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Cebu H Ir 2014

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Let's

build for
tomorrow's
generations
2014 Annual and
Sustainability Report
This is why we are looking closely at our environmental, social
and economic impacts today.

Our performance and how we improve it will define our


developments and how we create significant value for our
business and for society − inclusive of tomorrow's generations.
4
Table of
Contents
Envision. Deliver.
010. 2014 Performance at a Glance
012. Joint Message from the Chairman and the President
022. Message from the Chief Finance Officer

Build To Last.
033. Who We Are: Vision/Mission and Core Values
034. Ownership Structure/Membership in
Associations/Awards and Recognitions 2014
035. Subsidiaries and Affiliates
036. Business Review

120. Measure and Track Progress: Improving our Efficiencies


Take Responsibility. Environmental Health and Safety Policy
069. Corporate Governance Climate Change Policy
070. Governance Structure
074. Board of Directors 148. Take Action: Engaging our Employees
078. Board Committees Employee Engagement Drivers
092. Enterprise-Wide Risk Management
160. Exceed Expectations: Understanding Our Customers
Quality Policy
Inspire Positive Change.
Customer Satisfaction Ratings
105. Our Sustainability Story Customer Feedback: 24/7 Helpline and
107. Sustainability Policy Text Feedback Hotline
108. Sustainability Framework PWD Awareness
109. Materiality Process
110. Sustainability Structure 170. Build Capacity: Empowering Our Communities
111. Material Aspects Community Development Programs
112. Stakeholder Engagement Catalyze Economic Development:
118. Sustainability Performance at a Glance Contributing to Society
Significant Indirect Economic Impacts

182. Influence. Set Sandards: Supply Chain Management


Value Delivery Chain

186. Appendices

210. GRI Content Index

214. ASEAN Corporate Governance Scorecard Index

Keep The Balance.


216. Financial Statements

5
About this
Report
Scope and Coverage Data References and Assurance

Our 2014 Annual and Sustainability Report covers The references of each sector performance
the business operations and activities of Cebu are taken from the following documents
Holdings, Inc. (CHI) in Cebu, Philippines including or guidelines:
its subsidiaries and affiliates for the calendar year
Economic Performance
2014. G4-3, G4-5, G4-6, G4-28, G4-30
• Audited financial statements conforming with
The scope of our environmental data was generally accepted accounting principles in the
expanded. Data for 2013 was updated Philippines, and
accordingly for alignment. G4-22 • Internally-generated reports consolidated
from Finance, Commercial Business Group and
Purpose of Report
Corporate Communication and CSR Division
detailing our community investments for this
This Report is a valuable opportunity for us reporting period.
to assess and improve on our economic,
environmental and social performance.
Environmental Performance

This has been designed to provide our • Energy and water consumption from meter
stakeholders with relevant information about our readings by utility companies we subscribe to;
Company’s annual financial and sustainability
• Actual volume or weight of materials used as
initiatives, programs and progress. This was
shown in the records of our general contractor;
developed using the Global Reporting Initiative
(GRI) G4 reporting framework which we • Diesel consumption (generating sets) are from
pioneered in the country in 2014. characteristic fuel consumption given by the
manufacturer;
Included here are Construction and Real Estate • Greenhouse gas (GHG) emissions from
Sector disclosures. This report successfully direct energy; Computations derived using
completed GRI’s Materiality Disclosures Service. the GHG Protocol Corporate Standard and
See pages 211 to 214 for further information. Intergovernmental Panel for Climate Change
(IPCC) Reporting Guidelines; and
• Emission factor for the indirect energy
consumption is based on National Grid Emission
Factors by the Department of Energy (DOE).

6
Social Performance companies (PLCs). It helps us benchmark
against international best corporate governance
• Internally-generated reports on our labor
practices by publicly-listed companies and
and humtan rights aspects, health and safety,
encourages us to go beyond our national
product responsibility, and community
legislative requirements. See pages 214 for the
development programs.
ACGS Index.
• We benchmarked with Corporate Knights
The data assurance for non-financial data is
Capital’s 2015 Global 100 Index. This listing
conducted through the Company’s annual audits
is a ranking of the world's most sustainable
on Quality, Environmental, Occupational Health
corporations using 12 key performance
and Safety Management Systems (QEHS MS),
indicators. It allows us greater transparency and
which are held annually by our internal audit
a means to quantitatively compare to best in
and external certifying body. In between these
class global corporate practices. G4-15, G4-32
reviews, we also conduct data assurance through
our own Sustainability Technical Working Group
(STWG) assessments. G4-33 Additional Reference

Reporting Standards G4-15 The Company’s operational and financial


performance filed with the Securities and
This report conforms to: Exchange Commission (SEC) is reflected in the
Information Statement sent to stockholders and
• The Global Reporting Initiative Guidelines 4 is available at www.cebuholdings.com.
(GRI-G4) for the non-financial performance of
the Company under ‘Core” option. This year Feedback/Contact Information
we report on 56 General Standard Disclosures,
39 Material Aspects and 53 Specific Standard For questions, comments and
Disclosures (52 GRI and 1 CHI). See pages 210 suggestions, you may email us at
to 212 for the GRI Content Index. customer_care@cebuholdings.com. G4-31
• We have also identified six sector-specific
indicators following GRI’s G4 Sector Disclosures
for Construction and Real Estate.
• Our Report also adopts the ASEAN
Corporate Governance Scorecard (ACGS)
recommendations for ASEAN publicly-listed

7
01.
Envision.
Deliver.

Twenty six years ago, Cebu Holdings, Inc. (CHI)


laid the groundwork for land development in Cebu.
It all started with a big vision. With world class
master-planning of large-scale, integrated mixed-use
developments, we have helped change the economic and
physical landscape of Cebu.

As we expand to new geographies and reach a broader


market, we continue to deliver our promise—that
of fulfilling our share in making Cebu the center of
business, IT / BPO and tourism in the region.

Let's build for tomorrow's generations


2014
Performance
Highlights
We measure our impacts to the local economy and the society where we are present.
As we continue to operate responsibly, we strive to balance our performance across all
three criteria against our business objectives and long term goals. This section presents
a quick reference on CHI's triple bottom line performance for the year 2014.

OPERATIONAL
RETAIL SPACE LEASING
OFFICE SPACE LEASING
>> Ayala Center Cebu
>> eBloc Towers and The Walk

95%
61
thousand
average occupancy
129
thousand
sqm gross
leasable area
sqm gross
leasable area
95% average
lease out rate

RESIDENTIAL >> Cebu Business Park


ESTATES and Cebu I.T. Park
CONDOMINIUMS

772 thousand

924
number of sqm
residential total gross floor area
units sold

1,559 87.5%
expected GFA increase
number of units in five years (2019)
launched
(owned by CHI and ALI)
308,758 sqm total
under construction

10 Let’s Build for Tomorrow's Generations


ECONOMIC

AAA
PRS Credit
P2 billion
gross revenues
27%
P16.4 reaching
growth in
total assets
billion
Rating
1.63:1 current

P531 million
net income after tax 1.23:1
ratio
commercial
debt-to-equity
ratio

P2 billion
capital expenditure
ENVIRONMENT

82species
28%
of recyclables
increase
in volume 3,972 existing
trees nurtured

equivalent to 405,312 kgs at Cebu Park


District and
Amara

SOCIAL

8. 7
rendered a total of

3,353 total
out

training hours provided 541


volunteer hours
internal
customer
of 10

79%
satisfaction
rating
employee participation

average training hours per employee


ZERO 8.5
external
out
of 10

lost time
39 09 00
HRS MINS SECS
from work accidents
and injuries in
construction project
sites and in CHI offices
customer
satisfaction
rating

CHI 2014 Annual and Sustainability Report 11


JOINT MESSAGE FROM THE
CHAIRMAN AND THE PRESIDENT
G4-1, G4-2

Cebu Holdings, Inc. (CHI) is proud to consider itself as a major partner in building
Cebu. Since the late eighties, it has worked to unlock the value of land in Cebu Park
District, an integrated mixed-use development comprised of Cebu Business Park, and
subsidiary Cebu Property Ventures and Development Corporation’s (CPVDC’s) Cebu
I.T. Park.

Twenty six years ago, when Ayala Land was looking for a next estate to develop into a
central business district after Makati, Cebu was the top choice. The city showed promise
as an ideal location where Ayala Land’s affiliate company, CHI, could set the stage for
even further growth.

Since the late eighties, CHI


has worked to unlock the
value of land in Cebu Park
District, an integrated mixed-
use development comprised
of Cebu Business Park, and
subsidiary CPVDC’s Cebu
I.T. Park.

Bernard Vincent O. Dy

12 Let’s Build for Tomorrow's Generations


The year 2014 was
another record year
as we exceeded
financial targets. The
year ended with P2.3
billion in consolidated
revenues and a net
income of P530.9
million, the highest

Aniceto V. Bisnar, Jr.


ever for the Company.

In planting the seeds of progress many Building strong foundations


years ago, both CHI and Cebu are
reaping the rewards. Last year, Cebu City The year 2014 was another record
continued to be ranked one of the top year as we exceeded financial targets.
ten offshore BPO locations in the world. The year ended with P2.3 billion in
consolidated revenues and a net income
Our twin districts – Cebu Business Park of P530.9 million, the highest ever for
and Cebu I.T. Park continue to play a vital the Company.
role in the city’s economy. Both parks
and adjoining areas enjoy a critical mass We achieved this by strengthening
of locators in the spheres of business, our foundations.
banking and finance, IT/BPO and
tourism services. Today, both parks have We focused on raising capital to enable
over 65,000 workers. us to seize opportunities in the market.

CHI 2014 Annual and Sustainability Report 13


We focused on raising
capital to enable us to
seize opportunities in the
market. Last year marked
the success of our maiden We continue to enhance our existing
developments. Ayala Center Cebu, the
bonds offering, resulting centerpiece of our flagship development,
Cebu Business Park, recently expanded
in a capital infusion of
with a new wing and introduced
P5 billion for projects in premium retail brands and first-in-Cebu
concepts, enhancing the Cebuano
the pipeline and other shopping experience with a refreshing
leisure destination.
landbanking activities.
We also continue to serve the growing
demand for office space. Capitalizing on
the increasing IT and BPO demand, we
concurrently topped off and launched
Last year marked the success of our two additional eBloc Towers in Cebu I.T.
maiden bonds offering, resulting in Park through CPVDC. Today, Cebu I.T.
a capital infusion of P5 billion. The Park is home to over 70 percent of the
funds will be used for projects and city’s BPO industry.
developments in the pipeline and other
landbanking activities to further grow We were able to build up our leasing
our portfolio. Our offering was over- portfolio’s gross leasable area to 187,555
subscribed by 1.6 times, showing investor square meters of retail and office
confidence in the Company. space — comprising over half of the

14 Let’s Build for Tomorrow's Generations


Company’s revenues. This makes for a to 1.4 million square meters for office,
strategic mix of revenue sources with a commercial, and residential uses. This
steady flow of recurring income. will service the 65,000 workers of Cebu
Park District, a number which we expect
Sales of residential units also remain to grow by 20 percent in 2015.
strong as we start the turnover of various
products to buyers, such as Ayala Land We will also develop more projects in
Premier’s 1016 Residences, Alveo’s the Cebu I.T. Park to serve its growing
Sedona Parc, and the Avida Towers Cebu. population. The two-hectare stacked
mixed-use development in Cebu I.T.
Building for future generations Park, aptly named Central Bloc, will
showcase the convergence of business
We will continue to build within our and leisure that the Company is known
existing communities and develop for. We expect this landmark project to
new estates to ensure sustained be a strong anchor in the estate.
long-term growth.
Plans for our new mixed-use districts in
Cebu Park District continues to see Mactan and Mandaue are well under way.
strong development with a total of 17 Our 13-hectare proposed development
buildings currently under construction. in Mactan, under a joint venture with
These new structures will add 308,758 Taft Property Venture Development
square meters of gross floor area (GFA). Corporation, is set to become the
This will close to double the amount of mixed-use leisure and resort community
built-up GFA within the next five years of choice. We expect this development

CHI 2014 Annual and Sustainability Report 15


In working, we
also remember our
responsibility to our
shareholders, our
business partners,
the communities that

to service the projected tourism market


we develop and our
which is estimated to grow to 5.3 million
in 2020.
customers. CHI strongly
The 15-hectare city center in Mandaue, believes that sustainable
on the other hand, will feature
innovative residential developments and
communities are
commercial spaces having retail and
office components. CHI has a 10 percent
long-term drivers of
stake in this partnership with Ayala Land,
shareholder value.
Inc. and AboitizLand, Inc.

Building to last

With these plans, we are confident that


we will be able to sustain long-term as one among five finalists at the 3rd
growth. Our confidence is built on Philippine Stock Exchange (PSE) Bell
several factors: Awards. This is the highest accolade
given locally to listed companies with
First, our business thrives due to strong
“world-class corporate governance
corporate governance driven by integrity
standards and practices.” Assessments
and professional competence. This year,
were based on the strength of a
we were honored with high distinction
company’s adherence to PSE’s corporate

16 Let’s Build for Tomorrow's Generations


governance guidelines and relevant rules Lastly, we acknowledge our people
and regulations. as critical in ensuring that plans are
executed in accordance with our
Second, we are prudent in our business brand standards. Our strong culture of
outlook but remain adaptive to changes performance and teamwork allows us to
in the economic landscape and market achieve solid business results.
conditions. As we move forward with
our program to expand into new growth Building sustainable communities
centers, we plan carefully to ensure high
probability of success by understanding In working, we also remember our
clearly the needs of our consumers. responsibility to our shareholders, our
business partners, the communities
Third, our residential, commercial and that we develop and our customers.
leasing properties continue to be well- CHI strongly believes that sustainable
received by the market. We remain communities are long-term drivers of
market leaders in locations where we shareholder value.
are present. Given our track record of
creating masterplanned, integrated, Our business is closely linked to the
mixed-use communities, we are communities in which we operate,
confident that these new locations will and we continue to be integral to their
become significant contributors to our development. We communicate and
bottom line in the near future. work diligently with the government,
industry and community groups to

CHI 2014 Annual and Sustainability Report 17


We take great
pride in what has
been achieved. We
remain confident
in the capability of
our organization to
build on our success
even further. We benchmarked with Corporate Knights
Capital’s KPIs and aligned the disclosure
requirements with the ASEAN Corporate
Governance Scorecard.

develop strategies for the growth


We have also refined our Sustainability
of Metro Cebu through vibrant and
Framework to better align with the key
engaged communities.
economic drivers of Cebu – tourism,
BPO and IT, construction, and real estate
Sustainability is a key principle that
development. Our three focus areas
we have operated on from the very
namely, supporting local businesses and
beginning. In fact, we pioneered
enabling communities; designing and
GRI-G4 reporting in the country in
developing healthy, dynamic city areas;
2013. In pursuit of greater accountability
and bridging global companies to local
and transparency, this year, we
skilled labor and professionals, contribute
increased our General and Specific
to sustained performance delivery.
Standard Disclosures including one
(See more details on our Sustainability
CHI-specific indicator.
framework on page 108 of this Report.)

18 Let’s Build for Tomorrow's Generations


19

Our efforts to drive growth through positioning them for growth, enabling
sustainability was acknowledged strong relationships with local
through a Special Recognition at the government, and strengthening our
first Sustainable Business Awards (SBA) operating efficiency strategies and risk
Philippines 2014 for Best Practices in management approach.
Workforce Management with CHI being
the only Cebu-based company cited. We take great pride in what has been
achieved. We remain confident in
Our approach to sustainability has the capability of our organization
given us a number of benefits: creating to build on our success even
high-quality products, enhancing further. We will continue to build for
our market reputation as a trusted tomorrow’s generations.
brand, empowering our people and

Bernard Vincent O. Dy Aniceto V. Bisnar, Jr.


Chairman President

CHI 2014 Annual and Sustainability Report 19


02.
Set a target.
Exceed it.

We rely on our sustainability


framework as our road map to steer
us to meet the objectives we set. We
strive to maximize the use of our
resources and improve productivity
to ensure that we deliver or even
exceed our targets.

Let's build for tomorrow's generations


MESSAGE FROM THE CHIEF
FINANCE OFFICER
G4-1, G4-2

The Philippine economy showed its continuing resilience despite adversity, ending 2014 with
the third highest gross domestic product (GDP) growth in the region, after Vietnam and China.
Though the yearend 6.1 percent GDP growth was lower than that of 2013, it was a strong
performance considering the effects of recent natural calamities, as well as the uncertainties
of the global economic environment.

Against this challenging backdrop, we at Cebu Holdings, Inc. (CHI), have continued to manage our
business prudently, aggressively seeking opportunities for further growth while keeping risks within
manageable levels. Our balance sheet remains strong, even stronger in fact as we actively managed our
debt profile in 2014 ensuring it remained long-dated yet cost effective.

Our Company’s principal strength lies in its involvement in highly diversified businesses including a range
of residential products that cater to various market segments. The various residential condominiums
we have launched bring in over 4,500 units upon completion, making us the biggest real estate group,

“... we have
continued to
manage our
business prudently,
aggressively seeking
opportunities for
further growth while
keeping risks within
manageable levels...”

Enrique B. Manuel, Jr.

22 Let’s Build for Tomorrow's Generations


Our brand is very strong, our
financial position is healthy
with a variety of funding
sources available and we
have the manpower and
offering the most number of units across the
widest range of market segments in Cebu. Our the expertise to undertake
master planned estates are also the preferred
locations for traditional office, BPO office and both pocket-sized and
retail space leasing.
large-scale projects or
Combining leading-edge product innovation with
prudent and effective risk management practices, investments that balance the
we have the ability to manage a complex
portfolio of projects and developments and are need for sustained earnings
able to thrive and prosper through the cyclical
nature of the industry. growth and long-term
In Cebu, CHI is synonymous with quality and value creation.
prestige and is the most widely-trusted brand
in the local real estate industry. CHI, with Ayala
Land, maintains market leadership in all of our
product lines, with 22.8 percent share in the
residential vertical market and 17 percent share P2.2 billion as a result of a strategic balance of
in the BPO office leasing market. Our Company revenues from both our leasing and real estate
is in a very good place, and is positioned well sales businesses.
for continued growth. Our brand is very strong,
our financial position is healthy with a variety
Our consolidated assets grew 27 percent,
of funding sources available and we have the
reaching P16.4 billion at yearend. Our cash and
manpower and the expertise to undertake
cash equivalents and short-term investments
both pocket-sized and large-scale projects or
stood at P3.1 billion with a current ratio of 1.63:1
investments that balance the need for sustained
as of such date. Commercial debt-to-equity ratio
earnings growth and long-term value creation.
was at 1.23:1, while total debt-to-equity ratio was
at 1.86:1.
Maintain a strong balance sheet
Total capital expenditure of P2.29 billion was
We ended 2014 with a net income of P530.9 spent for the following: 39 percent for office
million, up by six percent versus that of the building, while 38 percent for investment in
previous year-- the highest yet recorded since subsidiaries and affiliates, nine percent for
1988. This is the result of the strong performance residential development, six percent each for
across all of our business lines including retail and commercial center improvements and land
office leasing, residential lots and condominium acquisition, one percent each for corporate
units sales and other income. Our revenue rose business and commercial lot development.
to P2.3 billion, up six percent from last year’s

CHI 2014 Annual and Sustainability Report 23


Cebu Holdings, Inc. and Subsidiaries (Year Ended December 31) G4-9

2014 2013 2012 2011 2010


For the Year (in thousand pesos)

Revenues 2,293,579 2,169,510 1,633,034 1,442,701 1,521,870


Net Income 530,877 501,145 443,640 436,192 406,200
Dividend Amount 230,409 211,208 192,007 134,406 134,406

At Year-End (in thousand pesos)

Total Assets 16,384,951 12,950,353 9,749,063 7,131,313 6,038,390


Cash and Cash Equivalents 3,099,293 1,191,755 1,864,017 1,217,187 923,173
Commercial Loans 6,719,480 4,377,977 1,845,062 950,675 165,000
Stockholders’ Equity 5,466,232 5,174,518 4,942,684 4,704,483 4,415,142

Per Share (in pesos)

Earnings Per Share 0.28 0.26 0.23 0.23 0.21


(EPS)
0.12 0.11 0.10 0.07 0.07
Dividend Per Share
2.85 2.69 2.57 2.45 2.30

Financial Ratios

Current Ratio 1.63 1.21 1.43 2.42 1.84


Commercial Debt-to-Equity Ratio 1.23 0.85 0.37 0.20 0.04
Total Debt-to-Equity Ratio 1.86 1.36 0.91 0.45 0.30
ROE 9.98% 9.91% 9.20% 9.57% 9.49%
ROA 3.62% 4.42% 5.26% 6.62% 6.88%
Stock Price 5.16 5.73 4.00 2.50 2.70

24 Let’s Build for Tomorrow's Generations


23% 61%
0.54B 1.38B
We saw earnings per share increase Interest and Retail Office
from P0.26 in 2013 to P0.28 in 2014. Our Other Income Space Leasing

cash dividends were declared at P0.12


per share or a total of P230.4 million in
10%
December 2014. 0.24B
Residential Lot
and Condo Sales
Strengthen operations REVENUE
MIX
and efficiency

We continue to invest in master planned, 6%


mixed use developments to drive enhanced
0.14B
quality of life within our created spaces, Theater
and support our vision of a dynamic, Operations

vibrant Cebu. 2.29 BILLION


TOTAL REVENUES
Recurring income from retail and office
space leasing made up 60 percent
of consolidated revenues, bringing in
P1.4 billion. With the opening of our latest expansion, Ayala
Center Cebu increased its leasable space to
127,000 square meters. This new wing brought
Revenues (in thousand pesos) G4-9
in premium brands such as Zara, Tumi and Fred
Perry, as well as the four-storey anchor, Rustan’s,
2,500
complete with supermarket and three levels of
2,293,579

2,000 2,169,510 department store. The mall now has over 500
merchants and a lease out rate of 95 percent.
1,633,034
1,500 1,521,870
1,442,701
With the IT and BPO industry being one of the
1,000 drivers of Cebu’s local economy, we continue to
build up our office leasing portfolio to cater to
2010 2011 2012 2013 2014 this demand. The first three towers of the eBloc

CHI 2014 Annual and Sustainability Report 25


Tower series are host to some of the top global IT Manage risks
companies and maintain an average occupancy
of 95.3 percent for office space. We are currently
CHI’s consistently improving profitability has
the market leader in BPO office stock, with over
led to expected improvements in cash flows.
61,439 square meters of leasable space. The
Our Company holds a sizeable amount of
ongoing construction of eBloc Tower 4 at Cebu
landholdings which add to its financial flexibility,
I.T. Park and the ACC Corporate Center at Cebu
enhancing its ability to pursue expansion plans in
Business Park will bring in an additional 46,988
the future.
square meters of leasable space by the last
quarter of 2015. Apart from maintaining a conservative debt
profile, there was no incidence of unexpected
Revenue from residential land and condominium
systems breakdown nor unexpected asset
sales brought in total income of P237.3 milion,
impairments or losses. Our debt maturity profile
contributing 10 percent to the Company’s
remains above five years and we continue to hold
revenue. With our robust and committed
a high AAA credit rating. We remain within policy
operational strategy for growth, the previous year
limits for interests cover and asset mix, and we
saw four project completion turnovers.
aim for improved return on investments for our
new partnerships and key developments.
Other components of revenue include equity
in net earnings of associates, interest and other
In the past year, our material risks were well
income of P539.1 million, which is 23 percent of
managed with the appropriate mitigation
the Company’s total revenue.

Net Income (in thousand pesos) G4-9 Total Assets (in thousand pesos) G4-9

700 19,000

17,000
16,384,951
500 530,877 15,000
501, 145
443, 640
436, 192 13,000
406, 200 12,950,353

300 11,000

9,000 9,749,063

100 7,000
7,131,313

6,038,390
5,000

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

26 Let’s Build for Tomorrow's Generations


Key Figures in 2014

REVENUE COMMERCIAL DEBT STOCK PRICE

P2.3 billion P6.7 billion P5.16/share


6 up from last STOCKHOLDERS’ EQUITY
year's P2.2 Billion RETURN ON EQUITY

NET INCOME P5.5 billion 9.98%


6 increase from
P530.9 million P5.2 Billion in 2013 RETURN ON ASSETS
Highest income
recorded since 1988
EARNINGS PER SHARE
3.62%
DIVIDEND AMOUNT P0.28 CURRENT RATIOS
DIVIDEND PER SHARE
P230.4 million 1.63:1
TOTAL ASSETS P0.12 COMMERCIAL DEBT-TO-EQUITY RATIO
BOOK VALUE PER SHARE
P16.4 billion 1.23:1
CASH AND CASH EQUIVALENTS P2.85
P3.1 billion

Stockholder’s Equity (in thousand pesos) G4-9 Stock Price G4-9

6,000
6.00

5.73
5,500
5.00
5,466,232 5.16

5,000 5,174,518
4.00
4,942,684
4,704,483 4.00

4,500
3.00
4,415,142

2.70
4,000 2.50
2.00

2010 2011 2012 2013 2014


2010 2011 2012 2013 2014

CHI 2014 Annual and Sustainability Report 27


CHI Debuts on the Local Debt Market
with P5B Bonds Due in 2021
Cebu Holdings’ Maiden Bond Issuance
Receives PRS AAA Credit Rating

Cebu Holdings, Inc.’s (CHI) P5-billion initial foray into the local debt market was fully subscribed to within
its first week of offering. Through the Philippine Dealing & Exchange Corp. (PDEx) platform last June 6,
2014. The entire subscription amount of P5 billion was raised. This is well and above the P3 billion initial
target forecast by CHI. The bonds were oversubscribed 1.6 times over, reflecting high investor confidence
and commitment in the Company. Both PDEx and the Philippine Rating Services Corporation (PhilRatings)
assigned a PRS AAA credit rating, a Cebu first, to CHI’s maiden bonds due in 2021. This rating is the
highest given which indicates minimal credit risk.

The bond issuance will help fund CHI’s projects and continuing landbanking initiatives.

28 Let’s Build for Tomorrow's Generations


measures undertaken. We are resolute in Subsidiary CPVDC is also set to embark on a
achieving high customer satisfaction rating goals. major redevelopment of a central lot in Cebu
In 2014, customer satisfaction scores improved I.T. Park. This will unlock land values, as well as
across our business units where we achieved an complement the I.T. Park’s growing population
average of 8.7 out of 10 rating, higher than the with a regional mall, hotel and additional
previous year’s 8.3 rating. office buildings.

Our Company is also set to expand in key cities


Have a sound strategy
in Metro Cebu, capitalizing on their strengths and
moving forward supporting their potential for growth.

We continue to rely on our sustainability All these are calibrated to capitalize on the
framework in growing the business. We have expanding market, diversify our product lines and
refined our strategy to drive three focus areas grow the business for you, our shareholders.
that will complement and boost our economic,
environmental and social capitals in the We will continue to deliver solid results from
years ahead. As we enter into a management our developments, further strengthen our
transitional phase for 2015, we will continue leasing capabilities, engage in smart, sound
to rely on strong corporate governance to new venture partnerships, and continue to trust
intensify delivery of operational and financial in our adaptability to meet changing market
performance. We also continue to look forward conditions for the benefit of our business and all
to enabling partnerships beyond those with our our shareholders.
parent company.

Moving forward, we will be launching additional


residential towers to add to our inventory of
units. We also plan to introduce an innovative
concept which capitalizes on a growing demand
in the office leasing business.

Enrique B. Manuel, Jr.


Chief Finance Officer

CHI 2014 Annual and Sustainability Report 29


03.
Build
to last.

CHI is stamped with 26 years of building


self-sufficient communities. This track record
guides us in setting the pace of development
as we expand to new geographies and create
more products of enduring value, that will
last even beyond our generation.

Let's build for tomorrow's generations


32 Let’s Build for Tomorrow's Generations
The magnitude of CHI’s
projects makes CHI
the leading real estate
company in Cebu.

The Company was established at the time when Cebu was


aggressively positioning to become a major investment destination in
the Philippines. CHI’s entry into Cebu was both timely and beneficial
for an island-province and city that is strategically located at the
crossroads of commerce and trade in the Visayas and Mindanao.
The magnitude of CHI’s projects makes CHI the leading real estate company in Cebu. The Company
has great faith in the growth and progress of Cebu and it also has served to catalyze the area’s urban
development. CHI has set the standard for high-growth commercial zones in Cebu City, and has
influenced the appreciation of land values through world-class development.

Core Values G4-56 Mission and Vision Statement G4-56, E.3

Focus on Customer We shall be the premier real estate company in Cebu


Bias for Results creating and providing market-driven products of enduring
Entrepreneurial Drive value through a customer-focused and highly-motivated
Teamwork
team of professionals.
Concern for People
Empowerment of People
We ensure the trust and confidence of our shareholders with
Pursuit of Excellence
sustainable and profitable growth while improving the quality
Love of God
Responsibility to the of life of the communities in the markets which we serve
Community with honor and integrity.
Enhancement of
Quality of Life

CHI 2014 Annual and Sustainability Report 33


Ownership Structure

Cebu Holdings, Inc. (CHI) is a publicly-listed Company engaged in real property ownership, development,
marketing and management.

The Company was registered with the Securities and Exchange Commission (SEC) on December 9, 1988,
with an authorized capitalization of P1.0 billion. As of December 31, 2014, the Company’s capitalization is
at P3.0 billion. G4-7, G4-17, D.1

49.80 - Ayala Land, Inc.

17.29 - Aberdeen Asset Management Asia Ltd.

11.52 - First Metro Investment Corp.

OWNERSHIP
STRUCTURE 10.7 5 - Aberdeen International Fund Managers Ltd.

5.07 - Government Service Insurance System

3.99 - PCD Nominee Corp. (Filipino)

1.58 - Others

Membership in Associations G4-16 Awards and Recognitions 2014


BUSINESS AND MANAGEMENT CHI maiden bonds issuance received AAA credit rating from
the PDEx and the Philippine Rating Services Corporation
Ayala Business Club Cebu, Inc. (PhilRatings) (April 30,2014)
Cebu Business Park and Neighboring Barangays Altruistic
CHI as a finalist in the 3rd Philippine Stock Exchange (PSE)
Alliance, Inc. Bell Awards, the highest distinction given to listed companies
Cebu Business Park Association, Inc. with ‘world-class corporate governance standards and
practices’ (November 10, 2014)
Cebu Chamber of Commerce and Industry
Chamber of Real Estate and Builders’ Association, Inc. CHI was given a special recognition at the first Sustainable
Business Awards (SBA) Philippines for best practices in the
Geoplan Cebu Foundation, Inc. workforce category (July 14, 2014)
International Council of Shopping Centers
Cebu I T Park – Special Citation for its vision, development
Management Association of the Philippines and continued support to Cebu’s emerging Information
Philippine Quality and Productivity Movement – Visayas and Communication Technology and Business Process
Management industry during the Grand Chamber Awards
Philippine Retailers Association (June 28, 2014)
Philippine Chamber of Commerce and Industry
Ayala Center Cebu’s ‘Opening Doors, Breaking Barriers’
Financial Executives Institute of Cebu, Inc. PWD awards finalist (Cause-related Marketing Category) –
Asia Pacific Shopping Center Awards, Singapore (November
SUSTAINABILITY REPORTING 11, 2014)
Global Reporting Initiative Organizational Stakeholder Ayala Center Cebu as the ‘Best Lifestyle Mall’ and The
Terraces as the ‘Best Park’ in the Best of Cebu 2014
ENVIRONMENTAL AND ECOSYSTEMS CONSERVATION recognized by Sun Star Cebu

Philippine Business for the Environment Ayala Center Cebu received the ‘Kasangga Award’ as an
Cebu Uniting for Sustainable Water Foundation Interruptible Load Program (ILP) Partner conferred by the
Visayan Electric Company (June 5, 2014)

EDUCATION AND TRANSFORMATIONAL AWARENESS Ayala Group of Companies (in Cebu) – ‘Tribute of Highest
Cebu Educational Development Foundation for Distinction’ Tourism and Investors’ Night, Cebu Business
Month, June 20, 2014.
Information Technology

34
Subsidiaries and Affiliates

100
CPVDC
76 CLCI
CEBU LEISURE COMPANY, INC.

CEBU PROPERTY VENTURES


AND DEVELOPMENT
CORPORATION
1994 - Formed as a joint-
venture company of Fun 35
Corporation and CHI
1997 - Fun Corporation
SOLINEA, INC.
Owner and developer of
Cebu I.T. Park sold its shares to CHI A partnership between CHI
1990 - Registered with the and Alveo Land Corporation
SEC on August 2 Owner and developer
of Solinea and BPI Cebu

100 37 Corporate Center at Cebu

AiO CIHCI Business Park

ASIAN i-OFFICE CEBU INSULAR HOTEL


PROPERTIES, INC. COMPANY, INC.

Initially a partnership between


1995 - Incorporated on April 6 100
CPVDC and Ayala Land, Inc.
A special purpose vehicle
A partnership between CHI
and AyalaLand Hotels and CBPTMI
Resorts Corp. CEBU BUSINESS PARK
that engages in real estate THEATERS MANAGEMENT
development Owner and developer of
COMPANY, INC.
Cebu City Marriott Hotel
Fully acquired by CPVDC in
April 2013 Registered with the
SEC to engage in all

55 aspects of the theatrical


and cinematographic

10 TPEPI entertainment business,


including theater
CDPEI TAFT PUNTA ENGAÑO
PROPERTY, INC. management and other
CEBU DISTRICT PROPERTY related undertakings
ENTERPRISE, INC. 2013 - Formed as a joint-
venture company with Taft
Formed as a joint venture Property Development Corp.
company with Ayala
Land, Inc., CPVDC and
AboitizLand to develop
to develop a 13-hectare
property in Mactan.
SPI
35
a 15-hectare property in SOUTHPORTAL
Subangdaku, Mandaue PROPERTIES, INC.
City, Cebu

CBDI
30 Formed as a joint venture
company with Ayala Land,
Inc. for the development

ASPI
35 CENTRAL BLOCK DEVELOPERS, INC.

Formed as a joint venture


of Alcove Residences (Park
Point Residences Sequel)

AMAIA SOUTHERN company with Ayala Land, Inc.


PROPERTIES, INC. and CPVDC for the Cebu I.T. Park
Superblock Development
Partnership between CHI
and Amaia Land, Inc. for the
development of Amaia Steps in
Mandaue City, Cebu
Capitalizing on the
opportunities presented PIT-OS
PO

After more than two decades in business, we have


aggressively capitalized on the opportunities presented
CONSOLACION

by a rapidly expanding Cebu market. With our expansion


projects, we continue to make our Company a sustainable
investment in the long haul.
TALAMBAN

BUSAY

CEBU CITY CANSAGA

NIVEL HILS
BANILAD AMAIA
STEPS
Mandaue PAKNAAN
MA
ND
AU
E CI
CEBU I.T. TY

PARK MANDAUE
GUADALUPE PROJECT
Subangdaku
CEBU
BUSINESS
PARK
TA
RRE MACTAN
CA INTERNATIONAL
AIRPORT
OSM
EÑA

CALAMBA
BLV

LABA
D

NGO
N

MACTAN
MAMBALING ISLAND

36
OBLACION

AMARA
Liloan, Cebu
OUR BUSINESS G4-4, G4-8, G4-9, G4-13

LILOAN
1 Strategic Land Management

2 Real Estate Development

3 Real Estate Business


- Commercial land sales
- Residential subdivision/condominium sales

Commercial Business
4 Operations and Management
- Retail space lease
- Office space lease
O

G
EN

MACTAN 5 Hotel Development and Operations


TA
N
PU

PROJECT - via affiliate Cebu Insular Hotel Co., Inc. (CIHCI)


Punta Engaño

6 Proprietary Sports Club Shares Sales

37
N
TA
AN
AB

NEW
POPE JOHN P.
C

CARD
XXIII SEMINARY

E RA
INA
LR
OSA
LES
N
N TA

AVE
BA
CA
P.
POCKET

NU
T
ES
QU
RO

E
SAN GREENS
ACC Corporate Center ST
N IÑO
Construction accomplishment: SAN
TO

39.11% as of December 2014 D


OA
ORR D
J
UI

A
O
SIQ

YR
E CEBU

NA
U
EN HOLDINGS

PA
AV
LUZ AO CENTER PO
AN CEBU CITY
ND GR
MI MARRIOTT
AYALA LIFE- HOTEL CITY SPORTS
FGU CENTER CLUB CEBU
AD
RO
BIL
IR AN 1016
RESIDENCES

P
O
THE TERRACES LO
Ayala Center Cebu AR
M
SA

CARD
AR
CH

IN A
AYALA
B
ISH

LR
CENTER
OP

O
CEBU
RE

SA
Y

LE
ES

PARK POINT

S
AV

ACC

AV
RESIDENCES N
E

E
UE
NU

CORPORATE
E

CENTER

PUV
PARKLANE
HOTEL TERMINAL SOLINEA
(CYAN)
UE

KAMAGONG
EN

MANDARIN
BO

HOTEL AV SOLINEA
HO

N
ZO (TURQUOISE)
L

QUEST HOTEL U
L
AV
E NU

SOLINEA
E

(LAZULI)
KAMPUTHAW

MOLAVE ST BPI
CORPORATE
NEGROS
TUNE HOTEL
CENTER ROAD
N. ESARIO STREET

POCKET
GREENS
TOJONG ST

MCCREW VILLE ROAD

BPI CEBU CORPORATE ACENTER


CACIA ST

Start of construction

ASILO DE LA
MILAGROSA
GOLDEN PEAK
HOTEL & SUITES

CEBU BUSINESS PARK


AVELINO MORALE
S ST
ND
OU

38
MP
O

S C
ZALE
GON
INA ST
C. BORCES

M. BORCES ST
H. BORGONIA ST
F. ARCILLA ST
Legend:
IN ST
JOAQU
H. JOAN
CA M commercial
OTE
S ROA
D

PARK Sedona Parc office


D
ÑA R
TOWER Construction accomplishment: ESCA

ONE residential
99.50% as of December 2014
SEDONA
PARC
retail
OCKET PARK
REENS TOWER
TWO
M

C
A
TA

ST
N

M. J.
OP
LEYTE LO

CUE
NCO
1016 Residences AV
EN
UE
Construction accomplishment:
OUR MOTHER OF PERPETUAL HELP

SAN ANTONIO

99.2% as of December 2014


SAN ROQUE ST

HIPODROMO
LAPU-LAPU ST

ST PAUL ROAD

FAITHFUL ST

C. MINA ST JOHN STREET


NAZARETH ST

Park Point Residences


Construction accomplishment:
HIPO
DR OMO OVAL RD
46.77% as of December 2014

SOR
SO GON R
TUGKARAN OA D
NURSERY

BANTAYAN ROAD
CARRETA

E
E NU
SORSOGON ROAD
Solinea 1 (Cyan) AV
OM IL
X
Construction MA accomplishment:
IMU

R AL
36.95% E
N as of December 2014
SA

GE
VE
NU
E

COLEGIO DE LA
Solinea 2 (Turquoise)
IMMACULADA CONCEPCION Construction accomplishment:
GORORDO AVENUE 16.23% as of December 2014

Solinea 3 (Lazuli)
Start of construction
G
EN
EC
H
AV
EZ
ST

39
CEBU BUSINESS PARK

Promoting business and


commercial growth in
the region

The park synthesizes the home-work-leisure dynamics, reshaping


the urban landscape of Cebu with the vibrant mix of retail, office,
living and residential developments, setting the pace for a more
sustainable living.

Cebu Business Park has seen 32 projects completed and 12


under construction continuing the build up of innovative spaces
positioned for growth.
40
41
AYALA CENTER CEBU

Setting a new standard in


Cebu’s retail industry

Continuing to complement Cebu’s vibrant community,


Ayala Center Cebu’s four level retail expansion adding
36,500 square meters of gross leasable area is now 95
percent leased out. The expansion brings in premium foreign
brands further increasing the options of merchandise mix for
the discerning Cebuano market and reinforcing Ayala Center
Cebu as the icon of shopping and lifestyle.
42
43

Best of Cebu
Awards
Ayala Center Cebu was named Cebu's Best
Lifestyle Mall in Sun Star's Best of Cebu 2014
Awards. The mall likewise received citations as
the Best Customer Restrooms, Best Jeepney
Terminal and Best Park.

The six-month selection process by editors of


Sun Star included incognito visits to nominated
establishments and deliberations on which ones
fulfilled a particular award or title.

The recognitions are a validation of CHI’s high


standard service delivery, giving shoppers the
widest range of choices and convenience,
the best planned facilities and unparalleled
customer service.

Rustan’s Supermarket at Ayala Center Cebu opened on


August 9, 2014. The event was lead by CHI’s Aniceto
V. Bisnar, Jr. and Rustan Super Center, Inc. CEO and
President, Donnie V. Tantoco.

43
AYALA LAND PREMIER: 1016 RESIDENCES, PARK POINT RESIDENCES AND AMARA

Offering exclusive
and distinctive living
experiences

1016 Residences, which is directly connected to urban resort City


Sports Club Cebu, gives residents a range of facilities and amenities
for shopping, recreation and business. This 109-unit tower neared
completion by the end of 2014.

Park Point Residences is built on top of Ayala Center Cebu,


with private access to the city's premier dining, shopping, and
entertainment destinations. It posted 49.5 percent completion
by yearend.
44
Amara, located in the northern town of Liloan in Cebu, provides
the ideal resort-inspired lifestyle where residents can nurture
relationships with family, neighbors and friends. Percentage
completion as of the end of 2014 stood at 95.6 percent for The
Parks at Amara.

45
Solinea Lazuli
and BPI Cebu
Corporate Center
groundbreaking
ceremonies
Solinea Inc. marked another important milestone
with the groundbreaking ceremony of its two
signature projects in Cebu: Solinea Lazuli and the
BPI Cebu Corporate Center.

This event formally strengthens and continues


the fulfillment of Solinea’s distinct city resort
living experience with the much-awaited third
residential tower, Lazuli. The BPI Cebu Corporate
Center, on the other hand, is Alveo‘s first
office development in Cebu, introducing next-
level, innovative workscapes as the Southern
Philippine’s number one business address.

46
ALVEO: SEDONA PARC AND SOLINEA

Introducing vibrant
and cosmopolitan
communities

Sedona Parc is a stylish residential condominium of only 114 units


that will offer an upscale lifestyle set in a tranquil and highly-
accessible parkside location. This innovative residential tower
neared completion by the end of 2014.

Solinea is CHI and Alveo’s first multi-tower development in Cebu


City, master planned and envisioned to offer city resort living.
Located across Ayala Center Cebu, this vibrant community broke
ground for its third tower in 2014.
47
CITY SPORTS CLUB CEBU

The urban
recreational and
sports resort

48
The urban recreational and sports resort located at the
heart of the metropolis offers a diverse range of amenities
for leisure, dining, health and fitness. Stepping up to
modernize its facilities, the club underwent a multi-million
peso renovation which started in 2013 to further enhance
its multitude of services to offer to club users.
49
50
CEBU CITY MARRIOTT HOTEL

Business and
leisure for the
discerning traveler
Located within the city’s premier business and lifestyle district,
Cebu City Marriott Hotel offers a quality experience for its guests.
The 299-room business hotel is beside Ayala Center Cebu offering
shopping, recreation and leisure activities at their doorstep.

51
RIVE
UN D
EN S
D
GOL
GOV. M
. CUEN
CO AV
E NUE CEBU COUNTRY CLUB

eBLOC
TOWER 4 eBLOC
J. M TOWER 1
.D
EL
M AR
S TRE POCKET
AVIDA TOWER ET
RIALA 1 GREENS

AVIDA TOWER
RIALA 2

AVIDA TOWER
Avida Tower Riala 1 RIALA 3
Construction accomplishment:

T
18.9% as of December 2014

R EE
ST
IA
Avida Tower Riala 2
ST

D
D

IN
2N

ET
Construction accomplishment:
ST

E
TR
T
1S

16.09% as of DecemberSA2014

S
N MIG
U

LA
EL RD

Avida Tower Riala 3 VIL


CENTRAL BLOC

T
EZ

EE
IN

Grand Launch:

TR
AS
ST
EG
A
July 12, 2014 W.

IG
OM G EO

DR
NZ

PA
ON
ST
RE
CAMP LAPU-LAPU E T
CENTRAL COMMAND AVIDA
TOWER 1

AVIDA eBLOC
Avida Tower 1 TOWER 2
TOWER 2
Turnover: August, 2014

eBLOC
TOWER 3

Avida Tower 2
Construction accomplishment:
93.7% as of December 2014

LA
GU
AR
DIA

CEBU IT PARK
ST
T
EX
DIA
AR

ST
GU

CE
LA

EN
WR
ST
ON

LA

52
NS

ST
HE
EP
ST
GE
N.
L
IM
ST
eBloc Tower 4

ST
S
O
NT
Construction accomplishment:

SA
D
BA
23.30% as of December 2014

J. A
DRA
HIN

INTERNATIONAL
BAU

PHARMACEUTICALS, INC.

GO
V. M
. CU
ENC
O AVE
CEBU MEDICAL NU
SOCIETY E

E
Central Bloc E NU
AV
SAMANTABHADRA NA
Site preparation INSTITUTE NL
U
A
JU

J.
M.
D EL
M AR
ST TESDA
R EE REGION VII
T
BUREAU OF
INTERNAL REVENUE

POCKET
GREENS
ET
RE
ST

THE WALK
AD

WATERFRONT
AB

CEBU

POCKET
GREENS
W.
G EO
N ZO
N
E

ST
RIV

RE
ET
D
AS

Legend:
LIN
SA

commercial

UC
MA
office
ST
ISE

residential
T
ES
O
QU

D
JA
R
ST

TO
ST

ST
FIR

retail
LD

METROSPORTS
ERA
EM

ST
ND
MO
A
DI

ST
RE
HI
PP

53
SA
CEBU I.T. PARK

Strengthening the
investment climate
in Cebu

Catering to leading global brands of the IT/BPO industry,


the foremost technological hub’s current expansion
of residential and leasing spaces with its mixed use
strategy catapults Cebu as the global gateway and prime
investment area. Cebu I.T. Park continues to sustain
Cebu’s robust growth with 20 buildings completed and
five more under construction.
54
55
56
Cebu I.T. Park Awarded for
Boosting ICT/BPM Industry

In its 2014 Grand Chamber Awards, the In a separate event, the Ayala group of
Cebu Chamber of Commerce and Industry companies, was lauded with the “Tribute of
gave a Special Citation to Cebu I.T. Park Highest Distinction” award during the Tourism
for its vision, development and continued and Investors Night of the Cebu Business Month.
support to Cebu’s emerging information and
communication technology and business process Signed by heads of the Cebu Chamber of
management industry. Commerce and Industry, the Province of Cebu,
and the City of Cebu, the award recognizes
The PEZA-accredited Cebu I.T. Park is home the Ayala group for its investment in Cebu
to over 70 percent of Cebu’s business process which could well be over P100 billion in
outsourcing (BPO) industry. It holds the largest economic value.
facilities of JP Morgan Chase and Co., NCR
Philippines, Accenture, Teletech IBM, Microsoft, “The Ayala group’s investment in the Cebu
Convergys and Aegis PeopleSupport and NEC Business Park and the Cebu I.T. Park are the
Telecom Software Phils, Inc. outside of Manila. most important components that determined
Ayala’s award of Highest Distinction. These two
To cater to the still growing workforce of over locations are hosting quite a number of foreign
35,000, the two-hectare superblock of Cebu I. T. direct investors, who are involved in a number
Park is set for redevelopment. The leasing portfolio of business ventures and endeavors, and the
will expand to include a regional mall, office most recent of which, are the BPOs and BPMs,”
buildings and a hotel, reinforcing Cebu I.T. Park as said Sabino Dapat, Chair of the Tourism and
the top BPO destination in the region. Investment Promotion Committee of the Cebu
Business Month 2014.
The panel of judges was led by Department of
Trade and Industry VII Director Asteria Caberte.

Cebu Holdings Inc. President (2014) Francis Monera receives the Tribute of Highest Distinction bestowed to the Ayala Group of Companies for its
contribution to Cebu’s development. The award was given by the Cebu Chamber of Commerce and Industry (CCCI). (L-R) Cebu City Mayor Michael
Rama, Cebu Governor Hilario Davide III, CCCI President Ma. Teresa Chan and Cebu Business Month Chairman Felix Tiukinhoy.

57
eBLOC TOWERS

Addressing the
continuing demand
for office space

The accelerated growth of the IT/BPO industry has seen the


rising demand for more office spaces. The modern offices of
the eBloc Towers with its retail provision at the ground floor
accentuate the 24/7 community of Cebu I.T. Park. In 2014,
eBloc Tower 3 was completed while eBloc Tower 4 was at 23
percent completion at yearend.
58
59
AVIDA TOWERS CEBU, AVIDA TOWERS RIALA, AMAIA STEPS MANDAUE

Comfort and
function in a secure
investment

Located within the bustling Cebu I.T. Park community, Avida


Towers Cebu was a best seller when it was first introduced
to the Cebuano market.

With the success of Avida Towers Cebu, Avida Towers Riala


was launched to cater to the demand for affordable homes
in the heart of the city. This multi-tower development offers
the convenience of integrated living right in the city's most
dynamic lifestyle district. The development is now on its
third tower.

Amaia Steps Mandaue is the first mid-rise project of Amaia


in Cebu province. Catering to the broad affordable market
segment, this development offers the hardworking family a
secure place to call home.
60
61
62
CENTRAL BLOC

A refreshing new
hub for business
and leisure

Central Bloc, which will rise at


the center of Cebu I.T. Park,
features two BPO office towers, a
500-store Ayala Mall, and a 214-
room Seda hotel. Connecting
Central Bloc to The Walk is a
one-storey retail component
complemented by open space,
further enhancing the work and
lifestyle experience of the city’s
young business professionals.
63
Expanding to new
geographies
MAGELLAN BAY

MACTAN
PROJECT
MÖVENPICK HOTEL
MACTAN ISLAND CEBU

AD
RO
ÑO
GA
EN
N TA
PU

MACTAN
SHRINE

SHANGRI-LA'S MACTAN
RESORT AND SPA

CHI forged strong partnerships for its continuing expansion with new large-scale,
integrated, master planned mixed-use districts in key cities in Metro Cebu.

Our 13-hectare proposed development in Mactan, is a joint venture with Taft Property
Venture Development Corporation. Capitalizing on Cebu’s booming tourism industry, it
is envisioned to become the resort and leisure hotel, retail and residential development
of choice.
SUBANGDAKU
ELEMENTARY

VE
SCHOOL

LA
SQ
U
EZ
ST
RE
TE

M.
LOG
T

AL
E PEREZ STR
RE E.O.

ARTA
BA
EET
ST

NO
A

A
EN

AVENUE
JA
Z
DEPARTMENT OF PE
AGRICULTURE - CEBU LO

BUREAU OF
INTERNAL REVENUE

INNODATA KNOWLEDGE
SERVICES INCORPORATED MANDAUE
PROJECT NORTH BUS
TERMINAL

UE
EN
AV

UE
A
RT

EN
A

AV
OG

N O
.L

UA
M

O
F. CAB
AHU
GS
T.

UE
EN
AV
G
L LI
Z UE
E.
F.

RD
E VA
UL
BO
KA

A
EN in Subangdaku, Mandaue City. This
O

This is a 15-hectare city center project located


H

M
SI

OS
UN
G

O
GI commercial spaces having retail and
ST

will feature residential developments Sand


RE

ER
ET

CEBU PORT AUTHORITY


office components.

CHI has a 10 percent stake in this partnership with Ayala Land, Inc., and AboitizLand, Inc.

CEBU DAILY NEWS


CEBU INTERNATIONAL
MACTAN CHANNEL
PORT
04.
Take
responsibility.

We operate under the principles of fairness,


transparency, and integrity. As a publicly-
listed company since 1994, CHI has adhered
to the rules and regulations of the Securities
and Exchange Commission and Philippine
Stock Exchange. To further strengthen our
corporate governance, we have adopted
internationally-recognized best practices.

Let's build for tomorrow's generations


Good corporate
governance is key to
CHI’s development
and sustainability.
Solid corporate governance, unwavering commitment to
sustainability, strong business ethics, and risk management
are intrinsic to Cebu Holdings, Inc. (CHI). These pillars
translate to accountability, transparency, determination,
and sound management that are core to CHI’s
corporate responsibility.

CHI is a publicly listed company with the directors holding no more than two percent of
Philippine Stock Exchange (PSE) since 1994. the outstanding capital stock.
CHI is compliant to all the rules and regulations
of the PSE and the Securities and Exchange Each director is elected annually. As a rule, any
Commission (SEC), and in applicable rules and former partner or employee of CHI’s current
regulations relating to the development of the external auditor is excluded from election.
Philippine capital market. Rule exclusion applies only in cases of elapsed
termination of service reaching a minimum of
two years.
Composition G4-40, E.4, E.12
There is a balanced and diverse mix of
There are nine members of the Board of
competencies and experiences in business,
Directors and three are independent. CHI is
finance and law among the board. The profile
fully compliant to the SEC and PSE governance
of each director is found on pages 188 of 191
standards of a minimum of two independent
this Report.

