,000

Less: Expenses

Registration Fees 202,000 202,000

Legal and Accounting Fees 30,000 30,000

Publication Fees 30,000 29,792

Documentary Stamps Tax 1,000,000 487,193

Printing costs 10,000 10,550

(ii) Total Net Proceeds 198,728,000 177,290,465 (iii) Use of Proceeds

Project-related Costs 100,000,000 42,095,286

Payment of maturing loans/ notes 90,768,000 108,921,600

Interest expense 7,960,000 1,144,713

Total 198,728,000 152,161,599 (iv) Balance of proceeds as of June 30, 2013 P=-- P=25,128,866

* SEC-CFD Order No. 144, Series of 2012 dated September 07, 2012.

Use of Proceeds as disclosed in the Final Prospectus is estimated for the Twelve (12)-month Period September 2012 to

August 2013.

** For the Ten (10)-month Period September 1, 2012 to June 30, 2013.

39


MAP OF THE RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP

50.42%

29.54% 9.18%

49.73% 90.81%

CITYLAND, INC. (CI)

(ultimate parent)

CITY & LAND DEVELOPERS,

INCORPORATED (CLDI)

(subsidiary of CDC)

CITYPLANS, INCORPORATED (CPI)

(subsidiary of CDC)

CREDIT & LAND HOLDINGS,

INCORPORATED (CLHI)

(subsidiary of CI)

CITYADS, INC. (CAI)

(subsidiary of CI)

CITYLAND DEVELOPMENT CORPORATION (CDC)

(subsidiary of CI)

100.00%

↓

100.00%

↓

2013 final prospectus

Documents