CHI 2014 Annual and Sustainability Report 69


GOVERNANCE STRUCTURE G4-34

BOARD OF EXECUTIVE COMMITTEE


DIRECTORS
COMPENSATION COMMITTEE

Internal
AUDIT AND RISK COMMITTEE
Audit
RISK COMMITTEE
PRESIDENT
NOMINATION COMMITTEE

SUSTAINABILITY COMMITTEE

CHIEF FINANCE OFFICER


Compliance Officer

MANAGEMENT COMMITTEE

Business Commercial Corporate


Finance
Development Business Services
Division
Group Group Group

Land Acquisition Leasing Operations Control and Security


Analysis
Strategic Land Marketing Human Resources
Management Accounting and Admin
Project Support /
Project Development Technical Asset Treasury / Funds
Corporate
Management Management
Communication
Office Leasing and Corporate
Operations Social
Responsibility

Customer Relations
Information Systems
Project Support /
Technical Asset
Management

70 Let’s Build for Tomorrow's Generations


CORPORATE GOVERNANCE

The revised manual of Corporate Governance


Independent Directors G4-40, E.12
effective July 21, 2014 stipulates the
qualifications, appointment and election of
CHI has three independent directors – independent directors.
Fr. Roderick C. Salazar, Jr., SVD, Enrique L.
Benedicto and Pampio A. Abarintos.
Persons appointed as Chairman “Emeritus”,
“Ex-Officio” Directors/Officers or Members of
We comply with the rules of the SEC with
any Executive/Advisory Board, or otherwise
regard to the nomination and election of an
appointed in a capacity to assist the Board in
independent director.
the performance of its duties shall be subject to
a one (1) year “cooling-off period” prior to his
We define an independent director as an
qualification as an independent director.
individual (1) who can and does exercise
independent judgment, (2) with nothing to
affect his independence from the Company or Chairman
management nor interfere with the exercise
of independent judgment in carrying out The chairman of the board has the responsibility
the responsibilities of a director, and (3) of ensuring that the Board of Directors exercises
holding no interests or no relations within the strong oversight over the Company and
Company by blood (within the second degree its management.
of consanguinity) or marriage to significant
stockholders, the CEO or any member of our top
Antonino T. Aquino served as chairman of the
management team.
board, assuming the position in 2009. He was
replaced by Bernard Vincent O. Dy on August
We also excluded from the list of independent
15, 2014. It is within the Chairman’s discretionary
directors those who may have served the
duties to level governance issues raised by non-
company as an officer or significant service
executive independent directors. Reputational
provider, unless two years have elapsed since the
risk management also falls under his jurisdiction.
termination of that service.

In order to ensure that adequate time and It is CHI policy that the Chairman should not be
attention is given to the fulfillment of each an immediate past president. E.6
director’s duties, CHI imposes a limit of five board
seats in any group of publicly-listed companies.

Independent directors may serve for a period of


not more than nine consecutive years.

CHI 2014 Annual and Sustainability Report 71


President authority within CHI’s management structure.
Collectively, the Board of Directors is responsible
Francis O. Monera held the position of president, for the success of the Company and ensures that
assuming the position in 2007 until December 31, CHI’s obligations to its stakeholders are met.
2014. He was accountable for the Corporation’s
organizational and procedural controls including The duties and responsibilities of the Board
internal control mechanisms. He had general of Directors include, but are not limited to
supervision of the business, affairs of the the following:
Corporation extending to employees and officers.
He had overseen the effective implementation • Approval and final adoption of the
of all orders and resolutions of the strategies and corporate strategy, with pro-active
policies promulgated by the Board of Directors. oversight of strategy execution;
Francis O. Monera was replaced by Aniceto V.
• Formulation and adoption of a corporate
Bisnar, Jr. effective January 1, 2015.
policy, starting with a policy related to
corporate governance and oversight of
The clear delineation of Board and Executive
strategy execution;
responsibilities within the governance structure
ensures balance, accountability and enhanced • Performance monitoring, which covers
independent decision-making. The duties and financial and non-financial performance as
responsibilities of the Chairman of the Board and well as oversight of risk management;
the President are complementary.
• Setting up of an accountability system,
which includes provision for rewards,
Responsibilities of the Board incentives and penalties; and

and Processes G4-34, G4-35, G4-36, G4-42, G4-45, G4-46 • Promotion of a culture of ethics, social
responsibility and good governance.
CHI has adopted a Code of Corporate
CHI’s Board of Directors adopts clear and specific
Governance as mandated by the SEC. Specific
guidelines on internal Board processes, and
roles, duties and responsibilities of the Board
in particular, the types of decisions requiring
of Directors are clearly defined and aligned to
Board approval.
relevant Philippine laws, rules and regulations.

Included in the Company’s Board protocol are


Key Roles and Responsibilities policies concerning the skills and competencies
of the Board of Directors. These policies include:
Overall stewardship of the Company rests on
the Board of Directors, the highest governing

72 Let’s Build for Tomorrow's Generations


Composition of the Board as of December 31, 2014 G4-38, E.4

DIRECTOR'S NAME TYPE PRINCIPAL NOMINATOR DATE FIRST DATE LAST ELECTED WHEN NUMBER
aaaa aaaa IN THE LAST ELECTED ELECTED OF YEARS
ELECTION SERVED AS
DIRECTOR

BERNARD NED Ayala Land, Nomination August 15, August 15, Board Meeting new
VINCENT O. DY Inc. Committee 2014 2 2014
ANTONINO T. NED Ayala Land, Nomination April 2009 2 April 2014 Annual 5
AQUINO Inc. Committee Stockholders'
Meeting
FRANCIS O. ED Ayala Land, Nomination April 2006 3 April 2014 Annual 8
MONERA Inc. Committe Stockholders'
Meeting
ANICETO V. ED Ayala Land, Nomination January 1, January 1, Board Meeting new
BISNAR, JR. Inc. Committe 2015 3 2015 - Nov. 11, 2014

EMILIO J. NED Ayala Land, Nomination April 2008 April 2014 Annual 6
TUMBOCON Inc. Committe Stockholders'
Meeting

JAIME E. NED Ayala Land, Nomination April 2008 April 2014 Annual 6
YSMAEL Inc. Committe Stockholders'
Meeting
MA. THERESA M. NED BPI Capital Nomination July 2012 April 2014 Board 2
JAVIER Corp. - Committe Meeting
AMTG
ANTONIO S. NED First Metro Nomination November April 2014 Annual 21
ABACAN, JR. Investment Committe 1993 Stockholders'
Corp. Meeting

FR. RODERICK C. ID N/A Nomination April 2005 April 2014 Annual 9


SALAZAR, JR., SVD Committe Stockholders'
Meeting
ENRIQUE L. ID N/A Nomination April 2003 April 2014 Annual 11
BENEDICTO Committe Stockholders'
Meeting

HERNANDO O. ID N/A Nomination April 2006 1 April 2014 Annual 8


STREEGAN Committe Stockholders'
Meeting

PAMPIO A. ID N/A Nomination April 2014 1 April 2014 Annual new


ABARINTOS Committee Stockholders'
Meeting

1
Pampio A. Abarintos replaced Mr. Hernando O. Streegan effective April 8, 2014.
2
Bernard Vincent O. Dy replaced Mr. Antonino T. Aquino effective August 15, 2014.
3
Aniceto V. Bisnar, Jr. replaced Francis O. Monera effective January 1, 2015.

CHI 2014 Annual and Sustainability Report 73


THE BOARD OF DIRECTORS

(from left to right)

Jaime E. Ysmael
Filipino, 53, has served as Director of CHI
since April 29, 2008. He has been the
Treasurer of CHI since August 2014.

Antonio S. Abacan, Jr.


Filipino, 71, has served as Director of CHI since
November 1993. Concurrently, he is the Vice
Chairman of Metrobank Group of Companies.

Ma. Theresa M. Javier


Filipino, 44, has served as a Director of CHI
since July 16, 2012. She is a Director of
CPVDC, a publicly listed company.

Bernard Vincent O. Dy Emilio J. Tumbocon


Filipino, 51, has been the Chairman of the Board of Directors Filipino, 58, has served as director of CHI
of CHI since August 2014. He is the President and Chief since April 29, 2008. He is a Senior Vice-
Executive Officer of Ayala Land, Inc. and Chairman of the President at Ayala Land, Inc., and a member
Board of Directors of CPVDC. of its Management Committee.

74 The Board of Directors’ Profile is found in pages 188 - 191 of this Report.
Aniceto V. Bisnar, Jr.
Filipino, 51, has been the President of CHI since
January 1, 2015. He is also the President of
CPVDC, a publicly listed company. Concurrently,
he is the Vice President and Chief Operating
Officer of the Visayas-Mindanao Group of Ayala
Land, Inc. Prior to being appointed as President,
he was Executive Vice President of CHI and
CPVDC since March 17, 2014.

Francis O. Monera
Filipino, 60, served as director of CHI and
CPVDC, from April 28, 2006 until Dec. 31, 2014.
He served as President of CHI and CPVDC from
2006 to 2014. He was the Chief Operating
Officer of CHI before he was elected president of
the Company effective January 1, 2007.

(from left to right)

Enrique L. Benedicto
Filipino, 73, has served as an Independent
Director of CHI since April 25, 2003. He is
currently the Honorary Consul of Belgium.

Pampio A. Abarintos
Filipino, 71, has served as an Independent
Director of CHI since April 8, 2014.

Fr. Roderick C. Salazar Jr., SVD


Filipino, 67, has served as an Independent
Director of CHI since April 29, 2005.

75
• Ensuring that at least one of its non- CHI requires of its directors, at least 75 percent
executive directors has prior working attendance of all Board meetings. Considerate
experience in the sector or broad industry provision for electronic presence is given.
group to which the Company belongs; Individual physical attendance is required in at
• Requiring all directors to undergo an least 50 percent of the Board meetings.
orientation program on corporate
The Board undergoes a formal self-rating
governance; and
system annually. Assessments are made on both
• Encouraging and supporting its directors to individual and collective capacities. Focus is given
attend continuing education programs on to level of compliance with leading practices
corporate directorship. E.8, E.9 and principles on good governance. Areas for
improvement are determined. Independence,
The Company’s Board of Directors also approves
experience, judgment, knowledge, time
and implements our vision/mission and core
commitment, and teamwork are factored in.
values. A Board calendar is also adopted to allow E.1, E.14, E.15, E.16
for periodic revisit and review of our governance
charter and of our corporate strategy map, along Group meetings, without the presence of any
with its related performance scorecards. E.1 executive director or management representative,
are supported and arranged for all non-executive
Board Performance G4-44 directors at least once annually. E.7, E.13

Director and Senior Executive


The Board meets at least three times a year.
Dissemination of agenda, presentation materials Compensation
and items for approval are made available at least
three days prior to meeting schedule. Non-executive directors are members of the
Board of Directors who are neither officers
Information is provided by the Corporate nor consultants of the Company. Per diem
Secretary who may also serve as adviser to the remuneration consists of P40,000 for each
board of directors. Board meeting attended and P20,000 per Board
committee meeting actually attended. Stated
The passage of important decisions that remuneration of non-executive directors became
significantly impact the Company requires the effective April 28, 2006. None of the directors
presence of a quorum of the directors. The has been contracted and compensated by the
Company requires two thirds of the directors Company for services other than as a director.
to be present for determining the quorum of
the meeting.

76 Let’s Build for Tomorrow's Generations


Record of Attendance E.7

Attendance of Directors - for Board and Organizational Meetings held last February 27, April 8, August 15 and November 11, 2014
BOARD NAME OF DIRECTOR ELECTION DATE NUMBER OF NUMBER OF %
MEETINGS MEETINGS ATTENDANCE
HELD DURING ATTENDED
THE YEAR

August 15,
Chairman Bernard Vincent O. Dy 2 2 2 100%
2014

Chairman Antonino T. Aquino 2 April 8, 2014 2 2 100%

Member Francis O. Monera April 8, 2014 4 4 100%

Member Ma. Theresa M. Javier April 8, 2014 4 3 75%

Member Antonio S. Abacan, Jr. April 8, 2014 4 3 75%

Member Emilio J. Tumbocon April 8, 2014 4 4 100%

Member Jaime E. Ysmael April 8, 2014 4 4 100%

Independent Fr. Roderick C. Salazar, Jr., SVD April 8, 2014 4 4 100%

Independent Enrique L. Benedicto April 8, 2014 4 4 100%

Independent Hernando O. Streegan 1 April 22, 2013 1 1 100%

Independent Pampio A. Abarintos 1 April 8, 2014 3 3 100%

1
Pampio A. Abarintos replaced Hernando O. Streegan effective April 8, 2014.
2
Bernard Vincent O. Dy replaced Antonino T. Aquino effective August 15, 2014.

CHI 2014 Annual and Sustainability Report 77


The Board is organized into five committees. The five committees support the Board in the exercise of
its authority. It is an organized means by which Company performance may be monitored, specific goals
realized and issues addressed, including but not limited to governance.

Board Committees and Functions G4-37, G4-40, G4-46, G4-47, G4-48, E.4, E.11, E.17, E.19

ROLES ACTIVITIES CONDUCTED IN 2014

EXECUTIVE COMMITTEE

Exercises the powers and attributes of the Board Adopted resolutions pertaining to the strategic and
of Directors, and reports all resolutions adopted tactical objectives of the Company.
by this committee to the Board of Directors.

AUDIT AND RISK COMMITTEE

Oversees external audit, internal audit, financial Approved quarterly and annual audited financial
reporting and risk management through its statements, annual external and internal audit
regular quarterly and special meetings held plan, quarterly internal audit reports, quarterly risk
in 2014. management updates, improvements to Committee
and Internal Audit charter, quarterly and annual report
of the Committee to the Board of Directors.

NOMINATION COMMITTEE

Reviews and evaluates qualifications of all Considered and approved the final list of nominees for
persons nominated to positions in the Company directors for the year 2014-2015.
which require appointment by the Board.

REMUNERATION COMMITTEE

Oversees remuneration of senior management Considered and approved the 1) 2013 performance
and other key personnel. Ensures the conduct evaluation and promotion of associates, managers
of formal and transparent procedure for fixing and executives; 2) 2013 performance bonus for the
remuneration packages of corporate officers associates, managers and executives; 3) the salary
and directors. adjustments for the qualified managers and executives
for 2014.

78 Let’s Build for Tomorrow's Generations


ROLES ACTIVITIES CONDUCTED IN 2014

SUSTAINABILITY COMMITTEE

Provides assistance to the Board of Directors Through the support of the Sustainability Technical
in its responsibility to the Company’s Working Group (STWG) headed by the Corporate
stakeholders that relate to the growth in Sustainability Officer (CSO), published the Company’s
the areas of economic, environmental, and Annual and Sustainability Report based on the GRI
social performance. G4 standard; In 2014, a joint executive session of the
Sustainability and the Audit and Risk Committee of the
board revisited the Company’s sustainability framework
and strategy, management approaches, targets,
programs and initiatives. The agenda also included
materiality assessment and stakeholder engagement
process and alignment of these initiatives to the
Company’s existing quality, environment, occupational
health and safety plans and programs.

Board Committees and Memberships

EXECUTIVE AUDIT AND RISK SUSTAINABILITY COMPENSATION NOMINATION


COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE

CHAIRMAN (NED) Emilio J. (ID) Fr. Roderick (ED) Francis O. (NED) Bernard (ED) Francis O.
Tumbocon C. Salazar, Jr., Monera Vincent O. Dy 2 Monera
SVD
(NED)Antonino T.
Aquino 2
MEMBERS (NED) Bernard (ID) Enrique L. (NED) Emilio J. (ED) Francis O. (NED) Bernard
Vincent O. Dy 2 Benedicto Tumbocon Monera Vincent O. Dy 2

(NED) Antonino T. (ID) Pampio A. (ID) Pampio A. (NED) Ma. (NED) Antonino
Aquino 2 Abarintos 1 Abarintos 1 Theresa M. T. Aquino 2
Javier 3
(ED) Francis O. (ID) Hernando O. (ID) Hernando (ID) Enrique L.
Monera Streegan 1 O. Streegan 1 Benedicto

(NED) Ma. Theresa


M. Javier 3

(ED) Jaime E.
Ysmael 3
1
Pampio A. Abarintos replaced Hernando O. Streegan, effective April 8, 2014.
2
Berndard Vincent O. Dy replaced Antonino T. Aquino effective August 15, 2014.
3
Resignation of Ma. Theresa M. Javier as Treasurer(ED) of the Company effective July 14, 2014.
3
Appointment of Mr. Jaime E. Ysmael as Company Treasurer., effective July 14, 2014.

CHI 2014 Annual and Sustainability Report 79


Director and Senior Executive Compensation G4-51, G4-52

Options Outstanding
The Company does not have stock options for its directors, executives, and employees.

TOP FOUR (4) HIGHEST PAID


PROCESS CEO
MANAGEMENT OFFICERS

(1) Fixed remuneration Basic Salary Basic Salary

(2) Variable remuneration None None

(3) Per diem allowance None None


(4) Bonus Performance bonuses are given to Performance bonuses are given to
management officers annually management officers annually

(5) Stock options and other None for CHI None for CHI
financial instruments

(6) Others (specify) None to report None to report

Aggregate Remuneration

NON-EXECUTIVE DIRECTORS
REMUNERATION ITEM EXECUTIVE DIRECTORS (OTHER THAN INDEPENDENT INDEPENDENT DIRECTORS
DIRECTORS)

(a) Fixed remuneration Francis O. Monera None None


- none to report

(b) Variable remuneration Francis O. Monera None None


- none to report

(c) Per diem allowance Ma. Theresa M. Javier - P600k for all board P760K for all board and
P120k meetings attended in 2014 committee meetings
attended in 2014

(d) Bonus Francis O. Monera None None


- none to report

(e) Stock options and None None None


other financial
instruments

(f) Others (specify) Francis O. Monera None None


- none to report

Ma. Theresa M. Javier - P600k for all board P760K for all board and
TOTAL P120k meetings attended in 2014 committee meetings
attended in 2014

80 Let’s Build for Tomorrow's Generations


NON-EXECUTIVE DIRECTORS
OTHER BENEFITS EXECUTIVE DIRECTORS (OTHER THAN INDEPENDENT INDEPENDENT DIRECTORS
DIRECTORS)

(1) Advances Francis O. Monera None None


- none to report

(2) Credit Granted Francis O. Monera None None


- none to report

(3) Pension Plan/s Francis O. Monera None None


Contributions - none to report

(d) Pension Plans, Francis O. Monera None None


Obligations incurred - none to report

(e) Life Insurance Premium Francis O. Monera None None


- none to report

(f) Hospitalization Plan Francis O. Monera None None


- none to report

(g) Car Plan Francis O. Monera None None


- none to report

(h) Others (specify) Francis O. Monera None None


- none to report

None None None


TOTAL

Board of Directors Stock Rights, Options and Warrants

The Company does not have stock rights, options or warrants of its shares for the Board of Directors.

CHI applies a performance-based compensation guaranteed bonus and performance-based


scheme for its senior executives. The incentive), for non-executive directors as
Balanced Scorecard (BSC) Management well as officers is annually disclosed in the
System, which utilizes financial and non- Definitive Information Statement. This is sent to
financial goals, measures our performance as shareholders with the Notice of Annual General
an organization. E.15, E.16 Meeting 15 business days prior to the Annual
Stockholders’ Meeting. E.18
Remuneration disclosure, inclusive of the
basic salary and other variable pay (i.e.

CHI 2014 Annual and Sustainability Report 81


The Management Committee targets which they are accountable for to the
Board of Directors. The management and Board
The day-to-day operations of the Company are of Directors are co-responsible for ensuring that
overseen by the management committee and good governance is always in place.
the management team. A specific vision and
strategic plan of action is laid out to achieve

Executive Officers

OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY
VARIABLE PAY

Francis O. Monera
President

Enrique B. Manuel, Jr.


Vice President and Chief Finance Officer /
Compliance Officer

Ma. Clavel G. Tongco


Vice President and Head, Commercial
Business Group

Nerissa J. Mediano
Vice President and Head, Business Development
and Office Leasing Group

Ma. Cecilia Crispina T. Urbina


Assistant Vice President and Head, Corporate
Services Group and Human Resources
and Administration

All above-named Officers as a group Actual 2013 P 18.2 million P 4.7 million
Actual 2014 P 26.1 million P 2.3 million
Projected 2015 P 27.4 million P 2.4 million

All other officers * as a group unnamed Actual 2013 P 17.1 million P 3.2 million
Actual 2014 P 19.1 million P 1.2 million
Projected 2015 P 20.1 million P 1.2 million

82 Let’s Build for Tomorrow's Generations


THE MANAGEMENT COMMITTEE

1 2

(from left to right) 3


1 Aniceto V. Bisnar, Jr.

Enrique B. Manuel, Jr.


Filipino, 41, is the Chief Finance Officer,
Compliance Officer and Chief Risk Officer of
Cebu Holdings, Inc. Concurrently, he also
holds the same positions for Cebu Property
Ventures and Development Corporation.

2 Francis O. Monera

(from left to right)

3 Maria Clavel G. Tongco


Filipino, 47, is the Vice President and Head
of Commercial Business Group of Cebu
Holdings, Inc. and Cebu Property Ventures
and Development Corporation. Concurrently,
she is the Assistant Vice President of Ayala
Land, Inc.

Ma. Cecilia Crispina T. Urbina Nerissa J. Mediano


Filipino, 45, is the Assistant Vice President and Filipino, 43, is the Vice President and Head of the
Head of Corporate Services Group and Human Business Development Group for Cebu Holdings,
Resources and Administration Division. She is Inc. and Cebu Property Ventures and Development
the Quality, Environment, Health and Safety Corporation. Concurrently, she is the Assistant Vice
(QEHS MS) champion at the mancom level. President of Ayala Land, Inc.

CHI 2014 Annual and Sustainability Report 83


THE MANAGEMENT TEAM

1 1. Finance Division
(from left to right)

Maria Sampaguita D. Daculan Noel F. Alicaya


Finance Manager (CLCI) Finance and Control Officer and
Finance Division Head
Judyline L. Boholst
Accounting Manager Jasmine R. Calero
Funds Management Manager
Elvira G. Mawe
Finance Manager

2. Business Development Group


(from left to right)

Romulo M. Alajid Raul S. Mananquil


Business Development Manager Land Banking/Office Leasing Manager

Catrina S. Martinez Hannah Myrh A. Ngujo


Marketing Manager Business Development Manager
2 Jonas R. Suan Ernesto T. Alfante, Jr.
Business Development Manager Project Support/Technical
Asset Manager

3. Corporate Services Group


(from left to right)

Vera R. Alejandria Joseph Francisco A. Dee


Corporate Communication and Network and Systems Admin Manager
Corporate Social Responsibility
Manager Suzette T. Go 4
Information Systems Manager
Ma. Cecilia Crispina T. Urbina
Human Resources and Admin Head Jennifer G. Sia
Internal Audit Manager
Jeanette A. Japzon
Corporate Communication and
Media Relations Manager

4. Commercial Business Group


(from left to right)

Edwin S. Layese Rudy I. Reuyan


Security Manager Project Support/Technical Asset
Management Unit Head

Celeste Bernardine K. Dy Anne C. Climaco


Deputy General Manager Marketing Manager
Ayala Center Cebu
84 Let’s Build for Tomorrow's Generations
Dividend Shares of Directors as of December 31, 2014

NUMBER OF INDIRECT SHARES


NUMBER OF
NAME OF DIRECTOR / THROUGH (NAME OF RECORD % OF CAPITAL STOCK
DIRECT SHARES
OWNER)

Bernard Vincent O. Dy 1 1 - 0.0000%

Francis O. Monera 2 1 - 0.0000%

Aniceto V. Bisnar, Jr. 2 1 - 0.0000%

Antonio S. Abacan, Jr. 18,751 - 0.0010%

Ma. Theresa M. Javier 1 - 0.0000%

Emilio J. Tumbocon 112,500 - 0.0059%

Enrique L. Benedicto 1 - 0.0000%

Fr. Roderick C. Salazar, Jr., SVD 1 - 0.0000%

Pampio A. Abarintos 1,000 - 0.0001%

13,500
Jaime E. Ysmael 3,375 0.0009%
(PCD NOMINEE CORP.-FILIPINO)

TOTAL 135,632 13,500 0.0078%

1
Bernard Vincent O. Dy replaced Antonino T. Aquino effective August 15, 2014.
2
Aniceto V. Bisnar, Jr. replaced Francis O. Monera effective January 1, 2015.

AUDIT AUDIT AND AUDIT- OTHER Accountability and Audit


YEAR RELATED FEES FEES

2010 P 628K P 227K The Audit and Risk Committee serves as an


oversight to financial reporting, external audit,
2011 P 649K P 213K
internal audit and risk management. A separate
2012 P 849K P 279K charter governs the oversight functions of the
Audit and Risk Committee.
2013 P 1,065K P 145K

2014 P 1.041K P 317.8K

* Exclusive of VAT and out-of-pocket expenses

CHI 2014 Annual and Sustainability Report 85


Records of Trainings – Board and Management Levels G4-43

The Board of Directors was able to attend Corporate Governance-related seminars and trainings
offered by the Institute of Corporate Directors (ICD) and those in coordination with Ayala Corporation’s
(AC) Corporate Governance working group for 2014. Training subjects are covered in the Corporate
Governance and Risk Management Summit (AC and ICD) and Distinguished Corporate Governance
Series (ICD).

NAME OF DIRECTOR / DATE OF TRAINING PROGRAM NAME OF TRAINING


OFFICER INSTITUTION

Corporate Governance and The Institute of Corporate


Bernard Vincent O. Dy 1 February 4, 2014
Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate


Antonino T. Aquino 1 February 4, 2014
Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate


Francis O. Monera February 4, 2014
Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate


Emilio J. Tumbocon February 4, 2014
Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate


Ma. Theresa M. Javier February 4, 2014
Risk Management Summit Directors (ICD)

Fr. Roderick C. Salazar, Corporate Governance and The Institute of Corporate


February 4, 2014
Jr., SVD Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate


Enrique L. Benedicto February 4, 2014
Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate


Hernando O. Streegan 2 February 4, 2014
Risk Management Summit Directors (ICD)

Corporate Governance and The Institute of Corporate


Jaime E. Ysmael February 4, 2014
Risk Management Summit Directors (ICD)

Enrique B. Manuel, Jr.


Corporate Governance and The Institute of Corporate
CFO / Compliance February 4, 2014
Risk Management Summit Directors (ICD)
Officer

Distinguished Corporate The Institute of Corporate


Antonio S. Abacan, Jr. February 5, 2014
Governance Speaker Series Directors (ICD)

Distinguished Corporate The Institute of Corporate


Pampio A. Abarintos 2 April 29, 2014
Governance Speaker Series Directors (ICD)
1
Bernardo Vincent O. Dy replaced Antonino T. Aquino effective August 15, 2014

86 Let’s Build for Tomorrow's Generations


Key officers and personnel attended the Ayala Group 2014 Sustainability Summit. Internationally
renowned sustainability and shared Value practitioner, Incite Director and co-Founder, Nicola Robins
facilitated training on embedding sustainability and shared value principles in business operations.

NAME OF DIRECTOR / DATE OF TRAINING PROGRAM NAME OF TRAINING


OFFICER INSTITUTION

Ayala Group
Francis O. Monera October 13, 2014 Incite
Sustainability Summit

Ayala Group
Aniceto V. Bisnar, Jr. October 13, 2014 Incite
Sustainability Summit

Ayala Group
Enrique B. Manuel, Jr. October 13, 2014 Incite
Sustainability Summit

Ayala Group
Noel F. Alicaya October 13, 2014 Incite
Sustainability Summit

Ayala Group
Vera R. Alejandria October 13, 2014 Incite
Sustainability Summit

We also conducted an in-house orientation program for our newly-elected director, Justice Pampio A.
Abarintos (Ret.) on May 15, 2014.

This in-house program is designed to give the Board member a better view and appreciation of the
Company in the discharge of his oversight functions and responsibilities.

CHI 2014 Annual and Sustainability Report 87


Independent Public Accountants The IAD provides independent and objective
assurance and consultancy services to the
SGV & Co. is the principal accountant and Company with the objective of adding value
external auditor of CHI. Jessie D. Cabaluna was and assisting the organization in accomplishing
the partner-in-charge for 2014. The Audit and its objectives through effective control, risk
Risk Committee is empowered to independently management and governance processes. Annual
review the integrity of our financial reporting audit plans, status updates and accomplishment
and oversee the independence of the external reports are submitted by the IAD to the Audit and
auditors. The Audit and Risk Committee is Risk Committee for review and approval, through
responsible for reviewing all financial reports its regular quarterly meetings.
for compliance with the internal financial
management handbook and pertinent Regular audits of the key processes of the
accounting standards, including regulatory Company's business and corporate service
requirements. It also recommends to the Board groups are conducted in accordance with the
and stockholders the appointment of the approved Internal Audit Plan. Special audits
external auditors and the setting of appropriate are undertaken when necessary. The QEHS MS
audit fees. Over the past two years, CHI paid or internal audits are conducted every 12 months
accrued the billed fees to its external auditor, and in accordance with the QEHS MS annual
SGV & Co., who was engaged to audit the audit program. The IAD also heads a cross-
Company’s annual financial statements. SGV & functional team of QEHS MS auditors. E.20
Co. also performed non-audit services this year.
Risk-Based Audit Approach
Internal Audit
The IAD executed its activities in 2014 in
The Internal Audit Department (IAD) reports accordance with the risk-based and process-
to the Audit and Risk Committee of the Board focused audit approach. This approach is in
of Directors. Through the Audit and Risk accordance with the Institute of Internal Auditors‘
Committee, the IAD assists the Board in the International Standards for the Professional
discharge of its duties and responsibilities as Practice of Internal Auditing (ISPPIA) and likewise
provided for in the July 2014 Revised Code of complies with the July 2014 Revised Code of
Corporate Governance. Corporate Governance.

88 Let’s Build for Tomorrow's Generations


External Quality Assurance Review Aside from compliance with IIA’s International
Professional Practices Framework which includes
An external assessment opinion by Punongbayan the definition of Internal Auditing, the ISPPIA
& Araullo (P&A), a member firm within Grant and the Code of Ethics, the EQAR covered
Thornton International Ltd, in 2014 concluded the assessment of IAD’s compliance with its
that the Company’s internal audit activities charter, plans, policies, procedures, practices
generally conforms with the International and applicable legislative and regulatory
Standards for the Professional Practice of Internal requirements; expectations of the IAD as
Auditing (ISPPIA) as issued by the Institute of expressed by stakeholders (includes the Board of
Internal Auditors (IIA). Directors and Audit and Risk Committee, Senior
Management and IAD’s auditees); integration
Internal Auditing Standard 1312 of the Institute of the IAD into the organization’s governance
of Internal Auditors (IIA) requires external process, including the attendant relationships
assessments be conducted at least once every between and among the key groups involved in
five years by a qualified, independent assessor or that process; tools and techniques employed
assessment team from outside the Company. by the IAD; mix of knowledge, experience and

CHI 2014 Annual and Sustainability Report 89


disciplines within the staff, including staff focus Reporting of Transactions
on process improvement; and areas on which
the IAD is able to add value to help improve the CHI is compliant to SEC requirements that
organization’s operations. directors and principal officers report any
acquisition, disposal or change in their
Compliance Officer shareholdings in the Company to the SEC and
to report changes in ownership of Company
Enrique B. Manuel, Jr. is CHI’s Chief Finance shares within five trading days. This reporting
Officer and Compliance Officer. He monitors requirement has been expanded to include
strict adherence to the Code of Corporate management committee members. All other
Governance and to the rules and regulations officers submit a quarterly report on their trades
of regulatory agencies. He is responsible of Company shares to the Compliance Officer.
for reporting any violations incurred directly
to the Board. These reports are supported Dividend Policy
and supplemented by recommendations
on appropriate disciplinary actions applying It is our policy to periodically declare part of
to responsible parties, as well as preventive our unrestricted retained earnings as dividends
measures to be adopted to avoid recurrence. to shareholders. This may be in the form of
stock or cash, or both. Company earnings, cash
Dealings in Securities flow, investment programs, and other factors
determine future dividend payments. Every
CHI adheres to a uniform policy on securities dividend declaration is subject to Board approval.
transactions to reinforce and formalize existing
government regulations against insider trading. In 2014, CHI declared cash dividends from
unappropriated retained earnings of the
Company as of December 31, 2013, of
P0.12 per share to all shareholders as of
record date November 25, 2014 and paid on
December 9, 2014.

90 Let’s Build for Tomorrow's Generations


CHI Finalist in
PSE Bell Awards
CHI was awarded and recognized as a
Finalist in the 3rd Philippine Stock Exchange
(PSE) Bell Awards. Held last November
10, 2014 at the Makati Shangri-La, it is
the highest distinction given to listed
Trading Blackouts/Insider Trading Policy companies with “world-class corporate
governance standards and practices.”
CHI adheres to a uniform Inside Trading Policy in Assessments were based on the strength of
all securities dealings. This means that directors, a company’s adherence to PSE’s corporate
officers and employees who are considered to governance guidelines and relevant rules
have knowledge of material facts or changes in and regulations.
the affairs of CHI which have not been disclosed
to the public, including any information likely to
affect the market price of the securities of the
Company, are prohibited from buying or selling
the Company’s securities during trading blackout
periods. Trading blackouts are required covering
ten trading days before and three trading days
after disclosure of quarterly and annual reports.

CHI’s shares of stocks, options to purchase


stocks, bonds and other evidence of
indebtedness are all covered under this policy,
as are all members of the Board of Directors,
all key officers, consultants, advisers and
employees of the Company who are made
aware of undisclosed material information,
including members of the immediate families of
key officers. D.4

In 2014, trading blackout notices were issued


for structured disclosures covering 10 trading
days before and three trading days after the
disclosure of quarterly and annual financial
results. Compliance with these periods is strictly
enforced. There was no case of violation of the
Company’s policy for the year. B.3

91
Enterprise-wide Risk Management
G4-2, G4-14, G4-EC2, E.21

We continue to implement our Enterprise- Periodic reviews are done at all levels of the
wide Risk Management (ERM) Program to Organization, including the ERM Team lead by
manage key risks and safeguard shareholder the Audit and Risk Committee and the Chief
value in the face of our growing business and Risk Officer, to ensure that risks are effectively
evolving environment. managed and the Company is addressing
relevant key risks.

ERM Framework
Results of monitoring of the ERM process are
also presented to the Board of Directors by the
The ERM framework continues to achieve
Audit and Risk Committee, at least quarterly or
its objective of systematic approach in risk
more frequently if necessary, to update them of
management throughout the Company. The
the status of the Company’s key risks to serve as
framework embodies the policy, scope, process
inputs in executive decision-making.
methodology, and organizational structure of
the risk management program. We utilize an
all-encompassing risk framework covering A Driver of Key Strategic Actions
oversight, management and internal control.
This framework systematically guides us through The Company was able to direct the following
monitoring, identifying, analyzing and treating key strategic actions in 2014:
risks in a timely and proactive manner at both
corporate and business-group levels. 1. Protecting the Balance Sheet through
Financial Risk Management

A Pro-Active Process Across We continue to take advantage of the current


low but slowly increasing interest rate business
the Organization
environment by increasing its leverage and
converting short-term to long-term debt, at
The ERM program adopts a top-driven, bottom-
favorable rates to fund the construction of our
focused approach and has the full support of the
leasing projects. This allows us to better balance
Organization’s management all the way up to
our debt capacity and debt maturity with a steady
the Board of Directors. It is a process by which
recurring income.
Management takes on a very active and key role
in managing risk. The identification, management In 2014, we issued P5 billion Fixed-rate Corporate
and monitoring of its key risks are made part of Bonds, allowing for conversion of long-term
the normal operations of the Company not just variable debt to fixed long-term. This allowed us
at the corporate level, but also at the individual to have a more predictable and manageable debt
business-group levels. This allows CHI to profile while freeing up additional debt capacity
manage its key risks to an acceptable level both through bank lines, should it become necessary.
holistically and individually and to address issues
in a timely manner.

92 Let’s Build for Tomorrow's Generations


Strategic Risk Operational Risk Financial Risk Environmental Risk

RISK IDENTIFICATION RISK ANALYSIS RISK TREATMENT RISK MONITORING AND REVIEW

2. Monitoring of Leading Market Indicators of the Amaia brand, for affordable housing, and
We rely on close monitoring of leading market office condominiums for sale through our affiliate
indicators for guidance in current and future Solinea, Inc.
project investments. Forecasts, industry and
6. Proactive Management of Environmental Risks
sales reports are regularly monitored and
reported to the operating project teams and We continue to adapt measures to reinforce our
senior management from where direct inputs in fully-functional Business Continuity Plan (BCP).
decision-making are derived for strategic and on- Our Crisis Management Team (CMT) ensures
the-ground issues. continuous operations or minimal disruption
during calamities and unforeseen events.
3. Close Monitoring of Ongoing Projects Improvements on our services and facilities
Early identification and management of delivery have also been implemented to ensure safety
risk allows us to keep our projects on-track, meet of our stakeholders and enhance our readiness
our customers’ requirements and achieve our capacity in times of emergencies and calamities.
sales and turnover targets. These allow us to protect our assets, including
our employees, customers and locators in
4. Expanded Partnerships Beyond our facilities.
Parent Company
In 2014, our BCP and CMT enabled us to mobilize
Strong synergies diversify risk and create the
our team to conduct relief operations for the
opportunity for us to increase our reach and
typhoon victims in Borongan, Easter Samar in the
depth in the Cebu market.
wake of typhoon Ruby in December.

In 2014, we partnered with strong local


In the years ahead, we commit to broaden
developers for the development of new estates in
our risk management activities and further
Cebu specifically Taft Punta Engaño Property, Inc.
minimize the occurrence of risk-related incidents
(TPEPI) with the Gaisano group in Mactan and
and losses. Our ERM gives us structure and
Cebu District Property Enterprise, Inc. (CDPEI)
timeliness in assessing and managing our main
with both the Ayala Land, Inc and AboitizLand in
risks. By appropriately managing our risk issues,
Mandaue. This strong strategic partnership allows
we continue to be a trusted brand, maintain
us to expand our product portfolio through
and improve on our operational efficiencies,
synergies, master planning, combined branding,
and foster long-term economic viability in
and deeper market knowledge.
the communities and environment where
we operate.
5. Diversification of Product Lines
We continue to build on our expertise and extend
our market reach. Since 2013, we have further
diversified our portfolio with the introduction

CHI 2014 Annual and Sustainability Report 93


Rights of Shareholders Shareholder Voting Rights

Shareholders have the right to nominate, elect,


Transparency in our Board of Director remove and replace directors and vote on
Nomination Process certain corporate acts in accordance with the
Corporation Code. Cumulative voting shall
The nominees were formally nominated to the be used in the election of directors. Directors
Nomination Committee by a shareholder of the may be removed with or without cause, but
Company, Ms. Suzette T. Go. Messrs. Abarintos, directors shall not be removed without cause if
Benedicto and Salazar, all incumbent directors it will deny minority shareholders representation
except for Mr. Abarintos, were nominated as in the Board. Removal of directors requires
independent directors. Ms. Go is not related to an affirmative vote of two-thirds (2/3) of the
any of the nominees for independent directors. outstanding capital stock of the Corporation.

Shareholder Meeting and


Voting Procedures

The annual stockholders’ meeting is preceded by


a notice period of at least 21 business days. The
Corporate Secretary issues the call for the regular
or special meetings. The notification includes the
agenda, date, time and venue of the meeting. The
agenda is clear on the resolutions to be taken up
for the meeting. Each resolution is to be limited
to a single agenda item with a brief rationale for
its inclusion. B.2

Shareholders have the right to ask questions


as well as be given answers on concerns
particular to the Corporation, its performance
and prospects. The presence of the Chairman of
the Board, the CEO, and the Chair of the Board
Audit Committee is required at these meetings.
Directors are urged to attend as much as is
possible. Their participation, or lack thereof,

94 Let’s Build for Tomorrow's Generations


is duly noted in the minutes of the Annual of Directors. In this regard, the notice of
Stockholders’ Meeting. These same minutes call for the annual stockholders’ meeting
must necessarily contain a compact summary of shall include a profile of all nominees for
questions and answers raised. seats in the board of directors inclusive
of the nominees’ age, qualifications and
The Company respects each shareholder’s right experience, date of first appointment to
to participate and vote in its annual stockholders’ the Board of the Company, and other
meeting. Each person, whose name appears in directorships in other publicly-listed
the Company’s books, is entitled to one vote corporations (or subsidiaries, whether listed
per common share of stock, given that payment or non-listed, within a group of companies.
conditions have been met. The vote may be
• All shareholders are to approve the
made in person or by proxy. Strict adherence to
appointment of the external auditor. A.2
applicable rules and regulations is followed in
cases of proxy voting or voting in absentia. The Resolutions put forth in the annual stockholders’
Notice to Stockholders specifies the date, time meeting related to mergers and acquisitions will
and place for validation of proxies, which should have an accompanying report defending and
be no less than five business days prior to the promoting the rights of these other stakeholders.
annual stockholders’ meeting. A.1, A.3, B.1, B.2
CHI upholds all laws concerning the proper and
An independent body is enlisted for assurance fair treatment of all its external stakeholders,
of compliance with voting procedures and in particularly our customers, creditors, the
keeping to ethics of transparency, fairness and government, and the local communities we
professionalism. Shareholders are asked to vote serve. Any and all violations of such laws such
on all matters of substance including but not as violations of the country’s commercial and
limited to: competition laws are deemed a grave offense.

• Changes or amendments to the Company’s Our Stakeholder Engagement section is found on


by-laws and articles of incorporation; pages 113-117 of this Report.
• Sale or purchase (or transfer) of a
significant share of corporate assets that Employee Relations
may result in a change in the character of
the Company; CHI's employees are among its chief foundation
and strength. Supporting, providing for and
• Authorization for the issuance of additional
enabling them growth is a primary concern. We
shares of the Company;
• All shareholders are given an opportunity to
elect individually the members of the Board

CHI 2014 Annual and Sustainability Report 95


apply a holistic approach to their welfare – both employee workforce. Company employees are
in and out of the workplace and throughout their required to annually disclose any business and
tenure with us. Open lines of communication are family-related transactions to the Company by
nurtured embodying the Company’s concern for accomplishing the Conflict of Interest Disclosure
their welfare and safety. Statement submitted to the Human Resources
and Admin Division that monitors compliance of
CHI also upholds all laws concerning the this policy. C.4, E.2
proper and fair treatment of its officers and
employees. Those within the Company found to
Whistle-blowing Policy G4-57, G4-58
be responsible for such violations are to be dealt
with in line with CHI’s policy on sanctions. C.1, C.2 It is of primary importance that a business,
in all of its activities, must operate in full
The policies concerning employee engagement,
compliance with applicable laws, rules, and
benefits and welfare, and various trainings are
regulations. Therefore, all employees must
given further detail on the Human Capital section
exemplify the behavior and professional
on pages 148-159 of this Report. C.3
demeanor consistent with such laws, rules,
and regulations, as well as the Company’s
Code of Ethical Behavior G4-41 applicable policies and procedures. Also,
third-party business partners must share and
The Code of Ethical Behavior outlines the general
embrace the spirit of commitment to these sets
expectations and set standards for behavior and
of standards.
ethical conduct. It provides guidelines for all
directors, officers and CHI employees, and that of
All employees, third party business partners,
its subsidiaries and affiliates. It aims to promote
or other stakeholders are encouraged and
and foster observance of principles founded
empowered to report their concerns should
on ethics, sustainability, social responsibility
they suspect or become aware of any illegal or
and good governance. CHI and its employees
unethical activities. This can be done through all
commit to adhere to the Company’s core values
CHI business integrity channels.
in conducting personal and business affairs.
The policy covers any of the following
The Code of Ethical Behavior is intended to
concerns: 1) conflicts of interest; 2)
be read in conjunction with the Company’s
misconduct or policy violations; 3) theft,
Human Resources Manual of Personnel
fraud or misappropriation; 4) falsification of
Policies. This includes the Code of Conduct
documents; 5) financial reporting concerns, and;
on acceptable office behavior for the orderly
6) retaliation complaints.
operation of the Company and the protection
of the rights, safety and benefit of the whole

96 Let’s Build for Tomorrow's Generations


DMA Anti-corruption, DMA Public Policy, DMA Anti-competitive
This policy provides employees, third-party
Behavior G4-S06, G4-SO7, G4-SO8
business partners and other stakeholders every
possible means for coming forward, so that they
Non-partisan Policy
report information to top management or to the
Board of Directors.
No contributions, either financial or in kind,
are given or awarded to political parties and
Certifications politicians and/or other related institutions by
the Company.
In 2014, CHI and its subsidiary Cebu Property
Ventures and Development Corporation’s
Anti-Money Laundering
(CPVDC’s) Quality, Environmental, Occupational
Health and Safety Management Systems
CHI complies with all the rules, regulations
(QEHS MS) continued to be certified to ISO
and directives issued by Bangko Sentral ng
9001:2008 and ISO 14001:2004 and OHSAS
Pilipinas and its Anti-Money Laundering Council
18001:2007. With the organizational changes
(AMLC). These cover general information and
implemented by the Company, the QEHS MS
documentation requirements for customers and
covers design and development and commercial
record-keeping standards.
business operations and management. CHI
is scheduled for recertification audit in 2015.

CHI 2014 Annual and Sustainability Report 97


Disclosure and Transparency Updates and additional information are included
in the Investor Relations section of our website
CHI remains committed to the highest standards for shareholders to access information in a timely
of disclosure and transparency. manner. For example, proceedings of analysts’
briefings by way of presentations are immediately
We aim to enable the investing community to made available in the Company website for
understand the true financial condition of the reference. The details of investors and analysts
Company and the management and quality of its briefings are found in the investor relations section
corporate governance. of the website. D.9

We aim to meet all disclosure requirements


We welcome the interest of both individual and
mandated by regulators, particularly those
institutional shareholders who wish to purchase
involving material events, disclosing them within
shares of the Company through the PSE. The
the prescribed reporting period.
Company maintains a minimum public float of its
shares openly traded in the exchange in order to
The Finance Division, headed by our Chief comply with the PSE requirements. A.4
Finance Officer directly reporting to our
President, ensures that we address the varying
For institutional investors, we aim to have at
information requirements of the investing public
least five percent of the Company’s shares
and communicate with minority shareholders
held by them at any given time. We endeavor
through timely and full disclosures to the PSE and
to work closely with them and encourage
SEC, Annual Stockholders’ Meetings, one-on-one
increased participation through their attendance
meetings, conference calls, investor visits and
at our annual stockholders’ meetings at a place
tours, website and emails or telephone calls.
accessible to all.

98 Let’s Build for Tomorrow's Generations


To help ensure that the disclosure remains • Disclosure of significant ownership.
adequate, CHI adopts the following The Company reports on its Annual and
disclosure practices: Sustainability Report and provides regular
updates of the shareholders with significant
• Timely issuance of the audited financial ownership of the Company’s shares as
statement. CHI targets the release of well as on their relationship with, including
such a statement 60 business days after their ownership, of related companies on
the close of the financial year. In no case its website.
shall the issuance of the audited financial
statement be later than 90 business days Content and Timing of Disclosures
after the close of the financial year. In
addition, the Board of Directors shall issue We also provide the investing public with
a certification together with the audited strategic, operational and financial information
financial statement that the financial through adequate and timely disclosures filed
statement is true and fair. with the SEC and PSE. Apart from the usual
• Updating of the Company website. The periodic reporting requirements, we also aim to
website shall provide information on the promptly disclose major and market-sensitive
results, both financial and non-financial, information such as dividend declarations, joint
of CHI’s business operations, as well as ventures and acquisitions, sale and disposition
on changes in the Company’s ownership of significant assets, as well as other material
structure and business group structure. information that may affect the investment
The website has a downloadable Annual decision of the investing public.
and Sustainability Report as well as
copies of notice of call for the annual 2014 Disclosure Citing
stockholders’ meeting, current by-laws and
Disclosures made by the Company in 2014
articles of incorporation.
include the acquisition of shares in the joint
• Handling investor concerns. These are venture company handling the Mandaue project,
addressed jointly by the Company’s Control PRS AAA rating from PhilRatings, CHI’s P5 billion
and Analysis Department and by the bond issuance, resignation of Ma. Theresa M.
Corporate Communication Division. The Javier as board treasurer, and the appointment
responsible officers of these offices are of Aniceto V. Bisnar, Jr. as new president of CHI
identified, including information on their effective January 1, 2015.
contact details. D.6

CHI 2014 Annual and Sustainability Report 99


Consolidated audited financial statements financial period. The results are submitted
for 2013 were submitted to the SEC on April to the SEC and PSE. Upon confirmation
15, 2014, as required. The audited annual by the SEC of its receipt of disclosure,
report is submitted at least 15 working days it is made available on the Company’s
before the Annual Stockholders’ Meeting. corporate website. D.2, D7
The audited Annual Report as contained in
the Definitive Information Statement was Ownership Structure
submitted to the SEC and the PSE on March
14, 2014. Interim financial report are released
We continually adhere to transparency in
between 30 and 45 days from the end of the
disclosing our ownership structure. The

Top Holders of the Common Equity Securities

SHAREHOLDING COMPANY NUMBER OF PERCENT BENEFICIAL OWNER


SHARES

Ayala Land, Inc. 956,241,738 49.80% Ayala Land, Inc.

PCD Nominee Corporation 331,962,700 17.29% Aberdeen Asset


(Non-Filipino) Management Asia Limited

First Metro Investment 186,695,363 9.72% First Metro Investment


Corporation Corporation

PCD Nominee Corporation 34,505,001 1.80% First Metro Investment


(Filipino) Corporation

PCD Nominee Corporation 206,395,200 10.75% Aberdeen International


(Non-Filipino) Fund Managers Limited

PCD Nominee Corporation 97,278,800 5.07% Government Service


(Filipino) Insurance System *

* The Company has no record on how the Government Service Insurance System exercises the power to decide how their shares in
the Company are to be voted.

100 Let’s Build for Tomorrow's Generations


Company annually discloses the top 20 holders • total revenues
of the common equity securities of the Company • operating profit
and the security ownership of certain record and
• net income
beneficial owners owning more than five percent
as it applies to directors and management. This • segment assets
information is also contained in the Definitive • investments in associates and jointly-
Information Statement sent to shareholders. controlled entities
Included are additional information on
• segment liabilities
subsidiaries, joint ventures, and special purpose
vehicles of the Company and the participation in • depreciation and amortization
them of CHI’s significant shareholders, directors
and senior officers. This information is also Transactions entered into with associates
reflected in the Company website as required by and other related parties in their conduct of
SEC. MEMO CIRCULAR # 11, D.1 business are on an arm’s length basis. Sales
and purchases of goods and services to and
from related parties are made at normal
Financial Reporting G4-41, D.7 market prices. Related party transactions
are discussed and quantified in the Notes
The Company’s financial statements comply to the Consolidated Financial Statements.
with the Philippine Accounting Standards and Information on the Company’s financial
the Philippine Financial Reporting Standards, instruments is accompanied by a presentation
as well as with the International Accounting of the Company’s risk management
Standards. The annual consolidated financial objectives and policies to allow for a better
statements provide a breakdown of total assessment of financial performance and
assets, total liabilities and equity, revenues, cash flows. Significant accounting judgments
costs and expenses, income before income and estimates are also disclosed. B.4, D.3
tax, net income attributable to equity holders
of CHI and minority interests and earnings
Additional information on our corporate
per share. A more extensive, transparent
governance initiatives may be viewed at
disclosure of segment results such as
www.cebuholdings.com D.8, E.10
assets, liabilities and revenues is provided to
enable shareholders to appreciate various
businesses and their impact on overall value
enhancement. The following are disclosed in
the Note on Business Segments:

CHI 2014 Annual and Sustainability Report 101


05.
102 Let’s Build for Tomorrow's Generations
Inspire
positive
change.
The concept of sustainability is anchored on change.
And in today’s world, the pace of change is immensely
faster and will continue to accelerate. By looking at
sustainability as an overarching concept and broad-
based s stem that unifies all other management s stems
approaches and initiatives into a common process and
common goal, we can be catalysts of change.

As we confront and respond to the challenges of


sustainable development and growth, we depend on each
individual in our organization who can initiate, inspire
and even be the change.

Let's build for tomorrow's generations

CHI 2014 Annual and Sustainability Report 103


104 Let’s Build for Tomorrow's Generations
Our sustainability
framework and
strategy is geared
towards conscientious
development.

Cebu Holdings, Inc. (CHI) is dependent on land. All of our


developments today and in the future will have various
impacts on the environment, the local economy and
communities. Our sustainability framework and strategy is
geared towards conscientious development enabling us
to grow our business and deliver quality products to last
for generations.

With the view of creating a better world, a strong Our sustainability framework is our key to good
financial base is the foundation of all of our land development and operations management.
sustainability engagements. Our sustainability As a business model, an adaptive visionary
business model needs to deliver value aligned to design allows us to integrate sustainability in
the long-term viability and enhancement of our our operations.
environmental, financial and social capitals. This
is why it is essential that we embed sustainability We again commissioned the Philippine Business
into our Company culture with a clear alignment for the Environment (PBE), a non-profit
to our overall vision and mission. Stated in the organization, to conduct a sustainability strategy
simplest of terms, our sustainability strategy and forum with CHI employees as well as to facilitate
business model share intrinsic value. our stakeholder workshops for the review and
enhancement of our sustainability framework.

CHI 2014 Annual and Sustainability Report 105


In our reworked Sustainability Framework, we Some key opportunities:
leverage ourselves as a trusted brand steered by
good corporate governance. We leverage our • Economic value distribution
people who are empowered through training • Creating direct or indirect inclusive
and volunteerism. We leverage our efficiency businesses in the community
strategies in resource management and enable
• Procurement
opportunities for shared value creation.
• Corporate Social Responsibility
Within our framework, we identified three focus
areas of equal importance. Designing and developing healthy,
dynamic city areas
Growing local businesses and markets
and enabling local communities We invest heavily in master planning, design
development, research, consultation, and due
Through our direct engagements, community diligence. We see Cebu as a healthy, dynamic,
initiatives, strong network of merchants and prosperous integrated community. In our vision,
locators, and other relationship-building we see shared spaces enjoyed by both young and
initiatives, we look beyond our infrastructure old - confident of a sustainable future.
developments. We also focus on the people
we engage on a day-to-day basis. Knowing Some key opportunities:
their needs and capacities, we are able to
make potential connections within our cross • Systems to make developments resilient,
platform stakeholders for mutually beneficial accessible, and have low eco-footprint; and
business opportunities with lower risks and • Access to the best architectural designers.
increased viability.

106 Let’s Build for Tomorrow's Generations


Sustainability Policy G4-14

At CHI, we are committed to continuously improve our (1) corporate


sustainability performance throughout our value delivery chain and (2) core
business strategy to maintain a long-term strategic position while driving
society towards a sustainable path. CHI will therefore:

1 Anticipate the future scenarios through our understanding of the


‘megaforces’ that will shape the future and continuously develop
strategies to maintain a strategic position in the market;

2 Make business decisions based on a wider understanding of our


impacts and dependencies to its natural, manufactured, financial,
human, intellectual, social and relationship capitals;

3 Ensure the Company's relevance by continuously engaging with


our stakeholders and aligning our value creation model to their
changing needs; and

4 Take leadership in driving society towards a sustainable path, in


areas that are most relevant to our business, and those that will
bring significant benefits to the business.

2014
CHILet’s Build
Annual
for Tomorrow's
and Sustainability
Generations
Report 107
SUSTAINABILITY FRAMEWORK G4-2, G4-18

Developing land, shaping the future


Creating better spaces, providing opportunities - for a better quality of life

Growing local businesses Designing and developing Bridging global companies


and markets + enabling healthy, dynamic to local top-level skilled
neighboring communities city areas labor and professionals

* Economic value distribution * Systems to make developments * Marketing Communications/


* Creating direct or indirect resilient, accesible and have Product Responsibility
inclusive businesses in low eco-footprint * Partnership with local talents
the community * Access to the best * Indirect economic impacts
* Procurement architectural designers and
urban planners
* Corporate Social Responsibility

SYSTEMS AND ENABLERS

Trusted Efficiency Empowered


Brand Strategies People

* Corporate Governance * Resource Management/ * Employee Engagement


Better ways of building
* AAA Credit Rating * Training and Capacity
and operating
Building
* Customer Satisfaction
* CHI Plus
* Feedback Mechanism/
Open Communication * Employee Volunteerism
Channels
* Health and Safety

LEGAL AND REGULATORY COMPLIANCE

108 Let’s Build for Tomorrow's Generations


Bridging global companies to local top Some key opportunities:
level skilled labor and professionals • Marketing communications /
Product responsibility;
We contribute to the improvement of the • Partnerships for local talents; and
local talent pool, culture and over-all quality • Indirect economic impacts.
of life not just within Cebu but within the
region. We continue to invest in enhancing Materiality Process G4-18
our developments, carefully conforming to
international standards, so that our businesses Below is a framework we adopted in the exercise
will continue to contribute to economic growth of our materiality process. This follows a linear
and national development. progression that covers a full reporting period.

1) IDENTIFICATION 2) PRIORITIZATION

Value delivery chain review Ranking of aspects based on perceived


degree of impact to business and to
Impact assesment vis-à-vis natural, human, stakeholders
social and relationship, intellectual,
manufactured, and financial capitals Quantitative and qualitative assessments

Localizing global sustainability megatrends Risk and opportunities analysis


vis-à-vis identified impacts

3) VALIDATION 4) REVIEW

Core Sustainability Team review and Continuing evaluation of future processes


indentification of key topics
Reference for emerging sustainable
development
Accounting for our stakeholders’
views and expectations Review of performance against targets and
benchmarks challenges

Legend: Sustainability Context Stakeholder Inclusiveness Materiality Completeness Stakeholder Engagement

CHI 2014 Annual and Sustainability Report 109


SUSTAINABILITY STRUCTURE

EXECUTIVE COMMITTEE
BOARD OF
DIRECTORS COMPENSATION COMMITTEE

AUDIT AND RISK COMMITTEE Internal Audit

NOMINATION COMMITTEE

PRESIDENT SUSTAINABILITY COMMITTEE

MANAGEMENT COMMITTEE /
SUSTAINABILITY COUNCIL

CORPORATE SUSTAINABILITY OFFICER

Energy, Water and Mobility, Traffic, Business Model Materials Efficiency and
GHG Reduction Air Quality and Sustainability - Waste Management
CLUSTER 1 Pedestrianization Innovation, Solutions CLUSTER 4
CLUSTER 2 for Unserved Markets
CLUSTER 3
Project Support/ Project Support
Technical Asset Business /Technical Asset
Management Development Business Development Management
• APMC • MDC • APMC • MDC
Office Leasing Finance
Human Resources Business Development
Commercial Business Commercial Business
and Admin
Commercial Business
Project Support/
Information Systems Technical Asset Finance
Business Development Management
• APMC • MDC
Commercial Business

Sustainability in the Human and Climate Change


Supply Chain/Sustainable Intellectual Capital Adaptation, Biodiversity
Consumption CLUSTER 6 CLUSTER 7
CLUSTER 5

Corporate Services Project Support/Technical Asset


Marketing Management
Business Development
Corporate Communication • APMC • MDC
Commercial Business
Business Development Corporate Communication /
Finance Corporate Social Responsibility
Cross-functional Team:
Review and Recommendation
Finance (to champion)

Audit Marketing

Commercial Project Support/Technical Asset APMC - Ayala Property Management Corporation


Business Management MDC - Makati Development Corporation

110 Let’s Build for Tomorrow's Generations


G4-18, G4-19, G4-20, G4-21, G4-23

MATERIAL ASPECTS WHY THIS IS MATERIAL ASPECT BOUNDARY

Economic Performance
Delivering returns for our shareholders is our Internal
top responsibility.

Indirect Economic Impacts


We rely on two keys to a thriving business: Internal and External
Procurement Practices
creating shared value and the practice of
inclusive growth.

Anti-corruption We are an ethical Company, our values and Internal


Anti-competitive Behavior codes are clearly defined and practiced. We
Public Policy are compliant to laws in all areas and aspects
of our operations.

Local Communities We believe in the principle of creating Internal and


Security Practices shared value and the social license to External
Procurement Practices operate. Inclusive growth and harmonious
Compliance (Society) relationships in our areas of operations lead to
Indigenous Rights a continuously growing business.

Customer Health and Safety We take steps to ensure that we are attuned Internal and
Product and Service Labeling and responsive to the needs of our customers External
Customer Privacy through service delivery and health and safety (shoppers and
Security Practices initiatives. They are given information for merchants, lot/unit
owners, security
Compliance (Product Responsibility) making educated decisions and at all times
personnel and
we ensure trust and confidentiality in keeping suppliers)
customer data safe.

Employment CHI is composed of capable and talented Internal and


Labor/Management Relations employees. We are clear on policies, programs External
Occupational Health and Safety and management systems targeted to their (suppliers)
Training and Education well-being and safety. We extend the same
Diversity and Equal Opportunity standards to be met by our suppliers.
Grievance Mechanisms for
Labor Practices
Forced/Compulsory Labor
Child Labor

Materials Overall We recognize our impacts on resources and Internal and


Energy Compliance the environment and work hard to mitigate External
Emissions Environmental them. We adopt policies and revise them (suppliers)
Water Grievance accordingly to ensure that we keep our
Effluents and Mechanisms impacts to the barest minimum possible.
Waste We extend the same standards to be met by
Biodiversity our suppliers.

CHI 2014 Annual and Sustainability Report 111


Material Aspects in the
Global Sustainability Context G4-2

In 2013, we viewed our Sustainability Framework against KPMG's identified Megaforces. In 2014, we
aligned it to Kate Rasworth's expansion of the Planetary Bounderies concept of Johan Rockström with
an inclusive view to social and environmental Boundaries.

While the business is geographically bound, we The knowledge that the causal effect of our
adapt our sustainability strategies within the actions today affect tomorrow's generations
conditions of our localized aspects vis-a-vis a makes us accountable. We go back to the basics
global context. To keep the business sustainable, of sound sustainable management, ethical
we endeavor to maintain healthy, secure, practice, and balance of capitals for solid triple
forward-looking communities and confine our bottom line performance to continue to shape
impacts within sensible limits of planetary and our envisioned future.
social boundaries.

PLA
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COMPLI ct L
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BIOD W FR E
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Real Estate
EM
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Development/
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PERFO R M

Commercial and
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SOCIAL
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Operations
OCE

BIODIV
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LOSS Y
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HEALTH
CAT

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112 Let’s Build for Tomorrow's Generations


Our 2014 Stakeholder Engagement

We underwent a series of focus group stakeholder In 2014, our engagement process moved beyond
engagements last 2013. It was the first time for clarifying perceptions and addressing issues to
us and our stakeholders to engage in meaningful planning for meaningful collaboration.
dialogue specifically identifying the positive
and negative impacts of CHI’s operations to the The diagram below and table found on the next
community and distilling the most important issues page identify our stakeholders, their concerns,
from the point of view of various stakeholders. and how we respond. These give a general view
of our engagement.
Our discussions elicited how they perceive us as a
Company in the conduct of our business and our
impacts to the environment and to society.

e nt
ag em
E ng
d er
ol Shoppers and Mall Merchants
eh Mall Merchants’ Employees
ak

Third-party Organizers/Exhibitors
St

Local Communities/Fenceline Barangays


Local Government Units Overseas Filipino
National Government Agencies Shareholders Professionals
Regulatory Bodies Tourists

CEBU
Property Buyers/Lessees
Brokers and Property Specialists
HOLDINGS, Institutional Investors
Homeowners Associations
Business Park Association
INC. Financial Analysts
Securities and Exchange
Commission/Philippine
I.T. Park Association
Stock Exchange
Condo Corporations

Employees
Business Partners

Suppliers
Business Organizations Service Contractors
Non-Government Organizations
Manpower Agencies
Civil Society Organizations
Socio-Civic/Charitable Institutions Banks and other Event and Talent Agencies
Educational Institutions Financial Institutions Utility Companies
Allied Industries Insurers/Insurance Brokers

CHI 2014 Annual and Sustainability Report 113


Outcome of Stakeholder Engagement Program in 2014 G4-8, G4-24, G4-26, G4-27

REASON FOR CHANNELS OF SUSTAINABILITY


STAKEHOLDER INTEREST AREAS HOW WE RESPOND
ENGAGEMENT ENGAGEMENT PRIORITIES

CUSTOMERS: End users of real Text Feedback - On-time - Minimizing heavy - Offering discounts,
CUSTOMERS:
shoppers, estate products and and TCS-MS completion traffic promos and various
merchants, services (multimedia format of building payment terms
shoppers, - Extended market
locators helpline) integrated construction
merchants, services for C, D - Customer
locators marketing,
- One-day and E sectors satisfaction surveys,
office lessees customer surveys
resolution of complaints handling
and complaints - Ban on use of
complaints
handling plastic bags - Farmers' City Market
- Immediate or (weekends)
- TCS-MS
time-bound help - Venue for family
response - Text Feedback
activities
system

CHI complies Submission of Compliant with Beyond - Practice


REGULATORS: with regulatory reports, disclosures rules, regulations compliance on transparency and
SEC/PSE requirements as and other and environmental economic, social full disclosure
a publicly-listed requirements; laws and environmental including the
Company to assure involvement in regulations provision of this
shareholders of SEC/ICD programs Report
good corporate and initiatives;
- Prompt submission
governance transparency
of requirements
and adequacy of
disclosure - Review of reports
prior to submission

Protect the Sale of shares of Improving Dividends Investor briefings;


INDIVIDUAL / interests of stocks, shareholder shareholder value declaration of
INSTITUTIONAL shareholders inquiries and dividends
SHAREHOLDERS by increasing updates; report
shareholder of Company
value; continue performance
its position as through
an excellent stockholders'
investment meetings and
vehicle annual reports

Monitor - Payment of taxes, Hiring of local - Health, safety, - Prompt payment


GOVERNMENT: compliance with all business permits employees from employment, of taxes and
LGUs and applicable statutory and licenses, neighboring environment, submission of
national and regulatory partnerships/co- barangays and local traffic reports
government requirements sponsored events, conditions
- Regular reviews
agencies and regular
- Venue for civic of compliance
reviews
interaction with regulatory
- Neighboring requirements
- Availability of
communities as
new and efficient - Provision and
partners and/or
technology maintenance of
beneficiaries to
that minimizes good road networks
the Company's
environmental
development - Practice
impacts
programs transparency and
full disclosure
including the
provision of
this Report
- Sharing of best
sustainability
practices

114 Let’s Build for Tomorrow's Generations


G4-8, G4-24, G4-26, G4-27

REASON FOR CHANNELS OF SUSTAINABILITY


STAKEHOLDER INTEREST AREAS HOW WE RESPOND
ENGAGEMENT ENGAGEMENT PRIORITIES

EMPLOYEES: Our important Townhall meetings, Adequate Wellness and work- Benefits upgrade;
EMPLOYEES:
organic and resource to climate survey, compensation and life balance merit increases;
outsourced
organic and achieve the volunteer programs benefits, health and wellness program
outsourced Company's goals safety, employee (CHI P.L.U.S.);
development competency
development
programs; health and
safety programs

Provide products Accreditation, - Continuing - Equal - Establishment of


EXTERNAL: and services for bidding, payment employment opportunities for and compliance to
employees of the Company; conformity with local contractors PCT standards
- Health and safety
merchants, implement Process Cycle Time
- Identify and - Implement
contractors, projects, programs (PCT) standards,
develop programs to
park and initiatives programs to
sustainable water educate and orient
associations educate and orient
sources (finite contractors and
and suppliers contractors and ground water suppliers on QEHS
suppliers on QEHS resource) best practices and
best practices and
benefits
benefits

Means of Conduct of press - Truthfulness - Publicity - Regular fellowships


MEDIA communication conferences, and usefulness
- Issues-handling - Regular updates on
PARTNERS through which fellowships, of information
new developments
CHI promotes its placement of paid shared - Media relations
brand, image and advertisements - High courtesy/
reputation reliability rating of
media relations
personnel or
any Company
representative
- provide sufficient
information about
the Company's
projects and
understanding of
its brands

Neighbors beyond Implementation - Local - Stringent - Partnerships with


LOCAL the Company’s of development employment selection process LGU or the local
COMMUNITIES: fencelines programs on /implementation communities
- Livelihood
barangay education, of policy for for Solid Waste
assistance
alliance employment, subcontractors Management (SWM)
environment, - Environmental to lessen unpaid programs
peace and program labor incidents
- Strengthening of
order, livelihood - Scholarship - Traffic congestion
the alliance
and alliance program - Sidewalk vendors
strengthening and fragmented - Implementation of
initiatives - Encouraging small access roads programs aligned
entrepreneurs by - Suspected illegal to the needs of the
supporting their drug use by BPO community
products employees - Local employment
- Increase in - High fuel prioritization
barangay income consumption
through barangay used in waste
permits from mall collection
merchants and - Reporting of
locators the number of
employees per
barangay

CHI 2014 Annual and Sustainability Report 115


OUR STAKEHOLDERS AND THEIR SUSTAINABILITY
MATERIAL
ASPECTS
CUSTOMERS REGULATORS SHAREHOLDERS GOVERNMENT EMPLOYEES
G4-24, G4-26, G4-27

Materials, Effluents and


Waste, Energy, Emissions,
Water, Biodiversity

Employment, Labor/
Management Relations,
Occupational Health
and Safety, Training
and Education, Diversity
and Equal Opportunity

Customer Health and


Safety, Product and Service
Labeling, Customer Privacy,
Security Practices

Community Engagement

Economic Performance,
Indirect Economic Impacts

Procurement Practices
and Supplier Impact
Assessments

Compliance and Grievance


Mechanism aspects covering
relevant categories

LEGEND:

Submission of timely Contractors’ training Tie-ups/involvement in


transparent reports, seminars on QEHS Surveys stakeholders’ activities
disclosures and best practices by invitation
other requirements

Regular monitoring/ Townhall Volunteer


reviews/audits meetings programs

116 Let’s Build for Tomorrow's Generations


PRIORITIES G4-24, G4-27
MODES OF ENGAGEMENT
G4-26
SUPPLIERS AND LOCAL
MEDIA
PARTNERS COMMUNITIES

Annual Supplier Accreditation


Integrated Concerns
Stockholders’ and Annual Performance
marketing handling
Meeting Evaluation

Agbayay Volunteer Shareholder


Press
Program and Inquiries and
Conferences
Employee Updates
Engagement
Initiatives
CHI 2014 Annual and Sustainability Report 117
Our Sustainability
Performance
WATER
19%
reduction of water
consumption
Water intensity equivalent to

(per GFA)
down by 36% 45,961 m3
at Ayala Center Cebu and CHI
at the CHI Corporate Office corporate office

EMISSIONS BIODIVERSITY

Expanded data gathering


mechanism to include Scope 3
8,437 trees
700 propagules

368 2%
reduction in
of CO2e reduced average GHG planted in
across Scopes 1-3 intensity 2014
at retail, office and at Ayala Center Cebu
tonnes estate developments and The Walk

17%
reduction in average
GHG intensity at Cebu Business
Park and Cebu I.T. Park

Let’s Build for Tomorrow's Generations


MATERIALS
recycled rebars
in 2014 totaled 1,764 m3
Improved instruments of measurement
for data reporting using project lifecycles

WASTES

24%
proper disposal, reuse,
reduction and recycling

waste reduction 14,780 tons of wastes

ENERGY

4%
reduction in electricity 17%
reduction
in energy
intensity at
consumption at Ayala Center Cebu Business Park
Cebu, Cebu Business Park and and Cebu I.T. Park
Cebu I.T. Park (478,451 kwH)

10,697
2% reduction
in energy
intensity
at Ayala Center Cebu
57%
reduction in
diesel
consumption
liters
at The Walk and
eBloc Towers
and The Walk

CHI 2014 Annual and Sustainability Report


Measure
and track ENVIRONMENT

progress. For the implementation of our Environmental,


Health and Safety and Climate Change Policies,
we rely on our Project Support/Technical
Asset Management Unit and Health and Safety
Committee in coordination with our general
At CHI, we have an contractor, Makati Development Corporation
and service provider, Ayala Property Management
opportunity to do things Corporation. This team regularly creates
synergies on efficiency improvements.

right in the way that we As a check and balance for the continued
implementation of our environmental
manage and use our engagements, we ensure compliance to all
applicable laws and conduct timely impact and
resources directl re ecting risk assessments, monthly performance reviews,
and recurring up-to-date capacity building
value in the way we programs. We rely on our employees, our
partners, and our customers as contributors to

do business. our environmental sustainability initiatives. DMA


Environmental, Health and Safety Policy

In providing real estate products and services, we commit to sustainable


development and the safety and health of our employees by:

Mitigating land, air and water pollution by addressing the


1 significant environmental impacts of our operations;

Mitigating the occupational risks by addressing the significant


2 hazards in the workplace and operations;

Complying with relevant environmental and occupational health


3 and safety laws and regulations;

Continuously reviewing our operational processes for resource


4 conservation, waste reduction and the mitigation of occupational
hazards and risks; and

Continually improving efficiencies through new, safe and


5 innovative technologies and processes.

CHI 2014 Annual and Sustainability Report 121


Handling our Materials Responsibly

The materials management is a key component of our business practice. We have existing procedures for
handling and disposal of waste. DMA Materials

On Our Construction Materials

Materials Use

In 2014, Cebu Holdings, Inc. (CHI) completed four residential developments and one office building. This
added a total of 135,829 square meters to the Company’s portfolio of constructed projects. Below are the
details of each completed project:

CONSTRUCTED FLOOR PROJECT PROJECT


AREA (sqm) START COMPLETION

RESIDENTIAL

1016 Residences 25,921.42 May 2, 2011 2014

Avida Tower 1 34,882.29 July 20, 2010 2014

Avida Tower 2 30,510.99 June 17, 2011 2014

Sedona Parc 14,566.00 May 4, 2011 2014

OFFICE

eBloc Tower 3 29,948.41 June 18, 2012 2014

In 2015, CHI looks forward to the turn-over of two more office buildings and four more residential
properties between 2016 and 2017. Strategically located in the city’s business districts, these
developments contribute to the growing demand for home and office spaces ably supported by retail
areas near project sites.

122 Let’s Build for Tomorrow's Generations


CONSTRUCTED FLOOR PERCENTAGE PROJECT
AREA (sqm) COMPLETION COMPLETION

RESIDENTIAL

Park Point Residences 46,781.00 44% 2016

Solinea Tower 1 53,362.56 25% 2016

Avida Tower Riala 1 37,794.00 19% 2017

Avida Tower Riala 2 32,510.00 16% 2017

OFFICE

ACC Corporate Center 57,540.59 39% 2015

eBloc Tower 4 27,482.61 23% 2015

Within a project’s life cycle, the amount of


construction materials used in real estate
construction is considerable.

It is of significant note that having simultaneous


CEMENT: SAND AND GRAVEL:
projects in development means different stages
or progression in view of completion. To render
data more relevant, CHI discloses its use of
384,358 116,446
bags bags
materials based on the entire project lifespan as
opposed to a year-on-year comparison.

Total materials used per completed project is


reported, for comparison purposes, upon project
completion. Most commonly used materials
in building construction include cement, sand
and gravel, wood, and rebars which have been REBARS: WOOD:
identified and measured. G4-EN1
47,7 73 1,446
kilograms cubic meters

CHI 2014 Annual and Sustainability Report 123


Breakdown of materials used per project is To read on additional data, refer to page 204 of
detailed on pages 192 to 206 of this Report. this Report.

Our contractor also made use of 1,764 m3 of


recycled rebars in 2014, offsetting a portion of
Managing our Waste,
the required construction materials. G4-EN2 Collaborating for Shared Value

As part of our conservation efforts on resource Proper waste management is crucial to our
scarcity, CHI reports on materials intensity, environmental performance. It has the potential
computed as the total consumption of materials to affect our water supply, air quality, and
per square meter of constructed floor area. contribute to our greenhouse gas emissions.
We are committed to the proper handling of
Projects have varying intensities per type of our wastes and advocate to reduce, reuse and
material used. For cement, 1016 Residences recycle where applicable.
posted 7.38 bags per sqm, the highest for a
residential property. Sedona Parc reported an We have tapped our neighboring communities
intensity of 6.59 bags of sand and gravel per sqm, for increased awareness and support on this issue
the highest among the three residential projects.

Materials Intensity per Project G4-9

8
7.38
7
6.59
Materials consumed per sqm of CFA

6.01
6

0.74
1
0.43
0.04 0.08 0.08 0.01 0.07 0.02
0.01
0
Cement Sand and Gravel Wood Rebars

1016 Residences Avida Towers Sedona Parc eBloc Tower 3

124 Let’s Build for Tomorrow's Generations


and have arrived at a long term, deeply-rooted, and residuals collected from the Company’s
mutually-beneficial solution. DMA Effluents and Waste properties and activities. G4-EN23

Waste Management As part of our social value initiatives, a


neighboring community is our accredited
Our Generated Waste collector. They received previous and ongoing
seminars on proper waste management and
In 2014, total waste generated from CHI-owned
handling. Once the sorting process has been
properties was at 14,790 tons, 24 percent below
properly done, recyclables are sold and residual
the registered total of 19,381 tons in the previous
wastes are delivered to the city landfill.
year. This covers all compostable, recyclables

Total Solid Waste Generated G4-EN23

25
Thousand tons

20

15

10

0
2013 2014

Pojects under Operational Properties Completed Projects


construction*

CHI 2014 Annual and Sustainability Report 125


ACC-Corporate Center, currently under
construction, generates the bulk of the waste
produced with 10,808 tons in 2013 and 5,521
tons in 2014. This is followed by Ayala Center
Cebu and the two business parks. Our other
.04
BIODEGRADABLE
properties contributed at smaller scales. 1,300
kg
Busted bulbs are tracked as hazardous waste
across all properties. In 2014, 261 kilograms of
88.17
RESIDUAL WASTE 11.7 9
bulbs were sent for on-site storage, a 131-percent
increase from the 113 kilograms collected and 3,030,910 RECYCLABLE WASTE

reported the year before. kg 405,313


kg

Total Wastes Total Wastes


collected collected from
(in tons) Ayala Center Cebu
(in kg)

2013 2014 2013 2014

Completed Biodegradable 122,544 1,300


3,312.40 2,908.84
Projects
Recyclables 305,684 405,313
Operational
4,054.97 4,937.41
Properties Residuals 2,214,024 3,030,910
Properties under
12,013.52 6,933.74
construction

* Data does not include figures from Park Point Residences


and Avida Towers Riala

126
Wastes Generated at Ayala Center Cebu G4-EN23

Thousand kilos
4,000

Solid Waste Management Program Highlights 3,500

3,000
CHI continued with its strong solid waste
management partnership with Barangay Luz 2,500

in 2014. A total collection of 3,437,523 kilos of 2,000

biodegradables, recyclables and residuals by the 1,500

community was made in 2014, up 31 percent


1,000
from the 2,631,641 kilos accounted in 2013.
500

0
2013 2014

Residual Recyclable Biodegradable

The recyclables collected generated an income


of P2,949,363.06 for the community workers of
Brgy. Luz in 2014.

To read on additional data, refer to pages 192-193


RECYCLABLES of this Report.
COLLECTED

35 dry cartons
6 plastic cups

13 mixed waste 5 mineral


water bottles
straw, aluminum cans,
9 glass
4 paper, plastic, galons,
chipboard, newspaper,

8 tin cans

3
metal sheets
wet cartons

8 assorted plastic

2 plastic galons

7 poly bag

CHI 2014 Annual and Sustainability Report 127


Cebu Business Park Green Space and
Composting Facility

Tugkaran (Cebuano term for yard) is a


2,805-square meter facility that features the
full cycle of solid waste management at Cebu
Business Park (CBP). This has served as a venue
to showcase best practices on segregation,
recycling and composting.

This provides a space that will allow Cebu


Business Park and Ayala Center Cebu to divert
organic materials from the solid waste stream.
Organic waste (i.e. grass cuttings from the
business park, food waste, and fruit peelings
and vegetables from the mall’s supermarkets)
will go into the system of compost production
until organic fertilizer is harvested, sold or used
locally. Income generated from this project goes
to the composting team from Barangays Luz,
Kamputhaw, Apas and Hipodromo.

This space serves as a venue to make the Cebu


Business Park a model of eco-friendly practices
as means to educate the community. This area
also has become a venue to engage barangay
volunteers in the planning and development of a
small-scale ecopark.

128 Let’s Build for Tomorrow's Generations


In 2014, CHI partnered with the Cebu Uniting In addition, CUSW facilitated the conduct
for Sustainable Water Foundation, Inc. (CUSW) of weekly meetings and workshops on the
to revisit the composting facility and process production of plastic pots out of 1.5-liter pet
in Tugkaran. Activities included the 1) conduct bottles to be used for planting vegetables.
of training and workshops to enhance the
knowledge and skills of the barangay volunteers
in biodegradable waste handling and vegetable
growing; 2) development of a portion of the area
into a vegetable garden as a source of additional
livelihood income for barangay volunteers.

The training highlighted the basic provisions


of RA-9003 or the Ecological Solid Waste
Management Act of 2000 and focused on the
target to reduce and divert the volume of garbage
brought to the landfill. By yearend, the team generated four compost
heaps with a total of 1,250 kilos that can be
In addition, Takakura Composting was used as soil conditioner. To improve on the
introduced to replace the current vermin- team’s productivity, the barangay’s composting
composting methods and techniques applied and the segregation teams, with CUSW and the
at Tugkaran. A demonstration on the use of property management of Cebu Business Park and
PET bottles as an alternative material for wall Ayala Center Cebu are looking into the process
container gardening was rendered in order to improvement to generate more output from
encourage participants in establishing backyard this program.
vegetable and herb gardens. This activity was also
supplemented by an actual demonstration on the
process of loading and mixing 200 kilos of fresh
garbage collected from Ayala Center Cebu.

CHI employee volunteers, together with the residents


of Barangays Luz, Kamputhaw, Apas and Hipodromo,
participated in the clean-up activity Tugkaran on
September 24, 2014. This was in celebration of the
National Clean-Up Month.

CHI 2014 Annual and Sustainability Report 129


Minding our Energy Consumption CHI’s total direct energy consumption from
diesel usage (specific to use of power generator
Rising energy costs and a projected decrease in sets at operational properties) was 108,711
power supply is a continuing challenge for timely liters, 76 percent higher than the 61,617 liters
delivery of our projects. Electricity consumption consumed in 2013. This is attributable to the
makes for a good proportion of our operational mall's engagement with PhilEnergy, Ayala Land's
costs. Improving our energy efficiency allows partner, to improve its aircon facilities. During
us to reduce cost. We introduce technological the first four months of the year, PhilEnergy
innovations as cost efficient, high standard consumed 85,440 liters of diesel or 85 percent of
alternatives that can lower our carbon footprint. the year's total consumption.
Integrating energy efficiency considerations into
our own design and construction enable long Total indirect energy consumption from
term benefits for the Company. DMA Energy electricity consumption at operational properties
was 57 million kWh, up 10 percent from 51.9
Our Energy Readings million kWh reading in 2013. The increase is
attributed to the expansion of Ayala Center
In 2014, total energy consumption was Cebu with additional 125 merchants occupying
217,378 gigajoules (GJ), 10 percent higher than 29,600 sqm.
197,122 GJ in 2013. Ninety six percent or 209.2
thousand GJ came from leased properties. Total Energy Consumption G4-EN3, G4-EN4
Energy consumed from completed projects and 250

construction activities contributed 4.2 and 3.9


Thousand Gigajoules

thousand GJ, respectively. G4-EN3


200

Total Energy Consumed (in GJ) 150

2013 2014
100

Completed Projects 1,818.00 4,245.80

Projects under 50
5,987.10 3,888.60
construction

Operational Properties 189,316.90 209,243.00


0
2013 2014

Completed Projects Properties under construction Operational Properties

130 Let’s Build for Tomorrow's Generations


Climate Change Policy

We believe that climate change is among the greatest of threats to mankind


and business sustainability, and its effect is global, local and personal.

We recognize our important role in mitigating climate change through our


business practices.

As a response we will:

Become more energy-efficient in our operations;


1
Begin to account and reduce the carbon footprint in our
2 operations, our products and services through our own efforts
and by influencing our contractors; and

Continue to ensure the health and viability of our controlled


3 protected areas, which serve as carbon sinks.

CHI 2014 Annual and Sustainability Report 131


Reducing Our Energy Consumption On 10,697 liters of fuel was recorded, with the two
Our Properties eBloc Towers contributing 82 percent or 8,808
liters, and The Walk with 1,889 liters.
CHI tracks total energy consumed (fuel +
purchased electricity) and energy intensity from Similarly, reductions from common areas was at
its properties. This is based on total energy 210,506 kWh for Ayala Center Cebu; 184,700 kWh
consumption of retail merchants, office building for eBloc Tower 1; 57,734 kWh for Cebu I.T. Park;
locators and common areas. and 25,511 kWh for Cebu Business Park, totaling
478,451 kWh of electricity consumption reduced
CHI is consistently working towards reducing in 2014. This accomplishment is attributable to
energy use. From 2013, a total reduction of

Total Energy Consumed per Operational Property G4-EN4

160
Energy Consumed (thousand Gigajoules)

140

120

100

80

60

40

20

0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office Mall Admin
Cebu Park Park Office

2013 2014

Energy Consumed (Gigajoules)

RETAIL OFFICE ESTATE* CORPORATE OFFICE

CEBU
AYALA eBLOC eBLOC CEBU I.T. CHI MALL ADMIN
THE WALK BUSINESS
CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE OFFICE
PARK

2013 134,972.1 5,463.4 25,637.3 20,378.9 1,341.5 784.5 477.4 261.8

2014 149,183.7 5,370.8 24,522.3 27,278.9 1,249.6 576.7 645.6 415.4

*Data includes purchased electricity consumption from common areas only.

132 Let’s Build for Tomorrow's Generations


133

our energy efficiency initiatives which include


LED retrofit program at the basement parking
area and lighting schedule adjustment. G4-EN6

To measure energy efficiency, we monitor Ayala Center Cebu


total energy consumed by each property
per square meter of gross floor area. This presented with
measure is important to gauge reduction
of our environmental impact in view of
Kasangga Award
business expansion.
At the simultaneous Cebu Unplugged
Retail spaces and office buildings posted higher Advocacy campaign launch and Kasangga
intensities primarily because of high energy use. Awards on June 5, 2014, Ayala Center
Ayala Center Cebu remains our biggest energy Cebu was recognized as one of the Visayan
consumer across our properties, followed by Electric Company’s (VECO’s) Interruptible
our two eBloc Towers. We continue to work Load Program (ILP) partners. The ILP
on improving our building designs and chiller System adopted by VECO seeks to address
systems among other innovations to drive the energy supply insufficiencies. It also takes
numbers down in succeeding years. into account blackout concerns seen to
affect Cebu arising from the destruction
of several power plants in 2013 by
Properties having the same use (e.g. retail, office)
typhoon Yolanda.
have consistent, similar intensities.

As an ILP partner, Ayala Center Cebu’s power


Our Completed Projects source automatically shifts from the grid
to the Company’s generators during peak
The entire period of construction per project hours. This would allow energy redistribution
is the data basis for CHI’s measures of total to consumers with lesser capabilities. The
energy consumption (fuel + purchased electricity Kasangga award is given in approbation of
consumption). This is done to account for Ayala Center Cebu’s commitment to action.
variations in type, number and construction
stages within a given year giving better
application of our measurements.

TOP PHOTO: L-R: VECO Vice President for operations,


Ricky Lacson, Ayala Center Cebu's Bong Dy and Rudy
Reuyan, and VECO Chief Operating Officer
Sebastian Lacson.
Total energy consumed was 2,930.9 GJ or 0.11 GJ/sqm of constructed floor area for 1016 Residences;
3,485.7 GJ or 0.05 GJ/sqm for Avida Towers 1 and 2; 2,228.2 GJ or 0.15 GJ/sqm for Sedona Parc; and
1,075 GJ or 0.04 GJ/sqm for eBloc Tower 3, the only office building completed in 2014.

Among the three residential projects, Sedona Parc is the most energy intensive.

To read on additional data, refer to pages 194-197, 204-205 of this Report.

Total Energy Consumption and Intensity per Completed Project G4-EN4, G4-EN5

4,000 0.18
Total energy consumed (GJ)

Intensity (GJ/sqm)
3,500 0.16

0.14
3,000

0.12
2,500
0.10

2,000
0.08

1,500
0.06

1,000
0.04

500 0.02

0 0.00
1016 Residences Avida Towers Sedona Parc eBloc Tower 3

Fuel Consumed Purchased Electricity Intensity

Total energy consumed and energy intensity

RESIDENTIAL OFFICE

1016 RESIDENCES AVIDA TOWERS SEDONA PARC eBLOC TOWER 3

Fuel Consumed (GJ) 191.2 544.4 840.0 157.9

Purchased Electricity Consumed (GJ) 2,739.6 2,941.3 1,388.2 11.9

Intensity (GJ per sqm) 0.11 0.05 0.15 0.01

134 Let’s Build for Tomorrow's Generations


Lowering Our Emissions, Expanding our Scope

Development and construction projects are major sources of our emissions. We track and work with
our contractors to identify opportunities for reductions in fuel consumption while helping improve our
emissions performance. Achieving this not only delivers mutual cost benefits and maximised efficiencies,
it also leads to improved environmental outcomes that benefit the business for the longer term.
DMA Emissions

Energy Intensity per Operational Property G4-EN5 CRE1


Total Energy Consumed per sqm of GFA

1.20

1.00

0.80

0.60

0.40

0.20

0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office Mall Admin
Cebu Park Park Office

2013 2014

Total Energy Consumed (Gigajoules per sqm)

RETAIL OFFICE ESTATE* CORPORATE OFFICE

CEBU
AYALA eBLOC eBLOC CEBU I.T. CHI MALL ADMIN
THE WALK BUSINESS
CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE OFFICE
PARK

2013 1.13 1.07 0.99 0.59 0.007 0.007 0.7 0.3

2014 1.11 1.05 0.95 0.78 0.006 0.005 1.0 0.5

*Denominator used to compute for intensity was the difference between gross floor area and gross leasable area to account for
consumption from common areas only.

CHI 2014 Annual and Sustainability Report 135


Our Direct and Indirect Emissions
collaborative engagement with our locators to
further lower our indirect emissions in the future.
Emissions to Air

The Company’s carbon emissions include direct In 2014, total carbon emission was 35,699 tonnes
emissions from fuel used in power generators of CO2 equivalent, 11 percent up from last year’s
and loss of refrigerant in air conditioning systems 32,211 tonnes. The largest contributor was
(Scope 1), indirect emissions due to purchased energy usage by mall merchants, office building
electricity consumed at common areas of locators and from our construction activities,
various properties (Scope 2) as well as other accounting for 26,564 tonnes or 74 percent
indirect emissions arising from fuel and electricity of the Company’s carbon footprint. Emissions
usage by our retail mall merchants, office from electricity use reached 8,843 tonnes or
building locators and from our construction 25 percent while Scope 1 emissions from diesel
activities (Scope 3). usage was at 293 tonnes or one percent of the
total emissions.
This is the first time that CHI expanded its data
collection system and report on Scope 3. We
consider these new measures as guidance for

Total GHG Emissions G4-EN15, G4-EN16, G4-EN17

40

30
Thousand tonnes of CO₂e

Total GHG Emissions (tonnes of CO2e)

20
2013 2014

Projects under
456.3 380.7 10
construction

Completed Projects 267.9 671.2


0
2013 2014
Operational Properties 31,487.3 34,647.3
Projects Under Construction Completed Projects Operational Properties

136 Let’s Build for Tomorrow's Generations


EMISSIONS perspective, reduction of Scope 1 emissions was
at 29 tonnes of CO2e, Scope 2 at 289 tonnes, and
Our Leased Properties Scope 3 at 368 tonnes. G4-EN19

CHI monitors its carbon emissions per property Normalizing the carbon emissions by total floor
creating more opportunity to reduce its area per property, data shows GHG or carbon
environmental impacts. Communication via intensities having slight decreases for our
audio or video conferencing is encouraged operating developments. This observation is true
where possible, to minimize overseas travel. for Ayala Center Cebu, The Walk, eBloc Tower
1 and the two estates, Cebu Business Park and
Scope 3 emissions, retail and office properties, Cebu I.T. Park.
contributed the largest portion of our total
emissions: Ayala Center Cebu - 17,410 tonnes of Our goal in the future is to lower our properties’
CO2e, The Walk - 807 tonnes, eBloc Tower 1 - GHG intensity, especially for eBloc Tower 2 and
3,579 tonnes, and eBloc Tower 2 - 3,716 tonnes. our corporate offices.

The 2014 higher figures are commensurate to Our Completed Projects


increased business activities resulting from the
expansion of Ayala Center Cebu as those of CHI recognizes the significant environmental
the offices. impact of construction activities and takes note
of direct and indirect emissions resulting from
Our Operational Properties our construction projects. It is a direction we
are looking into for future collaboration on
As a result of our efficiency initiatives, our emissions reduction.
properties achieved total GHG reduction of 368
tonnes of CO2e. Broken down per property, The Company measures and monitors energy
carbon reduction was 167 tonnes for eBloc and emission data from its construction sites.
Tower 1, 127 tonnes for Ayala Center Cebu, 35 Consistently adopting the same principle of
tonnes for Cebu I.T. Park, and Cebu Business
Park, and 39 tonnes for The Walk and eBloc
Tower 2. Correspondingly, on a per scope

CHI 2014 Annual and Sustainability Report 137


disclosure on project life cycles, we track our tonnes or 0.020 tonne per sqm for Sedona Parc;
emissions through data comparison per project and 13 tonnes or 0.00043 tonne per sqm for
completion rather than a per annual evaluation. eBloc Tower 3.
Total direct and indirect emissions was 472
tonnes or 0.018 tonne per sqm. Constructed To read on additional data, refer to pages
floor area for 1016 Residences, 531 tonnes or 197-201, 205-206 on this Report.
0.008 tonne per sqm for Avida Towers, 291

GHG Emissions per Property: Estates and Corporate Offices' Common Areas
G4-EN15, G4-EN16, G4-EN17

0.3
Thousand tonnes of CO₂e

0.2

0.2

0.1

0.1

0.0
2013 2014 2013 2014 2013 2014 2013 2014
CBP CBP CITP CITP CHI Office CHI Office Mall Admin Office Mall Admin Office

Scope 2

Total GHG Emissions (tonnes of CO2e)

ESTATE* CORPORATE OFFICE

2013 CEBU 2014 CEBU 2013 2014 2013 2014


2013 2014
BUSINESS BUSINESS CEBU I.T. CEBU I.T. MALL ADMIN MALL ADMIN
CHI OFFICE CHI OFFICE
PARK PARK PARK PARK OFFICE OFFICE

Scope 2 224.8 209.4 131.4 96.6 80.0 108.2 43.9 69.6

*Data was derived from electricity usage in common areas only.

138 Let’s Build for Tomorrow's Generations


GHG Intensity per Operational Property G4-EN18, CRE3

0.200

0.180

0.160
Total GHG emissions per sqm of GFA

0.140

0.120

0.100

0.080

0.060

0.040

0.020

0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office Mall Admin
Cebu Park Park Office
2013 2014

Total GHG emissions per sqm of GFA

RETAIL OFFICE ESTATE* CORPORATE OFFICE*

AYALA CEBU
eBLOC eBLOC CEBU I.T. CHI MALL ADMIN
CENTER THE WALK BUSINESS
TOWER 1 TOWER 2 PARK OFFICE OFFICE
CEBU PARK

Scope 1 0.188 0.177 0.164 0.098 0.0012 0.0011 0.119 0.055

Scope 2 0.182 0.176 0.158 0.131 0.0011 0.0008 0.160 0.087

*Data was derived from electricity usage in common areas only.

CHI 2014 Annual and Sustainability Report 139


GHG Emissions per Completed Project G4-EN17, G4-EN18, CRE4

500 0.050

450 0.045

400 0.040

350 0.035

300 0.030

Tonnes CO₂e / sqm of CFA


Total Tonnes of C0₂e

250 0.025

200 0.020

150 0.015

100 0.010

50 0.005

0 0.000
1016 Residences Avida Towers Sedona Parc eBloc Tower 3

Scope 3 Intensity

GHG Emissions (tonnes of CO2e)


RESIDENTIAL OFFICE

1016 AVIDA SEDONA eBLOC


RESIDENCES TOWERS PARC TOWER 3

Scope 3 (tonnes of CO2e) 472.3 530.6 290.9 13.0

Intensity (tonnes of CO2e/sqm) 0.018 0.008 0.020 0.0004

Sewage Treatment Plant


Cebu Business Park Cebu I.T. Park
The hours of operation of the Sewage Treatment Construction of a Sequencing Batch Reactor
Plant (STP) has been adjusted for both scheduled (SBR) with a capacity of 5,000 cu.m. per day is
running and idle hours for better electricity scheduled for 2015 to be located beside the
consumption efficiency. This optimizes STP existing wetland. This is to address increase in
operations where only an average daily 3,500 build-up and occupancy that may be beyond the
cu.m. of wastewater is generated in view of the existing wetlands' capacity of efficiently treating
STP’s 10,000 cu.m. design capacity per day. waste water.

140 Let’s Build for Tomorrow's Generations


Using Water Wisely

Water is a vital resource. We use water in the increase is due to higher water consumption
development and management of our projects generated by the mall expansion and from
at all phases. It is important that we source our completed projects.
water responsibly, use it efficiently and cost-
effectively, and manage its quality. We adhere Improving on last year’s data, we tracked water
to a strong focus of our water management and consumption of our retail merchants and
quality in our operations. We strive to effectively office building. We hope to use these numbers
manage our water consumption and quality per to advocate for over-all improved water
point of project life cycles. Where applicable, we use efficiency.
consider access to alternate water infrastructure
and support innovations promoting water On a per source basis, all properties of CHI
use efficiency. DMA Water located at Cebu Business Park withdraw
water from water utility providers. All Cebu
Our Water Usage I.T. Park developments (construction activities
included) source water from the ground. CHI
Water Consumption acknowledges the environmental impact of
this and is on an ongoing consultation with
In 2014, CHI’s total water consumption was experts and related parties for recourse to better
603,526 cubic meters (m3), 13 percent higher sustainable sourcing of water.
than the 532,362 m3 recorded in 2013. This

Total Water Consumption G4-EN8 Total Water Consumed (m3)

600
2013 2014
500
Thousand Cubic Meters

400 Projects under


8,903.8 16,542.3
construction
300
Completed Projects 24,973.5 62,099.5
200

Operational
100 498,484.6 524,883.8
Properties
0
2013 2014

Projects Under Construction Completed Projects Operational Properties

CHI 2014 Annual and Sustainability Report 141


Our Operational Properties m3 of 2013. Specific to common areas at the
mall, Ayala Center Cebu realized decreased water
Water consumption at retail and office consumption by 45,812 m3. Meanwhile, The Walk
developments including estates increased from showed a 41 percent increase in consumption
last year. from last year’s 15,589 m3, translating to an
intensity of 4.31 m3 per square meter. This is a
Ayala Center Cebu recorded a total of result of increased water consumption by new
388,033 m3 or 2.87 m3 per square meter of gross additional mall merchants.
floor area, three percent higher than the 378,207

Water Consumed per Operational Property G4-EN8

450

400

350
Thousand Cubic Meters

300

250

200

150

100

50

0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office
Cebu Park Park

2013 2014

Water Consumed (m3)

RETAIL OFFICE ESTATE* CORPORATE OFFICE

CEBU
AYALA eBLOC eBLOC CEBU I.T. CHI
THE WALK BUSINESS
CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE
PARK

2013 378,206.5 15,588.5 62,551.4 39,948.0 1,128.7 643.5 418.0

2014 388,033.0 22,033.9 49,361.6 57,335.0 3,632.0 4,249.3 269.0

*Data derived from common areas only.

142 Let’s Build for Tomorrow's Generations


Overall, total water usage at office properties was particularly measured by a lower intensity. In our
106,697 m3 in 2014, a four percent increase from CHI Office, we achieved a 36 percent decrease
102,499 m3 in 2013. eBloc Tower 1 reported of water consumed per square meter of total
a 21 percent decrease in water consumption common area space.
from 62,551 m3 to 49,362 m3 or 1.9 m3 per sq.
m. However, eBloc Tower 2 had a 44 percent Our leasing, commercial and residential
increase in water usage translating to a higher properties, make use of water sub metering
intensity of 1.65 m3 per sq. m from 1.15 in 2013. systems to monitor water consumption by our
residents, tenants, merchants, and locators. Our
Water usage at common areas of our estates service provider Ayala Property Management
and corporate offices are continually monitored Corporation, monitors and analyzes data to help
for water efficiency improvements. This is identify areas of excessive water consumption.

Water Intensity per Operational Property CRE2

5.0
Cubic meters per sqm

4.0

3.0

2.0

1.0

0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office
Cebu Park Park

2013 2014

Water Intensity (m3 per sqm)

RETAIL OFFICE ESTATE* CORPORATE OFFICE

CEBU
AYALA eBLOC eBLOC CEBU I.T. CHI
THE WALK BUSINESS
CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE
PARK

2013 3.17 3.05 2.41 1.15 0.006 0.006 0.6

2014 2.87 4.31 1.90 1.65 0.019 0.037 0.4

CHI 2014 Annual and Sustainability Report 143


Moving forward, we will conduct discussions with year comparison for water data has allowed us
our residents, tenants, merchants, and locators to better understand and make changes on our
for more participative and committed measures approach to water consumption. Our total water
for using water wisely. We will continue to use consumption was 24,090 m3 or 0.93 m3 per sqm
our sub-metering system as a key tool to manage of constructed floor area for 1016 Residences,
consumption and provider of critical data to 29,417 m3 or 0.45 m3 per sqm for Avida Towers,
achieve our targets. 31,827 m3 or 2.19 m3 per sqm. for Sedona Parc;
and 227,459 m3 or 0.92 for eBloc Tower 3 office
in 2014.
Our Completed Projects

Understanding a project life’s cycle, and using To read on additional data, refer to pages
project completion metrics as against a year-on- 201-203, 206 of this Report.

Total Water Consumption and Intensity per Completed Project G4-EN8, CRE2
Water consumed (thousand m³)

35 2.50

Intensity (m³/sqm)
30
2.00

25

1.50
20

15
1.00

10

0.50
5

0 0.00
1016 Residences Avida Towers Sedona Parc eBloc Tower 3

Total Water Consumed Intensity

RESIDENTIAL OFFICE

1016 RESIDENCES AVIDA TOWERS SEDONA PARC EBLOC TOWERK 3

Total water consumed (m3) 24,090.1 29,417.1 31,827.3 27,458.9

Intensity (m3/sqm) 0.93 0.45 2.19 0.92

144 Let’s Build for Tomorrow's Generations


Biodiversity

We strive to maintain a delicate balance of Parallel to the development of the master plan is
biodiversity impacts to enhance the liveability and the rehabilitation and the protection of adjacent
vitality of our communities. mangrove site to enrich existing vegetation
and to eventually help protect the adjoining
We ensure that we are compliant with applicable community in the future.
laws. We invest heavily in the research, design,
planning and development of our projects. In 2014, we engaged an ecological specialist,
Site assessments are carried out, biodiversity Cebu Uniting for Sustainable Water Foundation,
management plans are developed and Inc. (CUSW) to conduct an initial site mapping
appropriate actions are delivered. We strive to and characterization of a portion of the property
better understand the value that biodiversity where planting, rehabilitation and enrichment
brings to our communities— making them can be done.
stronger and healthier, more resilient of natural
stressors by design, and with a higher quality of As a kick-off activity of our engagement, an initial
life as a result of being part of an area with high mangrove trial planting activity was conducted
biodiversity value. DMA Biodiversity, G4-EN12 in the last quarter of 2014. Participated ably by
27 employee volunteers from CHI and ten from
the community. The group was briefed on the
Current Development: Our Project proper way of planting propagules on varying
in Mactan surfaces. It is projected that further activities
will identify metrics to support and promote
This is a 13-hectare master planned mixed-use positive contribution.
development. This project is located in Barangay
Punta Engaño, Lapu-lapu City where mangroves
are found along the project coastline.

CHI 2014 Annual and Sustainability Report 145


Our Sustainability Technical Working Group
(STWG) oversees this aspect of our biodiversity
initiative. Our Business Development Group,
TOTAL NUMBER
assesses long term protection mechanisms for SPECIES
OF TREES
land development. Taking on an innovative
management approach ensures long term
Cebu Business Park 31 2,531
conservation that benefits the project and
our community. Our pulse surveys with our Cebu I.T. Park 26 918
stakeholders tell us that customers value green Amara 25 703
breathable spaces. Developing land while keeping
in mind restoration of biodiverse areas add value TOTAL: 82 3,972
to our estates.

Trees planted
Tree count data
In 2014, CHI, through its employee volunteers
Existing trees in our areas for development and external partnerships planted 8,437 seedlings
are incorporated into our landscape design. and 700 propagules as part of the Company's
We conduct our inventory of trees grown and environmental initiatives.
nurtured in our estates.

146 Let’s Build for Tomorrow's Generations


Protection and Rehabilitation Efforts
Cebu Holdings, Inc. (CHI) employee volunteers The volunteers also participated in the Forest
took part in two nature restoration activities in Restoration Program kick-off activity of Ayala
separate initiatives in the fourth quarter of 2014. Business Club Cebu, Inc. (ABCCI) in Bgy. Pung-ol
Sibugay also in partnership with CUSW and the
The volunteers with the team of Cebu Uniting people's organization of Bgy. Pung-ol Sibugay.
for Sustainable Water (CUSW) conducted a Activities include collection of wildlings, bagging
trial mangrove planting and coastal clean up and establishment of a recovery chamber for the
on October 21, 2014. This activity was done in wildings collected. The group bagged a total of
preparation for the planned mangrove planting 1,200 seedlings that are scheduled to be planted
scheduled in 2015 as the Company's support to help on the first quarter of 2015.
protect and rehabilitate the mangroves in the coastal
project site in Punta Engaño in Lapu-Lapu City.

CHI volunteers participated in a trial mangrove planting and coastal clean-up in Bgy. Punta Engaño.

CHI volunteers help establish a recovery chamber for wildlings in


Bgy Pung-ol Sibugay, to support the Forest Restoration Program
of Ayala Business Club Cebu, Inc.

CHI 2014 Annual and Sustainability Report 147


Take
action. HUMAN CAPITAL

Employee Engagement

We strive to create a CHI is committed to provide a positive, engaging,


healthy, and empowering environment for its
culture that promotes employees. The workplace brings together
a diverse set of skilled individuals guided by

continual improvement. our set of core values and driven to achieve


CHI’s business goals while also fulfilling their
personal goals.
We continue to invest in
We strive to create a culture that promotes
the development, training continual improvement. We continue to invest in
the development, training and capacity building

and capacity building of of our employees. We continue to provide and


improve our employee wellness programs, and
we will continue to foster a safe, nurturing and
our employees. enabling workplace for our people.

We benchmarked with global real estate


companies listed in Corporate Knights Capital’s
2015 Global 100 Index as only the most
sustainable global corporations are included in
their annual assessment ranking. DMA
At CHI, we encourage our employees
to balance work, home and leisure
activities. We provide an avenue where
we can promote the value of teamwork
through our CHI PLUS (employee
wellness program) and 'Agbayay'
Employee Volunteer Program.

CHI 2014 Annual and Sustainability Report 149


Measuring Engagement Engagement Driver 2:
Teamwork / Work environment
In partnership with an external consultant, CHI
underwent an Organizational Climate Survey We believe in an open, dynamic workplace where
(OCS) in 2013 with the next one slated for 2015. each employee contributes to the best of his or
Ninety-seven percent of the total number of her ability. Different viewpoints yield creativity
employees participated in the survey. and feed innovation. We work through task
groups here at CHI depending upon the needed
Engagement Drivers function. This structure and approach gives us
flexibility and support in achieving operational
efficiencies. It enhances our ability and agility to
Our four key engagement drivers are 1) pride
adapt to differences at any point of any process
in working; 2) teamwork/work environment; 3)
– it fosters respect within and across CHI’s
personal; and 4) work-life balance. These four
employees and creates further opportunities for
indicators not only reflect how well we perform
learning and growth.
as an employer, it is also characteristic of a work
culture aligned to our corporate objectives.
Engagement Driver 3:
Engagement Driver 1: Personal and professional growth
Pride in working with the Company
Empowering our people is crucial to our lasting
growth. Attracting top-level talent and retaining
Our employees take pride that we know their
them allows us to engage and build on their
needs and act in their interest. They work with
talent, commitment and drive for the long
us to help derive sustainable business solutions
term. We maintain top bottom and bottom
and engage in partnerships that strengthen
top open lines of communications. We train,
community relations.
support, reward, and empower our people to be
innovative solution providers confident to make
the right decisions. At CHI, we have decentralized
Individual Competency Plans where a manager
works closely with an employee in their
development plan.

150 Let’s Build for Tomorrow's Generations


Performance Indicators under this sustainability of our business. It is an integral part
Engagement Driver: of our corporate responsibility to innovate ways
to better help all employees and their families
1. New hires and turnover by age group realize health goals, achieve a greater sense
2. Ratio of external hires to internal movements of well-being and work-life balance. As our
3. Average competency-based training hours employees become healthier and more balanced,
by employee category they become more efficient and inspired. This
provides a reciprocal benefit to our business
Engagement Driver 4: and cascades into the communities we serve
Work-life balance as a whole. Two key indicators drive our work-
life balance engagement – CHI PLUS and CHI
CHI’s people drive its success. Their health Agbayay Employee Volunteer Program.
and well-being are critical components to the

Average Competency-based Training Hours


by Employee Category G4-LA9

60 45

39.92
40
50
35
27.59
40 30

25
30
20
13.32
20 15

10
10
5

2012 2013 2014

Probationary/ Supervisors Associates Average for the Year


Regular MTs

CHI 2014 Annual and Sustainability Report 151


ENGAGEMENT DRIVERS

#1 Pride in Working
with the Company #2 Teamwork / Work
Environment
Employees’ pride in working with the Employees’ workplace is a safe, dynamic
organization shows trust in our environment where a culture of positive
Corporate Governance, sustainability engagements and mutual respect are
initiatives and confidence in continued predominant among employees.
employee engagement initiatives

90% 82% 96% 94%


“The company takes “We work with a
of the employees takes pride in effective measures for mutual respect that
proudly tell others recommending the our health and safety allows our team to
that they work in CHI company to others as at work” function smoothly.”
a good place to work

Working for the Company gives


93% 94%
me a sense of pride because
“Our immediate “We work with a
of the Company’s products manager/boss commitment to the
and reputation. encourages company that goes
professional and beyond expectations/
considerate conduct extra mile.”
in the workplace.”

88% The opportunities


that are tied when
working in this company
“We help each other are endless. One’s
innovate and adapt as
potential is fully
the team responds
to new developers.” maximized and
utilized.

152 Let’s Build for Tomorrow's Generations


#3 Personal and
Professional Growth #4 Work-life Balance
Learning oppotunities through varied A responsible employer focuses on the
approaches that allow employees to gain health and well-being of its employees.
knowledge and develop skills that contribute Healthier, well-balanced CHI employees
to their current job and career advancement. are more energized, better motivated
and more efficient.

88% 90% 98% 79%


“We are actively “We work in a variety
encouraged to of tasks that are CHI PLUS employee CHI Employee
enhance our skills interesting and participation Volunteer/Agbayay
and knowledge.” challenging participation
541 volunteer hours
Performance Indicators: 15 volunteer activities

1. New Hires and Turnover


by Age Group CHI develops programs
2. Ratio of External Hires not just focusing on work-related
to Internal Movements goals but also on wellness
3. Average Competency-based of the employees
Training Hours by Employee Category

The Company invests in trainings


and seminars to expose the
employees and enhance
competencies.

CHI 2014 Annual and Sustainability Report 153


154

CHI Recognized in the Cultivating a Culture of


Sustainable Business Sustainability
Awards
Embedding the sustainability mindset within the
Cebu Holdings, Inc. (CHI) was awarded a special company’s culture is critical. Thus, we educate
recognition at the first Sustainable Business our employees across business lines and have
Awards (SBA) Philippines 2014 on July 14 at systems in place to ensure that our sustainability
the Dusit Thani, Manila. CHI is the only Cebu- initiatives are aligned with our long-term
based company cited for best practices in the business goals.
Workforce category.

The goals of the first Sustainable Business Awards


are: (1) to increase awareness of sustainable
business best practices, and (2) to demonstrate
Employee Profile by Gender G4-9, G4-10
how sustainable businesses benefit companies,
the environment and all stakeholders. The
100%
business actions of various companies and
68% 71% 74%
its environmental impacts are quantitatively 80%

assessed in the SBA. Ten categories comprise this


comprehensive framework. 60%

40%
CHI’s high score was in terms of employee
development program and other employee 20% 32% 29%
26%
engagement activities. The Company also
0%
supports off-hour capacity and diversity building 2012 2013 2014

activities under its CHI P.L.U.S employee


Female Male
wellness program.

Leading sustainability experts forming part of the 26% 74%


National Advisory Panel judged the Sustainable
Business Awards.

TOP PHOTO: L-R: Philippine Stock Exchange President and


CEO Hans Sicat, CHI's Francis Monera and Aniceto Bisnar, Jr.,
and Philippine Business for the Environment Executive Director
Bonar Laureto.
We encourage a culture of sustainability through various employee
activities. We continue to strengthen our organization by optimizing use
of human capital, streamlining processes and empowering our people to
achieve the goals we have set.

CHI 2014 Annual and Sustainability Report 155


Composition of Governance Body and Breakdown of Employees by Gender G4-LA12

MALE FEMALE

2012 2013 2014 2012 2013 2014

Board of Directors 8 8 8 1 1 1

Management Team 7 8 8 10 12 13

Supervisors 6 6 6 18 21 24

Associates 10 8 8 25 24 25

Leadership Diversity
Percentage of Women on Board of Directors

2012 2013 2014 Benchmark

Percentage of Women on Board of Directors 11% 11% 11% 20%

Percentage of Women in Executive Management Employee Profile by Employee Category


G4-9, G4-10

100%

15% 21% 24% 24%


80%

8 62% 32% 32% 34%


60%

6
60%
40%

4 40% 39%
38%
59% 20%

0%
2012 2013 2014
0% 10% 20% 30% 40% 50% 60% 70%

Associates Supervisors Probationary/Regular MTs


2012 2013 2014 Benchmark

Note: This benchmark is based on the median values of


companies in the same sector in Corporate Knights Capital’s
2015 Global 100.

156 Let’s Build for Tomorrow's Generations


Employee Hires by Age Group G4-LA1 Employee Turnover by Age Group G4-LA1

12 12

10 2 10

2
6
8 8

9
6 6 1
8 8
4
4 4
5
4
2 2

2012 2013 2014 2012 2013 2014

30-40 years old Below 20 - 30 years old 30-40 years old Below 20 - 30 years old

*Data includes 3 project hires absorbed in 2014. Note: Reason for turnover data in 2014 is all personal
such as marriage or full time pursuit of further education.

The Balanced Scorecard (BSC)


Turn over Rate

CHI continually refines its Balanced Scorecard 14%


(BSC), a strategic management system. It is
based on four vantages of sustainability impacts
8 7%
–financial, customer, internal business process,
and learning and growth. Embedded into our 6
7%
corporate culture, it enables our people to
4
be aware and able to assess and align their
12%
contributions to the business’ sustainability
goals through their individual BSCs. This
performance and productivity framework aligns 0% 5% 10% 15%

with the Quality, Environment, Health and Safety


2012 2013 2014 Benchmark
Management Systems (QEHS MS).

Note: This benchmark is based on the median values


of companies in the same sector in Corporate
Knights Capital’s 2015 Global 100.

CHI 2014 Annual and Sustainability Report 157


Our employees, including new hires, undergo Occupational Health and Safety CRE6
seminars, orientations and workshops that
help embed sustainability in all aspects of their CHI strives to provide a safe and healthy work
functions and for them to gain a clear correlation environment at all times for its employees. We have
of our business goals and the individual Key a clear policy covered in our Quality, Environment,
Result Areas. Health and Safety Management Systems (QEHS
MS). Safety is of premium consideration at CHI and
Competency Development we regularly conduct safety training as needed.
Audits are conducted at regular intervals across our
on Sustainability
facilities. We identified Work Illnesses and Safety
Performance as our indicators.
Sustainability is prevalent in our communications
across our electronic Inside CHI newsletter
Work Illnesses G4-LA6
and our intranet. Actual sustainability practices
observed by CHI employees include monitoring
of C02 emission, waste segregation and recycling.
stomach
Earth Hour, Earth Day, Clean Up Drive initiatives 21 ache
have become regular employee engagements in
conjunction with other CSR activities through our
employee volunteer program. 35 fever

39 flu

40 headache

158 Let’s Build for Tomorrow's Generations


Lost Time Injury Rate G4-LA6

The Safety Organization of the Philippines presented awards of honor to our general
contractor, Makati Development Corporation (MDC). This is in recognition of achieving safe
man-hours without lost time accident in the following projects:

1016 Residences Avida Tower Two ACC Corporate Center

3.1 million safe


man-hours
January 1, 2013-September 30, 2014
3.3 million safe
man-hours
July 20, 2013-September 30, 2014
1.3 million safe
man-hours
January 1, 2013-September 30, 2014

MDC was also recognized for their Perfect Safety Record in the two projects:

Avida Tower One Sedona Parc

2.9 million safe


man-hours
without lost time accident continuously
2.2 million safe
man-hours
without lost time accident continuously
(January 1, 2013-September 30, 2014) (January 1, 2013-September 30, 2014)

Benchmarking against real estate companies Number of Fatalities G4-LA6


included in Corporate Knights Capital’s 2015
Global 100, CHI’s zero rate is the highest • We recorded zero incidents of occupational
achieved of any company in the same sector. related disease.
Note: This benchmark is based on the median values of • We recorded zero fatalities in 2014, a record
companies in the same sector in Corporate Knights Capital’s
2015 Global 100. Benchmark is at 14%.
maintained throughout our reporting period.
Comparing our performance to the median values of
companies in the same sectors that are part of Corporate
Knights Capital’s 2015 Global 100 shows that we are at par
with the world’s best when it comes to ensuring a safe and
secure work environment.

CHI 2014 Annual and Sustainability Report 159


160

Exceed
expectations. Delivering on Our Commitment,
Continuing as a Trusted Brand
DMA Customer Health and Safety, DMA Product and Safety Labeling,
DMA Customer Privacy, DMA Security Practices

We have a strong, clear commitment to our


This section details how we customers across our business lines. Their value
is reflected in the products we develop and in
deliver social value to our how we engage, respect and give high standard
service delivery. Our customers range from

customers. We look after merchants, retailers, shoppers, and locators. As


we seek to understand, respond and deliver on
their changing needs, we monitor, measure and
their satisfaction, safety innovate on improving customer experience and
in how we continue to be a trusted brand.
and security.
We rely on our Quality Policy and our “Focus
on the Customer” core value in meeting our
customers' needs.

Understanding our Customers to


Serve Them Better
Our customer handling process reinforces
customer fidelity and serves to protect our
reputation for developing safe communities.

We have business units in place handling specific


aspects of our customer engagements. Our
Commercial Business Group handles external
customer programs specifically geared to mall
merchants and shoppers.
Quality Policy G4-14

For us, the customer is first and quality is everyone’s job. We commit to:

Deliver our products and services to continually satisfy ever


1 changing expectations of our customers while meeting all
applicable regulatory and statutory requirements;

Provide our employees with competence-building programs to


2 improve productivity; and

Continually improve the Quality Management System's


3 effectiveness through a regular review process.

We have a broad-based customer complaints Our regular reviews touch on the following
handling system, the Total Customer Satisfaction measures: customer acquisition, retention,
Management System (TCS-MS), managed by market leadership and internal and external
our Corporate Communication and Corporate customer satisfaction. Our customers’
Social Responsibility Division. This covers experiences help us strategize and deliver
documentation, management, investigation and on additional value for our customers in our
resolution of customers’ complaints, positive and operations, service delivery and facilities design.
negative feedback as well as inquiries. We empower them to share inputs for our overall
improvement, thus building mutual respect
We conduct internal customer satisfaction between them and our Company.
surveys twice a year. The Ayala Property
Management Corporation (APMC) interfaces We are committed to providing safe and healthy
with our Project Support / Technical Asset spaces for everyone engaging our business:
Management Unit on resolving concerns customers, visitors, contractors, employees and
of owners and tenants of our office neighboring communities. The measures we
building facilities.

CHI 2014 Annual and Sustainability Report 161


undertook in 2014 to improve public safety and Customer Satisfaction Survey Results
security are found in the ERM and Communities G4-PR5

section of this Report found on pages 92-93 and


171-177, respectively. Internal Customer Survey

An uptrend in the Internal Customer Survey


Customer Satisfaction results show that we are improving in our
operations and management processes in pursuit
In envisioning a dynamic and vibrant Cebu, of delivering higher quality products and services.
retaining happy customers is critical to our
continued business sustainability and in leading
CHI’s Internal Customer Survey is conducted
our success to the future. We believe that
twice a year as a check and balance of our
healthier communities make for a better quality
organization’s social climate. In 2014, an average
of life, and in turn, improved well-being. When
rating of 8.7 out of 10, taken from 16 units
our customers are engaged and happy, they
surveyed, reflects an overall healthy business
let others know in their social interactions. We
environment for our employees.
not only get to keep our customers, they help
us expand our customer base. This leads to an
Shoppers’ and Merchants’ Survey
increase in financial returns for the Company.
In 2014, shoppers and merchants at Ayala Center
We conduct annual surveys to evaluate and Cebu voiced higher satisfaction as to the mall’s
monitor our performance on customer personnel, services, procedures and facilities. An
satisfaction. The results of these surveys are overall excellent rating of 9.1 was given, up six
then considered to further improve on our percent from the 8.6 rating record in 2013. The
products and services and analyzed for strategic building itself, mall ambiance, security, facilities
improvements on business performance. and directional signs were the most appreciated
attributes of Ayala Center Cebu according to
In 2014, CHI saw an increase in customer ratings
the surveyed shoppers. Additionally, retail store
from shoppers and merchants of Ayala Center
owners and managers/supervisors rated Ayala
Cebu and office building locators at our eBloc
Center Cebu highly giving an overall rating of 8.1,
Towers. This tool gives us an additional direct line
up seven percent up from last year's 7.6. High
and follow-up of our formal annual stakeholder
satisfaction areas are building facilities, utilities,
engagement. Moving forward, we intend to
services, personnel, systems and procedures.
pursue more shared value collaborations with our
customers at the malls and offices.

162 Let’s Build for Tomorrow's Generations


Office Building Occupants' Survey
maintenance rated very good. The office leasing
Office building locators at Cebu I.T. Park gave a team likewise did well on policy knowledge,
higher overall satisfaction rating of 8.3 for the telephone handling, tenant relations and
services rendered by the property management feedback mechanism for requests.
and office leasing teams servicing the building
occupants. This rating is up six percent than the Our 2014 survey identified areas for improvement
7.8 rating in 2013. On building administration, our on building administration particularly on the
power supply back-up system rated excellent. repair and maintenance of common areas.
Criteria on courteousness, cleanliness and

SURVEY 2012 2013 2014

Internal Customers 8.6 8.7 8.7 Average of


results from
16 divisions /

Ayala Center Cebu departments

Shoppers 8.7 8.6 9.1 surveyed

Ayala Center Cebu


Merchants 7.5 7.6 8.1
eBloc Towers 1
and 2 Locators 8.3 7.8 8.3

CHI 2014 Annual and Sustainability Report 163


164

To strengthen the emergency response system


within the communities of Cebu Business
Park and Cebu I.T. Park, an estate-wide
communication line to all locators, building
occupants, mall merchants and shoppers was
launched. Various emergency rescue teams of
the local government units also demonstrated
disaster preparedness skills in the Safety and
Emergency Preparedness Fair.
Cebu Park District
Emergency
Helplines Launched
A joint affair on Safety and Emergency Preparedness was held last December 3, 2014 at the
Cebu Business Park. Over 75,000 employees from all locators participated in a park-wide drill.
Demonstrations on basic first aid, firefighting/rescue, bomb detection, and awareness then
followed at The Terraces in Ayala Center Cebu.

The event highlight was the launch of the Cebu


Park District Emergency Helplines. These are
dedicated landline and mobile helplines serving
the Cebu I.T. Park and Cebu Business Park
locators, building occupants, mall merchants
and shoppers, and extending to residents within
Metro Cebu.

Partners include the Office of Civil Defense,


Cebu City Disaster Risk Reduction Management
Council, Cebu City Police Office, Bureau of Fire
Protection, Philippine Red Cross, Emergency
Rescue Unit Foundation (ERUF), and the
emergency response teams of the neighboring
communities of Cebu Business Park and Cebu CHI's Aniceto V. Bisnar, Jr. addresses the emergency drill
I.T. Park. volunteers and participants at the Emergency Helpline launch
at the Terraces.

EMERGENCY HELPLINES
Ayala Center Cebu
Ü-First Campaign

Ayala Center Cebu continues to provide its


patrons a pleasurable shopping and dining
experience by making their convenience its
top priority. In line with Ayala Malls’ Ü-First
Campaign, Ayala Center Cebu implements a
continuing program that provides facilities
for the elderly, families and persons
with disabilities.

The Concierge at Ayala Center Cebu provides the The Concierge becomes an avenue for valuable
following services: 1) general information on store feedback for the mall’s continual improvement.
locations, merchants' contact details, events, Priority treatment is provided to the senior
promotions and mass schedules; 2) restaurant citizens and persons with disability (PWD) with
reservation; 3) hotel bookings 4) flight and travel the mall’s wheel-in service, dedicated parking
confirmation; 5) personal shopper assistance; slots and seating areas around the mall.
6) call-a-taxi assistance.

166
Exceeding Our Own Expectations

Performance Monitoring of Outsourced


Moving forward, We are also developing the
Processes
SLA rating guide for our other contracting
We monitor and evaluate the annual performance partner, MDC.
of our property management at Ayala Center
Cebu on agreed service levels. This covers areas Total Customer Satisfaction
of facilities management, financial management, Management System
customer service, and environment, health
and safety. Our Total Customer Satisfaction Management
System (TCS-MS) documents and deploys
Service Level Agreement (SLA) points of policy concerns from customers and merchants at
consider overall ratings or any two of the four Ayala Center Cebu. Specific concerns cover
areas rating below 75 percent as performance issues related to the building’s common areas,
failure. Two successive failures count as a ground rest rooms, customer service, merchants, and
for termination. In 2014, our assessment found security. CHI has a customer feedback hotline
the average total SLA rating to be 89 percent, integrated in the TCS-MS. Complaints received
with customer service and facilities management from the system are recorded and reports are
cited as the strongest service delivery points generated periodically.
of APMC.

CUSTOMER FEEDBACK HOTLINE


text

TEXT: Project Name & Location<space>Feedback Details


example: Ayala Center Cebu Level 3 - no water at family lounge restroom

CHI 2014 Annual and Sustainability Report 167


PWD Awareness
Campaign

In July 2014 a series of activities promoting dignity and respect for Persons With Disabilities
(PWDs) was conducted in Ayala Center Cebu, for the PWD Awareness Month. This month-
long event was cited as Finalist in the International Council of Shopping Centers Asia Pacific
Shopping Center Awards 2014. This honor for excellence was given under category one of the
Asia Awards for Traditional Marketing on Cause-Related Marketing.

168
169

The PWD Awareness Month was in partnership


with the Cebu Provincial Government, Gualandi
Volunteer Service Programme, Inc. (GVSP),
and the Down Syndrome Association of the
Philippines Inc. (DSAPI). Provincial Board Member
Arleigh Sitoy and Vice Governor Agnes Magpale
spearheaded the launch.

moting
y by pro
te diversit s this
Ce le b ra sivenes
p e c t a nd inclu
res onth
dignity, ability m
with Dis
Persons

Activity highlights included 1.) “Inspiration” a


photo exhibit of inspired stories of individuals
overcoming odds, 2.) “Clarissa” a self-titled
painting from a young artist with Down
Syndrome, 3.) a job fair, 4.) the PWD Run and Roll,
5.) PWD Summit and 6.) PWD Got Talent show.

CHI 2014 Annual and Sustainability Report 169


170

Build
capacity. Helping Shape the Future
Empower At CHI, it is of importance that we help our

communities.
clients and our communities maneuver through
their own economic, environmental and
social challenges. We use our expertise, local
knowledge and partnerships to make positive
impacts in the cities and communities where we
do business.

This section underscores In our Company, we see how prudent


development shapes the economic landscape.

how we partner with our When we grow and expand our business, we
have to ensure that our communities have the
capacity to grow with us for equitable economic
fenceline communities. prosperity. DMA Local Communities

Agbayay and CHI Plus Match-up

We match the interests and passions of


our employees to meaningful and needed
community services where we operate. Each
year, employees lend time and expertise to help
non-profit initiatives and organizations and
people in identified neighboring communities.
We strive to develop innovative programs
that use the core strengths, capabilities and
expertise of our business and of our people to
maximize impacts.

Fifteen volunteer activities, which translated


into 541 volunteer hours of service in local
communities within the Metro Cebu area, were
rendered in 2014. We work hand in hand with
community residents to create opportunities
for livelihood, employment, education, peace Community Investments G4-EC1
and order, disaster risk management and arts
and culture. This is how we invested capital to support our
community programs in 2014.
It is not simply about doing the right thing.
Helping people gain on skills to improve the CHI’s community investments is centralized
quality of life is transformative— for the individual, through the Corporate Communication and
their families, communities, our business and our Corporate Social Responsibility Division.
economy at large. The other group with significant community
investment is the mall where people converge
Growing local businesses and markets and use mall space for schools, business and
and enabling local communities socio-civic organizations.

The Company distributed P11.4 million in


We’ve found through our community
community investments. Distribution is
engagements that capacity building, access
detailed below.
to markets, and basic business management
skills go a long way as starter seeds for growth
potential and in building confidence. We bridge
our community relations to our local government
units or business partners and our CSR initiatives
to address the gap.
37
Tourism, Arts,
19
Environment
Culture and Initiative and
Religion Sustainability
Strategy
Small Business Development G4-EN31

We help small businesses acquire the capital,


expertise and other resources they need to
10
Education
21
Relationship
grow. Through our own business network, CHI and Advocacy Building
for Children's
connects small businesses to crucial resources Welfare
that help them succeed. Our support covers the
full spectrum with the intent for the business
to do well enough to be independent. We take
part in investing, product development and
5
Relief
8
Health and
sharing access to markets and clients, business Operations Wellness
management training, facilities and the tapping of
new markets.

CHI 2014 Annual and Sustainability Report 171


'Agbayay' is the term we use to refer to both our community
engagement and employee volunteer programs. Our employee
volunteer program initiatives support the community development
programs of the alliance of neighboring communities of Cebu
Business Park and Cebu I.T. Park.

CSR Programs / Highlights of Agbayay Program in 2014

New Officers Inducted for CPVDC Inks Project Trabaho with


CBPNBAAI Barangay Apas

The Cebu Business Park and Neighboring In addressing unemployment and promoting
Barangays Altruistic Alliance, Inc. (CBPNBAAI) inclusive growth among its neighboring
inducted a new set of officers last July 4 at communities, we partnered with neighboring
the City Sports Club Cebu. The induction of barangays surrounding Cebu Business Park and
officers was witnessed by the barangay captains Cebu I.T. Park in a job fair on August 8, 2014 at
of CBPNBAAI member barangays. CBPNBAAI Barangay Apas.
includes Cebu Business Park, Cebu I.T. Park
and neighboring barangays: Apas, Carreta,
Kamputhaw, Hipodromo, Luz and Mabolo. This
organization expanded to include Barangays
Lahug and Kasambagan.

All the member barangays are partners


in the implementation of community
development programs.

172 Let’s Build for Tomorrow's Generations


CHI Organizes Team Building
Activity for Neighboring
Communities

Cebu I.T. Park hosted an adventure race for the


neighboring communities of Cebu Business Park
and Cebu I.T. Park.

Barangay Apas, Kamputhaw, Hipodromo, Luz,


and Mabolo competed in the Biochallenge.
Cebu Holdings Inc. and the Ayala Property
The move was done to promote the hiring of Management Corp. fielded a guest team.
construction workers and help meet operational Challenges included the planting of seedlings and
and manpower requirements relevant to the emergency preparedness and response.
redevelopment of the mixed-use superblock in
Cebu I.T. Park. Candidates came from barangays The activity also featured supersized Pinoy games
Apas, Mabolo, Luz, Hipodromo, Carreta and of takyan, tirador, jolen and other fun games.
Kamputhaw. The six barangays are members Barangay Apas emerged as the winner.
of the Cebu Business Park and Neighboring
Barangays Altruistic Alliance, Inc. (CBPNBAAI).

CHI 2014 Annual and Sustainability Report 173


CHI Partners with City Agriculture
for Farmers' Market

Cebu Holdings Inc. (CHI) combines community


needs at the Farmers’ Market at the Linear Park
of Cebu Business Park. Open from Wednesday
to Friday every second and fourth week of the
month, upland farmers sell to office workers who
get easy access to fresh produce.

The Farmers’ Market is a joint initiative of CHI


and the City Agriculture Department. The city
government provides market outlets for upland
farmers, cutting off the need for middlemen.

There are 19 satellite markets which are with farmers selling vegetables, fruits and
organized and distributed in urban barangays ornamental plants. Farmers from barangays
Adlaon, Pamutan, Sirao and Tabunan get to sell
their crops at the Farmers' Market.

According to City Agriculturist Joelito Baclayon,


farmer participants feel a sense of contentment
and satisfaction because they have established
regular customers.

Income and sales for farmers' families were also


noted to significantly improve to an average
of seven to nine thousand pesos per market
week. Due to direct customer feedback, crop
productions may also be better adjusted to suit
market needs.

174 Let’s Build for Tomorrow's Generations


Manu Manu also provided the barangay leaders training
on product photography and encouraged the
We continue to support the livelihood and crafts use of social media to reach a broader market
program, for the women folk of Barangay Luz, for Manu Manu products. As a future initiative,
which is now on its seventh year. They use rolled the Company’s volunteer program will include
or woven recycled office paper, newspaper, training on the basics of business management
magazines and the glossy side of sticker papers for the women of Barangay Luz. The goal for
in crafting bags, baskets, coasters, placemats, Manu Manu is to be independently managed in
candle holders, notepads, and pen holders under the future.
the Manu Manu brand.

Trainings on product design and development


has been successful. For 2014, we have helped
establish a Manu Manu community store
within the barangay hall. Employee volunteers

ALI President and CHI Chairman of the Board,


Bernard Vincent O. Dy, with Joy S. Sanciangco of ALI- SLMG
survey the products sold by Barangay Luz during the Ayala sa
Komunidad Fair on November 18 – 20 in Glorietta.

CHI 2014 Annual and Sustainability Report 175


Tugkaran Learning Series

Residents from the member communities of bottles. The materials were collected from the
CBPNBAAI participated in a learning series mall's Material Recovery Facility (MRF) and from
conducted by Cebu Uniting for Sustainable the participants’ own household.
Water (CUSW) at Tugkaran, the tree nursery and
composting facility at Cebu Business Park. A single chair is made out of 150 PET bottles and
will take up to six to eight hours to produce. The
The participants from Barangays Luz, Apas and collection of the biodegradable material was also
Hipodromo spent six consecutive Mondays in maximized with the vertical gardening method
chair making and vertical gardening preparation. where PET bottles were utilized as pot hangers.

In the activity, the participants composed of In December, a culmination activity was held
nine representatives per barangay were able to where barangays were judged according to
produce three chairs made out of recycled PET the quality of the chairs and the volume of PET
bottles collected.

176 Let’s Build for Tomorrow's Generations


CHI Supports Brigada Eskwela Shoe Box Campaign and Milk Drive

Cebu Holdings, Inc. (CHI) remains steadfast in In addition to the relief efforts for typhoon
helping improve the conditions by which children Yolanda-affected Northern towns in Cebu,
in communities receive basic education. In its two campaigns for children were supported by
Agbayay para sa Edukasyon program, CHI’s CHI employees.
support of DepEd’s Brigada Eskwela campaign
was threefold – Shoe boxes filled with school supplies were
given out to students of Tindog Elementary
(1) signage for Mabolo Elementary School and School in Medellin. The wrapped box donations
Kamputhaw Elementary School; replaced the traditional peer-to-peer yuletide gift
exchanges last Christmas.
(2) paint for classroom repainting of Barrio Luz
Elementary School and Camp Lapulapu Employees within companies of the Ayala
Elementary School; and Business Club Cebu, Inc. (ABCCI), including those
of CHI, were likewise engaged in the Northern
(3) an afternoon cleanup campaign by CHI
Cebu Milk Drive, a partnership with Children’s
employee volunteers at Mabolo Elementary
Hour and Tetra Pak, Inc.. Milk products worth
School on May 23, 2014.
P1.5 million were distributed to over 1,200
elementary students in Yolanda affected towns.
Beneficiaries are from Tindog Elementary School
in Medellin and Hagnaya Elementary School
in San Remegio.

CHI 2014 Annual and Sustainability Report 177


178

Catalyze
economic ECONOMIC

development. Our Management Approach


DMA Economic Performance, DMA Indirect Economic Impacts

CHI achieved significant progress in 2014. Sound


growth strategies and strong leadership, balanced
with strategic sourcing of financial capital
enables the business towards a sustainable
future. As we continue to improve our economic

This section details our performance, inclusive growth expansion will


benefit communities within and around our areas
of operation.
economic value generation
Economic Value Generated and
and distribution, including Distributed G4-EC1
the positive indirect The 2014 Economic Value Retained (total
revenue less the total economic value distributed)
economic impacts of our comprises 26 percent of our total revenue. In
computing the figures of our economic value
projects in the areas where distribution, we account for the following
components as shown in the table on page 180

we operate. of this Report.

Supporting the Local Economy


G4-EC7

In 2014, we continued to contribute to direct


government income by remaining one of the
top corporate taxpayers in Cebu. We have
supported the hiring of over 60,000 employees—
across our facilities and through our retail and
office space leasing and developments. The
salaries given in turn are further redirected
into local area spending. Property leasing and
developments have also helped generate various
service industries catering to newly-created A continuing testament of our direct impact to
and expanded markets such as food services, the local economy and the effectiveness of our
among others. The public utility vehicle terminal sustainability direction is the increase in land
at Ayala Center Cebu gives income capacity value per square meter of our Cebu Business Park
to transport providers delivering mobility and development. From a range of P700 to P1,500 in
transport connectivity among our patrons the 1980’s, it is now at P80,000 to over P100,000
within Metro Cebu. Green spaces such as per square meter in fair market value. Adjacent
those of The Terraces have also contributed and nearby properties have benefitted similarly.
to greater environmental awareness for the
general populace. General suppliers not only We will continue to build on the strong
share in this eco-awareness but also received performance of our current portfolio, optimize
profit benefits in our adaptation and use of more assets and further our capabilities.
eco-efficient technologies.

Our control mechanisms to stimulate economic performance remain as follows:

ROLE/ FUNCTION VIS-À-VIS


DEPARTMENT / DIVISION / MECHANISM
ECONOMIC PERFORMANCE

Key Performance Indexes (KPIs) Attainment of business objectives


Business Development Group Scrutiny of our growth margins, capital
Commercial Business Group strengths, performances and operational
efficiencies
Marketing and Operations Departments for
retail and office leasing
Finance Division

Finance Division Prudent management of general


administrative expenses, capital expenditures
and direct operating expenses

Corporate Communication and Corporate Monitoring and consolidation of Community


Social Responsibility Division (CC-CSRD) Investments

Ayala Land Sales, Inc. (ALSI) Outsourced company handling marketing and
sales for residential projects

CHI 2014 Annual and Sustainability Report 179


Significant Indirect Economic
Impacts and its Extent G4-EC8, G4-SO2 Employee
Wages and
Benefits
From a broader view, our indirect economic
impacts have led us to: 6
Payments to

• Change the productivity of organizations,


Providers of
Capital 11
12
sectors, or the whole economy Payments to
Government
• Spur transformative economic development
within bottom-of-pyramid communities
• Help improve environmental and social
awareness and conditions
Economic Value
Retained
26
• Make products available for low to medium
income markets
• Enhance skills, training and knowledge
in communities
• Support jobs along the value delivery chain
Operating Costs

45
• Stimulate and enable foreign
direct investments

ECONOMIC VALUE DISTRIBUTED ACCOUNTED FOR COMPONENT

Operating Costs Total cost of sales, general and administrative expenses,


excluding manpower costs, taxes and licenses, donations,
and amortization and depreciation

Employee Wages and Benefits Personnel costs less expenses incurred for in-house training

Payments to Providers of Capital Sum of dividends and interest expense paid for the year
Payments to Government Sum of provision for current and final taxes, including taxes
and licenses paid

Community Investments Total donations made and direct cost of social programs
and activities conducted for the year

180 Let’s Build for Tomorrow's Generations


Linking Local Talents placement of nearby community residents for
our locators.
Unemployment is an ongoing issue, yet Cebu
has sufficient numbers to meet skilled labor and
professional job positions. CHI believes that if the
Local Sourcing
proper physical structure is in place, it can serve As a real estate developer, CHI aims for local
as a powerful means to reduce unemployment sourcing in as much as the business allows. This
and build economies within and around our strategy promotes greater operations efficiency
developments. Our retail and office space leasing as well as contributes to local employment and
business provide an opportunity for us to link Cebu’s economic growth.
local talents with global companies particularly in
the area of information technology and business In 2014, the Company, through its general
process outsourcing. CHI and subsidiary CPVDC contractor Makati Development Corporation
are involved in and provide continuing support to (MDC), employed close to 6,000 construction
the Cebu Educational Development Foundation workers. This number includes employees of
for IT (CEDF-IT). It is a consortium of industry, subcontractors. Within the same reporting period,
academe, government and non-government organic workforce at MDC-Cebu was at 401 with
organizations that seeks to increase the quantity 55 percent sourced locally. Mapping ahead, CHI
and improve the quality of professionals in the will coordinate with MDC on targets as to local
Information and Communications Technology sourcing of workforce.
(ICT) and IT-enabled services industry. We
also help facilitate job fairs for the successful

7.8% 0.6%

Total Workforce at Cebu Park District: 5,142 400


0.4%
Cebu Business Park and Cebu I.T. Park G4-10 Construction Hotel/Sports
Club
229
Residential
CATEGORY CITP CBP
1.3%
BPO Offices 36,128 14,969 12.0% 828
Others
Retail 919 6,940
Residential 144 85
7,859
Retail 65,555 (Building/
Estate Admin)
TOTAL
Construction 2,033 3,109 WORKFORCE
Hotel / Sports Club - 400
Others 537 291 77.9%

39,761 25,794 51,097


BPO/Offices
TOTAL: 65,555
CHI 2014 Annual and Sustainability Report 181
182

Influence.
Set SUPPLY CHAIN

standards. G4-12, DMA Procurement Practices, G4-EC9, DMA Supplier


Environmental Assessment, G4-EN32, DMA Supplier Assessment for
Labor Practices, G4-LA14, DMA Supplier Human Rights Assessment,

G4-HR10, DMA Supplier Assessment for Impacts on Society, G4-SO9

Our relationship with We take supplier accreditation as an opportunity


to help our suppliers improve and grow. Our
relationship with contractors, suppliers and
contractors, suppliers service providers are essential to our success
and to the overall growth of Cebu. We strive to
and service providers are influence our accredited suppliers to align their
sustainability values with ours.
essential to our success
All our policies, engagements, purchasing and
and to the overall growth bidding requirements are defined and guided
by the Quality, Environmental, Occupational,

of Cebu. Health and Safety (QEHS) manual (PM 01-010


and PM 01-011). Our procurement process is
decentralized. Each department handles its own
requirements. Legal, financial and technical
evaluations are done ranging from stringent to
rigorous, based on the purchase caps of the
given project. The Limits of Authority define the
total contract amount of products and services
required to undergo a bidding process.

We set our standards high to provide positive


impacts to the communities we mutually
serve. Relevant suppliers undergo technical
evaluation as part of our supplier accreditation
Property Management Market Research

CHI VALUE
DELIVERY CHAIN
Commericial Center Operations and Project Conceptualization
Management / Office Space Leasing / Design Development
Residential Business

Punchlisting /
Project Turnover Construction

process documented in our QEHS Management Through capacity building and partnership,
System manual. As a check and balance of their we enable our suppliers to be industry leaders
alignment to our sustainability goals, we conduct in their own right. In this light, local suppliers
supplier performance evaluations and make comprise a fair share of our spending. This
assessments based on the following criteria— is in line with our general contractor, Makati
environment, labor, human rights, and societal Development Corporation’s practice of favoring
impacts. Labor compliance audits are done on a local subcontractors in our projects. In 2014,
quarterly basis. In 2014, there were no reports of local suppliers were paid a total of P1.5 billion.
violations to labor laws.

CHI 2014 Annual and Sustainability Report 183


06.
Appendices

Let's build for tomorrow's generations


Legal and Compliance received any grievance concerns pertaining to our
environmental practices to date.
DMA Compliance (Environment), G4-EN29, DMA
Non-discrimination, G4-HR3, DMA Freedom of We encourage our employees to be aware of and
Association and Collective Bargaining, G4-HR4, DMA drive actions that address corporate and personal
Child Labor, G4-HR5, DMA Forced or Compulsory environmental footprints. We continually gauge
Labor, G4-HR6, DMA Indigenous Rights, G4-HR8, and refine our systems to optimize our resource
DMA Anti-corruption, DMA Public Policy, G4-SO6, consumption. We remain open to partnerships,
DMA Anti-competitive Behavior, G4-S07, G4-SO3, initiatives and new technologies that help mitigate our
DMA Customer Health and Safety, G4-PR2, DMA direct and indirect environmental impacts.
Marketing Communications, G4-PR7, DMA Customer
Privacy, G4-PR8, DMA Compliance, G4-PR9, DMA
Employees and Labor
Environmental Grievance Mechanisms, G4-EN34, We adhere to a strict code of non-discrimination
Labor Practices Grievance Mechanisms, G4-LA16, in our employment policies. This covers all areas of
DMA Human Rights Grievance Mechanisms, G4- employee engagement including hiring, compensation,
HR12, DMA Grievance Mechanisms for Impacts on promotion and/or discipline. We do not tolerate
Society, G4-SO11. discrimination in any aspect of race, color, gender,
religion, age, disability, sexual orientation, gender
Environment
identity and expression, political bias, union affiliations,
Our core values and commitment to sustainability lead and/or ethnic origin.
us to the highest standards of business ethics.
We value our people and encourage open
In 2014, no incidents of non-compliance were found communication by everyone at any level. Our
with all laws and regulations relating to any of our communication and feedback process is clearly
operations extending to our supply chain. detailed in pp.25-26, and p.33 of our Code of Ethics.

We comply and protect the environment by meeting We are guided by our QEHS manual in the procedural
applicable regulatory requirements. Our Pollution handling of internal communications coursed through
Control Officers (PCOs) submit consolidated results the Human Resources (HR) and Admin Division.
of departmental monthly performance reviews to HR policies and the Company’s Code of Ethics and
the Management Committee. This reporting is done employee handbook are found on the website (www.
at a minimum of twice a year and is facilitated by cebuholdings.com/corporategovernance/manuals-
the Company’s Project Support/Technical Asset and-policies). Sources of information and channels
Management Unit (PTAMU) in coordination with Ayala of communication include the Inside CHI, HR
Property Management Corporation (APMC) and Makati e-Bulletin, and CHI Intranet and directives from the
Development Corporation (MDC). management team.

We consistently monitor our energy efficiency, water We have a clear mandate for the handling of labor
consumption (water catchment and reuse), green related grievances as defined in our Code of Ethics.
design and landscaping, and waste management Full confidentiality is observed throughout the process.
(solid and hazardous wastes) to help us further Managers are open and trained for the proper handling
develop sound strategies to drive and improve our and procedure of related concerns. CHI observes an
environmental performance. (See pages 192-206 of open communications culture. We have not received
this Report). any grievance concerns pertaining to our labor
practices to date.
We refer to our organizational Impact and Risk
Assessment procedure in our QEHS manual as We continually streamline our processes to proactively
procedure PM-EHS-01-001. A summarized flowchart eliminate injury, accident or illness incidents relating
is uploaded on our website, www.cebuholdings. to, or concerning, our employees. We implement and
com. Compliance with all applicable legal, regulatory follow clear rules and standards aligned to local and
and statutory requirements follows the procedure national health and safety regulations.
PM-EHS-01-002 of the QEHS manual. We have not

186 Let’s Build for Tomorrow's Generations


We observe a zero tolerance policy on child labor Consumer Advocacy
throughout our operations. This policy extends to
our supply chain where we require a Certification We observe transparency in our marketing
of Compliance to RA 9231 on Anti Child Labor Law communications for all our projects across our full
as an integral component of their accreditation line of business. We ensure that our integrity and
requirements. Further, we neither engage in nor core values are not compromised by misleading or
tolerate in any form the use of forced labor. Voluntary misrepresenting our intentions and developments or its
employment is practiced throughout tenure. impacts to the environment.

We hold ourselves accountable to all stakeholders


Community and IP Engagement
and give correct and adequate information on health
We rely on our Corporate Communication and and safety, quality control standards and intended
Corporate Social Responsibility Division (CC-CSRD) enhancements to the commercial, retail, residential
for the management of our community initiatives and and business communities we develop. There are no
engagements. Any communications and/or concerns incidents of non-compliance with regulations and
to and from the communities we engage are coursed voluntary codes relating to health and safety impacts
through them as well. of our products and services.

We have no current engagement with indigenous We respect our customers’ right to privacy. We apply
peoples or developments on land they inhabit. the same rigor of integrity and accountability in the
handling and protection of sensitive information –
Regulatory, Market and personal, financial and otherwise – given to us in the
Community Practices course of our day-to-day engagements. We have no
incidents of breach of customer privacy and/or loss of
We comply with all legal, consumer, and financial
customer information.
reporting requirements working against corruption,
including extortion and bribery. We have clear policies Compliance - Product Responsibility
to address and investigate thoroughly any and all
allegations of misconduct relating to the Company. We take shareholder and consumer concerns
Direct and indirect references are found on pp.14-22 seriously from land acquisition, design development,
Code of Ethics; pp.1-3 (Conflict of Interest Policy), construction to operations and property management.
pp.1-3 (Related Party Transactions Policy); and pp. 1-4 We implement a comprehensive risk management
(Insider Trading Policy). approach throughout our processes extending to our
supply chain, to ensure our product delivery is of the
We adhere to free competition principles and non- highest of standards. We fully comply with all safety,
restrictive practices that foster an open market and fair quality and regulatory requirements relating to our
trade policies. business. To ensure continuity of high quality service
delivery we conduct regular reviews on the following
We recognize that policy changes may have significant
measures: customer acquisition, retention, market
impact to our operations, revenues and development
leadership, internal and external customer satisfaction.
costs. We lend our expertise especially on long term
We align, adopt and adjust accordingly to customer
land design and development to policy makers upon
and market needs.
their invitation. We do not participate in lobbying and/
or political contributions. Our stakeholder engagement
with regulators and local government units are detailed
on pages 115-118 of this Report. Our memberships in
associations is listed on page 34 of this Report as well.

CHI 2014 Annual and Sustainability Report 187


DIRECTORS' PROFILE

Bernard Vincent O. Dy, North Triangle Depot Commercial AFFILIATIONS


Filipino, 51 Corporation Asiatown LT. Park Association, Inc.
Chairman of the Board of Directors of CHI Station Square East Commercial Cebu Business Park Association, Inc.,
since August 2014. Corporation Chairman and President (January 1, 2015)
ala reenfield olf eisure Club North Point Estate Association, Inc.,
Ayala Property Management Corporation Chairman,
EDUCATION Makati Development Corporation Hero Foundation, Board of Trustee
Masters in International Relations Nuevocentro, Inc.
(MIR ’97), University of Chicago
TREASURER
Masters in Business Administration
SIAL Specialty Retailers, Inc.
(MBA ’89), University of Chicago Francis O. Monera,
B.S in Business Administration (BSBA ‘85), SIAL CVS Retailers, Inc.
Filipino, 60
University of Notre Dame Director of Cebu Holdings, Inc. and Cebu
DIRECTORSHIP IN LISTED COMPANIES Property Ventures & Development Corp.,
President Chief ecuti e fficer Aniceto V. Bisnar, Jr., from April 28, 2006 to December 31, 2014
Ayala Land, Inc. Filipino, 51
Chairman, Cebu Holdings, Inc. President of Cebu Holdings, Inc. since EDUCATION
Chairman, Cebu Property Ventures & January 1, 2015 Manuel L. Quezon University, B.S in
Development Corp. Commerce major in Accounting (BSC '75),
Past Executive Vice President, Senior Vice EDUCATION Magna Cum Laude
President, Vice President and Assistant Vice Philippine Military Academy, Bachelor of Certified Public ccountant CP
President, Ayala Land, Inc. Science (PMA BS ’85, top 5% of class) Ateneo Graduate School of Business,
Past Group Head Residential Business and Asian Institute of Management, Master in Masters in Business Administration (MBA)
Commercial Business Group, Ayala Business Management (MBM 1989) DIRECTORSHIP IN LISTED COMPANIES
Land Inc. Harvard University Graduate School of
Corporate Marketing and Sales, Ayala DIRECTOR
Design, Master Planning, Urban Housing
Land Inc. Cebu Holdings, Inc.
and Mixed-Use Development Program
Cebu Property Ventures & Development
DIRECTORSHIP IN LISTED COMPANIES Corporation
OTHER DIRECTORSHIPS/ POSITIONS
President, Cebu Holdings, Inc. PAST PRESIDENT
PRESIDENT President, Cebu Property Ventures &
Development Corporation Cebu Holdings, Inc.
Serendra, Inc.
Vice President Visayas-Mindanao Group, Cebu Property Ventures & Development
Varejo Corporation
Alabang Commercial Corporation Ayala Land, Inc. Corporation
Accendo Commercial Corporation Chief perating fficer of the isa as VICE PRESIDENT
Aurora Properties Incorporated Mindanao Group, Ayala Land, Inc. Ayala Land, Inc.
Ceci Realty Inc. OTHER DIRECTORSHIPS/ POSITIONS PAST CHIEF OPERATING OFFICER
Vesta Property Holdings, Inc.
Chairman and President Cebu Holdings, Inc.
Bonifacio Land Corporation
Taft Punta Engano Property, Inc.
Berkshires Holdings, Inc. PRIOR GOVERNMENT POSITION HELD
CHAIRMAN AND DIRECTOR
Columbus Holdings, Inc Senior AVP/Corporate Controller,
Amaia Southern Properties, Inc. Philippine National Construction
CHAIRMAN
VICE CHAIRMAN Corporation
Ayala Land International Sales, Inc.
Anvaya Cove Golf & Sports Club SouthPortal Properties, Inc., AFFILIATIONS
Amicassa Process Solutions, Inc. PRESIDENT Past President, Cebu Chamber of
Amaia Land Corporation Cebu Leisure Company, Inc. Commerce and Industry (2006-2008)
Avida Land Corporation Vice President for Visayas, Philippine
VICE PRESIDENT
Alveo Land Corporation Chamber of Commerce and Industry
Alviera Country Club, Inc. sian ffice Properties nc
Ayalaland Commercial Reit, Inc. DIRECTOR AND PRESIDENT Emilio Lolito J. Tumbocon,
Lagdigan Land Corporation CBP Theatre Management Company, Inc. Filipino, 58
Cagayan De Oro Gateway Corp.
DIRECTOR Director of Cebu Holdings Inc. since
BGSouth Properties, Inc.
Cebu District Property Enterprise, Inc. April 29, 2008
BGNorth Properties, Inc.
Accendo Commercial Corporation
BGWest Properties, Inc.
Westview Commercial Ventures Corporation EDUCATION
Portico Land Corp.
Adauge Commercial Corporation B.S. in Civil Engineering (BSCE ’79),
Directpower Services, Inc.
Cagayan de Oro Gateway Corporation University of the Philippines
Philippine Integrated Energy Solutions, Inc.
Bonifacio Estates Services Corp. Masters in Business Administration (MBA
Bonifacio Estate Services Corporation,
Bonifacio Gas, Inc. ‘85), University of the Philippines
Amaia Southern Properties, Inc. Ceci Realty, Inc. Construction Executive Program (CEPS
VICE CHAIRMAN Aurora Properties, Inc. ’87), Stanford University
Bellavita Land Corporation Vesta Property Holdings, Inc. Senior Business Executive Program
ala reenfield De elopment Corporation HLC Development Corporation B P’ ni ersit of sia the Pacific
DIRECTOR The Executive Program (TEP’97),
Fort Bonifacio Development Corporation Darden Graduate School of Business
Ayala Land Sales, Inc. Administration, University of Virginia

188 Let’s Build for Tomorrow's Generations


International Studies (MBA), The School Chairman of the Board of Directors,
of Arts and Sciences of the University of sia Pacific eal state ssociation td
DIRECTORSHIP IN LISTED COMPANIES
Pennsylvania Philippine Chapter
DIRECTOR Fellow, The Joseph H. Lauder Institute of
Cebu Holdings, Inc. DIRECTORSHIP IN LISTED COMPANIES Management and International Studies
Cebu Property Ventures & Development
DIRECTOR
Corporation Antonio S. Abacan, Jr.,
Cebu Holdings, Inc.
GROUP HEAD OF THE VISAYAS- Filipino, 71
TREASURER Director of Cebu Holdings Inc. since
MINDANAO GROUP AND THE HUMAN
Cebu Holdings, Inc. November 1993
RESOURCES & PUBLIC AFFAIRS GROUP
Cebu Property Ventures and Development
Ayala Land, Inc.
Corporation EDUCATION
MANAGEMENT COMMITTEE MEMBER
SENIOR VICE PRESIDENT, CHIEF FINANCE B.S in Business Administration (BSBA,
Ayala Land, Inc.
OFFICER, COMPLIANCE OFFICER ’62) Major in Banking and Finance,
PAST SENIOR VICE PRESIDENT
Ayala Land, Inc. Mapua Institute of Technology
Ayala Land, Inc.
MEMBER, MANAGEMENT COMMITTEE, Major in Accounting (’63), Far Eastern
OTHER DIRECTORSHIPS/ POSITIONS University
Ayala Land, Inc.
Cebu Insular Hotel Co., Inc. Executive Program (’91), Graduate
MANAGING DIRECTOR
Cebu District Property Enterprise, Inc., school of Business at Stanford
Accendo Commercial Corporation Ayala Corporation Doctorate Degree of Business
Cagayan de Oro Gateway Corporation Administration (’10), Philippine Women’s
Taft Punta Engaño Property, Inc. University (Honoris Causa)
Alveo Land Corporation DIRECTORSHIP IN LISTED COMPANIES
OTHER DIRECTORSHIPS/POSITIONS
Amaia Land Corporation
CHAIRMAN, PRESIDENT & CHIEF DIRECTOR
Makati Development Corporation
MDC Buildplus, Inc. EXECUTIVE OFFICER Cebu Holdings, Inc.
MDC Equipment Solutions, Inc. OCLP Holdings, Inc. CURRENT SENIOR ADVISER
MDC Subic, Inc. Metropolitan Bank and Trust Company
CHAIRMAN OF THE BOARD OF
Ecozone Power Management MEMBER, ADVISORY BOARD
DIRECTORS
Laguna Technopark, Inc.
GT Capital Holdings Inc.
Anvaya Cove Golf & Sports Club, Inc. Aprisa Business Process Solutions, Inc.
OTHER DIRECTORSHIPS/POSITIONS
Northgate Hotel Ventures, Inc. DIRECTOR AND VICE CHAIRMAN
ALI Makati Hotel Property, Inc. CHAIRMAN
CMPI Holdings, Inc.
ALI Makati Hotel and Residences, Inc. Toyota Financial Services (Phils) Inc.
Aviana Development Corporation CHAIRMAN AND PRESIDENT
Sumisho Motor Finance
AyalaLand Hotels and Resorts Corporation Tower One & Exchange Plaza Manila Medical Services Inc. (Manila
Cebu Leisure Company, Inc. Condominium Corporation Doctors Hospital)
Lagdigan Land Corporation DIRECTOR AND TREASURER Circa 2000 Homes, Inc.
Corp Southcrest Hotel Ventures, Inc. Ayala Land International Sales, Inc. Manila- GT Medical Center
Westview Commercial Ventures Corporation Ayala Land Sales, Inc. Manila Tytana Colleges
Avencosouth Corporation Alveo Land Corporation VICE CHAIRMAN AND DIRECTOR
Whiteknight Holdings, Inc. Laguna Technopark, Inc.
sian ffice Properties nc Serendra, Inc. Panay Energy Development Corporation
Adauge Commercial Corporation. Ayala Hotels, Inc. VICE CHAIRMAN AND EXECUTIVE
AFFILIATIONS AyalaLand Hotels and Resorts Corporation DIRECTOR
Member, Construction Industry Arbitration Philippine Integrated Energy Solutions, Inc. Global Business Power Corporation
Commission of the Construction Industry DIRECTOR, TREASURER AND DIRECTOR
Authority of the Philippines - Department
COMPLIANCE OFFICER Cebu Energy Development Corporation
of Trade & Industry
Panay Power Corporation
Certified Pro ect anagement Professional Anvaya Golf and Sports Club
Panay Power Holdings
(PMP) of the Project Management Institute DIRECTOR OF ALABANG
ARB Power Ventures, Inc.
Commercial Corp. GBH Power Resources Inc.
Amaia Land Corp. Global Formosa Power Holdings Inc.
Avida Land Corp.
Jaime E. Ysmael, North Triangle Depot Commercial Corp.
Global Energy Supply Corporation
Filipino, 53 Station Square East Commercial Corp. CURRENT CORPORATE SECRETARY AND
Director of CHI since April 29, 2008 Ceci Realty, Inc. TREASURER
Aurora Properties, Inc. LGU Guarantee Corp.
EDUCATION Vesta Properties Holdings, Inc. MEMBER, ADVISORY BOARD
Business Administration, Major PAST EXCOM MEMBER Metrobank Foundation
in Accounting Ayala Hotels, Inc. Toyota, Manila Bay Corp.
Summa Cum Laude, University of the East,
Enjay Hotels, Inc. Toyota, Cubao Inc.
and Certified Public ccountant
Masters in Business Administration, Major AFFILIATIONS MEMBER, BOARD OF TRUSTEES
in Finance (MBA), The Wharton School Director sia Pacific eal state Manila Tytana Colleges
Masters in Business Administration in Association Ltd.

CHI 2014 Annual and Sustainability Report 189


DIRECTORS' PROFILE

AFFILIATIONS PAST CHAIRMAN


PRIOR GOVERNMENT POSITIONS HELD
Director for Banking, Finance and Coordinating Council of Private
Economic Development Specialist,
Taxation, Philippine Chamber of Educational Associations (COCPEA)
National Economic and Development
Commerce and Industry (three terms)
Authority (NEDA)
Member, Board of Governors, Makati PAST VICE PRESIDENT
Commercial Estate Association (MACEA) ffice nternationale de l’ nseignement
RECOGNITIONS
Fr. Roderick C. Salazar, Jr. Catholique (OIEC)
Huwarang Anak ng Bulacan / Outstanding
SVD, PAST MEMBER
Filipino, 67
Bulakeno Achievers, Club Bulakeno, Inc. FILIPINO, Inc. (Filipino Institute for the
Independent Director of Cebu Holdings Inc.
(2011) Promotion of
since April 29, 2005
Outstanding Filipino Award (TOFIL) for Integrity and Nobility) San Carlos
Banking, Philippine Jaycee Senate, (2008) Community Development Foundation
Outstanding Alumnus Award, Far Eastern EDUCATION Divine Word Educational Association
University (2007) Divine Word Seminary, Master of (DWEA)
CEO Excel, International Association of Philosophy (M.Phil.) Philippine Accrediting Association of
Business Communicators (2006) MA/MS Mass Communications, University Schools, Colleges, and Universities
Communications and Leadership Award, of Leicester (PAASCU)
Toastmasters International (1999) Honorary Doctorate in the Humanities Private Educational Advisory Council
Outstanding Alumnus, Mapua Institute (Hon. D. Hum, ’10), St Paul University, (PEAC)
Honorary Doctorate in the Humanities
Word Broadcasting Corporation
(Hon. D. Hum, ‘11), Aquinas University,
Ma. Theresa M. Javier, PAST MEMBER, BOARD OF TRUSTEES
Filipino, 44 DIRECTORSHIP IN LISTED COMPANIES St. Paul University, Tuguegarao
Director of Cebu Holdings, Inc. since Independent Director Cebu Holdings, Inc. St. Paul College, Pasig
July 16, 2012 OTHER DIRECTORSHIPS/POSITIONS St. Paul College, Iloilo
DIRECTOR
St. Paul College, Surigao
Visayas Cluster, Daughters of Charity
EDUCATION SVD Mission Philippines (DC) Schools
University of the Philippines Los Baños, CHAIRMAN, BOARD OF TRUSTEES RECOGNITION
BS Economics (BSE ’90), Cum Laude St. Scholastica’s College, Westgrove Croce Pro cclesia et Pontifice Papal
University of the Philippines Diliman, St. Agnes Academy, Legazpi City Award for his years of service to Catholic
MS Economics (MSE ’95)
MEMBER, BOARD OF TRUSTEES Education conferred August 14, 2010, in
Harvard Business School, CFA Institute
St. Paul University, Dumaguete City, Center the Archdiocese of Cebu
Investment Management Workshop (’06)
Harvard Business School, Advanced for Educational Measurement (CEM)
Management Program (’10) PRESIDENT Enrique L. Benedicto,
DIRECTORSHIP IN LISTED COMPANIES Filipino, 73
ffice nternationale de l’ nseignement
Independent Director of CHI since
DIRECTOR Catholique (OIEC)
April 25, 2003
Cebu Holdings, Inc. REGIONAL SECRETARY FOR ASIA
Cebu Property Ventures and Development ffice nternationale de l’ nseignement
EDUCATION
Corporation Catholique (OIEC)
BS Commerce ('64), University of San Jose
OTHER DIRECTORSHIPS/POSITIONS EXECUTIVE SECRETARY Recoletos
DIRECTOR ffice of ducation and aith ormation of DIRECTORSHIP IN LISTED COMPANIES
BPI Investment Management, Inc. the Federation of Asian Bishops
Independent Director, Cebu Holdings, Inc.
McCann World Group Philippines, Inc. Conferences (FABC-OEFF) Independent Director, SPC Power Corp.
Fintec Holdings, Inc., PAST CHAIRMAN, BOARD OF TRUSTEES OTHER DIRECTORSHIPS/POSITIONS
Roxas Land Corp.
St. Jude Catholic School, Manila (1998-
ALFM Peso Bond Fund CURRENT DIRECTOR
June 2014)
ALFM Dollar Bond Fund Enrison Land, Inc.
St. Scholastica’s Academy in Tabunok,
ALFM Euro Bond Fund Enrison Holdings, Inc.
Talisay City, Cebu Divine Word University
ALFM Money Market Fund Berbenwood Industries, Inc.
(now Liceo del
ALFM Growth Fund Benedict Ventures, Inc.
Verbo Divino), Tacloban City
Philippine Stock Index Fund Divine Word College of Tagbilaran (now CURRENT CHAIRMAN
HEAD, ASSET MANAGEMENT AND TRUST Holy Name University) Mabuhay Filcement, Inc.
GROUP PAST BOARD OF DIRECTOR CURRENT VICE-CHAIRMAN
Bank of the Philippine Islands People’s Television Network (PTV4) Bernardo Benedicto Foundation, Inc.
MEMBER, BOARD OF SENIOR ADVISERS First Metro Asset Management, Inc. (FAMI) RECOGNITIONS
Fund Managers Association of the PAST PRESIDENT
fficer in the rder of eopold ’ b his
Philippines Majesty Baudowin King of the Belgians
University of San Carlos (four 3-year
fficer in the rder of eopold’ b is
Trust fficers ssociation of the Philippines terms: 1987-1990; 1990-1993; 2002-
Majesty King Albert II of the Kingdom
PAST PRESIDENT 2005; 2005-2008)
Fund Managers Association of the Catholic Educational Association of the
Philippines Philippines (CEAP) (1992-2008)
Trust fficers ssociation of the Philippines

190 Let’s Build for Tomorrow's Generations


CORPORATE OFFICERS PROFILE

of Belgium, this is the highest award AFFILIATIONS Avida Sales Corp.


that can be given to civilians, Belgian or Ayala Land Sales, Inc.
Past fficer ntegrated Bar of the
non-Belgian Ayala Retirement Fund Holdings, Inc.
Philippines, Cebu City Chapter
Garbo sa Sugbu Awardee given by Buklod Bahayan Realty and
Past President, Rotary Club of Cebu,
the Province of Cebu for outstanding Development Corp.
University District
achievement in International Relations as North Triangle Depot Commercial Corp.
Honorary Consul of Belgium OLC Development Corp.
Enrique B. Manuel Jr., Southportal Properties, Inc.
Cebu City Council Resolution, Most Filipino, 42 CURRENT DIRECTOR AND CORPORATE
Outstanding Cebuano Citizen, February
SECRETARY
18, 1991
EDUCATION AG Counselors Corporation
BS Business Administration (BSBA, '94), Current Assistant Corporate
Great Cebuano Award (conferred by)
University of the Philippines, Secretary and Deputy General Counsel
The Province of Cebu Sugbuanong
Masters in Business Administration with a Ayala Land, Inc.
Kumintaristang Nagpakabana (SUKNA)
double major in Operations and Finance Current Assistant Corporate Secretary
(MBA, 2000), Boston University Graduate Ayala Corporation
Kapisanan Ng Mga Brodkaster Ng
Pilipinas (KBP) School of Business Alinet.Com, Inc.
CURRENT POSITIONS HELD
Mandaue Chamber of Commerce and Chief inance fficer Chief Compliance Nimfa Ambrosia L. Perez-
Industry, Inc. fficer Chief isk fficer and Paras, Filipino, 49
Member, Management Committee Assistant Corporate Secretary of CHI since
Entrepreneur of the Year Award, Cebu February 27, 2014
Chamber of Commerce and Industry on its Cebu Holdings, Inc. (March 2011-Current)
Centennial +10 Anniversary Cebu Property Ventures and Development
EDUCATION
Corporation
Bachelor of Law ('90), Manuel L. Quezon
University of San Jose-Recoletos, Most School of Law
Current Assistant Vice President and Group
Outstanding Alumnus’ Award CURRENT ASSISTANT CORPORATE
Chief inance fficer ala and nc
Visayas and Mindanao Group SECRETARY
Pampio A. Abarintos, CURRENT DIRECTOR Cebu Holdings, Inc.
Filipino, 71 Cebu Property Ventures and Development
Cagayan De Oro Gateway Corporation
Independent director of Cebu Holdings Inc. Corporation
CURRENT TREASURER
(CHI) since April 8, 2014 Integrated Micro-Electronics Inc.
Accendo Commercial Corporation
Philippine Integrated Energy Solutions, Inc.
Solinea, Inc.
EDUCATION CURRENT CORPORATE SECRETARY
PAST SENIOR MANAGER
Bachelor of Arts, (BA '65) Cum Laude, Adauge Commercial Corporation
Risk Management Group, Ernst & Young
University of San Jose Recoletos, Laguna Technopark, Inc.
LLP, New Yorkt
Bachelor of Laws ('69), University of the Ecozone Power Management, Inc.
Visayas, Northbeacon Commercial Corporation
Masters Degree in Business Administration June Vee D. Monteclaro- Nuevocentro, Inc.
(MBA, '81), Southwestern University Navarro, CURRENT SENIOR COUNSEL
DIRECTORSHIP IN LISTED COMPANIES Filipino, 43 Ayala Group Legal
Corporate Secretary of Cebu Holdings, Inc.
Independent Director, Cebu Holdings, Inc. PRIOR GOVERNMENT POSITION HELD
since February 27, 2014
OTHER DIRECTORSHIPS/POSITIONS State Counsel, Department of Justice past
Current Member, Management Committee work at the Regional Trial Courts of Makati
EDUCATION
(MANCOM), Current Chairman, and Quezon City
Bachelor of Laws (L.L.B. ’97), University
Committee on Discipline Current Arbitrator PAST LEGAL COUNSEL
of the Philippines Coca-Cola Bottlers Philippines, Inc.
Alta Vista Golf and Country Club, Cebu
City CURRENT CORPORATE SECRETARY RFM Corporation
PRIOR GOVERNMENT POSITIONS HELD Cebu Holdings, Inc. Roasters Philippines, Inc.
Cebu Property Ventures and Development
Executive Justice, Court of Appeals,
Corporation
Visayas Station (2004-2013)
Alabang Commercial Corp.
Judge, Regional Trial Court in Negros
Alveo Land Corp.
Oriental and in Cebu (1987-2004)
Asterion Technopod Inc.
Current Member, Regional Advisory
Avencosouth Corp.
Council of the Philippine National
Avida Land Corp.
Police (PNP) Region 7
RECOGNITIONS
Presidential Award, Court of Appeals, given
in Manila in 2005, for speedy case disposal
Retired with zero backlog of cases
Awardee for the Judicial Excellence, Most
Outstanding Judge of the Philippines
(2003)

CHI 2014 Annual and Sustainability Report 191


Data Annexes

A. Environment
A.1 Year-on-Year Comparative Data

Recyled Rebars (in m3) 2013 2014

Park Point Residences - 24.0

Solinea Tower 1,206.5 966.5

Avida Towers Riala - 20.8

ACC Corporate Center - 561.4

Sedona Parc 20.0 29.0

eBloc Tower 3 52.9 162.0

TOTAL (G4-EN2) 1,279.4 1,763.7

Non-hazardous Waste Generated (in tons) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 3,185.6 3,984.3

The Walk 12.4 12.8

TOTAL FOR RETAIL 3,197.9 3,997.1

eBloc Tower 1 89.9 99.5

eBloc Tower 2 98.3 154.8

TOTAL FOR OFFICE 188.3 254.3

Cebu Business Park 562.1 567.7

Cebu I.T. Park 106.7 118.4

TOTAL FOR ESTATES 668.8 686.1

TOTAL FOR OPERATIONAL PROPERTIES 4,055.0 4,937.4

COMPLETED PROJECTS

1016 Residences 546.9 306.2

Sedona Parc 658.2 1,261.9

TOTAL FOR RESIDENTIAL 1,205.1 1,568.1

eBLOC TOWER 3 (OFFICE) 2,107.3 1,340.7

TOTAL FOR COMPLETED PROJECTS 3,312.4 2,908.8

PROJECTS UNDER CONSTRUCTION

Solinea Tower (Residential) 1,206.0 1,412.7

ACC Corporate Center (Office) 10,807.5 5,521.0

TOTAL FOR PROJECTS UNDER CONSTRUCTION 12,013.5 6,933.7

TOTAL1 (G4-EN23) 19,380.9 14,780.0


1
Covers all compostable, recyclables and residuals collected from the Company’s properties and activities

192 Let’s Build for Tomorrow's Generations


Waste Collected by Brgy. Luz Collectors (in kilos) 2013 2014

Residual 2,214,024 3,030,910

Recyclable 305,684 405,313

Biodegradable 122,544 1,300

TOTAL (G-EN23) 2,642,252 3,437,523

Recyclables Collected (in kilos) 2013 2014

Plastic Gallons 5,846 6,632

Assorted Plastic 20,759 31,175

Mineral Water Bottles 18,171 21,441

Cups 25,348 25,472

Straw 8,488 5,138

Tin Cans 20,569 30,945

Glass 34,289 35,454

Aluminum Cans 3,700 5,002

Paper 2,460 4,526

Chip Board 9,854 1,636

Mixed Waste 30,769 54,650

Dry Cartons 102,100 140,559

Wet Cartons 17,708 11,218

Newspapers 4,784 797

Metal Sheets 839 1,072

Rejected Plastic - 447

Poly Bag - 16,991

Poly Bag 2 - 12,161

TOTAL (G4-EN23) 305,684 405,313

Busted Bulbs (in kg) 2013 2014

1016 Residences 100 186

Sedona Parc 13 0

Park Point Residences 0 70

eBloc Tower 3 0 0

TOTAL (GE4-EN23) 113 256

CHI 2014 Annual and Sustainability Report 193


Total Energy Consumption (in GJ) 2013 2014

BY PROPERTY STATUS AND TYPE OF ENERGY

OPERATIONAL PROPERTIES

Retail

Direct Energy 1,747.4 3,911.6

Indirect Energy2 138,688.1 150,643.0

TOTAL 140,435.5 154,554.6

Office

Direct Energy 638.1 297.1

Indirect Energy2 45,378.1 51,504.1

TOTAL 46,016.2 51,801.1

Estates

Indirect Energy 2,126.0 1,826.3

TOTAL 2,126.0 1,826.3

Corporate Office

Indirect Energy 739.2 1,061.0

TOTAL 739.2 1,061.0

TOTAL FOR OPERATIONAL PROPERTIES 189,316.9 209,243.0

COMPLETED PROJECTS

Residential

Direct Energy 264.2 338.9

Indirect Energy 1,438.1 3,832.1

TOTAL 1,702.3 4,171.1

Office

Direct Energy 110.3 70.7

Indirect Energy 5.5 4.0

TOTAL 115.7 74.7

TOTAL FOR COMPLETED PROJECTS 1,818.0 4,245.8

PROJECTS UNDER CONSTRUCTION

Residential

Direct Energy 5,530.7 2,645.5

Indirect Energy 36.3 665.2

TOTAL 5,567.0 3,310.7

194 Let’s Build for Tomorrow's Generations


Total Energy Consumption (in GJ) 2013 2014

Office

Direct Energy 39.1 112.8

Indirect Energy 381.1 465.2

TOTAL 420.2 578.0

TOTAL FOR PROJECTS UNDER CONSTRUCTION 5,987.1 3,888.6

TOTAL (G4-EN3, G4-EN4) 197,122.0 217,377.5


2
Includes electricity consumption from common areas, retail mall merchants and office building locators

Direct Energy Consumption - Internal (in GJ) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 1,652.9 3,890.2

The Walk 94.5 21.4

TOTAL FOR RETAIL 1,747.4 3,911.6

eBloc Tower 1 386.0 183.7

eBloc Tower 2 252.0 113.4

TOTAL FOR OFFICE 638.1 297.1

TOTAL FOR OPERATIONAL PROPERTIES (G4-EN3) 2,385.5 4,208.7

Indirect Energy Consumption - Internal (in GJ) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 42,145.2 41,387.4

The Walk 501.6 534.0

TOTAL FOR RETAIL 42,646.8 41,921.4

eBloc Tower 1 3,646.3 2,981.4

eBloc Tower 2 3,962.8 4,987.2

TOTAL FOR OFFICE 7,609.1 7,968.6

Cebu Business Park 1,341.5 1,249.6

Cebu I.T. Park 784.5 576.7

TOTAL FOR ESTATES 2,126.0 1,826.3

CHI Office 477.4 645.6

Mall Admin Office 261.8 415.4

TOTAL FOR CORPORATE OFFICES 739.2 1,061.0

TOTAL FOR OPERATIONAL PROPERTIES3 (G4-EN3) 53,121.1 52,777.3


3
Electricity consumption derived from common areas

CHI 2014 Annual and Sustainability Report 195


Direct Energy Consumption - External (in GJ) 2013 2014

COMPLETED PROJECTS

1016 Residences 61.6 66.7

Avida Towers Cebu 121.8 186.3

Sedona Parc 80.8 85.9

TOTAL FOR RESIDENTIAL 264.2 338.9

eBLOC TOWER 3 (OFFICE) 110.3 70.7

TOTAL FOR COMPLETED PROJECTS 374.5 409.6

PROJECTS UNDER CONSTRUCTION

Solinea Tower 599.7 423.3

Avida Towers Riala 4,931.0 2,222.2

TOTAL FOR RESIDENTIAL 5,530.7 2,645.5

ACC CORPORATE CENTER (OFFICE) 39.1 112.8

TOTAL FOR PROJECTS UNDER CONSTRUCTION 5,569.8 2,758.3

TOTAL (G4-EN4) 5,944.3 3,167.9

Indirect Energy Consumption - External (in GJ) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 91,174.0 103,906.1

The Walk 4,867.3 4,815.5

TOTAL FOR RETAIL 96,041.3 108,721.6

eBloc Tower 1 21,605.0 21,357.2

eBloc Tower 2 16,164.1 22,178.2

TOTAL FOR OFFICE 37,769.0 43,535.5

TOTAL4 (G4-EN4) 133,810.3 152,257.1

COMPLETED PROJECTS

1016 Residences 792.7 1,138.8

Avida Towers Cebu 169.0 2,215.2

Sedona Parc 476.4 478.2

TOTAL FOR RESIDENTIAL 1,438.1 3,832.1

eBLOC TOWER 3 (OFFICE) 5.5 4.0

TOTAL FOR COMPLETED PROJECTS 1,443.5 3,836.2

PROJECTS UNDER CONSTRUCTION

Solinea Tower (Residential) 36.3 665.2

ACC Corporate Center (Office) 381.1 465.2

TOTAL FOR PROJECTS UNDER CONSTRUCTION 417.4 1,130.4

TOTAL (G4-EN4) 54,982.0 57,743.9


4
Electricity consumption by retail mall merchants and office building locators
196 Let’s Build for Tomorrow's Generations
Energy Intensities (G4-EN5, CRE1) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 1.13 1.11

The Walk 1.07 1.05

AVERAGE INTENSITY FOR RETAIL 1.10 1.08

eBloc Tower 1 0.99 0.95

eBloc Tower 2 0.59 0.78

AVERAGE INTENSITY FOR OFFICE 0.79 0.86

Cebu Business Park 0.007 0.006

Cebu I.T. Park 0.007 0.005

AVERAGE INTENSITY FOR ESTATE 0.0069 0.0058

CHI Office 0.7 1.0

Mall Admin Office 0.3 0.5

AVERAGE INTENSITY FOR CORPORATE OFFICE 0.60 0.67


5
Calculated as total energy consumed per square meter of gross floor area

Reduction in Electricity Consumption (in kWh) 2013 2014

Ayala Center Cebu - 210,506.0

eBloc Tower 1 - 184,700.2

Cebu Business Park - 25,510.8

Cebu I.T. Park - 57,734.0

TOTAL (G4-EN6) - 478,450.9

Total GHG Emissions7 (in tonnes CO2e) 2013 2014

BY PROPERTY STATUS AND TYPE OF ENERGY

OPERATIONAL PROPERTIES

Retail

Scope 1 121.5 272.0

Scope 2 7,145.7 7,024.2

Scope 3 16,09.2 18,216.9

TOTAL 23,359.5 25,513.1

Office

Scope 1 44.4 20.7

Scope 2 1,274.9 1,335.2

Scope 3 6,328.4 7,294.6

TOTAL 7,647.7 8,650.5

CHI 2014 Annual and Sustainability Report 197


Total GHG Emissions7 (in tonnes CO2e) 2013 2014

Estates

Scope 2 356.2 306.0

TOTAL 356.2 306.0

Corporate Office

Scope 2 123.9 177.8

TOTAL 123.9 177.8

TOTAL FOR OPERATIONAL PROPERTIES 31,487.3 34,647.3

SCOPE 3: COMPLETED PROJECTS

Residential 259.3 665.6

Office 8.6 5.6

TOTAL FOR COMPLETED PROJECTS 267.9 267.9

SCOPE 3: PROJECTS UNDER CONSTRUCTION

Residential 389.7 295.0

Office 66.6 85.8

TOTAL FOR PROJECTS UNDER CONSTRUCTION 456.3 380.7

TOTAL (G4-EN15, G4-EN16, G4-EN17) 32,211.4 35,699.2


7
Gases reported include carbon dioxide (CO2 ), methane (CH4 ), and nitrous oxide (N2O) with global warming potential of 1, 21 and
310, respectively. Emission factor used is 0.6032. Assumption: Electricity is generated from diesel thermal power plants. There are no
traded GHGs.

GHG Emissions per Property7 (in tonnes CO2e) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu

Scope 1 114.9 270.5

Scope 2 7,061.7 6,934.7

Scope 3 15,276.7 17,410.0

The Walk

Scope 1 6.6 1.5

Scope 2 84.0 89.5

Scope 3 815.5 806.9

TOTAL FOR RETAIL 23,359.5 25,513.1

198 Let’s Build for Tomorrow's Generations


GHG Emissions per Property7 (in tonnes CO2e) 2013 2014

eBloc Tower 1

Scope 1 26.8 12.77

Scope 2 611.0 499.5

Scope 3 3,620.0 3,578.5

eBloc Tower 2

Scope 1 17.53 7.89

Scope 2 664.0 835.6

Scope 3 2,708.4 3,716.1

TOTAL FOR OFFICE 7,647.7 8,650.5

Cebu Business Park

Scope 2 224.8 209.4

Cebu I.T. Park

Scope 2 131.4 96.6

TOTAL FOR ESTATES 356.2 306.0

CHI Office

Scope 2 80.0 108.2

Mall Admin Office

Scope 2 43.9 69.6

TOTAL FOR CORPORATE OFFICES 123.9 177.8

TOTAL FOR OPERATIONAL PROPERTIES 31, 487.3 34,647.3

SCOPE 3: COMPLETED PROJECTS

1016 Residences 137.1 195.4

Avida Towers 36.7 384.1

Sedona Parc 85.4 86.1

TOTAL FOR RESIDENTIAL 259.3 665.6

eBloc Tower 3 (Office) 8.6 5.6

TOTAL 267.9 671.2

CHI 2014 Annual and Sustainability Report 199


GHG Emissions per Property7 (in tonnes CO2e) 2013 2014

SCOPE 3: PROJECTS UNDER CONSTRUCTION

Solinea Tower 1 47.7 140.9

Avida Towers Riala 342.1 154.2

TOTAL FOR RESIDENTIAL 389.7 295.0

ACC Corporate Center (Office) 66.6 85.8

TOTAL FOR PROJECTS UNDER CONSTRUCTION 456.3 380.7

TOTAL (G4-EN15, G4-EN16, G4-EN17) 32,211.4 35,699.2

GHG Intensities7 (G4-EN18, CRE3) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 0.19 0.18

The Walk 0.18 0.18

AVERAGE INTENSITY FOR RETAIL 0.18 0.18

eBloc Tower 1 0.16 0.16

eBloc Tower 2 0.10 0.13

AVERAGE INTENSITY FOR OFFICE 0.13 0.14

Cebu Business Park 0.0012 0.0011

Cebu I.T. Park 0.0011 0.0008

AVERAGE INTENSITY FOR ESTATE 0.00116 0.00097

CHI Office 0.12 0.16

Mall Admin Office 0.05 0.09

AVERAGE INTENSITY FOR CORPORATE OFFICE 0.09 0.12

OVERALL AVERAGE INTENSITY 0.10 0.11


8
Calculated as total GHG emissions per square meter of gross floor area

GHG Emissions Reduction Achieved6, 9 (in T CO2e) 2013 2014

Ayala Center Cebu - 127.0

The Walk - 13.8

eBloc Tower 1 - 167.0

eBloc Tower 2 - 9.6

Cebu Business Park - 15.4

Cebu I.T. Park - 34.8

TOTAL (G4-EN19) - 367.58


9
Includes Scope 1-3 reductions, where applicable

200 Let’s Build for Tomorrow's Generations


Water Consumption (in m3) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 378,206.5 388,033.0

The Walk 15,588.5 22,003.9

TOTAL FOR RETAIL10 393,795.0 410,036.9

eBloc Tower 1 62,551.4 49,361.6

eBloc Tower 2 39,948.0 57,335.0

TOTAL FOR OFFICE10 102,499.4 106,696.6

Cebu Business Park 1,128.7 3,632.0

Cebu I.T. Park 643.5 4,249.3

TOTAL FOR ESTATES 1,772.2 7,881.3

CHI Office 418.0 269.0

TOTAL FOR CORPORATE OFFICES 418.0 269.0

TOTAL FOR OPERATIONAL PROPERTIES 498,484.6 524,883.8

COMPLETED PROJECTS

1016 Residences 6,197.0 7,687.0

Avida Towers Cebu 9,080.0 19,814.0

Sedona Parc 9,549.0 7,139.6

TOTAL FOR RESIDENTIAL 24,826.0 34,640.6

eBloc Tower 3 (Office) 147.5 27,458.9

TOTAL FOR COMPLETED PROJECTS 24,973.5 62,099.5

PROJECTS UNDER CONSTRUCTION

Park Point Residences 1,576.8 4,279.0

Solinea Tower 1,382.7 3,856.4

Avida Towers Riala 1,171.0 1,504.7

TOTAL FOR RESIDENTIAL 4,130.5 9,640.1

ACC Corporate Center (Office) 4,773.3 6,902.2

TOTAL FOR PROJECTS UNDER CONSTRUCTION 8,903.8 16,542.3

TOTAL (G4-EN8) 532,361.9 603,525.6


10
Includes water consumption by tenants

CHI 2014 Annual and Sustainability Report 201


Water Intensities11 (CRE2) 2013 2014

OPERATIONAL PROPERTIES

Ayala Center Cebu 3.17 2.87

The Walk 3.05 4.31

AVERAGE INTENSITY FOR RETAIL 3.11 3.59

eBloc Tower 1 2.41 1.90

eBloc Tower 2 1.15 1.65

AVERAGE INTENSITY FOR OFFICE 1.78 1.78

Cebu Business Park 0.006 0.019

Cebu I.T. Park 0.006 0.037

AVERAGE INTENSITY FOR ESTATE 0.006 0.028

CHI Office 0.62 0.40

OVERALL AVERAGE INTENSITY 1.49 1.60


11
Calculated as total water consumed per gross floor area

Reduction in Water Consumption6, 12 (in m3) 2013 2014

Ayala Center Cebu - 45,811.5

The Walk - 149.0

OVERALL AVERAGE INTENSITY - 45,960.5


11
Water use reduction from common areas only

A.2 Project Lifecycle Data for Completed Projects


Cement (in bags)

1016 Residences 191,190.0

Avida Towers Cebu 12,626.0

Sedona Parc 590.0

eBloc Tower 3 179,952.0

TOTAL (G4-EN1) 384,358.0

202 Let’s Build for Tomorrow's Generations


Sand and gravel (in bags)

1016 Residences 1,960

Avida Towers Cebu 16,136

Sedona Parc 95,998

eBloc Tower 3 2,352

TOTAL (G4-EN1) 116,446

Wood (in m3)

1016 Residences 341

Sedona Parc 1,045

eBloc Tower 3 56

TOTAL (G4-EN1) 1,442

Rebars (in kilograms)

1016 Residences 19,127

Avida Towers Cebu 15,466

Sedona Parc 165

eBloc Tower 3 13,015

TOTAL (G4-EN1) 47,773

Materials Intensity13

Cement

1016 Residences 7.38

Avida Towers Cebu 0.19

Sedona Parc 0.04

AVERAGE FOR RESIDENTIAL 2.54

eBloc Tower 3 6.01

CHI 2014 Annual and Sustainability Report 203


Materials Intensity13

Sand and gravel

1016 Residences 0.08

Avida Towers Cebu 0.25

Sedona Parc 6.59

AVERAGE FOR RESIDENTIAL 2.30

eBloc Tower 3 0.08

Wood

1016 Residences 0.01

Sedona Parc 0.07

AVERAGE FOR RESIDENTIAL 0.04

eBloc Tower 3 0.002

Rebars

1016 Residences 0.74

Avida Towers Cebu 0.24

Sedona Parc 0.01

AVERAGE FOR RESIDENTIAL 0.33

eBloc Tower 3 0.43


13
Calculated as total materials used per constructed floor area

Energy consumption (in GJ)

Direct Energy

1016 Residences 191.2

Avida Towers Cebu 544.4

Sedona Parc 840.0

TOTAL FOR RESIDENTIAL 1,575.7

eBloc Tower 3 157.9

TOTAL DIRECT ENERGY 1,733.6

Indirect Energy

1016 Residences 2,739.6

Avida Towers Cebu 2,941.3

Sedona Parc 1,388.2

TOTAL FOR RESIDENTIAL 7,069.2

eBloc Tower 3 11.9

TOTAL INDIRECT ENERGY 7,081.1

TOTAL (G4-EN4) 8,814.7

204 Let’s Build for Tomorrow's Generations


Energy Intensity14 (G4-EN5)

1016 Residences 0.11

Avida Towers Cebu 0.05

Sedona Parc 0.15

AVERAGE FOR RESIDENTIAL 0.11

eBloc Tower 3 0.01


14
Calculated as total energy consumed per square meter of constructed floor area

GHG Emissions7 (in tonnes CO2e)

Scope 1

1016 Residences 13.3

Avida Towers Cebu 37.8

Sedona Parc 58.3

TOTAL FOR RESIDENTIAL 109.3

eBloc Tower 3 11.0

TOTAL SCOPE 1 EMISSIONS 120.3

Scope 2

1016 Residences 459.0

Avida Towers Cebu 492.8

Sedona Parc 232.6

TOTAL FOR RESIDENTIAL 1,184.5

eBloc Tower 3 2.0

TOTAL SCOPE 2 EMISSIONS 1,186.5

TOTAL EMISSIONS (G4-EN15, G4-EN16, CRE4) 1,306.7

Scope 3

1016 Residences 472.3

Avida Towers 530.6

Sedona Parc 290.9

TOTAL FOR RESIDENTIAL 1,293.8

eBloc Tower 3 13.0

TOTAL EMISSIONS (G4-EN17) 1,306.7

CHI 2014 Annual and Sustainability Report 205


GHG Intensity15 (G4-EN18)

1016 Residences 0.11

Avida Towers Cebu 0.05

Sedona Parc 0.15

AVERAGE FOR RESIDENTIAL 0.11

eBloc Tower 3 0.01


13
Calculated as total emissions per square meter of constructed floor area

Water Consumption (in m3)

1016 Residences 24,090.1

Avida Towers Cebu 29,417.1

Sedona Parc 31,827.3

TOTAL FOR RESIDENTIAL 85,334.5

eBloc Tower 3 27,458.9

TOTAL (G4-EN8) 112,793.4

Water Intensity16 (CRE2)

1016 Residences 0.93

Avida Towers Cebu 0.45

Sedona Parc 2.19

AVERAGE FOR RESIDENTIAL 3.56

eBloc Tower 3 0.92


13
Calculated as total water consumed per square meter of constructed floor area

B. SOCIAL
B.1 Human Capital

Employee Hires by Age Group (G4-LA1) 2013 2014

Below 30 years old 8 9

30-40 years old 2 2

TOTAL17 10 11

HIRING RATE 12% 13%


16
Data includes 3 project hires absorbed in 2014

206 Let’s Build for Tomorrow's Generations


Employee Turnover by Age Group (G4-LA1) 2013 2014

Below 30 years old 5 2

30-40 years old 1 4

TOTAL 6 6

TURNOVER RATE 7% 7%

External Hires and Internal Movements 2013 2014

External Hires18 2 1

Internal Movements19 5 13

TOTAL MOVEMENTS 7 14
18
Data includes SPs/Officers only
19
Data includes promotions and movements of SPs/Officers

Average Competency-based Training Hours


2013 2014
per Employee Category (G4-LA9)

Probationary/Regular MTs 32.53 33.48

Supervisors 27.22 35.47

Associates 23.03 50.83

AVERAGE FOR THE YEAR 27.59 39.92

Work Illnesses (G4-LA6) 2013 2014

Fever 16 35

Flu 38 39

Headache - 40

Stomach ache - 21

Employee Distribution by Gender (G4-LA10) 2013 2014

Male 23 22

Female 56 62

TOTAL20 79 84

Employee Distribution by Employee Category (G4-LA10) 2013 2014

Probationary/Regular MTs 20 21

Supervisors 27 30

Associates 32 33

TOTAL20 79 84
18
Data excludes project hires

CHI 2014 Annual and Sustainability Report 207


Composition of Governance Body and Breakdown of Employees by
2013 2014
Gender (G4-LA22)

MALE

Board of Directors 8 8

Management Team 8 8

Supervisors 6 6

Associates 8 8

TOTAL 30 30

FEMALE

Board of Directors 1 1

Management Team 12 13

Supervisors 21 24

Associates 24 25

TOTAL 58 63

Corporate Knights Capital’s Key Performance Indicators 2013 2014

Lost time injury rate21 0% 0%

Number of fatalities 0 0

Percentage of Women on Board of Directors 11% 11%

Percentage of Women in Executive Management 60% 62%


21
Calculated as number of lost time incidents (per 200,000 employee hours)

B.2 Customer Satisfaction

Customer Satisfaction Survey Ratings (G4-PR5) 2013 2014

Internal Customer21 8.7 8.7

Ayala Center Cebu Shoppers 8.6 9.1

Ayala Center Cebu Merchants 7.6 8.1

Cebu I.T. Park Locators 23


7.8 8.3

22
Data presented is the average of results from 16 divisions/departments surveyed.
23
2014 data is the average of results from APMC and Office Leasing surveys

208 Let’s Build for Tomorrow's Generations


C. ECONOMIC

Economic Value Generated and Distributed


2013 2014
(in thousand pesos)

Economic Value Generated: Revenue 2,169,510 2,293,580

Economic Value Distributed:

Operating Cost 1,010,592 970,474

Employees’ Wages and Benefits 135,831 142,867

Payements to Providers of Capital 269,933 416,862

Payments to Government 236,039 221,070

Community Investments 15,970 11,430

TOTAL ECONOMIC VALUE DISTRIBUTED 1,668,365 1,762,703

ECONOMIC VALUE RETAINED (G4-EC1) 501,145 530,877

Breakdown of Community Investments


2013 2014
(in thousand of pesos)

Donations 2,552 1,797

Direct Cost of Social Programs:

Education 1,740 489

Entrepreneurship 1,564 386

Environment (G4-EN31) 811 514

Tourism, Arts, Culture and Religion 5,227 3,542

Health and Wellness 363 767

Relationship Building 1,018 2,060

Relief Operations 2,696 434

Sustainability - 921

Advocacy for Children - 520

TOTAL DIRECT COSTS 13,418 9,633

TOTAL (G4-EC1) 15,970 11,430

CHI 2014 Annual and Sustainability Report 209


GRI CONTENT INDEX
GENERAL STANDARD DISCLOSURES

General Standard
Section or Sub-section, Page/s External Assurance
Disclosures
STRATEGY AND ANALYSIS
Message from the Chairman and the President, 12-19;
G4-1 not assured
Message from the Chief Finance Officer, 22-29
Message from the Chief Finance Officer, 22-29; Enterprise-wide Risk Management, 92-
G4-2 not assured
93; Our Sustainability Performance, 108, 112
ORGANIZATIONAL PROFILE
G4-3 About This Report, 6 not assured
G4-4 Our Business, 36-65 not assured
G4-5 About This Report, 6 not assured
G4-6 About This Report, 6 not assured
G4-7 Ownership Structure not assured
G4-8 Our Business, 36-65; Our 2014 Stakeholder Engagement, 115-116 not assured
Message from the Chief Finance Officer, 24-27; Our Business, 36-65;
G4-9 not assured
Employee Profile by Employee Category, 156
Employee Profile by Employee Category, 158; Total Workforce at Cebu Park District, 181;
G4-10 not assured
Human Capital Data Annex, 206-207
G4-11 Legal and Compliance, 186-187 not assured
G4-12 Supply Chain, 182-183 not assured
G4-13 Our Business, 36-65. No significant changes in supply chain. not assured
G4-14 Enterprise-wide Risk Management, 92-93; Sustainability Policy, 107 not assured
G4-15 About This Report, 7 not assured
G4-16 Membership in Organizations, 34 not assured
IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES
G4-17 Ownership Structure, 34 not assured
G4-18 Materiality Process, 108-109, 111 not assured
G4-19 Table of Material Aspects, 111 not assured
G4-20 Table of Material Aspects, 111 not assured
G4-21 Table of Material Aspects, 111 not assured
G4-22 About This Report, 6 not assured
G4-23 Table of Material Aspects, 111 not assured
STAKEHOLDER ENGAGEMENT
G4-24 Our 2014 Stakeholder Engagement, 113-117 not assured
Stakeholders were chosen based on their level of influence and interest in our
G4-25 not assured
organization as well as the extent of our impact of operations on them.
G4-26 Our 2014 Stakeholder Engagement, 113-117 not assured
G4-27 Our 2014 Stakeholder Engagement, 113-117 not assured
REPORT PROFILE
G4-28 About This Report, 6 not assured
G4-29 Our latest report covers our 2013 performance which was published in 2014. not assured
G4-30 About This Report, 6 not assured
G4-31 About This Report, 7 not assured
G4-32 About This Report, 7; GRI Content Index, 210-213 not assured
About This Report, 7; No external assurance for the Sustainability Report sections was
G4-33 not assured
conducted.
GOVERNANCE
G4-34 Governance Structure, 70; Key Roles and Responsibilities, 72, 76 not assured
G4-35 Key Roles and Responsibilities, 72, 76 not assured
G4-36 Key Roles and Responsibilities, 72, 76 not assured
G4-37 Board Committees and Functions, 78 not assured
G4-38 Composition of the Board, 73 not assured

G4-39 Mr. Bernard Vincent O. Dy, in his sole executive capacity, serves as Chairman of the Board. not assured

210 Let’s Build for Tomorrow's Generations


GRI CONTENT INDEX
GENERAL STANDARD DISCLOSURES

G4-40 Composition, 69; Independent Directors, 71; Board Committees and Functions, 78 not assured

G4-41 Code of Ethical Behavior, 95; Financial Reporting, 101 not assured
G4-42 Key Roles and Responsibilities, 72, 76 not assured
G4-43 Records of Trainings - Board and Management Levels, 86-87 not assured
G4-44 Board Performance, 76 not assured
G4-45 Key Roles and Responsibilities, 72, 76 not assured
G4-46 Key Roles and Responsibilities, 72, 76; Board Committees and Functions, 78 not assured
G4-47 Board Committees and Functions, 78 not assured
G4-48 Board Committees and Functions, 78 not assured
G4-51 Director and Senior Executive Compensation, 80-81 not assured
G4-52 Director and Senior Executive Compensation, 80-81 not assured
G4-53 This is not applicable. not assured
ETHICS AND INTEGRITY
G4-56 Core Values and Mission and Vision Statement, 33; Code of Ethical Behavior, 96 not assured
G4-57 Whistle-blowing Policy, 96 not assured
G4-58 Whistle-blowing Policy, 96 not assured

SPECIFIC STANDARD DISCLOSURES

Reason for External


Material Aspects DMA and Indicators - Page/s
Omissions Assurance
ECONOMIC
• G4-DMA – 178-179 not applicable not assured
Economic Performance • G4-EC1 – 171, 178, 180, 209
• G4-EC2 – 92-93
• G4-DMA – 178-179 not applicable not assured
Indirect Economic Impacts • G4-EC7 – 178-179
• G4-EC8 – 180
• G4-DMA – 182-183 not applicable not assured
Procurement Practices • G4-EC9 – 183

ENVIRONMENT
• G4-DMA – 120-122, 129
Materials • G4-EN1 – 123, 203 not applicable not assured
• G4-EN2 – 124, 192
• G4-DMA – 120-121, 128-129
• G4-EN3 – 130, 132, 194-196, 204-205
Energy • G4-EN4 – 130, 132-133, 194-196 not applicable not assured
• G4-EN5 – 134, 197, 205
• G4-EN6 – 131, 197
• G4-DMA – 120-121, 129, 139
Water not applicable not assured
• G4-EN8 – 141-144, 201-202, 206
• G4-DMA - 120-121, 130, 145
Biodiversity not applicable not assured
• G4-EN12 - 145

• G4-DMA – 141-144, 130, 135-136


• G4-EN15 – 136-138, 140, 197-200, 205
• G4-EN16 – 136-138, 140, 197-200, 205
Emissions not applicable not assured
• G4-EN17 – 136-138, 198-200
• G4-EN18 – 139-140, 201, 206
• G4-EN19 - 137, 201

• G4-DMA – 120-121, 124, 125, 131


Effluents and Waste not applicable not assured
• G4-EN23 – 125, 192-193

• G4-DMA – 120, 186


Compliance not applicable not assured
• G4-EN29 – 186

• G4-DMA – 120
Overall not applicable not assured
• G4-EN31 – 171, 209
Supplier Environmental • G4-DMA – 182
not applicable not assured
Assessment • G4-EN32 - 182-183

CHI 2014 Annual and Sustainability Report 211


GRI CONTENT INDEX
SPECIFIC STANDARD DISCLOSURES

Reason for External


Material Aspects DMA and Indicators - Page/s
Omissions Assurance
Environmental Grievance • G4-DMA – 186
not applicable not assured
Mechanisms • G4-EN34 - 186
SOCIAL: LABOR PRACTICES AND DECENT WORK
• G4-DMA - 148-153
• G4-LA1 – 157, 206-207
• G4-LA2 - In addition to statutory benefits are medical
Employment not applicable not assured
and clothing allowances, vacation, emergency and sick
leaves, and coverage under a group life, health insurance
and a retirement program.
• G4-DMA – 148-153
• G4-LA4 - Employees are given 30 days or 4 weeks
Labor/Management Relations not applicable not assured
notice prior to the implementation of significant
operational changes.
• G4-DMA – 148-153
Occupational Health and Safety not applicable not assured
• G4-LA6 - 158-159
• G4-DMA - Human Capital, 148-153
• G4-LA9 – 151
• G4-LA11 - Year-end performance reviews are done for
all employees of the Company. Probationary employees
Training and Education receive their review at least a month prior to conclusion of not applicable not assured
probationary period. Project employees receive the same
to ascertain contract renewal, extension or termination.
All employees regularized as of October 1, 2014 were part
of this review
• G4-DMA – 148-151
Diversity and Equal Opportunity not applicable not assured
• G4-LA12 - 156, 208
Supplier Assessment for Labor • G4-DMA – 182
not applicable not assured
Practices • G4-LA14 - 182-183
Labor Practices Grievance • G4-DMA – 186
not applicable not assured
Mechanisms • G4-LA16 - 186-187
SOCIAL: HUMAN RIGHTS
• G4-DMA – 182
Investment not applicable not assured
• G4-HR1 - 182-183
• G4-DMA – 186
Non-discrimination not applicable not assured
• G4-HR3 – 186-187
Freedom of Association and • G4-DMA – 186
not applicable not assured
Collective Bargaining • G4-HR4 – 186
• G4-DMA – 186
Child Labor not applicable not assured
• G4-HR5 – 186
• G4-DMA – 186
Forced or Compulsory Labor not applicable not assured
• G4-HR6 – 186
• G4-DMA – 160-161
• G4-HR7 – Upon hiring, all security personnel, including
third party organizations providing security
Security Practices not applicable not assured
personnel, are oriented and trained with Company
policies, processes and procedures which ensure
compliance with human rights provisions.
• G4-DMA – 187
Indigenous Rights not applicable not assured
• G4-HR8 – 187
Supplier Human Rights • G4-DMA – 182
not applicable not assured
Assessment • G4-HR10 - 182-183
SOCIAL: SOCIETY
• G4-DMA – 170
• G4-SO1 – All our operations underwent local
Local Communities community engagments and impact assessments as part not applicable not assured
of our due diligence.
• G4-SO2 - 180

• G4-DMA – 97, 187


Anti-Corruption not applicable not assured
• G4-SO5 – 97, 186-187

212 Let’s Build for Tomorrow's Generations


GRI CONTENT INDEX
SPECIFIC STANDARD DISCLOSURES

Reason for External


Material Aspects DMA and Indicators - Page/s
Omissions Assurance
• G4-DMA – 97, 187
Public Policy not applicable not assured
• G4-SO6 – 97, 187
• G4-DMA – 97, 187
Anti-competitive Behavior not applicable not assured
• G4-SO7 – 97, 187
• G4-DMA – 186-187
Compliance not applicable not assured
• G4-SO8 – 186-187

Supplier Assessment for • G4-DMA – 182


not applicable not assured
Impacts on Society • G4-SO10 - 182-183

SOCIAL: PRODUCT RESPONSIBILITY


• G4-DMA – 160-161, 187
Customer Health and Safety not applicable not assured
• G4-PR2 – 187
• G4-DMA – 160-161
Product and Service Labeling not applicable not assured
• G4-PR5 – 162-163
• G4-DMA – 187
Marketing Communications not applicable not assured
• G4-PR7 – 187
• G4-DMA – 187
Customer Privacy not applicable not assured
• G4-PR8 – 187
• G4-DMA – 187
Compliance not applicable not assured
• G4-PR9 – 187

CONSTRUCTION AND REAL ESTATE SECTOR DISCLOSURES


Energy • CRE1 - 134, 197, 205 not applicable not assured
Water • CRE2 - 143-144, 202, 206 not applicable not assured
• CRE3 - 139
Emissions not applicable not assured
• CRE4 - 140, 206
Occupational Health and Safety • CRE6 - 158 not applicable not assured
• CRE8 - Sales materials of our real estate products and
services are handled by Company partner, Ayala Land
Sales, Inc. (ALSI) in full compliance with all regulatory
requirements. All marketing communications, advertising
Product and Service Labeling not applicable not assured
and promotions for retail business operations is done
by the Company’s Commercial Business Group’s
marketing team in full compliance with all applicable laws
and regulations.

UNIQUE CHI INDICATOR


Employee Engagement • Engagement Drivers - 150-153 not assured

CORPORATE KNIGHTS CAPITAL'S KEY PERFORMANCE INDICATORS


Employee Turnover • Turnover Rate - 157
• Lost Time Injury Rate - 159
Safety Performance not assured
• Absolute Number of Fatalities - 159
• Percentage of Women on Board of Directors - 156
Leadership Diversity not assured
• Percentage of Women in Executive Management - 156

CHI 2014 Annual and Sustainability Report 213


ASEAN CORPORATE GOVERNANCE SCORECARD INDEX

A Rights of Shareholders Page Number


A.1 Basic Shareholder Rights 95
A.2 Right to participate in decisions concerning fundamental corporate changes 95
Right to participate effectively in and vote in general shareholder meetings and should be informed of the
A.3 95
rules, including voting procedures that govern general shareholder meetings
A.4 Markets for corporate control should be allowed to function in an efficient and transparent manner 98
A.5 The exercise of ownership rights by all shareholders, including institutional investors, should be facilitated 99
B Equitable Treatment of Shareholders
B.1 Shares and Voting Rights 95
B.2 Notice of AGM 94-95
B.3 Insider trading and abusive self-dealing should be prohibited 91
B.4 Related party transactions by directors and key executives 101
C Role of Stakeholders
C.1 The rights of stakeholders that are established by law or through mutual agreements are to be respected 96
Where stakeholder interests are protected by law, stakeholders should have the opportunity to obtain
C.2 96
effective redress for violation of their rights
C.3 Performance-enhancing mechanisms for employee participation should be permitted to develop 96
C.4 Stakeholders including individual employee and their representative bodies, should be able to freely 96
communicate their concerns about illegal or unethical practices to the board and their rights should not
be compromised for doing this
D Disclosure and Transparency
D.1 Transparent Ownership Structure 101
D.2 Quality of Annual Report 101
D.3 Disclosure of Related Party Transactions (RPT) 101
D.4 Directors and Commissioners Dealings in Shares of the Company 91
D.5 External Auditor and Auditor's Report 217-220

D.6 Medium of Communications 99


D.7 Timely Filing / Release of Annual / Financial Reports 101
D.8 Company Website 101
D.9 Investor Relations 98

E Responsibilities of the Board


E.1 Clearly Defined Board Responsibilities and Corporate Governance Policy 76
E.2 Code of Ethics or Conduct 96
E.3 Corporate Vision / Mission 33
E.4 Board Structure and Composition 69, 73, 78
E.5 Skills and Competencies 188-190
E.6 Board Chairman 71
E.7 Board Meetings and Attendance 76-77
E.8 Orientation Programme for New Directors 76
E.9 Directors' Training 76
E.10 Access to information 101
E.11 Nominating Committee 78
E.12 Board Appointments and Re-Election 69, 71
E.13 CEO / Executive Management Appointments and Performance 76
E.14 Board Appraisal 76
E.15 Director Appraisal 76-81
E.16 Committee Appraisal 76
E.17 Remuneration Committee / Compensation Committee 78
E.18 Remuneration Matters 80-81
E.19 Audit Committee 78
E.20 Internal Audit 88

E.21 Risk Oversight 92-93

214 Let’s Build for Tomorrow's Generations


Financial
Report

Statement of Management's Responsibility for Financial Statements


Report of the Audit and Risk Committee to the Board of Directors
Independent Auditor's Report
Notes to Consolidated Financial Statements
Shareholder Information

Let's build for tomorrow's generations

CHI 2014 Annual and Sustainability Report 215


CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENT OF MANAGEMENT'S RESPONSIBILITY


FOR FINANCIAL STATEMENTS
The management of Cebu Holdings, Inc. and Subsidiaries is responsible for the preparation and fair presentation
of the consolidated financial statements for the years ended December 31, 2014 and 2013, including the additional
components attached therein, in accordance with Philippine Financial Reporting Standards. This responsibility
includes designing and implementing internal controls relevant to the preparation and fair presentation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error, selecting
and applying appropriate accounting policies, and making accounting estimates that are reasonable in the
circumstances.

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

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

BERNARD VINCENT O. DY
Chairman, Board of Directors

ANICETO V. BISNAR, JR. ENRIQUE B. MANUEL, JR.


President Chief Finance Officer

216 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES
R e p o r t o f t h e Au d i t & R i s k C o m m i t t e e t o t h e B o a r d o f D i r e c t o r s
REPORT OF THE AUDIT & RISK COMMITTEE TO
R e p o r t o f t h e AuFor
d i tthe
R e p o r t o f t h e AuFor
& RYear
d i tthe
i s k Ended
& RYear
C o m mDecember
i s k Ended
i t t e e t o t31,
C o m mDecember
h e2014
i t t e e t o t31,
Board of Directors
h e2014
Board of Directors
THE BOARD OF DIRECTORS For the Year Ended December 31, 2014
The Audit & Risk Committee’s roles and responsibilities are defined in the Audit & Risk Committee Charter
The Audit & Risk Committee’s roles and responsibilities are defined in the Audit & Risk Committee Charter
approved by the Board of Directors. The Audit & Risk Committee provides assistance to the Board of
The Audit by
approved & Risk Committee’s
the Board roles andThe
of Directors. responsibilities
Audit & Risk areCommittee
defined in provides
the Auditassistance
& Risk Committee Charter
to the Board of
Directors in fulfilling its oversight responsibility to the shareholders relating to:
approved inbyfulfilling
Directors the Board of Directors.
its oversight The Audit
responsibility to the&shareholders
Risk Committee provides
relating to: assistance to the Board of
a.) the integrity of Cebu Holdings Inc.’s (the “Company”) financial statements and the financial reporting
Directors in fulfilling
a.) the integrity of its oversight
Cebu responsibility
Holdings Inc.’s (theto“Company”)
the shareholders relating
financial to:
statements and the financial reporting
process;
a.) process;
the integrity of Cebu Holdings Inc.’s (the “Company”) financial statements and the financial reporting
b.) the effectiveness of the systems of internal controls and the risk management process;
b.) process;
the effectiveness of the systems of internal controls and the risk management process;
c.) the performance and leadership of the internal audit function;
b.) effectiveness and
c.) the performance of the systems of
leadership of the
internal controls
internal audit and the risk management process;
function;
d.) the appointment, remuneration, qualifications, independence and performance of the independent
c.)
d.) the performance
appointment,and leadership ofqualifications,
remuneration, the internal audit function;
independence and performance of the independent
auditors and the integrity of the audit process as a whole;
d.) auditors
the appointment, remuneration,
and the integrity qualifications,
of the audit process as aindependence
whole; and performance of the independent
e.) the Company’s compliance with applicable legal and regulatory requirements; and
e.) auditors and thecompliance
the Company’s integrity of with
the audit process
applicable as and
legal a whole;
regulatory requirements; and
f.) the preparation of a year-end report of the Committee for approval of the Board and to be included in the
e.) annual
f.) the Company’s
report. compliance
preparation of a year-end with applicable
report legal and regulatory
of the Committee requirements;
for approval of the Boardand
and to be included in the
annual report.
f.) the preparation of a year-end report of the Committee for approval of the Board and to be included in the
annual report.
In compliance with the Audit & Risk Committee Charter, we confirm that:
In compliance with the Audit & Risk Committee Charter, we confirm that:
An independent director chairs the Audit &Risk Committee; All members of the Committee are
In compliance with the Audit
An independent & Risk
director Committee
chairs Charter,
the Audit &RiskweCommittee;
confirm that:All members of the Committee are
independent directors.
An independent
independent director chairs the Audit &Risk Committee; All members of the Committee are
directors.
independent directors.
We had five (5) meetings for the year with the following attendance rate:
We had five (5) meetings for the year with the following attendance rate:
We had fiveCommittee
(5) meetings for the year with the
Member No.following attendance
of Meetings rate:
Percent Present
Committee Member No. of Meetings Percent Present
Attended/Held
Committee Member No. of Meetings Percent Present
Attended/Held
Fr.Roderick C. Salazar, Jr. 5/5 100%
Fr.Roderick C. Salazar, Jr. Attended/Held
5/5 100%
Enrique L. Benedicto 5/5 100%
Fr.Roderick C. Salazar, Jr.
Enrique L. Benedicto 5/5 100%
Pampio A. Abarintos* 4/4 100%
Enrique A.
Pampio L. Benedicto
Abarintos* 5/5
4/4 100%
Hernando O. Streegan* 0/1 0%
Pampio
HernandoA. O.
Abarintos*
Streegan* 4/4
0/1 100%
0%
*PAAbarintos became a member of the CHI Audit and Risk Committee on April 8, 2014
Hernando O. Streegan*
*PAAbarintos became a member of 0/1 0% Committee on April 8, 2014
the CHI Audit and Risk
replacing HOStreegan.
*PAAbarintos
replacing became a member of the CHI Audit and Risk Committee on April 8, 2014
HOStreegan.
replacing HOStreegan.
We recommended to the Board of Directors the re-appointment of SGV & Co. as independent external
We recommended to the Board of Directors the re-appointment of SGV & Co. as independent external
auditor for 2014, based on the review of their performance and qualifications, including consideration of
We recommended
auditor to theonBoard
for 2014, based of Directors
the review of theirthe re-appointment
performance of SGV & Co.including
and qualifications, as independent external
consideration of
management’s recommendation;
auditor for 2014,
management’s based on the review of their performance and qualifications, including consideration of
recommendation;
We reviewed and discussed the quarterly consolidated financial statements and annual consolidated
management’s
We reviewed andrecommendation;
discussed the quarterly consolidated financial statements and annual consolidated
financial statements of Cebu Holdings Inc and subsidiaries (the “Company”, including Management’s
We reviewed
financial and discussed
statements of Cebu the quarterly
Holdings Inc consolidated financial
and subsidiaries statements and
(the “Company”, annual
including consolidated
Management’s
Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended
financial statements
Discussion of Cebu
and Analysis Holdings
of Financial Inc andand
Condition subsidiaries
Results of(the “Company”,
Operations as ofincluding Management’s
and for the year ended
December 31, 2014), with the Company’s management and SGV & Co.. We confirm the report of the
Discussion 31,
December and2014),
Analysiswithofthe
Financial Condition
Company’s and Results
management andofSGVOperations
& Co.. as
Weofconfirm
and forthe
thereport
year ended
of the
external auditors and the results of the review of the 2014 audited financial statements. These activities
December
external 31, 2014),
auditors withresults
and the the Company’s management
of the review of the 2014and SGV financial
audited & Co.. We confirm the
statements. report
These of the
activities
were performed in the following context:
external
were auditorsinand
performed thethe resultscontext:
following of the review of the 2014 audited financial statements. These activities
That management has the primary responsibility for the financial statements and the
were performedThatin the following context:
management has the primary responsibility for the financial statements and the
reporting process,
That management
reporting process, has the primary responsibility for the financial statements and the
reporting process,
CHI 2014 Annual and Sustainability Report 217
That management has the primary responsibility for the financial statements and the
reporting process,

That SGV & Co. is responsible for expressing the opinion on the conformity of the
Company’s consolidated audited financial statements with the Philippine Financial
Reporting Standards;

We reviewed and approved the management representation letter before submission to the Company’s
independent external auditors;
We discussed and approved the overall scope and the respective audit plans of the Company’s
Internal Auditors and SGV & Co. We have also discussed the results of their audits and their
assessment of the Company’s internal controls and the overall quality of the financial
reporting process;
We reviewed and approved all audit services provided by SGV & Co. to the Company and have
concluded that such services do not impair their independence;
We reviewed the reports of the Internal Auditors, ensuring that management is taking
appropriate corrective actions in a timely manner, including addressing internal control and
compliance with legal and regulatory issues. All the activities performed by Internal Audit
were conducted in conformity with the International Standards for the Professional Practice of
Internal Auditing;
We reviewed and discussed the adequacy of the Company’s Enterprise-wide Risk
Management (ERM) Process, including the major risk exposures, the related risk mitigation
efforts and initiatives, and the status of risk mitigation plans. The review was undertaken in
the context that management is primarily responsible for the risk management process.

Based on the reviews and discussions undertaken, and subject to the limitations on our roles and
responsibilities referred to above, the Audit & Risk Committee recommended to the Board of Directors the
inclusion of the Company’s consolidated financial statements as of and for the year ended December 31,
2014 in the Company’s Annual Report to the Stockholders and for filing with the Securities and Exchange
Commission.

February 12, 2015

FR. RODERICK C. SALAZAR, JR., SVD


Committee Chair

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


Member Member

218 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

INDEPENDENT AUDITOR'S REPORT


INDEPENDENT AUDITORS’ REPORT

The Stockholders and the Board of Directors


Cebu Holdings, Inc.
7th Floor, Cebu Holdings Center
Cebu Business Park, Cebu City

We have audited the accompanying consolidated financial statements of Cebu Holdings, Inc. and its
subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2014 and
2013, and the consolidated statements of income, consolidated statements of comprehensive income,
consolidated statements of changes in equity and consolidated statements of cash flows for each of the three
years in the period ended December 31, 2014, and a summary of significant accounting policies and other
explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

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

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements.

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

CHI 2014 Annual and Sustainability Report 219


Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Cebu Holdings, Inc. and its subsidiaries as at December 31, 2014 and 2013, and their financial
performance and their cash flows for each of the three years in the period ended December 31, 2014 in
accordance with Philippine Financial Reporting Standards.

SYCIP GORRES VELAYO & CO.

Jessie D. Cabaluna
Partner
CPA Certificate No. 36317
SEC Accreditation No. 0069-AR-3 (Group A),
February 14, 2013, valid until February 13, 2016
Tax Identification No. 102-082-365
BIR Accreditation No. 08-001998-10-2012,
April 11, 2012, valid until April 10, 2015
PTR No. 4751262, January 5, 2015, Makati City

March 11, 2015

220 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTS OF FINANCIAL POSITION


CEBU HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in Thousands)

December 31
2014 2013
ASSETS
Current Assets
Cash and cash equivalents (Notes 4 and 24) P
= 2,895,215 P
= 765,151
Financial assets at fair value through profit or loss
(Notes 5 and 24) 204,077 426,604
Accounts receivable (Notes 6, 16 and 24) 1,282,039 1,044,920
Inventories (Note 7) 1,177,799 1,247,248
Other current assets (Notes 8 and 24) 278,922 194,933
Total Current Assets 5,838,052 3,678,856
Noncurrent Assets
Noncurrent accounts receivable (Notes 6 and 24) 106,048 473,810
Property and equipment (Note 9) 71,954 70,266
Investments in associates and a joint venture (Note 10) 1,058,281 428,106
Investment properties (Note 11) 9,210,770 8,230,593
Deferred tax assets - net (Note 21) 16,238 13,968
Other noncurrent assets (Notes 12 and 24) 83,608 54,754
Total Noncurrent Assets 10,546,899 9,271,497
P
= 16,384,951 P
= 12,950,353

LIABILITIES AND EQUITY


Current Liabilities
Accounts and other payables (Notes 13, 16, 24 and 25) P
= 2,377,386 P
= 1,831,538
Current portion of long-term debt (Notes 14 and 24) 492,561 669,225
Income tax payable 37,128 49,597
Deposits and other current liabilities (Notes 15 and 24) 669,766 488,065
Total Current Liabilities 3,576,841 3,038,425
Noncurrent Liabilities
Long-term debt - net of current portion (Notes 14 and 24) 6,226,919 3,708,752
Pension liabilities (Note 20) 55,734 39,323
Deferred tax liabilities - net (Note 21) 77,836 59,319
Deposits and other noncurrent liabilities (Notes 15 and 24) 225,891 182,701
Total Noncurrent Liabilities 6,586,380 3,990,095
Total Liabilities 10,163,221 7,028,520
Equity (Note 25)
Equity attributable to equity holders of Cebu Holdings, Inc.
Paid-in capital 2,776,758 2,776,758
Retained earnings 2,738,804 2,438,336
Equity reserves (Note 23) (9,474) (9,474)
Remeasurement loss on defined benefit plan (Note 20) (38,778) (31,102)
Equity in remeasurement loss on retirement plan of an
associate (Note 10) (1,078) −
5,466,232 5,174,518
Non-controlling interests 755,498 747,315
Total Equity 6,221,730 5,921,833
P
= 16,384,951 P
= 12,950,353

See accompanying Notes to Consolidated Financial Statements.

CHI 2014 Annual and Sustainability Report 221


CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTS OF COMPREHENSIVE INCOME

CEBU HOLDINGS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, except Earnings Per Share Figures)

Years Ended December 31


2014 2013 2012
REVENUE
Real estate (Note 17) P
= 1,754,474 P
= 1,780,194 P
= 1,260,651
Equity in net earnings of associates and a joint
venture (Note 10) 79,679 47,050 73,901
Interest income (Notes 4 and 18) 71,168 72,835 83,179
Other income (Note 18) 388,258 269,431 215,303
2,293,579 2,169,510 1,633,034
COSTS AND EXPENSES
Real estate (Note 19) 1,127,172 1,150,340 751,590
General and administrative expenses (Note 19) 229,843 226,180 194,334
Interest and other financing charges (Note 19) 205,654 58,833 43,545
Other charges – – 1,528
1,562,669 1,435,353 990,997
INCOME BEFORE INCOME TAX 730,910 734,157 642,037
PROVISION FOR INCOME TAX (Note 21)
Current 145,519 182,041 161,570
Deferred 19,537 22,320 5,463
165,056 204,361 167,033
NET INCOME P
= 565,854 P
= 529,796 P
= 475,004
Net Income Attributable to:
Equity holders of Cebu Holdings, Inc. P
= 530,877 P
= 501,145 P
= 443,640
Non-controlling interests 34,977 28,651 31,364
P
= 565,854 P
= 529,796 P
= 475,004
Basic/Diluted Earnings Per Share (Note 22) P
= 0.28 P
= 0.26 P
= 0.23

See accompanying Notes to Consolidated Financial Statements.

222 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTS OF COMPREHENSIVE INCOME

CEBU HOLDINGS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)

Years Ended December 31


2014 2013 2012
Net income P
= 565,854 P
= 529,796 P
= 475,004
Other comprehensive loss
Other comprehensive loss not to be reclassified to
profit or loss in subsequent years:
Remeasurement loss on defined benefit plan
(Note 20) (7,676) (7,581) (13,433)
Equity in remeasurement loss on retirement plan
of an associate (Note 10) (1,078) − −
Total other comprehensive loss (8,754) (7,581) (13,433)
Total comprehensive income P
= 557,100 P
= 522,215 P
= 461,571
Total comprehensive income attributable to:
Equity holders of Cebu Holdings, Inc. P
= 522,123 P
= 493,564 P
= 430,207
Non-controlling interests 34,977 28,651 31,364
P
= 557,100 P
= 522,215 P
= 461,571

See accompanying Notes to Consolidated Financial Statements.

CHI 2014 Annual and Sustainability Report 223


CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTS
CEBU HOLDINGS, INC.OF
AND CHANGES
SUBSIDIARIES IN EQUITY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in Thousands, except Par Value and Cash Dividends Per Share Figures)

Years Ended December 31


2014 2013 2012
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF CEBU HOLDINGS, INC.
Capital Stock - P
= 1 par value (Note 25)
Balance at beginning and end of year P
= 1,920,073 P
= 1,920,073 P
= 1,920,073
Additional Paid-in Capital
Balance at beginning and end of year 856,685 856,685 856,685
Total Paid-in Capital 2,776,758 2,776,758 2,776,758
Remeasurement loss on defined benefit plan
(Note 20)
Balance at beginning of year (31,102) (23,521) (10,088)
Remeasurement loss (7,676) (7,581) (13,433)
Balance at end of year (38,778) (31,102) (23,521)
Remeasurement gain on retirement plan of
associate (Note 10)
Balance at beginning of year − − −
Equity in remeasurement loss on retirement plan of
an associate (1,078) − −
Balance at end of year (1,078) − −
Equity reserves (Note 23)
Balance at beginning and end of year (9,474) (9,474) –
Retained Earnings (Note 25)
Appropriated for future expansion 1,300,000 1,300,000 1,300,000
Unappropriated:
At beginning of year 1,138,336 889,446 1,937,813
Effect of pooling of interests (Note 23) – (41,047) –
Net income 530,877 501,145 443,640
Cash dividends - P = 0.12 per share in 2014,
P
= 0.11 per share in 2013 and P = 0.10 per share
in 2012 (230,409) (211,208) (192,007)
Appropriations during the year – – (1,300,000)
At end of year 1,438,804 1,138,336 889,446
2,738,804 2,438,336 2,189,446
NON-CONTROLLING INTERESTS
Balance at beginning of year 747,315 327,892 323,322
Effect of pooling of interests (Note 23) – (31,403) –
Net income 34,977 28,651 31,364
Additions to non-controlling interests – 448,969 –
Dividends paid to non-controlling interests (26,794) (26,794) (26,794)
Balance at end of year 755,498 747,315 327,892
P
= 6,221,730 P
= 5,921,833 P
= 5,270,575

See accompanying Notes to Consolidated Financial Statements.

224 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTS
CEBU HOLDINGS, INC.OF CASH FLOWS
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)

Years Ended December 31


2014 2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P
= 730,910 P
= 734,157 P
= 642,037
Adjustments for:
Depreciation and amortization
(Notes 9, 11 and 19) 312,744 218,763 138,362
Interest and other financing charges (Note 19) 205,654 58,833 43,545
Unrealized foreign exchange losses (gains) 371 (223) 1,531
Unrealized gain on financial assets at fair value
through profit or loss (2,654) (3,307) −
Pension expense (Note 20) 13,717 3,832 (4,153)
Loss (gain) on disposal of property and
equipment (52) (115) (217)
Realized profit from downstream sale
(Notes 10 and 29) – (4,127) (9,005)
Equity in net earnings of associates (Note 10) (79,679) (47,050) (73,901)
Interest income (Note 18) (71,168) (72,835) (83,179)
Operating income before working capital changes 1,109,843 887,928 655,020
Decrease (increase) in:
Accounts receivable 169,902 14,710 (98,241)
Inventories (Notes 7 and 29) 82,928 69,983 75,610
Other current assets (83,989) (103,399) (60,897)
Increase (decrease) in:
Accounts and other payables (Notes 13 and 29) 216,947 (948,452) 213,284
Deposits and other liabilities 224,891 40,122 93,454
Pension liabilities (8,272) − −
Net cash generated from (used in) operations 1,712,250 (39,108) 878,230
Interest received 31,910 13,674 63,938
Interest paid (223,572) (40,095) (38,099)
Income taxes paid (157,988) (153,069) (181,920)
Net cash provided by (used in) operating activities 1,362,600 (218,598) 722,149
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Investment properties (Notes 11 and 29) (928,403) (831,631) (757,864)
Property and equipment (Notes 9 and 29) (20,042) (31,750) (22,886)
Financial assets at fair value through profit
or loss (2,011,485) (423,297) –
Decrease (increase) in:
Short-term investments − – 2,956
Other noncurrent assets (28,854) (3,419) 34,710
Acquisition of associates and a joint venture
(Note 10) (551,574) (52,500) –
Acquisition of subsidiaries, net of cash acquired
(Note 23) − (530,129) –
Proceeds from sale/redemption of financial assets at
fair value through profit or loss (Note 5) 2,236,666 − −
Proceeds from sale of property and equipment
(Note 9) 322 3,394 803
Dividends received − 59,994 −
Net cash used in investing activities (1,303,370) (1,809,338) (742,281)
(Forward)

CHI 2014 Annual and Sustainability Report 225


CEBU HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

Years Ended December 31


2014 2013 2012
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term debt (P
= 2,622,250) (P
= 324,693) (P
= 55,000)
Availments of long-term debt 4,950,658 1,491,542 945,250
Dividends paid to: − − −
Non-controlling interests (26,794) (26,794) (26,794)
Equity holders of Cebu Holdings, Inc. (230,409) (211,208) (192,007)
Net cash provided by financing activities 2,071,205 928,847 671,449
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (371) 223 (1,531)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,130,064 (1,098,866) 649,786
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR (Note 4) 765,151 1,864,017 1,214,231
CASH AND CASH EQUIVALENTS AT
END OF YEAR (Note 4) P
= 2,895,215 P
= 765,151 P
= 1,864,017

See accompanying Notes to Consolidated Financial Statements.

226 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CEBU HOLDINGS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Group Information

Cebu Holdings, Inc. (the Parent Company) is domiciled and was incorporated on December 9, 1988 in the
Republic of the Philippines. The Parent Company is a 49.80%-owned subsidiary of Ayala Land, Inc.
(ALI), a publicly listed company. ALI is a subsidiary of Ayala Corporation (AC), a publicly listed company
which is 49.03%-owned by Mermac, Inc., 10.18%-owned by Mitsubishi Corporation and the rest by public.

The registered office address of the Parent Company is at 7th Floor, Cebu Holdings Center, Cebu
Business Park, Cebu City, Philippines. The Parent Company is engaged in real estate development, sale
of subdivided land, residential and office condominium units, sports club shares, and lease of commercial
spaces.

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

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

Cebu Leisure Company, Inc. (CLCI), a wholly owned subsidiary, is engaged in subleasing of commercial
spaces, food courts and entertainment facilities. The registered office address of CLCI is at 7th Floor
Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.

CBP Theatre Management Company, Inc. (CBP Theatre), a wholly owned subsidiary, is engaged in all
aspects of the theatrical and cinematographic entertainment business, including theatre management and
other related undertakings. The registered office address of CBP Theatre is at 7th Floor, Cebu Holdings
Center, Cebu Business Park, Cebu City, Philippines. CBP Theatre has not yet started its operations as of
December 31, 2014.

Cebu Property Ventures and Development Corporation (CPVDC), a subsidiary, is engaged in real estate
development and sale of subdivision land and residential units. The registered office address of CPVDC
is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.

Asian I-Office Properties, Inc. (AiO) is wholly owned by CPVDC and is engaged in all aspects of real
estate development and in leasing of corporate spaces. The registered office address of AiO is at 7th
Floor, Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.

Taft Punta Engaño Property Inc. (TPEPI) was incorporated on September 8, 2011, a wholly owned
subsidiary of Taft Property Venture Development Corporation (TPVDC), the real estate arm of VICSAL
Development Corporation. TPEPI’s primary purpose is to create a mixed-use commercial and residential
district within a 12-hectare property in Lapu-Lapu City. A joint venture agreement was entered into last
April 26, 2013 between TPVDC and ALI. Under the agreement, ALI will own 55% of TPEPI and TPVDC
will own the remaining 45% of TPEPI. ALI’s rights to the venture were subsequently transferred to the
Parent Company on September 18, 2013 to enhance the latter’s portfolio and operations. It is consistent
with the thrust of the Parent Company to expand its business. The registered office address of TPEPI is
at Vicsal Building, Corner of C.D. Seno & W.O. Seno Streets, San Miguel Extension, Barangay Guizo,
North Reclamation Area, Mandaue City, Cebu, Philippines.

The consolidated financial statements of Cebu Holdings Inc. and its subsidiaries (the Group) as of
December 31, 2014 and 2013 and for each of the three years in the period ended December 31, 2014
were endorsed for approval by the Audit and Risk Committee on February 12, 2015 and were approved
and authorized for issue by the Board of Directors (BOD) on March 11, 2015.

CHI 2014 Annual and Sustainability Report 227


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies

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

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

Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company and the
following wholly owned and majority-owned subsidiaries as of December 31, 2014 and 2013 and for each
of the three years in the period ended December 31, 2014:

Percentage of ownership
December 31
2014 2013
CLCI 100% 100%
CBP Theatre 100 100
CPVDC 76 76
AiO* 76 76
TPEPI 55 55
* wholly owned by CPVDC

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

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

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

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date when such control ceases. The financial
statements of the subsidiaries are prepared for the same reporting year as the Parent Company, using
consistent accounting policies. All intra-group balances and transactions, including income, expenses
and dividends relating to transactions between members of the Group, are eliminated in full on
consolidation.

228 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-controlling interests (NCI) represent the portion of profit or loss and net assets in subsidiaries not
wholly owned by the Parent Company and are presented separately in the consolidated statement of
income, consolidated statement of comprehensive income, consolidated statement of changes in equity
and within equity in the consolidated statement of financial position, separately from the equity attributable
to the Parent Company.

The excess of the Parent Company’s cost of investment in CPVDC over its proportionate share in the
underlying net assets at the date of acquisition was allocated to the “Inventories” and “Investment
properties” accounts in the consolidated statement of financial position. The purchase premium is
amortized in proportion to the area of lots (in square meters) sold by CPVDC.

The excess of the Parent Company’s cost of investment in TPEPI over its proportionate share in the
underlying net assets at the date of acquisition was allocated to the “Investment properties” account in the
consolidated statement of financial position. The purchase premium shall be amortized in proportion to
the area of lots (in square meters) sold by TPEPI.

Total comprehensive income within a subsidiary is attributed to the NCI even if that results in a deficit
balance.

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

• Derecognizes the assets (including goodwill) and liabilities of the subsidiary


• Derecognizes the carrying amount of any non-controlling interest
• Derecognizes the cumulative translation differences recorded in equity
• Recognizes the fair value of the consideration received
• Recognizes the fair value of any investment retained
• Recognizes any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components previously recognized in OCI to profit or loss or
retained earnings, as appropriate, as would be required if the Group had directly disposed of the
related assets or liabilities

The Parent Company considers a subsidiary as a subsidiary with material NCI if its net assets exceed 5%
of the total consolidated net assets of the Group as of the reporting period. There are no significant
restrictions on the Parent Company’s ability to use assets and settle liabilities of the Group.

The Group has two subsidiaries with material NCI. Additional information regarding the subsidiaries is as
follows:

Accumulated Balances
of Non-controlling Profit (Loss) Allocated to Non-
Interest controlling Interest
Subsidiary 2014 2013 2014 2013 2012
(In Thousands) (In Thousands)
CPVDC P
= 311,030 P
= 302,167 P
= 35,658 P
= 32,472 P
= 31,364
TPEPI 444,467 445,148 (681) (3,821) −

CHI 2014 Annual and Sustainability Report 229


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The summarized financial information of CPVDC and TPEPI is provided below. This information is based
on amounts before intercompany eliminations.

2014 CPVDC TPEPI


(In Thousands)
Statement of financial position
Current assets P
= 882,420 P
= 372,631
Noncurrent assets 3,313,079 615,640
Current liabilities 1,459,097 566
Noncurrent liabilities 1,438,367 −
Dividends paid to non-controlling interests 26,794 −

Statement of comprehensive income


Revenue P
= 550,730 P
= 1,719
Profit (loss) attributable to:
Equity of holders of the parent 114,543 (832)
Non-controlling interest 35,658 (681)
Total comprehensive income attributable to:
Equity of holders of the parent − −
Non-controlling interest − −

Statement of cash flows


Operating activities P
= 451,318 (P
= 3,921)
Investing activities (478,586) (13,606)
Financing activities (174,993)
Effect of changes in foreign exchange on cash
and cash equivalent − −
Net decrease in cash and cash equivalents (P
= 202,261) (P
= 17,527)

2013 CPVDC TPEPI


(In Thousands)
Statement of financial position
Current assets P
= 904,871 P
= 388,833
Noncurrent asset 3,048,387 602,034
Current liabilities 663,397 901,648
Noncurrent liabilities 1,896,906 −
Dividends paid to non-controlling interests 26,794 −

Statement of comprehensive income


Revenue P
= 460,834 P
= 679
Profit(loss) attributable to:
Equity of holders of the parent 104,311 (4,671)
Non-controlling interest 32,472 (3,822)
Total comprehensive income attributable to:
Equity of holders of the parent − −
Non-controlling interest − −

Statement of cash flows


Operating activities P
= 304,542 (P
= 8,351)
Investing activities (856,186) (51,602)
Financing activities 403,625 448,758
Net increase (decrease) in cash and cash
equivalents (P
= 148,019) P
= 388,805

230 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Adoption of New and Amended Accounting Standards and Interpretations


The Group applied, for the first time, certain standards and amendments, which are effective for annual
periods beginning on or after January 1, 2014.

The nature and impact of each new standards and amendments are described below:

Investment Entities (Amendments to PFRS 10, Consolidated Financial Statements,


PFRS 12, Disclosure of Interests in Other Entities, and PAS 27, Separate Financial Statements)
These amendments provide an exception to the consolidation requirement for entities that meet the
definition of an investment entity under PFRS 10. The exception to consolidation requires investment
entities to account for subsidiaries at fair value through profit or loss. The amendments must be
applied retrospectively, subject to certain transition relief. These amendments have no impact to the
Group since none of the entities within the Group qualifies to be an investment entity under PFRS 10.

PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities
(Amendments)
These amendments clarify the meaning of ‘currently has a legally enforceable right to set-off’ and the
criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting and
are applied retrospectively. These amendments have no impact on the Group, since none of the
entities in the Group has any offsetting arrangements.

PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and
Continuation of Hedge Accounting (Amendments)
These amendments provide relief from discontinuing hedge accounting when novation of a derivative
designated as a hedging instrument meets certain criteria and retrospective application is required.
These amendments have no impact on the Group as the Group does not have derivatives during the
current or prior periods.

PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets
(Amendments)
These amendments remove the unintended consequences of PFRS 13, Fair Value Measurement, on
the disclosures required under PAS 36. In addition, these amendments require disclosure of the
recoverable amounts for assets or cash-generating units (CGUs) for which impairment loss has been
recognized or reversed during the period. The application of these amendments has no material
impact on the disclosure in the Group’s financial statements.

Philippine Interpretation IFRIC 21, Levies (IFRIC 21)


IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment,
as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum
threshold, the interpretation clarifies that no liability should be anticipated before the specified
minimum threshold is reached. Retrospective application is required for IFRIC 21. This interpretation
has no impact on the Group as it has applied the recognition principles under PAS 37, Provisions,
Contingent Liabilities and Contingent Assets, consistent with the requirements of IFRIC 21 in prior
years.

Annual Improvements to PFRSs (2010-2012 cycle)


In the 2010-2012 annual improvements cycle, seven amendments to six standards were issued, which
included an amendment to PFRS 13, Fair Value Measurement. The amendment to PFRS 13 is effective
immediately and it clarifies that short-term receivables and payables with no stated interest rates can be
measured at invoice amounts when the effect of discounting is immaterial. This amendment has no
impact to the Group.

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Annual Improvements to PFRSs (2011-2013 cycle)


In the 2011-2013 annual improvements cycle, four amendments to four standards were issued, which
included an amendment to PFRS 1, First-time Adoption of Philippine Financial Reporting Standards -
First-time Adoption of PFRS. The amendment to PFRS 1 is effective immediately. It clarifies that an
entity may choose to apply either a current standard or a new standard that is not yet mandatory, but
permits early application, provided either standard is applied consistently throughout the periods
presented in the entity’s first PFRS financial statements. This amendment has no impact on the Group as
it is not a first time PFRS adopter.

Future Changes in Accounting Policies


The Group will adopt the following amended standards and Philippine Interpretations when these become
effective.

The nature and impact of each new standard and amendment are described below:

PFRS 9, Financial Instruments - Classification and Measurement (2010 version)


PFRS 9 (2010 version) 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. PFRS 9 requires all financial assets 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
(OCI) 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 OCI. 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 OCI 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
adoption of the first phase of PFRS 9 will have an effect on the classification and measurement of the
Group’s financial assets, but will potentially have no impact on the classification and measurement of
financial liabilities.

PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1, 2015. This
mandatory adoption date was moved to January 1, 2018 when the final version of PFRS 9 was
adopted by the Philippine Financial Reporting Standards Council (FRSC). Such adoption, however, is
still for approval by the Board of Accountancy (BOA).

Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate
This interpretation covers accounting for revenue and associated expenses by entities that undertake
the construction of real estate directly or through subcontractors. The 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 FRSC have deferred the effectivity of this
interpretation until the final Revenue standard is issued by the International Accounting Standards
Board (IASB) and an evaluation of the requirements of the final Revenue standard against the
practices of the Philippine real estate industry is completed.

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The following new standards and amendments issued by the IASB were already adopted by the FRSC
but are still for approval by BOA.

Effective 2015

PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions (Amendments)
PAS 19 requires an entity to consider contributions from employees or third parties when accounting
for defined benefit plans. Where the contributions are linked to service, they should be attributed to
periods of service as a negative benefit. These amendments clarify that, if the amount of the
contributions is independent of the number of years of service, an entity is permitted to recognize
such contributions as a reduction in the service cost in the period in which the service is rendered,
instead of allocating the contributions to the periods of service. This amendment is effective for
annual periods beginning on or after January 1, 2015. It is not expected that this amendment would
be relevant to the Group, since none of the entities within the Group has defined benefit plans with
contributions from employees or third parties.

Annual Improvements to PFRSs (2010-2012 cycle)


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

PFRS 2, Share-based Payment - Definition of Vesting Condition


This improvement is applied prospectively and clarifies various issues relating to the definitions of
performance and service conditions which are vesting conditions, including:
A performance condition must contain a service condition
A performance target must be met while the counterparty is rendering service
A performance target may relate to the operations or activities of an entity, or to those of another
entity in the same group
A performance condition may be a market or non-market condition
If the counterparty, regardless of the reason, ceases to provide service during the vesting period,
the service condition is not satisfied.

PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business


Combination
The amendment is applied prospectively for business combinations for which the acquisition date is
on or after July 1, 2014. It clarifies that a contingent consideration that is not classified as equity is
subsequently measured at fair value through profit or loss whether or not it falls within the scope of
PAS 39, Financial Instruments: Recognition and Measurement (or PFRS 9, Financial Instruments, if
early adopted). The Group shall consider this amendment for future business combinations.

PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the Total of
the Reportable Segments’ Assets to the Entity’s Assets
The amendments are applied retrospectively and clarify that:
An entity must disclose the judgments made by management in applying the aggregation criteria
in the standard, including a brief description of operating segments that have been aggregated
and the economic characteristics (e.g., sales and gross margins) used to assess whether the
segments are ‘similar’.
The reconciliation of segment assets to total assets is only required to be disclosed if the
reconciliation is reported to the chief operating decision maker, similar to the required disclosure
for segment liabilities.

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PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Revaluation Method -
Proportionate Restatement of Accumulated Depreciation
The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the asset may be
revalued by reference to the observable data on either the gross or the net carrying amount. In
addition, the accumulated depreciation or amortization is the difference between the gross and
carrying amounts of the asset.

PAS 24, Related Party Disclosures - Key Management Personnel


The amendment is applied retrospectively and clarifies that a management entity, which is an entity
that provides key management personnel services, is a related party subject to the related party
disclosures. In addition, an entity that uses a management entity is required to disclose the expenses
incurred for management services.

Annual Improvements to PFRSs (2011-2013 cycle)


The Annual Improvements to PFRSs (2011-2013 cycle) are effective for annual periods beginning on or
after January 1, 2015 and are not expected to have a material impact on the Group.

PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements


The amendment is applied prospectively and clarifies the following regarding the scope exceptions
within PFRS 3:
Joint arrangements, not just joint ventures, are outside the scope of PFRS 3.
This scope exception applies only to the accounting in the financial statements of the joint
arrangement itself.

PFRS 13, Fair Value Measurement - Portfolio Exception


The amendment is applied prospectively and clarifies that the portfolio exception in PFRS 13 can be
applied not only to financial assets and financial liabilities, but also to other contracts within the scope
of PAS 39 (or PFRS 9, as applicable).

PAS 40, Investment Property


The amendment is applied prospectively and clarifies that PFRS 3, and not the description of ancillary
services in PAS 40, is used to determine if the transaction is the purchase of an asset or business
combination. The description of ancillary services in PAS 40 only differentiates between investment
property and owner-occupied property (i.e., property, plant and equipment).

Effective 2016

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of Acceptable
Methods of Depreciation and Amortization (Amendments)
The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of
economic benefits that are generated from operating a business (of which the asset is part) rather
than the economic benefits that are consumed through use of the asset. As a result, a revenue-
based method cannot be used to depreciate property, plant and equipment and may only be used in
very limited circumstances to amortize intangible assets. The amendments are effective prospectively
for annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments are not expected to have any impact to the Group given that it has not used a revenue-
based method to depreciate its non-current assets.

PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants (Amendments)
The amendments change the accounting requirements for biological assets that meet the definition of
bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will
no longer be within the scope of PAS 41. Instead, PAS 16 will apply. After initial recognition, bearer
plants will be measured under PAS 16 at accumulated cost (before maturity) and using either the cost
model or revaluation model (after maturity). The amendments also require that produce that grows on
bearer plants will remain in the scope of PAS 41 measured at fair value less costs to sell. For
government grants related to bearer plants, PAS 20, Accounting for Government Grants and
Disclosure of Government Assistance, will apply. The amendments are retrospectively effective for

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annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments are not expected to have any impact to the Group as it does not have any bearer plants.

PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements
(Amendments)
The amendments will allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. Entities already
applying PFRS and electing to change to the equity method in its separate financial statements will
have to apply that change retrospectively. For first-time adopters of PFRS electing to use the equity
method in its separate financial statements, they will be required to apply this method from the date of
transition to PFRS. The amendments are effective for annual periods beginning on or after January
1, 2016, with early adoption permitted. These amendments will not have any impact on the Group’s
financial statements.

PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint
Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
These amendments address an acknowledged inconsistency between the requirements in PFRS 10
and those in PAS 28 (2011) in dealing with the sale or contribution of assets between an investor and
its associate or joint venture. The amendments require that a full gain or loss is recognized when a
transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is
recognized when a transaction involves assets that do not constitute a business, even if these assets
are housed in a subsidiary. These amendments are effective from annual periods beginning on or
after January 1, 2016.

PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations
(Amendments)
The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an interest
in a joint operation, in which the activity of the joint operation constitutes a business must apply the
relevant PFRS 3 principles for business combinations accounting. The amendments also clarify that
a previously held interest in a joint operation is not remeasured on the acquisition of an additional
interest in the same joint operation while joint control is retained. In addition, a scope exclusion has
been added to PFRS 11 to specify that the amendments do not apply when the parties sharing joint
control, including the reporting entity, are under common control of the same ultimate controlling
party.

The amendments apply to both the acquisition of the initial interest in a joint operation and the
acquisition of any additional interests in the same joint operation and are prospectively effective for
annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments are not expected to have any impact to the Group.

PFRS 14, Regulatory Deferral Accounts


PFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation,
to continue applying most of its existing accounting policies for regulatory deferral account balances
upon its first-time adoption of PFRS. Entities that adopt PFRS 14 must present the regulatory deferral
accounts as separate line items on the statement of financial position and present movements in
these account balances as separate line items in the statement of profit or loss and other
comprehensive income. The standard requires disclosures on the nature of, and risks associated
with, the entity’s rate-regulation and the effects of that rate-regulation on its financial statements.
PFRS 14 is effective for annual periods beginning on or after January 1, 2016. Since the Group is an
existing PFRS preparer, this standard would not apply.

Annual Improvements to PFRSs (2012-2014 cycle)


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

PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in Methods of
Disposal
The amendment is applied prospectively and clarifies that changing from a disposal through sale to a
disposal through distribution to owners and vice-versa should not be considered to be a new plan of

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disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the
application of the requirements in PFRS 5. The amendment also clarifies that changing the disposal
method does not change the date of classification.

PFRS 7, Financial Instruments: Disclosures - Servicing Contracts


PFRS 7 requires an entity to provide disclosures for any continuing involvement in a transferred asset
that is derecognized in its entirety. The amendment clarifies that a servicing contract that includes a
fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the
fee and arrangement against the guidance in PFRS 7 in order to assess whether the disclosures are
required. The amendment is to be applied such that the assessment of which servicing contracts
constitute continuing involvement will need to be done retrospectively. However, comparative
disclosures are not required to be provided for any period beginning before the annual period in which
the entity first applies the amendments.

PFRS 7 - Applicability of the Amendments to PFRS 7 to Condensed Interim Financial Statements


This amendment is applied retrospectively and clarifies that the disclosures on offsetting of financial
assets and financial liabilities are not required in the condensed interim financial report unless they
provide a significant update to the information reported in the most recent annual report.

PAS 19, Employee Benefits - regional market issue regarding discount rate
This amendment is applied prospectively and clarifies that market depth of high quality corporate
bonds is assessed based on the currency in which the obligation is denominated, rather than the
country where the obligation is located. When there is no deep market for high quality corporate
bonds in that currency, government bond rates must be used.

PAS 34, Interim Financial Reporting - disclosure of information ‘elsewhere in the interim financial
report’
The amendment is applied retrospectively and clarifies that the required interim disclosures must
either be in the interim financial statements or incorporated by cross-reference between the interim
financial statements and wherever they are included within the greater interim financial report (e.g., in
the management commentary or risk report).

Effective 2018

PFRS 9, Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and PAS
39 (2013 version)
PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which
pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge accounting
model of PAS 39 with a more principles-based approach. Changes include replacing the rules-based
hedge effectiveness test with an objectives-based test that focuses on the economic relationship
between the hedged item and the hedging instrument, and the effect of credit risk on that economic
relationship; allowing risk components to be designated as the hedged item, not only for financial
items but also for non-financial items, provided that the risk component is separately identifiable and
reliably measurable; and allowing the time value of an option, the forward element of a forward
contract and any foreign currency basis spread to be excluded from the designation of a derivative
instrument as the hedging instrument and accounted for as costs of hedging. PFRS 9 also requires
more extensive disclosures for hedge accounting.

PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of January 1,
2018 was eventually set when the final version of PFRS 9 was adopted by the FRSC. The adoption
of the final version of PFRS 9, however, is still for approval by BOA.

The adoption of PFRS 9 is not expected to have any significant impact on the Group’s consolidated
financial statements.

PFRS 9, Financial Instruments (2014 or final version)


In July 2014, the final version of PFRS 9, Financial Instruments, was issued. PFRS 9 reflects all
phases of the financial instruments project and replaces PAS 39, Financial Instruments: Recognition
and Measurement, and all previous versions of PFRS 9. The standard introduces new requirements

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for classification and measurement, impairment, and hedge accounting. PFRS 9 is effective for
annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective
application is required, but comparative information is not compulsory. Early application of previous
versions of PFRS 9 is permitted if the date of initial application is before February 1, 2015.

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

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

IFRS 15, Revenue from Contracts with Customers


IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue
arising from contracts with customers. Under IFRS 15 revenue is recognised at an amount that
reflects the consideration to which an entity expects to be entitled in exchange for transferring goods
or services to a customer. The principles in IFRS 15 provide a more structured approach to
measuring and recognising revenue. The new revenue standard is applicable to all entities and will
supersede all current revenue recognition requirements under IFRS. Either a full or modified
retrospective application is required for annual periods beginning on or after 1 January 2017 with
early adoption permitted. The Group is currently assessing the impact of IFRS 15 and plans to adopt
the new standard on the required effective date once adopted locally.

Cash and Cash Equivalents


Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that
are readily convertible to known amount of cash with original maturities of three (3) months or less from
date of placement and that are subject to an insignificant risk of changes in value.

Fair Value Measurement


The Group measures financial instruments such as financial assets at FVPL at fair value and discloses
the fair value of its investment properties at each reporting date.

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

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

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

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

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

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

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

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Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable

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

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

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

At each reporting date, the Group analyses the movements in the values of assets and liabilities which are
required to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, the
Group verifies the major inputs applied in the latest valuation by agreeing the information in the valuation
computation to contracts and other relevant documents.

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

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

Financial Assets and Financial Liabilities


Date of recognition
The Group recognizes a financial asset or a financial liability in the consolidated statement of financial
position 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 the
settlement date accounting.

Initial recognition
Financial assets and financial liabilities are recognized initially at fair value. Transaction costs are
included in the initial measurement of all financial assets and liabilities, except for financial instruments
measured at FVPL.

Financial assets within the scope of PAS 39 are classified as either financial assets at FVPL, loans and
receivables, held-to-maturity financial assets, or available-for-sale (AFS) financial assets, as appropriate.
Financial liabilities are classified as either financial liabilities at FVPL or other financial liabilities. The
classification depends on the purpose for which the investments were acquired or liabilities were incurred
and whether they are quoted in an active market. Management determines the classification of its
financial instruments at initial recognition and, where allowed and appropriate, re-evaluates such
designation at every reporting date.

As of December 31, 2014 and 2013, the Group’s financial assets are of the nature of loans and
receivables and financial assets at FVPL.

“Day 1” difference
Where the transaction price in a non-active market is different to the fair value from other observable
current market transactions in the same instrument or based on a valuation technique whose variables
include only data from observable market, the Group recognizes the difference between the transaction
price and fair value (a “Day 1” difference) in the consolidated statement of income under “Interest income”
and “Interest and other financing charges” accounts unless it qualifies for recognition as some other type

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of asset. In cases where variables used are made of data which is not observable, the difference
between the transaction price and model value is only recognized in the consolidated statement of income
when the inputs become observable or when the instrument is derecognized. For each transaction, the
Group determines the appropriate method of recognizing the “Day 1” difference amount.

Financial assets and financial liabilities at FVPL


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

Financial assets and financial liabilities are classified as held for trading if they are acquired for the
purpose of selling and repurchasing in the near term. Derivatives, including separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging
instruments or a financial guarantee contract. Fair value gains or losses on investments held for trading,
net of interest income accrued on these assets, are recognized in the consolidated statement of income
under “Other income” or “Other charges”.

Financial assets may be designated at initial recognition as FVPL if any of 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 are part of a group of financial assets which are managed and their performance evaluated
on a fair value basis, in accordance with a documented risk management or investment strategy; or
the financial instrument contains an embedded derivative that would need to be separately recorded.

As of December 31, 2014 and 2013, the Group holds its investment in Unit Investment Trust Fund (UITF)
BPI Short-term fund as held for trading and classified these as financial assets at FVPL. Management
takes the view that it is held for trading and is a portfolio of diversified short-term fixed income instruments
invested and managed by professional managers.

Loans and receivables


Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are not entered into with the intention of immediate or short-term resale
and are not designated as AFS financial assets or financial assets at FVPL.

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

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

As of December 31, 2014 and 2013, the Group’s loans and receivables include cash and cash
equivalents, receivables except ‘advances to contractors’ and ‘dividends receivable’ included under ‘other
current assets’.

Other financial liabilities


Other financial liabilities are financial liabilities not designated as at FVPL where the substance of the
contractual arrangement results in the Group having an obligation either to deliver cash or another
financial asset to the holder, or to satisfy the obligation other than by the exchange of a fixed amount of
cash or other financial asset for a fixed number of own equity shares. The components of issued financial
instrument that contain both liability and equity element are accounted for separately, with the equity
component being assigned the residual amount after deducting from the instrument as a whole the
amount separately determined as fair value of the liabilitiy component on the date of issue.

After initial measurement, other financial liabilities are subsequently measured at amortized cost using the
effective interest method. Amortized cost is calculated by taking into account any discount or premium on

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the issue and fees that are an integral part of the EIR. The amortization is included in the “Interest and
other financing charges” account in the consolidated statement of income.

As of December 31, 2014 and 2013, the Group’s other financial liabilities include accounts and other
payables, long-term debt, deposits and other liabilities except for ‘advance rent’ and ‘customers deposits’
and other obligations that meet the above definition (other than liabilities covered by other accounting
standards, such as income tax payable).

Deposits and Other Liabilities


Deposits and other liabilities which include tenants’ deposits are measured initially at fair value. The
difference between the cash received and the fair value of tenants’ deposits is recognized under “Deposits
and other liabilities” in the consolidated statement of financial position and amortized using the straight-
line method under the “Real estate revenue” account in the consolidated statement of income. After initial
recognition, tenants’ deposits are subsequently measured at amortized cost using effective interest
method. Accretion of discount is recognized under “Interest and other financing charges” in the
consolidated statement of income.

Derecognition of Financial Assets and Financial Liabilities


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

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

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

Impairment of Financial Assets


The Group assesses at each reporting date whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be
impaired if, and only if, there is objective evidence of impairment as a result of one or more events that
has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or the group of financial
assets that can be reliably estimated. Evidence of impairment may include indications that the borrower
or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or
principal payments, the probability that they will enter bankruptcy or other financial reorganization and
where observable data indicate that there is measurable decrease in the estimated future cash flows,
such as changes in economic conditions that correlate with defaults.

Loans and receivables


For loans and receivables carried at amortized cost, the Group first assesses whether objective evidence
of impairment exists individually for financial assets that are individually significant, or collectively for
financial assets that are not individually significant. If the Group determines that no objective evidence of
impairment exists for individually assessed financial asset, whether significant or not, it includes the asset
in a group of financial assets with similar credit risk characteristics and collectively assesses for

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impairment. Those characteristics are relevant to the estimation of future cash flows for groups of such
assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms
of the assets being evaluated. Assets that are individually assessed for impairment and for which an
impairment loss is, or continues to be, recognized are not included in a collective assessment for
impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of the estimated
future cash flows (excluding future credit losses that have not been incurred). The carrying amount of the
asset is reduced through use of an allowance account and the amount of loss is charged to the
consolidated statement of income under the “General and administrative expenses” account. Interest
income continues to be recognized based on the original effective interest rate (EIR) of the asset. Loans
and receivables, together with the associated allowance accounts, are written off when there is no realistic
prospect of future recovery. 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 account. Any
subsequent reversal of an impairment loss is recognized in the consolidated statement of income, to the
extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.

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

Future cash flows in a group of financial assets that are collectively evaluated for impairment are
estimated on the basis of historical loss experience for assets with credit risk characteristics similar to
those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect
the effects of current conditions that did not affect the period on which the historical loss experience is
based and to remove the effects of conditions in the historical period that do not exist currently. The
methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group
to reduce any differences between loss estimates and actual loss experience.

Offsetting Financial Instruments


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

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

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

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

Cost includes:
Land cost
Land improvement cost
Amount paid to contractors for construction and development

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Borrowing costs, planning and design costs, cost of site preparation, professional fees, property
transfer taxes, construction overheads and other related costs

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

Club shares are valued at the lower of cost or NRV. Cost is determined on the basis mainly of the actual
development cost incurred plus the estimated development cost to complete the project based on the
estimates as determined by in-house engineers, adjusted with the actual cost incurred as the
development progresses. NRV is the estimated selling price in the ordinary course of business, less
estimated costs to sell.

Property and Equipment


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

Major repairs are capitalized as property and equipment only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the items can be measured reliably.
All other repairs and maintenance are charged against current operations as incurred.

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

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

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

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

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

Investments in Associates and a Joint Venture


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

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

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

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

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Under the equity method, the investment in an associate or a joint venture is initially recognized at cost.
The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net
assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or
joint venture is included in the carrying amount of the investment and is not tested for impairment
individually.

The consolidated statement of income reflects the Group’s share of the results of operations of the
associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI.
In addition, when there has been a change recognized directly in the equity of the associate or joint
venture, the Group recognizes its share of any changes, when applicable, in the consolidated statement
of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the
associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.

The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the
face of the consolidated statement of income outside operating profit and represents profit or loss after tax
and non-controlling interests in the subsidiaries of the associate or joint venture.

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

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

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

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

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

Depreciation and amortization is computed using the straight-line method over its useful life. The
estimated lives of investment properties under buildings and improvements are 5 to 40 years.

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

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

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

Combinations of Entities Under Common Control


Business combinations of entities under common control are accounted for using the pooling of interests
method. The pooling of interests method is generally considered to involve the following:
The assets and liabilities of the combining entities are reflected in the consolidated financial
statements at their carrying amounts as of date of acquisition. No adjustments are made to reflect fair
values, or recognize any new assets or liabilities, at the date of the combination. The only
adjustments that are made are those adjustments to harmonize accounting policies.
No new goodwill is recognized as a result of the combination. The only goodwill that is recognized is
any existing goodwill relating to either of the combining entities. Any difference between the
consideration paid or transferred and the equity acquired is reflected within equity.
The consolidated statement of income reflects results of the combining entities for the full year,
irrespective of when the combination took place.
Comparatives are presented as if the entities had always been combined.

The financial information in the consolidated financial statements are not restated for periods prior to the
combination of the entities under common control as allowed by the Philippine Interpretations Committee
(PIC) Q&A No. 2012-01.

Asset Acquisitions
If the assets acquired and liabilities assumed in an acquisition transaction do not constitute a business,
the transaction is accounted for as an asset acquisition. The Group identifies and recognizes the
individual identifiable assets acquired (including those assets that meet the definition of, and recognition
criteria for, intangible assets) and liabilities assumed. The acquisition cost is allocated to the individual
identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Such a
transaction or event does not give rise to goodwill. Where the Group acquires a controlling interest in an
entity that is not a business, but obtains less than 100% of the entity, after it has allocated the cost to the
individual assets acquired, it notionally grosses up those assets and recognizes the difference as non-
controlling interests.

Impairment of Nonfinancial Assets


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

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An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has
been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its
recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in
prior years. Such reversal is recognized in the consolidated statement of income unless the asset is
carried at revalued amount, in which case, the reversal is treated as a revaluation increase. After such
reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.

The following criteria are also applied in assessing impairment of specific assets:

Investments in associates and a joint venture


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

Equity
Capital stock and additional paid-in capital
Capital stock is measured at par value for all shares issued. When the shares are sold at premium, the
difference between the proceeds at the par value is credited to “Additional paid-in capital” account. Direct
costs incurred related to equity issuance are chargeable to “Additional paid-in capital” account. If
additional paid-in capital is not sufficient, the excess is charged against retained earnings. When the
Group issues more than one class of stock, a separate account is maintained for each class of stock and
the number of shares issued.

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

Unappropriated retained earnings


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

Appropriated retained earnings


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

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

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

NCI
NCI represents the portion of profit or loss and the net assets not held by the Parent Company and are
presented separately in the consolidated statement of income, consolidated statement of comprehensive
income and within equity in the consolidated statement of financial position separate from the equity
attributable to the stockholders of the Parent Company.

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Revenue and Cost Recognition


Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be measured reliably, regardless of when the payment is being made. Revenue is
measured at the fair value of the consideration received or receivable, taking into account contractually
defined terms of payment and excluding taxes or duties. The Group assesses its revenue arrangements
against specific criteria in order to determine if it is acting as a principal or an agent. In arrangements
where the Group is acting as a principal to its customers, revenue is recognized on a gross basis. The
following specific recognition criteria must also be met before revenue is recognized:

Rental income
Rental income from noncancellable and cancellable leases are recognized in the consolidated statement
of income on a straight-line basis and the terms of the lease, respectively, or based on a certain
percentage of the gross revenue of the tenants, as provided for under the terms of the lease contract.

Real estate sales


For real estate sales, the Group assesses whether it is probable that the economic benefits will flow to the
Group when the sales prices are collectible. Collectibility of the sales price is demonstrated by the buyer’s
commitment to pay, which in turn is supported by substantial initial and continuing investments that give
the buyer a stake in the property sufficient that the risk of loss through default motivates the buyer to
honor its obligation to the seller. Collectibility is also assessed by considering factors such as the credit
standing of the buyer, age and location of the property.

Revenue from sales of completed real estate projects is accounted for using the full accrual method. In
accordance with PIC No. Q&A 2006-01, the percentage-of-completion method is used to recognize
income from sales of projects where the Group has material obligations under the sales contract to
complete the project after the property is sold, the equitable interest has been transferred to the buyer,
construction is beyond preliminary stage (i.e., engineering, design work, construction contracts execution,
site clearance and preparation, excavation and the building foundation are finished), and the costs
incurred or to be incurred can be measured reliably. Under this method, revenue is recognized as the
related obligations are fulfilled, measured principally on the basis of the estimated completion of a
physical proportion of the contract work.

Any excess of collections over the recognized receivables are included in the “Deposits and other current
liabilities” account in the liabilities section of the consolidated statement of financial position.

If any of the criteria under the full accrual or percentage-of-completion method is not met, the deposit
method is applied until all the conditions for recording a sale are met. Pending recognition of sale, cash
received from buyers are presented under the “Deposits and other current liabilities” account in the
liabilities section of the consolidated statement of financial position.

Cost of real estate sales is recognized consistent with the revenue recognition method applied. Cost of
residential and commercial lots and 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 Group’s in-house technical staff.

Theater income
Theater income is recognized when earned.

Interest income
Interest income is recognized as it accrues using the effective interest method.

Other income
Recoveries are recognized as they accrue. Service income is recognized when the services are
rendered.

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Cost and Expense Recognition
Cost and expenses are recognized in the consolidated statements of comprehensive income when
decrease in future economic benefit related to a decrease in an asset or an increase in a liability has
arisen that can be measured reliably.

Cost and expenses are recognized in the consolidated statement of comprehensive income:
On the basis of a direct association between the costs incurred and the earning of specific items of
income;
On the basis of systematic and rational allocation procedures when economic benefits are expected
to arise over several accounting periods and the association can only be broadly or indirectly
determined; or
Immediately when expenditure produces no future economic benefits or when, and to the extent that,
future economic benefits do not qualify or cease to qualify, for recognition in the consolidated
statement of financial position as an asset.

Borrowing Costs
Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the
respective assets (included in “Investment properties” account in the consolidated statement of financial
position). All other borrowing costs are expensed in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

The interest capitalized is calculated using the Group’s weighted average cost of borrowings after
adjusting for borrowings associated with specific developments. Where borrowings are associated with
specific developments, the amounts capitalized is the gross interest incurred on those borrowings less
any investment income arising on their temporary investment. Interest is capitalized from the
commencement of the development work until the date of practical completion. The capitalization of
borrowing costs is suspended if there are prolonged periods when development activity is interrupted. If
the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at inception date whether the fulfillment of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not
explicitly specified in an arrangement. A reassessment is made after inception of the lease only if one of
the following applies:
(a) There is a change in contractual terms, other than a renewal or extension of the arrangement;
(b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was
initially included in the lease term;
(c) There is a change in the determination of whether fulfillment is dependent on a specified asset; or
(d) There is substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances gave rise to the reassessment for scenarios (a), (c), or (d) and at the date of
renewal or extension period for scenario (b).

Group as lessor
Leases where the Group does not transfer substantially all the risk and benefits of ownership of the assets
are classified as operating leases. Lease payments received are recognized as an income in the
consolidated statement of income on a straight-line basis over the lease term. Initial direct costs incurred
in negotiating operating leases are added to the carrying amount of the leased asset and recognized over
the lease term on the same basis as the rental income. Contingent rents are recognized as revenue in
the period in which they are earned.

Group as lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Fixed lease payments are recognized as an expense in the consolidated
statement of income on a straight-line basis while the variable rent is recognized as an expense based on
terms of the lease contract.

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Pension Cost
The Group maintains a defined contribution (DC) plan that covers all regular full-time employees. Under
its DC plan, the Group pays fixed contributions based on the employees’ monthly salaries. The Group,
however, is covered under Republic Act (RA) No. 7641, The Philippine Retirement Law, which provides
for its qualified employees a defined benefit (DB) minimum guarantee. The DB minimum guarantee is
equivalent to a certain percentage of the monthly salary payable to an employee at normal retirement age
with the required credited years of service based on the provisions of RA No. 7641.

In accordance with PIC Q&A No. 2013-03, the obligation for post-employment benefits of an entity that
provides a defined contribution plan as its only post-employment benefit plan, is not limited to the amount
it agrees to contribute to the fund, if any. In this case, therefore, the Group’s retirement plan shall be
accounted for as a defined benefit plan. Accordingly, the Group accounts for its retirement obligation
under the higher of the DB obligation relating to the minimum guarantee and the obligation arising from
the DC plan.

The DC liability is measured at the fair value of the DC assets upon which the DC benefits depend, with
an adjustment for margin on asset returns, if any, where this is reflected in the DC benefits.

For the DB minimum guarantee plan, the liability is determined based on the present value of the excess
of the projected DB obligation over the projected DC obligation at the end of the reporting period. The DB
obligation is calculated annually by a qualified independent actuary using the projected unit credit method.

Pension costs comprise:


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

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

Net interest on the net defined benefit liability or asset is the change during the period in the net defined
benefit liability or asset that arises from the passage of time which is determined by applying the discount
rate based on government bonds to the net defined benefit liability or asset. Net interest on the net
defined benefit liability or asset is recognized as expense or income in consolidated statement of income.

Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the
effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately in
other comprehensive income in the period in which they arise. Remeasurements are not reclassified to
profit or loss in subsequent periods.

The liability recognized in the consolidated statement of financial position in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the reporting date less fair value of
the plan assets. The present value of the defined benefit obligation is determined by using risk-free
interest rates of long-term government bonds that have terms to maturity approximating the terms of the
related pension liabilities or applying a single weighted average discount rate that reflects the estimated
timing and amount of benefit payments.

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

Current income tax relating to items recognized directly in equity is recognized in equity and not in the
consolidated statement of income. Management periodically evaluates positions taken in the tax returns

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with respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.

Deferred tax
Deferred tax is provided, using the balance sheet liability method, on all temporary differences with certain
exceptions, at the reporting date between the tax bases of assets and liabilities and its carrying amounts
for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences with certain exceptions.
Deferred tax assets are recognized for all deductible temporary differences and carryforward benefits of
unused tax credits from excess of minimum corporate income tax (MCIT) over the regular corporate
income tax and unused net operating loss carryover (NOLCO), to the extent that it is probable that taxable
income will be available against which the deductible temporary differences and carryforward benefits of
unused MCIT and NOLCO can be utilized.

Deferred tax liabilities are not provided on nontaxable temporary differences associated with investments
in associates and a joint venture.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable income will be available to allow all or part of the
deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date
and are recognized to the extent that it has become probable that future taxable income will allow the
deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates and tax laws that have been
enacted or substantively enacted as of reporting date. Movements in the deferred income tax assets and
liabilities arising from changes in tax rates are charged against or credited to income for the period.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss.
Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in
equity.

Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.

Foreign Currency Denominated Transactions


The consolidated financial statements are presented in Philippine Peso, which is the Parent Company’s
functional and presentation currency. Each entity in the group determines its own functional currency and
items included in the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded using the exchange rate at the date of the
transactions. Monetary assets and liabilities denominated in foreign currencies are restated using the
closing exchange rate prevailing at reporting dates. Exchange gains or losses arising from foreign
exchange transactions are credited to or charged against operations for the year.

Earnings Per Share (EPS)


Basic EPS is computed by dividing net income for the year attributable to common stockholders of the
parent by the weighted average number of common shares issued and outstanding during the year
adjusted for any subsequent stock dividends declared. Diluted EPS is computed by dividing net income
for the year attributable to common stockholders of the parent by the weighted average number of
common shares issued and outstanding during the year after giving effect to assumed conversion of
potential common shares, if any.

Segment Reporting
The Group’s operating businesses are organized and managed separately according to the nature of the
products and services provided, with each segment representing a strategic business unit that offers
different products and serves different markets. Financial information on business segments is presented
in Note 26 of the consolidated financial statements.

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Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the
Group expects some or all of the provision to be reimbursed, the reimbursement is recognized as a
separate asset but only when the reimbursement is virtually certain. The expense relating to a provision
is presented in the consolidated statement of comprehensive income net of any reimbursement.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed
unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent
assets are not recognized in the consolidated financial statements but disclosed when an inflow of
economic benefits is probable.

Events after the Reporting Date


Post year-end events up to the date the financial statements were authorized for issue that provide
additional information about the Group’s position at the reporting date (adjusting events) are reflected in
the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in
the notes to the consolidated financial statements when material.

3. Significant Accounting Judgments and Estimates

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

Management believes the following represent a summary of these significant judgments, estimates and
assumptions:

Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on the amounts
recognized in the consolidated financial statements:

Operating lease commitments - Group as lessor


The Group has entered into commercial property leases on its investment property portfolio. Leases
where the Group does not transfer substantially all the risks and rewards of ownership of the asset are
classified as operating leases. The Group considered, among others, the length of the lease term as
compared with the estimated life of the assets. The Group has determined that it retains all significant
risks and rewards of ownership of its properties.

A number of the Group’s operating lease contracts are accounted for as non-cancellable operating leases
and the rest are cancellable. In determining whether a lease contract is cancellable or not, the Group
considered, among others, the significance of the penalty, including economic consequence to the lessee.

Operating lease commitments - Group as lessee


Management exercises judgment in determining whether substantially all the significant risks and rewards
of ownership of the leased assets are transferred to the Group. Lease contracts, which transfer to the
Group substantially all the significant risks and rewards incidental to ownership of the leased items, are
classified as finance leases. Otherwise, they are considered as operating leases.

The Group has entered into lease contracts with various parties for certain properties. The Group has
determined based on an evaluation of the terms and conditions of the arrangements, that all significant

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


risks and rewards of ownership of these properties are retained by the lessor and accounts for these
contracts as operating leases. In determining whether the lease is cancellable or not, the Group
considered, among others, the significance of the lease term as compared with the estimated useful life of
the related asset.

Classification of club shares


Being a real estate developer, the Group determines how these shares shall be accounted for. In
determining whether these shares shall be accounted for as inventories or as financial instruments, the
Group considers its role in the development of the Club and its intent for holding these shares.

The Group classifies such shares as inventories when the Group acts as the developer and its intent is to
sell a developed property together with the club share.

Distinction between investment properties and inventories


The Group determines whether a property is classified as investment property or inventory as follows:
Investment property comprises land and buildings (principally offices, commercial and retail property)
which are not occupied substantially for use by, or in the operations of, the Group, nor for sale in the
ordinary course of business, but are held primarily to earn rental income and capital appreciation.
Inventory comprises property that is held for sale in the ordinary course of business. Principally, this is
a residential or industrial property that the Group develops and intends to sell before or on completion
of construction.

Distinction between investment properties and owner-occupied properties


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

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another
portion that is held for use in the production or supply of services or for administrative purposes. If these
portions cannot be sold separately as of reporting date, the property is accounted for as investment
property only if an insignificant portion is held for use in the supply of services or for administrative
purposes. Judgment is applied in determining whether ancillary services are so significant that a property
does not qualify as investment property. The Group considers each property separately in making its
judgment.

Distinction between business combination and property acquisition


The Group acquires subsidiaries that own real estate. At the time of acquisition, the Group considers
whether the acquisition represents the acquisition of a business. The Group accounts for an acquisition
as a business combination where an integrated set of activities is acquired in addition to the property.
More specifically, consideration is made with regard to the extent to which significant processes are
acquired and, in particular, the extent of ancillary services provided by the Group. The significance of any
process is judged with reference to the guidance in PAS 40 on ancillary services.

When the acquisition of subsidiaries does not represent a business, it is accounted for as an acquisition of
a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities
acquired based upon their relative fair values, and no goodwill or deferred tax is recognized. See Note 23
for the acquisitions made by the Group.

Assessment of joint control of an arrangement and the type of arrangement


Joint control is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous consent of the parties sharing control.
Management assessed that the Group has joint control of Cebu District Property Enterprise, Inc. (CDPEI)
by virtue of a contractual agreement with other shareholders.

The Group applies judgment when assessing whether a joint arrangement is a joint operation or a joint
venture. In making this judgment, the Group determines the type of joint arrangement in which it is
involved by considering its rights and obligations arising from the arrangement. The Group assesses its
rights and obligations by considering the structure and legal form of the arrangement, the terms agreed by

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


the parties in the contractual arrangement and, when relevant, other facts and circumstances.
Management assessed that CDPEI is a joint venture arrangement as it is a separate legal entity and its
stockholders have rights to its net assets.

Collectibility of the sales price


In determining whether the sales prices are collectible, the Group considers that the initial and continuing
investments by the buyer of about 10% would demonstrate the buyer’s commitment to pay.

Contingencies
The Group is contingently liable for various claims. The estimate of the probable costs for the resolution
of these claims has been developed in consultation with the legal counsels and based upon an analysis of
potential results. The Group currently does not believe these proceedings will have a material adverse
effect on the Group’s financial position. It is possible, however, that the results of operations could be
materially affected by changes in the estimates. As of December 31, 2014, the Group has a pending
litigation disclosed in Note 30.

Management’s Use of Estimates


The key assumptions concerning the future and other key sources of estimation and uncertainty at the
reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities are as follows:

Revenue and cost recognition


The Group’s revenue recognition policies require management to make use of estimates and assumptions
that may affect the reported amounts of revenues and costs. The Group’s revenue from real estate is
recognized based on the percentage of completion measured principally on the basis of the estimated
completion of a physical proportion of the contract work. See Notes 17 and 19 for the related balances.

Estimating allowance for impairment losses


The Group maintains allowance for impairment losses based on the result of the individual and collective
assessment under PAS 39. Under the individual assessment, the Group is required to obtain the present
value of estimated cash flows using the receivable’s original EIR. Impairment loss is determined as the
difference between the receivables’ carrying balance and the computed present value. Factors
considered in individual assessment are payment history, past due status and term. The collective
assessment would require the Group to group its receivables based on the credit risk characteristics
(customer type, credit history, past-due status and term) of the customers. Impairment loss is then
determined based on historical loss experience of the receivables grouped per credit risk profile.
Historical loss experience is adjusted on the basis of current observable data to reflect the effects of
current conditions that did not affect the period on which the historical loss experience is based and to
remove the effects of conditions in the historical period that do not exist currently. The methodology and
assumptions used for the individual and collective assessments are based on management’s judgment
and estimate. Therefore, the amount and timing of recorded expense for any period would differ
depending on the judgments and estimates made for the year. See Note 6 for the related balances.

Estimating the NRV of inventories


Inventories are valued at the lower of cost or NRV. To determine the NRV, the Group is required to make
an estimate of the inventories’ estimated selling price in the ordinary course of business, cost of
completion and costs necessary to make a sale. NRV for completed real estate inventories is assessed
with reference to market conditions and prices existing at the reporting date and is determined by the
Group in light of recent market transactions. NRV in respect of real estate inventories under construction
is assessed with reference to market prices at the reporting date for similar completed property, less
estimated costs to complete construction and less estimated costs to sell. In the event that NRV is lower
than the cost, the decline is recognized as an expense. The amount and timing of recorded expenses for
any period would differ if different judgments were made or different estimates were utilized. No provision
for inventory obsolescence was recognized in 2014 and 2013. The Group’s inventories carried at cost are
disclosed in Note 7.

Estimating useful lives of property and equipment and investment properties


The Group estimates the useful lives of its property and equipment and investment properties based on
the period over which these assets are expected to be available for use. The estimated useful lives of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


property and equipment and investment properties are reviewed at least annually and are updated if
expectations differ from previous estimates due to physical wear and tear and technical or commercial
obsolescence on the use of these assets. It is possible that future results of operations could be
materially affected by changes in estimates brought about by changes in factors mentioned above. See
Notes 9 and 11 for the related balances.

Evaluating impairment of nonfinancial assets


The Group reviews investments in associates, property and equipment, investment properties and other
noncurrent assets (other than financial assets, such as dividends receivable) for impairment of value.
This includes considering certain indications of impairment such as significant changes in asset usage,
significant decline in assets’ market value, obsolescence or physical damage of an asset, plans in the real
estate projects, significant underperformance relative to expected historical or projected future operating
results and significant negative industry or economic trends.

As described in the accounting policy, the Group estimates the recoverable amount as the higher of an
asset’s fair value less costs to sell and value in use. In determining the present value of estimated future
cash flows expected to be generated from the continued use of the assets, the Group is required to make
estimates and assumptions that may affect investments in associates and a joint venture, investment
properties, property and equipment and other noncurrent assets. See Notes 9, 10, 11 and 12 for the
related balances.

Determining the fair value of investment properties


The Group discloses the fair values of its investment properties in accordance with PAS 40. The Group
engaged independent valuation specialist to assess the fair value as at December 31, 2014 and 2013.
See Note 11 for the related balances.

Deferred tax assets


The Group reviews the carrying amounts of deferred taxes at each reporting date and reduces deferred
tax assets to the extent that it is no longer probable that sufficient taxable income will be available to allow
all or part of the deferred tax assets to be utilized. However, there is no assurance that the Group will
generate sufficient taxable income to allow all or part of deferred tax assets to be utilized. The Group
looks at its projected performance in assessing the sufficiency of future taxable income. See Note 21 for
the related balances.

Estimating pension liabilities and other retirement benefits


The cost of defined benefit pension plans and other post-employment medical benefits as well as the
present value of the pension obligation are determined using actuarial valuations. The actuarial valuation
involves making various assumptions. These include the determination of the discount rates, future salary
increases, mortality rates and future pension increases. Due to the complexity of the valuation, the
underlying assumptions and its long-term nature, defined benefit obligations are highly sensitive to
changes in these assumptions. All assumptions are reviewed at each reporting date.

In determining the appropriate discount rate, management considers the interest rates of government
bonds that are denominated in the currency in which the benefits will be paid, with extrapolated maturities
corresponding to the expected duration of the defined benefit obligation.

The mortality rate is based on publicly available mortality tables for the specific country and is modified
accordingly with estimates of mortality improvements. Future salary increases and pension increases are
based on expected future inflation rates.

While the Group believes that the assumptions are reasonable and appropriate, significant differences in
actual experience or significant changes in assumptions could materially affect retirement obligations.
See Note 20 for the related balances.

Fair value of financial instruments


PFRS requires certain financial assets and liabilities to be carried at fair value or have the fair values
disclosed in the notes, which requires use of extensive accounting estimates and judgments. While
significant components of fair value measurement were determined using verifiable objective evidence
(i.e., foreign exchange rates and interest rates), the amount of changes in fair value would differ if the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Group utilized different valuation methodology. Any changes in fair value of these financial assets and
liabilities would affect directly the consolidated statement of income and consolidated statement of
changes in equity. Certain financial assets and liabilities of the Group were initially recorded at its fair
value by using the discounted cash flow methodology. See Note 24 for the related balances.

4. Cash and Cash Equivalents

This account consists of:

2014 2013
(In Thousands)
Cash on hand and in banks P
= 156,967 P
= 468,782
Cash equivalents 2,738,248 296,369
P
= 2,895,215 P
= 765,151

Cash in banks earn interest at the prevailing bank deposit rates. Cash equivalents are short-term, highly
liquid investments that are made for varying periods of up to three (3) months depending on the
immediate cash requirements of the Group, and earn interest at the respective short-term rates.

Total interest income earned from cash and cash equivalents amounted to P
= 31.1 million, P
= 23.2 million
and P
= 51.7 million in 2014, 2013 and 2012, respectively (see Note 18).

5. Financial Assets at Fair Value through Profit or Loss

This account pertains to investments in BPI Short Term Fund (the Fund), a money market unit investment
trust fund which the Group holds for trading and is a portfolio of funds invested and managed by
professional managers. The Fund aims to generate liquidity and stable income by investing in a
diversified portfolio of primarily short-term fixed income instruments. This is measured at fair value with
gains or losses arising from changes in fair value recognized in the consolidated statement of income
under “Other income” or “Other charges”. Realized and unrealized gains recognized from changes in fair
value through profit or loss amounted to P = 3.5 million and P
= 4.3 million in 2014 and 2013, respectively
(see Note 18).

The fair value of the investment in UITF is based on net asset value per unit determined by using
valuation techniques and is classified under Level 2 of the fair value hierarchy. These valuation
techniques maximize the use of observable market data where it is available such as quoted market
prices or dealer quotes for similar instruments.

6. Accounts Receivable

This account consists of:

2014 2013
(In Thousands)
Trade:
Residential development P
= 311,340 P
= 475,576
Shopping centers 145,964 102,199
Corporate business 68,083 96,055
Commercial development 30,617 102,508
Others 1,626 30
Advances to contractors (Note 16) 415,098 403,317
Receivables from related parties (Note 16) 345,236 276,604

(Forward)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2014 2013
(In Thousands)
Receivables from employees P
= 15,452 P
= 10,770
Accrued receivable 14,958 14,087
Others 53,290 51,161
1,401,664 1,532,307
Less allowance for impairment losses 13,577 13,577
1,388,087 1,518,730
Less noncurrent portion 106,048 473,810
P
= 1,282,039 P
= 1,044,920

The classes of trade receivables of the Group are as follows:

Residential development pertains to receivables arising from sale of residential lots and condominium
units.
Shopping centers pertain to receivables arising from lease of retail space and land therein, movie
theaters, food courts, entertainment facilities and carparks.
Corporate business pertains to receivables arising from lease of office buildings and accrued rent
receivable arising from the difference between the amounts of rental revenue earned based on the
straight-line computation for noncancellable leases per PAS 17, Leases and the amount of actual rent
collected.
Commercial development pertains to receivables arising from sale of commercial lots and club
shares.

Terms and conditions of receivables are as follows:

Sales contract receivables, included under residential development, are noninterest-bearing and are
collectible in monthly installments over a period of one to two years. Titles to real estate properties
are transferred to the buyers only once full payment has been made.
Leases of retail space and land therein, included under shopping centers, are noninterest-bearing and
are collectible monthly based on the terms of the lease contracts.
Leases of office spaces, included under corporate business, are noninterest-bearing and are
collectible monthly based on the terms of the lease contracts.
Receivables from sale of commercial lots, included under commercial development are noninterest-
bearing and are collectible in monthly or quarterly installments over a period ranging from two to four
years. Titles to real estate properties are not transferred to buyers until full payment has been made.
Advances to contractors are recouped upon every progress billing payment depending on the
percentage of accomplishment.
Receivables from related parties are noninterest-bearing and collectible within one year.
Receivables from employees are composed of both interest and noninterest-bearing advances and
are collectible over a period of one year through salary deduction.
Other receivables are due and demandable.

As of December 31, 2014 and 2013, residential development trade receivables with a nominal amount of
P
= 317.6 million and P
= 493.5 million, respectively, were initially recorded at fair value. The fair value of the
receivables was obtained by discounting future cash flows using the applicable rates of similar types of
instruments.

The aggregate unamortized discount on trade receivables amounted to P


= 6.3 million and P
= 18.0 million as
of December 31, 2014 and 2013, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Movements in the unamortized discount on trade receivables as of December 31, 2014 and 2013,
respectively are as follows:

2014 2013
(In Thousands)
Balance at January 1 P
= 17,968 P
= 17,844
Additions 28,401 49,807
Accretion (Note 18) (40,111) (49,683)
Balance at December 31 P
= 6,258 P
= 17,968

The Group has not recognized provision for impairment losses for the years ended December 31, 2014,
2013 and 2012. Gross amount of receivables individually determined to be impaired amounted to
P
= 13.6 million as of December 31, 2014 and 2013.

7. Inventories

This account consists of:

2014 2013
(In Thousands)
Subdivision lot for sale and development P
= 582,830 P
= 636,728
Club shares 355,654 355,092
Condominium units under development 239,315 255,428
P
= 1,177,799 P
= 1,247,248

A summary of the movements in inventories is set out below:

2014

Subdivision
lot for Condominium
sale and units under
development development Club shares Total
(In Thousands)
Balance at January 1 P
= 636,728 P
= 255,428 P
= 355,092 P
= 1,247,248
Construction/development costs incurred 5,813 79,623 − 85,436
Disposals (recognized as cost of sales) (25,721) (129,726) 562 (154,885)
Transfers (33,990) 33,990 − −
Balance at December 31 P
= 582,830 P
= 239,315 P
= 355,654 P
= 1,177,799

2013

Subdivision
lot for Condominium
sale and units under
development development Club shares Total
(In Thousands)
Balance at January 1 P
= 729,660 P
= 170,763 P
= 357,340 P
= 1,257,763
Construction/development costs incurred 79,288 307,225 − 386,513
Disposals (recognized as cost of sales) (90,717) (276,379) (2,248) (369,344)
Acquisition through business combination 53,819 53,819
Transfers from (to) investment property (81,503) − − (81,503)
Balance at December 31 P
= 636,728 P
= 255,428 P
= 355,092 P
= 1,247,248

For the years ended December 31, 2014 and 2013, the Group did not record any provision for
impairment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Other Current Assets

This account consists of:

2014 2013
(In Thousands)
Input VAT - net P
= 133,178 P
= 175,550
Prepaid expenses 115,663 18,005
Dividends receivable 29,858 −
Others 223 1,378
P
= 278,922 P
= 194,933

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

Prepaid expenses consist of advance payments for project management fees, business taxes, office
supplies, rentals, advertising and promotions, commissions and other expenses.

9. Property and Equipment

The rollforward analyses of this account follow:

2014

Buildings Furniture,
and Fixtures and Transportation
Improvements Equipment Equipment Total
(In Thousands)
Cost
At January 1 P
= 108,499 P
= 113,464 P
= 18,633 P
= 240,596
Additions 7,506 7,255 5,281 20,042
Disposals (5,805) (9,852) (2,672) (18,329)
Transfer to investment property
(Note 11) − (28) − (28)
At December 31 110,200 110,839 21,242 242,281
Accumulated Depreciation
At January 1 77,601 81,182 11,547 170,330
Depreciation and amortization (Note 19) 6,600 8,494 2,973 18,067
Disposals (5,805) (9,844) (2,410) (18,059)
Transfer to investment property
(Note 11) − (11) − (11)
At December 31 78,396 79,821 12,110 170,327
Net Book Value P
= 31,804 P
= 31,018 P
= 9,132 P
= 71,954

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2013

Buildings Furniture,
and Fixtures and Transportation
Improvements Equipment Equipment Total
(In Thousands)
Cost
At January 1 P
= 89,354 P
= 98,103 P
= 32,985 P
= 220,442
Acquisitions through business
combination (Note 23) − 1,474 − 1,474
Additions 20,354 9,900 1,496 31,750
Disposals (1,209) (1,442) (15,848) (18,499)
Transfers (Notes 11 and 29) – 5,429 – 5,429
At December 31 108,499 113,464 18,633 240,596
Accumulated Depreciation
At January 1 77,343 71,691 22,143 171,177
Acquisitions through business
combination (Note 23) − 510 − 510
Depreciation and amortization (Note 19) 1,467 9,353 3,044 13,864
Disposals (1,209) (372) (13,640) (15,221)
At December 31 77,601 81,182 11,547 170,330
Net Book Value P
= 30,898 P
= 32,282 P
= 7,086 P
= 70,266

Depreciation and amortization charged to general and administrative expenses amounted to


P
= 18.1 million and P
= 13.9 million for the years ended December 31, 2014 and 2013, respectively
(see Note 19).

Fully depreciated assets that are still in use amounted to P


= 89.71 million and P
= 63.24 million as of
December 31, 2014 and 2013, respectively.

As of December 31, 2014 and 2013, there are no capital commitments related to the Group’s property and
equipment.

10. Investments in Associates and a Joint Venture

This account consists of:

2014 2013
Cost
Balance at January 1 P
= 967,626 P
= 416,052
Accumulated equity in net income
Balance at January 1 12,054 (39,123)
Equity in net income for the year 79,679 47,050
Equity in realized profit from downstream sales − 4,127
Balance at December 31 91,733 12,054
Accumulated equity in other comprehensive loss
Balance at January 1 − −
Equity in other comprehensive loss for the year (1,078) −
Balance at December 31 (1,078) −
P
= 1,058,281 P
= 428,106

There were no dividends for the years ended December 31, 2014, 2013 and 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Group’s equity in net assets of associates and a joint venture and the related percentages of
ownership are shown below.

Percentages of Ownership Carrying Amounts


December 31 December 31
2014 2013 2014 2013
(In Thousands)
Associates:
Cebu Insular Hotels Company, Inc.
(CIHCI) 37% 37% P
= 222,666 P
= 205,844
Solinea, Inc. (Solinea) 35 35 229,376 170,334
Amaia Southern Properies, Inc. (ASPI) 35 35 98,436 51,928
Southportal Properties, Inc. (SPI) 35 – 60,200 –
Joint Venture:
CDPEI 14 – 447,603 –
P
= 1,058,281 P
= 428,106

The significant transactions affecting the Group’s investments in associates and a joint venture are as
follows:

2014
In 2014, a joint venture agreement was made and executed between ALI and Aboitiz Land, Inc. to
incorporate with 50% interest each, a new company (CDPEI) which will take the development and
operation of mixed-use developments with residential, commercial and retail components within the
parcels of land located in the City of Mandaue, Province of Cebu and other areas. ALI subsequently
assigned 10% and 5% interests to the Parent Company and CPVDC, respectively for a consideration of
P
= 300.0 million and P
= 150.0 million, respectively. For the year ended December 31, 2014, the Group
recognized equity in net loss amounting to P = 2.4 million.

The Parent Company also acquired 35% interest in SPI for a consideration of P
= 60.2 million. The other
65% interest was acquired by ALI.

The Parent Company also made additional capital infusion to ASPI amounting to P = 40.6 million in relation
to the latter’s increase in authorized capital stock. The transaction did not change the Parent Company’s
ownership interest in ASPI.

2013
In 2013, the Parent Company acquired a 35% interest in ASPI for a consideration of P
= 52.5 million from
Amaia Land, Inc. (Amaia), a subsidiary of ALI.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the summarized financial information of the associates and a joint venture
based on their PFRS financial statements, as of December 31, 2014 and 2013 and for the years ended
December 31, 2014, 2013 and 2012:

CIHCI

The Group has a 37% interest in CIHCI, a company incorporated on April 6, 1995 with principal place of
business at Cebu City Marriott Hotel, Cardinal Rosales Avenue, Cebu Business Park, Cebu City. CIHCI’s
summarized financial information follows:

2014 2013
(In Thousands)
Current assets P
= 257,044 P
= 182,470
Noncurrent assets 662,460 702,542
Total assets P
= 919,504 P
= 885,012

Current liabilities P
= 172,730 P
= 188,049
Noncurrent liabilities 163,436 155,338
Equity 583,338 541,625
Total liabilities and equity P
= 919,504 P
= 885,012

2014 2013 2012


(In Thousands)
Revenue P
= 465,913 P
= 126,436 P
= 423,385
Costs and expenses 421,797 91,553 386,113
Net income 44,116 34,883 37,272
Other comprehensive loss (2,908) − −
Total comprehensive Income P
= 41,208 P
= 34,883 P
= 37,272

Solinea

The Group has a 35% interest in Solinea, a company incorporated on April 2, 2007 with principal place of
business at 7th Floor, Cebu Holdings Center, Cardinal Rosales Avenue, Cebu Business Park, Cebu City.
Solinea’s summarized financial information follows:

2014 2013
(In Thousands)
Current assets P
= 1,875,332 P
= 1,024,900
Noncurrent assets 892,439 850,977
Total assets P
= 2,767,771 P
= 1,875,877

Current liabilities P
= 2,243,360 P
= 1,575,682
Noncurrent liabilities 207,510 149,778
Equity 316,901 150,417
Total liabilities and equity P
= 2,767,771 P
= 1,875,877

2014 2013 2012


(In Thousands)
Revenue P
= 954,347 P
= 381,847 P
= 315,782
Costs and expenses 787,863 323,351 238,242
Net income P
= 166,484 P
= 58,496 P
= 77,540

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CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CDPEI

The Group has a 14% interest in CDPEI, a company incorporated on February 20, 2014 with principal
place of business at Aboitiz Corporate Center, Gov. Manuel Cuenco Ave., Kasambagan, Cebu City.
CDPEI’s summarized financial information follows:

2014
(In Thousands)
Current assets P
= 432,481
Noncurrent assets 2,552,883
Total assets P
= 2,985,364

2014
(In Thousands)
Current liabilities P
= 1,346
Equity 2,984,018
Total liabilities and equity P
= 2,985,364

2014
(In Thousands)
Revenue P
= 3,700
Costs and expenses 19,682
Net loss (P
= 15,982)

The aggregate financial information on associates with immaterial interest (ASPI and SPI) follows:

2014 2013
(In Thousands)
Carrying amount P
= 158,636 P
= 51,928
Share in net income (loss) from continuing
operations 5,548 (572)
Share in total comprehensive income − −

11. Investment Properties

The rollforward analyses of this account follow:

2014

Buildings and Construction


Land Improvements in Progress Total
(In Thousands)
Cost
At January 1 P
= 1,719,393 P
= 7,549,132 P
= 740,325 P
= 10,008,850
Additions 181,159 150,563 943,115 1,274,837
Transfers − 131,414 (131,414) –
Transfer from property and equipment
(Notes 9 and 29) − 28 − 28
Disposals − (12,533) − (12,533)
At December 31 1,900,552 7,818,604 1,552,026 11,271,182

(Forward)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Buildings and Construction


Land Improvements in Progress Total
(In Thousands)
Accumulated Depreciation
At January 1 P
=− P
= 1,778,257 P
=− P
= 1,778,257
Depreciation and amortization (Note 19) – 294,677 − 294,677
Transfer from property and equipment
(Notes 9 and 29) − 11 − 11
Disposals – (12,533) − (12,533)
At December 31 – 2,060,412 – 2,060,412
Net Book Value P
= 1,900,552 P
= 5,758,192 P
= 1,552,026 P
= 9,210,770

2013

Buildings and Construction


Land Improvements -in- Progress Total
(In Thousands)
Cost
At January 1 P
= 790,644 P
= 3,411,412 P
= 1,774,635 P
= 5,976,691
Acquisitions through business combination
(Note 23) 811,173 2,041,823 174,300 3,027,296
Additions 36,073 89,066 803,650 928,789
Transfers from inventories (Notes 7 and 29) 81,503 − − 81,503
Transfers from (to) investment properties
and property and equipment (Notes 9
and 29) − 2,006,831 (2,012,260) (5,429)
At December 31 1,719,393 7,549,132 740,325 10,008,850
Accumulated Depreciation and
Amortization
At January 1 − 1,341,490 – 1,341,490
Acquisitions through business combination − 231,868 − 231,868
Depreciation and amortization (Note 19) − 204,899 – 204,899
At December 31 − 1,778,257 − 1,778,257
Net Book Value P
= 1,719,393 P
= 5,770,875 P
= 740,325 P
= 8,230,593

The Group’s investment properties are currently used for commercial leasing. Construction-in-progress
includes cost of eBloc 3, eBloc 4, ACC Corporate Center commercial buildings.

Depreciation and amortization on buildings and improvements charged to operations amounted to


P
= 294.7 million, P
= 204.9 million and P
= 125.9 million and for the years ended December 31, 2014, 2013 and
2012, respectively (see Note 19).

Total rental income from investment properties amounted to P = 1,381.6 million,P


= 1,131.1 million, and
P
= 854.9 million for the years ended December 31, 2014, 2013 and 2012, respectively (see Note 17). Total
direct operating expenses related to investment properties that generated rental income amounted to
P
= 781.0 million, P
= 542.6 million and P
= 234.1 million for the years ended December 31, 2014, 2013 and
2012, respectively.

Borrowing costs capitalized to construction-in-progress amounted to P


= 67.7 million and P
= 33.4 million in
2014 and 2013, respectively (see Note 14). Capitalization rate used for general borrowings is at 4.75%
for 2014.

The aggregate fair value of the Group’s investment properties amounted to P


= 16,930.8 million,
P
= 10,725.3 million as of December 31, 2014 and 2013, respectively. The fair values were classified under
Level 3 of the fair value hierarchy.

The fair values of the investment properties were determined by independent professionally qualified
appraisers.

262 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair values of the land and buildings were arrived at using the Market Data Approach and Cost
Approach, respectively. In Market Data Approach, the value of the land is based on sales and listings of
comparable property registered within the vicinity. The technique of this approach requires the
establishment of comparable property by reducing reasonable comparative sales and listings to a
common denominator. This is done by adjusting the differences between the subject property and those
actual sales and listings regarded as comparable. The properties used as basis of comparison are
situated within the immediate vicinity of the subject property. In the Cost Approach, the value of the
buildings is determined by the cost to reproduce or replace in new condition the assets appraised in
accordance with current market prices for similar assets, with allowance for accrued depreciation based
on physical wear and tear, and obsolescence plus an estimate of developers’ profit margin.

For Market Data approach, the higher the price per sqm., the higher the fair value. For Cost Approach,
whose unobservable inputs include estimated costs to complete and estimated profit margin and hold and
develop property to completion, the higher these costs and required profit margin, the lower the fair value.

As of December 31, 2014, capital commitments for investment properties amounted to P


= 1,081.1 million.

12. Other Noncurrent Assets

This account consists of:

2014 2013
(In Thousands)
Deposits P
= 64,764 P
= 2,205
Deferred input tax 17,103 19,262
Dividends receivable (Note 16) − 32,734
Others 1,741 553
P
= 83,608 P
= 54,754

Deposits include advance payments made by the Group for future land and building developments.

Deferred input tax arises from purchase of capital goods and is recoverable in future periods.

Dividends receivable represents dividends declared by CIHCI which are due to be received by the Parent
Company in installment until December 31, 2015.

13. Accounts and Other Payables

This account consists of:

2014 2013
(In Thousands)
Payable to related parties (Note 16) P
= 893,611 P
= 127,695
Accrued project costs 832,472 1,209,562
Retentions payable 258,454 261,787
Accrued expenses 257,230 176,665
Taxes payable 71,463 48,010
Interest payable 34,414 4,968
Dividends payable 11,957 1,858
Others 17,785 993
P
= 2,377,386 P
= 1,831,538

Payable to related parties generally are due and demandable and are settled in cash at market prices.

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CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Accrued project costs arise from progress billings or unbilled completed work on the development of
residential and commercial projects.

Retentions payable pertains to the portion of the progress billings of constructions retained by the Group
which will be released after the completion of the contractor’s projects. The retention serves as a security
from the contractor in case of defects in the project.

Accrued expenses consist mainly of direct operating and administrative expenses, payroll, systems cost
and marketing expenses.

Taxes payable pertains to amusement taxes, net output VAT and expanded withholding taxes.

Dividends payable pertains to dividends declared by CPVDC (see Note 25).

Accrued project costs and accrued expenses are noninterest-bearing and are normally settled on 30 to
180-day terms.

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

14. Long-term debt

This account consists of long-term bonds and bank loans of the Group as follows:

2014 2013
(In Thousands)
Bonds:
Due 2021 P
= 5,000,000 P
=−
Bank Loans:
At 0.60% per annum spread over the floating
rate of average 91-day treasury bill rate − 2,550,000
At 0.65% per annum spread over the average
floating rate of 91-day treasury bill rate 540,000 607,500
Fixed rate corporate notes with interest rate of
4.75% per annum 420,000 420,000
At 0.38% per annum spread over the average
floating based on Mart 1 rate 400,000 400,000
At 0.50% per annum spread over the fixed rate
based on PDST-R1 rate 296,050 299,150
At 0.50% per annum spread over the fixed rate
based on PDST-R2 rate 85,950 86,850
At 0.50% per annum spread over the fixed rate
of average 5-year treasury bond rate 4,000 4,500
At 0.88% per annum spread over the average
floating rate of 91-day treasury bill rate 23,875 24,125
6,769,875 4,392,125
Less unamortized debt issue cost 50,395 14,148
6,719,480 4,377,977
Less current portion 492,561 669,225
P
= 6,226,919 P
= 3,708,752

In April 2008, the Group obtained loans with principal amount of P


= 425.00 million from Metropolitan Bank &
Trust Company. The loan shall be paid for a maximum term of seven years from and after the initial
drawdown date and is subject to fixed interest rates ranging from 7.76% to 9.73% per annum.

In October 2010, loans were availed amounting to P = 680.0 million which are due on 2017. In respect with
the fixed rated portion of these loans, fixed interest is the weighted average yield of the 7-year treasury
bonds based on PDST-R2 plus a spread of 50 basis points per annum. In respect of the floating interest

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CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


portion, floating interest rate is based on the weighted average yield for the 91-day treasury bills based on
PDST-R2 plus a spread of 65 basis points per annum.

In March 2011, the Group obtained loans with a maximum principal amount of P = 2.8 billion from Bank of
the Philippine Islands. The loan shall be paid for a maximum term of five years from and after the initial
drawdown date. In respect with the fixed rated portion of these loans, the fixed interest shall be the
interpolated yield for treasury bills based on PDST-R2 plus a spread of 60 basis points per annum. In
respect of the floating interest portion, floating interest rate is based on the weighted average yield for the
91-day treasury bills based on PDST-R2 plus a spread of 60 basis points per annum. The loans were
pre-terminated and fully paid in 2014.

In December 2012 and February 2013, the Group obtained loans with a maximum principal amount of
P
= 400.0 million. These loans are expected to mature on 2018 and 2019, respectively. The loan bears a
floating interest rate based on the average yield for the 91-day treasury bills on PDST-R2 plus a spread of
80 basis points per annum or Bangko Sentral ng Pilipinas Overnight Reverse Repurchase Agreement rate
plus a spread of 37.5 basis points, whichever is higher.

In December 2013, the Group availed loans with a principal sum of P


= 420.0 million which are due in 2021.
The loan is subject to fixed interest rate of 4.75% per annum.

The loans which were availed from local banks in 2013, are used to finance the construction of eBloc 3
and eBloc 4 commercial buildings and are included under “Investment properties” (see Note 11).

The loan agreements provide for certain restrictions and requirements with respect to, among others,
major disposal of property, pledge of assets, liquidation, merger or consolidation and maintenance of ratio
between debt and the tangible net worth not to exceed 3:1. These restrictions and requirements were
complied with by the Group as of December 31, 2014 and 2013.

On June 6, 2014, the Parent Company issued P = 5.0 billion fixed rate bonds. These bonds have a term of
7 years, payable in 2021, with a fixed rate of 5.32% per annum. The proceeds will be used to fund the
Group’s projects in the pipeline, including on-going projects within the Cebu Business Park and Cebu I.T.
Park and land banking initiatives.

Interest on long-term debt recognized in the consolidated statement of comprehensive income amounted
to P
= 182.4 million and P
= 51.7 million for the year ended December 31, 2014 and 2013, respectively (see
Note 19). Interest rates range from 2.15% to 4.75% and 3.88% to 4.75% per annum for the years ended
December 31, 2014 and 2013, respectively.

For the years ended December 31, 2014 and 2013, the Group has capitalized interest from borrowed
funds as part of the investment properties account amounting to P = 67.7 million and P
= 33.4 million,
respectively. Capitalization rate used for general borrowings is at 4.75%.

The rollforward analyses of the unamortized debt issue cost follow:

2014 2013
(In Thousands)
At January 1 P
= 14,148 P
= 4,938
Additions through business combination − 3,351
Additions 49,342 8,100
Amortization (Note 19) (13,095) (2,241)
At December 31 P
= 50,395 P
= 14,148

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CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The maturities of long-term bank loans at nominal values as of December 31 follow:

2014 2013
(In Thousands)
Due in:
2014 P
=− P
= 72,250
2015 493,875 493,875
2016 168,000 168,000
2017 508,000 508,000
2018 420,000 420,000
2019 80,000 80,000
2020 80,000 80,000
2021 20,000 20,000
P
= 1,769,875 P
= 1,842,125

15. Deposits and Other Liabilities

This account consists of the following:

December 31
2014 2013
(In Thousands)
Tenants’ deposits P
= 610,375 P
= 465,891
Customers’ deposits 183,775 145,291
Advance rent 74,382 51,396
Retentions payable 16,297 −
Construction bond 10,828 8,188
895,657 670,766
Less noncurrent portion 225,891 182,701
P
= 669,766 P
= 488,065

The rollfoward analyses of deferred credits under tenants’ deposits follow:

2014 2013
At January 1 P
= 13,591 P
= 15,117
Additions 3,868 3,258
Amortization (Note 19) (7,251) (4,785)
At December 31 P
= 10,208 P
= 13,590

Tenants’ deposits consist of rental security deposits to be refunded by the Group at the end of the lease
contracts. These are initially recorded at fair value, which was obtained by discounting its future cash
flows using the applicable rates for similar types of instruments.

Customers’ deposits include customers’ downpayments related to real estate sales and excess of
collections over the recognized receivables based on percentage of completion. The Group requires
buyers of condominium units to pay a minimum percentage of the total selling price before the two parties
enter into a sale transaction. In relation to this, the customers’ deposits represent payment from buyers
which have not reached the minimum required percentage. When the level of required payment is
reached by the buyer, a sale is recognized and these deposits and downpayments are considered as
payments to the total contract price.

Advance rent pertains to tenants’ advances which are to be applied by the Group against the rent and
service due at the end of the lease terms.

Retention payable pertains to the portion of the progress billings of contractors retained by the Group to
be released after the guarantee period, usually within one year after the completion of projects. The
retention serves as security from the contractor against potential defects in the projects.

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CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Construction bond payable pertains to deposits made by tenants as security for the construction and
design of the leased premises, to be refunded upon completion, which usually takes less than a year.

16. Related Party Transactions

Terms and Conditions of Transactions with Related Parties


The Group in its regular conduct of business has entered into transactions with related parties. Parties
are considered to be related if, among others, one party has the ability, directly or indirectly, to control the
other party in making financial and operating decisions, the parties are subject to common control or the
party is an associate or a joint venture. Except as otherwise indicated, the outstanding accounts with
related parties shall be settled in cash. The transactions are made at terms and prices agreed upon by
the parties. There have been no guarantees provided or received for any related party receivables or
payables and are generally unsecured. Furthermore, these accounts are non-interest bearing except for
intercompany loans.

The Group does not provide any allowance relating to receivable from related parties. This assessment is
undertaken each financial year through examining the financial position of the related parties and the
markets in which the related parties operate.

The following tables provide the total amount of transactions that have been entered into with related
parties for the relevant financial year:

Amounts owed by related parties


2014 2013
(In Thousands)
Associates
Solinea P
= 224,657 P
= 224,431
Parent Company
ALI 9,303 5,965
Subsidiaries of ALI
Avida Land Corp. (ALC) 77,153 40,151
Alveo Land Corp. (Alveo) 29,665 110
Makati Development Corp. (MDC) 3,015 1,107
Ayala Land Sales, Inc. (ALSI) 611 195
Amicassa Process Solutions, Inc. (APSI) 147 270
Leisure and Allied Industries, Phils. (LAIP) 84 263
Accendo Commercial Corp. (ACC) 55 160
Others 546 3,952
Total P
= 345,236 P
= 276,604

CHI 2014 Annual and Sustainability Report 267


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts owed to related parties


2014 2013
(In Thousands)
Parent Company
ALI P
= 334,173 P
= 86,398
Subsidiaries of ALI
DirectPower Services, Inc. (DPSI) 150,000 –
MDC 150,055 –
Serendra, Inc. 100,000 –
ALC 73,097 22,793
PhilEnergy 68,085 18,131
Alveo 18,131 154
Alabang Commercial Corp. 10 153
Others 60 66
Total P
= 893,611 P
= 127,695

Revenue
2014 2013 2012
(In Thousands)
Associate
AiO P
=− P
=− P
= 15,812
Parent Company
ALI 3,855 12,098 –
Subsidiries of ALI
LAIP 2,084 − −
Alveo 811 − −
Total P
= 6,750 P
= 12,098 P
= 15,812

Costs/Expenses
2014 2013 2012
(In Thousands)
Parent Company
ALI P
= 122,322 P
= 73,461 P
= 57,317
Subsidiaries of ALI
Alveo 5,201 10,475 –
ALC 1,568 7,523 –
Ayala Property Management
Corp. (APMC) 7,860 8,346 –
Total P
= 136,951 P
= 99,805 P
= 57,317

Receivables from/payables to Solinea, Avida and Alveo pertain mostly to advances for and
reimbursements of operating expenses, development costs and land acquisitions. Other related party
receivables and payables pertain to advances and reimbursements arising from the Group’s ordinary
course of business. These are generally trade-related, unsecured with no impairment, noninterest-
bearing and payable within one year. The loans from DPSI, MDC and Serendra, Inc. bear interest
ranging from 2.3% to 2.5% and are due and demandable as of December 31, 2014.

Included under accrued project costs in accounts and other payables are construction costs payable to
MDC amounting to P = 572.6 million and P= 295.5 million as of December 31, 2014 and 2013, respectively.
Advances to MDC, which are included under advances to contractors in accounts receivable amounted to
P
= 324.6 million and P
= 358.6 million as of Dec. 31, 2014 and 2013, respectively.

268 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The nature and amounts of material transactions with related parties as of December 31, 2014 and 2013
are as follows:

Expenses to ALI pertain to management fees, professional fees and systems costs.

Management and service fees charged by ALI amounted to P = 79.8 million, P


= 73.4 million, and
P
= 44.4 million in 2014, 2013 and 2012, respectively. Payable to ALI as of December 31, 2014 and 2013
arising from this transaction amounted to P = 111.8 million and P= 42.5 million respectively. Professional fees
charged by ALI amounted to P = 18.9 million, P
= 33.0 million and P
= 0.6 million in 2014, 2013 and 2012,
respectively. Systems costs which were included in the Group’s manpower costs amounted to
P
= 32.1 million, P
= 19.7 million and P
= 13.9 million in 2014, 2013 and 2012, respectively.

Included in the Group’s other current assets is a dividend receivable from CIHCI amounting to
P
= 29.9 million as of December 31, 2014. This is collectible in installment until 2015. This was previously
included under other noncurrent assets with carrying amount of P = 32.7 million as of December 31, 2013.

As of December 31, 2014 and 2013, the Group has entered into transactions with Bank of the Philippine
Islands (BPI), an affiliate, consisting of cash and cash equivalents, financial assets at FVPL and long-term
debt with carrying amounts as follows:

2014 2013
(In Thousands)
Cash and cash equivalents (Note 4) P
= 564,726 P
= 697,125
Financial assets at FVPL (Note 5) 204,077 426,604
Long-term debt (Note 14) 1,359,513 4,387,875
P
= 2,128,316 P
= 5,511,604

Compensation of key management personnel by benefit type follows:

2014 2013 2012


(In Thousands)
Short-term employee benefits P
= 26,067 P
= 20,634 P
= 18,832
Post-employment pension and
other benefits 2,270 2,237 2,807
P
= 28,337 P
= 22,871 P
= 21,639

17. Real Estate Revenue

This account consists of:

2014 2013 2012


(In Thousands)
Rental income P
= 1,381,638 P
= 1,131,136 P
= 854,939
Real estate sales 237,295 546,794 309,682
Theater income 135,541 102,264 96,030
P
= 1,754,474 P
= 1,780,194 P
= 1,260,651

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CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. Interest and Other Income

Interest income consists of:

2014 2013 2012


(In Thousands)
Interest income:
Cash in banks (Note 4) P
= 1,817 P
= 1,354 P
= 239
Cash equivalents (Note 4) 29,240 21,798 51,503
Short-term investments – – 400
Accretion of receivables (Note 6) 40,111 49,683 31,037
P
= 71,168 P
= 72,835 P
= 83,179

Other income consists of:

2014 2013 2012


(In Thousands)
Recoveries P
= 339,929 P
= 206,091 P
= 110,785
Service income 32,795 32,660 79,210
Beverage 5,488 17,729 4,533
Realized/unrealized gain on
financial assets at FVPL
(Note 5) 3,489 4,281 −
Penalties − − 15,300
Others 6,557 8,670 5,475
P
= 388,258 P
= 269,431 P
= 215,303

Recoveries pertain to income from sewer, light and power and water charges from its rental operations.
These are recognized when earned.

Service income pertains to various management fees charged by the Group to various parties.

Penalties represent payments made by a lot buyer in relation to certain construction violations. The lot
buyer has agreed to comply with the specified restrictions. Penalties are based on the contractual terms of
the agreement.

270 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. Costs and Expenses

Real estate, rental and theater expenses consist of:

2014 2013 2012


(In Thousands)
Depreciation and amortization
(Note 11) P
= 294,677 P
= 204,899 P
= 125,895
Cost of real estate sales (Note 7) 154,885 369,344 203,507
Marketing and management fees
(Note 16) 151,264 167,310 91,969
Producers’ film share 75,424 56,492 55,808
Manpower cost (Note 16) 13,846 11,790 10,494
Rental 1,179 1,355 2,773
Direct operating expenses:
Light and water 180,030 119,349 92,856
Security and janitorial 85,224 56,312 44,189
Repairs and maintenance 65,176 54,417 30,268
Taxes and licenses 60,114 39,399 41,504
Commission 7,809 19,606 12,635
Dues and fees 6,332 13,579 17,351
Professional fees 2,450 4,806 610
Insurance 3,239 4,515 8,598
Transportation and travel 399 245 475
Entertainment, amusement
and recreation 70 47 227
Others 25,054 26,875 12,431
P
= 1,127,172 P
= 1,150,340 P
= 751,590

General and administrative expenses consist of:

2014 2013 2012


(In Thousands)
Manpower cost (Notes 16 and 20) P
= 129,267 P
= 124,856 P
= 121,613
Depreciation and amortization
(Note 9) 18,067 13,864 12,467
Taxes and licenses 13,742 10,861 285
Professional fees 9,664 8,076 7,643
Trainings 9,642 3,788 3,964
Transportation and travel 7,770 10,144 6,938
Advertising 7,213 11,378 3,973
Repairs and maintenance 6,903 10,106 6,813
Security and janitorial 5,270 3,579 3,265
Stockholders' meeting 4,286 7,712 7,807
Postal and communication 3,582 3,672 4,304
Supplies 3,443 2,130 2,251
Utilities 2,745 3,341 4,495
Rental 2,631 754 1,507
Entertainment, amusement and
recreation 1,022 930 1,304
Insurance 1,188 1,581 2,591
Others 3,408 9,408 3,114
P
= 229,843 P
= 226,180 P
= 194,334

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interest and other financing charges consist of:

2014 2013 2012


(In Thousands)
Interest on long-term debt
(Note 14) P
= 182,372 P
= 51,699 P
= 22,803
Amortization of discount on
long-term debt (Note 14) 13,095 2,241 4,136
Amortization of deferred credits
(Note 15) 7,251 4,785 3,020
Other financing charges 2,936 108 13,586
P
= 205,654 P
= 58,833 P
= 43,545

20. Pension Plan

As discussed in Note 2, the Group maintains a defined contribution (DC) plan which is accounted for as a
defined benefit (DB) plan with minimum guarantee due to the requirements of RA No. 7641.

The asset allocation of the plan is set and reviewed from time to time by the Plan Trustees taking into
account the membership profile, the liquidity requirements of the Plan and the risk appetite of the Plan
sponsor.

The principal actuarial assumptions used to determine retirement benefits with respect to the discount
rate, salary increases and return on plan assets were based on historical and projected normal rates.
Actuarial valuations are made annually. The Group’s annual contributions are agreed between the Plan
Trustees and the Group, in consideration of the contribution advice from the Plan Actuary.

The Group’s fund is in the form of a trust fund being maintained by BPI Asset Management. The primary
objective of the Retirement Fund is to achieve the highest total rate of return possible, consistent with a
prudent level of risk. The investment strategy articulated in the asset allocation policy has been
developed in the context of long-term capital market expectations, as well as multi-year projections of
actuarial liabilities. Accordingly, the investment objectives and strategies emphasize a long-term outlook,
and interim performance fluctuations will be viewed with the corresponding perspective.

The components of pension expense (included in manpower costs under “General and administrative
expenses”) in the consolidated statements of income are as follows:

2014 2013 2012


(In Thousands)
Current service cost P
= 12,442 P
= 2,297 P
= 1,475
Net interest expense 1,275 1,535 1,233
Curtailment effects – – (6,861)
Total pension expense (income) P
= 13,717 P
= 3,832 (P
= 4,153)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The remeasurement effects recognized in other comprehensive income (included in Equity under
“Remeasurement loss on defined benefit plan”) in the consolidated statements of financial position follow:

2014 2013 2012


(In Thousands)
Actuarial loss due to liability
experience P
= 10,429 P
= 616 P
= 1,863
Actuarial loss due to liability
assumption changes − 6,965 11,570
Return on plan assets greater
than discount rate 537 – –
Remeasurement losses in other
comprehensive income P
= 10,966 P
= 7,581 P
= 13,433

The amounts recognized under pension liability in the consolidated statements of financial position for the
pension plan are as follows:

2014 2013
(In Thousands)
Defined benefit obligation P
= 63,403 P
= 39,323
Fair value of plan assets (7,669) –
Liability recognized in the statements of financial
position P
= 55,734 P
= 39,323

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

2014 2013
(In Thousands)
Balance at January 1 P
= 39,323 P
= 27,910
Remeasurement loss arising from changes in
financial assumptions 10,429 7,581
Current service cost 12,442 2,297
Interest expense 2,233 1,535
Benefits paid (1,024) −
Balance at December 31 P
= 63,403 P
= 39,323

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

2014 2013
(In Thousands)
Balance at January 1 P
=– P
=–
Interest income on plan assets 958 –
Contributions 8,272 –
Benefits paid (1,024)
Return on plan assets less than discount rate (537) –
Balance at December 31 P
= 7,669 P
=–

The Group expects to contribute P


= 4.2 million to its retirement fund in 2015.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In 2014, the allocations of the fair value of plan assets follow:

Deposit instruments 53.17%


Mutual Funds 35.23
Unit investment trust fund 8.13
Government securities 3.60
Cash and payables (0.13)
Total 100.00%

The cost of defined benefit pension plans and other post-employment medical benefits as well as the
present value of the pension obligation are determined using actuarial valuations. The actuarial valuation
involves making various assumptions. The principal assumptions used in determining pension and post-
employment medical benefit obligations for the defined benefit plans are shown below:

2014 2013
Discount rate 4.50% 4.50%
Salary increase rate 7.00 7.00

The sensitivity analysis below has been determined based on reasonably possible changes of each
significant assumption on the defined benefit obligation as of the end of the reporting period, assuming all
other assumptions were held constant:

Effect on DBO
December 31, December 31,
2014 2013
Discount rate 1.0% increase (10.20%) (17.7%)
Discount rate 1.0% decrease 12.18 21.3
Rate of salary increase 1.0% increase 11.75 20.9
Rate of salary increase 1.0% decrease (10.07) (17.7)

The weighted average duration of the defined benefit obligation at the end of the reporting period is 15.12
years.

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

2014 2013
(In Thousands)
Within 1 year P
= 1,722 P
= 723
More than 1 year to 5 years 19,714 7,537
More than 5 years to 10 years 25,462 14,061
More than 10 years 426,930 366,947
P
= 473,828 P
= 389,268

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CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. Income Taxes

Reconciliation between the statutory income tax rate and the effective income tax rate follows:

2014 2013 2012


Statutory income tax rate 30.00% 30.00% 30.00%
Tax effects of:
Income subjected to lower income
tax rates (5.18) (1.09) (1.47)
Equity in net earnings of associates
and a joint venture (3.31) (2.25) (3.47)
Interest income and capital gains taxed
at lower rates (0.02) (0.08) (0.83)
Others 1.09 1.26 1.79
Effective income tax rate 22.58% 27.84% 26.02%

The components of net deferred tax assets as of December 31, 2014 and 2013 follow:

2014 2013
(In Thousands)
Deferred tax assets on:
Unapplied NOLCO P
= 21,642 P
= 11,303
Advance rent 6,267 4,104
Difference between tax and book basis of
accounting for real estate transactions 2,269 3,603
Allowance for impairment losses 2,102 2,102
Interest accretion 1,104 755
Unrealized foreign exchange loss 923 923
Accrued expenses − 295
Others 515 411
34,822 23,496
Deferred tax liabilities on:
Capitalized interest 12,982 6,120
Accrued rental income 2,033 2,163
Difference between tax and book basis of accounting
for real estate transactions 1,357 –
Deferred credits 1,100 762
Others 1,112 483
18,584 9,528
P
= 16,238 P
= 13,968

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of net deferred tax liabilities as of December 31, 2014 and 2013 are as follows:

2014 2013
(In Thousands)
Deferred tax assets on:
Accrued expenses P
= 4,454 P
= 11,970
Retirement benefits 10,273 9,743
Allowance for probable losses 2,983 3,032
Unrealized foreign exchange loss 800 756
18,510 25,501
Deferred tax liabilities on:
Difference between tax and book basis of accounting
for real estate transactions 24,572 41,559
Unamortized capitalized interest 53,732 25,773
Excess of acquisition cost over the net assets of a
subsidiary 15,272 15,368
Others 2,770 2,120
96,346 84,820
P
= 77,836 P
= 59,319

The table below shows the details of NOLCO that may be used by the Group as deductions against future
income tax liabilities:

Year Incurred Amount Applied/Expired Balance Expiry Date


2012 P
= 16,057,533 P
=− P
= 16,057,533 2015
2013 21,617,684 − 21,617,684 2016
2014 34,465,935 − 34,465,935 2017
P
= 72,141,152 P
=− P
= 72,141,152

22. Basic/Diluted Earnings Per Share

The following table presents information necessary to compute EPS:

2014 2013 2012


(In Thousands, except EPS)
a. Net income attributable to the equity
holders of the Parent Company P
= 530,877 P
= 501,145 P
= 443,640
b. Weighted average number
of outstanding shares 1,920,073 1,920,073 1,920,073
c. Basic/Diluted Earnings per share
(a/b) P
= 0.28 P
= 0.26 P
= 0.23

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CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

23. Business Combinations

Asian I- Office Properties, Inc. (AiO)


On April 16, 2013, CPVDC acquired the 60% interest of ALI in AiO for a cash consideration of
P
= 436.2 million. Both AiO and CPVDC are under the common control of ALI. This transaction will allow
ALI to consolidate into CPVDC the development and operations of BPO offices in Cebu and businesses
related thereto, which should lead to value enhancement, improved efficiencies, streamlined processes
and synergy creation among ALI and its subsidiaries. This is also consistent with the thrust of the Group
to build up its recurring income base. The following were the carrying values of the identifiable assets and
liabilities of AiO at the date of acquisition:

April 16,
2013
(In Thousands)
Assets:
Cash and cash equivalents P
= 59,993
Accounts receivable 411,183
Inventories 53,819
Other current assets 12,630
Property and equipment* 964
Investment properties* 2,192,588
Deferred tax assets 2,575
Total assets 2,733,752
Liabilities:
Accounts and other payables 531,465
Income tax payable 5,515
Other liabilities 120,813
Long-term debt 1,364,700
Total liabilities 2,022,493
Total net assets 711,259
Acquisition cost (720,733)
Equity reserves (P
= 9,474)
*net of accumulated depreciation

December 31,
2013
(In Thousands)
Total revenue P
= 326,200
Total costs and expenses 229,640
Net income P
= 96,560

Taft Punta Engaño Property, Inc. (TPEPI)


On October 31, 2013, the Parent Company acquired a 55% interest in TPEPI for a consideration of
P
= 550.0 million. The acquisition will allow the Group to consolidate its businesses resulting in improved
efficiencies and synergy creation to maximize opportunities in the Cebu real estate market. The
transaction was accounted for as an asset acquisition. The following table summarizes TPEPI’s assets
and liabilities acquired by the Parent Company as of date of acquisition:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31,
2013
(In Thousands)
Cash in bank P
= 217,858
Input VAT 14
Investment properties 332,128
Net assets acquired 550,000
Acquisition cost 550,000
Excess of cost over net assets acquired P
=–

24. Financial Instruments

Fair Value Information


The following tables set forth the carrying values and estimated fair values of the Group’s financial assets
and liabilities:

December 31, 2014 December 31, 2013


Carrying Carrying
Value Fair Value Value Fair Value
(In Thousands)
LOANS AND RECEIVABLES
Trade receivables
Residential development P
= 311,340 P
= 311,340 P
= 475,576 P
= 483,302
Corporate receivables 68,083 64,856 102,199 89,467
OTHER FINANCIAL LIABILITIES
Long-term debt P
= 6,719,480 P
= 7,263,808 P
= 4,377,977 P
= 4,522,315
Deposits and other liabilities 821,275 818,786 619,370 619,240

The methods and assumptions used by the Group in estimating the fair value of the financial instruments
are as follows:

Financial assets at FVPL - The fair value estimates are based on net asset value as of the reporting
dates.

Cash and cash equivalents, current accounts and dividends receivable - The carrying amounts
approximate fair values due to the relatively short-term maturities of these instruments.

Noncurrent accounts and dividends receivable. - The fair values are estimated based on the discounted
cash flow methodology using the applicable discount rates for similar types of instruments. The discount
rates used ranged from 2.4% to 3.8% and 2.8% to 3.2% as of December 31, 2014 and 2013, respectively.

Accounts and other payables and current portion of deposits and other liabilities and long-term debt - The
fair values approximate the carrying amounts due to the short-term nature of these accounts.

Noncurrent portion of deposits and other liabilities and long-term debt - The fair value of fixed rate
instruments are estimated using the discounted cash flow methodology using the Group’s current
incremental borrowing rates for similar borrowings with maturities consistent with those remaining for the
liability being valued. The discount rates used ranged from 1.8% to 3.8% and 2.2% to 3.7% as of
December 31, 2014 and 2013, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Hierarchy


The Group uses the following hierarchy for determining and disclosing the fair value of the financial
instruments by valuation technique:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for assets or
liabilities, either directly or indirectly
Level 3: inputs for the asset or liability that are not based on observable market data

The Group categorized the fair value of long-term debt and deposits and other noncurrent liabilities under
Level 3 as of December 31, 2014. The fair value of these financial instruments was determined by
discounting future cash flows using the applicable rates of similar types of instruments plus a certain
spread. This spread is the unobservable input and the effect of changes to this is that the higher the
spread, the lower the fair value.

There have been no reclassifications from Level 1 to Level 2 or 3 categories in 2014 and 2013.

Financial Risk Management Objectives and Policies


The Group’s principal financial instruments comprise cash and cash equivalents, financial assets at FVPL
and long-term debt. The main purpose of the Group’s financial instruments is to fund its operations,
capital expenditures and finance the projects. The Group has various other financial assets and liabilities
such as trade receivables and trade payables, which arise directly from its operations.

Exposure to credit risk, liquidity risk and market risk (i.e., foreign currency risk and interest rate risk) arises
in the normal course of the Group’s business activities. The main objectives of the Group’s financial risk
management are as follows:

to identify and monitor such risks on an ongoing basis;


to minimize and mitigate such risks; and
to provide a degree of certainty about costs.

The Group’s financing and treasury function operates as a centralized service for managing financial risks
and activities as well as providing optimum investment yield and cost-efficient funding for the Group. The
Group’s BOD reviews and approves policies for managing each of these risks.

Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party
by failing to discharge an obligation. The Group’s credit risks are primarily attributable to financial assets
such as cash and cash equivalents, financial assets and FVPL and accounts receivables. To manage
credit risk, the Group maintains defined credit policies and monitors on a continuous basis the Group’s
exposure to credit risks.

Cash and cash equivalents and financial assets at FVPL. The Group adheres to fixed limits and
guidelines in its dealing with counterparty banks and its investment in financial instruments. Bank limits
are established on the basis of the Group’s rating that covers the area of liquidity, capital adequacy and
financial stability. Given the high credit standing of its accredited counterparty banks, management does
not expect any of these financial institutions to fail in meeting their obligation. The Group’s exposure to
credit risk from these financial assets arise from the default of the counterparty, with a maximum exposure
equal to the carrying amounts of these instruments.

Commercial development and residential development trade receivables. With respect to trade
receivables from the sale of real estate properties, credit risk is managed primarily through credit reviews
and monitoring of receivables on a continuous basis. The Group undertakes supplemental credit review
procedures to ensure the adequacy of provisioning for certain installment payment structures. Customer
payments are facilitated through various collection modes including the use of post-dated checks and
auto-debit arrangements. Exposure to bad debts is not significant and the requirement for remedial
procedures is minimal given the profile of buyers. As for the sale of lots, the Group includes in the
contract to sell provisions that the title to the properties will only be transferred to the buyers upon full
payment of the contract price.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Corporate business and shopping center trade receivables. Credit risk arising from rental income from
leasing properties is primarily managed through a tenant selection process. Prospective tenants are
evaluated on the basis of payment track record and other credit information. In accordance with the
provisions of the lease contracts, the lessees are required to deposit with the Group security deposits and
advance rentals which help reduce the Group’s credit risk exposure in case of defaults by the tenants.
For existing tenants, the Group has put in place a monitoring and follow-up system. Receivables are
aged and analyzed on a continuous basis to minimize credit risk associated with these receivables.
Regular meetings with tenants are also undertaken to provide opportunities for counseling and further
assessment of paying capacity.

As for the receivables from related parties, receivable from employees, dividends receivable and other
receivables, the maximum exposure to credit risk from these financial assets arise from the default of the
counterparty with a maximum exposure equal to their carrying amounts.

An analysis of the maximum exposure to credit risk from the Group’s trade receivables and the fair values
of the related collaterals are shown below:

December 31, 2014


Financial effect
Maximum of collateral
exposure to Fair value of or credit
credit risk collaterals Net Exposure enhancement
(In Thousands)
Trade receivables
Residential development P
= 311,340 P
= 731,792 P
=– P
= 311,340
Shopping centers 132,387 440,913 − 132,387
Corporate business 68,083 77,958 − 68,083
Commercial development 30,617 89,148 – 30,617
Total P
= 542,427 P
= 1,339,811 P
= P
= 542,427

December 31, 2013


Financial effect
Maximum of collateral
exposure to Fair value of or credit
credit risk collaterals Net Exposure enhancement
(In Thousands)
Trade receivables
Residential development P
= 475,576 P
= 1,099,256 P
=− P
= 475,576
Commercial development 102,508 131,134 − 102,508
Corporate business 96,055 13,621 82,434 13,621
Shopping centers 88,622 317,069 − 88,622
Total P
= 762,761 P
= 1,561,080 P
= 82,434 P
= 680,327

280 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below shows the credit quality by class of the Group’s financial assets (gross of allowance for
impairment losses):

December 31, 2014

Neither Past Due nor Impaired


Medium Past Due or
High Grade Grade Low Grade Impaired Total
(In Thousands)

Cash and cash equivalents (excluding


cash on hand) P
= 2,894,822 P
=− P
=− P
=− P
= 2,894,822
Financial assets at FVPL 204,077 − − − 204,077
Trade
Residential development 294,570 − − 16,770 311,340
Shopping centers 81,472 2,604 22,876 39,012 145,964
Corporate business 59,131 82 − 8,870 68,083
Commercial development 30,617 − − − 30,617
Others 1,626 − − − 1,626
Receivable from related parties 345,236 − − − 345,236
Receivables from employees 15,452 − − − 15,452
Accrued receivable 14,958 − − − 14,958
Others 53,290 − − − 53,290
Other current assets
Dividends receivable 29,858 − − − 29,858
P
= 4,025,109 P
= 2,686 P
= 22,876 P
= 64,652 4,115,323

December 31, 2013

Neither Past Due nor Impaired


Medium Past Due or
High Grade Grade Low Grade Impaired Total
(In Thousands)
Cash and cash equivalents
excluding cash on hand) P
= 764,746 P
=− P
=− P
=− P
= 764,746
Financial assets at fair value through
profit or loss 426,604 − − − 426,604
Trade
Residential development 475,576 − − − 475,576
Commercial development 102,508 − − − 102,508
Shopping centers 26,839 − − 75,360 102,199
Corporate business 96,055 − − − 96,055
Others 30 − − − 30
Receivable from related parties 276,604 − − − 276,604
Receivables from employees 10,770 − − − 10,770
Accrued receivable 14,087 14,087
Others 51,161 − − − 51,161
Other noncurrent assets
Dividends receivable 32,734 − − − 32,734
P
= 2,277,714 − − P
= 75,360 P
= 2,353,074

Others includes non-trade receivables from sewer and management fees, receivable from SSS and
accrued interest receivable from money market placements.

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

Cash and cash equivalents and financial assets at FVPL - based on the nature of the counterparty and
the Group’s rating procedure. These are held by counterparty banks with minimal risk of bankruptcy and
are therefore classified as high grade.

Accounts and dividends receivables - high grade pertains to receivables with no default in payment;
medium grade pertains to receivables with up to 3 defaults in payment; and low grade pertains to
receivables with more than 3 defaults in payment.

As of December 31, 2014 and 2013, the Group does not have restructured financial assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Group has no significant credit risk concentrations on its receivables. Policies are in place to ensure
that lease contracts and contracts to sell are made with customers with good credit history.

Given the Group’s diverse base of counterparties, it is not exposed to large concentration of credit risk.
As of December 31, 2014 and 2013, the aging analyses of receivables presented per class, is as follow:

December 31, 2014

Neither
Past Past Due but not Impaired
Due nor 30-60 60-90 90-120 Individually
Impaired <30 days days days days >120 days Impaired Total
(In Thousands)

Trade
Residential development P
= 294,570 P
=– P
= 7,756 P
= 988 P
= 4,930 P
= 3,096 P
=− P
= 311,340
Shopping centers 106,952 9,296 2,894 4,113 2,681 6,451 13,577 145,964
Corporate business 59,213 – 1,015 – – 7,855 – 68,083
Commercial
development 30,617 – – – – – – 30,617
Others 1,626 – – – – – – 1,626
Receivable from related
parties 345,236 – – – – – – 345,236
Dividends receivable 29,858 – – – – – – 29,858
Receivable from employees 15,452 – – – – – – 15,452
Accrued receivable 14,958 – – – – – – 14,958
Others 53,290 – – – – – – 53,290
Total P
= 951,772 P
= 9,296 P
= 11,665 P
= 5,101 P
= 7,611 P
= 17,402 P
= 13,577 P
= 1,016,424

December 31, 2013

Neither
Past Past Due but not Impaired
Due nor 30-60 60-90 90-120 Individually
Impaired <30 days days days days >120 days Impaired Total
(In Thousands)

Trade
Residential development P
= 475,576 P
=− P
=− P
=− P
=− P
=− P
=− P
= 475,576
Commercial
development 102,508 − − − − − − 102,508
Shopping centers 26,839 46,893 3,813 5,474 5,431 172 13,577 102,199
Corporate business 96,055 − − − − − − 96,055
Others 30 − − − − − − 30
Receivable from employees 10,770 − − − − − − 10,770
Dividends receivable 32,734 − − − − − − 32,734
Receivable from related
parties 285,998 − − − − − − 276,604
Accrued receivable 4,693 − − − − − − 14,087
Others 51,161 − − − − − − 51,161
Total P
= 1,086,364 P
= 46,893 P
= 3,813 P
= 5,474 P
= 5,431 P
= 172 P
= 13,577 P
= 1,161,724

Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments
associated with financial instruments. Liquidity risk may result from either the inability to sell financial
assets quickly at their fair values; or the counterparty failing on repayment of a contractual obligation; or
inability to generate cash inflows as anticipated.

The Group monitors its cash flow position, debt maturity profile and overall liquidity position in assessing
its exposure to liquidity risk. The Group maintains a level of cash and cash equivalents deemed sufficient
to finance operations and to mitigate the effects of fluctuation in cash flows. Accordingly, its loan maturity
profile is regularly reviewed to ensure availability of funding through an adequate amount of credit facilities
with financial institutions.

As of December 31, 2014, current ratio is 1.6:1.0, with cash and cash equivalents and financial assets at
FVPL of P = 3,099.3 million accounting for 53.1% of the total current assets, and resulting in a net working
capital of P
= 2.3 million.

As of December 31, 2013, current ratio is 1.2:1.0, with cash and cash equivalents and financial assets at
FVPL of P = 1,191.8 million accounting for 32.4% of the total current assets, and resulting in a net working
capital of P
= 0.6 million.

282 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Overall, the Group’s funding arrangements are designed to keep an appropriate balance between equity and
debt, to give financing flexibility while continuously enhancing the Group’s businesses.

The table below summarizes the maturity profile of the Group’s financial assets and financial liabilities at
December 31, 2014 and 2013 based on the contractual undiscounted payments.

December 31, 2014

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total


(In Thousands)
Cash and cash equivalents
(excluding cash on hand) P
= 2,894,822 P
=– P
=– P
=– P
= 2,894,822
Financial assets at fair value through
profit or loss 204,077 204,077
Accounts receivable 938,192 42,858 9,207 2,567 992,824
Dividends receivable 29,858 – – – 29,858
Total financial assets P
= 4,066,949 P
= 42,858 P
= 9,207 P
= 2,567 P
= 4,121,581
Accounts and other payables P
= 2,305,923 P
=– P
=– P
=– P
= 2,305,923
Long-term debt 492,561 168,000 508,000 5,550,919 6,719,480
Deposits and other liabilities 369,674 91,890 171,229 4,707 637,500
Total other financial liabilities P
= 3,168,158 P
= 259,890 P
= 679,229 P
= 5,555,626 P
= 9,662,903
Interest payable P
= 34,414 532,729 266,000 931,364 P
= 1,764,507

December 31, 2013

< 1 year 1 to < 2 years 2 to < 3 years > 3 years Total


(In Thousands)
Cash and cash equivalents
(excluding cash on hand) P
= 764,746 P
=− P
=− P
=− P
= 764,746
Financial assets at FVPL 426,604 − − − 426,604
Accounts receivable 881,846 191,606 − − 1,073,452
Dividends receivable 586 32,148 − − 32,734
Total financial assets P
= 2,073,782 P
= 223,754 P
=− P
=− P
= 2,297,536
Accounts and other payables P
= 1,783,528 P
=− P
=− P
=− P
= 1,783,528
Long-term debt 669,225 1,091,588 1,513,160 1,104,004 4,377,977
Deposits and other liabilities 185,690 182,701 − − 368,391
Total other financial liabilities P
= 2,638,443 P
= 1,274,289 P
= 1,513,160 P
= 1,104,004 P
= 6,529,896
Interest payable P
= 761 P
= 1,237 P
= 1,717 P
= 1,253 P
= 4,968

Cash and cash equivalents, financial assets at FVPL, accounts receivable and dividends receivable are used
for the Group's liquidity requirements. Please refer to the terms and maturity profile of these financial assets
under the maturity profile of the interest-bearing financial assets and liabilities disclosed under interest rate
risk section.

Foreign currency risk


Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.

Majority of the Group’s transactions are denominated in Philippine Peso. There are only minimal placements
in foreign currencies and the Group does not have any foreign currency denominated debt. As such, the
Group’s foreign currency risk is minimal.

The following table shows the Group’s consolidated foreign currency-denominated monetary assets and their
peso equivalents as of December 31, 2014 and 2013:
December 31, 2014 December 31, 2013
Php Php
US Dollar Equivalent US Dollar Equivalent
(In Thousands)

Cash and cash equivalents $990 P


= 44,273 $110 P
= 4,884

CHI 2014 Annual and Sustainability Report 283


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In translating the foreign currency-denominated monetary assets into peso amounts, the exchange rates
used were P = 44.72 to US$1.00 and P= 44.40 to US$1.00, the Philippine Peso-US Dollar exchange rates as
at December 31, 2014 and 2013, respectively.

The following table demonstrates the sensitivity to a reasonably possible change in the US dollar rate,
with all variables held constant, of the Group’s profit before tax (due to changes in the peso equivalent of
the dollar denominated cash and cash equivalents and short-term investments). There is no other impact
on the Group’s equity other than those already affecting the profit or loss.
Increase (Decrease) Effect on Profit
in exchange rate Before Tax
(In Thousands)
December 31, 2014 P
= 1.00 P
= 990
(1.00) (990)
December 31, 2013 1.00 110
(1.00) (110)

Interest rate risk


Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.

The Group’s interest rate exposure management policy centers on reducing the Group’s overall interest
expense and exposure to changes in interest rates. Changes in market interest rates relate primarily to
the Group’s interest-bearing debt obligations with floating interest rate as it can cause a change in the
amount of interest payments.

The Group manages its interest rate risk by leveraging on its premier credit rating and maintaining a debt
portfolio mix of both fixed and floating interest rates. The portfolio mix is a function of historical, current
trend and outlook of interest rates, volatility of short term interest rates, the steepness of the yield curve
and degree of variability of cash flows.

The following tables demonstrate the sensitivity of the Group’s profit before tax and equity to a reasonably
possible change in interest rates on December 31, 2014 and 2013 with all variables held constant,
(through the impact on floating rate borrowings):

December 31, 2014


Effect on income before income tax
Increase (decrease)
+ 100 basis - 100 basis
Change in basis points points points
(In Thousands)
Floating rate borrowings (P
= 14,879) P
= 14,879

December 31, 2013


Effect on income before income tax
Increase (decrease)
+ 100 basis - 100 basis
Change in basis points points points
(In Thousands)
Floating rate borrowings (P
= 63,511) P
= 63,511

284 Let’s Build for Tomorrow's Generations


The terms and maturity profile of the interest-bearing financial assets and liabilities, together with its corresponding nominal amounts and carrying values (in thousands)
are shown in the following table:

December 31, 2014

Interest terms (p.a.) Rate Fixing Period Nominal Amount < 1 year 1 to 5 years Carrying Value
Group
Cash and cash equivalents Fixed at the date of investment Various P
= 2,882,693 P
= 2,882,693 P
=− P
= 2,882,693
Accounts receivable Fixed at the date of sale Date of sale 1,385,475 1,282,427 103,048 1,385,475
P
= 4,268,168 P
= 4,165,120 P
= 103,048 P
= 4,268,168
Parent Company
Long-term debt
Fixed
Peso Fixed rate of average 5-year treasury bond
+ 0.60% spread Maturity date P
= 4,954,092 P
=– P
= 4,954,092 P
= 4,954,092
Floating
Peso Floating rate of average 91-day treasury
bill rate + 0.60% spread Maturity date 1,765,388 492,561 1,275,827 1,768,388
P
= 6,719,480 P
= 492,561 P
= 6,229,919 P
= 6,722,480

December 31, 2013

Interest terms (p.a.) Rate Fixing Period Nominal Amount < 1 year 1 to 5 years Carrying Value
Group
Cash and cash equivalents Fixed at the date of investment Various P
= 764,746 P
= 764,746 P
=− P
= 764,746
Accounts receivable Fixed at the date of sale Date of sale 974,628 783,022 191,606 974,628
P
= 1,739,374 P
= 1,547,768 P
= 191,606 P
= 1,739,374
Parent Company

CHI 2014 Annual and Sustainability Report


Long-term debt
Fixed
Peso Fixed rate of average 5-year treasury bond
+ 0.60% spread Maturity date P
= 489,607 P
= 489,607 P
=− P
= 489,607
Floating
Peso Floating rate of average 91-day treasury
bill rate + 0.60% spread Maturity date 3,902,518 3,902,518 − 3,902,518
P
= 4,392,125 P
= 4,392,125 P
=− P
= 4,392,125

285
CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Equity price risk


Financial assets at FVPL are acquired at a certain price in the market. Such investment securities
are subject to price risk due to changes in market values of instruments arising either from factors
specific to individual instruments or their issuers or factors affecting all instruments traded in the
market. Depending on several factors such as interest rate movements, country’s economic
performance, political stability, domestic inflation rates, these prices change, reflecting how market
participants view the developments.

The Group measures the sensitivity of its investment securities based on the average historical
fluctuation of the investment securities’ net asset value per unit (NAVPU). All other variables held
constant, with a duration of 0.05 year and 0.04 year for 2014 and 2013, respectively, a 1.0%
change in NAVPU will increase/decrease net income and equity by P = 0.1 million and P
= 0.2 million
for the year ended December 31, 2014 and 2013, respectively.

25. Equity

Capital Stock
The details of the Parent Company’s common shares are as follows:

2014 2013
Authorized shares 3,000,000,000 3,000,000,000
Par value per share P
= 1.0 P
= 1.0
Shares issued and outstanding 1,920,073,623 1,920,073,623

In accordance with SRC Rule 68, as Amended (2011), Annex 68-D, below is a summary of the
Parent Company’s track record of registration of securities.

2014 2013
Number of Number of
Number of holders of holders of
shares Issue/offer Date of securities as of securities as of
registered price approval December 31 December 31
Common shares 3,000,000,000 P
= 1.00 par value February 14, 1994 4,350 4,508
P
= 4.00 issue price

Retained Earnings
The retained earnings available for dividend distribution amounted to P = 1,147.4 million and
P
= 868.2 million as of December 31, 2014 and 2013, respectively. Retained earnings include
undistributed net earnings of subsidiaries and associates amounting P = 701.0 million and
P
= 551.6 million as of December 31, 2014 and 2013, respectively. These amounts are not available
for dividend declaration until declared by the subsidiaries and affiliates.

On November 11, 2014, the Parent Company’s BOD declared P = 0.12 per share cash dividends
from unappropriated retained earnings to all its issued and outstanding shares as of record date
November 25, 2014, and paid on December 09, 2014. On October 9, 2013, the Parent
Company’s BOD declared P = 0.11 per share cash dividends from unappropriated retained earnings
to all its issued and outstanding shares as of record date November 5, 2013, and paid on
November 29, 2013.

On November 11, 2014, the CPVDC’s BOD declared P = 0.12 per share cash dividends from
unappropriated retained earnings to all its issued and outstanding shares as of record date
November 25, 2014, and paid on December 09, 2014. On October 9, 2013, the CPVDC’s BOD
declared P
= 0.12 per share cash dividends from unappropriated retained earnings to all its issued
and outstanding shares as of record date November 5, 2013, and paid on November 29, 2013.
Dividends payable amounting to P = 12.0 million and P
= 1.9 million remained outstanding as of
December 31, 2014 and 2013, respectively.

286 Let’s Build for Tomorrow's Generations


CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Capital Management
The primary objective of the Group’s capital management policy is to ensure that debt and equity
capital are mobilized efficiently to support business objectives and maximize shareholder value.
The Group establishes the appropriate capital structure for each business line that properly
reflects its premier credit rating and allows it the financial flexibility, while providing it sufficient
cushion to absorb cyclical industry risks.

The Parent Company is not subject to externally imposed capital requirements. No changes were
made in the objectives, policies and processes from the previous years.

The Group monitors its capital structure using leverage ratios on both a gross and net basis, and
makes adjustments to it in light of economic conditions. Debt consists of long-term debt. Net debt
includes long-term debt less cash and cash equivalents and financial assets at FVPL. The Group
considers as capital the equity attributable to equity holders of the Parent Company.

As of December 31, 2014 and 2013, the Group had the following ratios:

2014 2013
(In Thousands)
Long-term debt P
= 6,719,480 P
= 4,377,977
Less:
Cash and cash equivalents 2,895,215 765,151
Financial assets at fair value through profit or loss 204,077 426,604
Net debt 3,620,188 3,186,222
Equity attributable to equity holders of Cebu Holdings, Inc. P
= 5,467,310 P
= 5,174,518
Debt to equity 122.90% 84.61%
Net debt to equity 66.22% 61.58%

26. Segment Information

The business segments where the Group operates are as follows:

Core business:
Commercial development - sale of commercial lots and club shares
Residential development - sale of residential lots and condominium units
Shopping centers - development of shopping centers and lease to third parties of retail space
and land therein; operation of movie theaters, food courts, entertainment facilities and
carparks in these shopping centers; management and operation of malls
Corporate business - development and lease of office buildings
Others - other investing activities such as investment in joint ventures and sale of non-core
assets

No business segments have been aggregated to form the reportable business segments.

Management monitors the operating results of its business units separately for the purpose of
making decisions about resource allocation and performance assessment. The accounting and
measurement policies used are consistent with the policies used in preparing general-purpose
financial statements.

Sales, costs and expenses include amounts that are directly attributable to each segment. Items
that are not directly identified are allocated based on the segment’s proportionate share on the
total revenue.

CHI 2014 Annual and Sustainability Report 287


288
Business Segments

The following tables regarding business segments present assets and liabilities as of December 31, 2014, 2013 and 2012 and revenue and expense information for the
three-year period ended December 31, 2014.

2014

Eliminations
Commercial Residential Shopping Corporate and
Development Development Centers Business Others Adjustments Total
(In Thousands)
Revenue
Sales to external customers P
= 747 P
= 238,042 P
= 1,250,299 P
= 291,661 P
= 865 (P= 27,140) P
= 1,754,474
Equity in net earnings of associates and a joint venture − − − − 238,401 (158,722) 79,679
Total revenue 747 238,042 1,250,299 291,661 239,266 (185,862) 1,834,153
Operating expenses (6,070) (210,308) (576,430) (233,571) (355,859) 25,223 (1,357,015)
Operating profit (loss) (5,323) 27,734 673,869 58,090 (116,593) (160,639) 477,138
Interest income − 35,560 2,915 − 32,693 − 71,168
Other income − 36,949 180,364 128,767 42,178 − 388,258
Interest and other financing charges − − − − (205,654) − (205,654)
Provision for income tax − (8,320) (71,511) (17,427) (67,798) − (165,056)
Net income (loss) (P
= 5,323) P
= 91,923 P
= 785,637 P
= 169,430 (P
= 315,174) (P
= 160,639) P
= 565,854
Net income (loss) attributable to:
Equity holders of Cebu Holdings, Inc, (P
= 5,323) P
= 90,008 P
= 783,777 P
= 155,639 (P
= 332,585) (P
= 160,639) P
= 530,877
Non-controlling interests − 1,915 1,860 13,791 17,411 − 34,977
(P
= 5,323) P
= 91,923 P
= 785,637 P
= 169,430 (P
= 315,174) (P
= 160,639) P
= 565,854
Other Information
Segment assets P
= 158,078 P
= 1,200,286 P
= 6,242,584 P
= 2,182,047 P
= 5,286,393 P
= 241,044 P
= 15,310,432
Investments in associates and a joint venture − − − − 3,291,473 (2,233,192) 1,058,281

Let’s Build for Tomorrow's Generations


Deferred tax assets − − − − 16,238 − 16,238
Total assets P
= 158,078 P
= 1,200,286 P
= 6,242,584 P
= 2,182,047 P
= 8,594,104 (P
= 1,992,148) P
= 16,384,951
Segment liabilities P
= 169,373 P
= 307,721 P
= 1,609,069 P
= 2,059,518 P
= 5,924,059 P
= 15,646 P
= 10,085,385
Deferred tax liabilities − − − − 77,836 − 77,836
Total liabilities P
= 169,373 P
= 307,721 P
= 1,609,069 P
= 2,059,518 P
= 6,001,895 P
= 15,646 P
= 10,163,221
Segment additions to property and equipment and
investment properties P
= 720,581 P
=− P
= 165,833 P
= 402,529 P
= 5,936 P
=− P
= 1,294,879
Depreciation and amortization P
=− P
=− P
= 192,699 P
= 101,979 P
= 18,066 P
=− P
= 312,744
2013

Commercial Residential Shopping Corporate Eliminations


Development Development Centers Business Others and Adjustments Total
(In Thousands)
Revenue
Sales to external customers P
= 89,988 P
= 512,788 P
= 983,415 P
= 216,830 P
=– (P= 22,827) P
= 1,780,194
Equity in net earnings of associates – – – – 169,496 (122,446) 47,050
Total revenue 89,988 512,788 983,415 216,830 169,496 (145,273) 1,827,244
Operating expenses (19,133) (398,702) (530,176) (223,446) (226,268) 21,205 (1,376,520)
Operating profit (loss) 70,855 114,086 453,239 (6,616) (56,772) (124,068) 450,724
Interest income – 41,339 65 4,464 26,967 – 72,835
Other income – 18,353 1,942 126,962 208,803 (86,629) 269,431
Interest and other financing charges – (5,609) (74) (45,334) (7,816) – (58,833)
Provision for income tax (21,257) (25,867) (63,306) (22,111) (71,747) (73) (204,361)
Net income (loss) P
= 49,598 P
= 142,302 P
= 391,866 P
= 57,365 P
= 99,435 (P
= 210,770) P
= 529,796
Net income (loss) attributable to:
Equity holders of Cebu Holdings, Inc, P
= 49,598 P
= 128,896 P
= 380,686 P
= 51,742 P
= 100,993 (P
= 210,770) P
= 501,145
Non-controlling interests – 13,406 11,180 5,623 (1,558) – 28,651
P
= 49,598 P
= 142,302 P
= 391,866 P
= 57,365 P
= 99,435 (P
= 210,770) P
= 529,796
Other Information
Segment assets P
= 390,947 P
= 1,406,827 P
= 4,275,352 P
= 3,105,970 P
= 3,204,280 P
= 124,903 P
= 12,508,279

CHI 2014 Annual and Sustainability Report


Investments in associates – – – – 2,912,729 (2,484,623) 428,106
Deferred tax assets – – 6,346 – 7,622 – 13,968
Total assets P
= 390,947 P
= 1,406,827 P
= 4,281,698 P
= 3,105,970 P
= 6,124,631 (P
= 2,359,720) P
= 12,950,353
Segment liabilities P
= 154,675 P
= 696,387 P
= 3,359,937 P
=– P
= 3,808,136 (P
= 1,049,934) P
= 6,969,201
Deferred tax liabilities – – – – 59,319 – 59,319
Total liabilities P
= 154,675 P
= 696,387 P
= 3,359,937 P
=– P
= 3,867,455 (P
= 1,049,934) P
= 7,028,520
Segment additions to property and equipment and
investment properties P
=– P
=– P
= 468,421 P
= 460,367 P
= 31,751 P
=– P
= 960,539
Depreciation and amortization P
=– P
=– P
= 102,088 P
= 102,927 P
= 13,748 P
=– P
= 218,763

289
290
2012

Commercial Residential Shopping Corporate Eliminations


Development Development Centers Business Others and Adjustments Total
(In Thousands)
Revenue
Sales to external customers P
= 86,876 P
= 283,587 P
= 886,581 P
= 29,508 P
=– (P= 25,901) P
= 1,260,651
Equity in net earnings of associates – – – – 194,026 (120,125) 73,901
Total revenue 86,876 283,587 886,581 29,508 194,026 (146,026) 1,334,552
Operating expenses (59,137) (279,090) (470,989) (8,425) (151,251) 22,968 (945,924)
Operating profit (loss) 27,739 4,497 415,592 21,083 42,775 (123,058) 388,628
Interest income 4,461 15,331 – – 63,387 – 83,179
Other income – 24,562 11,056 1,387 264,346 (86,048) 215,303
Interest and other financing charges – – – – (43,545) – (43,545)
Other charges – – – – (1,528) – (1,528)
Benefit from (provision for) income tax – (23,228) (81,915) (3,876) (58,278) 264 (167,033)
Net income (loss) P
= 32,200 P
= 21,162 P
= 344,733 P
= 18,594 P
= 267,157 (P
= 208,842) P
= 475,004
Net income (loss) attributable to:
Equity holders of Cebu Holdings, Inc, P
= 32,200 P
= 14,410 P
= 342,906 P
= 14,176 P
= 248,790 (P
= 208,842) P
= 443,640
Non-controlling interests – 6,752 1,827 4,418 18,367 – 31,364
P
= 32,200 P
= 21,162 P
= 344,733 P
= 18,594 P
= 267,157 (P
= 208,842) P
= 475,004
Other Information
Segment assets P
= 718,012 P
= 1,339,559 P
= 4,262,438 P
= 520,031 P
= 1,903,994 P
= 389,945 P
= 9,133,979
Investments in associates – – – – 2,213,957 (1,607,511) 606,446
Deferred tax assets – – 849 – 7,789 – 8,638
Total assets P
= 718,012 P
= 1,339,559 P
= 4,263,287 P
= 520,031 P
= 4,125,740 (P
= 1,217,566) P
= 9,749,063

Let’s Build for Tomorrow's Generations


Segment liabilities P
=– P
= 197,090 P
= 135,404 P
= 22,285 P
= 4,056,629 P
= 37,497 P
= 4,448,905
Deferred tax liabilities – 13,759 (4,623) – 8,517 11,940 29,593
Total liabilities P
=– P
= 210,849 P
= 130,781 P
= 22,285 P
= 4,065,146 P
= 49,437 P
= 4,478,498
Segment additions to property and equipment and
investment properties P
=– P
=– P
= 1,604,628 P
=– P
= 22,886 P
=– P
= 1,627,514
Depreciation and amortization P
=– P
=– P
= 125,660 P
= 235 P
= 12,467 P
=– P
= 138,362
CEBU HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

27. Leases

Operating Leases - Group as Lessor


The Group enters into lease agreements with third parties covering rentals of commercial and
office spaces and land therein. These leases generally provide for either (a) fixed monthly rent, or
(b) minimum rent on a certain percentage of gross revenue, whichever is higher. All leases
include a clause to enable upward revision on its rental charge on annual basis based on
prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases of the Group are as
follows:

December 31
2014 2013
(In Thousands)
Within one year P
= 379,046 P
= 320,772
After one year but not more than five years 970,450 671,573
More than five years 1,358,094 2,090,119
P
= 2,707,590 P
= 3,082,464

Contingent rent recognized in 2014, 2013 and 2012 amounted to P


= 108.0 million, P
= 102.6 million
and P
= 99.7 million, respectively.

Operating Leases - Group as Lessee


The Group entered into lease agreements with third parties. These leases generally provide for
either (a) fixed monthly rent, or (b) minimum rent or a certain percentage of gross revenue,
whichever is higher.

28. Philippine Economic Zone Authority (PEZA) Registration

CPVDC was registered with PEZA on April 6, 2000 as an Information Technology (IT) Park
developer or operator and was granted approval by PEZA on October 10, 2001. The PEZA
registration entitled CPVDC to a four-year tax holiday from the start of approval of registered
activities. At the expiration of its four-year tax holiday, CPVDC pays income tax at the special rate
of 5% on its gross income earned from sources within the PEZA economic zone in lieu of paying
all national and local income taxes.

29. Notes to Consolidated Statements of Cash Flows

The noncash activities of the Group pertain to:

Transfers from property and equipment to investment properties amounting to P = 0.02 million in
2014,
Transfers from inventories to investment properties amounting to P = 81.5 million in 2013;
Transfers from investment properties to property and equipment amounting to
P
= 5.4 million in 2013;
Transfers from investment properties to inventories amounting to P = 14.1 million in 2012;
Equity in realized profit from an associate amounting to P
= 4.1 million and P
= 9.0 million in 2013
and 2012, respectively;
Acquisitions through business combinations (Note 24);

CHI 2014 Annual and Sustainability Report 291


Accrued construction billings (included in accounts and other payables) recognized under
inventories amounting to P= 13.5 million, P
= 332.1 million and P
= 146.0 million in 2014, 2013 and
2012, respectively; and
Accrued construction billings under investment properties amounting to P = 346.4 million and
P
= 846.8 million in 2014 and 2012, respectively.

30. Contingencies

CPVDC is currently involved in a legal case related to property restriction violation. The outcome
of this legal proceeding is not presently determinable.

In the opinion of management and its legal counsel, the eventual liability under this case, if any,
will not have a material or adverse effect on the Group’s financial position and results of
operations. Accordingly, no provision for any liability has been made in the consolidated financial
statements. Further, disclosure of additional details beyond the present disclosures may affect the
Group’s position and strategy. Thus, as allowed by PAS 37, Provisions, Contingent Liabilities and
Contingent Assets, only general descriptions were provided.

Publication Team
ADVISER
Aniceto V. Bisnar, Jr. President

EDITORIAL TEAM
Noel F. Alicaya Finance and Control Officer
Vera R. Alejandria Corporate Communication and Corporate Social Responsibility Manager
Jeanette A. Japzon Corporate Communication and Media Relations Manager
Cecil T. Urbina Corporate Services Group / Human Resources and Admin Head
Jennifer G. Sia Audit Manager
Jonjay O. Camson Analyst
Archie T. Obeso Analyst
Christine M. Estrella Corporate Communication Assistant

CONTRIBUTORS
CHI Sustainability Technical Working Group:
Business Development, Finance, Commercial Business and Corporate Services
Makati Development Corporation
Ayala Property Management Corporation

PHOTOGRAPHY
Portraiture Raul V. Arambulo
Francisco "Paco" Guerrero
Landscape Paul Gotiong
Events/Activities Hiede L. Mantilla
Christine M. Estrella
Grace V. Carino

COVER CONCEPT DESIGN AND LAYOUT


Medium 3 Red Apple Creatives, Inc.

FINAL ART
Publicis JimenezBasic

SUSTAINABILITY MANAGEMENT CONSULTANT


Philippine Business for the Environment

292 Let’s Build for Tomorrow's Generations


KK

Shareholder Information
CORPORATE HEADQUARTERS
Unit 701, 7/F Cebu Holdings Center
Cardinal Rosales Avenue
Cebu Business Park
Cebu City, Cebu 6000 Philippines
Tel (6332) 231 5301
Fax (6332) 231 5300

STAKEHOLDER INFORMATION
For inquiries from institutional investors, analysts, the financial and
business community on the financial report and feedback from our various
stakeholder groups on the sustainability report, please write or call:

Cebu Holdings, Inc. Unit 4C1, 4/F Tower One and Exchange Plaza
Unit 701, 7/F Cebu Holdings Center Ayala Triangle, Ayala Avenue
Cardinal Rosales Avenue Makati City 1226 Philippines
Cebu Business Park Tel (632) 908 3575 / 759 4894
Cebu City, Cebu 6000 Fax (632) 750 6647
Philippines
Tel (6332) 231 5301
Fax (6332) 231 5300

www.cebuholdings.com
customer_care@cebuholdings.com

SHAREHOLDER SERVICES AND ASSISTANCE


For inquiries regarding dividend payments, change of address and
account status, lost or damaged stock certificates, please write or call:

Stock Transfer Services, Inc.


34/F, Unit D Rufino Pacific Tower
6784 Ayala Avenue, Makati City
Tel (632) 403 2410
(632) 403 2412
Fax (632) 403 2414
stsi@stocktransfer.com.ph

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Cebu Holdings, Inc. 2014 Annual Report cover is printed on Naturalis which is made from 50%
Post Consumer Waste (PCW) and contains 100% Elemental Chlorine Free wood pulps from
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The main pages of this report are printed on woodfreepaper produced with pulps from
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The Financial Statements of this report are printed on 9Lives Offset recycled
which is made of 100% post consumer waste.
Unit 701, 7/F Cebu Holdings Center,
Cebu Business Park
Cebu City 6000
Cebu, Philippines

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